301: Travis Kling On The Future Of Bitcoin

Travis Kling is the Founder and Chief Investment Officer at Ikigai Asset Management. In this conversation, we discuss the great accelerator, quantitative easing, modern monetary theory, inflation, strong dollar, politics, China, the generational divide, and Bitcoin. =============================== 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. www.blockfi.com/pomp =============================== Pomp writes a daily letter to over 50,000 investors about business, technology, and finance. He breaks down complex topics into easy to understand language, while sharing opinions on various aspects of each industry. You can subscribe at www.pompletter.com

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

• 0:00Speaker 00

  This is Anthony Pompliano. Most of you know me as Pomp. You're listening to the Pomp Podcast, simply the best podcast out there. Let's kick this thing off.

• 0:11Speaker 00

  Travis Kling is the founder and chief investment officer at Aikigai Asset Management. In this conversation, we discuss the great accelerator, quantitative easing, modern monetary theory, inflation, the strong dollar, politics, China, the generational divide, and Bitcoin. I really enjoyed this conversation with Travis, and I hope you guys do as well. Before we get into the episode, though, I want to quickly talk about our sponsors. The first is BlockFi. They've got three products. You can deposit crypto and they'll give you a US dollar loan. You can deposit crypto and earn up to 8.6% APY in their interest-bearing accounts, or you can buy and sell crypto on their brand-new crypto exchange. Later this

• 0:54Speaker 00

  year, they're going to be launching a Bitcoin credit card. That's right, a regular credit card that pays your rewards in Bitcoin rather than dollars or loyalty points. I'm an investor and a user and a huge fan of the company. Go check them out, especially the interest-bearing accounts where you can earn up to 8.6% APY. You can go to blockfi.com/pomp, again, blockfi.com/pomp, to learn more. Also, don't forget that I write a daily letter to over 50,000 investors about business, technology, and finance. I break down complex topics into easy-to-understand language while sharing opinions on various aspects of each industry. You can subscribe at pompletter.com, again, pompletter.com, or go in the description of this podcast and

• 1:38Speaker 00

  click on the link there. All right, let's get into this episode with Travis. I hope you guys enjoy it. 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 for informational purposes only.

• 2:11Speaker 00

  All right, guys. Bang, bang. Travis is back. What's up, man?

• 2:17Speaker 01

  Hello, good sir. How are we doing?

• 2:19Speaker 00

  We're great. This is quarantine time now. You got a beard. We're doing it remotely. Ready for round two?

• 2:26Speaker 01

  Yeah.

• 2:27Speaker 00

  Round one was quite popular. Don't disappoint.

• 2:32Speaker 01

  No doubt.

• 2:34Speaker 00

  Don't know you. Let's start with what you do and where you come from.

• 2:44Speaker 01

  Yeah, so I run a crypto hedge fund called Ikigai Asset Management. We launched December 2018. We're primarily focused on the liquid part of the crypto market. And to be honest with you, these days, we mostly just trade a lot of Bitcoin, mostly.

• 3:05Speaker 01

  I came from a traditional hedge fund investing background, specifically in the energy industries. I worked at a hedge fund called Magnetar Capital for four and a half years doing long-short energy equities and non-controlled private equity and debt in the energy space. And then in the middle of 15, I went to Point 72 in New York, Steve Cohen's hedge fund, was a portfolio manager there, running a long-short equities book of energy and materials equities. A little bit of commodity, a little bit of options. Fell down the crypto rabbit hole summer of 17. Not being a tech guy, not a tech investor, not much of a tech kind of guy.

• 3:45Speaker 01

  And convinced myself that this was the most significant technological innovation since the internet the first time around. And as such, was likely to be the most significant investment opportunity of a generation. So I decided to start my own investment firm.

• 4:00Speaker 01

  When we launched in December of 18.

• 4:04Speaker 01

  We had qualitative research as a pretty big part of our investment process. And over the last, going on nine months now, starting in September of last year, we evolved our investment strategy into something much more systematic, models driven, and primarily quantitative. So it's kind of started off as something a little bit more qualitative, and now we trade Bitcoin pretty systematically.

• 4:35Speaker 01

  And so all of the stuff we're going to talk about today is like all of the, not even just the crypto qualitative stuff, but it's the really big picture, macro qualitative stuff that's like wrapped up around it. And then there's little $150 billion Bitcoin, you know, right in the middle of these, you know, these really big things. So there's a lot to talk about.

• 5:01Speaker 00

  So when you made that switch from qualitative to more quantitative or systematic, performance went off the charts. That's all we can say. I know because we're LPs in the hedge fund, which is important to get out of the way. But let's start with, we are just living in a crazy, crazy world. And I think that you've used a number of different frameworks to think through this. But one of them is kind of the great accelerator. So maybe let's just start there with like what that means? And maybe you can explain a little bit of like why it's important.

• 5:45Speaker 01

  Yeah. So you and I have been talking about doing this for probably a month or so now. And even longer than that, because I think I remember kind of in like mid to late March, and you were asking about doing an episode. And I honestly, there was so much going on that I didn't know what was going on. And I was like, I don't have a view on any of this stuff yet, because it's such a tremendous amount of change that's going on in real time right now. And so I think over the course of April, some of these things started.

• 6:22Speaker 01

  You start getting more clarity around some of the broad directions that these various different things might might take. And if you think, you know, maybe there's half a dozen or so big factors that you want to say, okay, what's going to happen in this factor and that factor and that factor. And at the beginning, you have such a broad spectrum of outcomes that it's like impossible to develop a base case on on on on any of these things. But then I feel like over the last three or four weeks, it's I've at least been able to start to develop these base cases. And then you can definitely change your mind, right? As new information becomes available. But you can at least have maybe like a base case to work off of. And

• 7:07Speaker 01

  then as new stuff comes about, you see whether or not you're right or not, right? And so this concept I keep coming back to is Corona as the great accelerator. And there's just on on all of these different fronts, it seems like Corona just accelerated things that were already well on their way. And and you can think about that in like a very like micro personal level. And you could say, oh, man, you know, I was using Postmates a pretty good amount. And it seemed like this whole cloud kitchen thing was like, going to get some legs to it. Okay, you just saw an incredible acceleration of that trend that was already

• 7:51Speaker 01

  in place, right? And you can think about it on on a bigger picture, you know, work from home, right? That was a trend that was ongoing. And then you can think about the really, really big stuff. So like, quantitative easing, MMT, China, the strong dollar, globalization versus deglobalization, the this generational divide. And then those are these big pieces I was talking about. And then it's like, I think we're going to talk a while before we actually start talking about Bitcoin. But I think Bitcoin is just, it's just the thing that's sitting right in the middle of all that. So.

• 8:35Speaker 00

  And it feels like this idea of the great accelerate really isn't just a financial thing. Right. You, you mentioned kind of the idea of everything from food delivery and cloud kitchens. But if you really go even further than that, work from home, if you look at, you know, colleges and universities, kind of the questioning of like, why are we paying so much money if we can do the same thing online? And not have to pay for such a kind of high touch experience. If you then even go even farther and start talking about like, okay, well, there was a lot of talk about high valuations. Right. We saw WeWork kind of blow up and now all of a sudden there's a lot of companies under pressure. It just feels like this is something, I, I've used the terminology like the virus exposed the shams of society.

• 9:20Speaker 00

  So that's kind of the, the structural things that were there. No one really wanted to talk about them, but like bam, now they're there front and center. But I think what you're talking about is more the trends that are, that lay on top of that structure. Right. The things that the world was changing already. Now people are being forced to literally accelerate that change. Right?

• 9:41Speaker 01

  Yeah, no, that's exactly right. And so, you know, friendly reminder, because it's easy to lose track of all these things that have happened. Right. So the feds expanded their balance sheet by just shy of $3 trillion in the last, you know, less than 90 days.

• 9:57Speaker 01

  But we were doing QE before anybody ever said coronavirus. The, the Fed cut rates three times before anybody ever said coronavirus. The repo market blew out five months before anybody said coronavirus. The, the Fed funds flipped the, the overnight offer rate a year ago. A year ago that happened. And so, so these, these pieces that were, that were in place.

• 10:24Speaker 01

  You know, well before any of this coronavirus stuff started happening. And specifically like.

• 10:32Speaker 01

  This dollar shortage situation, which you've had, you know, a few guests on that have talked about it. Brent Johnson with his dollar milkshake theory, Jim Bianco. I call these guys the macro voices cohort. It's the guy that Eric Townsend has all the time, which I've been listening to that podcast religiously. They've done a great job. Luke Grauman goes in that bucket. Danielle DiMartino Booth goes in that bucket. And they all have, you know, a lot of similarities around their viewpoint.

• 11:03Speaker 01

  But they were talking about how dire this dollar shortage situation was before anybody ever said coronavirus. And then you can just look at the magnitude and the ferociousness with which the Fed and the Treasury reacted when this hit. And you know that they knew how tight everything was beforehand. And that's how you got a situation where in the second week of March, you had capital markets seize up so much, right? And it's real easy to think about this. If the VIX is going up at the same time that gold is going down,

• 11:46Speaker 01

  there's a, you're having a big problem in a financial market. And it's a Lehman-esque type of problem. And I didn't think in the second week of March that it looked like,

• 11:57Speaker 01

  it looked like an investment bank was going to go down because the banks have, you know, had to recapitalize. Like they're not nearly the same situation as Awa. But like, what about the risk parity funds? What about all the, all the really biggest hedge funds that had gotten bought in the overnight lending market? And the repo was blown out and the knock on effects of that, right? And so here comes the Fed with whatever it was, four trillion of a nap. Yeah, essentially infinity, actually. The way to characterize it was infinity because they said infinity. But it wasn't just that we'll do unlimited amounts of QE. They were also real acute. They started getting, the term that I like to use is exotic.

• 12:39Speaker 01

  The Fed started getting exotic with that monetary policy stimulus. And they started doing things like, like announcing that they're going to buy credit ETFs. And we're going to do municipality stuff. And, you know.

• 12:56Speaker 01

  We, in such a short amount of time, you're talking about, talking about like forty-five days that all this stuff happened, right? And you lose track of, you know, this, this term cross the Rubicon, right? We crossed the Rubicon so rapidly in terms of the things that were acceptable or deemed unacceptable previously that, that now we've already done them and nobody cares. Oh, and then, you know, then a ton of fiscal stuff. Andrew Yang, yo, Andrew Yang was running for the President of the United States on a universal basic income with an MMT underlier and people, I mean, people thought this guy

• 13:41Speaker 01

  was crazy. And then you fast forward ninety days and now they're doing exactly what he's talking about. I mean, it's exactly what he's talking about.

