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This is just mental.

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Like trying to navigate these markets feels like 2008, 2010, all over again.

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It just feels like there's something freaking off here.

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They don't trust the government to not come in with a tsunami of long dated paper at some point because they have to.

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The debt spiral, we're in it mathematically.

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There's just nothing we can do here.

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There's four doors and three of them have been locked and there's just no other option but the fourth door.

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There's really no choice for these guys.

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They're going to have to print money at this point.

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What we are experiencing right now is an information or a knowledge arbitrage.

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And so people just do not yet understand how Bitcoin is different.

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Bitcoin is going to trade above a million dollars in early 2030s.

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2032, 2033, I would be very surprised if we're not touching million dollar Bitcoin.

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What a freaking beating it's been, huh?

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Holy shit. So it's so funny. When I asked you around Christmas time, if you want to do a pod,

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you're like, there's not much happening right now. Maybe we should hold off for a little bit.

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How quickly that has changed. I don't know if this is total recency bias, which it probably is,

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but this is the most turbulent macro world I've remember in such a long time.

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No, I was just saying this morning on Macro Monday,

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I was like, this is just mental.

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Like trying to navigate these markets

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feels like 2008, 2010 all over again.

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It just feels like there's something freaking off here.

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So I'm bringing up this.

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So I've got maybe, okay, good.

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So yeah, I mean, there's just,

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it just feels like, I don't know.

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I just can't put my finger on it.

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Like the reality is,

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Bitcoin's acting like it's, I don't know, it's disconnected from the market. The market's going

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up. Bitcoin's down 30% from the high. And now it's just, it's like chomping sideways,

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just grinding. It's like, and lower on the weekend. I don't know. How are people's spirits about it?

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Oh, I mean, I think sentiment is shot. Like it's almost as bad as I ever remember it being.

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um but the weirdest thing is that like when bitcoin when sorry when gold's been ripping

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over the last year bitcoin's been like it's done its thing a little bit but it's been

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relatively flat ish um not really had the volatility to the upside like gold but then

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as soon as gold started crashing initially it didn't seem like anything was going to happen

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with bitcoin like it's kind of held firm but then it's had all the volatility to the downside too

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and i just i don't know what's going on like what's your read on that i mean

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I want to say that Bitcoin's sniffing out

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that the markets are just about to get really hairy.

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And we saw a taste of it on Friday, right?

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So you saw, you know, he had Warsh be,

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he was announced on Friday.

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Well, you kind of felt some turbulence before that

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because you had Powell come out

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and, you know,

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for the first time I hadn't watched him talk

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for the first time in a while because I just figured he'd be saying the same exact thing.

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And he came out a little bit more hawkish than even I expected, you know.

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But let's be clear, this is now, it's not even political, it's personal for him, you know.

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He was so humiliated by Trump when Trump brought him into that facility

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and the new Fed facility that their new Fed building or renovating, right,

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the billion dollar renovation.

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He brought him in there.

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They put hard hats on.

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And Trump's a big guy.

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And you've got little Powell in his tie

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and his big hat on.

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And he just looked, he knew that he knows what he's doing.

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He made him look like a little caricature,

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like a little boy patting him on the head.

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Is this when he had the paper,

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like he had the budget in his hand as well?

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Yeah, yeah.

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Pretty humiliating.

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What do you think Powell's thinking?

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The most powerful attorney, basically,

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in all of finance, right?

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being the head of the Fed, not really an attorney role,

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but he's humiliated.

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Now he's like, fuck you, Trump.

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You're not gonna push me around.

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And so his legacy is he wants to be known as the guy

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who engineered a soft landing.

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I mean, look, the reality is, you know, people don't remember

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they won't remember all the things they did before,

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and they're going to remember these moments, right?

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Now, you and I will remember that he printed over $5 trillion

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in 2020 to 2022, and that's what caused all this.

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That's what caused this inflation.

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And he's been reeling ever since, scrambling,

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trying to tamp it down.

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He went from this is just transitory to,

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you know, well, now it's because of,

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possibly because of tariffs to,

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oh, we have it under control.

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And that's what he wants, he's done in just a couple months here.

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His term's over. And so, he wants to be remembered

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as the guy who engineered the soft landing.

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He wasn't pushed around, he was apolitical, he wasn't,

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you know, he wasn't in, you know, cahoots with the Treasury,

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with Besant or with Trump,

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and he was independent and he ran the Fed independently.

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We both know that's ridiculous.

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They cut rates twice before the election,

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before Trump was elected,

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before the presidential election here.

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And then they just stopped.

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And that was like, it doesn't really pass the sniff test.

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Independent of the Republican Party,

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but not of the Democrat Party.

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Yeah, it just didn't pass the sniff test. So that's what's going on, right? And then it comes out Wednesday to bring it back full circle. What we're talking about here, it comes out Wednesday, super hawkish, and the markets start getting nervous.

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Um, well, now you see, then you, you get Warsh as the, as the nominee that, uh, that Trump has, is, is nominated to replace him. He's got to go, he's got to go through the, uh, process here still in front of Congress, but, um, he's got to be, um, confirmed.

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but the market immediately responded.

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Now, I feel like what happened was you've been seeing,

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we can't talk about macro without talking about metals now.

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You can't talk about it without talking about the debasement trade

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and that thesis that's come on very strong this year.

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and gold and silver in particular have taken the mantle on they're going to they're going to be the

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assets that are going to be the ones that people turn to investors turn to for protection against

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ultimate debasement jp morgan put our report i talked about i did a report with uh with unchained

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we'll put a link in here that people can grab it um that talks all about this the gold and silver

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debasement and possibly and bitcoin eventually will be the one that that people will turn to

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obviously not today but that's that's the thesis and so on friday what i think would happen was

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when warsh was announced as the nominee then uh that kind of set off a cascading effect with metals

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So gold and silver started falling pretty dramatically.

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Here's the thing.

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Before that, you had the exchanges out there ratcheting up margin requirements for metals.

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And that has been, that's created an issue for people who own these things,

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that they have to have a larger and larger margin.

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well when you had this announcement on Friday you started that tumble it just

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said cascading something this cascading effect we're just trading margin calls

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one after another after another you saw silver do this insane move you know when

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you when you look at it from from Friday and just looking at the the daily to go

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So from $121 per ounce all the way down to $70 in chains, like $72 or $73.

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I mean, mental for an asset like this.

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These things, that and gold were moving the entire market cap of Bitcoin multiples over.

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And it was just insane.

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which is swan.com forward slash WBD. I'm pretty sure on Friday, gold's down move was

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00:13:12,740 --> 00:13:16,460
like three and a half times the Bitcoin market cap in a single day.

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Incredible. Yeah.

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Insane.

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00:13:18,300 --> 00:13:37,860
And so, but I think it was not just Warsh, it was also the margin calls. And I wrote all about this in my newsletter this past week, this incident, this specific thing with Warsh and what it really means for him to be the nominee.

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Well, yeah, he came out and he's been known as, wanted to be known as a hawk, meaning that for your listeners who aren't in the world of Fed and Fed speak, let's translate it for them.

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When you're a dove, that means that you're expansionary.

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You want low rates, you want QE, you want easy money, and you want to juice the economy that way.

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00:14:04,100 --> 00:14:08,860
When you're a hawk, you're tight money supply.

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00:14:09,560 --> 00:14:12,340
You're tight on rates, meaning you want to keep them high

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00:14:12,340 --> 00:14:17,440
and make sure that you do not allow inflation to notch or ratchet up.

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00:14:17,980 --> 00:14:21,100
And you're against QE if you're a hawk.

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00:14:21,480 --> 00:14:25,500
And he's vocally been like that before.

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In fact, he basically wanted to vote against QE and all that way back when, and Bernanke insisted that he get on board to have a unanimous vote.

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And then he did, and he quit, basically.

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So this was at the time of the financial crisis when he was a governor, is that right?

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He was so young and 38 years old, and I'll have to pull up my news.

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So usually I have my newsletter up.

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Let's see.

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Let's see what, you know, I've got the actual data in here.

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So I don't want to quote the wrong thing on your show here, Danny.

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So just give me a...

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00:15:03,420 --> 00:15:06,860
But I'm pretty sure he was the youngest Fed governor ever, I think.

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00:15:07,320 --> 00:15:10,860
He is super young, you know, 38 years old.

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00:15:10,980 --> 00:15:11,600
That's correct.

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00:15:11,600 --> 00:15:18,860
So he's 38 years old, Fed governor, and he's being muscled by these guys.

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He's just a kid and he's being muscled by these guys.

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And he decides, OK, I'll vote that way, but I don't like it and you're going to lose me.

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And so he leaves.

220
00:15:31,140 --> 00:15:38,440
But remember, he was also he worked at Morgan Stanley right before he was a Fed governor.

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So they used him to kind of help engineer this whole process and and and and work with the with Morgan Stanley and convert it to a bank holding company.

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This is all in the newsletter, so I won't bore your listeners with this.

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But the bottom line is he's an insider.

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He knows how this stuff works.

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He's been there before.

