Darius Dale, Managing Director at Hedgeye Risk Management: The Truth about Bitcoin's Future

Darius Dale is the Managing Director and Partner at Hedgeye Risk Management. In this conversation, Anthony Pompliano and Darius discuss the macroeconomy, monetary policy, the role of the Federal Reserve, China’s economic development, Bitcoin’s future potential, and the importance of financial literacy in today’s world. BLOCKFI-----BlockFi allows you to keep your crypto, put it up as collateral, and receive a USD loan funded directly to your bank account. They do loans ranging from $2,000 to $10,000,000, and they're perfect for helping you reach your financial goals of all sizes. Visit BlockFi.com/Pomp to learn more about putting your crypto to work without having to sell it. UNSTOPPABLE DOMAINS-----Make your crypto currency payments simple and build censorship resistant websites. Visit unstoppabledomains.com and purchase your blockchain domains today! ETORO-----This episode of Off the Chain is sponsored by eToro, the smartest crypto trading platform, and one of the largest in the world. Join 11 million other traders and create an account at etoro.com and build your crypto portfolio the smart way.

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

• 0:00Anthony Pompliano?

  Hey guys. Before we get started, I want to talk about three sponsors of the Off the Chain Podcast. These three companies make all this possible, so go check them out. The first company is BlockFi. Think about this: if Bitcoin and other cryptocurrencies have any chance of ever becoming the next global reserve currency, we're gonna need a lot of infrastructure and wealth management services built. It's exactly what BlockFi is doing. As most of you already know, I'm a huge fan of the company, and I even invest it. Alongside that, I'm also a user. Today, BlockFi offers three products. The first is giving US dollar loans against your crypto as collateral. The second is an interest-bearing account for your crypto deposits. And the third allows you to buy or trade crypto.

• 0:40Anthony Pompliano?

  These three products are super important, helping people do more with their Bitcoin, Ethereum, GUSD, or whatever. But if you don't want to sell your crypto and you need US dollar liquidity, BlockFi can give you a loan. Or maybe you're a long-term holder like me, but you want to earn some interest on your assets. Obviously, rates vary, but right now BlockFi is paying, I think, 6.2% APY on Bitcoin and 8.6% APY on GUSD deposits. Unheard-of interest rates in the legacy fiat world. And as if these three products weren't enough, this is super exciting, but BlockFi recently sent an email to all their users, and they said that they're gonna launch a credit card in 2020 that pays the credit card rewards in Bitcoin, rather than giving you cash back or loyalty points. A Bitcoin rewards credit card not only sounds dope,

• 1:24Anthony Pompliano?

  but should help more people earn Bitcoin for their everyday purchases, too. So BlockFi's been a long-term supporter of Off the Chain Podcast. I'm a huge fan. Go to blockfi.com/pomp and check them out. There may even be some discounts and surprises when you go, so go to blockfi.com/pomp, wink wink, blockfi.com/pomp. Now, the second advertiser is a new one for us: unstoppable domains. Many of you have probably already heard about YouTube taking down crypto-related content or MetaMask getting removed from the Google Play Store. Well, essentially, the decentralized web's gonna make that kind of censorship impossible. There are a lot of companies working on decentralized web, but one of the companies that I'm really excited about is unstoppable domains. They've created a way for anyone, even those without technical knowledge, to launch their own

• 2:10Anthony Pompliano?

  Decentralized website. You can literally go to unstoppabledomains.com and use their dot crypto domains to build a decentralized website. That website is then controlled by you and you alone. It is done the same way you control your Bitcoin, so you've got a private key. I've got a website set up on a decentralized storage and now I'm the only one who can take it down. It allows me to host this podcast, a blog, or whatever else I want on the domain without worry of censorship or deplatforming. And if that wasn't cool enough, I can even get paid Bitcoin directly to that domain as well. So the reason I why I like what Unstoppable Domains is doing is because this is how the internet was supposed to work. You can publish whatever you want online without anyone stopping you. The decentralized web is the future of the internet, and so you should definitely start paying attention to what's being built there.

• 2:56Anthony Pompliano?

  Head over to unstoppabledomains.com and go get your dot crypto domain today. Again, unstoppabledomains.com and make sure to tell them that Pomp sent you. The third advertiser is eToro, another longtime sponsor of the Off the Chain Podcast. This company is probably the most underrated company in all of crypto, in my opinion. They got started in Israel and quickly built a massive business offering stocks, commodities, traditional currencies, and cryptocurrencies to users around the world outside the US. But last year, they finally launched in the United States and got started by offering cryptocurrency trading. Now, this isn't just any crypto exchange, though. eToro has pioneered two critical functionalities. The first is a concept called social trading. This essentially has two components to it.

• 3:38Anthony Pompliano?

  The first is that you can click on any asset on the platform and immediately get access to a social network or feed around one of those assets. Take Bitcoin, for example. When you navigate to the page, there are thousands of people sharing information, charts, graphs, and opinions about Bitcoin, its price movements, future outlook, etc. The same goes for any other asset on the platform. But then eToro came up with an even more innovative feature called copy trading. So let's say that when you find someone in those asset social feeds that you think is really smart or has a unique view on investing, rather than simply wish that you could invest like them, you can click the copy trader button, and eToro will automatically mirror your portfolio to that trader's portfolio. So let's say that that

• 4:20Anthony Pompliano?

  Person buys an asset, you automatically buy that same asset in your portfolio. Or if they sell an asset, you sell the same asset in your portfolio. So it's pretty cool to see a crypto exchange that has both social trading and copy trading all in one location. Etoro is now up and running in the United States and continues to grow at an incredible rate. They're so impressive, I even invested in this one. So here's a little secret. Etoro is actually larger than Robin Hood, but don't tell anyone because that's not really that popular of an opinion here in the US. So head on over to etoro.com and sign up for an account. Let me know what you think about their social trading and copy trading. When you hit etoro.com, let them know that I sent you. They really, really hate getting customer service tickets and social media mentions about me. So you guys know what to do. And lastly, Off the Chain.

• 5:05Anthony Pompliano?

  Finally, don't forget that it's not only a podcast. I really enjoy recording all of these episodes, but I also write a daily letter to our investors. So most people would keep these letters confidential or private. But I allow anyone to subscribe to read the letters every morning. You can simply go to offthechain.substack.com and sign up today. All right, let's kick this episode off. 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. Darius Dale is Managing Director and Partner at Hedgeye Risk Management. In this conversation, we discuss the macro economy, monetary policy, the role of the Federal Reserve, China's economic development, Bitcoin's future potential,

• 5:48Anthony Pompliano?

  and the importance of financial literacy in today's world. I really enjoyed this conversation and I hope you do as well.

• 5:55Speaker 01

  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.

• 6:21Anthony Pompliano?

  On each other for a while. He may be the only person I know who I'm willing to drink with, talk macroeconomics and then go on a football field and beat them. But that's a special place in my life. Thanks for coming to do this.

• 6:35Speaker 02

  Yo, it's a pleasure, man.

• 6:36Anthony Pompliano?

  You even have the swag on.

• 6:37Speaker 02

  Absolutely, man.

• 6:38Anthony Pompliano?

  He's got the head eye swag.

• 6:40Speaker 02

  Absolutely.

• 6:40Anthony Pompliano?

  Alright, let's go through your background first and then we'll get into macroeconomic stuff. You grew up where, Seattle?

• 6:47Speaker 02

  Yeah, so I was born in a kind of a podunk town called East St. Louis. At the time, it was the murder capital of the United States. So kind of had my fun running with that, that old crowd. We moved, my family moved to Seattle when I was, I think I was 11 years old. And sort of got involved in sports and whatnot and that kind of kept me out of those, you know, those, those communities.

• 7:09Anthony Pompliano?

  We gotta talk. So you, what, went to Seattle and played football only?

• 7:14Speaker 02

  Mm-hmm. Yeah, played high school football at West Seattle. Shot the coach, Burgha, shot the coach, Rupi.

• 7:19Anthony Pompliano?

  Listen, man, come on, you can't be shouting out your high school team if they were scrubs.

• 7:22Speaker 02

  Come on. Well, my senior, I got a story for you. I don't want to digress. My senior year, we were the first West Seattle high school football team since 1954, I believe, to make the Washington State playoffs. And you want to know the last play of the league's city championships they called? On fourth and six, on fourth and goal from the six-yard line, they called a dive right to run right behind me. I picked my D end up, drive him to the end zone, fall down, pancake him to the end zone, roll over and the running back's right next to me with the ball in the end zone. Touchdown.

• 7:54Anthony Pompliano?

  Alright, fair. So you guys won state championship?

• 7:56Speaker 02

  No, no, no. Bounced in the first round. That's neither here nor there, though.

• 8:00Anthony Pompliano?

  Listen, listen, listen, if you climb the mountain, the mountain, doesn't matter how big the mountain is, right?

• 8:04Speaker 02

  Absolutely.

• 8:05Anthony Pompliano?

  Alright, so you ended up going to play football at Yale.

• 8:08Speaker 02

  Mm-hmm.

• 8:09Anthony Pompliano?

  Why Yale?

• 8:10Speaker 02

  Uh.

• 8:11Anthony Pompliano?

  I heard that school sucks.

• 8:12Speaker 02

  Yeah, it's funny. Another funny story there. So I, you know, my family, I grew up, you know, very poor, you know, for lack of a better word. You know, we didn't even have the internet in high school. And this is back in the day where you just, you know, you just didn't have any exposure outs, you know, you don't have the internet. And certainly, I don't think a lot of people in the younger generation can empathize with that now, but information was not ubiquitous back then. I was getting recruited to play football, you know, for some Pac-12 schools, the biggest probably being University of Washington, which is a hometown school. So I was pretty set on going to University of Washington. In fact, it was the only school I'd applied to at the time, and playing football there. But my high school coach, knowing the student that I was, student athlete that I was, sent my VHS, and this is taped for for younger viewers. It's a it's a black rectangle that you stick into a VCR.

• 8:54Anthony Pompliano?

  You used to have to make them yourself. There was no website that like all this kid blew up.

• 8:58Speaker 02

  You used to have to stick these things in and record football games with these giant boxes. Anyway, so he sent my tape to to the coaches at Yale and they started recruiting me. You know, when they first got there, when I first met Coach Reno, who's now the head coach at Yale, he flew to Seattle to visit me. When he left my school, I I I literally, my friend asked me, oh, who's that from? Because they were used to seeing coaches come in and recruit me. I go, I don't know, some small school in Connecticut. I had no idea. I'd never heard of Yale. I had no idea what the significance of going to Yale was. I heard of Harvard and Princeton from the movies, but I had no idea Yale was part of that sort of lead institution base. So, you know, fast forward, fast forward into my second semester senior, I'm still set on going to UW.

• 9:37Speaker 02

  I'm still getting hounded by coaches at Yale. Coach Craig McGowan, who's my AP marine biology teacher at the time in high school, he he he was also the head of marine biology at the University of Washington, where I was sort of dead set on going to school. He pulled me aside after after our final, heading into second semester and goes,

• 9:55Speaker 02

  if you don't like, I I don't know what to tell you, basically is what he's saying, but I can make sure you don't go to University of Washington. You should go to Yale, but if you're too dumb to figure that out, I'll make sure you don't go to University of Washington. And that's when everything clicked. So that was the first time I got on the plane.

• 10:09Anthony Pompliano?

  So, the way, the first time you ever got on a plane?

• 10:12Speaker 02

  Yeah, was to go to my visit to Yale.

• 10:13Anthony Pompliano?

  Really?

• 10:13Speaker 02

  Yeah.

• 10:13Anthony Pompliano?

  So you said AP classes. You want to hear a great one? When I got to college, a kid was showing me his schedule. And we were freshmen and I was like, hey, man, how come you ain't got a math class? And he was, and I thought like idiot, you know, you didn't schedule one. And he was like, I don't have to take any. And I was like, what do you mean? He's like, oh, I took them in high school. I was like, what? And he was like, yeah, AP classes. And I was like, oh, my high school didn't have that. And he's like, no, I'm sure that they did. You're just an idiot. And I was like, no, we didn't have that. Like, I would know. And so he's like, well, you should like, maybe ask somebody. So I called the smartest person I knew and I was like, hey, do we have AP classes? They were like, yeah, I took all of them. You were in none of them.

• 10:52Speaker 02

  Let me guess, it's our buddy Jamie?

• 10:54Anthony Pompliano?

  No, it wasn't Jamie either.

• 10:56Speaker 02

  Shout to Jamie.

• 10:57Anthony Pompliano?

  We got a mutual friend who are at the high schools, but uh, no. And I remember thinking like, oh wow, man, like you could have taken classes in high school that counted towards college like, and I was busy playing sports and all this stuff, damn.

• 11:09Speaker 02

  Look at you now.

• 11:10Anthony Pompliano?

  Yeah, well, well, here's what's funny. So you went to Yale, I went to Bucknell and we would go play. I think we only played at Yale one year. And then we go to Harvard and Princeton, all these places. And Yale always cracked me up because they cared. Like, like at these other schools, like students would come, they would leave, whatever, but at Yale, like the fans cared.

• 11:32Speaker 02

  Totally, man. We had a good fan base. We were pretty good when we were there. And I think that sort of fosters the community around Yale. And also, New Haven is a great town. You know, New Haven's had a rich tradition around that Yale football program. You know, maybe not less so today with, you know, the advent of this, you know, internet and TV and all these big TV deals for college football. But back in the day when it was just your hometown team, Yale was big time, you know, in the 60s, 70s and into the 80s.

• 11:54Anthony Pompliano?

  What uh, what's your biggest takeaway from being a student at Yale?

• 11:58Speaker 02

  Oh man, my biggest takeaway from being a student at Yale, I don't even know if it's my takeaway, it's something I would go back and do had I, had I known. I would, I would have challenged myself more academically. I wouldn't have been afraid to protect my GPA as much as I was. Cause I sort of, I felt academically inferior coming from a, you know, inner city public school. It wasn't the worst school, you know, I did get to go to a better school than I otherwise could have. But, but you know, certainly wasn't a good school, certainly wasn't the quality of schools that a lot of people were going to.

• 12:25Anthony Pompliano?

  You're playing the game of school, right?

• 12:27Speaker 02

  Yeah, I was playing the game of, you know, don't look like an idiot around all these really, really smart people.

• 12:31Anthony Pompliano?

  Yeah. Paul Graham's got a great thing he just wrote where it's, you have to learn to unlearn. And it's the whole idea that like, most kids, when they go through college or high school, they're basically, they've learned how to hack the test. Right? Meaning that, okay, so you want me to pay attention to all this information? And at the end of the course of the semester or whatever, I'm going to take a test.

• 12:51Speaker 02

  Yeah.

• 12:51Anthony Pompliano?

  And if, what, you know, I think the example uses like, I don't know, medieval history or something, right? He's like, If school actually optimized for learning, what you would do is you would go read the five best books on medieval history.

• 13:01Speaker 02

  Totally.

• 13:02Anthony Pompliano?

  And then you would walk away and be like, I know the most about medieval history than I possibly could. Like, I should pass this class.

• 13:06Speaker 02

  Totally.

