97. Bitcoin Strategy with Michael Saylor CEO of Microstrategy

hello and welcome to another episode of the bitcoin standard podcast on today's podcast we

have a special guest coming back for the third time the one and only michael saylor having

basically bought up all the bitcoins he's here to tell us about the uh what he thinks of the bitcoin

market how things are going his expectations for the way going forward then we're going to also

discuss my new book the fiat standard which michael had a um enormously important role

in helping me develop and finalize into the final book so michael thank you so much for joining us

thanks for having me safe so i guess a good place to start is just your general ideas about the

bitcoin um space and the bitcoin market and the development since the last time we spoke we spoke

i think it was for the last time we spoke was i think in february it's been now almost 10 months

so it's been a while um so a lot has happened has it been that long february really was it february

or march april okay anybody remember yeah a lot has happened okay yeah a lot has happened

so um i i presume your bullishness is still intact yeah so you want my summary

for the past six months um yeah and uh i mean if whatever you find worthwhile

um yeah well i mean i think if we just focus upon what's going on the china crackdown took place the

hash rate moved uh to the united states you know we we drew down to you know 80 85 extra hash and

now we're back up hitting all-time highs again so i think the the overall mining network has

redistributed itself and and further decentralized itself and has been a western drift of the bitcoin

network so i would say geopolitically we saw bitcoin drift west and i would say um economically

and uh that's all been a good thing i think i think we've seen a substantial western embrace

of bitcoin since uh may even if we look at the political winds that are blowing

clearly there's um there's a lot of support there was a fear i think six months ago that

we might have government antipathy toward bitcoin in the west you know you heard the most informed

criticism was you know ray dalio's well it's so good someone's going to ban it right it kind of

first it was well i don't get it i don't like it it's bad and then became i guess it's not

bad and then it became well i guess it's not going away and it works but it works too well

then it became a jamie diamond ray dalio it's just too good you know even you know frank g eventually

everybody kind of revolved around or settled upon the narrative that yeah it's not bad it's good but

it's too good and that's why i'm afraid of it and um i think in the last six months right we see in

fact the opposites happened the administration's in favor we've got supporters of bitcoin in the

administration it seems to me like biden was a positive check the entire set of administrative

regulators or positive checks uh most of the noise around regulation is really just the alt coiners

right the d5 people the security token people the staking protocols the you know stable coin issuers

and um you know they they want to generate a bunch of noise that uh that regulators are hostile but

i can't see any activity in the past six months from a regulator that was in my opinion uh

hostile to bitcoin um i think that uh the politics right now are such that

you have kind of crypto versus bitcoin you have all the all the alt coins versus bitcoin and and

generally uh generally if the alt coins could drag bitcoin into the debate right if it's bad

for the altcoin they want it to be bad for bitcoin so that all the bitcoiners will support their

position so i think you see a lot of that where people will try to re-characterize utterances by

regulators as being bad for bitcoin when in fact they're not bad for bitcoin they're bad

for security tokens defy exchanges unregulated crypto exchanges nfts or something else but not

bitcoin i think the other dynamic you see here is a little bit of tension between the entrepreneurs

that control the industry in the first decade and the institutions coming in the next decade

like um everybody in the world agrees that digital currency is a good idea i mean the chinese want

digital currency i think every country wants it even the us wants it we just can't agree

on whether or not you should be an fdic and you know chartered bank to issue it and whether or not

what what are the licenses you need to issue a digital dollar versus versus um

anything else versus an analog dollar so i think there's a lot of noise that's all about

all about will the entrepreneurs continue to be able to do business unfettered or will they need

to come public right is it public investors or private investors is it public companies or

private companies is it chartered banks or techno entrepreneurial banks is it onshore offshore

um i think that in the past 30 30 to 60 days the the thing that's surprising to me is actually

there's so much general support for everything in congress in the senate right you know the

narrative was they're going to ban it i think that i i think my observations they don't want to ban

anything right like which is which actually means that you have um you have the administration in

the middle you have the politicians on the far you know the far uh what is the word uh liberal side

and then you kind of have uh a bitcoin maximalist on the other side which is

which is uh to my mind interesting um i think that the volatility in the market right now is it

is because bitcoin is still conjoined with the rest of the crypto industry

like as far as i can see the people driving the market uh in the near term from day to day are

large pools of hedge fund hedge fund capital and investor capital highly leveraged fast money

that's cross-trading bitcoin versus every other altcoin offshore and in d5 with huge leverage

and their time horizons are one minute to one week like for example if you look

if you look at um minute by minute trading patterns of bitcoin versus eth

they're trading in lockstep almost uh every 60 seconds like you'll see um

you'll see a dump in the market in eth and it'll be reflected in bitcoin in 30 seconds and so um

that's interesting and i've seen uh that correlation going on for a while

uh irregardless of news and uh of course i think that a lot of people have a lot of money

and they have a lot of leverage right you can trade with 20x leverage you can trade in

theory if you you know if you cross-collateralize through a defy exchange you know you could trade

with even more than 20 dex leverage so there's a lot of fast money with a lot of leverage trading

across the c5 crypto exchanges and the d5 exchanges and they've got you know cardano

and dogecoin cloth cross-collateralized to eth and it seems pretty clear to me someone's got a big

block of bitcoin tied up in eth in the eth network and when eath trades down bitcoin's trading down

almost like they're they're a fused currency pair or fused asset pair

and they couldn't on connect that they can't uh dis

what is the word disintegrate that in the near term over the long term like months quarters

years yeah but in minutes hours and days it seems like there's a lot of integration

there so you know what what do i think in general it's like obviously i'm bullish on the asset class

it seems to me that that uh we've got remarkable consensus that bitcoin is digital property

we got market remarkable consensus that bitcoin is the one universally accepted commodity we've

also got a consensus growing that everything else is a security by the way safe which is

if you roll a clock back 12 months i think it wasn't clear but i think right now

out of 6 500 cryptos i think that you might have a debate over 12 of them being property and it

looks like everything else is a security and and if you're not if you're not a proof-of-work

coin if you're a proof-of-work coin that's a fork of bitcoin or something like that maybe there's

a debate about whether it can be property half of them aren't half of them are but

everything that's got an ico everything on proof of stake everything related to d5 all you know

all of the functional coins all the staking tokens it's pretty clear the view of the regulators is if

it's if there's staking involved it's a security if there's defy involved it's probably a security

right if there's a central organization if there's a venture capitalist involved it's a security if

there's a central development head it's a security right any of those things and our securities

and uh i think i think a lot of people don't want to embrace that reality but that is kind of the

reality and so so we're in this very interesting tension where where uh what should theoretically

happen is most of the altcoins should disappear or they should you know probably they should be

disappear a few should become publicly listed privately listed security tokens with disclosures

and different rails a lot of the entrepreneurs should uh should exit right they get squeezed

out of the market a few entrepreneurs can come public like cross the chasm can you get an fdic

license in order to issue a stable coin right that kind of stuff can you actually get the appropriate

license can you hire the right lawyers in order to get through that chasm and some do but 98 don't

and you know what's what i see coming from the president's working group and all the

all the regular if you read the the stable coin memo if you read the denial of the spot etf if

you read the crenshaw memo which was issued by a commissioner of the sec caroline crenshaw and if

you parse all the testimony of the regulators in congressional hearings and public speeches

the conclusion you come to is there are two things that are acknowledged that the world wants

one thing the world wants is it wants digital dollars stable coin digital dollars and it wants

10 trillion of it 20 trillion of it like we've got a 160 billion dollar stable coin

market you know with tether and circle leading but what the world really wants is it wants 10

20 30 50 trillion of it i mean they want to replace their lira and their pesos and

you know every every currency in the world they want to flip from local currency to dollars and

they want to go from analog dollars to digital dollars right i don't i don't trust the peso or

the leerer so i want the dollar but i don't trust the bank so i want it out of the bank right so

so if i were to go and interview a thousand people on the street in africa or south america or asia

and i said would you rather convert your local currency to the us dollar and would

you rather have your local your your dollars in your hand versus in your bank

i think that you'd have like 90 95 90 98 uh consensus that everyone would rather have custody

of their own currency and they'd rather have the strongest currency in the world and the us dollar

is the strongest currency in the world for two reasons one because you can trade cross borders

right you can trade between libya and lebanon and turkey and paris and the us with the dollar

and you can't do it with the cny or the euro or the local currency so so it's the cross

it's the worldwide global medium of exchange and the second reason they want it is because it's

losing value the slowest i mean maybe there's like two or three i don't know maybe the swiss

you know frank or something there might be two or three currencies that look a little bit stronger

but it looks like you've basically got currencies pegged to the dollar yeah and then you've got

currencies getting weaker than the dollar at a gradual rate and you've got currencies getting

by the way you've got some getting weaker to the adult than the dollar the gradual weight that's

shielded by capital controls like i think the cny is getting weaker than the dollar but there's

capital control so it's not so obvious it's pegged but with capital controls and we know like

the argentine peso is pegged with capital controls well and it's still getting weaker at a rapid rate

right the 100 pesos to the dollar is the official rate 200 pesos to the dollar is

the unofficial rate and it was 20 pesos to the dollar 36 months ago so i think what you see

is the dollar is setting the standard everybody pegged at the dollar that's got no capital control

they're just weakening at the same rate the ones with weak capital controls are weakening 10

faster and the ones and others are weakening 20 30 40 50 faster and they're literally collapsing so

that's the currency story everybody wants digital dollars and they don't trust their banks and then

the property story is and this is not uniform right i think that smart people that are informed

know they want to swap out their weak property for strong property or their weak asset for strong

asset but there's a lot of debate there right so you know what what i would say i would say

every property is weaker than bitcoin so sell your real estate sell your equity sell your bond sell

your gold sell your silver sell your commodities so you're collectible sell everything by bitcoin

but um generally i not everybody fully understands that i don't know we're two three four

five percent into the education and safe everybody everybody in the world understands that the dollar

is better than their local currency there's there is not a debate a 1.5 billion people in china

everybody in brazil everybody in argentina everybody in africa so i'm sorry to tell you

but unfortunately i know from lebanon there is significant debate about this people have

maintained the idea that their leader is going to be recovering against the dollar

as the leader has gone from 1 500 to 25 000 there's still people delusional enough to say

oh 25 000 well this is clearly undervalued now and we're going to come back to 12 000.

