#250: Peter Schiff on Why The US Dollar Is Unsustainable and The Fed Has to Print Infinite Dollars

Peter Schiff, the CEO and Chief Global Strategist at Euro Pacific Capital Inc. He previously made a number of great calls during the Global Financial Crisis and it looks like he is turning out to be right again this time. In this conversation, Anthony and Peter discuss what happened in 2008, why that crisis has led to the current one, what the Fed's actions right now mean, why they are likely to be ineffective, and what the world will look like in 5-10 years. =============================== BLOCKFI-----BlockFi allows you to keep your crypto, put it up as collateral, and receive a USD loan funded directly to your bank account. They do loans ranging from $2,000 to $10,000,000, and they're perfect for helping you reach your financial goals of all sizes. Visit BlockFi.com/Pomp to learn more about putting your crypto to work without having to sell it. UNSTOPPABLE DOMAINS-----Make your crypto currency payments simple and build censorship resistant websites. Visit unstoppabledomains.com and purchase your blockchain domains today! ATLANTA CHEMICAL-----Atlanta Chemical Engineering LLC is the industry's leading supplier of high-quality color changing (thermochromic) paints and inks. Visit atlantachemical.com and choose your own color and activation temperature thermochromic paint, ink or pigment.

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

• 0:00Anthony Pompliano?

  What's up everyone, this is Anthony Pompliano. Most of you know me as Pomp. You're listening to Off the Chain, simply the best podcast in crypto. Let's kick this thing off.

• 0:10Anthony Pompliano?

  Peter Schiff is the CEO and Chief Global Strategist at Euro Pacific Capital, Incorporated. He previously made a number of great calls during the global financial crisis, and it looks like he is turning out to be right again this time. In this conversation, we discussed what happened in 2008, why that crisis has led to the current one, what the Fed's actions right now mean, why they are likely to be ineffective, and what the world will look like in five to 10 years. Peter and I had a lot of fun recording this episode, so it should be highly entertaining. With that said, we recorded remotely and had a few technical difficulties, so we've done our best to edit those out and make it an easy listen. Before I get into this episode, though, I want to talk about our sponsors. The first

• 0:52Anthony Pompliano?

  is BlockFi. BlockFi's got three products. You can deposit crypto and take a US dollar loan, you can deposit crypto and earn up to 8.6% APY in an interest-bearing account, or you can buy and sell crypto on their cryptocurrency exchange. They'll also be releasing a Bitcoin Rewards credit card later this year. Head on over to blockfi.com/pomp, again, blockfi.com/pomp, and check them out. You won't be disappointed. The second is Unstoppable Domains. You can go to unstoppabledomains.com/browser and check out their new portal to the decentralized web. We all know the decentralized internet is the future, but it's been really hard to access for people without technical knowledge. So head on over to unstoppabledomains.com/pomp,

• 1:36Anthony Pompliano?

  or I'm sorry, unstoppabledomains.com/browser, and you'll be able to access the decentralized web as well. Lastly, I'm giving any unsold inventory this week to small businesses around America. They're really suffering right now. And so today's third sponsor is Atlanta Chemical. They've got this really cool paint pigment, where basically what you do is you go and you buy the paint pigment, you can make slime for your kids while you're sitting home in quarantine, and that slime will change colors with heat. So think of it as taking the paint pigment, making slime, and then when your kid touches it, it could turn from black to purple, from red to green, etc. It's a great do-it-yourself project at home if you've got kids and you're wondering what to do during quarantine. So head on over to

• 2:20Anthony Pompliano?

  atlantachemical.com and check them out. Now, let's get into this episode with Peter, and I hope you guys enjoy it.

• 2:26Speaker 01

  Anthony Pompliano is a partner at Morgan Creek Digital. All opinions expressed by Pomp or his guests on this podcast are solely their opinions and do not reflect the opinions of Morgan Creek Digital or Morgan Creek Capital Management. You should not treat any opinion expressed by Pomp as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of his opinion. This podcast is for informational purposes only.

• 2:52Anthony Pompliano?

  All right, guys. Bang, bang. I have the one and only Mr. Peter Schiff here. He is going to educate us on the economy. He's been yelling and screaming about this stuff for the better part of a decade. And you've been right, sir. So thanks so much for coming on and talking about all this.

• 3:11Speaker 02

  Sure. And you know, a lot of things are going to happen because there's a lot of other predictions I've made that haven't come to fruition yet, but they're all, it's all going to happen. I mean, it's what's happening now is just, you know, part of it.

• 3:23Anthony Pompliano?

  All right. So let's go all the way back to 2008, that financial crisis and just give us an overview of the things that you saw and kind of what you were really calling for at the time in terms of the structural issues in the market and why the quantitative easing and the monetary stimulus didn't allow for the correction of the market at that time.

