#1176 Balaji Srinivasan On Bitcoin & The Stealth Banking Crisis

Balaji Srinivasan is an entrepreneur and an investor. He was the former chief technology officer at Coinbase, a former general partner at the venture capital firm Andreessen Horowitz, and he also has a number of nine figure exits as a founder of companies. In this conversation, Balaji and I discuss the current banking crisis, the potential of hyperinflation, what happens to the U. S. dollar moving forward, why he made a $1 million bitcoin bet over the next 90 days, and what exactly Balaji thinks has led up to this scenario. ======================= Pomp writes a daily letter to over 200,000+ investors about business, technology, and finance. He breaks down complex topics into easy-to-understand language while sharing opinions on various aspects of each industry. You can subscribe at https://pomp.substack.com/

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:02Anthony Pompliano?

  What's up everyone? This is Anthony Pompliano. Many of you know me as Pomp. You're listening to the Pomp Podcast, which is my effort to find the most interesting people in the world and sit with them for hours while I ask questions in an effort to learn. We have no advertisers on this podcast, so it would mean the world to me if you would subscribe to the show on your favorite audio platform, watch episodes on YouTube, and tell your friends and family about the podcast. My goal is to help millions learn from the world's most interesting people. So let's get into today's episode. Balaji Srinivasan is an entrepreneur and an investor. He was the former Chief Technology Officer at Coinbase, a former general partner at the venture capital firm Andreessen Horowitz,

• 0:44Anthony Pompliano?

  and he also has a number of nine-figure exits as a founder of companies. In this conversation, Balaji and I discuss the current banking crisis, the potential of hyperinflation, what happens to the US dollar moving forward, why he made a $1 million Bitcoin bet over the next 90 days, and what exactly Balaji thinks has led up to this scenario. I really enjoyed learning from Balaji in this conversation, and I hope that you enjoy it as well. Once you get done listening to this, this is an important conversation, so jump on Twitter and let us know what you agree with and what you disagree with. That conversation after the episode can help us all continue to pursue what is truth and what is noise.

• 1:26Anthony Pompliano?

  Here is my conversation with Balaji Srinivasan.

• 1:31Speaker 01

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• 2:00Speaker 02

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• 2:31Speaker 03

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• 3:00Speaker 04

  Anthony Pompliano runs Pomp Investments. All views of him and the guests on his podcast are solely their opinions and do not reflect the opinions of Pomp Investments. You should not treat any opinion expressed by Pomp or his guests as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of his personal opinion. This podcast is for informational purposes only.

• 3:23Speaker 05

  Pomp, good to see you. You can see that I'm like, you know, still a normal guy or what have you, right?

• 3:37Speaker 05

  But basically-

• 3:38Anthony Pompliano?

  Let's start here. Let's start here, Balaji. I think a lot of people saw you put the bet out, and they're all focused on the bet. But to me, the bet is merely you sounding the alarm. And so, let's go back to 2020 and walk us through what happened to get to the point where you believe the banks are now insolvent? Like, how did we get here?

• 4:01Speaker 05

  Great question. So if you actually go and you look at my, um, my post on this, okay? So why did I do this? Actually, I, I did not propose a bet. I accepted the bet, right? He, he's the one who made the bet over here, number one. And number two is he did that after I put out my initial, I thought I would do tasks and so on for people, like they would go and go and do tasks for Bitcoin, right? But it was a good way to, this actually got 11 million views. It was good bait to bring attention to the key point, which is everything the narrative outlined in this post here. And this fortunately got 2.3 million views. Okay. Cause this is the core set of concepts.

• 4:43Speaker 05

  You only read one post, read this. Okay. I'm just going to go through it. Can you see the screen?

• 4:48Anthony Pompliano?

  I can.

• 4:49Speaker 05

  Okay. So got a post, uh, right here. Um, so this basically, you know, this was a bet thread, but the point of it was actually get people to read this. Okay. Just as in 2008, the bankers lied. We forgot how much they had lied to us. Because, you know, that was, that was obviously a huge thing in 2000. They basically almost bankrupted the world economy, lying to us, lying to themselves, some competence, combination of greed and competence, malice, or whatever, blowing up the whole world economy, right? This time, the central bankers, the banks and the bank regulators have lied to all dollar holders and depositors. It's not your typical fractional reserve situation. There is enough in the banks on a mark to market base to cover withdrawals.

• 5:34Speaker 05

  Um, I, I call it Uncle Sam Bankman Freed. Okay. That's actually, if you want one line, just like Sam Bankman Freed, he, uh, you know, he owed people, let's say a thousand Bitcoin, right? But when they, but, and he had some balance sheet that said his assets added up to a thousand Bitcoin. And he fooled himself, or he fooled the rest of the company, or whatever it was, into thinking he actually had that. But he's actually like gambling and all this other stuff. And he may marked it at what he had when he bought it, but he didn't have it when people came. And when people actually came, he couldn't liquidate those assets to actually get the Bitcoin that they wanted, because he had gone and gambled it, right? And and then, of course, the entire exchange collapsed, right?

• 6:16Speaker 05

  This is basically what has happened, not just at FTX, but at all the banks. All the banks bought long-dated US treasuries as well as other bonds in 2021. They binged on bonds, as I'll show you in a second, okay? They binged on bonds and um the basically in response to the Fed's guidance, here's here's the article, do you see this? Banks are binging on bonds, but not because they want to see this. Smoking gun article, right, from 2021, shows enormous increase in buying of all these bonds and less commercial loans. They all got centralized on one guy, Uncle Sam, right? Buy bonds, even if it means skimpy profits.

• 6:58Speaker 05

  So they have to invest in one of the least lucrative assets around, government debt guaranteed to produce skimpy profits. Right? And actually, what happened was

• 7:11Speaker 05

  basically that all the printed money from 2020 sloshed around the economy and it cut off the normal flow of normal loans because customers had, you know, high levels of cash. And they normally didn't take out loans, so it broke the banking model. So all they did is they put all this enormous amounts of cash into bonds. And when the yield on the treasury note rose to 1.75%, banks hungry for higher returns rushed to buy them. So this was like 1.75% was like a high return in 2021, August 2021, right? And moreover, and that spike didn't last, right? So, by the way, this is all like banking gobbledygook to many people, right? But um part of the thing about this, I'll explain the simplest terms I can, right? First, what you should do, right?

• 7:55Speaker 05

  What you should do is buy Bitcoin, get your coins off exchanges and go to a crypto-friendly jurisdiction. Inside the US, that'll be like Florida or Texas or something like that. Outside the US, which might actually be better, honestly, as I'll get to, would be like El Salvador, actually, or UAE or um, you know, like.

• 8:16Speaker 05

  Singapore and so on, like Western Europe are not so much, you know, any, basically the closer it is to blue America in a network sense, you know, Japan is far away from blue America, but it's very connected to blue America in the sense of having lots of US dollar deposits. The closer it is to blue America in a network sense, the more it banked on the Fed and the worse off it is. Okay. And just to give you a sense of what actually happened, first I'll show you some graphs. Okay. Cause graphs get the point across. Um, this is a graph of like, how much treasury is making. Look at that. It's just down into the right. Okay. This is a graph of how, meaning they're, they're losing money. Okay. Treasury, the central bank is losing money.

• 8:56Speaker 05

  It doesn't look like normal, normal times. Okay. Um, this is a graph of unrealized losses.

• 9:04Speaker 05

  Okay. And this is really like the core bomb that's blowing up this whole thing. All of these-

• 9:07Anthony Pompliano?

  And Balaji, Balaji, just so people understand the chart that we're looking at here, this is unrealized losses for the banks, the actual, uh, large banks, mid-sized banks, small banks. This is their unrealized losses that are sitting on their balance sheets that they don't necessarily have to mark to market.

• 9:21Speaker 05

  Yeah. Unless you actually come and ask for your dollars. Okay. If you ask for your cash, there'll be an Uncle Sam Baikman Freed situation where they don't have the dollars on hand to make up for it. But that's what happened with Silicon Valley Bank. That's what happened with other banks. Credit Suisse has now just admitted it was a bank run that got them. In the digital age, bank runs are very fast. Once people hear that something's possibly been solved, they all just go and pull their money out. Right? And so the, the whole concept of, oh, they'll only ask for this much at this time. That's no longer the case. You could have everybody do an outflow at the same time if it goes viral.

