#1415 Anthony & Polina Pompliano | The Fed Will Make Bitcoin & Stocks Skyrocket!

Polina Pompliano, Author of ‘Hidden Genius’ and Founder of The Profile, and Anthony Pompliano, Author of ‘How To Live An Extraordinary Life’ and CEO of Professional Capital Management, discuss why Jerome Powell can’t stop cutting interest rates, all-time high number of US citizens dependent on government aid, using bitcoin to pay your taxes, and what will happen when cheap capital floods the market. ======================= Buy book: https://www.amazon.com/Live-Extraordinary-Life-Anthony-Pompliano/dp/0857199927/ ======================= Gemini is the safe and secure way to trade crypto. Gemini is offering eligible new users the opportunity to earn $100 in BTC when they trade $1000 in crypto within their first 30 days of signing up. Head over to ⁠⁠https://www.gemini.com/partners/pomp⁠⁠ and start trading crypto to earn $100 in BTC. ======================= The Pomp Podcast is powered by BetOnline.ag, the premier crypto-friendly place to gamble on politics and sports, casino, poker and horse racing. BetOnline.ag gives you the ability to use Bitcoin and more than a dozen altcoins to make deposits and withdraw your winnings. There are no crypto transaction fees, and processing is instantaneous and secure. Visit https://promotions.betonline.ag/pomp and use PROMO CODE: POMP100 to receive a 100% matching bonus on any crypto deposit. BetOnline.ag is available in nearly every country around the world, making it the top global gaming destination for crypto users. ======================= Pomp writes a daily letter to over 265,000+ 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/ ======================= View 10k+ open startup jobs: ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠https://dreamstartupjob.com/⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ Enroll in my Crypto Academy: https://www.thecryptoacademy.io/

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. 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. 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. What's up guys? We've got a great episode for you today with Polina Pompliano. Today we talk about Jerome Powell cutting interest rates and how he can't stop. He's going to only keep continuing. On top of that, we then get into why the number of US citizens dependent on government aid has skyrocketed to a new all-time high. Wait until you see

• 0:47Anthony Pompliano?

  the chart and the data we have is going to blow your mind. We then get into how dumb of an idea it is for you to pay Bitcoin for your taxes and why politicians keep suggesting this, but I wouldn't be so quick to believe what they're saying. And then lastly, we finish up with cheap capital. What's going to happen when all of this capital comes flying into the market, asset prices, interest rates, etc. We've got lots of information for you. And there's one little Easter egg that I left in the episode for you, which is, I've got a clever idea as to how we can stop government spending. The politicians won't like it, but you sitting at home, I think you're going to like it. And so, once you find that Easter egg, you hear my idea on how we can cut down government spending, leave a comment, let me know what you think, whether you agree with it or you don't. Here is my latest conversation with Polina Pompliano.

• 1:30Speaker 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.

• 1:53Anthony Pompliano?

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• 2:36Anthony Pompliano?

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• 3:21Anthony Pompliano?

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• 4:04Anthony Pompliano?

  Plena, what do we got today for the people?

• 4:07Speaker 02

  All right. Fed Chair Jerome Powell indicated that if the economic data remains consistent, there are likely two more rate cuts coming this year, but in smaller quarter percentage point increments. That stands in contrast with market expectations for more aggressive easing. And he said that the recent half percentage point interest rate cut shouldn't be interpreted as a sign that future moves will be as aggressive.

• 4:36Anthony Pompliano?

  We have changed the monetary regime in this country and in this economy. We went from loose monetary policy to tight monetary policy. That's what happened in 2022. For two years, they held on for as long as they can. But now, the market structure wins. It overpowered the central bank and they have to cut interest rates. They have to print money. We know they're printing money because M2 money supply is continuing to expand. And now that they've done a 50 basis point rate cut, everyone realizes they are going to cut more. Now Jerome Powell has a very interesting job because he's got to manage monetary policy. But even more importantly, he has to manage the expectations of people in the economy. Because what you don't want is a central bank that shows up and just makes random

• 5:20Anthony Pompliano?

  decisions and has a knee jerk, money gets more expensive, money gets cheaper, but no one can actually plan their life. And so what he's doing is he's trying to tell people what he's going to do in the future, but he has to caveat it with as long as the data continues in the trend that it is going in. And so to go from at the beginning of the year, people thought there was going to be six or seven interest rate cuts, then over the summer, people thought there was going to be zero, to now it looks like we're going to end up with three, a 50-point cut just previously last month in September, and then two more 25 basis point cuts. There'd be a total of 100 basis points cut in the interest rates, which means that cheap capital is now available. Now, where does this show up in the economy? You get small businesses tend to borrow more than large businesses.

• 6:05Anthony Pompliano?

  And also you get real estate where lots of borrowing, whether it's mortgages for residential or even commercial. And then you Start to see interest rates across many other consumer kind of staple, you know, verticals. They start to come down as well. And so if cheaper capital is available, people will go and they will borrow it. This is why you seen the Russell 2000 back in kind of late summer. Start to rip upwards because people realize, oh, my God, they're going to cut rates. If they cut rates, then these small businesses can be able to borrow money at cheaper rates. If they can borrow more money at cheaper rates, they're going to be able to invest. That should be accretive to the equity. Same thing is you're starting to see mortgage rates come down. And so this really is good over the short term for the US economy.

• 6:51Anthony Pompliano?