• 3:44Speaker 02

  Yeah, well, I'll try to, you know, give a kind of Cliff Note version of that because it's a, it's a pretty long question and I've, you know, I've answered it on a lot of different things. In fact, I did a three and a half hour live YouTube chat yesterday and I kind of touched on some of that there. So people can go and, you know, to go to my YouTube channel or Schiff Radio, I put it up on my podcast this morning and people could, could listen to that if they have more time. But basically, so we had the dot com bubble pop and, and that was fueled by Fed policy and artificially low interest rates and, and things like that. Greenspan had them. And we had a shallow recession that was truncated by the Fed. The Fed cut interest rates to 1%.

• 4:28Speaker 02

  And that prevented the recession from running its natural course. It kind of short circuited it. So stocks and real estate never really finished going down because the Fed intervened and, and propped them up. And a lot of people think, well, that's a good thing, but no, because, yeah, so. We exacerbated those imbalances by cutting rates to 1%. And so by doing that, the Fed, yes, made the 2001 recession shallower than it otherwise would have been. But instead of the benefits of a recession that kind of cleansed the problems in the economy

• 5:07Speaker 02

  and laid the foundation for a real recovery, we got a recovery based on a housing bubble. And I knew that this was very unsustainable. I knew that there was going to be a big financial crisis when real estate prices ultimately fell, which they would, all bubbles pop. And I knew that when real estate prices went down, unlike when stock prices went down, which was more a function of the individual owner. I mean, most people didn't borrow money to buy stocks. I mean, there was some margin buying, but most people, you know, they bought stocks with their own money. But they bought real estate with somebody else's money. And so I knew that when real estate prices fell and mortgages defaulted,

• 5:50Speaker 02

  that it would become a financial crisis because the lenders would be in trouble. And I knew that a lot of the loans had been extended with minimal to no down payments. And there was going to be very little, if any, equity left in the homes for the collateral. But I also knew that unlike the stock market, a lot of people were using their real estate, their houses as an ATM machine. So a lot of cash out refis were enabled. And so there was a lot of consumer spending that really never should have taken place. It was only because people thought they were richer than they were and somebody was willing to lend the money against their house to go and buy a car or take a vacation or do whatever they were doing. And so I knew that when real estate prices collapsed and all the home equity disappeared, that all the consumer spending would go along with it, disappear.

• 6:36Speaker 02

  And so I knew we would have the worst recession since the Great Depression, that we'd have double-digit unemployment, trillion-dollar deficits. I wrote about it, I talked about it. And then everything I forecast happened, including what I said the government would do about the financial crisis, you know, because I knew it was coming. I said that they would make the same mistakes that caused it. They would slash interest rates and print a bunch of money and try to reflate the bubbles.

• 7:03Speaker 02

  The only thing I got wrong is that they didn't try to reflate the bubble. They succeeded. And the bubble got much bigger. And now that bubble has popped finally. And they are attempting to reflate it again. That's, you know, and I said, the minute the Fed tried to normalize rates and shrink their balance sheet. In fact, even before they tried it, when they just talked about it. I said that this bubble is so big, there's no way that you can, you know, take the air out of it. So I said, if the Fed ever tried to normalize rates, they would be back at zero. If they ever tried to shrink their balance sheet, they would have to reverse the process. And those forecasts have come true. The Fed never got to normal. We got to two and a half, and now we're back at zero.

• 7:48Speaker 02

  The Fed never shrank its balance sheet very much. In fact, today, the balance sheet is bigger than it's ever been, and it's headed for the moon. People are now talking about $10 trillion balance sheet. I was talking about that years ago. Now people are talking about it today. We're going to get there probably even faster than I imagined we would. But the reason I knew the Fed could never normalize rates or shrink its balance sheet is because I knew that instead of a recovery, we had a gigantic bubble. And as soon as the air started coming out, they would desperately try to refill it. But the crisis. So as I was saying,

• 8:23Speaker 02

  we're now at the point of the real crash because they are going to try to reflate the bubble. So they're doing everything they did after the financial crisis, only on a much bigger scale. Because this is a much bigger financial crisis. Because we have a lot more debt now. In fact, they keep trying to deny that it's a financial crisis. Of course, it's a financial crisis. The banks would have already failed if it wasn't for what the government is doing. But this time, they don't want to just bail out the banks. They want to bail out everybody. The entire nation is getting a bailout. They're printing money like crazy. But they don't realize that when they did it the last time, it didn't work. It was a failure. That's why they're doing it again. But they've got a false sense of complacency. Because when they did it before, all the inflation that they created

• 9:09Speaker 02

  went into the stock market, went into the real estate market. So these guys think that they can get away with that again. It's not going to happen this time. This time, it's going into the supermarket. This time, you're gonna see runaway, maybe hyperinflation. I think hyperinflation, as bad as that is, I used to think that was a worst-case scenario. Now it's kind of the most probable. It's not a guarantee, you know, but in order to avoid hyperinflation, things are gonna have to get really, really bad. But, you know, I think we're gonna go through something in this country unlike, nobody in this country has experienced it. I mean, they've experienced it in other countries, you know, Argentina, Venezuela, Zimbabwe,