• 13:07Anthony Pompliano?

  But instead of what they do is they optimize for that test. And that test is based on the notes and the lectures that that teacher gave. And then, so if you want to pass the test, you shouldn't go read the five best books. Instead, you should read the teacher's notes.

• 13:17Speaker 02

  And guess what? In college, it's always like, half of the books are written by the professor. That's their day job.

• 13:21Anthony Pompliano?

  And the tests are all floating around, which he brings up, right?

• 13:23Speaker 02

  Totally.

• 13:23Anthony Pompliano?

  And he's like, you know, the teacher who's been teaching for 15 years can only ask so many questions. So they end up getting recycled by accident or on purpose, whatever. And so you end up optimizing for the test.

• 13:32Speaker 02

  Yeah.

• 13:33Anthony Pompliano?

  And his point is, when you leave college, you end up optimizing for a test, and you don't even realize it.

• 13:38Speaker 02

  Yeah.

• 13:38Anthony Pompliano?

  So when you're building companies, right, how do I fundraise? Well, fundraising isn't the point of building a company.

• 13:43Speaker 02

  Absolutely not.

• 13:44Anthony Pompliano?

  It's just a test, right? How do I get that job? How do I, you know, you, you start to optimize your life around the same thing school taught you. Uh, but if you can unlearn that, there's huge advantages.

• 13:54Speaker 02

  Oh, my God. It's so, you're, you hit the nail on the head when it comes to companies and, and education. Like, specifically on companies, your business should be principally focused on solving a problem that your clients face, that your customer base face. That, that is, that is the literal and single most important variable that determines, you know, successful businesses, successful enterprises, relative to unsuccessful ventures. To me, that's, yeah.

• 14:16Anthony Pompliano?

  What'd you do when you left school?

• 14:18Speaker 02

  Oh, so I've been, uh, I, I joined Hedgeye. Um, so you, let's, let's backtrack in terms of how this all played out. So it's, you know, 2008, you know, the world's in financial crisis, financial ruin. A lot of my buddies aren't getting offered at their internships and, and on Wall Street. You know, I'd only sort of late, you know, I'd only become a sort of good enough student kind of late in the game, um, just even consider Wall Street, and I actually started to take it seriously. Uh, but I kind of missed that whole sort of, you know, Goldman Sachs internship whole ordeal.

• 14:44Anthony Pompliano?

  For those that aren't aware, the, uh, Wall Street, uh, get an internship, participate in the summer.

• 14:49Speaker 02

  That starts heading into your junior year of, of, of college, at, at the, at the latest.

• 14:53Anthony Pompliano?

  Go, go to Brother Jimmy's, uh, on, uh, on the weekend.

• 14:57Speaker 02

  Or sidebar.

• 14:58Anthony Pompliano?

  Yeah, whatever the new, uh, new hottest intern bar is.

• 15:01Speaker 02

  Mm-hmm.

• 15:01Anthony Pompliano?

  Um, but, but it, it's pretty competitive.

• 15:04Speaker 02

  It's very competitive, and that starts, you know, these ones. A lot of these kids have been groomed for life for these kind of opportunities. I wasn't even aware that the opportunities existed. But once I became aware, you know, they became very interesting to me. However, I was, you know, so just kind of late to the curve. So, you know, kind of kicking the tires, trying to look for an off beaten path to get into the financial services industry. I actually saw an ad in the Y D N, the Y Daily News. It says, we're hiring. It's a full page ad. I mean, I've never seen an ad in the Y D N. And it was by Hedge I C E O Keith McCullough at the time. This is back in two thousand eight. It says, we're hiring because no one else is hiring on Wall Street. And, and you know, Hedge I C E, he also went to Yale. He's a hockey captain in ninety nine. And he, you know, he said, look, I'm gonna start a company. He's, I think he was thirty three or thirty four at the time.

• 15:47Speaker 02

  I want to start a company. I want to, I have a vision for where research is going to go, independent investment research is going to go. I have a vision for where, for the mediums in which finance is going to, you know, sort of change in terms of the communication mechanisms and delivery mechanisms of information. I think that's going to change. And I need a bunch of young analysts that I really can afford at Wall Street rates to come work for me. And so I was part of that first cattle class of analysts, you know, you know, kind of, I guess, the longest, longest surviving one. Others have gone off to business school, done, you know, done some really great things around the world, but you know, certainly sort of.

• 16:17Anthony Pompliano?

  What'd you guys do when you first got there? Like, what was his pitch to you?

• 16:21Speaker 02

  Well, his pitch to us was, I'm employing you.

• 16:26Speaker 02

  So that was the first pitch. But secondarily, it was an opportunity to work at a startup. Like, you know, it was an opportunity. I'm a partner now. I'm, you know, the co head of the macro team with Keith. And, you know, I've been at Hedge I for ten and a half years now. And the opportunity to build something was the pitch. You know, it wasn't going to be lavish. I mean, I remember plenty of days where the heat in our office, we were right on the office campus. So I kind of lived in New Haven for, for seven years or three years after college before I moved to New York. You know, it was, it was, it wasn't glamorous, but it was awesome because you could just see the wheel starting to turn as our collective knowledge base grew, our client base grew, and our feedback loop grew. All those things kind of, you know, kind of grew exponentially over the years.

• 17:06Anthony Pompliano?

  Yeah. And so, uh, talk a little bit about what you guys actually do, and then we'll get into the macroeconomics and what you guys are seeing this year.

• 17:11Speaker 02

  Yeah. So Hedge I, at its core, is a sort of distillery of invest. Your great investment research, um, you know, kind of the, the whole genesis behind the name hedge eye is, is sort of, you know, it, it's, it's what, what you would see if you looked into if you, if, if a, if a high-class hedge fund had transparency around their investment decision-making processes. Uh, so Keith, a former buy-side, uh, had a prolific career on the buy-side, you know, at some very big shops and some very big positions. Um, had a really successful career and really want, you know, during his non-compete when Carlisle Blue Waves Venture blew up. He basically said, I wanted to recreate my team. I want to recreate my process. But blogging is just as easy as ma- managing money, if not more. There's no competition in the, in the, in the, in the investment research sphere.

• 17:54Speaker 02

  I mean, you talk about the people he's competing with, you know, on TV. And it's not much better, you know, on the sell side, you know, in terms of the traditional banks and brokers, you know, if only because of their confluence of interest. So, you know, what we're trying to do is effectively show world-class process in terms of investment decision-making. And then share that process with, you know, institutional investors, hedge funds, mutual funds, pension funds. And then we touch, uh, sort of investment advisors, we touch retail investors, you know, there's, there's a, there's a product set and a product solution for each of these people. And a price for each of these people and it, and it works. It's a great business.

• 18:26Anthony Pompliano?

  And, and so as you guys do that, like, uh, talk to me about what is the deliverable? Is it a, um, hey, we've done work on this asset class in this country. Here's how, uh, we view it. Uh, we're thinking that long over the next six months is a good idea. Here's the product to actually get that exposure. Um, and like, here's the ideas, uh, is it vehicles that they can invest in? Like, like, how do you actually, um, interact with the clients?

• 18:50Speaker 02

  Yeah. So it's, it's mostly through, uh, sort of the various mediums. I think one of the key scrape visions. And I think, um, I'm actually shocked that no one has, has tried to compete in this, this arena that he's sort of kind of built. Is that the fact that we create, you know, marketable, consumable content? You know, traditional, and no matter how good the research is on the sell, on, on, in hedge, in, in the, in Wall Street. It's, it's delivered in a very boring, very traditional sense. Here's a PowerPoint presentation. Here's a research note. We're going to do a conference call. We said to hell with all that. We still do all those things because that's kind of the, you know, the lowest sort of...

• 19:27Anthony Pompliano?

  Expectation.

• 19:27Speaker 02

  Yeah, that's expectation. That's kind of lowest common denominator of communicating. But what's beautiful about Hedge Eyes, you know, not only do we have world-class analysts and world-class research that is as good or if not better than most, you know, and I know Mint's words about that. It's the fact that we created and presented in a consumable format. So we have a video team. We have a lot of very expensive live full studio in our office. You know, we can produce video content, you know, consumable video content that's, you know, on par with anything you're going to see on CNBC and Bloomberg. And so when you sort of marry the fact that we have great analysts, great investors, you know, with repeatable, transparent processes and accountability, I think that's another thing that's unique to Hedge Eyes, the fact that we're accountable to all of our calls. You know, a lot of investors, a lot of people kind of do what we do, or at least on the side of

• 20:11Speaker 02

  finance, you know, they'll pop up when something's going well for them and they'll go away when it's not going well for them. We're on, we're in our clients' inboxes every day. We're producing video content every day. I'm on Twitter every day. You and I interact on Twitter. It is, it is about, you know, just being there for the client. If the client may be a portfolio manager, you know, trillion-dollar asset manager, and we have a couple of those. If the client's a guy managing $30,000 in his P A, you know, we have a lot of those as well.

• 20:35Anthony Pompliano?

  Yeah. Uh, let's go around the world a little bit in terms of different asset classes and what's going on. Uh, let's start here at home in the U S. What, uh, what'd you guys see in 2019, uh, kind of from a macro viewpoint?

• 20:46Speaker 02

  Yeah. So, I mean, you know, 2019 has been a really interesting year. It's probably the most...

• 20:49Anthony Pompliano?

  Chaos!

• 20:50Speaker 02

  Yes, it's probably the most interesting chaotic year of my career in terms of all of the different sort of, kind of macro things that happened relative to sort of some of the expected outcomes. And I namely use the sort of year-to-date return. In fact, I'm not even sure what the year-to-date return is. To me, and just to us in general, investing is not about year-to-date. Year-to-date is a compensation scheme. That's how hedge fund investors get paid. That's how, you know, the people on Wall Street get paid. It's not about year-to-date. It's about when did you make this decision and how well did the decision do in terms of, you know, performance? And so to me, the biggest, the biggest call of 2019 was duration. Uh, duration for those that don't know, it's, uh, it's sort of the sensitivity to interest rates. Um, so we...

• 21:32Speaker 02

  A view that interest rates will fall going back. This is going back heading into Q4 of 2018. If you recall, you know, for those who are in finance, you couldn't have a conversation in finance. If I wasn't prefaced with, okay, so rates are going to four to six percent on the 10 year. What do you do from there? We we stopped that conversation down in its tracks and say, okay, the economy is about to inflect in rate of change terms. Inflation is about to inflect in rate of change terms, and it's very likely that bond yields get cut in half from here. That was a great call, but all the things associated with that, making that call were also great calls like being long housing, being long gold, being long the dollar, dollar tends to go up when financial conditions are tightening. You know, things of that nature. So that was a good year for us in that regard. I wouldn't, you know, it's probably a mixed year in terms of calling stocks because I mean, I, I think, um, you know, we, we definitely got the sector and style factor exposures right, but I don't know that we were sort of

• 22:18Speaker 02

  as exposed to sort of the quote unquote year to date return if we, we could have been. But we certainly weren't exposed on the downside in Q4 of last year. We actually made the call um, that the market would crack and be led to the downside by, by more sectors and style factors then.

• 22:30Anthony Pompliano?

  Got it. And so how do you think about, um, let's just call it all of the Federal Reserve, uh, and the geopolitical slash just political stuff going on in terms of like the, uh, the instability or, or the uncertainty, right? So you've got a

• 22:44Speaker 02

  I'm worried.

• 22:45Anthony Pompliano?

  You've got a president that, uh, is raging multiple trade wars, right? Or at least threatening multiple ones and engaging in some of them. Um, you've got a Federal Reserve that has chosen to cut rates, right? It looks like QE

• 22:58Speaker 02

  Forced to cut rates.

• 22:59Anthony Pompliano?

  Okay, so, so explain more.

• 23:00Speaker 02

  Well, the force to cover it. So the Federal Reserve tends not to do what the bond market is suggesting. So you go back into, you know, what kind of call catalyzed the rate cut in, in, you know, heading into the first rate cut in July. It was a summertime soon in May. It was a degradation in economic data. It was the rise in credit spreads that we saw, you know, in the, in the second quarter of this year, you know, the Federal Reserve, you know, Jay Powell, don't forget is worth a hundred million dollars. He's, you know, worked at Carlyle. He's a private equity guy. His singular first and foremost job as Federal Reserve Chairman is to make sure the credit cycle continues to work. And I actually think he's doing a fairly good job of it. I think he's sort of certainly elongated the business cycle with their actions they took this year um, in terms of monetarian easing, but that doesn't mean the business cycle goes away.

• 23:40Anthony Pompliano?

  Somebody's once said to me, uh, People think that the Federal Reserve job is to manage a currency and what they forget is their job is to manage an economy.

• 23:48Speaker 02

  Their job is to manage liquidity. Don't I I can, we can talk about this for two hours.

• 23:52Anthony Pompliano?

  Explain that more.

• 23:53Speaker 02

  Absolutely, the Fed, the the one, I I had a very, very um important to say, to say the least. Bond investor teach me this a few years ago. This is probably sort of twenty sixteen. And he said the the the most important driver of economic activity, of inflation, of investor expectations is liquidity. It's the supply and demand balance or imbalance between maturing debt obligations and the cash to invest in new ones. Or so the the cash from the maturing ones and the the supply or the the the lack thereof supply of of new um demand for credit. And so as long as the Federal Reserve can have a policy setting that facilitates that in a in a really sort of productive manner, that's actually quite good for the economy. That's the virtuous cycle

• 24:38Speaker 02

  uh that we tend to see, you know, when the economy is doing well and stocks and credit are doing really well. When that breaks, and it's hard to, it's, you know, it's, you know, a lot of these, these are private debt instruments. It's hard to understand when that could potentially break. And a lot of times that breaks as as a function of investor confidence. You know, investors, you know, if they think interest rates are headed lower, they're more likely to hoard cash, they're more likely to sort of, you know, sort of um, you know, be in defensive assets. And it's less likely to sort of extend credit. And so you the sort of the the the sort of credit chain and and we can talk about repo as well. Cause I think this is what's happening in the repo market as well. You know, I think that whole process gets sort of, you could, there's a a wrench gets thrown in that process when the economy slows, which people start to get nervous at the margins.

• 25:17Anthony Pompliano?

  Repos?

• 25:17Speaker 02

  Repo, oh man, that's, this is my top, my favorite topic right now. To me, let's take a step back from repo and then dive into repo. Repo is only cool, we'll talk about like once every three, four, five, six, ten years. You know, they they call it the plumbing of the financial system. No one ever talks about the damn financial system it's plumbing. Like what, what, where are these pipes going? This is the point of the global economy. The world economy is a dollar, a dollar credit-based economy. For better or for worse. Like, we could argue to six ways to Sunday if that's a good thing or a bad thing.

• 25:50Anthony Pompliano?

  Yeah, it's, it's inflationary currency that's Federal Reserve with fractional reserve system.

• 25:54Speaker 02

  Yeah, we, yeah.

• 25:55Anthony Pompliano?

  Credit all-based.

