#1012 Joe Carlasare & BitcoinT.I.N.A. On Changing Paradigms In Our Global Financial System

Joe Carlasare is a Commercial Litigator at SmithAmundsen and BitcoinT. I. N. A. is a Bitcoin personality. In this conversation, we discuss the massive changes we're seeing in our economy, how long a recession may last, why this period can be good for Bitcoin holders, and how to navigate this economic landscape. ======================= Brave Wallet is the first secure crypto wallet built natively in a web3 crypto browser. No extension required. Store, manage, and grow your portfolio, get NFT & multi-chain support, and more. Download the Brave privacy browser at brave.com/Pomp, and click the wallet icon to get started. ======================= Today’s episode is sponsored by Abra. Based in California and backed by top VC firms, Abra is an all-in-one simple, secure app that allows you to trade over 110 cryptocurrencies, get 0% interest loans using your crypto as collateral and earn interest with up to 14% APY on stablecoins and 8.15% APY on Bitcoin. Join nearly 2 million users by downloading Abra from the Google Play or Apple App store. If you download the app today, you will get $15 in free crypto once you fund your account. You came, you invested — now conquer. =======================

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

• 0:02Anthony Pompliano?

  What's up everyone, this is Anthony Pompliano. Most of you know me as Pomp. You're listening to the Pomp Podcast, simply the best podcast out there. Now let's kick this thing off. Joe Carlesar is a commercial litigator and Bitcoin Tina, he's just into Bitcoin and the macro environment. In this conversation, we talk about everything from the Federal Reserve, interest rates, all sorts of macro movements, Bitcoin, the housing bubble, and much, much more. I really enjoyed this conversation with both Joe and Bitcoin Tina. I hope you guys enjoy it as well. Before we get into this episode, though, I first want to talk about our sponsors. Today's episode is brought to you by Brave. Brave Wallet is the first secure crypto wallet

• 0:43Anthony Pompliano?

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• 1:24Anthony Pompliano?

  Download Brave at brave.com/pomp and click the wallet icon to get started. Again, go download Brave at brave.com/pomp and click the wallet icon to get started. Today's episode is sponsored by Abra. They're based in California and they're backed by top VC firms. Abra is an all-in-one, simple, secure app that allows you to trade over 110 cryptocurrencies, get 0% interest loans using your crypto as collateral, and earn interest with up to 13% APY on stablecoins and 7.15% APY on Bitcoin. You can join nearly 2 million users by downloading Abra from the Google Play or Apple App Store. If you download the app today, you will get $15 in free crypto once you fund your

• 2:07Anthony Pompliano?

  account. You came, you invested, now conquer. Abra, conquer crypto. Go check it out today.

• 2:14Speaker 01

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

• 2:37Anthony Pompliano?

  We have two special guests. We've got Joe and Bitcoin Tina who are joining us. And my goal here is to talk about the macro environment, Bitcoin, and a whole bunch of different things that that kind of seem to be somewhat interrelated. And Joe, maybe we'll start with you. You've got this framework that I think you've been using for a number of years to analyze and evaluate the macro environment. Maybe you could just walk us through like, what is that framework that you use to understand kind of how the system is working?

• 3:10Speaker 02

  Sure. Just for those that don't know, I'm Joe Carles. Sorry, I'm a commercial litigator with the attorney at Smith, Olmanson. I'm not a professional investor. None of this is financial advice, obviously. But I am, I've been investing and trading since I was in high school. And what I've noticed, and if you just zoom out, take a big picture approach on this. My view is that the overall system, the credit-based system that we've been in for decades now is an inherently unstable system. It requires constant credit growth, or you have these spasms, right? You have, you have increasing volatility. And the really helpful thing so far that we've been in this, this favorable period for the last several decades has been one where we've generally had low CPI inflation.

• 3:54Speaker 02

  We have not had significant issues where, you know, people are really feeling the pain at the pump and feeling the pain for groceries. That may be changing, you know? The, the times may be a-changing, and I think we're entering potentially a paradigm shift here whereby volatility is going to increase. Whenever there's a paradigm shift, whether it's in society, markets, economics, it generally increases volatility. So my framework that I think you alluded to, and I'll let Bitcoin Tina speak to this as well, is that we should Expect the next 10 years might be very different from the last 10 or 20 years. We should expect a framework whereby you will see this, these rapid upswings, rapid downswings as the system struggles to figure out what comes next.

• 4:38Speaker 02

  As central bankers attempt with desperation to push against the tide. It doesn't mean to be scared. This is not a doomsday prophecy. That's not what we're into at all. But I think that the, the popular conventions and notions about what Bitcoin does or what markets do, or how the stock market always goes up into the right. They may continue, but you should be open that, that there might be a paradigm shift here. So I'll let Bitcoin Tina speak to that as well.

• 5:06Speaker 03

  Hey guys. Yeah, I, I, I agree basically with Joe.

• 5:11Anthony Pompliano?

  When you think about that framework Bitcoin Tina, talked a little bit in terms of, so something that says basic as stocks always go up into the right, right? Because of the debasement of the currency.

