Why Bitcoin Wins No Matter What Congress Does | Anthony & Polina Pompliano

Anthony and Polina Pompliano discuss why socialism — both explicit and implicit — is the biggest threat to investor portfolios, and why the economy feels painful despite the stock market hitting all-time highs. We also discuss bitcoin, the Clarity Act, and Google's AI spending bet. =================== Arch Public is an agentic trading platform that automates investment strategies across Stocks, Commodities, ETFs and Crypto. Whether you’re rotating into AI & Gold, allocating to the S&P 500, or accumulating Bitcoin, Arch Public executes your plan 24/7 without ever taking custody of your assets or funds. Sign up today at https://www.archpublic.com, and start your FREE automated trading strategy! =================== Looking for a better place to trade? BloFin gives traders access to deep liquidity, advanced futures products for crypto AND TradFi assets, fast execution, and a clean, intuitive interface—all in one platform. To celebrate their partnership with us, they're giving away $100,000 in Deposit & Trade Rewards. Deposit, trade, and earn rewards based on your activity during the campaign. Check them out at ( https://partner.blofin.com/d/Pomp ). =================== BitcoinIRA: Buy, sell, and swap 80+ cryptocurrencies in your retirement account. Take 3 minutes to open your account & get connected to a team of IRA specialists that will guide you through every step of the process. Go to https://bitcoinira.com/pomp/ to earn up to $2,000 in rewards. =================== 0:00 - Intro0:52 - Interest rates, the Fed & the economy6:28 - Why socialism is the #1 threat to investors15:26 - Bitcoin price update & the Clarity Act23:56 - AI's business model & Google's big bet34:12 - Market sentiment, the cost-of-living crisis & gambling addiction41:37 - Closing message: be nice

• 0:00Speaker 00

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• 0:30Speaker 01

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• 0:59Speaker 04

  The number one threat to investors' portfolios over the next 20 years is socialism. And there's two types of socialism. There's explicit socialism and there's implicit. What's going on, guys? I have a very special treat for you. Polina Pompliano, my beautiful wife, she is back. For the last year, she has been like a ghost. You haven't seen her. She's been gone. It's because we had two beautiful little boys and now she is back from the maternity leave. And we're ready to get into it. There's a lot we gotta cover. You know me, if my wife's here, I got a hot take about something. And so we get into everything, from why socialism is a big threat to investors' portfolios, what's going on in the economy, why inflation is higher, why somebody, people actually are feeling pain in their everyday lives, but the stock market's at all-time highs.

• 1:43Speaker 04

  And of course, we talk about some of my life advice. Let me, you know, just talk about what are some of the things you should take away from this conversation. Here it is with Polina Pompliano. All right, Polina, what's the first topic?

• 1:54Speaker 05

  All right, we're talking interest rates. Citadel...

• 1:56Speaker 04

  Boring.

• 1:58Speaker 05

  You sound like our two-year-old. Citadel surprised investors on Monday with a report that they expect the Federal Reserve to raise interest rates this week. Do you think the market is underestimating what could happen?

• 2:11Speaker 04

  I do not think that interest rates are gonna be raised. I think that they're probably just gonna kick the can down the road by getting the inflation report where it showed that inflation was cooling. That means that the Fed is gonna have a much harder time going and raising interest rates. On top of that, if you look at all of the market probabilities, every single data point is showing that the Fed is less likely than they were previously to raise interest rates. And so will they cut? Probably not either. I think they're just gonna keep kicking the can down the road. It's what the Fed does best. They'll say, let us just wait for some more data. The Fed 100% wants to cut rates if they could, but the data's not there yet. And so I understand everyone wants to be contrarian. Everyone wants to be a genius and say, oh, they're gonna raise rates. That's the cool thing to say, but I just don't see that happening.

• 2:53Speaker 05

  But do you think that... So Trump said that he wants the Fed to lower rates. Do you think there's some political pressure there?

• 2:59Speaker 04

  There's definitely political pressure, and they should lower rates over time. The problem is that when the Iran war kicked off, you had this short-term energy spike in prices. And so at one point, 60% of the increase in inflation, month over month, was all due to energy. And so if all of a sudden, energy prices start to come back down, which they have, and then they've resurged again, then they've come back down, then they've resurged again, you get this like volatility in energy prices that make it really hard to predict where is inflation gonna be. So actually, one of the worst things you could do is you could start to tighten or increase interest rates. And when you do that, all of a sudden, you're doing it in the middle of the AI slowdown over the summer, headed into August and September. And at the same time, you get a spike in energy prices.

• 3:44Speaker 04

  Like, you could really start to mess with this. So we got a good thing going. Let the US economy keep doing its thing. You're seeing the earnings per share. You're seeing all of the future EPS is all growing at this incredible rate. Companies are more profitable today than they've ever been before. And so just let the economy do what it's supposed to be doing. Either leave rates where they are or cut them. But if you raise rates, you gotta be a first-class moron. And I don't think they're gonna do that.

• 4:11Speaker 05

  What assets do you think are mispriced if interest rates stay high for a long?

• 4:18Speaker 04

  Well, I think that almost every asset price in the world right now is misunderstood because one of two scenarios is gonna play out. Either we're gonna get sky-high inflation, like all the doomers are predicting, and in that case, then every asset price is gonna explode going forward. Or two is we're gonna get the deflationary or disinflationary forces that maybe Elon Musk is predicting, where you're gonna get this massive force that swallows the US economy from AI, robotics, deportations, and tariffs. And that means that actually, asset prices are gonna have a very hard time going forward. Now, what I think is the most likely scenario here is we do see some of the deflation from AI, robotics, et cetera. At the same time, the government is not gonna stop printing money. Like, these people have lost their minds. Republicans, Democrats, Biden, Trump...

