Pod Insights The Pomp Podcast #734 The Economy Is Worse Than You Think w/ Preston Pysh About this episode Preston Pysh is a financial investor and host of the "We Study Billionaires" podcast. In this conversation, we discuss negative yielding debt, increasing stress on pension plans, and how Bitcoin can solve recent macro economic problems. ======================= Circle is a global financial technology firm that enables businesses of all sizes to harness the power of stablecoins and public blockchains for payments, commerce and financial applications worldwide. Circle is also a principal developer of USD Coin (USDC), the fastest growing, fully reserved and regulated dollar stablecoin in the world. The free Circle Account and suite of platform API services bridge the gap between traditional payments and crypto for trading, DeFi, and NFT marketplaces. Create seamless, user-friendly, mainstream customer experiences with crypto-native infrastructure under the hood with Circle. Learn more at circle.com.
Transcript Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.
0:02 Anthony Pompliano? What's up everyone, this is Anthony Pompliano. Most of you know me as Pomp. You're listening to the Pomp Podcast, simply the best podcast out there. Now let's kick this thing off. Preston Pish is a financial investor and the host of the podcast, We Study Billionaires. In this conversation, we discuss everything from negative yielding debt to the incredible stress that pension plans are under, to how Bitcoin can help solve a lot of these problems. I really hope you enjoy this conversation. I always enjoy talking to Preston. Before we get into the episode, though, I want to quickly talk about our sponsors. First up is BlockFi. BlockFi provides financial products for crypto investors. Those products include a high yield interest account, a US dollar loan product against your crypto collateral, and a no fee cryptocurrency trading platform.
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2:52 Anthony Pompliano? Circle Yield is over-collateralized and fully secured with Bitcoin collateral to protect your funds. This also makes it a great fit for crypto institutions who want to diversify their treasuries and reduce risks while staying on-chain. You get your choice of terms from one month to 12 months and a fixed rate that's higher than what you'll get at a bank or in many fixed income markets. Visit circle.com/pomp to book a meeting with one of their experts. Again, circle.com/pomp to book a meeting with one of the experts at Circle who will help you figure out how to manage your corporate or institutional funds or your treasury to earn higher yield.
3:28 Speaker 01 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.
3:51 Anthony Pompliano? First thing I want to start with is inflation, 6.2%. How off is that number?
3:57 Speaker 02 That's the number they're telling you, and that's the scary part, you know? So, I mean, you want to talk about an elephant in the room kind of scenario. Here you are looking at 6.2%. The equity market's priced at 2% or 3%. The fixed income market's priced at 1.5% if you're looking at the 10-year treasury. So, you know, for me, I'm just looking around the marketplace and saying, how are people not talking about this elephant in the room of 300, 400 basis point negative spread on pretty much everything on the planet?
4:35 Speaker 02 Right? And I just don't see it going away. And I know I'm way more, I'm a little different than Danny Boy as far as how I'm looking at things.
4:47 Anthony Pompliano? When you think, when you think about these metrics, right?
4:49 Speaker 02 Yeah.
4:51 Anthony Pompliano? The 6.2% inflation, let's just say, we'll give them the benefit of the doubt, that's the real number. It's probably not, I think you and I agree on that, but let's just say it is.
4:58 Speaker 02 Yeah.
4:59 Anthony Pompliano? The traditional assets and traditional asset allocation, 60, 70% of it's dead in the water at 6%. Right? Like, even if that was the real number, every bond's underwater, pretty much almost all commodities are either break even or underwater on a real return basis. And so you're basically left with public equities that likely are overvalued from multiple basis. Or you can go look at something like Bitcoin, but like, other than that, like, where the hell do you go? Real estate?
5:28 Speaker 02 Where do you go? You said every single bond on the planet is negative yielding and not by a little bit, but like a lot. And that's what the number they're telling you.
5:39 Speaker 02 So now let's, let's pull up the Lynn Alden, Saylor, you know, I've been throwing out the M2 argument really kind of being like the real metric of how much the basement's happening. And you're in double digits, so the number might be twice as, as bad as what, what they're telling you. So, and you mentioned commodities. So like, when I'm thinking of like a commodity business, like their margins suck, their after-tax margins, you know, 3%. I don't, I, it depends on which, you know, commodity you're talking about. Most of these commodities after tax, their margins are like 3, maybe 5% at best. So like, how in the world are all these companies which make
6:19 Speaker 02 business around the world going to possibly survive in these circumstances? Which kind of leads to like the bigger point is the supply chain issues that we're seeing right now, a function of the influx of fiat that was added, or are we actually seeing all price signals like melt down in real time? And does it maybe even accelerate from here? I, I don't know the answer to that, but I definitely wouldn't write it off as being. Not what's happening.