okay i'll defer to you since you're you're on the ground there may and i will i will

retract my statement i'll state it fine absent extraordinary patriotism you know idealistic

patriotism brainwashing is another word for right most the great let's just say even like 80 right

the great majority of people absent the patriots and the idealists know that they'd like to swap

out their weak currency for a strong currency on the other hand there's a lot of debate in the u.s

or you know in other markets about do i want to hold the s p index or do i want to have a second

investment property or do i i want to own some gold or do i want to own commodity baskets now

let's come back to the whole point though i'm talking about regulators

if you parse very carefully gary gensler's public statements no less than five or six occasions he

said two there are two things that stick out two things that are very important maybe three

three things i'm going to reduce the last you know everything that's been uttered by the most

influential regulators in the world to three things one thing satoshi's innovation is real

which is another way to say we have created truly decentralized digital property in cyberspace that

is not owned and controlled by any company any individual or any government we have

common property para pursue to gold or land or commodities that's the first innova innovation

right the immaculate conception as we'd like to call it here and it's another way of saying if i

understand securities law and if i understand law and if i understand finance then i will

acknowledge that you can create digital property assuming that you have a fair permissionless

network without an ico or a central party or an investment contract so we know that bitcoin has

done it it may theoretically be done again by somebody else maybe a fork a bitcoin right you

could probably your best argument would be a fair fork of bitcoin now if it were to fork right now

then maybe the thing that was created could also be deemed as uh property i'm not saying it would

succeed right like why not you know here's here's your best idea what if the if the

chinese government forked bitcoin and then made it illegal to use the first fork but the second fork

they kept in china you know and then they didn't interfere with it any other way and maybe if elon

musk forked bitcoin and mars and you had mars coin china coin and bitcoin and all three of them

started from the state of the network right now and then they had some geographic political reason

to be separated and you could hold that china wall or that mars wall up and there's nobody in mars

right but if there was right if you could do that then maybe you have another digital property right

maybe and i i'm gonna i think that's the bar set for altcoiners basically this is what you gotta do

that's a good way to say it satoshi said a high bar but that's the bar right that's the

the bitcoin standard is the satoshi standard is a is a fair distribution without an ico

without intent to profit on the efforts of others that is just a community property right so

that's the that's the first uh thing to take away the second utterance um though you know

to be able to trade 24 7 365 at the speed of light with zero friction is useful in the world

of commerce that is to say um i think that uh i think that gensler recognizes and i think any

fair affair regulator or economist or politician recognizes that there's a benefit to be able to

move stuff at the speed of light friction free 24 7 365 the digital digital transformation of

the economy or fintech if you will and for that to manifest itself uh effectively right now you need

a digital dollar right you need a digital currency and i've said before why because there's a hundred

million companies that have collectively invested trillions and trillions of dollars in accounting

systems and installed those systems over 30 years so that they can trade with each other

and because of the inertia of the accounting systems the systems inertia the corporate

inertia and the existence of nation states it means that it is either illegal or impractical

for for all the all the economic actors to not trade in currencies so um as long as the eu and

the u.s dollar the us exists and as long as the us dollar and the euro are legal tender

and as long as companies like sap and oracle run the accounting for disney and mcdonald's and

pfizer and and the us government and the payroll etc as long as that happens then you're going to

use dollars and euros but what we know what we recognize is that not being able to move them

on the weekend with a computer is holding back the worldwide economy you know even today just

about every day i pick up the phone right and then i have to approve wire transfers

like this is a 30 year old way to move money around 30 years so so we we still

have a situation where it's very challenging to move uh to move currencies as a medium exchange

so the second thing that everybody wants is they want the digital currency and they want

they want a small amount of local currency digital rupees and digital pesos and digital

niara and digital as long as there's a nation state that exists you need a small amount of

that hold it for a day right digital bowl of ours and then they want a larger amount like

a month worth a month to a year of digital dollars and then they won then after that

what you want is you want something to hold a lifetime digital property right so so um

i think that uh the first observation is digital properties and innovation the second observation

is we need digital currency and people need to trust this stuff and nobody trusts

stable coins right now issued by entrepreneurs offshore right the the never ending tether fund

right never ending right and you know tether is an entrepreneurial company i'm glad they exist and

they exist to meet a need and if my choice was to have money in a bank in afghanistan or hold

tether dollars and you know on my phone then i would prefer the latter than the former

it's pretty obvious why they exist but but if jp morgan issues a trillion dollars of stable coins

it'll be good for the industry it'll be good for the world at the point that uh

that you have public silvergate bank a publicly traded bank they just raised five 480 million

dollars last week by the way right a publicly traded bank with an fdic license that issues

hundreds of billions and then trillions and then tens of trillions of dollars of us dollars that's

the bargain that it takes for the us government to trust the to trust the coin moving that's just

that that's the expectation they have and it's not an unreasonable one because there's no way that

facebook or google or apple or amazon will ever move trillions of dollars of stablecoin around

from tether it won't happen right and there's no way that you will see microsoft and amazon

and ibm and pfizer do cross-border payment remittance unless it comes from unless

they have access to a stable coin from a bank of america or citigroup or whatever

so if you're looking for the big use cases for uh for these things you're going to want to have

massive amount of stable coin for all for for global remittance for payments

between 8 billion people and for the hundred million companies to trade with each other

so that's the second observation and the third observation that you get over and over again

is um most everything else is a security right if if you know if if there's an ico and it was issued

in you know an expectation of earning a profit and it is a small group of people if we're depending

on the efforts of others it meets the meets the definition of investment contract security so

what we're waiting for right is clear guidance about if you if you're currently owning

securities or you've issued one what do you do next if you're trading them what do you do

next if you want to issue a stable coin what do i have to do to get to a stable coin

and that creates a a lot of regulatory uncertainty and overhang if you're if you're a crypto trader

if you're a default exchange if you're a security token all of those but where is there no overhang

if you just want if you want to own bitcoin's digital property for a hundred years

and hold it as a store of value it's crystal clear right it's not going to be banned it's

not even banned in china i mean per official guidance the chinese don't want you to trade otc

it's a capital control issue they have this issue with mining bitcoin which is is silly but i i

have yet to see a bright line edict in chinese that says you cannot own digital property they

haven't said it in fact they've said the opposite and um everywhere else where there's regulatory

regulatory action it seems to me that it's all touching on stable coin issuance stable

coin transfer its issue it's touching on tax it's touching on securities laws and leverage and uh

you know that the frustration of the of the other token holders and the entrepreneurs

is obvious and high right um and i think that uh that bitcoin

suffers due to the volatility that's induced by being conjoined by literally like there might be

billions of dollars of bitcoin that's actually linked as a trading pair as collateral to eth

and every time it moves everything is moving up and down literally second by second

minute by minute and uh you know it's like it's illegal to trade with 20 to x leverage

on the nasdaq it's illegal right but but in fact what you have in the other crypto markets is

20x 100x leverage and you can cross-collateralize that stuff and uh you know it's it the regulators

have yet to give clear guidance i think they don't really want to they don't want to crash the market

right i mean they they could literally crash the market but but um i think that that's a 36 month

thing safe so i don't know if that helps yeah yeah i think it's it's very astute what you said that

uh the alts are trying to drag bitcoin into this and i think uh you know your average out coiner

is usually out there complaining about bitcoin consuming so much energy and bitcoin is

uh boiling the oceans and um bitcoins outdated and we don't need bitcoin and we need to move on

and you know just yesterday i saw some guy from um one of the most centralized uh crippled um

[ __ ] coins which i won't name explicitly making a proposal for how to

advance bitcoin by moving off proof of work in order to reduce electricity consumption so they're

always uh you know they're always so concerned about bitcoin they need to change bitcoin and

they think bitcoin is dead and they want you to not invest in bitcoin because they want you to

join the gains until the regulators come about and which point they start getting angry at bitcoiners

because you know bitcoiners aren't supporting us and bitcoiners are uh cheering on the sec

and bitcoiners are um being statists and uh it's pretty uh it's pretty interesting

and i think that you also see that as well from the um from a lot of the

organized lobbying i think um a lot of the dc coin people um their modus operandis to try and get

i mean nobody lobbies for bitcoin that's the thing a very few people um like if you get

bitcoin you realize it doesn't really need you to lobby for it much and you realize there's

a very high opportunity cost for investing in lobbyists and you'd rather just stack sats with it

because bitcoin is clear you know it's it's very clear that it as you said um the satoshi's

innovation is real the immaculate conception it wasn't the security there was it was obvious it

wasn't a security it was just a digital form of property that emerged organically on the internet

nobody controls it so there's no point behind wasting money on lobbying but there is a lot of

incentive for outgoingers to spend a lot of money on lobbying because

it's very clear that their altcoins are securities and so there's a lot of incentive to try and

bundle in the altcoins with uh bitcoin in order to try and pass it off as and you know everybody

wants their altcoin to be part of the small number of outs that are like bitcoin you know

well you know ours is decentralized ours and bitcoin are decentralized but all these other ones

you know let the sec tear at them um i'm also wondering what do you think in terms of i think