• 5:20Speaker 03

  So, so it's, it's important, I want to put a framing on this because it helps instruct me how I see the big picture. And I think it's important to try to understand what the big picture is. So for years, we went through the tech media telecom bubble and busts. 2008, nine, which was housing credit bubble and housing credit bubble and Euro, Euro dollar bust. And I think we've been building a sovereign debt bubble. And I think that this, a, a long time ago, I, I analogized that to when I was a kid rotting down the hill on a bicycle, swerving back and forth because I thought it would be fun.

• 6:03Speaker 03

  And finishing off crashing into the ground and pretty much breaking my teeth. Wasn't, wasn't a good end. And then recently I came across what Matthew Pines tweeted, what he calls a fugoid cycle. Dynamic instability leaves to, it's very wordy, self excited divergent oscillations and exponential runway. It's a lot like my swerving on my bicycle and smashing my face in the ground.

• 6:31Speaker 03

  I think that's what path we've been going on. And you have to look at what the nature of a credit system is. Credit systems are inherently unstable and they go through. Expansions and contractions and the contractions, the contractionary periods can lead to extreme contractions and they often try to stave it off. Where we are now is, is, is an interesting place because CPI is at record highs. It's hard to know how aggressive they are going to be in, in trying to stave it off and whether or not there is or isn't what people consider before a Fed put. And I'm, I just don't know and, and neither does anybody else.

• 7:16Speaker 03

  But my guess is it could be pretty extreme to the downside and, and ultimately I expect it to be pretty extreme in terms of response. Now, I don't think it'll just be the Fed response. I think it'll actually be a federal government response ultimately, but we have a lot in the way there too, because of the nature of politics in this country. So it may be hard to make your way through. So for me, it, it's about maintaining a viewpoint of optionality in how you approach this. I think we may have an opportunity to acquire a lot more Bitcoin, which is both good news and bad news.

• 7:59Speaker 03

  Because it may be in prices which none of us would like to see, but yet we'd like to see it because we can add to our positions. So it's, it's very hard to judge. Um, I'm trying to remember, what did Yogi Berra say about, about guessing about the future? I can't remember that quote, but it's a great quote.

• 8:18Anthony Pompliano?

  So when you start to think about this, this global macro environment for both of you, obviously the Federal Reserve is continuing to increase interest rates. As they increase those interest rates, uh, what we are watching play out here, um, is a very controlled destruction of demand to try to get inflation to come down. Uh, we had Nick Carter on the show yesterday. Nick's viewpoint is that they just can't raise interest rates aggressively enough to get the inflation down. He believes that they will pivot at some point, they'll wave the white flag. And when they do that, where we will likely end up is, uh, with high degree of inflation in the United States, which to Joe's point would be very different than what we've experienced over the last 10 or 20 years.

• 9:00Anthony Pompliano?

  Is that kind of like the base case that, uh, maybe Joe, you, you are, are viewing here is that we should expect to have much higher inflation over the coming decade or so?

• 9:09Speaker 03

  Can you, one second, can you put up the Matthew Pines tweet so people can look at what that full goods cycle looks like that can you put that up?

• 9:16Speaker 02

  Yeah. And while you're putting that up, I think the quote Tina that you're referring to is that it's tough to make predictions, especially about the future. That's the Yogi Bear quote. But, but the key thing, Pom, to your question, which I, I think it is that that's exactly right. Because the inflation that we're experiencing, quote unquote, CPI inflation, that is not driven, at least from my view, primarily by monetary policy. It's driven by the fiscal spending, which was out of control coming out of the pandemic. They spent trillions of dollars handing out stimulus and the PPP loans and so forth. And at the same time, we have under invested in our infrastructure. We've under invested in development of various natural resources. So you have a structural dynamic in play where we're

• 10:01Speaker 02

  not going to get more of these goods and services. So the Fed can hike to ungodly rates. They can hike, you know, a thousand basis points. It's not going to fix the fact that there's not enough oil coming out of the ground. It's not going to alleviate the energy shortages. So it's not going to solve these structural problems. What they're trying to do is they're trying to cave, in my opinion, to the political pressure, which every single senator and congressman is hearing from their constituents right now, how outraged they are about gas prices. They're not familiar with this. We've got an entire generation who's never had to deal with, you know, gas or energy costs at these levels. So they're hearing it and the Fed has to do something. So the only thing they can do is pretend to be able to push back against the CPI. And I happen to agree with, with Nick. I think

• 10:45Speaker 02

  he's right. I don't think you're going to fix this issue. You're not going to destroy demand absent causing a real bad recession. That'll, that'll of course bring that CPI down. But I don't think that's what people want.

• 10:55Anthony Pompliano?

  Yeah. And then when you guys think about some of the interest rate hikes that are occurring right now are happening with the contraction of Q1 GDP.

• 11:07Anthony Pompliano?

  Is your thought process that we are already in a recession? Is it almost a guarantee that we are headed into a recession? Like, how do you think about hiking interest rates with contracting GDP, high inflation? Like, this just seems like a complete freaking mess.