• 9:51Speaker 02

  you know, other countries have gone through hyperinflation, just we haven't. But what we're gonna go through is gonna be much worse than what people went through during the 1930s, during the Great Depression. Because, you know, money gained value during the 1930s. We're gonna destroy the value of our money. And, you know, I mean, so, I mean, everybody's excited about the government taking care of everybody and the government providing everybody with stimulus checks. Well, I mean, those stimulus checks aren't gonna matter if there's nothing to buy, if the money that they're printing doesn't have any purchasing power. That's where we are right now. You know, I mean, everybody thinks the government can take care of the people, when the government doesn't have any money that doesn't first take from the people. And it's not, and if it's not gonna take it

• 10:36Speaker 02

  from taxes, if it's just gonna print it into existence, which is what we're doing, then you're simply destroying the value of the money. There's no free lunch, right? People keep talking about World War II, and it has to be like World War II. Yeah, in World War II, the government didn't bail out the people, the people bailed out the government. The government raised taxes dramatically to fight World War II. The government borrowed money from the people during World War II, and then after the war ended, the government paid the people back what they borrowed. So now, it's the opposite. The government is broke, the people are broke. So, I mean, you know, how is a broke government gonna bail out a broke nation? They can't. So that, but they think that the money they print

• 11:19Speaker 02

  has value. It doesn't. They're about to find out. I mean, I, you know, I think the dollar's gonna collapse. Once this liquidity crisis is over, short-term liquidity, which is causing a rush into dollars, which is what happened during the financial crisis, early in the 08 financial crisis. The dollar went up, but then it got killed. And the only reason it stopped falling was because everybody believed, because the Fed convinced everybody that it worked because they said they were now going to end it. They were going to normalize rates and shrink the balance sheet back down to where it was before. And I never believed that. I said it was impossible, but Wall Street believed it. But no one's going to believe that now. I mean, they're not even going to pretend that anymore. So, once the dollar starts to fall, it's never going to stop.

• 12:04Speaker 02

  You know, the price of gold is not going to stop rising. During the financial crisis, the initial liquidity crunch caused about a 25% drop in the price of gold, which, you know, the stock market lost half its value. So, gold didn't do as bad as the stock market. But, within about six or seven months, gold made a new high. And then it kept going. And then, you know, it went up to almost 2,000. The high before the financial crisis was maybe like 1,100. And it went down to 8,000 or something. This time, gold only fell about 15%. And it's already recovered almost all of its losses from the peak. It's only about another 2% or 3% away from its high. And it's only been, you know, a week or two.

• 12:47Speaker 02

  So, this shows you how much bigger the current crisis is, and how much more reckless the Federal Reserve and Congress's stimulus and bailouts are, and how much more destructive. I mean, even though the dollar index has rallied, no, we didn't rally much. We rallied a few percent. I mean, it went, the dollar index during the financial crisis of 08 went from 71 to like 104. So, this time, it went from about 98 to about 102. You know, so, not much of a dollar move.

• 13:21Anthony Pompliano?

  What happens in a world where the Federal Reserve does what we all think it is going to? So, they are going to end up printing trillions of dollars here. One, do you think that's actually what they're going to have to do? And then, two, what does the world look like, you know, five years from now if they go ahead and do that?

• 13:36Speaker 02

  Well, I think this is really the final stage of the end of the, you know, dollar dominance as the global reserve currency. I mean, the Federal Reserve yesterday did something that I also predict they would do a long time ago, is that is go to QE infinity. And not only QE infinity for the treasuries and mortgage-backed securities, but they're now adding muni bonds, corporate bonds. So the Federal Reserve is going to be buying the entire dollar-denominated bond market. Because the only way they can keep interest rates so artificially low is to lend all the money themselves. Because no private lender is dumb enough to make a loan with a negative yield, a negative real yield after inflation.

• 14:18Speaker 02

  And I think what's going to happen is this is going to be a mass exodus out of the dollar. I think foreign central banks are going to take advantage of the Fed's bid to sell all their treasuries to the Fed. So the Fed is going to be buying all the treasuries from around the world and all the dollars. And what are central banks going to do with the dollars that they get when they cash in their treasuries? They're going to buy a lot of gold. That's what they're going to do. Because they're going to have to hold something else as a reserve for their fiat currency. Because before everybody was using the dollar, all these foreign central banks were holding gold. Well, they're going to buy gold.

• 15:01Speaker 02

  As I said, before, before we went off the gold standard, or before Bretton Woods, the central banks backed their currency with gold. And the United States, you know, after the war, Second World War, we convinced the world to back their currencies with dollars instead of gold. But it was easy to do that because the dollar was as good as gold. Because if you had $35, you could get an ounce of gold. You ask the government for it and they would give it to you. And it was, it was one, that was the exchange rate. 35 paper dollars for one, you know, ounce of gold.

