Michael Saylor and Danielle DiMartino Booth - Swan Signal Live - A Bitcoin Show - E33

all right everyone welcome back to swann

signal

live this of course is a production of

swan bitcoin the safest way to

accumulate bitcoin with automatic

recurring buys at swanbitcoin.com

swan signal live is a weekly show we

pair up great guests for compelling

discussions about economics

and bitcoin i'm your host brady swenson

head of education at swan

we have a monster of a show for you

today i've been excited about this one

ever since we scheduled it with daniel

dimartino booth

and michael saylor but before we dive in

a

exciting announcement to share with you

uh about swan bitcoin

daily buys are up and running we've been

talking about it for a month or so now

we've been

signing people up for the beta program

at swanbitcoin.com

dailybuys you can still jump in on that

uh the team is now stacking daily

uh and we have been testing it we are

rolling it out slowly to

all of the uh beta group uh so that's

super exciting uh

you know automatic recurring buys uh our

service dollar cost averaging is the

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your cost basis over time

just set it and forget it there's no

distractions that swan from altcoins

uh we are laser focused on helping you

accumulate bitcoin

and educating you about what's going on

here for example through

this very show so let's dive in to the

show now

uh we have the amazing danielle

dimartino booth with us

she's a former fed insider she was a

right-hand analyst to

dallas fed president richard fisher

during the 2008 financial crisis

um and through that experience she came

to uh call out

the monetary malpractice malpractice of

the fed uh

in her book fed up an insider's take on

why the federal reserve is bad

just straight up says it right there um

she now runs her own research firm quilt

intelligence

danielle really appreciate taking the

time today welcome to the show happy to

be here thank you for having me

absolutely and we have of course michael

saylor ceo of microstrategy a publicly

traded enterprise

business intelligence company michael

burst onto the bitcoin scene over the

past few months when he put

microstrategy onto a bitcoin

standard by converting nearly all of the

company treasury to bitcoin 450 million

dollars worth over the past few months

michael welcome to swan signal live

thanks brady

all right so yeah as i just stated there

in the introduction michael is obviously

a bitcoin bull

um and this being a show focused on

macro and bitcoin

i'd like to just start by getting your

thoughts on bitcoin danielle before we

jump in to focusing on your expertise

and discussing macroeconomics and

monetary policy

there's obviously so much that we agree

on on those two topics

uh and we'll unpack those uh you know

those two topics here on the show

um so let's just start with getting your

general view on bitcoin

and i was wondering if your thoughts

have evolved at all

in light of large investors like paul

truder jones rival powell

buying bitcoin uh and companies like

microstrategy and now square we recently

found out is choosing to hold it as a

corporate reserve asset well clearly

there's about seven trillion dollars

excuse me i

former central bank are only thinking

trillions there's about a billion

dollars right now

on corporate balance sheets um held as

cash and cash equivalents so you've now

got a fairly new line item that says

bitcoin

and uh you know i had a lengthy

interview recently with a fellow by the

name of jeff booth

and he has he has looked at deflation

through the prism of technology

and where that's going to take the

global economy in the next several

generations

and it was very impactful in that we

spoke about the end game which everybody

talks about everybody talks about what's

going to happen

if and when we go from let's say after

the next three trillion we tack on

from 30 to 60 trillion dollars of u.s

debt where does that take us

and the the standard answer is

especially

inside the macroeconomic community which

i'm not trying to endorse in any way

shape or form but there's always some

happy kumbaya

jubilee ending to where all of the major

sovereigns get together in a room

presumably including the united states

and china and they agree to expunge

all sovereign debts just wipe the decks

clean

i've never really bought into the

simplicity of that

given that there has been saber rattling

going on in the background

and into an increasing extent as china

has become

larger on the world stage and because

and has become

technologically dominant we know that

they're winning in the ai

game we know that they're winning when

it comes to the number of patents that

they're putting out we know that

they've already got a third of the

telecommunications equipment on planet

earth

so china is definitely marching towards

trying to become the economic superpower

we know

however that the yuan is not an accepted

medium of exchange as of yet still south

of two percent

globally so the the

jeff's main premise is that rather than

segway from a currency war