• 11:20Speaker 02

  It is a mess, and I'll let Tina speak to this. But my view is, you know, you can get bogged down in the term technical recession, whether NBER says this is a recession or not. In reality, we've never recovered some of the growth trends we had for the 90s and the early 2000s. Coming out of the GFC, we never recovered that trend. We have been in a, most of the world has been in a period with anemic, low growth, and we've kind of just gotten by with more and more fiscal stimulus here or there, more and more favorable accommodative monetary policy. That is not fixing the long-term problem, which is too much debt and very poor demographics in most of the Western world.

• 11:58Anthony Pompliano?

  Tina?

• 11:59Speaker 03

  Yeah, Joe and your prior guest, Darius Dale, said the same thing. Don't get fixated on the nature of recession. It's, again, guessing about the future is very difficult, and it's hard to know. A lot of this is how do these various policymakers respond? Personally, I think that rates are already very high. I'm not talking about Fed funds, I'm talking about interest rates. I heard somebody say the other day that around the time of Volcker, debt to GDP was in the neighborhood of 30%. We're at 130% now. So if I assume that, and if I do some simple math here, if, where's the 10-year now? About 3.4, 3.5%?

• 12:43Speaker 02

  Right.

• 12:43Speaker 03

  If I do some very simple math, and I take 130 and I divide it by 30, that gives me a multiplier of 4.3 times. And then I multiply that by the 10-year, which is at 3.32, that compared to, you know, 1979, 80, 81, that we're already at 14.3% rates.

• 13:08Speaker 03

  People look at that absolute number and say, oh, 3% rates, it's so low. Well, it's only low relative to the size of the debt that you have to service. It's very high. We're at 14.3% rates now. And I believe that

• 13:24Speaker 03

  Where people get a lot of stuff wrong is that prices get rejected in an economy at some point. It's they hold on, hold on, hold on, and finally get rejected when they're too high. And between what we're seeing in food and energy and interest rates. I think you'll see prices rejected. I think it's going to do a lot of damage to the housing market. Which I, I, I believe that the Fed has been targeting.

• 13:53Speaker 03

  The housing market and the stock market for wealth effect for years already. So. I don't know how this works itself out. I, I've always said there'll be some point at which the Fed gets religion. I know they got religion right now, and I don't know how much of that religion we can take. I don't happen to think we can take that much of it. I would prefer to see the Fed pivot. But at some point, the longer they continue on this path. The sharper rates will decline and the sharper the various CPI do not think will end up needing. A yield curve control. Unless they give up sooner, in which case then the economy, the economy can start accommodating that.

• 14:37Speaker 03

  And they will have to institute yield curve control. So. A friend of mine said to me the other day that he thinks we've entered the suddenly moment. But suddenly could be six days or six years. And I kind of agree with him and it's hard to know when you, you look at the, that Fugoid cycle. The oscillations going up and down, going greater and greater. At some point along that, we're going to be entering that suddenly moment. But. I think the amplitude of the oscillations continues to grow. Joe had made a comment, it may not be. Pertinent to the current period because we don't know how those oscillations go. Over the course of this decade that you could see within the same 12 month period.

• 15:21Speaker 03

  $5,000 Bitcoin and $500,000 Bitcoin. So I think for me, the mental framework is to prepare yourself psychologically. As well as financially for optionality. And those who are well prepared for that optionality will make a lot of money. I'm heavily in Bitcoin.

• 15:45Speaker 03

  But I sold some because I'm old and I don't have an income. I don't work. So I had to, but I went from a hundred percent Bitcoin or virtually a hundred percent to like eighty percent. So I still have a lot of Bitcoin. Bitcoin goes to half a million dollars. And I miss deploying that into more Bitcoin. I'm still gonna be okay. But if things turn downwards, which they could, it'll give me a chance to buy a lot more and more than replace what I bought. So I, I think framing is just so important. And, and here's the thing that Bitcoiners must focus on, in my opinion. This is not about Bitcoin. This is about macro.

• 16:28Speaker 03

  And since two thousand and nine, we have not been in any, in, in a macro environment, anything like this. And I think it has the potential for being quite bad. I think it, it could be one of the worst environments of the last hundred years. So you need to be mentally prepared and financially prepared to take advantage of it. It's hard to know how it progresses. It's very hard to know and hard to guess how policymakers respond. And it very much depends on how they respond. And that's why you have to have a notion of optionality.

• 17:07Speaker 03

  But I think there'll be some people who will handle this very well and will grow incredibly rich coming out of this, owning Bitcoin. But you're gonna have to figure that out for yourself, but don't use the model of how you think Bitcoin trades to be your framework. You have to make it larger because Bitcoin has never been, and neither have any of us been in an environment like this. These are very high CPI levels. So do they cave? The policymakers, do they cave too soon, as some would say? And do we experience growing higher inflation?

• 17:49Speaker 03

  Or do they get that religion and crush it? And that will crush stock prices. It'll crush Bitcoin prices.

• 18:00Speaker 03

  We have a period right now where there's no relief. If you're a legacy investor, stocks and bonds, if you have a stock and bond portfolio, you've been hit very hard in your stocks and in your bonds. Now, for years, bonds would act counter to your stocks. So there's a lot of damage happening to people. I believe there'll be a lot of damage in housing. I believe there'll be a lot of damage in stocks and bonds. And I would highly recommend you're listening to an interview that Stanley Druckenmiller gave for the Arizona Conference. You can find this on YouTube. And he said some things that you should pay attention to. He's the GOAT. He's one of the greatest of all time investors. And he said some things

• 18:45Speaker 03

  which should scare you. They scare me.