• 9:56Anthony Pompliano?

  And on that point, I think it, on that point, I think it's very important to, um, to kind of understand that what you're talking about is not just the flow of information being fast, but you're also talking about the fact that now for a bank run to occur, you don't have to go sit in line and or stand in line at the bank. You can literally open a new tab, press a couple of buttons and move your money. And so the speed of action matches the speed of information. And that's really what's driving a lot of these problems.

• 10:21Speaker 05

  That's exactly right. That's exactly right. And so essentially the digital bank run is, I mean, we, we were pushed into this era by the Fed, as I'll get to, basically, um, you know, these graphs, okay, they're down into the right graphs. They're huge. I mean, this is 2008 for comparison, right? These are enormous, enormous yawning, you know, numbers here, right? And here is, um, Here's the community banks. Okay, so this is, these are the commercial banks and this is the central bank. Okay. And then the community banks, here's the Fed admitting that, um, you know, the rising interest rates have, and again, all this is in jargon and it's jargon, just like, you know, it's like camouflage for a snake. You know, a snake has evolved camouflage. You didn't design the camouflage, but if it didn't have the camouflage,

• 11:06Speaker 05

  you'd be able to catch it and kill it. Right? So all of these words are ways for them to hide the ball from you. Fine print is not simply a tactic, it's their strategy. Right? The, you know, in 2008, they would have used mocking terms on you. They said something like, tell me you don't know what a CDO is without telling me you don't know what a CDO is. Okay. And the whole point is that nobody knows what a CDO is. Neither the guy selling it nor the guy buying it. They're all, some guys relying, some guys relying to themselves, some guys relying to their counterparty, some guys are stupid. Nobody asked the obvious question of, this thing isn't worth what we think it's worth. And if you did say that, I can't believe, I mean, they'd be marking down the portfolio. So nobody wanted to believe that until somebody poked around enough

• 11:48Speaker 05

  and found actually these houses, nobody's making payments on them. Right? And in the same way, unrealized losses lowering tangible equity capital. Basically what they're saying is, um, at the, at the end of 2021, four banks had, you know, tangible, this is the thing they've made up tangible equity capital. TLDR is at the end of 2021, four banks were insolvent. By June 30th, they knew 333 of these community banks were insolvent. Meaning if there's an economic shock, go ahead. If you came for the money, the money was gone. Go ahead.

• 12:18Anthony Pompliano?

  And that comes specifically for those that are trying to understand what happened there. At the end of 2021, rates were still at 0%. By June, it was very clear that they were hiking rates and were going to continue to hike rates. So.

• 12:30Speaker 05

  Yeah, it was a surprise.

• 12:31Anthony Pompliano?

  By June, it was very, it was very severe and it was obvious that they were now underwater on the debt they had bought.

• 12:37Speaker 05

  Yeah, the thing, the thing to remember is this is like, you know how in so many other contexts, right? Masks don't work before they do, right? You're a right wing conspiracy theorist, blah, blah, blah. If you're saying the coronavirus is even here and you shouldn't wear masks, oh my God, everybody needs to wear a mask at all times, blah, blah, blah, right? And the science has said this, right? And they just, you know, they either truly forget or they don't want to remember, they just shift like a school of fish, right? The lab leak, obviously a conspiracy theory, oh, I always had suspicions about the lab leak, why wouldn't you? Seems like a reasonable thing, right? Inflation, and this is a big one, right? Inflation. See, you can do that maybe for some political stuff,

• 13:19Speaker 05

  right? But when you, when you do it, when you're actually signing a contract at the flip before the flop, then everybody's screwed, okay? And that's what happened. Essentially, back when the political class was just denying things, stop worrying about inflation, right? Inflation fear lurks, even as officials say not to worry. Powell, Donald plays inflation risk, as Yellen foreshadows future spending, right? And then, whoop, like this, okay? So, you know, again, and people who are watching this don't need to know how interest rates work, but essentially what they did was they faked out everybody. Everybody is making long-term plans. They said inflation was a conspiracy theory, it's not real. You buy 10-year bonds, that denial continued through 2021.

• 14:04Speaker 05

  Then the rates just got hiked super fast in one year, higher than 10 years. Everybody who was a bondholder got destroyed, including SVB by many others, all by the Fed. This is what happened, right? Everybody who trusted the Fed, everybody who made essentially a long-term bet in 2021 on the, the, the full faith and credit of the US government, on the financial health, 10-year bond, supposed to be a stable country, it's not supposed to go wee, wee, wee, wee, up and down like this, right? They got destroyed, absolutely destroyed. Basically, in a sense, if you still thought America was the same country in mid-2021 and you still kept doing what you were doing, then you weren't doing the right thing. Clearly, the country had just permanently changed, right?

• 14:45Speaker 05

  Even if, you know, like what had happened before in 2020 with the crazy riots and so, so forth, all of that now became the government. And so that kind of went now, it's like swallowing the poison, right? And so everybody, you know, the form may have been the same, but the substance would now totally different, right? And, um, you know, so I said, like inflation is a case where yesterday's conspiracy theory became today's conventional wisdom. The issue is all kinds of contracts got, see, you know, a lot of folks claiming that SVB was a victim of the industry. They, they weren't that big and they weren't in shock. The thing is, this is just either, it's either delusional or it's wrong or it's whatever. But, you know, as, as I mentioned over here, even Janet Yellen

• 15:25Speaker 05

  has admitted that, uh, the high interest rate environment, basically that caused people to lose market value. I mean, duh, right? And everybody's like, oh, why don't you just hedge interest rate risk? Well, because you can hedge if it goes from like point one percent to 1.1%. You can't hedge if it's point one percent and goes to 4.75%. It just completely destroys all of your projections. So just showing you that.

• 15:51Speaker 05

  But I'm going to jump out of the banker stuff in a second because as I said, the whole point of it is it's been naturally selected to be very confusing and to not know where things are, right? But the, but basically just to give you a sense, they project in December 2020 is going to be point one forever. Right? Everybody who's trying to make long-term decisions is buying long-term bonds. And then, oh my God, it's actually 4.75% in 2023. Shit, you know, I'm now totally crushed, right? Because the rate totally changed. And you can see actually a record of their forecasts and how they change over time. Now, the thing about this is to understand these forecasts, billions and billions and billions of dollars are based on them. And when they wiggle like this, because they're such conformists that they go up and down and up and down, right?

• 16:35Speaker 05

  When they wiggle at that extent, it like whiplashes the entire economy and causes all kinds of things to break and chatter and so on. Cause all these pension funds and all these things that buy it on their guidance, trust them. And then they all go off a cliff at the same time like Lemmings. And that's basically what happened. So it's coming back up the stack. Um, you know, here we are. So.

• 16:57Speaker 05

  Basically, they all knew this huge crash was coming. Okay, so all the stuff on interest rates and so on. You don't have to worry about that too much. I mean, it's kind of the backstory to this, right? But the main point is the banks, central banks, the banks and banking regulators all knew a huge crash was coming. The phrase is unrealized losses, but they never notified you, the depositor. Instead, they allowed, the regulators allowed banks to hide their literal insolvency in footnotes until one guy figured it out. Okay. And so here, just take a look at this. Ready? One, two, three, four, five, six, seven. I guess I'm the only one using Twitter Blue to its fullest.

• 17:35Anthony Pompliano?

  When I saw you use this, I literally said Twitter Blue was made for Balaji footnotes. This is amazing.

• 17:41Speaker 05

  Right? So, because I'm not like, this is not, oh, you some crazy guy just saying this, blah, blah, blah. I have names and dates and specific links in their archive. So I'm just going to show you five links that show that the central bank, which is the Fed, the banks and the banking regulators all knew a huge crash was coming, but they never notified you, the depositor. Instead, they allowed banks to hide their literal insolvency in footnotes until somebody figured it out. Okay. So link number one, here's the Fed. Okay, all the banks are insolvent. Three hundred thirty-three community banks versus four over here. Okay. And by the way, people will be like, oh, how'd they hide it, huh? They publish it on the web. That's really hiding it, right? It's called, you know, well, you call it hiding and played site.

