Video - Bitcoin in the Boardroom with Michael Saylor

michael how are you man awesome

it's a double awesome day double awesome

well lots to talk about

but listen look really appreciate you

coming on um

i know you wanted to save your favorite

bitcoin podcaster last um

so i appreciate that man and uh yeah

we've we've got a massive thing to talk

about haven't we we just

a huge like what time in a huge

announcement that square

hasn't hasn't invested any money in

ethereum

[Laughter]

yeah i woke up this morning and i and i

saw that and made

it made reading twitter worthwhile for

the year yeah

it was it was just an extraordinary

piece of news

why do you think they have why do you

think they haven't put any money into

ethereum

well i think in the crypto industry

there's two

competing narratives in school

two competing schools of thought you can

describe crypto

as as vegas and cyberspace

or you can you can describe crypto as

the savings alone

at the end of the universe and if what

you wanted was the savings alone at the

end of the universe you want bitcoin

it's about

trust reliability put it there

leave it for 30 years and you don't

really want

lots of exciting things happening and

and

and on the other hand the entire d5

movement and

and the ethereum movement is all about

smart

people doing complicated things in a

hurry

in order to get some edge on

some other smart person

and uh and it's a little bit too much of

a wild west and so

if you're attracted to the one thing if

you're a trader then maybe you like that

but

i'm not a trader i mean corporate

treasuries aren't traders

they're looking for the savings loan at

the end of the universe

right man well listen look it's it's a

strange one because

obviously you made a huge like bet on

bitcoin right

we'll call it bet for now um square have

a much bigger balance sheet but have put

50 million dollars in

but in some ways it's it's also just as

important because that's like a

that's a signal to silicon valley that's

a signal to

other fortune 500 companies right

oh i think it's more important um i

think it's more important because

first of all jack is such an iconic

figure and such a leadership figure in

the world

i mean he's he's a world wide

leader right he represents something to

everybody

and second they didn't

they didn't make this move as as just a

financial gesture they don't need the

money

right they have more money than god 10

billion in cash that's sitting around

but the market caps of twitter and

square together

are 150 billion or

closing on 200 billion or something so

this is not about money

this is about empowerment right and if

you read their

uh their press release what they said is

we believe the cryptocurrency in bitcoin

and specific

is going to empower an entire class of

people all around the world to live a

better life

and and i think that that's

incredibly powerful because now you have

two different reasons that you might

want to invest in bitcoin

one reason we think it's a good treasury

reserve asset and it's safe

and it's financially responsible the

second reason is

there's 932 million people in those 20

countries with collapsing currencies

that have no chance at a decent life

and this is a lifeboat for them right

it's as i said it's like an arc of

encrypted

energy to escape the flood

of a currency collapse and i think

square

they wrapped they wrapped that entire

move uh with uh with the agenda of

make the world a better place who wants

to stand against that

who exactly listen so i imagine you woke

up you saw that

and first yes amazing

uh and then i imagine then you also

checked out the bitcoin price

but i haven't checked it and confirmed

it but i did see someone say on twitter

that

the micro strategy stock price went up

five percent is that true

i i believe it's up today and

and i am not allowed to comment on the

stock price going up nor going down and

so i don't make a practice

of that i like him uh i'm delighted that

bitcoin price is up and i'm delighted

that this is injecting positive

constructive

uh inspirational energy into the space

you know and i think only good things

are going to come from that well i

didn't see any micro strategy news today

so

it's that thing where uh micro strategy

share

micro strategy is like a bitcoin etf now

i mean you can't comment on that but i i

can

well listen look that's uh an amazing

start to the day uh it's that kind of i

know you you're aware of parker lewis

and his writing but it's like that

gradually

then suddenly it's just like it's

another one

but this is such a big one and i do

wonder whether this will signal out to

silicon valley i

because people do respect jack dorsey

and well firstly i i wonder whether

twitter themselves will also

you know make an investment um but i

wonder if the likes of facebook will be

looking or

other silicon valley companies are

thinking look we're selling all this

cash

why are they doing it should we consider