um in a sense like the the the attack on bitcoin many people many bitcoiners have been pretty

paranoid about the idea that governments are going to attack and it seems you know uh even the china

thing as you said yeah they banned the mining but they haven't banned ownership and they haven't

they haven't thrown anybody in jail because they own bitcoin you know they haven't criminalized it

it's not like owning cocaine you're not getting searched and arrested for it you um but it seems

to me like you know fiat world is fighting back in a sense by perhaps um you know people who are

from the fiat world they just sim i'm not saying this is kind of a conscious conspiracy it's just

intellectually they think of it as um you know the fiat coins as the alt coins because they're

centralized they allow us to do more tricks they allow us to have more leverage they allow us to

have uh more credit more uh financing it looks to me like that is kind of the attack on bitcoin like

um people who are uh not excited about the prospect of hard money and escaping fiat

are thinking of you know boosting all the non-bitcoin coins like you think of somebody

like um elon musk coming in and choosing to pump dogecoin um i think that's not entirely

unrelated to the fact that you know the a lot of people coming from traditional finance are

in the fiat mindset of money needs to be controlled by a group of people

well i mean i think that if um the bitcoin community just embraced the idea

that uh bitcoin is digital property and is going to coexist with digital currencies issued by the

united states or europe or china then 99 of all of the resistance and friction just disappears

completely and then what you realize is your debate is is with gold and your

debate is with real estate and your debate is over whether you should buy the s p index

and just becomes an investment decision and then everybody that doesn't want to own

bitcoin because they want to own apple stock just looks like they like apple stock right

like if you want to invest in a in a vc venture if you want to invest in a hotel

if you want to invest in a stock if you want to invest in a collection of picassos

these are all just different investment decisions that you made in lieu of buying bitcoin if you

characterize it like that then it becomes a lot less uh controversial a lot less heated and

uh just step back and let and let the battle of the currencies take place between the currencies

i mean the real the real battle right now is between the dollar and the peso and the niara and

the rmb and the you know etc all the currencies and and uh there's no reason bitcoin doubled

every year for the next decade it still wouldn't be but a small fraction of the money in the world

so for the next decade we could simply be good citizens watch uh watch digital property

grow from being one out of 500 trillion dollars right we're one at one five hundredth

of the property in the world or something like that why not just become 20 of the property in the

world become 200 tr you know if we're 200 trillion and there's a thousand trillion right we'll be 20

so at the same time like if i'm gold it's like the gold people they want us to agree that we're

both sound money and the enemy is the fed okay well like let's think about that for a second

i'm going to basically give the gold bugs 90 of the money they're gonna they're going to be

worth 10 trillion i'm worth 1 trillion and we're both going to collectively agree that we want to

topple 100 million businesses all the accounting systems in every nation state in the world

together like why would i even bother right why why not simply just destroy gold why not just take

the 10 trillion of gold and go from 1 trillion to 10 trillion and how about you know try walking

into the boardroom of disney corp or coca-cola and telling them that we've decided that we stand for

toppling nation states and the currency and what we want them to do is buy bitcoin like

i i've said this before you you literally could line up everybody in every corporation the world

hold a gun to their head and say you have to stop taking dollars and switch your accounting systems

and you have to shoot them all because even if they wanted to they couldn't right nobody can

change the fact that the world runs on dollars and the accounting systems are wired for currency

so we're picking a pyrrhic battle like we're going to we're going to war over

nothing because if if you just understand bitcoin is property and you accept the fact that okay well

what's the negative the negative is if i transfer it and i sell it i have to pay

tax on it that's the negative what's the positive you're not supposed to sell it

like the positive it like the the worst thing you could possibly do in my opinion is encourage

people to give up their bitcoin so it's it's not a problem that you have to pay a tax

if you just never pay it the current tax code implies that you should buy it and hold it forever

and the current tax code of currency implies you should get rid of it as soon as you can

because there's no cost to get rid of it so if we simply looked at the world like that

then we would stop wasting so much energy right if you've looked at every single banker every time

they mention they say well is bitcoin a cr is it a currency well i mean their answer is no it's not a

currency jerome powell can't admit it's a currency christina lagarde saying it's not a currency

and then the bitcoin community oftentimes recoils in horror like yes we are yes we are

why do you want to be like why can't you actually be property worth 10 million dollars a coin

and not be a currency if i told you you could you could basically go from zero to ten million

dollars a coin and everybody will help you along the way every company every government will help

you along the way to become worth ten million dollars a coin or you can fight with everybody

right the entire way and if you succeed you'll have toppled every government and every political

group and every company and destroyed the entire 20th century economy but you'll have your currency

like what what's left right like if i rip every single company to zero and i destroy

every country and every political system you'll have your currency but what are you going to buy

with it when every company is non-existent and every government doesn't exist right you can't

even buy bullets to defend yourself and that you know and the post-apocalyptic anarchy that follows

because bullets get manufactured by companies they use accounting systems that run on dollars right

so so i guess my point really is it's not a battle of fight like ultimately there's a there's a view

the view is well you know the politicians have too much power and they use the currency right uh

to to abuse that power yeah yeah right and the solution is you basically demonetize everything

in the world that's that's in the physical realm and you demonetize all the currency derivatives

and you just do it gradually in such a way that every company and every government that's smart

enough to buy into it benefits from it and then one day you wake up and instead of instead of 60

or 70 of the wealth in the world being a currency derivative it's 10 and you know when 10

of the wealth in the world's a currency derivative and the rest is like digital property then

inflation won't be so much a problem anymore right very shortly right uh inflation's not going to be

like people in venezuela don't have to worry about the government forcing them

to hold the bolivar and inflating it because the boulevard has already lost so much of its energy

that at this point when the government can no longer print the money and inflate it right what

you really have to worry about is the government just seizing your property at the barrel of a gun

right they're just going to expropriate it right there right the any government that

prints too much currency eventually loses their currency privileges their currency collapses

and so i what you've got is this rippling succession of currency collapses and eventually

what happens is you get down to like three or four currencies and every single year the currency is

ten percent less of the economy than it was before and at some point you know at some point they'll

be we'll be down to the cny and the usd maybe like maybe there's like four currencies left

and instead of uh instead of how much money is denominated in usd right now you've got you've got

all the usd you've got every other currency pegged to the usd you've got 100 trillion dollars of

sovereign bonds or whatever then you've got 50 trillion dollars worth of currency derivatives

that are equities then you've got all of the commercial real estate which has got

rents that are capped at cpi so they're currency derivatives so if i stacked everything up what

i have like 300 400 trillion dollars worth of currency derivatives all pegged to the dollar

about and if bitcoin grows to be 100 trillion to 200 trillion then you would have

a hundred trillion in currency derivatives pegged to the dollar and now the ratios shift right

and as the ratios shift then inflation gets to be less of an issue because the currency collapses

like like who when do politicians realize their currency what they can't can fight the currency

i i think that in turkey and in argentina and in venezuela they're figuring it out right now right

like you'll be astonished in lebanon nobody has any idea that inflation is a problem it's truly

shocking like nobody thinks the money printing is a problem people see that all the money in

their hands has been printed in the last two years the the money supply has gone up about eight-fold

in the last two years eight-fold increase so about 700 percent increase in the last two years

and you will almost never hear anybody mention inflation as being part of the

problem it's astonishing but yeah you're right eventually they're going to figure it

out it's just when their currency collapses right when your currency like for example

what would be the market to issue argentine sovereign debt right now in new york city

right not not high right not not very high so at that point you have to switch to taxation or

rationalization right you have to start to rationalize your expenditures down

yeah and physical printing physical printing is what they're doing becomes taxation or you go to

rationalization or you go to expropriation and confiscation we're going to get there and and

when that happens the result is a function of lots of things that are above my pay grade

but um if i if i was sitting in any country right now and i wanted to do

the best thing for the world i wouldn't say you know buy bitcoin so that we can

defeat your central bank i would say buy bitcoin because it's better than buying a building

right i mean if i was sitting in turkey and i was giving a presentation and erdogan was listening

my message would be you know you can invest in a building or a company but bitcoin is probably

a better investment is even better investment than gold because bitcoin is pure digital energy

it'll be good for turkey it'll be good for you it'll be good for the turkish lira

don't you want everybody in turkey to get rich

yeah like like bitcoin isn't is an export digital energy is an export industry whereas

uh investing in a building or a piece of land in istanbul is a domestic industry so i think that

it doesn't matter who you are everybody pretty much gets the idea that we're better off

if we have uh 21st century clean export industries that are generating huge

you know huge cash flows or huge uh benefits to the domestic economy so i i i would say pair it as

it is property by law and the only way it you know it's a it's a legal definition that's defined by

the communist central party by the federal by the irs by the eu central you know or by the eu

in brussels you can either embrace that and say it's property okay it's better property let's go

ahead and replace the other 500 trillion dollars of property with a better property why don't we

grow 500 to one and somewhere around 200 or 300 to one we can come back to our political debate

about whether we like the idea that governments can have a currency like if you don't like the

idea that the government gets to designate the currency while you can run for office and you can

you know you can try to change that right but at this point in time the likelihood that you're

going to get the eu or the chinese you know party or the united states to abandon their currencies

is next to nothing and all you're going to do is you're going to divert 99 of your energy

from something constructive and the constructive thing is is to stop

people from making mistakes of buying a second rental property as an investment or buying gold

or keeping yeah a checking account right or saving account which is the same thing these days yeah

you don't need to be the enemy of the people or the enemy of the government

to to promote digital property yeah i'm a better idea i must say you've kind of won me over a lot

on this regard um you may not be able to tell from my twitter and my public pronouncements but i can

i i sympathize with the idea that uh you know we'll cross that bridge when we get to it it's

still a very long way away and um at this point i think the the the comparative advantages of