• 18:47Speaker 02

  Like what?

• 18:49Speaker 03

  He doesn't trust the bank's balance sheets. You know, I don't know if he's right or he's wrong. But if stock prices and housing prices go down significantly, he's gonna be right. We could have a solvency crisis. We could have a financial crisis.

• 19:02Speaker 02

  The point, and I think, I don't want our remarks here to be mistaken, because the issue here that I think Tina agrees with, and feel free to chime in if you disagree, Tina. But, Pop, we're not coming on here to be doomsdayers, doom and gloomers, to try to get people depressed about this. We're trying to make people understand that a paradigm shift could be underway, and you should prepare yourself. And part of that preparation results in you understanding that extreme volatility might be here to stay. And with respect to Bitcoin, you understand that Bitcoin mitigates not only against the debasement of your money, but all sorts of other policies that could be put in place. And maybe Tina can speak to this.

• 19:41Speaker 03

  Oh, absolutely.

• 19:42Speaker 02

  Policies that people are underestimating in the marketplace. It offers you a unique asset that is unconfiscatable, as many people identify. Tina, why don't you speak to that real quick?

• 19:52Speaker 03

  Joe's completely right about that. And that's one of the extreme values of Bitcoin, the fact that you can control your private keys. In my opinion, banks were invented as what I like to call a technological solution to the problem that existed. If you're a wealthy person, and you want to, let's say you have $10 million, $20 million, $50 million, whatever it is, a lot of money. Well, you might put half of it into stocks and maybe real estate. What do you do with the rest of it? Well, effectively, in one form or another, you're putting it into a bank. So that's out of your control. Bitcoin changed that, and that's a really big deal because now you can hold that wealth

• 20:34Speaker 03

  outside of a legacy system, and that's a huge, huge, huge shift. This is something which fin twitch legacy players really do not understand and do not understand the extraordinary value of. And I think people are going to learn a very hard, very expensive lesson in the coming years about why this is so valuable. We don't know what policies could come into place. Who would have thought that we'd be basically locked in our homes for as long as we were? I mean, I never thought we could be locked in our homes as a response to COVID. So we don't know what policymakers-

• 21:14Speaker 02

  Or if you're a real estate investor that you wouldn't be able to evict or foreclose on someone for a year, right?

• 21:20Speaker 03

  Right, these are crazy things. So Bitcoin's value is not well understood by most people in the marketplace, but I think they're going to come to understand it. Bitcoiners understand this. So how do you balance it? You got to figure out your own situation, what makes sense for you. But I think that where we are and what we're doing makes me more bullish in the long run on Bitcoin than ever before. But it's going to be a tough path. It's not simple here. And we've always known, there's that meme of hodling, you know, what people think hodling is and what hodling really is. Well, it's going to be a tough path and your guess is as good as mine because I don't

• 22:05Speaker 03

  know. I don't know what the future is going to bring and I don't know what the policymakers are going to do. But I think all roads lead to Bitcoin and all roads lead to very high price of Bitcoin.

• 22:19Anthony Pompliano?

  When you guys think about this idea of increasing volatility, I can't remember which one of you mentioned it, but somebody said, you know, $5,000, $500,000. That is a level of volatility that most people couldn't even dream of stomaching. And if you look backwards, you can see with Bitcoin, you know, in the last four years, there's been, I think, four or five different 50% drawdowns. But still, as we sit today, 65% of all Bitcoin in circulation hasn't moved in a year. And so in some ways, this cohort of the financial sector, they're used to more volatility than, let's say, kind of a traditional stock or bond portfolio,

• 23:01Anthony Pompliano?

  60-40 portfolio. Is it your thought process that it could become even more volatile? And therefore, even the people today in Bitcoin, who are used to some degree of volatility, they may need to prepare for even more than we've seen in the past? Or would you expect the volatility of Bitcoin to actually go down in the coming years? And it's the rest of the financial market that would experience these high degrees of volatility?

• 23:26Speaker 02

  Personally, I think volatility for Bitcoin will increase. I think it's the exact opposite. And then I'll give you a simple reason why. You've had a very favorable environment for regular, traditional, legacy market assets. You've had that favorable. I think that could be changing with what we talked about earlier with the dynamic between CPI and central bankers' ability to stimulate. But the reason most carefully, I think, is that what we realized in the pandemic is that stimulus itself is going to be necessary to get the system running again if you have another deleveraging event like Tina talked about. If the Fed is wrong and here, and then they push really hard to try to combat CPI, and they trigger

• 24:08Speaker 02

  recession, and then QE alone is not going to be enough to stimulate and get the engine running again, you can expect more of those stimulus checks. I, for one, expect more of that. And once you have UBI introduced into the system, whether it's domestically or abroad, or both, you're going to see a ton more quote unquote money printing. That's going to be a ton of stimulus entering the system. And that can propel Bitcoin to unfathomable heights. But on the way down, right, for the next, you know, six months, 24 months, whatever, before we get this thing under control and before, you know, we figure out how this is going to all unfold, you could see Bitcoin go much lower, right? Nobody really knows. And if you're trying to trade that, I think it's a fool's errand. Nobody's going to get it right. Most people are going to get it wrong if they're trying to trade it.