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And, yeah, he's the youngest Fed governor in history when he was 35.

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And Bush is the one who put him on the Fed.

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But anyways, then he goes and he marries Jane Lauder, you know, S.A.

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Lauder and the granddaughter of S.A. Lauder. And, um, I mean, her father's worth almost

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$5 billion. Uh, so, I mean, this is just, I mean, how far away from the Cantillon effect

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are you really? I mean, not very far. Like this is-

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Right next to the spigot.

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You're right next to the spigot. And so, I mean, you know, yes, he's, he's been in

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a very vocal hawk.

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He's also benefited greatly personally from this whole system,

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clearly whether it through marriage into such a wealthy family or through Morgan Stanley and all the rest of it He has I don know the guy I don have anything against him Just on observation though the reality is he stepping

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into this situation with a, and it kind of gives, in my opinion, it kind of gives Trump coverage.

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Like, look, I nominated a hawk. If he lowers rates, it's because it's the right thing to do.

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But we all know what's happening here. We have over $10 trillion of debt that's coming due here this year. Why? Because we never turned out the debt. We've talked about this ad nauseum.

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But the problem is Scott Bessent wanted, he was so also very vocal and critical of Janet Yellen when during the campaign, when Trump was campaigning, he was very vocal about how she just made a major mistake.

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She should have termed out the debt.

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And he said, I'm going to term out the debt.

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That's what we're going to do.

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We're going to move it back out on the calendar to manage it better.

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So we're not playing this game of chicken of $2 trillion plus deficits.

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We're just tacking on trillion after trillion after trillion dollars on top of the T-bill,

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on all the T-bills that are out there, and demanding more and more and more banks and

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individuals to buy these T-bills.

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Where are you going to find all that demand?

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Okay, we're going to get to that.

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But the issue here is that he was super vocal and critical about all that.

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Why was he?

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Well, to be fair, Janet Yellen should have, she screwed up royally too.

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We have so many problems here.

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And if you go back in sequence, you have, Janet was the Fed, she was the head of the

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Fed at one point.

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She was chair of the Fed.

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So she knows how this works.

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Then she goes to the treasury.

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Then you've got, now you've got Powell, the head of the Fed.

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You've got the lockdowns.

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You've got supply chain issues.

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You've got all that going on.

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And then he prints and goes and prints $5 trillion plus.

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Okay, that was stupid.

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We got that going on.

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That's number one.

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Now you've got, oh God, we need people to be buying these treasuries because we've printed

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so much money.

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We bought all these.

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How are we going to get them off our sheets?

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at the same time you have Russia that goes and invades Ukraine and in a you and I've talked

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about this before I may have said this on your show before but in a monumentally stupid decision

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they decide to seize their assets Russia's assets United States decides to seize their assets

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seize their treasuries, kick them off the SWIFT network. I mean, how stupid was that? So now

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you're in a situation, flash forward, now you've got inflation raging, the Fed's having to raise

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rates. Yellen knew this was going to happen. She had to. I mean, she had to know. And she didn't,

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she missed her opportunity. She didn't turn out the debt. They were issuing T-bills. She never

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changed the quarterly funding, you know, to deal with this better before the rates had to be

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ratcheted up. And so here we are. Now you've got $10 trillion of debt that's got to be turned over

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annually. Plus you're adding one to $2 trillion of that every single year, probably more. And

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now you need more buyers of treasuries. Where are they going to come from? Where are they going to

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come from? Well, now you've got this whole fight in Congress about, you know, basically the stable

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coin legislation that they're trying to make it, they're trying to create a situation where you

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have stable coins that are, you know, pegged to the U.S. dollar, clearly, issued through banks,

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and the banks are the ones who are going to be buying these treasuries because they're using

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them for stable coins. Now the banks are in the fight over whether or not they have to pay interest

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to their customers who own these stable coins. I mean, it's just insidious, right? So they buy

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these stable coins, they get that yield on the stable coins and they don't pass it on to the

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customers. It's basically what they're doing now. They get this cash sitting on the Fed balance

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sheet. They're getting paid interest on this, and they're not passing along to their customers.

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The customers get 0.002% interest rate or 0.2% interest rate instead of the 4 point

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whatever it should be. At this point, back then it was 4 point. At this point, it should be at

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least 3.6, 3.7%. They're giving them nothing. They want the same deal. They want to keep that,

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you know, that profit engine going. And so, but anyways, to bring, to land the plane on this,

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now we've got an issue where Besson is at the treasury. The rates are still high because the

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Fed refuses to lower them. You know, Fed funds is still at, on average, 3.65%, you know, because

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it's 3.5 to 3.75%. And so it's 3.6% or so. And the 10 years out at 4.3%. Everything is keyed off

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the 10 year, Danny, you know this mortgage rates, auto late auto loan rates, personal lines of

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credit, your credit card rates, everything is keyed off the 10 year. And if it's a 10, it's at

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4.3%. Well, where do you think mortgages are? They're over 6%. It's keyed off of that.

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And that's what Trump wants to lower.

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But here's the thing that people keep hearing them say

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over and over and over again,

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I cannot emphasize this enough,

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is that Besant will be out there saying,

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we've got to lower rates.

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Trump will be out there saying, we've got to lower rates.

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The Treasury will go lower rates.

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And what will happen?

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Well, when they lowered rates right before the election,

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they lowered them by 50 basis points.

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And the 10-year rose by 50 basis points.

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Why?

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Why? Because people don't believe that either inflation is tackled or that they're going to be able to issue enough, have enough buyers of treasuries, 10-year treasuries, that they're going to be able to issue them at that rate.

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So what they're saying is they don't trust the government to not come in with a tsunami of long dated paper at some point because they have to, because the deficits are so high.

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You know, the Lin Alden, nothing stops this train.

318
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And my take on this has been the debt spiral.

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We're in it mathematically.

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There's just nothing we can do here. There's four doors. And this is how I like to frame it now, is there's four doors and three of them have been locked and there's just no other option but the fourth door.

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You know, the austerity door locked. You're not going to get austerity. Neither party is going to cut expenses enough at the government level that it's going to make a difference.

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We tried with those. We're still at $2 trillion deficits. Taxing, raising taxes. First of all,

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it's not popular. Second of all, it's only popular with the people who want taxes on billionaires.

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You see what's happening in California and New York. The billionaires are leaving. They're

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literally going to Miami and Austin. They're leaving. They're coming here, Danny. The housing

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prices here are going up because we have a deluge of wealthy people coming in from California into

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Las Vegas for people who don't know where I'm sitting. It's crazy. The houses, just the nice

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houses go fast here. But anyways, so taxes don't really work, number one, because they're not that

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popular. And number two, there's a productivity, you know, it crests at a certain point of taxes

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where the amount that you'll bring in in taxes on GDP levels out and peaks because it starts

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hurting productivity. Why is that? Because companies who are taxed higher, small companies

332
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who are tax hire individuals, they aren't reinvesting in productive lines of products,

333
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in new products. They're out hiring people. They're paying taxes. And it goes to the government

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and it gets wasted. We've seen how much waste is in there. I mean, Minnesota is, if the people who

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are not on Twitter and X and don't know what's going on in Minnesota, God help you, the fraud in

336
00:26:19,557 --> 00:26:26,258
that state is, it's crazy. The fraud in California is insane. They just waste money. It goes right

337
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into their pockets. It's the Cantillon effect at the political level. It's awful. And I'm not,

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I mean, it's both parties, by the way. It's not just one party. So that's the second door.

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The third door, well, we could default. You could just default on your debt and reset it.

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That's not happening.

341
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You would never do that with, you know,

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debt that's denominated in your own currency.

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You'll just print more money, which is door four.

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And we keep doing it.

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We're doing it every day.

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Right now, we're doing it in soft QE,

347
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where they're out there, they're buying T-bills

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in order to, supposedly, in order to make sure

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that the bank reserves are high enough

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that it can meet the velocity of capital needed

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for this amount of GDP, which is about 10%.

352
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We're getting to that level.

353
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It's starting to make the Fed a little bit nervous.

354
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So they're out there buying T-bills now.

355
00:27:16,737 --> 00:27:18,678
Regular market processes, right?

356
00:27:18,798 --> 00:27:21,278
No, it's QE light.

357
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And eventually what the market is telling you

358
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is they're gonna have to buy longer dated treasuries.

359
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They're gonna have to do Operation Twist

360
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where they're out there buying longer dated treasuries

361
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and that's full-on QE.

362
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Not yet, but they will.

363
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Maybe it takes an event.