• 5:02Speaker 05

  I saw that chart you tweeted.

• 5:03Speaker 04

  Bush, Obama, I don't care who you talk about. These people have lost their freaking minds. They are printing so much money. And some of it is structural. Like, I think that the Doge effort was a very valiant effort. They wanted to get costs down. One thing is for sure, is there is massive fraud going on in this country in terms of we're funding schools with no kids, we're funding adult daycares. I mean, you just go through this stuff. It's billions and billions of dollars in every single one of these cities that they continue to go to. At the same time, though, is they're also printing money to do all kinds of other crazy stuff as well. It's not just fraud. And so if you look at, well, how do you actually get the federal deficit to shrink? A huge reason why you have trouble doing that is because the national interest payments is so high.

• 5:47Speaker 04

  So if you have increasing size of the debt and interest rates stay high, then your national debt payments end up staying high, which causes you to take out more debt and just becomes this recursive, you know, situation. So the reason I explain that is like, it does not matter who the President of the United States is. They're going to print money. We now, it's structural. There's no changing that. The most valiant effort in American history to get costs under control failed.

• 6:11Speaker 05

  Yeah, but it's also like six months of that.

• 6:15Speaker 04

  People forget, like, it's like the American people in the mainstream conversation, they have amnesia. We had Doge inside of buildings trying to go figure out where to save money. And the politicians, you people forget, they were outside of the building banging on the door like idiots. Being like, get out of the building! You shouldn't be able to cut costs! Like, that's how big the grift in Washington DC is. The second they said, we're not gonna let you spend money without knowing where it's going or making sure that it's actually being used effectively, the politicians were protesting. They showed up and were banging on the door like little kids.

• 6:52Speaker 05

  But I think that that was less about Doge and more that it was spearheaded by Elon Musk. I think if it was Mom Donnie in those buildings, they'd be fine with it.

• 7:02Speaker 04

  Of course, because Mom Donnie would never be able to cut the grift. And so therefore, they don't got anything to worry about. They'd be like, yeah, go play the theater kid. But instead, Elon Musk shows up and everyone's like, oh, wait a minute. This dude actually can get shit done. He's serious. He's actually going to be able to stop this spending. And so that's why they show up and they protest. But it's just, if you go and you look at all of this... I recently wrote this piece. This is probably the most important thing that I've written. No one will think that, but in my mind, it is. The number one threat to investors' portfolios over the next 20 years is socialism. And there's two types of socialism. There's explicit socialism and there's implicit. Explicit socialism is like what we're seeing with Mom Donnie in New York City. We're gonna have five city-run grocery stores and the rule is gonna be you have to sell all of the goods for 30% less than the market rate.

• 7:47Speaker 04

  Well, the number one thing that is gonna happen is that he is gonna have to ration food. Because what do you do? If you sell everything for 30% less, there's gonna be a line around the corner. So there's only so much food you can put in the grocery store. How do you decide who gets it? By sex, by race, by creed, by some other socialist construct that they come up with that's completely untethered from reality? They're gonna have to figure out how to ration the food. That's gonna be a absolute cinema when they have to decide who gets the food and who doesn't. The second thing is, there's gonna be a bunch of people. I've already seen them tweeting about it. They're like, when this grocery store opens, I'm gonna be there on opening day. I'm gonna buy as much food as I can and I'm gonna go sell it at the market rate. Are they gonna outlaw people from buying the food? Are they gonna outlaw them from reselling the food? Where does it stop? So what you have is you have explicit socialism,

• 8:32Speaker 04

  which we know doesn't work. Ask all of the Venezuelan immigrants, the Russian immigrants, et cetera, who've come here, who literally left countries where there was no food on the shelves to come to America.

• 8:40Speaker 05

  We should have my dad call in.

• 8:42Speaker 04

  Your dad calling in would be absolute circus.

• 8:45Speaker 05

  He was in breadlines when I was born.

• 8:47Speaker 04

  It's crazy. It's crazy. These people are idiots. They don't study history and they... All they're doing is they're saying what sounds good, but the only way to sell something for 30% less than what its actually market rate is is that the government takes the loss.

• 8:58Speaker 05

  I'm sure that they will have some sort of like, here's who you have to be in order to even go to the grocery... I don't know.

• 9:05Speaker 04

  Okay, so they're gonna discriminate.

• 9:07Speaker 05

  Of course.

• 9:08Speaker 04

  No, but this is, this is, it goes back to like, in order to fulfill the socialist promise, you have to discriminate. And what they will do is they will make a moral case as to why the discrimination is okay. But if you're saying that grocery prices are too high, then why can't all New Yorkers go to the grocery store?

• 9:25Speaker 04

  That would make sense.

• 9:26Speaker 05

  But wouldn't those grocery stores put the regular grocery stores out of business?