• 24:53Speaker 02

  And I don't know a single person at the bottom in the pandemic in March of 2020, when Bitcoin was around $4,000, who said that within a year, it was going to be, you know, challenging $60,000. That that's incredible amounts of volatility for an asset like that. And I think it will increase with more and more fiscal stimulus, which is necessary in our system. We need to stimulate and be by basically giving cash out to people because of the leverage in the system. But Tina, what do you think?

• 25:20Speaker 03

  So here, I just want to find this to get the quote correct because it's the at the top of my my Twitter. Let me just find this because it really fits. So, you know, I as basically, you know, I have a very, very large Bitcoin position, particularly, you know, considering the various factors of, you know, not working, not being young.

• 25:44Speaker 03

  Max Kaiser said, only keep money in fiat that you're willing to lose. Anything not Bitcoin will vanish. Actually, he said crypto, but I'm saying Bitcoin, although I quoted it the way he said it.

• 25:57Speaker 03

  I'm prepared to lose my cash in the legacy system.

• 26:02Speaker 03

  You know, but I will look for opportunities if it goes lower to go add and rebuy all my Bitcoin back. And then some, I'm prepared to lose that. I, as I said, I'm very heavily in Bitcoin, but I need to be able to ride through this period. And you have to have the mindset, you know, If you have no, no stabilizers, if you don't have shock absorbers in your system, it's gotta be a very bumpy ride. And so you need to build in those shock absorbers, whatever they are for you. It's highly dependent on who you are. Shock absorbers are taking a second job. The shock absorbers are things that will bring you in money to really add

• 26:45Speaker 03

  to your stacking. I think, I've always thought for a long time now, because of my framework of how I see the world, that all roads will lead to Bitcoin, and it will lead to extraordinary prices of Bitcoin. And I think the volatility will come down, you know, in that, what is that, seven, eight figure Bitcoin, which I still expect to see this decade, and maybe into the 30s. It's hard to know exactly. But I think you'll still see extraordinary high prices, because I think that, I think, I think the legacy system is fundamentally broken. I think the nature of the credit system is fundamentally broken. And so I

• 27:29Speaker 03

  remain hugely bullish on Bitcoin, with the recognition that the ride could be pretty bumpy.

• 27:36Speaker 02

  Yeah, and it's not just the legacy system, right? We've got political and geopolitical instability abroad. So why would we expect markets, any market, to be not volatile when you've got all sorts of issues popping up across the globe, particularly with these commodity shortages, the war? You should expect very volatile markets to correspond to what's happening in the real world.

• 27:58Anthony Pompliano?

  When you guys think about kind of the average American, so obviously, I think we all three spend a bunch of time talking about investors, and, you know, the top 55% of Americans have investments, but the bottom 45% don't. Right now, inflation officially is at 8.6%, which on its face is bad by itself. But then when you start to look at things like the inflation-adjusted average hourly wage growth, it's been negative for 14 months. And so it's very obvious that wages aren't keeping up with the increase in prices of those consumer goods. How bad can it get for the average person who, forget

• 28:41Anthony Pompliano?

  Bitcoin for a second, just has no financial portfolio to help them weather the storm of high inflation that we're currently experiencing?

• 28:49Speaker 02

  Yeah, they're gonna have to lean on credit and that's the problem, right? And this is not a new phenomenon with real wages, as you described. It's perhaps more severe. It's a difference of degree, but not one of kind. You can expect that customers and, you know, consumers, regular people that don't have a lot of assets, they're gonna go back to the well, right? They're gonna try and get over levered. You're seeing some of those early statistics about credit cards. They're trying to return to the trend we had pre pandemic where we're, you know, dependent on credit cards. We're dependent on a short term revolving credit to survive and make up that gap because you're not seeing real wages increase. So, yeah, I think that's how they do it. I mean, it's been par for the course. So when you're in that dynamic where you've got the pressures of inflation

• 29:32Speaker 02

  and now you no longer have the Fed put, you no longer have the Fed at your back assisting it. Tell me how you think that, you know, consumers are gonna hold up. I don't think they will. I think, you know, it's just a matter of time. When, how long? Anybody's guess?

• 29:48Anthony Pompliano?

  Yeah, it's, um, it's very unfortunate. And then I guess if you're sitting at the Federal Reserve right now, what can you do? Do you just keep trying to hike interest rates and tame inflation and hope that everything works out? Do you say, look, we gotta increase interest rates, but maybe we shouldn't do it so aggressively and we kind of slowly do it? Do you throw your hands up and say, hey, inflation's better than a recession and let's just let inflation run wild? Like, what is your, both of your opinions as to what the Fed should do right now?

• 30:17Speaker 02

  Well, first of all, I'll let Tina go first on this one.