• 18:24Speaker 05

  Or you could say, all right, did they tell the depositors, the millions of like Republicans and so on, that the banks had lost their money? You know, that, that the Fed had told the banks to lose their money? Did you notify the depositors? Publishing this coded kind of thing on their website does not say in plain English that if you came for your dollars, it would not be there. Right? So it's not, it's like a non-disclosure disclosure, right? Here's another one, you know, FDIC worried about growing unrealized loss in banks' portfolios. It's a very substantial overhang. It could impact our institutions. It's $400 billion. I mean, it's starting to be real money, right? Okay. And, um, and it's because the Fed raised rates. Okay. Then here.

• 19:08Speaker 05

  Is that same guy FDIC Chair is two or three days before SVB saying unrealized losses weaken a future banks ability to meet economic needs, right? The total was $620 billion, right? And, uh, you know, just, just absolutely gigantic numbers. Okay. Here, the Fed itself, okay? In Fed minutes, February 23. Again, this stuff is written, it's like verbally encrypted, you know? It's like ostensibly disclosed, but it's not. The effect of large unrealized losses on bank's security portfolios. So they did know that, you know, basically, you know, Powell, the day later, right? Went and, you know, on March 7th, he went and testified to Congress. Now, March 6th was this FDIC thing, March 7th, he went to Congress.

• 19:54Speaker 05

  And, um, he said something to the effect of that the banks were solvent, right? But the Fed lied, banks died, right? That's basically, you know, if we're going to get to the core of it. Once basically the, the Fed had basically passed off. See, the Fed raised these rates and the value of bonds banks, uh, own dropped. What happened was all the banks panicked. They're like, oh crap, we all listened to the Fed. We all went and, uh, they all went and binged on bonds. Okay. And, uh, you know, here's where is it? There's binging on bonds. They listened to the Fed. They binged on bonds. They all got destroyed at the same way at the same time. And then what did they do? They're like, what should they do in reaction to the large losses, right?

• 20:39Speaker 05

  Like, you know, the resulting impact on capital. They were scared. The Fed had just surprised them and just destroyed their entire portfolio, right? Anxious bankers wondering what they should do. And so they decided to do is transfer securities to HTM. Okay. The heck is HTM? Um, oh, it's, uh, it's basically like hold to maturity. It's basically like Sam Bankman Freed going and buying something. It gets marked down 60%, but he says it's still worth what it was. It's like your NFT, you still think it's worth a million dollars. No, it's not worth a million dollars. Okay, no one's going to pay you a million dollars for it. But you hold to maturity. Oh, actually, no, sorry. It's a little different than that. People always want the technical. Oh, no. It's an NFT that will return that pays you 1% each year and it will return a million dollars in,

• 21:22Speaker 05

  you know, eight or nine more years. But if you, uh, but today there's another one that you can buy for the same amount that returns you 5% each year or whatever. And so your one is worth way less by comparison. They'll always want to be like, oh, that's specific typo or, you know, like slight imprecision means. But the substance of it is that they did some accounting magic to hide their gigantic losses. And, um, this was true at many different banks, like SVB also did this, evidence of deception by SV management where, they used to have a very clean line showing those securities. Then they made it, you know, reserve, reserve, right? And then suddenly, oh, ta-da, 491. Like basically they're, the regulators allowed the bank to hide their little insolvency in a footnote.

• 22:09Speaker 05

  Okay. Oh yeah. You know, we just moved things around 81.6 billion dollars. Not a big 81.6 billion dollars, more than GDP of a smaller country, put in a footnote. And this is what set up the situation where, um, some engineer at, you know, Dropbox or whatever, you know, like some, you know, some employee of some tech company goes to work one day, finds that their company's bank account, the money is gone in some American bank that they thought they could trust for, you know, 40 years. And wanting their business checking account back is blamed on them, right? Like, think about, you know, how insane that is. And I was like, how could that possibly have happened? Right?

• 22:53Speaker 05

  And, and one of the things that's going on here, by the way, is you know how, um, if you're, you know, in San Francisco, right? You pay for all the police and get none of the protection. Okay. It's what's called anarcho tyranny. Okay. So that's like, uh, you're, you're, you're an Uber driver and you're in San Francisco. And, uh, you get a 200, 300 dollar parking ticket. Okay. For doing nothing. But the guy who smashes your window and, and, you know, wilds out in the street, nothing happens to them. Okay, so it's a tyranny and the anarchy at the same time, right? Similarly, this is like anarchy tyranny, but for banks where somehow the money can be gone overnight. That's the anarchy, but the tyranny is 5,000. Why the heck is this stupid?

• 23:37Speaker 05

  I mean, all these farms and all this verbiage there, but the regulator doesn't know that the bank is insolvent. Didn't warn depositors. You find out in a bank run with all of these filings. That was, that was what I was trying to figure out. How, when did this actually happen? Then I pulled on that and I pulled on that and I pulled on that until I could add up what I was seeing in front of me. And I was like, they're all dead. This is just the first bank that floated up to the surface. All the banks are dead and they're just going to keep coming up. And so, you know, that's why I tweeted this and nobody else here is like, uh, you know, March 11th. As soon as I kind of, I got on this like a dog on a bone because I was like, how the heck could a $200 billion bank go to zero like this?

• 24:20Speaker 05

  And it's like, oh, that wasn't a unique cause of them is treasury. Cause there is trying to blame it on, oh, they did risky VC bets and so no, they bought treasuries, which was like supposedly the safest asset in the world. Right? And so even on March like 11th, right? I was like, where we'd like to see in the company because it wasn't a single bank issue, it's a central bank issue. Right? Most banks are suffering unrealized losses thanks to rapid change. And people are like, no, no, you're trying to make special cleaning, right? And there's all kinds of weird optical illusions that people have in this space. They like worship the Fed. Oh my God, I can't believe you're blaming the Fed. They think of the Fed as like, like a God or the referee or something where you're not.

• 24:58Anthony Pompliano?

  Wizard of Oz.

• 25:00Speaker 05

  Yeah, exactly. And you know, the thing is I, this kind of stuff always bored me frankly, because I was, you know, it's, it's like, it's kind of meant, it's a lot of money for sure. But it's also written in such a way as to be boring and complex. But point being though, that, um, this was 10 days ago. I was like, you know, we're going to, not a single bank issue, central bank issue. That was, that was basically, um, so that was before, so you know, they, they basically, we now have five banks dead, right? There's Silvergate, there's, um, Signature, there's SVB, there's First Republic and there's Credit Suisse. And some of them are dead and some of them are murdered, right? But, uh, clearly it's not a single thing. And moreover, the new WSHA, dozens of banks.

• 25:42Speaker 05

  May have risked a similar, similar, so like 186 banks, maybe prone to some risk. Who knows if it's 186 or if it's 333 or if it's, um, you know, like many, or in this case, he's like, uh, you know, I always say is as most banks has a, like, what is the exact number of dead banks? Who knows? Okay. But what happened after the SVB thing was found out is the Fed moved into, because I think they were trying to figure, they were trying to hope that there would never be a bankrupt or something like SBF. No one would ever come looking for their money. Right?

• 26:18Anthony Pompliano?

  So, real, real, real quick before, uh, before we get into what happened with the Fed kind of stepping in. What I want to also just call out very quickly is that a huge part of this was all of the stimulus, all of the quantitative easing, all the bailouts, all, all of this stuff that happened between 2020 and it's called 2022. One of the key things that, uh, people focused on was inflation, the rise of prices that people were paying attention there. But I had an aha as I was reading your tweets and kind of looking at more of it is like, guess where all of that money ended up? Regardless of if an individual or a corporation had it, is it ended up in a bank? And so it was a deposit somewhere, right? If I received a $1,200 check and I turn around, I give it to a business, that business puts it in a bank as a deposit.

