end the Fed. There should be no Federal Reserve. We should have a sound money unit that we all
transact in, and the price of that money should be set by the free market, and that's called the
interest rate, period. Nothing else. There should be no bailouts. If you fail, you fail. The chairman
sets the tone, and the dissents, even the dissents are somewhat planned. I mean, it's all
kabuki theater to make it look like, oh, we've got these 12 wise people trying to figure out
exactly what the monetary policy should be. And they're so thoughtful and deliberate.
And they're going to get it absolutely right. And since 1913, they've done nothing but fuck it up.
What they're going to do, in my opinion, is this decade, and I've said this for a long time,
this is going to be a decade of inflation. It started in 2020. We're six years into it. We're
not anywhere close to the end of it. Before this is all over, we'll have double-digit inflation.
We almost had it last time. We got to nine. We're going to get double-digit inflation.
The good news is, you know, the economy will probably be cooking and unemployment will be relatively low.
How are you doing anyway, sir?
I'm doing great. No complaints. It's all good.
You know, looking forward to a sound money future.
Well, yeah, me too.
We were just saying before the show, the sentiment in Bitcoin seems incredibly low right now.
I'm hoping that's a bottom signal.
Like, I don't think, I think even during sort of the FTX crash, it was a better sentiment than it is today.
Yeah, I'm trying to remember that.
It was pretty bleak then too.
But yeah, probably the most amazing thing about this one is you kind of got Bitcoiners eating Bitcoiners.
And that just drives me nuts because we're all on the same team.
You know?
100%.
It's funny, like then everyone banded together because that was kind of like, although obviously hugely impacted Bitcoin.
It was kind of a shit coin-y thing that was fraud, SBF doing its thing over there.
It didn't really impact us.
And it felt like everyone kind of, all the Bitcoiners were on the same side there, whereas
now there's so much infighting.
They're fighting over Saylor.
They're fighting over Bit110.
It was a sleazeball trashed and blew up.
And so all crypto got thrown out, including us.
Yeah, no, you're right.
I mean, we were all in it together.
And hey, it's 15.
It's down hugely, but so what?
Right?
And yeah, now, and I think, you know, I think a lot of people really kind of bought into
the narrative.
we hit 100 we hit 126 you know we're on our way to 200 and then you know it didn't happen and so
you've got a recipe for disappointment and anger and so on and so forth and nobody ever said this
was going to be easy but say one of the things i really take comfort in danny is is that you know
if you look at all the drawdowns i mean you look at any asset class you look at the history of the
asset class right if you look at the drawdowns in bitcoin i mean you know what we had 90 75 80 i
I mean, they're all big.
I mean, you know, over 60%.
And as painful as this has been, you know, October we had a high, what, 124, 126.
You know, now I think the low on this one is 60.
So just a tad over a 50% drawdown, I mean, hey, this is nothing.
And to me, that speaks to kind of the institutional adoption.
You know, there's a strong bid at the low end of the power law is kind of how I see it.
So I'm just not worried.
you know it's like everybody else i'm impatient you know i'd like to see it go to 200 tomorrow
but you know if that happens next year so that's okay yeah i mean if you'd have told me five six
seven years ago that we're only gonna have 50 drawdowns i'd have bit your hand up for it so i
guess like we can't complain about this we're moving in the right direction i mean if if 60
is the new 15 you know all right i can live with that because i know what that means when we do get
into the upswing phase that we're going to 180 or 200 or 240 or something. It's going to be much
higher than it was the last time around. So here we are. Yeah, Bitcoin will continue to win. But I
want to talk to you about everything that's just happened at the Fed because Kevin Walsh just had
his first meeting. There's loads of stuff I picked out a bit that I thought were interesting. I think
it seems like he wants the Fed to kind of change course on some of the stuff that they're doing.
But before I get into my thoughts, I want to hear your thoughts. You'll know this far back
than I do. So what was your general take on it? We just, and it'll be interesting to compare our
perspective. So first of all, may I call for a confession? I actually thought he would say some
dovish stuff. I mean, I feel like they need to be dovish eventually. They, you know, they're,
you know, they had to turn QE back on, although they call it reserve management in December
and they've been buying the long treasury bonds with, you know, the short-term notes. And so,
So, you know, I see strains in the monetary system and the 10-year hit 470 and the Japanese, you know, 10-year went up and the yen is struggling to go, you know, look like it's going to go through 160.
So it seems to me like, you know, financial conditions are kind of indicating that they're going to have to print here at some point.
So I kind of thought they would do it.
And in part, also, I thought that because pre being appointed, he had kind of said, hey, you know, we're going to use this trim medium PCI, which is, you know, 100 points, 100 basic points lower.
So 2.3, it's the Dallas version.
And by the way, he said, I kind of see myself like Greenspan.
I think all this AI is going to lead to productivity and therefore we can have lower rates and not have inflation.
So so I kind of thought he might surprise on the inflationary side.
I was wrong.
I was dead ass wrong.
Um, what he did was very interesting and this just shows how they're so good at always changing
the game.
I mean, basically he came out and said nothing, you know, like zero guidance.
I mean, it was like, it was like Greenspan, you know, like if you understand what I'm
trying to say, then I haven't done a good job of, of, of delivering my message.
