#1156 Peter Schiff On The Fed, Interest Rates, Labor Market, Gold, & Bitcoin

Peter Schiff is the co-founder of Euro Pacific Asset Management. In this conversation, we talk about the federal reserve, inflation, interest rates, employment market, gold, bitcoin, and much more. ======================= Announcing LYCEUM | Miami, a day-long event on March 4th in Miami Beach hosted by Pomp. We’re gathering an explosive group of experts to engage in a series of bold discussions, covering topics from investing, emerging tech, longevity, space exploration, entertainment and more. The speaker lineup includes names such as investing legend Cathie Wood, NYT bestselling author Vivek Ramaswamy, billionaire Christian Angermayer, master of Contrarian Thinking Codie Sanchez, Modern Wisdom host Chris Williamson plus many more. Listeners will receive an exclusive 40% discount on VIP and Insider Pass tickets with code POMP40. General Admission tickets are free of charge. Spots are limited so head to lyceummiami.com to buy your ticket today. ======================= Pomp writes a daily letter to over 200,000+ 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 https://pomp.substack.com/ =======================

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• 0:02Anthony Pompliano?

  What's up everyone, this is Anthony Pompliano. Many of you know me as Pomp. You're listening to the Pomp Podcast, which is my effort to find the most interesting people in the world and sit with them for hours while I ask questions in an effort to learn. We have no advertisers on this podcast, so it would mean the world to me if you would subscribe to the show on your favorite audio platform, watch episodes on YouTube, and tell your friends and family about the podcast. My goal is to help millions learn from the world's most interesting people. So let's get into today's episode. Peter Schiff is the co-founder of Euro Pacific Asset Management. In this conversation, we talk about the Federal Reserve, inflation, interest rates, the employment market, gold, Bitcoin, and much more. I always enjoy talking to Peter, and I hope you guys enjoy this one.

• 0:47Anthony Pompliano?

  Once you get done listening, jump on Twitter and let us know what you liked, what you didn't like, what we could do better. I always appreciate the feedback and it helps make every single episode improved for the listening experience. Here is my conversation with Peter Schiff.

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

• 3:19Anthony Pompliano?

  All right, guys. Bang, bang. I've got Peter Schiff here. Peter, I thought a great place to start is the Federal Reserve. For over a year now, it's been talking about destroying demand, and they have done a fantastic job of destroying investor demand. But now we are seeing the inflation number start to come down. We are at maximum employment at a 50-plus-year low in that unemployment number. What is going on? And is the Fed winning? Or are there actually problems underneath all of these seemingly positive numbers?

• 3:47Speaker 06

  No, the Fed is not winning, but everybody else is losing, that's for sure. You know, they haven't really destroyed demand. They've changed it a little bit. But if you look at what's happening...

• 4:02Speaker 06

  People who have jobs are spending everything they earn and then some. The savings rate is near record low. Credit card debt is record high. So people keep on spending. Nobody is cutting back on their consumption. Maybe they're spending more money on food and insurance and rent and less money on other items. But in aggregate, we haven't seen a reduction in spending or an increase in savings. The government continues to spend like crazy. They just passed that reconciliation bill. But the government deficits, despite what Biden said in his non-state of the union address the other night, the deficits are skyrocketing.

• 4:44Speaker 06

  And so that's all additional spending demand in the economy. The Fed hasn't done anything to bend that curve. And so I think we have seen this transitory improvement in the numbers because they were really bad and now they're not as bad. But I think that as the year progresses, we're going to see that change and we're going to start to see a worsening of the inflation data again, something that the markets are really not prepared for, neither is the Fed.

• 5:12Anthony Pompliano?

  How does that work? Explain. So right now, we peaked, you know, just under 10% or so in terms of the official inflation rate in America. It's now come down below 7%. Why do you think it is going to get worse? And this would contradict, there's many investors like Barry Stone, like and others, who think that we're actually going to see negative inflation come in the summer. What is your logic in terms of why you think the inflation data will worsen over the coming months?

• 5:38Speaker 06

  Yeah, well, first of all, it's only 7% if you look back for an entire year. A lot of people are saying, hey, if you look back six months, it's around three or something like that, which may be true. But of course, again, the way the government measures prices and what actually happens to prices are two different things. So the real increase in prices is much greater than what is being officially reported by the government. But I think that, you know, you had this initial spike in a lot of prices and then the Fed started hiking rates and that had an impact on the dollar, it had an impact on commodities, you saw. Commodity prices come down, particularly oil prices, and higher interest rates had an impact in housing and other areas of the economy.

• 6:19Speaker 06

  And so you've got some temporary easing of the inflationary pressures. Also, US GDP got a boost from the strength of the dollar because the initial result of higher rates was a stronger dollar. That brought down the cost of our imports that helped keep commodity prices down. That also helped boost the GDP numbers. But I think all that is going to reverse. We saw a big drop in the dollar in the fourth quarter. Dollar weakness is continuing so far in 2023. I expect it to accelerate. And that's going to worsen the trade deficits. And that's going to help push commodity prices to new highs. And all of that's going to put renewed upward pressure on the inflation numbers.

• 7:02Anthony Pompliano?

  When that happens, what is the Fed's response? So they are getting close to a pivot, I think, in most people's minds. But if all of a sudden we see a reacceleration of inflation data along with historically low unemployment, does that give them kind of free license to just ratchet up the interest rates and try to destroy as much of kind of this consumer and investor demand that still exists?

• 7:28Speaker 06

  Well, you know, the real problem for the Fed might be that not only do we get a surprise uptick in inflation, but we get a downtick in the economy. You know, it's only a matter of time before we start laying people off. I mean, we're already laying people off, but eventually it's going to be impacted more in the official numbers. Because right now, what's creating all this noise in the jobs numbers are all the part-time jobs that people are being forced to take on because they can't get by on the income from their full-time job. Or some people may have had a couple of part-time jobs and they needed to take a third part-time job.

• 8:12Speaker 06

  So that's going on right now. Because if you look at the data over the last 10 months, we've actually lost full-time jobs. There are fewer people that have full-time jobs now than had them 10 months ago. But you have over a million and a half more people that now have part-time jobs. Now, some of those people Have still have their full-time job, they're just working another job. Now, why would somebody who has a full-time job go out and get a second job? Well, it's because they can't afford to pay the bills with the salary from their full-time job. So they need to moonlight. And so that's what's going on, and that's really what is impacting these numbers. As far as why the unemployment number is so low. I know a lot of people aren't being counted as unemployed.

• 8:54Speaker 06

  And I know a lot of people a couple of years ago made the decision to be self-employed. They got into the gig economy, whether they're driving Ubers or DoorDash or something like that. And so they can never be fired. You know, once you decide that you're just going to work for yourself, you can't fire yourself. So you can never really be unemployed. So I think there's a lot of noise in these numbers. I think the labor market is considerably weaker than the Fed believes or the market believes. But at some point, all these layoffs that we're getting, and look, more layoffs were announced today. Look at a firm that buy now, pay later companies, stock down 20% today, laying off, I forget, a quarter of their workforce. I mean, who didn't see that one coming?

• 9:35Speaker 06

  And I talked about the nonsense of these buy now, pay later companies when they were, you know, all the rage. But one of the reasons that consumers were able to spend money is because they didn't have to pay. They just got stuff for free and they thought they'd pay later. But of course, they're going to pay never. And that's going to be the problem for a lot of these companies because, you know, they fronted the money. And now they're not going to get it from their customers. But you're getting more and more layoffs, you know, from tech companies. You're going to see a lot more layoffs in, you know, crypto and blockchain, all these companies, you know, hired people. I mean, all these guys are going to lose their jobs. But I think that what's going to surprise the Fed is going to be that not only is inflation going to turn higher.

• 10:20Speaker 06

  But the economy is going to turn down and so will job creation and unemployment will go up. So inflation will be stronger than the Fed expects. The economy will be weaker. Now, what does it do? That's the $64 trillion question. Is the Fed in a weakening economy and maybe even a financial crisis? Who knows what might blow up? Because interest rates, you know, they're almost 5% now and they're going to be 5% pretty soon. You know, we were at zero. So that's a huge change. You know, you built an economy around 0% rates. It can't function at 5%. The whole thing has to implode, which is a good thing because we had a phony economy and that needs to implode. But when it does, it obviously creates a lot of problems.