• 15:35Speaker 02

  And and so that worked, but in 1971, because we had printed more dollars than we had gold and foreign nations like France were coming to the United States with their dollars and asking for their gold, and we didn't have enough, then we defaulted on that promise. And the dollar had a major devaluation because gold went from $35 an ounce to 800. Right? And then, but the dollar continued to function as the reserve, even though it was no longer backed by anything. So basically, other fiat currencies were backed by a fiat currency, which meant they were backed by nothing. But the world continued. But because we had this privilege of just printing

• 16:17Speaker 02

  paper money that people would hold in reserve, we had all this seniorage gain from our status. And so America began to live beyond its means. And we developed an economy that is based on consumption and imports and borrowing. And we don't save enough, we don't produce enough. And all this has been sustained by the world who has supported us by accepting our IOUs and and and not cashing them in. And and so the world had has had to support the United States. So America gets to live above its means, and that means the rest of the world lives beneath it to make that policy. So central banks are going to buy gold to replace the dollars that they're no longer holding in reserves and US treasuries.

• 17:01Speaker 02

  And you know, the central banks used to earn interest on their treasuries. That was another reason that they held them. Well, they can't earn any interest now, so they might as well just hold gold. And and so gold's going to be remonetized. And it's gonna, you know, and and I think so five years from now, to the extent that this has happened, the world's going to be a much better place, I mean, outside the United States, because the world is not going to have to support America anymore, and we're a very expensive habit to support. So I think you're going to see an increase in the standard of living in, particularly in a lot of the emerging markets that have been doing the lion's share of the heavy lifting. They've been having the big trade surplus with us, and they've been, you know, loaning us their their their savings.

• 17:41Speaker 02

  And so, so that's going to be a big plus for people who are living in other parts of the world.

• 17:52Anthony Pompliano?

  So how do we solve this problem? Can we simply? Can we simply just put the dollar back on the gold standard? Would that solve the problem?

• 18:03Speaker 02

  Well, the dollar will be back on a gold standard eventually. I mean, that's the only solution, but there is no solution that is painless. That is the problem, right? There's nothing that we could do that's going to change the reality of that, the fact that as a nation, we're broke. So we're going to have to come to terms with that. And the government's going to have to tell the public, instead of like, we're going to take care of you, like they're saying now, we, you're on your own, we can't take care of you. So, and a lot of people think that the government's going to support them in their old age. They're not. A lot of people think the government's going to provide them with healthcare. They can't, right? So, we're going to have to, yeah, so, I said, you know, it's going to be very

• 18:45Speaker 02

  difficult to rebuild the economy, but it's, it'll be impossible if we increase government. I mean, the real risk is that America becomes a complete totalitarian type socialist country. That's, you know, that's the direction that Benjamin is swinging. And I do believe that when we have this massive crisis, we have runaway inflation, which is going to start with price controls, and then, you know, rationing, and, you know, shortages, and long lines, and black markets, and all kinds of things. But, you know, as things get really bad, capitalism is going to get the blame. Greedy businesses who are raising prices are

• 19:26Speaker 02

  going to get the blame. You know, so I don't know. I mean, it, it, it, America could be a very, very dark place five years from now. It could be a very, very, I mean, much worse than now. I mean, you think it's like out of a, out of a movie now, like this is so surreal and kind of apocalyptic that nobody wants to go outside. It's going to be very different when, you know, you can't go outside because it's not safe, because people are rioting and, you know. So, as it, look, things could get really, really bad. I mean, it's, you know, we are going to destroy the currency. And, you know, that's, that's a very dangerous thing to do. I mean, it's, it's, it's worked out horribly, you know, in other countries. But you know, there's a big hubris out there now that we got away with it last time.

• 20:09Speaker 02

  We can get away with it on an even bigger scale this time. We could just print money. We can mint trillion dollar platinum coins. We can, we can load up digital wallets with digital dollars and just start giving people money to spend. Like just create it out of thin air. Look, we can create all the paper money we want, but we can't create purchasing power. We can't create the products. In fact, this is the crazy thing about, because this coronavirus, because people are quarantined and not working, the supply of goods and services available is going to diminish, right? So there's going to be less stuff to buy. At the same time, the government is creating more money to buy it.

• 20:51Speaker 02

  So you're going to have all this cash and fewer goods and services to buy. So it's like we're getting the, the prices going up on both ends. We're getting a decline in supply at the same time that we get an increase in, in, in, in demand. I mean, right now we're getting a little bit of an increase in, a decrease in supply in energy or, or in demand because nobody's flying around. But you know, as all the US oil companies, the shale companies go bankrupt and start and stop drilling. And then when the dollar goes up and all of a sudden the emerging markets start importing more oil, oil prices are going to go way up and Americans are going to be stuck, you know, paying through the nose.

• 21:31Anthony Pompliano?

  What currency ends up taking global reserve status if the dollar fails?

• 21:35Speaker 02

  Well, no currency. I, I already said that. So I don't think the world is just going to anoint another reserve currency. Remember, the only reason the dollar became the reserve currency is because it was backed by gold. There are no currencies today that are backed by gold. I don't think it makes sense to put the crown on the euro or the yen or the Chinese, you know, RMB. So I think the most logical choice is just to go back to what worked before it was the dollar and that's gold. And that way, you know, every, it's all fair. Nobody can print gold, you know, gold is mined out of the ground. It's a real commodity. It represents actual work.