• 9:30Speaker 04

  Well, first of all, these grocery stores are gonna be disaster. If you've ever been to anything that the government runs, there's no way they're gonna run it efficiently. And so the lines are gonna be through, you know, all the way around the corner. People are not gonna wanna go do this. But it's kinda like Yogi Berra says, nobody ever goes there anymore because it's too busy. Right? So the whole thing is that, yes, there's gonna be a ton of people who go there, but it's not gonna be able to service enough people to put the other ones completely out of business. What it is going to do, though, is gonna distort market prices. And they're gonna come under pressure. And so that's basically this guy's whole plan, is we're gonna distort market prices. And what it's gonna do is it's gonna make food everywhere else go up more in price. The second thing is he's doing it with the rent freeze. In what world do you say to landlords, your costs are increasing, but you can't raise your revenue?

• 10:14Speaker 05

  Right.

• 10:14Speaker 04

  Guess what's gonna happen? People are gonna say, okay, well, I can't invest in the building. I can't upgrade it. I can't make the changes that I need to make because I'm literally gonna start losing money, which is all part of the plan. Because guess what? Then they have to basically vomit those buildings up. They have to turn them over to lenders. They have to do all this stuff. And it ends up in the hands of the people who aren't trying to run economic, uh, kinda profitable buildings. Instead, these people will just turn them into these socialist dreams. So that's explicit socialism. There's also implicit socialism. So everyone who just heard all that and got upset, don't worry, I got something coming for you. And now let's slip around to the other side. Implicit socialism is the government printing money and basically handing it out like candy on Halloween. These people are literally saying, where can we stuff it?

• 10:55Speaker 04

  They are persistent bid in the financial markets, which means that that's helping investors, not the average person. It is also the social programs where they're handing out all this money to daycares and, you know, all this other kinda fraudulent type stuff. The third thing is that they are then giving all kinds of pork to various politicians like kinda side quest. And so if you go and you read these, uh, different bills, it's crazy what's in there. I will never forget in 2020, when they passed that bill and they literally were paying people to smoke weed and then drive to see what the effects are. And the reason I will never forget that is because we had thousands of people in the audience who were willing to do it for free. And so it comes back to this idea, the government's really good at wasting money.

• 11:40Speaker 04

  And socialism can show up in multiple forms. The explicit form is the thing that everyone fears and talks about and understands from history. The implicit form, we have in this country as well. There is socialism for rich people as much as there is socialism for people who don't have a lot of money. Now, the socialism for rich people comes in a different form and a different factor. How do I know? I've got a ton of friends who they all are beneficiaries of it. They ain't complaining about that. They're not calling it socialism, but it's a different form of socialism. And so ultimately, where I believe that we should end up is we should end up with a very small government. The government should be focused on very specific things. They should be focused on helping the United States citizen. And I think that everything else, the private sector for the most part can go and they can handle. And if you go and you look at these charts that show when the government gets involved,

• 12:25Speaker 04

  healthcare, food, transportation, et cetera, prices go up. When private sector gets involved, they go down. And so ultimately, I think that is going to be the thing that we are not gonna see in this country. Today's episode is brought to you by Bitcoin IRA. Are you a crypto investor with a retirement account but don't have any crypto in that retirement account? Then listen up, this message is for you. Bitcoin IRA is revolutionizing the way Americans save for retirement. They're helping smart investors diversify their savings with access to over 80 cryptocurrencies. With world-class customer service, military-grade encryption, and a vertically-integrated licensed trust company, it's no wonder more than 200,000 Americans trust Bitcoin IRA to secure their financial future. Getting started is quick and easy. It takes just three minutes to open an account.

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• 13:46Speaker 05

  I will say, though, on an optimistic, optimistic note, um, I think this situation is gonna allow for a lot of innovators to come into the market and maybe...

• 13:58Speaker 04

  Which situation, the Mom Donnie thing?

• 13:59Speaker 05

  Yeah.

• 14:00Speaker 04

  I mean, maybe, but just think for a second, let's, let's take two different futures and compare them. We have Mom Donnie, which is saying a government-run grocery store, which is gonna sell things below the market value. The government's gonna fund it and lose money, $70 million, whatever. He's saying it's gonna take $30 million to build one grocery store.

• 14:17Speaker 05

  Oh.

• 14:18Speaker 04

  What's he gonna do? Take $27 million, put it in his pocket, and the other $3 million, build the grocery store? Like, you, you couldn't spend $30 million to build a grocery store if you tried. So even with the unions and all the craziness in New York City, $30 million is insane. The average grocery store costs like $2 to $3 million to build. So you're saying you're going to more than 10x the cost to build the grocery store? There's fraud somewhere in there, has to be. The second thing is compare that to the vision that Travis Kalanick, the Uber founder, has. He recently came out of stealth with a company called Adams. And what he's talking about is using robotics to be able to make a healthy meal that is faster, cheaper, and better quality than what you could make at home.

• 15:00Speaker 04

  So if he can make a meal that is better and cheaper than what you could actually do by going to the grocery store, buying the food, and making it yourself, that is deflationary. The cost of the food is going to come down. I have way more confidence in Adams and Travis getting the cost of food down than I do in Mayor Mom Donnie, who's never managed people, never had a real job, can't do anything, and just continues to regurgitate Nicholas Maduro's talking points and somehow thinks that he's gonna end up with a different example or a different outcome of that experiment. So that's a perfect example. You have public sector and private sector all latched on, food is expensive. Who are you gonna bet on? I'll put my money on the private sector all day long compared to the public sector.

• 15:45Speaker 04

  And I can't wait. Let, go build the grocery stores. I cannot wait. You know why? Because this is going to be a disaster. And every single grocery store, they should plaster his face right on the front door. Make sure everyone knows this is his idea. Because when they fail, when they go up in the theoretical flames, like, you know, the meme where the guy's sitting there, like, everything's fine and everything's burning around him, Mom Donnie's face should just be right on the front door.