• 25:55Speaker 02

  Those are all secondary considerations behind this, beyond the statement. The global economy is based on largely dollar-denominated-based credit. And most of global trade is not only financed, but also settled in US dollars. My theory on that is because we probably have the biggest guns, we exert the most coercive force around the world. That could change, but I'm not making that call. So you take this back to there was the problem in our repo market. The repo at its core is really just overnight lending. It's, it's people with cash that want to earn a yield. And, and sort of lend on a secured basis to either repo transactions or, you know, sort of money market funds. You know, money market funds are actually, you know, funding the repo markets. You know, it's people with cash and in terms of the liquidity and the credit system meets the demand for credit.

• 26:41Speaker 02

  It's, it's that. So when there's less of that cash coming in for people who need the cash, who need the repo to sort of lever up. You know, I think of like big hedge funds, a lot, a lot of these big hedge funds, you know, sort of rely on repo to sort of grow their balance sheet. Um, you know, so they, they might have a need for, for, for leverage, um, to, to sort of, to gross up. But they, you know, they might not necessarily be an incremental supply of cash. And the reason there's no incremental supply of cash is because the US dollar is so strong. The Federal Reserve, and then this happens before every recession. The Federal Reserve takes the benchmark interest rate for the world's reserve currency. For the currency that all trade and credit is settled in globally, higher than all the other benchmark interest rates.

• 27:22Speaker 02

  And you know, that creates a series, a, a ton of distortions as it relates to the, you know, sort of the supply and demand for credit. There's 14 trillion dollars of dollar-denominated credit off balance sheet, like not in the US, not issued by a US domiciled sort of borrower. That, that, that credit has to be financed in dollars, like the banks who issue that credit, the hedge funds. Issue with that credit, they the insurance pension funds issue that credit, they have to finance in dollars. So when the dollar goes up, their ability to finance in dollars gets curtailed at the margin. So they have to issue FX swaps, all these things, and that's draining cash out of our repo market. And it's, it's, it's, this is, this happens every time ahead of a recession because what it's really telling you is that monetary policy settings are too tight for the liquidity.

• 28:05Speaker 02

  It's creating a supply and demand imbalance at that, at that sort of integral juncture between cash and credit demand.

• 28:11Anthony Pompliano?

  And, and so should people be worried about what's going on in the repo market?

• 28:16Speaker 02

  Or? If it persists, now the Fed has thrown the, I mean, I wouldn't even call it the kitchen sink. They've thrown the bus at this, this issue.

• 28:22Anthony Pompliano?

  Yeah, they're, they've now, uh, I saw somebody who recently put it in BTC terms. They said 70 million BTC.

• 28:31Speaker 02

  Yeah.

• 28:31Anthony Pompliano?

  So it's, it's hundreds of billions of dollars now have been thrown out. Now, it's important to call out, that's not a hundred, you know, hundreds of billions of dollars of net new capital. That is, some of the capital is being reused night after night after night. And so it's, hey, we're gonna put, you know, 50 billion, but it's not 50 billion total. It may be some smaller number used, you know, 10 billion, five times, whatever.

• 28:54Speaker 02

  Absolutely, absolutely. But their balance sheet has grown, I, I'm, I'm sort of quoting this off the top of my head and I could be wrong. So correct me if I'm wrong on this, I think their balance sheet has grown about 300 billion dollars in the last four months. Um, and it's scheduled.

• 29:03Anthony Pompliano?

  Is it QE?

• 29:05Speaker 02

  No, technically no, because I think QE has a different intention. Let's take a step, this step aside, do we even have to call it QE? It, it, it is what it is. It's, it's the Federal Reserve growing its balance sheet by sort of swapping cash, swapping the reserves for short-term assets that are going to mature, they're likely, they're likely going to be on a path until foreseeable future, until the dollar can really start to crack. So you don't have to necessarily call it QE. To me, QE is a, is a different dynamic. The, the purpose of QE and, and the reason they targeted longer maturities in the bond market is because they wanted to compress term premiums. They wanted to basically make bond yields as low as they possibly could be to stimulate demand for credit, to stimulate demand for, for, for levering up among households.

• 29:47Anthony Pompliano?

  They're essentially manipulating returns of various assets.

• 29:50Speaker 02

  Bingo.

• 29:50Anthony Pompliano?

  In order to change. Behavior in the

• 29:52Speaker 02

  Bingo. Yeah. QE is designed to change behavior, whereas this is really just designed to make sure this thing works. And it's a lot of, there's some technical factors in there that are unnecessary discussed.

• 30:02Anthony Pompliano?

  I think the only reason why the is it QE, is it not QE, uh, becomes a conversation point is because they specifically said it wasn't.

• 30:08Speaker 02

  And again, don't forget Jay Powell's not a technical, he's not a technocrat, he's not a monetarist or anything like that. So, you know, he's going to get himself in trouble when he starts talking about these really big.

• 30:16Anthony Pompliano?

  He's an impossible job, I think.

• 30:18Speaker 02

  A very impossible job. And quite frankly, I think he's doing a fairly good job of what they set out to accomplish, which is to extend the economic cycle. You know, we're at full employment. We're probably going to remain at full employment for longer than we otherwise would have had they not cut interest rates, had they not also authorized this sort of repo activity.

• 30:34Anthony Pompliano?

  If they hadn't stepped in, uh, really kind of what? Q, it's Q three of this year for sure, but even, uh, there were some troubling signs, I think, Q four last year, right? All the way up until now. So over the last 12 months or so, there's been various ways that they've stepped in. For those that are, uh, not watching and just listening, uh, we've got some Bud Lights here.

• 30:53Speaker 02

  Yeah, I'm on my third beer, pardon me.

• 30:55Anthony Pompliano?

  Darius, uh, told me, he said, uh, is this like a formal thing or is this like a Bud Light thing? I simply texted back Bud Light.

• 31:01Speaker 02

  Both, both.

• 31:04Anthony Pompliano?

  Yeah. So, so if they hadn't stepped in and, uh, and acted at all, where do you think we would have been? Right? So it's like, we know what happened because they stepped in, but is that a full scale recession? Is that, you know, depression is that eh, it would have been bad, but it wouldn't have been that bad. Like, like where, where were we headed before they actually stepped in?

• 31:21Speaker 02

  So we're definitely headed towards recession and we're still headed towards recession. I would argue that the Fed has bought itself some time in, in, in, in months and quarters to sort of, kind of walk this sort of thing off the plank on a, at a slower pace. But, you know, the, the Fed doesn't control the business cycle, the profit cycle. To me, the profit cycles would wag, is a, is a dog with a tail that's sometimes being wagged by the Fed. But the dog is the business cycle and the profit cycle and the relationship between labor and profits. You know, for 10 years, we've had this very slow sluggish recovery. And what that's done is allow, and, and a slow sluggish recovery, and we can go into, I think it's a really big topic we should probably hit on is, is sort of the impact of monetary, ultra easy monetary policy. To me, I think it's deflationary.

• 32:02Anthony Pompliano?

  And one of the reasons I think it's been deflationary is because you allow for industry consolidations. You allow for established players in every market to get bigger, to buy growth, to quash competitiveness. So this is one of the reasons why the economy has grown slower because smaller businesses are more dynamic and they grow faster. But it's also one of the reasons why wage pressures have been relatively subdued relative to what your traditional economists would have thought based on the Phillips curve. You know, but all those things are still moving in the direction of, you know, economic activity, you know, the business cycle maturing.

• 32:31Speaker 02

  It's just taking much longer than.

• 32:33Anthony Pompliano?

  Yeah, it's lurching forward.

• 32:34Speaker 02

  It's taking much longer because of all these sort of what I would consider to be deflationary disinflationary sort of policy stimulus. But we're we're kind of there yet. You know, if you look at sort of, there's a few things, you know, I don't like to talk about charts, you know, in podcast format. But there's a few data points that I think are really important to highlight for your listeners. You know, so obviously, you know, fifty, sixty year lows in unemployment, da, da, da, da, da, da. But there's some cracks underneath the hood in the labor market that are starting to suggest that the deterioration we saw in corporate profits that began in Q three of this year. The last quarter is likely to continue. So you've got private sector wage growth at three, three point seven percent. That's at a cycle high. You have total nonfarm payrolls growth at one point four seven percent. You know, that's trending towards a cycle low. At the end of every business cycle, those things really start to diverge, i.e. employment growth starts to slow dramatically as as wages stay high and sticky.

• 33:19Speaker 02

  You know, the unit labor cost inflation is hard to get rid of.

• 33:23Anthony Pompliano?

  It's the economic equivalent of fat.

• 33:25Speaker 02

  Yeah, it's fat. Bingo. You actually have to fire people to reduce your unit labor costs at this point in the profit cycle.

• 33:31Anthony Pompliano?

  Yep.

• 33:32Speaker 02

  That's the point.

• 33:33Anthony Pompliano?

  Yeah. And and so as you kind of look at this, one of the things that I think is really interesting is somebody like a Ray Dalio, right? Because I think most people.

• 33:44Speaker 02

  Learned a lot from him, by the way.

• 33:45Anthony Pompliano?

  Who he just.

• 33:48Anthony Pompliano?

  He's seen as a very kind of traditional guy, right? In the sense of markets and kind of how he views, he's very professional, etc. And earlier this year, he wrote a thing that said, look, central banks have two tools. They can cut rates and they can print money, right? And they're unlikely to have the same impact if they do that now as they historically have had, right? So last two recessionary periods, cut rates, I think it's five hundred fifty. Basis points or more, uh, we obviously don't have that much to cut. Uh, if they print money, we're kind of addicted a little bit to it. And so we're kind of used to the impact that that can have. And so that impact is softening. Um, and his prediction or, or kind of thought process was they're going to cut rates, they're going to print money. And eventually we're going to move into a world of, uh, modern monetary theory or this MMT.

• 34:31Anthony Pompliano?

  Uh, and I don't think he really took a position on like, is it good or is it bad? But more of like, it just is what it is, right? Like, like we're headed in that direction.

• 34:40Speaker 02

  I think we're already there.

• 34:41Anthony Pompliano?

  Okay, explain.

• 34:42Speaker 02

  I mean, don't forget that one of the things that catalyzed the spike in repo rates in the Q3 of this year was the fact that the, the, the treasuries, um, when they, when the Congress authorized this sort of, uh, increase in the debt limit, debt limit, it allowed the treasury to start to reissue bills again. They have a very heavy bill issuance calendar for the second half of the year. So it started to drain cash out of the market. You know, treasury, the big dog eats first, and this is how finance works. So when the big dogs start draining cash out of the market, you know, repo rates started to spike and the Fed said, oh my God, there's not enough dollars to go around for the treasury to get fed, for foreign, for foreign commercial banks to get fed, you know, for foreign hedge funds to get fed, for our own commercial banks to get fed, you know, the ones that aren't, you know, that aren't flush with reserves. And they tend to be pretty concentrated. So I think what the Fed is doing is effectively acknowledging in so many words that

• 35:25Speaker 02

  US budget deficits are really big and they're draining a lot of cash from the system. But what's also draining a lot of cash from the system is that foreign international banks, commercial banks and all these different players, they also want to extend assets in dollars because dollars have the highest yield. So now they're draining cash from the system via FX. There's all these different things happening in and around the market that are a mere function of the Federal Reserve's monetary policy setting being too tight for the supply and demand balance of liquidity and, and, and demand for credit.

• 35:53Anthony Pompliano?

  China, what's going on there?

• 35:55Speaker 02

  Love China. China's in a secular slowdown, man. Um, you know, so China's been slowing for 10 consecutive quarters. Uh, one of the, the, the, the most important metric we track in the Chinese economy, um, which is the nominal growth rate of secondary industries. That's, that's, that's the China dream. That's the urbanization. That's all the stuff that kind of touches that stuff. And it's been, it peaked at 14% after the Shanghai core. Shanghai core was their massive fiscal monetary stimulus program that we saw in 15 and 16, mostly through 16 and led to eight, seven, the highs we saw in growth, both in China and globally. Seventeen, they peaked in Q one of seventeen, they've been slowing ever since. Um, you know, they're effectively from a signaling perspective in terms of their communication, but also from a signaling perspective in terms of their monetary policy settings. They're just managing a slowdown. You know, so like every six weeks you'll hear they're pumped maybe two hundred billion CNY in, in open market operations or,

• 36:40Speaker 02

  you know, they'll lend this medium term loan or whatnot. And this is, this is the way the PBOC manages their liquidity, um, uh, policy settings. But on a trending basis, you know, almost coming out of the market at a hundred billion dollar clip a month. You know, medium term, the, the balance of the medium term lending facilities, you know, down twenty to thirty percent year over year. You know, they're basically acknowledging the fact that they can't get the dollars that they need to grow their credit base. So they're just going to allow it to slow into the dollar breaks until the Fed cracks the dollar with some very aggressive policy. I'm not sure if we're there yet.

• 37:08Anthony Pompliano?

  What would that be?

• 37:10Speaker 02

  I think the Fed has to turn around and say, we're either going to increase the amount. We're, we're going to start to meet the incremental demand. Cause right now it's like, oh, here's, you know, I'm licking my finger and putting it in the air, uh, mimicking Jay Powell. Here's sixty billion dollars a month. But is it really sixty? They don't, I don't think they really know what the, what was really demanded by the market. I think what would be an incrementally dovish step is saying, we're going to automatically increase our, our, our sort of, um, our supply of, of bank reserves to, to take out liquidity from the market or to supply liquidity to the market rather. It commensurate with the step ups in demand. Or they can actually start to move out of the maturity curve and say, we're explicitly targeting term premiums. We wanted to, you know, do this whole QE thing.

• 37:51Anthony Pompliano?

  How much demand do you think is unmet right now?

• 37:53Speaker 02

  Oh, I don't know.

• 37:54Anthony Pompliano?

  What are you talking about size wise?

• 37:55Speaker 02

  Uh, you know, so I haven't done this analysis myself, so I don't, I don't want to put too much stock in it. But I, I did see a paper floated around the street, you know, clients push us, you know, email, you know, people's research all the time. And they kind of want to get our take on it. Yeah. Cause we have a very quantitatively oriented investment framework and we can talk about that, uh, some other time. But, you know, they, they want to see how this meet, you know, with, with some of these sort of key takeaways mean in the context of our quads. So, you know, I did see a paper that said there's a, there's a, uh, one point four trillion dollar hole relative to the, the amount of sort of dollar based liabilities that, that global commercial banks have to fund their US dollar assets relative to the size of their US dollar. Assets that are on their balance sheets.

• 38:33Anthony Pompliano?

  Wow.

• 38:34Speaker 02

  So 1.4 trillion is a lot, a lot, a lot of liquidity, man.

• 38:37Anthony Pompliano?

  What? That's uh.

• 38:38Speaker 02

  That's over a hundred, that's over a hundred billion dollars a month if the Fed has to supply that.

• 38:41Anthony Pompliano?

  Yeah, well, the way I think about, what is that? That's two times, right? Cause I think it was 700 million, uh, 700 billion was the TARP.

• 38:48Speaker 02

  Yeah, oh dude, we're. What is, what the hell? It's a billion amongst friends at this point. We're talking in trillions now, brother. Come on now, I mean, yeah. This is why, by the way, this is why Bitcoin exists. I don't know that Bitcoin is a tradable good, and we could talk about whether it's a commodity, whether it's a currency, whether it's money. You know, I think I have my views on each of those things.