• 30:19Speaker 03

  It's not a Fed problem. It's an administration problem. I mean, with a lot of policies that were put in place, we kind of shot ourselves. You can pick the body part that we shot ourselves in. We kind of shot ourselves with our, with our policies. So I can't tell you exactly what to do because I don't know exactly what to do. I remember hearing stories from World War II. You know, one of the things that the FDR administration did was Do everything they could to cut any governmental red tape that was in the way of of fighting World War II. I think that same attitude needs to be taken by the federal government, by the Biden administration.

• 31:04Speaker 03

  Cut any red tape that is standing in the way of getting the economy to function properly. I keep hearing stories of shortages. This is the United States of America. I've never in my entire life heard of these types of shortages. It's crazy, stupid shit that there are shortages on. So this is not a Fed issue. It's an administration issue. And I can't tell you the details that what they need to do exactly. I don't know the answer, but I'm sure there are lots of people out there who do. So that I think is the actual answer.

• 31:45Speaker 02

  Then there's a very basic thing that could be done, which is fix our energy policy. We have a flawed, broken energy policy and the mere pivot from the White House on how we're treating that energy policy, I think, could send the price of oil plummeting because, you know, we live in a very much an expectations-driven market. So if you actually heard a message coming out of the White House that is going to go after more petrochemical supply, more oil supply, that's going to change expectations. It's going to change the narrative and that's what you need. I agree with you. I don't think the Fed can do anything. I think they should have been more honest with folks about these issues with supply demand imbalances and a recognition that there are limits to what they're doing. And you heard Chair Powell say that the very beginning of that yesterday.

• 32:30Speaker 02

  I mean, he was asked explicitly, do you think we can still get a softish landing? And he said, kind of, sort of, maybe, but you know what? That's going to depend on external factors beyond the Fed's control. That's him finally getting the message that there are limits to this, the inipotence of the Fed. I think so many people in traditional finance just look at the Fed and say they're the Wizard of Oz, they can control all things. And I think that's a misnomer. I don't think that that's actually true.

• 32:56Anthony Pompliano?

  When you guys start to think about a number of these policies, is it that they don't understand what's happening or they don't identify the same things that you all are sharing? Or is it something where they actually understand it, but they're trying to play a confidence game? And so you kind of have to do what people expect you to do, even if it's not the right thing, because it keeps the confidence and kind of kicks the can down the road. Like, how do you think about the difference of we're playing a confidence game? Let's do what people expect us to do. Let's quote unquote, maintain credibility you hear thrown around a lot versus, you know, maybe a Paul Volcker style, like rip the Band-Aid off, do the unpopular thing, but it ends up being the right thing in the long run?

• 33:38Speaker 03

  Well, I don't think you can do the Paul Volcker thing. And I think we're already doing the Paul Volcker thing.

• 33:45Speaker 03

  To go back to, we live in a credit system. Credit system is fundamentally based on confidence. It's what it is.

• 33:56Speaker 03

  Are you going to lend money to someone for their business? Any business? If you're concerned about the future? And the answer to that is no, that's not, that's not how it works. Because your upside is limited. Your upside is the interest you make on the loan. Your downside is you don't get paid back. So it's fundamental, it's a fundamental flaw in the nature of a credit system. I think it's inherent. I think this is why we've seen,

• 34:26Speaker 03

  what we've seen in credit systems going back to time immemorial. Credit systems are fundamentally unstable.

• 34:35Speaker 02

  But with respect to the Fed, it's absolutely the latter about the confidence game that you pointed out, Pom. What we have is a dynamic where the Fed started to pivot and turn hawkish late last year, early part of this year. And you saw them communicating that quite clearly. People took Chair Powell seriously and the rest of the FOMC. And what did you see? You saw a historic rout in the bond market. The sell-off in bonds and the rise in yields was one of the fastest in history. That tells you that the Fed's primary tool to set expectations is paramount. That's their ability, their ability to get out there and set the expectations and push everything in the credit markets in the direction they want.

• 35:19Speaker 02

  That is all dependent on people still believing in the Fed. And I think what we saw with the CPI print is once you had that elevated print that came in even above the economists' expectations, the market, which has sold off really rapidly the last few days, it sensed the fact that there's no way these guys can pivot without destroying their confidence. They have to keep the foot on the gas with respect to future hikes. And you saw it, sure enough, they leaked to the Washington Post that they were going to do this 75-bit hike. That just tells you how they're operating. They're operating with the standard that they have to communicate expectations to the market and the market's going to actually tighten because you or I, we can't access the Fed window. We have to go borrow at the two-year or the 10-year.

• 35:58Anthony Pompliano?

  When you guys think about the US dollar versus other fiat currencies, is it the thought process that other fiats that are considerably weaker will devalue against the dollar, the dollar will strengthen on that relative basis? And the dollar and Bitcoin will both strengthen and kind of thrive in the short term? Or do you think all fiat currencies end up getting lumped together and the relative comparison doesn't matter?

• 36:23Speaker 03

  So we talk in Clubhouse a lot about the Euro-dollar system and listen to and read a lot of things Jeff Snyder writes. The Euro-dollar system is much, much larger than the US credit system. When you're doing business overseas in a non-dollar country, which is pretty much many of them, most of them, and you borrow in the Euro-dollar market, you're borrowing in a dollar-denominated loan. So what that means is you have effectively

• 37:01Speaker 03

  You're effectively short the dollar when you take that loan. So if you're earning your revenues in pesos, Argentinian pesos, or whatever currency you're in, if the dollar gets stronger, you're now short because you're earning in one currency, then you have to pay it all for the dollar. This strongly supports the dollar. And it goes back to understanding the nature of what this system is. So you can see the dollar grow stronger. And again, it's about, you know, it's about how, you know, we talk about two different facts about the dollar.