6:46 Anthony Pompliano? When you start to look at this, right? So let's say that you're one of these bond investors. Or maybe let's take pension funds. Pension funds are actually the better example. I think it was Calpers recently said that they're going to go ahead and they're going to start taking on some leverage in their portfolio. They're going to start adding a larger allocation to alternative assets. I see you grinning right now, which which means you know exactly where I'm going with this.
7:11 Anthony Pompliano? I mean, is this insane stuff to literally have a pension fund that's got a responsibility to millions of pensioners to say they're going to take on leverage?
7:19 Speaker 02 Everybody who's not, who doesn't own Bitcoin, basically has a gun to their head and they're being told, go further out on the risk curve. It's it's that simple. Like you don't even need to say anything more than that. That's it.
7:37 Speaker 02 And I know people want to hear more analysis, but I mean, the analysis is this, if they keep debasing and manipulating the fixed income market, which they've been doing for decades.
7:50 Speaker 02 What they're effectively doing is just going to every single person and saying, hey, you like stocks? Well, now we really want you to go out on the curve. You want bonds? Well, get in, get into the high yield stuff because that's the only thing that can even remotely look like it's going to outpace your CPI numbers now. And it's not, it's all negative. The whole thing's negative. So, you know, people, people might look at the sell off in Bitcoin right now. It, you know, here we are the day after we're Black Friday. You get your, you got your, you got your fire sale prices happening on Black Friday here. I think it's down, I don't know, what, 20%, 25% or something right now. And we're, we're at 54,000 or whatever it is. And people might look at that and say,
8:34 Speaker 02 wow, that thing's really scary looking because it's so volatile. And I just look at it as being pretty much the only market left in the world that is not being manipulated. Right, like, no, nobody's coming to save you. This thing could drop to 30,000. Nobody's gonna come and save you. And that's why I'm in it. It's because of that. And I think that what that's gonna do over time is it's gonna garner more trust. It's gonna be hard for people to bear the volatility as they don't maybe fully understand the fundamentals. But for those who do, I mean, I'm just looking at this and saying, well, you got tons of impairment over in China. It looks like it's starting to spill into the rest of the markets around the world. And that's probably what's, you know, causing the sell off when you're
9:15 Speaker 02 looking at Bitcoin. In fiat terms, you're looking at, you know, a lot of impairment in the credit markets.
9:21 Anthony Pompliano? And so what's it gonna take to get these guys to either wake up or start to buy Bitcoin? Is it just a time thing? Like, literally, they have to get more familiar with it? They have to get more of a track record of it not disappearing? Or is there other things that you think can happen to really kind of accelerate it?
9:35 Speaker 02 It's time. Because based on the situation we're in, they have to keep the base. Right? The market's gonna keep throwing fits in fiat terms, because there's so much credit that's been added. They keep expanding the monetary baseline each time it does throw a fit. And so we're gonna have it throw another fit. When it happens, it's very hard to forecast. I mean, we could pull up some charts that I sent over to your guys there, that's showing the Euro bond market. And you can see that you're starting to see the longer duration bonds over in Europe start to break the 40-year trend, which has never happened. Right? So
10:17 Speaker 02 that's starting to play out. In the US, it's still under the trend. So that's the equity one. If you, the Euro bond yields. I'll go to the next one, right there. So this, this chart right here is, you know, that trend line you're seeing is, is a 30 to 40-year trend line in fixed income. And you're starting to see long-duration bond Europe start to break the trend already. If you go to the US one, which was the one that preceded that chart. That's showing you that you can see the 40-year trend line is starting to creep up as as there's yields are going higher. That's a sell-off in the fixed income market.
10:57 Speaker 02 So it's selling off like crazy. The yields going higher and it's selling because your CPI is printing over 5%, just about a 6.2% in this last print and that's been happening for six. So if you're sitting in this stuff, you're just eating a negative 300 basis point.
11:19 Speaker 02 And what these yields are, I mean, how long can you continue to sit there and endure that pain? That's the billion trillion dollar question right now.