• 27:03Anthony Pompliano?

  And so the quote unquote, big winners throughout 2020 and 2021 was the bank deposits growing at hundreds of percent, which then basically now put them in a position where they had to figure out, what do we do with all these new deposits? And that's really kind of what led to them buying these long duration bonds because of the zero interest rate environment, put them all at ma- massive risk. And so we get to the failure of SVB and maybe you can explain kind of what the Fed and kind of other organizations are doing by stepping in here.

• 27:32Speaker 05

  Yeah. So. So basically, um, I mean, it goes back even further, right? Because, you know, if people have known, like, the US is living on borrowed time for a long time, you know, that it's been printing so much money, it's had, like, it's a zombie economy for a while, right? Um, you know, bail out of GM, bail out of this, right? All kinds of things, just got tons of money to stay afloat. And you have, for example, like the Marvel reruns, you know, all that type of stuff, where, um, you have seventy-five, eighty-year-old presidents, you know, all of that stuff, right? So you can, you can pull it back to the pandemic, you can pull it back to the financial crisis, you can pull it back probably further than that, you know? And, uh, there's probably steps that people could have taken at any one given moment.

• 28:18Speaker 05

  Um, but specifically with the pandemic, yeah, you're correct, that huge amounts of money sloshed onto the balance sheet of banks, they had to do something with it. Everybody else also had lots of money, they weren't taking out loans. So the banks also did think maybe inflation's gonna come, but they knew the Fed was denying that they were gonna hike rates. So they're like, okay, fine, um, we're going to just instead, um, buy these crappy bonds that we've got now and get these ten years. And then when Powell hiked rates so fast, so quickly, nobody could find a counterparty for their huge bond portfolio, because they're all in the same boat at the same time, because expressing different opinions, all these lemmings just went off the cliff, and everybody was just hoping that the Fed would eventually pivot, right? And now they have.

• 29:01Speaker 05

  Because after SVB, they decided, okay, rather than having people just go and withdraw, you know, their money and cause a bank run, no, instead, we're gonna just print money behind every depositor, F Fed DIC insurance, okay? And so now, the game, now it's, now we're an endgame, okay? Because now, what they have done, what that is, is it's a stealth monetization of the debt. All the, all the debts that they owe, they have now just magic them away, and they don't want to call it that. But one of the clever things is that these bondholders, um...

• 29:35Speaker 05

  Now, they they are so happy to have their losses deleted by the Fed that they're probably not realizing that the amount of money injected into the system, like, for example, you buy a billion-dollar bond, okay, you just lost fifteen percent on it, or something like that. And the Fed says, you know, I'm gonna value, so it's it's eight hundred fifty million, oh crap. And the Fed says, you know what, I'm gonna still value that at a billion. And this BTFP program, they're like, the markdown didn't happen. And and they do something complicated, it's not exactly buying it some loan kind of thing. But the the point of it, though, is that you got your your billion, and rather than your eight hundred fifty million, you got that extra money, the hundred fifty, you know. And so you're feeling happy at that time. And I don't know what the exact contracts are

• 30:19Speaker 05

  that they signed. But that bank that, you know, was killed by the Fed and now saved by the Fed is happy. But I wouldn't be surprised if they signed something that says, oh, you can't accuse us of it being a sovereign default. But now, ta-da, they have managed to get people to eat that sovereign default. And now they just hope that, basically, the level of inflation that's in the system, where they've just increased the money supply so dramatically, is not something that's going to flow into Bitcoin. And and like, I know, everything I'm saying here just sounds like really complicated and intricate and like, hard to track or whatever. But the TLDR is, imagine if Sam Bankman-Fried, he had these assets, you know, he he owed you a thousand

• 31:02Speaker 05

  Bitcoin. People came back and he only had four hundred Bitcoin. And he had assets he thought were worth six hundred Bitcoin. He couldn't sell those to get six hundred Bitcoin. But then, suddenly, in comes the government and issues him stuff over here, new Bitcoins, and he can give them back. That won't work for Bitcoin because you can't print Bitcoin. The twenty-one million limit is actually, it's such a simple but important hard constraint on the entire system, right? Whereas with the Fed, they can swoop in behind the scenes and start printing dollars such that these guys can make good on their obligations, right? And that is what has happened, where there's essentially like both domestic and international bills. Now, by the way, just to take temperature, on a one to a ten, you know, I should probably tweet this. Do

• 31:45Speaker 05

  you, are you aware, or do you believe that a financial crisis has happened?

• 31:50Anthony Pompliano?

  I'm the wrong person to ask because I know that we not only are going to have a financial crisis. I know that we are in one and it is way more drastic than most people realize. Hence why I'm spending so much time talking about this.

• 32:04Speaker 05

  Right, exactly. That's right. So this is the stealth financial crisis. That's actually why, see, because NYT and others, they're all pointing your attention at something else. They're not front paging this intentionally because they don't want you to panic. Don't panic. Whatever you do, you know, like remember FTX is fine, assets are fine, right? That's exactly what's happening now. Treasury and, and you know, Fed have statements out saying we're solvent. Money is there. Don't worry, you know, all the banks are good, full faith and credit, blah, blah, blah. And of course, when you have to put that statement out, that's obviously when, um, things aren't going good. You know? So what I, again, the simple version of what I think happens, and there could be a lot of twists and turns,

• 32:50Speaker 05

  is it's really going to be one of two things.

• 32:53Speaker 05

  First, um, lots of, there's all kinds of chaotic printing and bank runs and so on in the weeks to come as worried depositors check on their funds. And the big branch point is whether they wire it to big banks or they turn into Bitcoin. And that determines basically whether, literally like whether freedom lives, as funny as that sounds, okay? Because if everybody wires to big banks, then, and they think, oh my God, the Fed saved us, the big bank saved us. And all the small banks and all the tech banks and so on die. Well, the Fed now CBDC, which they chose, by the way, to announce even in the middle of this crisis. Okay. They announced on March 15th, it's going to come out in July. Okay.

• 33:33Speaker 05

  Then all the money is trapped at all the big banks. And then in July, you only have like four banks left or whatever it is. The CBDC is rolled out and too big to fail becomes like too big to escape.

• 33:47Speaker 05

  You literally can't spend your money without government approval on anything. Oh, you want to buy that? Beep beep. Nope, that guy is bad, that person. You can very fine-grained pulling of every single transaction anybody's ever done. You can't exit the system. It is like, it becomes like you go from a free person to having monopoly points on somebody's computer. It's even more than, I mean, the Fed system has become more like that even, you know, right? And whoever they don't like, they delete them. And whoever they like, they they add them. And the whole CBDC basically makes all kinds of monkeying around with individual people's balances much easier to do, right? And that is what China is certainly doing, right? So anybody who's politically unaffordable to the regime, they freeze, they can seize, they can spy,

• 34:31Speaker 05

  they can do whatever, right? And who was politically favorable, they just direct deposit somebody else's money and nobody can see it, right? So, um, you know, and then of course they can cut off interconvertibility into cryptocurrency. They just won't let somebody buy or sell it for that, or at least not without without knowing about it. Um, and you can imagine maybe OTC trades where the second part of that, you know, like the the BTC part of it isn't shown, but they they won't like it, right? So so the current path before setting up the bit signal was something where, and again, how intentional is it versus how emergent? I don't know. But the current path was that the Fed causes this crisis, bankrupts all the banks. You know, one of them has a bank and Fed rolls in, they're both arsonist and firefighter.

