You have a 20th century economy with defective assets, and then you have a digital opportunity where you can actually run on a digital capital that is 100% available, where the capital has a useful life of 10,000 years.
You know, it works for anybody, right? It works for anybody at any stage in the hierarchy. There's nothing more valuable than knowing where an asset is going to be in 20 years.
Today's video is a very special video for this YouTube channel because this is a Bitcoin only and German only YouTube channel, but this video will be in English.
And the reason is we have a very special guest and you ask me so often to interview him and yeah, the time has come. We have micro strategy founder Michael sailor here in the interview for my German audience. You probably hear this video in German because YouTube will send you the German voice line.
You can change this back to the original English voice line by using the settings from YouTube down there. And now I wish you a lot of fun with this interview.
Hello, and hi Michael. It's so nice to have you here on my channel. I think it's the first time we met together in front of camera, but yeah, nice to have you here. Yeah, thanks for hosting me.
So Michael, let's do a little bit jumps through the history your history, your Bitcoin journey. So I think everyone in the Bitcoin community knows you as one of the Bitcoin bolts or the biggest Bitcoin bolts, but in 2013 you made a tweet.
It said Bitcoin's days are numbered and yeah, it seems like it's just a matter of time before it suffers the same fate as online gambling. What made you change your mind in 2020?
You know, in 2013, I was more of a tourist and I had about 100 opinions on 100 different things. And I wasn't really heavily economically invested or emotionally invested in any of those things.
And so that tweet is, you know, is the tweet of an intellectual tourist looking from a distance without really have what I didn't have in 2013 as I didn't have a need for Bitcoin.
And I didn't have a deep understanding of the technology, you know, and the ideology of Bitcoin. I just had the observation of a, you know, a casual intellectual.
What changed over the next seven years is I think primarily I had a need for Bitcoin, right? I mean, the most important thing is to is to need something I, you know, I joke with people I say Bitcoin is on a need to know basis.
If you don't need to know, then you're not going to dig deeper. So the first thing that happened in 2020 was the COVID lockdowns and, you know, bringing the entire world economy to a grinding halt will make you stop and take notice. And, you know, when, when the economy stopped when the office is shut down.
We had to embrace a lot of new ideas. For example, Zoom or remote meetings and the like, right? Things that I had rejected for the previous decade, all of a sudden I accepted in a couple of days because I had to.
And then what followed next was in essence, the equivalent of a lockdown of the financial market. If you take interest rates to zero.
Right. You're basically trying to stop the passage of time. It's like trying to make water flow uphill. Right. You're stopping entropy. You're starting to interrupt gravity.
Right. The idea that all capital shall be valued at zero.
It's such a such a strong point. It's, it's, it's equally strong to and no one can come within six feet of anyone else on the planet.
If families can't meet, you can't go to the office. No truck can roll. No airplane can fly. So in the same way that we basically shut down Main Street, we kind of shut down wall street and in a weird sort of way.
So, so that cost capital went to zero and that caused a huge spike in some assets, right? Like stocks went through the roof.
And that was a paradigm shift. I mean, a massive disruption because what you had was was a world where a set of decisions got made.
And the decision was, if you work for a living, you can't anymore, you're going to starve to death.
And the second decision is, if you have cash in the bank, it's now worthless.
And the third decision was, if you happen to hold a piece of real estate or an equity, it's worth twice as much.
So how is it possible that certain assets are worth twice as much and certain people got insanely rich and had a great year when the entire economy shut down and the value of capital was zero.
So all the sudden that's such a disruptive disturbing event that that would cause you to go back and question your premises.
So at that point, you know, I had a problem and the world was disrupted. And that was, and that 12 weeks I accepted zoom, I accepted remote work, I considered what what true digital transformation was.
And then I had to start thinking about capital and review, you know, if if you didn't really care, for example, you might not care that a few people in a central bank set the cost of capital for the world.
You want, you might not care if you're invested in a portfolio of big tech stocks like Apple and Google and Facebook and Amazon.
And if those stocks keep going up and you feel like you're getting rich and the world is working, then some theorist in the Bitcoin community says, you know, there's something wrong with central banking, right, the creature of the Jackal island is not a book that I would have read in 2015 because, because my view is, oh, Google's great apples, great Amazon's great Facebook is great.
So I think that's what's going through a digital transformation, that's where all the action is happening. What is it matter that we created a central bank 100 years ago on Jackal island, right, it doesn't matter because you don't have a need to know.
And 2020, if you're sitting on a bunch of cash and the interest rate goes to zero.
And the central bank says the interest rates are going to stay at zero for the next four years. I mean, there was a point where they literally said, yeah, interest rates are zero. I'm not even thinking about thinking about raising rates into the year 2024.
At that point, you stop and you're like, okay, wait a minute, my business is shut down. My capital is worthless.
And there's some people in the economy that are winning. And there are some people that are economy that are losing. And the ones that are winning are doing no work.
And the ones that are losing are working themselves to death.
And you're playing a losing game. There's a point there, right, a sobering point where you just realize the casino is rigged. If you stay in the casino, you're going to lose everything.
The only way to win is cash in your chips and walk out of the casino, right? And then you then you got to either create your own casino, create your own game that you can win.
Or you better find a different, a different game or a different pursuit where losing is not a guarantee.
So I would say that's what happened in 2020. And I came back to Bitcoin when I just realized that, you know, the system that I was working in was, was an essence wired such that there was no way to win.
Do you think there are so many educated economists out there and they all misunderstood Bitcoin or a lot of them.
So do you think they are still on this view on this old way they see Amazon and everything and say, it's working. Why we need Bitcoin? What do you think make them misunderstood Bitcoin so much?
I think that if we step back and look at the big picture, I think the great majority of economists don't even understand money.
And if you look at it, the only people that came close to understanding money are the Austrians. But the Austrians didn't have the internet, semi-conductors and cryptography.
So the theoretical, you know, perfect money is a shared immutable, true ledger.
