295: Balaji Srinivasan On The Argument For Decentralization - Part 1

Balaji Srinivasan is an angel investor and entrepreneur. He is formerly the CTO of Coinbase and General Partner at Andreessen Horowitz. He was also the cofounder of Earn.com (acquired by Coinbase), Counsyl (acquired by Myriad), Teleport (acquired by Topia), and Coin Center. In this conversation, we discuss centralization vs decentralization, total state vs market anarchy, land vs cloud, the impending political realignment, failing institutions, and MMT vs Bitcoin. This is Part 1 of the conversation. We will release Part 2 at a later date. =============================== Pomp writes a daily letter to over 50,000 investors about business, technology, and finance. He breaks down complex topics into easy to understand language, while sharing opinions on various aspects of each industry. You can subscribe at www.pompletter.com

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

• 0:00Anthony Pompliano?

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

• 0:11Anthony Pompliano?

  Balaji Srinivasan is an angel investor and entrepreneur. He was formerly the CTO of Coinbase and general partner at Anderson Horowitz. He was also the co-founder of Earn.com, Council, Teleport, and Coin Center. In this conversation, we discuss centralization versus decentralization, total state versus market anarchy, land versus cloud, the impending political realignment, failing institutions, and MMT versus Bitcoin. This is part one of the conversation, and we will release part two at a later date. I really enjoyed this conversation with Balaji, and I hope you do as well. Now, before we get into the episode,

• 0:51Anthony Pompliano?

  don't forget that I also write a letter every single day to over 50,000 investors where I break down the complex topics behind business, technology, and finance. You can sign up in the description or go to pompletter.com. I try to break down these topics in easy-to-understand language while sharing opinions on various aspects of each industry. If you want to learn more about business, technology, and finance, it's a no-brainer. Pompletter.com. Again, pompletter.com. All right, let's get into this episode with Balaji. I hope you guys enjoy.

• 1:28Anthony Pompliano?

  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. All right, guys. Bang, bang. I have Balaji here with me. Thank you so much for doing this. I'm super excited to talk to you.

• 2:02Speaker 01

  Cool. Good to be here.

• 2:04Anthony Pompliano?

  For sure. For those that don't know who you are, you've got a lot of relevant experience, and I know that you are not a fan of credentialism, but maybe just give us a couple of data points just on your background and training so that people can understand the perspective you're coming from.

• 2:22Speaker 01

  Sure. So my background, you know, Stanford PhD in electrical engineering, also have an MS in chemical engineering. I taught computer science and stats at Stanford for several years. Started a genomics company, which ended up with a CTO and co-founder that ended up, that ended up being sold for 375 million. I was an angel investor in Soylent, Superhuman, Lambda School, Cameo, Bitcoin, early in Ethereum, Zcash, other kinds of things.

• 2:55Speaker 01

  Also, I was a venture capitalist at Andreessen Horowitz, multi-billion dollar venture capital firm. Helped boot up what became parts of our bio and crypto funds. I taught a MOOC course with 250,000 students worldwide back in 2013. So, you know, being an educator as well. And then within crypto, I've done a bunch of stuff. I'm an investor in lots of crypto companies and coins and whatever. But most recently, I took over one of our portfolio companies, long story, which I wrote about. I turned that around, turned into earn.com, got that to profitability. So let's Coinbase, was CTO of Coinbase.

• 3:34Speaker 01

  While at Coinbase, did a bunch of stuff, but in particular, you know, one, a few headlines took earn and integrate into Coinbase, a Coinbase earn, which has done several hundred million dollars in sales from 2018 to 2019. You can, it's on the homepage of Coinbase if you, if you tried it, right? So, and helped launch USDC, our stablecoin, which has done very well. Drove all the asset addition and so on there. All of this is obviously with a team of folks and whatnot. Brought on billions of dollars in assets for custody and basically just did a bunch of stuff there. And then since last June, I've finally taken the first time off that I've had in more than 10 years or whatever. And

• 4:19Speaker 01

  Because you know, I can't like, I'm not wired like a normal person to take a vacation. Just because there's

• 4:28Speaker 01

  you're either doing something, you're not doing it. And if you're not doing it, it's much easier than you don't have. It's like a homework assignment or whatever. When you're a kid and you have something due on a Christmas break and you know. So I can never take like a normal vacation, but took time off a first time in a long time and basically just, you know, did math. I do math and I program and I angel invest and whatnot. And that brings us to the present day, you know, and you know, I can take from here.

• 4:57Anthony Pompliano?

  For sure. Before we get into the fun stuff, what's the biggest surprise or learning you've had from taking time off? Like the thing you didn't expect to walk away with or learn during that time?

• 5:10Speaker 01

  Um, I think I was surprised at how

• 5:16Speaker 01

  easy it is to like, like the time passes fast, actually. Um, you, you wouldn't kind of think that. Um, so

• 5:26Speaker 01

  yeah, just it's, it's, it's not like a learning or anything like that, but rather um, unless you go after things with the same discipline that you have when you're an operating executive. It's easy to just lose a week, lose two weeks or whatever, which is fine. You don't always have to be super efficient on everything. But that was just something which I hadn't had time off in such a long time that I hadn't realized that. So.

• 5:52Anthony Pompliano?

  Yeah, that's awesome. You were one of very few early on that identified the potential issues with the coronavirus and were quite vocal about, hey, this is serious. This may come here. Here's potential implications. And you know, frankly, we all now know, many people, one laughed, two, literally disagreed publicly. There was articles written, kind of the whole nine yards. You've been vindicated, kind of in a weird way of nobody wanted this to happen, but, but at the same time, you were able to, to kind of warn people, if you will. What is your evaluation as we sit here, kind of mid-May of just what's transpired, right?

• 6:35Anthony Pompliano?

  We don't have to go in tons of detail, you know, people obviously know a lot of this, but, but just kind of what's your general evaluation of that health crisis?

• 6:44Speaker 01

  So, you know, I've tweeted some of this and I'm writing a bunch of long form stuff which I will, which I will drop at some point. But Act One was and is the virus crisis, which is ongoing. Act Two is the financial crash and Act Three, I think, is the crisis of our institutions. And I really think that we are in for some crazy stuff. And I, you know,

• 7:12Speaker 01

  I think I called some of these aspects actually pretty early on, but I think the new political axis, or, you know, whether you want to call it trade-off axis or what have you, worldwide, is, you know, antivirus and pro-freedom. Okay, so those are like, kind of like the two poles. You might call it the total state versus market anarchy. Okay. And the, so what's, what's kind of going on here? So, we're in the middle of this huge political realignment where old issues just don't matter as much and things are rotating and new coalitions are forming, even if there's some old party labels or things like that.

• 7:53Speaker 01

  And I think you can identify those two camps as centralization versus decentralization, as modern monetary theory versus BTC, as, you know, the, the state versus the network, as, you know, kind of mandatory versus free, and, you know, health versus wealth. Okay, those, it's actually interesting to think of those as kind of opposite poles in the sense that the state is, you know, the actor that is now pushing quarantines and it's, you know, it's enforcing stay-at-home orders, you know, masks being mandatory, all the type of stuff.

• 8:37Speaker 01

  And there's a genuine argument for it in the sense that, you know, many- Many predispositions, or presuppositions, rather, that people have about, okay, you know, my neighbor can do their thing and it doesn't matter so long as it doesn't affect me, completely break down in a coronavirus world where if your neighbor is not taking precautions, you very well could get sick. And so you have an interest in their health in a way that you just didn't before. Now, in a sense, arguably, that's good because, you know, okay, well, I have an interest in their health. I will help them stay healthier and keep myself healthier at the same time. There's, you can make an argument from a skin of the game or alignment standpoint that, you know, a community of people who care about each other's health

• 9:22Speaker 01

  will probably be better. You know, just like, you know, you're part of a fitness club or whatever, you know, and, and, you know, people live together and that's actually good, right? Um, so, but let's call this one axis, right? The total state. And that's, you know, the lockdown of Wuhan, that is the, you know, surveillance of folks who, you know, with, with yellow and green and red codes, not just in China, but other places. That's price controls, etc. Okay. Now, on the other side is market anarchy. And this is essentially the polar opposite of that. And this is, um, to caricature it in extremis, it is, uh, you know, uh, don't wear a mask,

• 10:06Speaker 01

  uh, but, or, um, I should have the choice as to whether to wear a mask. It is, um, you know, like, the laws are necessarily bad. Everything the state is doing is wrong, etc. And, um, you know, and, but the good aspect of it is, uh, look, we're gonna need to decentralize, we're gonna need to encrypt, um, we're gonna need to protect privacy, and we're gonna need to have a free market because the state may protect health at the expense of wealth to such an extent that folks are giving silly orders, uh, you know, to seize masks, seize head sanitizer, to impose price controls, to ban people from selling things at Walmart and Target, to stop Uber Eats from doing things, uh, you know, was, was even proposed like banning M&As or whatever

• 10:50Speaker 01

  over a certain size. Those things have nothing to do with controlling the virus whatsoever, and they're, uh, things, and of course, printing trillions of dollars, right? And so there's legitimate abuses and failures on the side of the total state that the kind of anarchy poll will will correct and push against. And I think either of these two polls is probably bad. But what's, and that probably is bad. What's interesting is how many different permutations and so on there are in the center. It's like a very, you know, there's, there's a number of different combinations and things you can do, okay? And I'll give some of them.