bitcoin is just that it is a much better form of property and a much better store of value and the

political implications will come later and i think you know the engineering side of me sometimes

begins to think we're better off just focusing on this engineering aspect of it rather than just um

you know thinking about the political implications because a you know the political implications are

just going to get people in trouble which you know we don't want especially when you know if you're

holding if you're holding the royal flush in your hands and you know that this is going to um

this is going to win eventually whatever happens it is just going to win out against

all the other kind of combinations of cards that you could come up with then you don't need to be

going around telling everybody that you're going to be winning in fact generally it's

it's it's it's it's a very bad tactic to celebrate victory before it happens and i can see the point

that yes i think you're absolutely correct on the demonetization of gold it's something that

i think is uh it doesn't really appeal much to me um being a hard money person austrian economics

but i think it's it's reality at this point and i think um clinging on to gold was probably the

biggest financial mistake that i've ever made i i even after i heard about bitcoin for many years i

still consider no no you know it's still tiny and gold is the big deal gold is the real thing there

have been pretenders against gold before but i think this is it it's over i think it's uh

bitcoin is only about a tenth of gold at this point and that's just within throwing distance

by bitcoin standards so it's uh it's clear that gold is being demonetized it's not rising as

everything is rising you know you keep pointing out that lumber and copper and nickel have been

rising more than gold and so that's an enormous 10 trillion dollar market of people who still save

money in gold and still buy gold and i think it's at this point it's uh you may as well be holding

fiat currency in fact you are in a sense holding fiat currency because central banks hold about

a sixth of all the world's gold so you're just basically pumping central bank bags when you're

buying gold that's the reality of it they control the market for gold they control the

market for settlement and clearance of gold they won't let there be uh free markets in

gold so that you could have a bank built around gold moving all around is still enormously

expensive it can't compete with fiat or bitcoin in terms of moving it around and in a global

economy that's a death sentence and i think in the last century um you know you could have resisted

that death sentence because you didn't have an alternative to gold but now we do we have bitcoin

um and i think i also agree with you on the fact that the us dollar is going to basically eat

all the other fiat currencies um it's it's very obvious that all over the world people would

rather hold dollars and i think it's just a matter of um you know the same analysis that i use in the

bitcoin standard about the hard money driving out the easy money definitely applies for the dollar

and all the other currencies the us has an enormously larger margin for inflation

um without than all the other currencies because the currency is just so much bigger and so you

know the turkish leader erdogan needs a whole lot of inflation in order to squeeze out a tiny little

bit of extra money whereas the us government needs a very tiny little bit of inflation to finance

itself and its military so i i think i i i agree with that but i'm wondering like how do you see

how do you see this playing out do you really think that the central banks are going to just

um legalize and um allow their banks to hold on to digital currencies and how does that fit in

you know you said jp morgan is going to issue a 1 trillion of stablecoin but will won't it just be

central bank digital currency why do you even need jpmorgan because you know you look at the chinese

model with a digital yuan and you can see you know with the universal basic income stuff coming along

why do we even need jpmorgan why doesn't the center why doesn't the fed

just add an app to the pla to the google and apple store and everybody can get a dollar well i mean

first of all the government couldn't do it if they wanted to but if you go back and parse

jerome powell's comments on the subject uh six months to 12 months ago he was pretty much

saying that in about four years we'll study it and maybe in eight years we'll do something

and then i think uh christina lagarde at the same time said well we've decided we're going to start

studying it and the chinese were testing it so in terms of the spectrum the chinese were were

sort of aggressively testing it the europeans were thinking about studying it and americans weren't

even thinking about thinking about studying it yet to paraphrase um there's no political consensus

there's no political will in this country for the for the um central bank to actually issue currency

um you can see that the utterances of senators and congressmen for the past three months there they

recall in horror at that idea you can also see it with the with the withdrawal of the name of

of the candidate for the occ do you see like she just withdrew her not her candidacy because she

had articulated support for such a notion as you just described and nobody wanted to see that so

keep in mind that uh you know you think the banks you think jp morgan bank of

america citigroup or the like you think they would like to see it so sometimes

sometimes i think we just we're too what is the word uh imaginative in our conspiracy theories

you can't simultaneously have a strong banking lobby that's your enemy and

then also imagine the government overcoming the same strong banking lobby to also be your enemy

right uh so if you see the world in that adversarial way you you think the worst but but um

a different view is this which is it's not bad for the united states dollar to spread

around the world it is not bad if the banks start issuing the dollar and if people could

move the dollar faster on some kind of high-speed crypto rail then maybe that'd be good for bitcoin

right everybody advances together so what do i think will happen yeah i mean i think that um

that you're going to see big banks you're going to see it's not clear to me whether jp morgan or

goldman sachs will jump on this as aggressively as silvergate bank it's not clear but it is

clear that someone's going to get on this very aggressively it'll either be like an avanti you

know moving forward or it'll be a silvergate bank who have already said they're doing it i

mean they've been very explicit about it or it'll be a jp morgan or a bank of america that'll do it

um government you know again governments have to be very adept at doing things and and oftentimes

they're not so so uh i don't expect any of these governments to do it effectively even in china

i don't think the chinese government is nearly as effective as their private sector i mean we saw

that with the alipay alibaba wechat type issues they they still have companies and there's still

tension between the companies the regulators and the central party right i mean there's a there's a

federal a federal level of the chinese government then there's a provincial level it was provincial

politicians supporting bitcoin mining in china and then there's regulators and then there's companies

so it's just hard and uh and ultimately you have to have the technical wherewithal to do it

but i guess even then it it doesn't really so much matter what

any other regulator thinks right the single most important entity here is the united states

and the administration right because if the dollar is the world's reserve currency

then the digital dollar right as defined by uh the administration and the regulators treasury et

cetera are gonna set the standard for how digital dollars move and um i think it's pretty clear

what they want what they want is either you're an fdic approved bank or some public regulated

entity that meets the same standards if you read um the sec denial letter on the spot etf what they

say over and over again is they're troubled by the fact that bitcoin trades on crypto exchanges

that do not meet uh the standards and abide by the principles of national securities exchanges

and those principles include ideas like don't lie cheat and steal from the customer right right

so if you look at the principles there they're basically saying we want transparency and a

set of principles and we want them to be abided by in the crypto exchanges

and with the stablecoin they're saying you know we want to be able to trust that just like a bank

and uh we don't want some i mean the real you know the nightmare scenario would be some entrepreneur

offshore has 10 billion in capital what if i put you know 10 billion of an altcoin backed by

you know i i could have a hundred million dollars in capital i could spin up yo-yo coin and have 10

billion of yoyo coin i could mint an nft on it and i could trade it to myself three times from

100 000 to a million to 10 million i could print it all in all with basically wash trades i could

lever it up twenty to one have twenty five thirty forty billion of yoyo coin and then i could use it

to back a stable coin and the stable coin becomes 200 billion or 500 billion worth of us dollars

that's the nightmare scenario right where you've got like nothing at the bottom you've got a crypto

punk that circulated six times in blind wash sales that was levered up to an altcoin that was

levered up to a stable coin that was released and now that stuff gets into consumers wallets

and it gets used for commerce and it becomes a systemic risk so i you know you can't blame the

regulators in that way when they say uh we don't like the idea that there's blind wash

trades with no surveillance agreements and we don't like the idea that

the stable coin issuers don't meet our standards as banks and uh you know the crypto community will

say oh yeah well that's like you know that's the regulators attacking bitcoin there's nothing to

do with bitcoin like i saw today you know some crypto punk thing traded for 10 million dollars

okay but you know like if i sold it to myself six times and i started by buying it for a nickel

you know how much is it worth who could say right and there's no there's no way

to even figure out whether the person that owned the thing sold it to themself

like it used to be my concern in an auction would be you've got your best friend bidding on it

but but we're much worse than that we're at a point right now in cyberspace where you could spin

up a hundred versions of yourself and you could be bidding against yourself selling to yourself

buying from yourself what's it worth you know it's like what do you want it to be worth how do you

know it's opaque right so i think um i think that uh you know these opaque markets are a challenge

and uh for the industry to grow up you know you've got to go to the point where there's more

transparency securities have transparency banks have transparency regulators have transparency

you know i i think ultimately all this stuff has a huge impact on high velocity digital assets right

like nfts and stuff like this high velocity bitcoin if you're holding it as digital property

properly understood is low velocity the whole idea of bitcoin is i just buy it and i hold it

like i own a building for 27 years and if you're holding low velocity money for 27 years right then

is that a threat to anybody not really i mean you kind of get to the maybe at the end of the day

you'll get to a point where someone will be concerned about that capital moving

out of a capital control environment but it's like so far down the list of

regulatory priorities compared to all these other things like rigged auctions and you know and hyper

lever levered you know self-dealing that um i think that uh it's almost like not even worth

being on the radar right now yeah i think a lot of bitcoin is worry too much about

some of the noises from the regulators but i think it is far more concerning for these other um

projects and shady dealings um moving on a little bit to the sailor strategy what do you think of

the sailor strategy well first of all what do you think about the el salvador situation in general

and also what do you think about the volcano bond that they're issuing it is kind of the

application of the sailor strategy to uh the sovereign level does that kind of

make you revise your uh analysis of the dollar and uh bitcoin because i

mean they are essentially doing the same thing they're issuing a billion dollars

um of um bonds and then they're using half of that at least to buy bitcoin um you know

i my view would be you should issue a billion dollars of bonds and buy a billion a bitcoin

the sailor my strategy is very simple and orthodox which is buy bitcoin with cash they're doing half

a billion on infrastructure and stuff which you know is that just makes a sovereign debt

yeah sovereign debt yeah it's 50 something safe like the truth of the matter i don't have an