Right. And nobody in the history of the world created a shared immutable, true ledger.
Right. The closest thing is if a philosopher king ran the monetary system and they were fair and equitable maybe.
But, you know, that only happens for short periods of time and then they get deposed or they die or they whatever.
And generally that we don't see that. And so that being the case, the closest thing to something that was effective money was sort of maybe gold or maybe sort of a credit system run by a philosopher king.
But it's not until Satoshi develops Bitcoin that you actually have an example of a shared immutable, true ledger system or fair ledger system that's conservative.
And by conservative, I mean like thermodynamically or physically conservative, like not leaking energy.
So because we never had a proper money, then I don't think any classically trained economist could have developed an engineer a physically grounded or mathematically grounded understanding of monetary economics.
So they have to learn from you.
What happens next is since they don't have a physically or scientifically grounded basis for monetary economics, then you don't really have a scientifically grounded basis for economics.
And that means that everything that follows, which means corporate finance and investment theory is also not scientifically grounded.
What you have is people, they're people working to develop call it a particular solution to a problem, but not the homogeneous solution to the problem.
And the particular solution to the problem is, you know, is a set of rough guidelines that work only for a certain amount of time, only subject to a certain set of assumptions.
So for example, you know, Warren Buffett is the greatest investor of the last 50 years.
Warren Buffett's investment advice is limited to picking stocks, equities, primarily equities in the United States and the US dollar system.
And occasionally he utters a few words on on real estate and he talks about commercial real estate a little bit, but mostly just equity picking stock picking.
And of course, if you think about that, you think, well, what are the assumptions he made? Well, the assumption is the United States won't fail as a country.
The assumption is the dollar won't fail as currency. The assumption is that companies will be allowed to exist by the political system and the US won't become communist.
Because if the political system shifts, companies don't hold any economic value at all.
You know, the valuable equity goes to zero in a communist system, right? Right after Lenin or Stalin or Castro took over, there is no capital value in any stock.
So you have to make an assumption about the political system. But then again, if I take you and I drop you into why more Republic or Nigeria or let's just take Argentina, Argentina in the year 2000.
I give you a million dollars and I say you can buy anything.
Okay, well, by any company.
Let's say I constrain you to buying companies. Well, what's the winning, what's the winning choice or winning strategy in Argentina if you're limited to buying equities in Argentina?
There isn't any. Like there's no, like even if even if I made you God, even if you knew the future, if you could go forward in your time machine 24 years, see exactly what's going to happen and then go back to the year 2000 in Argentina.
If I construct the system or I construct the model such that you have to pick from amongst an infinite array of companies, there is no winning solution. They're all losing because all companies are currency derivatives and the Argentine peso goes from one peso to the dollar to 1400 pesos to the dollar, which means that anything value on cash flows is worthless.
So here we didn't see the political system go communist what we saw was the currency goes to zero and if the currency collapses all currency derivatives clubs.
So let's expand the investment model or or or the range of investment choices and let's say you can invest in not just stocks, but you can invest in real estate or commodities or you can invest in, you know, in bonds.
Okay, there's not a single bond that pays off in pesos that doesn't go to zero. There's not a single piece of commercial real estate that pays you rents and pesos that doesn't go to zero because they're all currency derivatives and their currency derivatives correlated to the a rs to the peso.
So if I so if I have a time machine and I go forward and I know that the peso is going to devalue by 99.9%. It doesn't matter what your investment theory is with regard to choosing between real estate bonds and equity portfolio diversification is irrelevant.
What you're doing is you're shuffling deck chairs and the on the Titanic and so the big insight is the theory of economic relativity or just understanding the Doppler effect or understand that that it looks like the mountain is flying up in the air, but it isn't you're falling right.
When you're falling with a big ego, you think that your investments are going up in value, but what's really happening is you're crashing to your death, you just have a big ego because you're arrogant because you can't imagine having fallen off the cliff right.
So if I if I get you, you know, high on drugs and you just fall off a cliff, you're like I'm flying. No, you're not flying right. You're dying. Okay.
So so in this particular case, if you have a big enough ego to assume that the country you live in will go on forever and to assume that the currency that you breathe and the currency that you operate in will hold its value.
Then portfolio theory and economic theory and Keynesian theory and you know real estate analysis and equity analysis and stock analysis, all of these subjects matter.
But literally if I put you on the deck of the Titanic, the only you know when people start screaming the only question that matters is is there a hole in the ship will the ship sink.
And after you answer that question, the only other question is how do I get off the ship. Right. And so I think that if you think about it that way, you have a bunch of economists for the past hundred years.
They they don't really appreciate monetary economics or monetary physics.
And that probably that they haven't written papers that are informed by physics and form by engineering and form by mathematics and you know informed by cryptography and the like.
So you started with an unscientific discipline really more of an art. It's an art, not a science. You started unscientific and then because because you never saw what what is the material of economics. What's the fluid of economic energy.
So you start with a currency. Okay. What is capital right most economists don't even if you go to chat GPT and you type in define capital the answer is awful.
If you go to Google and you Google capital you say define capital. What is capital go and ask you know a hundred economists or a hundred business people what is capital.
They have awful definitions right of what capital is they struggle with it.
And it's ironic because you know capitalism is what we think we're doing right and capital markets are supposed to be moving capital around and and
the economists ought to be interested in the creation of capital and the proper allocation of capital but they don't understand what capital is.
And they don't understand it because the way they move it around their capital assets are all currency derivatives.
So if you look at if you look back over the history of civilization you know read Durant story of civilization and you know what you're you're struck by the fact that
you know infant mortality rate in London in the 18th century it's 70% until it goes to and then when you actually move out of the city maybe get to 40% infant mortality rate and the person average person's dying at age 30.
And now you start to trace well why are they dying. They're dying because of dirty water. They're dying because of dirty air. They're dying because of dirty food.