I mean, he gave literally no message.
You know, we, we are not giving forward guidance.
We don't know where we're going.
We're going to do a big overhaul of everything.
and like the bureau the good bureaucrat that he is you know um we're going to create these new
committees i i um well he had a name for him i the task force the ai task force yeah mr task force
so we have a task force five task force to deal with all these different issues okay great
um and so you know i guess the way he decided to play it was and i i take this because trump
you know, reacted positively to what he did. I think the game, it's clear to me that what the
game plan is, is okay, he can't come in and immediately cut rates because he looks like
he's bowing to Trump. He's got to establish that he's a mean, tough, fulker-like, you know,
sound money guy. And he iterated that, you know, the 2% is too high and probably the inflation is
too high and we are going to get it back to Tariq. Said that multiple times. I was a very,
he emphasized that message. Okay. That's important. Um, you know, didn't say how,
and then and then he said you know we got these committees going to work on these problems and
i think what he's going to do is he's going to throw the inflation committee you know a bunch
of gobbledygook and they're going to come back and tell him no you know yes sir we you know we
actually can cut rates because trim mean pci is lower and you are getting the productivity gains
you got you thought you were going to get and i i think he is going to cut he's going to have to
eventually whether it's the next meeting the one after that my guess is the next meeting
because the midterms are coming up.
And so, you know, I suspect at that point,
but at that point he will be able to say,
hey, look, I'm a hawkish guy,
but I'm telling you the right thing to do here
is to look through this data and cut.
And that's what Basant was saying too,
that the data is,
I couldn't believe Basant used the word he said,
he called it transitory.
I was like, dude, that's not a very good word.
I mean, that kind of got it,
got run out of the rail.
So I was wrong,
but I don't think I'm entirely wrong longer term.
I think he's ultimately going to have to,
crump and cut rates. Now, his whole ballot sheet reduction thing, and he also calmed the bond
market by saying he intended to do that. I'm not sure. I don't think he can do that. That's where I
part ways with this whole Fed is that they are a machine for creating money. I've had a chart that
I put up on Twitter a lot that shows the growth of debt and the growth of GDP, and the two lines
are separating because debt is growing faster than GDP. Well, that's a problem. Eventually,
you can't support the debt unless you create more M2 to make the nominal GDP higher. Maybe not real
GDP, but at least nominal. So I think, you know, I still think my big print thesis is real. I don't
know whether it happens in a big print or a medium print or, you know, the time, who knows, but I
think it's real. But I guess I was kind of, you know, I thought to myself, I mean, he also sounded
kind of arrogant i mean i mean my partner said it was kind of like ted lasso does a fed meeting you
know like you know arrogant and folksy and we're gonna get it right and it's all gonna be okay and
trust us i'm like really dude i mean come on so um you know we'll see what happens obviously
you know if he had been more dovish our stuff would have you know taken off gold silver bitcoin
but he wasn't and here we are but you know it's not like we got hit hard either i mean he
And remember, he didn't say rate hike.
He just said, I'm not going to tell you what we're going to do.
So, you know, like Greenspan, he's kind of letting everybody read their own, read it and say to themselves whatever they want.
I mean, I'm sure there are those people who think, oh, he's going to slay inflation and be hawkish.
And there are people like me who think, no, he's going to ultimately cut.
He's just not saying it yet.
He's trying to establish his credibility.
So I came over.
I was disappointed because, you know, I want to get on with the show here.
They're going to print.
Why don't they just do it?
But, you know, I understand why he's doing it the way he's doing it.
He had to establish that he's not a Trump butt boy and that he was willing to be, you know, firm on inflation.
Give some credibility.
You know, I mean, to be honest with you, the whole goddamn thing is a charade.
I mean, the 12 people are voting, all the stuff they say.
They make it sound like it's so damn scientific.
And in fact, it's just, you know, finger in the air.
It's all vibes.
Wild ass guests.
total gaslighting and bullshit.
Do you know what I mean?
Mathematically, they are going to print money.
They always have printed money. They will always
have to print money. Unless,
I mean, where I'm wrong, where we are
wrong is if the government gets responsible
and balances budget.
Never going to happen. Yeah, I just
checked those numbers and we're running at
$2 trillion or more. And the war
didn't help.
We're just
waiting. We're waiting for Godot and it's a little annoying.
I'm annoyed. Everyone's annoyed, but it is what it is. I'm very comfortable that we're on the right
side of this. So that's how I thought. How did you see it? I mean, probably quite similar. One
of the things that I did think was really interesting in what he said was he's going to
have, I think, an inflation task force where they're going to go, I think he used the term
back to first principles on what inflation is, which to me sounded like he was going to reinvent
what inflation is so it fits his narrative better.
And then on the other part of that,
he also said that he cares about the left part of the decimal place,
not the right.
So he's essentially, in that said,
he doesn't mind if inflation is 2.9%.
As long as it's got a two at the start, he's okay.
So it felt like they were moving the goalposts a lot
with both what inflation is and how it's calculated
and what the Fed are happy with.
