Robert Breedlove, Founder of Parallax Digital: An Open Letter to Ray Dalio re: Bitcoin

Robert Breedlove is the Founder and CEO of Parallax Digital, a professional services firm specializing in Digital Asset Investments and Digital Securities Consulting. In this conversation, Robert and Anthony breakdown the historical perspective of breakdown of money, why gold served that purpose for so long, how free-market capitalism must be allowed to thrive, and go point by point in his open letter to Ray Dalio on why Dalio agrees with Bitcoiners assessment on the macroeconomy; but is missing the importance and ultimate success of Bitcoin. Check out Robert's full article: 'An Open Letter to Ray Dalio re: Bitcoin' -----If you enjoyed this episode and want to stay updated on everything Bitcoin, blockchain, and crypto. Check out Off the Chain newsletter by visiting offthechain.substack.com and join 35,000+ other investors currently subscribed to my daily investor letter.

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

• 0:00Anthony Pompliano?

  What's up everyone, this is Anthony Pompliano. Most of you know me as Pomp. You're listening to Off the Chain, simply the best podcast in crypto. Let's kick this thing off.

• 0:10Anthony Pompliano?

  Robert Breedlove is the founder of Parallax Digital, an investment fund focused on cryptocurrencies and blockchain technology. In this conversation, Robert breaks down the historical perspective of money, why gold served that purpose for so long, how free market capitalism must be allowed to thrive, and then we go point by point in his open letter to Ray Dalio on why Dalio agrees with Bitcoiners' assessment on the macroeconomy, but is missing the importance and ultimate success of Bitcoin. This conversation is not only really engaging and informative, it's also highly entertaining. I can't wait to hear what you guys think about it. Before we get started though, remember, I don't just do the podcast. I also write a daily

• 0:55Anthony Pompliano?

  letter to over 40,000 investors. If you go to offthechain.substack.com, you can subscribe along with the 40,000 other people. I try to share my thoughts on markets, Bitcoin, prices, and other things related to the Bitcoin, blockchain, and cryptocurrency industry. So again, go to offthechain.substack.com and sign up today. Alright, let's get into this episode with Robert. I hope you guys enjoy it.

• 1:26Anthony Pompliano?

  Anthony Pompliano is a partner at Morgan Creek Digital. All opinions expressed by Pomp or his guests on this podcast are solely their opinions and do not reflect the opinions of Morgan Creek Digital or Morgan Creek Capital Management. You should not treat any opinion expressed by Pomp as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of his opinion. This podcast is for informational purposes only. With Murad, and it was really kind of, here's the bull case, the ultimate argument for Bitcoin. I have found the second person that makes an incredible argument, and he happens to be sitting here with me. So thanks so much for coming to New York and doing this.

• 2:07Speaker 01

  Thanks, Pomp. Appreciate you having me.

• 2:09Anthony Pompliano?

  Are you ready?

• 2:10Speaker 01

  I'm ready.

• 2:10Anthony Pompliano?

  Now, before we get started and get into your background... There are a few people who come in here prepared. There is nobody who has ever come in here with, what do you got, you've got 28 pages of notes. And as I read this, I think I learned more than I've learned in the last six months. So we got a lot to get through. What'd you do before Bitcoin?

• 2:34Speaker 01

  So I was an accountant by trade, actually, of my master's degree in accounting and finance. I spent four years as a certified public accountant. And then branched out on the entrepreneurial path as a CFO for a number of early-stage companies, a few tech companies. And then I actually began investing in crypto personally, in 2014, but more heavily in 16. And actually, didn't realize what Bitcoin was when I first saw it. And was drawn in more so by Ethereum and the concept of smart contracts. And so I started making heavy investments into the space late 16, early 17. Where my money went, my mind followed. And then as I studied the space more and more closely, I became more and more of a Bitcoin maximalist or rationalist.

• 3:20Anthony Pompliano?

  And what was the thing that pulled you in with Ethereum at first? What caught your eye?

• 3:24Speaker 01

  You know, it was the, the lightbulb moment was the realization that the entire finance industry is a smart contract with human beings on top of it. And a lot of that stands to be automated, I think, going forward.

• 3:39Anthony Pompliano?

  All right. Let's get into kind of this ultimate argument for Bitcoin. Cause I think the way that you think through the asset, you come at it from a very first principles-based thought process, right? And one of those first ideas is like, what is trade and how we think of unit of account? So maybe let's start there and we can kind of work our way into like, why Bitcoin actually matters.

• 4:02Speaker 01

  Perfect. So yeah, I think it's easiest to start from the beginning and the realization that everything we say, do, or make starts out as an idea. Like literally everything we touch, think about is an idea before it's anything, right? And the purpose of the world economy is to generate and share useful ideas through trade.

• 4:24Speaker 01

  As we trade, our ideas become better, giving everything we say, do, or make more specialized qualities. An easy way to think about this is considering how like our transportation technologies have gone from wagons to automobiles to airplanes.

• 4:36Anthony Pompliano?

  For sure.

• 4:38Speaker 01

  And so in trade, everything is valued at some ratio of everything else. Meaning that, you know, this car might be worth 132 chairs, or this house might be worth 11 cars. And money is the medium through which we more easily calculate these exchange ratios.

• 4:54Anthony Pompliano?

  It's basically a base unit or a common unit of account that we can always go back into when we go to trade.

• 5:00Speaker 01

  Absolutely, like a universal measurement system, like the second or the meter or anything else, right? So, like any other tool, the purpose of money is to save us time. And generating time savings itself is the purpose of all tools. So for instance, we can dig more holes per hour using a shovel than we can with our bare hands. And in this sense, money is just a tool that helps us negotiate and execute trades more quickly. So it's a medium through which economic actors communicate their preferences, which drives human action. And what this means is that by choosing to buy a car or sell your house, the economy responds dynamically by producing more cars and less houses, essentially.

• 5:43Speaker 01

  So contrary to popular misconception, money is not a government creation, which I think most people are under that illusion.

• 5:50Anthony Pompliano?

  Okay, you're going to have to explain that one.

• 5:51Speaker 01

  Absolutely. So, the simplest way to think about this is that money arises naturally in any trading society. It is simply the most tradable thing. So as people seek to satisfy their wants through trade, they steadily seek to trade their things for more tradable things to get closer to the thing they ultimately want, right? So as this dynamic unfolds, something necessarily becomes most tradable, or more tradable than everything else, whether it's salt, cattle, or gold. And this most exchangeable thing is money. As societies advanced historically, they coalesced around precious metals as money due to their superior monetary traits of durability, divisibility, portability, recognizability,

• 6:36Speaker 01

  and most importantly, scarcity. So, gold, which is the most scarce monetary metal, came to dominate the world as its supply is the most inflation-resistant or inelastic. Governments co-opted gold, and over time, they built a pyramid scheme on top of gold called fiat currency.

• 6:56Anthony Pompliano?

  Alright, so let's stop for a second here, where when you talk about these five superior monetary traits: durability, divisibility, portability, recognizability, and scarcity. Just give us a quick one second on each one of those. What do those actually mean?

• 7:11Speaker 01

  Absolutely. So durability means it persists across time, so you know it won't physically deteriorate, which metal's really good at. Divisibility means it can be broken down and recombined into various amounts, so you can easily calculate and trade things. Also, which gold is good at in the form of coins. Portability means it can be transported across space, so you're moving value across space. Recognizability means it can be assayed or verified by someone that's trading, so you can actually tell that it's actually gold or cash. And then scarcity is just limited supply.

• 7:44Anthony Pompliano?

  Which creates value.

• 7:45Speaker 01

  Yes. So scarcity is of primary importance because anyone that can compromise that supply will do so to steal the value stored therein, which we do with fiat currency today.

• 7:57Anthony Pompliano?

  For sure. And so, when you say that gold was co-opted by governments, what does that mean?

• 8:02Speaker 01

  So, when I say it's co-opted, and I call fiat currency a pyramid scheme, it'll help to define a pyramid scheme. So a pyramid scheme is essentially a business structure in which those in higher tiers steal value from those in lower tiers. So fiat currency is a pyramid scheme with central banks at the top, who hold the only real money today, which is gold. That generate profits by making loans to successive layers of banks below them. With each layer profiting from the loans it makes to the subsequent layers of banks below them.

• 8:34Anthony Pompliano?

  So the people at the top make the most, the people under them make the second most, the people under them make the third most, etc.

• 8:39Speaker 01

  Yeah, and the people using the currency at the bottom of the scheme get stuck holding the bag, so to speak.

• 8:44Anthony Pompliano?

  And those are the everyday citizens in the bottom 50%.

• 8:47Speaker 01

  Everyone using fiat currency, exactly, yeah. Uh, so it's a leverage-based business that requires steadily more debt accumulation to remain functional over time. And it inevitably breaks down when the debt load becomes unserviceable, which I would argue is happening in the world today.

• 9:02Anthony Pompliano?

  Mm-hmm.

• 9:03Speaker 01

  Um, so when governments commandeered the market for money, it became unfree or centrally planned. So we moved away from a free market, which we'd call capitalism, to a centrally planned market, which is something more akin to socialism.

• 9:16Speaker 01

  So in this sense, uh, you know, free markets are natural organizing principles that encourage us to find better ways of doing things by making bets with one another. So as we can prove others wrong in the marketplace by finding and selling better ways of doing things, productivity gains diffuse into society through trade. These gains come in the form of better ways of saying, doing, and making things. Said differently, productivity gains come from more specialized ideas which come from trade. So in this sense, free markets are idea meritocracies, which we're gonna talk more about here in a minute. Uh, free markets are essentially unhampered trade networks that encourage the cultivation and diffusion of the best ideas within society.

• 9:59Speaker 01

  All regulations and limitations on free market dynamics reduce their efficacy. The ultimate expression of regulation is a monopoly in which the free market, in which all free market competition is suppressed through coercion or violence. And in the world today, the market for money is not a free market. It is forcibly dominated by banking cartels.

• 10:20Anthony Pompliano?

  And these are two things here, right? The first, the free market dynamics is, uh, literally laws that prevent people from creating other fiat currencies, etc. Uh, and then the banking cartels, kind of in air quotes, is both the government banking, right, so, uh, or Federal Reserve, central banks, but also the financial organizations as well that have some hand in, uh, kinda how all this works.

• 10:44Speaker 01

  Absolutely. I think, uh, to put it kindly, they're all in bed together, uh, and that the- The defining characteristic would be that they do not allow free market experimentation to compete with fiat currency. So the market is unable to adapt, or learn, or evolve at all, because it's centrally planned and controlled.

• 11:00Anthony Pompliano?

  Okay.

• 11:01Speaker 01

  So, in that sense fiat currency pyramid schemes are monopolies, which, as we learned in Economics 101, come at a very heavy cost to society. Monopolies increase prices, they decrease innovation, and they reduce trade. So whereas free markets make mankind become more productive, which is an economic benefit, monopolies or unfree markets make mankind become less productive, which is anti-economic. So with all this sort of background in mind on money and markets, we are here today to talk about one of the greatest capitalists in history, Mr. Ray Dalio.

• 11:38Anthony Pompliano?

  All right. Before we get into Dalio, one of the things that you and I have connected on, and I think really kind of drove us to want to do this, was Ray has written a number of really great pieces that basically highlights the entire Bitcoin argument, minus the conclusion of Bitcoin is the answer.

• 12:03Speaker 01

  Yes, a lot of pro-Bitcoin pieces without ever saying Bitcoin. It's unbelievable, yeah.

• 12:08Anthony Pompliano?

  So, let's start with Ray, and then we'll kind of get into the arguments, etc. But just so for people at home, that's essentially one of the main reasons why we wanted to do this, was because he's right there on the edge.

• 12:19Speaker 01

  He's there, and he's, you know, he's long gold, which if you understand gold, and you really understand the valuation fundamentals, then you should understand Bitcoin and its valuation fundamentals, ultimately. So Ray is the most successful hedge fund manager in history, and that's not hyperbole, that's fact. He started Bridgewater, his firm, from his apartment, which today is valued at, I think, about $160 billion. He incepted a cultural paradigm at his hedge fund called the idea meritocracy. In the idea meritocratic culture, candid reviews of colleagues are encouraged. So in his book, he wrote a book called Principles, he even shares a memo that a subordinate

• 12:58Speaker 01

  shared with the entire firm at Bridgewater, grading Ray a D for his performance in a meeting. So the idea is that everyone can review everyone candidly, you know, even up to and including the CEO. So this cultural style promotes the propagation of truth and minimizes office politics. And in this spirit, I decided to write an open letter to Ray Dalio regarding Bitcoin to review his assessment of Bitcoin. So I started this essay by giving Ray an F for his assessment of Bitcoin for three reasons. And he laid out basically three critiques of Bitcoin and I went through them in turn.

• 13:39Speaker 01

  So first, Ray says that he is sold on blockchain technology but not Bitcoin, despite Bitcoin being the only market-proven use case today for blockchain. I argue that blockchain today is a mostly unproven buzzword. You know, there are some potential use cases for it perhaps, but none of them are market-proven. Or is Bitcoin is more, it is being market-proven in real time and it is the hardest monetary technology in history. So I don't think you can beat long blockchain and short Bitcoin. It just makes no sense.

• 14:13Anthony Pompliano?

  It's kind of like saying, hey, I like the internet, but the largest internet company, I'm not into that one.