• 11:03Speaker 06

  A lot of people are going to lose a lot of money and that's go, you know, that's not going to be something that the government is going to want to sit by and just, you know, watch it play out. They never do. They always feel compelled to intervene and do something, even if what they do makes everything worse. But will the Fed sit back or will the Fed rather fight inflation and say, you know, to hell with the economy or the labor market or the financial system or the stock market? We don't care. We're going to fight inflation. We don't care what's happening in the economy. Or are they going to say, we don't care about inflation. We got to go help the economy. We got to do something about what's happening in the economy. And of course, the only thing the Fed can do is create inflation. That's the only thing it's ever done.

• 11:47Speaker 06

  That's its only tool is inflation. So the Fed is going to have to say, yes, we have high inflation, but we're going to make it even higher because we feel that we need to do that to help the economy or the labor market.

• 12:00Anthony Pompliano?

  So we're looking right now and talking about the Federal Reserve in the United States. What's been surprising, I think, to many over the last 60 to 75 days is that the Federal Reserve has been draining liquidity from the market. They've been creating these tighter financial conditions. Also, the ECB has been doing the same exact thing, but we've seen numerous central banks in Asia actually pumping liquidity into the market. And so when you take the top 10 central bank balance sheets on a net basis, you find that over the last 60 to 75 days, there's been about $500 billion increase to those top 10 central bank balance sheets. And so when you see what the Fed is doing, is there some weird world where like all of the effort and all of the time and energy that they're putting into draining liquidity is just being washed away by these Asian central banks that are actually pumping liquidity

• 12:45Anthony Pompliano?

  in at a much faster rate than it can be drained on the Western world?

• 12:49Speaker 06

  Well, first of all, I don't know that the Fed is actually draining it fast enough. I mean, the balance sheet's still around 4.5 trillion, I mean, 9 and 8.5 trillion, excuse me. So it's an enormous balance sheet. I mean, you know, it's only come down maybe half a trillion from its peak. But of course, the balance sheet blew up a lot faster than it's shrinking. Remember how quickly we inflated that balance sheet? The deflation is taking a lot longer. And I don't, I think it's going to be aborted. I don't think the Fed is going to continue on this path because the rate hikes that we've already had are taking a toll on the economy right now. And we're just beginning to see the effects. And it's going to get a lot worse.

• 13:31Speaker 06

  Remember, it's only been a year, not even, since the Fed raised rates for the first time, right? So, you know, there is a lag between the increase of rates and the effect on the economy. And so we're just kind of catching up to those effects. But they're going to be enormous in all segments of the economy. I mean, not just the stock market and the real estate market, but you have an, you know, American economy that's based on cheap money. I mean, that's what it was running on for more than a decade. Well, now it's time to pay the piper. And everybody's broke. You can't pay the piper. So that's bad news for the piper, who thought he was going to get paid? But it's everybody else too, because now they can't get any more free music or entertainment.

• 14:13Speaker 06

  So there's a huge day of reckoning here that we're just on the cusp of.

• 14:18Anthony Pompliano?

  Let's take kind of each segment of the market or each market participant independently. What does this mean for small business owners or individual investors or consumers? Is there kind of a full-on recession? How bad is it? When does it happen? How are you thinking about what the impact of this situation will be on the average American or those small business owners?

• 14:38Speaker 06

  Well, yeah, it's going to be a huge recession. I think it'll be a bigger recession, a deeper recession than anything we've experienced in our lifetimes. And, you know, because a bust is proportionate to the boom. And this has really been an unprecedented boom created by the Fed, created by artificially low interest rates and quantitative easing. And so this could be one hell of a hangover. That's what's going to happen. And you know, so but different people are going to be affected differently. You know, the definition of a recession is when your neighbor is out of work and it's a depression when you're out of work, right? So, you know, not everybody's going to lose their job.

• 15:20Speaker 06

  But I think everybody's wages are going to be reduced in real terms. So even if you don't lose your job, I think that the money that you earn is not going to go as far when you when you go to buy stuff. Because I think unlike previous recessions, this one is going to be inflationary. You're going to have recession and inflation happening at the same time. And that's what's going to make this recession so much more painful. Because even if you don't lose your job, it's going to hurt. And I think most investors are going to lose money. I think most investors over the last decade or two have been channeled into the wrong assets by the artificially low interest rates. So a lot of people own very high multiple companies, growth companies, and in fact,

• 16:04Speaker 06

  companies in many cases that don't even have any earnings at all. Right? They were they were just speculating on earnings in the future. But people were willing to do that when the cost of money was basically zero. But I think as the dynamics change, a lot of people are going to realize that they're holding the wrong assets. And they're going to get repriced and marked down. So, you know, there was going to be big losses for most investors that, you know, have the FAANG stocks or a lot of these stocks that did really well, you know, when the Fed was blowing up the bubble, but they're going to do horribly when it bursts. And then, you know, the same thing for, you know, your favorite cryptocurrencies. I mean, cryptocurrencies also got caught up into the speculative mania.

• 16:48Speaker 06

  And, you know, the air is going to come out of that bubble, too. So a lot of people that had a lot of money, or at least they thought they had a lot of money in their in their in their digital wallets are going to find out that there's really not much there. I mean, they'll still have the crypto, they just won't have much real money if they if they try to sell it.

• 17:05Anthony Pompliano?

  When you look at the assets that will do best, so you talked about FAANG stocks, crypto, a couple of other assets that you anticipate will do poorly in this environment, what are the assets that you're most excited about or that you think the average individual likely will end up benefiting if they are positioned correctly?

• 17:22Speaker 06

  Well, I mean, and these are the assets that I've been buying for a long time anticipating this. It's not like I just woke up and decided, you know, I've been, I've been planning for this for a long, long time. In fact, a lot of people would say, well, you know, see, I'm wrong because I've been saying this for so long. I wasn't wrong. I just knew what was going to happen a long time before it did. But I think the assets that are ultimately going to do well are, one, commodities. I think commodities are going to do extremely well in an inflationary cycle. And that's, you know, all sorts of commodities, industrial metals, agricultural commodities, oil and gas. So I have investments there. And of course, precious metals, you know, they're, you know, going to do very well. Gold's the

• 18:03Speaker 06

  king of all commodities, and I think it's going to do very well in a commodity bull market, especially if we have ultimately end up having a dollar crisis, currency crisis, and gold is, you know, remonetized in some shape or form, either by the private sector or by various governments. And so there could be a huge increase in, in, in the price of gold in this type of environment. But I think that there'll be a lot of money lost in bonds, paper assets. I think that people that own quality real assets will do better. And so that's the value stocks. I mean, companies that actually have big earnings right now, not companies that might earn money in the future, but that earn a lot of money right

• 18:47Speaker 06

  now and have been earning a lot of money in the past so that the income is reliable and dependable. And the companies are selling goods and services that people really need to buy. And they'll buy them. I mean, maybe they'll buy a little bit less, but they'll keep buying and they'll, they'll cut back or give up something else in order to buy these things. And so you want to own those businesses. I think the businesses That cater to consumers that don't have a lot of debt and that have more productive jobs are going to be better because their customers are going to be in a better position to pay. And, you know, so that would exclude, you know, the US. I mean, some Americans will be able to pay, but a lot of Americans will be too broke to buy, buy products. I think

• 19:31Speaker 06

  the emerging markets are going to be, you know, much more fertile ground. I think the, you know, the consumers there are going to be in better shape. They don't have the kind of debt that you have, let's say, in the United States or some of the, you know, more developed Western economies. You have younger populations. They're still working, educated, skilled, making stuff and it so they can, you know, generate real demand because they can also generate supply to create that demand. And so, yeah, I also want to invest in, in those economies. I think emerging market stocks will be winners, you know, in, in, you know, this environment. I think they'll do better on balance than the developed markets.

• 20:15Speaker 06

  And I think, you know, overseas markets will do better than, than domestic markets here in the United States. And I think equities will do better than, than bonds, but it depends on the equity. I mean, because there are stocks that are going to go bankrupt and that's, you know, you lose 100% if your company goes bankrupt. But a lot of stocks that won't go bankrupt, investors will decide that maybe they're worth 10 cents on the dollar or 5 cents on the dollar relative to what they thought in a very different investing environment.

• 20:42Anthony Pompliano?

  When you mentioned gold, one of the things that I've had previous guests come on and talk about is the idea of sanctioned hedges. And so, obviously, we saw Russia invade Ukraine. We saw the United States and many other countries around the world kind of coordinate and issue immense historic sanctions against that country. And what it led, I think, a lot of people in the gold community to start talking about is, well, hold on a second. There's a lot of central banks who see that happening. They want to lessen their dependence on treasuries or US dollars and therefore it will lead to more increased purchases of gold in those central bank reserves. One, have we seen that happen in the year or so since Russia invaded Ukraine and the US and NATO levied those sanctions? And two, how

• 21:24Anthony Pompliano?

  do you think gold as a sanctions hedge potentially plays into any future price movements in the asset?