to a trade war that's where we are right

now uh in in

the cycle of cycles but rather from

going from

currency to trade to hot war which

is how historically since the romans

existed how currency reserve currencies

have exchanged hands

and that is when blood falls uh and

rather than doing that

jeff suggested that that bitcoin could

could rise up as a peaceful alternative

to there being an actual altercation

between

the united states and china one group of

allies versus another group of allies

china iran russia saudi arabia

versus the united states and the rest of

the world so

it would require i think a lot of

standing down

and but i do see that as being

a potential avenue going forward

because much to the dismay of of gold

bugs i've never seen the practicality

of switching back to the gold standard

so

uh with that i will say that i used to

be much more skeptical than i

am uh i understand that economically

speaking if you're talking about

productive capacity that when quantum

comes along the math completely shifts

uh in terms of the economics of bitcoin

and that can also be

uh you know a pioneering revolutionary

step ahead so i am much less skeptical

today than i was

say six months ago but i'm not letting

go of my gold

just yet excellent i really appreciate

your take on that michael

uh any reaction to danielle's take there

there's a lot to unpack we have the

idea of china perhaps you know

competing trying to compete against the

dollar for a global reserve currency

status of course we

heard about iran changing their oil

contracts uh to

being denominated on yuan from the us

dollar that was interesting news

but also you know danielle mentions

quantum there i'm wondering if during

your research

um your extensive dive into bitcoin

before you made this move

uh that you uh you know researched that

idea

uh as a potential catalyst for uh you

know

a breach of the bitcoin network

um well i guess i

i think that all currencies are

collapsing right now

and um and as every government's

printing money everywhere in the world

that that means there's uh

there's a stampede of value out of

currency

into something else so so i think when

you print more money when you inflate

the currencies or inflate the monetary

supply it's the equivalent of like

sucking all the oxygen

out of the room

i'm an astronautical engineer and so

this concept called adiabatic lapse

and what it means is that um as

as the pressure drops away the the

energy drops at the system so

every thousand feet you go up the

temperature drop by three degrees

and if you go up 50 000 feet the

temperature drops by 150

degrees versus sea level which means

that if i take you up high enough

in the atmosphere i simultaneously

starve you of oxygen and freeze you to

death and of course that's why you don't

jump out of a plane at 50

000 feet um all the currencies are doing

that right the governments are basically

inflating them up it's like taking

everybody

up 50 000 feet so they're they're

freezing

and they're choking to death and so

now in that stampede everybody's chasing

after something else with some tangible

value and

you know one idea is gold and the other

idea is big tech

and i think gold is defective and i you

know i spent 45 minutes explaining why

on

peter mccormick's podcast fundamentally

the reason gold is defective is because

it's commodity

and if you're buying gold as a store of

value you're you're assuming that human

beings will be stupid and won't figure

out how to produce any more

and that's been a bad bet in the history

of the world to assume that people can't

produce more of something they want

in fact they seem to produce more of

everything they want there's nothing in

the history of the world that

we wanted that we couldn't produce more

of oil

real estate whatever so i don't think

commodities work

and um we can delve in a bit but but i

actually think that's not the crowded

trade i think that everybody's

stampeding into

nasdaq stocks and big tech right so

they're charging toward

apple amazon facebook google

you know microsoft because they think

that those are stores of value

not not because they're more bullish on

apple right they're time to be bullish

on apple was a decade ago

or google buy facebook stock when it was

12 bucks a share

when social networks were first hitting

the idea that facebook is a great store

of value at 280

a share or whatever the number is right

now is it's a little bit late

but the fact of the matter is people are

so desperate to avoid getting

froze to death right in this currency

collapse

that that they're chasing toward

grasping at anything and right now their

best idea i think is big tech

so that's that's what i think so

danielle the fed has printed 22 percent

of all u.s dollars that have existed

uh to date this year obviously we are

just way too far down this path to turn

back now

um you know that was the case probably a

long time ago uh so we're in a world of

monetary socialism now

and um i'm wondering you know are we

finally now at the points um you know

austrian economists

uh and fed critics have been you know