• 11:33Speaker 01

  So lots of many different countries. It's almost like the ideologies that they had almost didn't matter. And now they've just executed in totally different ways. For example, Sweden and New Zealand, you would have clustered them together ideologically before this, but they've taken polar opposite policies, you know, where Sweden has basically taken a let it rip policy and New Zealand has controlled the virus. You know, the US and Australia, you might have clustered them and Australia has contained the virus and the US is, you know, not, right? But then even more than that, you know, to give some sense of where society ends up, you could have a Chinese authoritarian state. You could have a Taiwanese democratic state that didn't even have a lockdown, but has

• 12:17Speaker 01

  managed to mostly keep the virus under control, or actually not mostly, seemingly totally. You could have, you know, a New Zealand policy, which is democratic, but also did a lockdown and got the virus under control. You could have Sweden's policy, which had no lockdown and is letting the virus go crazy. Or you could have America's policy, which is a kind of a cargo cult, half-ass lockdown, and then combined with letting the virus go rile. So it's like at least five different combinations, you know, Taiwan, China, New Zealand, the US and Sweden. And then there's a sixth, which I think is emerging in the US, which is the snow crash strategy. And I think this is actually where the US is probably going to land up, where some

• 13:00Speaker 01

  combination of snow crash and Ready Player One, the state has failed. It is actually not capable of doing the blocking and tackling. If it, if it had any, you know, tricks up its sleeve, we would have seen them already at this point, right? There's no crack military unit, there's no, you know, special forces or, you know, super vaccine, there's nothing like that. There's no Area 51, there's no Manhattan Project, no one's coming to save us. And so, once you realize that, that's actually, it's something where it's completely the opposite of the movies, you know, in Contagion or in, you know, any movie, you know, there's a, I mean, that's the biggest thing that Contagion, the

• 13:45Speaker 01

  movie, got wrong, that the CDC was going to be competent, right? And I'm not saying the CDC is completely incompetent, they have, they've done some things right, you know, some of the studies they've done are fine, but they are not actually able to control a disease and they're the Center for Disease Control, right? So where I think we land up is some combination, and I'm not endorsing this, by the way, but I think, you know, there's a few possible scenarios where the US lands up. So one is, and these are not mutually exclusive, but let's call it Snow Crash, Ready Player One, and then someone else actually said Asimov's, like Naked Sun or Solaris, also another one, right? But let me go through these. So Snow Crash would basically be where the

• 14:26Speaker 01

  state can't protect people, you know, for example, Amazon is doing like mass testing of all its employees, it's developing all of these technologies to essentially turn Amazon's campus into a green zone, and potentially that becomes an export where they can export that to other corporate campuses and other communities, you know, it's like the natural extension of Ring and some of the other products that they sell, right? Where you basically keep the virus out with multiple layers of defense, everything, you know, the most extreme would be like negative pressure air rooms, but hand sanitizer, gloves, all that type of stuff. Then, you know, so basically what that is, is a corporate, individual and community-imposed

• 15:08Speaker 01

  order that controls a virus and keeps it out of your campus, but, you know, the commons are a tragedy, okay? Then, second is Ready Player One, where there's proposals, serious proposals to print $2,000 a month for everybody, if you've seen that, right? And if that proposal goes through, and I think it might, you have a scenario where everybody is sitting at home and they're receiving $2,000 a month. And that's money which, see, the thing is, I think we're going to see both deflation and inflation, deflation in the price of all the things that people don't want anymore, like, like, you know, air travel, or, well, actually, air travel's tricky, I'll come

• 15:52Speaker 01

  back to that, let's say, concerts, events, things of that nature, right, people will slash prices to try to bring folks in. But then you'll get price inflation of things people do want, like masks, hand sanitizer, other type of things, right? And once you get soaring prices, here's where the crypto stuff comes in, or one of the many angles. You have soaring prices for masks, for hand sanitizer, and, you know, pulse oximeters, all the type of stuff to deal with the disease, as well as for things like food, consumer staples, because you've suddenly injected a huge amount of printed money, and capacity supply is usually flat or down because people are staying at home, because supply chains

• 16:34Speaker 01

  have been disrupted, because folks overseas aren't shipping as much stuff, and so on. So you have, like, much more money and flat or down supply, well, and, and, you know, you have demand, right, prices are going to increase, which we've seen, you know, for masks and hand sanitizer. So then, once you have prices soar, many states will impose price controls, which will cause shortages, and/or they will prevent the sale of some of these things, and eBay and other places have actually already prevented the sale, I believe, of masks and hand sanitizer. And again, and I'm using it as a placeholder for a lot of other things that people would buy. At which point, markets go dark, and you start to get the crypto economy, you know, things like Open Bazaar and so on, become important, because you can't buy the stuff

• 17:19Speaker 01

  on an above-ground market, like a mask or whatever, it's like, hard to, hard to buy, an N95 mask. And you know, you can make the argument like people shouldn't be able to buy those masks. They should only buy a surgical mask or whatever. I understand, right? But the demand will be there that people will want to buy those things and they'll want to buy food and they'll want to buy consumer staples and whatnot. And so, you know, essentially this printed money that they get will be, I think, useful for three things.

• 17:46Speaker 01

  You know, one, maybe it'll pay the rent. Maybe there'll be some price control imposed on the rent or something like that. Two, maybe it'll buy food. And three, it'll pay for internet stuff, which is probably the most,

• 18:00Speaker 01

  you know, like something like Dropbox is probably gonna have the least problem when, you know, if there's significant inflation. Because their margins, their gross margins are so high that the, you know, marginal cost of delivering another, you know, Dropbox thing to somebody is not that high, right?

• 18:17Speaker 01

  But then you have this Ready Player One world where people are basically staying home and being paid to play video games or just surf the internet, right? And they just don't go out, but consumption has dropped off a cliff. And then the third model is this naked sun model where, you know, folks go out to rural areas and work remote from there. And they kind of have a natural social distancing built into it. And, you know, they just socialize over the internet for the most part, other than being with, you know, like, obviously, they're probably with family members. Maybe there's some friends who move out there. But it's like more like a rural life, like a lot of people used to live in the 1800s in the US. You know, you're just relatively low population density. And you, you know, maybe you put on your VR headset or you

• 19:03Speaker 01

  you otherwise connect that way, but you have just, you know, greenery and so on around. It's kind of a beautiful landscape, right? So I'm not saying all of those, I mean, those are not mutually exclusive. All of those could happen at the same time.

• 19:17Speaker 01

  But we start to get a future that in the US that looks very different than what is happening in green zones that have managed to keep the virus under control. Well, let me pause here because that was a long burst, but I want you to get in order. Go ahead.

• 19:33Anthony Pompliano?

  No, I think keep going. The big thing that I would just, if you can clarify. So I think part of what you're talking about is like a decentralized response and then the state response, right? And those two things are somewhat counterbalanced to each other. But it's not also, I don't believe you think that it's a complete blanket in even a country, right? So right now, I think most people would say, hey, the East has been very, very good from a centralized standpoint. And part of that is because the population buys into those centralized governments. Here in the West, there's a little bit less of that kind of buy-in. And so people are maybe somewhat wary and also kind of have this democratic view of like, the government is one voice, but we also have a voice. And so that has

• 20:16Anthony Pompliano?

  been somewhat of a more decentralized response. I've seen you talk a lot, though, like, it isn't just country by country. You actually may get a breakdown even further than that at the state, county, maybe even the city level. So kind of keep going on that thread, but just.

• 20:30Speaker 01

  Totally. Yeah, sure. Should I address this one? Yeah. So one very important high level thing, I think, is, so two important high level things. In my personal preference stack rank, and other people may differ on this, but at least I think I am consistent, you know, or what I say is consistent, given this implicit value set, right? Which is, or not even implicit, I've been very explicit about it, which is I would rank like a competent centralized state like Singapore. I think that delivers the best quality of life. I know Singapore is trying to get, you know, Corona under control and so on. But a Singapore, a Taiwan, a South Korea, and now this gets to my second point, a New Zealand, and Australia, right? They have managed to get the virus under control. So it appears, so Slovakia,

• 21:16Speaker 01

  I think Estonia has, I think Israel has, right? These are places which, you know, I think will provide, those are like, that's the best answer, like a competent centralized state for something like this. Then a distant second. Is the decentralized response, the snow crash response, where in the absence of a competent centralized state, if you have an incompetent, or even worse, a malicious state, the decentralized response at least allows you, your community, your company to get together, right? If you have a hapless government, what's happened is the government is now, by not doing a good job of keeping the commons free of this virus,

• 21:58Speaker 01

  it's like a tax on every transaction that's happening. It's basically like an out of control fire that's burning because the fire department can't put it out. Because the CDC can't control disease, because the FDA hasn't approved tests. We have this viral fire burning that is imposed a tax on every transaction, right? Okay, so then at least allow individuals to put out the fire in their own little zones. That's the decentralized response. And then the worst is like the incompetent or malicious, and you know, you can always argue which is which. But I do think there's a distinction, you know, malicious is like, you know, North Korea, right? Or, or something like that, and you know, incompetent is simply just much of, much of the US unfortunately, right?