• 16:08Speaker 05

  This will be a hallmark thing of his platform.

• 16:12Speaker 04

  If he believed in it, he'd call Mom Donnie Martz.

• 16:14Speaker 05

  I'm, I'm sure.

• 16:16Speaker 04

  That's what he should call Mom Donnie Martz. Call him Mom Donnie Martz, put your name on it, and let's see how it goes.

• 16:21Speaker 05

  I mean, okay, ready?

• 16:23Speaker 04

  You like that one?

• 16:24Speaker 05

  Yeah, yeah, yeah. Um, Bitcoin's price...

• 16:27Speaker 04

  I thought it was on top of my head.

• 16:27Speaker 05

  I can tell. Bitcoin's price fell to 63,000 as of this recording. It seems that most attention is on the looming Clarity Act vote in DC. Tell us what the Clarity Act vote is, why is it important, what's gonna happen?

• 16:44Speaker 04

  People gonna get mad. Bitcoin doesn't need the Clarity Act because Bitcoin's already got clarity. Bitcoin doesn't need the Clarity Act. This has nothing to do with Bitcoin. Bitcoin is not a security. Bitcoin is held by tens of millions of people, hundreds of millions of people around the world. Bitcoin's good.

• 16:59Speaker 05

  Okay, but your friend...

• 17:00Speaker 04

  Bitcoin don't care about the politicians.

• 17:01Speaker 05

  Your friend Jordi Visser said that Bitcoin does need the Clarity Act to pass to get positive momentum back to the crypto market and reach all traders.

• 17:09Speaker 04

  Bitcoin, if the Clarity Act never passes, will go back to all-time highs. Will the Clarity Act passing help Bitcoin go back faster? Sure. Because there will be a bunch of enthusiasm from people who don't understand Bitcoin, like the politicians and the, uh, Wall Streeters, et cetera. But Bitcoin itself is going to be just fine without the Clarity Act. Because Bitcoin is the thing in the crypto industry that has the most clarity. Everyone agrees, there is no debate. It is not a security. It is there as a store of value. It is being used by hundreds of millions of people around the world to protect their purchasing power. Now, if you go and you look at all the other areas, what is the Clarity Act really about? Stable coins, yield, and all these different aspects of the industry. But it's not even so much over should there be yield or should there not?

• 17:55Speaker 04

  What it's really about is who gets to participate in the upside? Because one of the big debates is let's take stablecoin yield. Should crypto companies be able to give yield or should that only be available to banks? They both agree it's better for the consumer for them to get yield, obviously. What they're disagreeing on, who gets to do it? Who gets to profit off of it? And so what you have is stablecoins and yield is gonna be a thing regardless of clarity or not. It's just who gets to be the boss? Who gets to be the extractor of value in that scenario? And so again, as I say, I personally, I don't care about the Clarity Act. I know a lot of people who do. Good for them. I'm glad that the crypto industry has representation in Washington DC that is fighting for the rights of the users and the companies and all this stuff.

• 18:40Speaker 04

  But for me personally, I hope Bitcoin. Bitcoin's fine. Bitcoin doesn't need the clarity.

• 18:45Speaker 05

  What happens if it doesn't pass?

• 18:48Speaker 04

  Well, it's already happened multiple times.

• 18:49Speaker 05

  Yeah.

• 18:50Speaker 04

  Guess what happened? Everyone woke up the next day. They ate their breakfast. They put on their pants one leg at a time. They drank some water and they went to work.

• 18:56Speaker 05

  So you don't think, you think that regulatory clarity is not super important?

• 19:04Speaker 04

  We have regulatory clarity. That's the whole, that's my whole point. We have regulatory clarity. We know what are the different securities and not securities and all this stuff. What we are arguing over is who gets to profit? And guess what? The banks are digging their heels in and saying, if you want to act like a bank, you gotta be a bank. And then you've got the people in the crypto industry that are saying, you suck. You guys suck at serving these consumers. You're boxing them out. You are just debanking people. You are kicking them out of your institutions. And it is better for the consumer to be able to get yield. And so we should be able to offer that, just like you should be able to offer that. By the way, they're both right. Is if you go and you look at the banking rules, they're very specific rules that the banks are saying, hey, everyone should have to adhere to these.

• 19:46Speaker 04

  If you want to be a bank, then you gotta get to the regulatory clarity as a bank. Okay, well, vice versa, the crypto people are like, we've been trying to be a bank, but you won't let us be a bank. So the consumer is suffering because you guys are playing this insider game. You're pulling up the ladder behind you. Both sides are right, but again, it goes back to, my guess is the people's voice will always be heard and the people don't give a shit about the banks.

• 20:09Speaker 05

  Scaramucci said that if it doesn't pass, he fears that people like Brian Armstrong of Coinbase will start building businesses offshore. Do you agree with that?

• 20:18Speaker 04

  Of course. That's the whole story of crypto is these people.

• 20:21Speaker 05

  So it does really matter? I mean, that.

• 20:23Speaker 04

  No, doesn't matter. They're gonna go build it offshore. It's still gonna get built. Like, the only thing the Clarity Act can do is shoot the United States in the foot.

• 20:32Speaker 05

  Right, that's what I mean.

• 20:33Speaker 04

  Yeah, well, it matters to the United States, of course, but in terms of.