• 14:18Speaker 01

  Hundred percent, yeah. I like the internet but not HTTP or some analogy like that. So that was the first critique. Secondly, and this one's a bit longer, but I think this is really important and a lot of people struggle to get this one. Ray says that Bitcoin could be disrupted by another cryptocurrency, citing iPhone disrupting BlackBerry as a comparative example. Now, this is extremely unlikely because Bitcoin is a path-dependent, one-time invention. Its critical breakthrough is the discovery of absolute scarcity, a monetary property never before and never again achievable by mankind.

• 14:57Speaker 01

  That's a mouthful.

• 14:58Anthony Pompliano?

  So this is probably one of the most important things for those that either are just learning about Bitcoin or are trying to understand why Bitcoin is different than everything else. So really explain what exactly you mean here.

• 15:09Speaker 01

  Absolutely. So, for instance, so with path dependence, we'll start with that. Path dependence entails that the sequence of events matters as much as the events themselves. For instance, you get a dramatically different result if you shower than dry yourself off versus if you dry yourself off and then shower.

• 15:28Anthony Pompliano?

  Pretty clear example.

• 15:30Speaker 01

  Yeah, pretty clear, right? So as a thought experiment, if a new Bitcoin was launched today, it would have extremely weak chain security early on as its minor network and hash rate would have to develop from scratch. And today, in a world where awareness of Bitcoin is more prevalent, this new Bitcoin with comparatively weak chain security would inevitably be attacked by incumbents. Whether these were incumbent projects seeking to defend their head start, international banking cartels, or even nation-states. Path dependence protects Bitcoin from disruption as the organic sequence of events which led to its release and assimilation into the marketplace cannot be replicated.

• 16:13Speaker 01

  Further, Bitcoin's money supply is absolutely scarce, a totally unique and one-time discovery for money. Consider that if this new Bitcoin was released with an absolutely scarce money supply, that its holders would be incentivized to hold the money with the greatest liquidity, network effects, and chain security. This would cause them to dump new Bitcoin for the original. Even if this new Bitcoin featured a diminishing money supply, so negative scarcity if you will, or in other words, a deflationary monetary policy, how would its rate and mechanism of money supply decay be determined? As market participants jockeyed for position to maximize their economic benefit of the

• 16:55Speaker 01

  deflationary monetary policy, chain forks would ensue that would diminish the liquidity and chain security for new Bitcoin. Causing everyone to eventually pile back into original Bitcoin. So essentially Bitcoin's terminal money supply growth rate of absolute zero is the ultimate monetary shelling point. And shelling point is a game theoretic focal point that people tend to choose by default in an adversarial game like money.

• 17:21Anthony Pompliano?

  All right, so the ultimate monetary shelling point and the terminal money supply growth rate of absolute zero. First, let's start with the terminal money supply growth rate. What is that?

• 17:34Speaker 01

  Absolutely. So Bitcoin is issued on a perfectly predictable supply curve that terminates in the mid 22nd century. So no more Bitcoin will ever be issued into existence after that.

• 17:47Anthony Pompliano?

  And this is the thought process of starts at 50 Bitcoin, every block as a reward, you get cut in half to 25, 12 and a half, 6.25, and you go all the way down and eventually you literally can't split in half anymore.

• 17:59Speaker 01

  Absolutely. And it goes to zero. It's basically exponential decay that approaches zero. So I think today before the mayheming, we're at like 1800 Bitcoin produced per day. To give you an idea how quickly this contracts, by the year 2100, I think we're below one. I sent a tweet about that, but it just contracts very quickly. So mankind, you know, our biggest weakness is our inability to understand exponential growth or decay. So this is, it's a really big deal.

• 18:28Anthony Pompliano?

  Okay.

• 18:30Speaker 01

  So back to game theory and the shelling point piece. In game theory, a game is just any situation where there can be winners or losers. A strategy is just a decision-making process. And a shelling point is the default strategy for games in which players cannot fully trust one another, like money. So the absolute scarcity of Bitcoin in this sense is a really big deal. And I like to compare it to the discovery, actually, of the number zero. The discovery of zero was special as it represents absolute nothingness. Its role as a placeholder gives our numerical system its power to scale and cycle through other numbers, giving them different meanings depending on its location.

• 19:14Speaker 01

  Consider the difference between 20 and 20 million. Each zero represents another order of magnitude of the integer 2. Similarly, the discovery of absolute scarce money is special.

• 19:28Speaker 01

  Gold became money because of the monetary metals. It had the most inelastic or relatively scarce money supply. This meant that no matter how much time was allocated towards gold production, its supply increased the least.

• 19:39Anthony Pompliano?

  Meaning that no matter how hard or how many resources people threw at it to get more gold, it was still the hardest to get.

• 19:47Speaker 01

  Exactly. So it's kind of like this game theoretic backstop. And that's what makes it become money. And that's why people express things in that value because it's the most predictable supply.

• 19:56Anthony Pompliano?

  Okay, keep going with gold and then we'll compare it to Bitcoin.

• 19:58Speaker 01

  Absolutely. So since its supply increased the most slowly and predictably, gold was favored for pricing things and became the dominant money on the free market. The absolute scarcity of Bitcoin makes it the ultimate pricing mechanism for the ceaseless changes in human productivity, enabling societies to more effectively communicate their preferences through trade, store their wealth securely, and cooperate and compete at scale.

• 20:23Anthony Pompliano?

  So when it comes to gold, there's two components that you just described. One is the difficulty at which to produce it. The second is the predictability of the incoming supply, right? Or the new supply.

• 20:36Speaker 01

  Yep, correct.

• 20:38Anthony Pompliano?

  Both of those things are pretty proven over thousands of years. It's really hard to make or get. And we've got a pretty good idea of how much we're digging up out of the ground every year, finding, etc.

• 20:49Speaker 01

  Yep.

• 20:50Anthony Pompliano?

  When it comes to Bitcoin, it is harder to get Bitcoin than it is to get gold in terms of the production. And also, it is verifiably true what that supply is at all times with an incredible amount of accuracy.

• 21:09Speaker 01

  Absolutely.

• 21:10Anthony Pompliano?

  Which is basically taking all of the properties of gold that we have put value on and now putting them in a much more scientific, provable, mathematic-type mentality or mechanism. And so it's actually improving on those mechanisms of gold or aspects of gold for Bitcoin.

• 21:31Speaker 01

  That's exactly correct. And so if you think, if we could somehow miraculously press pause on everyone's job today and tell everyone to go mine gold, we could produce a lot more gold, right? We could get a lot more above ground a lot more quickly. You could not do that with Bitcoin. Bitcoin has this ingenious invention called the difficulty adjustment. That's basically like an ever-receding horizon. The more you chase it, the further it runs away. So, we know with essentially perfect mathematical certainty exactly how many Bitcoin will be issued between now and the last Bitcoin being mined in the mid-22nd century. Again, that's a property we've never had with any asset, commodity, or whatsoever.

• 22:11Anthony Pompliano?

  And I think the part that is really important in that is this difficulty adjusting adjustment works both directions. So if we put more resources towards mining, right? If you and I are partners and we want to produce Bitcoin, the more that we put, overall, it becomes harder for everyone on the network to get their share that they previously had because of that difficulty adjustment.

• 22:34Speaker 01

  That's correct.

• 22:34Anthony Pompliano?

  But also, if we shut down our operations, it can get easier as well.

• 22:38Speaker 01

  Absolutely.

• 22:39Anthony Pompliano?

  And so, the ability to increase or decrease the difficulty based on the production investment, we've just never seen that before.

• 22:47Speaker 01

  No, never seen it. It's like dynamic demand adjustment. And, you know, with gold, the marginal revenue of the market price tends to converge with marginal cost of production. So as we see kind of Bitcoin hash rate grow, which is how much operational and capital expenditure is being allocated towards its production, we can use that as a proxy for where we think the value will go. So I think the hash rate today is 13 times what it was at the December 2017 peak. So that's kind of, we look at it as kind of a leading indicator in that positive feedback loop that is Bitcoin.

• 23:18Anthony Pompliano?

  For sure. So let's go back to the number zero.

• 23:20Speaker 01

  Absolutely. So, in the same way that the number zero enables our numeric system to scale and more easily perform calculation, so too does money give an economy an ability to socially scale and more easily perform economic calculation. And social scalability is one of those terms from Nick Zabo that essentially means the more we can do with less effort or without thinking about it, the more productive we are as a society. So...

• 23:51Speaker 01

  Back to money, simply scarcity is essential to the utility of money and a zero-growth terminal money supply represents perfect scarcity, which makes Bitcoin a perfect monetary technology. From this perspective, both the discovery of zero and absolute scarcity are ideas or tools that enable society to scale by saving us time and calculation and trade. So, that was a long run, so I'll try to summarize it a little bit. Since the invention of Bitcoin represents the discovery of absolute scarcity, or absolute irreproducibility, which occurred due to a particular sequence of idiosyncratic events,

• 24:33Speaker 01

  its emergence into the world cannot itself be reproduced. Absolute scarcity is a one-time discovery, just like the heliocentric model of the solar system or any other major scientific paradigm shift.

• 24:44Anthony Pompliano?

  Alright, so there's a lot of people who do not believe in Bitcoin, or do not see the value, and what they would basically say is, there's a lot of big words, but you made a claim that absolute scarcity is a one-time discovery. Can it be replicated, but it's just the first time it's discovered there's value? Or is it absolute scarcity can only happen one time?

• 25:09Speaker 01

  I think, as a monetary property, it can only be discovered once, because money is valued based on its liquidity and network effects. So if you try to reproduce Bitcoin 2.0 with absolute scarcity today, the value of that just gets collapsed into Bitcoin, because it already has such a huge lead in terms of liquidity and network effects. And I don't see how you can disrupt that.

• 25:31Anthony Pompliano?

  Okay, a fair launch?

• 25:34Speaker 01

  Yeah, so, in short, like, a fair launch via a proof-of-work system is no longer possible due to path dependence. Yet another reason why Bitcoin cannot be replicated or disrupted by another crypto asset using this consensus mechanism. So at this point, it seems like absolute scarcity for money is truly a one-time discovery that cannot be disrupted any more than the number zero can be disrupted. A true Bitcoin killer would necessitate an entirely new consensus and distribution model, and nothing to date has been conceived that could fulfill this requirement. So in the same way that there's only ever been one analog gold, it looks like there's only ever gonna be one digital gold.

• 26:14Speaker 01

  So that was a long critique of Ray's second critique.

• 26:17Anthony Pompliano?

  So, part of this is, the properties that make gold valuable have been supercharged or put on steroids when it comes to Bitcoin. They're more approvable, they're more mathematically factual, if you will. And, the argument you're making is that although we can identify what those properties are and we can assign value to them, they cannot be replicated for a variety of different reasons. And some of that is, the actual feature itself cannot be replicated. And then some of it is, the feature's position in a sequential list of events cannot be replicated. And depending on either one of those, when you combine them,

• 27:01Anthony Pompliano?

  you cannot reproduce Bitcoin in the form that it is and kind of the value that it is.

• 27:05Speaker 01

  Yeah, yeah, I guess, since it's a game theoretic, you can't replay the game, so to speak, of money, right? You can't, just, no one can decree gold is no longer valuable. The free market determines that it has value. The free market has determined that Bitcoin has value. And these, as money, you know, the more liquidity and more network effects it has, the more value it has. So they coalesce to a single money. So that's why we have one gold. And for all, all indications today are, Bitcoin is the one digital gold, so to speak.

• 27:39Anthony Pompliano?

  Okay. The third point that Ray had?

• 27:42Speaker 01

  Yeah, so Ray's third critique of Bitcoin is, he says that price-stable central bank or corporate-issued cryptocurrencies like Libra are a better alternative than Bitcoin, as it is too unstable to be used as a medium of exchange. So, in one sense, it's true, because central banks are already announcing their attempts at this. However, the one thing they will never do is give up control of monetary policy. Which means, that this is the means, by the way, monetary policy control, through which they enrich themselves. And this goes by a lot of names, the Cantillon effect, confiscation via inflation, the shadow tax, or even taxation without representation.

• 28:22Speaker 01

  So since Bitcoin has an absolutely scarce money supply, which is a monetary policy akin to absolute zero, it will continue to appreciate on an exchange ratio basis against fiat currencies, which are inevitably printed into worthlessness over time. Exchange ratio volatility against fiat currency is a normal consequence of price discovery for an emergent asset like Bitcoin. So a good kind of example for this is to consider Amazon, which crashed 94% from $85 to $5 in 1999, before growing over 33,000% since in its ascent to market dominance today. And Amazon accomplished this historic feat by gaining control of the digital market for distribution networks.

• 29:06Speaker 01

  This, the space which Amazon conquered is driven by scarcity in the form of finite distribution channels, and it is subject to winner-take-all dynamics due to network effects and economies of scale. Similarly, the market for money is driven by scarcity and subject to winner-take-all dynamics, as we saw with gold. So in fact, Bitcoin is monetizing along the same path as gold today, in that it's being used first as a store of value, then once it has accrued enough value to incentivize people to spend it, it will become more widely adopted as a medium of exchange. And when it finally is used widely enough, it will become the primary denominator of prices worldwide, making it a unit of account. So this is like the same evolutionary path that gold followed, we see Bitcoin following

• 29:51Speaker 01

  today.

• 29:52Anthony Pompliano?

  Okay, so there's two pieces here that I want to cover. So first is Amazon. You described this 94% drawdown that it had. Also, many people don't know that every single year since it's been public, it's drawn down double-digit percentage at least once. And I think the average intra-year drawdown is like over 30%.