• 13:49Speaker 00

  So I want to go back to the idea of the dollar shortage first, right? Which is, I think in the macroeconomic world and people who manage money professionally, they really have a good grasp of that. But just spend kind of a minute describing what that means in layman's terms for people who aren't in that seat. And then we can get into kind of some of the knock-on effects and why that's put us in the position that we're in today.

• 14:14Speaker 01

  Okay. Simplistically, and again, I would say if you want to go deep, go dig into all the macro voices, guys. Simplistically, dollar shortage, the dollar is the world reserve currency. That means a lot of different things, but it means that countries around the world want to transact in dollars, dollar-based transactions, financial contracts, liabilities, financial instruments. You want to do that in dollars because you feel good about the stability of what that's going to be. That creates what is very broadly now been called the Eurodollar market, which is basically

• 14:55Speaker 01

  all of the dollar-denominated liabilities and financial instruments that exist outside of the United States and thus outside of the direct purview of the Federal Reserve. And...

• 15:10Speaker 01

  When this dollar shortage situation was, which had been, again, going on for a year, close to a year. I mean, I think the macro voices, guys, would probably tell you it's been going on for like five years. If you want to go all the way back to, you know, when, you know, I guess when

• 15:29Speaker 01

  like, I guess, foreign buyers of treasuries stopped becoming net purchasers of treasuries, which I think was in 14. I know that was a big part of that kind of dollar, how that started. But you fast forward to today and you have a big deleveraging event, a market crash like we had in March. And the whole world was already scrambling, you know, barely getting enough dollars to satisfy these various different, you know, contracts and financial instruments. And then there's this big race for dollars and you hit, it's just a vacuum. And the easiest way to think about how big that vacuum was,

• 16:12Speaker 01

  was that the Fed and the Treasury and the US government announced north of $7 trillion of monetary and fiscal stimulus from, you know, over about a six-week period of time in kind of March, April. And the DIXI, the dollar index, which is the US dollar weighted against a basket of international currencies. The DIXI was unchanged over that period of time. So $7 trillion of stimulus. Again, you only did, you did like $2 trillion in the financial crisis over a really big, you know, multi-year period of time.

• 16:52Speaker 01

  And we did $7 trillion in, you know, six weeks and nothing happened to the dollar. That's how short the world was dollars. And so, so the setup that that puts in place is,

• 17:08Speaker 01

  it now puts the United States government in a position to basically be shooting against dollar weakness with

• 17:21Speaker 01

  Record levels of stimulus, unprecedented levels of stimulus. I don't know if you saw the statistic. Goldman put this out in their research about three weeks ago. The, hold on, let me make sure I get this. The disposable personal income in the United States in 2020, Goldman predicts to be 0.5% higher than in 2019. Higher. Basically flat, let's call it flat. Disposable income, flat year over year. How is that possible? That's possible because of the magnitude of the fiscal stimulus

• 18:02Speaker 01

  the United States is providing right now for people in this, in these unprecedented times. Whether that's the right thing to do or the wrong thing to do is not what we're talking about right now. And it's almost like less interesting, actually. So it's just identify what they're doing. And that's what they're doing. And as long as the dollar is hanging in around here, in my opinion, it's giving the Fed and the Treasury the green light to keep doing more and keep doing more. And that's basically what they're shooting against.

• 18:39Speaker 00

  So the way that I think about this, right, is you have a dollar that is strong because it's, there's a shortage. Right? It takes less dollars to buy more of a good or a service. And what you're basically saying is the Fed and the Treasury are sitting here saying, wait a second. I realize that we have a strong dollar. The way to drive recovery is going to be to weaken the dollar over time. But if you talk to somebody like a Dan Tapirio, he would say you have to systematically weaken the dollar over time or you won't be able to drive the actual recovery that you need. Right? And so what they're doing is they start out with, you know, I call it the water gun showing up in the combat zone. Right?

• 19:24Speaker 00

  They literally, it was like a couple hundred billion, just didn't do anything. And then all of a sudden it was, they dropped a monet- Stimulus bomb on the battlefield, right? And they literally said, hey, we're gonna drop. You know, I think it was the $2 trillion, right? Which, by the way, was a trillion dollar stimulus plan and over the span of like 72 hours doubled in size before it got approved.

• 19:44Speaker 01

  Right.

• 19:44Speaker 00

  Right? And that now all of a sudden there is, and wait a second, we still didn't put a dent in that. And so now you see, you know, the Democrats having approved, I think it was in the House, $3 trillion, right? And it's just like, hey, how do we go bigger and bigger and bigger? And what they're really trying to do is systematically weaken the dollar by flooding the market with as much currency as possible. I think that then leads to this world of like, okay, so how are they doing that? Or what are they doing with it? You've already mentioned that it started out with easy stuff, right? Let's go buy treasuries, you know, all that kind of stuff. Then they got it more exotic. It ultimately leads to the question of like, do we just get the UBI and MMT where you basically have the politicians directing where the money's going, not the Federal Reserve, etc.

• 20:28Speaker 01

  Yeah.

• 20:28Speaker 00

  As we sit here today, how do you think through, does that happen or not? And what's the ramifications if it does happen?

• 20:36Speaker 01

  Yeah. So the, kind of the only difference between QE and MMT is whether or not you're going through the machinations of pretending like you're gonna pay it back. In QE, the Treasury, Prince Treasuries sells it to the Fed, the Fed creates money to buy the Treasuries, and they use a dealer, right? An intermediary bank, they use a dealer.

• 21:10Speaker 01

  And in theory, the dealer is supposed to add some sort, one, legally, there's a, there's a sort of like legally, I think it's the Federal Reserve Act, I guess, or some offshoot of that. So legally, they got to go through that. And then also, in theory, it's supposed to like, keep a market price on what is going on, right? But it's like, the dealer, that's not at all the way. So I can just promise you, that's just not at all the way it's working, right? Because the dealer knows that, that they're right here to buy it off of them. Buy it from the Treasury, sell it to the Fed, make a little spread, nice little business. And so,

• 21:52Speaker 01

  I, I like, I, I think that when you, when you look at,

• 21:57Speaker 01

  Going through the machinations of pretending like we're still doing QE, but with the Treasury right alongside the Fed. And then the only difference between QE and MMT is that, okay, we're not even going to borrow the money anymore. The, um, we're just going to create it literally out of thin air, not even pretend like we're doing this kind of paper IOU type of thing. And I don't, there's not really that much difference between that and what we're doing right now. There's just not that much difference in practicality. So we're kind of already there on MMT. And again, back to this cross the Rubicon kind of thing.

• 22:39Speaker 01

  A lot of this stuff, you know, it's tremendously hard to walk back. Once you get it out there on the monetary side, it's really hard to walk it back. Um, we've seen that, like, we've seen this movie before. We've seen them try and walk back the monetary side. We saw the tightening and it ended up with Q4 18 dumpster fire for all risk assets globally. And you had, uh, Jay Powell, uh, December 17th, uh, 2018, talking about the Fed was on autopilot. And, uh, the market really didn't like that autopilot, right? And, uh, Trump didn't like that autopilot. And they did in January of 19, their massive dovish capitulation.

• 23:20Speaker 01

  Again, reframing just how quickly we've come here, but that all these pieces were in place before we got here, right? Cause we're just talking about January 19, when January 2019, when they did the dovish capitulation. And so, so walking back the monetary thing is going to be really, really hard to do. Walking back to fiscal is going to be really, really hard to do. Um, and, and finding the right

• 23:46Speaker 01

  kind of give and take, um, in terms of the, the, the pace that, uh, you're trying to pull back this fiscal support. When people can't find jobs is going to be very, very delicate. And they're definitely going to err on the side of doing more, not less. But that's just, they are. So what, where does that put us with the pace of quantitative easing?

• 24:18Speaker 01

  You know a lot about the pension liability problem. Um, you and I have talked about it some, USCO talks about it a lot. Um, that again, the great accelerator. Um, that was a problem before anybody ever said Corona. And the stock market move in March made that from a, a, you know, a very, very big problem to this kind of gaping hole. Right. At the S and P 500 at 2000, the size of the pension line a- and what that does commensurate to other risk assets, right? So just use that as a proxy for all risk assets. What happens to the corporate debt? What happens to real estate? Doesn't work.

• 25:00Speaker 01

  What we, you know, pension liability problem, you know, it's been a problem for over a decade. Uh, used to feel like it was a long way away. That problem used to feel like a long way. Now all of a sudden it's not, it's not feeling like it's such a long way away. And so here comes quantitative easing. Uh, we were 12 years on into it in, in the United States. Uh, we did QE and then tried to do the QT. Didn't work. Started, started QE again before anybody ever said Corona. And then, um, what we know, what we think we know about the way QE works is that it doesn't really cause inflation. It doesn't cause headline CPI inflation.

• 25:43Speaker 01

  It doesn't cause, uh, the way that the Fed measures inflation for their 2% inflation target. Right. Cause you hit one month since the financial crisis. Did you hit that? Right? We know that's that. And it doesn't really cause that much economic growth. Causes a little bit, but that was the most tepid e- e- economic recovery. Uh, in, you know, in the history of the United States since World War II that we had. So it doesn't really work that well for that, but what it does do is it makes asset prices go up.

• 26:12Speaker 01

  And, uh, the Fed is Dealing with, it is an organization full of people the same age as the people that are having the pension liability problem. It's there, it's, it's, those are the same people. And so, the Fed is willing and able and incentivized to put the S and P 500 at 5,000 instead of 2,000, where that pension liability problem becomes a, a, a much smaller problem. And they have a track record of a willingness to do that. And so, the base case, that they're just gonna keep going and keep going, ad nauseam.

• 26:53Speaker 01

  Gotta worry about the Dixie to a certain extent, but you sure would like it weaker than it is right now. You know, you just did 7 trillion and it didn't do anything to the Dixie. You can look at what's happening with inflation expectations right now, right? Five-year forwards were at 2%, right before anybody ever said Corona. You dipped down to 80 bips in March, five-year forward inflation, and now you're, you're hanging out at 1.5%. 1.5% inflation for five-year forwards. And so, um, I'm also the opinion they don't want it to happen too quickly.

• 27:29Speaker 01

  Because I think if, um, I, I, I, you know, you talked to a lot of different people about, about what's going on here. I've talked to some really smart guys that you and I both know, uh, that from very early on said, um, this Corona thing is being tremendously overblown. And the magnitude of the monetary and fiscal response that's, that is, uh, happening in the face of this is just going to completely juice risk assets in a big, big way, and they're gonna overshoot. And the, the motto amongst that group is, uh, new high by 4th of July.