opinion on that and i i i wouldn't endorse everything done by everyone that happens to

have bitcoin attached to it right it's like it's like you're asking me about the business plan of a

bitcoin miner well would i buy the bitcoin mining stock some yes some no but you're now you've moved

into the you've moved into the realm of securities right if you pick you know do i endorse paypal

versus square versus coinbase you know versus ftx that's a that's a securities issue do i

endorse a a minor that's a securities issue do i endorse any any country doing anything they want

no but what do i endorse i think they should buy bitcoin right i'm here's what i think makes sense

you should buy bitcoin with uh with assets um i think that makes sense i think that it makes

sense to deploy 24 7 365 light speed systems to move assets around probably even the dollar right

so for example i think it makes sense to have a digital wallet that has dollars on it and has

bitcoin in it and it moves on the lightning network at the speed of light but you know

what i i would i would endorse you moving on the what's up network too like or the apple

pay network of the go if google apple amazon facebook if they all agreed to just move bitcoin

and digital dollars on their own networks i'm very i'm open to that now is that better

than lightning like now you're back into a it's a proprietary competitive issue right what's better

lightning or apple pay well i mean what's better youtube or twitter what's but i mean these are all

there are what if i had a choice of bitcoin versus the other thing i always choose bitcoin

that's better yeah because bitcoin but here's the distinction it's an ethical

distinction bitcoin is property property is property is ethically superior to

a security like for example if you ask me should i own bitcoin or microstrategy stock the answer

is bitcoin is a property microstrategy stock is a security when you when you're buying the security

you're taking you're taking management team risk competitive risk execution risk you're you've got

nexus in a nation state microstrategy is a u.s regulated company twitter has got a headquarters

so does apple right so so look when you go to el salvador well el salvador is a nation state right

so so should i live with my bitcoin in el salvador or live with my bitcoin in florida or live with my

bitcoin in lebanon or live with my bitcoin i mean very complicated question right i mean yeah no

but i mean i guess i don't i i don't really think there's one answer i think you've got to respect

everybody's choice when it comes to these things if they have to make a choice

right i i guess i would applaud the idea

that you're buying bitcoin anything that's buying bitcoin i applaud but uh you know

i'd rather actually see you say i took a billion dollars worth of cash and i bought bitcoin and

then i'd rather see you say i borrowed a billion and i bought bitcoin right i think the purest

right is is the best approach i mean when you're when you're asking me would i endorse a bond

that's going to invest in blank well if the blank is something other than bitcoin

then you've just enticed me to make a securities statement right i i'm taking like should you or

should you not do that well i'm not i'm not asking you if you should that's a risk or not

i think i'm i was asking it in terms of you know the previous question where we were discussing the

evolution of the dollar and bitcoin i guess the question here is this if um if el salvador and

this is not entirely out of the question if they go and announce that uh you know if they produce

a new currency if they revive their old colon but this time it's 100 redeemable for bitcoin

basically they just rename the you know they all they need to do basically is just change the

denomination on their chivo app from being satoshi to being colon you know they could make it so that

one satoshi is one colon and then anybody in the world can download that app and send bitcoin to it

and then that complicates things because now um the colon is a foreign currency and that uh

changes the treatment of it in uh in u.s law if i'm not mistaken then you can use that as a

currency because it is a foreign currency so it's like you're buying and selling euros

and then that probably um you know legally and taxation-wise does that change the analysis

that you've offered what do you think i think it's a b it's above my pay grade say

like getting into the creation of a new you know national currencies a bit above my pay grade i

i have a different point of view i i think that all the currencies are going to go away except

for the dollar and the rmb like you want to when when everything is reduced to the end game here

it seems to me like you've got the dollar you've got currencies in the western world pegged to

the dollar and by the way the chinese currency is pegged to the dollar right now okay so if i look

at it i wouldn't i'm not sure how much effort i would spend on creating another one i mean i

think that ultimately you've got everybody's going to dollarize and if they're not going to dollarize

maybe uh maybe the chinese can stand against the u.s dollar i mean they're making a good run at it

but the only way that they're actually pegging to the dollar is through capital controls if their

capital controls fail this the cny is going to collapse against the dollar okay so so uh

it seems to me that if you look forward a decade you've got 8 billion people that have

a couple of digital currencies in their wallet they have the local currency they hold for a

couple of days they have the worldwide currency they hold for a couple of months and they have

some assets and uh and bitcoin is the king asset but there are other assets like i'm not i'm not

saying other crypto assets but for example maybe you want to own a share of stock and apple if they

ever tokenize apple stock then maybe that'll be an asset you would hold in your wallet now

80 of the world can't buy securities i mean they have they can buy crypto but they

can't buy securities because securities aren't tokenized they don't trade 24 7 365. so you know

let me ask you this question right what do you think the world needs more

like apple and google token or uh dogecoin son of dogecoin for the puppy coin token

right like what if we ever go forward right puppy coin the cool could do without but

probably google and apple the world still wants so i actually think the only reason you have so many

crypto assets is because they trade 24 7 365 and they're egalitarian and everybody can hold them

and people can't buy facebook token or apple token or google token in africa on a saturday

afternoon friction free so it's possible when the dust settles that the sec will actually

create a path for securities to roll off of nasdaq and new york stock exchange and trade

365 days a year 24 7. and if that happens then you'll have assets you'll have some property

and maybe you'll have a gold token if you're silly i don't know i mean a bitcoin token a

something token and you have some security assets and that's your portfolio of uh investments that's

your treasury portfolio and then you'll have your wallet your your checking account and

that'll be dollars and pesos or dollars and euros or something like that or dollars in cny

and you can see why i mean we we're not going to make apple computer go away in the next five

years we need apple computer we're not going to make the chinese government go away we need the

chinese government some stuff will go away weak companies will go away weak tokens will go away

weak currencies you know will just collapse but but you know wherever the currency collapses

that means the government collapsed right i mean didn't you just tell me that people

still like the lyra in lebanon so when the government completely collapses then the

the lebanese currency will also be gone until that point what you have what you've

really got is just a question of ratios like what portion of your money is in each of those things

right and if 57 of your money is in bitcoin and 22 of your money is in equity tokens

and then uh ten percent of your money is the dollar and two percent or one percent of your

money is in the local currency then that seems rational and uh you just move that speed of light

so i i guess what i would say constructively is we would be better to spend our bandwidth

focusing upon the macroeconomic situation which is in 10 years bitcoin's up 161 percent

a year for the last 10 years gold is up one percent every year for the ten years

the s p is up fourteen percent long bonds are up two point three percent okay so the real issue is

how do you let eight billion people pick their mix of those macro assets and

you know we can see what's happened the past 12 months right gold's down three

percent bitcoins up 163 percent s p is up 27 bonds are down six percent

okay so what you really want to do is you just want bitcoin to continue to demonetize

monetary assets real estate's monetized equities are monetized why are they monetized safe well one

reason they're monetized is because you can't buy real estate and you can't buy equities on binance

like finance does a really good job of trading stuff right like the crypto world here's what we

should like about the the crypto world they really push really hard this idea of let's be let's

upload any token and let you trade it 24 7 365. like i mean ftx maybe is between ftx and binance

they kind of put all the traditional exchanges to shame right you want to monetize or if you want to

liquidate your property it's uh six to 12 months and six percent fee and amounts of paperwork so

it's really hard to to to liquidate it once i'm into it and it's hard to buy it

how do you buy a piece of uh las vegas real estate if you live in uh south africa

can't right so i feel like the discretionary money is finding its way into crypto tokens

but it's quite possible if we tokenize all the other assets in the world that then there's a

different balance right there's there's too much money and currency derivatives and there's not

enough money in other things but if you know if we demonetize some of the other things like

if you're international you're more likely to buy apple stock if it's tokenized in a crypto exchange

but you're less likely to buy apple stock if you live in america once you trust bitcoin

right so we have this war of capital and a flow of capital and capital is going to flow

from traditional assets to digital assets in one system while uh while capital uh flows

from crypto assets back into traditional assets in another system if if every all eight billion

people in the world had equal access to everything right which they don't i think the short of it is

when you get into this issue of currency wars you've moved into debates between nation states

and i i just don't think it's a good use of time i think it's much more constructive for us to focus

upon upon um getting people to reallocate energy from the 99 of the assets which are not currently

bitcoin and not currently digital and if they just sweep them all to digital

right then then you'll get to see a rationalization of investment portfolios

yeah i think ultimately what is driving all of this you know the reason people have to

be trading all this stuff is as you call it money is like an ice cube i think if the u.s

dollar was inflating every year and the supply was increasing every year at only one percent

i think that would just um kill all of these uh markets you know if it was if the supply

was increasing on one percent the value of the us dollars in real term would be probably going up by

two three four percent depending on obviously what good you're looking at but i think for most people

holding on to dollars at that point becomes a very good option it's no longer a melting ice cube

so of course that's a very very big if we're not going to move to that kind of world but i think

the um i i agree with you and i don't want to be too much of a devil's advocate here and i don't

want to be putting you on the spot but i think um i i think there's a bit of an unstable equilibrium

as long as the dollar is inflationary we're going to have all of that money moving around

looking for a home and the only way this resolves is when it finds its home

in the best asset and the tricky part here is that there's no stopping the strain you know

you said if it doubles every year for the next 10 years if it doubles every year for the next

10 years it's going to be at around a thousand trillions which is a quadrillion dollar which is

currently in in today's dollars it's double the size of all the assets that are in the world

um even if it goes up to 150 percent it'll be at around a thousand trillion or a quadrillion

in about 18 years so you know by that time i think there's no escaping the political implications of

the fact that you've basically eaten up the bond market and really the the the the i think the

the main course here in the grand prize is not so much the dollar as much as it is the bond market

because the bond market is what allows the dollar to be inflationary it's what allows governments

to continue to borrow so i guess i guess my point here is is why would you want to extrapolate out