11:28 Anthony Pompliano? When you're looking at the, if we go back to that first chart that we had up with the trend line down in the interest rates, does everything go negative? Like, do we literally get just negative everything across the globe in terms of?
11:42 Speaker 02 In nominal terms, yes. Like, that's the next step in real terms. Everything across, even here in the US, it's all negative in real terms. But the next step is they're going to try to take them negative in nominal terms. So now, like, anybody who's buying this stuff knows that if they hold it through the duration of the yield or for the coupon, like, if you're holding it to the maturity date, you're guaranteed to lose right now, based on these inflation numbers. Once they start getting printed negative in nominal terms, you're basically having people come in and sign contracts that guarantee the loss
12:23 Speaker 02 of buying power in nominal terms. It's like, hey, come over here, sign this contract. I guarantee you, I'll give you back $95 for every hundred you give me. I promise you. Right? And it's already like that in real terms, but in nominal terms, that's when it's just like, so demented, you can't even believe that we're living in fantasy land. Like, it's crazy.
12:42 Anthony Pompliano? Is the US the last one to do it? Like, it's so religious?
12:46 Speaker 02 Yeah. Based on the charts, that's what it looks like.
12:50 Anthony Pompliano? Yeah.
12:51 Speaker 02 And so I guess when I'm looking at the sell-off we're having in Bitcoin right now. Right? And I'm saying, all right, is this just, uh, you know, some speculators versus long-term holders kind of sell off like a short-term little cycle that we're seeing? Whereas maybe this is bigger because if you go back to the chart, the equity chart there, which was the first one you guys pulled up there, the global equity index. When you look at this one, okay, these are all the big major stock markets around the world. The one in the purple down there, that's China. And you can see in the big dip there you had at the beginning of 2020, that's your COVID dump. That's your big giant impairment event, supply, demand shock. And you can see how well China's done since COVID and it has done really bad.
13:36 Speaker 02 Now, the reason I tell you it's done bad is because they haven't been playing the basement game like everybody else has been playing the basement game. So if you're playing, you know, going back to this monopoly example that we sometimes talk about on, on shows. Like if everybody at the game is cheating and everybody's sticking their hand in the, in the bankers. Uh, you know, where the, where the, where the fiat's sitting and everybody's clawing some into the game, but you aren't. Are you winning or are you losing? Because playing by the rules or, or being fiscally responsible right now isn't probably the best strategy. The best strategy is print as much as you can and start buying Bitcoin with whatever you print.
14:13 Anthony Pompliano? When you look at something like this, it's very easy to see there's this macro, you know, debasement going on. You get interest rates going down, but then all of a sudden somebody like El Salvador shows up with a Bitcoin-backed bond. How do you look at that Bitcoin-backed bond, uh, as an attractiveness compared to all these other bonds around the world? And what does that mean in terms of like, do we eventually see more and more people go ahead and say, wait, maybe I'm not going to do 50% of the bond to go buy Bitcoin, but should I do 2%, 3%? Like, is that the?
14:41 Speaker 02 Yeah.
14:41 Anthony Pompliano? Is that the pathway out? Like, what's your views there?
14:44 Speaker 02 I look at El Salvador the same way I look at MicroStrategy. Right? Like MicroStrategy over the last year has murdered it so badly, right? Like they have just crushed it. But how many other companies are out there doing the same strategy in a public kind of way? Now, you might have it on the private side, but in a public kind of way, you're not seeing it. And when I think of El Salvador, I think of them in an exact same way. They're going to murder this, like absolutely murder this. Because the yield alone that they're doing is where CPI is at, or at least the published CPI. Right? That doesn't even talk about the Bitcoin special coupon kicker that's associated with the bond, right?
15:29 Speaker 02 Just like Michael's debt that he was issuing. It was the best performing debt issuance for the year. So El Salvador is doing, they're basically pulling a Michael Saylor, but they're doing it from a nation-state level. By the time the rest of the nation-states start figuring it out, we might be another year or two or whatever from now. But they're going to figure it out and it's going to become the textbook play. And once a couple of them start figuring out, I think this thing's going to move out a whole lot faster than people could ever imagine.
15:58 Anthony Pompliano? How important is it that it's a nation-state versus a city or a state or something like that? Like actually having a country do it, is that matter? Or if Miami or San Francisco or Austin, Texas, if, you know, kind of some city in the United States did this, it would have the same impact?