• 28:10Speaker 01

  They're talking about the S and P 500, getting, you know, getting back to the highs of, of, uh, late Feb, uh, by 4th of July, which is, would be a disconnect. You're talking about 40 million unemployed, S and P 500 at all time highs. That feels too soon to me. And I, I would have thought before Sunday night that they want, and I actually think they got QE dialed in well enough. I actually think they've got QE plus the messaging dialed in well enough that, um, that they could, I think they got a pretty decent handle on, on, on when to take the S and P 500 to all time highs. I thought they would want to lay off of that honestly until late September when people get ready to vote.

• 28:53Speaker 01

  So it's my base case assumption you're going to get new all time highs in the S and P 500 and they're just going to use QE. You just, it's just a lever. You're just, it's just a lever. But after listening to Jay Powell on 60 Minutes Sunday night, that was not a man that wanted to wait very long, uh, before getting a new all time high in the S and P 500. And so you see these, all these different pieces that are kind of starting to get put into place.

• 29:18Speaker 00

  So when you get that disconnect, right? Cause I agree with you that there's a massive disconnect right now. And, and I continue to say that the, uh, the stock market is not a representation of the economy. It's a representation of central bank actions at this point, right? And, and, and you're talking specifically about using that QE as that lever. Do you believe that they can stay disconnected? Or do you have to have some sort of, um, matching? Whether that means the stock price can go up and eventually has to fall back down to match economic reality? Or you basically inflate it for so long at the dislocated level

• 29:57Speaker 00

  that you buy time for the economic data to recover and kind of get up to meet the expectation of those stock prices or asset prices? Like, like how, how do you solve the problem over the long run of not having a dislocation?

• 30:11Speaker 01

  I, I boil it down to, this is the way I simplistically think about that. I say it is a totally reasonable base case to assume that that disconnect will be meaningfully wider than it's ever been ever before. And you just, and so you just kind of, I don't know, use that. I don't run an equities fund, right? So it's like, I, I don't, maybe I don't have to have it that dialed in, right? As opposed to maybe some other people, that's just how I think about it. Is that it's a great base case to just assume that those things are going to get. Way more disconnected than they ever have before and they could stay disconnected for an extended period of time. And then again, when you, you know, as new information becomes

• 30:54Speaker 01

  available, you just keep watching Jay Powell, keep watching Steve Mnuchin. Okay, Steve Mnuchin's doing the debit card thing. Okay, he made a joke about debit cards with Trump. Yes, we got that going on. And then you got Jay Powell on 60 Minutes. Okay, so that's, okay, we'll put that there, we'll put that there, right? And that's, you know, you just, like, you take it kind of level, level by level from that perspective.

• 31:20Speaker 00

  So, the one thing that we definitely agree lockstep on is it's very hard to walk back all of the stimulus, right? And if you look at, let's take the unemployment benefits, the, the boost or the beefing up, right, the extra $600 a week. We know for sure that there are many people who are making more money on unemployment than they were at their job, right? You could argue that that's because the unemployment kind of boost was inappropriate, or you could actually argue that that says more about people being not paid enough before all this happened, right? Kind of, kind of two sides of that coin. Democrats want to extend it past July, right? And there's talking about kind of

• 32:05Speaker 00

  end of the year in their latest three stimula, uh, $3 trillion proposal. Republicans say, we're not extending that at all, right? And, and now you get this political kind of battlefield over who's gonna take it away, right? And who can point who, the finger at who, because we're in an election year. And so how much of that, like, political, uh, really just posturing, right, or peacocking, if you will, uh, plays into the Federal Reserve decisions?

• 32:38Speaker 00

  Understanding that Jay Powell in the 60 Minutes interview said, oh, Congress has oversight over us, right? Which I thought was, you know, hysterical to hear him say. But how do you think about the kind of the political layer over all of these decisions that are getting made in the economy?

• 32:56Speaker 01

  Yeah. Look, I think the first thing I'd say is, I did not come on here to talk about the coronavirus. Like, I'm not gonna talk about medicine. Don't ask me about. Like, it's like, I try and understand like everybody else, but like, it's been a little annoying when you get like the hedge fund guy to come on and try and talk epidemiology. It's a little, you've seen a lot of that lately. But I think what's been really disappointing to me has been how politicized the response has become. And if you're paying attention, you know that to

• 33:35Speaker 01

  be the case. And I just would have hoped we could have done a little bit better than that. Part of me, you know, if you pay attention to what I talk about, you know, I'm not a huge fan of government in general. And I think for a multi-decade period of time, we've had an issue where the best in this country, most of them have no desire to go into politics. And a lot of people that do have a strong desire to go into politics, aren't the guys that you want in run, like making the decisions on how to run the country. And there's definitely

• 34:18Speaker 01

  exceptions to that. I really want to point that out. But broadly speaking, a lot of times, the people that are most attracted to the way the political process is in the United States right now, are people that have these specific personality situations that, you know, would make them less ideal than than some leaders that you could think off the top of your head, man, I wish that guy was, you know, helping us run the country, right?

• 34:49Speaker 01

  And you've seen that in a lot of different places. You've seen that in the states' responses with the federal government. You're seeing that in kind of a number of different layers. But it seems like the fighting over

• 35:06Speaker 01

  The magnitude of the fiscal stimulus, honestly, I think is just posturing.

• 35:16Speaker 01

  Because you're talking about somewhere in between an unbelievable amount and a completely unbelievable amount. And if the, if the more fiscally conservative side of people, if, if they go in their direction and it looks like things aren't working out, we'll immediately do a lot more. And, and everyone's very cued in on that. And again, the main thing that they're kind of, kind of shooting against, dollar, you know, where the dollar is and inflation. And you need inflation. And we can't find it. We couldn't find it. For the last 12 years, we haven't been able to find it. And coronavirus is a deeply deflationary event.

• 36:01Speaker 01

  But you have, again, the great accelerator. You had a number of other really strong deflationary forces that were already, you've been in it forever. Technology, right? Technology is very deflationary. Been going on for a long time. Demographics, deflationary. Everybody's getting older, deflationary. It's the yuppie, yuppie to nerd ratio. The ratio of the, the spenders to the savers. And when you get an elderly population, that's a, that's a deflationary, fundamentally deflationary event. And we've got Japan as an example. You have a bunch of different countries as an example. Um, one that I heard recently

• 36:45Speaker 01

  that I had not thought of before as a deflationary effect is unprofitable companies. So very, very large companies that the market allows them to issue equity and debt continuously to fund businesses that don't, don't generate earnings or, or cash flow. We got a lot of those, right? We got a whole lot of those. Uh, because they have this kind of top line revenue growth or, or whatever. But you're, if you think about that, you're throwing capital into a hole that isn't, you know, functionally producing sort of GDP type of growth, right? Deflationary.

• 37:29Speaker 01

  You have, and then here comes coronavirus, deeply deflationary. And oil, okay, oil, you know, does this incredible pullback, also deeply deflationary. And so, so the United States is searching for where to find inflation. And so, if you use that as a base case backdrop, they're going to keep doing more in terms of monetary and fiscal stimulus. And then, where else can we find inflation? We can find inflation in deglobalization.

• 38:03Speaker 01

  And that brings us to, this is what Schumacher was talking about. And, and other smart guys have been talking about this, okay? So, the Corona, this Corona then sort of pulled back the curtain on the fact that there's supply chain issues, number of people have been talking about this already. There's a book written a couple of years ago, China RX, or something like that. The, the book about how vulnerable our prescription supply chain was in America. Whatever the stat is, like 90% of all, uh, uh, blood pressure medication or something, I don't know. I don't want to misquote it, but it's like, real problem. You saw that come on, you just recently, last week, you saw the announcement of the

• 38:47Speaker 01

  advanced manufacturing facility for prescription medication in Richmond, Virginia. I think is where that's being done. A lot of people talking about bringing, you know, first is, it's the kind of national security type of supply chain. So you bring back pharmaceuticals, you bring back PP and E, bring back microchips, right? Whatever that microchip company just announced last week. They're, they're now, they brought their manufacturing facility, they're building back on, on, on shore. And then, and then you can just get creep in terms of other supply chain things. Especially you can get creep in terms of, of other supply chain, bringing it back from, from China back in the United States.

• 39:31Speaker 01

  When Larry Kudlow is talking about paying for the costs. That was a month ago. Like, oh, why don't we just peel off? And, and the thing is, is like, before... Crossing the Rubicon. Before all the numbers that we started doing this go around, to peel off $300 billion to pay for US manufacturers to bring manufacturing facilities from China back on the United States, where are we going to find $300 billion? Where are we going to find that? Well, now, in the backdrop we have now, we ripped $2 trillion on a Thursday the other day because Powell was worried about the unemployment numbers. Like, these are incredible numbers that we're talking about now. So you can definitely find

• 40:17Speaker 01

  $300 billion to bring the supply chain back from China. Oh, and by the way, oh, we get to create a ton of jobs. Awesome. Oh, and we may be able to get that much, much desperately needed inflation that we can't find. And then the real kicker,

• 40:36Speaker 01

  the real kicker is that we get to fight communism. Pop?

• 40:39Speaker 00

  So, the two things that are really interesting to me. The problem you're talking about in finding inflation, right? I think the concern is there's a bucket. And when the bucket's empty, that's a deflationary environment, right? And we're trying to fill the bucket with water. And literally, we started with an eyedropper, right? It's just drop, drop, drop, drop. And then take a genius or a rocket scientist look and say, hey, that's going to take a long time to fill that bucket up. Or say, hey, you know what? Maybe we should pour a little more water, a little faster. And then all of a sudden, something like coronavirus happens and say, hey, we need the bucket full right now.

• 41:15Speaker 01

  Yep.

• 41:16Speaker 00

  And they take literally a fire hose. But the fear is, you don't even fill the bucket. It's overflowing because you shot way too much water in, right? Or you shot too many dollars into the system.

• 41:27Speaker 01

  Yep.

• 41:28Speaker 00

  And so, before we get to the fighting communism and kind of the whole China showdown,

• 41:36Speaker 00

  Do you worry about overshooting in terms of the monetary stimulus and eventually getting that high level of inflation or even just over 2%? Forget high level.

• 41:46Speaker 01

  I don't worry about it. They're gonna do it. So there's no point in me worrying about what's gonna happen because they're gonna do it and then we're gonna find out what happens. I mean it. They're gonna do it. They're doing it right now.

• 42:01Speaker 00

  So I agree with you. And I actually think that there's a separation. This is the other thing that I've been thinking about a lot recently. There's a separation between the inflation actually happening and just the fear of the inflation happening. Right? So if you go back to 08, 09, gold goes down 30% you know, summer of 08, and then they do start doing all this printing and people just, oh my God, here comes inflation. They run into inflation hedge assets. Those things explode, right? Gold hits all time high in 2011, all that kind of stuff. Inflation never actually came, right? But it was the fear of it that drove the inflation hedge asset prices up.

• 42:38Speaker 01

  Yeah.