They're dying because of dirty instruments dirty surgeries right they can't fix their teeth dirty teeth you know they don't know about sterilization they don't know about antibiotics they've got dirty air they don't have clean air clean water clean food you know you're you know if you drink water you know you're drinking the sewage water and you're getting
good quality and color okay so what do we do so we drink wine and beer okay great so then we get gout because we're drinking alcohol all the time so what is what is the story of civilization it's you you have to overcome this there's two ideas one is is your trapped in a dirty system where all the fluids are dirty
the foods dirty, the water's dirty, the air's dirty, everything's dirty.
And then the second is you have to get over your superstitious ideas like
the solution is I bleed you to death. I'm going to bleed you. I'm going to bleed the bad stuff out of
you, right? So I'm leaching the energy out of your body. Today you would say pretty stupid. I'm
operating on someone with rusty equipment. I'm infecting them. I'm bleeding them. I'm feeding
food that's got bacteria in it. And I'm giving them drinking water bacteria in it. And oh, everybody's
dying. Okay. So, but they didn't know, right? They didn't know the instruments are dirty. They don't
know about boiling water to avoid infecting the mother during childbirth, right? They just don't know.
So the entire field of economics, it's got the same two ideas. Basically the money's dirty,
the money is ineffective. It's toxic. Like, capitalizing a company on the peso or the Naya
Naya or the Y-MAR mark, right? Or something, capitalizing on a currency that's crashing and
collapsing, the Russian rubble, right? That's, you know, just as bad as feeding your child sewer
water, you know? And then the second thing they don't get is you don't help the patient by bleeding
them. And so when you're inflating the currency, you're sucking the economic energy out of the system.
So I'll come back to the question, I pose, what is capital? Capital is economic energy.
Okay, what are all these assets? They're all capital assets. They're just ways, we have to take
the economic energy and we have to swap it into an asset that we can then use to trade in time or
space. Okay, so coming back to Argentina, what's the winning strategy? The only thing you could possibly
buy 24 years ago with a million dollars would be a scarce desirable asset that you can leave
Argentina with, right? So if you buy a Picasso in the year 2000, you would still be rich. You know,
because assuming you can cover the maintenance, if you buy a bar of gold that you can get out of the
country, maybe a bar of gold, a Picasso, maybe, if you buy a plane, a yacht, a boat, their maintenance
cost is such that they're, they're basically bleeding energy out over 10 to 20 years. And so
they're not good long term capital assets. Everything else that's a currency driven in the country
is defective and dissipating energy, you know, at a ridiculous rate.
The, you know, so the economists, they start with this lack of understanding what a capital asset
should be. And after, and what are the, any economists that thinks that a bond, a current, a bond,
which is a currency derivative is capital asset, right? Starts by, by basically prescribing that you
bleed 10% of your blood out of your body every week as a prescription to be a good athlete, right?
It's like that's the start. So if you have a bond based upon a currency collapsing at 14% a year,
right? You're going to an essence kill yourself within, you know, 10 years, five years even.
And if the bond is built on a currency collapsing at 7% a year, which is the US dollar, then maybe
you've got a 15, 20 year life of the capital. And if on the other hand, you bought some, you bought
a, a capital asset which would last for 50 to 100 years, maybe if you trade wisely, you can make
money. That's what wealthy families in Europe or the United States do. They own buildings in London
or Paris. But the, but the problem with like what's the best capital asset? Maybe land. But the problem
with owning land is there's a property tax of 1% a year. And if the government re-appraises the
value of the land, statistically, a million dollars or a million euros invested in land is going
to come with a tax bill of a million euros over 30 years. And so maybe 50 years. So the truth is
land is only a 50 year capital asset. A bond is a, you know, a UST bill is a 15 or 20 year capital asset.
A weaker bond is a 10 or five year capital asset. And, you know, what do you have to be to hold
capital longer? And the answer is you have to be the royal family of England. Right? You have to
be a sovereign. If you're the emperor in Tokyo, if you're the royal family in the Middle East,
and you own land, then you can hold the capital asset for 100 years or 200 years. Why? Because you
don't get taxed on it. You see, the reason that the royal family owns the land the middle of London
is they're not getting taxed 1% on the value of the property. It's the tax that kills you. And so what
what institutions are the long as lasting institutions in the Western world? They're tax-free institutions,
the Roman, the church, the universities, and the royal families. And they all have the same thing
in common generally what they get tax abatement on property tax. And you know, that's what you need
desperately. Right? I'll make another observation about tax, right? Which is most people don't think
about this. The best tax treatment, right, is if you're sovereign, you don't get taxed on anything
in the territory that you can control. You just have to defend the territory. And then the sovereign
can designate an asset as legal tender. And if I designate an asset as legal tender, it means it
isn't taxed on a trade, a vibration of the asset. And it isn't taxed on time. And it isn't taxed
on a transfer of entities or on a mortality event. Right? I'll probably say sometimes it is taxed
on mortality by the way. So I'll be able to take that back and I'll say I think inflation is a
form of tax, right? Well, well, that's a separate idea. What I'm getting at is if I give you euros
and you give them back to me and I give them back to you and you hold them, there's no tax
event that takes place. So tax debt, yeah, right? And if I ran the euro currency such as there was
no inflation in it, then you would have the same amount of capital 10 years from now even though
you engaged in 10,000 transactions. Right? Now, we're going to leave inflation aside because I
just want to focus on tax. Taxation is a source of economic energy dissipation. Inflation is a
separate source of energy dissipation. So with tax, if I then take that legal tender and then I
designated as property, or let's say I designated as a property asset like a bar of gold, or maybe I
designated like equity. Now, if I give my equity to you and you give it back to me and I give it
back to you and there's volatility, then there's a capital gains tax, a short term capital gains
tax. If the frequency is less than a year, otherwise a long term capital gains tax. And so
anything that's designated as an investment asset or a property asset gets taxed on the trade.
And so every time you vibrate it, you change the form of the economic energy, you change it from
Apple stock to an S&P index to a building, you know, to legal tender back to a bond, back to Apple
stock. There's a tax every time that changes hands like that. So that tax dissipates economic energy.