Which, to me, it seemed like he was setting up
to start cutting rates and being a bit looser.
um but i but who knows like what what do you think they're going to do when they go and look at like
the inflation data and what it is do you think they are going to reinvent the the wheel on that
they could i mean they could use the trim mean pci which throws out the outliers um you know there's
there are lots of different ways to measure inflation and you know i mean and some you know
i mean i mean we we interpret inflation as higher prices but sometimes higher prices occur and look
and it is i mean inflation is when something costs more we all call it inflation but
sometimes it's a supply issue, right? I mean, you know, to a certain extent, some of the inflation
we're feeling right now is the fact that we had a war and the Strait of Hormuz got closed and
oil was $60 or $50 pre-war and it squirted up into the 100 range. And so that got passed into
everything. So that was, you know, that's not M2 growth directly. That's actually a supply issue,
you know, a tightness of supply, you know, causing prices to go up. Now, you know, we all interpret
it as inflation, but it's not M2 inflation. So, you know, there's just a lot of things. I mean,
and there's this measure and I've been meaning to look into it. I haven't had the time to get on
Claude and Chet to UPT and dig into it a lot, but there's some measure called truflation. Some of
your listeners may know something about it. Apparently it's pretty low. And so, you know,
I'm not sure exactly what they're doing or how they're calculating it, but you know, this is
lying with statistics. I mean, you can, you know, I mean, you can, you know, you can basically make
anything true if you massage the numbers hard enough. So yes, I picked up on both those points
that you said, and that's my estimation of how this is going to go down. But we'll just have to
see. I also think it's interesting. He did say, you know, he said, look, I want to shrink the
balance sheet. But I remember I read the statement where he said that very carefully. This was a week
or two ago, or maybe even longer. And he, you know, he also kind of said absent, you know,
extraordinary conditions. And I thought, you know, I don't know if he used those exact words,
but he said, all, you know, markets being calm or in normal conditions, I think he said,
in normal conditions, I want to shrink the balance sheet. Okay, well, that's leaving yourself the
exception for what Hank Paulson recently talked about as the break glass moment And you and I haven spoken I spoken on other pods about this but you and I haven spoken about this I don know if you saw it but sometime in the last six weeks Hank Paulson so he the architect of 2008 and you know the bailouts and all
And he comes and he's retired.
He's rich and ex-Goldwyn-Sacks, ex-Treasury secretary.
And he just decides to come out.
And he hasn't made any noise.
I mean, he hasn't been active in anything for, you know, since then, really.
I guess he wrote a book.
But, and he comes, he decides to come out on Bloomberg and say, you know, this debt thing is really somewhat of a problem.
And we've got a lot of debt and it's building up.
It's getting large relative to underlying economy, you know, blah, blah, blah.
And, you know, there could be a real problem here at some point in the future.
And it could even lead to what I would call a break the glass kind of moment in the debt markets.
And we ought to be probably thinking about what our plan is if and when that occurs.
Now, that really, I was like, wow, because that's, that's what we all think could occur, right?
I mean, the debt will be too large relative to the GDP and they'll have to print more money to address that discrepancy.
And so here's the former Treasury Secretary coming out, you know, unprompted and saying it.
But I don't think he was unprompted.
I think somebody at fairly high levels said, hey, why don't you go float this trial balloon?
And he did.
And so to me, that was kind of a warning.
And there have been others who've said it.
I mean, hell, even Powell used to say, you know, this can't go on forever.
this debt growing faster than GDP. So, you know, they kind of know it in the back of their minds.
And, uh, um, you know, I mean, I, I think where we get the big print, where my book looks right
is if something really breaks and it kind of, everything cascades into a correlation of one
and there's just not enough money in the system. And, you know, then, I mean, um, you know, the
bomber and, and the warning signs for that, that I watch are the 10, the U S 10 year, the Japanese
10 year and the Japanese yen, because it's where all the carry trade is funneled through. And so,
So, you know, right now they're all under control and I'm sure that, you know, Treasury Department watches them very, very closely too.
But my point is that if something were to very quickly, you know, if we were to have like a Liz Trust kind of moment, you know, like you guys had in Britain, you know, the monetary fire hoses would be brought to bear very, very quickly.
And at that point in time, you know, our stuff just goes bananas.
So, and we'll just have to see.
I'm not guaranteeing that's the outcome,
but I think it's in the realm of possible outcomes, right?
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This sounds a little bit tinfoil hat, but do you think the Fed sometimes will look at the
situation, they'll realize that their sort of fiscal deficit's way too high, and they're
waiting for something to break, kind of hoping something breaks so they can do this? Because
like just under normal market conditions, they don't. They can't, obviously.
Yeah, well, certainly something breaking gives them cover, no doubt.
I think they would prefer to not have things break, though.
I mean, it's embarrassing when they break.
It hurts their credibility when they have to come in with fire hoses, et cetera, et cetera.
And we're all starting to detect a pattern.
I mean, my book talked about that.
2008, okay, that's big print one.
COVID, that's big print two.
The next one, and each one kind of got kicked upstairs.
I mean, you know, 2008 was housing and financial leverage in the Wall Street banks.
You know, 2020 was an economy shutdown, but we kind of kicked it up at the sovereign debt level.
And the next one's kind of the big one.
I mean, if people start to lose faith in the currency, you know, we got to go to yield curve control.
And that's what they did in World War II.