• 42:39Speaker 00

  Here, I think you get a kind of a repeat. There's the fear. You see people talking about it. People will definitely run into these assets, right? You even see Paul Tudor Jones talking about it, all this kind of stuff. But I actually think that they're gonna do it this time.

• 42:53Speaker 01

  Yeah.

• 42:54Speaker 00

  Right? And to your point, does it become a, hey, we're targeting 2% and so we hit 2.5 or 3%? Or is this a, well, we way overshot and we get into scary levels of inflation that I think people are looking around the room saying, hey, is this thing gonna survive? Like, where do you think we end up if we get the inflation?

• 43:14Speaker 01

  Yeah. So first, you need to make sure we're talking about headline CPI inflation in US dollar terms. As soon as you step outside of US dollar terms, you know, people use this, the term, the dollar wrecking ball. You heard people, right? Then describing what the dollar does to emerging economies, right? The euro's in a lot of trouble, man. I mean, the euro's, I don't know how much you've been paying attention to the Constitutional Court in Germany and like, I mean... It's in real trouble. Japanese yen is in real trouble. So now you talk, this goes back to these macro voices, cohort guys, where they're talking about, oh, you're going to flee the dollar as the,

• 43:56Speaker 01

  as the, they're doing so much monetary fiscal stimulus, you're going to flee the dollar as the world reserve currency into what? Into another currency? What currency are you going to go to? Everybody's in worse shape than we are. And so, um, that's why they're all such gold bugs, right? Um, and I get that. And, you know, sometimes I always have this nagging feeling in my head about gold, where when the entities most incentivized to keep the price of gold from drastically increasing

• 44:36Speaker 01

  relative to the currency that they control also hold 25% of the gold. In my head, I'm just like,

• 44:49Speaker 01

  you know, and it used to sound real tinfoil hat until a couple of those guys at JP Morgan went to jail on the precious metals desk. Right now, maybe anyways, I don't want to get into that, but like,

• 45:00Speaker 00

  Wait, before, before you go on, it's not so tinfoil hat when you know that they're willing to do certain things. Because right now, what, you know, whichever side is right or wrong, I don't know all the details, but literally Venezuela is suing, I think it's Britain, because they won't give them their gold.

• 45:17Speaker 01

  Yeah, I saw that.

• 45:18Speaker 00

  Basically, everyone is admitting, yes, this is Venezuela's gold, but we're not going to give it to you. And I get it that the sanctions and kind of all that kind of stuff, but it's just, you, you start to understand that there's things that are happening that everyone is a rational actor and that sometimes leads to irrational things happening in a market. If you don't understand why somebody's doing something, right? And, and it feels like, um, like this is kind of Brent Johnson's theory at Santiago, right? Which is like, we're in bad shape, but relative to everybody else, we're actually in great shape. And so, even though we get kind of screwed,

• 45:59Speaker 00

  if everyone else gets screwed more, then on a relative basis, we win, right? Which, which is pretty crazy.

• 46:05Speaker 01

  Yeah, you know, I have this weird, I've had this theory, again, as a guy that has done plenty of public railing on the Fed and Treasury and all this kind of ridiculousness, it's a big part of why I do what I do for a living. I've had this like crazy thought that like, what if they were actually way smarter than I'm giving them credit for? And they were setting up all of these dollar denomin- you know, allowing all of these dollar-denominated contracts and financial instruments to exist, and they see that keep growing and keep growing. In the back of their head, they go, if anything really bad

• 46:49Speaker 01

  ever happens, the whole world is gonna have to rush to try and get dollars to satisfy these things, and it will give us the the buffer that we need to do, you know, incredible amounts of support for Americans.

• 47:10Speaker 01

  I don't know. I'd be giving them a lot of credit, which has not generally been my tendency, but...

• 47:16Speaker 00

  But at the same time, at the same time, it's not out of the realm of possibility.

• 47:24Speaker 01

  No.

• 47:25Speaker 00

  Right? All right, so as we see this all happening, let's talk about China. There is a man who's the President of the United States, who came in, and he had, to put it lightly, some very radical ideas compared to the establishment. This is everything from the de-globalization, this is taking on China directly in all the trade, we'll call it talks if you want, befriending dictators of enemies of the United States, and kind of playing up those relationships, to questioning

• 48:07Speaker 00

  very long-term relationships that the United States has, both on the diplomatic side, but also things like the World Health Organization, the Climate Accord, all these different things.

• 48:20Speaker 00

  Whenever there is something very disruptive like that, it's obviously going to be polarizing. So I don't want to get into kind of the political polarization that's well documented. But the one thing that in some weird world we've backed into, many of those policies are now going to be adopted. But the impetus for them is not going to be our president wants to do this. It's going to be the virus forced us to do this. Right? So the deglobalization. Now everyone wants to take on China. Both sides of the aisle are looking over there and saying, whoa, hold on a second. Right? And maybe for some different reasons, but ultimately we get this showdown.

• 49:03Speaker 00

  And so, you know, you know, uh, I spent a year in Iraq. A war that was started over WMDs that weren't there. Uh, and there's a lot of people I think that question that whole narrative of what, you know, 18, 20 years later, why are we still at war in the Middle East?

• 49:25Speaker 00

  This is not a let's go invade, you know, the, the largest population country in the world. This is let's engage in an economic war that 50 plus percent of our country doesn't even understand. Right? And so let's just start at a high level. How you see us positioned today, like that economic battlefield, if you will, like, how is it positioned? And then where do we go?

• 49:49Speaker 01

  Yeah. The

• 49:53Speaker 01

  lot, lot to unpack on China.

• 49:56Speaker 01

  Um, Trump ran for president on make America great again. And like you said, again, back to this, the great accelerator. He was already making moves on China way before anybody ever said coronavirus. And, um, you had the tariff wars, which were, you know, a year ago, right? That those cranked up and they came to this like pseudo deal. But you knew that like the pseudo deal was really just Trump was like, that's enough for my first, uh, term. And like, I'm definitely coming back with these guys in the second term. And a lot of this has been driven for Trump, a lot of this has been driven by Steve Bannon, right? That is the most hawkish guy that's closest to Trump.

• 50:42Speaker 01

  And Steve Bannon was out here the whole time with Kyle Bass and some of these other guys with the level of hawkishness, it felt like it was kind of halfway to Alex Jones, right? Especially, it felt unprecedented in a way because Obama was such a, you know, he really was a globalist and he wanted everybody to get along. He's a big get along guy, right? And that felt, you know, Obama was incredibly presidential, right? It's just, I mean, sometimes, politics aside, sometimes I see Trump get on TV and you really

• 51:26Speaker 01

  miss Obama, right? Regardless of policy decisions, but just like, you know, Obama's a good guy, right? So, so with the, so with globalization, Trump starts wanting to walk that back. Then here comes coronavirus. I'm of the opinion that,

• 51:49Speaker 01

  you know, it's, it's becoming increasingly apparent that

• 51:53Speaker 01

  the United States is, is going to hold China accountable for coronavirus. And there's going to be a full uncovering of the facts. I have no doubt that the intelligence agencies, like, let's be, like, how, how much digging do you think the intelligence agencies have been doing over the last couple of months? Like, let's be honest, let's just frame it like that and we don't even have to answer the question. Just frame the question.

• 52:24Speaker 01

  They're gonna answer for that. And then you're just starting to see the first things trickle in, right? Like what you said, World Health Organization, okay?

• 52:33Speaker 01

  A number of other things. And then here comes the supply chain coming back. And the craziest thing, the experience for me personally, that's been crazy is that, have you listened to Steve Bannon's podcast at all?

• 52:50Speaker 00

  So I haven't listened to Steve Bannon. Before you tell us about this podcast, the one thing I will say about Steve and Kyle. So I did an episode with Kyle, went down to Texas and had lunch and it was fantastic. Incredibly intelligent guy, right? Obviously.

• 53:11Speaker 00

  I left and I said, he really believes what he's saying, right? There was no doubt. There was no kind of anything. I didn't know anything about Steve Bannon. Before I went down there, we did not talk about Steve Bannon while I was there. Afterwards, I saw on Real Vision that Kyle interviewed Steve Bannon.

• 53:31Speaker 01

  I watched that episode, yeah.

• 53:32Speaker 00

  And basically, you could sum up my understanding of Steve Bannon as headline, you know, kind of coverage of him, right? So kind of he was the right wing crazy guy that the media really kind of took some shots at. And that was, you know, that's all I knew about him. Didn't know anything. After I listened to him and Kyle talk in that interview, I said, two things you can't argue with is Steve Bannon is incredibly intelligent.

• 53:59Speaker 01

  Smart.

• 54:00Speaker 00

  And Steve Bannon has a better pulse on the geopolitical landscape than pretty much almost anybody else I've heard talk about it, right? And he may be wrong. He may be right. He may be, you know, ill advised in one area. He may be kind of, you know, waving his hand in other areas, whatever. But the dude is on top of a lot of stuff. And so I have not listened to the podcast, but I just want to put that out there as I was very surprised when I heard him talking on those two fronts.

• 54:30Speaker 01

  Yeah. So the way

• 54:33Speaker 01

  The way that my China view has been formed really over the last probably like five weeks or so. At the beginning of April, um, I started to listen to Steve Mann's podcast. The guy goes two hours a day, like six days a week, played a lot of content, man. And again, it's like kind of halfway to Alex Jones. But I started noticing that he was talking about things that were that the United States was going to do on the podcast. And then like 10 days later, it would come true. Like Trump would do it and you or you'd see some announcement, you'd see some move. And he had talked about, he took, he called the pull it pulling the funding from the World Health Organization. He called that a month before it happened.

• 55:19Speaker 01

  And he was talking about it factually. And, uh,

• 55:26Speaker 01

  and so that was the first thing. And then I think in the second week of April, I saw Bill Maher,

• 55:33Speaker 01

  say that we need to call this the China virus. And that there's not, we shouldn't be changing the nomenclature, whatever of how viruses are named, just to try and be, uh, not step on anybody's toes in China. Okay, this is not Kyle Bass saying this. This is deeply left, right? The champion of the Mar, right? And, um, then I, then I started thinking about it and you, you start, this is what I meant at the beginning of this conversation where you see how all these things are interconnected, then you start thinking about the inflation thing. And then you start thinking about how the hell are we going to get, what, what do we, we need jobs.

• 56:18Speaker 01

  We really, really need jobs. And, uh, then you start thinking about, uh, the potential for behind closed doors, politicians on a conservative side rapidly arriving at the view that.