• 37:42Speaker 03

  It's purchasing power, but it's also the cross rates, the FX rates. So there's two different things happening and people often are casual in their discussion of it and don't specify the differences. Once you get to a period of massive spending, the dollar can depreciate in terms of buying power. Maybe buying power versus houses or buying power versus stocks or buying power versus goods and services. And can still grow stronger versus other currencies. So I think because of the nature of the credit system, you can see both things happen.

• 38:24Speaker 03

  The dollar can grow stronger versus other currencies and grow weaker versus purchasing power, which would be hugely beneficial for Bitcoin. So Bitcoin goes up and Dixie goes up. But the tendency is that when the dollar is getting stronger globally, it's said that the dollar tends to be a global wrecking ball. So it's not a simple answer. And I don't know that I can give you a great answer here. And maybe Joe can give you a better answer than I can give you. But absolutely Bitcoin can go up and the dollar can go weaker in purchasing power, which is what we've been seeing for decades already with asset price inflation.

• 39:03Speaker 02

  Yeah, I mean, really quickly, if you had to boil down the world's problems into one word, one word, I think you'd have to go with debt. There's too much debt out there. Sovereign countries, the sovereign states are over indebted. And the reason that's significant to the dollar discussion is go look at the work of Brent Johnson. Look at countries that aren't as privileged as the United States. They have to finance their debts by quote unquote printing, by expanding their native monetary supply. But they have to do what Tina was talking about, repay many of their obligations in dollars. So what you effectively have is you have this dynamic where many countries have to print, quote unquote, print their native fiat currencies. And they have to do a bid to the dollar because that's how they have to satisfy their obligations.

• 39:48Speaker 02

  So that dynamic where there's over indebtedness and countries are going to have to continue to spend is just going to feed that. It's going to feed more and more of an artificial bid towards the dollar. So I happen to think the dollar is going to be the last one standing and probably strengthens over the foreseeable future.

• 40:04Anthony Pompliano?

  My last question for each of you, maybe each of you can take a stab at it. Global debt to GDP, 350%. US debt to GDP, somewhere like 130%, I think at this point. Everyone talks about the debt, which I think is a very important part. Bitcoin as non-debt money is a potential first kind of principal solution to that issue. It'll take a while, I think, for it to come to fruition, but definitely is off to the right start and continues to gain momentum and adoption today. The other half of the equation, though, usually goes undiscussed, which is increasing economic output, increasing the economic production.

• 40:47Anthony Pompliano?

  And the idea of like, can we grow our way out of the problem? Or is it simply a function of getting rid of debt and not taking on more? How do you guys feel about kind of the economic growth component of this? And is it possible to grow ourselves out of this problem?

• 41:04Speaker 03

  Well, in the existing system, I think it's going to be very difficult to grow your way out of the problem. But if there were just certain discoveries, I don't know what they would be, maybe nuclear fusion. There were certain discoveries that took place in coming years. Sure, you could have a massive increase in productivity.

• 41:25Speaker 03

  But I think short of that, no, I don't think you can grow your way out.

• 41:28Anthony Pompliano?

  Joe?

• 41:29Speaker 02

  Yeah, I tend to agree. I think that it's going to be hard. And what I would add to the challenge of compensating for this with increased productivity is the demographic trend. Many countries, and it's a good thing, right, that you have an older population, but we have to find a way to put, you know, bigger segments of our population, larger segments of our populations globally to work even in some fashion. We have to change the nature of what it means to work and contribute to the workforce. The thing about productivity, I think, you know, you have some of these exponential technologies like AI and others that that could change the conversation. The question there becomes, well, if you have that productivity, is that going to be widespread? Are you going to see it disperse through the population? Or you're just going

• 42:12Speaker 02

  to have, you know, the few companies that have the dominance in AI, are they going to accrue all the benefits? That's not going to be widespread and sustainable that would drive productivity over the long run. I do think there's a possibility, though, and I won't discount it. I'm an optimistic person, and I think that's the way anybody who's managing money or trying to, you know, handle themselves in a personal financial decisions should focus on what could happen. And yeah, of course, if we have innovation, technological innovation, you could you could potentially see upticks in productivity. But I don't think that you're going to get out of this debt problem merely by growing your way out.

• 42:47Anthony Pompliano?

  Yeah, it's unfortunate. I think that's the perspective of many people. I tend to be an optimist as well, and maybe there is some way to fix that. But it's a tall task.