• 21:31Speaker 06

  Yeah, I think absolutely that is happening right now. I think You know, central banks around the world are concerned about the weaponization of the US dollar and the SWIFT system. They saw what happened to Russia and what is happening to Russia now, and they don't want that to happen to them. And so we have created another reason for the world to de-dollarize. I mean, they had plenty of reasons to do it anyway, but we were foolish enough to give them even more because America benefits dramatically from the dollar's reserve status. And when we lose that status, and we will, it's a matter of time, it's going to be a

• 22:12Speaker 06

  huge wake-up call because it's going to mean a dramatic decline in the standard of living of just about every American. And so, you know, it's a mistake to accelerate that process. I mean, if you're a politician, if you really understood it, but that's what we've done. And so, yeah, I'm sure that these foreign central banks are buying more gold for that reason. And also, you know, they think the dollar is going to lose value and they want to have a more stable store of value as a reserve asset for their own currencies. And so I think that's going to continue, especially when the world kind of wakes up to the reality that 2% inflation is a thing of the past and that the inflation rate is

• 22:57Speaker 06

  going to be much higher than that, at least, you know, even the way the government measures it. And that's going to result in a revaluation or repricing of the dollar and a repricing of gold. I mean, the dollar is worth a lot less in a higher inflation environment, especially if interest rates will be perpetually negative. And gold is worth a lot more. And, you know, when the markets come to terms with that, you're going to see the adjustment.

• 23:22Anthony Pompliano?

  The Federal Reserve's inflation target is 2%. You're talking about a persistently higher percentage in that inflation measurement. What do you think that percentage would be? And would that cause the Federal Reserve to actually increase their target rate from 2% to something else in order to have a higher likelihood of claiming victory in obtaining the target?

• 23:42Speaker 06

  Well, I don't know if they're going to officially increase the target. I mean unofficially, they may concede that, but they may be afraid of the effects of making that announcement. But of course, they never should have had a 2% target. There's no reason for inflation to be 2%. It's not like if it's 1% that that's a problem and it needs to be higher. The only problem with 1% is that it's not zero. Zero inflation is better than 1%. So if inflation is 1%, it's not that it needs to be 2%. And in fact, if you have falling prices, if prices are going down by a percent, there's no need to force them higher. I mean, we all benefit from falling prices. I mean, everybody wants to buy stuff for less money.

• 24:27Speaker 06

  There's nothing wrong with prices going down. That's how standards of living go up, right? The things that you want to buy are less expensive. I mean, everybody wants to buy stuff for less money. Sometimes if you can't afford something, you have to wait until the price comes down and then you can afford to buy it. I mean, so falling prices creates demand and it lifts living standards and that's what we need. But you know, the Fed concocted this BS that we needed 2% inflation. We didn't. We needed it like a hole in the head. But the problem is now they've created so much inflation under the guise of targeting 2% that they have no way of even bringing it back down to 2%. But I have no idea what the annual rate is going to be.

• 25:08Speaker 06

  But whatever it is, it will not be reported accurately because they're going to continuously monkey around with the CPI. And so it's never going to honestly reflect how much prices are going up. In fact, all the years that the Fed claimed we had less than 2% inflation, my guess it was at least double, if not triple, 2%.

• 25:29Anthony Pompliano?

  When you think about other factors in the economy that could affect the monetary fiscal policy or how different market participants act, the debt limit is an area of concern and an area of conversation right now. We obviously hit the 31 point whatever trillion dollar debt limit. There is this period between now and June where the Treasury has stepped in with emergency measures and they're essentially playing around with some of the different expenses that they are responsible for can affect. Do you think the United States debt limit gets increased? Could the US default? And how does the debt limit play into monetary policy and the Fed decision making?

• 26:12Speaker 06

  Well, it will be increased, unfortunately, because it's always increased. But every time we get close to having to increase it, the Republicans make a big deal about it, so long as there's a Democrat president. Because when Trump was president, or when Bush was president, they didn't care. They raised the debt ceiling. But once you have a Democrat in the White House, then all of a sudden you get a few Republicans who say, "Oh, hey, we don't want to raise the debt ceiling. Well, we want to cut spending." Well, why don't you cut spending when you got the White House? Because they don't actually want to cut spending. They just want to talk about it. And so you're going to get some Republicans talking about how we have to get a handle on the debt. But at the end of the day, we never get a handle on the debt.

• 26:56Speaker 06

  And we're going to increase the debt ceiling. Now, we would all be better off if we never increased the debt ceiling, had they never raised it the very first time. And we've had it for like 100 years. But we'd be better off if the initial debt ceiling was still in place. So we didn't have all this debt. The reason we have so much debt is because they keep raising the ceiling. And it's nonsense to say we have to raise the ceiling to pay our bills. If we wanted to pay our bills, we wouldn't have to raise the ceiling. We would just pay our bills. The reason we want to raise the debt ceiling is so we can continue to not pay our bills. So we can go into debt instead of paying our bills. But the problem is paying the bills actually costs money. Nobody wants to pay the bills. The politicians want to keep on kicking the can down the road

• 27:39Speaker 06

  so they want to raise the debt ceiling again so that we can continue to not pay our bills and have the national debt go up to 35 trillion, 40 trillion, 50 trillion, you know, infinity and beyond. But the problem is going to come when we reach a ceiling that we can't raise. And that is the lending ceiling. That is the willingness of the rest of the world to loan us money. Because when we hit that ceiling, then we're done. But the crazy part about it is... We tell our creditors, if we can't borrow more money, we will default. Well, we're basically telling the creditors that this is a Ponzi scheme.

• 28:22Speaker 06

  Because we're only going to pay back our current bondholders if we find somebody dumb enough to buy new bonds, and then we can take that money and use it to pay off the guys who own our bonds now. I mean, but why would you deliberately loan money to a government if they're telling you right off the bat, if we can't borrow more money, we're just going to default and you're never going to get your money back? You know, the politicians should be saying, if we don't raise the debt ceiling, we are going to cut Social Security, we're going to cut Medicare, and we're going to prioritize interest on the national debt. Or we're going to have an emergency tax hike, we're going to raise everybody's taxes so we can pay the debt.

• 29:07Speaker 06

  No, they don't say that. They say if we can't borrow more money, we're defaulting. So, I mean, so how much longer can this go on? Because default is inevitable. It's only a question of when. Now, of course, the other thing that they can do if they're not going to default, well, they just print. Well, then there's hyperinflation, and that's the same thing. It's actually worse than defaulting.

• 29:28Anthony Pompliano?

  When people talk about monetizing that debt, I think there's a lot of people who are in the camp of the US is not going to default, they're going to continue to try to monetize, devalue the currency. We've already talked about some of the issues in terms of the interest rate, the current state of the economy. Is there a world where the Fed, whether officially or unofficially, just says, hey, we have to return to loose monetary policy, we have to return to zero or negative interest rates, and therefore we are just going to be okay and have everyone have to become okay with living with much higher inflation? Not necessarily moving their target rate, but could we see a world over the next 10 or 20 years in the United States where inflation is 10 or higher on an annual basis? Hey, guys, what's going on?

• 30:12Anthony Pompliano?

  I hope that you're enjoying this conversation, but I wanted to interrupt for a quick second and tell you about a brand new conference that I'm hosting on March 4th at the Miami Beach Convention Center. The event is called Lyceum Miami and tickets are completely free for anyone who wants to come. I'm bringing together many of the most popular guests from the podcast over the last couple of years. Some of the guest speakers that we've already announced are people like Vivek Ramaswamy from Strive Asset Management, or Delian and Mike Solana from Founder's Fund, Chris Williamson from the Modern Wisdom Podcast, Codie Sanchez from Contrarian Thinking, and billionaire Christian Angermayer, among many others. I've got a number of amazing surprise guests as well, some that you definitely will not expect,

• 30:57Anthony Pompliano?

  and others that come from walks of life that you will be scratching your head as to how I even got them to show up. But come check out Lyceum Miami on March 4. The Lyceum was a public gym in Athens, Greece, where people used to come together, talk about ideas, and debate topics that were important to society. I want to meet people in person, in real life, once again, after three years of a hiatus from real life events. And so I'm hosting the event, and as I mentioned, anyone from anywhere can come to this event completely for free. All you need to do is go to lyceummiami.com and you'll be able to pick up a free general admission ticket.

• 31:40Anthony Pompliano?