it because

even though it's 50 million it was

actually a very small percentage

of what they have on their balance sheet

yeah well i think there's a a parade

of wonderfuls that can follow this you

know

for example uh there are a lot of people

that uh

that will look to uh square

as an extraordinary progressive

successful company

which they are right it's just

extraordinarily successful

and they're going to want to copy uh

this because

who wants to argue with success and

especially technology

progressive success there's another

group of people

they're gonna that are going to stop and

say what do you mean

when he said bitcoin is a tool for

empowering

those in the world that uh that don't

have other options right

what's this empowerment message uh mean

and they're gonna start thinking about

it and they're going to realize that

people in sub-saharan africa can't buy

apple stock and wire it

to their loved ones in order to avoid

being

beaten to death by by a collapsing

currency

right and that's that's the difference

right

nobody's going to buy a t-bill they're

not going to buy bars of gold they're

not going to buy

stocks they're not going to buy real

estate in order to avoid

having the currency collapse and being

impoverished or starved to death

but in fact right the real news from

yesterday that i tweeted about was

bitcoin hits an all-time high in turkey

which is meaningful for

90 million people and there was an

awesome story

on medium about the other 19 countries

where the currencies are also collapsing

and so when people start thinking about

an investment that's going to change the

life of a billion people

and then they start thinking well what's

the next billion people that are gonna

have their currency collapse

and then they start seeing there is a

fundamental difference between buying

amazon stock

and buying bitcoin because amazon stocks

not gonna fix the problem for a billion

people in the world

and i i think that that's awesome to

bring that people's attention

i think the third thing the third

wonderful thing that's going to come

from this

is that if if jack does it

there's a whole raft of other

billionaires

that are sitting on other companies with

treasuries and they start thinking

well if it's the right thing to do for

the world and if he did it in a

courageous fashion

then why shouldn't we do it in a

because it's the right thing to do for

the world and that takes us to the

fourth

the fourth wonderful the fourth

wonderful

is all of the hedge fund

and fast money dudes on wall street just

sitting about

sitting around talking about how to

front run all the non-traders

right i'm not a trader like i buy it

i'm thinking i'm gonna hold it until you

rip it from my cold dead fingers right

if

if i don't fail and whatever else i'm

doing in my life

it's going to be passed on to my errors

and my heirs errors and

if i run into a crisis or a problem

i'm going to take some out of my piggy

bank and i'm going to convert it to fiat

to solve the problem that's

that's the view of uh of a long-term

investor that's the view of someone with

conviction

right like that's why it's silly to talk

about i sold it this week so i could buy

it cheaper next week

you look pretty silly on a day like

today

so there's that group of people but

there's another set of fast money

crowd fast money traders on wall street

and the hedge fund guys and they're

thinking and obsessing over the shape

of the bend of the reaction curve

you know they're trading gamma and

they're thinking i'm gonna short it to

buy it

to short it to buy it to and

now they're thinking well maybe we can

get ahead of the guy that's about to

follow jack dorsey's lead

so jack did it then there's someone who

just is greedy

right they just want to make the money

they're going to get in between the

front run

the next decent committed investor

and that creates its its own

self-perpetuating thing and of course

then you have just a raft of publicity

and news stories and you'll have a whole

set of boardroom conversations and

corporate conversations both not just

in in public companies but in private

companies

and in those private companies they're

thinking well this is not even that

you know one percent means it's

immaterial which means

you don't you probably don't have to go

to the board

and get you know and you don't have to

go through a whole set of approvals that

you would need if it became 10

or 20 percent or 50 right like i

wha what we did we wanted to telegraph

because it's not one percent

but but one percent makes a difference

and i and if you're a private company

well you don't have to worry about that

you just move

and so i think that there's just uh an

avalanche of wonderful things that

happen

and all of them add up to this this

simple observation right

bitcoin is a good thing and it's a safe

thing

and you might want to get some and catch

it in case it catches

on right yeah that's worry

and that's enough that's a pretty good