• 22:15Speaker 02

  You, you know, yeah, I know a lot of people that, you know, that follow you are thinking, no, no, this is where Bitcoin comes in, right? Like Bitcoin is going to be the new medium of exchange. It's going to be the new store of value. It's going to be the new money. And I don't think there's a chance of that happening. I just don't, I don't see any central banks deciding that they're going to use Bitcoin as their reserves. It's just, it's, no banks have Bitcoin on their balance sheets now. They have gold. There's no precedent for using a digital currency.

• 22:51Speaker 02

  And it doesn't have the, the, the physical properties that gold has that gives it value to store. And so I don't see that. I don't see individuals flocking to cryptocurrencies either. Uh, you know, I just don't see, uh, people transacting in Bitcoin. It's too unreliable, unstable, volatile. You know, I, I just don't see that happening at all. I mean, it's a bunch of wishful thinking out there. People just think they're gonna own these Bitcoins and they're gonna be super rich because they have a few Bitcoin or a fraction of a Bitcoin, whatever they got. But, uh, I think it's just a pipe dream. I think, uh, Bitcoin's gonna collapse, uh, as well as a lot of these fiat currencies. Probably more because Bitcoin could go to zero. Or close enough to it that, you know, might as well be.

• 23:36Speaker 02

  But no, and I think when we, when we go back to sound money, what are the reasons that people want? Let me finish this. One of the reasons that people want Bitcoin is because the current monetary system is flawed. And I agree, anybody who, you know, thinks the monetary system is flawed and there's gonna be a crisis. And they've bought Bitcoin. I agree with them that there's gonna be a crisis. Once, once, once, uh, we have a sounder monetary system based in gold again, then the case for Bitcoin won't be as strong because now we'll have a, a, a sound monetary system. You know, yes, there'll still be all this government surveillance, which I don't like. But the problem is you really can't get around it with Bitcoin unless you're totally underground.

• 24:19Speaker 02

  But even then, you know, the government can track what's going on on the internet. So I, I don't, you know, unless you're just, you know, physically handling, handing somebody, uh, your, you know, your, your seed, seed phrase on a piece of paper. You know, they're gonna, you know, if you're doing anything online with Bitcoin, you're creating a, you know, a digital, uh, trail that they could follow.

• 24:39Anthony Pompliano?

  What do you think of habits to the traditional currencies? Will we see digital fiat currencies, meaning a digital dollar, a digital one, a digital ruble, et cetera? Or do those currencies never actually get to be digital?

• 24:49Speaker 02

  Well, I mean, in most, they're actually digital now. I mean, most of the money that the Federal Reserve creates is digital. It's not, you know, it's not a bill. The actual physical cash is a small part of the money supply. So in a way, we already have that. But yes, in fact, they're even talking about that now. It's in one of these stimulus bills is they basically, they will allow digital dollars to be created that are one to one with the physical dollar. And you can spend those and they would be liabilities of the Fed. They would be on the Fed's balance sheet, just like cash, except it would be digital cash. And I think that's actually going to be a bad thing for the people, because now the government has complete control over you, because they know every, all

• 25:33Speaker 02

  the money you have, they know where it is, and they know how you're spending it. And they can micromanage your spending. They can deny you the ability to use it for certain things or certain products. I mean, I mean, and they know everything you buy. So yeah, I mean, that's, you know, they could just outlaw cash and, and, you know, just have everybody using digital cash. But yeah, they could do that. But again, whoops.

• 25:58Speaker 02

  But, um, what's so funny?

• 26:03Anthony Pompliano?

  Dropping the computer. Come on.

• 26:06Speaker 02

  Huh?

• 26:07Anthony Pompliano?

  There's a, it's a professional operation here. You can't be dropping your computer like that.

• 26:12Speaker 02

  Yeah, well, look, I'm at my house. But anyway, what was I saying? Yeah, but you know, it is to say, what you should do, see, you, you know, you, you, you know, that you, you understand the problems with the fiat monetary system. You understand the problems with quantitative easing and zero percent rates and, and you know, there's a big crisis coming. But unfortunately, you know, you're, you're steering everybody in the wrong direction. That's the problem. You got, you know, you got, you can't make your followers go broke so they have nothing to save. You know, I mean, you gotta, you gotta get them into real money. You gotta get them into gold, right? And you gotta get them out of Bitcoin. Be, you know, be, be the guy that gets out. Don't be the guy that goes

• 26:53Speaker 02

  down with the ship. You gotta have, I told you, you gotta, I heard you got half your network in Bitcoin.

• 27:00Anthony Pompliano?

  Listen, I don't disagree that gold is gonna do well coming out of this, but I also think that Bitcoin is going to do much, much better than gold just because it's more volatile. On the increase of quantitative easing, both gold and Bitcoin will do well.

• 27:14Speaker 02

  But how do you know that? How do you know that? Based on what? What if it, what if it just goes down?