• 20:37Speaker 05

  Bitcoin specifically.

• 20:38Speaker 04

  For Bitcoin or for users around the world, like, people are going to get served. Whether it is done by a US-regulated financial institution, or it is done by an international-regulated financial institution, or it is done by an unregulated financial institution. The voice of the people will be heard. We have the internet now. It is completely open. And people are going to end up getting this. And by the way, guess where? Almost all of the innovation in finance lately has come from, from the crypto industry. Perps from the crypto industry, stablecoins from the crypto industry, tokenized securities from the crypto industry, Bitcoin from the crypto industry. We could go through this all day long. We could play this game all day. The legacy banks and the legacy players in the traditional financial system, they ain't building nothing new.

• 21:24Speaker 04

  Nothing.

• 21:25Speaker 05

  Of course, but this is the next new thing and they gotta profit.

• 21:28Speaker 04

  By the way, that should be their business model. They have the luxury of not having to take the risk of innovating. They can wait for somebody else to do it, make sure that it works. And then they've got so much money in the distribution and the compliance departments and all the lawyers and stuff. And then they could say, that's a cute little idea you have. Let's take it and let's roll it out to our user base. So both sides are doing what they should do. The innovators and the upstarts, they're the ones who have to pioneer. They're the ones who have to go and innovate. They're the ones who have to go and create this new stuff, because if they don't innovate, they don't get a competitive advantage. But the big banks or the big institutions, they don't need to take that risk. Their whole game is risk mitigation and just be good at distribution. So they let the innovators innovate and then they just play copycat. Great.

• 22:12Speaker 04

  Let the market play out how it's supposed to play out. But this idea that some piece of legislation is ultimately going to kill the entire industry or make it, you know, the utopia that everyone wants it to be. It's just not that black and white. It's much more in the gray.

• 22:25Speaker 05

  I'm gonna start a government-owned crypto exchange?

• 22:28Speaker 04

  That's fine. You could do that. And guess what it'll happen? The same thing that everything else happens with the government is it'll fail.

• 22:35Speaker 05

  All right, you are on one today. Okay.

• 22:37Speaker 04

  Because there's a bunch of people who all of a sudden are, they tend to, and by the way, it's left, right, even independents. Somehow, the government, everyone wants to go cry to the government. Look at the AI industry. We have American companies that have created these large language models. Modern day miracle that they were able to create these things. The way they did it, nobody is confused. They took a bunch of information that was created by other people. They trained their models on it. And now they're offering it. It's one of the best business models in the world for some period of time. They're selling intelligence. Who doesn't want to pay them for that? But the second that someone says, that's a cute little business you got over there. That's a high-margin business. Jeff Bezos said, your margin is my opportunity.

• 23:19Speaker 04

  And these Chinese models and these Chinese companies said, wouldn't it be crazy if we let you be the pioneers? Go spend all that time, energy, money and compute to train those models? And then we were able to just distill them and basically come up with a much cheaper, much faster, better performance model that didn't require us to spend all that time, money, energy and compute? Of course, the market's interested in that. So what do these companies do? Rather than compete in the market and say, we can build a better model. We can go and learn from what they did to us. We can go and win this. We can out-innovate them. They run to the US government, they start crying. They stole our model, blah, blah, blah. By the way, if they stole code, like actual IP theft,

• 24:02Speaker 04

  that is a different story than if they distilled the model in terms of, they basically just drafted off of that. Because the way that OpenAI, Anthropic, and other companies, they distilled off of original IP. So you can't do something and then get mad when somebody does it to you. But that's very different if there's actual IP theft in terms of somebody lifted the code. If somebody went and actually stole that. We don't yet know. I have heard rumors that that is actually part of the involvement as well. I would completely change my tune if we get evidence that that's what's happened. But so far, the only thing that has been accused publicly is, oh, they distilled our model. And we don't like that because it's causing too much competition for us. My guess is the US government is going to not be cool with the IP theft

• 24:45Speaker 04

  or the specific, kind of like lifting of code or stealing of trade secrets. But they're not going to get involved if it's just distillation and kind of global competition.

• 24:56Speaker 05

  Speaking of AI, Google reportedly lost 5.9 billion in Q2, driven by massive capital expenditures on AI infrastructure. This marks the first time in the company's public history that its quarterly free cash flow turned negative.

• 25:12Speaker 04

  I got a lot of thoughts.

• 25:13Speaker 05

  What are your thoughts?

• 25:15Speaker 04

  On one hand, they're betting the farm. On the other hand, they got a big farm. Right? So you think if they're betting the farm, this is very intentional, that they are making these very large capex bets. The reason why they're doing that is because they believe it's gonna pay off in ROI. I think that Sergey Brin, if I remember correctly, said some version of, I would rather go broke than lose the AI race. Right?

• 25:37Speaker 05

  I mean.

• 25:38Speaker 04

  So they are trying to invest as much as possible, including being free cash flow negative. On the other hand, I forget the exact number on their balance sheet, but they could do this for a long time. They could lose $5 billion per month or per quarter. And they could probably do that for years before they ran out of money. So, are they betting the farm? Yes. It's just a really big farm.

• 26:04Speaker 05

  How do you distinguish between necessary capital investment and spending versus reckless capital destruction?

• 26:12Speaker 04

  Nobody knows.

• 26:13Speaker 05

  Do you think, do you think that the stock is down because the market can't really value these businesses five years from now?