• 30:12Speaker 01

  Yep.

• 30:13Anthony Pompliano?

  Right? And so when you start to look at it, it's just, that all equates to, it's a highly volatile stock.

• 30:18Speaker 01

  Yes.

• 30:19Anthony Pompliano?

  But volatility works both ways. You need volatility to go up, you also need volatility to go down. And so if you're going to have the best-performing stock, or a stock that goes from nonexistent to the dominant one in the world, you have to have that volatility, right? But nothing's going to go from zero to hero, if you will, without actually having the volatility in between.

• 30:38Speaker 01

  Of course. You know, the world is dominated by nonlinearities. And when you're looking at a binary bet like Amazon, that was either bust, or, you know... Originally, it was just an online bookstore. We didn't see that it was going to evolve into all this, but it dominated that space, right? And Bitcoin is sort of the same. It's like it's either worth nothing, or it's a global reserve asset. So this volatility is the market trying to discover what it is. Is it zero, or is it hero, so to speak?

• 31:03Anthony Pompliano?

  For sure. And then the second thing you talk here about is this idea that Bitcoin is monetizing along the same path as gold. So gold, essentially, nobody used. Then people started to use it as, hey, this is valuable. Do you want to actually barter or use it? Then it became a more valuable asset over time. It's more and more people say, hey, well, I want some of that. And then, at some point, once it had this quote-unquote "stable" value, right? Because people knew this is what it is worth, people then started to use it as an actual currency. And then eventually, prices of the assets. People started to say, hey, well, I will trade you my camel for two gold coins.

• 31:41Speaker 01

  Absolutely.

• 31:42Anthony Pompliano?

  And Bitcoin is doing the same thing.

• 31:43Speaker 01

  Absolutely. And we think, you know, our unit of account today is dollars largely. Dollars used to be gold, right? Dollars were deprecable for gold.

• 31:50Anthony Pompliano?

  Paper claim on gold?

• 31:51Speaker 01

  Yeah, we were thinking in gold, even though we think we're thinking in dollars today, which are no longer pegged to gold, which we'll get to. We were actually thinking in gold for that very reason.

• 32:02Speaker 01

  So that covers like my three responses to Ray's three critiques of his assessment of Bitcoin. Then after reading his book Principles, I realized that Bitcoin positively embodied many of the principles Ray lays out in his book. So I decided to write my essay, which is titled "An Open Letter to Ray Dalio Regarding Bitcoin", to share my findings, which brings us to the first principle.

• 32:24Anthony Pompliano?

  All right, so you saw what Ray said. You responded to Ray. Then you read the book, and you said, wait a minute, it's even more of a reason why he should actually be paying attention to this.

• 32:36Speaker 01

  Yes.

• 32:37Anthony Pompliano?

  And you wrote about kind of breaking down Bitcoin in the framework of the principles in which he is sharing with the world.

• 32:43Speaker 01

  Absolutely. So his explaining it to him through his own worldview, if you will.

• 32:48Anthony Pompliano?

  All right, let's start with the first principle, which is this idea of meritocracy.

• 32:51Speaker 01

  Yeah, so the pinnacle of Ray's worldview is the idea meritocracy, which Ray describes as, quote, "Idea meritocratic decision-making is better than traditional autocratic or democratic decision-making in almost all cases."

• 33:07Speaker 01

  So, an idea of meritocracy is a cultural paradigm. It's a free market for ideas, a way of subjecting ideas to a simulated form of natural selection. It's a kind of Darwinism for ideas, if you will. And I see it as an open environment for the proliferation and combination of the most meritorious ideas, free from man-made impediments such as ego, policy, and hierarchy. So, again, team members at Bridgewater review one another's work, meeting contributions, and attitude in real time, using a suite of custom-made management tools, which are software-based tools used to gather real-time feedback. "An idea of meritocracy is intended to be aligned with reason and impervious to politics,"

• 33:51Speaker 01

  is kind of the gist of it. And, you know, I think we see this in the world, that the more objectively measurable and traceable the outcome of a job, the less political it is by nature, as competence is the primary determinant of who gets that job. So, an example here would be like, consider how professional athletes are paid for points they put on the board or other stats which are objective metrics, whereas a politician is paid based on his charisma or cunning, which is clearly very subjective. So, you know, jumping back to our original thesis, that everything starts out as an idea, since everything we say, do, or make starts out as an idea, the idea of meritocracy is a free market. It's the same thing.

• 34:32Anthony Pompliano?

  And this is really, you know, people who work in like a corporate job will understand this really well, is if I have an idea, the actual idea by itself, doesn't matter who brought it up, when they brought it up, how they brought it up, any of this stuff, just the idea, the actual merits of the idea. The best ideas can withstand attacks from every direction.

• 34:52Speaker 01

  Absolutely.

• 34:53Anthony Pompliano?

  They can withstand the attack of who brought it up, why, how, where, everything. What we tend to see in organizations, or even larger in the world, is not idea meritocracies. We tend to see hierarchies. We tend to see the "I'm the boss, it's my idea, do it my way", even if it's not the best idea. And so, I think that the technology world has done much better job of encouraging some of these meritocracies. And some of that is because, to your point, when I was at Facebook, one of the phrases that they would use is "code wins arguments". We can sit here all day long and debate things, like "let's go build it, it works or it doesn't", right? And so that was a form of a meritocracy in the sense of like,

• 35:38Anthony Pompliano?

  if you build it and it works, then what are we arguing about like it works, right? And so I think that's what we're seeing, kind of a very big division in the world of the people who previously weren't exposed to nor wanted idea meritocracies are doubling and tripling down on the prevention of them.

• 35:56Speaker 01

  Absolutely, yeah.

• 35:57Anthony Pompliano?

  The people who like this world and believe in the value of the idea meritocracies, they're doing everything they possibly can to double and triple down on the protection of them.

• 36:06Speaker 01

  Yeah.

• 36:07Anthony Pompliano?

  And so you get this very diverse world or division in the world, but it comes back to the idea of either you buy ideas have merit on their own or they don't, or you buy into who says it, when, where, how, etc., is almost more important than the ideas of which people share.

• 36:24Speaker 01

  Absolutely. You know, I think that the division you speak of is sort of between dominance and competence, right? Where dominance being, "it goes because I said so because my desk is bigger than yours", whereas competence is like, "this thing works in the real world according to the market test or it doesn't", right? And I think if you just think about that, it's clear which of the two outcompetes the other, right?

• 36:49Anthony Pompliano?

  Of course.

• 36:49Speaker 01

  The domination thing is just not sustainable. Like, people that are dominated are resentful, right? They're gonna always find a way to kind of stab you on the back or not work as hard or whatever, whereas competence, hierarchies if you will, reward ingenuity and innovation, things of that sort. So, I agree, I think the world's going that way.

• 37:13Speaker 01

  Getting back to kind of what markets are in that respect. Markets are necessary to disseminate knowledge because knowledge has a localized dimension to it. Meaning, every person is most familiar with the prevailing economic circumstances specific to their place in space-time and industry. Free markets are the best assimilators and disseminators of these localized pools of knowledge within an economy. And a free market can be thought of in this sense as a kind of nexus where many minds become one through the mechanism of price. And that's what capitalism

• 37:51Speaker 01

  actually.

• 37:53Speaker 01

  And in this sense, free market capitalism is directed by the collective decisions of all economic actors, whereas essentially planned socialism is directed by the decisions of a handful of bureaucrats. Kind of like what we're talking about here. So, you know, free markets reward competence. Planned markets reward dominance, effectively.

• 38:16Speaker 01

  And in that sense socialism is a top-down unnatural despotic

• 38:22Speaker 01

  organization, and you can kind of think of the traditional org chart as you brought up. Whereas capitalism is bottom-up natural democratic, which is much more like the idea meritocratic organization that Ray founded.

• 38:34Anthony Pompliano?

  And one thing just to comment here, because I've been fortunate enough to spend enough time kind of in the finance Wall Street-y type world, and also the Silicon Valley technology world. Many of the largest organizations in the world today from the technology sector, although they appear from the external to be very top-down, kind of these traditional org charts. When you get inside of them, they are incredible meritocracies, right? They are much more flat organizations than you would traditionally see in large organizations. And so I think that outside of something like Bitcoin versus gold versus fiat currencies, et cetera, we see other applications of this framework.

• 39:17Anthony Pompliano?

  In our world today, and the people who are winning in those competitions are the people who tend to have much more meritocracies in their organizations.

• 39:27Speaker 01

  Absolutely.

• 39:28Anthony Pompliano?

  And therefore, it would be natural for us to see that seep into other aspects of our lives and continue to be the superior way or the superior framework to apply.

• 39:38Speaker 01

  Yes, I agree completely. And I guess sort of the backdrop to that is, you know, digital technology enables us to exchange things so much more fluidly that it just, it dissolves these dominance hierarchies and rewards competence again. And another like, Ray is a big fan of Steve Jobs. And I remember Steve Jobs, I'm kind of paraphrasing, but he said, "At Apple, we don't have committees or board meetings. Like, we just figure out the best way to do things, and that's why we're the best."

• 40:03Anthony Pompliano?

  That's a shocking strategy.

• 40:04Speaker 01

  Yeah, right.

• 40:06Anthony Pompliano?

  So, all right, the elephant in the room.

• 40:08Speaker 01

  Yeah, so the elephant in the room then is why, in light of the overwhelming evidence favoring a free market economic system, do we still tolerate central planning in the largest market of all, the market for money? So, to understand the differences in free and unfree markets, a set of formulas will help us go a little further. And Ray gives us the following formula for the idea of meritocracy, which equals radical truth plus radical transparency plus believability-weighted decision-making.

• 40:43Anthony Pompliano?

  So, the formula that he uses is radical truth added to radical transparency added to believability-weighted decision-making equals this idea of meritocracy.

• 40:55Speaker 01

  Yes.

• 40:56Anthony Pompliano?

  So, there's three inputs.

• 40:57Speaker 01

  Yes.

• 40:58Anthony Pompliano?

  Radical truth, radical transparency, and believability-weighted decision-making.

• 41:00Speaker 01

  Yes. And again, since idea meritocracies are free, and free markets are the same thing, we can translate this to a free markets version, if you will. And this is my sort of translation. So, I say free markets equal truthful price signals, which we're going to talk more about here in a second, plus transparent and reliable rule of law, private property rights, and hard plus skin in the game-weighted decision-making.

• 41:28Anthony Pompliano?

  Okay, so your three inputs are truthful price signals, transparent and reliable rule of law. Private property rights and hard money. And then the third is skin in the game weighted decision making.

• 41:46Speaker 01

  That's exactly right.

• 41:47Anthony Pompliano?

  Okay.

• 41:47Speaker 01

  And there's a lot of terms in there you may not be familiar with, but we will go into them.

• 41:51Anthony Pompliano?

  Let's go.

• 41:52Speaker 01

  So with these formulas in mind, let's dive into each of their elements and consider their relationships with markets, money and Bitcoin. The first formulaic element of Ray's idea of meritocracy is the principle of radical truth. Which Ray describes as quote, "Truth, or more precisely, an accurate understanding of reality is the essential foundation for any good outcome." Unquote.

• 42:16Anthony Pompliano?

  I love that.

• 42:17Speaker 01

  It's great, right?

• 42:18Anthony Pompliano?

  Like, forget Bitcoin, forget anything, just. "Truth, or more precisely, an accurate understanding of reality is the essential foundation for any good outcome." When you sit and think about that, duh.

• 42:31Speaker 01

  Yeah. Truth will set you free, right?

• 42:33Anthony Pompliano?

  Right, well, just like, if you don't have an accurate understanding of reality, how the hell can you do anything? Make decisions, you know, evaluate, none of that stuff. So of course it is true, but the fact that he has to clearly state it.

• 42:47Speaker 01

  Yeah.

• 42:47Anthony Pompliano?

  To kind of put that in people's minds is actually a little scary in the world.

• 42:51Speaker 01

  Yeah, I agree. It's funny. It's like, we're constantly trying to redraw our map of reality. And if you're not paying attention to the redrawing process, reality is going to run you over, right?

• 43:01Anthony Pompliano?

  Absolutely. Alright, so this is his principle of radical truth.

• 43:04Speaker 01

  Yeah, so this is the idea that gaining a clear perception of reality is paramount to facing it head on and dealing with it. So in markets, it's commonly said that price is truth. Meaning that all known market realities are expressed in any particular asset's price at any given moment. You may remember from Economics 101 that the market price is the intersection of supply, which is an objective quality. And demand, which is an intersubjective or opinion-based quality. So put another way, prices are like data packets that convey information about scarcity, which is objective. And value, which is intersubjective. Each entrepreneur's decision to buy or sell is influenced by prevailing prices,

• 43:47Speaker 01

  and in turn communicates back into the market the state of economic conditions relevant to him, which again, in turn, influences the same decision-making of all other entrepreneurs within his market. That this is intersubjective value. And all of those decisions are based on actual availability of time, resources, and know-how. This is objective scarcity.

• 44:09Anthony Pompliano?

  So really what you're describing here is the most important concept when it comes to Bitcoin. Supply and demand. And that supply and demand leads to all sorts of things like price discovery, et cetera. But understanding fundamentally what is supply and demand. If you don't have that belief, that understanding, et cetera, you're going to really struggle to understand Bitcoin.

• 44:31Speaker 01

  Absolutely. So again, back to truth, which is price. It exists at the intersection between objective reality and our subjective interpretations of it, essentially.