• 56:34Speaker 01

  You know, the CCP, the Chinese Communist Party is, uh, is being treated as, uh, you know, really a bad actor. And we're treating them as a bad actor because there's now this body of evidence that shows that they're acting as a bad actor towards us. And it's not kinetic war, which was what we used to call war, like what you went to go do. And, and, but now we're talking about the economic war and the information war. And you're increasingly seeing this, this mounting body of evidence that that is what's going on. And, um, one of the main ways that I realized that it was going to get bipartisan support

• 57:18Speaker 01

  after you think about inflation, which you need and the job creation, which you need, was one of the main reasons that, that progressives were having a hard time getting on the, this Make America Great anti is because it feels xenophobic, right? Building a wall along the Mexico-Texas border feels very xenophobic. And progressives have definitely tried to paint, um, some of the situations going on with China in a, in a xenophobic type of manner. I understand that. But what you're able to do is, this is not about the Chinese people. We love the Chinese people. This is not about, um, uh, Chinese Americans.

• 58:03Speaker 01

  We love Chinese Americans. This is about the Chinese Communist Party. We are fighting communism and there is nothing more that Americans love than to fight communism. And when you can reframe it like that is we actually want to, um, free the Chinese people from the communist rule. And then you start getting these USSR look-alikes. And that picture, yeah, what, what Democrats gonna, what, how do you stand up to that? Oh, no, I'm super, super pro-China because I don't like jobs for Americans in the worst economic downturn

• 58:45Speaker 01

  in American history, when unemployment rate is at unprecedented levels. Oh, no, I don't want to bring jobs back to America. Nobody's going to take that stance. And now it doesn't have to be about xenophobia. And again, I'm not, this is not my view. This is my observation of, of these pieces that have been laying in place. And the amount of, you know, it was a little over a month ago that I think I kind of came to this realization. And the amount of dominoes that have started falling in this broad direction is giving me pretty strong confidence that the United States is about to put the screws to China

• 59:24Speaker 01

  a bunch of different ways and to a degree that I think just a really short amount of time ago would have thought is being impossible. And then we're going to see how strong the Chinese economy really is. I think when the United States really tries to start to, to punch back, I think, and, and, you know, against a lot of the different things that have been going on.

• 59:52Speaker 00

  So, most of that punching back, as we sit here today, looks economic, right? And that's everything from weakening the economy, from the inside out, pulling back supply chains, pulling back jobs, right? All that kind of stuff. Also externally weakening them, that's through the tariffs and all that kind of stuff. Do we go from an economic war to a physical war? Like, do, do, does it creep out into something that looks different than what I think the path that you and I see right now? Like, can you see that happening?

• 1:00:29Speaker 01

  So I just take the view of experts. Um, some of the experts that I've, I've read and listened to on this topic. Say that China does not have interest in a physical war. The, the really sad part is that if you just looked at history. History would tell you that with almost no exception, you go to physical war when things like this come to a head.

• 1:00:53Speaker 01

  Um, you know, with very little exception. I think there, there is some hope that in 2020. We can avoid that. Um, but it's, it's scary. Um, but I, but I have. Again, heard from experts that, that, that, you know, make a career out of following China. Um, that China does not want that. Um, and that they think that over, again, they have a tendency to think on, you know, they think much, much longer term than I think. US politics and things like that are able to think on. And they're thinking over decade, over decade, over decade of experience.

• 1:01:34Speaker 01

  Uh, or, or, or, uh, uh, just decades of, of going back and forth with economic and, and information. Warfare that eventually, uh, you know, the US just slides into a sort of more subsidiary position. Um, I just get the sense that over the next handful of years. The US is gonna punch back there.

• 1:02:00Speaker 00

  Yeah, it was really interesting. Peter Zehan, uh, kind of a.

• 1:02:04Speaker 01

  Yes.

• 1:02:04Speaker 00

  Global strategist.

• 1:02:06Speaker 01

  Did you have him on?

• 1:02:07Speaker 00

  I did.

• 1:02:08Speaker 01

  Oh man, I hadn't listened to that. Oh, he's so good.

• 1:02:10Speaker 00

  And, and he basically, his whole theory, for those that don't know, is, uh, he looks at demographics. He tries to understand how the world will, uh, kind of evolve over time based on that demographic, uh, information. And, uh, he's of the belief that within the next 10 years, there will not be a unified China. Right? He, he, he believes that basically China is on the precipice of, uh, at best breaking up. At worst, uh, blowing up, right? It is kind of a, I think would be fair way to categorize it. And so. How does this affect the rest of the world, right? You got the two superpowers locked horns in kind of the middle of the arena and they're gonna go at it, right?

• 1:02:54Speaker 00

  And it's kind of like a prize fight in that they're both gonna land punches to some degree. The question is gonna be who knocks who out at the end?

• 1:03:03Speaker 01

  Right.

• 1:03:05Speaker 00

  Is the rest of the world just sitting in the stands watching? Or are they doing things that to help either side or manipulate the situation in any way?

• 1:03:17Speaker 01

  Um, I mean, it feels like there's gonna be major collateral damage from this, right? We know that the EU is, the EU economy is basically mostly Germany. And Germany has hitched its horse to the China cart. And they've been able to sort of, you know, import growth from China that is in a lot of ways buoyed the entire European Union. So I think there's potential for major collateral damage in the European Union is, you know, if, if, you know, these two sides start going against each other.

• 1:03:58Speaker 01

  I don't have a base case there. It's more, you know, all these different things, these really big things we've been talking about. I really, if you can tell, I just try and pick a general direction as a base case. And then you're just waiting for new information and you see if you're confirmed or you're denied. And what it looks like right now is like, okay, it looks like the United States is really gonna try and put the screws to China. And there's a good chance that China's gonna do something to try and put the screws back to them. And we're gonna go in that direction and then you just watch is, you know, every time a new, you know, every time Chinese stocks get delisted from the NASDAQ, right? Like you're seeing, dude, banning.

• 1:04:43Speaker 01

  A month ago, he was talking about, at least three weeks ago, Bannon on his podcast was telling you this was gonna happen. That's what he's made, listening to his podcast, like such a weird, like, just a weird experience because of how accurately he's called a lot of this stuff.

• 1:05:01Speaker 00

  And it's not by coincidence, right? It's not like the guy's got a magic ball. It's one of these things, if you, if you want to predict the future, you know, go build it, right? And that's what he's doing. Is he's got the ear of the president and he's basically saying this stuff, because that's what he believes. And then he goes and he tells the president, hey, you should do this, right? And some percentage of those ideas, you know, get through the filter and we'll end up getting implemented. I guess the other part of this kind of superpower, you know, showdown is in a world where China wins that, right? And it happens over, you know, a decade, let's call it. Does the US dollar lose the global reserve currency status? Like, is it, is it a battle where that is what is at stake? Is the global reserve's currency status?

• 1:05:46Speaker 01

  It's a great question. You could put yourself in the shoes of the leaders of the Chinese Communist Party, and they're trying to play 50-year, 100-year ball. And you could say, man, this US dollars of world reserve currency is a huge pain in our ass. And it is a tremendous pain in China's ass. And if you saw in April, when the Fed extended those FX swap lines to all the major central banks in the world, you didn't get a swap line? PBOC did not get a US dollar FX swap line. And then, just to sort, we very talked about crypto so far. We're gonna get to Bitcoin. But just to circle back to crypto, here comes

• 1:06:29Speaker 01

  the USDT prints, the tether prints. All the US, the majority of the tether printing has been a backdoor FX swap line into China and other parts of Asia that desperately, desperately need dollars, and they'll take them any way they can get it. They love tether, they've been loving tether for non-crypto use cases. I first started hearing about that in April of last year. Remittance payments, cross-border payments, supply chain logistics payments, capital flight, all these different use cases. And, and, and so, as

• 1:07:11Speaker 01

  As we kind of start to squeeze China and we figure out the different ways that we can put, you know, the US puts the screws to them, but in the meantime, you know, incredible amounts of money supply increase. Now, look, you, you listen to some of the macro voices cohort guys. Like I think Luke Grauman would say we got like 50 trillion of room. I think that, I mean, I've heard him through, you know, and I think these guys throw out these insane numbers in terms of the amount of room that you have. Uh, I don't have, those guys are way more of an expert on that than I do. But I think the thing,

• 1:07:54Speaker 01

  important thing to realize is that

• 1:07:58Speaker 01

  those chickens are going to eventually come home to roost for the US dollar.

• 1:08:04Speaker 01

  And they're not going to be baby boomers problems. They're going to be our problems. There's going to be, that's going to be your problem. That's going to be, that's my problem. That's, that's not my, I love my mom, love my parents. It's not going to be my parents' problem. It's not Donald Trump's problem. It's not, it's not Joe Biden's problem. It's not Jay Powell's problem. It's not, it's, it's not any of their problems. It's, that's going to be our problem to deal with. And so you're, you're doing damage to, uh, the strength of the US dollar to, um, uh, kick the can further down the road. And when people talk about, uh, boomer sociopathy,

• 1:08:50Speaker 01

  that's exactly what they mean in terms of you're putting him, you're putting it future generations, you can just look at, there's a history to all this shit, dude. There's hundreds and hundreds of years of fiat currency history, central banking history. There's history to all this. Without exception, when you do this, it leads, it ends very poorly. There is no exception to that. But it doesn't happen right now. We got room to give. And by the time it does come to a head, it's not going to be their problems, it can be our problem. So how are we going to fix, like, what's our generation going to do to fix that problem? Okay, here comes a non-solving form of money.

• 1:09:34Speaker 01

  Really, it's real radical. Technology hadn't been around very long to do it. Boomers definitely don't like it. I think it doesn't make any sense at all.

• 1:09:45Speaker 01

  But when you look at how we got here.

• 1:09:51Speaker 01

  And the way that we got here with the monetary policy situation. It's actually a lot like how we got to the global financial crisis on the micro level of subprime. How did subprime happen? Most people, everybody's seen The Big Short. A lot of people read the book, right? If you've read the book, then you know that a key factor in how the subprime mortgage crisis happened was because of a lack of, there was nobody checking anybody else, right? And there was a lack of checks and balances and the incentive structure was all wrong, right? Because everybody got to punt the risk and you had the guy making the originations that got the bonus and then the bank didn't have to hold it. They could punt it. And then the bank that got it punted to them, they collateralized it and they sold it to somebody else.

• 1:10:34Speaker 01

  And there's Germany over there that would always buy everything and like, that's, there was not a system of accountability. Well, the same thing has happened over a multi-decade period with what we've done with, with, with the monetary policy of the US dollar. And that's part of this, you know, bigger thing that I talk about a lot called the trust revolution. And as we fast forward through the rest of this decade, and I think we've touched on a number of things that we're going to see happen in the next decade, real big, important, massive things that are going to happen. Who knows what the outcome's going to be? But as you move through the 2020s and, you know, we'd probably get to 2030, is the Euro around?