364
00:27:37,658 --> 00:27:46,578
maybe it just takes a uh a certain amount of um of uh interest of yield on the tenure they have no

365
00:27:46,578 --> 00:27:50,818
choice i've got to get in there and start controlling it through yield curve control

366
00:27:50,818 --> 00:27:57,977
effectively by buying bonds and getting those rates lower so anyway that's a long way of saying

367
00:27:57,977 --> 00:28:07,477
that yeah wash is um he's a known as a hawk that's great it's um but he has no choice

368
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there's i mean there's so much in there i want to definitely get into the four doors but on wash

369
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like so he is he was like very young fed governor he must be an impressive person i don't know very

370
00:28:16,278 --> 00:28:22,078
much about him but he clearly had a very successful career yeah he's against qe which i think we both

371
00:28:22,078 --> 00:28:26,477
agree makes a like even though it's great for our bitcoin bags it's not great for society like we

372
00:28:26,477 --> 00:28:32,117
like i agree with him there it's terrible yeah but there's no way trump is going to nominate someone

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who is not going to lower rates and potentially do something like qe and try and stimulate the

374
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economy, get things going. So like what changed between him leaving as Fed governor to now that's

375
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like allowed him to get this nomination? Well, I mean, you know, he, remember that

376
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he's a kind of a product of, of, um, of, uh, um, Stanley Druckenmiller. Right. Okay. And,

377
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And so is Scott Besson.

378
00:29:04,358 --> 00:29:06,318
So they all know each other.

379
00:29:07,498 --> 00:29:08,898
I mean, Danny's a big club.

380
00:29:09,237 --> 00:29:10,078
We're not in it.

381
00:29:11,078 --> 00:29:14,638
I mean, I didn't make $120,000 a year

382
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and become worth $240 million in Congress.

383
00:29:19,418 --> 00:29:22,178
That's just, it's crazy.

384
00:29:22,178 --> 00:29:25,418
So, okay, that's a big accusation.

385
00:29:25,418 --> 00:29:36,278
um that my feeling on it is not really what his stance is going to be as much as what are the

386
00:29:36,278 --> 00:29:42,697
choices like what are the choices and it's just math and they're going to fall back on that they're

387
00:29:42,697 --> 00:29:46,877
going to say we're doing what we need to do to shore up the markets to make sure that that we

388
00:29:46,877 --> 00:29:52,737
don't have a dysfunction in the credit markets at some point i don't know when that happens

389
00:29:52,737 --> 00:29:56,057
I'm not calling for a credit event or a failed auction.

390
00:29:56,057 --> 00:29:59,138
I'm just saying that look at Japan.

391
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Look at how long they had to be out there controlling yields.

392
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And now look at it.

393
00:30:03,498 --> 00:30:06,938
It's blowing out because they've lost control.

394
00:30:08,338 --> 00:30:15,158
So, yeah, what changed is he's an insider.

395
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He knows these guys.

396
00:30:16,737 --> 00:30:18,038
They feel comfortable with him.

397
00:30:18,038 --> 00:30:24,318
whatever he said to Trump, whatever he said to Scott Besson, it made them feel comfortable that

398
00:30:24,318 --> 00:30:31,138
he's on board with doing what they need to do. And they know that they're going to need to manage

399
00:30:31,138 --> 00:30:38,758
this at some level. Now, I don't know how much it's going to be. Now, here's where it gets crazy.

400
00:30:41,098 --> 00:30:46,318
There's been a lot of people calling for productivity miracle and that you're going

401
00:30:46,318 --> 00:30:52,638
to how now have this spike in productivity because of AI. Well, remember, you're too young to remember

402
00:30:52,638 --> 00:30:57,717
this, but when I started on WallShoot, we didn't have these things, man. I had a BlackBerry. It was

403
00:30:57,717 --> 00:31:06,717
like a little dial BlackBerry. It was like a beeper with text messages. And so we all thought

404
00:31:06,717 --> 00:31:11,658
that's going to make us all so productive. It's going to be, you know, wow, the productivity is

405
00:31:11,658 --> 00:31:17,678
going to be through the roof. Well, yeah, it did help productivity, but also just dumped more work

406
00:31:17,678 --> 00:31:24,918
on you. You're just, it just became that you, each individual was expected to be able to do more. Why?

407
00:31:25,538 --> 00:31:32,858
Because they can answer emails 24 seven. They could answer messages or phone calls or whatever

408
00:31:32,858 --> 00:31:39,578
they need to do, sign documents for God's sakes at dinner on your phone. And that's, that's gotten

409
00:31:39,578 --> 00:31:45,638
to be where it is. Okay. Well, why does this matter? It matters because if you have this

410
00:31:45,638 --> 00:31:51,498
productivity boom, well, on the other side of it with AI, there is a casualty on this one.

411
00:31:51,498 --> 00:32:00,578
And the casualty is that young or entry-level data entry kind of clerk,

412
00:32:00,578 --> 00:32:09,697
uh simple and a simple math analysis simple analyst um you know the the the number of jobs

413
00:32:09,697 --> 00:32:15,557
that are going to be taken over coding i mean coding's dead you like to be a coder like you

414
00:32:15,557 --> 00:32:24,358
the vibe coding thing is just that's mind-blowing um you don't need to have somebody who understands

415
00:32:24,358 --> 00:32:32,518
code anymore. This stuff does it better and without mistakes. And so the thing is,

416
00:32:32,638 --> 00:32:40,758
it's going to cost people jobs. And as Jeff Booth says, and this is this whole thesis,

417
00:32:41,338 --> 00:32:48,818
this is what got me to understand and be and really dive deep into the Bitcoin rabbit hole

418
00:32:48,818 --> 00:32:56,518
and get comfort around it is that this technological revolution is deflationary.

419
00:32:57,158 --> 00:33:01,898
At the same time now, it's going to be really hard on some jobs.

420
00:33:04,138 --> 00:33:07,377
You know, you and I are on Twitter and we see this stuff.

421
00:33:07,898 --> 00:33:11,018
And we see what's happening in the AI world.

422
00:33:12,117 --> 00:33:14,918
Danny, the normal person is not seeing this stuff.

423
00:33:14,918 --> 00:33:27,697
I talk to people who are not in the know, who are just not on this stuff, who are just going to work every day. They're nurses or doctors or lawyers, and they're not looking at this stuff. They have no idea what's going on.

424
00:33:27,697 --> 00:33:34,318
cloud bot no clue you know like that's that's so far down the road they don't even know what the

425
00:33:34,318 --> 00:33:43,117
different what gemini versus open ai versus grok versus uh you know um anthropic and cloud they

426
00:33:43,117 --> 00:33:48,057
don't know the differences the different engines the different capabilities they have no clue they

427
00:33:48,057 --> 00:33:52,398
just hear ai and say oh yeah chat gpt you plug it in and get you know it's kind of like google

428
00:33:52,398 --> 00:33:53,398
Yeah.

429
00:33:53,398 --> 00:33:55,398
They have no clue what's coming.

430
00:33:55,398 --> 00:34:01,438
So, anyway, so the point is, this is the whole thesis for Jeff Booth, is that the acceleration

431
00:34:01,438 --> 00:34:15,235
of advancement in technology brings the acceleration of this deflationary effect And so what it going to do to GDP If you haven tried out Club Orange yet then now is the time

432
00:34:15,235 --> 00:34:16,855
It's my go-to place to find Bitcoiners

433
00:34:16,855 --> 00:34:18,455
whenever I'm traveling.

434
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435
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436
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437
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438
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439
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440
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441
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442
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443
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444
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445
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446
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447
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475
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But could you not have a scenario where GDP actually increases quite significantly because

476
00:36:26,335 --> 00:36:32,975
of productivity gains with AI and stuff, even while employment is also dropping off a cliff?

477
00:36:33,055 --> 00:36:37,195
I could see a world where we have massive productivity gains, but also a huge rise in

478
00:36:37,195 --> 00:36:42,895
unemployment. Exactly. And so you have a huge rise in unemployment, which will hurt GDP.

479
00:36:42,895 --> 00:36:48,795
It just, everything you're seeing is you're getting to do more and more and more

480
00:36:48,795 --> 00:36:55,175
for less for fewer dollars that's that's deflationary well the productivity gain will be

481
00:36:55,175 --> 00:37:01,395
be because everybody's using these things and plugging them in and getting productivity out of

482
00:37:01,395 --> 00:37:08,815
it but um how much is that going what are the gains in dollar terms so we're going to need the

483
00:37:08,815 --> 00:37:16,055
the offsetting effect which is expansion of the money supply and so that's the scary part yeah i

484
00:37:16,055 --> 00:37:22,155
I mean, something I've said a load of times on the show at this point is I can't see a world where we don't have some form of universal basic income at this point.

485
00:37:22,155 --> 00:37:37,555
Like if AI does what people are predicting that it will and replace a large number of jobs, like you were saying with software developers, like one good developer now can probably replace 10 with like using AI tools alongside themselves.

486
00:37:38,195 --> 00:37:40,135
So there's your productivity game.

487
00:37:40,535 --> 00:37:44,855
So the company makes more money because that one person could do 10 jobs.

488
00:37:44,855 --> 00:37:49,095
exactly and so that's where i'm like yeah i think you could get increased productivity

489
00:37:49,095 --> 00:37:54,555
with increased unemployment but then does ubi have to follow that because what are people going

490
00:37:54,555 --> 00:38:00,155
to do if they can't find jobs like the government isn't just gonna let them sit and rot yeah that's

491
00:38:00,155 --> 00:38:06,595
a philosophical question that's beyond my pay pay grade you know um i don't i do expect something

492
00:38:06,595 --> 00:38:10,995
like that if you talk if you talk to elon that's what he believes he believes you're gonna have and

493
00:38:10,995 --> 00:38:13,835
it's going to be like a wealthy universal income.