predicting the the demise of the dollar

and the results and and whatever

the outcome will be for quite a long

time are we finally at that point now

where the fed loses control of the

dollar

and as michael's saying uh you know are

we in a currency collapse in your

opinion

i wouldn't say that we were in a

currency collapse in

real time uh the

dollar has not yet been pushed it's the

worst cliche i could use in in response

to that question

but uh but we haven't gone far enough

in the process and part of it is because

the capital markets are still

wide open and there is still enough

confidence in central bankers

to keep this ruse alive to keep the

narrative

alive and a lot of investors are

depending on doing

just that if that wasn't the case we

wouldn't have come into the year

with about 78 percent of corporate debt

to u.s gdp

and now we're going to exit the year i

just ran the math at close to 95

of uh of corporate non-financial debt

to gdp the end result of this

is highly destructive and not just

highly destructive for

investors but it's highly destructive on

a societal level

because when you pile on two trillion

dollars of debt on the corporate

america's balance sheet that was over

laden to begin with what you end up with

in the event that the

that the stimulus is not able to produce

what we call

escape velocity for macroeconomic growth

what you end up with

is a lot of companies that are way over

leveraged

that don't have very high recovery

values and that is why

sometimes when we see such and such

retail chain

uh filed for chapter 11 and they're

closing all their stores

and what that means is rather than go

through a restructuring in which a part

of the company is retained

you end up having the entire entity

destroyed

because the fed has managed to give so

many

walking wounded so many zombies one in

five us corporations

fed policy has managed to give them

lifelines such that they can

in the case of american airlines they

can they can float a couple billion

dollars of debt based on their frequent

flyer program you can collateralize

anything for heaven's sake but when when

the time comes therefore

for the inevitable and they are

inevitable the fed can postpone

insolvency

it cannot indefinitely it cannot

forestall

insolvencies indefinitely it can buy

companies time but that's it

but my point is the time that is

purchased puts

more corporate uh more debt on corporate

america's balance sheets

such that when the time comes to file

you end up with liquidations

many more people put out of work than

would have needed to have been the case

had companies not been walking wounded

and they were structured when there was

still value left to be

carved out of the company

so brady i i have a take on this if i

could

i i obviously i don't think we're gonna

see a currency collapse i wouldn't say

that

i just think the currencies are all just

gonna get weaker they're just sliding

and

i mean a reasonable expectation is the

monetary supply expands by

more than ten percent a year for the

next three years instead of

i think safety says in his book he says

seven percent a year for a decade

so i'm guessing got more than more than

seven percent so let's just say 10

10 to 15 a year for the next three or

four years

and i think that probably happens

everywhere in the world and

you know every government's going to

sort through their issues and there's

going to be tons of complicated

developments of which i i don't think

any of us can define exactly how they'll

turn out

all i think all we know is that rational

investors with hundreds of trillions of

dollars of money

are looking at this saying the only way

i can hold bonds is if i think if

interest rates go negative if they're

not going negative

then buying a 30-year bond is like me

giving you

everything that i own waiting for the

end of my life and you give back a third

of it to my heirs

after i'm dead so that that makes no

sense right

to buy a bond or sovereign bond and uh

it's hard to buy real estate because

half of it's impaired and no one can

figure out whether how you know our

theme movie theater is ever going to be

valuable again

it's very complicated situation and

scary situation

if you have a nice house i recommend you

keep it right if you had extra cash

and you wanted to buy a beautiful house

this is a good time to buy it

so if there's something that you love

that you're passionate about

then you probably ought to buy it and

otherwise

you've got this extra extra monetary

energy

it's hard to find debt and so now you're

down to precious metals or

stocks and the fed and and the central

bankers have crowded everybody out of

every trade

like literally they've the reason the

stock market's going up

and the gold is going up is because they

bought up

everything in the middle so you either

have to have conviction on gold

and there are people that have it or or

i mean you've got a billion people on

the planet that think that facebook

apple amazon and google are you know

walk on water

right and you can't blame them i mean

they they're the they're the biggest

success stories of a decade