16:15 Speaker 02 Yeah, I think so. I think it's a little bit more demonstrative for other nation-states to see. So if you have some cities doing it, it's an interesting story. But when you have literally an entire country who's wired into this whole IMF, BIS, like global model, and they're saying, you know what? Screw that. We don't need this model. Like this is, this is what we're going to do and we don't need you. And let's demonstrate why we don't need you right in front of everybody's faces. Right? And that's exactly what they're doing.
16:47 Anthony Pompliano? And when that occurs, do you think other nation-states run to go do this exact same thing in terms of adopt Bitcoin? Or I call it like plugging into the Bitcoin network? Or is it what we've seen in the public markets, where there's two or three others that have followed that were non-Bitcoin or crypto-native? But for the most part, most people haven't decided to go ahead and do the exact same thing?
17:07 Speaker 02 I think once you get to a market cap of maybe 10 trillion, it's a little hard to ignore at that point.
17:13 Anthony Pompliano? So it was like one trillion.
17:15 Speaker 02 A trillion now. I think once Bitcoin gets to a 10 trillion market cap, I think it's going to be a little hard to like ignore it at that point.
17:22 Anthony Pompliano? Got it. So 1 trillion was kind of the first milestone. Then we got to get to 10 trillion. And once we get there, that's gold parity, basically. Then all of a sudden, you know, now people got to start really paying attention.
17:30 Speaker 02 Yeah, I think once you get to a certain point, it's going to be so big that I don't care what kind of argument you come up with. You're just, you're going to look like an idiot trying to argue against it at that point.
17:41 Anthony Pompliano? All right. I got another kind of topic I want to talk about, which I saw you retweeted Luke Gromen earlier today. And in it, he said, it's not that stocks can't go down. It's that the US government can't default. And US policymakers have allowed the system to evolve such that stocks going down too far and staying down for too long will most certainly cause the US to default on their treasuries or entitlements. Can you describe a little bit more about like what happens here? If the stock market did go into a bear market for a prolonged period of time, like, how would that look like for the US, for the balance sheet, for the debt, etc.?
18:12 Speaker 02 I think for the like, the top 100 companies in the country, or even the top 500, you might not see the the real economic impact. What you're going to see is, is the Fed step in, or over in Europe, they're going to step in with the ECB, they're going to recapitalize everything. All that printing that would go in through the bond market, or even through UBI, straight into the hands of people. It's going to just immediately turn back into spending that's going to suck all that, all that printing straight into the most highly capitalized companies because they have all the competitive advantage. So on the indexes, I would expect them to continue to melt up. They won't outpace Bitcoin in that melt up. But as far as the
18:57 Speaker 02 real economic impact, the smaller companies and the ones that don't have large margins, or like a deep entrenched competitive advantage, they're going to get wrecked. And so that's where you're, you're, you're smaller towns that are dealing with smaller capitalized companies that don't have deep margins. Like, the economic impact there is going to Continue to trend in a really kind of devastating way and very concerning. And so you're going to have this growing trend of this divide between what's being published in the indexes versus what's happening in the real economy. We've already seen it playing out that just amplifies itself here in the coming five years.
19:37 Anthony Pompliano? And when you start to think about, if you're an institutional asset manager and you've got the environment we're talking about, do you go all in on Bitcoin? Like if you can't, let's just say that you've got a 20% mandate. You can't go all in on any one asset class. You can only allocate it for 20%, etc. What do you do with the other 80%? So you're the most aggressive. You go 20% Bitcoin, other 80% you should go equities? Like what would you do?
20:04 Speaker 02 Yeah, I mean, you definitely don't want to be in, you don't want to be in fixed income because that's going to be completely impaired. So it really comes down to you have to own something that's equity based and you have to own something that's equity based. It's going to have an enduring competitive advantage in a depression like kind of scenario that continues to play out in real time. So, you know, which kind of companies kind of fit that bill? I would, I would really focus on the companies that are essential things that you have to continue to own through. People are always going to need food. People are going to need certain types of things. You know, I don't see people getting rid of their phones and things like that. So like, that's how I would think through the framework.