  The question is, what is the optimal rate? Where are they trying to get to? And so if they cut 100 basis points now, they'll be somewhere in that 4.25 to 4.5 range on interest rates. Can they get us down to three, three and a half, two and a half, two? Where do we end up? When they continue to slash into 2025, what is the resting interest rate? And I think there's a lot of people who make the argument, we can't survive over the long run with interest rates at two and a half or 3%. We are a economy that is addicted to cheap money. We need interest rates closer to 0%. I don't know if I'd go that far, but I know that interest rates aren't going to stop at 4%. We are going to have to push down into the twos, maybe the low threes. And that's where I would expect interest rates to end up.

• 7:37Anthony Pompliano?

  And so if that cheap capital is available to people, they're going to pull on it. They're going to borrow and they're going to put it into the economy. And so all of those people who continue to say, oh, I think that stocks are overvalued. Oh, I think we're headed into a recession. The central banker is telling you he's going to stimulate the economy. He's pulling one of the levers and he's saying cheap capital is going to now be available. Of course, the economy is going to be stimulated. And so I think that the people predicting, you know, some massive crash or the next Great Depression or whatever crazy thing they're saying today, they are going to be on the wrong side of history.

• 8:13Speaker 02

  Hmm, interesting. Yeah, so he said that the two cuts that would come this year would be a total of 50 basis points more than.

• 8:23Anthony Pompliano?

  Yes, they did 50. Now they're going to do 50 more. It'd be a total of 100 basis point cuts. And I think that that's prudent, right? If we were in an emergency situation, you know, if you go back to March of 2020, he did two emergency rate cuts and got us down to 0% very quickly. I don't think the central bank, based on what they're doing, feels like we are in an emergency situation. And so they kind of do a one big jumbo cut in a 50 basis points back in September, that kind of told the market, hey, we're serious. We're paying attention. We're here. We are going to stimulate this economy. Now they can ease off a little bit and only do 25 basis point cuts, which tells people, but we're also going to be prudent. We're not going to just slash this hundreds of basis points, you know, all at once. We

• 9:05Anthony Pompliano?

  are going to slowly start to wean the economy off of these higher interest rates. And ultimately, what they are trying to do is they're trying to achieve the kind of ever elusive soft landing. And right now, it looks pretty good for them. Unemployment is still relatively low. They are seeing that rates are coming down, money is expanding. There hasn't been an official recession in the last, you know, six to 12 months. And so it doesn't mean that they are guaranteed to get there. But if you were to engineer a soft landing, what they are doing would be a high probability way to achieve that. What to me is most interesting, all

• 9:47Anthony Pompliano?

  of this is happening right before an election. So with the September cut, are we really going to cut right into the election? And so stocks are up since they cut. Bitcoin is up, right?

• 9:58Speaker 02

  Do you remember in 2020 when they cut, was it before or after the election?

• 10:02Anthony Pompliano?

  In 2020?

• 10:04Speaker 02

  Yeah.

• 10:04Anthony Pompliano?

  No, they they cut in March of 2020.

• 10:06Speaker 02

  That was after.

• 10:07Anthony Pompliano?

  Yeah, they did the two emergency rate cuts. They put things down and.

• 10:12Speaker 02

  No, that was before the election.

• 10:13Anthony Pompliano?

  That was before the election, but they cut, you know, eight months before the election, nine months before the election, whatever it was, probably eight months. And so if you cut eight months before the election, then it doesn't have the perception that you are interfering in the election, right? Because it's eight months away. It's almost a full year before the election. The problem with cutting rates two months before the election, right, is everyone says you're doing it for political purposes.

• 10:42Speaker 02

  Even if you're not.

• 10:43Anthony Pompliano?

  Even if you're not. And so a lot of a central banker's job technically is to manage the monetary policy, to manage the economy, to try to get a safe, secure, stable economy. The problem is we're all humans. They're human and so are the market participants. And so a part of their job that is unwritten is to manage expectations, to avoid the perception of some sort of nefarious activity, to avoid the perception of kind of meddling in elections. But if you cut rates after having them at, you know, five plus percent for two years, sixty days out from an election, of course, one side of the aisle is going to yell and scream and say, hey, you are influencing this election whether you mean to or not,

• 11:28Anthony Pompliano?

  and it's unfair.

• 11:30Speaker 02

  But, and, and, right. So they're meant to be apolitical, but it doesn't prevent politicians from writing letters to Jerome Powell, trying to influence his decision, correct?

• 11:41Anthony Pompliano?

  I have long said that I don't think that the Federal Reserve is actually acting in a political manner. I don't think they're looking at when's the election, should we cut, should we not because of the election. I don't think that that's what goes on. On top of that, the political class loves to yell and scream that the other side is trying to manipulate the Federal Reserve or the central bank. And so I don't agree with that either. I can give you example after example. Donald Trump, when he was president, would get on Twitter and he would tweet at Jerome Powell and he would say all kinds of stuff about weakening the dollar and the strength of America, what he should. Do with monetary policy.

• 12:17Speaker 02

  Right.

• 12:18Anthony Pompliano?

  That is whether it actually influenced decisions or not. It was an attempt to influence monetary policy. Joe Biden has called Jerome Powell into his office. Yes, he recently said he never met Jerome Powell. He literally called him into his office and they had a meeting. And when Joe Biden did that, it was after there was a lot of debate, is monetary policy being correctly overseen? I don't know what was said in that meeting. Then if you go a step further, Elizabeth Warren recently wrote a letter to the central bank saying that they should cut interest rates. First it was 50 basis points. And then when the rumor was they were going to do 50, she wrote another letter that said it should be 75 basis points. And so politicians on both sides of the aisle

• 12:58Anthony Pompliano?

  have for a long time tried to influence monetary policy. The problem is politicians aren't economists. They're not central bankers and the central bankers who have training and data at their fingertips, they struggle to do this. It is nearly an impossible job. And so when you start to collide central banking activities and decisions with political influence, I think it's just a recipe for disaster. And so you either have to do one of two things. Either you say, screw it, the central bankers aren't in charge. We're going to put the president or the current administration, they're going to get to set the price of money and they're going to be the ones who do this. Or you have to go the full other extreme, which is the central bank is going to be independent.