494
00:38:14,015 --> 00:38:15,235
It's not just basic.

495
00:38:15,855 --> 00:38:17,255
Yeah, that's one that I can't understand, though.

496
00:38:17,275 --> 00:38:19,935
I don't understand how that can actually make sense,

497
00:38:19,995 --> 00:38:21,615
like how the math from that can make sense.

498
00:38:22,295 --> 00:38:23,915
Well, that's, that's it.

499
00:38:24,095 --> 00:38:25,755
We have, I think we have a long way to go

500
00:38:25,755 --> 00:38:27,775
and a lot of disruption, a lot of pain to get there,

501
00:38:27,955 --> 00:38:28,575
to be truthful.

502
00:38:28,815 --> 00:38:31,995
And that's, that's a, that's not a cynical view.

503
00:38:31,995 --> 00:38:33,535
It's just a, it's a cautious view.

504
00:38:36,635 --> 00:38:38,255
Yeah, so anyway, you cut it though.

505
00:38:38,395 --> 00:38:39,355
Anyway, you cut it though, Danny,

506
00:38:39,415 --> 00:38:40,955
that's the whole point of all this is that

507
00:38:40,995 --> 00:38:44,195
there's really no choice for these guys.

508
00:38:44,495 --> 00:38:47,015
They're going to have to print money at this point.

509
00:38:47,795 --> 00:38:48,895
So with, um,

510
00:38:49,175 --> 00:38:50,715
Worf coming in potentially.

511
00:38:50,915 --> 00:38:52,495
So actually maybe we should explain that.

512
00:38:52,515 --> 00:38:54,135
So he's been nominated by Trump,

513
00:38:54,215 --> 00:38:56,855
but what actually happens next before he is the fed chair?

514
00:38:57,855 --> 00:38:58,335
Yeah.

515
00:38:58,375 --> 00:39:00,155
So now he's got to go through a Senate confirmation,

516
00:39:00,155 --> 00:39:02,255
um, you know, process.

517
00:39:02,255 --> 00:39:04,655
And I don't know what that, what that schedule is,

518
00:39:04,655 --> 00:39:07,715
but that's what, that's what the, you know,

519
00:39:07,755 --> 00:39:08,815
the normal route is.

520
00:39:08,815 --> 00:39:14,255
I don't, God only knows, God only knows that the Senate could come up with some, who knows.

521
00:39:14,975 --> 00:39:24,775
I think he chose him because he doesn't appear like he's just going to be this figurehead that

522
00:39:24,775 --> 00:39:30,255
is going to do Trump's bidding and just lower rates. It doesn't appear like that.

523
00:39:30,675 --> 00:39:38,015
And the market's telling you that they believe that, you know, he's not going to. So as far as

524
00:39:38,015 --> 00:39:43,315
the gold and silver markets. That's what they were saying. Yeah, the long end of the curve

525
00:39:43,315 --> 00:39:47,635
is still hanging in there. So that's the question. It's like, it's kind of a battle

526
00:39:47,635 --> 00:39:56,155
between realities here. And my take is, like I said, is like, there's just,

527
00:39:57,235 --> 00:40:02,015
there's, he's not going to have a choice. There's eventually, we're going to have to lower rates.

528
00:40:02,015 --> 00:40:06,675
We're going to have to do QE. It's just math. I mean, it's not something that's trying to pump

529
00:40:06,675 --> 00:40:11,615
Bitcoin bags. It's just math. It's just the reality of the situation.

530
00:40:12,935 --> 00:40:16,695
So I was reading your newsletter and that was one of the interesting things because basically all

531
00:40:16,695 --> 00:40:21,715
you saw on Twitter that day is that gold and silver reacted, seemed like people thought he

532
00:40:21,715 --> 00:40:26,315
was going to be a hawk, which I find hard to understand because like if Trump's nominating

533
00:40:26,315 --> 00:40:30,195
him, I imagine they've had plenty of conversations and he's going to, I think he probably will do

534
00:40:30,195 --> 00:40:36,055
Trump's bidding. But you put this chart up on the newsletter. Can you explain what this actually is?

535
00:40:36,675 --> 00:40:55,355
Yeah. So this is the different yields, right? And so you can see in here, it's the two-year, the 10-year, and the 30-year yields. And so, you know, they gyrated pretty heavily here, right?

536
00:40:55,355 --> 00:41:04,775
And that's the surprising part is that investors are trying to get a handle on actually what is going to happen here.

537
00:41:05,515 --> 00:41:09,015
Like, where are we going here with these rates?

538
00:41:09,095 --> 00:41:17,035
And they settled in just a little bit lower than they started out.

539
00:41:17,035 --> 00:41:22,175
But it's not that much.

540
00:41:22,235 --> 00:41:24,895
It's just the gyration was what was interesting.

541
00:41:25,355 --> 00:41:34,615
look at this. These are US treasuries and look at where they're going. It's crazy for them to just

542
00:41:34,615 --> 00:41:42,755
run around up and down like that in one day. It's just not typical. And you're seeing that with all

543
00:41:42,755 --> 00:41:46,955
these things. So this is the market trying to figure out what he's going to do. And where has

544
00:41:46,955 --> 00:41:51,915
it kind of settled? Has the bond market decided it's going to be pretty neutral, his appointment?

545
00:41:51,915 --> 00:42:14,995
Well, that's the other chart, is if you bring up Fed funds, the Fed funds charts, you can see that the Fed funds futures, which are those two Bloomberg charts in there, the Fed funds futures, they didn't move around pretty much at all.

546
00:42:14,995 --> 00:42:44,315
And that was surprising. So if you think this guy is going to be a hawk or this guy is going to be a dove because of being nominated by Trump, then you would have expected the Fed funds futures to move, meaning the Fed funds futures will trade according to where investors believe Fed funds will settle out.

547
00:42:44,315 --> 00:42:46,535
So that's these two.

548
00:42:47,115 --> 00:42:47,615
Exactly.

549
00:42:48,415 --> 00:42:55,855
So before he was announced, this is like the day of the Fed meeting on Wednesday.

550
00:42:56,115 --> 00:42:59,735
So it's still showing the 128 meeting number there.

551
00:43:01,735 --> 00:43:05,715
But before that, you can see here on the left, the implied overnight rate.

552
00:43:06,095 --> 00:43:12,555
Looks like it bottoms out there at about somewhere about 3.1%.

553
00:43:12,555 --> 00:43:23,415
that's where it bottoms out there in in the end of 26 beginning of 27 so 3.1 percent so that says

554
00:43:23,415 --> 00:43:29,715
that the implied number of rates or of hikes or cuts on the right hand side you can see

555
00:43:29,715 --> 00:43:39,715
that it's somewhere around you know somewhere around 2.2 cuts now you go to the next chart

556
00:43:39,715 --> 00:43:41,195
after he was announced.

557
00:43:42,175 --> 00:43:44,015
And what do you have?

558
00:43:44,295 --> 00:43:47,415
The number of cuts went,

559
00:43:47,675 --> 00:43:51,615
it just, it went down a little bit.

560
00:43:52,315 --> 00:43:53,235
Yeah, so on the previous one,

561
00:43:53,275 --> 00:43:54,675
it's more like 1.75.

562
00:43:55,255 --> 00:43:57,475
And then after he was announced,

563
00:43:57,475 --> 00:43:59,235
it goes down to about 2.2.

564
00:43:59,235 --> 00:44:00,835
Yeah, exactly.

565
00:44:01,015 --> 00:44:02,215
So it's just, it's barely,

566
00:44:02,495 --> 00:44:05,315
and then it's right at 3.1%

567
00:44:05,315 --> 00:44:08,615
is where you're coming in on the total,

568
00:44:08,615 --> 00:44:11,675
the ultimate rate.

569
00:44:12,015 --> 00:44:14,475
So it's like it was a non-event

570
00:44:14,475 --> 00:44:16,455
to the Fed Fund's future.

571
00:44:16,615 --> 00:44:19,115
So the Fed Fund's traders are like,

572
00:44:20,055 --> 00:44:21,275
well, he's just going to keep doing

573
00:44:21,275 --> 00:44:24,795
what Powell's doing

574
00:44:24,795 --> 00:44:27,335
is what they're considering right now.

575
00:44:27,855 --> 00:44:30,815
And so what you're watching is real time,

576
00:44:30,935 --> 00:44:32,275
all these markets just trying to figure out

577
00:44:32,275 --> 00:44:33,275
what the heck is going to happen.

578
00:44:33,935 --> 00:44:35,815
And what's interesting about it

579
00:44:35,815 --> 00:44:39,575
is that the gold and silver, as far as the,

580
00:44:40,115 --> 00:44:43,215
if they were really being bought up for,

581
00:44:43,795 --> 00:44:47,055
because of worries about U.S. debasement,

582
00:44:47,595 --> 00:44:49,715
this is not just U.S. investors reminding you.