• 42:59Speaker 03

  I think actually Bitcoin will fix it, I hate to tell you. But I actually think Bitcoin will result ultimately in a change of paradigm. But I think, you know, we'll have to go through a lot of the negative aspects of the existing system. I disagree with most of the world on this. There are very few people who currently agree with me, but I think there'll be virtually no credit in a Bitcoin world, and it'll be a world of equity investment and money, money being Bitcoin, because of the technological change of what Bitcoin is. And I think it will tend to create a world with much higher growth rates. And I think it will reshape the way the economy works ultimately. And

• 43:41Speaker 03

  a lot of people don't agree with me on this, but that's what I think. But I think we'll end up with that because of the inherent pain. Of the existing legacy system of the credit system. And whether we were on a gold standard or not, we were still in a credit system. I think credit is fundamentally the problem, particularly bank credit. Because it is with bank credit that you create new money. And that I think is at the heart of the fundamental problem. And I don't think people fully understand yet, including many Bitcoiners, the nature of and the power of what this technology is. So actually Bitcoin makes me hugely optimistic. How long that takes, I don't know.

• 44:25Speaker 03

  And I don't know that that I'll get to the promised land because I'm not young. But but I do think that Bitcoin actually does fix this. Sorry.

• 44:38Anthony Pompliano?

  I love it. I love it. Uh, both of you, one of our sponsors is Eight Sleep. I sleep on the mattress every single night. What is your guys' sleep schedules? And do either of you guys have an Eight Sleep?

• 44:49Speaker 02

  I don't have an Eight Sleep. I'll have to look into it because I I've been probably not sleeping as well as I should recent months and weeks. But that's the nature of life as a lawyer. You never get enough sleep.

• 45:00Anthony Pompliano?

  You got to, it's like a thermo regulated thing. I put it ice cold and you just fall asleep. And it's frankly so magical that I tracked down the founder and say, man, I got to invest in this. This thing is is amazing. Tina, what about you? What's your sleep schedule?

• 45:14Speaker 03

  It varies. Sometimes I'm having too much fun talking to people on Clubhouse.

• 45:18Anthony Pompliano?

  You, you, every time I ever went on Clubhouse, you were in there and you were just preaching. And I was like, man, this guy is all over. And I wonder what he does every day. And then when I met you, I said, oh, OK, I got it now. He he's living the good life.

• 45:29Speaker 03

  I live on Clubhouse. That's what I do. You know, we've developed a lot of good friends. I mean, I met Joe from Clubhouse and I consider him a great, great, great friend. And he's somebody who very smart, who I've learned a lot from. And there are and there are other people too, you know, Hoddle's there all the time. And I love Hoddle and John Corey. And there's, I don't want to leave names out, but there's a bunch of people who are just fantastic. So it gets.

• 45:57Speaker 03

  John Seth is there all the time and I'm good friends with him. So there are, I sometimes fall asleep, sometimes I fall asleep at my desk. Yesterday, I fell asleep in my chair.

• 46:11Anthony Pompliano?

  Don't tell people.

• 46:12Speaker 03

  I need a better, I need a better sleep schedule. You're totally right.

• 46:15Anthony Pompliano?

  Don't, don't tell people you're falling asleep at the desk talking on Clubhouse. All right. Where can I send people to, to find both of you guys on the internet?

• 46:22Speaker 03

  Wait, wait, they, they heard me snore a number of months ago. It was embarrassing as hell. I was snoring.

• 46:28Anthony Pompliano?

  Joe, what are you doing hanging out with this guy, man?

• 46:31Speaker 02

  Oh, I don't know. You know what? The, one of the great things though, all this stuff we talk about, everything interesting here, you know, it's great that we live in a time where we can chat in real time about this and have, you know, shows like yours and have Twitter spaces and Clubhouse and digest this all. I mean, it would be a lot more difficult going through all this if you just had to read about it and, you know, some dry, you know, black and white paper.

• 46:53Speaker 03

  And one more thing, and actually two aspects. One, Twitter gave me this in the last bear market and Twitter and Clubhouse are giving me this now, helping me with my own personal psychology because managing your own psychology is really important in this and having friends you can talk to and, and, and discuss things with. And the second thing, which my goal for this bear market is crowdsourcing information about what's happening in the economy. And so we can do that because we're talking to people who we know, we're talking to them all the time and we can start to better understand what's going on because we go through this process together

• 47:32Speaker 03

  and we talk. And so that is my goal, crowdsourcing and understanding. So we learn about the different things that are happening and can get information maybe a little more quickly and understand it better and analyze it. So I think there's a huge, huge opportunities here.

• 47:50Anthony Pompliano?

  I love it. All right, my friends. Thank you so much for your time today. I learned a bunch, and I think everyone else seemed to have enjoyed it as well. So we definitely will have to do this again. But I appreciate your time and just keep going. It's crazy times ahead, but we need each other. So I look forward to bringing you guys back at some point.

• 48:08Speaker 02

  Thanks, Pom. Appreciate it.

• 48:09Speaker 03

  Thank you very much, Pom.

• 48:11Anthony Pompliano?

  Thanks so much for listening to today's episode. I really hope you guys enjoyed this one. Make sure you subscribe on Apple, Spotify, or your favorite podcast player. And if you're looking to try to transition to get a new job in the Bitcoin or crypto industry, we've got you covered. Head over to pompscryptocourse.com. We've developed a curriculum with the top teams across the industry. It's a three-week intensive training program with over 50 events packed into that three-week time period. Go to pompscryptocourse.com to learn more, and I'll meet you guys for the next episode.