That's a friction. Now, but that's not the worst treatment. The worst treatment is I call it real
estate property. And now if it's real estate property, it's a building. Then you don't get taxed
just on the trade. If you buy the building for me, you get I get charge capital gains, you know,
and then when you trade the building or someone else, it's a double capital gains. But then when you
don't trade the building and you just hold it for a year, you get the property tax on it. So when I
designate something like that, it actually becomes taxed on the trade and the transaction and it
gets taxed on time. You could hold the building in your family for a hundred years and not trade it,
and you still get taxed 100% of the value of the building, you see, maybe 200% of the value of the
building over 100 years. So that's that's worse. But then there's a triple tax, which is when I put
an excise tax, like, you know, like for example in London, there's a tax on the capital gain. There
would be a tax on just the on just the trade of the building and excise tax and then there's a
tax on holding the building. You know, so you can triple tax an asset if you want to. So when you
think about that, you're and I haven't even got to the impact of inflation, the quadruple tax
is then I inflate the currency and because the currency collapses, the nominal value of the building
goes up and that means that when I trade the building and it has a real value, which is equal to
what it was 10 years ago, the nominal value is double and then the government charges you with 30%
capital gains tax on the million dollars. So if you're your price, right? So in that particular case,
it's in the government's best interest to basically inflate the currency and scare the
and scare the property holders into having to trade it. Of course, I haven't you know, I haven't
got to the to the city tax, the neighborhood tax and the provincial tax and the state tax, right? So
so my point here to all this is you started with a million year olds worth a capital.
And then the question is how much capital will be left over 100 years? If you're you know,
if you're moving the capital a different way and I come back to Tesla's observation,
if you want to understand the universe, think in terms of energy frequency and vibration.
Well, this is exactly what we don't do in politics or economics and we don't really do that much in
investment theory, anything that investment, you know, investor like Charlie Manger or Warren Buffett,
they give you kind of conventional particular solutions, but they're only useful if you don't
question the assumptions and if you're living at the same time period they lived in, if you got to go
back to 1970 and be a United States investor living the same timeline as Charlie Manger and Warren
and did the same things they did then their rules are relevant, but their rules don't make any sense in
the YMR Republic or the 16th century Spain or in Africa today, you know, that because they're just
particular solutions to a differential equation based on a set of assumptions that aren't valid.
So that it's they're not wrong in their frame of reference. They're just not right in the universe.
And you and the regular view, right? Yeah, and so let me just make that last point on Tesla and then
so people understand the point I'm making then we'll move on the next topic, which is now energy
economic energy is capital and vibration is every trade or transfer every time you you trade capital
for a building for a share of stock for a bond for a currency for an ice cream cone, right?
You're vibrating the economic energy through different transformations just like kinetic energy
becomes potential energy becomes acoustic energy becomes, you know, whatever, electrical energy,
right? There are vibrations of different types and there is an impedance, there is a friction,
right? There's a loss of energy through that vibration and then the frequency is referring to
the rate of vibration and the and the duration over which you hold that asset, that material,
what are you holding it for a hundred years? Are you holding it for a hundred milliseconds?
And once you start to think that way, well then a lot of things become very clear, right? There
are some capital assets you can't hold very long. There are some and there are the rate at which you
dissipate economic energy is a function of the the frequency with which you're vibrating and then
also the entity doing the the vibration and the nexus, right? A church can move money through a
hundred different assets back and forth tax-free, you know, a university can hold the same property for
a thousand years tax-free, your family can't, you see? And so when you start to understand
the the solution to the problem is different for an individual versus a trust company versus an
operating company versus a sovereign entity depending upon what nation you're in, what city you're in,
what neighborhood you're in and whether or not the capital is oscillating in the physical domain,
the financial domain, or the digital domain. And of course you're not going to get that speech at
a Charlie Munger or Warren Buffett or any economist, right? Their world is very very constrained based
upon what they learned and they engage in lots of discussions of faux metrics which are meaningless
in their in their constrained synthetic world. And as long as their world consists of other people
that live in the same world, then they have these synthetic, you know, faux conversations
that don't at all relate to the the greater universe, but they just can't see the greater
universe because they've just grown up in this very synthetic, you know, idealistic theoretical
world that that's all they could imagine because just like doctors didn't understand germs
so they had a microscope until you have x-rays and microscopes, you think that that illness
comes from demons and spirits, but because you imagine stuff superstition, you need an explanation
for why you're dying so you have to imagine the God struck you with the evil spirits and a curse.
And then when you actually can see the cells breaking down, now you know you're dying of something
very very precise, you know why you're dying, it's got you're drinking too much alcohol or because
someone cut you with a rusty blade and you're infected and at that point you're on a path toward
a solution and I think we're we're at this inflection point moving from economics as art,
you know, colored by superstition and religion and ideology and we're crossing this boundary where
economics becomes science and it's informed by mathematics and engineering, right and the scientific
method, but you know you have to date that in my opinion to January 3rd 2009 when Satoshi unleashes
Bitcoin and and there's a singularity and all of a sudden there's actually engineering, physics
and mathematical principles that are starting to spread in a viral fashion through the economy
and it was like a nothing and then it's a million dollar fire and then a billion dollar network
and then a 10 billion then a hundred billion now it's a trillion dollar network but still a trillion
dollars is 0.1% of the economy so 0.1% of the economy has clean money and 99.9% of the of the
economy runs on dirty toxic assets that are defective that are operated by people that don't know
their trading defective assets because how would you know if you'd never if you'd never seen clean
how do you know that you're dirty? Yeah you don't know what cleanness or dirty is you can measure it
you have no idea of this so that brings me to my next question because you often say Bitcoin solves
50% of all problems in the world but don't you think that most problems today finding their route
nearly everything finding their route are evil in fiat currencies? So I think we will have new
problems when we probably on a Bitcoin standard but what the other 50% what do you think?