• 39:07Anthony Pompliano?

  Right into Bitcoin. What's your thoughts on it?

• 39:09Speaker 02

  Yeah, before we go back into Bitcoin, this whole game that they're trying to keep, and we're going to Bitcoin. This whole game that they're trying to keep going, this dollar-based credit game. It's clearly broken. Obviously, we wouldn't have had a 08, we wouldn't have had the sort of political unrest that we see globally. We wouldn't have the sort of, the sort of inequality that we see domestically and globally. It's clearly broken.

• 39:31Anthony Pompliano?

  That's my biggest thing.

• 39:32Speaker 02

  They're, they're scrambling to maintain this game.

• 39:34Anthony Pompliano?

  My, my biggest thing is the wealth inequality that uh, when we.

• 39:38Speaker 02

  Break preaching to the choir.

• 39:39Anthony Pompliano?

  When we break from uh, the gold reserve and we basically go into a system where, okay, I can print money now. What a lot of people don't understand, and, and actually to me, it's an education problem, right? Uh, we don't financially educate uh, young people as they grow up and they're still don't have the financial education. I wrote this thing um, a few weeks ago that said, uh, money is too dangerous of an idea for school. Because if people actually understood how money works, right? It's the Henry Ford quote, right? If people understood banks, there'd be a revolution before the morning.

• 40:07Speaker 02

  Yeah, absolutely.

• 40:08Anthony Pompliano?

  Which is, the whole idea of money is that there's inflation, that inflation will ravage your wealth if you leave your wealth in dollars, right? And so you, people who are uh, quote-unquote intelligent or financially literate, they understand this, they get out of dollars, they get into real assets, stocks.

• 40:22Speaker 02

  Liquid assets.

• 40:23Anthony Pompliano?

  Yeah, all stuff. Well. Fifty percent of Americans don't understand that game or aren't in a position to play that game.

• 40:28Speaker 02

  You think it's as high as fifty? I think it's way lower than that.

• 40:31Anthony Pompliano?

  Oh, that don't understand?

• 40:33Speaker 02

  No, no, you think you think the proportion of Americans that do understand is is fifty percent?

• 40:38Anthony Pompliano?

  Well, here's why I get fifty percent.

• 40:40Speaker 02

  Americans that do understand is somewhere around ten to twenty percent.

• 40:43Anthony Pompliano?

  That's probably true. Uh, I'm giving people, the the metric I'm using is to get to fifty percent is that fifty percent of Americans can't afford a four or five hundred dollar emergency bill. So those are people who for sure are living paycheck to paycheck.

• 40:55Speaker 02

  Yeah, for sure.

• 40:56Anthony Pompliano?

  Have no cash, have no assets, it's just paycheck to paycheck. In that world, those people are one usually also not, um, they don't benefit from having a inflation adjusted wage contract.

• 41:07Speaker 02

  Yeah, of course.

• 41:07Anthony Pompliano?

  They're getting paid their fifteen bucks an hour, ten bucks an hour, every single year, year in and year out, they think they're getting paid the same, obviously not.

• 41:12Speaker 02

  Absolutely.

• 41:13Anthony Pompliano?

  Uh, because of inflation, but also then they're leaving all of their savings in cash, that cash is just getting.

• 41:18Speaker 02

  If they have savings.

• 41:19Anthony Pompliano?

  Exactly.

• 41:20Speaker 02

  You can't be balls to the wall along equities, making four hundred dollars a week and you gotta, you know, pay the light bill.

• 41:25Anthony Pompliano?

  Of course, and and so I think that that's a world where, um, at the wealth inequality is so obvious, right? It you can look at very explicit charts that show wealth inequality has gotten way worse.

• 41:37Speaker 02

  Chaps my ass more, by the way. I grew up very poor, uh, two drug addict parents, been evicted probably seven or eight times, lived in a van for two months.

• 41:45Anthony Pompliano?

  Yeah.

• 41:45Speaker 02

  Nothing chaps my ass more than the wealth equality these people are perpetuating.

• 41:48Anthony Pompliano?

  So you're already a Bitcoiner, right? Whether you know it or not, because the whole idea, in my opinion, around Bitcoin today, right? There's a lot of people, um, who who will say it's a savings technology, right? What that basically means is today we ask people to be experts at what they do for a living. So, you know, uh, whether you're a researcher, whether you're a marketer, whether you're a teacher, a fireman, uh, you're just an accountant, you know, whatever you do, you have to go and be good at it so that you can get paid to make a living. You make that money, but then we ask you, not only do you have to be good at your job, we also need you to be a good investor. Because we need you to understand when you get out of that that cash, if you're smart enough to understand to get out of the cash, do you go into equities? Do you go into gold? Do you go into bonds? Do you go into real estate? Do you go into private markets? Can you go into private markets? What are the laws, right?

• 42:31Anthony Pompliano?

  All this stuff that it takes to invest, the everyday American has no fuck. Clue what's going on there, right? And so asking you to be good at your job, plus we're asking you to be a good investor. And so

• 42:40Speaker 02

  That's where hedge guy comes in.

• 42:41Anthony Pompliano?

  The well, so one, there's professionals who can help, right? So some people just say, look, I have no clue. I'm going to hand over my money or the ideas to somebody else. The second thing is that people try and they actually screw it up. Yeah. Right. And so then what they do, they go and they invest in some dumb stuff, right? And actually lose their wealth faster. And so what is happening is, well, what if there was a currency that allowed the world to operate in such that when you earned your living, you could leave your wealth in that asset that you earned it in? And that asset was not inflated away, was not debased away.

• 43:10Speaker 02

  Yeah, no, I, I, I, I'll push back a little on that because I agree, I agree with what you're saying. What I

• 43:16Anthony Pompliano?

  Nobody ever comes in here and pushes back. I want some pushback.

• 43:18Speaker 02

  No, absolutely. And again, it's, and it's, it's coming from the perspective of someone who kind of like, not from the sense of someone who's deep in the knowledge of crypto and Bitcoin, but more just someone who's, you know, kind of deep in the knowledge of kind of how the global economy works. There's Bitcoin can be one of three things. It could be a commodity that you speculate in and it's, it has a use and a, an in use and a, and a cost of carry and a cost of production. It could be a currency, a medium of transaction, or it could be money, which is supposed to be a store of value. Like gold was money for the, gold and silver were money for the vast, vast majority of human history.

• 43:51Anthony Pompliano?

  Why do you separate money and currency?

• 43:53Speaker 02

  Because money is a, is a, is a medium of exchange. Money is how, how the, how the person who manufactured this delicious Bud Light I'm drinking can, can get the stuff that I have that I, so I don't have to carry gold to, to

• 44:09Anthony Pompliano?

  Oh, currency, currency is the way that you

• 44:10Speaker 02

  Currency is how, yeah, currency is how I physically transfer my wealth to him so I can get, purchase a good or service. And, and money is my ability to purchase that good or service. And so I think when you separate those things, I think Bitcoin kind of touches on all three. But the one thing I think that it, that it has, that it doesn't satisfy the money criteria, and this is my own personal view, at least not yet, is the fact that it's very volatile. Money at its core, and, and based on what you just told me about people not wanting to watch their wealth get inflated away. You cannot afford if you're making, let's call it a thousand bucks a week and you know, you have two bedroom power board, four kids, to have your value, your, your light bill, your rent, go down by fifteen or sixteen percent in a, in a, in a day or in a week.

• 44:54Anthony Pompliano?

  Well, it, it, it's very much.

• 44:55Speaker 02

  That's not money.

• 44:56Anthony Pompliano?

  It's very much.

• 44:57Speaker 02

  That's a speculation.

• 44:57Anthony Pompliano?

  Yeah, it's, it's very much, so there's two buckets here. One is, uh, where are you in the life cycle of adoption, right? When there's very, uh, low levels of adoption, it's much more volatile. As you get more and more adoption, it becomes less volatile. We know that it's becoming less volatile, but it's still volatile.

• 45:11Speaker 02

  It is.

• 45:12Anthony Pompliano?

  Right? Uh, and then the second is, there's definitely various wealth levels as to how you are affected. So if you only have a thousand dollars, you put all a thousand dollars into it and then it fluctuates thirty percent, well, that's thirty percent of your wealth.

• 45:24Speaker 02

  Yeah, totally.

• 45:24Anthony Pompliano?

  If instead you put one to five percent of your wealth, right, and it fluctuates thirty percent, not as much, uh, uh, not as big of a deal because the risk is kind of contained to a allocation in your portfolio that is for what you would think as risky assets, right? So I think a lot of that, uh, is kind of where we are on the stage of adoption and also who is participating, but.

• 45:45Speaker 02

  Quick question.

• 45:45Anthony Pompliano?

  Yes.

• 45:46Speaker 02

  Why, and this is a very dumb question in the context of your listeners.

• 45:49Anthony Pompliano?

  You know way more about the macro economy than I do. I probably know more about Bitcoin than you, so let's get it.

• 45:53Speaker 02

  Probably. You're being very modest. Um, you know, you're one of the world's leading experts in blockchain.

• 45:58Anthony Pompliano?

  Darius is Satoshi.

• 46:00Speaker 02

  Anyway, so what I don't understand, and this is more, just, just take me out of the, the, the, the, don't talk to me about the white papers and all that stuff. Take me to like the whiteboard explanation of why the price of Bitcoin changes at all.

• 46:15Anthony Pompliano?

  Okay, so, um, well, a couple of, again, uh, relatively elementary or simplistic things, but, uh, still important to state, I think, is just to remind people about price. So one, price is a function of supply and demand.

• 46:27Speaker 02

  Of course.

• 46:28Anthony Pompliano?

  Right? Uh, two is, um, it depends on what you price the asset in. So the whole idea of Amazon stock, well, one Amazon stock equals one Amazon stock. No, we price them in dollars.

• 46:39Speaker 02

  It's a numerator and denominator.

• 46:40Anthony Pompliano?

  Yeah, and so the, the dollar value is, is moving. Same thing with Bitcoin, right? It, it's, the dollar is priced in dollars, so you end up with one dollar. equals one dollar inflation is kind of the hidden tax right and so that that purchasing power is changing but one dollar equals one dollar with Bitcoin

• 46:56Speaker 02

  one by the way that goes back to what I said on the dollar based credit system one dollar only goes one dollar because we all agreed to agree to use US dollars the the basis for the entire global financial system

• 47:05Anthony Pompliano?

  so Bitcoin if you live in a Bitcoin world right I always describe like there's two financial systems there's an inflationary fractional reserve system that's dollar based and that's how we all know and we and we uh denominate everything in dollars then there is this deflationary kind of automated software driven world that let's say that Bitcoin is what you're going to denominate everything in actually in the Bitcoin denominator world one Bitcoin goes one Bitcoin it has forever just like one dollar goes one dollar now where you see the price volatility is what is the dollar worth versus Bitcoin and Bitcoin versus the dollars and so uh there would be some people who are I'm not going to argue this but some people would argue that the dollar is being devalued against Bitcoin right now systematically and over a long period of time

• 47:49Anthony Pompliano?

  sure I'm all in on that but the price volatility in dollar terms of it went from a thousand dollars in you know January 2017 to 20 to three to 14 to seven I mean that's a lot of volatility right in dollar terms and so I think what ends up happening here is you get one hyper hyper retail driven markets historically because there's not a lot of electronic trading there's not a lot of the structures that are in place in in kind of Wall Street in terms of smoothing price right they can't stop markets

• 48:19Speaker 02

  and valuation based frameworks

• 48:21Anthony Pompliano?

  all this stuff right so you have a relatively small amount of people who hold an asset it's very human driven and so all of a sudden everyone gets excited price shoots up all of a sudden everyone gets really scared right price goes down a lot so that's one aspect of it the second is like the price discovery of this thing is um it's kind of natural right if you think about it hey there's this new asset it's 10 years old people are trying to figure out what is it worth right gold we pretty much know right I mean gold over a 10 year period is basically not moved right it's kind of yeah it's had fluctuations in between but for the most part it's been like dead money for about 10 years when you look at Bitcoin over 10 years it went from a dollar to ninety thousand dollars in the last decade right I mean nuts in terms of if you put one dollar in and what it's worth today right so you put you bought one dollar of Bitcoin 10 years ago today

• 49:06Anthony Pompliano?

  that one dollar is worth ninety thousand dollars right huge in terms of price uh uh appreciation right or Bitcoin appreciation in dollar terms But it's all because people are trying to figure out what is Bitcoin worth?

• 49:17Speaker 02

  Totally.

• 49:18Anthony Pompliano?

  Right? And I don't think anyone has an answer yet. Now, the one thing that I do think is really interesting is so we go back to what's happening in repo markets and federal reserves and demand liquidity, all stuff. We don't actually know exactly what they're doing from a supply. Like I, you or I couldn't tell anyone how much dollars is being printed today, right? Now, we can, we can look at bank assets and we can kind of triangulate.

• 49:40Speaker 02

  It's hard, man.

• 49:41Anthony Pompliano?

  But we don't know an exact number with a hundred percent certainty.

• 49:43Speaker 02

  They're hypothesizing three month T-bills, like five, six, seven times. No one knows.

• 49:48Anthony Pompliano?

  No one knows.

• 49:49Speaker 02

  That's, that's why the Fed is finding in the dark.

• 49:51Anthony Pompliano?

  Yes. Second is, well, I'll even give you a better stat. Uh, I forget the exact math. Uh, my partner Mark knows it. Um, but there's like, the Fed has been trying to guess the next quarter's GDP for like 248 times or something. They've never got it right.

• 50:07Speaker 02

  The Atlanta Fed, the Atlanta Fed, which was the, the biggest sort of advent in federal reserve history. This is, this changes the way we think about forecasts. We're doing this now casting thing. And by the way, you know, we, we've stumbled some of their ideas in terms of developing our own now cast, which are far more accurate. The Atlanta Fed's now cast, and mind you, I have a lot of respect for these people. They're really smart people. They have a, they have a intra-quarter tracking error of 240 basis points and a number that can basically be zero to 300 basis points.

• 50:36Anthony Pompliano?

  It's crazy.

• 50:36Speaker 02

  It, it literally, this quarter on November 13th, their Atlanta Fed tracker went to 0.36 percent. Now it's 2.36 percent. Like that, if, as an investor, I mean, maybe that's great if you're an economist and you know, you're a P E economist. That is shit for an investor. I don't know if I use profanity.

• 50:54Anthony Pompliano?

  Yeah, you can. We're drinking beers. You literally bloodlights.

• 50:57Speaker 02

  Sorry.

• 50:58Anthony Pompliano?

  But all right. So, so here's the, the thought process. If we don't know the supply of dollars, right? We can guess and get close, but we don't know for sure. And then we don't know demand either. So there's a bunch of models that let's model supply and let's model demand. But basically what we're doing is we're guestimating on both of those things. And we come out with price, right? Or, or what the output of that equation is. So supply, demand, we end up with a, a result. With Bitcoin, we know with 100% certainty, one side of that equation. So we know supply. Today, 1,800 Bitcoin were created and put out into circulation that previously were not in circulation. That happens every single day for four years. In May 2020, it's going to get cut from 100, uh, 1,800 to 900, right? And so that supply schedule is known, it's transparent, it's predictable.