story well but there's another

interesting news story that came out why

something someone twitter today i don't

know if you noticed but

uh argentina is heading to its tenth

default but there was a tweet by

professor steve hanke who by the way is

he's not a bitcoin believer but this was

interesting he put

argentina's net liquid foreign reserves

have evaporated

and the peso is tanking again argentina

has no strategy and argentina is really

interesting because

i always talk about like if i try and

talk to my friends go down the pub and

they're like pete tell me about this

bitcoin thing it's always hard to

explain it when i was out in

uruguay i was sat down with a couple of

people from argentina if so easy to

explain

they just get it we just explain yes

money the government can't steal they

can't inflate away and they can't see

they're like oh

how do i get some so to see that

on the same day

i i feel for argentina and i i have

business in argentina in fact i have a

very

we are the number one business

intelligence company in argentina we've

got a great business there and i've got

great employees there

but you want to hear two good argentina

stories from a non-bitcoin

yeah okay here's my first i had a

million dollars in argentina 10 years

ago

and a bank account and i read the news

and there was no bitcoin and uh so i did

the best thing i could i said put it in

bank of america's branch

in rio and uh

i'm sorry uh in bonnezar's i guess

gotta get my city straight put it put it

in a bank of american bonus errors

good now move it into a us dollar

account

great because i don't trust the peso the

peso is trading one

one peso to one dollar is pegged

and i said i'm reading all this news

that they might go off the peg

so put it in dollars i and then i said

can you just wire it back to the us

and they said my lawyers go no that's

illegal capital controls

i said i so i can't i i can't get my

money out

no okay we'll put it in bank of america

and um bonus errors great

so in rapid succession this happens

press release all

us dollars in argentina are hereby law

required to be converted to pesos oh man

you're a million dollars million pesos

next day

the peso is not peg is broken and now

the peso trades 10 pesos to the dollar

and i had a hundred thousand dollars

worth of pesos in 24 hours

and somewhere after being beat to death

a couple of months later it's like

oh and now you can wire out your money

if you pay a 20 or 30 percent fee

so my million dollars became about 80

000

in short order and and that was my first

experience

with uh but and we were a wealthy

company right so

it just irked me but i had money

elsewhere

if i had if that was the only million

dollars in the world

and you took 90 percent of it it crushes

you

so i felt for the argentines then but we

kept doing business and we do business

and pesos

ten years go by nine years go by the

year is 2019. i still don't know bitcoin

so i start reading the wall street

journal hold on hold on you're saying

are you telling me 2019 you still didn't

know bitcoin

i was an idiot no no no no that's just

interesting

i'm going to come back to that i look i

about it in 2013

i forgot about it i got wrapped up into

the rest of the world i was busy doing

my thing there are a lot of reasonable

people that are just busy doing other

things and they don't focus no it's not

so i really didn't

yeah no it's not a criticism here's what

i know it's like it's how quickly you

moved them when you found out

you know uh wars have a way

of opening people's minds to new ideas

you know if you if you read the

structure of scientific revolution by

thomas kuhn he talks about paradigm

shift and the message is

people don't embrace new ideas until

they die

and and uh you have to wait for the

entire generation to die

intelligent people don't embrace new

ideas till they die

unless there's a war right and the war

is the one

is the one exception like world war ii

comes along

and you get some new ideas or as trotsky

said you know you may not be interested

in war

war is interested in you and when some

when when there's a war on

covid or there's a war on currency

and you get slugged in the face or when

the currency collapses by 90 percent

then then not being aware of something

flips to oh my house is on fire where

was the fire extinguisher thingy again

that i

didn't think about so i think this is a

year that opened a lot of people's minds

yeah

2019 i still don't know bitcoin

i read the paper the peso is crashing

again

and i started and i start having anxiety

about our

our cash i'm like how much money do we

have in argentina

my finance people like i think a million

and a half dollars

now we have we had 600 million dollars

elsewhere

you know so they're like well it's just

like it's not that much

first their answer was it's not that

much i'm like tell me how much again

a million and a half dollars maybe two

i'm like well tell me exactly how much