• 35:16Speaker 05

  Somehow they know exactly what's about to happen, right? FJIC rolled in real, they're real professionals, right? Actually, they they knew the bank, that everything was insolvent, right? And then what happened was

• 35:34Speaker 05

  that with all of these small banks, the tech banks, community banks going down and all the money pinned at the central bank or at the at the big banks, um, the CBDC rollout becomes very simple. You just have four banks and really all the same. And now you don't have any choice. And the alternative to that, though, is if people buy Bitcoin, that is literally the exit from the system. It is something that they cannot control. They cannot edit the entries on that ledger. That's the whole point. It's this bulletproof decentralized ledger. And the trillion million number, they can't corrupt it, and they can't censor it. And this whole thing, everything that we've ever talked about here, you know, you and me for

• 36:14Speaker 05

  10 years, and you know, what's funny is, I am not, neither of us, I don't think, you know, I'm not a Bitcoin maximalist, but we're all going to be Bitcoin maximalists now. Okay, what I mean by that is, the Bitcoin maximalist philosophy, and again, I've recognized that many of its exponents and so on are like insane, and it's all true, but unfortunately, you're gonna kind of need insane people for what is about to happen. Okay, their worldview is the closest. Most people, most of our people don't have any idea of what's coming. Okay, but Bitcoin maximalists are maybe the only people on earth who are prepared for the potential sovereign default of the US dollar and the rise of Bitcoin, and the

• 36:56Speaker 05

  concept of hyper Bitcoinization where the reserve currency switches over to BTC and all fiat around the world, like basically collapses relative to the hardest money around, right? And basically, what the, what the US has done, what the Fed has done is it's caused the fiat crisis. It's not really just a banking crisis, it's a fiat crisis. Because the crisis of having everything centralized in one place, and them all screwing it up in the same way at the same time, and lying to everybody with uncheckable things. Every single thing that the most intense Bitcoin maximalists would say, you know, for example, I posted that meme of, you know, you could sell your Bitcoin for millions someday, is like, Neo, when you're ready, you won't have to, right? Because like selling for trillions

• 37:36Speaker 05

  of Zimbabwe dollars, right? So hyper Bitcoinization, which is the simultaneous rise of Bitcoin and transition to reserve currency in the crash where the fiat's against it, is going to be a huge mess. Because I think it's going to come much faster than people think, because with all this printed money, we've got about three months before this CBDC gets out there, where you're still a free man, you know, and you might be able to wire it out, and you might be able to turn Some of it into BTC and hold that locally. And that is basically the way like that is a way that we might preserve some degree of freedom on the other side of this. Cause either it's a go ahead. I know that sounds, see, I don't normally talk like this, right?

• 38:13Anthony Pompliano?

  No, no, I know you don't. That's why I wanted to talk to you about this. So I think a key question and I should blame you because once you put out this bit signal, I have somehow become a half spokesperson for Balaji. I literally have gone on podcasts and they're asking me, what is Balaji doing? I have no clue. So I figured you could explain for yourself. But the other thing is in private, there's people who I think follow your work and they're like, look, Balaji usually doesn't have this type of language. Balaji usually isn't, you know, this public in terms of some of the things that he believes. And so that makes them pay attention. When you made the bet, the $1 million Bitcoin price in 90 days, help unpack in that bet, are you saying hyperinflation in the United States?

• 38:56Anthony Pompliano?

  Or are you saying, no, whether hyperinflation or not, people are going to start to exit. And therefore they are going to buy Bitcoin and it will push the price to $1 million in 90 day period. Like, how do you think about, let's go through kind of, if your vision of what is about to happen occurs, what does that world look like over the next 90 days?

• 39:17Speaker 05

  What I think is either, so the reason I did the bet was to get people to the Bitcoin lifeboat. Buy Bitcoin, get your keys off exchanges, get to a Bitcoin friendly jurisdiction. That is the message. Buy Bitcoin, get your keys off exchanges, get to Bitcoin friendly jurisdiction. Um, everything else I say is a rationale for that, right? But that's what the message I'm getting out there is. I'm basically burning money to do this. It is not something that I'm, I mean, the thing is I believe in Bitcoin, but I also believe in the public good. And that's going to be something that's insured supply and what follows. If what I'm saying is correct, and I believe it is, that the central banks and like the US government has betrayed people on this level, right? Such that they just. Blew up huge amounts of people's savings, okay? And you couldn't even trust the banks.

• 40:02Speaker 05

  I mean, like, obviously, you knew you couldn't trust the banks, quote unquote, in 2008. But the degree to which, you know, it's like the South Park episode, you know? Hey, blah, blah, blah, it's gone, right? You know that thing, right? That's, that's literally what we're talking about. Or, or like, you know, South American kind of bank. You trust a South American bank? Now, maybe in this century, you do. You know, the flipping, just like it was from like Russia to China, like China's now the senior partner. Or from Britain to India, India's now the senior partner. It's quite possible that in this century, it's like, this is South America's time to shine because they understand currency crises. They understand the value of Bitcoin. El Salvador, you know, his model is now something that he could export over, you know, South America. You could have, you know, who knows what happens and what follows. I actually think Kelly becomes a pretty important person in the world, actually.

• 40:46Speaker 05

  Um, El Salvador might become one of the richest countries in the world with, with all the Bitcoin they've got if this happens. Okay.

• 40:53Speaker 05

  But, but basically what I did was, uh, most people were not, this financial crisis was creeping up like a, like a panther or like a, like a cloud enveloping people. They weren't even aware of it. It was just invested so much in stealth mode that whether, you know, people were just sleepwalking. It just wasn't a topic of conversation and so on. Now, this is something that's cut through the noise and everybody is aware that there is a financial crisis on. And that the banks don't have your money, that the money is gone, right? And that you should probably exchange some of it to Bitcoin and you should do that sooner rather than later. Because, um, you don't know, it, it, we all don't know.

• 41:36Speaker 05

  It's just hard to predict timing on anything. But they have announced a July launch of the CVC and that feels like as good a deadline as any. They've been killing the crypto rails, right? They killed Signature, they killed Silvergate. There aren't that many ways out. And so what I wanted to do was say, get Bitcoin, get your friends and family to get Bitcoin. Get your coins off exchanges and do that now because they might close the doors. They might bar the exit. Now, the thing is, the good thing is, they won't be able to bar it worldwide because the US doesn't have control over all banks worldwide anymore. There's like UAE and Saudi and so on, but they still do have control over quite a big chunk of it. And, uh, you know, one way of thinking about it is, you know, I was born an American and I, um, I, I'm doing this because I actually love American values.

• 42:21Speaker 05

  You know, Paul Revere, the printing is coming. Right? The printing is coming. That's literally what we're talking about, right? The printing is coming. This is a, you know, another American analogy. This is a digital Pearl Harbor on all dollar holders. The dollar holder is a bag holder. Okay. And I mean that literally, you know, it's funny is, you know, I, the funny thing about this is I sound now like the most intense maximalist ever, right? I don't know what.

• 42:47Anthony Pompliano?

  Yeah, you, you do, but, but the reason why I'm laughing is because, uh, what you're saying is actually very little to do with Bitcoin, right? Like you are basically looking at the traditional financial system and you are saying there are major problems here. And I don't give a shit if you care about Bitcoin or you don't care about Bitcoin, but you have to identify what the problems are and then make the decisions for yourself. Oh, by the way, I, Balazs, you believe that Bitcoin is the best solution, but some other people may go buy real estate or buy whatever asset that they think is better. But first you have to get them to identify the problem before they even begin to think about a potential solution.

• 43:24Speaker 05

  I know, but even then I think, yes, the reason I'm saying Bitcoin, and as I said, I'm a maximalist for now, for the, for like, for digital wartime, right? Bitcoin only. And the reason is that real estate and other kinds of things like that, um, may, maybe real estate in red states, I guess, but lots and lots of fiat stuff is, you know what happened to the Russians or the Canadian truckers? Right? Their stuff was just seized, right? So I have a feeling that as these banks all melt down, right? The most trustworthy things out there, I mean, your, your business checking account isn't secure. And if you want it back, that's a bailout, right? This kind of crazy stuff, which, what it does, by the way, see a normal predator, when it walks up to you, like, or it's running at you, it looks, got fangs and sharp and you're like, oh,

• 44:09Speaker 05

  and then you, you know, you fight back against it and you have legitimate self-defense. Imagine a predator that like could, you know, anesthetize you, you know, like a mosquito in a sense, and it sucks your blood and you don't even know it's there, right?