so i i think really what's going on

right now

is that the store of value for

a billion people or or however many

has become technology stocks and uh

that just that just means that as the

fed prints more money

you you know there's going to be a

little tug of war and i think over the

near term

people will probably buy equities and

stocks because it's easy to do so

and they understand them and i think

over the long term

this is a time horizon thing right if

you're looking out over the next decade

maybe five to ten years and yeah buying

technology is not a bad idea

their fixtures are not going away if

you're looking out between 10 and 100

years

then you start to say well technology

companies they've got

ceos and central operations and

competitors and they've got countries

that

they've got to deal with they've got

trade and regulatory issues and

a lot of complications and moving parts

they have to do a lot

a lot of things every year to be a store

of value apple's got to keep shipping

upgrades to the iphone like the one

they're doing today

and then the apple watch and

everything's going to have an opinion

about whether the new ios or the new

iphone or the new apple watch was a good

thing or a bad thing and how the chinese

feel about it and how we're going to

deal with it etc

lots of complications so your

alternative of course

to gold or to big tech is bitcoin

and bitcoin doesn't have complications

there's no ceo to disagree with

there's no board of directors there's no

there's no one country there's no

central headquarters

it doesn't have to keep shipping new

versions of itself

it is it as it sits right now the

current functionality of bitcoin is

to store all the world's money forever

in a fair and equitable fashion

and that's enough i mean that's that's

what we want right so

i feel that right now you've got a bunch

of people

they all agree on one thing everybody

agrees currency is getting weaker and we

have to

we have to run to a store of value they

all disagree about whether the store of

value

is gold or big tech or bitcoin

but if i think if people think about it

a bit i think they'll conclude that

the technology is a crowded trade it's

run its course

and if you wanted to make a lot of money

in it you probably should have bought

all those things in 2010

11 or 12 and right now right now they've

got as many complications

as they have benefits as a store of

value and i think with regard to gold as

i said before it peaked in the 19th

century

in 95 cities 95 of the cities in the

world they seized it in the 20s

20th century and if they don't seize it

then the gold miners will just make more

and they're your enemy

so i i can't see going back to a 19th

century idea as a 21st century solution

is very progressive and that only leaves

one choice which is bitcoin

which which is a pretty good 21st

century solution is a store in value

so i don't know what will happen in the

next week or month

and i don't know what companies will

succeed or fail and i can't tell you

what every country is going to do

and and whether or not you should short

the dollar go along the dollar versus

the yen or the one or the whatever

and there are a lot of guys in the macro

industry that care a lot about it make a

lot of money on it all i can say is it

seems pretty obvious to me that if your

time horizon is 10 years or more

the store of value with the most promise

in the 21st century with the least

complications to it

is bitcoin all right

danielle uh i saw you react to

the comments about real estates uh i'd

love to hear your thoughts on real

estate both corporate and

residential uh so i mean

if there's anything there's something

that is very disingenuous about saying

that the coronavirus

caused all of the issues that are

currently in in the economy

the coronavirus didn't cause corporate

america to be over leveraged the

coronavirus didn't cause

what we're finding out to be equity

cushions on commercial mortgage backed

securities to be so thin

all of this occurred in advance of and

in addition to that what the coronavirus

did change however was

where americans bore people want to live

people are looking to move out of into

the suburbs into the exurbs

you used to have a millennial generation

that was like i'm hip

i'm spending my money on experiences on

traveling i want to live in urban

centers i want to live close to

everything

i don't want the life of my parents i'm

going to shun that and you had

yesterday alone there was a story on

bloomberg about three

luxury um retirement community buildings

that are going up

in manhattan ready to open because

the baby boomers were going to come in

from the excerpts they were going to

come in from the suburbs

and also want to be closer to their

children and want to be close to

hospitals

that's all gone away so coming into 2020

there were two kind of bulletproof

sectors in commercial real estate they

were office

and multi-family urban center office

central business district

office and multi-family high-rise

downtown

that map has been turned on its head

retail's been a train wreck a long