• 26:18Speaker 04

  Stock is down because every boomer is running around yelling and screaming about how AI is a bubble. And, you know, they don't see the value of it. Capex ROI is never gonna be there, blah, blah, blah, blah, blah, blah, whatever. Right? It's the same reason why they were yelling that Amazon is never gonna be valuable or name, name whatever theme. What we know is that when there's a technology innovation that leads to a massive boom, you need companies to invest in it. Historically, there are some cycles where it has been a bad bet. Remember clean energy in the 2000s? Right? That was bad. People lost a lot of money. But for the most part.

• 26:50Speaker 05

  Because sometimes when you bet the whole farm.

• 26:52Speaker 04

  Yeah, again, they just got a really big farm, right? And so they could do years and years and years of this. The reason why I believe that they are making such a big capex bet is because they are seeing growth in so many of their other businesses based on the use of AI. And so Jordi Vissar walked me through this and I thought he had a pretty good way of explaining it of just like, if you're growing YouTube or some of your other business lines, double-digit percentages, you're like, hey, this stuff's really valuable. Well, it's valuable for us. It's gonna be valuable for everybody else. We should go invest in being the infrastructure provider of this, right? And so I just think that there may be, I don't know, two to four quarters where everyone's all worried about, oh, it's, you know, are they gonna get the ROI or not, blah, blah, blah, whatever.

• 27:38Speaker 04

  What's gonna end up happening is they're gonna get the ROI. My guess is they may even get a bigger ROI than people are expecting. And these companies that are making these investments are gonna look like geniuses in hindsight. Today's episode is brought to you by Blowfin. If you're actively trading crypto, then you already know the platform matters. Execution speed matters, liquidity matters, and reliability during volatile markets, that definitely matters. That's why more traders are starting to use Blowfin. They've built a trading platform focused on fast execution, deep liquidity, advanced futures products, and a really, really clean user experience. They don't overcomplicate things. You can trade hundreds of spot and perpetual pairs. They integrate directly with TradingView, and they've built a platform for both active traders and people who are just getting started. Security is a major focus, obviously. Assets are custody with fire blocks, they provide proof of reserves,

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• 28:51Speaker 05

  If I'm an independent investor watching this, why do I care?

• 28:56Speaker 04

  Well, you should ask CFO Sylvia first, obviously. I see plug. But you care because if you're an investor in Google, the share price is going down.

• 29:05Speaker 05

  Right.

• 29:05Speaker 04

  So you're like, hey, wait a minute, did I make a mistake? Especially if you bought it recently. You're like, am I catching a falling knife? Is Google a zero?

• 29:12Speaker 05

  Wow.

• 29:13Speaker 04

  Now, I don't think Google's zero, I don't think many people think it's a zero. But people do wanna understand, okay, if the stock price is compressing, should I be buying more? Should I be worried? Should I be selling? What should I do? And this is the hard part about investing, is people think that, you know, if a company, let's say, compounds at, I don't know, 15 or 20% a year, year after year after year, they just think it's like this like straight line up into the right. That's not how it works. Company goes up 30, 40%, it draws down 20, 30%, it goes up, it comes down, right? There's all this volatility to it. We're in a drawdown. So there's some people who are panicking. There's 100% people who, they bought Google, it went down, they panicked, and they sold.

• 29:54Speaker 04

  There's a bunch of people, I think Bill Ackman, in the last two years, he bought, uh, put on a Google position, stock drew down, he gets more interested. He's like, this is a good company, but now it is more fairly valued than it was just, you know, three or four months ago, and so then he goes and he buys up. And so it just comes back to like, how disciplined are you? How much work have you done on the individual business? What is your perspective on that business? What is your timeframe? Are you trying to, you know, put on a trade for a week? Or are you trying to hold the business for the next 10 years? Very different, you know, kind of optimizations. But anyone who thinks that Google's going out of business makes no sense. But I do think that they're betting the farm on AI, and they're making, obviously, huge, multi-billion dollar investments.

• 30:37Speaker 05

  Another good thing to ask CFO Sylvia, which

• 30:40Speaker 04

  Oh, is that a plug?

• 30:41Speaker 05

  I will ask you instead.

• 30:43Speaker 04

  Damn.

• 30:43Speaker 05

  But what milestones or trends or something should investors look for when they are making these AI investments to make sure it's paying off?

• 30:54Speaker 04

  Well, the single most important thing, in my opinion, is where do you wanna play in the stack? And what I think has basically happened is there's been a separation into a couple of different groups of people. The first is, you get some folks who believe in something called the FAT AI model thesis. I came up with that term.

• 31:13Speaker 05

  FAT, PHAT?

• 31:15Speaker 04

  No, FAT. Because in crypto, there used to be something called the FAT protocol thesis. And the FAT protocol thesis, which I was very loud about, it's probably not gonna be true. The FAT model, FAT protocol thesis basically was the idea that the protocol is where all the value is going to accrue.

• 31:32Speaker 05

  This is like the, the

• 31:33Speaker 04

  So Ethereum.

• 31:34Speaker 05

  Picks and shovels.

• 31:35Speaker 04

  Not even picks and shovels. This is like the actual protocol itself, right? Is that's where all value is going to accrue, that you weren't going to get value at the application layer or the various infrastructure pillars are all gonna be at the protocol layer. As you already pointed out in 30 seconds of thinking about this, well, what about all these other businesses that are in the stack? Obviously, they're gonna have value too. So the FAT protocol thesis is wrong, and end up being wrong. The AI investors are about to learn the same lesson that the crypto investors already learned, which is that the FAT AI model thesis is wrong as well. FAT AI model thesis is basically the idea that all value accrues to the model providers. But instead, what we're already seeing is that you're gonna get an application layer, you're gonna get a compute layer, you're gonna get a model layer,

• 32:17Speaker 04

  you're gonna get this kind of like fragmentation, and there's going to be a value that accrues to each layer of that stack. And so the FAT AI model thesis is wrong as well.