You know it's if we think about electricity and clean water people used to die at age 30
and then we brought we introduced electricity infinite clean energy and infinite clean water
and then we introduced antibiotics and we introduced you know maybe clean food and clean room
manufacturing and now people live to 70 or 80 okay so everybody's called everybody's lifespan doubled
and and probably you know if you die between ages of 30 and 70 before you died for one of those
reasons now we're living to 75 or 80 but we still got problems right and the problems are based on
religious differences political differences we haven't settled the communist versus socialist versus
capitalist issue we haven't eliminated inequality um you know in some cases the problems are
introduced by abundance like now we drink ourselves to death we we can create too much sugar too much
it used to be people died because they starve to death right throughout human history the number one
cause of death is you starve to death we don't starve to death anymore the number one cause of death
today is metabolic disease we eat ourselves to death or we drink ourselves to death so I think
abundance creates its own problems and with Bitcoin what Bitcoin does is it's is it's digital capital
so it solves it reforms the capital markets and it makes it possible to instead of holding capital
for 30 years you could hold capital for 3000 years okay so it stretches out the duration of your
capital instead of being able to to oscillate the capital you know at at 10 vibrations per year
you could oscillate the capital at 100 megahertz right you know it's something much faster right
we've got high frequency oscillation and and we've got long duration economic longevity but
we haven't solved the issue of you know how should we deal with entitlements how should we deal with
the disagreement over global warming we disagree over foreign policy we disagree we we have you
know you have um these great digital companies Apple Google Facebook Amazon and now you can
basically plug into a billion people and now there's a disagreement about whether or not the
politician should be able to tell the companies what they can say or do right it's like uh now it's
possible for us to give free information to uh eight billion people but now uh one government would
say well we don't want you to give that information well another government will say we want you
to give that information what happens when two governments disagree about what the eight billion
people should know you've got a foreign policy issue you've got a military issue right that China
blocks blocks uh Google YouTube and it blocks x and Twitter and China and Facebook they fear free
information that's what they do that's the reason why they burn books uh do things like this they
fear information well so there's a diss and there's just a disagreement right and so there's
disagreements what is in what is censorship what is misinformation you know if I if I create an AI
fake of you or an AI fake of me that says Bitcoin is bad I hated I'm selling on my Bitcoin and it
gets released and it goes viral okay is that free speech or is that a scam you know and there's a
disagree there's and so there's a disagreement about how to deal with it so I you know I I have
laser eyes and I have and you'll see them on on x and I keep them and the significance of laser
eyes is can you hear them yeah you're a focused right well I'm focused I think that there's one good
thing I believe in clean money I believe in and digital capital I believe that there's $450
trillion of wealth tied up in physical and financial capital assets that are defective I believe
you know and I and I said this in Nashville a few weeks ago I said that $450 trillion is bleeding
off three or four percent of its economic energy each year that means it's a $10 trillion
in efficiency in the economy due to entropy and due to inflation so I that's a very clear problem
to me I believe we can solve that problem through the digital transformation of capital I believe
that every family every corporation every every institution every government would benefit from
recapitalizing on digital capital that will make them live longer and happier but I can't solve
your family problems right two people are still going to get divorced children are still going
to fight with their parents right people are still going to disagree about whether the mayor's
policy is a good policy or a bad policy they're still going to be multiple parties they're still
going to disagree about wealth inequality they're still going to disagree about whether they should
fight the war or not fight the war they're still going to disagree about the meaning of God and
who's God and religion and and the implications and they're still going to disagree about lessons
from history and we can't and medicine you know should you take that you know drug is that vaccine
good for you well I mean smallpox vaccine seems to have been a success it used to be that you know
one out of five people died of smallpox I get it but I also understand people that don't like
modern vaccines they think they're rushed and and maybe you know there's too many coming too
fast and they haven't been tested and you know there are various diverse points of view and
you know in modern medicine is is a miracle but a lot of people abuse it right and and and so
you can have a hundred opinions on that but but at the end of the day I think keep those to yourself
if if you want if you want to do good for the world I believe the humility suggests
if you devote 150% of your time to one subject and that's all you think about with every waking moment
and you attempt to come up with the most informed insight on that one subject it's perhaps
possible that people might actually get benefit from your opinion but pride come with before
fall and so when you start thinking that you can have that informed opinion on 10 subjects
by allocating 10% of your time to each subject right or maybe you know there are people that
will pine on a hundred subjects but it's not likely that with one percent of your time you're the
world's expert on all 100 subjects you know and even if you even if you were you know 100
times smarter than the genius right there's someone that's as smart as you that's focused upon
this one subject their entire life even if you thought you were godlike and smarter than them
the world doesn't have the bandwidth to absorb 100 different ideas from you so I think if you
want to be effective you need to be laser like and focused and it's it's practical but also it's
just humble observation and and let other people focus on solving the other problems and I think
like curing cancer is that one problem what because I'm sure none of none of my background
qualifies me to cure cancer but it's not even one problem right it might be a hundred different
types of cancer and a hundred problems but it might be a thousand different problems because
it's a different answer for different types of people maybe it's a hundred thousand problems
and a hundred thousand different people need to devote their entire life to to curing one strain
of the one thing and and that's okay so I think humility and focus is really critical to making
progress effectively yeah I agree totally and I think you only can control your own life you
don't know what's good for other people so in the end this is what probably Bitcoin
brings to us the sovereignty about your life not about the life from others that's a point
I think everyone has to solve his problems by themselves right and I have one other point which is
some problems are straightforward and they're solvable within your lifetime for for example
you know look at Google and Facebook and Apple and Amazon they actually solved problems that