And, you know, I mean, as I've said in the past, I mean, if it really does break and it breaks hard, you know, the Fed might step in and say, okay, well, we stand ready to buy.
you know whatever treasury bills you folks want to sell you know um at a at a you know at a um at a
fixed rate and um you know that rate will be low enough compared to inflation that the entire bond
market is going to look at the fed and say sold to you and and you know the total fed balance sheet
goes from you know what six something now it was nine at the peak you know to 18 because the bond
market is 30 trillion plus. So, you know, that's, that's one of those possibilities. And I actually
think there's a decent chance of that happening, but, but they, you know, they don't want it to
happen and they're going to try to, you know, incrementally do it, you know, kind of keep
everything together. I mean, and, you know, and they've done a pretty good job of that, right?
I mean, when, when Silicon Valley bank failed in 2023, I thought, okay, this was, this is it,
here we go. They're going to, you know, it's going to be a huge, they patched it all back together.
They created the BTFP.
They, Yellen came out and said she'd guarantee all the deposits, even though she couldn't
because there's 17 trillion and the FDIC only had a couple hundred billion, but it got everybody
calmed down.
And there's a certain, you know, there's a certain bias in the United States that we're,
you know, we're doing a good job and we're still the best country in the world.
And we've got, you know, the best currency in the world and all that other stuff.
And to some degree, those things are true, but we're also, you know, the boat is also
leaking.
and some of the weaknesses are showing.
And so, you know, I think there's a, you know, but, but do they want it to break?
I don't think so.
I think they want to incremental.
I mean, they want to, they want to just keep the system.
My guess is that every single Fed chair just wants to keep the system going as is status
quo, you know, 7% inflation, but call it two and, you know, become a hero and end up like
Bernacki on the cover of magazine or Powell who got an award from Princeton as being, you know,
the most noteworthy alumni of the last, you know, 30 years or, you know, whatever it might be. And
I'm sure that's what Worsh is aiming for as well. I mean, he doesn't want to have a fire
breakout. And so, you know, that's why they're doing this reserve management program. They'll
do other things too. They'll, you know, I know there's a point of this out. My partner, James
Lavish has, you know, really dug into the fact that the supplemental leverage ratios at the banks
are changing and that'll allow, I mean, they'll probably try and do QEV of the banks.
I mean, if they don't want to put them on their balance sheet, they'll try and get the
banks to put them on their balance sheet.
And who knows?
I mean, they could probably create some new program, you know, some new acronym and new
program and give the banks an incentive to buy those treasuries.
I don't know what that'll look like, but it wouldn't surprise me to see them do that.
But those treasuries got to get bought.
And, um, if they don't get bought and people think that the currency is failing because,
you know too much money is being printed and too much debt is being accumulated well then you know
then problems arise i mean you know i mean i just saw that we had 1.3 trillion run rate last 12
months at 1.3 trillion of interest expense in the united states and we've got i mean you know total
defense spending was 900 billion and trump must take it one five of course that's not going to
help the deficit and uh you know 1.3 trillion is a lot of money and and i've also seen that you
know, depending on what you look at, that we've got a role, we've shifted all the debt to the
short-term, you know, bonds or notes, and we've got a role nine plus trillion of it in the next 12
months. And I mean, the one thing that cutting rates would do is it would actually help their
P&L. I mean, if, you know, they're paying, they're now paying on these shorter notes, you know,
three, three something. And, you know, if, if, if we took rates down to one and a half percent,
I mean, we'd have a hell of a lot of inflation, they'd run it hot, but it would also cut the
government's interest bill because they could sell notes at that level and, you know, okay,
great. They're not paying as much. Now, you know, again, eventually, you know, what, what all of
these moves will trigger and what they're trying to prevent is Gresham's law where, you know,
I've studied hyperinflations. I wrote about them in my book. We all know how these monetary systems
fail. Um, most of these other systems that fail, we're not the world's reserve currency in the
most powerful country in the world. So we're not talking apples to apples, but a system,
A monetary system fails when everyone knows they can't stop printing.
When it becomes completely obvious to everyone that they can't stop printing the currency, they all abandon the currency.
And the currency becomes worthless.
There is no longer any demand for it.
And so the question is, how close are we to that point?
And I would say we're not that close, but we're closer today than we were before 2008 and before 2020.
And, you know, I think with every piece of debt and every, you know, program that they put in, we get closer still. And so at some point in time, you know, it's like, this is like a critical stage. There's a name for it, but it's like when something changes form, like, you know, water goes to ice or boils and goes to gas.
I mean, it's like, or an avalanche or a volcano.
I mean, it can stay a certain way for a long point in time.
And then you get the last snowflake that falls and bang, you know, the avalanche releases and goes down.
I mean, the same, or the same would be true with, you know, a volcano.
I mean, the magma can be bubbling around and nothing's going on.
And then suddenly enough pressure gets built up and wow, you know, you got, you know, Mount St. Helens.
I mean, it's like, and I kind of feel like there's a little bit of a parallel there with this monetary system.
You know, they can keep piling on this debt and keep patching it up.
they can keep doing all these various things.
But at some point, you know,
we could get to the point where, guess what?
There just isn't enough money in the system.
And if they don't cure it and cure it fast,
you know, we got a correlation of one event.
And we've seen them.
We saw one in 08.