• 44:41Anthony Pompliano?

  And the objective reality, for example, when it comes to Bitcoin is 1,800 Bitcoin are going to get created today out of the 21 million that will ever be available.

• 44:50Speaker 01

  That's correct.

• 44:50Anthony Pompliano?

  That is provable with math. No one can deny that.

• 44:55Speaker 01

  Yes.

• 44:56Anthony Pompliano?

  The subjective element is how many people want those 21 million Bitcoin.

• 45:02Speaker 01

  That's right.

• 45:02Anthony Pompliano?

  And that's where, when those two things intersect, kind of truth versus perceived truth, that's where you get price discovery.

• 45:09Speaker 01

  Yes, and they feed back into one another, right? So after the May 2020 halving in a couple of months is going to constrict by half to 900 Bitcoin per day. And you know, the Bitcoin feedback loop theory at least is that as you constrict scarcity and money, it actually drives demand for that money. In addition to the other benefits Bitcoin provides, like inflation resistance, confiscation resistance, et cetera. So. Getting back to price signals, price basically representing truth in the marketplace. Central banks broke the truthfulness of money by centralizing gold and issuing depository receipts, which are basically dollars that were redeemable for gold, in excess of their gold reserves.

• 45:50Speaker 01

  So if they had 10 tons of gold, they issued 100 tons worth of dollars redeemable for gold. So they're just making promises in excess of what they had.

• 45:59Anthony Pompliano?

  And the thought process here was if I give out 10 times the number of IOUs to what I actually have, mathematically, I'm going to take the risk that not everyone is going to come ask me for the gold at the same time.

• 46:17Speaker 01

  That's exactly right, yeah.

• 46:19Anthony Pompliano?

  Which 99.9% of the time is and was true.

• 46:24Speaker 01

  Yep.

• 46:25Anthony Pompliano?

  There have been very specific cases, though, these quote-unquote "bank runs",

• 46:29Speaker 01

  Yep.

• 46:29Anthony Pompliano?

  where people panic.

• 46:31Speaker 01

  Yep.

• 46:32Anthony Pompliano?

  And they say, "Whoa, timeout."

• 46:33Speaker 01

  Yep.

• 46:33Anthony Pompliano?

  "I want my gold." You ever seen, what is the viral video? No, the viral video from Mobile, Alabama, where they said leprechauns are in the tree?

• 46:42Speaker 01

  That's right.

• 46:43Anthony Pompliano?

  Oh, man, a lot to play at one day, but there's basically these guys, and there's a folklore in the neighborhood that there's a leprechaun, and it cuts away at the end to a guy, he goes, "I want the gold. Where the gold at? I'm gonna get me a backhoe and dig up that tree. I want my gold." And so it's similar here, right? People say, "I want my gold." But if you've promised more IOUs than you have, you obviously can't pay everybody.

• 47:08Speaker 01

  Absolutely, yes.

• 47:09Anthony Pompliano?

  And that's the truth, that's the breaking of the truthfulness, as you described it.

• 47:11Speaker 01

  Yes, and when the trust breaks down, things go more free market again, right? People want the gold. They don't want your promises, they want hard money.

• 47:19Anthony Pompliano?

  Joe, we gotta, we gotta get that clip, man. "I want the gold, where the gold at?"

• 47:24Speaker 01

  So when central banks did this, they severed the skin in the game of money and gave central banks a mechanism for perpetually privatizing profits from money production, which is called seniorage, and socializing government losses through inflation.

• 47:41Speaker 01

  So, skin in the game, it's a really important concept from my favorite author, Nassim Nicholas Taleb. And that guy's was, he's, if you haven't read his books, he's unbelievable. Read them all, twice. I draw on his wisdom a lot in my thinking and my writing. But, so, skin in the game is a concept based on symmetry. It's a balance of incentives and disincentives that is necessary for most systems to function properly. So with central banking, it can, it has essentially no disincentives in the fiat currency system. As there is a near zero cost of money production, central bankers are incentivized to print money into worthlessness, acquiring scarce assets with these self-annihilating currencies on their gradual, then sudden way to zero.

• 48:25Speaker 01

  So again, if you go back to gold, that the marginal cost of production tends to converge with its market price. The marginal cost of production of fiat currency is zero, for all intents and purposes. It's no, like, it's intuitive where the values end up. They converge to zero because of market dynamics.

• 48:42Anthony Pompliano?

  And, and important to this point, which I don't hear talked a lot about, is, uh, there is a convergence of two components. One is theoretical, and one is, uh, reality, or historical reality. The theoretical is what you just described. Well, if it caused zero to produce, then how could it have value? Right? And kind of, you can, uh, pull a lot of, uh, intellectual Olympics to unpack what that exactly means. But we also know that every fiat currency in the world, uh, historically, and also, every currency, other than the modern day currencies that have been created that were still living in their kind of average life cycles,

• 49:25Anthony Pompliano?

  have all failed because of debasement, or the devaluing of these currencies. Because ultimately, no matter how valuable it starts, if you devalue or debase it away over time, well, you trend towards zero.

• 49:37Speaker 01

  Yes.

• 49:37Anthony Pompliano?

  Right? And then, there's all kinds of implications of that, but we just, we have the theoretical frameworks of which, simple things like supply and demand, etc., all apply, and as long as we believe that the solid concepts, there, there's a theoretical argument. But we also have the historical track record and the failures of that model of inflationary or, or devaluing of a currency, that just leads to zero at some point.

• 50:01Speaker 01

  Absolutely.

• 50:02Anthony Pompliano?

  And it's the best we've ever had.

• 50:03Speaker 01

  Yeah.

• 50:03Anthony Pompliano?

  Like, it's the best of the worst ideas.

• 50:06Speaker 01

  Yes, and...

• 50:08Speaker 01

  Fiat currency is not a new thing, like it started, I think, 7th century China was the first one. Every one of them have ended in hyperinflation. This is not like, it happens sometimes, every time it happens. And the only, you know, the best performing one today is the British pound. 317 years old, it's lost 99.5% of its value, right? And as you said, we're living through its kind of normal life cycle. They all trend towards zero. It's just, it's an empirical fact. So, in this sense, as a wise man once said, "Inflation is the surest way to fertilize the rich man's field with the sweat of the poor man's brow."

• 50:48Anthony Pompliano?

  Wow.

• 50:49Speaker 01

  Yeah.

• 50:49Anthony Pompliano?

  I never heard that one before. "Inflation is the surest way to fertilize the rich man's field with the sweat of the poor man's brow."

• 50:56Speaker 01

  Yeah.

• 50:56Anthony Pompliano?

  Essentially saying, "The rich get richer, the poor get poorer."

• 51:00Speaker 01

  Yeah, and they're doing it by backstabbing them, right? You're surreptitiously taxing them by printing more money. And people not understanding how the system works just think, well, prices go up every year and that's just the natural way of things. It's really kind of insidious in that sense. So, inflation of the money supply, and this is very important for capitalism, it's a violation of private property rights. As it reallocates wealth away from its original owners, who are the citizens, into the hands of those closest to the governors of the monetary system, who are typically the politically favored few. Inflation also distorts the price signals propagated by fiat currency, which causes entrepreneurs to overborrow, misallocate capital, and misprice risk.

• 51:45Speaker 01

  And this is very pathological to an economy, really. And so, if you think of inflation, it's kind of like, I say, it's like a computer virus almost, it corrupts these data packets on value and scarcity that we call price signals. And for the same economic principles and reasons that price fixing led to the starvation of millions in Soviet Russia. Fixing the price of money, which is the interest rate, causes these recurrent economic calamities, what we today call the business cycle. And we think, again, is normal, but it's not. It's a consequence of centrally planned money.

• 52:19Anthony Pompliano?

  And a key piece of this is not only that it happens, but the lack of information and transparency and education of those that are at the bottom of that pyramid scheme that you described, who don't understand it's happening and don't have the information necessary to to measure what is happening, right? I always go back to this idea of, tell me how much money was printed today.

• 52:44Speaker 01

  Exactly.

• 52:45Anthony Pompliano?

  You can. Now, there's ways to triangulate, right? There's always some smart ass who says, you know, I can tell you what the bank asset balance sheet. Okay, I get it. But how many people understand that the dollar in their wallet actually is worth less money today than it was last year?

• 53:04Speaker 01

  Yeah.

• 53:04Anthony Pompliano?

  If you go out on the street, I'm willing to bet 50% plus of the 330 million Americans have no clue. That concept is so foreign to them. They have no clue.

• 53:15Speaker 01

  Right.

• 53:16Anthony Pompliano?

  And so what ends up happening is there's an education advantage or an information advantage that some portion of the population has over others. But even those that know this happens, they don't know how bad it is.

• 53:26Speaker 01

  Yes.

• 53:27Anthony Pompliano?

  Right? And I think that's where you start to unpack some of this and realize, wait a minute, what is the solution?

• 53:32Speaker 01

  Yeah. Another thing, interesting aspect of that is, you know, again, we know, anyone, everyone knows how much Bitcoin was produced today and every day forever. How many people, this army of macroeconomists and analysts and CNBC people that pore over the details of central bank meetings, their body language, their wardrobes, trying to figure out what they're going to do next? Like, it's such a total drain of human ingenuity and capability. It's really silly, I think, when you see it that way.

• 54:04Anthony Pompliano?

  I'm trying to quickly look up, and I may not be able to find it quick enough. I believe it is the Federal Reserve's GDP forecast. Shout out to Mark Yuskow. He's the one who told me this one. I think that they have now made something like 220, right? So somewhere around that number of forecasts. What percentage of the time have they been right?

• 54:31Speaker 01

  Sub 5%?

• 54:33Anthony Pompliano?

  Zero.

• 54:34Speaker 01

  Zero percent, yeah.

• 54:35Anthony Pompliano?

  They've gone 0 for 220 or whatever.

• 54:38Speaker 01

  Yeah.

• 54:39Anthony Pompliano?

  Now, again, I believe that to be correct. People will fact check me online, but if I remember the information correctly, it's zero. If it's not zero, it's a very, very small number, right?

• 54:49Speaker 01

  Yeah, yeah, yeah.

• 54:49Anthony Pompliano?

  For sure, less than 5%. And so when that happens, you have this centrally planned model. But the people who are doing the planning aren't accurately forecasting what is going to happen.

• 55:03Speaker 01

  100%. Because it's not possible.

• 55:06Anthony Pompliano?

  It's kind of hard to make decisions, exactly. It's just hard to make decisions in that environment.

• 55:09Speaker 01

  It's impossible. An economy is a complex adaptive system like the weather, right? You cannot control or manage an economy any more than you can manage the fucking weather, frankly.

• 55:20Anthony Pompliano?

  Well, we got a president who thinks he's gonna, he's gonna nuke hurricanes. Yeah, go ahead. All right, we won't go there, go ahead.

• 55:26Speaker 01

  That's how, you know, out of control things have gotten, right? Uh, so as with all well functioning markets, the price of money must emerge through and constantly reorient itself against the natural interactions of supply and demand. Attempts to centrally plan this market only distort truth in the form of distorted price signals and trigger over borrowing, recessions, and cause the boom and bust business cycle. So another way to look at fiat currency price signal distortion is with Wittenstein's ruler. This is another thing I got from Taleb. This is really interesting to think about. Unless you have confidence in a ruler's reliability, if you use a ruler to measure a table, you may also be using the table to measure the ruler.

• 56:08Anthony Pompliano?

  God, that's good.

• 56:09Speaker 01

  The less you trust the ruler's reliability, the more information you are getting about the ruler and less about the table, right? So said differently, the more you can trust the constancy of a unit of measurement, the more signal it gives you and the less noise it gives you.

• 56:24Anthony Pompliano?

  That is so good. I've never heard that before. That is so good.

• 56:27Speaker 01

  So, back to Bitcoin. With an absolutely fixed supply, Bitcoin will restore the clarity of these economic price signals that are so critical to proper capital allocation, risk assessment, and entrepreneurial coordination across space time.

• 56:42Speaker 01

  So, kind of simply, free market money like gold was a universal system of measurement.

• 56:47Anthony Pompliano?

  Everyone could trust it.

• 56:49Speaker 01

  Everyone could trust it, and it was constant and reliable anywhere in the world, right? So, other universal units of measurement like seconds, meters, or kilograms, they're all immutable in value to maximize the coordination of human action. Upon these foundations of standardized measurement, the machinery of global commerce is constructed. Builders of skyscrapers, electronics, and all other goods rely on the constancy of these measurements, of these measurement units, when sourcing materials and coordinating labor efforts from around the world. The immutable money supply of Bitcoin means that, once it is used widely enough to function as a unit of account, that its price signals will carry more truth than any other money in history. Bitcoin is a monetary channel free from the noise of unexpected supply fluctuations,

• 57:35Speaker 01

  which necessarily means it carries the clearest signals. In this way, Bitcoin is the perfect conveyor of the data packets on value and scarcity known as price signals. So, I like to say, the analogy I share is, I say money is like economic water. And when it comes to price signals, fiat currency is inscrucibly murky. It's got lots of noise. You can't tell whether a price change is real or it's inflation-driven, right? Bitcoin is the opposite. It is crystal clear. It is pure signal and has absolutely zero unexpected inflation forever. So, an economy run on a Bitcoin standard would have fewer and less extreme booms and busts. And "The Bitcoin Standard," by the way, is a book that everyone needs to read.

• 58:20Anthony Pompliano?