i still care yeah well like 1.6 million

dollars

i said so can we can we repatriate it

well no there's capital controls we know

how i did i said

i said can you buy gold with it

no we can't we could buy gold i said can

what

can you buy anything and carry another

country well we can't we don't think we

did i said

can you buy it okay this is true i

literally said to my

my finance person my treasurer with my

general counsel

in the room i said can we buy a yacht

with it and sail the yacht to the

caribbean

please tell me you did that

they looked at me like you're

they looked at me like are you you know

just like

you can't tell your boss that you

batshit crazy

but they're like we don't think we can

do that

i said i said peter i said

i'm deadly serious buy a boat

and sail it to the caribbean get the

money out of the country they said

that we don't think we can do that and

so that was

an example of me just not winning

an argument or not winning discussion

the final result

or the resolution was we bought some

some govern some sovereign

debt uh something from the argentine

government that we could legitimately

move out after we took a 20

haircut man you know and so and so that

was

my two argentina stories now

if i had it to do again today the

question i would have asked instead of

saying can you buy a boat and sail it to

the caribbean would be

can you buy bitcoin of course of course

oh man the country's such a basket case

i mean a lot of places in south america

are

um organized one of the places i've been

this uh okay

but i mean i went out to venezuela

earlier this year

again it's just these places are such a

basket case

um but explaining to bitcoin to them is

like really

it's really easy anyway listen we've got

a lot to get through

um did did i

i can't remember because we spoke before

did i tell you about that time you first

messaged me

tell me so i remember doing it so

on the day that by christ before you

knew me

peter i i knew you you and i were on a

first name basis

i had listened to 10 or 20 hours of you

this and what bitcoin did before you'd

ever heard of me yeah i hope that was

more

you listened to more of that than you

did a pomp but listen look i

i get a my dms are open right and i get

a lot i get a lot of messages

and and a lot of them are just like

nonsense so you have to just

you filter them very quickly on the day

your news came out

it was like uh you'd message me you dm

me

but you didn't send me a message you

just sent me a uh

link to the tweet and i was just like

whatever i don't care whatever this and

just ignored it

and then i saw i think something like

nick carter tweeted about it i was like

oh what's this and read the story i was

like

oh that's cool i should try and talk to

the ceo trying to get on the podcast so

now i was googling microstrategy

microstrategy ceo and it comes up

michael saylor i'm like okay

so i click on uh the link in the google

search results it comes up with you

and i'm like oh his dms are open i click

on your dns and there it is and there's

the message where i'm like

oh [ __ ] you messaged me so big big

confession there

peter i didn't i didn't know anybody in

the bitcoin community

and they didn't know me i was a i was a

non

person and so i made a list

i made a list of the 12 or the 10

most influential people in the bitcoin

space

and i thought well maybe if i message

each of the 10

one of them will notice it and they'll

post it because no one's following me

and so i so i was uh i was

doing the best i could with the tools

yeah that i had at my disposal my

mistake well listen look we got we got

here in the end

a bit of a uh you've been busy now this

last few weeks right

in the yeah yeah we're pretty busy doing

a lot of things

working hard no i mean like

you're in the bitcoin space you've been

done doing a lot of interviews you've

been you know become known

like so confession number two i haven't

listened to any of your other interviews

yet and i did it on purpose um i tend

not to listen to

other bitcoin podcasts because if i know

if i'm going to interview person i don't

want to be distracted

like this one i i purpose

yeah they're deadly boring and i kept

all really good stuff of course like you

said i mean like i said you

it's your favorite podcast so but no i

haven't listened to the others i do know

you've talked about

like your career history i know you

talked about that with palm so we won't

bother doing that

um but there is there is a bunch of

stuff to talk about firstly though like

how are you finding because you said

2019 that's really interesting so you

discovered it obviously went deep down

the rabbit hole quick

pulled the trigger which is amazing but

how

like how are you finding navigating the

space because

it can be great and it can be

unforgiving um

but how are you finding it

i like bitcoiners right okay i i love

everything about them right i mean i

i love the the austrian economic