moving train wreck for a long time

lodging

was a surprise obviously that is again

directly related to the coronavirus

but what we're finding out is that the

debt that was taken out on some of this

real estate

was just off the richter scale and now

it's coming back to haunt the developers

you're seeing jingle mail which is

something that we referred to during the

subprime housing crisis

but you're seeing people get up and walk

away from portfolios you're seeing

people

abandon hotels outright they do the math

they say the debt against it is never

going to be worth

well i'm not going to spend another

penny servicing it and

away they go so this will still be a

process that takes some time

to to play out unfortunately

we're seeing what we saw in the consumer

price index

uh this morning that was released we're

seeing rental

inflation come down and that is going to

scare the federal reserve even more than

anything because it's the stickiest form

of inflation we're seeing that act as a

drag on the cpi

it's going to play out the same way in

the core pce that the fed follows in

other words

the fed's going to have even more

license to continue printing in the

background because it's going to be

afraid of the boogeyman

of deflation so but right now commercial

real estate

is one of the few areas of

the entire asset class universe right

because the fed is backstopping stocks

the fed is backstopping

bonds corporate bonds they're not

backstopping anything but federally

backed multi-family loans

so it's one of the few places where

investors have found

wow there's price discovery here and

what you know

my reaction came from the fact that

michael was talking about not knowing

what the value

is and we're in that price discovery

process right now and it's not pretty

and we're going to find out what it

looks like on the other end but

it is at least one place that

you know because foreign investors are

pretty much gone

there's been a lot of geopolitical

tensions that have been driven up

because of the coronavirus

so you're not going to have this flood

of foreign investors coming in to save

the day

as we've seen in past cycles so again

it's

the reason i'm so excited and animated

and passionate is because when you

have ptsd from working inside the fed

for so long there are very few asset

classes where you

get to actually see true price

discoveries where buyers and sellers

come together

and figure out this thing called price

without any interference by the fed

that's what we're seeing in commercial

real estate what we're seeing in

residential real estate

i'll sum up for you in four different

factors

there's this exodus to the suburbs and

the and the excerpts that's the one

and only fundamental factor fha lending

has gone

bananas you only need a three and a half

percent down payment

and we we've got fannie and freddie

doing cash out refinancings at about a

50 billion dollar cash out run rate

per quarter that's a lot of money going

into the hands of people who

built up over 30 trillion dollars of

home equity and on top of that fannie

and freddie are using

they've got 80 percent of plain vanilla

refinancing they've got

90 percent of cash out refinancing

volumes they're using something called

an automated appraisal waiver

so that you don't actually have to you

know see the house make sure that the

value is there

they're just pushing it through the

system and putting cash out the back

door

so very much a very much a

a government-led housing boom in

addition to the fact that there is that

one fundamental factor

of people truly wanting to get out of of

the city

so again real real estate is it's going

to get interesting

yeah yeah and daniel you know michael

daniels they're talking about

you know true a real price discovery

uh you know this idea uh you know that

we have in capitalism where

you know you have a a price for

something that actually communicates to

the producer and the consumer the value

of something uh

you know and obviously prices are very

important uh

when they become manipulated uh you know

we have a bad outcomes

uh and we'll talk in a minute about

zombie corporations for instance and

and uh you know all kinds of bad

outcomes uh and it's not it's not

capitalism it's monetary socialism when

you're

you know playing uh with with the price

signals so much

so every action there as well um and i

wonder

you know i i assume that you're thinking

you know bitcoin is

a space where price discovery is

happening unimpeded

yeah i think bitcoin's probably one of

the few places where we've still got

price discovery going on

and i suppose luckily it's because there

are people that disagree with us brady

and we should be happy that there are

people that disagree with

our views with regard to bitcoin because

otherwise there'd be no one to sell it

to us

and that would be unfortunate i i think

the price discovery is like uh being

pushed out of most of the other markets

uh this year and that's uh

unfortunate for the austrian economist

in the uh space yeah we're all nodding

our heads at once

yeah uh michael i wanted to ask you