We saw one in 2020.
You know, nothing about the system has changed.
So why wouldn't we see another one?
That's kind of how I see it.
Yeah.
With you saying like this will fail
when everyone realizes they can't stop printing,
like you and I know they can't stop printing.
Bitcoiners know, gold bugs know.
like enough people know right now.
And if they do it again,
that sort of pool of people that know
is just going to increase.
With each event, it gets larger, right?
08 created a bunch of gold bugs.
2020 created a bunch of Bitcoin bugs.
The next one will create, I mean,
but you know, I mean, I don't know
what percentage of the, I mean,
I think most of the population knows
that inflation is a problem.
I mean, that's because they go to the grocery store.
We all know that.
But I also think most people in the population
don't know what causes inflation.
That's exactly right.
That's the problem.
I think there's probably 10 to 15% that really understand that the fundamental issue is the printing money and the Fed and the government deficits and have really connected all the dots, you know.
And that's why I wrote my book was to try to help educate everybody else so that eventually, you know, as this continues, it keeps getting worse.
Everyone keeps losing more and more money and having to live, you know, on less and less money on a relative purchasing power basis.
You know, we start voting for or advocating for sound money politicians.
I mean, you know, the two brightest things I've seen in the United States, I don't know how familiar you are with either of these guys, are guys named Thomas Massey and Warren Davidson.
Thomas Massey awesome Yeah these are sound money people You know I mean Cynthia Loomis is too but unfortunately she retiring And so that a start
You know, Ron Paul was a sound money person, but he aged out, sadly.
You know, but there will be more because, you know, people will experience pain and realize that this is the cause of the pain.
And, you know, eventually we'll get through the other side.
I mean, one of the things that angers me the most, people call me a doomer.
And I'm not a doomer.
I'm very optimistic in the human condition.
I'm very optimistic on technology.
I mean, our lives are getting better in so many ways.
But in an unfair, we have an unfair system where the lives of people at the top are getting better.
The lives of people at the bottom are getting worse.
That's just tragically unfair.
And it's what creates a lot of dysfunction.
And, you know, we've got to get back to the sound money system if we want to solve that problem.
And so, you know, having blue scream at red or having red scream at blue, that's just not doing anything.
that's all just that's unfortunate that's a hegelian i mean they want you to do that
because it takes you it takes your eyes off of them them being the fed and the and the people
the bankers and the system and the politicians that are laughing all the way to the bank right
a hundred percent and it's funny you know that i i'm no macro guy i'm a macro tourist and i feel
like over the last but over the last six months i've been going down this path where i've been
like maybe the big print isn't coming maybe like reserve management maybe they can find a new way
out of this and then if you imagine this is like the bell curve meme where on the left it's like
big print on the right is big print i was somewhere in the middle and the thing that's pushed me back
to the left is i was reading one of luke groman's pieces recently and he was talking about this 8
trillion or 9 trillion in the next 12 months that um of debt that has to roll over and it's rolling
over into very high rate and you look at that there's so much stuff that's unsustainable but
You look at that and it's like, that is completely unsustainable.
Like that cannot continue without something breaking.
And I just think now, more than I have done in a little while, I just think a big print is inevitable.
And I don't think we're that far away.
Like I can't imagine it last 12 months at this rate.
Well, you're, you know, you're singing my song, but honestly, I wrote the book and I'm afraid I might end up looking wrong.
I don't know.
I mean, Lynn, who I respect enormously is much smarter than I am.
I mean, thinks that they can gradually, you know, work their way through it.
And they may be able to.
I just don't know.
And I read Luke too, and he's brilliant.
And he's got, you know, I think he leans a little bit more on my side, you know, just there's going to be nuclear level of printing.
But we just don't know.
We don't know.
There's so many moving pieces.
There's politics.
There's, you know, a ton of other things.
I mean, I will say this, in favor of the big print, my partner, David Foley, and I have done a lot of work on it.
There's just a lot of leverage, a lot of bubbly shit in the economy.
And so, you know, one of the things that leads to a monetary problem is when you have pumped up valuations that deflate because, you know, somebody made economic decisions based on those valuations and therefore they got to change their life and cut back.
I mean, and, you know, there wasn't necessarily a big print around the dot-com bubble in 2000.
But I mean, to tell you there, you know, they, the old, they, they started the housing bubble after that as a reaction to that.
When that burst, there were a lot of pumped up valuations and dot-coms.
And when that burst, the NASDAQ went down 82% and stocks went down 50%.
That was no fun for anybody.
And, you know, they didn't print there.
They, they took rates to 1% and blew a housing bubble.
But, you know, we can't blow another bubble because the next bubble would be on Mars. I mean, we're at the sovereign debt levels, but there's no more bubble left to blow. But I guess what I'm alluding to is when I look at a SpaceX or some of the, you know, the valuations of the chip stocks right now, I think they're going to say, okay, well, there's a lot of, you know, paper value in these things that at some point could deflate when, you know, if they don't come true the way people think they're going to come through.
I'm not anti-AI.
I love AI.
I use it all the time.
It's going to change the world.
It's just like the internet.
It's going to be enormously important.
I totally agree.
I was in the internet.
I invested.
I made money in it.
I rode the bubble.
I got hurt on the backside of it, although I did short some things too.