• 22:41Speaker 01

  And frankly, the UK, France, Italy, Spain, even Germany, right?

• 22:47Speaker 01

  Basically, Western Europe, the US and Canada have actually had some of the worst responses to this, which I can get into. And, and so when you've got an incompetent centralized state, they're doing things like infinite lockdown with no plan, right? And that's not, that's, that's also, that's stupid, right? Like, one way of thinking about it is, every country that is doing lockdown, whether they admit it or not, is copying China. Because China did it first, and it was like, oh my God, I can't believe they're doing this. And, you know, at first there was a lot of, oh, they would only do this in an autocratic and, you know, crazy society, etc.

• 23:28Speaker 01

  Then, people basically ignored the virus while it was spreading through China, and then Iran. And it was only when it hit Italy that, that actually people are like, wow, you know, like it could actually hit here, not in a third world country. And I'll come back to that point, by the way, China is not a third world country. That's, I think, one of the biggest Issues that people, you know, in the US, especially I think on the East Coast, um, had is they still have a time warp model of China from like the seventies as, you know, a primitive country or oh, it would only happen over there, you know, blah, blah, blah. Uh, and it's, it's simply not, right? It's a very sophisticated place in many ways, and I'm not saying it's all good, but I'm just saying to, to appreciate that.

• 24:08Speaker 01

  Um, anyway, once it hit Italy and Italy went into lockdown, then in mid-March, the US copied Italy. And so you're copying a copy without admitting you're copying. And whenever that happens, I mean, you, you, you being not being you, you're in tech, right? Like as a product manager, if you're copying a feature from another company without admitting you're copying that feature, uh, you get like a Zune kind of experience, remember the Zune versus the iPod, right? Or, uh, you get like, um, just, I mean, early Bing, Bing is actually okay today, but like Bing versus Google, you're just, just having an ersatz, you know, version of the same, right?

• 24:49Speaker 01

  And, uh, you know, one mental model is you have this, um,

• 24:57Speaker 01

  uh, you, you, you have this very agile state, uh, you know, that is able to execute this kind of lockdown. And then you have this lumbering American, you know, or Westerner who tries to follow the same gymnastics and simply can't do it. Right? And so it might, you know, when you're talking about like how the Chinese executed lockdown or how, you know, it's, it's been executed in other places. Um, it's not just, oh, everybody go stay at home. It's like a hundred things they were doing. For example, uh, you know, uh, centralized quarantine, right? They set up these field hospitals, but you know, they, they built these things in, in, you know, 10 days. And the, the hospital they built in 10 days wasn't like the thing in the Javits Center.

• 25:41Speaker 01

  It was a hospital that had negative pressure rooms. I mean, the Javits Center, I mean, look, it's fine that they built it. I'm not taking anything away from it, but the Lishenshan Hospital that was built in China had negative pressure rooms. It had telemedicine for doctors to come in remotely. It had drone delivery bots, um, and it was basically set up so that you could remote operate the hospital and, and the patients weren't, um, you know, exposing like doctors to the, the virus because healthcare workers were dying over there, right?

• 26:10Speaker 01

  You know, it was it was stuff like, you know, drones with thermal imaging cameras. It's it's stuff like, um, you know, mobile CT scanners that are very high throughput that can just scan a bunch of folks. It's it was simply a technological feat where all the levers of both technology and policy were were applied at the same time. I wrote a blog post on this, by the way, you know, I tweeted it like, you know, a piece of it was, you know, Chinese government's guide to containing the virus is like in V7. And again, to be clear, I'm not saying, you know, oh, China is good and moral or anything like that. I am saying that insofar as you're copying a copy, you should at least understand what it is you're copying and what is you're doing.

• 26:54Speaker 01

  And what happened was in in China, the lockdown was executed, and I've tweeted about this also, you can see my tweets in March on this. But in China, the lockdown was a top down thing that was executed by the technocrats running the Chinese state. You know, in in the US, lockdown was like a bottom up cry from Twitter. You know, from like all these academics or engineers or whatever, like Tomas Poyo, like, you know, he wrote a great article like this hammer and dance. He's like a random guy, right? And he's fine, he's smart, right? Like, I'm like, I'm glad he wrote the article and so on. But this is something where it's rear wheel drive. The smart people are not in our press and state.

• 27:38Speaker 01

  You know, these people literally can't divide, you know, like, I don't know if you saw that that thing where, you know, like everyone, Bloomberg could give everybody a million dollars to the US. It's true. And Brian Williams nods at this, right? Like, like, you know, and obviously our, you know, whether it's the mayor or the governor or the president, like, these, these folks are not like, they're not doing a great job, right? And so you you have something where.

• 28:08Speaker 01

  It's not just the idea, it's execution, right? And the idea is, oh, have people stay at home and then execute all these complicated series of steps to control the virus. Well, uh, you know, we, we simply don't have the talent in our state to, to do that. Um, and so, uh, so that's a huge divergence in a branch point, um, especially relative to the past, because, you know, nineteen fifty, nineteen sixty eight, you know, the US did Apollo, right? Within living memory, basically about fifty-two years ago, right? The US was number one, right? It could do things that nobody else could do. It was the best at coordinating huge projects, right? It could bring men, material, everything together to, to get things done, right?

• 28:51Speaker 01

  And, uh, what's happened is that the state capacity of the US since, since basically the, you know, like Apollo project has just fallen off a cliff. And, um, the state capacity of China and actually India and other countries has risen over that period. And now there's like a crossing point, right? You know, there's just no way that China nineteen sixty-eight would have out-executed America nineteen sixty-eight. But China twenty twenty has out-executed America twenty twenty. As has frankly Taiwan and New Zealand and Australia and Slovakia and Vietnam and, and, and all these other countries. There's a website called ncoronavirus.org/countries that goes into this, right?

• 29:34Speaker 01

  Um, and so like it's, it's really important to, to, to recognize that in the same way that it was important for, for example, Steve Ballmer to understand that Google had out-executed them. Before you could actually, you know, that Apple had out-executed them, right? Like, you know, he was, uh, famously in, in denial about this for a long time, you know? Um, and, uh, there, there'd be this sort of corporate nationalism, you know, that would happen in Microsoft where he'd say, oh, you know, I, I tell my kids, you don't, you don't use an iPhone and you don't use Google. And it's a great way of, of basically blinding yourself to what's happening in the rest of, you know, the industry.

• 30:17Speaker 01

  Again, not saying that you copy it directly and naively. I am saying that you understand when someone's ahead of you and what they're doing and, and you, if you decide to clone it or you build something better, fine, but don't, don't be in denial about it, right?

• 30:34Speaker 01

  Another example of this that I tweeted was, you know, with Yeltsin, you know, who in the late 80s came to the US, right? So this was around the time of the thawing of US and Russian relations, right after towards the end of the Cold War. And Yeltsin came and he visited and he saw like a NASA control panel or whatever, right? And, you know, he was like, ah, we've got rockets in, in the Soviet Union as well. Not a big deal, whatever, right? But you know what he was really impressed by?

• 31:02Anthony Pompliano?

  What's that?

• 31:04Speaker 01

  It was, uh, there was a random stop that they made on the trip home to a supermarket.

• 31:11Speaker 01

  And when he saw like this Randalls supermarket, okay, Randalls was just the name of the chain. He was awestruck. There's a famous photo of him like just holding up his hands in dismay. And basically he's like, because the thing is that an American supermarket had so much plenty relative to the drab Russian supermarkets. And at first he thought this was some special showroom supermarket and a fake one that, you know, he'd been brought to, because that's what the Soviet Union did, it faked everything, right? It's like, you know, this is fake or whatever. And then, once he realized it was real, he realized that even the leaders of the Soviet Union, of which he was one, right? He was a very exceptional person who was allowed

• 31:55Speaker 01

  during the time of the USSR to travel abroad, not just anywhere, but to America, right? So even the leaders of the Soviet Union had fallen for their own propaganda about how, you know, the capitalist West was, was behind and so on and so forth. And the leaders of the Soviet Union didn't have the quality of the supermarket experience that a random working person in Texas would have had, right? Uh, and so he said, you know, look, if people at home knew about this, there'd be a revolution, right? And so, you know, this is something where it's so, so, so important to not have excessively nationalistic or corporate nationalism or whatever nationalist blinders on. Um, you know, I'll give a third example.

• 32:39Speaker 01

  Do you know what the Meiji Revolution was?

• 32:41Anthony Pompliano?

  I do not.

• 32:43Speaker 01

  Okay, so that's how Japan modernized. In the mid 1800s, you know, they'd been an isolated society for a long time. And to shorten a longer story, in the mid 1800s, they came into contact with, you know, the West, right? And, you know, these boats arrived and opened up Japan as a market and so on. It's a famous kind of story. And the Japanese realized they were behind. You know, they had been isolated for so long and, you know, here were these Westerners with all of this technology that, you know, was like just a level of magic, almost like, like UFO landing level, level thing, right? But they were very pragmatic and very smart and they said, "Look, we're gonna,

• 33:26Speaker 01

  we are going to change our national slogans," right? And, you know, gosh, I'm gonna find the term for this.