20:47 Speaker 02 For me, yeah, I mean, I pretty much own Bitcoin. It's the only thing I trust because here's, here's the, here's the critical thing. Everything today equity based is based on a PE of really low interest rate. Continue to transition to this new system, right? That interest rate environment is going to change because it's going to become free and open again, opposed to completely manipulated and yields being negative. So as that happens, all equity is going to reprice itself and capitalize itself at a lower multiple than what it is now. But when that takes place or when the market starts realizing that is the big if. So that's why I have a very hard time owning equities is because I don't want to own something
21:30 Speaker 02 that's a PE of 35 or 45 when my expectation is, is it's going to start trending in a direction of a PE of 10. Because if that happens, well, now you've lost 80% of the market cap through that transition, right?
21:44 Anthony Pompliano? One of the things that I keep going back to is obviously more and more people are pushing out further on the risk curve, which would bring you towards venture capital and kind of these private market opportunities, but the illiquidity is not changing, right? And actually, if you go back to 99, 2000, where was there more pain? Was there more pain in the public markets or was there more pain in the private markets? You can make an argument for either one.
22:05 Speaker 02 Yeah, I mean, it's really hard because I think most market participants cannot get past the cognitive bias of there's always going to be government issued fiat currency. They can't get past that that mental leap and that, you know, that critical thinking that's required to get beyond, is that even possible? And so they're, well, if central banks are going to take yields nominally negative, then I guess I need to keep owning stocks because it's going to continue to melt up. But what they're not looking at is their loss in buying power relative to a potentially new form of money.
22:47 Speaker 02 And that's how I personally look at the equation. And when I look at it and you look at the volatility, I think that's all part of it. If you think, if you think Bitcoin can go to 100 trillion and you're at 1 trillion right now, well, it's kind of normal to have 30% volatility. You should expect that based on what it's trying to, what it's trying to mature into.
23:09 Anthony Pompliano? And so when you go ahead and you look out and you think to yourself, Michael Saylor has got this argument that he's made multiple times where Bitcoin will serve as a global store of value and then you'll have the dollar continue and actually get stronger and stronger against other weak fiat currencies. Let's look out five or 10 years. Is that the view of the world that you have or do you see it some other way, kind of in the short term, in terms of how the dollar and Bitcoin are related to each other?
23:37 Speaker 02 I completely agree with Michael. I guess where I'm, where I'm a little bit different in a public kind of way, and I have no idea what Michael's private opinion on this is. I know what his public opinion is. And, and I think he publicly talks about that transition slowly playing out over a very long period of time. For me, I'm looking at history and history typically suggests that that that happens, but then it aggressively transitions to the new form of of money. And so I don't know where that point is. I kind of suspect it's, I think a lot of people would disagree with this. I think it's kind of on like the next five year timeframe. Just because I think that what comes next in the fixed income space is going to be so grossly
24:22 Speaker 02 obvious and stupid that it's going to be almost near impossible to ignore. And I think that's the thing that I'm, uh, why I'm so bullish on Bitcoin is because of how mutilated, uh, the fixed income space is. And I think that's going to be the thing that erodes all trust in the old system. Not that Bitcoin's gonna, uh, you know, the stock to flow is going to make everybody just get to this point that they think that that's the better form of money. I think it's going to be more fear of the old system that drives people to heavily adopt Bitcoin in a, in a, uh, kind of face ripping event.
25:04 Anthony Pompliano? Got it. And then when you think about, uh, over the very long term, is your thought process that Bitcoin, you know, gets kind of monetized as a store of value and then eventually becomes that medium of exchange and rises to become a kind of a, a global reserve currency on the internet or kind of however you want to talk about it?
25:21 Speaker 02 Yes, that's exactly what I think will happen. And so people that are saying like, nobody will ever spend it. Well, you will spend it when the buying power doesn't go up by 200% a year. And like the buying power is pretty flat, which is what will happen if you have, you know, 100 trillion plus of valuation on it is like, you'll get to a point where nobody's going to accept the old currencies and they're, they're demanding that everything is settled in Bitcoin. And at that point, like you're going to want to start owning equities because all of those equities, their balance sheets and their income statements completely in Bitcoin. Because you're going to have to own something that just is pumping out free cash flows at that point.
25:59 Anthony Pompliano? Yeah. Talk to me about, uh, the podcast network you guys have built as well, because I think one of the things people forget about, uh, Is that you've got, um, obviously your own personal beliefs in terms of macro environment and investing, but you've been studying billionaires, literally it's in the name of the first podcast. And then you guys have built out an entire network of other podcasts that talk about finance, interview people around investing strategies, et cetera. Like, how does that help you in your journey of learning and then ultimately expressing that view in a financial portfolio?