• 32:27Speaker 05

  Is what's happening in AI right now reminding you of the earlier days of Bitcoin?

• 32:33Speaker 04

  Yeah, and for maybe reasons people don't realize, but I think the people who are into AI, they're right, which is probably the single most important part of the entire analysis, is AI is gonna be a thing. If you believe that, you're gonna do better than the people who don't. Bitcoin, same thing. Didn't matter when you bought, how much you bought, you know, if you bought one time, dollar cost average. If you believed in Bitcoin and you bought Bitcoin, regardless of how you did it, up until now, you pretty much have done very, very well. And so being right about the macro trend is the single most important thing. The second thing is, what is the greatest threat to Bitcoin 10 years ago? PR. People hated it. It had to be resilient enough to weather the storm from all the people who said it was for criminals

• 33:15Speaker 04

  and drug dealers, and the government should ban it and put people in jail, and you know, all this stuff. Bitcoiners are the worst communication specialists in the world.

• 33:24Speaker 05

  Those were the Wild, Wild West days.

• 33:26Speaker 04

  We are amazing at memes, we are horrible at mainstream communication. And so the AI industry is going through the same thing. The AI, if you listen to some of these people in the AI industry talk, you're like, there is, I don't trust that person to watch my kid for five minutes. Like, that person just seems off their rocker. They're out there saying all kinds of insane things. And the way they communicate and their message and all this stuff is horrible. They have a communication problem. Now, you know who does not have a communication problem? Interestingly, is Meta or Facebook. If you go look at some of the recent ads they've started to publish, they basically have an entire ad campaign saying they're betting on humans.

• 34:09Speaker 05

  Is it because they have so much data and they know what works and

• 34:12Speaker 04

  Well, I have insight into why they're probably doing this, but their campaign is all about, we're betting on humans. And that's why they're augmenting the humans with AI. Whereas their competitors are like, we're gonna wipe out all of humanity's jobs and blah, blah, blah, you know? And then they're doing, they're like tweaking while they're saying it, right? So if you think about that, that's like two very different things. When you hear a company say, I'm betting on humans, I'm a human, I'm on team human, I like that idea, versus, we're gonna take over the world, we have a nuclear weapon, you know, like, that, you guys

• 34:45Speaker 05

  I mean, yeah, it is, it is very similar. I remember some of the early Bitcoin conferences you and I used to go to. I mean, it was all over the place, and I was like, how is this person intelligent and building a business? And you'd be like, oh, that's Crypto Panda Whale on Twitter, he knows what he's doing. And I'm like, it's crazy, it was crazy town.

• 35:04Speaker 04

  There was a lot of characters back then.

• 35:06Speaker 05

  Where did the characters go? I'm sure they're still out there.

• 35:10Speaker 04

  They're still being characters.

• 35:11Speaker 05

  Um, okay, our final topic for today is market sentiment remains negative despite the market doing really well and being near all-time highs. Why do you think that people are so pessimistic?

• 35:26Speaker 04

  Both are true.

• 35:27Speaker 05

  Why?

• 35:27Speaker 04

  The market is doing well, but everything's too expensive. The market is doing well, and the government keeps destroying purchasing power. The market is doing well, people live in certain cities and they're scared to walk down the street because they don't know if they're gonna be safe or not. The market's doing well, and then you get online and you see that there's fraud going on everywhere. The market's doing well, and then the mayor of New York City is saying that he's gonna run government's grocery stores. So you look at this and you say to yourself, both things are true. The market is going up and the market is doing well. At the same time, people go to the gas pump, and they're like, yo, the war in Iran is causing energy prices to go up. I try to fill up my truck and it's a hundred bucks. What the hell?

• 36:07Speaker 04

  I don't care what the stock market's doing, the fact that Walmart's stock went up ain't helping me pay for gas. My grocery bill is not coming down. And so people are pessimistic because their lived experience on a day-to-day basis is the total aggregate increase in price over the last five years. They can remember, I got a paycheck, I could pay my rent and buy food for two weeks, and then the other paycheck, I would go and I'd buy food for two weeks and store the rest away in my savings. And now they're like, wait a minute, where's all my money going? I'm buying the same stuff, but I don't have as much money left over to put in my savings. What is happening here? Or then you start looking at things like childcare.

• 36:50Speaker 04

  I did a whole video about it. It's crazy. The average childcare in America now, if I remember the data correctly, it's like $30,000.

• 36:58Speaker 05

  That's like my college tuition at a state school.

• 37:02Speaker 04

  That is insane. And I walked through the math. If you get paid $60,000 a year, and you pay taxes, let's just say you pay 20K in taxes, ballpark, it means you have $40,000 left. You pay childcare for one child, that's $30,000. You have $10,000 left. How was somebody supposed to make that work? Oh, by the way, that $10,000 that you have left over, let's say that you have no other income, no other help, etc. How do you live on $10,000? Impossible. But let's just say that you do have other help. At the same time that your wages are not growing substantially, you're getting exploding costs. And again, I go back, both sides of the aisle are to blame for this stuff. And I was very excited about Doge's ability to cut government spending.