were useful to a billion people and they did it within 20 years but the people use this
solutions free like they are not forced by the by the government or so yeah that's a different
topic but my point is you can give a book you can give YouTube or you can give books to a
billion people and you can do it in 10 years and it's a meaningful advance forward
solving the problem of what books they should read we might be debating that for a thousand years
and so we come to Bitcoin you can solve the problem of impaired capital right let's come back
to the elephant in the room the capital markets are defective the existing traditional finance capital
markets they operate something like you know 19% of the time right from 9 30 in the morning till 4 in
the afternoon Monday through Friday you basically got you know 32.5 hours right 32.5 hours out of
168 hours a week the capital markets function in the United States so they function that way
but they only function that way for about 10% of the people in the world right maybe 800 million
people have access to that capital market at best so what you've really got is a 2% solution you've
got a 10% of the of the world you know that's able to access the markets 20% of the time
how does someone in China access the US capital markets how does someone in Asia or Africa
how does an australian access the US capital markets during working hours in Australia
how does an American access the US capital markets on the weekend
right there is no capital there is no the money markets shut down the capital markets shut down
there's no liquidity there's no leverage also all of the assets that circulate on this capital markets
are for the most part currency derivatives so under the best of circumstances their USD currency
derivatives that are bleeding 7% of their economic energy a year so what you have is is a capital
markets available to 2% of the world there are gatekeepers that you know there are circuit breakers
like look what happened the other day where the Tokyo stock exchange the futures ripped up
and they and they shut down the futures market it shut down the stock exchange
right and look at the bond markets the number one capital asset in the world is the US T bill
it's not liquid and and functioning 24 7365 so the only capital market that is 24 7365 that's
functioning is bitcoin right bitcoin is digital capital it is open to the entire world it is a
egalitarian it is it is programmable it's intelligent right and and in that particular and it's true
right it is and that makes it very volatile but the volatility attracts market makers
and that's why someone will actually post 20 billion dollars of collateral and they'll give you
20 billion dollars of liquidity on Sunday afternoon during the worst financial crisis of the year
on a day when everyone else is afraid to do anything you can actually find billions and billions of
dollars of credit or liquidity if you if you actually needed to travel to Tokyo and on Sunday afternoon
someone held a gun to your head and you needed to liquidate 25% of your assets for cash in an hour
you can do that with bitcoin you cannot do that with bonds equity real estate gold diamonds
fill in the blank there's you know you probably could even do it with a lot of currencies right the
banks are closed so what you have here is you have a 20th century economy running on a crippled
system with defective assets and then you have a digital opportunity where you can actually run
on a digital capital that is 100% available that is that has where the capital has a useful life of
10,000 years not 10 years right where the impedance to the transfer you know is theoretically
close to zero you know other than you know whatever taxable issues pop up depending upon your domicile
and and that's the world that we're building right now that's the opportunity and so the reason I'm
laser like focused on bitcoin is I think within 30 years it's very reasonable within 30 years from
when Satoshi launched that network you could actually introduce a hundred trillion dollar digital capital
market that takes us from a 2% solution to a 100% solution that takes us from a 10 20 year duration
economic life expectancy to a 10,000 year economic life expectancy so it's something that's
achievable it won't cure cancer it won't get us to Mars it won't solve you know religious and
political and social and ideological differences those things have to be solved by somebody else
and I will leave that's their life's work and maybe they will and maybe they won't but I rather think
I think as a technologist that the breakthroughs and civilization are fire
steel electricity petroleum internal combustion engines nuclear reactors airplanes railroads
right straightforward radio right straightforward things and then bitcoin digital capital these are
the breakthroughs each one of them came and it made the world a better place but we still used
it to fight wars and we still you and and you know Stalin used steel and Stalin used electricity
and so you're you're gonna have issues the one so when I say 50% of the problems are solved by bitcoin
I mean that 50% of the problems can be solved by digital capital but the other 50%
they're going to be the work of corporations and politicians and institutions and intellectuals
for the next thousand years and that's okay so you think that's the time frame where the dollar
still will be alive next to bitcoin yeah I mean I said in my speech in Nashville a few weeks ago
my base case is bitcoin grows you know an ARR 29% and and if even if it goes to 13 million
a coin over 21 years 13 million is a lot right I mean if you're looking at where bitcoin is today
and it goes to 13 million it's a 200 x bitcoin would still only be 7% of the world's wealth
yeah dollars much larger right you know bonds will still be larger equity will still be larger real
estate will still be larger I don't you know and I happen to to see that there's a dualism in the world
that will continue there will be currency digital currency and there will be digital capital
and I believe the digital currency will be whatever is designated as legal tender by the dominant
nation states of the world right for the for the reason I pointed out the tax reason if China
and the United States designate the CNY and the USD as legal tender then you're going to be able
to oscillate it at high frequency and an economic transaction with no taxable event and so it's
it's going to be the dominant currency asset and on the other hand bitcoin will emerge as the
dominant capital asset but there are other assets the people want they're still going to want credit
companies and individuals will still want to borrow money right I mean why wouldn't you want to
borrow money and governments will still want to borrow money and there will still be companies
like Google and Apple and they will have equity and there will still be people that want to live in
buildings and houses and there will still be skyscrapers and commercial buildings so so asset
classes like commercial real estate bonds and equity will continue as long as there are people
living in the real world as long you know robots might do all the work but we'll still have
warehouses to put stuff in from the rain and the snow right we'll still have airplanes we'll still
have trains someone will still securitize them with debt or equity and there'll still be companies
Apple does something it creates the iPhone you can't create the iPhone and so as long as they're
as specialization of labor and capitalism there'll be companies when the world goes communist
there's no equity but I'm not forecasting a world descended to communism if all the nation
states collapsed and there were no nation states there would be no designated currency but I'm not
forecasting that I I don't think a world without Apple and without nation states is a good world