• 1:11:18Speaker 01

  I don't know, probably not, honestly. You know, huge changes that will have occurred. And does the world start looking at the damage that's been done to the US dollar?

• 1:11:30Speaker 01

  And the fact that historically, inevitably, there's a transition from one world reserve currency to the next. The last time we had one of those was the British pound after World War I. We got to World War I, pound was wrecked. People used the dollar and the British pound together in between World War I and World War II. Down on the backside of World War II, British pound was so wrecked, we did Bretton Woods, here comes US dollar, been there ever since. There's a timeline to all of these. What's the chances that has the US dollar inevitably become so damaged that people are really looking for where else to go, that our generation, not our parents' generation, our generation decides, I think we should go with non-sovereign, I think we should go with something that's governed by open source computer software?

• 1:12:18Speaker 00

  I mean, look, I'll take it even a step further. Not only is it our generation, at what point do other countries just say, "Look, I'm not playing this game," right? I see the economic battle between the US and China. I see all of this manipulation going on. I see the printing. I just want something that I know what's going on, right? And I think that that perspective applies to countries, but to your point, also to an entire generation of people who literally right now, the meme, right, which as we're learning is the memes are the message. The meme is, "Don't fight the Fed, but money printer go brrr," right?

• 1:12:59Speaker 01

  I was thinking about this the other day, actually, money printer doesn't go brrr, it actually goes beep boop. I don't know, I thought about that the other day.

• 1:13:07Speaker 00

  Yeah, I mean, but here's the thing, right, is when you think about what they are doing, there's never been a generation that has had the access to information and the access to the people that we have today. So part of what I always joke about is, a magic show only works if you don't know how the magic is done. But as soon as somebody tells you how the magic trick actually is carried out, it's no longer magic, right? And what we're seeing is, they're revealing the magic trick. They're saying, "We literally go into an account and we edit the number." Right? If you hold on a second, why do I pay you taxes?

• 1:13:50Speaker 01

  Yep.

• 1:13:51Speaker 00

  Right? Why do you need my tax money as revenue if you can just edit your bank account? That doesn't make any sense, right? And you start again, that's a small subset of people who start to think that way. Then they see on, you know, the first 60 minutes of the crisis where literally they're saying, well, we have infinite money. Right? We just, we could print as much as we need. Okay, there's a second.

• 1:14:11Speaker 01

  You're talking about Cash Kari?

• 1:14:12Speaker 00

  Yeah.

• 1:14:13Speaker 01

  That one? Yeah, that's amazing. Yeah.

• 1:14:15Speaker 00

  Then you get Jay Powell, right? And you keep going through it. And what you realize is it goes from a very small subset of the internet, right? This crypto community, but there's literally videos floating around. There's memes. I've tweeted three or four of them where people are taking Jay Powell and they're putting him on videos of rappers throwing money around, right? And it's a joke at first, but the reason why it's a funny joke is because there's truth in every joke.

• 1:14:44Speaker 01

  Yeah.

• 1:14:44Speaker 00

  And when you start to see is the narrative changes. And of course, there's some cutoff. I don't know what the age cutoff is, but some group of people above a certain age are like, you young kids are idiots, right? You know, who's a Dave column the other day said, young people, the number one rule is don't complain about your government. That's for old people to do, right? But, but the point being, at some point, that meme is just accepted fact. And when that happens, trust ends up eroding away. And people start looking around the room and they say, well, where's the most transparent thing?

• 1:15:18Speaker 01

  Yeah.

• 1:15:18Speaker 00

  Right? And I think that that's what we're seeing happen. The question is, can you get enough people to kind of tip over and seek that out?

• 1:15:29Speaker 01

  Yeah.

• 1:15:29Speaker 00

  Actually get the tipping point to actually occur, right?

• 1:15:33Speaker 01

  Well, I mean, I think, I think that just in the last 90 days, again, the great accelerator, just in the last 90 days, I think you have had an entirely new swath of, you know, kind of almost category of, of investors that were not considering Bitcoin.

• 1:15:56Speaker 01

  That look at the magnitude of what we just did and are really starting to consider it at the first time. I mean, I really know that to be the case, right? And there's a few that obviously, you know, Paul Tudor Jones is, you know, probably, you know, the one that's being talked about the most, and that's great. And, um, uh, you know, his investor letter, you know, what he wrote was, you know, really, really good. Or I highly doubt he wrote it, but the guy he got to write it, you know, they spent a lot of time on it, like a third of the whole thing was dedicated to it. Um, and RinTech, Renaissance Technologies, trading it. Um, again, very different, very different type of investor. Um, and I've been having some fun,

• 1:16:37Speaker 01

  sort of like, daydreaming sessions, imagining, trying to imagine how Renaissance Technologies is investing in Bitcoin. And like, what are they, because they're not a market making firm. They're, they're a firm that like, tries to take every single financial instrument on the planet, is incredibly simplistic, and nobody really knows how they do it. But like, they, again, most successful hedge fund of all time by a long shot. And they like, take thousands of financial instruments, or hundreds, probably thousands, and each one is made up of like, a tiny little slice of a specific type of risk. And each instrument is like

• 1:17:19Speaker 01

  a combination of different tiny little dashes of like a thousand different types of risk. And then there's a relationship across all those different types of risk, across all those different financial instruments. And then you like, try and find ones that are, you know, cheap or expensive relative to some other ones. And you go along those, the cheap ones, you go short the expensive ones. And it's that kind of thing. Again, I could be completely wrong, but I mean, broadly speaking, there, you know, it's something, maybe something like that. So it's been fun to imagine, like, how do they, how do they code up Bitcoin? Like, when is, like, when is Bitcoin, I mean, they didn't, they didn't get into it and make a change to their fund structure or their regulatory documents to

• 1:18:02Speaker 01

  short the thing into a hole, a hole in the ground. They didn't. It was more likely they did something like, oh, Bitcoin's cheap relative to the Fed, the size of the Fed's balance sheet.

• 1:18:13Speaker 01

  You know, that's a very simplistic relationship. And then you just think about that. And then you and then insert like another thousand different financial instruments with different sort of types of risk, right? And it's just like, it's been fun to think about. You know, what do they think the relationship of BTC is to gold or to ten years or to the VIX or to FAANG stocks or to, you know, a lot of different things like that. But

• 1:18:43Speaker 01

  you are seeing, you know, okay, another example. Andreessen Horowitz, right? Oversubscribed on a 515 million, uh, million dollar fund.

• 1:18:54Speaker 01

  You're seeing a lot of different, I, I, I'm sure you've noticed it anecdotally. How many people just hit you up out of the blue, right? You're a little different, you're like a major figure. But in crypto, for me, I'm like, for all my friends and family and things like that. I'm just the guy that does a lot of Bitcoin more than anybody else that they know. And so, you know, when I get, you know, a dozen text messages in the third week of March about buying Bitcoin, most of them already bought. And then, you know, we, we just recently, uh, opened up our fund to take outside investment again. And the amount of the interest that there's been in it. And you see a lot of these different things where

• 1:19:36Speaker 01

  we've covered so much ground from a monetary and fiscal policy perspective. You know, again, I bang this drum all the time. Bitcoin is a non-sovereign, hard cap supply, global immutable decentralized digital store of value. And it's an insurance policy against monetary and fiscal policy irresponsibility from central banks and governments globally. Been saying that since the beginning of last year, way before any of this stuff happened. Then you do seven trillion of monetary and fiscal stimulus in less than 90 days. And people just start thinking about that a lot more. Yeah.

• 1:20:06Speaker 00

  Well, and I think part of it is, um, before it was, uh, a religious, um, kind of irrational type investment, right? Very much, very similar to like a venture capital investment. So it's either going to be worth, you know, boatloads more than it is now, or it's going to be worth zero. And I think a lot of people looked at it that way.

• 1:20:27Speaker 00

  Now what people say is, well, hold on a second. Forget what asset it is. I know what's happening on the economic side because they're talking about on television every day. Right? And the numbers are just mind boggling.

• 1:20:40Speaker 00

  What can I do, right? And there's really only three things you could do, I guess, four things you could do, right? In the short term, you can hold dollars, you can hold gold, you can hold land, you can hold Bitcoin, right? And maybe there's some other, you know, kind of crazy exotic things, whatever. But for the most part, those are four easy to understand examples. In the medium term, you probably can still hold dollars, you can hold gold, land and Bitcoin. In the long term, you can't really hold dollars, right? Because it's going to end up getting devalued away. So now you're back to gold, real estate, Bitcoin. And yes, I'm sure that there will be the inflation of stock prices along the way. But you still have that dislocation between the economic underlying data and asset price. And so,

• 1:21:23Speaker 00

  you know, Paul Tudor Jones wrote it, I thought really well, where he said, look, the fastest horse wins, right? And it's, I think all of these are going to go up, but this one specifically. And it reminded me, I gotta go back and get it. I wrote, this is in March, I wrote a piece ranking all of the assets over the next two years. And I gave stocks like an eight out of 10, right? I gave oil like, I think it was like a five out of 10. And I said, gold is going to go over 2,000. I think it's going to end up somewhere between 2,000, 2,500 bucks, but it's a two out of 10. Because that's really not that big of a move compared to something like a Bitcoin where the volatility is going to work in its favor, right? You're going to get this massive increase in price. And what shocked me was

• 1:22:08Speaker 00

  how many, like, traditional Wall Street folks reached out and they said, wait a minute, you're telling me that the same drivers of, you know, gold or real estate is going to be the driver of Bitcoin? Like, explain that to me more. Because they were already convinced that those other two assets were going to do well because of all the monetary stimulus stuff, right? And so I think that's where you're going to see the kind of confidence build, is that connection between what drives this price compared to that macro environment.

• 1:22:37Speaker 01

  But another way to back into high conviction around a Bitcoin long is going back to the incentive structure for the Fed to put the S and P 500 at 5,000. Again, the way I always frame it, willing, able, incentivized, with a track record of printing. Look at that pension liability problem. We need this thing at 5,000. And you think about that as the backdrop, there's no way Bitcoin doesn't work. If that call is correct, there's a you.

• 1:23:16Speaker 01

  It's highly unlikely that Bitcoin doesn't work in a really, really big way. And obviously from a percent return perspective, works massively back. You know what? That's a double. So that's a double in the S and P 500 from here. Right? Little, a little less than a double. Well, if that, if that's the backdrop, then I mean, BTC is going to be 50,000 plus. It just is. It is. And maybe there's a chance that Satoshi moves his coins. Maybe there's a chance that somebody does some of the blockchain. Somebody steals all of coin, some catastrophic idiosyncratic type of risk. And you got to manage around those and that's why there's active management. But like

• 1:23:58Speaker 01

  that backdrop, it's really, really unlikely that Bitcoin doesn't work in a big way there.