  Safe Dean, give us, uh, give us our cut of the book sales. No, for real, "The Bitcoin Standard" is a fantastic book. Safe Dean wrote it, and you should definitely read it.

• 58:29Speaker 01

  Absolutely.

• 58:32Speaker 01

  So, yeah, Bitcoin is basically the most truthful money that's ever existed.

• 58:35Anthony Pompliano?

  Okay, so, I just wrote down this question, but now's a good time to ask it.

• 58:40Anthony Pompliano?

  If you hold the assumption that Bitcoin is going to be the most provable, true unit of measurement, right? It, like seconds, meters, etc., will not change. It has that consistency. Why do so many intelligent people fear truth? Meaning, there's a lot of really, really smart people who have done various levels of work on Bitcoin. Most of them, kind of surface level, drive-by knowledge is what I call it. And they yet do not believe that it has value, or do not believe that it will be valuable in the future. How do we kind of figure out that contrast between, these are very smart, intelligent people who actually seek

• 59:25Anthony Pompliano?

  truth in most aspects of their life, especially their investing or entrepreneurial careers. Yet, when it comes to something that is provably true, there's a disconnect.

• 59:35Speaker 01

  Yeah, you're really digging into the seismicness, if that's even a word, of this shift. Like, it truly is a once-in-500-year kind of paradigm shift, which I know, when you and I think Melt Dem talked about the transition to double-entry bookkeeping, and Bitcoin being this transition to triple-entry bookkeeping. I think it's really hard for people to comprehend the magnitude of black swans like this. And black swans don't necessarily, doesn't mean something's negative, per se, it's just something that's very hard to predict that has a huge impact.

• 1:00:12Anthony Pompliano?

  Yeah, the internet's a black swan event, if you're pre-internet looking and saying, "Wait a minute, did through this computer network?" What does that mean?

• 1:00:19Speaker 01

  Yes, and that is the best analogy for Bitcoin. Bitcoin really kind of is the internet in a lot of ways. It's just, where the internet is this open-source, free-market set of protocols for moving information, Bitcoin is the same thing for moving value. So as far as smart people not grasping it, I really think, because Bitcoin takes a lot of hours to dig into and have the lightbulb moment, I think a lot of people just haven't done the work. And that number, I think, varies between people, but it's high, right? It's between 100 and 200, 300 hours, probably, of just studying Bitcoin and all this multi-disciplinary domain to really grasp the significance of it.

• 1:00:58Anthony Pompliano?

  All right, the next principle, the principle of radical transparency.

• 1:01:03Speaker 01

  Yes, so the principle of radical transparency, Ray describes as, quote,

• 1:01:09Speaker 01

  By radical transparency, I mean giving most everyone the ability to see most everything. Unquote. So, in free market capitalism, we have three cornerstones, which we mentioned earlier. We have rule of law, which gives us a means of nonviolent dispute resolution. We have private property rights, which gives us respect for the relationships between people and assets. And we have hard money, which gives us a free market-selected money and an accurate conveyor of price signals. So with strong and reliable rules in place, entrepreneurs are then free to "play the game", so to speak, accumulating capital for themselves and diffusing any innovations gleaned in the process into the whole of society through trade.

• 1:01:51Speaker 01

  So, an analogy here is like if you imagine a poker player sitting at a table, where if, and if the hand rankings changed every few hands at the whims of the casino. Without sound rules on which to build a strategy, no player would remain engaged for long and they would quickly exit the game. So we have kind of a similar problem today with centrally-planned money. The problem with the perceived safety of the US dollar is the opacity of the rules which govern its existence, including: how many dollars are there in existence? As you asked earlier, how many will be issued in the years to come? Who gets to decide? What are their criteria for deciding? And most importantly, who stands to profit from their production? Right?

• 1:02:34Speaker 01

  So even though the US dollar today is really just an SQL database maintained at the Federal Reserve, they could choose to open its records to audit, they refuse. Right? To counterbalance this opacity, and we touched a little bit on this earlier, there's an army of macroeconomists, analysts, and market commentators pouring over every detail of the statements issued by central bankers, including not only their words, but their tone, delivery, and even their wardrobes.

• 1:02:57Anthony Pompliano?

  It's incredible.

• 1:02:59Speaker 01

  It's unbelievable.

• 1:03:00Anthony Pompliano?

  Did they say "dovish"?

• 1:03:02Speaker 01

  Yes. "Was her tie yellow"? It's unbelievable. So to understand how absurd this is, imagine if a semi-governmental agency was put in charge of setting prices for automobiles. Ask any free-market capitalist if this seems like a good idea, and he will spew vitriol at you for even suggesting such a socialistic method of managing prices for automobiles. Any true capitalist will tell you that only the market should determine prices at the intersection of supply and demand. But then, very smoothly point out to them that the Fed sets the pricing of the US dollar, which is the interest rate, which is the United States' most valuable export market, and does so based on undisclosed criteria and closed-door discussions.

• 1:03:47Speaker 01

  Indeed, fiat currency is antithetical to free-market capitalism. It is monetary socialism.

• 1:03:53Anthony Pompliano?

  Explain very quickly the interest rate and how that is the pricing of the US dollar and this idea that it's the most valuable export market.

• 1:04:02Speaker 01

  Yeah, so essentially, there with money, you have the supply of loanable funds, if you will, which would be the money supply. You have demand for loans. And wherever supply and demand crosses is the price, which is the interest rate. And that's just the interest rate you see on loans. But the Fed sets this price, like as if the Fed came out and said, "All cars are $20,000, or all $25,000." And as we know from, you know, studying Soviet Russia and whatever, every time you try to interfere with free-market dynamics, you create surpluses or shortages. It just causes damage to the economy. The market has to clear at the price the market clears at.

• 1:04:37Anthony Pompliano?

  And this is where you see the current president, President Trump, absolutely railing on the Federal Reserve publicly via tweets, etc., saying, "Hey, other economies are doing X or Y."

• 1:04:50Speaker 01

  Yes.

• 1:04:50Anthony Pompliano?

  "We're not, they have an advantage, we don't," etc. Some of that is, he doesn't have control, right? Or his, you know, kind of executive branch doesn't have control, to the opacity of the rules and criteria, etc., but also the optimization for different things, right? One of the, one of the things that, I forget, I really wish I could remember who said this because I thought it was just incredibly, you know, clear in the way that they described it. They said, "Central bank's job is not to manage money. The central bank's job is to manage economies, of which money is a tool to do." And I thought that it was very interesting because, again... Take the president, take an entrepreneur, take an investor, take the Federal Reserve. All four of those people exist in one single economy.

• 1:05:35Anthony Pompliano?

  They all may be optimizing for different things and therefore want different things. In a free market, the market is the ultimate referee.

• 1:05:42Speaker 01

  Yes.

• 1:05:43Anthony Pompliano?

  In this world, that's not the case.

• 1:05:45Speaker 01

  Absolutely. Yeah, it's, you know, the Federal Reserve and central banking in general is intended to be politically agnostic. Right? The president's supposed to have no say in it, but you can just see, you put people in charge of something, it becomes politicized. It's inevitable. And Trump's just taking it to the ultimate extreme where he's tweeting directly at these guys. This tweet the other day, who's the worst enemy for the US, you know, the Chinese president or Jerome Powell?

• 1:06:08Anthony Pompliano?

  Oh, did he say that?

• 1:06:09Speaker 01

  Something like that. I'm like, what the, what world are we living in? So.

• 1:06:13Anthony Pompliano?

  It's hard, man.

• 1:06:14Speaker 01

  It's crazy. It's truly crazy. So I'd say the in-market sunlight is the best disinfectant. When everyone can see the criteria and process behind a decision, they're more likely to deem it trustworthy. With Bitcoin, the algorithm which sets its money supply is totally transparent, meaning people can universally agree that the system is fair and unbiased. As an open source monetary protocol, Bitcoin is essentially the principle of radical transparency and perpetual action. And bankers hate this because Bitcoin basically automates the functions of a central bank, which are maintaining money supplies or monetary policy, reaching consensus as to account balances, and facilitating international value flows.

• 1:06:58Speaker 01

  This transparency in money also gives us the restoration of strong property rights and money. Few people realize that monetary inflation is a direct violation of property rights. Crazily, this is a legally enforced injustice, right? We're talking about the cornerstone of capitalism that's legally enforced that we're breaking. It's legalized counterfeiting is what inflation is. Printing money is like amending the list of who owns what, since money can be used to obtain anything on the market, and a corruption of the private property rights intrinsic to capitalism itself. So Bitcoin as an answer to this is an uninflatable, confiscation-resistant, free-market-based money.

• 1:07:40Speaker 01

  This provides its users with stronger property rights than inflatable, confiscatable, and de-authorizable fiat currencies.

• 1:07:48Speaker 01

  So in this sense Bitcoin is the purely transparent alternative to the opacity of central banking. It is a beacon of light outcompeting an industry purposefully shrouded in darkness. Once properly understood Bitcoin's superior visibility inescapably enhances its believability.

• 1:08:05Anthony Pompliano?

  Explain that.

• 1:08:06Speaker 01

  So Bitcoin's superior visibility inescapably enhances its believability. It is an immutable unbreakable rule set whereas the rules and fiat currency and central banking are shifting all the time based on political agendas and twists and turns.

• 1:08:25Anthony Pompliano?

  Bitcoin is the ultimate meritocracy because it can withstand any attack.

• 1:08:29Speaker 01

  Exactly.

• 1:08:30Anthony Pompliano?

  Whereas the existing system is based on who says it, when they say it, where they say it, how they say it.

• 1:08:37Speaker 01

  Subject to political capture.

• 1:08:38Anthony Pompliano?

  It's not the merit of the idea that wins.

• 1:08:41Speaker 01

  Exactly. Exactly right. So as and once you see that, you know, again, once you have that lightbulb moment with Bitcoin, you can't unsee it. Like I think clearly you've seen it's like it is it's a it's an epiphany. I don't know what else to call it really. And as you've said, Ray, quote, "Having nothing to hide relieves stress and builds trust," unquote. Transparency and reliability are the essence of Bitcoin's utility as money. So how do you not believe in Bitcoin, Ray? And it's truly unique in that its supply is absolutely predictable and absolutely scarce. So in this sense Bitcoin is the most credible monetary policy in human history, outcompeting

• 1:09:24Speaker 01

  the least trustworthy monetary policies in human history.

• 1:09:27Anthony Pompliano?

  So I recently have started to talk about this much more publicly, which is going back to your point earlier about why can't a new Bitcoin get created? Everyone always thinks and talks about this from a technology standpoint. Well, fiats are all going to get digitized, right? You know, other people can create digital currencies. True. On a technology competition kind of horizontal playing field, everything is going to be digital, whether it is Bitcoin, whether there's a fiat currency, a new digital currency, etc. But that's not where the competition ends up, right? It's like saying, hey, there used to be internet companies versus non-internet companies. Now they're all internet companies, right? The competition is at the monetary policy level.

• 1:10:08Speaker 01

  That's absolutely right.

• 1:10:08Anthony Pompliano?

  And what you said here is Bitcoin is the most credible monetary policy in history, outcompeting the least trustworthy monetary policies in history.

• 1:10:17Speaker 01

  Yes.

• 1:10:18Anthony Pompliano?

  From a monetary policy competition standpoint,

• 1:10:22Speaker 01

  Mm-hmm.

• 1:10:22Anthony Pompliano?

  this is a landslide.

• 1:10:24Speaker 01

  Yep.

• 1:10:24Anthony Pompliano?

  In terms of which one is more transparent,

• 1:10:27Speaker 01

  Yep.

• 1:10:27Anthony Pompliano?

  which one is more believable, and which one is more predictable.

• 1:10:30Speaker 01

  Yep.

• 1:10:32Anthony Pompliano?

  If those three things end up being important, I think we know who the winner ends up being. If those three things for some reason end up not being important, then other currencies have a choice.

• 1:10:41Speaker 01

  Yes.

• 1:10:42Anthony Pompliano?

  I think you and I are in the camp of those three things are pretty damn important.

• 1:10:45Speaker 01

  A quick study of history would tell you have been and in theory always would be important, right? So long as people seek to store their wealth across time, so as long as human self-interest is a thing, the scariest money wins, right? That's what gold is, and now that's what Bitcoin is. So Bitcoin's rapidly gaining a track record superior to central banks across all dimensions. Reliability, predictability, auditability, cost effectiveness, and resistance to censorship or manipulation. It is thereby further eroding the believability of central bankers, which is in shorter supply with every dollar printed. Which brings us to the third formulaic element of Ray's idea meritocracy,

• 1:11:29Speaker 01

  the principle of believability-weighted decision-making.

• 1:11:33Anthony Pompliano?

  I don't even know what that is.

• 1:11:35Speaker 01

  Yeah, this is a, this one's a mouthful. So Ray describes it as, quote, "When you're responsible for a decision, compare the believability-weighted decision-making of the crowd to what you believe," unquote.

• 1:11:49Anthony Pompliano?

  So the believability-weighted decision-making, okay?

• 1:11:52Speaker 01

  Yep. So

• 1:11:55Speaker 01

  if we look at fiat currency in terms of believability, the best performing central bank fiat currency in history, as we mentioned earlier, was the British pound, has lost 99.5% of its value in 317 years. And when it comes to maintaining purchasing power across time, gold has a believable track record, or its fiat currencies could barely be less believable. An ounce of gold, and this is a popular one, an ounce of gold has roughly equaled the value of a fine man's suit for over a century, whereas the cost of the same suit in dollars has skyrocketed. Further, the implementation of fiat currency offers limited to no assurances to its users that their wealth will be protected from confiscation, censorship, inflation, or counterfeit.