• 27:20Anthony Pompliano?

  Well, what it has it done for the last 11 years? And what the structure, it's actually more provably scarce than gold. And it's easier to use than gold.

• 27:31Speaker 02

  What it's done for the last 11 years, how do you know the last 11 years wasn't a bubble? You don't know that. You, I mean, it started out very obscure. As like, kind of like a game for libertarians and things like that. And, you know, it didn't really start attracting investor attention. Until it really moved up to about 1,000 and then it pulled back and it stayed at 2, 300 for a few years. And then all of a sudden, everybody rushed into it and it went up to 20,000. Now it's at 6,600, you know, almost three years later. To me, that looks like a bubble that peaked. I don't see how you can, you know, know for sure. I mean, you could guess that maybe this is that, that move up to 20,000

• 28:15Speaker 02

  was just another move similar to the moves that Bitcoin made when it went from a dollar to $10. But I don't think so. I think that those moves could be discounted because they were so inconsequential in terms of actual value. Uh, that you can't look at it. You have to look at, yeah, a lot of people, a lot of people thought that the institutions were going to be the next people in to take the market to new levels. And I never bought that that was gonna happen. I mean, other than a few, you know, Bitcoin type funds. The real institutional money was not gonna get into Bitcoin. I mean, these guys won't even get into gold. You know, I mean, if they don't want to buy gold, I mean, they're not gonna, they're not gonna go to buy Bitcoin. Um, so, and now that Bitcoin has collapsed as much as the market

• 29:00Speaker 02

  on the way down. Um, you know, Bitcoin is actually, this month, February is a horrible month for stocks. You know, Bitcoin is actually down a little bit more. So there was no safety in Bitcoin. Gold, you know, gold is up during this month. So gold is acting like a safe haven. It's acting like a store of value. Bitcoin is acting like another speculative asset. Why would anybody want that? I mean, what's the point of buying that? So I don't see the institutional demand coming in to Bitcoin. And I don't think there's a lot of more of individuals coming in. I think by and large, most of the adopters have already adopted it. I think, you know, you got some people who are putting more money in.

• 29:42Speaker 02

  But I don't really see a lot of growth in people that never bought Bitcoin deciding now that they're going to buy it. I think we've kind of run out of the new buyers. I mean, there's some, but at this point, there's a lot of people trying to get out. There's a lot of people who bought a lot of Bitcoin. You know, when it was that in that period from 200 to 1,000, and I think had a lot of, I think that's when some of the big money came in. I don't think some of the big money was buying it when it was a dollar or $5 or $10. I think most of the people that were buying it that cheap have already gotten out. I mean, there could be some that still have it. But I think a lot of those guys hit, you know, hit the bids a long time ago with most of their Bitcoin. But I think there's a lot of bigger money like the Winklevai or some of these other way.

• 30:28Anthony Pompliano?

  So all right, Peter, listen, here's, here's what I want to do. When we come out of this financial crisis, just like in 2009 and 10, when everyone saw the quantitative easing coming and they were worried about the devaluation of the dollar, they ran into gold, right? And obviously gold did very well from kind of end of 2008, beginning of 2009 through 2011 when it hit the all time high.

• 30:47Speaker 02

  Yeah.

• 30:48Anthony Pompliano?

  I am with you that I actually agree. Same thing's going to happen here. Massive quantitative easing. People are going to run into the safe haven assets or sound money principles. That's why I think gold and Bitcoin will both do well. The only difference between the two that I see is you have the Bitcoin halving occurring in about 50 days. And so would be like at the end of 2009 or 10 or in the 2010, as everyone ran to gold, 50% of all of the gold miners shutting off. So 50% of the new supply just goes away, making that scarce asset even scarcer. What do you think?

• 31:22Speaker 02

  Well, first of all, well, first of all, I don't think Bitcoin qualifies as sound money, number one. But number two, even if half of the gold miners shut down. It really is not going to make that much of a difference because the incremental supply of gold every year is very, very low. I mean, gold gets its value from the gold that already exists. I mean, the increase in the supply of new mining maybe adds 1% to the gold market. So it's really the supply and demand of the gold that's already here. And all the gold that's ever been mined is still here. We have the gold and that's

• 32:00Speaker 02

  that's our gold supply. And so Bitcoin, the annual increase in supply is bigger. I mean, each year now, the impact of the mining in Bitcoin has a greater impact on supply. And so even if they cut the mining in half, the supply of Bitcoins would still be growing faster than the supply of gold. But I think when it comes to Bitcoin, what's more important is not going to be the supply, but the demand. You know, there's always demand for gold, you know, lots, you know, half of it is used in jewelry. So it's so gold. So there's all kinds of real world demand for gold in industry. And then you have central banks that are

• 32:43Speaker 02

  going to be buying gold for monetary reserves. And then you have the investor demand, but there's this demand there. Bitcoin only has demand from one source, and that's people who want to speculate on the price going up. And I think if a lot of people no longer want to speculate on the price going up because it's been going down and they're losing money, there's no demand. You know, one of the reasons that Bitcoin gained a lot of popularity is after 2011, the price of gold went into a bear market for many for several years. And during that time, I think a lot of the gold bugs were, you know, frustrated. But then they saw Bitcoin, digital gold supposedly, going up, whereas real gold was going down.