But one of the things that was certainly true was that in 2000 and 2001, we didn't know exactly what was going to happen.
We didn't know.
I couldn't see that Amazon would become Amazon.
I couldn't see Facebook.
I couldn't see all the, they just didn't exist or they weren't fully developed.
You know, we, we invested like crazy in a bunch of fiber, all which got used, but which
got totally devalued.
I mean, WorldCom and all these other companies, you know, went, went bankrupt or had to get
restructured because they took on too much debt to build too much fiber.
And, you know, and I, I just feel like that same, you know, that same story is being played
out in AI, right?
Yeah.
That, you know, that it will change the world, no doubt.
but you know chasing the it's it's the new shiny thing and by the way actually that's part of why
bitcoin is kind of punk right now i mean i know people in bitcoin bitcoiners and and tech guys
who are kind of like yeah bitcoin's old hat i'm i'm i'm all in on ai okay all right good luck with
that what are you paying for what are the cash flows how does it how does that all work you know
so i mean and both of those things can be true like i i'm with you ai is clearly going to change
everything but the market can also be overvaluing them right now like that's those both can be true
and this and yeah there's a pattern as old as time it's happened with railroads canals i mean
you name it the automobile radio you know rca i mean all of it so the thing that i think is
interesting though is like when you talk about the u.s economy doing quite well like i don't know
if it is outside of ai stocks like ai stocks is the economy right now it seems and well that's
like yeah and do they let them fail if do they let the bubble pop well the the you get into the
strategic yeah the whole strategy we've got to win this versus china and you know you see the
u.s investing in intel and so on and so forth i mean you're right i mean the u.s gdp would not be
doing very well without you know what is it i think it's this year it's 600 billion and it's
trending towards a trillion of capex on ai on data centers chips machines etc i mean oh my god i mean
And look, I hope they know what they're doing.
And I see really good companies taking on a lot of leverage to do it.
And the one that I kind of respect a little bit is Apple because they're not doing it.
I think my partner and I have talked about this.
They might be just sitting around waiting to see how it all shakes out.
But even Google, they're all making an enormous CapEx bet that winning this race is important.
And they may be right.
They may be completely right, and I may be completely wrong.
but i look at it and i also i just get the feeling that it has that dot com you know um we don't
really know exactly how it's all going to work and you know and the other thing that i think is a
threat there that i don't think enough people have focused on is that this deep seek thing in china
i mean this stuff may not be as proprietary or as hard to replicate as everybody thinks and everyone's
like well it's a race and we got to win it well is it or can somebody in china do it cheaper and
easier and better and faster. I mean, we kind of saw a glimpse of that with DeepSeek. So,
you know, I just don't know. It's, look, I'm excited by it because I do know, I look at my
life and I look at how much my productivity goes up. You know, I mean, I want to understand
something quickly. You know, I hop on Claude and chat and I can get my arms around it. You name it.
It's just, it's stunning. And that's going to be replicated, you know, a thousand times over
throughout the entire economy. So that's a really good thing. But is the capital being allocated
correctly today? It doesn't feel like it to me. I'm skeptical. I mean, I look at space. I mean,
the satellite business, the Starlink business, that is a fabulous business. I want to own that
business, but I don't want to own it at this price. The thing that keeps me up at night with
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that's bitkey.world and use the code wbd and i i think the point you you raise on ai is actually
really interesting because like I agree.
I think one of the things I've been watching
is the price of compute for these AI companies
has gone up like over 100% in the last six months
or something.
It's a number like that.
And the sort of open source models
that you can run on your own computer
are like getting very, very good.
They're not quite as good as the frontier models,
but they're very good for most things.
And I just wonder when people stop paying for it
and start using this sort of open source ones
you could run at home.
Like that might be too techie,
that might be unrealistic,
but it's a trend that I'm definitely going to be watching.
Well, and also, I mean, I'm paying for Claude.
I'm paying for chat.
I'm just at the $20 a month level.
I'm not paying for the big stuff.
But, you know, but as I understand it,
I haven't used them much.
I mean, you know, Grok and Gemini,
I mean, I think with Grok, you've got to be paying,
you know, you've got to be a blue checkmark on Twitter.
That's not terribly expensive.
And I think, isn't Gemini free, the Google product?
I don't know.
I think it's very low cost, I think.
Yeah, I actually don't know.