sect and i love the libertarian sect and

i love the people that have read

science fiction and robert heinlein and

and the moon is a harsh mistress and

there ain't no such thing as a free

lunch and the citadel people i love that

and i love the um i i love the people

that are focused upon how we empower the

billions of people

bank the unbanked and i i love the

techno enthusiast

and uh i love the pr i love the

progression of it and then i love the

refreshing contrarians and the skeptics

and uh and the likes it's a it's an

interesting community with people with a

lot of passion

some of them can be like people can get

bent out of shape

over the smallest the smallest thing you

know you'll trigger them if

if you were to say something little you

know that

once once somebody thinks that their

encryption is better they're like

bitcoin's not encrypted

you know or once somebody thinks their

transactions are fast or like bitcoin's

too slow

or once they think that you know

the ones that want to bank the unbanked

get kind of upset that maybe people with

money might get a benefit from it

and they're like you know we can't have

the institutional interest hijack this

thing

and so there's a lot of people that wear

their heart on their sleeve

but i'd rather have it that way than the

other way

i mean the other way is just a bunch of

mercenaries that don't

that don't give a damn about anything

like the guy that buys bitcoin so that

they can

make it three percent trading yield and

sells bitcoin like

that's fair that's too much for me i

don't want to be

in a world full of mercenaries that are

just

looking at me as a one-night stand

it's boring as well um

okay before we get into it we we like i

said we've got a lot to get through the

one thing i did want to talk to you

about

is how much exposure have you had

to how the kind of open source

dev world works because one of the

things i was gonna i know it's a bit

cheeky but i was gonna pitch it at you

is that

um you've already made a massive

investment but have you like have you

considered or would you consider

like dev sponsorship have you spent much

time looking at that stuff

you know as i got in the bitcoin

community i i realized

that the real unsung heroes

of this space are the developers that

are that are working on the software

especially things like bitcoin core

if it doesn't get upgraded we all have a

and maintain

we all have a problem and if it gets

upgraded

too enthusiastically we still have a

problem

and so so then i started thinking

who's paying all those people

to to keep the heart you know and the

soul

of bitcoin beating and uh that

that's a rabbit hall that i'm getting

i'm moving down right now i've been

um i've been on

uh a journey to get more educated as to

how how bitcoin core and how how

bitcoin software in general gets

maintained

tested developed start to understand the

consensus mechanisms

etc and i would say

the conclusion i'm coming to is we need

to support it

so so peter i think you convinced me

uh our company is going to start by

supporting a bitcoin

developer uh i got to figure out which

big

developer but uh but we're going to

start by supporting one

and then i and i think we'll evolve and

increase our support over time because

it's amazing

the unsung heroes of this space

that are doing they're the keepers of

the flame are the developers right so

if you want this thing to last for 30 40

50 100 years

we actually need passionate developers

they're going to maintain this so yeah

it seems like i should be supporting

that effort the company should be

supporting that effort

very i i probably took that planet when

i started but now i'm not

no i'm i'm appreciating the need for it

but that is so cool

that you know because it does rely on on

it's like there's one of these weird

things with bitcoin like you can own it

but

but some people have a sense of

responsibility to support it

in other ways there is a lot of people

supporting developers the fact that you

would do that's very cool

look we'll have that conversation

offline because i guess we have to think

about who who would be the first person

to speak to

about who you would want to consider

supporting and you might want to figure

that one out yourself

um but that's very cool i will help you

out with that

okay so i am that's very cool what a man

that's amazing okay

so the the first era i want to go into

is that and interestingly square came

out with their announcement today

and also talked about um releasing

almost like a guide for people who

wanted

to invest in bitcoin so i thought it

would be interesting also

just to go through your experience as

well um

cover that before we get into some of

the juicy details about like

what you think about bitcoin some of the

interesting topics where i'm sure we'll

battle on some of them but

can you just talk me through the

timeline of of how this happened so

you discover in 2019 what the timeline

was

up until the point where you not like