right so I'm not a pure anarchist so so I I don't see the dollar disappearing you know it's the
dominant currency if anything I don't and I think that when you construct this argument as you know
Bitcoin is against the dollar or Bitcoin is against the currency I think it's it's unnecessarily
confrontational and it's not constructive and it misses the point which is Bitcoin is capital
and Bitcoin really is demonetizing real estate equity portfolios and bond for portfolios held as
capital and that's a four hundred trillion dollar addressable market and Bitcoin is one four
hundredth of it and so you know if you're going to pick a fight why don't you just pick a fight with
gold and buildings and and companies that are that have overpriced stock they're not going to arrest you
right they don't have armies and the truth is they're really the enemy I mean the enemy is
is I invested four hundred trillion dollars into real estate buildings and overvalued companies
and I could have just put it in a Bitcoin and Bitcoin would be worth four hundred trillion and
set a one trillion so why don't you just focus upon that because eliminating banks and eliminating
the government comes with a lot of other problems like like what are you going to do when the
government collapses and this anarchy in the street and the police all go home and everybody gets
to be their own policemen and you know it's like it's it's a it's a nice it's a nice fantasy that
you're going to defend yourself with a gun but the way it really works in war is someone over the
horizon sprays a bunch of bullets over the hill and they hit you not even knowing they killed you
right it's like you're not defending yourself against anything when anarchy breaks out because
they're just going to set the city on fire right you you can't shoot a fire with a bullet and so
it's in our best interest not to encourage anarchy it's in our best interest to actually
instead of praying for the collapse of your bank of the corporation and of the country
it's a better idea that you fix the bank fix the corporation fix the country and when you've got
someone in your family that you disagree with and they're unhappy it's better to make them happy
than it is to go to war with them and so you know just like anything else you know it's like
try to figure out why these bad things happen and then fix the underlying cause
and and you would say and I would agree a lot of times the underlying cause is bad bad money
right broken money is an underlying cause it's not the only cause right like like the the fact
that the company failed and everybody in your city lost their job because they didn't have a
treasury that can be fixed by recapitalizing the company with Bitcoin but you know you can't fix
the fact that the company creates defective products that nobody wants to buy so
so if the problem is the balance sheet then you fix that if the problem is the operation or the
operational mission I wanted to sell you you know Xerox machines or I wanted to sell you cameras
with film in them and nobody wants to buy them anymore you can't fix that right that that you
just have to bow to reality yeah and I think in the end probably the dollar has has to be
become a better currency when Bitcoin is opponent right so I think we will get a better world
if we Bitcoinize the world without deleting the dollar especially because we don't
will live in this time frame where it probably happens so it could probably happen in the next
thousand years but I don't think we will see that so I totally agree with that on you I have
one or two last questions we can do this very quickly because I think you can celebrate this weekend
because on this weekend it marks the false anniversary of your announcement that microsradi
will be pursuing a Bitcoin strategy right so since then the price of Bitcoin along with the
stock value of microsradi has multiplied in fact the stock value has grown even more than the company
companies Bitcoin holdings how would you explain this yeah Saturday is the four-year anniversary
of our announcement I think we announced our Bitcoin strategy August there's like August 10th or
August August 11th I guess it came out something like that so it's four years and you know Bitcoin is
up five six X or stock is up 10 X and you know how do I explain it the explanation is if you look
at Bitcoin's performance it's been compounding at an annual growth rate of about 55% a year for four
years and the S&P has been compounding at about 13% so the tradify the conventional cost of capital
is 13% but the digital cost of capital is 55% and the 13% probably you know it kind of
suggests that the money supply the currency supply probably expanded about 10% a year if you
basically assume that companies create 3% productivity a year then the 13% improvement was maybe
3% productivity 10% inflation something like that and you could debate is the inflation rate 13% a year
or 12 or 11 or 10 but the number is somewhere in the 10 to 13% a year and I'm just going to say 10%
so as you're inflating the currency supply 10% a year you know a diversified portfolio of
big of powerful companies kind of about tracks it and keeps up maybe slightly ahead
most other assets are falling behind gold fell behind bonds are you know down bonds are minus 5%
okay so what's the winning strategy well take all of your money all your treasury
and micro strategy had 500 million dollars at the time if we'd held it in bonds or invested in bonds
we would have had minus 5% a year we would have had 400 million right so that was a losing strategy
um and if we'd rolled it into into S&P index we would be up you know 30 40% or whatever
a 13% compounded but the problem is the regular regulations for a public company don't lie to do that
you're not allowed to as an operating company invest in a securities portfolio so
we rolled it into Bitcoin if you rolled in the Bitcoin you get a 55% improvement a year
but how do you out you know how do you outperform Bitcoin and here I'll just make an investment analysis
I say when I look at portfolio theory if you bring me an idea like an investment idea my cost
to capital is 55% risk-free right right now right Bitcoin is 55% risk-free everybody's like well it's
all volatile it's volatile but it's 55% so at the end of the day once you've accepted uh Bitcoin's
volatility you're long Bitcoin the volatility doesn't matter the cost to capital is 55% risk-free if
you want to pitch me a business idea and you guarantee me 65% it's kind of like a distraction it might
be interesting if I loved you but it has to be a guaranteed 65% if you come back to my base case
where I say 29% ARR over 21 years well then you'd have to pitch me something which generates 40%
a year for 21 years risk-free or guarantee there isn't anything right there's there's nothing so
so uh no conventional idea makes any sense so how do you outperform Bitcoin and the answer is the
only way to outperform Bitcoin is more Bitcoin so what did micro strategy do well first we rolled
all of our treasury into Bitcoin and then what we did when we did that maybe half the enterprise
value of the company was Bitcoin and so you would have you would have a business a 500 million dollar
business growing 55% a year bolted on to a 500 million dollar business growing 0 to 5% a year
right because most businesses don't grow at 13% right the 13% that's the S&P index is weighted by
Google and Nvidia you know that grow out outside of that and the other 495 companies grow 0 to 5%
a year they decrease it right yeah yeah so so what we did first was we bolted on a 500 million dollar
digital capital business that's growing 55% a year then we went and we borrowed 650 million dollars
at less than 1% interest a few months later we took advantage of the capital markets and then we bought
650 million of Bitcoin so at that point we now had a 1.2 billion dollar business