583
00:44:49,855 --> 00:44:53,015
Like, this is the, most of this is coming from central banks.

584
00:44:53,455 --> 00:44:56,135
I mean, they're buying a thousand tons

585
00:44:56,135 --> 00:44:58,955
from the last three years,

586
00:44:58,955 --> 00:45:03,535
which is just, that's double what the normal high rate is.

587
00:45:03,535 --> 00:45:14,835
And so they're concerned about holding U.S. dollars, meaning they're concerned by holding U.S. treasuries, meaning that they're concerned about holding U.S. dollars because of that debasement.

588
00:45:15,155 --> 00:45:21,495
So for gold to sell off so steeply, that was a little bit of a wake-up call.

589
00:45:22,095 --> 00:45:27,295
And does that mean that, oh, hey, we actually are going to get this under control?

590
00:45:28,035 --> 00:45:29,215
I don't think so.

591
00:45:30,215 --> 00:45:35,395
So with the gold, like the gold trade has been insane over the last 18 months or so.

592
00:45:35,575 --> 00:45:40,515
Do you think this is that trade sort of ending or do you think it's just taking a break?

593
00:45:43,395 --> 00:45:44,755
Well, I don't think it's ending.

594
00:45:44,935 --> 00:45:46,615
I just think it's just taking a break for sure.

595
00:45:47,555 --> 00:45:49,555
You know, you can't have something go.

596
00:45:49,555 --> 00:45:52,595
Look, the old saying is trees don't go.

597
00:45:52,735 --> 00:45:54,615
They don't grow straight to the sky.

598
00:45:55,915 --> 00:45:58,735
And so it was due some sort of pullback.

599
00:45:58,735 --> 00:46:01,855
I did not expect it to be so violent so fast.

600
00:46:02,695 --> 00:46:04,535
It was due a pullback, though.

601
00:46:05,595 --> 00:46:08,215
Do I think it's over? No, not by any stretch.

602
00:46:10,295 --> 00:46:12,915
What I would hope and expect, though,

603
00:46:12,915 --> 00:46:17,855
is that as gold and silver kind of settle in

604
00:46:17,855 --> 00:46:21,335
and the volatility decreases and they get into a trading range,

605
00:46:21,635 --> 00:46:24,335
that's where anybody who's been playing them for momentum,

606
00:46:24,635 --> 00:46:27,655
obviously there were some players that were playing momentum in them,

607
00:46:27,655 --> 00:46:32,995
once that happens then they get bored and hopefully that's when they rotate back into

608
00:46:32,995 --> 00:46:36,575
bitcoin well that was going to be my next question like when does bitcoin get his run

609
00:46:36,575 --> 00:46:43,215
yeah so well i'm wary of bitcoin here and the reason is because we haven't had a sell-off in

610
00:46:43,215 --> 00:46:49,895
the general market it's like bitcoin what i if you looked at bitcoin the last number of times

611
00:46:49,895 --> 00:46:52,175
we had a big sell-off in the general market,

612
00:46:53,295 --> 00:46:57,075
then Bitcoin kind of front ran it.

613
00:46:57,595 --> 00:46:59,755
And then everything kind of followed.

614
00:47:00,295 --> 00:47:02,635
And so I expected, oh, Bitcoin's sniffing out

615
00:47:02,635 --> 00:47:06,695
the MAG-7 being overvalued here

616
00:47:06,695 --> 00:47:08,215
and the general market's going to sell off.

617
00:47:08,235 --> 00:47:08,815
It never did.

618
00:47:09,315 --> 00:47:10,635
So Bitcoin sold off.

619
00:47:11,235 --> 00:47:13,655
But then gold and silver ripped higher.

620
00:47:14,455 --> 00:47:19,095
So there was like this negative cascading effect there

621
00:47:19,095 --> 00:47:21,835
where Bitcoin kept selling off and kept grinding lower

622
00:47:21,835 --> 00:47:24,515
because Bitcoin and gold kept grinding higher.

623
00:47:24,735 --> 00:47:26,835
So it was like people were rotating out.

624
00:47:27,835 --> 00:47:29,115
Anybody who was looking for momentum

625
00:47:29,115 --> 00:47:32,695
was rotating out of Bitcoin into gold and silver.

626
00:47:33,055 --> 00:47:34,995
Not anybody, but some people who were.

627
00:47:36,015 --> 00:47:37,395
And so here's my concern is that

628
00:47:37,395 --> 00:47:40,135
we get some sort of steep market drawdown

629
00:47:40,135 --> 00:47:41,955
because of an event, Danny,

630
00:47:42,095 --> 00:47:46,335
that causes that typical, everything correlates to one trade

631
00:47:46,335 --> 00:47:49,055
where you walk into the hedge fund office

632
00:47:49,055 --> 00:47:52,915
You walk into an investment fund, you say, just sell 10 or 20% of everything.

633
00:47:53,395 --> 00:47:53,935
I don't care.

634
00:47:54,015 --> 00:47:54,735
Get it off the books.

635
00:47:54,875 --> 00:47:55,935
I need liquidity.

636
00:47:56,135 --> 00:47:56,835
Why would you do that?

637
00:47:56,855 --> 00:47:59,835
Because you need to be ready for margin calls.

638
00:47:59,955 --> 00:48:05,775
Even if you're a hedge fund, you're on portfolio margining, meaning that you're getting haircuts

639
00:48:05,775 --> 00:48:08,735
that are as low as maybe 2%, 3%, 4%.

640
00:48:09,415 --> 00:48:18,935
And with certainly 5% or 6% with your blue chip stocks, meaning that you only have to

641
00:48:18,935 --> 00:48:25,715
put up five or 6% and you could borrow 96% against it. Well, they move those requirements

642
00:48:25,715 --> 00:48:31,755
kind of dynamically during periods of stress. So if you expect there's going to be a period of

643
00:48:31,755 --> 00:48:37,895
stress, you're selling stuff over the weekend. Well, what can you sell? Bitcoin. So Bitcoin goes

644
00:48:37,895 --> 00:48:42,175
down over the weekend. Everything correlates to one, meaning gold and silver go down along with

645
00:48:42,175 --> 00:48:49,835
stocks, that worries me because if that happens, Bitcoin's still not safe here at 78. It will go

646
00:48:49,835 --> 00:48:58,755
into 60s and test that, possibly test that lower band of the power law in whatever it is, high 50s

647
00:48:58,755 --> 00:49:08,015
now. So that's actually a good question, exactly where it is. And if you look at it as of

648
00:49:08,015 --> 00:49:17,595
today, if you're looking at the power law for 211, it's 52, six, 52, seven ish, somewhere around 50,

649
00:49:17,595 --> 00:49:24,515
50 to 55,000. I would expect that it would test that if we get a steep drawdown in everything,

650
00:49:24,695 --> 00:49:29,795
because markets correlate to one. This is something in that investment funds and hedge

651
00:49:29,795 --> 00:49:34,275
funds will be able to sell. And you sell what you, you can, not what you want to.

652
00:49:34,275 --> 00:49:43,455
so does that mean that there's pain coming well I don't know I mean but I do believe Danny that

653
00:49:43,455 --> 00:49:52,875
that Bitcoin over the long term is going higher if things settle out here and this market resumes

654
00:49:52,875 --> 00:49:59,295
its march upwards I would expect that Bitcoin will join in that's my expectation that we will

655
00:49:59,295 --> 00:50:07,055
go back and test our all-time highs again this next year. But that's a lot of ifs.

656
00:50:08,355 --> 00:50:13,415
I mean, 58K gang might be right. I mean, that means a reality. Like if that happens,

657
00:50:13,455 --> 00:50:18,815
it'll be absolutely hilarious. But one of the things that like Trump is pretty cooked,

658
00:50:18,855 --> 00:50:23,015
I think in the midterms with everything that's happening, like he is, it seems at least from

659
00:50:23,015 --> 00:50:29,015
afar, he can't really win the midterms unless something extraordinary happens in the next like

660
00:50:29,015 --> 00:50:33,315
eight months or whatever it is. And one of those things has to be the economy, the economy

661
00:50:33,315 --> 00:50:37,775
absolutely flying. So he's going to do everything in his power to make that happen. I imagine

662
00:50:37,775 --> 00:50:42,675
like Bitcoin must do well in that scenario. So is that one of the things that's kind of

663
00:50:42,675 --> 00:50:50,695
you're holding out hope for? Well, I mean, um, I'm wary of that, that them juicing the economy,

664
00:50:50,855 --> 00:50:55,075
lowering rates, heating it up because then you're going to have inflation again.

665
00:50:55,075 --> 00:50:58,875
Inflation doesn't come on right away, though, as we all saw.

666
00:50:59,255 --> 00:51:03,815
You print money, you buy bonds, and it filters in

667
00:51:04,455 --> 00:51:07,855
through the Cantillon effect, and it kind of filters in that way.