26:34 Speaker 02 I mean, at the end of the day, we're just trying to keep.
26:39 Speaker 02 Now, the thing that I kind of learned through the years by studying all these various billionaires and just people in finances. I mean, it's just one giant math equation for the most part where you're just trying to find what can I own? That is going to give me as buying power relative to everything else that's on the market. And, um, you know, Buffett's the guy that I first started studying. And I mean, I learned just how he, how he thought about equities versus fixed income. And which one you want to own at certain points in time, based on how their value, how the yield is, is, uh, being forecast versus the price that you pay in the market.
27:21 Speaker 02 And when I think of like our business as far as like the network, we want to try to cater to as many people as possible, but also, um, put out content that we think is most beneficial to the listener. And so is some of our bias entered into like what kind of media we're creating? Absolutely. Um, do we think Bitcoin's probably the most important thing in the next five years? Absolutely. That's why we're covering it the way we are. Does this mean that everybody that listens to the show is going to be open to that? Of course not. And so we're still trying to cater to all the listeners and, but while also kind of highlighting what we think is, is value to the marketplace.
28:02 Speaker 02 And hopefully we do a good job with that, but that's something that we take very serious and in kind of an ethical kind of way. Like if it, if it's not something that I think is going to add value to the, to the listener, I'm, I'm sorry. I'm just not going to, I'm not going to give it any airtime.
28:16 Anthony Pompliano? I think that's a good way to view the world and I learned that over time as well as, hey, sorry, we're just not going to publish that one. Joe, John, what questions you guys got for Preston?
28:24 Speaker 02 Hey, Preston, how you doing? Thank you for joining us. Hey, what's up, Joe? Happy Thanksgiving to your family.
28:29 Anthony Pompliano? Uh, thank you. So my question would be around Jerome Powell. He obviously got reappointed to be the Fed Chairman again. Do you think that matters a lot? Does it matter very little? Just what are your thoughts around kind of his reappointment?
28:41 Speaker 02 I think, and I have pretty much nothing to base this on, but I just get the impression that him and Janet Yellen kind of have a decent working relationship. And when you look at what has to come next, which is complete coordination between the central bank and the treasury. Maybe that's why he got, you know, re-nominated is because Janet didn't see him as a threat. And they kind of see the, the direction and the coordination that's going to be required moving forward. Let me just emphasize, when the, when the central bank and the treasury start coordinating hand in hand, it's usually a very concerning time in any nation's history.
29:15 Anthony Pompliano? Gotcha.
29:18 Anthony Pompliano? John, what questions you got?
29:19 Speaker 04 Hey, Preston. Nice to see you again.
29:20 Speaker 02 Hey, hey.
29:21 Speaker 04 Hey, hey.
29:22 Anthony Pompliano? Preston, you, you don't know this, but John ate 50 nuggets earlier.
29:25 Speaker 04 Sounds a little tired.
29:26 Anthony Pompliano? He had a little foodie contest on the show.
29:28 Speaker 04 I'm fine. I'm fine.
29:29 Anthony Pompliano? So, got to put it on face. Got to put it on face. So, my question would be around inflation. Like, the number is 6.2% that they're telling us. What do you think the number is? Do you think it's going to continue in next year? What are your thoughts around how that will affect kind of all the equity markets and Bitcoin in general?
29:45 Speaker 02 So I think the number is more between like 10 to 15% based on the compound annual growth rate of the M2.
29:53 Speaker 02 My bigger concern is it, it appears that it's accelerating. So it's not a linear. Anytime you do a compound annual growth rate, you're, you're kind of interpolating a percent that's over something that's not linear. And so my bigger concern is the, the higher portion of that number that makes up that 10 to 15% has happened in the last couple of years. And if that trend continues in a, in a nonlinear way, that means the, the number in the coming, you know, three years, five years, should be higher than the number that we're quoting over the last 10 when you're, when you're doing the calculation. So I think that's very concerning. It's going to be interesting to see what the next big giant QE event is going to look like and how much they're going to add.