the internal one where you made the

decision you think

yeah you know what i i we need to do

this can you talk me through that kind

of like timeline

the world the world undergoes this

enters into this pandemic and all the

geopolitical reaction of the pandemic

starting mid-march by mid-april

uh it's pretty clear to me

that there's going to be a k-shape

recovery that what we've

what we've got is a massive fed

intervention which has

inflated the value of fixed income

securities

and stocks back to all-time highs or on

the way to all-time highs as though

there was no pandemic and as the

as though there is no lasting

consequence or economic consequence to

the pandemic

and then on the other hand main street's

shutting down and uh and

there's there's what they say on tv and

then there's what you think

and what i thought was everybody on

television was being very optimistic you

know as we started with 15 days to stop

the spread

and uh then it became maybe by easter

and then it became well not quite yet

and then you know and then it became one

thing after the other and so

by april it's pretty clear there's a

disconnect and

that disconnect causes you to question

all the things you thought you knew

about money

and all the things you thought you knew

about the economy uh

if if you believe that inflation is less

than two percent and the fed is managing

this really well then maybe you would

have noticed that interest rates just

start

jumping back up to five percent and

they're two and a half

and you're thinking well maybe we'll get

there to five and it's like a two

percent

thing when and when interest rates go

from two percent to zero

in a matter of days and then when

when the sentiment becomes well i'm not

thinking about raising interest rates

and i'm not thinking about

for

many many years and you and then you

realize well

assets are going up cash is not going up

in value

inflation inflation in theory is not

here but

asset inflation is obviously here so if

there is no inflation how come i can't

afford to buy anything that's going up

in price so rapidly

if there's no inflation and and

from that point you start to reassess

your views about

uh the impact the intervention of the

central bank and the impact of

the government and you didn't really

have to address it before but then you

have to address it

so i would say i was kind of woken from

my slumber or shaken

out of uh a lithu

by about mid april and then i started

about six weeks

of intensive exploration and that's when

i discovered

the bitcoin community the crypto

community

i started uh going going down the rabbit

hole and i'm

i'm reading the internet of money and

i'm listening to a bunch of your

podcasts and i

i am listening to some pop podcasts i'm

not gonna lie

but i'm also watching debates

between eric boris and peter schiff and

then i eventually find

i find i find at some point

i remember you saying you disagree with

safety

sefedeen's view of arts yeah he's wrong

and food

all right and i'm like who is the

safedeen dude

and because you're talking about him so

i guess i better read it

and i i understood what you were saying

and i get that uh

and uh i uh but but the the nuggets i

took out of the book were the seven

percent

expansion of the monetary supply for ten

years

right and then that's the eye-opening

thing

for a decade and then once you once you

see that the monetary supply is

expanding at seven percent and and there

is no

inflation and interests are low and then

you see

that uh that the s p 500 is is going up

by eight percent a year for a decade

and then you start looking at the bond

rate and you're like

okay well interest rates on the 10 years

went from 550 basis points to 50 basis

points

then you'd realize that a 1 million bond

inflated to be

10 million you have to pay 10 million to

get the same

550 000 in interest

that you could have gotten so sorry to

get the same 50 000 in interest that you

could have gotten for 1 million

10 years ago and that means the

inflation rate on a bond is 22

and so once you get that and that's a

insight i had between april 1st and june

then i realized i'm on a melting ice

cube of 500 million dollars worth of

money

the purchasing power is dwindling at 10

to 20

a year i have to do something and then

just become a question of what are you

gonna do

and uh i you know i i'd cycle through

all these other

these other investments but bitcoin is

the purest

it's the it's the purest treasury

reserve asset

if you're if you're looking for a if i

had a hundred million dollars and i

wanted to put it into

a a vault and take it out in 30 years

maybe if i wanted to put 100 million in

a vault and take it out 100 years from

now

and most people they roll their eyes

when i say this because they're like

well

who's gonna live a hundred years who

thinks about it that's not the point

the point is when you're thinking about

a hundred days there's just a bunch of

noise