668
00:51:07,955 --> 00:51:20,332
And so it takes time It certainly won happen before the midterms Even if they started printing today it It would be difficult for that to happen So um so I don think he worried about that He more worried about

669
00:51:20,432 --> 00:51:23,332
oh, let's keep the economy juicing and we'll manage it.

670
00:51:23,432 --> 00:51:26,452
We just won't let it get out of control like, like Powell did.

671
00:51:26,552 --> 00:51:28,752
That's what he's thinking, I bet.

672
00:51:28,852 --> 00:51:30,952
Um, and so he's gonna play that game.

673
00:51:31,052 --> 00:51:33,552
He's gonna try to, he's gonna try to, you know,

674
00:51:33,652 --> 00:51:34,652
walk that tightrope.

675
00:51:34,752 --> 00:51:37,452
It's a, it's a tough one to walk, as we've experienced.

676
00:51:37,452 --> 00:51:42,012
but you don't have to come in with a bazooka.

677
00:51:42,692 --> 00:51:46,273
You don't have to print $5 trillion, I don't think,

678
00:51:46,412 --> 00:51:49,112
unless there's some sort of credit issue

679
00:51:49,112 --> 00:51:50,852
or a credit event or black swan,

680
00:51:50,932 --> 00:51:52,532
then you're gonna have to print more than five.

681
00:51:52,892 --> 00:51:53,972
You might have to print 10.

682
00:51:54,712 --> 00:51:56,492
So, and that's the scary part.

683
00:51:57,512 --> 00:51:59,572
And on the backside of that, of course,

684
00:51:59,912 --> 00:52:03,813
Bitcoin will not benefit,

685
00:52:04,032 --> 00:52:07,313
but it will reflect the devaluation of the dollar

686
00:52:07,313 --> 00:52:08,172
on the other side of it.

687
00:52:08,392 --> 00:52:09,293
That's what it will do.

688
00:52:10,052 --> 00:52:10,132
Yeah.

689
00:52:10,273 --> 00:52:13,552
I mean, with the political incentives as they are,

690
00:52:13,692 --> 00:52:15,293
I think they would deal with inflation

691
00:52:15,293 --> 00:52:16,672
after the midterms if they thought

692
00:52:16,672 --> 00:52:18,672
juice in the economy would actually win them

693
00:52:18,672 --> 00:52:19,552
in the midterms.

694
00:52:19,692 --> 00:52:20,793
But we will see.

695
00:52:20,872 --> 00:52:21,952
It's going to be an interesting year.

696
00:52:22,692 --> 00:52:24,813
You obviously follow the liquidity cycles

697
00:52:24,813 --> 00:52:25,472
pretty heavily.

698
00:52:25,972 --> 00:52:28,652
Michael Howell, he's your guy on that.

699
00:52:28,972 --> 00:52:30,912
Where are we at in terms of liquidity cycles?

700
00:52:32,912 --> 00:52:33,092
Yeah.

701
00:52:33,672 --> 00:52:35,472
Well, and that's the thing is that

702
00:52:35,472 --> 00:52:43,452
Michael believes that we're going to top out here this year. And that global, because when you look

703
00:52:43,452 --> 00:52:49,632
at it, it's not just M2. You got to look at the global situation. And if you have the ECB tightening,

704
00:52:49,872 --> 00:52:57,732
if you got the UK tightening, if Australia starts tightening, they have big markets. And so,

705
00:52:58,372 --> 00:53:05,452
but it's not just central banks. It's the full-on liquidity and meaning the borrowing

706
00:53:05,452 --> 00:53:07,293
and the volatility.

707
00:53:07,492 --> 00:53:09,752
If volatility rises in bonds,

708
00:53:10,512 --> 00:53:12,892
well, that means that there's a higher requirement

709
00:53:12,892 --> 00:53:16,452
for collateral, which is an input.

710
00:53:17,592 --> 00:53:19,252
You know, obviously, central bank buying,

711
00:53:19,432 --> 00:53:22,832
central bank QE, central bank QT,

712
00:53:23,152 --> 00:53:25,892
those are all things, the interest rates themselves,

713
00:53:26,532 --> 00:53:28,793
and then the shadow banking.

714
00:53:29,592 --> 00:53:33,672
And so all you need is some disruption in the markets

715
00:53:33,672 --> 00:53:34,852
in that general cycle,

716
00:53:34,852 --> 00:53:38,273
and you'll get a contraction of the money supply.

717
00:53:38,793 --> 00:53:41,052
But he's been saying for a long time

718
00:53:41,052 --> 00:53:43,072
that he's thinking that we're going to be topping out here

719
00:53:43,072 --> 00:53:45,092
in this next quarter.

720
00:53:45,432 --> 00:53:47,972
And so we'll see if he's right.

721
00:53:48,672 --> 00:53:52,052
But he's more of, and I like him, Danny,

722
00:53:52,252 --> 00:53:55,932
I like his analysis because I don't know exactly

723
00:53:55,932 --> 00:53:57,132
how he calculates it.

724
00:53:57,532 --> 00:54:00,692
It's proprietary, but he does liquidity.

725
00:54:00,692 --> 00:54:09,273
and it's and that includes all the the debt and financing uh and shadow uh banking where the

726
00:54:09,273 --> 00:54:14,752
financial firms are lending to each other and that's repo market stuff and all that so that all

727
00:54:14,752 --> 00:54:22,332
matters uh it's not just printing money so m2 is useful it's the it's the biggest component of all

728
00:54:22,332 --> 00:54:27,512
that but it's not the only one yeah i need to get him on the show you have to do an introduction for

729
00:54:27,512 --> 00:54:32,212
me because I'd like to get into that. Yeah, absolutely. I like Michael. I'll intro him to

730
00:54:32,212 --> 00:54:37,372
you. It sounds like you're pretty cautious though, going into 2026 on Bitcoin.

731
00:54:38,092 --> 00:54:45,273
This is, well, look, you know, we're, you know, that I co-managed the Bitcoin Opportunity Fund

732
00:54:45,273 --> 00:54:50,652
with David, David Foley. And we're, we have to be exposed because that's what our investor,

733
00:54:50,752 --> 00:54:55,552
we're on a Bitcoin standard. We own Bitcoin instead of dollars. That's our, that's part of

734
00:54:55,552 --> 00:55:04,612
our thesis. That's our operating measure. And so we're looking for the best opportunities we can

735
00:55:04,612 --> 00:55:10,112
find out there. We're finding some opportunities. We're picking away at them. When we see some of

736
00:55:10,112 --> 00:55:16,212
these things draw down so steeply, we're picking opportunities. We're not buying every single

737
00:55:16,212 --> 00:55:23,212
treasury, Bitcoin treasury company. There's a handful that we feel comfortable with

738
00:55:23,212 --> 00:55:28,712
that we feel can execute on the plan

739
00:55:28,712 --> 00:55:34,512
of basically creating Bitcoin through fiat arbitrage.

740
00:55:35,273 --> 00:55:37,612
And MicroStrategy is one of them.

741
00:55:38,172 --> 00:55:40,152
I can't talk too much about it

742
00:55:40,152 --> 00:55:42,532
because I'm on the board of directors of Strive now,

743
00:55:42,692 --> 00:55:44,352
but Strive is one of them.

744
00:55:45,692 --> 00:55:48,132
You know, MetaPlanet, obviously,

745
00:55:48,652 --> 00:55:50,212
21, Jack Mahler's company,

746
00:55:50,212 --> 00:56:05,313
Those are ones that we feel have, and not to call out any of the other ones, but those are, and then we own some out in some emerging markets like Oranger down in Brazil.

747
00:56:06,152 --> 00:56:11,632
So there are some that we feel are well positioned and we are exposed to.

748
00:56:11,632 --> 00:56:35,852
The good news is that as tumultuous as it's been, especially for the Bitcoin treasury companies, is that because we're a hedge fund and we operate in the capital markets, we are able to buy these in the private market and get them at close to or under 1M NAV to the underlying Bitcoin of the company.

749
00:56:35,852 --> 00:56:50,012
So, you know, we have exposure to the Bitcoin, but we haven't been hurt by the contraction of that multiple of MNAV on the underlying Bitcoin.

750
00:56:50,172 --> 00:56:50,832
So that's the good news.

751
00:56:50,992 --> 00:56:54,592
But to answer your question, we are cautious.

752
00:56:54,992 --> 00:57:02,752
And we have some interesting hedges on to protect against that downside volatility, which we expect there to be volatility here.

753
00:57:03,532 --> 00:57:04,572
It's insurance.

754
00:57:04,572 --> 00:57:05,752
It costs money.

755
00:57:05,852 --> 00:57:34,152
Uh, it's difficult to do without either just throwing away money, burning the money or getting yourself in a situation where you're not really protected. Those are, it's a challenge. Um, but we've done this for many years and we, you know, we've both been doing this for about 30 years. And so we've seen a lot of markets and we've seen a lot of situations and we've got some interesting hedges on that we feel will help mitigate some of that volatility.