30:37 Speaker 02 I would argue that the number is going to be way higher than what we saw on COVID. And that should surprise a lot of people considering. That supply-demand shock that we had with COVID is viewed
30:51 Speaker 02 as a market participants being a one-off type event and something that will never happen again. But I completely disagree with that. And I think that the next big fit that the market's going to throw is going to produce a printing in the basement that's going to make COVID look like a joke, probably three to four times maybe higher as far as what they're going to have to do to insert into the market. And then that's going to probably be a point where the market's saying, all right, what in the world is happening here? And if I was going to say one more thing on that topic. So when you think about the basement, you got to ask yourself like, if there's 100 units in the system and you expand it by double and now you're making it 200 units in the system.
31:35 Speaker 02 When you add that additional 100 units into the system, you have to choose where it's going, right? For the last decade, they've chosen to add those units via the fixed income market into the bond market by bidding the prices of bonds so the yields come down. And then there's people who are receiving that cash for those bonds that they used to hold are now deciding where they're going to take that cash and put it into the rest of the market. So if you're watching the price of corn, right? Or you're watching the price of wheat and these people who are receiving these 100 additional units through the fixed income market are deciding to take them and then buy stocks or buy equity with those newly added units into the system.
32:20 Speaker 02 Well, you're probably not going to see it show up in the price of wheat or corn. And I think that's where market participants have been saying, well, we don't have any inflation. We don't have any inflation. Like, it's not real. Well, it is real. And it's nesting itself into the area that the people who are receiving the benefit of that printing decide where they want it to go next. And they've decided that they want it to go into equities because there's only so many yachts you can buy until you say, hey, I'd like to own more equity, which is going to generate more free cash flows, more returns for me. So I'm going to own equities, right? And that's what's been happening over the last decade plus. And, you know, so people that like to throw around this term inflation.
33:02 Speaker 02 I don't think they really understand what the real definition of it is. And I would, I would define it as anything that expands the monetary baseline units in the system. And then whatever credits constructed on top of it.
33:12 Speaker 04 Well said.
33:13 Anthony Pompliano? Preston, before I let you go, you don't know that this has happened because you've been on this live stream, but President Boo Kelly of El Salvador tweeted 15 minutes ago and said, El Salvador just bought the dip, 100 extra coins acquired with a discount, hashtag Bitcoin. The fact that we have a nation state buying the dip, I mean, this is insane. It's awesome, but it's also insane. What do you think about this?
33:37 Speaker 02 I love it. I love his vibe, by the way. Like, I jokingly tweeted at him a couple of days ago that Sweden wanted him to turn off his volcano. And he then retweeted me and said, the volcano is going to turn itself off here in the next million years. So we don't have to worry about that. His whole vibe is just hilarious, right? Like, who would have thought you'd have a president of a nation, like, taking the joke and retweeting it. I think he's really kind of thumbing his nose at the entire, at the entire world as like, how are, how is everybody so dense that they can't see this? That's what I think indirectly, that's what he's saying with all these posts. He's saying, how in the hell can you guys not see this?
34:21 Anthony Pompliano? Yeah. It also seems, I think to your point of like, it's not just the action, it's the way he's doing it. And he's doing it in the face of the IMF and all these other people. I forget who I saw tweeted, maybe yesterday, day before, like the IMF, it has like, you know, it's like a made up organization, right? Made up like in terms of, they basically got put in place as having some authority or power, but that's because a bunch of people all agreed to it. And at any point, if people are just okay, now they don't, you know, what would be the ramifications of that? And so it seems like there's nobody who can stop them, you know, go short of maybe like an actual like physical kind of violent war. He's the leader of a sovereign nation.
35:03 Anthony Pompliano? And he's going to do what he thinks is best for his citizens and barring some sort of external intervention. And then keep doing it, right?
35:12 Speaker 02 I think that I think the concern isn't him. I think the concern is probably the hundred other nation states that are looking at what he's doing that have a similar setup as far as how they can benefit from this. They've got the natural resources, right? They don't need the IMF if they go and do a block stream bond note or like everything here, they've got the the remittance type win on their hands if they would implement this. I'm just looking at this and saying, who's next? And how many of them are coming?
35:49 Anthony Pompliano? Who do you think is next?
35:50 Speaker 02 Once five nation states doing this, like, I don't know. I would, I would argue the people that are going to be next are the ones that have the biggest win on their hands by doing something similar. So I would think it'd be another nation state that that looks and and is similar in in the way that it's set up like El Salvador with some of those key things that I was just talking about.
36:11 Anthony Pompliano? Got it.
36:12 Speaker 02 The ones that are going to be the last to figure it out are the ones that that benefit the least from the transition.