• 13:39Anthony Pompliano?

  They are not going to be influenced by politicians and politicians are not allowed to publicly comment about what the central bank is doing. And so if you do that, now all of a sudden you strip away the politician's ability. The hard part is how do you enforce that? What is the rule? Are you going to fine them financially if they talk about something? Right? We live in a country with free speech. And so what you get is kind of this middle ground, which is the central bank is supposed to be independent. The politicians continue to try to influence it. How much influence do they really have is unclear, but we have humans making decisions about monetary policy, hoping that they get it right.

• 14:15Speaker 02

  Yeah. And Trump has previously said that he would love to limit the independence of the Fed and have more of us, that the president should have more of a say over interest rates.

• 14:23Anthony Pompliano?

  I don't think he went as far as to say the president should control the interest rate, but I think, but I think he said that they should have more influence, which again, The kind of middle ground is where I think you get a lot of kind of murky results. So just go to the extreme, either you have independence or you don't. But the more that you can actually empower a monetary policy to be independent, I think is better, obviously. And I actually think you should strip away the humans. And so if you look at something like Bitcoin, you know, one of the things about monetary policy that people don't really understand is our monetary policy today is reactive. Something happens in the world, you get, you know, a pandemic. Then we go and we change our monetary policy to react to the world.

• 15:06Anthony Pompliano?

  And the argument for doing that is, well, we know this event is occurring. And so we can manipulate the economy to respond to whatever event happens. So there is a liquidity crisis when the pandemic hits because everyone gets scared. They start selling assets, they want dollars. So instead, let's drop the interest rate and let's stimulate the economy by printing money. When you go to do that, the hope is that you are going to drive a certain action or a result. And when you drive that action, that will have a positive impact and it'll help kind of mitigate the damage from the event in the world. Bitcoin, on the other hand, is the other extreme. It is not a reactive monetary policy.

• 15:48Anthony Pompliano?

  It's a proactive monetary policy, which means it sets a monetary policy and it does not change regardless of what happens in the world.

• 15:54Speaker 02

  Which, you know, could inflict a lot of pain on a lot of people who...

• 15:58Anthony Pompliano?

  It could, but it always goes back to the trade off. Are you optimizing for short term or long term? And in the US economy today, we optimize for the short term, right? The damage that was done to the US economy over the last five years from suppressing interest rates and printing money should be one of the biggest scandals in American history. Think about how crazy it is that the average income needed to buy a home in America was $59,000 in 2020. Today it stands at over $120,000. It more than doubled in four years. Think about the prices at the grocery store.

• 16:43Anthony Pompliano?

  Think about the prices when you go to a restaurant. Think about the prices of everyday goods that people need to live. Think about how much everything got more expensive, but income didn't keep up. And so when you look at that and you say to yourself, wait a second, we optimized for a short-term stimulus to mitigate the damage of a pandemic. There's a very strong argument, both morally and economically, to do that. But every action has a reaction. And the reaction is we destroyed the purchasing power of the US dollar. There are estimates that $1 in 2020 now is the equivalent of 70 cents.

• 17:28Anthony Pompliano?

  30% destruction of your purchasing power in four or five years. And so if you say to yourself, okay, who got hurt by that? It's the bottom 50% of Americans. The top 50%, guess what? They can destroy my purchasing power all day long. I have investable assets. All they're doing is they're just making stocks more valuable. They're making Bitcoin more valuable, making real estate more valuable. In a crazy way, by destroying the purchasing power of the US dollar, they are making the wealthy wealthier. And so instead, you have the bottom 50% of people who don't have investable assets. They just sit in cash. They live paycheck to paycheck, or they just sit with 100% of their money in their bank account. And so think of an average hourly worker.

• 18:11Anthony Pompliano?

  Let's say that they were getting paid $15 an hour in 2020. If they still are getting paid $15 an hour, the central bank and the politicians stole their income because they devalued the dollar. And so that $15 in 2020 could buy them X amount of goods. Today, it can buy them X minus 30%. So even though that person thinks they're still getting paid $15 an hour four or five years later, they actually, in terms of purchasing power, are getting paid less to do the same job. That's not their company's fault. That is the central bank and the politicians who printed money and suppressed interest rates. And so I think it just goes back to this idea that if you want to have a long-term, sustainable, strong economy,

• 18:54Anthony Pompliano?

  you have to make decisions that are aligned to optimizing for that long-term outcome. But the problem is the central bank chairman, he's not going to be here long term. The politicians don't want to be here long term. And so they don't care about that as much. It's the people who are going to still be in the system. They're the ones saying, wait a second. Inflation ripped, you destroyed my purchasing power. My income can't keep up with the cost of goods. Now all of a sudden, the income to housing gap has widened to such a crazy state. Who's coming to help me?

• 19:27Speaker 02

  Well, this leads us perfectly into our next topic, which is that Americans today are way more reliant than ever on government aid. So Americans reliance on government support is soaring, driven by programs such as social security, Medicare and Medicaid. That support is especially critical in economically stressed communities throughout the U.S., many of which lean Republican and are concentrated in swing states, crucial in determining the presidential election outcome. Neither party has much incentive to dial back the spending, as we just mentioned. And here's some crazy stats. So the country hasn't always been this reliant on government support.

• 20:09Speaker 02

  In 1970, government safety net money accounted for significant income in fewer than 1% of American counties. By 2022, 53%, more than half of all U.S. counties drew at least a quarter of their income from government aid. And

• 20:28Anthony Pompliano?