  Make sure you claim your ticket in order to get in through the doors. Lyceum Miami is going to be a great time, so come check it out, come hang out with me, many of the popular guests from the podcast, and other like-minded individuals. Lyceum Miami, March 4, Miami Beach Convention Center. I hope to see you there. All right, let's get back into this conversation.

• 32:01Speaker 06

  I think so, although I don't think our creditors will put up with 10% inflation that many years in a row, especially when the interest rates are well below that and they're really getting killed. But, you know, inflation is a form of default. If the central bank prints a bunch of money and you have 10% inflation and we have a $30 trillion national debt, we've just repudiated $3 trillion of the 30. I mean, it is a slow default. That's what it is. It's just a different way of defaulting. You do it through inflation instead of just reducing what you pay. But it's the impact is the same for the bondholders. Either you get all your money back.

• 32:44Speaker 06

  I mean, either you get all your money back, but you can't buy as much. Or you get less money back, but you can actually buy the same as it, you know? Let's say there's 10% inflation. If I got 90 cents on the dollar. Well, that's the same as getting 100 cents on the dollar with 10% inflation. Or I can get 90 cents on the dollar with no inflation. But, you know, prices are going to go up a lot more than 10%. I mean, they could double, they could triple, they could quadruple. And that is a huge haircut. You know, the bondholders end up losing 70, 80% or more of the value of what they loaned. And, you know, that's like the government paying off 10 cents on the dollar, 20 cents on the dollar.

• 33:23Anthony Pompliano?

  What about the national debt interest payment? So between the last three to four years, I think we've paid 375 billion to 475 billion dollars annually in that natural national debt interest payment. On top of that, the interest rate that we've paid is anywhere between 0.1 to like 1.9%. There are a number of different organizations and economists out there saying that they believe that the US will be paying more than a trillion dollars annually in interest payments for the national debt by 2030, 2033, whatever.

• 33:58Speaker 06

  No, no, no, not by 2030, maybe even by the end of this year, but certainly by next year. The the interest tab, you know, assuming just a Fed 5% rate, right? Fed funds rate, which we're going to be at, you know, in March or, you know, the, you know, the Fed's going to hike rates another couple, you know, 50 basis points or so. That's what it says. We should be at a trillion in interest by the end of the year, if not next year. But we're not going to stop there. I mean, then we'll be 2 trillion. And what happens when the national debt is 50 trillion and interest rates are 10%? Well, that's 5 trillion a year in interest on the national debt. I mean, the numbers are enormous because the debt is going to keep going up.

• 34:41Speaker 06

  And interest rates are going to have to keep going up because the more debt we have, the more inflation we're going to create. And the more inflation we create, the higher interest rates have to be. So this is unsustainable. Even Powell admitted that what we're doing is unsustainable. It is unsustainable. And when is it going to end? Only when there's a crisis and a crisis is coming. Because the politicians will not act in advance of a crisis to avert one. They will wait until there is a crisis and then they will try to react to the crisis after it happens. And so there will be a debt crisis. The only question is when? And I think it will be a currency crisis as well as a debt crisis. Because the response to a debt crisis is to print more money.

• 35:26Speaker 06

  And that creates the currency crisis.

• 35:28Anthony Pompliano?

  Describe a little bit more in detail how you expect that crisis to play out, both the debt and the currency crisis. What would your expectation be with either the sequence of events or the things people should pay attention to?

• 35:38Speaker 06

  Well, as buyers for US treasuries or dollar-denominated debt in general disappear, nobody wants to loan money anymore because the interest rate is not even close to compensating you for what you're losing. Especially when the dollar really starts to fall. Then foreigners are not going to want to loan us money if the dollar is going down against their base currency. So you're going to start to see a loss of buyers. And then the Fed is going to step in with an even bigger quantitative easing program to pick up the slack, to buy the bonds that nobody else wants. Well, where does the Fed get the money to buy those bonds?

• 36:22Speaker 06

  It has to create it. And that means it expands the money supply. So it creates even more inflation, which will push the dollar even lower. And that will force even more people to want to get rid of US bonds. Assuming there are still some private buyers around. Now you're going to chase them out. And now the Fed is going to have to expand its QE program even more. Because if the Fed doesn't step into the market, interest rates really go up. You know, look what happened in 1980 with Volcker. They went up to 20%. They could go higher than that now. I mean, we have a lot more debt now than we had back then. So in theory, we, you know, rates should go higher now than they were back in 1980.

• 37:03Speaker 06

  But of course, since we have so much more debt than we had back then, the economy would completely implode. It would be just a meltdown. So they're not going to let that happen. But the only way they can prevent that from happening is by creating more inflation. And that's really what leads to the currency crisis because the markets figure this out finally. And nobody wants our dollars. You know, I think it'll start abroad where foreigners don't want our dollars. But then Americans won't want the dollars either because they won't be able to buy very much with them. So I mean, the whole world will be trying to get rid of them.

• 37:38Anthony Pompliano?

  In that situation, what will they want?

• 37:41Speaker 06

  Well, I mean, obviously they could want real money, so they can want gold or silver. To the extent that there are other currencies that are holding up better. I mean, you know, you know, I don't know if it's the euro or the yen, or it's going to be a smaller currency. You know, they could look at the Swiss franc or the Norwegian kroner. There could be other currencies, although maybe some of these other central banks will get, you know, their acts together and back their currency by gold. I mean, I don't know if it'll be a major central bank like a Europe, or maybe it'll be like China or Saudi Arabia or somebody will come up with a viable alternative that that people will have confidence in. But, you know, it's easy to have confidence in gold and silver. You don't have to accept a government. And, you know, you can't inflate the the supply.

• 38:26Speaker 06

  There's a certain amount in existence and the supply grows very slowly. So, you know, there are hard money alternatives. And I know, you know, your audience is, oh, they're going to go to Bitcoin. I don't think so. I mean, I just don't see that as a hard money alternative to anything. And I just, you know, there was some speculative demand for Bitcoin.

• 38:48Speaker 06

  But in a safe haven, risk-off environment, I just don't see that demand there. And certainly for, you know, larger players, you know, you can't put a significant amount of money in a Bitcoin because you take a huge risk that after you buy it, the price crashes.

• 39:03Anthony Pompliano?

  So Bitcoin is up about 40% to start 2023. It's the fastest start since 2013, about a decade ago. What do you think is driving that demand? Is it a risk on, risk off environment? Is the central bank balance sheets just getting an injection of liquidity? Is it people who are worried about a potential USD fault trying to get out of the system and try to find other assets? What's driving such a big, you know, kind of movement in the price of something like Bitcoin to start the year?

• 39:31Speaker 06

  Yeah, well, keep it in perspective. I mean, the price is around 22,000, you know, whereas last year it almost hit 70,000. So the reason it's had a big bounce in January is because it got destroyed in 2022. It's one of the worst years it's ever had. Certainly, in terms of market cap, it has to be the worst year it's ever had as far as how much market cap was lost during a calendar year. So we had a big drop. You know, the ride to zero is not going to be in a straight line. I mean, there's going to be plenty of bear market rallies. And we've seen a bear market rally in Bitcoin. We've seen a big bear market rally in all of the crypto-related stocks that were down 80, 90% last year. They rallied too really big.

• 40:16Speaker 06

  Look at the Kathy Wood Arc Innovation ETF, which was a disaster, or fund was a disaster in 2022, and it had a big bounce. So all the stuff that really went way down went up. Now, the question is why? Well, maybe there were some shorts that covered all at once. You had a lot of shorts that covered, and so that created some, some buying. Also, I think there is some speculation. People see these stocks that are way down and they're like, hey, let me, let me play a bounce. Maybe, you know, hey, Bitcoin was 70,000 and it went to 16,000. Maybe it'll go to 25, 30,000. That's a pretty good return. Let me get in there and, you know. So I think you got some speculative money that came in there.

• 40:59Speaker 06

  But I think everybody that bought the losers from 2022, they're going to lose again in 2023.

• 41:07Speaker 06

  You know, today was a pretty bad day. I mean, look at some of these stocks, you know, got really beat up pretty badly. It was a technically a very bad day, the way the market reversed. But particularly in the crypto sphere, a lot of these stocks, you know, got shellacked today. Coinbase, MicroStrategy, you know, some of these stocks.

• 41:26Speaker 06

  But I think that they're all going to make new lows. You know, the FAANG stocks as well. I mean, it's not all these high beta risk assets that bounced off the lows are going to make new lows, in my opinion, early in 2023, not late in 23. I think early in 2023, they're going to make new lows. And I think what you saw last year was a movement out of momentum in the value. That's why that's why we did so well last year. I mean, if you look at the money that I manage, right, at your Pacific Asset Management, my two key strategies where, you know, most of our money are, we have a dividend payer strategy and a value strategy.