• 51:42Anthony Pompliano?

  When you add in the fact that if I can know with 100% certainty the supply schedule of the currency, now I just have to worry about modeling the demand side, right? So thinking about the future value of something. Well, let's say that you and I are really bad. We're just as bad as the economists, the Federal Reserve, etc. And all we say is we're going to be super simplistic about it. We're simply going to take the rate of demand that has occurred for the last 11 years and we're going to extrapolate it out with no rate change. So no increase, no decrease. We're just going to say it stays the same. We could be wrong on that, but just saying that. As you do that, what ends up happening is because you know the supply with 100% certainty and you just extrapolate out, what you get is a continued increase in dollar terms of the value of Bitcoin.

• 52:24Anthony Pompliano?

  Because artificially supplied asset demand increases, well, the US dollar value is going to go up.

• 52:29Speaker 02

  Totally.

• 52:29Anthony Pompliano?

  And so I think this is where you see, um, folks in like the macro economy world, right? They're too smart. Like I'm convinced that most of them, they're like, it can't be that easy.

• 52:40Speaker 02

  They're a lot smarter than I am.

• 52:42Anthony Pompliano?

  They're like, it can't be that easy.

• 52:43Speaker 02

  Totally.

• 52:44Anthony Pompliano?

  But if you go back to just the pure basics of supply and demand, what occurs is that's the value, right? And this is the key piece. The value is pretty well documented in terms of a lot of these models and stuff because you have one input that you know with 100% certainty and you can just extrapolate demand.

• 52:59Speaker 02

  Totally.

• 53:00Anthony Pompliano?

  The price is what's volatile.

• 53:02Speaker 02

  The price is what's volatile and the price is quoted in the unit of something else.

• 53:06Anthony Pompliano?

  Yes.

• 53:06Speaker 02

  And this to me is the fundamental, I don't want to use the word issue because it's not an issue. It's actually not a flaw. I'm looking for a more elegant word. I think this is the fundamental problem that Bitcoin and crypto in general still need to solve. If you, if you, you're either, and there's two problems. One, you have to decide whether or not you're trying to usurp the dollar-based credit system or you want to compete alongside the dollar-based credit system. Pick, pick your poison. If you want to usurp the dollar-based credit system, then you can no longer quote your price in dollars for obvious reasons.

• 53:38Anthony Pompliano?

  So I think that this is the biggest difference between Wall Street and the hardcore Bitcoiners. The hardcore Bitcoiners are denominating things in satoshis, which is the smallest unit, right? Think of it as like, you know, pennies or whatever, um, or E T C.

• 53:52Speaker 02

  Yeah.

• 53:53Anthony Pompliano?

  The finance, I want to put it in a, in a portfolio with a bunch of other assets, etc.

• 53:59Anthony Pompliano?

  And so, uh, what's interesting, and I don't have an answer for this. Can it be both? Well, here, can it serve one purpose for one community? And another community basically takes that same asset that's serving that purpose in the Bitcoin world? And then dollar denominated and have it serve a purpose for them as well. I actually think it can. What I don't know is how does that perform in down markets? How does that perform in these other economic type cycles? Not just the longest bull market in history where basically every asset's going up into the right just because, uh, you know, we're, we're printing things to them.

• 54:33Speaker 02

  Well, and, and also, you know, like walk, let's, let's play a thought, you gave me a thought experiment, let's play a thought experiment where the dollar is no longer the asset that settles global trade, that settles global credit. But also, by the way, it's probably somewhere between five hundred and a trillion, five hundred billion and a trillion dollars in global derivatives. If the dollar gets replaced by anything, I, I don't care if it's Bitcoin, empty cans of Bud Light, if anything, there will be chaos. There'll be wars, there'll be death, there'll be people scrambling to replace the system. There'll be big guns and tanks and nuclear bomb. This is the problem with, and I, and again, I don't want to use it with problems, I think there's an elegant solution here that is well above, above my pay grade.

• 55:18Speaker 02

  But if you want to usurp the dollar based credit system, you got a hell of a lot of hate to bill and a lot of really angry people with a lot of big guns.

• 55:25Anthony Pompliano?

  Well, it's basically you, you're, you're essentially taking away the power.

• 55:28Speaker 02

  You're taking away the power of government.

• 55:30Anthony Pompliano?

  Yeah.

• 55:30Speaker 02

  They don't, they don't have, they have a vested interest in, in remaining in power.

• 55:33Anthony Pompliano?

  So this is, uh, this is where you get deeper down the Bitcoin rabbit hole, right? Which is.

• 55:38Speaker 02

  I don't think this is deep, I think this is topical.

• 55:40Anthony Pompliano?

  Well, well, so there's two components that I think, uh, most Bitcoiners, uh, either one believe or think is a higher likelihood chance than people would admit. So not necessarily saying it's a ninety percent chance, but just saying, let's say everyone thinks that this is a one percent chance and they think it's five percent, right?

• 55:58Anthony Pompliano?

  Well, let me tell you what it is and then I'll tell you what it is. So the first is the separation of state and money. So exactly what you're talking about, right?

• 56:05Speaker 02

  Oh, yeah.

• 56:06Anthony Pompliano?

  The state, the one of the most powerful weapons it has is the fact that they control

• 56:11Speaker 02

  Control the currency.

• 56:12Anthony Pompliano?

  But even more so that the United States controls the global reserve currency.

• 56:15Speaker 02

  Totally.

• 56:16Anthony Pompliano?

  We've done a fantastic job of weaponizing it, all this stuff.

• 56:19Speaker 02

  Yeah, we do.

• 56:19Anthony Pompliano?

  There's also a lot of noise internationally that people want to get away from the dollar based system.

• 56:23Speaker 02

  Good luck.

• 56:23Anthony Pompliano?

  Whether it's Russia, China, Iran today was talking about it, etc., right?

• 56:27Speaker 02

  Good luck. You know who the world's, I don't want to cut you off, the emerging market world's largest dollar denominated borrowers?

• 56:35Anthony Pompliano?

  China.

• 56:35Speaker 02

  Oh, China, oh, yeah, yeah, yeah. China, these guys can't get, they can't get off the system.

• 56:38Anthony Pompliano?

  Yeah, yeah, yeah. Well, well, so that's one piece of it is this separation of state and money. The second piece of it, though, is every global currency, yeah, give me another one.

• 56:48Speaker 02

  Absolutely.

• 56:48Anthony Pompliano?

  We're, we're, we're just gonna go through.

• 56:49Speaker 02

  I'm on my third, he's on his fourth, I'm on my fourth, he's on his third beer.

• 56:53Anthony Pompliano?

  Is every, every global reserve currency that has failed, has failed for one of two reasons. It was debased away, or there was conflict.

• 57:04Speaker 02

  And they tried to extend themselves too far.

• 57:05Anthony Pompliano?

  And somebody else, basically, you know, your country has all of the power because you have the currency. I come in, I basically kill all of your people. Now I'm in charge because I'm the most military power, you know, highest military power.

• 57:17Speaker 02

  Need guns.

• 57:17Anthony Pompliano?

  Yeah, now I put my currency in place. So debasing the currency, every country in the, in the world today is already doing that, right? Now they're doing it in a very controlled manner, right? It's all these things, but every single currency that is a fiat currency is being debased away. So that's kind of, the countries are doing it to themselves. They're eating themselves alive in a very slow manner that could last hundreds of years.

• 57:40Speaker 02

  By the, by the way, one quick thing, and now you keep going. It's impossible to run a fractional reserve banking system and not perpetually debase.

• 57:49Anthony Pompliano?

  Of course.

• 57:50Speaker 02

  You, that's the whole point of the system. Exactly. When maturing credit, you need somewhere to put the new money, you need inflation, you need growth because there are more people coming down the pike, there are more people with needs and demands for homes and demands for goods and services. This is that, that, once you start that, once you put the can out of the worms or worms out of the can, you can't put them back in.

• 58:07Anthony Pompliano?

  Absolutely. So that's one piece of it. The second piece, though, is, and this was a thought I had about a, I don't know, six months ago, whenever I wrote it.

• 58:16Anthony Pompliano?

  In the physical world, the most powerful military has the most guns, the most soldiers, the most, you know, the best airplanes, the best ships, all this stuff. In the digital world, the best offense is the best defense.

• 58:29Speaker 02

  Yeah.

• 58:29Anthony Pompliano?

  So, what I mean by that is, if I get in, if I hack you, or you're in another country, I'm an adversary, I hack into your electrical grid, your nuclear system, whatever, you essentially are under attack until you kick me out.

• 58:41Speaker 02

  Yeah.

• 58:42Anthony Pompliano?

  Right? Now, you can attack me, but if you can't get in,

• 58:45Speaker 02

  Yeah.

• 58:45Anthony Pompliano?

  I'm the most powerful, right? If I get in and you kick me out, then, again, you can retain power as long as you keep me out.

• 58:51Speaker 02

  Mm-hmm.

• 58:52Anthony Pompliano?

  So if defense is the best offense in the digital world, the most, or the strongest computing network in the world is Bitcoin. It has more computing power securing that one network than all other computing networks that exist. So there's nothing more powerful.

• 59:08Speaker 02

  Can I, can I push back on that a little bit? Because one of the things I thought is so fascinating about Bitcoin is just the sort of, the energy intensity it takes to mine Bitcoin.

• 59:15Anthony Pompliano?

  Yep.

• 59:16Speaker 02

  What if you cut off Bitcoin power supply?

• 59:18Anthony Pompliano?

  So, this is, uh, as you get into this, right, what you realize is, okay, there's a ton of computing power that's securing it. Very provable in terms of, it, it, it's nearly impossible to deny.

• 59:28Speaker 02

  Like, human capital, but what about the actual electricity?

• 59:31Anthony Pompliano?

  No, the machines. So there's more computing power, meaning the machines, that is securing that network than any other computing network in the world. So, you could spend billions of dollars, if you're the United States, China, whatever, you can't hack the system.

• 59:44Speaker 02

  Why wouldn't I cut off your natural gas supply?

• 59:45Anthony Pompliano?

  Okay.

• 59:45Speaker 02

  Get you from turning your lights on.

• 59:47Anthony Pompliano?

  Because, and this is the key piece of Bitcoin, you couldn't,

• 59:51Speaker 02

  Not I, the government.

• 59:52Anthony Pompliano?

  Yeah, you couldn't do this any other way than the way that it grew. It's so decentralized, meaning that there's so much computing power in each area of the world.

• 1:00:00Speaker 02

  Yeah, you're right. There's no one to attack.

• 1:00:01Anthony Pompliano?

  Well, here's what the United States says. Cool, we're gonna shut off all electricity in the United States. We don't know who's mining, who's not.

• 1:00:06Speaker 02

  You would have to do that.

• 1:00:06Anthony Pompliano?

  We're gonna, no, even if you did it.

• 1:00:08Speaker 02

  You would target large-scale mining, or large-scale consumption operations.

• 1:00:10Anthony Pompliano?

  Even if you cut off everyone in the United States, Bitcoin would continue running. Right? Now, let's say that two countries said, "Hey, we're gonna do it." So, the US and China.

• 1:00:17Speaker 02

  It requires unprecedented global coordination, and you would never get that from any government.

• 1:00:21Anthony Pompliano?

  It's nearly impossible, right?

• 1:00:23Speaker 02

  You already have the two largest geopolitical powers in the world beefing, and they're gonna keep beefing until one of them goes away.

• 1:00:28Anthony Pompliano?

  Even if they agreed to coordinate, along with a bunch of other countries, Bitcoin Network would still keep running.

• 1:00:32Speaker 02

  Right.

• 1:00:32Anthony Pompliano?

  Exactly.

• 1:00:33Speaker 02

  You know what I think they're going to do?

• 1:00:34Anthony Pompliano?

  What?

• 1:00:34Speaker 02

  And, and, um, our demographer Newhouse is really thoughtful on this topic, and I'm sort of sourcing some of his ideas. Governments are really good at playing copycat. If this shit works, they're gonna, they're gonna wanna, they're gonna take all the greenbacks out of my wallet, not of your wallet, and they're gonna transition them to a digital currency. And they're, you know, I'm not sure whose technology they're gonna steal, or if they're gonna, you know, enlist, you know, CIA types in to create this, but we're moving in the path of Federal Reserve wanting full control over the quantity and price of money. Right now, they have partial control over both.

• 1:01:04Anthony Pompliano?

  Yep. Well, and this is, I think, where there's this guy, Alex Gladstein, I'll send you a bunch of this stuff, so he's the chief strategy officer of the Human Rights Foundation, right? And so his life has pretty much been dedicated to what you and I would consider more philanthropic and kind of socioeconomic issues, etc., but in foreign countries. So, things around freedom of speech, independence, self-sovereignty, etc., but not here in the United States for the most part, usually somewhere else. He's brought up the point, which I think is a very valid point, which is, as these countries go and move to digital currencies, pretty much every country in the world's talking about these central back digital currencies, right? They want to create a digital currency, same monetary policy, they're in control, they can print, they can remove, they can do whatever.

• 1:01:46Speaker 02

  Same group of crooks making the policy settings.

• 1:01:48Anthony Pompliano?

  What it does is, it drastically increases their surveillance capabilities.

• 1:01:52Speaker 02

  Of course, that's the whole point, right?

• 1:01:54Anthony Pompliano?

  Take cash out of the system, now I know where everything is, I increase my tax revenue, all this kind of stuff.

• 1:01:58Speaker 02

  Totally, they're very incentivized to do this, by the way.

• 1:01:59Anthony Pompliano?

  And so when that happens, Bitcoin is the only digital currency that has the pseudonymity, right, or the anonymity, depending on how you use it, and has the security to withstand state-level attacks, and is not geographically constrained in terms of centralization, etc. And so what it's gonna do is, it's gonna be the only way that people can opt out, use digital money, without providing the surveillance capabilities to the state.

• 1:02:26Speaker 02

  So I completely agree with that, and this is cool, you were talking, we're digging now into like revelation in Bible terms, you know, like this, this is, it's called the mark of the beast. And I genuinely believe, and my brother's a biblical scholar, or at least now he is. I genuinely believe, and I don't want to get too far into this topic because I'm a heretic, but there's going to be a mark of the beast and, and I genuinely believe that it's going to be a centralized currency or a series of centralized currencies where you can only transact, you can only be quote unquote on the grid in a centralized currency and something like Bitcoin will allow people who defect from that grid to not, to, to sort of stay

• 1:03:01Anthony Pompliano?

  It's a separation of state money.

• 1:03:02Speaker 02

  But, but don't forget, when you deny the mark of the beast, it says in the Bible, you deny your access to food, you deny your access to education, you deny access to shelter. You're basically choosing to live in the wilderness just so you can quote unquote, maintain your purchasing power. I don't know how many people are going to choose to do that. And by the way, this is written thousands of years ago in the Bible.

• 1:03:21Anthony Pompliano?