• 1:24:04Speaker 00

  Yeah. Yeah. And I think what you're talking specifically is about is structurally Bitcoin couldn't be better set up for what we're seeing. Right? And, and it's just interest rates drop. You get printing of money. You've got a store value asset that is based on artificially capped supply. And you just had the halving, right? Like, that's the part that that's so crazy to me is a lot of the analysis I see right now. Talks about Bitcoin in the macro environment and they basically like as soon as the halving isn't even here. Right? It's like, that's not even part of the analysis. When you add in that part, I continue to tell people, it's like gold in 2009. When everyone should have been buying gold before it went up almost 200%.

• 1:24:48Speaker 00

  Imagine if 50% of the gold miners just shut off. Right? And they just say, hey, look, half the, half the gold supply that you thought was coming online is not coming online now.

• 1:24:58Speaker 01

  Yeah. The other thing that's been, I think, pretty. Specifically around Bitcoin that's been incredible to watch over the last couple of months is, you know, people talk about anti-fragility a lot, throw that around a lot. But the juxtaposition of Bitcoin's anti-fragility relative to how obviously fragile traditional financial markets had become and so incredibly distorted. And specifically, you think about Black Thursday. And at peak to trough, Bitcoin is down 50% in 24 hours. Really hate to see that for your, if you're gunning for the world reserve currency, being down 50 in 24 hours is a big problem, right?

• 1:25:43Speaker 01

  I get that. But the bounce, the magnitude of the bounce and how spot-driven it's been. And also specifically around anti-fragility. This is, this is a setup around Black Thursday. It was leverage-driven.

• 1:26:06Speaker 01

  People had gotten real built up on the halving. People were super, super long on, on the perpetual swaps across all the platforms. Tether borrow rates were super high. Contango was blown out. I did a, a little podcast with Nathaniel Whittmore with, uh, on, on February 14th. At the end of it, he asked me, what do you think the biggest risk is right now and, and what are you most worried about? I said, how levered this market is right now. It's very levered long. It was a month before. And, um,

• 1:26:41Speaker 01

  that was an untenable situation.

• 1:26:45Speaker 01

  And last time Bitcoin encountered a big untenable situation was the BCH BSV fork hash rate war thing in November 2018. And Bitcoin did it down 50 then too. Took a couple of weeks, but it did it down 50. What happened after that was Bitmain and Jiyoung Woo and Craig Wright and Calvin Air and all the clown shows, their role in this ecosystem was diminished to the point that it got a lot, lot harder for them to do something bad to Bitcoin.

• 1:27:27Speaker 01

  And don't get me wrong, down 50, right, but it bounced all the way back and this and the other. Leverage situation, very untenable. You roll through to Black Thursday, down 50 in 24 hours, but you shook. That was a nuclear bomb event in terms of the market structure for Bitcoin. I can just tell you that without getting into detail. It was just like, and the entire market structure changed. And that entire buying back, I mean, the vast majority of the bounce after Black Thursday was very much a spot driven. It was just not derivatives led.

• 1:28:08Speaker 01

  It was not leverage led and it was mostly US spot and US retail and the herd. And we know a little bit more about what the herd did now with a little bit of hindsight, right? Herd's been buying, like Paul Tudor Jones doesn't have any friends. And, and you get to where we are today and you now have us at wherever we're at right now, 9K. And, but the, the foundation underneath where we are at the price level is much, much more sound. And don't get me wrong, Asia is, you know, still the 800 pound gorilla in the room.

• 1:28:52Speaker 01

  But the bounce from, from a bunch of different angles looks to us to have been US led. And that's real healthy. And I think it's directly in response to both retail investors, high net worth, the guy buying $200 on Coinbase, every, from him to Paul Tudor Jones, everybody's looking at what's going on monetary and fiscal policies and they're going, probably worth taking a little flyer on this. This may be the best hedge on the face of the planet for this thing and the market cap's the size of Costco. So I should, you know, might be worth doing.

• 1:29:26Speaker 00

  The part that's so funny to me is on that 50% drop, the coins that were sold had all moved in the last like year for the most part, right? Overgeneralization. But basically, if you had held for, you know, more than a year at that point, they weren't selling. And you just saw the transfer from the weak hands to the strong hands. And the part that I continue to go back to, we could sit here and we could talk about all the technical aspects of Bitcoin. We could talk about all the macro, etc. All that stuff is important. But at the end of the day, money is a belief system. And there is no group of people that believes in a currency more than Bitcoiners believe in Bitcoin. That just absolute hold forever lock in.

• 1:30:09Speaker 00

  It's the greatest defensive moat in the world, right? Because nobody can do anything to shake them, right? Whereas the US dollar, a lot of people who believe, but literally, by the way, when people are writing about inflation, they're writing, I'm questioning what's going to happen in the future, right? There's a shaking of confidence. And it's not, I think it's going to fail tomorrow. It's not, I think it's going to fail in five years. But it's this all of a sudden doesn't look as strong as it did yesterday, right? And I actually think that when Bitcoin drops, what you see is the exact opposite of what you see in other markets. You see those convicted people lean in more rather than run. And to me, I just go back to like, that's really hard to quantify. It's really hard to explain to somebody until they see it.

• 1:30:54Speaker 00

  But when you look at that, that to me is the most defendable thing for all Bitcoin. And it's the most bullish signal, right, in all of this.

• 1:31:02Speaker 01

  Yeah. I mean, just, I don't know, try and sum it all up like, those really big pieces that are surrounding this thing. And then you just have this, this non-something form of money sitting right in the middle of it. And I mean, we didn't even get into.

• 1:31:22Speaker 01

  You know Bitcoin in the middle of the China versus the United States thing, I mean that's its own and and trying to bring mining capacity back into the United States and that is a trend and you know stranded gas and and and renewables out in West Texas and

• 1:31:41Speaker 01

  you know it's it's a you know the digital Remembi right the DCEP and that rolling out and it looks like the United States is may go let Libra kind of compete against the DCEP. I I also think that there's there's probably a view internally in the government that nobody's going to use the DCEP because the United States is about to put the screws to China and and people just don't want aren't going to want to deal with the Remembi. And then maybe in time you can get Libra to go compete on the continent of Africa because that's the big

• 1:32:27Speaker 01

  the big I think

• 1:32:30Speaker 01

  DCEP on the continent of Africa, China, one belt, one road. You know, while the United States States spent 10 trillion dollars in the sand dunes in the Middle East. They spent 10 trillion dollars on infrastructure in Africa. And if you ask any kind of global macroeconomist where the next 50 years of GDP per capita growth in the world is going to come from. It's going to come from the continent of Africa. It is in the best interest of sort of the United States national security for I think the DCEP to not gain mass adoption on the continent of Africa. And they probably recognize that

• 1:33:11Speaker 01

  it's a it's probably a good idea to let Libra go compete on that and you know if you're on the continent of you know, I don't want to speak for I I've never been to Africa, actually, so I don't want to put words in anybody's mouth, but I would guess that if you could choose between a Venmo that was loaded up with dollars and a Venmo that was loaded up with DC, you know, with Remembi. Like you know, all being equal, you'd probably pick the dollar. So that's going to be you know, a big factor of it unfolding over the coming years.

• 1:33:42Speaker 00

  You ready for a wild prediction that I think has a lot of possibility of happening?

• 1:33:49Speaker 00

  Libra is R and D for the digital dollar.

• 1:33:52Speaker 01

  Yep.

• 1:33:53Speaker 00

  They're gonna let, they're gonna let Libra play it out. Fight them a little bit, let them know you can't do whatever you want. Keep doing it, come give us an update, do all this kind of stuff. At the 11th hour. All of a sudden, digital dollar is going to come out of nowhere.

• 1:34:09Speaker 00

  And my guess is, uh, right now, it's intellectually interesting to them, right? We saw it in one of the stimulus package proposals. Let's give a digital dollar to people to deliver the, the stimulus, whatever. It got taken out pretty quickly. But.

• 1:34:25Speaker 01

  Oh, yeah, yeah.

• 1:34:26Speaker 00

  It's too, it's too sexy of an idea. They don't understand how it works. They don't understand how to do it. They have no clue the risks associated with or anything. But to say, I helped put for the digital dollar. Means you get reelected, right? And so, so intellectually interesting from a, from a politician's standpoint. Technologically, we need it, right? For a whole bunch of reasons. And then from a, a global power standpoint, what you're talking about. It's accessibility, right? And I keep going back to, look, if you're in Venezuela right now, right? Or Zimbabwe, or wherever your currency has failed you. You want dollars, right? You want the stability, you want the full faith and credit of the United States government behind you. And, you know, all this kind of stuff. You can't get the dollar.

• 1:35:09Speaker 00

  And so if all of a sudden, there's a digital currency that has a different monetary policy and happens to be China's. But all you need is an internet connection. Now all of a sudden, China's currency is more accessible to you than the US dollar is. And so you're just naturally by peak path of, uh, least resistance, you end up with the, the Chinese currency. Or there's Bitcoin. And so that to me is interesting. But I don't believe that the US will let that happen. I think that they'll go ahead and digitize the dollar and make it an even playing field. But ultimately where the competition comes down to, it's not on the technology front. Cause now everything's digital. It's at the monetary policy level.

• 1:35:49Speaker 00

  And I, and I think that the one thing that's going to end up happening is the internet is going to break the Fed. Because the Fed is dependent on at least 50% of Americans not understanding how money works.

• 1:36:01Speaker 01

  Yeah, yeah.

• 1:36:04Speaker 00

  And if the internet, you know, basically teaches you, gives you access to the information. You say, hey, this is a game that's rigged, right? It's rigged if I don't know the rules. So let me get out of this thing. And whether that's into stocks, other assets, Bitcoin, whatever. I just think that that education will be one of the biggest inflection points out of all of this.

• 1:36:24Speaker 01

  Yeah.

• 1:36:25Speaker 00

  He's like, we're headed there. Before I let you go, two questions. One, I don't think you'll answer, but I'll try. Any price predictions that people want to know from you?

• 1:36:37Speaker 00

  Any timeline, any price you choose?

• 1:36:41Speaker 01

  I nailed that. The last time we did this, I nailed that one to the wall, actually.

• 1:36:47Speaker 00

  That's why they want you to do it again.

• 1:36:50Speaker 01

  Um.

• 1:36:55Speaker 01

  I don't know. I.

• 1:37:00Speaker 01

  I'd prefer not to, I guess. I think.

• 1:37:08Speaker 01

  You know, if I got even money that a year from now, even money bet a year from now. We've hit new all time highs. I mean, I would take even money. Yes.

• 1:37:19Speaker 00

  All right. That's pretty conservative compared to most people, what they think is going to happen.

• 1:37:24Speaker 01

  Yeah, I think.

• 1:37:29Speaker 01

  I get the sense that maybe the herd's not going to let this thing run away from them.