20 years imagine a revolution in the world and then invite someone to assume you're correct and

therefore shut you down now wouldn't it be smarter if you simply focused upon demonetizing gold

because you might be wrong i mean isn't it i mean there's a certain arrogant presumption

would do is to assume that you know what the world will look like in 15 years

there's a different world which is what if everything just becomes digitally transformed

and bitcoin grows as digital property and we have digital assets in the form of equity tokens

and apple stock spreads around the world and then capital flees from this currency to that currency

and may you know everybody thinks the dollar is going to weaken but the dollar is going

to strengthen before the dollar weakens and uh what if what if what happens is everything gets

digitally transformed and capital moves faster and the world gets rational and in the you know and if

you know if if uh if capital flows out of sovereign debt it'll flow out of third you

know other nations sovereign debt first which will strengthen the dollar which may which may actually

have the counter effect so capital is going to flow out of all these things if capital does flow

let's say capital flows out of bonds and the bond market collapses well the yields

are going to triple and then there are a lot of people that are holding capital in value

stocks are going to sell their value stocks and they're going to migrate into the bonds again

right and so you're going to have you're going to have all sorts of trading for the next decade

to two decades and it's very difficult to know what'll happen but you know there there is a

pessimistic view which is well i'm sure it's going to pretty much collapse the world and

we're either going to get away with it or please stop us or or there's another optimistic view

which is the world's going to get more rational and as the world gets more rational capital

is going to be allocated more rationally and political systems going to be rationalized and

as the world gets more rational things will get better and at some point we will you know

if you believe in the political process at some point people will spend less money

or they will rationalize the tax in some way and there'll be some peaceful resolution to the thing

so be it big like we still do need we still need companies right

you still need companies so at some point apple stock's going to be worth something

even if it goes to a dollar there'll be someone that'll think it's a good investment right

so you need companies you you know you still need countries like maybe they'll reorient right maybe

canada will break into french speaking and english speaking or not right but you still have political

systems um are bonds destined forever you know i mean there's still a place for bonds it's just

different bonds a different rate right if bond if bond yields go up then capital will flow back into

them it's the the argument that i make in the fiat standard is that what's driving the bond market

is not the credit worthiness worthiness of the borrower but rather the um the demand for a store

of value you know the reason people are buying greek bonds and brazilian bonds and up until very

recently lebanese bonds is because where else are they going to put their money they don't

they still don't know about bitcoin and they just think that there aren't any good ways where you

don't get equity risk but now you know with the discovery of bitcoin it becomes much um it becomes

a much more compelling place than you know lending to all these governments so yields will go up but

then governments won't be able to service those yields and so i think we'll likely witness the

bond market shrink and yeah i mean i i think there is there's also kind of middle ground between my

view and yours here and which is that governments will just learn uh discipline and they'll be able

to buy bitcoin they'll be able to save their uh you know save themselves by buying bitcoin and

they'll continue to be able to operate but they won't but they'll operate responsibly and they'll

have to shift towards uh you know they'll get a big boost from their bitcoin holdings going up

but it won't be um a system where they can continuously run eternal deficits they'll

get a boost that'll allow them to phase out their irresponsibility um hopefully you know relatively

uh bloodlessly and smoothly but then you know the the the big kind of high time preference

party of the 20th century has to come to some kind of end and the governments that managed

to transition to some form of responsibility will obviously do much better than the ones that don't

yeah yeah i agree okay great i mean couldn't you say that at the end of the day there'll be

three classifications of political reaction there'll be some governments that that uh

resist reality and they collapse and and maybe they collapse into civil war or they just collapse

into chaos and there'll be some governments that that fight resist struggle and eventually uh

reconfigure themselves after great deals of pain and agony and they'll be some governments

that that look at the world and they they uh transform themselves in an agile fashion

and they maybe they don't get through without k without stress but they morph

into something different and accommodate the world right what happens if a small country

the best example would be what if a small country that still has a currency starts

printing the currency to buy bitcoin the first one right there's a little bit of room right like

like what if uae right or or saudi arabia what if they were to go and just start

buying bitcoin with their currency like how long could i mean in theory couldn't you if

you ran a country like uh emirates couldn't you go ahead and buy billions two three five

ten billion of this before anybody noticed before and it might never weaken your currency right

yeah they've got an annoying strength capital right

yeah they're hosting world cups that you know cost them a lot of money they could be buying bitcoin

and watching the world cup on tv like a good uh i mean a good model to consider is norway

and sweden and other sovereign wealth funds right the the really they're you know you've

got regressive you've got cuba and venezuela right and north korea and they're not really

good at embracing property rights and then you've got the middle of the road conventional

and their central banks are holding you know u.s sovereign debt or gold but mainly just sovereign

debt and then you've got progressive nations and norway is one norway's got a massive equity

portfolio right switzerland's got a massive they they didn't use gold they actually used big tech

as a store of value um you know ksa and uae in fact all of the middle eastern countries

they generally have sovereign wealth funds that are holding diversified portfolios of property

including equity they own banks they own big tax sometimes sometimes they own like tons of property

real estate reits not to mention commodities right oil rights like mineral rights and the like so

i think uh i think generally the world is a more complicated place then we are able to

predict right like you're trying to predict what the market will do and is is it the whole basis

of austrian economics right that nobody can really predict the market you know yeah it's human action

at the end of the day and so everybody has free will right like microstrategy can do what it did

like microstrategy stock was 120 and then we flipped and it's up by a factor of five and

and what do we do we basically bought some bitcoin and then we started issuing stock to buy bitcoin

isn't that the same as a country buy some bitcoin and starts issuing currency to buy bitcoin

yeah right yeah so i guess it's a slightly different because it devalues the currency

when you issue more of it but if you back it up it isn't slightly different because when you

issue stock you devalue the stock right you'd if you're issuing equity you're diluting the equity

and if you issue currency you're diluting the currency but but the equity is a claim on the uh

on the cash flows of the company and the currency is a claim on the assets of the bank that issued

the currency if it is redeemable and uh if it's redeemable in gold or bitcoin then yeah

so that's what they've got to do they have to go on a bitcoin standard let's let's be

extreme right what happens if uae buys 10 billion dollars of bitcoin and the price of

bitcoin then increases by a factor of 20. and next thing you know they've they've got 200

billion dollars worth of bitcoin and everybody in the world knows they've got 200 billion

worth of the first thing that's going to bitcoin is the saudis are going to want to buy more then

yeah so i think i think the point here really is yeah

you can spend a lot of time fantasizing about how you never want any banks to buy bitcoin you never

want any companies to buy bitcoin and you never want any governments to buy bitcoin and since

they're not going to ever buy any bitcoin you're the enemy of the banks and the companies and the

government right yeah right and and you see that narrative right like like banks are the enemy of

bitcoin companies are the enemy of bitcoin not your keys not your coin the government's

the enemy of bitcoin but the other possibility which just turns the entire thing on its head is

what how would you feel if you woke up tomorrow and you found out that

goldman sachs did buy 10 billion dollars of bitcoin and uae bought 20 billion of bitcoin

would you be angry by the way your bitcoin would be trading at like four million dollars of bitcoin

and you could be angry and say no no give that back to us i want to go back to 50 000 bitcoin

look if institutions weren't involved in bitcoin bitcoin would be trading at like 8 000 right now

right if you look at you know the last 18 months so you could like just

we could unwind that and you go back to 8 000 bitcoin or you can move forward but

it's just a taste so you know my what's my big point here it's

it's like nobody can predict how the future will evolve except to make this one observation

people are generally rational and they take the path of least resistance and so at some point

it's possible that someone's going to buy the bitcoin not because they agree with with

your most extreme vision of no governments and no companies and living together peacefully in one

world currency maybe that's not why they're going to do it maybe they just want the money right yeah

for sure uh bitcoin is is far more popular than anarchist ideology that's for sure i i totally

so when she has that right when that happens then uh the entire thing is going to tilt a different

direction inconceivable right you don't you just don't even know which direction it's going to go

but the world is going to find its way forward and and uh you know like when the lockdowns took place

right there's this phrase life finds a way right you know like the jurassic park phrase when the

lockdowns took place we shut down cruise lines and we shut down airlines and we shut down theme parks

and we shut down movie theaters and if you're if you're uh an investor in the disney corporation

you could look at the disney corporation and you could say well they're in cruise lines

oh and hotels hotels airlines cruise lines theaters everything's shut down you know

and if you're if you're an analyst you could say well it's pretty obvious the stock

is impaired the company is impaired i should just dump my stock or i should short the stock

but at the end of the day someone went on television and said how's disney going to react

and someone went and disney went on top and said we're just going to do disney plus streaming

and they said well how many customers do you have like right now you know at the time of the

lockdown they were like the ninth largest you know non-launch streaming service and it would

have accounted for 0.1 of their revenue or 1 of their revenue and minus nothing of their profit

and you could just focus on that narrative or you get on tv and say yeah well we think by the year