• 33:36Speaker 01

  Hold on, there's a, there is a, yes. They, they changed the slogan.

• 33:46Speaker 01

  So it was, the new slogan was "Enrich the country, strengthen the military."

• 33:53Speaker 01

  But the, hold on, I want to find the, the...

• 33:58Speaker 01

  They have different slogans for different eras.

• 34:06Speaker 01

  See if I can find it.

• 34:10Speaker 01

  It was,

• 34:14Speaker 01

  it's sort of like a mission statement, but for the country, right? I think it was something like,

• 34:22Speaker 01

  "Expel the barbarians and revere the emperor," right?

• 34:28Speaker 01

  And, hold on one second.

• 34:33Speaker 01

  And then, um, and then the new one was like enrich, I'm probably butchering this, but the new one was, um, enrich the country, strengthen the military. So the point being that going from expel the barbarians and revere the emperor to, uh, you know, enrich the country, strengthen the military. That's, that's actually very different, right? The first is, um, you know, a slogan which is about stasis, right? Expel the barbarians, revere the emperor, right? And the second is a slogan which is about growth, right? Um, you know, enrich the country, you know, strengthen the military. And, uh, that's, that's a radical shift actually, right? It's a change in mission statement.

• 35:14Speaker 01

  And so, um, and so Japan modernized and they became, you know, that's why, uh, they, you know, they're the first, um, you know, non-white country to actually beat a European power. That was actually a very big deal, uh, the Russo-Japanese War in the early 1900s, right? Um, which was the first time that a non-white country had beaten a white country, you know, or European majority, I already want to call it, um, in a war. And it was a huge thing for like colonialism to, uh, it was, it was one of the big things that helped, um, colonize people realize they could win, right? And I, you know, like, that gets into all kinds of historical stuff, but my main, my

• 35:55Speaker 01

  main point on this was, uh, whether it was Sethia turning around Microsoft, whether it was, um, Yeltsin looking and seeing how behind Russia was, whether it was the Japanese going and doing the Meiji, you know, restoration, um. This was something where folks who were smart realized they were behind and rather than get all outraged about someone pointing that out, they're like, okay, we're behind, how do we get ahead, right? And this actually brings us to China, which is, um, you know, 1978, when Deng Xiaoping, you know, took over China, uh, it was very difficult, by the way, for him to take over China. That's a whole story. Most Americans, it's, it's actually kind of interesting to me.

• 36:36Speaker 01

  Um, you know, this, this is actually one of the more important things to know. Like, how did China become rich, right? How did India become rich? Just like you'd read a Harvard Business School's case study on Netflix, right? Or Amazon. How did these countries turn around? You read about how companies turn around. How do you turn around a country? That's even harder, right? Many, much harder. And I think there's a lot of lessons for business and management and so on. Even if, again, you know, like, I'm sure there'll be the comments, "Oh, my God, China's evil." Okay, got it, right? Fine. I may agree with you on many of these premises.

• 37:14Speaker 01

  Just like, you know, the Soviet Union was evil in many ways. And yet, we can discuss it in a dish-passionate way that, you know, like, they did do Sputnik, right? And that was something that helped put out the space race and so on. And so, you know, we can kind of separate those two bits, right? Okay, coming back to Deng Xiaoping for a second. He also turned around the country, right? So it's a fourth example of these turnarounds, right? Satya turning around Microsoft, you know, Russia at least partially turning themselves around. I mean, they had a horrible go of it in the 90s with the transition to capitalism. But former Soviet Union countries like Estonia did extremely well. Poland has done well and so on. So on net, it's probably, not probably, it is a win. And certainly, Japan did well. Okay, so how did Deng Xiaoping turn around China?

• 38:00Speaker 01

  Well, he had a few things which have become slogans now. You know, the famous one, you know, "black cat, white cat, doesn't matter if it catches mice." Another one was, "let some people get rich first." Which basically said, "Look, I know that we're going to go from everybody equally poor to some degree of, quote, you know, income and wealth inequality, but that's okay so long as you realize you'll get, you know, wealthier later." And these are very compact slogans, right? "Let some get rich first" doesn't mean you'll never get rich. It just says, by injecting the word "first," it's like, okay, fine, they go first, I'll go second, but it's fine, right?

• 38:37Speaker 01

  Later, there's another slogan that the Chinese have, which is, "the backwards will be beaten." Okay, that's very important where, you know, there's a, there's a guy called scholars, I think scholar stage on Twitter, I may be butchering that, but um. He has a good article on this, but the backwards will be beaten basically means um. That, you know, China, you know, it's a proud country and during, you know, the opium wars and, you know, during the, how the Japanese invaded them during World War Two. You know, they, they were, they were brought low, right, by folks outside with superior technology. And so China itself has a balance between rationalism and nationalism.

• 39:21Speaker 01

  Right? So, uh, and these are intention. Okay. So nationalism is, you know, like be proud, China is the best, you know, et cetera. And rationalism says, hey, we may not be the best in something. What are we not the best in? Let's learn about that. Those are intention. Okay. Um, and, uh, you know, when you combine them, you have something where you can both advance science. And, you know, strengthen the military and the country and so on and so forth. You know, another place that rationalism and nationalism are intention that you're actually very familiar with.

• 39:55Anthony Pompliano?

  Where?

• 39:55Speaker 01

  Crypto. Because every crypto tribe. There's the nationalism of boosting my coin. And there's the rationalism of the technology and the science and the features of other coins. That might be worth adopting or thinking about or looking at, um, you know, obvious example being, uh, let's say privacy, right? You know, anybody in, in Bitcoin, um, should know about Zcash and zero knowledge. And, uh, that's, that's just important, right? That makes Bitcoin better, right? And, um, if, if you're in the mode of, oh, everything's a shitcoin or whatever. You know, that's just excessive nationalism, right? Uh, and not enough rationalism.

• 40:39Speaker 01

  Now, with that said, something I have learned over the last six, seven years is, um, there's more value to nationalism than you might think. Uh, you know, cause you, you can, um. The tribalism of crypto is, in a sense, an extension of Mac versus PC, or you know, Emacs versus VI. There's something about it where it's not just a technology, but a community, and it's a sunk cost, and there's something where a community gains value from expanding, because if you have a billion people using iOS, it's better for you as an iOS user than if there's only a million people, right? Which is kind of why this technology evangelism takes place on a...

• 41:24Speaker 01

  I'm not saying it's like always that quote "self-interested" or whatever, but it's, I think it's one of the reasons, right? And that reaches its apotheosis, or maybe not, maybe it's not Zenith yet, maybe there's more forms yet, right? With crypto, where there's a financial incentive to bring other people into your coin, etc., right? So that irrational nationalism is actually helpful to fight off price drops, right? To say, "This is the best, I don't care what it says on the screen, I don't care what you say, I'm gonna close my ears, never gonna sell," etc. It's actually kind of good to have some of those folks in the community, but not too many, because if there's too many, then you can't improve

• 42:06Speaker 01

  or react to anything, you'll never admit flaws of any kind, right? So, alright, let me pause there, because that's like a lot of history, a lot of stuff, yeah.

• 42:16Anthony Pompliano?

  So, I want to go back to the China thing in a second, but staying on this nationalism versus rationalism, it sounds like what you're saying is, if you have nationalism without the rationalism, it's almost like everyone feels like, "Hey, we're in this together, but we're all the poor people in China back in the day," right? Like, there's no ability to actually improve or change or recognize what needs to be done, it's just we're all bought into this blind belief.

• 42:41Speaker 01

  Yeah, it gets even worse than that, though, because it turns into...

• 42:49Speaker 01

  There's no growth, right? The rationalism is what provides a growth. The nationalism is what provides a tribalism. And in the absence of any growth, people fight over a zero sum pie. Because it doesn't just stay as nationalism, it becomes nationalist socialism. Where, you know, right? Like, like those tribes, you know, one way of putting it is, you know, you see this dynamic on Twitter. Whatever ideology somebody may claim to have, on Twitter, it becomes Twitterism. Where the most extreme version of that ideology is selected for likes and clicks and so on. And the folks who promulgate that are reinforced in that by other people's social reinforcement.

• 43:31Speaker 01

  And it just like is this feedback loop that is, is kind of a radicalizing sort of thing, right? You see this all the time. And no matter what your ideology is, if it's, whether it's tolerance, well, you get F you, right? Whether it's a non-aggression principle, it ends in F you, right? These things, well, hmm, that's interesting. Non-aggression is F you. Now, of course, people say, oh, well, that's just violence or whatever. But no, it actually means civilization as well, you know? Like, you know, there's, there's a, the point of the non-aggression principle is not to go around saying F you to everybody. The point is to maintain a civilized society. And, you know, like, it's, it's something where, like, civilization is good, even if people take it for granted, right?