• 37:44Speaker 04

  What I realized is that nobody in Washington DC, outside that very small group that went in there and tried to do it, nobody's incentivized for the gravy train to stop. There ain't nobody who's going to be able to get it under control. Republicans, Democrats, the system is rigged in a way where they are going to print money. And because they're going to print money, the living expenses of the everyday American is going to explode higher. And so the only thing that the average American can do is to try to use their investment portfolio to outperform that inflation. And that is incredibly difficult to do. That is why you have gambling culture. That is why you have people who are going and buying all kinds of crazy meme stocks, doing, you know, betting on what color someone's tie is going to be, or how long their press conference is going to be.

• 38:29Speaker 04

  All this stuff is because we are destroying the purchasing power of the US dollar, and it is leading to the degradation of society. And when you get the degradation of society and the loss of hope, you end up in a situation where you've got people who say, why don't I put it all on black?

• 38:45Speaker 05

  I did just read this article that said, "Risk of gambling addiction reaches all-time high. The rise in sports betting apps and online casinos has also led to an increase."

• 38:55Speaker 04

  I ain't saying that I could see the future, but Nothing's Off the Table podcast, y'all should go listen to it.

• 38:59Speaker 05

  See how I like teed you up?

• 39:00Speaker 04

  Nothing's Off the Table podcast, I, plus our team, we are minority shareholders in a brand-new media platform called Nothing's Off the Table. It's a guy, his name is LJ. LJ got a wild story. If you go and you look at LJ's story, he, around 18 years old, his best friend murdered someone, murdered, like with a capital M, and confessed to him he had to testify at the trial. Then LJ went, you know, he had a little party, bender, if you will, bender being like five years, alcohol, drugs, etc. And then he started gambling, and he lost a ton of money. If I remember correctly, the numbers, I think he lost like $10 million personally, that he was making in a business, and he was taking it and basically going and gambling it all away.

• 39:44Speaker 04

  And now he's sober, he is helping people recover from alcohol and drug addiction. But more importantly, his content is very focused on helping young men try to overcome the gambling addiction. And I personally believe that gambling is going to become a massive, massive crisis in America. It may already be there, but it's only going to get worse. You can't watch sports without them shoving gambling down your throat. You can't turn on the TV without them talking about the odds.

• 40:10Speaker 05

  This really started, I mean, 10 years ago, when like DraftKings and FanDuel, like...

• 40:14Speaker 04

  Before, when it was like, oh, it's a little bit of entertainment, okay. But when they started to legalize this stuff in the way that they have, and now the leagues are incentivized, the players are incentivized, all this stuff.

• 40:25Speaker 05

  It's you versus the machine.

• 40:26Speaker 04

  Of course. And unfortunately, you cannot rely on the individual discipline of a young man whose brain is not even fully developed yet to resist these companies that are full of data scientists and engineers that are trying to engineer dopamine in these apps and ads, etc. And so they're just, got the deck stacked against them. And so what they need is they need a better vision. You can complain all you want about these companies. These companies are doing what they're supposed to be doing. They're private market actors that are pursuing economic profits. That's how capitalism works. And if you don't like it, don't complain, go compete. And what I think LJ is doing that's very interesting is he's trying to provide a different vision of the future. And he's saying, listen, if you do not want to live your life as a degenerate gambler,

• 41:10Speaker 04

  you can change your life. You can go in this other direction. How does he know? He did it. Here's this other direction. And he has these conversations that are incredibly emotional, incredibly entertaining, with people who have done all kinds of crazy stuff. I mean, the stories on that podcast are insane.

• 41:27Speaker 05

  My favorite part of the stories that he shares on his podcast is always like the low, and then the relearning of, wait, why am I doing this? Like that sort of come-to-Jesus moment that people have.

• 41:41Speaker 04

  This guy has had on people who've been into drugs, alcoholics, people. He had on, one of the most popular clips that's ever happened, is he had a woman come on who was in sales in the technology industry, tech sales. And she's like, "I was a functioning alcoholic because every single thing in that industry was just drink, party, drink, party."

• 42:00Speaker 05

  Yeah, you gotta entertain the client.

• 42:01Speaker 04

  Correct. And she's like, "And I became an alcoholic." And then guess what? The reason why it went viral is because a bunch of salespeople are like, "That's basically me."

• 42:08Speaker 05

  Yeah, I do wonder, like, you know how there's been that trend of Gen Z not drinking? I wonder if that's shifted to possibly gambling.

• 42:18Speaker 04

  We're...

• 42:19Speaker 05

  We're not Gen Z. I hate to break it to you.

• 42:22Speaker 04

  No, I don't want to be Gen Z. I'm Gen Pomp.

• 42:27Speaker 04

  I am, I've been sober for five years.

• 42:30Speaker 05

  Yes, but you were never...

• 42:32Speaker 04

  Five and a half years? No, I didn't have a problem, but like, I just, I haven't drank in five and a half years. I'm proud of that. All right, I have one last message for everybody today. I hope that you guys all enjoyed this conversation. I'm very happy to have Polina back. She is here. She's gonna be on the podcast every week. But my message to all of you, be nice. Be nice to those around you. Be nice to your loved ones. Be nice to your friends. Be nice to the strangers. Be nice to the gamblers. Be nice to the socialists. Be nice to everybody. But tell the socialists they're wrong, because history's not on their side. That's it. See you guys next time.