• 44:25Speaker 05

  That's kind of like these, these finance guys, these bankers, who will take your money and tell you you're bad for resisting, you know? They're like, you know, again, it's, it's something where, uh, natural selection operates at many different levels. Obviously it operates at the level of the physical and visible kind of thing, but also operates at the level of ideologies and even business practices, right? If, um, if they had not adopted those kinds of things, then, um,

• 44:52Speaker 05

  They would be more easily spotted. Oh yeah. Well, this says, send all my money to so and so place. No, thank you very much. Right. And so the funny thing is all kinds of maximalist impulses, like distrusting contracts, distrusting, you know, complicated things. I want simple things. Like lots of those impulses are going to be good impulses in what follows, you know, like minimum necessary complexity. Um, we're basically the whole de-financialization of this gigantic kind of thing may happen actually really fast as tons of banks go down and so on. And we'll see what happens, right?

• 45:27Anthony Pompliano?

  Talk a little bit, talk a little bit about, yeah, talk a little bit about the speed at which this has happened previously. So, you know, for example, I know somebody who lived in a country where there was hyperinflation. It literally happened in 60 days, right? It went from everything's fine to bam, hundreds of percent of inflation. Explain a little bit as to why you think this kind of combination of historical hyperinflation and the speed at which it happens, combined with what I call the digital catastrophe, right? This kind of speed of information and action can then almost accelerate it at even faster pace.

• 46:01Speaker 05

  That's right. So first is hyperinflation table, right? This, look at the speed of this. This is hours to days, right? It's really, really, really, really, really fast. Okay. Second is the digital bank run, right? So here is actually, right? Social media driven bank run killed credit suites 10 billion in a day. 12th deposit S U B collapse from asset size of 55 billion. C O blames Twitter, right? Social media rumor. Okay. So, um, so basically digital bank runs are, they're not built for that. All dot Frank assumes people come in in person, right? So the system isn't set up for something from this angle, right?

• 46:44Speaker 05

  So one is that hyperinflation. Two is, third is just look at, you know, some of these stocks, right? First Republic Bank here. Look, this was, this was like pretty legit bank for a long time, seemingly, right? Um, look at that. Look at that. Is that, that, see it's continuous and it looked, thought that they were getting really rich and then dead.

• 47:06Speaker 05

  Right? Everybody knew that this was fake, but it's like kind of accelerating your entire life and then ending it. That's what the Fed did, you know? It's like, just, just look at that, what that felt like going from that to that, right? That's the printing and that's the, you know, rate hiking and like, you know, I'm not saying this is a normal business cycle, but they went bananas and they, you know, just, you know? So the thing is, that's First Republic, all right? Here is, uh, you know, Silicon Valley Bank.

• 47:37Speaker 05

  Right? Look at that. Again, it's continuous and it's just digital and dead at the end. Okay. Here is, um, the, the so-called, uh, the so-called discount window.

• 47:50Speaker 05

  Again, they make all this stuff, you know, give all these various names. So, look at this. This looks like.

• 47:58Speaker 05

  Here's another thing, like, you know, there's like some little wrinkles and so on and then that's 2008, this is Corona, discount window is already just far beyond anything. There's a little bit of, you know, kind of thing. This is just, does that look like a normal graph?

• 48:13Anthony Pompliano?

  No, of course not. And then also I think that there, there's another piece to this whole thesis that, um, hasn't really been called out a lot. It's like the central bankers learned a playbook in 2008. They perfected it during, uh, coronavirus 2020. And now it's like they're in the big leagues and when they see that fat, you know, fastball coming down the middle of the plate, they can swing with all their might. And so as you see in this chart here, like they're swinging, they just gave back a third of everything they sold off their balance sheet in a year. They give it back in literally one week.

• 48:43Speaker 05

  Half, I think it's half.

• 48:46Speaker 05

  Half of all the QT in one, right? It does, this is the last screenshot. Who knows? It said like, it's like 5X that by now, who knows, right? Um, and, and they also, by the way, they, they, uh, they lie like they breathe, right? Because every single thing they say, you have to like translate Fed speak where it's like, you know, they, they lie in certain ways where if you're, um, you know, uh, I'll give a great example, like, um, okay, look at this, right? March 12th, we're only going to print 25 billion. Now it's two trillion, four days later. How about that? And it's actually, what it actually is, is infinity. Right? And so, so you know, this graph no longer looks that crazy anymore relative to

• 49:30Speaker 05

  the discount window stuff, right? Like these, um, you know, they, they look the same. And the thing is, everybody's known that this was going to happen. One of the, I think, one of my contributions in all of this is reframing this as not like some tech guys thing or whatever, but as like the final big debt crisis that Dalio predicted, right? Everybody knew this would come, but not exactly how and when. And the Fed didn't have strategic surprise, but it had tactical surprise. And again, whether it's intentional or emergent, doesn't matter, right? TLDR is, they are now doing that digital devaluation of the dollar. And so now what's going to happen, I think, is now the fire alarm has been rung. Hopefully, you have something where only dollar

• 50:15Speaker 05

  holders pay for the sins of the dollar. Okay, so everybody, because if you think there's multiple tribes in the US, there's blue tribe, red tribe, gray tribe, like Sky Alexander's, foreign tribes, right? So hopefully, everybody who doesn't fully trust the banks and the US government, hedges into Bitcoin to a greater and greater extent. Um, and we'll see exactly how that manifests. And then they'll have like, you know, they'll print so much that probably prices of, you know, bread and other kinds of things will go up versus the dollar. And that's when, you know, things start to get pretty nasty, right? Um, but we'll see what happens. Uh, I mean, the big thing is, by the way, when you go back and watch this video, Dalio has cartoons in there,

• 50:58Speaker 05

  and he does that, it's very well done. But it means that you feel like it's something happening to people at a far away time and place, and people don't panic or freak out or whatever. But then watch those and then replace those cartoons with the assets going to zero and people being in conflict with like real photos in your head, and it feels very different. You know what I mean? Like, no one cares today about the collapse of the Dutch or whatever, because that was hundreds of years ago. It's a different thing when it's like happening to you, you know? Let me pause there.

• 51:27Anthony Pompliano?

  So I have a couple of questions that now that people understand, you know, how we got here, what the Fed is doing, what you think will happen kind of moving forward. Maybe the first place to start is you said this a couple of days ago now. I have had people across tech, finance, Bitcoin, you know, crypto world, whatever, reach out to me and ask some version of, is Balaji serious? What is he thinking? Do you agree with him? What percentage likelihood do you think it is? Whatever. From your standpoint, have you had people from the traditional financial world reach out to better understand this? Or is it still an internet thing? And it's basically the community of people who know you from the internet? Or have you now started to have this narrative and this kind of idea seep into the traditional

• 52:11Anthony Pompliano?

  financial world where people are starting to pay attention?

• 52:13Speaker 05

  So I'm aware that several large billionaires have started buying Bitcoin. No, not started, like, like have. They, see, the thing is, this set of facts that I put together over here

• 52:26Speaker 05

  is a, like, this is not crazy, right? This is a set of highly, this is a well documented essay with links, graphs and charts that makes sense. It tells a story that makes sense, that predicts both past, I mean, like that, that makes sense of past events and predicts future events. And it puts all the pieces together as to what happened and why it happened and what's going to happen. And at least to a terrifying conclusion, which is all the banks are dead and we're going to find out one bank rat at a time. Like what they've, what they've decided to do is to monetize the debt in the most chaotic way by having it be first come, first served. Okay, they print tons of money and all the banks have your money.

• 53:10Speaker 05

  But the only person who has a purchasing power is a person who turns into Bitcoin first.

• 53:16Speaker 05

  That's it. Right? The purchasing power is being eroded silently with this print, right? And because this is like the last print, you know, they've just, they have monetized the debt. So insofar as I made a contribution, it was that. And to your, to your question, yes, I mean, like there's zillion people who've called and messaged or whatever. And all I've done is I've said, you know, the first thing they're like, all right, you know, some people, actually the people who know me know that I'm not. I, you know, you know, I mean, for I don't know, five years, 10 years, something, something in that range, right? I'm not a John McAfee kind of guy, right? There's, there's only one other time I've ever rung the fire alarm. And that was like on this level, and that was early COVID.