  That's crazy.

• 20:30Speaker 02

  Yeah.

• 20:31Anthony Pompliano?

  That is insane.

• 20:33Speaker 02

  I know, you should look at the the map, like how it's colored in. It shows it's the Wall Street Journal, but it shows like the 1% of counties who relied on government aid in 1970. And then 2022, it's all filled out.

• 20:50Anthony Pompliano?

  If you're a politician, your incentive is to give people free things and not worry about the long term impact. And so the sad reality is that there are a lot of people who need help. And so if you're a politician and you say to yourself, my constituents need help and it's also going to help me get elected, guess what you do? You give them help. The hard part is that, just like when you have a kid, if your kid constantly tells you, I'm hungry, I'm hungry, I'm hungry, and your kid's fat, the best thing you can do for the kid is actually tell them you shouldn't eat. Right? You should go and eat healthier food. You should go and you should work out. You should do all these things.

• 21:31Anthony Pompliano?

  And so what we have in many counties around the country is we have people who actually need help. And then we have a whole bunch of nonsense like boondoggle aid. And so there are people who actually need help. If you're legitimately homeless, the fact that we have the greatest economy in the world, we live in the greatest country in the world, and we have people who live on the street is insane to me. We should go and help those people. We have people who have mental health issues, that have drug issues that need all kinds of aid and subsistence. We should help those people. But we got a hell of a lot of leeches too. And those leeches are the people who are going after the boondoggle aid,

• 22:11Anthony Pompliano?

  who basically are getting all sorts of these programs that get created and they're being given to people who don't need it. Let me give you a great example. Leon Cooperman, who's a billionaire, went on CNBC and he said to a politician, "I get a social security check. I'm a billionaire. Why are you giving me a couple thousand dollars a month? I don't need the money." But because the country is so driven in terms of the boondoggle aid, that literally Leon Cooperman, who doesn't need the money, is receiving thousands of dollars a month, which leads to tens of thousands of dollars a year. Imagine how many people don't need it and still get it.

• 22:56Anthony Pompliano?

  And so if you look at something like social security, if you look at things like Medicare, you have to try to run a balance of social security in particular is going to be bankrupt. We are going to run out of money. The government is now running a Ponzi scheme where they are taking money in the short term from people who are working in productive. They can't invest it at a fast enough rate to keep up with the amount they have to pay out, because people are living longer than they expected. And so now they've caught themselves where they literally don't have the money to continue this program. Past, I think the estimate from the Congressional Budget Office is like 2034. So we are 10 years away from running out of money in that program. So you have one of two options. You either can have somebody with the courage to step in and say, "Listen, we gotta make hard decisions.

• 23:40Anthony Pompliano?

  We're gonna have to cut some of the promises. We're gonna have to change the way to do this."

• 23:46Anthony Pompliano?

  You have to say, you know what? We're just gonna let it run its course. When it runs out of money, it runs out of money. And guess what? If you're a young person today, we're not making the promise. You're not gonna get social security.

• 23:56Speaker 02

  No politician will ever do that.

• 23:58Anthony Pompliano?

  Well, it does beg the question, what's better? Is it better to go to the people who have relied their entire life on the promise that they're gonna get it? And you say to them, you're gonna get less? That's really painful. These people are the people who are counting on this. Or is it better to go to somebody who's, take me, come to me at 35, 36 years old? And say, hey, you know what? Don't count on it. It ain't gonna be there. Right? We're not gonna give it to you. That is probably easier to swallow, cuz I got years, I got 30 years, right? You know, 25 years to plan. Versus if I was 62, 63 years old and you say, hey, by the way, I know you thought you were getting X dollars, but we're actually only gonna give you 70% of it.

• 24:37Speaker 02

  Yeah, and I think so a number of reasons for this dramatic growth. One of which is that a much larger share of Americans are now seniors. Their healthcare costs have risen. And at the same time, many communities have suffered from economic decline because of the challenges, including loss of manufacturing, leaving government money as a larger share of people's income in those places. And the map, actually, if you look at it, the map of government spending also could kind of help explain why Donald Trump has risen in such popularity. He not only has promised to revive America's stagnating communities, but he's also said he would protect social security or Medicare from, quote unquote,

• 25:19Speaker 02

  even a single penny of cuts, in which this stance is actually a departure from that of prior Republican leaders who pushed to curb the spending, in some cases by cutting benefits for future retirees.

• 25:31Anthony Pompliano?

  I think Trump knows he's got four years. If he wins, he's gonna be there for four years.

• 25:38Speaker 02

  Right.

• 25:39Anthony Pompliano?

  And so, no tax on tips? Great. No tax on social security? Great. No tax on name your next thing overtime? Great. Not gonna touch social security or Medicare. Why? Cuz I'm only gonna be here for four years. I ain't gonna run out of money while I'm there. And so, again, it goes back to, are we optimizing for the short term? Or are we optimizing for the long term? If you put politicians in office who are 60, 70, 80 years old, they don't have a long term. And so if you go back and you look at many consider the best politicians in American history, most of them, they're the founding fathers. They were in their twenties and thirties. They had to think long term. They were going to be around long term. And so it's this weird

• 26:21Anthony Pompliano?

  thing where we've become a country where part of becoming a politician is you gotta be old. And it's not a society you want to live in.

• 26:29Speaker 02

  But here's my question. I think, um, let's say a politician comes in, he's super honest with people. You're, we're gonna run out of money. Don't count on this if you're, you know, a young person counting on, uh, social security. That's not gonna get you elected, right? The people don't want to hear that. They don't necessarily want to hear the hard truth. Don't you agree?