• 44:13Speaker 01

  And so, so, oh, gosh, I lost my train of thought.

• 44:20Anthony Pompliano?

  So let's bring that up. Let's keep going down that path of how does that apply to China? Which I think part of what you're pulling.

• 44:29Speaker 01

  Okay, wait, let me finish, but I just, I just remembered my question. So, so the thing is that all of these ideologies become Twitterism. And Twitterism becomes zero sum. Because once you have tribalistically managed to shoo off everybody, shoo off all growth, shoo off anybody that wants to improve it and so on, then you fight among other people for who is the most tolerant of them all? Who is the maximalist of the maximal, you know? Like, this, this kind of stupid thing, right? Like, in this, in this very closed loop of people, where you try and find some flaw that this person had and then just attack them, right? You know, and And that's actually the trap that, you know, China was certainly stuck in for many, many

• 45:14Speaker 01

  years, right? Purge after purge after purge, internal political rivalries and so on and so forth. So you get tribalism without the growth mentality. And then, you know, flip side of it is you can also have excessive rationalism, right? Excessive rationalism, I think, is less pathological than excessive nationalism, but it basically results in you having, you know, a bunch of science and a bunch of engineering and a bunch of cool stuff, but, you know, somebody will come and take away all your toys. It's like, it's like in Civilization, you know, the era play the game?

• 45:50Anthony Pompliano?

  Of course.

• 45:51Speaker 01

  Yeah. So Civilization, the game.

• 45:55Speaker 01

  If you put all your money into technology and commerce and, and nothing else, the guy next door with one spearman can just come in and take all your stuff, right? So if you, if you go excessively rationalist, you do not survive either, right? So, so clearly there's some kind of balance here. And I think that that trade off is something that we're going to need to negotiate as a society because it's a real adaptation. And unfortunately, I feel we're moving in the wrong direction on it where people are becoming more irrationally nationalistic, just at a time when it's actually more important to be open minded.

• 46:38Anthony Pompliano?

  So on this piece, I guess part of this is, is that balance, right? We talk about negotiating the balance, is that driven from the state level? Or is that something that's more bottoms up and driven by the people and who they elect into office and kind of the people actually end up controlling that in some way?

• 46:57Speaker 01

  It's all of the above. I mean, in a sense of.

• 47:04Speaker 01

  You know, the state, just as one example, right? World War II, the state had women go off to war. And, or not to actually fight, but to, like, they were working in factories and so on. And then afterwards, there was a new normal and women were working more frequently, right? So something where a centralized thing came in from above, changed behavior and preferences. And then even when that force was removed, there was still a permanent delta. Right? There's still a change. So that was something where top-down and bottom-up, like, you know, even when top-down left, bottom-up retained some imprint of the top-down force and then kind of went on its own, right?

• 47:46Speaker 01

  And so, so I don't think it's, you know, it's just one example, like, you know, tariffs matter, right? Like, you know, the, the trade policy really matters, immigration policy matters. Those are things that are set, you know, somewhat top-down. And I was going to say somewhat, because obviously outcry matters and so on as well. But, you know, those definitely influenced what is feasible bottom-up, right? So I wouldn't, I wouldn't be able to divide it necessarily. But what I would say is, certainly, in, if you feel you're in a technology space, right? It behooves you to look at every green zone that's out there and understand what they're doing, right?

• 48:27Speaker 01

  And then also think through, okay, what's going to happen in red zones? And so just let me define terminology here, because I'm just using it for my Twitter or whatever. But a green zone is basically a place that's gotten the virus under control. And in, you know, you can be more precise and say it's a, it's a region with comprehensive testing that has no new cases in, let's say, you know, two weeks or four weeks, right, some time period. And the reason both those are important, a region, so a spatial region, with comprehensive testing, so, because if, if you're not testing, then I don't believe you're a green zone, right? And no new cases, meaning you have extended a streak, right? You've been just sampling and have you, and you really have quelled the virus, right? Okay.

• 49:14Speaker 01

  And a red zone is everywhere else, right? Both the places without testing, because you don't know if the virus is there. And certain the places that have testing and that have let it go vertical. So one of my theses is that green zones will actually, in general, be able to sort of let up on the, the state will be there, but in general, they're going to have better health, better wealth, and less of a state presence. Okay. The reason being because you've, you've sort of managed to keep society like, like wobbling on a new normal, right? Rather than just have it crash, right?

• 49:56Speaker 01

  Conversely, in a red zone, I think you're going to get huge strain pressures where you get a series of things where viral destruction leads to economic destruction, leads to viral destruction leads to like, they actually, you know, stack on top of each other, right? So for example, right? You have the serious virus. Okay. Then folks, you know, they do lockdown or, you know, cargo cut lockdown. Okay. Then they all get mad, understandably, because people are going bankrupt and so on. They come out and some of them unfortunately are like, oh, the virus isn't a big deal or, you know, just the flu, bro, or whatever, right? Don't wear masks. Boom. That leads to another level of viral destruction. Right? Oh, actually, yeah, I mean, I kill you, but it might significantly diminish lung function

• 50:40Speaker 01

  for the rest of your life or for weeks or months. Who knows, right? And who knows the percentage on that? Yeah, we don't have good morbidity stats. We have good mortality stats, or I should say, okay, mortality stats. Like we know case fatality rate and so on. We don't yet know like what percentage of normal people, you know, have eight week convalescences or have permanently decreased lung function. We don't know the long-term effects of this thing. Right? So, so folks who just rushed out there, oh, actually bam, they just walked right into this virus, which is going crazy, by the way, in 50 states.

• 51:16Speaker 01

  And then, then that leads to yet another pullback where demand goes back into, you know, like people go back at home and so on. And that leads to more unemployment and more unhappy people.

• 51:28Speaker 01

  And that kind of stuff stacks. Now you don't have the money to go and pay for, you know, like masks or hand sanitizer so people get the virus more, you know, that that type of stuff, right? So you can have this really negative feedback loop. Actually, not a negative feedback loop. It's a positive feedback loop in a sense of amplifying it, right? That leads to more unrest potentially. And, you know, so Iran actually had some civil unrest and whatnot, right? And I mean, the biggest thing is Americans should understand that it can happen here. I mean, just as one example, Michigan evidently armed. Do you see this thing?

• 52:08Anthony Pompliano?

  I did see it. And I think that actually Michigan was real guns. And I don't know if you saw Raleigh, North Carolina, where I grew up, there was people who walked around with fake guns. So they literally took like a piece of wood and made it look like a 50 caliber. They had a inner tube that they made look like an AT4, you know, rocket launcher. And they were basically doing a play on Michigan was real. We're pissed off. We're not going to go walk around with the AT4 for real. But like, here's our almost social unrest display. It's very interesting to see that happening in multiple locations.

• 52:43Speaker 01

  Exactly. And so, I mean, look,

• 52:49Speaker 01

  it's, this whole situation is bad on like a number of different levels. But it's, it's something where you're getting more sci fi movie almost every day, right? And the problem is that, you know, there's at least two analogies for what the virus is doing. And let's talk about some of the crypto implications of it. One analogy is to analogize it to an invasion. Okay, so people have talked about this. They're like, oh, is this a recession or a depression? And that's because, you know, those are, those are things that come to mind as, is this like the 2008 crisis or not? Because everybody lived through that. It's a reference point, right?

• 53:35Speaker 01

  But I think that a better analogy, I mean, this is not fundamentally an economic event. It's not fundamentally a political event. It's it's a biological event. It's a physical event. Right? And it's like, imagine this thing floating in space and then you project it down into the X Y plane. Okay.

• 53:52Anthony Pompliano?

  It's basically like Red Dawn. I don't know if you ever saw the movie.

• 53:55Speaker 01

  Yeah, yeah, yeah.

• 53:57Anthony Pompliano?

  Right, they look out the window and all of a sudden they're getting invaded. People are parachuting into the parking lot. Right? It's not people, it's a biological incident.

• 54:06Speaker 01

  That's exactly, I think it's so with the very, very important caveat. It's just because I know someone will mystery us. I'm not saying it's a bioweapon or anything like that. Okay, I'm not. Okay, it's a naturally occurring virus, probably with everything we know. It's possible it could have escaped from the lab or whatever. People have talked about that. I think that's a possibility. But, um, you know, like, there's no evidence indicates a bioweapon. Okay, with that said, uh, the entire US military and NATO were basically a magno line. Do you know what that is? Right, yeah, so.

• 54:39Anthony Pompliano?

  Good, yep.

• 54:40Speaker 01

  Well, so, you know, in France, after World War One, they're like, oh, we're going to build a system of fortification. So the next time the Germans come with their trench warfare, we'll be ready for them. And the Germans just completely invalidated that where the Nazi blitzkrieg just went around. You know? And it was like a classic example of fighting the last war. And then the French just got defeated. Right? Um, and, you know, the US military and NATO have been MIA in the pandemic. Right? And by the way, you know, people say, oh, you know, uh, Asia had SARS and they were ready and we weren't. I'm like, the US had an anthrax scare in 2001. Right, number one. Number two is, uh, you know, there was Ebola in 2014. Right?