36:18 Anthony Pompliano? Yeah, which means the US is probably last to to do it.
36:22 Speaker 02 But it depends on the leadership, right? So you have leaders that can figure this out and understand it. And then it very similar like Michael Saylor, like, why did Michael Saylor do what he did? A, you have to understand it, which, in my opinion, is a pretty big hurdle because you have to understand the macro backdrop and then you have to understand why Bitcoin isn't going to fail, which is a lot of research studying, understand, you have to be a person with like deep critical thinking, you got to enjoy the critical thinking. So you have to, A, do that. And then, B, you have to have control in a manner that that if you have one vote and you need 20 votes to implement something like this, well, you can know everything you in existence, but you've still got to convince the other 19 people to do it.
37:08 Speaker 02 And so I think that's the challenge. So like micro strategy, Michael had a majority voting rights because he had, you know, the way that his voting rights were structured inside of his country. I suspect that down in El Salvador, the current president has a lot more influence in order to sway the vote than maybe some other nation states. And so those nation states that maybe have more decentralized voting, might have a more difficult time getting something like this pushed through to take such an aggressive change of direction. Because remember, all these people that are elected, the thing they want is enough stability with just enough happiness with their district so that they
37:48 Speaker 02 get reelected. So if you go and do something that's dramatic, you're, you're potentially jeopardizing your reelection efforts because you created too much volatility in how, how the change would be perceived. So it's kind of like this, this, this scenario. But I would say, I would break it down into the two like core things. Like you have to understand it, and you have to have enough voting rights or voting sway in order to kind of get it through.
38:13 Anthony Pompliano? Yeah. It's, um, the geopolitical aspect of this is nuts. Like, I don't think there's a right answer, but it really does feel like, um, everyone is undervaluing what he's doing from an impact standpoint. And in hindsight, everyone would be like, how did we not assign more importance to that?
38:33 Speaker 02 Completely agree.
38:34 Anthony Pompliano? Maybe you and I are wrong and we're morons. Like, possible.
38:38 Speaker 02 Very high probability there, too.
38:40 Anthony Pompliano? Yeah, exactly. All right. Where, where can we send people to find you on the internet? I appreciate you taking the time from Thanksgiving to come on here.
38:47 Speaker 02 Yeah, no, I appreciate the invite. I'm on Twitter at Preston. There it is right there. I also have a podcast. You can see the link there on my Twitter. It's theinvestorspodcast.com. I do the We Study Billionaires show every Wednesday where I'm talking about Bitcoin. And yeah, just appreciate the invite and nice to meet you, John and Joe. We haven't talked before, so I'm pretty excited to say hi to you guys.
39:11 Anthony Pompliano? We're, we're pumped that you came on. Thanks for doing it during Thanksgiving.
39:15 Speaker 02 Yeah, I want to, I want to swing into the studio when I'm down there in April for the Miami event.
39:19 Anthony Pompliano? Let's go. Open invite. We, we have an open seat right over there. It's got your name all over in April.
39:26 Speaker 02 I'm coming.
39:26 Anthony Pompliano? Maybe we'll give you some Chick-fil-A. John will do a McDonald's. No more of those.
39:31 Speaker 02 I love Chick-fil-A. I give all my thoughts to John.
39:37 Anthony Pompliano? Awesome, man. All right. Thank you so much for coming, Preston. We appreciate it. Make sure, if you guys don't already, please go follow Preston on Twitter and then definitely check out not only his podcast, but the entire podcast network is very, very good. I find myself listening quite often, so make sure you go check that out as well.
39:51 Speaker 02 Paul, when are you coming on the show? That's the question. When can I interview you, Paul?
39:57 Anthony Pompliano? When do you want to do it?
39:58 Speaker 02 Let's do it soon. I know it's hard to claw you away because you create so much content, but we got to do it.
40:04 Anthony Pompliano? You tell me when you want to do it and I'm in.
40:07 Speaker 02 I'll shoot you a DM.
40:08 Anthony Pompliano? All right, buddy. Sounds good. Thank you.
40:10 Speaker 05 See you, Preston. Thanks for having me.
40:11 Speaker 02 All right. See you, guys.
40:12 Anthony Pompliano? Later.
Previous #733 Bitcoin's Black Friday Sale w/ Dylan LeClair Next #735 Analyzing The Bitcoin Market Sell-Off Page updated October 29, 2026 · transcript and summary are machine-generated