• 26:51Anthony Pompliano?

  I think there's a way to say it that explains to people the issue. The problem is if you position it as, I'm taking something from you, of course, people said, don't take it from me. But I'll give you a great example. When the pandemic hit in March of 2020, Plin and I lived in a building in New York City. Uh, we were very fortunate to live in this building. There was a number of highly successful people who lived in the building. I remember talking to, uh, somebody that worked at the building management and they told me there's people in the building who are writing them letters and emails, asking them to reduce their rent. And I in particular know one or two of the people and what they did for

• 27:34Anthony Pompliano?

  a living. They were unaffected, but they saw it as an opportunity to get leverage on the building and try to get reduced rent.

• 27:42Speaker 02

  Right.

• 27:43Anthony Pompliano?

  In that situation, my inclination, you know what? I got the money. I'll pay a little extra if that helps the building. And so the difference is when something happens, are you the type of person who goes and says, I want, I want, I want? Or are you the type of person that shows up and says, how can I help? What do we need? And I think that's really the difference in the positioning is I'm going to take away this benefit that you're going to get 30 years from now, or we collectively need to sacrifice so that we have a better, stronger economy and country for you and your children 30 years from now.

• 28:27Anthony Pompliano?

  You have to get collective buy-in. And the problem is, as a country, there are moments where we have that collective buy-in. There wasn't a hell of a lot of partisan politics on September 12th, 2001. It was, "I'm an American, before I am a Republican, a Democrat, or anything else."

• 28:45Speaker 02

  But I don't think that, just in general, I don't think in the early 2000s, people were so polarized.

• 28:51Anthony Pompliano?

  They may not have been.

• 28:52Speaker 02

  You could be a Democrat, I could be a Republican, we could be great friends. These days, it's nearly impossible.

• 28:57Anthony Pompliano?

  Maybe that is true, maybe it's not. But the point being, we have politicians in this country that spend so much time trying to pull people apart.

• 29:09Speaker 02

  Right.

• 29:09Anthony Pompliano?

  It has become a competitive sport to say, "My team is good and your team is bad." If you go back and you look, one of the things I did recently, which kind of feels weird to even admit this, but I went back and I found a YouTube video, and it had a bunch of the highlights of great political speeches over the years. And it had JFK, and it had Reagan, and it had all these different people. And it was kind of like the famous parts of all of it. The video was probably like 25 minutes long. I watched probably seven minutes, and I had to go do something. In seven minutes, all I kept saying to myself was, "Wow, that sounds like people that really cared."

• 29:47Speaker 02

  They were trying to unite the nation.

• 29:49Anthony Pompliano?

  Of course, because that was the winning strategy. Now we live in a polarized media world where actually the winning strategy is just attack the other person. And so, I do believe that we will have kind of a pendulum swing back to common sense and centrist and things like that. But I just think that you don't get solutions by ignoring the problem, right? You know, in the book that I wrote, one of the letters I write is that bad news doesn't get better with time. Ignoring the fact that social security is going to run out doesn't get better with time. And so I do think that we have to rip the Band-Aid off, we have to go after some of these things.

• 30:27Anthony Pompliano?

  But it doesn't mean you gotta hurt the people who are relying on the actual aid today. And then the other thing we do need to have is we need to have a conversation in this country about, if you don't need the aid and you take the aid... You are stealing from your neighbor.

• 30:47Speaker 02

  Yeah, but who are they supposed to talk to about that Cooper man was like, I don't need the aid. I'm still getting the aid.

• 30:53Anthony Pompliano?

  What my point is that it's not about a billionaire getting a social security check. That was just one egregious example, right? But it is about is if people buy into the collective belief that we are all in it together, then you can instill ethical and moral frameworks that show people don't take from your neighbor. Instead, we have a society where imagine this, there's an aid program out there, right? And you live in a country, you live in a county or in a city and you're saying to yourself, they are busing migrants into my city. They're giving them free cell phones. They're giving them free rent. They're giving them free food. I'm gonna go get mine. Right?

• 31:38Anthony Pompliano?

  Why is it that the person who doesn't contribute from a tax revenue standpoint to the economy? Why are they getting all these free handouts? And so it's not hard to very quickly put yourself in a position and be like, of course, people are going to say, well, if they're getting it, I'm going to go get it. But it goes back to this idea of how do you put smart capital allocators? Which by the way, is literally the antithetical positioning of any politician in the world.

• 32:10Anthony Pompliano?

  In a position to allocate capital and then have people buy into only pull from the system what you need.

• 32:18Anthony Pompliano?

  Don't pull from the system because you're greedy. You're fighting human nature. And so it's a very complex problem. I don't think that there's a one size fits all solution. I think that you're always going to end up with some group that's not happy. But it goes back to, do you want to know how you get politicians to start talking about this stuff? If you can get people on both sides of the aisle? If you give people a choice and you say, hey, whether you vote for Republican or Democrat, we're addressing the social security issue. So regardless of who you vote for, the next president is going to address this issue. They may have different ways to address it, but both candidates agree this is a problem. And you're damned if you do, you're damned if you don't in that voter box, because both of them are going to address the issue. That's how you get politicians in a position to be able to address this stuff.

• 33:04Anthony Pompliano?

  The problem is, we don't have politicians actually want to work together in this country. We have politicians that want to dunk on each other on Twitter. And what it ends up doing is it creates polarization and divisiveness that ends up actually not helping. It just does more destruction over the long run.

• 33:18Speaker 02

  I agree.