I think if you have a Google account,
you get like some usage for free i think but i don't exactly know or it's like they're trying to
trade you like yeah like chat yeah no i started using chat but i quickly hit my question limit
and i was kind of like all right i'll pay you the 20 bucks i mean so it's going to be really
interesting to see how it plays out though um because the one of the things i was talking to
peter dunworth on the show recently um and he made a point that i think was actually very interesting
in that there's a lot of people in this ai trade right now it's clearly taken the wind out the
sales of Bitcoin a little bit over the last sort of 12 months or so. But like when that trade does
roll over and at some point it will, like it could be in five years time, who knows, but at some point
that trade will roll over a little bit. Like where do people put their money? Because like the bond
market is not looking attractive, like other equities outside of AI aren't looking particularly
attractive. Like does that start flowing back into things like gold and Bitcoin? Like these are people
who are sort of tech savvy, you'd imagine on the whole that the AI investors like Bitcoin looks
pretty attractive then i think that's right i think that's absolutely right that bitcoin does
look attractive and you know bitcoin is just it's um you got to be patient with this asset
you just you really have to be patient and uh you know i've got people that i put into it last year
that you know probably have average costs of 100 105 110 and they're calling me and they're scared
and i'm just like look i told you when you did it you know you got to be prepared for a 50 drawdown
and think to yourself, if that happens, I'll buy more, not sell. And I don't think they're even
close to the buy more. I'm trying to prevent them from selling. But those of us who've been around
it a long time, you know, we just, we understand it. And it's just kind of like, okay, you know,
it is what it is. I mean, this is, this is the nature. I mean, I, you know, go back and study
the growth of Amazon. I mean, Howard Marks, you know, made a fortune. Um, I think it was Howard
Marks. No, it was somebody else. Um, I'm getting my name, the names wrong, but there was a fellow
who was an investor in Amazon from the beginning.
And, you know, he suffered big drawdowns
and he just kept, you know, he'd buy the dip
and did extremely well with it.
So yeah it Bitcoin just looks more and more attractive And the thing that this kind of plays into and one of the questions i had for you about the fed meeting i want you to try and clear
this up for me larry is um the idea of getting rid of forward guidance because that has been
a thing for the last i don't know how long um like but when power was talking about higher for
longer and things like that like they have given foreign guidance and water wants to get rid of
that entirely. Why do you think that is? Because is it the idea that they want to keep some
optionality, keep some flexibility? They know that inflation's high. They know that the treasury
market's not in great shape. And instead of telling the market what they're going to do,
they want to kind of keep that flexibility. Or is it that they think the market can't
sort of is too fragile to have the forward guidance at this point?
Well, that's a great question. I, you know, I'm not quite sure. I think it, I think it just,
in my mind, it just kind of falls into the let's change what's continually changed the rules of
the game to keep the other side up. We're the other side, right? We're trying to figure out
what the hell they're going to do. And so, you know, um, they'd gotten to the point where they
had dot plots and projections and Nikki leaks and all kinds of stuff. And I can see where they kind
of said, you know what, we're, we're hamstrung by this. We've got our, you know, got our arms
tied behind our back because we're giving, telling people shit, we got to warn them of
shit and all that kind of stuff.
And they, they thought they were being responsible in doing that.
Um, and now they, they, they, they, they have decided they want to have optionality without
any restraints and, you know, let it, let it just, you know, let's let it rip.
And to me, this takes us back to Greenspan.
I mean, um, Greenspan did the same thing.
I mean, he talked in total gobbledygook.
I mean, he gave forward guidance, but you couldn't figure out what it was.
And I mean, he even joked about it.
You know, if you think you understood me, then obviously I didn't do my job very well.
He said that once.
And so, you know, the job, I mean, really the job is the job of a con man.
I mean, they're supposed to sit there and convince us they've got inflation under control.
And yet they don't.
And they're doing things to inflate.
That's really the whole job.
I mean, in a nutshell, that describes what a Fed chairman has to do.
He has to gaslight the public into thinking that the money is sound and the Fed has got 12 people.
I mean, you know, I find it hysterical, Danny, that people say, well, you know, wars can't get the votes to cut rates.
I mean, give me a break.
The way this works is that the chairman bullies everybody else.
I mean, read, you know, read the books about, you know, what Bernanke did to Thomas Honig or what, you know, Greenspan, I mean, you know, or Yellen.
I mean, the chairman sets the tone and the dissents, even the dissents are somewhat planned.
I mean, it's all kabuki theater to make it look like, oh, we've got these 12 wise people trying to figure out exactly what the monetary policy should be.
And they're so thoughtful and deliberate and they're going to get it absolutely right.
And since 1913, they've done nothing but fuck it up.
I mean, and it's kind of like, you know, Jesus Christ, guys, just stop gaslight.
Stop with the fucking bullshit and admit that you're the department of inflation and your job is to inflate, you know, at a rate that we can all tolerate.
And, you know, basically keep this fucking game going in favor of the bankers and the politicians.
Why don't you just say that?
I mean, obviously I'm being facetious.
They can't say that.
But that, you know, that's to me, that's really what's going on here.
It's just they're just playing a game.
And and I'm just so annoyed by it and so fed up with it.
And the sooner we can get rid of it and we get the entire world to realize that it's a it's a sick joke on all of us, the better off we'll be.
I mean, that's that was the whole Ron Paul movement.
Just end the Fed.
There should be no Federal Reserve.
We should have a sound money unit that we all transact in.
And the price of that money should be set by the free market.
And that's called the interest rate, period.
Nothing else.
There should be no bailouts.
If you fail, you fail.
you know and you want to take on a bunch of leverage and swing for the moon great but if you
blow it you know you lose everything and you're out of business you're not you know bailed out like
Lloyd Blankfine was and you know when he was one on Goldman Sachs in 08 you know and now he
you know lives in a mansion on Long Island and you know and holds forth on Twitter about all
kinds of policy issues just makes me sick it's like you know the guy shouldn't be bankrupt right
a hundred percent I couldn't agree with that more it's um like what it says to me the lack
for guidance is they just don't know what they're going to do.