that you know it's all it's all

irrational there's that phrase the

market can stay

irrational longer than you can stay

solvent

and so what people think about 90 days

or one year or two years or three years

then you're just making a bunch of

decisions based upon the greater full

theory i know it's stupid to do

it's it's stupid um to loan money at one

percent interest

but if there's a fool that's going to

actually agree to loan it at 50 basis

points for the rest of my life

i'm actually going to make a lot of

money when that other pool steps into

that trade so

the greater full theory kind of gets

gets into the mix when you take a

one two three five year time frame when

you go out ten years

it gets different but when you go to 100

years it's extremely

clarifying because now you realize

the structural defect of every other

idea you have

with uh with a gravitas

so when i started saying saying what am

i going to do with this money and i

started thinking

10 years out 30 years out 100 years out

and then i and then i discounted back

it became clear that real estate bonds

stocks you know uh corporate debt

sovereign debt

gold silver commodities

none of these things going to work they

all have defects with them

and and we can go into to all of the

defects if you want light but

the conclusion is they all have defects

and you're going to lose 99.5 of your

money if you leave it in the bank

over 100 years you're probably going to

lose 95

of your money in gold but you might lose

it all in goal two over a hundred years

for a lot of reasons

tell me definitely in the best tell me

that one because i would have thought

gold

i would have thought gold would have

been a kind of safe but unless

you think bitcoin is destroying gold's

value proposition

by it's an important point maybe the

single most

important point uh the single most

important attribute of bitcoin versus

gold that people do not understand i

think

because they're not really thinking

deeply about the problem

and it's this go into

any bank in any major city

in the year 1900 and put a

put a million dollars into gold

okay think this through you have a

million dollars in the year 1900

you walk into the best bank in tokyo

and you buy a million dollars of gold

how much money do you have by the year

2000

i mean i don't know because tokyo

did they win or lose the war okay they

lost the war

okay in 1945 they lost the war

right the bank failed the government

fails

now go into beijing in 1900

by the year 2000 what happened to your

gold it's gone

pick a city in the western world by

bonus eras it's gone rio de janeiro it's

gone

berlin it's gone but it's gone twice in

berlin

you would have lost the money in 1918

when they lost the first world war you

would have lost the money in 1945

you probably would have lost the war

when the weimar republic failed

and the nazis took over in 1933. there

are three regime changes

you would have lost your money and paris

you would have lost it

when the germans walked in marched into

paris

you know in 1940. give me a city

where you would have not lost your money

bedford

wait try new york try new york you would

have lost it in 1933.

the united states won every war in the

20th century

you would have lost your money in new

york dc san francisco and chicago

london not clear

you might have had the gold seized in in

a currency revaluation in london i

haven't studied that one

off the top of my head i'm thinking

maybe you would have not

lost all your money in geneva or zurich

maybe that's the only place right i mean

rome doesn't work but but how about

madrid

nope spanish civil war okay so

that's counterparty risk in a hundred

years

there's a 95 percent chance the bank

fails

or the regime fails right 95

if the if the bank doesn't fail the

regime doesn't fail and nobody sees your

gold

or your money right and and the currency

doesn't collapse

in the best case miners are going to

produce two percent more gold every year

if you produce two percent more gold

every year the half-life of gold is 35

years which means you go from 100

million in gold to 50 million in gold to

25 million in gold to 12 and a half

million in gold

that's assuming the price of gold is

flat

if the price of gold tracks inflation

you're gonna get two percent more gold

you're going to lose 87 percent of your

purchasing power over 100 years if the

regime doesn't fail

but there's a problem with that because

it's a commodity

okay i got my start in business peter

modeling commodities for dupont

and exxon like petroleum

nylon right fibers polyester

all these commodities do you know what

the problem is with commodities

the problem with commodities is it's a

dirty word no

intelligent business person ever

in a hundred years wanted to be known

for being in a commodity business

when i'd sit around with the dupont

executives like oh we got to get out of

this business this is commodity business

uh this business was really good until

it got commoditized