• 42:08Speaker 06

  And for the smaller investors, we created mutual funds that mimic those same strategies in our separately managed accounts. And you can buy those funds through my asset management company, a broker dealer. You could buy them at any of the discount brokers. And if you look at what happened with U.S. News and World Report, they just came out a couple of weeks ago and they looked at 350 large cap value funds. And these two funds fall into that category. There are two of the 350 funds. And U.S. News and World Report ranked these funds, not just last year, but just over three years, five years. And they said, okay, what's the top fund?

• 42:51Speaker 06

  You know, and they ranked the top 60 out of 350. And my two funds were number one and number three. Now somehow Goldman Sachs got to number two. Hopefully I edged them out next year and I'm one and two. And Goldman Sachs is, you know, somewhere lower. But the reason that I did so well on a relative basis, on an absolute basis, we didn't make much money last year. We were positive in those funds, which was good in a market that got killed. And, you know, and the reason we weren't up more is because the dollar was up 10% and these are all foreign funds. So we had to be up 10% just to break even and we more than broke even. But I think the reason I did really well and the reason we were able to make up for years of underperformance to get so high

• 43:35Speaker 06

  Highly ranked was because of the types of stocks that we own and the sectors that we overweight. And it's value, it's dividend paying stocks. It's, you know, we avoided a lot of the tech stocks and the financials that really blew up in 2022. And I had avoided them for years because I knew they would eventually blow up. And I don't think they're finished blowing up. And so I think that those trends that were in place last year are going to accelerate. They've had a reversal in January. But those two funds are lagging. They're up, you know, they're up so far this year, but they're not up as much as the benchmarks. Because the benchmarks still have all these overpriced crap stocks that bounced.

• 44:14Speaker 06

  But as this reverses, I think these strategies are going to thrive once again. And I think that they'll do even better this year. Because I believe instead of going up 10%, the dollar is going to get killed in 2023. I think this could be one of the worst years the dollar's ever had. Of course, 2024 could be even worse. But I think we're going to start to see the dollar going down. And that's going to be a big headwind for any of the non-dollar, you know, international strategies.

• 44:42Anthony Pompliano?

  When you see the dollar going down, does that mean that an asset like Bitcoin will benefit from a weakening dollar?

• 44:50Speaker 06

  You know, it could. I mean, you know, I mean Bitcoin can go up or down for any reason, right? I just don't see the correlation that gold has to the dollar in Bitcoin. I mean, if you look at the trading, most days, if you see the dollar is up, gold will be down and vice versa. That's not necessarily the case with Bitcoin. Bitcoin, to me, is more correlated with, you know, Cathie Wood, Ark Innovation, with those type of stocks. That's, that's where I see a strong correlation, not to a currency market or the precious metals market, but to other high-risk assets. Now, you know, can some people like, like you, for example,

• 45:34Speaker 06

  you may react to a weak dollar by buying Bitcoin. Because you think Bitcoin is some kind of digital gold and an alternative to gold. And so you want to buy it as an inflation hedge. And you're probably not alone. There are some other people that might do the same thing. I just don't think there's enough of you out there. And I think most of you who think that way already have like most of their money in Bitcoin. You know, I don't think they've got a lot of dry powder right now to buy more Bitcoin. But I also think there's a lot of money still in Bitcoin that wants out. You know, you got to, you know, you got to remember that. There's a lot of people that got into it because they thought they were going to make a quick buck and now they're kind of stuck and they're looking for any kind of strength

• 46:14Speaker 06

  to get out. You always have the wild card of the grayscale Bitcoin trust. I mean, what's going to happen to that? What if they end up having to liquidate all their Bitcoin? What if all that Bitcoin that's lopped up in that trust ends up having to go out to the market? I mean, who's going to buy that? So there's a lot of wild cards out there. And then you have all these companies that are bankrupt and, you know, may have to be selling their crypto assets. How much leverage is still in the system? You know, there's so many potential, you know, bombs that could explode in the crypto space. So I would look at it as like a safe

• 46:53Speaker 06

  haven or store of value. I mean, it's just so much risk compared to just buying gold, which doesn't have any of those risks.

• 47:00Anthony Pompliano?

  So when you look at, let's say, a store of value, right? I think that you correctly called out that, yes, Bitcoin is up 40% or so to start 2023, but it's down, I think, about 65%.

• 47:11Speaker 06

  Probably not anymore. You know, check the price.

• 47:14Anthony Pompliano?

  So it's down about 65% from the all time high in Q4 of 2021. It's down about 50-ish percent or so over the last 12 months. And so depending on your timeframe ends up having a different analysis. But if you go back kind of pre pandemic era, Bitcoin was sitting somewhere in the $8,000 range. It's now over 20, whether 22, 23, whatever it is. Gold obviously has also gone up during that pandemic era, but not nearly as much as Bitcoin has. And most other assets haven't kept up with Bitcoin either. How do you think about time horizons when measuring a store of value? Is it something that you look at over a year, five years, 1,000 years? Like, what is your kind of framework for evaluating these?

• 47:55Speaker 06

  You don't measure a store of value based on price because you can't store a price. And that's an important distinction that everybody misses. Bitcoin has a price.

• 48:08Speaker 06

  And that price is determined every day by the supply and demand. I mean, you can see the price, it's trading. It doesn't have any value. You don't need to have value to have a price because people could value anything. Right? Value is totally different. And so what is the value of gold? Apart from its price, you know, what is the value of that metal? Right? Well, it's all of the things that gold can be used for, for which, you know, there really are no substitutes if you really want the quality or the effect, whether it's making jewelry or conducting electricity or wherever the applications are. There is a value for gold.

• 48:52Speaker 06

  Now, there's going to end up being a price, you know, assigned to that that's going to change. But there is value there. And when you're storing gold, you're storing that value, the metal itself and all the things that you could do with the metal. Bitcoin doesn't have any use other than the fact that I can buy and sell it. But apart from that, in and of itself, there's absolutely nothing you can do with it. You can't make anything out of it. It doesn't matter how many you have. If I have 100 ounces of gold, I can make 100 times the amount of jewelry as if I had one ounce of gold. If I have 100 Bitcoins, I can't do anything more than if I only had one or if I just had one Satoshi. Which is why I don't even think the 21 million Bitcoin is relevant.

• 49:35Speaker 06

  It's the 2.1 quadrillion Satoshis that you need to look at because there's no difference. I mean, so you're really buying a bunch of Satoshis and there's, you know, there's a whole bunch of them out there, you know, because all Bitcoin is is an arbitrary bundle of Satoshis that, you know, and again, it doesn't matter how many you have, you still can't do anything with it. So Bitcoin doesn't have value. And so you can't store what you don't have. You can't store a price because price is purely dependent on, on supply and demand. And, and so will there be demand for Bitcoin in the future? I don't know. I mean, I know there's going to be supply. Right? We know that the supply is there. We don't know if there's going to be demand. And I think that most of the demand for Bitcoin

• 50:20Speaker 06

  has come from people who thought they would get rich buying it. You know, and the institutional demand that came in late to the party like, you know, Anthony Scaramucci with the Skybridge funds, you know, why did all that money get go in? Because they thought they could get rich, you know, and then there was also a degree of FOMO that, oh, you better buy this, you're going to miss out on this huge move, you know, and so you had some people coming in. But I don't think those buyers are there anymore. I think the big drop in Bitcoin has scared off all that money and now all the fraud, you know, some of the biggest players. I mean, look at Bankman Fried. He was like the poster boy of crypto and he was a complete fraud, you know, and if Scaramucci

• 51:03Speaker 06

  couldn't see that this kid was a fraud, then how are you going to trust his judgment? Right? I mean, he's telling you Bitcoin is great, but he also told you that Sam Bankman Fried was great. I mean, what kind of judgment is that, you know? And so a lot of the people, and it wasn't just FTX, you had a lot of other, you're Celsius or Terra Luna, all these various companies and now what's happened Gemini or I can't even keep them straight, they're all blowing up. But people start to think, wait a minute, you have all these frauds, all these scams, maybe everything is a scam, right? Maybe, you know, people are just getting away and then there's going to be more regulation coming. Congress is coming in, you know, trying to, you know, with more heavy regulation in the industry. So these are huge problems. So I don't see where the demand is going to come from for this, for Bitcoin.