• 55:22Speaker 01

  And number three, there were actually written pandemic plans, like Bush had something on this. Look, you know, DARPA has stuff. There's all this stuff that's written down. It's supposed to be like a biodefense program or whatever. It's just, they can't execute on it. Right, they're literally incapable of doing it. So. The every rogue state, every terrorist, frankly, every state in the world has seen that, you know, all the defenses of the US, right? You know, you have the Atlantic and the Pacific, you have all these aircraft carriers and nuclear missiles and so on, all the soldiers, everything, basically just completely invalidated by the virus.

• 55:59Anthony Pompliano?

  Well, here's one kind of analogy that I've thought through. So I don't know if you know this, I was in the army for six and a half years. And so

• 56:06Speaker 01

  Oh, really?

• 56:07Anthony Pompliano?

  Relatively intimate with both the the expertise and the incompetence that goes on within those ranks.

• 56:13Speaker 01

  Great.

• 56:13Anthony Pompliano?

  Just like any organization.

• 56:14Speaker 01

  I'm not beating up on the military, by the way. I'm just saying that, just, yeah, go ahead. Yeah.

• 56:17Anthony Pompliano?

  Well, so here's one way to think about this, right, is one of the most successful ways to attack the US military over the last, call it decade or so, has been actually to either use embedded soldiers. So like in Afghanistan, for example, US and Afghan soldiers go out on a mission. All of a sudden, the Afghan soldiers, which are deemed friendly, turn and shoot a US soldier.

• 56:39Speaker 01

  Right.

• 56:39Anthony Pompliano?

  Right. Kind of a blue on blue type incident. But yes, they have a different uniform. They're just our ally. The second thing would be something like a Fort Hood shooting, where literally it's somebody in a US uniform.

• 56:49Speaker 01

  Radicalized.

• 56:50Anthony Pompliano?

  Who's just radicalized and shoots.

• 56:52Speaker 01

  Yep.

• 56:52Anthony Pompliano?

  Then if you go to like the aircraft carrier, where I think it was a general or a colonel or whatever.

• 56:57Speaker 01

  Right. So the virus extends that because you basically are capturing somebody and turning a soldier into a threat by basically.

• 57:03Anthony Pompliano?

  Yeah. And so we saw this on kind of steroids if earlier, just a couple of weeks ago, there was a, I'll call him the captain of the ship. I don't remember his exact.

• 57:13Speaker 01

  Grant Crozier. Yeah.

• 57:14Anthony Pompliano?

  Yeah. He wrote the letter and he said, look, I'm basically stuck on an aircraft carrier with a bunch of soldiers and every single one of them is now a weapon against each other because they're just infecting each other and I don't have the tools to handle this.

• 57:25Speaker 01

  Right.

• 57:25Anthony Pompliano?

  Basically, let me become not ready for war. Let me actually

• 57:30Speaker 01

  Right.

• 57:30Anthony Pompliano?

  destabilize my ship so that I can protect my soldiers and we can preserve our readiness in the future. And I think that that is something just people didn't understand, people didn't think about. And when then when you see it happen, you're like, whoa, that could decimate an entire military force. It could decimate a lot of different.

• 57:49Speaker 01

  A French aircraft carrier got taken down, right? Um, and you know, like, basically, there's, there's a sense, I mean, you know, World War I started with cavalry. Do you know that, right? Like, actually, you're an army guy, you know more military history than I do, for sure. But, um, a lot of people don't know this, that's actually, you know, it started with horses and horse charges and ended with, you know, the first mechanized warfare, right? I have a feeling that, you know, COVID-19 may make the era of infantry, and even human-staffed, you know, boats and so on, go away. And it'll just all be a robot war. It's all drones, all drone ships, all drone everything, and it won't be human-staffed. Go ahead.

• 58:30Anthony Pompliano?

  Yeah, and I think part of this, this fits into the larger narrative, just like the virus has just served as an accelerant, right? And obviously, you know, if you had talked to people a year ago and said, hey, in the future, are we going to have more foot soldiers or more drones right on the battlefield? Most people would say, hey, it's going to get more automated, it's going to get more kind of autonomous and all that kind of stuff. Now, all of a sudden, it becomes, well, not only is that technology one component of it, but we actually may be rendered not as effective if there's things like this out there, right? I mean, you know, any sort of military unit that spends lots of time together, that's like the exact opposite thing you want to be doing for, you know, some sort of viral outbreak.

• 59:07Speaker 01

  Exactly, that's right. And, and especially given, you know, a few things. First is,

• 59:14Speaker 01

  the, I mean, like, it's, it's actually a pretty serious virus for at least some fraction of healthy people. Okay, we don't know the exact percentage, but, you know, for example, I posted that thing with that 45-year-old former football player, right? Or Mara Gay in the New York Times has written about her story, right? Um, you know, Kat Gleason, uh, is an entrepreneur, very fit. Alyssa Shafinsky, um, you know, Lauren Sugarman, like, these are folks who, you know, they've all tweeted about it and what have you. Uh, there's plenty more who, you know, I can't, you know, talk about, but I've, I've talked to a lot of COVID-19 patients because, you know, in tech, you know, there's a saying, right? You look at your dashboards and you talk to customers, right? There's a quantitative and a qualitative.

• 59:56Speaker 01

  And, and, you know, it's, people will often, I think, have a middlebrow dismissal of talking to customers or talking to patients, they'll be like, oh, that's anecdotal, that's, you know, N equals one. Oh, you know, blah, blah. And what they don't understand is...

• 1:00:15Speaker 01

  Every data collection starts, or not every, many data collection efforts start with a conversation like that. For example, you're looking at your dashboards and you talk to a customer and they say, "Oh, I wasn't able to log in." You're like, "Oh, no, really?" And then you go and you instrument that and you find 10% of your customers can't log in on mobile Safari or whatever, right? And you're like, "Oh my God," you're just blind to that, you're data blind because you didn't have the metric and you didn't have the metric because you hadn't talked to customers, right? The analog of that today is folks are looking at lethality stats, case fatality rates, and they're seeing correctly, and this is important,

• 1:00:54Speaker 01

  92% of deaths are for people over age 50 and 75% of hospitalizations are for people over age 50. And I've quoted those stats a lot and it's important to know those things. But the wrong conclusion is, "Okay, then that means, you know, I'm 30, so I've got nothing to worry about," right? Yeah, you may not die, right? That's true, but, and so relative to death, everything is mild, okay? However, relative to a cup of coffee in person, you may not want to risk, you know, a 10-week sickness and permanently decreased lung function. Right? So, so like it's where you set that bar and the problem is people are comparing it to death and they're thinking, "Oh, it's not a big deal."

• 1:01:38Speaker 01

  Of course, sure, you know, few things are a big deal relative to death, right? Go ahead, you're gonna say.

• 1:01:44Anthony Pompliano?

  Well, I was just gonna ask, so part of this, I think, and the thing that I personally struggle with the most and I think other people that I talk with, there's this element of like, how accurate is the data, right? And I had the whole conversation with, I don't think it is a fair question or a fair expectation to have 100% accuracy in the data in the middle of kind of the firestorm, right? It's kind of like you're at war and if you said to somebody, "How many bullets you got left?" Maybe somebody knows, but most people say, "Well, I got less than I had when I started," right? And they can kind of directionally, and so I think that for this.

• 1:02:20Speaker 01

  I can give you a good answer, I can give you my answer on that.

• 1:02:24Anthony Pompliano?

  Okay, so I just want to understand like how important you think like exact accuracy versus directional accuracy is during this?

• 1:02:32Speaker 01

  Yeah, so, so, um, I mean, it does depend, you know, if you're talking about the dosing of a drug, sometimes, you know, like, it actually can be sensitive, right? But, um, yeah, in general, I, you know, I, I think directional is a way to go because we're in kind of fog of war kind of situation. With that said, there's some very high signal events, right? Wuhan happened, Italy happened, NYC happened, right? Like, these are well documented, you know, they're like, basically, you know, in, in late January and early February, when I was fighting off the first just the flu folks, right? I would basically make the following point, which was December 1st, Wuhan was a normal city.

• 1:03:11Speaker 01

  By January 23rd, um, hospitals were overflowing, uh, and the, the city was shut down by the Chinese government, like, you know, you had, like, uh, you, you, you basically had the thing brought to a halt, right? Like, the sickness brought the city to a halt. That's not like a flu situation, right? And then the same thing, what's that? Fifty-three days. Yeah, exactly, fifty-three days, less than two months, you had a city basically brought to its knees, right? And, um, you know, that is, that was, that's not, that is simply, I mean, every, every single person in that city, you, there'd been the flu coming through before, right?

• 1:03:52Speaker 01

  So the flu thing, by the way, is, uh, it's one of these mind viruses that I think will end up killing, or it, what it does is it increases the number of people killed by Corona, because it disables the behavioral immune system. It, it's kind of like, you know, this thing has a stealth mode to it, where because the symptoms it produces are variable, not everybody melts down in a pool of blood like Ebola, right? Like Ebola, everyone's like, okay, that's gonna kill me, and you take extreme precaution on it, right? You know, or, or like, you know, something like nine eleven, right? Like, it was very obvious that things got blown up. It was very visible, but it's very tangible.