756
00:57:34,152 --> 00:57:41,952
so that's a long way of saying that we would not be surprised at all if bitcoin goes and tests

757
00:57:41,952 --> 00:57:46,592
these levels again but the good news is that when you do things like that danny and this is what

758
00:57:46,592 --> 00:57:53,872
you know listeners um ought to have in their in their head is that when you protect against

759
00:57:53,872 --> 00:58:01,112
volatility like that what happens is you can why you wind up making money on that hedge on the way

760
00:58:01,112 --> 00:58:08,293
down, then you harvest that and you turn around and you plow it back into what you believe

761
00:58:08,293 --> 00:58:09,712
in in long term.

762
00:58:10,652 --> 00:58:17,252
And so you can then, what happens is you're buying convexity because you're then, you're

763
00:58:17,252 --> 00:58:23,432
buying these things on the dip and you're purchasing securities that will give you convexity

764
00:58:23,432 --> 00:58:24,192
on the upside.

765
00:58:24,192 --> 00:58:29,432
meaning that it's a form of leverage

766
00:58:29,432 --> 00:58:31,632
that doesn't expose you too far on the downside.

767
00:58:32,432 --> 00:58:34,012
And so you're already buying them

768
00:58:34,012 --> 00:58:36,092
at a very attractive price

769
00:58:36,092 --> 00:58:38,512
and you've made money on the downside

770
00:58:38,512 --> 00:58:40,152
and then you're going to make money on the way back up.

771
00:58:40,672 --> 00:58:44,172
That's the way we're,

772
00:58:45,692 --> 00:58:47,412
that's our goal in our operating

773
00:58:47,412 --> 00:58:49,032
and our mechanism here.

774
00:58:49,532 --> 00:58:51,813
And so we're cautious.

775
00:58:52,172 --> 00:58:53,952
We're not just plowing everything in

776
00:58:53,952 --> 00:59:01,832
every single dip, we're being aware and trying to be nimble without being cute. And it's a pretty

777
00:59:01,832 --> 00:59:07,172
fine line to walk. Yeah. So are you doing this with like options on iBit and stuff? I had David

778
00:59:07,172 --> 00:59:10,172
Dredge on the show recently. I don't know if you know him, but he talks a lot about this.

779
00:59:10,672 --> 00:59:14,313
Is that the kind of stuff you're doing? Is it option contracts on iBit and things like that?

780
00:59:15,532 --> 00:59:20,952
Yeah, we've done options, contracts and all kinds of stuff. And it's sometimes we do it on

781
00:59:20,952 --> 00:59:27,992
securities that we feel would be proper hedges for a general market downturn and give us a little

782
00:59:27,992 --> 00:59:33,932
bit more beta exposure, which would be more like Bitcoin, because the problem with IBIT is that

783
00:59:33,932 --> 00:59:38,372
the options are expensive, or that's a challenge. It's not a problem. It's just a challenge that the

784
00:59:38,372 --> 00:59:43,252
options are expensive. So you have a choice. You can either just buy insurance on the downside,

785
00:59:43,432 --> 00:59:47,992
you just buy puts, or you can do some sort of put spread where you're buying this insurance,

786
00:59:47,992 --> 00:59:52,032
but you're also selling the insurance past the level

787
00:59:52,032 --> 00:59:54,232
that you're comfortable with taking the risk of.

788
00:59:54,572 --> 00:59:56,832
Because I don't think that Bitcoin's going to 20,000.

789
00:59:57,572 --> 01:00:02,032
So to be hedged under 50, under 40,000,

790
01:00:02,032 --> 01:00:03,872
it doesn't really make sense to me.

791
01:00:04,412 --> 01:00:07,992
And so you can harvest some of that on the other side.

792
01:00:08,392 --> 01:00:10,972
And what happens is you wind up giving yourself

793
01:00:10,972 --> 01:00:16,732
a better risk reward of that insurance.

794
01:00:16,732 --> 01:00:20,192
that doesn't come without challenges though.

795
01:00:20,432 --> 01:00:22,132
It's not just like, oh yeah, that's a great idea.

796
01:00:22,172 --> 01:00:22,773
We'll do that.

797
01:00:23,132 --> 01:00:24,773
Because what winds up happening, Danny,

798
01:00:24,892 --> 01:00:28,692
is that as you're still far out on some of these options,

799
01:00:29,293 --> 01:00:31,092
you have what's called theta,

800
01:00:31,652 --> 01:00:36,592
which is that time value that's embedded in that option.

801
01:00:37,512 --> 01:00:39,952
And so even if you get,

802
01:00:39,952 --> 01:00:44,273
let's say you're protected down 10% down to down 20%.

803
01:00:44,273 --> 01:01:03,313
Well, if the market goes down, you know, IBIC goes down 18%, that's great. You've captured 100% or you've captured 18, you've captured 90 odd percent of what you expected to capture without the cost of the options.

804
01:01:03,313 --> 01:01:07,152
and you then you just cover them, right?

805
01:01:07,652 --> 01:01:11,072
Well, you can't because there's still time value

806
01:01:11,072 --> 01:01:12,872
embedded in that short option.

807
01:01:13,192 --> 01:01:15,992
And so it's really difficult to stick the landing there.

808
01:01:16,472 --> 01:01:18,692
And so you wind up trading around them a little bit

809
01:01:18,692 --> 01:01:20,072
to make sure you get the best out of it.

810
01:01:20,072 --> 01:01:21,773
You harvest the most that you can out of it.

811
01:01:21,912 --> 01:01:25,492
And that's where you have to be nimble and not cute

812
01:01:25,492 --> 01:01:26,672
is what I'm talking about.

813
01:01:27,352 --> 01:01:29,252
Yeah, this stuff's way too complicated for me.

814
01:01:29,372 --> 01:01:31,692
Like I only vaguely understand options.

815
01:01:31,692 --> 01:01:36,892
like there's no way I'm touching any of this stuff. In fact, yesterday I significantly increased my DCA

816
01:01:36,892 --> 01:01:42,732
and I'm tempted to take out another Bitcoin backed loan. Taking out a Bitcoin backed loan when it's

817
01:01:42,732 --> 01:01:49,293
126,000 is obviously higher risk, but like down here I'm starting to see, well, I'm very tempted.

818
01:01:49,293 --> 01:01:54,092
We'll see. I might do another one. But- Yeah, it's tempting. I always caution people to be

819
01:01:54,092 --> 01:01:57,912
Be aware that when your collateral is,

820
01:01:58,612 --> 01:02:03,813
you're buying something on margin

821
01:02:03,813 --> 01:02:05,952
and that collateral is that volatile asset

822
01:02:05,952 --> 01:02:06,572
that you're buying.

823
01:02:06,752 --> 01:02:08,192
It's just, it is dangerous.

824
01:02:08,773 --> 01:02:10,252
And so you have to do it with money

825
01:02:10,252 --> 01:02:12,372
that you're very comfortable with.

826
01:02:12,632 --> 01:02:14,172
And it's about position sizing, right?

827
01:02:14,232 --> 01:02:16,032
Like if you do it with a small enough part of your stack,

828
01:02:16,092 --> 01:02:18,332
then you can always cover the potential margin call.

829
01:02:18,572 --> 01:02:21,092
Like there's ways to do it in a sensible way.

830
01:02:21,092 --> 01:02:21,972
There's ways to do it without,

831
01:02:22,372 --> 01:02:23,492
but yeah, sensibly.

832
01:02:23,492 --> 01:02:29,972
without taking undue risk and without being risk wiped out, being wiped out. Yeah. So, yeah. Well,

833
01:02:29,972 --> 01:02:36,172
I'm, uh, I, I'm like eternally perma bullish. Like I, I, I really struggled to see a scenario

834
01:02:36,172 --> 01:02:40,912
where Bitcoin's not, you know, significantly higher in a year's time, but I'm often wrong.

835
01:02:41,032 --> 01:02:45,472
So don't take, don't take that with a grain of salt. But, uh, James, this has been awesome.

836
01:02:46,392 --> 01:02:52,332
I wouldn't, I'm, I'm with you. I, I believe that what we are experiencing right now,

837
01:02:52,332 --> 01:02:59,152
Danny, is an information or a knowledge arbitrage. And so people just do not yet understand how

838
01:02:59,152 --> 01:03:06,152
Bitcoin is different and why it is the ultimate store of value and the ultimate debasement asset.

839
01:03:06,572 --> 01:03:13,313
They just don't understand it yet. There's a lot of confusion. The mainstream media puts out

840
01:03:13,313 --> 01:03:19,532
confusing and hit pieces about it all the time. They commingle it with all the other cryptocurrencies

841
01:03:19,532 --> 01:03:22,212
and they just call them all the same thing.

842
01:03:22,212 --> 01:03:23,212
And so I have friends who say,

843
01:03:23,212 --> 01:03:27,632
oh yeah, I own Bitcoin, I own the Solana one.

844
01:03:27,632 --> 01:03:29,632
And it's like, they just don't get it.

845
01:03:29,632 --> 01:03:31,832
And it's okay, it's not their fault.