2025 we're going to actually be growing a hundred percent year over year and everybody said this is

great they've got a plan stuck at an all-time high yeah and so you know and so the point really is

are you going to bet on everybody to lose or and not come up with the right strategy

or what are the odds that they're just going to find a strategy which is a winning strategy and

a winning way to accommodate right i mean nobody on d nobody from disney got on television and said

you know the you know streaming video will never replace the theme parks it will never replace

you know the the movie experience we believe families need to come together in our hotels

and be in our you know disney world rides i mean they didn't spend a lot of time

you know wallowing in self-pity and dealing with that reality just completely change the focus

talk about the new thing and move forward so i i think that uh everybody loves a winner

and bitcoin's a winner and the winning strategy is let everybody win with us right nice

definitely everybody can win with is it i don't care what government you know can governments win

yes all of them even the ones i don't like even the ones i don't like right can companies win all

of can the banks win yeah sure they can i don't you know you don't like that company because they

censor this thing no they could still win like at the end of the day if everybody wins with you and

your you know you have the most extreme values like multi-sig coal storage with you know

guns and a cabin and your own source of water and your own food supply you're still going to

be better off right yes you know your bitcoin's still going to be worth 10 million a bitcoin

yeah my view on all of this is to tell people that you know bitcoin is permissionless and that

includes that it's complete you can't stop people from selling ious for bitcoin you know people

think about it as if we need to stop people from buying bitcoin ious well no it's bitcoin holders

who are selling ious and there's nothing you can do about it and i think you know generally

as a libertarian leaning anarchist i i i don't get upset at things that are peaceful i can't oppose

people doing peaceful things that don't hurt others so i'm definitely with you on that now

i wanted to talk a little bit more about your um strategy for buying debt buying bitcoin with debt

i think you know your your appearance with this strategy was really the kind of um the glue that

held the fiat standard book together it's what allowed me to finalize this book because it really

made it all click to me that the way to win in bitcoin is to stack or gold with you know with a

hard monetary system the way to win is to stack as many units as you can you know get as many sats as

you can as many gold coins as you can and you know the more you get the more secure you are the more

you can feed your family the better off they are the more you can guarantee their future into um

into the future um when you're not there and that's how you win but then with fiat it really is

the other way around you want to stack a negative balance as much as you can you know and you've

said this before and it blew my mind but really the point with fiat is to die with as much debt

as you can you know you want to keep on rolling on debt as much as you can throughout your life and

um that and and so acquire hard assets and take on fiat debt you want to have fiat as your liability

and i think that just makes a lot of sense and it's really clarified my thinking about the fiat

standard in that this is this is this is really how rich people get rich under fiat they borrow

in fiat poor people hold on to savings in fiat and then they witness their savings depreciate

and the returns that you make from holding money in the bank don't keep up with inflation

and if you're borrowing you're benefiting from the fact that you're uh benefiting from the inflation

so i think this is this is um and you know i come from a background where i used to think

you know borrowing is bad and i you know for the first few years that i've heard about bitcoin i

first didn't buy and then i didn't borrow to buy and i thought you know i'll just wouldn't borrow

but in retrospect that was probably the second biggest mistake other than um holding on to gold

is that i could have borrowed lebanese liras um and bought bitcoin and like i've run the numbers

on it and it's just absolutely it's an absolute no-brainer in retrospect when especially when

the leader has lost 95 of its value in the last couple of years and bitcoin has gone up many many

multiples so i want to ask you um what do you think is the correct strategy to do

in terms of debt because we had this discussion in the last time and it was in late february when you

came here for the last time and you know you said things are going to be different from now on we're

not going to get major drawdowns in bitcoin i said you said you know something like 30 40 percent

probably i said well i i can see us losing 70 80 since then we haven't had 1780 but we did have

56 percent which is significantly large numbers so a lot of people who might have taken on the

strategy of borrowing um might have gotten wrecked and lost their bitcoin so what do you think is the

correct strategy to do so you want to borrow but then if you're borrowing you're leaving yourself

vulnerable to price fluctuations you could get liquidated okay well i mean the first question is

is who's loaning the money to you right and what are the terms of the loan so bitcoins up 163

on average each year for a decade if your time horizon is four years

right i mean i think no one ever lost money holding bitcoin four years right

i mean there's like a two-year time period when it was pretty brutal

otherwise you want to have a four-year time horizon

and um look if you if you um were borrowing you could have borrowed money on your credit cards

right i mean like you could have borrowed money at 15 interest and you still would have made a 150

yield right so there's almost no interest rate i mean nothing between 0 and 15 that would have been

too much in that entire time period now if you look out for the next decade what's your forecast

i mean i i think that expecting a 20 appreciation is not unreasonable on the next two three four

five years like will it go faster i mean yeah you would expect faster than that but

what it means is that any interest rate between 0 and 15 is probably fine as long as you have intent

to hold for four years or longer because you could in theory get a drawdown

12 months right that would put you underwater so you can't have any

any loan that comes due so if you look at the loans that are safe right any

loan you can roll forward you know for a reason amount of time is probably good

um a home loan a 10-year 15-year and 30-year mortgage against property is a no-brainer the best

sources of debt are subsidized by the countries the nation-states right so in the united states

we subsidize debt against real estate property especially conforming law but even non-conforming

we subsidize conforming loans via freddie mac and fannie mae and you could borrow money at

two and a half percent interest it's not mark to market so if you had any equity in property

you could pretty much borrow at two and a half percent and you could invest at a hundred and

sixty one percent right so what's the risk of that i i don't see the risk right like

is bitcoin gonna go up more than three percent a year for the next decade you know if if so then

it's a mistake not to maximize any kind of home equity loan right now

the united states government is supporting the mortgage market um even in jumbo loans

via buying mortgage-backed securities each month so even on jumbo loans and the like right i mean

isn't the cost of debt for lots of things three four five percent um i think that uh

any of these loans that are that are south of eight percent they seem to me like pretty

good money for an asset which we can reasonably ex it's going up at 20 x that rate right so

so if they're not marked to market against the bitcoin it's a non-question right now i think

the real issue is what would you borrow against your own bitcoin well if you borrowed against

bitcoin with a loan to value 25 percent you're probably safe that but i i would i try to avoid

if i was going to be marked to market i mean the rules in the equity market the us are you can't

normally lever up more than 50 loan to value and there's good reason for that right if you if you

had a million dollars of assets and you borrow 500 000 and then you have 1.5 million in assets

if you were to get a 70 a 66 draw down right then you're gonna get a margin call right so so i think

that uh when you lever more than two to one you put yourself in a situation where you can get

wiped out obviously everybody in the crypto area in the community is leveraging between two to one

and twenty to one or two to one and a hundred one that's why they get forced liquidated all the time

because they're doing massive leverage i i personally aren't i i wouldn't

i'm not a real big believer in and borrowing money that gets marked to market because you get

this destructive cycle right where the asset trades down and if you ever do get a margin

call and you're uniformly in that you could get liquidated then you're wiped out permanently so

i don't think that's a very good thing but if um if i had um

a million dollars of bitcoin and my choice was to sell a hundred thousand dollars of it

to pay my living expenses or borrow a hundred thousand dollars against it at six percent or

seven or eight percent i would probably borrow the hundred thousand pay the eight percent

and keep the million dollars of exposure then sell it because if you sold 100 in order to sell it

you would have to actually sell in some cases up to 200 000. like if you live in california

and you have a million dollars of bitcoin you would have 800 000 of bitcoin the next day you

would pay a hundred thousand in tax of the state of california you would have a hundred thousand to

live on and your stack would be reduced to eight hundred thousand right so if on the other hand

you were just to borrow a hundred thousand you would have a loan to value ten percent

and uh you would incur eight thousand dollars in interest over the course of a year

and you would have a million dollars appreciating it whatever bitcoin appreciates that so

if a bitcoin appreciates it 20 you'd have 1.2 million the next year right and then you could

do it again you could do it out infinite right at that level so you just have to be able to stomach

the volatility the way you stomach the volatility is you keep your loan to value really low

really low uh even smarter idea though is um is uh if you're a dentist or you're you're you

have some kind of business finance your cash flows like find it like you have a

business right if you can sell equity in the business that's a way of financing the business

and if you sell if you mortgage the business that's a way of financing the business and

both of those have the benefit of not being marked to market loans

well let's take the extreme what if i offered you a million dollar loan for a hundred years

on a on on against your personal signature and the interest rate was three percent

would you feel it's risky to buy bitcoin with that

like what's the worst that could happen not much nothing right you'll be dead in a hundred years

the worst that could happen is in a hundred years after you're dead the bitcoin is less worth less

than a million dollars right see so small chance i maybe you can come up with some way bitcoin

goes to zero the day after you take the loan and you can't pay the three percent interest

then i guess it comes due so slight risk of owning the bitcoin but you see as that as the term of the

loan extends as the interest rate falls and as the collateral changes you know debt goes from

being debt to being equity what if i just gave you the million dollars forever and no interest rate

and no redemption rate that's equity right yeah would you take that and buy bitcoin with it

probably why wouldn't you yeah like like if you're a dentist and your dental practice is going to

appreciate fi it's going to grow 5 a year you're going to grow your top line 5 your cash flow is