• 33:25Speaker 02

  And so while gold wasn't going up, Bitcoin had the party to itself. And it was like, see, we're better than gold. But now the gold is going up. And in fact, it's going up while Bitcoin is going down. People are like, okay, now I can buy real gold. I don't need Bitcoin anymore because actual gold is going up. I don't need this substitute. And so I think the demand is going to go away. And so I don't think it matters about a reduction in the increase of supply. If we have a collapse in demand, what's your Bitcoin worth? Because it's you can only use Bitcoin. It's only if somebody wants to buy it from you because they think the price is going up. But if all the people think the price is going down, then nobody's going to want to buy it. Everybody's going to want to sell. And who's going to do the buying? There is nobody. So the price is going to implode.

• 34:09Speaker 02

  I mean Bitcoin, any day, I mean, you've seen days, just one day this month, the price of Bitcoin was down by like 50%. Like almost overnight. It can go down by 90% overnight. I mean, it could just implode. There's nothing to stop it. And so you're taking incredible risk when you own Bitcoin. You know, is it possible? I will agree that it is. Yeah, I was saying that I think it's possible that Bitcoin can make another run to the highs or maybe make a new high. But I think that is a low probability outcome. I think there is a much greater probability that we're in a bear market and we're nowhere near the bottom. And so, you know, I don't think the risk reward is there.

• 34:54Speaker 02

  And I think if you want to gamble on something going way up, I think like silver, you know, at 12, 13, $14 has a better chance of going up five or 10 fold than Bitcoin. And I think it has a lot less risk. It's not going to zero. I think mining stocks, which are very speculative assets, they're not safe havens like gold. But as far as speculative assets are, I think mining stocks, if you want to buy something, it can go up five, 10 times, 20 times. I think junior mining stocks for your money are a better gamble than Bitcoin. So if you want to gamble and take a lot of risk, there's better places for Bitcoin. If you don't want to gamble, if you wanted to play it safe, you got no business in Bitcoin. There's nothing safe about it. You know, so you can't compare it to gold.

• 35:38Speaker 02

  I think gold is a lot safer than any fiat currency, you know, over a longer time horizon, right? A year, two years, five years. But that's not true about Bitcoin. Bitcoin is more volatile and more risky than any fiat currency out there. And anybody who thinks differently is just deluding themselves.

• 35:55Anthony Pompliano?

  I agree with you that gold is safer than most currencies and I also will agree with you that gold is more stable, but also that means that the lack of volatility works on both the upside and downside. So it drew down 12%, right? When it goes up, it's going to go up however much percentage. The difference is that Bitcoin has some of the same sound money principles, but it drew down 50%, right? But when it goes up, it goes up. It's up 70%.

• 36:20Speaker 02

  Why is Bitcoin still... Well, if that's the case, why is Bitcoin down?

• 36:25Speaker 02

  Huh?

• 36:27Anthony Pompliano?

  It's up 70% in the last 12 months.

• 36:31Speaker 02

  That's because in the year before that, it was down 70%. So Bitcoin crashed from 20,000 down to 3,000, you know, and so then it rallied. Yeah, I mean, you can't argue that Bitcoin is not in a bear market, right? It is in a bear market by definition and it's a volatile asset. I will give you that. I mean, as a trading vehicle, if you want to trade it, yeah, you could get in and out of it. It's very volatile. It's a good, it's good for trading. But it's in a bear market and I don't think that rally means anything. I mean, it was, you know, you, talk to me when we're at new highs. Talk to me when Bitcoin is above 20,000. But, you know, I don't even, I doubt it's even gonna get back to above that 14,000 high.

• 37:16Anthony Pompliano?

  I agree with you that when you hold it short term, it's incredibly volatile, right? But over long periods of time, it's proven to be a very well-performing asset and I think that the setup that we have with quantitative easing and the halving is going to be amazing for Bitcoin over the next 18 to 24 months.

• 37:34Speaker 02

  Bitcoin, there is no long-term with Bitcoin. It goes back 10 years, 11 years. I mean, you can't, you can't, you can't derive any conclusions about how it's going to perform. Bitcoin was not around before the last financial crisis. So this is the first economic downturn crisis that Bitcoin has ever experienced. So there is no precedent. We have no idea because there's been no historical precedent for how Bitcoin would respond in a recession, in a, in a, in a stock market, in a bear market, because it hasn't seen that. It's, it's too young. Its lifespan has been too short. So you don't know, you can't say the long term. There is no long term with Bitcoin.

• 38:18Speaker 02

  It's all short term.

• 38:20Anthony Pompliano?

  The one thing I will admit to you is in the next 18 to 24 months, Bitcoin has to shine or it won't fulfill the promise that it has. Right? This is the perfect setup for Bitcoin and for gold. But if Bitcoin doesn't perform, then that's when people will start to say Bitcoin's not what everyone said it was.