• 51:47Speaker 06

  And Bitcoin competes now with over 20,000 other cryptos that are also vying for part of that, you know, crypto pie. You've also got all kinds of equities that are now linked to crypto, whether it's the Grayscale Trust or MicroStrategy or Coinbase, or you could buy those things, right, as a bet on crypto. You don't have to actually buy Bitcoins. You've got all sorts of things that compete for what I believe is going to be a shrinking pool of potential buyers. And remember, you like to look at timeframes. Bitcoin was 20,000 in December of 2017.

• 52:25Speaker 06

  So, you know, we're five years past that. And Bitcoin is about the same price, right? You know, and if I'm right, I think Bitcoin is going to crack 10,000 this year. How low it goes, we'll see. Maybe it gets to 5,000. I mean, it'll bounce, my guess. It won't, you know, again, it's not going to be a straight line of zero. But so at some point this year, I think you get $10,000 Bitcoin. And then you're going to compare it to $20,000 Bitcoin in 2017. And now you're like, you know, six years later, you know, it's down 50%. I mean, that's significant. You know, nobody expected that. You know, back then, everybody was so excited. It was supposed to be hundreds of thousands by now.

• 53:09Speaker 06

  You forget how bullish everybody was a few years ago. You know, everybody now wants to go back to the beginning. You know, when Bitcoin was under 1,000 or under 100. Yes, sure, of course, if you bought it way back then, you did great. The problem is not that many people bought it way back then. And the people who bought it back then didn't buy that much money worth. Most of them, I mean, some people did. And now they're, you know, billionaires or they were. But most of the people who own Bitcoin are losing money. They didn't buy it until 2021 or 2022. And they're down 50% or more. And, you know, they're not happy about that. They don't like the fact that they bought Bitcoin. They didn't expect it to go down this much. And of course, a lot of people that own Bitcoin are going to need money soon.

• 53:54Speaker 06

  They could be unemployed soon. You know, how are they going to get money to pay the rent? You know, the landlord doesn't want their Bitcoin. They're going to have to sell it. You know, they want to buy groceries. The, you know, the supermarket doesn't take Bitcoin. So there's a lot of hodlers, I think, that are going to have to sell. Some of them are going to be forced to sell because they took out loans. Imagine when Bitcoin goes below 10,000. I think there's going to be a lot of people that are going to be forced to sell their Bitcoin. Even if they don't want to, they'll have no choice because they have to repay their debts.

• 54:22Anthony Pompliano?

  You made an argument about Bitcoin not having value outside of price. If we look at gold and use the same argument, I believe that the number is somewhere between 7 to 10% of gold is used for jewelry, metals, etc. And the rest is really used as store of value. Maybe that number is wrong, go correct me if I have misspoken.

• 54:42Speaker 06

  Yeah, I'd say 50% of the gold production annually goes towards jewelry. The new gold that's produced. So that's the number one use, is gold is used for jewelry.

• 54:54Anthony Pompliano?

  Why do they say that the only 7% or so of the market cap is for jewelry? Like you're saying 50% of the new production, why is it 50%?

• 55:02Speaker 06

  The new production, right, that's taken out of the mines is consumed in the jewelry industry.

• 55:08Anthony Pompliano?

  Why is so much of the new production going to jewelry versus other use cases?

• 55:11Speaker 06

  Because there's a jewelry industry that needs it, right? They need to make jewelry, they need gold, right? But yeah, I mean, I think about 20% maybe, the numbers of the gold is held by individuals for, you know, store of value. I mean, central banks have a big chunk of it too.

• 55:29Anthony Pompliano?

  So let's just use for the purposes of this conversation, let's say 50% of gold is used for jewelry, you know, conduction, all the use cases outside of store value. And 50%, whether it's individuals, companies, central banks, whatever, is used for store of value. In that argument, would you say that if all of a sudden people decided, oh, I don't want gold for the price, right, kind of for that quote-unquote "store of value," that there'd be a 50% reduction in the market cap?

• 55:57Speaker 06

  No, it doesn't work that way. And, you know, the reason that gold is, you know, a store of value is because if I have an ounce of gold, that ounce of gold is not going to decay, it's not going to rot, you know, it doesn't have a half-life, you know, it doesn't change. And in fact, even if I have gold in jewelry... That piece of jewelry could be melted down and the gold is exactly the way it was before it was made into jewelry. It has all the same properties. So the properties don't diminish over time. So no matter how long you hold on to it. So people are going to need gold in the future.

• 56:41Speaker 06

  And in fact, there's probably going to be more uses for gold in the future. I mean, there's a lot of use for gold in medicine and aerospace. And as we have advancements in that area, I mean, there's probably going to be demand for gold and uses for gold that we don't even know about yet, based on how unique gold is and the things that gold can do. There'll be more things that it's used for, just like there's more uses for gold today than there were 200, 300 years ago. Look at all the gold that's used in the chip industry. They didn't have that before. They didn't use gold for that. So gold is a very valuable, rare metal. It is the most useful metal of all the metals on the periodic table.

• 57:23Speaker 06

  Now, sometimes they use other metals because gold is too expensive. And that's one of the things that would happen. If the price of gold really started to fall, people would start using gold instead of copper or instead of, you know, because now all of a sudden it would make sense. At a certain price point, you're going to use gold. But the reason that you might use copper is because the gold is too expensive. So you can't use gold. You've got to use something that will still work. But there are some areas where you can't use copper. You have to use gold. And then whatever the price is, you just have to pay it. But you could historically look at the price of gold and you can compare it to the price of all these other commodities. I mean, you could look at wheat, you could look at soybeans, you could look at copper, you could look at oil, and you could look at gold and you could say, what are these historic relationships?

• 58:07Speaker 06

  I mean, those relationships should hold and they do hold over time. You can't do that with Bitcoin. There's no historic relationship between the price of Bitcoin and the price of anything else. There's no way to know how much Bitcoin will be worth versus a bushel of wheat. There's just absolutely no way. I mean, you can't do anything with it. But the market can make a judgment about how much an ounce of gold is worth relative to a bushel of wheat. You can make that relative price.

• 58:37Anthony Pompliano?

  You mentioned fraud earlier and a number of crypto companies, whether they committed it, they're victims to it, there's a daisy chain of leverage, there's a bunch of these kind of issues across various companies, hedge funds, products. But we've also seen a number of allegations over the last two or three years, some further back, things like Nikola, where there was allegations and eventually courts found individuals made, you know, kind of misleading statements to investors and things like that, all the way up to, most recently, Hindenburg Research has levied, you know, 100-page report against Adani and kind of the entire group in India and many of the things happening there. How much of the nefarious action, or maybe even just ignorance that ends up hurting

• 59:22Anthony Pompliano?

  investors, is a sign of the times in bull markets versus you think it's industry-specific? You've long talked about kind of crypto, but is it a crypto thing in your mind? Or is it more so just good times and now the tide goes out and you see who's swimming naked, if you will?

• 59:38Speaker 06

  Well, look, when you have easy money and you have a kind of casino-like environment in risk assets, you're going to have a lot more of that. Obviously, you're going to have, you're going to have more fraud, more get-rich-quick schemes. And, you know, people will have that appetite and they'll have the money in order to gamble. And of course, you know, it feeds on itself. I mean, your neighbor starts making a bunch of money in crypto and he starts telling you how rich he is and maybe you start to see it because he bought a brand-new car or something. And so you get into it, you know, it kind of feeds on itself, it becomes contagious. And, you know, crypto, I think, was almost like a perfect asset for that.

• 1:00:22Speaker 06

  You know, it had a real sexy story. You know, when I first heard the story, you know, I just was, you know, I understood money too much to get taken in on it. And so I just kind of like dismissed it and didn't realize that so many people would get sucked into it. But I think the people who took large positions...

• 1:00:45Speaker 06

  In Bitcoin and then did a great job of promoting it. I mean, it's a, you know, a huge success story for the people who got in early and pumped this thing up and cashed out. Right? So a lot of people made a bunch of money off the marketing of this, you know, pyramid, Ponzi, chain letter, however you want to describe it. I mean, it has characteristics of all these things. But with 0% interest rates and the Fed printing all this money, you know, that helped create the story like, yeah, we need an alternative to the dollar, you know, and, and, oh, gold, gold's no good, gold's old school, gold's analog, this is digital, it's like the internet, you know, it was all this sexy BS, you know?

• 1:01:27Speaker 06

  Um, you know, there's an expression in my industry, you know, you sell the sizzle, you know, not the steak. The problem is, you know, with Bitcoin, there is no steak. You're, it's all sizzle, but they, you know, they were able to sell it. And so a lot of people got into it. And then part of the thing was a lot of celebrities, you know, entertainers, uh, sports stars, you know, influencers got into it because it's the perfect platform for them in the internet age where you can have millions of followers on Instagram or Tik Tok and some company could say, hey, here's some of this shit coin, you know, go out and talk about how it's going to the moon and we'll give you a bunch.