5 percent and someone said they want to invest in your dental practice and buy half of it and

they'll give you a million dollars would you give them half of your upside and then take the million

invested in bitcoin which you thought was going to grow at 20 a year for the next 20 years

you see in that particular case what you're doing is you're

diversifying your portfolio from a cash rich

value stock right your cash practice to now a property portfolio

so i think when you're really thinking about financing the question is

what kind of money can you raise and and what strings come attached to it

and it's different for everybody right it depends on what country you live in

if you live in the u.s you have fannie mae and freddie mac and you have like you need a car you

can pay for the car in cash or you can borrow money at two percent interest to buy the car

well everything is a choice of do i own bitcoin or not right

if i pay for the car in cash it's like i paid for it in bitcoin right

it may be worse it may be like if i pay for the car with bitcoin not only did i pay for the car

but i paid for it twice because i got to pay tax on the bitcoin if i owned the bitcoin so the worst

case would be to give up a hundred thousand in bitcoin to get a fifty thousand dollar car

the next worst case would be i had fifty thousand in cash i could either buy bitcoin with it or

i could buy a car with it and the best case would be i got i bought the car for nothing

and i accepted a three percent loan against the car

that i paid off over seven years and i kept the bitcoin you see or i bought bitcoin so

ask me a question would i rather borrow money at three percent sometimes by the way you can borrow

money at like zero percent interest to buy a car have you noticed like if the dealer has a subsidy

sometimes the dealer will subsidize the loan and they'll give you a no interest

loan or a one percent loan to buy the car so mike should i buy should i borrow money

to buy the car or should i pay for it in bitcoin yeah and and not invest bitcoin

the answer is i think i would take the loan i would take all the credit you would give me

and i would maximize the portfolio i think the general principle if you step back is um in an

inflationary environment right if the inflation rate is 15 percent the monetary inflation rate

is 15 and it's at least 15 right now if the inflation rate is 15 and the cost to capital is 5

and you have a use of proceeds if you've got a property that you believe will appreciate

faster than 15 let's say 30 right then all day long what you would do is you would borrow

you would take on debt and pay the 5 you would invest the capital into the property yielding 30

percent you would scrape the 25 arbitrage and the only thing you would spend your time focused on

is how do i negotiate the terms of the loan so i don't get forced liquidated by a capricious lender

like i don't want for example um if you could buy a house and the house was a three percent mortgage

and you could either pay for it in cash or pay three percent mortgage an inflationary

environment you would probably take the mortgage right probably now what if the bank had a clause

in the in the loan that said every month we can send an appraiser to your house and if we think

that your house is worth less because it got struck by lightning or your neighbors moved in

and they blur loud music or because people because the mayor instituted lockdowns in your city if we

think it's worth less we can mark down the price of the house by 25 and then if it gets marked down

below you know below the value of your loan then we can call the loan and you owe us the principal

immediately on demand now would you take the loan no yeah so the problem is the terms not the loan

basically borrowing on exchanges is the worst thing you could do

because the exchange could mark down the value of your collateral while you're asleep based upon

a manipulation and force liquidate you and take your life savings yeah it's like it's like you

went to bed and bitcoin was 49 000. and uh during the night it traded down to 16 000 for 13 seconds

and then the exchange force liquidated you and they took all your money and sold your

bitcoin at 23 000 and you've lost everything and now bitcoin is trading at 59 000 again

and how do you feel like you got yeah it's happened abused right yeah

okay so that's the problem with mark to market

especially mark the market when you when you post your collateral in the hands of a counterparty

you know and that could even be some like dogecoin guy manipulated the market down

like that the real problem in the crypto world is it could be yo-yo coin levered up a hundred

to one force liquidated rippling into each rippling into bitcoin in fact i'm certain

i'm certain that volatility from all these other cryptos does ripple into bitcoin you can watch it

right it's like someone hammers this thing 37 and the ripple is felt over here because bitcoin is

cross-collateralized they're pledged as collateral to each which is pledged as collateral to

yo-yo coin or something and these things are all highly levered and traded all the time

so i think you got to be really careful like in general about pledging collateral that could be

forced liquidated but i think that if you can actually raise debt with um fixed collateral

right the best thing is i mortgage a property i mortgage a building i mortgage a car i mortgage a

business i borrow money on a personal non-recourse loan you know something like that and then i use i

use that because you want long-term capital that's got a low interest rate but even at the end of the

day the interest rate is really secondary like whether you pay four percent or eight percent

at the end of the day isn't really as important as whether or not the collateral is marked to market

and forced liquidated on volatility right that's really the material thing that'll destroy you

right the likelihood that bitcoin will trade down 50 um for one minute sometime in the next

five years is high but the likelihood that it will trade fifty down 50 percent and stay there forever

is low right so you just got to understand that

yeah but you know now by the way safe i think one more point to make which is important is

the monetary inflation rate is um is the risk of doing nothing so

if the monetary inflation rate was seven percent seven percent monetary inflation every year and

you were thinking about investing in something right um you would you would think well

there's only a seven percent cost to do nothing but if the monetary inflation rate went to 21

now the cost is 21 per you have to believe you're going to get wiped out 21

of the time not to do something and if the monetary inflation rate went to 60 percent

then you would have to believe that there's a 60 chance of losing

all your money in the next 12 months to do nothing so as the monetary inflation rate

let's take lebanon right in lebanon if you if the currency lost 90 of its value in 12 months

and i gave you any other option as long as the other option doesn't liquidate you it doesn't wipe

you out with ninety percent probability you would have been better off to take the other option

so i think that uh the decision decision-making here your thought about um taking on leverage

becomes easier as the economy hyper inflates let's take the extreme i ca i tell you that

the local currency is going to lose 95 percent of its value in the next 12 months

wouldn't you think you really just want to mortgage up just about everything because that's

like 2 a week almost so yeah i mean certainly if you could get credit card debt or whatever

you'd be you know the the local currency return on digital property is going to be

180 200 300 a year like what is what does the number look like in turkish lira or argentine

pesos right now for bitcoin well we lost 12 months it's probably pretty ridiculous right yeah

yeah absolutely well what are your thoughts on inflation moving forward where do you see it going

do you see us sticking around the 15 20 range uh for the next few years or going higher or lower

or do you just not know much about the future and prefer not to speculate that's perfectly

acceptable answer by the way you know um on inflation you know what i i s a couple of points

one one thing i said today on twitter as i said there's four big myths the first myth is at cpi

the second big myth is that it's even a single number the third big myth is it's caused only

by monetary policy and the fourth big myth is that it can be cured by manipulating the interest rate

and i think that people have misconceptions about all those things on inflation it's it's caused by

by uh unhealthy policies of government by by the government meddling in the economy

in an unhealthy fashion that's what causes inflation in the same way that inflammation

is caused by unhealthy chronic practices in your personal life right and and if you continue them

the information continues and if you continue with the government engagement with the economy

the inflation will continue and you can't just stop it by raising interest rates to 15 right if

if we if we jacked all the interest rates through the roof tomorrow as long as there are tariffs

and there are you know there are labor controls and there are manufacturing controls and there are

travel controls and there are other government edicts and medical interventions those things

even without money printing if the money supply didn't expand at all you still have inflation

right if you do the simple thought test if the money supply was constant and i

pretty much made it illegal for anybody to work except on tuesday and thursday

the price of everything goes up right if i say that you have to have a seat in between you

and the next person on airplane the price of the ticket doubles you know there's they're also every

single every single edict drives inflation and you know we have more of them than in our lives right

never in our lives have we seen so much government engagement with the economy and

that's what's called the inflation rate if i wanted so so with that as a caveat right

since there is there is no one number the closest thing we can get to one number is a single a

single number for the rate of monetary inflation the cost of capital if we simply liquidated all

the capital in the civilization and we reduced it to dollars and we said at what rate are we

inflating that index and i guess i guess i'm persuaded it was seven percent for the a decade

for in the us and western europe from 2010 to 2020. i think um you know safe this is interesting

if i look at if i look at the s p index it was about 10 for that time period it's 13 right now

but we we include this massive 2020 before covid about 10 percent and i got a figure 7 percent was

monetary inflation 3 was some kind of productivity or something that's my best

guess and if i look at it right now in the past 12 months we've got 23 24 almost 24 on the s p index

and that means at least 20 21 monetary inflation that doesn't account for the dilution from issuing

excessive debt and equities in the s p 500 so if you allowed for that then you could you could make

an argument that we've got monetary inflation equal to the s p or or slightly but we're

looking at monetary inflation in the western world tripling and if i look forward the next four years

i there's no circumstance under which you can't you wouldn't consider it's

got to go at double the rate it was from 2010 to 2020 so it's minimally 15 a year

i figure and then it's logic says between 14 and 22 percent is the best guess

and and i would allow for a little bit of flexibility there

like i i would swear no chance it's going below 14 no chance but but you

know if you're a pessimist you would say 22 23 and if you're an optimist you'd say 14

and then you would say maybe and then you would say that for four years and then maybe we'll

get some paper 2024 between 2028 and maybe we can taper from 14 to 12 to 11 to 10 but

you know at the end of the decade could we get back to being to in fighting at seven percent

right maybe that would be success right and and the catalyst for that would be digital

transformation of the economy maybe digital you know the the growth of digital property a lot of

bitcoin the digital transformation of everything else of assets the digital transformation of

products a massive com what we're really we're distorting the economy so much though

that we're really changing the definition of gdp and maybe even i mean for example

if no one goes to a movie theater ever again and if we eliminate 90 of business travel then both of

those are deflationary and we could say we have more business meetings and we watch more movies

but the economy will contract so i think that that that will start to come into play it's like that's

like a hedonic adjustment in a way like it's it's not that different than your sirloin steak became

soy burger or like meat meat derivative product something but you know it's been so long that

we forgot that we ever had the other thing so we don't know to miss it i think we'll see some of

that when you get out when you get out more than a decade that's what makes this really difficult

but i i think you want to plug in a number plug in 14 but now i think that the wild card here

is that's in the united states and western europe but i really think that what we're

seeing is the system cracking in on the fringe in turkey in argentina in all south america

you know the interest rates in brazil are what right nine percent right now and the interest

rates in turkey have been 16 15. so i think that uh in the developing world you're going to see

something different right if if the us inflates at 14 what people haven't

really factored in is that everywhere else they're inflating 20 percent to 30 percent

and the question is what are the consequences and i think i think there are two really big

trends right which is people are going to snap up digital currency if it's available

as much as they can get their hands on and they're going to snap up digital assets

a la bitcoin and no it won't be like everybody because to your point there's so much stubbornness

there's so much inertia right you're really telling me their people are believing in the

lebanese local currency even today yeah it was it was stunning like one of these blogs that i

follow which generally has semi-decent analysis on economics so they're anti-price controls and stuff

they were saying the lebanese lira is the most undervalued currency in the world and it should be