• 53:57Speaker 05

  And the reason I did it then was the same reason did now is because I took the hit of having been like, you know, execrated for weeks as a racist, blah, blah, blah, blah. Oh my God, you're such a racist for saying it's coming from China, like this kind of insane stuff, you know, oh my God, you know, you're so paranoid, blah, blah. At the time, by the way, and here's the thing, by the way, about COVID. Today in 2023, people believe two things. Number one, China had a virus that leaked out of a lab that infected more than 700 million people worldwide and killed 7 million of them, sickening tens of millions of others. And they covered it up and that's so terrible and it's bad. True. Of course, you know, NIH actually also funded China. So like the US is also involved.

• 54:42Speaker 05

  It's like this terrible kind of thing, right? The gain of function research, all this stuff. And number two, it wasn't that big a deal. Life went on. COVID's over, right? So now the thing is, I actually agree with both those statements. But at the time in early 2020, if you go back and look at the number of deaths, it was growing exponentially like that. And nobody was paying any attention to it. And it was an empirical question that it managed to top out at about 7,000 deaths per day rather than like 70,000, right? So. I, you know, like, if you go back and look at my tweeting, I basically stopped tweeting about it around the time they started saying, oh, you know, race related, you know, was it racism is a real pandemic or some, something, you know, insane like that, right? Remember the riots and

• 55:25Speaker 05

  so on. Once people just started going, losing their minds, I did not tweet about it. What I wanted to alert people to was this was a real thing. The problem is that while the tech, you know, and of course, people will argue about this. So one thing I'll find is there's a lot of people who believe both that China is super ill for letting this leak out of a lab and it's just the flu. It wasn't a big deal. It was not just the flu. It just, it was a novel virus that killed a lot of people, right? We, you know, I, you can argue about which vaccines are good and, you know, so on. I think probably what it is, is that getting COVID was so bad that a vaccine that gives some percentage of people similar effects to COVID, it's as if they were infected with COVID and it's at larger scale. That is my rough belief, right? So that it's probably

• 56:06Speaker 05

  better to get the vaccine that's get out. But I know that people will differ on this and argue on this and so on. I'm not here to litigate that. What I am here to say is that the early stages of COVID, I think that there absolutely was something happening and there were a lot of changes that were going to happen. And that's what I kind of flagged, right? Um, as for now, I think this is going to be something similar where this is something that, uh, the full consequences of lots of, you know, Western banks being dead, uh, lots of money being printed and a CBDC and a lot of consolidation in a CBC. I don't know exactly what they're going to be, but they could be even worse in some ways because if you have a CDC, you just can't get your money

• 56:49Speaker 05

  out ever, maybe, right? Depending on how much level of control is, you may not ever be able to get it out. And if you can't ever get it out, they might not let you buy a plane ticket. They meant there's so many things that they would do to people who are politically disfavored without saying anything that, uh, it would be pretty, pretty nasty, right? Anyway, let me pause there.

• 57:08Anthony Pompliano?

  All right. The next question that a bunch of people, when I told them that we were going to do this, uh, were asking me is what is your best argument for why you're wrong? Or what is your best argument for why the US dollar will not inflate away and it will continue to be the global reserve currency?

• 57:24Speaker 05

  The best argument for, so I actually don't think, all right, well,

• 57:29Speaker 05

  Let's do a few. What's my best argument for why I'm wrong? I think the best argument for why I'm wrong is probably that this will happen, but it'll be over a longer time scale. And it won't be that fast. And this is not the final crisis, but it's the precursor to the final crisis or the, you know, the final crash will be in a few years or something, right? Something about it feels different, though. And the reason it feels different is it's a consumer facing crisis.

• 57:56Speaker 05

  In the sense of all the previous ones were enterprise crises, you know, like you just read in the news that bankers were worried and anxious and sweating and so on. You didn't have 40,000 companies and all of their employees, all at the same time, completely panicking that they, that their entire life's work would go to zero. Because, you know, supposedly they're, you know, like, and it was blamed on them, you know, like that, you didn't have something like that, right? That is something that causes a fundamental distrust in the US banking system. Moody's downgraded the banking system. In many ways, America is already Argentina. Okay. Now, so why am I wrong? If I'm wrong, I'm wrong because it takes longer for inflation to propagate out than I think. Because I think now they have printed so much money that it's a matter of time.

• 58:42Speaker 05

  But I want to be wrong in a sense because, and I'll probably post this when I post a bet, like, I hope I don't win. Okay. In that sense, because,

• 58:55Speaker 05

  what this is, is a way to call attention to this stealth financial crisis. And, you know, it's like prepping, you know? It's like buying a gun or whatever. You hope you don't have to use it. But you better be prepared because you might. You know, so buying Bitcoin and getting to a jurisdiction that is Bitcoin friendly, that has, you know, Texas GOP has this thing, shall not be infringed, right? The right to buy, sell, send and receive Bitcoin shall not be infringed. Mississippi, Montana, they have right to mine bills. Tennessee, Wyoming have the Dow laws, obviously Florida, you know, is pro Bitcoin. Um, and I kind of think what will happen is a potential dividing line in the not too distant future will be, there'll be states that don't, blue states that don't allow

• 59:40Speaker 05

  individuals to hold Bitcoin, only the government can, like gun bans, right? And red states that allow individuals to hold Bitcoin. And I think that's going to be now, of course, when I say Bitcoin, maybe it's lightning or something like that, you know, we all that is to be figured out, obviously transactions, volumes, all those stuff that's important.

• 1:00:00Speaker 05

  And anyway, there's way more I could say, but let me, let me stop there.

• 1:00:04Anthony Pompliano?

  So when you mentioned Bitcoin and kind of, you know, Second Amendment, it makes me think of Jason Lowery and the thesis around like the soft war and basically Bitcoin being this, you know, projection of power and something that the United States should go ahead and embrace. Given the existing financial situation, it, is it your recommendation that the central bank should immediately go buy Bitcoin as a hedge against their own devaluation of the fiat currency? Or do you think?

• 1:00:34Speaker 05

  They would never, ever, ever, ever, ever do that. Just these guys being with it. It's, it, they have an economic theory that could not predict the existence of Bitcoin. And I mean, really what that, that's what this is. It is, do you trust Powell or Satoshi?

• 1:00:52Speaker 05

  That's literally what this is, right?

• 1:00:55Speaker 05

  And you know, people said, you know, the Fed is more powerful than the president and so on. If Bitcoin becomes the global reserve currency, that is a changing of the order. It is a different, it is a different world after that, right? So they would never, um, they would never, I maybe, I don't know, I doubt it. I've never seen a central banker that likes Bitcoin. There's some that understand it, but they don't like it because it's the one thing that they can't manipulate on their keyboard. It's the one thing they can't seize or freeze. You know, they're almost like a video game developer. Points here, points there, and so on, except there's consequences in the real world. You know, you can make a game more interesting by adding certain points, but making people dance in the real world, you know, by just sloshing numbers around the spreadsheet is, is not fun, right?

• 1:01:39Speaker 05

  For the person who's having to dance in such a way, like these people who are faked out by, oh, rates are going to be low rates, whoa, rates are so high. And they all just crash, gigantic pileup of bodies at the base of that cliff, you know?