• 1:02:10Speaker 06

  And then, you know, you could tell all your fans about it and they're going to buy it and it's going to go up and you're going to make a bunch of money. I mean, that's what Kevin O'Leary did too, and he got into, um, um, FTX, you know, because I remember, you know, I, I was doing an interview. This is when I did the interview with Celsius, when I debated Mischinsky and I said, hey, you're running a Ponzi scheme. I figured that out right away from the, the stuff he was saying. But the, the lady who was moderating it asked me, you know, well, when are you going to change your mind like, like Kevin O'Leary? And I said at the time, and this is, you know, a year and a half ago, I said, well, Karen O'Leary only changed his mind because he was paid to change his mind. He became a shill for a crypto company.

• 1:02:53Speaker 06

  He was negative on Bitcoin until somebody paid him to be positive on it. Right? And, and so he sold out. You know, and that's the same thing that his buddy, you know, Mark Cuban did from Shark Tank. He was very negative on Bitcoin until all of a sudden he got into, you know, NFTs or whatever hell he did. And all of a sudden, you know, he, you know, had laser eyes or whatever. All these guys got sucked into it because there was so much money. Everybody was making so much money at the height of this bubble.

• 1:03:21Speaker 06

  But the bubble's popped. Now, a lot of people don't recognize that yet. I get it, you know, because, hey, Bitcoin's still at 22,000. So yeah, it's still a big number. There's still a big market cap.

• 1:03:33Anthony Pompliano?

  One of my last questions-

• 1:03:34Speaker 06

  But let's see what happens in a couple of years. Let's see where it is.

• 1:03:36Anthony Pompliano?

  One of my last questions for you is, do you think that celebrities promoted Bitcoin or gold more? And you got to remember that celebrities, rappers, athletes, all the people you're talking about, influencers, kind of this whole cohort of people with audience. They have gold chains, gold teeth, they're talking about various things. Former President Donald Trump's got a gold toilet, gold room, the whole thing. Which asset do you think has been promoted more globally? Bitcoin or gold?

• 1:04:12Speaker 06

  Well, when rappers, you know, have their bling, you know, and they're wearing gold, they're not promoting it as an investment, as a way to get rich. It's a fashion statement. It's a way to display your wealth. I'm so wealthy that I can afford this gold toilet bowl or whatever for Donald Trump. But so they weren't promoting it as a way to get rich. Bitcoin was sold to buy, not to wear it around your neck, but to get rich so you can afford to buy gold and put it around your neck. It was, it was a way to get rich. So absolutely Bitcoin was, was promoted far more heavily than gold. The only celebrities that have ever really endorsed gold- And they're not those type of celebrities. You know, you'll see gold companies like I'm associated with Shift Gold.

• 1:04:56Speaker 06

  I started it, but I don't own it anymore. But I help, you know, deal with their, their marketing and I make sure I have input into their products and what they're selling because they're still using my name and I'm, I'm still promoting the company and I'm associated with these guys. And so, you know, they've got to do the right thing or I will end my association. So customers are getting served as well now as when I own, own the whole business. But there are gold companies that hire celebrities to recommend them. Usually they're talk show hosts because a lot of the ads are on, you know, conservative talk show, you know, guys that are talking about inflation and the big deficits and you

• 1:05:40Speaker 06

  have to buy gold. So there celebrities do get paid to recommend, not necessarily gold, but recommend that you buy gold through whatever product, whatever company rather, has paid them to go out and promote the gold. But then what ends up happening is those companies end up ripping off their customers because instead of selling them, you know, a low markup product, like the type of products that Shift Gold sells, they end up selling these faux numismatic coins where they're marking up the coins 20, 30, 40, 50% or more above the value of the gold. And that's how they can afford to pay these celebrities to, to recommend them is because

• 1:06:23Speaker 06

  any customers who come to these firms as a result of those endorsements get ripped off. But that is much smaller scale compared to, you know, what we saw, you know, I mean, no gold company had a Super Bowl ad. I mean, you had four different crypto companies. I've never seen a gold company that can afford to advertise on the Super Bowl. You know, it's funny. I did a live interview the other day. And the guy started talking about ChatGPT. And I said, you know, I hadn't used it. My son was had been using it a lot and having a lot of fun with it. But I asked him, you know, we're talking about gold. And I said, why don't you ask the ChatGPT? Who's the world's most well-known gold bug? And it came up with me, right?

• 1:07:08Speaker 06

  That's what that's that. And then it got like Mark Faber like after me. And then that was it. I mean, it shows you like, there's nobody out there. Like that's really associated with gold more than me. Now, I also asked it to say, well, who are the biggest Bitcoin critics? And my name didn't even show up. They had so many people, you know, Warren Buffett, Charlie Munger, Dr. Doom, what's his name?

• 1:07:36Anthony Pompliano?

  Norrell Robini?

• 1:07:37Speaker 06

  Norrell Robini, Paul Krugman, Jamie Dimon. I forget, there's a whole long, I didn't even show up.

• 1:07:44Anthony Pompliano?

  Were you jealous? Were you jealous?

• 1:07:46Speaker 06

  I'm insignificant when it comes to criticizing Bitcoin. But when it comes to gold, the only one they could find really was me. So it's like, gold is not anywhere near the hype that Bitcoin is, not even close.

• 1:07:59Anthony Pompliano?

  When you talk to your son and he says, hey, I want to make a decision. I have $100 and I want to make sure that I hold as much of this value over the next 50 years. You tell him to buy Bitcoin?

• 1:08:12Speaker 06

  Of course not. Why would I tell him that? Now, he might, he might think that that because again, he's 20 years old. Doesn't know any better. You know, I'm trying to teach him, but you know, there's always a, you know, rebellious side to kids, right? You always want to rebel against your father, you know, make your own mark, do your own thing. And the younger generation always thinks they know something that their father or their grandfather didn't know. I mean, that's, that's not new. I mean, that's how history repeats itself. Maybe when my son eventually has a son of his own and he learned his lesson the hard way about Bitcoin, maybe his son will be, you know, you know, taken in by some type of similar Ponzi.

• 1:08:56Speaker 06

  And he'll be able to say, listen, son, let me tell you, when I was your age, I, I got all, you know, suckered into this thing called Bitcoin. I don't know if you've ever heard of it or you remember. Let me tell you a little bit about this thing Bitcoin. And you know, maybe, maybe he'll have more success than I did, or maybe it'll be the same. Ah, Dad, you don't know what you're talking about. This isn't some Bitcoins, Bitcoin, whatever that is, you know, this is, this is different. But, um, you know, that, you, you can't repeal human nature, unfortunately, but you know, the central banks pay, play a big part in, in, in storing this stuff up. And they certainly did with the Bitcoin mania and all the other cryptos. I mean, not just Bitcoin, obviously, uh, you know, because you have 20,000 plus coins out there. And I use the word coin lightly because they're not actually coins.

• 1:09:41Speaker 06

  And in fact, you know, most people don't even call them cryptocurrencies anymore. They dropped currency. It's just called crypto, right? Because they realize that it's no, people aren't really using it as a currency. So it's just crypto. You know, that's what it is. It's, you know, but what the hell is crypto? It's, it's nothing.

• 1:09:55Anthony Pompliano?

  Do you know how many, how much annual transaction volume of gold there is? Is that number?

• 1:10:00Speaker 06

  No, transactions, what type of transaction you talk about? And are you talking about like on the futures market, people trading gold futures?

• 1:10:07Anthony Pompliano?

  No, not futures.

• 1:10:08Speaker 06

  Are you talking about physical gold?

• 1:10:10Anthony Pompliano?

  Like actual gold, like Bitcoin on chain, right? So not, uh, futures or anything derivatives or anything, but actually on chain. Uh, in 2021 had $13 trillion of volume during that year.

• 1:10:22Speaker 06

  Yeah, I mean, that's trading volume, right? It's not, it's not like people going buying a cup of coffee.

• 1:10:27Anthony Pompliano?

  Not on the exchanges, not on the exchanges, on the actual blockchain in terms of transacting. Now, what they're transacting for, we don't know, right? So could it be someone transferring a certain amount from one wallet to another wallet? For trading purposes, maybe, but we're, we're taking out exchange traded volume. And we're talking just about transaction volume.