• 1:12:37Speaker 01

  And even if you believe in central banking flat out, and you're just committed to it, you would still be really hard pressed to defend the believability of central bankers themselves.

• 1:12:48Speaker 01

  Not only for their missed forecasts, as you alluded to earlier, but a number of other things. So as Ray says, "Think about people's believability, which is a function of their capabilities and their willingness to say what they think, keep their track records in mind."

• 1:13:04Speaker 01

  In terms of capabilities, central bankers have arrogated themselves virtually unlimited latitude to manipulate the supply and price of fiat currency in pursuit of politically determined ends. They have exercised these privileges based on largely undisclosed criteria and are notorious for their veiled communication styles. In other words, central bankers seem quite unwilling to say what they think, and their decision-making criteria are shrouded in falsehood. And in regards to track records, central bankers likely hold the world record for the most abysmal performance in history. They've caused multiple waves of currency devaluation and unemployment during their reign over money over about the past century. And since reputation must be earned through honesty,

• 1:13:47Speaker 01

  it is unsurprising that central banks have struggled in this respect as their business model is built on deception.

• 1:13:53Anthony Pompliano?

  So, one thing that I'm going to say here, which I think is an important thing, and I've thought a lot about, earlier you were talking about, central bankers seem quite unwilling to say what they think. Some of that is because it is personally valuable, or from a central banking standpoint, it's valuable for them not to say what they think, right? The other part is... The words they use are important because people nitpick over every single word. So it's almost like you have this self fulfilling prophecy of I'm gonna be careful what I say because that's what's good for central banks, for dollar dominance, etc.

• 1:14:35Anthony Pompliano?

  And then, oh, by the way, now you're gonna be super nitpicky, so then I really can't say what I mean. And, you know, it kind of just reinforces itself over and over and over again. And somebody once said to me, they were like, Jerome Powell's got the hardest job in the world. Because literally, if he says one wrong word, all kinds of chaos can ensue.

• 1:14:50Speaker 01

  He can't win. He can't win.

• 1:14:52Anthony Pompliano?

  And so I'm actually of the belief that the job is near impossible. It's incredibly difficult predicting GDP, all this stuff is just super, super difficult.

• 1:15:03Anthony Pompliano?

  And so the individual people are really just trying to do their job, right?

• 1:15:08Speaker 01

  Yes.

• 1:15:08Anthony Pompliano?

  Now, from a systematic macro standpoint, huge issues. It's no one single person who is responsible for that, right? It's over time, it's a lot of people, different organizations, etc. But separating the people from the structure, I think, is really important. And it's very similar to like, a lot of people go to work and just want to do their job. I think most of them actually think they're doing what they're supposed to be doing. I think you and I are talking about the macro system here, which is very, very flawed over a long period of time.

• 1:15:34Speaker 01

  Absolutely. I mean, the system for, by virtually every measurement, does not work. And the job is impossible because trying to hold back free market dynamics is like trying to hold back the tide, right? These things, they play out, they're natural organizing principles, they're intrinsic to nature. You can't fight mother nature. So I think we're just, you know, we saw Soviet Russia collapse when they tried to centrally plan everything in the economy. We outcompeted them because we gave free market rein to everything except money. But now we're just gonna see central control over money fall.

• 1:16:08Anthony Pompliano?

  For sure.

• 1:16:08Speaker 01

  For the same reasons. So another way to look at the believability of money is by setting facts versus opinions. Opinions are like soft money in that they can easily be diluted and distorted, which is very clear in politics, for instance. Facts, though, are like hard money in that they are rooted in scientific realities. In the case of gold, these are chemistry and physical rarity, and in the case of Bitcoin, these are mathematics and thermodynamics. So, said simply, do we believe the largest market in the world is best governed by opinion or fact?

• 1:16:43Anthony Pompliano?

  And again, this goes back to my question. Why do so many intelligent people fear facts? Fear truth?

• 1:16:49Speaker 01

  Yeah.

• 1:16:50Anthony Pompliano?

  Keep going.

• 1:16:51Speaker 01

  Yeah, it's crazy. So, in this respect, I'd say buying Bitcoin is like buying a put option on central banker malfeasance, or going long facts and short opinions, which is kinda like your long Bitcoin, short the bankers, I guess, said differently.

• 1:17:05Anthony Pompliano?

  Long facts and short opinions is probably a more popular way to say it. Long Bitcoin, short the bankers.

• 1:17:13Speaker 01

  So, the reason central bankers cannot be believed is because they lack skin in the game. Taleb sums this up, sums up skin in the game nicely by saying, quote, "Don't tell me what you think, just show me what's in your portfolio," unquote. And regardless of what they say or think, central bankers have been stuffing their portfolios with gold lately. And that, that is the indication of, of gold as dominant free market money. So, money, which is the largest and most critical market in the world, simply cannot evolve without practitioners who are subjected to real-world consequences and trade-offs in real time. Since central bankers don't face the consequences of their decisions, they suffer from the

• 1:17:55Speaker 01

  agency problem, which is a conflict of interest inherent to any organization where one party is expected to act in another party's best interest, but is not exposed to the proper balance of incentives and disincentives to do so.

• 1:18:11Speaker 01

  So said simply, if you lack skin in the game, then you lack believability, right?

• 1:18:16Anthony Pompliano?

  And just real quick, I just quickly Googled, uh, central bank, uh, gold buying. So, central banks accumulated over 668 tons in gold purchases this year, which is more than 2018's record numbers. So 18 set a record, 19 surpassed it. In fact, the key drivers in gold demand this year stemmed from central bank purchases, most of which were bought, 390 tons during the first two quarters of 2019. And so the central bank gold purchases in 2019 surpassed last year's 50 year high.

• 1:18:52Speaker 01

  Exactly.

• 1:18:53Anthony Pompliano?

  And so over the last 50 years, central banks have never held more gold or bought more gold, going back to your believability. That all came from bitcoin.com.

• 1:19:01Speaker 01

  And we, you know, the corollary is we've never printed this much money, right? So they're literally hedging against one another's counterparty risk, holding each other's currency.

• 1:19:09Anthony Pompliano?

  Which, again, going back to individuals versus the macro system, if you're an individual sitting in that seat, you know you're printing a lot of money and also there's a hedge out there. The rational thing is to buy a bunch of gold while you print, right? So they're doing what is rational from their seat.

• 1:19:23Speaker 01

  Yes.

• 1:19:23Anthony Pompliano?

  What we're talking about here is the more macro structure is flawed and that's why they're having to do what they're doing.

• 1:19:27Speaker 01

  And I would say, to make good economic decisions, you could completely ignore everything they say and just watch that buying pattern alone. So, Skin in the Game explains why ancient Roman architects were required to, required by law to stand beneath their monolithic arches when the scaffolding was removed, often with their families, which is crazy.

• 1:19:49Anthony Pompliano?

  I love that.

• 1:19:49Speaker 01

  So this, this deadly disincentive to malperformance worked wonders, as some of the oldest arches constructed in this way are still standing at over 2,000 years of age. So what if central bankers were subjected to the devastation they inflict on economies? Should their decision-making not work out, perhaps the world would be, still be on a gold standard and the, the dire need for bitcoin today would be drastically lessened.

• 1:20:14Speaker 01

  So without skin in the game, your interests are inherently conflicted and you suffer from an agency problem anytime you're managing other people's money, and this includes central bankers. And this is why most asset allocators prefer to invest in hedge fund managers that have substantial amounts of their own net worth tied up in their funds, because that is skin in the game, right? And it's also why central planning always causes moral hazard, because the overlords are not exposed to the depravity they inflict on their people.

• 1:20:39Anthony Pompliano?

  So, an important piece here is, part of inflation that rarely gets talked about, is that inflation actually causes wealth inequality.

• 1:20:52Speaker 01

  Yes.

• 1:20:52Anthony Pompliano?

  And the reason this occurs is that, as we print more money, the currency itself, so dollars, become less and less valuable, right? Just inflation is devaluing the dollar. But, the quote-unquote wealthy, the elite, the rich, the top, really 25 to 50% of individuals, they don't keep 100% of their wealth in the currency. They keep it in real assets. And so if the currency is being devalued away, the asset prices actually rise.

• 1:21:24Speaker 01

  Yes.

• 1:21:25Anthony Pompliano?

  So, what we get is we get this very specific separation in a population. So take the United States for example. At least the bottom 50%, if not more, cannot afford a $400-$500 emergency payment. So what that means is, they live their life paycheck to paycheck with near 100%, if not 100% of their wealth in cash. And every year that is being worth less and less. This is the feeling of, "I can't get ahead, I can't get ahead, I can't get ahead." So inflation is eating away at their wealth. The remainder of the population, whether that's 30, 40, you know, 50%, they take a

• 1:22:06Anthony Pompliano?

  portion, usually a majority portion, of their wealth, and they do not leave it in cash. They buy stocks, they buy real estate, they buy all kinds of different assets, art, you know, all stuff. As the dollar is deflated, uh, devalued away, you then get asset price rising. So you're getting the quote unquote, poor or the people in cash are getting poorer. And the quote unquote wealthy, those within real assets are actually getting richer. The rich get richer, the poor get poorer. And this is exactly what you're talking about here is not only is this essentially planned model, they don't have quote unquote skin in the game from a, well, if you make bad decisions,

• 1:22:45Anthony Pompliano?

  but on top of that, their own personal wealth is protected from this inflation and devaluation because they actually own real assets. They don't hold cash.

• 1:22:56Speaker 01

  That's right.

• 1:22:57Anthony Pompliano?

  That is why we're getting the wealth inequality gap that we have. And if we can remove that structural issue, all of a sudden we have a much more fair, equal world.

• 1:23:10Speaker 01

  Yes.

• 1:23:11Anthony Pompliano?

  There's a lot of people who don't want to see that happen.

• 1:23:12Speaker 01

  Absolutely. Um, I think one of the biggest consequences of that is you see real estate prices soaring, right?

• 1:23:21Anthony Pompliano?

  It always goes up, doesn't it?

• 1:23:22Speaker 01

  This is residential, this is corporate real estate, it's everything. And this has a really perverse effect because I would argue that people sort of, uh, near the top or in the middle, put a lot of their wealth in their house, right? And because they're trying to protect it from inflation, right? It's their, it's their nest egg, it's their savings tool. This has a perverse consequence though of causing the market prices of homes to go to create a bubble and actually drives homelessness. So a very consequence is if you look at the money supply increase from 2008 to today and the increase in the homeless population in this country, they're very highly correlated. And I would argue that that's why, right? You're pricing people out of homes.

• 1:24:02Anthony Pompliano?

  And if you overlay that same chart with, uh, wealth inequality charts, somehow it looks very similar.

• 1:24:08Speaker 01

  And the S and P 500, right?

• 1:24:10Anthony Pompliano?

  Looks very similar.

• 1:24:11Speaker 01

  Getting pumped, yeah.

• 1:24:12Anthony Pompliano?

  And, and part of this too is I, what I find, especially when it comes to Bitcoin, you know, you and I talk to a lot of different types of people and we're all kind of trying to figure it out. When I get behind closed doors with intelligent people in the finance industry, they all know this happens.

• 1:24:26Speaker 01

  Yeah.

• 1:24:26Anthony Pompliano?

  It's not fun to talk about.

• 1:24:28Speaker 01

  Yeah.

• 1:24:28Anthony Pompliano?

  It's not in favor to talk about.

• 1:24:30Speaker 01

  That's right.

• 1:24:30Anthony Pompliano?

  It's not, uh, it doesn't make it easier to go to sleep at night, et cetera. But it is important to talk about.

• 1:24:37Speaker 01

  Absolutely.

• 1:24:38Anthony Pompliano?

  And the more that we talk about it, the more awareness there is towards it. And I think that awareness drives the, um, the desire to fix it.

• 1:24:48Speaker 01

  Yes.

• 1:24:48Anthony Pompliano?

  Right?

• 1:24:49Speaker 01

  Yeah.

• 1:24:49Anthony Pompliano?

  And so if people don't talk about it, I don't care how uncomfortable it is, you can't fix the problem. And it goes back to the idea of transparency and truth.

• 1:24:55Speaker 01

  Absolutely. Again, everything starts out as an idea, right?

• 1:24:58Anthony Pompliano?

  Shocking.

• 1:24:59Speaker 01

  And...

• 1:25:00Anthony Pompliano?

  It's almost like Dalio's onto something.

• 1:25:01Speaker 01

  Yeah, yeah, yeah. And I forget who said it, but someone said, "There's nothing in the world that can stop an idea whose time has come."

• 1:25:08Anthony Pompliano?

  That's true.

• 1:25:09Speaker 01

  And it feels like Bitcoin's time has come, so...

• 1:25:12Anthony Pompliano?

  We're gonna get into that. Alright, keep going.

• 1:25:14Speaker 01

  So, talking about skin in the game, you know, central banks have none, essentially. And on the other hand, all market participants in Bitcoin have skin in the game. The node operators are incentivized to maintain the rules. Miners are incentivized to sanctify the Bitcoin ledger efficiently. Developers expend their time supporting an open source project. Bitcoin holders expend real resources to acquire their Bitcoin. All of these Bitcoin market participants are just like the ancient Roman architects, standing beneath their newly unscaffolded arches. They all have skin in the game. That's what makes the system work.