growing a 55% a year bolted on to a 500 million dollar business growing 0 to 5% a year so now we're
getting to 75% of our enterprise value but what do you do next well then then a few months later
we borrowed a billion dollars more than a billion dollars at 0% interest and we bought Bitcoin
so you see then we got to about 80% of the enterprise being that digital capital business and then
what do we do next we saw we borrowed another 500 million dollars in a senior note and at that point
you know we're starting to look like we're 100% Bitcoin then we issued a billion dollars of equity
then we did another built in a few billion more in converts and so all total we raised
a 7.5 billion dollars or you can count it all up but 7 to 8 billion dollars a capital
to invest in Bitcoin and the company became more than 100% we became 120% you're like
well are you 100% all in no I want to I don't want to be 100% all in I want to be 125%
all in right I want to be double triple maxi all in and why because if the if Bitcoin is
appreciating a 55% a year and you can borrow money at 5% a year you're basically getting 50% a year
on every dollar you borrow borrow a billion dollars and you're making 500 million a year right so
why wouldn't you and of course we we borrowed money we have a blended interest rate of 1.6%
so we're borrowing money at 1.6% and we're investing it at 55% so the question is so how do we do
so well we out well we basically got more Bitcoin because we're using the capital markets and our
position as a publicly traded operating company to to issue securities to convert to BTC the most
credit worthy entities in the world are United States listed publicly traded large operating
right if you have a long track record right we've got 30 years of financial statements everybody
knows us everybody knows me you could go you can figure out what I was doing 20 years ago 25 years
ago you you can figure out how much you know we made or lost every quarter since 1995 or something
right so there's a lot of information there that makes us more credit worthy and so if you could
borrow money let's let's take any individual if you're an individual family and you've got a bunch
of real estate and you could borrow money and in government subsidize mortgage for 30 years for
3% interest and that was the case in the US two years ago if you could do that and you bought Bitcoin
appreciating a 55% a year it would be a pretty good idea to borrow a million euros or a million
dollars pay three percent interest for the next 30 years and then invested in an asset that's going
up faster than three percent right in fact that's how you get rich I mean that's the number one way
you get rich you basically go levered long desirable property buy a you know borrow a hundred million
dollars to buy a hundred million dollar building you know and then let inflation drive up the value
the building to 200 million and now you just made a hundred million dollars on five million
dollars of equity you know yeah how do you convert five million into a hundred million what you
have to post five million of equity lever it up with a hundred million of debt buy something that's
going to appreciate and value so that's what micro strategy is done and since we just did it with
digital real estate I mean the world's most desirable property is Bitcoin and we did it before
anybody else appreciated this dynamic obviously I'm telling everybody and some people will do it but
you know as they say everybody gets Bitcoin at the price they deserve and you in order to appreciate
Bitcoin is digital property you have to put in the hundred hours in order to understand it and
then after you put in the hundred hours to figure out that it is desirable property and cyberspace
then it becomes very simple exercise you buy it with the cash you have you buy it with the cash
flows you generate and then you ask the question can I borrow any money and if you can borrow money
you know on terms where the note won't come due in less than four or five years you're probably
okay if you're borrowing money mark the market you know you don't want to take 10x mark the
market leverage because that's in permanent capital you might get wiped out on volatility so
so short duration you know capital not a good idea but a 10-year note a 20-year note a 30-year note
a seven-year note not mark the market that's a good idea and then if you can raise capital via equity
if you have a business you know if you were in Germany running a you know a supermarket chain
or a restaurant chain and you could sell and your your chains valued at 500 million euros and you
could sell 500 million euros of equity and then buy Bitcoin with it then your supermarkets
probably growing 3% or 4% a year the Bitcoin's growing 20 to 40% a year it's just like doing an
acquisition of a digital monopoly growing 20 to 40% a year forever I mean if you went to any business
person and you said hey I found the next Facebook and I guarantee you they're going to grow 20% a year
for the next 20 years and you can buy them at two times revenue or one times revenue or something
would you do the deal of course you would do the deal sure and so Bitcoin is the perfect merger partner
for anybody and and so buy it with cash buy it with equity buy it with debt
right buy it anyway you can don't sell it and that's the that's the big the big corporate finance idea
and the people that can do it best are private family run companies with excess cash or credit
but public companies especially cash cows with credit or cash flows they can do it institutions that
are allocated to physical and financial assets that are defective they can do it a family a worker
you know I did you know if you work in a McDonald's and you make 10 euros an hour or 20 euros an
hour if you invest it in Bitcoin and then you and then you calculate what'll be worth in 21 years
the Bitcoin goes to 13 million of coin it's a 200x return right so you're making 10 euros an hour
but it's going to return 2000 euros you know in 21 years discounted back at the conventional
you know interest rate and it's like making a thousand euros an hour working in a fast food
restaurant and so you know it works for anybody right it works for anybody at any at any stage in the
hierarchy you know there's nothing more valuable than knowing where an asset is going to be in 20 years
it's more valuable to know the Bitcoin will go to 13 million in 21 years then it is to know
it will go to 13 million tomorrow you see yeah if I told you it went to 13 million and it'll go to
13 million and 30 seconds the valuable thing is the time I need to know where it's going to I need to
know 21 years in advance because that gives me leverage knowing 21 seconds in advance is just a
piece of trivia as noise 21 years in advance that's signal and so you can do with that what you will
but clearly the reason I'm laser like focused on it is I can't I can't tell you what you should do for
living I can't tell you how to solve your personal problems all I can tell you is how to solve your
capital investment problem and the and the solution of that is digital capital and after you've
sifted through 10,000 crypto networks you will realize that the world's greatest digital capital
is Bitcoin and then then you've got that as that weapon that you can use to make a better life
for yourself that's perfect last words really thank you so much for your time I know the time
is very short thank you for everything you said today and I think you perfectly changed micros
strategy from Fiat Derivate to a Bitcoin Derivate and it works very fine I think for you and for
your company so thank you so much for your time Michael and thank you for watching the video
guys out there so like the video subscribe to the channel and yeah thank you so much
to gather thank you