• 1:10:45Speaker 06

  So there's that much, so that's the volume that's happening on no exchanges. Just if I were to give, if I was going to send you some of my Bitcoin, you're talking about that. Money going from my, money moving from one wallet directly to another. We're not money Bitcoin, moving from one wallet to another wallet.

• 1:11:01Anthony Pompliano?

  Well, you, you called Bitcoin money. It's okay. We got you.

• 1:11:03Speaker 06

  Yeah, that was a, that was a mistake. I meant Bitcoin, not money.

• 1:11:07Anthony Pompliano?

  And so when that, uh, those transactions, 13 trillion. Now, again, there's a bunch of caveats. What is it for?

• 1:11:12Speaker 06

  No, no, when you say 13 trillion, you mean 13 trillion times Bitcoin moved from one wallet to another?

• 1:11:20Anthony Pompliano?

  13 trillion dollars worth.

• 1:11:22Speaker 06

  No, oh, 13 trillion.

• 1:11:24Anthony Pompliano?

  Of annual volume.

• 1:11:24Speaker 06

  Worth of it. So you're not talking about 13 trillion transactions.

• 1:11:28Anthony Pompliano?

  No, no, no.

• 1:11:28Speaker 06

  You're talking about 13 trillion of market cap moving.

• 1:11:32Anthony Pompliano?

  Correct. And so when you think of that number.

• 1:11:34Speaker 06

  Again, I don't know what that is. I don't know, like you have some whale that moves.

• 1:11:37Anthony Pompliano?

  No, no, no, I'm saying for gold.

• 1:11:39Speaker 06

  Couple hundred million from one wallet to another wallet.

• 1:11:41Anthony Pompliano?

  The reason why it's interesting to me is because, um, it's more than Mastercard in a given year. Right? And so again, is it a direct comparison? There's debate, but I would wonder if gold is more than the 13 trillion of Bitcoin in 2021?

• 1:11:57Speaker 06

  No, I would think it'd be less. I don't think gold is moving around like that.

• 1:12:01Anthony Pompliano?

  Yeah. So technically, if that's the case.

• 1:12:05Speaker 06

  But the difference between Mastercard, Mastercard or Visa or American Express, these are, these are payment mechanisms where money is being paid, you know, used as a method of payment.

• 1:12:17Anthony Pompliano?

  So Bitcoin may have been used more than Mastercard for medium of exchange.

• 1:12:21Speaker 06

  There's no, there's not even, it's not even close.

• 1:12:24Anthony Pompliano?

  How do you know?

• 1:12:25Speaker 06

  I mean, I, look, I, I don't go into stores and see, you know, signs, you know, for Bitcoin. I mean, I, I, I would guess personally.

• 1:12:34Anthony Pompliano?

  Why would people be using a digital currency that's native to the internet? Wouldn't they be using it on the internet more where you're not going to see what they're transacting?

• 1:12:41Speaker 06

  Why? I mean, they could use it in the real world too, but I don't go to websites where, you know, I mean, Shift Gold takes, you know, we have a thing with, with Bitcoin where we work with BitPay. But I, I, I would say that the interest in accepting Bitcoin was greater.

• 1:12:58Speaker 06

  Among merchants in 2017 than it is now. I think they've lost interest.

• 1:13:04Anthony Pompliano?

  That's not true.

• 1:13:05Speaker 06

  I don't know that there's no interest, but I just think that, you know, they've lost it because they realized it didn't work. Look, remember Tesla initially said, we're gonna, we're gonna sell our cars for Bitcoin and Elon Musk tried it for, I don't know, a month or so, how long, and then just said, you know, it doesn't work and he stopped it. Didn't want to do it anymore. And so, you know, I just don't see it working as a payment. In fact, most people in the industry will concede that Bitcoin is not a good medium of exchange for payments, that it's just digital gold, it's just a store of value, which of course it's not. You know, they're trying to reinvent it as something it's not. It had, there's no real use case for Bitcoin.

• 1:13:49Anthony Pompliano?

  None?

• 1:13:50Speaker 06

  No.

• 1:13:51Anthony Pompliano?

  Not even for speculation?

• 1:13:52Speaker 06

  You know, I mean, do, right now, do people use it for ransomware? You know, yeah, but maybe there's better cryptos that are more secure and more private that you could use, you know, to commit a crime than Bitcoin.

• 1:14:06Anthony Pompliano?

  Well, so I like, I like talking to you because you make absolute statements like there's no use case, but I think if I pushed you a little bit, you would say that actually a use case of Bitcoin is speculation, right?

• 1:14:18Speaker 06

  Well, that, yeah, but that's not an actual use case. That's what, yeah, I mean,

• 1:14:21Anthony Pompliano?

  It's like a fake use case?

• 1:14:22Speaker 06

  It has to be a part from speculation. Yeah, I can speculate on something that's useless. But yeah, I mean, I will concede you that there are a lot of ways to gamble today. You know, you can buy lottery tickets, you could go to a casino, you can bet on the Super Bowl on Sunday, or you can buy Bitcoin, right? Yeah. So, you know, Bitcoin competes with all those forms of gambling. I'll give you that.

• 1:14:45Anthony Pompliano?

  Peter, I always like giving you a hard time. I appreciate you sharing so much information, especially about the economy. You have a very great grasp, I think, of the economic machine, also how much the Federal Reserve seems to be struggling with controlling what's going on. If people want to find you on the internet, where should they go? And if they want to find out more about Euro Pacific, where can they go there?

• 1:15:07Speaker 06

  Well, they can find me on the internet. You can look above my shoulder, your Pacific Asset Management. If you have a portfolio and you're interested in having my team manage it for you, you should give us a call. We have all sorts of strategies. Even if you've got some money in Bitcoin, you can't have all your money in Bitcoin. I think I remember you told me you had half your money in Bitcoin. So at least you won't lose the other half. And maybe that's the way that I can manage. You know, in strategies that will do well, I think, in an inflationary environment, in a weak dollar environment. So happy to take on new clients. We work with investors all around the world, not just in the United States.

• 1:15:50Speaker 06

  And again, people can buy my mutual funds through their existing brokerage account. Pretty much all the major discount brokers have my funds on their platform. So you can go and buy them there. I'm all over social media. You know, I don't have as many Twitter followers as you. I mean, at one point I had more, but you just blew by me in the Bitcoin bubble. But I'm closing in on a million. I've got like, you know, 920 some odd thousand. So, you know, I'm gaining on you a little bit, maybe. I don't know. Maybe I'm falling further behind.

• 1:16:19Anthony Pompliano?

  I'll throw you a party. I'll throw you a party when you get to a million.

• 1:16:23Speaker 06

  But, you know, but I'm on Twitter. That's where I am most often. And if you read the tweets, they're almost all mine. I mean, some of them come from Schiff Gold. But most of the tweets are I write myself. And it's way I'm communicating with people through Twitter, kind of almost the way Donald Trump did. So I've been using that platform. In fact, I even pay Elon Musk now the eight bucks a month just to do my part. I had a check anyway after many, many years, but now everybody's got a check if you pay the eight bucks. But I want to contribute to the cause somewhat. But I'm on, you know... Facebook, not as much anymore. I'm on Instagram. I'm even on TikTok. You know, we're putting out a lot of TikTok content, trying to reach the younger people with my

• 1:17:08Speaker 06

  message. So yeah, try to follow me on all these social media platforms. Spread the word. Get your friends to follow me and listen to my podcast. You know, there's a brand new episode that just came out today, The Peter Schiff Show. I commented on Biden's State of the Union address yesterday. So to get my take on that, just go and listen to The Peter Schiff Show. You can listen at Schiffradio.com. You can go to my YouTube channel, listen to it there. Or if you're, you know, podcasts, you know, on iTunes or Stitcher or these various other platforms, just search for The Peter Schiff Show. I know you've got the

• 1:17:42Anthony Pompliano?

  That was a great pitch. That was a great pitch.

• 1:17:45Speaker 06

  Well, isn't yours like, yours is like the world's greatest podcast or something like that?

• 1:17:49Anthony Pompliano?

  Just the best.

• 1:17:51Speaker 06

  Well, the world's best, the second best.

• 1:17:55Anthony Pompliano?

  All right, Peter, I appreciate it very much. I always enjoy talking to you.

• 1:17:58Speaker 06

  But yeah, I mean, so I'm out there. I'm all over the internet.

• 1:18:00Anthony Pompliano?

  All right, we're ending it though. We're ending. We gotta end. We gotta, I gotta things to go do. I can't talk to you forever. All right. I love you. I will see you later. Thank you so much. Talk soon. Bye.

• 1:18:08Speaker 06

  All right. So long.