• 1:25:49Anthony Pompliano?

  There's a lot of Bitcoiners who just got super excited when you described them as "Roman architects standing beneath their newly unscaffolded arches." Alright, go ahead.

• 1:25:57Speaker 01

  So, to pull it all back together, going back to Ray's formula that we outlined, or that Ray gives us for the idea of meritocracy and its free market equivalent, we have the idea of meritocracy equals radical truth plus radical transparency plus believability-weighted decision-making, which is equivalent to the free market format of free markets equal truthful price signals, transparent and reliable rule of law, private property rights and hard money, plus skin-in-the-game-weighted decision-making. Based on what we have learned so far, we can translate these equations once again into central banking and Bitcoin versions.

• 1:26:40Speaker 01

  Where we have, central banking equals untruthful price signals, because they broke the honesty of money. There is still transparent and reliable rule of law because central banking doesn't really affect the rule of law so much, but they have marginalized private property rights because they confiscate people's wealth via inflation. And they have soft money, right? It is not free market determined and it's used as a mechanism of control. And they have the agency problem weighted decision making. They don't have skin in the game, so they have an agency problem instead.

• 1:27:11Anthony Pompliano?

  So, central banking equals untruthful price signals plus transparent and reliable rule of law, marginalized private property rights and soft money, plus agency problem weighted decision making?

• 1:27:21Speaker 01

  Yes.

• 1:27:22Anthony Pompliano?

  How's that compared to Bitcoin?

• 1:27:23Speaker 01

  And so Bitcoin, on the other hand, has absolutely truthful price signals. This is something that is even, it's even more scarce than gold, right? Gold is relatively scarce. Bitcoin is absolutely scarce, which makes it the perfect medium to move price signals through essentially. It also has transparent and reliable rule of law. It has private property rights which are restored in Bitcoin because it's uninflatable. You can't steal people's Bitcoin via inflation or confiscation. And it is an absolutely hard money, meaning that it's free market determined and it can't be inflated at all. Plus, it has skin in the game weighted decision making, as we just covered with its market participants. So, in this sense, clearly Bitcoin is 100% consistent with the equation

• 1:28:08Speaker 01

  for free markets, whereas central banking is almost entirely inconsistent. Since this free market equation is equivalent to the idea meritocratic equation, we may deduce: Bitcoin is completely consistent with Ray's formulation of the idea meritocracy and central banking is not. So, if we go all the way back to the beginning, to Ray's original assessment of Bitcoin, assuming Ray's principles are stated forthrightly, how can he possibly be a non-believer in Bitcoin? Bitcoin is both an idea meritocracy and a free market. As you said, Ray, quote, "When someone says, 'I believe X,' ask them, 'What data are you looking at? What reasoning are you using to draw your conclusion?'" Unquote.

• 1:28:53Speaker 01

  So let me ask you, Ray, after Bitcoin's impeccable performance for over a decade, it's had over 99.98% uptime, it's never been hacked, it's evolved into the most secure computing network in the world, it's storing around 200 billion in-market value, depending on the day, and it has cleared over $1 trillion of USD value of transactions in total. What data and reasoning are you using to draw your conclusion about Bitcoin? Ray, my guess is that like many smart people, you have disregarded Bitcoin at the outset. In accordance with one of your favorite principles, I implore you to keep an open mind about Bitcoin, and perhaps you'll come to see it as an embodiment of open-mindedness itself.

• 1:29:37Anthony Pompliano?

  So, let's stop there. We've probably got another 15 or 20 minutes. And I want to talk about a couple of things. The first is, I'm not going to compare Ray Dalio and Warren Buffett. They're two very separate types of people, I think, very separate thought processes, etc. I'm in the camp, when it comes to Warren Buffett, of, "Let's not ask the person who openly states, 'Hey, I'm not a technologist, I don't really understand technology stuff, I'm usually a little bit later than most.'" They're probably not the best person to have an opinion.

• 1:30:11Speaker 01

  Half his portfolio is banks.

• 1:30:12Anthony Pompliano?

  Of course, right? The whole thing, and that's, you know, I think most people understand that, they listen to me. Ray's different. Is it important for Ray to believe in Bitcoin? For Ray to publicly come out and state that he sees value in it? Or is he in the camp with many others where it doesn't really matter, Bitcoin doesn't care?

• 1:30:33Speaker 01

  I would say it doesn't matter what any of us individually think at all. It's up to the market to decide, right? Market's the referee. That's right. Market's the referee. Market is selecting Bitcoin currently.

• 1:30:46Speaker 01

  But I do think because of the violation of civil liberties that central banking represents, that it would be encouraging to see a thought leader, someone of raised stature in the space to come out and speak positively about Bitcoin. I think that would just be a good humanitarian effort, if you will. But it doesn't matter. The market will decide. The king.

• 1:31:09Anthony Pompliano?

  And so you've done a fantastic job of laying out what I'll call the structural reasons of not only one, why the existing system has flaws and likely those flaws can be accelerated or exasperated to ultimate failure. You've also laid out this argument for why structurally Bitcoin is a solution, if not the solution, and how it can very quickly continue to double and triple down on its benefits and ultimately kind of have this ascension or rise in the world. Where do we go? Right?

• 1:31:49Anthony Pompliano?

  And what I mean by that is can Bitcoin become the next global reserve currency? Can Bitcoin be used as a unit of account? Will it? Just how do you think about where we sit today in 2020 and kind of what happens over the next 10 to 20 years?

• 1:32:12Speaker 01

  So there's an excellent book. It's very popular. It's called The Sovereign Individual. This book was written in the mid 90s, I believe, and was very prescient in the sense that it predicted. It predicted anonymous cyber cash, i.e. Bitcoin. It predicted the digitization of securities, which I think is next. And the thesis of this book is that society comes to reflect the technology on which it is built. So in the industrial giant, you know, huge industrial complexes, basically to move the earth and build the buildings and all the things. So we developed around that a gigantic nation state.

• 1:32:53Speaker 01

  And the argument is that now that society is being facilitated by the microprocessor and digital technology, that will actually shrink the role of government. We'll see a dramatic decentralization of government over the coming years. And so I think we're moving into a world where the role of government and the nation state in our lives is kind of this oppressive institution is going to be declining gradually. And then, you know, suddenly at some point. And it's really hard to see past that. This thing, you know, the nation state model is so fundamental to our identity, right? We all, I'm an American, I'm this, I'm that. It's but at the end of the day, we're all just people on the planet.

• 1:33:35Speaker 01

  So I think it's as much of a cultural epiphany as it is a financial innovation, as it is almost a religious change. It's really, it's really profound.

• 1:33:46Anthony Pompliano?

  As that occurs, governments, central banks, others, kind of those in power, they're not going to just say, oh, show's over, shut the lights, close the curtain. Let's go home, let's, let's go take our bow first and then we're going to go home, right? We're seeing some steps that we've seen before, right? So in past recessionary periods, the two things that we've seen happen are, on average, we see interest rate cuts of about 500 basis points or more. And then we see quantitative easing, right? The printing of more capital. The interest rate cuts we've seen a little bit happening. Obviously, where we sit today, we don't have 500 basis points to cut. So there's the likelihood we're going to zero or if not negative.

• 1:34:31Anthony Pompliano?

  There are some areas in the world where we've gone negative already. Two is the printing of cash. In the United States, you know, there's a whole bunch of controversy. Should we do it now? Should it, you know, happen later, whatever? But one of the things that recently came out is Hong Kong. So they're dealing with two specific issues right now. They've got the protest, kind of the anti-Beijing or anti-China conversation. A lot of what was very peaceful and at times has become violent and then gone back peaceful and kind of bouncing back and forth protest.

• 1:35:03Anthony Pompliano?

  And then they've got the coronavirus, kind of this, you know, virology-related thing that really, to me, the coronavirus is less about the virus is going to go kill millions of people and it's more about creating fear, which leads to economic slowdown.

• 1:35:17Speaker 01

  Yep.

• 1:35:17Anthony Pompliano?

  Right?

• 1:35:17Speaker 01

  Yep.

• 1:35:18Anthony Pompliano?

  And so if you get protests, which obviously shut down cities, etc., you get economic slowdown, you kind of exasperate that with the virus slowdown. They've introduced a $15 billion economic stimulus plan recently. And as part of that plan, they are going to give 10,000 Hong Kong dollars, which is the equivalent of about 1,200 bucks US, to seven-plus million citizens.

• 1:35:41Speaker 01

  Helicopter money.

• 1:35:43Anthony Pompliano?

  So, we're seeing it in action now.

• 1:35:45Speaker 01

  Oh, yeah.

• 1:35:46Anthony Pompliano?

  It used to be we would print the money and go buy assets to inject the money into the financial system. I saw multiple articles from what many would consider legitimate, truthful mainstream media organizations. Some would say that's an oxymoron, some would not. But, these are, these are well-respected publications and things that I read on a daily basis.

• 1:36:09Anthony Pompliano?

  And we're, and phrases like "giveaway"

• 1:36:12Speaker 01

  Yep.

• 1:36:12Anthony Pompliano?

  were being used. And as I sat there and I thought about this-

• 1:36:17Speaker 01

  It's so crazy.

• 1:36:19Anthony Pompliano?

  All I could say to myself was, "You don't give away something that has value."

• 1:36:24Speaker 01

  Right.

• 1:36:26Anthony Pompliano?

  I've never done that in my life.

• 1:36:27Speaker 01

  Right.

• 1:36:28Anthony Pompliano?

  Because even philanthropic, etc., you get back, whether it's moral-

• 1:36:35Speaker 01

  Yes.

• 1:36:35Anthony Pompliano?

  -rewards.

• 1:36:36Speaker 01

  Goodwill.

• 1:36:36Anthony Pompliano?

  You get back intellectual rewards, right? You get back, kind of, you're in a better mood. Like, there's always some, "I give something, I get something in return."

• 1:36:49Anthony Pompliano?

  Helicopter money is coming.

• 1:36:51Speaker 01

  Yes, it is.

• 1:36:52Anthony Pompliano?

  And the reason I wanted to talk to you about this is Ray Dalio has pretty much said, we've got modern monetary theory, which is essentially helicopter money.

• 1:37:03Speaker 01

  Yep.

• 1:37:04Anthony Pompliano?

  Whether you think it's good or not, it is on the horizon and we're kind of speeding towards that.

• 1:37:10Speaker 01

  Yes.

• 1:37:11Anthony Pompliano?

  What does that world look like?

• 1:37:13Speaker 01

  Um, so I guess a couple of things, and I believe the figures are by the year 2022, the US government will be generating tax revenue below its interest expense. So if you can imagine trying to, if you made-

• 1:37:33Anthony Pompliano?

  So we're like unit economic negative.

• 1:37:35Speaker 01

  If you made a hundred thousand dollars a year, but you paid a hundred and twenty thousand dollars a year of interest on your credit cards, you can only imagine what direction you're going, like as far as-

• 1:37:44Anthony Pompliano?

  A widening loss.

• 1:37:46Speaker 01

  You're going to bankruptcy, like it's mathematically certain.

• 1:37:50Anthony Pompliano?

  When is that gonna happen?

• 1:37:51Speaker 01

  I think it's 2022 when-

• 1:37:53Anthony Pompliano?

  Oh, this is like two years.

• 1:37:54Speaker 01

  A couple of years, yeah, and that's-

• 1:37:57Anthony Pompliano?

  So let's say people are bad at math and it happens in 2025.

• 1:38:01Speaker 01

  Yeah, so you've got it going that direction and then I would say that, and that's all the while tearing society apart at the center, right, driving this wealth disparity. So you have this buildup of populism, this potential of social revolt, you know, people are in the streets, they're mad, we've seen this all over the world. You really saw it after 2008, Occupy Wall Street movement. And it's almost like the fiscal and monetary policy tools just get more and more creative to try and fight those fires. And I think helicopter money is probably just the last expression of that, just really trying to give people money to make ends meet, but at the same time, you're driving hyperinflation of said

• 1:38:43Speaker 01

  money in the, in the nearer term by printing that much money, right? So-

• 1:38:50Anthony Pompliano?

  Is it better to give it to the people rather than to buy assets?

• 1:38:53Speaker 01

  Um, I guess in the short run perhaps, but at the end of the day, when you're printing this much money, value flows to scarcity, right? So we're talking about real estate, businesses, gold, and you know, the scariest liquid asset in human history, absolutely scarce Bitcoin. So-

• 1:39:12Speaker 01

  I think you just have to watch the actions of central banks. Again, they're buying gold. And then protect yourself with owning real things, not storing your value in currency.

• 1:39:25Speaker 01

  But in any case, it ends, it's ugly. The end is ugly, right? It's literally tearing apart the trust fabric, the whole society together, and it's painful for everyone.

• 1:39:38Anthony Pompliano?

  What's your biggest fear over the next decade when it comes to the relationship between Bitcoin, central planned money, and what is called the economy in general, the financial system?

• 1:39:53Speaker 01

  Ah, biggest fear.

• 1:39:58Speaker 01

  You know, I guess a lot of this has to do with how quickly it happens. There's actually, if hyper Bitcoinization, which is a term where Bitcoin becomes the dominant world reserve money, a lot of people use. If that happened today, I actually think it would increase the wealth disparity a lot.

• 1:40:15Anthony Pompliano?

  Why?