  That may be the fairest argument against Bitcoin, right? So people always ask me two questions. What's the best argument against it? What's the most likely reason why?

• 1:03:29Speaker 02

  And mind you, I'm not arguing against Bitcoin. Yeah. I'm just playing devil's advocate.

• 1:03:32Anthony Pompliano?

  But what's the best argument against it is actually Bitcoin does exactly what people think it's going to do and nobody cares or it's too inconvenient, right? So basically even though it's better technology, but all the stuff, it's just too inconvenient. People don't care, right? They're not going to change. They can't, they can't mentally shift from dollars to BTC, you know, all that.

• 1:03:49Speaker 02

  I don't think it's a mental shift. I think you can't, it's going to get to a point where you can't physically shift. If you want to maintain your status quo.

• 1:03:56Anthony Pompliano?

  It is possible.

• 1:03:56Speaker 02

  Your, your, your, your status quo that's being eroded by inflation.

• 1:04:00Anthony Pompliano?

  Yeah, it is definitely possible. So that's one. Two is what is the most likely cause that it fails? It's actually a self inflicted wound.

• 1:04:06Speaker 02

  I don't think it's going to fail.

• 1:04:07Anthony Pompliano?

  Well, so the developers end up creating some kind of bug, et cetera, right? That, that could fail. To me, that's the biggest risk. It's not state level attacks, all this other kind of stuff. It's just somebody makes a mistake, right? Now, the beauty is that the process is pretty thorough, right? And, and quite extensive in terms of reviewing code, et cetera. And so it's unlikely that it happens. But to me, that's like the biggest issue.

• 1:04:28Speaker 02

  Yeah. And again, like, I wouldn't use the word fail. Like, everything has an issue, right? Like, we're humans. At the end of the day, we're talking about. Measuring, and I think this is the most valuable part of money. And that I don't think Bitcoin touches, I don't think the US dollar touches, I don't think any of these things touch. I think the only thing that really touches this is probably something that you can physically, I'm not a gold bug at all, but I do think it's gotta be something that we all have agreed to agree on for thousands of years that this is has some value. And this is why I think gold is probably the purest form of money is because money is really just a unit of human time. I'm basically a

• 1:05:06Speaker 02

  Yeah, I'm a, I'm not, I'm not, I'm neither of these things. I, I have, I need to do more research to figure out what I think I, I want to be in long term, but I think there's a reason for all of these things in your portfolio. And I don't want to say portfolio like I'm trying to invest in this. I want to say like in your life portfolio.

• 1:05:20Anthony Pompliano?

  Yep.

• 1:05:20Speaker 02

  Like you, you need, like when I, when I, when I, when I pay someone for something, it's not because I, I want it. It's because I'm acknowledging that it took him time of his, you know, his perpetual human life that'll eventually end to create this good or this service. And I'm transitioning some of my time for some of his time.

• 1:05:40Anthony Pompliano?

  That, so the best uh thing that I've told people that gets them immediately to realize that Bitcoin has value is one currency, which is the dollar, is inflationary in nature, and so it promotes consumption. Right? Get out of this, buy things, buy things, buy things.

• 1:05:55Speaker 02

  Totally.

• 1:05:55Anthony Pompliano?

  When you go to a deflationary uh structure, right, with a disflationary monetary schedule, all of a sudden you're incentivized to save. You're, you're incentivized, my time is very valuable.

• 1:06:05Speaker 02

  My time is valuable.

• 1:06:05Anthony Pompliano?

  Pay me this and I'm gonna hold this, right? Cause that's how valuable my time is. And I think that mindset shift is really, really hard for Americans, right? Just cause it's consume, consume, consume. Uh, but also too, it's driven by the dollar, right? And the structure. Uh, so, so I think, look, you're gonna do more research, we're going, we're gonna bring you back and you're gonna be a full born uh Bitcoiner, cause I could already tell you, you think a lot of the same things that Bitcoiners think.

• 1:06:27Speaker 02

  I think the

• 1:06:27Anthony Pompliano?

  You just haven't spent the time yet, right?

• 1:06:30Speaker 02

  To be, to be frank, I mean, I've thought, I've thought about, I'm a conspiracy theorist at heart.

• 1:06:34Anthony Pompliano?

  Who do you, who do you think Satoshi is then?

• 1:06:36Speaker 02

  Uh, oh, I don't, I don't, I don't know enough about Bitcoin to say, I mean, I know who that is supposed to be. I don't know that we know who he is.

• 1:06:42Anthony Pompliano?

  Okay.

• 1:06:43Speaker 02

  I think, I think it's a concept to be totally honest with.

• 1:06:45Anthony Pompliano?

  Yeah.

• 1:06:46Speaker 02

  A group of people, but I think it's a it's a it's supposed to represent like, hey, man, you're looking for me. I don't exist. That's the fucking point.

• 1:06:52Anthony Pompliano?

  Marty Bent is a guy in the Bitcoin world and he he used to work at Barstool Sports. And, you know, he's a cool dude and and he calls it the immaculate conception.

• 1:07:02Speaker 02

  Yeah.

• 1:07:03Anthony Pompliano?

  Right? It's the it's a religion. Money's a religion, right?

• 1:07:06Speaker 02

  Oh, this is religion. I have I'm wearing a for the reviews, I'm wearing a gold chain. And the reason I wore the I'm wearing a gold chain is because when I grow up, when I grew up, all the people that had societal value to me were gold chains. And these are rappers, these are athletes. You know, unfortunately, I'm not from the kind of communities that, you know, thought people like Bill Gates or people like Jeff Bezos had societal value. I didn't know those people were. I didn't have the internet. You know, so to me, that that is what's what's valuable to me. But value is a is a transferable is a it's a transferable concept and it's a non-transferable concept. And what I mean by that is you can pay someone money to do something for you or currency to do something for you. But also, what's also valuable to me is like, you know, like, I have a, you know, a letter from my girlfriend.

• 1:07:51Speaker 02

  You know, like, that that's only valuable to me.

• 1:07:54Anthony Pompliano?

  So you'll you'll love this. One of the things that I'm fascinated by is the cultural icons that you and I grew up with. We're about the same age and I remember like very distinct moments growing up. So the first is when Jay-Z's Big Pimpin' came out and he had the music video on the on the yacht, right? With the girls.

• 1:08:11Speaker 02

  I'm not gonna lie to you, two days ago in the shower after the gym, I I sort of was mimicking Jay-Z's dance when the sun came on while I was in the shower, in the shower. Not kidding. This is two days ago, by the way. So we, yes, we share a lot of the same.

• 1:08:23Anthony Pompliano?

  Right. So Big Pimpin' was a big moment. The second was Nelly, Country Grammar.

• 1:08:28Speaker 02

  Yep.

• 1:08:28Anthony Pompliano?

  And you just heard that that initial. Oh, man. And you just everyone just stood up in the room. Everyone kind of looked at you.

• 1:08:35Speaker 02

  You look around like, okay, who's the available chick in the room? You.

• 1:08:38Anthony Pompliano?

  So that was the second. The third was first time I ever skipped school in high school. Carter II, Lil Wayne came out.

• 1:08:46Speaker 02

  Oh, my God.

• 1:08:47Anthony Pompliano?

  My buddy was like, hey, man, Carter II came out. I was like, what's that? He's like, this is a fire CD. I was like, I'm there. And we went and skipped school and went bought it. So those guys, right, who were these like cultural icons, right? Allen Iverson, all this stuff. Now what's happened, I even thought Michael Jordan, like all these guys.

• 1:09:03Speaker 02

  For our era, this is our era, by the way.

• 1:09:05Anthony Pompliano?

  So there's a, there's a very, uh, direct line in the sand where half of them made horrible financial decisions. Right? If you, if you look at Allen Iverson, Lil Wayne, all these guys.

• 1:09:16Speaker 02

  Cause they didn't have any coaches.

• 1:09:18Anthony Pompliano?

  Zero, zero.

• 1:09:18Speaker 02

  When you grow up in these communities, there's no one saving and investing money. It's not even about how I spend money. It's, I literally don't know how to invest money. I don't know how to open a mortgage, a start a mortgage. I don't know how to open an investment account. I don't even know who to call if I want to fucking buy the stock market. It's literally a lack of resources and education.

• 1:09:36Anthony Pompliano?

  Take those guys and on the other side of the line, Puffy, Jay-Z, right? All these guys who, Jay-Z's a billionaire.

• 1:09:44Speaker 02

  What the difference is between them? They surround themselves with really intelligent people.

• 1:09:48Anthony Pompliano?

  Absolutely. They, one of my favorite things is that Jay-Z and LeBron James, both when they got, first hit it, called up Warren Buffett and said, I got, I need to come see you. You're supposed to be the smartest guy in the world on this thing. Tell me, tell me what to do.

• 1:10:01Speaker 02

  That's the, that's the difference.

• 1:10:02Anthony Pompliano?

  LeBron James, 18 year old kid, who, who by the way, uh, to me, uh,

• 1:10:06Speaker 02

  Legend.

• 1:10:07Anthony Pompliano?

  He, he is. Okay. That's my point, right? Like 18 years old, he was 16, I think. And he was on this, on the Sports Illustrated cover, the chosen one, all this stuff. From 16 years old till today, he's played in the NBA now for 17, 18 years.

• 1:10:20Speaker 02

  Most minutes ever.

• 1:10:21Anthony Pompliano?

  Right? The dude, you've never heard affairs, fraud, no tax issues.

• 1:10:28Speaker 02

  The worst thing you can hear about LeBron is that he's, he's too nice of a teammate. This guy let JR Smith get the ball in the NBA finals. Like my man, like this is how, he's, that's the worst thing. And so carry on, but that's the, again, I agree with your point.

• 1:10:42Anthony Pompliano?

  And so when you look at that, that's somebody who, by the way, grew up with a single mother.

• 1:10:46Speaker 02

  Yep.

• 1:10:46Anthony Pompliano?

  Right? I actually think the last scandal he was involved in was when he was in high school. He somehow got like, remember he got with the two Mitchell and Ness jerseys and like a Hummer or something?

• 1:10:54Speaker 02

  It's not a scandal.

• 1:10:55Anthony Pompliano?

  There, there was something that happened and all of a sudden was freaking out. And so what did he do? He just said, just take it back. Like I, I, you know, whatever.

• 1:11:02Speaker 02

  If getting stuff for free is a scandal, then who are all these like, I don't want to be, I'm not even going to be gender biased, anything. There's a lot of people who are much younger than me, who clearly don't work and earn the same level of income that people like you and I make. That live in our buildings. I'm like, how do you live here? And I don't mean like they shouldn't live there. I mean like, somebody's paying your rent. And this is very New York City thing, but it is what it is.

• 1:11:25Anthony Pompliano?

  So, uh, my favorite by far is, uh,

• 1:11:32Anthony Pompliano?

  the individuals that at Ohio State took their, their cleats that they owned.

• 1:11:39Speaker 02

  And, yeah.

• 1:11:40Anthony Pompliano?

  And sold them.

• 1:11:41Speaker 02

  Yeah.

• 1:11:42Anthony Pompliano?

  And got in trouble for it.

• 1:11:43Speaker 02

  Oh, and the tattoo thing? It's like, my man, I'm friends with the guy who runs the tattoo shop. I can't get a tattoo. So, so my uncle can put a hundred thousand dollars in stocks in my portfolio and that's fine. But if I get a tattoo, you know, it is, it's institutionalized racism. We don't need to go on a tangent on that. That's what that is.

• 1:11:59Anthony Pompliano?

  I, I am, uh, there's two things that are happening in the world right now that I'm incredibly happy over the last six months have come out. One, the NCAA is going to allow athletes to start making, uh, money off their likeness.

• 1:12:09Speaker 02

  Off their likeness, yep.

• 1:12:09Anthony Pompliano?

  So you can't get paid to play, but I can go and I can go, uh, put my face on a poster.

• 1:12:14Speaker 02

  That's fair. It's fair if we didn't solve it.

• 1:12:16Anthony Pompliano?

  Whatever. So, so look, you want to be famous, be famous, right? And, and get paid that way, but don't get paid to play. Fine.

• 1:12:21Speaker 02

  I agree with that.

• 1:12:22Anthony Pompliano?

  Second thing is, uh, the SEC is looking at opening up the accreditation laws to allow more people to participate in the private markets.

• 1:12:29Speaker 02

  Say that again, the SEC is.

• 1:12:30Anthony Pompliano?

  The SEC is, so I have the whole.

• 1:12:33Speaker 02

  So you no longer have to be an accredited investor to, to.

• 1:12:35Anthony Pompliano?

  They're going to change, they're going to change the way that they define accredited investor.

• 1:12:38Speaker 02

  Like lower the threshold from a million?

• 1:12:40Anthony Pompliano?

  So that would, uh, be part of it. Uh, we'll see if they do that or not. The biggest piece is that it would be education based.

• 1:12:47Speaker 02

  I agree.

• 1:12:47Anthony Pompliano?

  Take a test. I've yet to meet somebody who doesn't agree with that.

• 1:12:50Speaker 02

  Yeah, totally.

• 1:12:51Anthony Pompliano?

  Just take a test.

• 1:12:52Speaker 02

  Just take a test. If you have, no, by the way, no one's going to want your 30 bucks on, on, on a, take private. You know, like they're not going to want it. But if you can, if, if they actually want, you can crowdsource $30 at a time. Uh, you can, you and I can go on Twitter and raise $2 million tomorrow if we needed to.

• 1:13:07Anthony Pompliano?

  So I wrote a thing literally today that, uh, basically says, uh, accreditation is, uh, violating the American dream. And is discriminating against millions of Americans based on wealth.

• 1:13:18Speaker 02

  Yeah.

• 1:13:18Anthony Pompliano?

  It's definition.

• 1:13:19Speaker 02

  But tell them, I guess who writes the tax code? It's Congress. Everybody in Congress is a millionaire. Everybody in Congress is invested in interest in keeping the game going the way they designed it.

• 1:13:26Anthony Pompliano?

  They all wrote books. None of them did insider trading.

• 1:13:28Speaker 02

  No, yeah, of course.

• 1:13:29Anthony Pompliano?

  All right. Listen, before we wrap this thing up, I gotta ask you, uh, aliens and dinosaurs. What's, what's up believer, non-believer?

• 1:13:36Speaker 02

  Oh yeah, I definitely believe in dinosaurs. I don't think you can argue with it.

• 1:13:38Anthony Pompliano?

  And dinosaurs? Alright, so here's my question on dinosaurs. Every dinosaur you and I have ever seen pretty much looked the same. So when they say pterodactyl, we know what that looks like. T-Rex, we know what that looks like.

• 1:13:47Speaker 02

  I think those are renditions. I disagree that they look the same. I think what we saw...

• 1:13:51Anthony Pompliano?

  No, we've both seen the same model of what they tell us they looked like.

• 1:13:54Speaker 02

  Yeah, yeah. No, I disagree that the model is accurate. That's what I'm saying.

• 1:13:58Anthony Pompliano?

  So, my big question is, and I saw this meme on the internet, now I'm fascinated with it. You think that the dinosaurs had hair? Like hair like you or I, in terms of every dinosaur you've ever seen? None of them had like mullets or long hair or anything? Think about a dinosaur you've seen that had hair. None of them.