about you know the environment

running a corporation uh in this

environment you know you've been

running microstrategy founded it i think

you said it was you've been running it

for 20

plus years right maybe 30 years now

30 30 89 we came public in 1998 so i've

been public company ceo for 22 years

okay so you you've been through uh quite

a bit as the

you know heading up a company how has

you know

the monetary policy of the united states

and its evolution

impacted your ability to run a

corporation in this country

no i think the primary uh development

of this year and the most interesting

one is the um

the onset of the virtual wave and uh

by virtual wave i mean the the

virtualization

of a lot of products and a lot of

processes

uh that uh were previously delivered

manually so a lot of things we did

you know the the practice of meeting and

face face to face with customers the

practice of

of of having a one-on-one meeting the

events and travel and entertainment and

and the way that uh customers

view you changed dramatically

between march first and uh july first

in the second quarter and i would say

when we started

the second quarter uh i believe that

people had to be working next to each

other

and we had to and we had to uh be face

to face with a customer

and uh we didn't really believe much in

video

video conferencing techniques and we

really didn't i'm not when i say we i

mean

my company in particular every other

company is a different stage on this

journey

but we didn't uh we didn't fully

appreciate the power of

streaming on demand video

and i would say by the end of the

quarter what we realized is

zoom is magical technology

you can zoom anywhere at the speed of

light you can bend time and space

if i can zoom six thousand miles away

and then i punch the record button and

then i can convince somebody

that my software works then i could just

upload that

meeting to my website and let it run 97

000 times

and that causes you to think harder

about why is it you're taking 40

meetings a week why don't you take 40

meetings a second

and and uh it you change your view like

i used to hire a person in sydney

australia to run consulting and now you

realize you can have somebody in

singapore running

consulting in sydney australia and then

you realize that one meeting a day

isn't really appropriate why not seven

meetings a day

and then you think well heck what if i

just have the person that had the

meeting record themselves and have 700

000 meetings a day and then you start

thinking

you start thinking well maybe i'll just

have the website do all this stuff

and so you have a complete collapse and

dematerialization

of hundreds of thousands of hours you go

from

uh you know one person has a one hour

meeting with a customer costs a thousand

dollars

and then they zoom there and it costs a

hundred dollars

and then they record it a hundred times

and it costs a dollar

and then it streams ten thousand times

and it costs less than a penny

and then you start thinking why is it

that i need to have

a bunch of average people that are

that are manually going through

laborious processes

struggling to understand how things work

why don't i just have the engineer that

built the product

explain how it works 187 000 times a

week

and that's kind of mind-blowing and

that's the virtual wave it's a

it's a complete collapse

dematerialization of what you're doing

and

you have to rethink everything about a

company

once you understand that that's that's

the new idea

how has well how has the the monetary

policy changes over the past 30 years

affected your approach to the business

obviously it's led you to

this point where you've converted your

corporate treasury to bitcoin

i mean i think i don't think it changes

the p l i mean to be clear

like if you're in the business of

selling pizzas

or selling anything selling cars

you make cars you sell cars you make

pizzas you sell pizzas you know

you make movies you sell movies the

monetary policy is not changing the p

l the monetary policy you know when it

when

you're printing seven percent more money

i guess it changes your view toward the

balance sheet

and so at seven percent more money a

year then you conclude well the cost

capital is seven or eight percent so if

you're really smart that means you have

to buy your stock back or you have to

leverage up

or you have to invest in things that

will have more than seven percent a year

in cash flow growth so

so that the monetary policy drives your

view as an investor on the balance sheet

it doesn't change the way you view

daycare

or the way you view a paint job you know

or any any of those products and

services

so i i would say that um that

the primary uh the primary impact the

the change in the monetary policy this

year is we we kind of went from a seven

percent expansion to a 15

expansion and uh it's kind of like we

went from second gear to fourth gear

and people that could afford to be

oblivious and be

what is the word uh be non cavalier is

the word

you could be cavalier with your balance

sheet with cash

on it if you had two percent inflation