• 33:21Speaker 02

  US Congressman Matt Gaetz has proposed the bill that would allow Americans to pay their federal income tax in Bitcoin. He said the radical move would, quote, "promote innovation, increase efficiency, and offer more flexibility to American citizens." He cited his recent visit to El Salvador, which in 2021 became the first country to allow Bitcoin as a legal currency, as the inspiration for the bill. You claim that it doesn't make sense for anybody to pay their taxes in using Bitcoin. Why?

• 33:51Anthony Pompliano?

  This is dumb. Stop it. Stop it. Politicians, please stop it. This is insane.

• 33:56Speaker 02

  He's trying to appeal to your people.

• 33:59Anthony Pompliano?

  And if Bitcoiners are dumb enough to buy into this, then we deserve everything we get. Stop it.

• 34:05Speaker 02

  Are there people who actually think this is a great idea?

• 34:07Anthony Pompliano?

  Yes, they were tweeting about it and I had to respond like, "Stop it. Please stop it."

• 34:12Speaker 02

  Okay, so why is it not a good idea?

• 34:14Anthony Pompliano?

  Why would you spend an asset today that is going to be worth more in the future?

• 34:21Speaker 02

  Because you want to pay your taxes.

• 34:22Anthony Pompliano?

  It means you don't understand the asset. And even worse than that is, why would you take one of the best performing assets in history and give it to the government?

• 34:32Speaker 02

  So the government?

• 34:33Anthony Pompliano?

  Who is then going to turn around and sell it?

• 34:37Anthony Pompliano?

  It makes no sense. Spending Bitcoin makes no sense from a personal economic position because it is going to be worth more in the future. At some point, it may reach a price stability that when it reaches that stability, you then can spend it without the loss of future purchasing power. Maybe at that point, if we get to a price stability, things will be priced in Bitcoin. Maybe. All of that is possible, but not necessarily guaranteed or probable. Buying Bitcoin and holding Bitcoin is the number one use case of Bitcoin. It makes you somebody who is storing your value.

• 35:22Anthony Pompliano?

  Why would you ever pay for anything in a store of value when you have dollars, which I just told you they've been devaluing at a historic rate? You want to spend things today that are going to be worth less in the future, and you want to hold things today that are going to be worth more in the future. So people who celebrate the stupidity of I'm going to pay my taxes in Bitcoin, don't understand. I previously was one of those stupid people. That's why I can say it. Because in the past, people have announced this stuff, whether in other countries or in the US. And it sounds amazing. Had to do a little bit more work, had to get smarter, had to really understand, had to sit and think about it. I thought a lot about it.

• 36:03Anthony Pompliano?

  Now, I went from this is smart to this is the dumbest idea in the world. On top of that, in the United States, let's take off our stupid hat and put on our dunce hat, which is not only are you spending an asset that's going to be worth more in the future, you pay taxes on spending the Bitcoin.

• 36:22Speaker 02

  So you have to, when you sell the Bitcoin, you have to pay the tax on the Bitcoin to pay your tax?

• 36:27Anthony Pompliano?

  The government's tricking you. If you're dumb enough to get tricked, you deserve to spend your Bitcoin. They're saying if you spend your Bitcoin to pay your taxes, we then are going to tax that transaction. But hey, me who actually is spending something that's going to be worth less in the future, I send them the money, they don't tax me because I'm using dollars. So spending your Bitcoin to pay your taxes, not only do you lose out on the future price point, but then you owe the government more taxes. So it goes back to, this is simply a political grandstand that is trying to get headlines. If you are promoting this idea and not calling it stupid, you are helping them. Promote dumb ideas that trick people that is all about politics.

• 37:11Anthony Pompliano?

  It goes back to if you believe that you are actually serving your constituents correctly, you would never have this go forward.

• 37:19Speaker 02

  But maybe he doesn't really understand it either.

• 37:22Anthony Pompliano?

  Then what are you doing putting forward legislation? That is like the definition of America. I put forward legislation that I don't understand.

• 37:32Speaker 02

  I don't know.

• 37:32Anthony Pompliano?

  Again, let me take off the dunce hat and put on the stupid hat again.

• 37:34Speaker 02

  He was inspired by El Salvador.

• 37:37Anthony Pompliano?

  El Salvador doesn't tax you when you spend the Bitcoin.

• 37:41Speaker 02

  Maybe that's part of his proposal. We don't know.

• 37:44Anthony Pompliano?

  No, it's not part of the proposal. I read the proposal. And so again, it goes back to a couple of years ago, actually in the state of Ohio, same state. The treasurer, Josh Mandell, he said, hey, you can pay your business taxes doing this. And Josh and I both, I think we're very excited about this, right? I remember when it went through, everyone was celebrated. This is incredible, whatever.

• 38:07Anthony Pompliano?

  Now that we got smarter, I don't know where Josh stands on it, but now I'm saying to myself, wait a second, spending the Bitcoin ain't a good idea. And so it goes back to again, you're allowed to change your mind. If you get new information, if you spend more time thinking about it, you could change your mind.

• 38:23Anthony Pompliano?

  When we have politicians though, that do stuff like this, they're doing dumb proposals, but claiming to be pro Bitcoin. If you put forward a proposal that people can pay their taxes in Bitcoin, you are not pro Bitcoin. What you are trying to do is you are running a sophisticated scheme to part people from their Bitcoin.

• 38:48Anthony Pompliano?

  So if you are running a scheme to part people with their Bitcoin and claiming to be pro Bitcoin, that is basically a high level.

• 39:00Anthony Pompliano?

  Scam.

• 39:01Speaker 02

  Somebody commented on your tweet about this and they said, "A government way to collect crypto for free."

• 39:07Anthony Pompliano?