• 1:14:16Speaker 02

  Again, so I guess I'm probably, yeah, alright, I'm four beers deep here answering this, so just, you know, keep that in mind.

• 1:14:24Anthony Pompliano?

  What's the Bud Light answer? Did dinosaurs have hair?

• 1:14:27Speaker 02

  Okay, so yes, dinosaurs definitely exist because we have the technology to sort of date carbon and things of that nature, so I agree with that. But again, these are, like, when, I was, I used to collect rocks as a little kid, you know? I mean, I'm telling you, when I was poor, I was very poor. We didn't have anything going on at home, you know? I would literally go outside when I was like five to 10 years old, and just find cool rocks. Rocks that I thought were cool. I know shit about them. You couldn't look them up on the internet. There was no internet back then. At least not for us. But, when you grab things out of the ground, it's not like just that one dinosaur is perfectly, its bones are perfectly preserved in the position it died in. It was thousands, if not millions, of years ago. You're gonna get two or three bones most as an archaeologist, and you have to freaking imagine

• 1:15:09Speaker 02

  what goes where, what it's supposed to look like. These are all renditions based on artists and archaeologists and their imagination, so give them some credit for trying, but don't necessarily say that's what a goddamn Tyrannosaurus rex looked like. We don't fucking know.

• 1:15:21Anthony Pompliano?

  The New York Post had an article the other day that basically said, there's wide-held belief in the scientific community that dinosaurs became extinct because asteroids hit the Earth. So there's this big asteroid impact and a bunch of dinosaurs died.

• 1:15:33Speaker 02

  That's false.

• 1:15:34Anthony Pompliano?

  Well, that's what science believes. So, what the New York Post wrote an article, which by the way, credit to the New York Post for doing hard-hitting journalism on science.

• 1:15:42Anthony Pompliano?

  They found a report that basically said, uh, now there's this study that shows there was a very large volcanic eruption and there was increased mercury, mercury levels, which they believe actually was leading to the extinction of dinosaurs before the asteroids hit. And so they basically were calling bullshit on the science community, which I found quite funny because-

• 1:16:02Speaker 02

  They're both wrong and the reason-

• 1:16:03Anthony Pompliano?

  Nobody knows.

• 1:16:03Speaker 02

  And as I say, the reason they're wrong is not because that's not what the actual occurrence was. It's because no one fucking knows. It's like, don't present anything as, and this is one thing that we were, you know, to take this back to finance and whatnot. And I'll, I'll end with a question. I'll have, I have a secondary question for you. And it's-

• 1:16:19Anthony Pompliano?

  Oh, we're still talking aliens. Go ahead.

• 1:16:20Speaker 02

  Yeah, we're still, we're still talking aliens, but before we truly conclude, I'll go there. But no one knows, man, that the, the biggest issue with, with, with what's going on, and I think with the coolest thing about Bitcoin, crypto and, and the information era that we live in now, which is 10, 20 years old, is that information is decentralized now. Not just currency and, and current money and commodities, it's information. Think about where I am. If I graduated with what I knew coming out of college in 1989, I would be a frickin' janitor. Do you know how much statistics and advanced theories on, on macroeconomic theory I've taught myself, just watching YouTube

• 1:17:03Speaker 02

  videos, just reading white papers, reading, you know, it's the best, these are, I, I probably have the equivalent of, of multiple PhDs in, in economics and statistics. And it's not because I majored in these things at Yale. It's because there's, information is now ubiquitous and I can go learn it and I can teach myself and learn at my own pace for the last 10 and a half years.

• 1:17:26Anthony Pompliano?

  Do people get mad if we both together put YouTube PhD in our Twitter bios?

• 1:17:31Speaker 02

  I, I am, I am one of the YouTube PhDs and I'm proud of it.

• 1:17:35Anthony Pompliano?

  Yeah.

• 1:17:36Speaker 02

  I'm absolutely proud of it.

• 1:17:36Anthony Pompliano?

  Well, it's, it's a self-starter.

• 1:17:38Speaker 02

  It's actually helped me. It's actually helped me. If I actually graduated from Yale, knowing everything I should have remembered from economics and ivory tower, macro P, macro, micro P, you know, all this gobbledygook that they preach. I would be fucking terrible at investing. These people don't understand how the real world works. They understand how their models work.

• 1:17:58Anthony Pompliano?

  Yeah, yeah, yeah.

• 1:17:58Speaker 02

  And that's a very different thing. So I'm actually quite blessed of growing up in this information age. And I've and and sort of self taught myself the shit that actually matters. There's only so much stuff that actually matters. That's one of the the great contributions Ray Dalio has made to our industry is that, hey, man, you guys are looking at all this crap. You're all being macro tours, but these things actually matter.

• 1:18:17Anthony Pompliano?

  I couldn't agree more. Speaking of things that matter, aliens, real or not?

• 1:18:21Speaker 02

  Uh, again, this is one of those things we can't. We have no empirical evidence to prove. So the concept of real needs to be massaged a bit, right? They're real so much to they're real in the sense that if people believe they exist, they exist. Because all of this is.

• 1:18:35Anthony Pompliano?

  Is there intelligent life outside of Earth?

• 1:18:37Speaker 02

  Uh, oh, well, I'm very religious, so I believe, you know, if God's not on Earth, then yes. But again, that's we don't need to talk about religion here. Let's go back into a more sort of existential concept. Something is only real in the human sense if a human can observe it and or believe it.

• 1:18:55Anthony Pompliano?

  Agreed.

• 1:18:57Speaker 02

  If if a human being can observe and or believe it, or or actually, I'll take the other way around. If a human being can observe it and or believes it, then it is real because there's no other plane. We only live in this dimension.

• 1:19:11Anthony Pompliano?

  Yeah, it's our perspective.

• 1:19:12Speaker 02

  It's our perspective. We're we're viewing, hearing, touching, tasting, feeling things. If we're if there's no other plane where something can exist that we're not touching in one of those senses. So to answer your question, yes, everything that people say is real, that they truly believe is real, is real. But it doesn't necessarily mean you can observe it empirically.

• 1:19:32Anthony Pompliano?

  Yeah.

• 1:19:33Speaker 02

  So you have to separate those things.

• 1:19:33Anthony Pompliano?

  What you're basically talking about is if aliens were invisible and they were all around us, but no one ever realized it, there's no scientific proof of it, etc.

• 1:19:39Speaker 02

  So you just have to find out what you mean by real. Is it real because someone believes it? Or is it real because there's an empirical evidence on it?

• 1:19:45Anthony Pompliano?

  Do you believe that there's intelligent life outside of Earth? Other than religion?

• 1:19:49Speaker 02

  I believe it because other people believe it, but I don't personally believe it. There's obviously no empirical evidence.

• 1:19:57Speaker 02

  I believe aliens, sorry, sorry, take this back. I believe aliens exist because other people believe aliens exist. Not because, not because.

• 1:20:07Anthony Pompliano?

  In the mental image of aliens, more so than like.

• 1:20:10Speaker 02

  Yes, there's no other plane to discuss. We only live in this universe.

• 1:20:15Anthony Pompliano?

  Will.

• 1:20:15Speaker 02

  There's no, if someone in this universe thinks aliens exist, then we have to acknowledge that aliens exist. Cause we're talking about it right now, are we?

• 1:20:22Anthony Pompliano?

  Facts.

• 1:20:22Speaker 02

  Aliens do exist.

• 1:20:23Anthony Pompliano?

  I talk about it every day.

• 1:20:24Speaker 02

  You and I are talking about aliens right now.

• 1:20:26Anthony Pompliano?

  So the reason why this question I ask every podcast episode is, uh, because one day I was laying in bed and I was like, fuck. You think aliens got pets?

• 1:20:36Speaker 02

  Oh my.

• 1:20:38Speaker 02

  You were laying in bed and found out?

• 1:20:39Anthony Pompliano?

  Randomly and I turned to Plin and I said, hey, uh, you ever thought about if aliens have pets? And she's like, go to sleep.

• 1:20:44Speaker 02

  By the way, congra, I don't know if you guys don't know, I'm sure you posted on Twitter, but you just got engaged to beautiful woman, awesome woman. I don't know how the hell she puts up with you, but.

• 1:20:52Anthony Pompliano?

  Darius, Darius is, uh, he's seen me at my worst and at my best. So, uh, she, she's winning in this relationship for sure. Well, actually I'm winning.

• 1:21:01Speaker 02

  You're definitely winning.

• 1:21:03Anthony Pompliano?

  By, uh, by sure, but she, uh, she makes me better. Um, so yeah, I was laying there and I was like, you know what? Aliens, everyone always looks at them as one type of homogeneous, uh, species, right? Like independence, all these movies, right? Why don't they have pets? I bet you they have pets. Like, or is there not like a multi-species type, uh?

• 1:21:23Speaker 02

  I think people will be uncomfortable drawing alien pets. Cause then by definition, you now making the choice of who, who or what type of alien.

• 1:21:31Anthony Pompliano?

  Joe's giving you the, the side eye.

• 1:21:34Speaker 02

  We're in the, we're in the 2009, post oh nine era where you can barely say I drink Bud Light and not have people come at you on Twitter. You know what I mean? Like, if you believe aliens have pets, then you are, you're, you're, you're now making a decision of what type of alien or what type of being is an alien pet. And now you're talking about discrimination, all these other things. Like, mind you, I'm a black dude from the hood. Like, few people in the world have been discriminating against me more than I have, certainly in this country. I get the discrimination thing, but let's lighten up a bit, folks. I mean, Jesus Christ, like you're. Check your emotions at the door and let's learn how to make money together.

• 1:22:09Anthony Pompliano?

  I uh, I'm a real big believer in what they call Bud Light politics. And Bud Light politics is basically if you think you disagree with somebody, you have to drink three Bud Lights with them before you can agree that you disagree with each other.

• 1:22:20Speaker 02

  I love that. That's a good motto to live by.

• 1:22:22Anthony Pompliano?

  And so literally, if you go and drink three Bud Lights with somebody and you walk away saying we still disagree with each other, then you actually disagree. But like, I don't know, 20, 30, 50% of people would actually find out they agree.

• 1:22:33Speaker 02

  Disagree, just don't hurt anybody. My, my, I don't even, I don't even necessarily believe in the golden rule, like, like, like, just, just do whatever the, yo, my man, let my man cook. My man, you can cook as long as you're not hurting anyone.

• 1:22:48Anthony Pompliano?

  Yep.

• 1:22:48Speaker 02

  And I think the concept of pain and hurt are fairly universal. I don't think we need to go too far into defining those. Just don't hurt anybody. If you want to do some weird creepy stuff or do this or that, just let people cook, man. China, China, let the people in, was it Wujian? Was the name of the province?

• 1:23:05Anthony Pompliano?

  Oh yeah, I don't know.

• 1:23:06Speaker 02

  The Muslims cook, brother. Let the people in Hong Kong cook. Let them cook. They're not hurting you. You're still in control.

• 1:23:12Anthony Pompliano?

  Let them do whatever they want.

• 1:23:14Speaker 02

  Alright, so before we wrap up, I'm now being a podcast host.

• 1:23:19Anthony Pompliano?

  If Darius had a podcast, he'd be top 10 in the world, easy.

• 1:23:22Speaker 02

  I, I probably would. I would also get fired by all my clients, uh, because I have a very, very loose filter, as you can tell by this, uh, Bud Light consumption.

• 1:23:31Anthony Pompliano?

  He brought Bud Lights to the first podcast episode.

• 1:23:34Speaker 02

  Hey man, look, I, I drive better, three to four beers deep Bud Lights specifically.

• 1:23:39Anthony Pompliano?

  Okay.

• 1:23:40Speaker 02

  I, I invest better, one to two Bud Lights deep because I'm less gun shy. Um, what else do I do? I do some other wink, wink things better when I'm six to eight Bud Light deep.

• 1:23:51Anthony Pompliano?

  Alright, what's your question?

• 1:23:52Speaker 02

  Alright, alright.

• 1:23:53Anthony Pompliano?

  We got a PG podcast.

• 1:23:54Speaker 02

  PG podcast, absolutely. Alright, um, so this is my favorite question I like to ask people, certainly, and, and I think you would be one of the best people out there in, in, in our, in our, in our respective communities and our sort of co-joined community, because you, you understand hip hop and the culture.

• 1:24:11Anthony Pompliano?

  Alright.

• 1:24:12Speaker 02

  You know?

• 1:24:14Speaker 02

  If you had to design a Mount Rushmore of hip hop, who do you put on it?

• 1:24:21Anthony Pompliano?

  How many people do I get?

• 1:24:22Speaker 02

  Four, Mount Rushmore. No, no As and Bs, no extra guy, no, no 1A, no.

• 1:24:27Anthony Pompliano?

  Does a group count as one?

• 1:24:29Speaker 02

  A group can count as one. I'll give you that.

• 1:24:33Anthony Pompliano?

  Man.

• 1:24:35Speaker 02

  It's hard, huh?

• 1:24:35Anthony Pompliano?

  No, it's not hard at all. NWA, Biggie, Tupac and Lil Wayne.

• 1:24:40Speaker 02

  Wow, that is the quickest response.

• 1:24:44Anthony Pompliano?

  And by the way, I honorable mention Jay-Z could switch with Lil Wayne in my opinion.

• 1:24:49Speaker 02

  Wow, that is, ladies and gentlemen, I've asked this question to dozens of people and I have never ever had anyone respond in under three to five minutes. There's usually, there's usually a two minute pause, like, oh, man, this is hard.

• 1:25:05Anthony Pompliano?

  Alright, so let me explain. NWA, greatest group of all time, anyone who says it will fight.

• 1:25:10Speaker 02

  Alright, well, I'm not gonna disagree with you.

• 1:25:12Anthony Pompliano?

  Biggie and Tupac is probably the greatest rivalry ever and they had the perfect combination of entertainment, uh, the like, kinda lyrics, uh, and kinda just their mastery of the poetic aspects of rap. And then you add in kind of the, the violent components, the coast, etc. Just like, that's like-

• 1:25:31Speaker 02

  Exposing people to the-

• 1:25:32Anthony Pompliano?

  That's probably just like the, the golden age of hip hop, right? So you get those three. Lil Wayne I put up there because Lil Wayne was probably the first, uh, guy, at least of my generation, who really took what was more of kind of a raw, underground hip hop type community and pulled it into what we consider like the pop world today, right? Or, or kinda the socially acceptable world today. So NWA was the first time that there was like, like somewhat crossover, I think, into, um, you had like white dudes who didn't live in the hood who were running around, you know, singing NWA lyrics. Eminem and Lil Wayne are probably the two that started to pull it. Jay-Z's just the fucking goat, though. Like, like, so when you put those up there, holding it to force pretty hard, cause you can very quickly spider

• 1:26:17Anthony Pompliano?

  into all these other ones, but I gotta go with NWA, cause I think they're the best ever. Uh, Tupac and Biggie as just a duo that coexisted in a world where like, we'll never see that again in our lifetime. Uh, cause the thing also was at that time when they said, "Yo, I'm gonna shoot you." It was like 80% probability they were serious.