or thought you did and and if you had

seven percent inflation

and if your company is growing 20

percent a year

like google you know like facebook like

amazon

and in that case you can probably be

cavalier with your with all the cash on

your balance sheet too because it's kind

of like a small factor

but if you have um if you have a low

growth company if your company's growing

less than 20

a year if you're going 5 a year and

if the if the asset inflation rate goes

to 15

a year and if half of your half of your

enterprise value is your balance sheet

well then you get into an interesting

conundrum right because then you realize

you might very well

lose more value on your balance sheet

than you can generate from all the work

you do on your p

l right and that puts you into a new

situation and i would say that's that's

part of

the catalyst that got me here yeah yeah

danielle uh

you know just thinking about the way

this monetary policy is affecting

corporations i'd love to hear you talk

about this idea that your money printing

is propping up

companies like michael is saying that

aren't growing uh

and uh that we call we call them zombie

companies they're sort of walking dead

they should be in a capitalist society

kind of cleared out

for you know making way for innovation

and new entrepreneurs come in and fill

the space

in a better way so can you talk about

the impact of zombie companies

on the economy uh in the united states

so um just on a macroeconomic level

having one in five u.s companies not be

able to cover their

net interest expense with their incoming

cash flow is

problematic and as you say it's

something that creates a

long-term drag on productivity because

you end up

having an inability for new entrants new

innovators new

job creators to come in in the aftermath

of the end of a credit cycle because the

credit cycle

is effectively not ending you're keeping

them alive

and we actually still have companies

that we kept alive from the financial

crisis if you think about

whatever caesars used to be called and

clear channel what it's called today

i mean the examples go on and on coming

into 2019 we already had 14

of us corporations were zombies to begin

with so we've been dragging around this

anvil we've been dragging around this

dead weight

which is why growth has been so anemic

for the past

decade or so pushing this envelope as

far as we have though

in the current environment listening to

what michael is describing

because he's talking about massive

levels of automation i mean

magnitudes of automation the likes of

which we haven't seen

you have to bear in mind that one in ten

global employees

in january 2020 was employed in travel

and tourism

talk to any ceo including michael and

they will tell you

there's there's no reason that their

former travel budget shouldn't go

straight down to the bottom line going

forward because the need to put the

employee

in in business class travel and fly them

halfway around the world and put them up

in a five-star hotel for a week

it's negated effectively and but but

there are

there are economic prices to pay for

that

in terms of long-term unemployment not

just in the united states

but globally and it's

it's good to look at things in a vacuum

it's good to be agnostic about how we

approach investments but there are

definite

economic prices to be paid on a societal

level

for fostering zombies for not allowing

new entrants to come in

because you're going to end up having

much too large of a proportion of your

workforce who's out of work

and that is problematic yeah

i can i can see why that's problematic

uh you know michael was talking about

the dematerialization of of work um you

know driven by

exponential advancement in technology

and you mentioned

uh at the beginning of the show that or

before we started recording

that uh you know you spoke with jeff

booth and his book the price of tomorrow

uh talks a lot about the deflationary

forces of technology

butting up against the inflationary

policies uh of the fed

and every other central banker in the

world at this point uh

so how how do you see you know what

we're talking about here

this uh deflation in jobs

powered by technology affecting the

economy

uh and the dollar and currencies etc

well so i think that the people who are

the markets right now have gotten ahead

of themselves

the yield curve steepening is it's

premature we still have to deal with the

millions and millions of americans and

millions and millions of people

worldwide who are out of work out of

work is a simple way of saying

i don't have enough money to buy what i

need to buy so i need the government to

help me

and it is that dynamic and the fact that

there are going to be greater

redundancies as technological

as as we de-materialize in in to use

michael's term

they're going to be greater and greater

numbers of redundancies

such that we have to think about public

spending

that is going to be beneficial to the

future if you look at what they do in

china they throw tons of money into

their economy

they have plenty of bad banks they have

plenty of bad debts i don't deny