• 38:39Speaker 02

  Right, but let's say you wait for that. Let's say you and so people have to realize right now that if what you're saying is true is Bitcoin's got to put up or shut up over the next year, year and a half. You have to realize that if it doesn't do that and you hold the entire time, you lose everything. You're not going to be able to get out because everybody's going to want to get out then and there's going to be nobody to get in. So that's why people need to make sure, right? And you would have to agree, everybody needs to look at how much Bitcoin they have and ask yourself this one question. If I lose 100% of this, am I totally okay with it? Am I fine if I lose all the money I have in Bitcoin?

• 39:20Speaker 02

  And if you can't answer that question, yes, then you got to sell down your position to the point where you can answer yes to that question. Because even if it goes up as high as people think it is, a million dollars for Bitcoin, you could still be rich, even if you sell half your Bitcoin now.

• 39:35Anthony Pompliano?

  I don't disagree that people should look in their portfolio and understand that there's a very binary outcome to Bitcoin. Either it's worth a lot more than it is today or it's worth next to zero, right? But I don't think that people are confused by that in most cases. I think people actually have sized that risk appropriately in their portfolio.

• 39:55Speaker 02

  Oh, but hold on, we don't have his silver. It wasn't delivered. Tell them we don't have it.

• 40:00Speaker 02

  Yeah, go ahead. What was the question?

• 40:04Anthony Pompliano?

  You need to get some more Bitcoin. Are you going to buy more Bitcoin going into this?

• 40:08Speaker 02

  I don't have any Bitcoin. I lost all my, I lost all my Bitcoin. And you never sent me the hundred dollars worth. It's just as well. I would have lost that too.

• 40:19Anthony Pompliano?

  Are you going to buy more going into this quantitative easing?

• 40:24Speaker 02

  Me, I don't have any. How am I gonna buy any Bitcoin?

• 40:28Anthony Pompliano?

  No, but will you buy some?

• 40:31Speaker 02

  No, I'm not gonna let anybody else get out. I'm not gonna be, I'm not gonna, I don't even know, how is anybody, we don't even have the silver yet. Some guy is trying to pick up some silver from my house, delivered to my house.

• 40:45Anthony Pompliano?

  Alright, listen, the video keeps screwing up, so I don't want to keep you for, I don't want to keep you for too long since the video keeps screwing up, but um, we're gonna see what happens. No, no, no, no, we're done, we're done. Here's the thing, here's what I'll say. You and I both agree on what's gonna happen with quantitative easing and the devaluation of the dollar and many other fiat currencies. We see eye to eye on all of that. I can see and actually agree with you that gold will do very well over the next two, three years, right? Just like it did coming out of the 2008 crisis. The only thing I think we disagree on is will Bitcoin do well also? Right? I say yes, you say no, and we'll see what happens. But I think 75, 80% of this stuff we actually agree on.

• 41:29Anthony Pompliano?

  And then it's just fun to, you know, talk a little shit on Twitter and jab each other.

• 41:33Speaker 02

  I think it's possible that Bitcoin could do well, but not in the long run. So even if it does do well over the next two to three years, it's still a bubble. It just means that it's a bigger bubble and it's eventually gonna pop. But I do think, looking at the chart and looking at how it's been trading, I think it's more likely that Bitcoin is already a pop bubble and I don't see it reflating to new highs. So I think it's a bear market and I think any rallies are opportunities to sell. And, you know, and I think for people who only have Bitcoin, if you only have Bitcoin and don't have gold, wouldn't you agree they should take some of their Bitcoin and buy gold with it? They don't have any, they just have Bitcoin?

• 42:15Anthony Pompliano?

  No, you're selling silver. You're gonna believe in precious metals? You're selling your silver right now. How much do you believe in precious metals?

• 42:25Speaker 02

  I'm not selling my silver at all. I got, I got somebody coming over to my house to pick up the silver he bought.

• 42:32Speaker 02

  They would deliver to us.

• 42:33Anthony Pompliano?

  Alright, listen, I appreciate you doing this. This is a ton of fun. We're gonna keep doing this throughout the, uh, the entire financial crisis.

• 42:40Speaker 02

  You use the phone next time, or Skype.

• 42:45Anthony Pompliano?

  Well, you gotta get better Wi-Fi.

• 42:48Speaker 02

  I use Skype, it works fine. It's this, it's this thing that we're using. Alright.

• 42:55Anthony Pompliano?

  Alright guys, thanks so much. Hey everyone, Pop here. If you liked this episode of Off the Chain and want to help us take crypto to the top of the Apple, Spotify, and other podcast charts, please do us a favor and rate, review, and subscribe. To review, simply go to the Off the Chain homepage, scroll down until you see the five blank stars. Taking 15 seconds to fill those stars in and leave a quick review goes a long way in helping us take the entire crypto ecosystem to the top of the charts. I appreciate you listening and see you next time on Off the Chain.