• 1:40:15Speaker 01

  Because Bitcoin's not widely penetrated in the world, right? Maybe less than 1% of the world hold it. So if it happened today, you'd have 1% all of a sudden holding the most valuable asset in the world and 99% excluded. So I think if hyper Bitcoinization happens too fast, in the short run, it could maybe exacerbate the problems. Now, in the long run, it's clearly better for all the reasons we outlined today. But the transition, it's just hard to predict the timing of, and you know, transitions are inherently bloody. So I guess it's earning.

• 1:40:49Anthony Pompliano?

  One of my last questions for you is, we talked a lot about the centrally planned money and economies. Is it bad? Like, having a centrally planned economy and money to some degree instills order, right? The free market can create chaos, it can create volatility, price discovery, all this stuff. Is it all bad? Or is it just macro level, long-term, not good? How do you think about that?

• 1:41:20Speaker 01

  So Taleb would say you can suppress the volatility inherent to nature in the short run, which central banks are designed to do, right? Price stability, target unemployment, et cetera. But all you're doing ultimately is delaying the nonlinear outcomes of this volatility into the future and making it worse. You're amplifying it. So I think anytime you try to impose a regulation or a central planning body on a free market system, you're maybe better in that medium term that the system operates and functions well, as it has for some time now, but the ending gets worse and worse. So if we're keeping the ends in mind, no, the free market is the ideal organizing principle for humanity.

• 1:42:04Anthony Pompliano?

  What's the best book you've ever read?

• 1:42:06Speaker 01

  Holy shit, you're gonna ask me that?

• 1:42:14Speaker 01

  You know, a long time ago, I read a book called The Tao of Way Off The Beaten Path, but for me, when I was a kid, I was a very scientifically minded kid and didn't have much of a respect for the spiritual domain, but this book bridged the two for me. It drew, I think the subtitle of the book is The Parallels Between Ancient Eastern Mysticism and Quantum Physics. And that book is incredible. It was written 25, 30 years ago, but it just made me a more whole person, I guess.

• 1:42:46Anthony Pompliano?

  What's the story behind the tattoo?

• 1:42:49Speaker 01

  I have a Bitcoin tattoo on the inside of my right arm and I got this

• 1:42:54Anthony Pompliano?

  It is the Bitcoin symbol with the circle on it.

• 1:42:57Speaker 01

  It is the Bitcoin symbol.

• 1:42:58Anthony Pompliano?

  Oh, he just flexed. He flexed. Watch out. Get the police. He just flexed. He literally just flexed his bicep. All right, what's the story?

• 1:43:06Speaker 01

  So we launched our fund in November 17 during 2018.

• 1:43:13Anthony Pompliano?

  That was a great time for about six months, six weeks.

• 1:43:16Speaker 01

  Great time to launch. We crushed it early on and then took some lumps along the way in 18. And I had been playing psychologist to a lot of our investors and, you know, writing a lot and publishing a lot. And in November, I don't have any other tattoos, by the way. This is my only tattoo. So November 2018, I had become so philosophically aligned with Bitcoin that I said, fuck it. I got the tattoo.

• 1:43:37Anthony Pompliano?

  I love it.

• 1:43:37Speaker 01

  And I love it. So for me, it represents skin in the game and I think that's what Bitcoin's all about.

• 1:43:43Anthony Pompliano?

  As a reminder.

• 1:43:44Speaker 01

  Yeah.

• 1:43:45Anthony Pompliano?

  I love it. Let's talk aliens and then you get asked me a question to finish this thing.

• 1:43:49Speaker 01

  Alright.

• 1:43:50Anthony Pompliano?

  Believer or non-believer? By the way, I realized recently that after we talk about all this stuff that seems probably really crazy to like macroeconomists and finance people etcetera, and then I ask about aliens, they're like, "What the hell is going on?"

• 1:44:04Speaker 01

  It's a detour.

• 1:44:05Anthony Pompliano?

  But what do you think about aliens?

• 1:44:08Speaker 01

  So.

• 1:44:08Anthony Pompliano?

  Do they exist?

• 1:44:09Speaker 01

  I have, I guess, sort of an interesting perspective.

• 1:44:15Speaker 01

  So E equals mc squared, energy equals mass times the speed of light squared. So matter, like this table, is actually light, but it's frozen light, right? So, and the same thing, like what water is to ice, energy is to matter, is kind of the analogy, right? And Joseph Campbell, who's this famous American mythologist, he said he thought that energy and consciousness were the same thing. So I kind of think everything's conscious, like the whole universe is alive, just we're more alive, or like a higher frequency of consciousness, whereas this table has a really low frequency. I have nothing to back that up, by the way, it's just sort of things I tied together.

• 1:44:54Speaker 01

  So to say aliens, I mean, like us, almost certainly they're out there mathematically, but I think consciousness is ubiquitous.

• 1:45:06Anthony Pompliano?

  I don't think I've ever expected somebody to say that the table has a consciousness.

• 1:45:13Anthony Pompliano?

  But that's a fantastic answer. Alright, what one question you have for me to finish up?

• 1:45:21Speaker 01

  What worries or scares you about this transition? I mean, it's clearly, it's major, so what do you see?

• 1:45:27Anthony Pompliano?

  The people who can be best helped will miss it.

• 1:45:33Anthony Pompliano?

  And the reason is...

• 1:45:39Anthony Pompliano?

  Two-fold. One, it is a parachute that is masked as an adrenaline rush.

• 1:45:50Speaker 01

  Okay, I like that.

• 1:45:52Anthony Pompliano?

  Meaning that the escape hatch, the thing that can save you from the existing system is being promoted by many as the casino.

• 1:46:04Speaker 01

  Yeah.

• 1:46:05Anthony Pompliano?

  You can get rich quick.

• 1:46:05Speaker 01

  Yeah, yeah, yeah.

• 1:46:06Anthony Pompliano?

  Right? So if you think of like you jump out of a plane, there's some people who do it for the adrenaline rush.

• 1:46:10Speaker 01

  Yeah.

• 1:46:11Anthony Pompliano?

  And then there's some people who are just super thankful I got a parachute.

• 1:46:13Speaker 01

  Yeah.

• 1:46:14Anthony Pompliano?

  Right? Because I fell out or something, right?

• 1:46:15Speaker 01

  Yeah, yeah, yeah, yeah.

• 1:46:17Anthony Pompliano?

  It's really hard to get somebody who doesn't like adrenaline rushes to go jump out of a plane.

• 1:46:24Speaker 01

  Right.

• 1:46:25Anthony Pompliano?

  And...

• 1:46:26Speaker 01

  Until the plane's crashing, right?

• 1:46:28Anthony Pompliano?

  All of a sudden, everyone wants a parachute.

• 1:46:29Speaker 01

  Yeah.

• 1:46:30Anthony Pompliano?

  Right? So there's a little bit of that going on.

• 1:46:32Speaker 01

  Yeah.

• 1:46:33Anthony Pompliano?

  The second piece is

• 1:46:38Anthony Pompliano?

  we have done such a poor job, not only in the United States, across the world, of financial education, that even people who understand, even people who believe this has value and can be important,

• 1:46:54Anthony Pompliano?

  fear wins the day.

• 1:46:57Speaker 01

  Uh huh.

• 1:46:58Anthony Pompliano?

  And so, you know, what I tell people all the time is, "I can't tell you what to do in your personal situation. I don't have all the facts, I don't have all the information, I don't know what your goals are, I don't know what you're optimizing for, etc." But what I can tell you is, being right and not reaping the benefits is almost as bad, if not worse, than being wrong. So, if you're the person who makes $50,000 a year, you've got $20,000 in savings, you've got, you know, bills you gotta pay, you got a family, etc., and you buy $10 worth of Bitcoin because you believe that's the future.

• 1:47:41Anthony Pompliano?

  And you are right, that $10 will have no impact. And so, again, what ends up happening is, what is the risk tolerance that somebody has? Right? How do they think about portfolio management? How do they think about when to take risk off the table in some situations? How do they think about the other things they're doing in their portfolio which may reduce the overall risk? Right? How do they think about the non-core? Like, all of these things are actually highly complex topics that even some of the best professional money managers or financial advisors in the world get wrong.

• 1:48:19Anthony Pompliano?

  If you are an individual, the likelihood that you can kind of line up multiple decisions. So, I gotta do my work, or my own research. I gotta understand what this is. I then gotta believe it is gonna be important and valuable. I then gotta size it correctly in my portfolio for the upside and the downside. I gotta have the intestinal fortitude, courage, persistence, and frankly, naivety to not be emotional and biased when the volatility happens. And then at some point, I've gotta be able to navigate the security, the announcements from different governments and organizations and all. Like, you start overlaying all this stuff.

• 1:48:59Anthony Pompliano?

  To end up at the end, having been right with the right size, you know, not completely unwavering throughout the whole thing, etc., it's gonna be a small number of people, man.

• 1:49:08Speaker 01

  Yeah, that's why it's important to stay humble and stack hats.

• 1:49:12Anthony Pompliano?

  I, look, Marty is gonna come in here in a little bit, and I think that him and Matt Odell got the right idea, man.

• 1:49:20Speaker 01

  That is, that is the meme, by the way, for Bitcoin.

• 1:49:24Anthony Pompliano?

  I, I just tend to think, again, you know, I say it over and over again on the podcast, like, people have to do their own research. They have to understand there's a lot of risk in this. But on the chance that any of this is correct.

• 1:49:42Anthony Pompliano?

  We are talking about something that we can't comprehend today.

• 1:49:45Speaker 01

  That's right.

• 1:49:46Anthony Pompliano?

  Right? And what I always describe to people is when the iPhone was created 12 years ago, we're not talking about a long time ago, I think it's 13 years now, right? So 2007. Who in their right mind thought, ah, podcasts and Uber?

• 1:50:03Speaker 01

  Yeah, yeah, right.

• 1:50:05Anthony Pompliano?

  Right? Podcasts and Uber are gonna be a thing.

• 1:50:07Speaker 01

  Yeah.

• 1:50:08Anthony Pompliano?

  Nobody.

• 1:50:09Speaker 01

  Yeah, right.

• 1:50:10Anthony Pompliano?

  But that is part of the impact of the iPhone.

• 1:50:12Speaker 01

  Yes.

• 1:50:13Anthony Pompliano?

  The internet.

• 1:50:13Speaker 01

  Yeah.

• 1:50:15Anthony Pompliano?

  Today, literally, there are people watching a live stream right now of us having this conversation.

• 1:50:20Speaker 01

  Crazy.

• 1:50:21Anthony Pompliano?

  Who would have thought that 30 years ago?

• 1:50:23Speaker 01

  Yeah.

• 1:50:23Anthony Pompliano?

  Nobody. And so it's just like, we not only overestimate what we can do in one year and underestimate in 10, like, you know, the Gates quote.

• 1:50:32Speaker 01

  Yeah.

• 1:50:33Anthony Pompliano?

  But I actually think that over like a 20, 30 year period, on day one, we can't even imagine, we couldn't even dream of what's possible

• 1:50:41Speaker 01

  Right.

• 1:50:42Anthony Pompliano?

  for really, really innovative disruptive technology. The question comes down to, is Bitcoin gonna be one of those? Or is Bitcoin gonna go the way of, you know, all of the other things that were gonna be great that ended up not being?

• 1:50:54Speaker 01

  It's like, as the rate of change gets faster, we get more blind to what the future holds, almost.

• 1:51:00Anthony Pompliano?

  Yeah.

• 1:51:00Speaker 01

  It's so fast.

• 1:51:01Anthony Pompliano?

  Well, it goes back to, we can't understand compounding. We can't understand exponential growth, right?

• 1:51:07Speaker 01

  That's what the digital age is all about.

• 1:51:09Anthony Pompliano?

  It's being built on top of the internet.

• 1:51:11Speaker 01

  Hell, yeah.

• 1:51:12Anthony Pompliano?

  All right, man. Where can people find you on the internet?

• 1:51:14Speaker 01

  So I'm at Twitter, at Breedlove22, which is my last name, that's B-R-D-L-O-V-E-22.

• 1:51:21Anthony Pompliano?

  Where'd the 22 come from?

• 1:51:23Speaker 01

  It's just one of my favorite numbers.

• 1:51:25Anthony Pompliano?

  All right.

• 1:51:25Speaker 01

  Yeah. And, uh...

• 1:51:27Anthony Pompliano?

  I thought you were gonna tell me some crazy story about high school sports or something.

• 1:51:30Speaker 01

  About a conscious table or something.

• 1:51:33Speaker 01

  Uh, yeah, I post there about a lot of my writings. And our website is parallaxdigital.io, P-A-R-A-double-L-A-X-digital.io.

• 1:51:45Anthony Pompliano?

  Awesome, man. Thank you for coming to do this.

• 1:51:47Speaker 01

  Thanks, man. This is a lot of fun.

• 1:51:48Anthony Pompliano?

  I think that people are gonna like this.

• 1:51:50Speaker 01

  I hope they do.

• 1:51:51Anthony Pompliano?

  We're gonna see. Awesome, man. All right, thank you.

• 1:51:54Speaker 01

  Thanks, man.

• 1:51:56Anthony Pompliano?

  Hey everyone, Pop here. If you liked this episode of Off the Chain and want to help us take crypto to the top of the Apple, Spotify, and other podcast charts, please do us a favor and rate, review, and subscribe. To review, simply go to the Off the Chain homepage, scroll down until you see the five blank stars. Taking 15 seconds to fill those stars in and leave a quick review goes a long way in helping us take the entire crypto ecosystem to the top of the charts. I appreciate you listening and see you next time on Off the Chain.