• 1:37:35Speaker 01

  You may, you may get into a period of. We may be in a lot of accumulation over that period of time, over the next year. And like how much you can disguise that accumulation. You know, probably depends and.

• 1:37:53Speaker 01

  You know, there's still potential for a lot of macro stress, but. Yeah, I mean, that's a little, that's maybe a little conservative, but. You know, like if you told me new all time highs by September 30th, even money, I'd take the under.

• 1:38:10Speaker 00

  All right.

• 1:38:11Speaker 01

  Yeah.

• 1:38:12Speaker 00

  What is the one signal or data point that you wake up every day and look at? That people wouldn't expect you to look at?

• 1:38:26Speaker 01

  It's probably, without getting into too much specifics, it's the because we've built a lot of models that cover a lot of bases. So the few things I look like, and to be honest with you, because we've done a lot of this modeling work, it's actually freed me up to

• 1:38:48Speaker 01

  spend a lot more time thinking about and researching the bigger picture. It's funny, like I said, we talked about this big picture stuff the whole time, but like we run this fund on a bunch of models that don't have anything to do with the big picture.

• 1:39:03Speaker 01

  So I think the things that I still look at on a discretionary basis are things that we have not nailed down the model for yet. And I'd say without getting into specifics broadly, it's like putting together, piecing together a picture of how much leverage is in the kind of Bitcoin price discovery process at any given moment and you know, kind of broadly, how much

• 1:39:30Speaker 01

  you know, if longs or shorts or offsides relative to that kind of price discovery actions happening right now. That's probably what I still look at pretty regularly, kind of manually.

• 1:39:42Speaker 01

  Yeah.

• 1:39:44Speaker 00

  If people want to find you on the internet, where do you want to send them?

• 1:39:49Speaker 01

  Twitter is good, Travis underscore Kling, K L I N G, and the fun websites, Ikigai.fund, I K I G A I dot fund. Don't I get, I thought I get a question for you.

• 1:40:00Speaker 00

  Sure.

• 1:40:01Speaker 01

  So I still can do that. How's the?

• 1:40:05Speaker 01

  I don't.

• 1:40:06Speaker 00

  What are you like a podcast guest expert now?

• 1:40:11Speaker 01

  Well, I thought that was part of the deal is I get to ask you a question.

• 1:40:13Speaker 00

  Yeah, it is. For second time guests, it's like you already got one question. Why should I give you two? But go ahead.

• 1:40:19Speaker 01

  I wanted to know, maybe Yusko's been having a lot more of these conversations. Um, I just haven't had a chance. I've talked to him recently, but I didn't have a chance to ask him this question.

• 1:40:30Speaker 01

  The conversations with the more institutional side of folks, just over the last two months. How would you characterize the state of that, you know, kind of broadly? Has it changed? Has the frequency picked up? Has the tone changed at all? Is it about the same? Were people already interested in January and there's the same amount of interest? Like, how would you characterize that?

• 1:40:55Speaker 00

  So there's definitely, uh, I'll just say like fun fundraising mechanism changes. You know, if, if people, uh, had a focus on their own portfolio, not investing in new funds at the moment. Give us a couple of weeks, like all that, take that aside.

• 1:41:12Speaker 00

  I think it's a lot of people who understand what's going on. They do this for, you know, a living. They manage a lot of money and, uh, they're asking the same questions that the Paul Tudor Jones are asking, right? How do I hedge this thing?

• 1:41:24Speaker 00

  If it, what happened, if what I believe is going to happen, happens, what assets are going to perform best?

• 1:41:32Speaker 00

  And it's kind of this feeling of like, all right, we're in the warmups for showtime. Like we're about to play the NBA championship game, you know, it's, it's game seven. We're in warmups, so we got a whole game ahead of us to play. But like, the, the four quarters get played over the next 18 months, right? The next 24 months and, uh, you know, it's like any game, right? Like, hey, first quarter, yeah, there might be some back and forth, whatever. But like, it's pretty chill compared to the fourth quarter with two minutes left.

• 1:42:00Speaker 01

  Yeah.

• 1:42:01Speaker 00

  And, and so I think that, um, that type of analogy of like, they feel like, hey, we're getting warmed up. You know, there's some electricity in the stadium, right? People are excited. They know it's going to be a big game. The question is just which team wins? And, uh, and so I think, you know, that's both the challenge and the opportunity of, uh, you know, I, I think I've told you this before, but I don't think I've ever said on a podcast. I'm always shocked at how many people I talk to in the institutional world that close the door and say, I own Bitcoin. I say what like and I'm not talking like, you know, family office, like you expect it there. I'm talking about like the CIO of public pensions that are managing like the fireman's pension fund.

• 1:42:42Speaker 00

  Right. And they're like, yeah, I own Bitcoin. I've owned it for, you know, three years. Like I'm a believer. Right. I know all you guys and you're sitting there. You're like, why? And you're like, I believe the same thing that you believe. Right. And it's always funny because then you look at their portfolio and you say, why isn't it in the fund? Why have you not made certain moves? And they go, well, the thing is that people think I make the decisions around here. Right. I make the suggestions, but ultimately, you know, I got bosses, right? In terms of the boards and things like that. And so I think that that is the been the biggest challenge. That is becoming an easier conversation for a CIO to have with the board because Renaissance Technology, Paul Tudor Jones, JP Morgan Chase is now banking Coinbase and Gemini.

• 1:43:27Speaker 01

  Yeah.

• 1:43:27Speaker 00

  Right. You get all these little data points and each one on its own doesn't really matter. But the totality of them gives you some mitigation of career risk is how I would put it. And I think that that is probably one of the more important developments over the last, you know, six months or so.

• 1:43:45Speaker 01

  What, one last thing I'll say on that note, I feel like in the last couple of months, because of what's going on with monetary and fiscal stimulus, I've heard more and more people frame Bitcoin as Bitcoin has to work here. Like it's, if it doesn't work here, we should just, you know, maybe we should give up on it. Cause if it doesn't work here, it's just, it's not going to work. It's never going to work.

• 1:44:11Speaker 01

  And then, and then I think about that, the whole career risk thing. And then the generational thing that we talked about earlier. And you go, no, it probably is going to work now. It's probably going to work in 20. It's probably going to work in 21 and 22. It's going to work in 30 too. Oh, and it's going to work in 2040 as well, too, as you just slowly transition from.

• 1:44:36Speaker 01

  The seventy year old that still thinks this is magic internet money for drug dealers to buy drugs on the internet. And it's never done the work and it's just the decade plus amount of time that that rolls off. And you know, maybe there's some chance that it's that it's not Bitcoin because something happened Bitcoin ends up being Ask Jeeves. And you know, I don't want to piss off the maximalist for this, but I'm just saying there's a, you know, whatever. But like a non sovereign form of money. And, uh, you know, I think that Bitcoin over its history has had a tremendous ability. To get people to give up on it and cough it up.

• 1:45:18Speaker 01

  Into the hands of people that don't and that that's been an incredible trade every single time without exception. So I'm always wary about people being like, oh, it's gotta work. It's been work now. It's not gonna work. And it's like, uh, Bitcoin may make you sell everything and then right after that it works.

• 1:45:38Speaker 00

  The way I'm talking to people about it is, uh. If you don't see a material increase in price in the next eighteen months. What you will get is not Bitcoin failed. You will get people revisiting. What Bitcoin is and why Bitcoin is important because one of the strong narrative right now is the macro. Environment and the macro environment is here now. And so it's almost like that is a thesis that makes a lot of sense and is intuitive to a lot of people. If it's disproven. Again, I'm with you. Bitcoin doesn't fail, right? But people go back to the drawing board of like, well, what is this thing? Right? And I think that that's a really important nuance. Because there are a lot of people who say, oh, if it doesn't work in eighteen months, it's over.

• 1:46:22Speaker 00

  Right? And I don't think that it's over. I think that that narrative now comes into question. Right? And you gotta kind of talk through, okay, well, if that didn't work in that time period. When, you know, what is the the narrative that ends up proving to have a higher degree of accuracy?

• 1:46:40Speaker 01

  Probably gonna work though.

• 1:46:43Speaker 00

  Listen, you ain't gotta ask me what I think. You, you, you know where I stand. I think, uh, I, I, I think a lot of people, um, you know, we're getting to the point now where it's not so much, uh, what do I think about Bitcoin? Now, a lot of the conversations with the people who, you know, in 18 and, and beginning in 19, even mid, middle of 19, we're kinda, should I buy some, uh, what is this thing? Kinda all that early education stuff. Now, when I talk to those people, it's not, do you have exposure? It's how much have you increased your exposure? Right? It's like they're, they're on, you know, stage two, three, four, et cetera. Uh, and, uh, I, I have a buddy, uh, who, uh, who bought some Bitcoin.

• 1:47:26Speaker 00

  Um, and, uh, when it dropped, basically dropped to his cost basis. And, uh, I talked to him afterwards, did not talk to him on that day. I called him a couple of days later and, and I basically was like, are you good? Right? And he goes, well, I guess I'm a Bitcoiner now because that shit was scary.

• 1:47:46Speaker 00

  Right? But it was just this belief of like, hey, I, I wrote it out. I didn't panic. Right? I, I, you know, whatever. And he almost felt like he had earned the right now to enjoy whatever happens next. Um, and I thought that was really interesting. Obviously it only benefits the people who kinda had skin in the game that day. But, uh, I don't think that there's that many people who, uh, held, for example, in the November to December 50% drop. I think a lot of people got shaken out there. This one, I actually think a lot of people didn't get shaken out. It was more of kinda the leverage and the Wall Street and all that. And so people kinda earned their stripes now. And now they feel like, hey, you know, if I didn't sell it then, then I, you know, I can't ever sell it, basically.

• 1:48:27Speaker 01

  Yeah, yeah, yeah.

• 1:48:29Speaker 00

  So, all right, man. I appreciate you doing this. I think people will, uh, will enjoy it. I got tired of people, uh, tweeting at me saying that we had to do a, a round two. So, well, you did not disappoint, but, uh, we'll do it again. We'll, we'll do a round three at some point.

• 1:48:44Speaker 01

  Always a pleasure.

• 1:48:47Anthony Pompliano?

  Alright guys, thanks for listening to that episode. I hope you enjoyed it just as much as I did. My goal is to educate as many people with these conversations as possible, so please go subscribe on your favorite podcast channel, leave a five-star rating and a review. These things really help the podcast get higher up on the popularity charts, which ultimately brings more people to learn. Also, don't forget you can go to YouTube to watch each conversation in video format as well. Just search my name, Anthony Pompliano, on YouTube and you'll find our channel with hundreds of awesome and informative videos. Thanks again for listening to this one and I'll see you for the next one.