  Yeah, and so again, I'm obviously bombastically describing this. I do happen to believe that people should be able to be free to do whatever they want with their assets. And so it's less about, "Do I really care whether it's approved or not?" Not really. But I do think that people need to be educated when it comes to, "Why should you not do this?" But make your own choice. If you're one of the people who is like, "You know what, I'm gonna sacrifice my Bitcoin because I want to try to encourage the circular economy of Bitcoin," whatever, more power to you.

• 39:38Speaker 02

  Yeah, and I think-

• 39:39Anthony Pompliano?

  I'm not gonna do that, though.

• 39:41Speaker 02

  I think a lot of people's point is that this will kind of, you know, promote the acceptance of Bitcoin and paying taxes.

• 39:50Anthony Pompliano?

  The government can print money, tell them to promote it, right? Why do you gotta be the one to pay for the promotion?

• 39:55Speaker 02

  Yeah.

• 39:56Anthony Pompliano?

  Right? And on top of that, I mean, here's where it gets real crazy. Imagine telling your grandkids, "Ah, back in the day, old grandpa, he was a genius. He had one Bitcoin and then he gave it up to Uncle Sam, all in the name of promoting Bitcoin."

• 40:14Speaker 02

  Didn't you say you gotta sometimes sacrifice for the greater good?

• 40:18Anthony Pompliano?

  Yeah, you can sacrifice by not doing things, right? And so actually, the sacrifice of the greater good requires there to be a greater good. You giving your Bitcoin for taxes, there's no greater good. There's no positive outcome to it. So it goes back to, this is just political grandstanding. So just call what it is. By the way, that's fine. Guess what? That's the part of the job of a politician that's campaigning is to literally come up with asinine campaigns, ideas, so that they can get attention. People are confused. We elect politicians because we think they're in the governance business. Politicians are in the entertainment business. And that is why we get some of the politicians that we get, is because they're really good at entertainment.

• 41:03Anthony Pompliano?

  This is right out of the Hollywood script. What's the thing I can announce that really isn't, anyone's gonna do, one, two, isn't actually a good idea, but three, sounds good?

• 41:16Anthony Pompliano?

  And next thing you know, pay your taxes on Bitcoin.

• 41:19Speaker 02

  Mm hmm.

• 41:22Speaker 02

  All right, well, we kind of touched on this in the beginning, but the fact that cheap capital is coming. You wrote about this in your newsletter this morning. And you said, September had the largest number of collective cuts globally since April 2020. As central banks continue to cut rates, investors won't be able to help themselves. Borrowing and investing will accelerate. That's interesting. What do you think?

• 41:49Anthony Pompliano?

  Cheap capital is coming fast and furious.

• 41:51Speaker 02

  Can you, can you just tell people what cheap capital is?

• 41:55Anthony Pompliano?

  There is more money coming into the system, so global liquidity is skyrocketing. Because they're printing money, they are going to put more money into the system. Think about if you had like a little, you know, one of the best ways to think about the economy is think if you have like a little toy set of a village. Right? And so you got all these little people, everything, you set it all up and you're standing over it, kind of like, you know, God, God mode or God view, looking at the little village.

• 42:21Speaker 02

  And then we have founder mode, we got God mode.

• 42:23Anthony Pompliano?

  Yeah, well, you just, like in video games, you can have like God mode. And so you're looking down on it and you say, okay, let me see how many dollars are in this little economy here. And then you simply say, okay, I'm just going to double the amount of money that I'm going to put in the system. Everyone in this little kind of simulation has got twice as much money. Well, guess what happens? All the prices of the goods go up. All the asset prices go up because people got more money, they got to spend it, right? They got to put it somewhere. And so global liquidity is just a measurement of how much money is in the system. That's going up. Why is it going up? Because they can print money, that's what they're doing. On top of that, the cost of money is an interest rate. And so they're dropping that. China just did a 50 basis point cut. The US just did a 50 basis point cut.

• 43:06Anthony Pompliano?

  Central banks, all are in agreement, we need to stimulate the global economy, they're going to cut interest rates. So you have, think of it as a wave of money coming and that wave of money is really cheap. And so if you have cheap capital coming fast and furious, asset prices go up and the price of goods goes up. And so if you're an investor, you're going to be a winner. If you get long and you chill for a long enough period of time, five or 10 years, asset prices are going to keep going up. If you're a saver, you're going to be a loser. You're going to end up with less purchasing power in the future because they're going to devalue your currency. And so if you look at this, every measurement you look at, global liquidity, the liquidity cycle, all that stuff, it's all going up.

• 43:50Anthony Pompliano?

  But we go back to where does it show up in the US economy? There's a chart of the income housing gap skyrocketing from, you know, $50, $60,000 to now $120,000. Then if you go and you take a look at, there's a restaurant index because people go into restaurants. Porter, Stansberry share this great thing. 10 straight months, it's going down. Why are people not going to restaurants as much? Because the shit is expensive. How it's okay if, you know what, to cook at home would be $12. To go to the restaurant, it's 20. Eh, it's eight bucks, right? But you know, they got, I got service. I get a drink. I do all stuff, whatever. It's a good time. If it's $12 to cook a meal at home and it's $45 to go to the restaurant, I'm not going to the restaurant. I'm going to go eat at home.

• 44:35Anthony Pompliano?

  And so you get this contraction that starts to happen because the price of goods has skyrocketed. And so it just goes back to if we have undisciplined monetary and fiscal policy, which the monetary policy tried to be disciplined. It got tight for two years. The politicians never got the memo. They've been printing cash, literally like there was no repercussions. I mean, you ever heard of the CHIPS Act? You heard of the Inflation Reduction Act? I mean, we can just rattle off tons of these things. Hundreds of billions of dollars. Where did all the money go? How much money was sent to Ukraine? How much money was sent elsewhere? We got hundreds of thousands of people, if not millions of people pouring across the southern border.