846
01:03:31,832 --> 01:03:36,472
They're just not interested in doing the research themselves

847
01:03:36,472 --> 01:03:37,813
and they're listening to mainstream media

848
01:03:37,813 --> 01:03:40,512
and getting their news off of Facebook

849
01:03:40,512 --> 01:03:41,832
or their research off of Facebook,

850
01:03:41,832 --> 01:03:42,912
they're just not getting it.

851
01:03:42,912 --> 01:03:45,612
And so there is an information arbitrage

852
01:03:45,612 --> 01:03:47,732
that you and I are experiencing right now.

853
01:03:47,732 --> 01:03:51,552
It feels bad and it makes you feel like, am I an idiot?

854
01:03:52,273 --> 01:03:56,252
Am I just stupid that I'm, how early am I here?

855
01:03:57,112 --> 01:03:59,092
And the answer is you're still pretty early

856
01:03:59,092 --> 01:04:01,932
because I think that Bitcoin is gonna trade

857
01:04:01,932 --> 01:04:04,712
above a million dollars in early 2030s.

858
01:04:05,332 --> 01:04:08,152
2032, 2033, I would be very surprised

859
01:04:08,152 --> 01:04:10,273
if we're not touching million dollar Bitcoin.

860
01:04:11,313 --> 01:04:13,192
That's me, that's my thesis.

861
01:04:13,392 --> 01:04:15,273
That's where I believe this thing is going.

862
01:04:15,273 --> 01:04:22,412
But I also believe that part of that is that knowledge arbitrage will close.

863
01:04:23,012 --> 01:04:41,512
And as that does, you're going to have the Harvards and the Yales and the University of Texas and the CalPERS and the Texas teachers and every pension and fire fund out there taking positions in Bitcoin as a core asset.

864
01:04:41,512 --> 01:04:47,192
And when they do that, that's when that knowledge begins to really spread.

865
01:04:47,313 --> 01:04:49,212
And people are like, oh, so Bitcoin is different.

866
01:04:49,252 --> 01:04:50,432
Okay, so Bitcoin is different.

867
01:04:50,512 --> 01:04:52,092
It's not just this moonshot thing.

868
01:04:52,492 --> 01:04:53,992
It's digital gold.

869
01:04:54,152 --> 01:04:55,832
Okay, then I should probably own some.

870
01:04:56,212 --> 01:05:02,972
And funny enough is I think that that's going to be a much healthier rise for Bitcoin in price and a much more stable rise.

871
01:05:03,172 --> 01:05:05,632
It's not going to be this massive volatile thing.

872
01:05:05,692 --> 01:05:07,612
It's going to be like people, oh, I get it.

873
01:05:07,632 --> 01:05:08,532
Okay, I get it.

874
01:05:08,872 --> 01:05:09,552
Oh, okay.

875
01:05:09,652 --> 01:05:10,532
I understand now.

876
01:05:10,532 --> 01:05:11,032
I understand.

877
01:05:11,032 --> 01:05:17,592
I understand how it's different. And then we'll feel vindicated and, uh, you know, we'll look like

878
01:05:17,592 --> 01:05:23,932
we're 143 years old when we're, when we're just in our fifties or in your case thirties.

879
01:05:24,432 --> 01:05:27,552
I mean, I'm looking forward to feeling vindicated again, but I'm with you. I think

880
01:05:27,552 --> 01:05:32,012
like I could see million dollar Bitcoin by the mid twenties thirties and it's really not that

881
01:05:32,012 --> 01:05:38,273
far away. So you want to buy it now and sell it to them later. Exactly. Just hold on tight.

882
01:05:38,273 --> 01:05:39,752
James this has been awesome man

883
01:05:39,752 --> 01:05:41,132
I'll see you in Vegas

884
01:05:41,132 --> 01:05:41,872
in a couple of months

885
01:05:41,872 --> 01:05:42,992
maybe we should run it back

886
01:05:42,992 --> 01:05:43,492
absolutely

887
01:05:43,492 --> 01:05:45,412
but thank you for coming on the show

888
01:05:45,412 --> 01:05:46,332
tell everyone where to go

889
01:05:46,332 --> 01:05:46,912
to find a newsletter

890
01:05:46,912 --> 01:05:47,892
I think it's one of my favorite

891
01:05:47,892 --> 01:05:48,672
newsletters in Bitcoin

892
01:05:48,672 --> 01:05:49,752
so people should check it out

893
01:05:49,752 --> 01:05:51,592
thank you Danny

894
01:05:51,592 --> 01:05:52,813
it's called The Informationist

895
01:05:52,813 --> 01:05:54,052
you can find it

896
01:05:54,052 --> 01:05:55,212
jameslavish.com

897
01:05:55,212 --> 01:05:56,172
it's on Substack

898
01:05:56,172 --> 01:05:57,612
there's a free version

899
01:05:57,612 --> 01:05:59,313
that you get one full

900
01:05:59,313 --> 01:06:01,232
piece every month

901
01:06:01,232 --> 01:06:02,293
and then there's a paid version

902
01:06:02,293 --> 01:06:03,112
you get all four

903
01:06:03,112 --> 01:06:04,712
it comes out every Sunday morning

904
01:06:04,712 --> 01:06:07,773
so I really enjoy writing it

905
01:06:07,773 --> 01:06:08,672
and it's a great community.

906
01:06:08,773 --> 01:06:11,472
We get a lot of comments in there and some banter,

907
01:06:11,572 --> 01:06:12,232
and it's good.

908
01:06:12,452 --> 01:06:15,293
So it's something that I didn't expect

909
01:06:15,293 --> 01:06:19,492
to become what it has, you know?

910
01:06:20,552 --> 01:06:24,212
When I was talking about this with my wife last night,

911
01:06:24,273 --> 01:06:25,813
she was like, well, how did you even come up

912
01:06:25,813 --> 01:06:26,793
with the idea of it?

913
01:06:26,813 --> 01:06:29,252
And I was just thinking, well, do you remember that book?

914
01:06:29,892 --> 01:06:31,592
I think it's called How Things Work,

915
01:06:31,592 --> 01:06:35,572
and it's this big, like, coffee table-looking book

916
01:06:35,572 --> 01:06:39,652
that's got photos of like elevators or buildings

917
01:06:39,652 --> 01:06:44,692
or very tall buildings and structures or airplanes.

918
01:06:44,972 --> 01:06:48,352
And you see a cross section of it, really cool drawings.

919
01:06:48,452 --> 01:06:50,252
You see how everything works in there,

920
01:06:50,332 --> 01:06:51,232
but it's really simple.

921
01:06:51,452 --> 01:06:56,132
And so it's, and I was thinking my vision for this thing

922
01:06:56,132 --> 01:06:59,552
was it would be kind of like that in a newsletter.

923
01:07:00,152 --> 01:07:05,472
And now, you know, with the ability to make infographics

924
01:07:05,472 --> 01:07:07,932
much more easily with,

925
01:07:09,032 --> 01:07:11,472
because I understand Photoshop and all that stuff.

926
01:07:11,512 --> 01:07:13,592
And with AI, it's a big help.

927
01:07:15,152 --> 01:07:16,992
It's becoming more and more like that.

928
01:07:17,032 --> 01:07:18,552
So I'm having more fun with it than ever.

929
01:07:19,512 --> 01:07:20,432
So there's that.

930
01:07:20,532 --> 01:07:23,632
And then of course, if you're an accredited investor

931
01:07:23,632 --> 01:07:26,752
and you're interested in owning exposure

932
01:07:26,752 --> 01:07:27,932
to Bitcoin and Bitcoin companies

933
01:07:27,932 --> 01:07:29,372
in a little different way,

934
01:07:30,532 --> 01:07:33,332
we have the Bitcoin Opportunity Fund 2 just launched

935
01:07:33,332 --> 01:07:35,992
and perfect timing actually

936
01:07:35,992 --> 01:07:39,572
for people who want to get exposure to this thing.

937
01:07:39,732 --> 01:07:40,952
And so if you're interested,

938
01:07:41,092 --> 01:07:42,832
just go to bitcoinopportunity.fund

939
01:07:42,832 --> 01:07:45,293
and reach out and we can jump on a call

940
01:07:45,293 --> 01:07:46,012
and see if it's something

941
01:07:46,012 --> 01:07:47,732
that would be appropriate for you

942
01:07:47,732 --> 01:07:49,852
and kind of talk through it.

943
01:07:50,092 --> 01:07:51,232
So, and that's it.

944
01:07:52,392 --> 01:07:52,793
Awesome.

945
01:07:52,912 --> 01:07:53,912
I will make sure there's a link

946
01:07:53,912 --> 01:07:54,892
to the newsletter in the show,

947
01:07:55,152 --> 01:07:56,032
but thank you, James.

948
01:07:56,132 --> 01:07:57,273
I will see you soon, man.

949
01:07:58,452 --> 01:07:59,232
You're welcome, Danny.

950
01:07:59,232 --> 01:08:01,172
Always good to see you and talk to you.

951
01:08:01,212 --> 01:08:02,052
See you in Vegas soon.

952
01:08:03,332 --> 01:08:05,313
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