• 1:04:36Speaker 01

  This is invisible, and it's highly variable. And you're basing everything, I mean, you're not getting close to a Corona patient, right? You know, probably, right? You're at least not intentionally. So everything is like at a distance. And what I've realized is that if you don't trust, you know, experts or the press, and you know what? There's unfortunately, a lot of good reasons not to trust them because they've messed up a lot. Yet, on their hand, they're not, you know, even if they, I mean, this is, you know, I tweeted this the other day, but basically,

• 1:05:10Speaker 01

  expert, I mean, it's so obvious, right? But I'll just say this, it's like, you know, Democrats need to learn that experts aren't always right. Republicans need to learn that experts aren't always wrong. Libertarians need to learn that a state can succeed, and progressives need to learn that a state can fail. And those are all like, almost tautologically obvious kind of things. Yet, I think, given some of the responses to that, it pokes directly at a few blind spots there, right? Because once you move from the Manichean ideological zero or one hundred aspect, right?

• 1:05:45Speaker 01

  You say, yeah, okay, CDC did screw up, WHO did screw up. But they don't, not everything they publish is wrong. You have to be able to read it critically. And then that, now here's the rub. The rub is, most people cannot do technical diligence.

• 1:06:01Speaker 01

  If they can't do technical diligence, they can only do social diligence. And so they can only, like, trust something uncritically, or say it's all fake. So what's happened is, because our institute, and, and so one of the issues also is, just as our institutions have become more noticeably unreliable, they've thumped their chest harder to say how, how they are the truth. Great example, the New York Times literally runs an ad campaign about how it's the truth. When it published a bunch of bad reporting on Corona early on, like, including things that said, oh, it's all xenophobic and what have you, right? And, and then, you know, like, it actually had some just the flu journalism in there. And then, you know, two months later, it's saying it's not just the flu.

• 1:06:43Speaker 01

  Well, who would have given them that idea, right? You know, like, Fox did, and Rico did, and BuzzFeed did, and Washington Post Perspectives did, and Wired did, and, and so on. Who would have given that idea, right? And so, the

• 1:06:56Speaker 01

  The issue is that there'll be a real tragedy, which is folks who reasonably do not trust these institutions will find that they're not always wrong.

• 1:07:08Anthony Pompliano?

  So

• 1:07:08Speaker 01

  And yeah.

• 1:07:09Anthony Pompliano?

  And then Press on this component, right? Because you mentioned like the people in Michigan who show up with, you know, with guns and

• 1:07:17Speaker 01

  Right.

• 1:07:18Anthony Pompliano?

  Are basically saying, look, we don't want to agree to the lockdown. And there's this underlying sentiment in the United States specifically around freedom, the Constitution, just don't tell me what to do.

• 1:07:30Speaker 01

  Right.

• 1:07:32Anthony Pompliano?

  And that to me kind of feels like it bleeds into this idea of the countries or the governments there. They're not always wrong, but there is a some, you know, sense of distrust, or if everything goes to shit, I'm going to take my personal freedom and I can, you know, go solve my own problem. And I think you're seeing some of the extreme examples of that when people show up in Michigan, et cetera. But at what point do we get where that becomes not the extreme and starts to seep into the mainstream mentality and it leads to the ultimate failure of an institution, right? Or actually, it's not just the WHO being wrong. Sometimes people just point and say, they're always wrong. We no longer trust them.

• 1:08:14Speaker 01

  Unfortunately, it's already there where like this QAnon stuff and, you know, plandemic and what have you. I mean, that's some true crazy stuff, right? And, and, you know, it's not even, it's no longer rational. It's like arguing with like a religion or something because folks, they don't, they don't, they're not arguing in the way that I would talk to a scientist, which is here's X, here's Y. If A, then B, you know, that kind of thing. They're just, they're just on another planet, right? And the problem is

• 1:08:58Speaker 01

  People, people don't understand how much stuff is running, like, you know, to, to just keep society going, right? And if you, if you break all of that, you're taking it for granted, right? These armed protesters and so on, like, look, I understand that they're mad about the lockdowns and so on. I think that they're not really, but let's talk about that just for a second, okay? Just because it's, it's been turned to this binary thing and it's much more complicated than that. Okay. First, the best outcome would be like a New Zealand or Australia or Taiwan, you know, which is a democratic country that managed to control the virus.

• 1:09:43Speaker 01

  That's going to have healthier people and wealthier people in the long run. Okay? So it shows that A, it's possible, B, it's achievable, and C, it's achievable without becoming a police state and so on. Very, very important to know that that was possible. Okay? All right. So that was possible, but the US hasn't achieved it. So what does that mean? Okay. So when you've got an out of control virus and it's a serious virus, okay? So let's take that as a premise because folks want to, there's folks who want to say it's like just the flu or whatever, leave that aside for now. Okay. You've got an out of control, serious virus. That means, so if we give the analogy of an invasion, right?

• 1:10:26Speaker 01

  I'm going to give a different analogy, which is the power going out. Okay? So our society is explicitly premised on power, water, roads, and increasingly internet, right? And if the power goes out, you don't expect a restaurant to be able to serve the same number of customers. The oven doesn't work, for example. The lights don't go on, you know, all the type of stuff, right? Okay. If the water goes out, you don't expect them to serve customers. You expect the, you know, state, the utility to fix that. And then if it can't, you realize, okay, I need to get a generator. I need to get like a water purifier. And those, by the way, are inefficient, you know, when they're not done centrally.

• 1:11:11Speaker 01

  A lot of the stuff is much, much, much more efficient when it's done centrally. From a power standpoint, from a cost standpoint, having 10,000 generators is just, you know, those things aren't as good, right? Solar panels are different. I come back to that, but let's just say in general, okay.

• 1:11:27Speaker 01

  Plus a pain in the neck, right? It's something where it's a tax, not just on your money, but it's on your time to like not be able to plug something in and have it go on. Okay. So these are utilities that were explicitly premised on. But we are implicitly premised on the absence of serious infectious disease in the public square. Okay, I want to linger on this point. We are taking, or we until COVID-19 took for granted the public health triumphs of the 20th century. So I tweeted this, you know, but basically there's a review from 1976 of the conquest of infectious diseases like a bicentennial summary, right? It talked about all the measures and talking an enormous,

• 1:12:12Speaker 01

  it was, it was thought of at that time in 1976 as a massive social and technological achievement on par with like getting to the moon was controlling, you know, cholera, malaria, tuberculosis, all these infectious diseases in the United States. And, and this is before they had PCR. They didn't have PCR testing. They didn't have much of the technology we have today. They did a lot of it with, um,

• 1:12:38Speaker 01

  you know, draining of swamps and, you know, like sanitation, certainly vaccines and whatnot. But basically they, they took the problem seriously and they executed on, and they went and eradicated or controlled a lot of these diseases. And what's happened is over the last 50 years, people have just sort of forgotten that that was ever a thing. And so that's how we have society or many, many businesses are premised on the presence of this utility, which is public health. For example, conferences or concerts or, uh, you know, frankly, any large crowd of any kind, rallies, right? Or public, public transit, you know, um, restaurants, bars.

• 1:13:23Speaker 01

  All of these things with gatherings of large crowds are implicitly premised on the public health being, being present. So like the power going out, you can think of the health going out. So what happens? If the health has gone out. Just like it would be kind of crazy to say to a restaurant, power through and just serve your customers if the oven doesn't work. Well, if the health has gone out and the restaurant opens back up, a bunch of things happen. First, some significant fraction of customers stay home. Second, there's new costs that are imposed on the restaurant. I don't know if you saw California's reopening guidelines for restaurants, but they basically expect like Joe's Diner to implement bio-defense mode. Okay. All right. So if Joe's Diner, go ahead.

• 1:14:06Anthony Pompliano?

  I was gonna say that sounds very reasonable, right?

• 1:14:09Speaker 01

  Exactly. It's the state has failed, so it's a snow crash thing. All right. So, so number one, many customers will stay home, right? Number two, new costs are imposed on a place which is at its lowest point financially. It's just been two months out of revenue. It's like sucking, sucking wind. Business is down and now the state expects it to like, you know, basically build a clean room around a dining table, right? Okay. Number three, workers will get sick because the virus is uncontrolled, right? So you have much more in the way of random matches. Number four, you have PR and liability risk.

• 1:14:52Speaker 01

  The moment that like your restaurant or whatever is marked a hotspot because you know, there's a report, a news report of someone getting it, boom, business vanishes again, right? To show that that's not an exaggeration, in South Korea, 2,000 bars were shut down after one guy, you know, walked through five, did you see that?

• 1:15:13Anthony Pompliano?

  I did not.

• 1:15:14Speaker 01

  Okay. Yeah. So after South Korea opened up, okay, because they had gotten the virus under control, one COVID-19 guy walked into a bar and he went to a few, bar hopped for a night and managed to infect like all in the order of 40 to 70 people, the exact number is still being determined. 1,900 people had to be tested and traced and 2,000 bars were shut down.

• 1:15:37Anthony Pompliano?