• 1:01:54Speaker 05

  So no, I think, you know, I haven't read Lowry's thing. I saw it online. I think the basic issue by with a lot of those guys who I like is that they just have a romantic image in their head. I mean, the thing is, you know, the thing for my network state book like God, State and Network. It's like, what is Leviathan, right? What is the highest power? And a lot of philosophies actually reduced to this even unconsciously. Is the highest power almighty God? Is it the, you know, the military, the state, like the US military or the Chinese military, if you're in China? Or is it encryption? Right? And the thing is that I think a lot of people

• 1:02:36Speaker 05

  just still project onto the current US government, what it was as opposed to what it is, you know? It's like it's been silently corrupted in some ways, not that silent, actually, but it has the same flag and it has the same this. It's got, it's like, um, you know, Scott Alexander talks about the skin suit wearer, right? Like something kills something and wears its skin, you know? So it's got the skin of the old America, but the substance is like some demon that's inhabited it. And, you know, that has gotten all the banks to tell you that it's your fault if the money is gone, right? And, um, you know, by the

• 1:03:17Speaker 05

  way, all these FDIC things, you know, like you used to have like small bank bankruptcies. You didn't used to have like gigantic hundred billion dollar banks with no warning, go absolutely to zero. Right? That's new. That's like not, you know, that's the 2008 crisis, but that's not what like a well-run system is supposed to be. It's okay. And it's a systemic thing, you know, probably, by the way, one thing I think about, you know, it's, there's, there's libertarian theory that I, um, I never got that into, but now I'm much more into it. And that's, you know, basically the Fed is serial killer, right? If you go back in time, probably if you go and look at the mortgage crisis, you can find the fingerprints of the Fed and probably every, every crisis, you can find the fingerprints of the Fed injecting all this variability. And then everybody else dies and a bunch

• 1:04:02Speaker 05

  of bodies at the edge of the cliff. And the Fed keeps playing their games interest rate up and straight down and straight up and straight down, pretending that injecting all this chaotic cyclicity and craziness in is adding value somehow, when it's actually just joystickling, you know, the system. And they would never give up that control. Because it makes them feel important. And how could we not help people or whatever, right? And the control would have to be taken away. And that's a big one. All right. Let me pause here.

• 1:04:29Anthony Pompliano?

  So another piece that I think people are interested in is the nation state versus the state. We just saw today Florida Governor Ron DeSantis, he gave a press conference. He said that he is going to propose legislation to outlaw the use of CBDCs in the state of Florida, both domestic and foreign. Put aside for a second whether he legally can do it or not, because so much debate of that on Twitter. But this idea that like, some of these states may not wait for federal guidance, and they may actually go against the nation's interests. How do you kind of balance that?

• 1:05:05Speaker 05

  Well, so one thing I've, and I've got a ton of graphs on this, but basically, actually, let me show some of these, right? So I've been tracking this for a while. And what most people don't know is that the 10th amendment has basically been coming back. Okay. So in the sense that states breaking away from the feds.

• 1:05:21Anthony Pompliano?

  Blas, you are an expert Googler.

• 1:05:24Speaker 05

  Am I? Yeah.

• 1:05:26Anthony Pompliano?

  Yes.

• 1:05:27Speaker 05

  Here we go. So, um, first of all, states have already been breaking away from the feds. You know, right of the people to own, hold and use, you know, shall not be infringed, right? And, um, all right. So states are setting their own sanctuary. So sanctuary state laws, these have been going on for a long time. And some of them are to the left and some are to the right of the federal government, right? And, uh, you know, here marijuana laws, okay, they differ, uh, gun laws, abortion laws, right? All of that stuff differs quite a bit from state to state, and it's getting more so, right? And, um, the thing about this is,

• 1:06:12Speaker 05

  you know, here is, you know, Wyoming, legal Dow recognition, Colorado first state to accept crypto for taxes, Miami crypto capital of the world. Like crypto is a political issue and states will literally split on crypto as to whether they are fiat state or a crypto state. Like that's like a fundamental difference. In fact, I actually think in what comes after this, after the fiat crisis, I think you're going to see a lot of the fiat economy, all the derivatives and so a lot that just melts down, you know, basically it just just all poof and I don't know who gets what money. And you have essentially fiat states, maximalist states where it's Bitcoin only. And then crypto states which have, you know, Bitcoin plus, right? But all three of them will value Bitcoin and we'll all like fight over it.

• 1:06:55Speaker 05

  And then the question is whether Bitcoin itself, um, see, cause gold, I mean, gold will also be valuable in that world, but as like a state to state thing. Bitcoin itself then is going to actually be under, you know, the serious stress test and we'll see what happens. Go ahead. You're gonna say.

• 1:07:12Anthony Pompliano?

  No, my, uh, I think my last question for you is, um, when you look at this entire situation playing out, you're raising the alarm. You're, you're kind of sounding the alarm. You've put the bit signal up. You've got people from all walks of life that are starting to pay attention to it. If you had to guess now, 90 days, a year out, whatever kind of timeframe you want, how many people do you actually think will listen?

• 1:07:39Speaker 05

  I don't know, but I do know that at least I feel that I did my duty to warn innocent Americans that, I mean, there's a tradition on both the American left and right of being suspicious of the American government. Right? Where it's on the left when it's coin tell pro and all these people wiretapping and so on. Or if it's on the right, you know, when it's like, don't tread on me libertarianism, right? There's a healthy suspicion of the state. And both left and right libertarians are within kind of our crypto community. And that's a strain of, you know, Americanism has been there for a long time. And so, you know, essentially I think of it as, you know, there's, there's basically four options, right?

• 1:08:23Speaker 05

  One is you just go back to sleep, watch Tik Tok, don't do anything. Okay. Two is, um,

• 1:08:32Speaker 05

  You, this is a false story. You wire all your money to a big bank. Now you think you're safe. 5% interest, great. A lot of people will fall through this door because they just don't get it. Then the trap shuts in like July or whenever the CBDC and then they cannot withdraw their money and they're stuck and they're like, I trusted them. No, right. And that's, you know, right. Then third, you get to Bitcoin, at least some, you're hedged, right? You're hedged into Bitcoin. But fourth, you want to also be in a Bitcoin friendly jurisdiction because otherwise you're going to have problems being in a, in a, having Bitcoin when everybody else doesn't, right? Um, and so I don't know what, like of the people, where they land at one, two, three and four.

• 1:09:15Speaker 05

  So

• 1:09:15Anthony Pompliano?

  I think that's fair.

• 1:09:16Speaker 05

  We'll see.

• 1:09:17Anthony Pompliano?

  What, um, I lied. I actually have one more question for you.

• 1:09:19Speaker 05

  Sure, of course.

• 1:09:20Anthony Pompliano?

  What is the one, what is the one thing that you're looking for moving forward? What is the milestone? What is the data point? What is the thing that you'll be like, yes, this thesis is on track. Uh, if you see it happen, is it more banks failing? Is it, you know, more QE, balance sheet expansion? Like, what are you looking at?

• 1:09:37Speaker 05

  Well, the thing is, the way that they're doing this printing, the, the question is whether or not we actually see with the, they have managed to get it to the system to the point that people are scared about whether their money's in the bank. And they print it to make sure that if you come and do a bank run and you move your money, that you still have it. So the, um, the fundamental thing would be, I mean, certainly the Bitcoin price going up would, you know, we'll see when it, if and when it starts mooning, right? And, um, and maybe people need to get their wires to exchanges or something like that. But fundamentally, it's going to be individuals and then it's going to be, um, firms and then it's going to be, uh,

• 1:10:17Speaker 05

  you know, like funds and then eventually it'll be, I think, small sovereigns, like Naib Akheli and Jack Dorsey, um, getting involved would be pretty important, uh, because they also have a pretty big microphone and whatnot. And there's a feedback effect because the more the price of Bitcoin goes up and it's now showing the true decoupling, if you saw that, right? It's finally decoupled from all the other assets. Um, so, and we're talking about people moving huge amounts of money at once. Right? They're moving their like entire bank accounts, right? So those are large purchases and a large percentage. I'm not saying, you know, it obviously depends on each person and what their percentage is and so, um.

• 1:10:58Speaker 05

  You know, you obviously need to pay your bills and fiat. Don't, you know, don't invest something foolish or what have you. But it's, it's, it's something where you should hedge, hedge what you can. And again, it's not about like making money. It is about not losing money, about saving money. It's just, it's the flip of what people, you know, how people think about these markets. So it's, it is, it actually is much closer to the maximalist worldview, you know? So anyway, let me pause there.

• 1:11:25Anthony Pompliano?

  Balaji, I appreciate you doing this. I know that you and I both are exhausted and probably going to fall asleep as soon as we hang up. So I appreciate you taking the time to do this. I think there's a lot of people who are very interested in, in your views. And if anyone is not following you on Twitter, they absolutely should. And we'll definitely do this again in the future.

• 1:11:43Speaker 05

  All right. Thank you, sir.