• 1:26:37Speaker 02

  Yeah. And by the way, we're not glorifying violence. This is America, folks. People go to the movies to watch. I'm using Arnold Schwarzenegger because that's popular in my day, but like, people go to movies to watch violence. Hip hop is a depiction of violence that America craves. UFC, boxing, football.

• 1:26:54Anthony Pompliano?

  Yeah.

• 1:26:55Speaker 02

  It's the same depiction of violence, just in a lyrical art form.

• 1:26:58Anthony Pompliano?

  Oh, I'll take it a step further. Uh, hip hop is a mirror of society. And people don't like looking in the mirror.

• 1:27:03Speaker 02

  Oh, man.

• 1:27:03Anthony Pompliano?

  So what ends up happening is if you look at all, especially the first three, right? So if you look at NWA, Biggie and Tupac, they weren't making stuff up. They were literally just, they were just, they were literally just creating music about their day.

• 1:27:14Speaker 02

  It was truth.

• 1:27:15Anthony Pompliano?

  Right? It was, hey, this happened yesterday, or this happened, you know, a week ago, whatever. And what ended up happening was that really resonated because it was this raw authenticity. And so, uh, i- if you think about that, those like earlier days of hip hop, it's very different than today where I think it's more of, people have figured out like the algorithm, right? They, they realize like, okay, here's the type of music I make. Here's the beats that I need to use. Uh, here's how we're going to distribute it, etc.

• 1:27:38Speaker 02

  It's a science. Music in general is a science now.

• 1:27:40Anthony Pompliano?

  Yeah. And, and so I think that, um, but it's also why you see guys like, I don't know, Chance the Rapper, right? Uh, and some of these guys, um, did you watch, uh, what's the Netflix, um, documentary that came out recently, uh, on, um?

• 1:27:55Speaker 02

  Probably no, because I don't watch TV, but.

• 1:27:57Anthony Pompliano?

  No, no, no. Who, uh, it's the dude who's, uh, dating one of the Kardashians, um.

• 1:28:01Speaker 02

  Bro, I live under a rock, man.

• 1:28:04Anthony Pompliano?

  What? No, it's not Kanye. It's, uh, um, it, uh, West, Westworld or whatever. Uh, Travis Scott. Yeah, yeah, Travis.

• 1:28:12Speaker 02

  I know who that is. I, I, there's no way I watch it on television.

• 1:28:15Anthony Pompliano?

  So Travis Scott, basically, he, he's very similar in that, like, it's just, uh, go in the corner, right? So you want to know a fun fact?

• 1:28:23Speaker 02

  Yep.

• 1:28:24Anthony Pompliano?

  I talked to a very well-known producer recently, a, a music producer, and, uh, we were talking about something. And he goes, oh, man, making the music so easy today. I go, what do you mean? He goes, dude, this is what I do. I send beats to people. They literally like are on their tour bus or they go in the bathroom at like, uh, uh, a rest stop or something. And they record the lyrics on their phone, like literally go to like voice memo.

• 1:28:45Speaker 02

  Oh, my God.

• 1:28:46Anthony Pompliano?

  Email it to him and he takes that voice recording and then mashes it up and then you have a hit song.

• 1:28:52Speaker 02

  There's so much technology to change it now.

• 1:28:53Anthony Pompliano?

  And I said, excuse me? And he goes, oh, yeah, dude, I could just hit up three dudes and be like, yo, give me a, give me a verse. Uh, here's the beat. And literally those recorded on their phones and send it to them. Then he can mix it all up. And then you got a song that nobody ever saw each other. So literally everyone was in different locations. They just send them the files.

• 1:29:09Speaker 02

  And just to quickly interject, what you're talking about is the, the information age, the technology age. It is just quicker and easier to do everything that human beings used to toil and struggle over. So guess what? To me, that's deflationary. Because you need less things to, to change that unit of time for.

• 1:29:27Anthony Pompliano?

  I'm gonna end with, you gotta answer, who's on your Mount Rushmore?

• 1:29:30Speaker 02

  Okay, so.

• 1:29:31Anthony Pompliano?

  Cause I know you thought about it.

• 1:29:32Speaker 02

  Oh, I've definitely thought about this. I've, I, this, to me, is one of the coolest discussion topics out there and hopefully it starts a good debate on Twitter. Um, I, I think, I think you have to decide what your Mount Rushmore is. And so, no, no, no, I'll be quick. I'll be quick. You have to decide what your Mount Rushmore is. My Mount Rushmore are the people who were the foremost relevant people in hip hop, but not necessarily the foremost relevant people in hip hop according to one generation. Because I do think, I do think now that we're seeing guys like Jay-Z turn 50 and we're seeing Diddy and Jay-Z be billionaires, we have to acknowledge that on the other side of that, there's a whole community of people that are 14, 15, 16, that are listening to hip hop and, and have no

• 1:30:14Speaker 02

  freaking clue where those 99 bricks went or 96 prints went, you know, that's a Jay-Z reference. And they don't even know where those bricks are or where they were. But so anyway, my point is.

• 1:30:23Anthony Pompliano?

  Marcy Projects.

• 1:30:24Speaker 02

  Marcy Projects. Marcy, is Marcy even Projects now? It's probably like a nice community. That's what happened to my neighborhood in Seattle, not to digress. Um, anyway, so Jay-Z, obviously.

• 1:30:35Anthony Pompliano?

  Yep.

• 1:30:35Speaker 02

  Jay-Z was huge in the 90s. Um, arguably one of the two or three best lyricists ever in hip hop. Um, in terms of raw talent, the most raw talented MC, second most raw talented MC's, next one's the most raw talented. Jay-Z's the most raw talent because he, he didn't write anything down. He was very unique in that sense that he can come in and there's many.

• 1:30:54Anthony Pompliano?

  Savage.

• 1:30:55Speaker 02

  There's many recollections of him. When him and Cam did Welcome to New York City, he said, Cameron said, quote, Jay-Z walked in there, heard the beat in the six minutes, he was walking out of the studio. He laid down in a whole, one of the most classic hip hop songs of all time in six minutes, just thinking in his head and freestyling.

• 1:31:10Anthony Pompliano?

  So I know you didn't listen to the episode, so I gotta tell you. So the music producer I was talking to is Ryan Leslie.

• 1:31:15Speaker 02

  Oh, yeah, Harvard guy, right?

• 1:31:16Anthony Pompliano?

  Yeah, Grammy nominated, etc. We're talking about something else.

• 1:31:18Speaker 02

  Yeah.

• 1:31:18Anthony Pompliano?

  But he came in, he did an episode. He told me a story about Jay-Z. So he was one of the producers on the Jay-Z Kanye album.

• 1:31:25Speaker 02

  Yeah.

• 1:31:25Anthony Pompliano?

  And they were in Australia. And while they're in Australia, Jay-Z woke up, he did like the Oprah show or something in the Sydney Opera House. Then he went, he took Beyonce on like, you know, to some location, they did whatever. Goes through the whole day, they have dinner, all this stuff. They start recording music. It's Ryan Leslie as the producer, Jay-Z is the artist, and there's like an audio engineer. Sitting in the living room in this house they rented in Australia. It's three o'clock in the morning, and Jay-Z's just going hard, hard, hard all the time. And all of a sudden, he stands up and he throws his headphones off and goes, who the fuck is gonna catch me? Who's gonna catch me? I'm Jay-Z.

• 1:31:58Speaker 02

  Yeah.

• 1:31:58Anthony Pompliano?

  And look what I'm doing now.

• 1:32:00Speaker 02

  Yeah.

• 1:32:00Anthony Pompliano?

  And the whole thing was, it didn't matter how much better he was than everybody, he was still hungry. And he is, and this is 10 years ago, 12 years ago now, right? In 2007, 2008, whatever. And Ryan Leslie says, that's when I realized Jay-Z's different.

• 1:32:12Speaker 02

  Yeah.

• 1:32:12Anthony Pompliano?

  Right? And so it's the same thing. He didn't write anything down. He could walk in and be out in six minutes. Like, he's crazy.

• 1:32:17Speaker 02

  And by the way, he learned this skill, and he de glorifies it now as a responsible father and, you know, respected member of our community, of the US, American community. You know, he's like, man, like, I had a lot of spare time sitting on project benches selling drugs. And I actually did something with my time, and I invested in myself. So all you out there listening, no matter what your social circumstances are, no, who's listening to this podcast, what your demographic is, but we all share one thing in common, and it's, you have a ticking heart, you have a thinking mind. Use that to your advantage.

• 1:32:48Anthony Pompliano?

  Facts.

• 1:32:48Speaker 02

  It's like, we wouldn't, you and I wouldn't be here if we didn't, if we didn't use those to our advantage and take advantage of the resources that we could pull towards us.

• 1:32:55Anthony Pompliano?

  Of course.

• 1:32:56Speaker 02

  And then as we got further and further along, the resources got grew and they become better. So, anyway, let me, let me finish this.

• 1:33:00Anthony Pompliano?

  All right, Jay-Z.

• 1:33:02Speaker 02

  You're gonna hate me, or some, a lot of your folks are gonna hate me for this, and it's not a personal preference, but I'm gonna go Eminem.

• 1:33:08Anthony Pompliano?

  Oh, he, I, he's definitely up there.

• 1:33:10Speaker 02

  Okay, good. So I personally-

• 1:33:11Anthony Pompliano?

  He's top 10 all time.

• 1:33:13Speaker 02

  I, I, I think he's the most talented rapper, lyricist of all time. No one has ever rapped like him.

• 1:33:17Anthony Pompliano?

  Yeah.

• 1:33:18Speaker 02

  Big L.

• 1:33:19Anthony Pompliano?

  It's hard, it's hard to refute, it would be hard to refute he's not top 3 lyricist.

• 1:33:23Speaker 02

  Lyricist. So Eminem would tell you Big L is the best lyricist?

• 1:33:27Anthony Pompliano?

  Yeah.

• 1:33:27Speaker 02

  I would tend to agree with that based on my personal preference, but Eminem has a substantially longer discography unfortunately because Big L was murdered. Um, substantially longer discography at what was the peak and probably continues to be the peak of lyricism.

• 1:33:42Anthony Pompliano?

  They made a movie about him.

• 1:33:44Speaker 02

  Yeah, the purest form of rap, man. Yeah, and so like, and also, that's beyond the point. That's me arguing from the perspective of a hip hop head. Don't forget what he did for rap music. He took rap music from my inner-city ghetto project, you know, drug dealing, gang banging area, and put it in every suburban home in the country and in the world.

• 1:34:05Anthony Pompliano?

  I remember when him and Dr. Dre came out and he was like, uh, what, what, uh, what, what did he say, um, and he's in the basement, or I forget the lyrics, but I remember just listening to that over and over and over again for months.

• 1:34:18Speaker 02

  What did he say to somebody he hate? Anyone trying to make trouble your way? Yeah, so yeah, absolutely. So you gotta, you gotta tip your cap because of what he did for hip-hop. He took hip-hop from a urban art form to a, a international art form. Um, single-handedly almost.

• 1:34:32Anthony Pompliano?

  Alright, Jay-Z, Eminem, you're two for two.

• 1:34:34Speaker 02

  Lil Wayne, you gave all the background on Lil Wayne.

• 1:34:36Anthony Pompliano?

  Yeah.

• 1:34:37Speaker 02

  And this is something that pains me to say out loud because I'm not a fan. I don't believe what he's done. I think he's part of the problem as it relates to what you people in our generation have, um, think about hip-hop, but dude, you gotta give it to Drake, man.

• 1:34:49Anthony Pompliano?

  Oh, yeah.

• 1:34:50Speaker 02

  The guy's been a legend for 10 years now, and people who are 14, 15 to 25, 26, they don't know who Jay-Z and Eminem are.

• 1:34:59Anthony Pompliano?

  They have no clue.

• 1:35:00Speaker 02

  They barely know Lil Wayne at the tail end of his once illustrious career.

• 1:35:03Anthony Pompliano?

  But he, but so here's my thought on Drake. Drake's the perfect example of the science at work.

• 1:35:09Speaker 02

  He is pure science. It's wheelchair Jimmy.

• 1:35:12Anthony Pompliano?

  He understands, here's what works, so I'm gonna go do what works. I'm not going to just do what I want to do.

• 1:35:17Speaker 02

  No.

• 1:35:17Anthony Pompliano?

  Uh, and he's definitely intelligent about doing that, which by the way, makes him great.

• 1:35:22Speaker 02

  Which makes him great. Oh, I love that. Thank you, brother.

• 1:35:25Anthony Pompliano?

  Right? Like, uh, people will definitely hate that you said Drake, because like, he's not a rapper, man.

• 1:35:30Speaker 02

  I hate it, but it's true.

• 1:35:31Anthony Pompliano?

  But.

• 1:35:32Speaker 02

  If you hate it, you're a hater.

• 1:35:35Anthony Pompliano?

  The haters are hating?

• 1:35:36Speaker 02

  Yeah, absolutely.

• 1:35:37Anthony Pompliano?

  Alright, man. Listen, where can people find you on the internet?

• 1:35:39Speaker 02

  Alright, so yeah, um, obviously my Twitter, I'm at Hedgeye D Dale, H E D G E Y E D D A L E. Just a lot of hot takes on finance.

• 1:35:49Anthony Pompliano?

  Alphabet soup over there?

• 1:35:50Speaker 02

  Alphabet, well, I mean, I have a weird name, Darius Dale. Um, so Hedgeye is obviously my firm, my brand, I rep that D I E. Um, yeah, so, look, I'm a very accessible guy, I like to engage in the debate. I, you know, I, I may not be the smartest guy in the room, but I'm definitely gonna be one of the hardest guys in any room I walk into.

• 1:36:05Anthony Pompliano?

  I, uh, I, I gotta say, um, you, uh, when did I see you? You were, oh, uh, uh, with Julia on CNN.

• 1:36:14Speaker 02

  Yeah, yeah, yeah.

• 1:36:15Anthony Pompliano?

  And I saw you.

• 1:36:15Speaker 02

  Oh, Julia's great, she's really sharp.

• 1:36:16Anthony Pompliano?

  And you were just dropping dime after dime, and I was like, yo, my man is at the New York Stock Exchange up on the catwalk, and he is lighting a fire up there.

• 1:36:25Speaker 02

  From the hood to the stock exchange, man. Where are we at now? Where's next?

• 1:36:28Anthony Pompliano?

  I love it, I love it. Yeah, White House. Alright, so, um, alright, people can, uh, can find you on Twitter, I appreciate you doing this. We definitely have to do it again.

• 1:36:37Speaker 02

  Absolutely.

• 1:36:37Anthony Pompliano?

  Uh, we might have to get, uh, we got a couple other friends that, uh, that might liven up the conversation even more.

• 1:36:42Speaker 02

  Totally.

• 1:36:42Anthony Pompliano?

  And, uh, next time we do it, though, there would definitely be Bud Light here, so I appreciate you coming in.

• 1:36:46Speaker 02

  Of course, man. Thanks for having me, I appreciate you guys listening. Thank you.

• 1:36:49Anthony 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.