  One guy.

• 1:15:38Speaker 01

  One guy.

• 1:15:39Anthony Pompliano?

  Yep.

• 1:15:40Speaker 01

  One guy, right? Now, I'm not, I'm not saying it's his fault or anything like that. He didn't know, I think he was asymptomatic or what have you, right? But this gives a sense of how the, when the health has gone out.

• 1:15:55Speaker 01

  A significant part of the economy is no longer economically feasible to the same extent. Right? Anything based on, you go ahead. So, so, and, and the lockdown doesn't, doesn't fix it, is my point, right? Unless you control the virus, you have less customers because people will social distance. You have like bio defense mode that you need to implement. If you don't implement it, then workers will get sick and people who come will get sick and there's constant PR and liability risk. So what do I think actually happens? Right? What I think happens is many restaurants will essentially, just take restaurants for a second. I'll go to other kinds of businesses. They will have to upload themselves and cloudify themselves. What do I mean by that?

• 1:16:39Speaker 01

  So the restaurant will shut down, the smart restaurant will shut down its physical facility, citing force majeure. Um, do cloud kitchens.com to set up a new backend, which is headless. And that can be, by the way, out in the middle of nowhere. It doesn't have to be a plum location. You don't need, you don't care about your tables. You don't care about your chairs, your decor. Number three, your storefront becomes purely digital. You're in an app. Uh, and number four, uh, you, um, basically are now just delivery only. Okay. So you've digitized yourself, you've, you've become headless, you cut off the front, right? The restaurant itself is shut down. By the way, this is another very important aspect. You could end the lockdowns.

• 1:17:22Speaker 01

  Well, that actually takes away leverage from businesses in an important way. Because now it's no longer an atypical time. If it's no longer atypical time, they have to pay all their rent and other kinds of things. But now they're at 25% of revenue. Right? So you, you've pushed them into this weird intermediate state, which is also kind of likely to kill them. And the, the fundamental thing I think is the end of lockdowns, folks, look, I, I, I understand. I understand where they're coming from. A lot of folks, I mean, I've never been blasé. If you look at my feed, even, even back to early March, when people were talking about shutting down South by Southwest and so on. Right? Um, it almost made me like throw up to think about, okay. You know, these people worked so hard on this for a whole year. I know how hard it is to organize something.

• 1:18:07Speaker 01

  And then people say, oh, just shut down your conference. Well, that's gonna, you know, that's, that's something where those guys are just taking it on the chin for a public good, you know, maybe the state could reimburse them or something I was thinking, you know, but now it's so widespread, you multiply that by a million, that's what's happening in America, right? So I totally understand where the end lockdown folks are coming from. The issue is that even though you might risk it for, to, to go back to work for your job,

• 1:18:35Speaker 01

  you're not going to risk it to, um, just go and like, get a drink at the bar. Or if you do, you may not, you may not do so forever, right? So let's talk MMT BTC, right? Uh, you know, it's funny, I, last year, or for a while, I've basically been talking about how the title fight of the 2020s will be MMT versus BTC. And, um, I think that's coming even faster than I expected. Uh, where we're definitely, you know, whether you call it MMT or not, we are definitely in the time of the unlimited government, right? And, you know, that's the opposite, by the way, of limited government, is unlimited government. So you have a government that has no limits on, you know, it can put people under house arrest effectively with lockdowns.

• 1:19:18Speaker 01

  It can change prices, it can, you know, shut down your business, it can ban flights, uh, it can print money, it's basically a wartime kind of government, right? The unlimited government.

• 1:19:30Speaker 01

  And, uh, the, the thing about MMT is it doesn't make any sense, in my view, if you, uh, like, in, in, in logical terms, okay? Um, and just to, to articulate what it is, for those folks who don't know what it is, um, modern monetary theory or MMT is, uh, there's, there's the

• 1:19:54Speaker 01

  observation that the state can print money, and that's often accompanied by the recommendation that the state should print money. Okay, and it should print money to pay for everything, and, uh, that there's no constraint on the state doing this, right? And you know, essentially, like if they're pressed on, oh, won't it cause inflation? They say, well, don't worry. If inflation happens and prices start going up, we'll just raise taxes to pull the money we just printed back out of the economy. Right now, the, the, just to show that I'm not making this up, there's a, there's a video that you might be able to link or what have you by.

• 1:20:37Speaker 01

  Uh, gosh, it's, I, I tweeted it a while back, uh, but it essentially shows the MMT folks treating the economy as like a tank of water. And they pump in water and they pull it out with taxes and so on. And this is a very naive view for many, many reasons. One of which is, uh, in a time of inflation, if you try to increase taxes, well, people, you know, they've already got lower consumption and they're going to resist that. Number two is, uh, the economy is not a tank of water. It's, it's adversarial, right? Like people will respond to incentives. And one of the things they'll do is they'll move their money into BTC or other cryptocurrencies and so on. And get out of the tank where, you know, you're, you're, you're printing all this money.

• 1:21:20Speaker 01

  And so MMT, you know, it can't be really understood in terms of what its people say. But it can be understood from a different sense, which is, I have a gun.

• 1:21:32Speaker 01

  Right? MMT is the language of the state, the total state, the unlimited state, which says, uh, the state can increase taxes to 99% and expropriate everything you have. Right? Because that's what that means, like, print all the money means dilute you down to zero. It's like being able to print trillions of shares on the cap table or what have you. Right? And so it means that I can print all this money and because it's currency within this realm, I can seize any asset of anybody. Uh, and induce in a quiet and stealth way, right? Because you don't see your percentage of, you know, market cap. Right? Now, one thing I want to be clear about, it's not as simple as just straight inflation, because there's huge deflation occurring in the economy as well.

• 1:22:15Speaker 01

  So we're probably going to get something where it's like pandemic deflation, as I mentioned, of all the, all the things people don't want, like concerts go to zero. In terms of price or drop substantially, all the things they do want rise in price. Okay. So, so in one corner is MMT, this language of the total state.

• 1:22:33Speaker 01

  In their corner is BTC, which is, you know, maybe the leader of the free world, right? I think that's provocative statement, but, you know, the US itself is sort of absent globally from the pandemic crisis. You know, it doesn't stand for freedom. It, or rather, I mean, maybe it does, but it's not like, you know, usually when there's like a flood in some country, you have Marines land and they, you know, hug babies and pose for a photo op. And, you know, it's good stuff, right? You know, like they're moving sandbags. You probably did some of those missions or whatever.

• 1:23:08Speaker 01

  And, and the US is completely absent from the global stage on this. They're not defending other countries because they've been invaded themselves, right? And so who's the leader of the free world? I think it's going to be Bitcoin. Bitcoin is the leader of the free world.

• 1:23:25Anthony Pompliano?

  What you're kind of talking about here is MMT is a complete state initiated process. You devalue the currency. You get people addicted to the state being the savior and having to drive all of the value. And literally, it's like a child and a mother, right? The mother has to take care of the child or the child doesn't, they kind of thrive. Bitcoin is some weird way, the 180 degree difference. And it is coming at it from in one area, you can print as much as you want. In this one, you can print zero, right? It is completely decentralized.

• 1:23:57Speaker 01

  That's right.

• 1:23:58Anthony Pompliano?

  And so I think a lot of people are wondering, okay, I buy the argument that those two worlds are going to coexist for some period of time. Can they coexist forever? Or do they meet in kind of that boxing match in the middle? And one has to knock the other out.

• 1:24:15Speaker 01

  So I think that where they, so the analogy I would give is, I think BTC ultimately wins.

• 1:24:25Speaker 01

  But it's going to be a giant fight between, I mean, like, you know, think about Facebook before 2016 and then Facebook afterwards. Afterwards, everybody's like, oh my God, this thing is actually. Extremely powerful and, and you know, all these attacks were launched and it's still standing, but it took more fire at that time than it ever had before. Once Bitcoin hits 100,000, I don't know when, I mean frankly, it could happen in a week from now, it could happen a year from now, it could happen in five years from now, or whatever, right? But eventually it will. Once it hits like 100,000 and you know Bitcoin being what it is, it could happen in a day after being nothing for a long time. When it does, and I have no doubt that it will eventually, simply because so much money is being printed,

• 1:25:10Speaker 01

  when it does, then you're going to get another level of state interest in it, in all senses of the term. Some states will actually adopt it as like a gold-like thing. Other states will try to stamp it out, you know, but as long as some states adopt it and the internet doesn't go down, Bitcoin will win.

• 1:25:31Anthony Pompliano?

  And that's it, folks. That was part one of the conversation with Balaji. We'll be releasing part two shortly. I hope you come back and listen to that one.

• 1:25:41Anthony Pompliano?

  All right, guys. I really appreciate you listening to that episode. I loved it and hopefully you found it valuable. Before I let you go, don't forget to go and subscribe on your favorite podcast channel to this podcast, leave a review, leave five stars, help me get more people listening to all this great information. If you also want, we publish these on YouTube in video format. You can just search my name, Anthony Pompliano, on YouTube and find the channel, subscribe there. I hope you guys are enjoying all this. I'm loving making it. And so we will see you on the next episode.