• 45:17Anthony Pompliano?

  We have cities that literally are overrun that are saying, we need help.

• 45:23Anthony Pompliano?

  And instead, we're spending money on dumb things. And so, one of the most infuriating things that you can do, nobody's gonna do it, but I promise you, if you really want to understand American politics, if you want to understand it where the economy went wrong, go read one of those bills. Go read the Inflation Reduction Act. Go read the CHIPS Act. And start asking yourselves, why are some of the budget items in there? There was a bill back in 2020, I forget which one it was, $25 million of cleaning supplies for the Capitol Building. For one year. $25 million to keep the building clean. I don't know if that's a lot or not, but that was just the supplies. That wasn't the staff, that wasn't the labor. How much money are they spending to keep the building clean?

• 46:07Anthony Pompliano?

  I don't know. Then if you go and you look, there was another line item where somebody was getting a billion dollars to a nonprofit. I think it was something to do with like the Appalachian Trail or mountains or trees or some shit. Turns out that it's like the wife of one of the politicians. Her nonprofit got a billion dollars. Right? Then we go and we look at another clause in this was they wanted to study the effects of driving high.

• 46:36Speaker 02

  Yeah, that's what it was.

• 46:37Anthony Pompliano?

  And I remember joking saying, we got plenty of people in our audience who do that shit for free. You don't need to spend any money, just ask for volunteers. Then on top of that, there was something to do with highways. And they wanted to study the impact on exotic plants. And it was some ridiculous $50 million. Again, how about we just make it a college school project for somebody? And we put our young people to work and we say, you guys want to be smart?

• 47:04Speaker 02

  It's the same.

• 47:05Anthony Pompliano?

  You want to be a botanist? You don't need $50 million, get your ass out there and study the exotic plants.

• 47:09Speaker 02

  It's the same thing when you give somebody who's undisciplined with money, money? That's what they're gonna spend it on. They're not gonna all of a sudden wake up and be like, I'm gonna be very disciplined with my money and I'm only gonna dedicate it and allocate it, you know, appropriately.

• 47:24Anthony Pompliano?

  You want to know one of my greatest ideas I've never said publicly for politicians? Everything you spend money on, you gotta put some of your own money in it. You wanna give $50 million to the botanist study? You gotta put some of your cash in, put a thousand dollars in there. You wanna give money for the cleaning supplies at the Capitol building? Put a thousand dollars in. You wanna give a billion dollars to his wife? Put a thousand dollars in. You wanna see spending in this country dry up real fast? Have them put skin in the game. If you wanna spend the taxpayers' money, you gotta spend your money side by side.

• 48:03Speaker 02

  And it should be like, um, you know, the, the portions should match how much the American people are spending with theirs.

• 48:10Anthony Pompliano?

  Imagine that. You'll have politicians in the streets begging people, "We ain't got no cash." Right? And so it goes back to if people are spending their money, they act very differently than if they're spending your money. And how exactly would it work? No clue. But I know one thing, you'll see spending drop significantly. And so it goes back to the old Warren Buffett or Charlie Munger. Show me the incentive, I'll show you the outcome. The incentive is if I spend money, I get more votes, I get reelected, if I get reelected, I get more power.

• 48:46Anthony Pompliano?

  Duh, they're gonna spend more money. But if instead the incentive is every time you spend my money, you gotta spend yours? Lot less spending going on. And so I think those are the types of solutions where if you look through an economic lens and you wanna attack these problems, you gotta come at it from a personal incentive standpoint. And my guess is that if you suggested that, if somebody put forward legislation and said, "Hey, all of us in Congress or all of us in the Senate, if we approve spending, we gotta put our own cash in, that person be kicked out within 60 days." They would do everything they possibly can to stop somebody who wanted to suggest that stuff.

• 49:28Anthony Pompliano?

  And so what I have come to the conclusion of is there's a ball rolling down the hill. In order to stop the ball from rolling, you gotta stop the momentum. The inertia's working against you. No one person can stand up and stop the ball from going down the hill. You collectively as a group can, but it requires a complete overhaul of the type, the quality, and the long-term perspective of the people who are running our country.

• 50:01Speaker 02

  True.

• 50:02Anthony Pompliano?

  I don't know a single country in the world who's ever had that overhaul done successfully. And so if you study history, we're heading in one direction. I hope, I wish, we don't head in that direction. I hope we can U-turn it, but history suggests maybe we're just gonna try to hold on for as long as we can.

• 50:24Speaker 02

  What a note to end on today. Thank you very much.

• 50:28Anthony Pompliano?

  Appreciate you guys all watching. See you guys next week. What's up, guys? I hope you're enjoying this episode, but I got a quick message for you. I just released my very first book. It's called How to Live an Extraordinary Life. In this book, there are 65 life lessons that I've picked up over the years. These lessons will teach you about money, investing, relationships, work, health, happiness, and much more. In this book, I wrote letters to each one of my children, and I tried to share those life lessons with them. If you pick up this book, there's three things that I can promise you. The first is that it is very concise. The audiobook is only three hours. You can listen to it on a long drive or on a rainy afternoon. The second thing is that you're gonna learn something. It's worth the price of admission just for the lessons themselves.

• 51:10Anthony Pompliano?

  And then the third thing is, it will make you think more deeply about your life and how you try to live it. So go pick up How to Live an Extraordinary Life today. It's a quick read. It's very impactful. It's very concise, and it would mean the world to me for the support. Go check it out today on Amazon, Barnes & Noble, or wherever you buy your books. Hardcover, audiobook, it all works. Thank you so much for the support, and I'd love to hear what you think about the new book.