At least with Powell, like he was saying,
hire for longer and the market could kind of digest that.
And I know it kind of sucks that the market trades
on the words of this one person,
but it just screams to me that they don't know.
They don't know what they're going to do.
They're stuck.
I do think the Fed looks trapped here.
One of the things that I've been reading though,
Jeff Ross's Substack is brilliant.
I've been reading it a lot.
And he was talking about the Fed don't actually set the rate.
the market sets the rate and it's the like the two-year bond and the overnight funding rate
and i was looking at that recently and that that now is signaling that rates need to go higher or
will go higher do you do you think that is probably likely in the next meeting i know i know earlier
you said do you think they're going to cut at some point jeff gunlock thinks rates need to go higher
same thing and and we've all we all know that the two-year you know really is the fed funds rate
kind of in disguise um and and groman has a great chart where he just shows the two-year has been
going higher, you know, open above the rate by a significant amount. Yeah, I think that would be a
great way to run it. But as a practical matter, I don't think that's how they are going to run it
because I think they're political. And, you know, I think Vicente is in on all of this.
And as much as said, they expect to grow their way out of it. And how do you get growth? You drop
interest rates so that you get more projects being taken on. I mean, you know, one of the
problems right now is all these people have frozen in their houses. There are people who have 3%
mortgages that can't move because the new bigger house that they want would have a 7% mortgage.
They can't afford it. And so, you know, if they can get rates down substantially,
you know, the housing market will pick up, you know, I mean, I mean, look, we,
what they're going to do in my opinion is this decade, and I've said this for a long time,
this is going to be a decade of inflation. It started in 2020. We're six years into it.
we're not anywhere close to the end of it.
Before this is all over, we'll have double-digit inflation.
We almost had it last time.
We got to nine.
We're going to get double-digit inflation.
And the good news is, you know, the economy will probably be cooking
and unemployment will be relatively low.
Somebody's got to build those data centers.
Somebody's got to do all this work.
But the bad news is that, you know, with, you know,
and somebody's got to do those housing, you know, all of it.
When we get interest rates low, economic activity will pick up.
So we won't have an unemployment problem.
But what we will have is we'll have a red-hot inflation problem because the money supply growth will start to pick up again.
I mean, it's already running at 4% or 5%, and it'll run significantly hotter, and then that'll filter through to the economy.
And, you know, heaven forbid that the stock or the bond market breaks.
I mean, if either of those things break, that's what it will take to get the big print, right?
The big print, if we just run it hot, we'll end up looking like, you know, Turkey or Argentina or, you know, we'll be kind of an emerging market economy with good nominal growth and high inflation.
I can see that's actually a scenario that I think is reasonably likely that, you know, that does not require a big print, but that leads to, you know, $10,000 gold and $400,000 Bitcoin.
I mean, I, you know, and, and, you know, $10 gas or $15 gas and $25, you know, ground beef.
I mean, I'm talking five years out or something.
I mean, I, I guess one of the possible paths and, you know, I, I would guess that would
kind of be more of Lynn's, you know, medium print.
Um, you know, if something breaks, if, if this, if we get a leveraged unwind, you know,
whether it be AI or, you know, private credit or who knows what.
But if we get a leveraged unwind somewhere, the stock market breaks, the bond market breaks, well, then we're going to get a big print.
And then it's going to get really hairy really fast.
And, you know, 12% inflation is going to look like a good thing.
I mean, it's going to be 20%.
And I think in the next one, I mean, that's the one that could lead to, you know, the reset, the monetary reform.
I mean, if you use the fourth turning model, I'm modeling, we fix all this in the 2030 to 2033 timeframe.
And that's just a guess, but it's based on fourth turnings lasting a certain amount of time.
And this one started in 08, right?
So it lasts 20 to 30 years.
I mean, let's say it lasts 30 years.
That would take 2038.
Maybe it will last that long.
I don't know.
But it appears like the pace is picking up.
And certainly the size is picking up.
I mean, Bernanke printed three trillion.
It took him four years to do it.
Powell printed five trillion in 18 months.
So, you know, the next guy could print eight or nine trillion in six months or something.
I mean, I'm just, you know, I'm spitballing here, but you know, you never know.
The scale of it is insane.
I honestly, without Bitcoin, I don't know how you'd look at this with any kind of hope.
Cause like you were talking about people moving house at this point.
Like I'm looking at buying a house at some point and like Bitcoin gives you that low
time preference where I'm like, Bitcoin's at 60K right now. If I wait a year or two, I'll probably
get a house at half price. I can wait for rates to come down. I mean, it can also put you in a
kind of stasis where you don't do anything because you know you have the best performing asset. But
it does give you time, which I just don't know what you'd be doing if you didn't have Bitcoin.
Well, that's the thing. I mean, you want to own assets where time is on your side. And
impatience kills so many people. I mean, probably one of the biggest mistakes I see everybody,
and particularly people in the younger categories make,
and I've learned this lesson so many times the hard way,
is you want to get there faster so you use leverage.
Oh, boy.
I mean, and that's, by the way, that's kind of what some of the treasury companies are doing.
Do you know what I mean?
And don't get me wrong, I'm a micro strategy holder,
and I believe what Saylor's doing is fine.
But I'm just, you know, leverage in an asset like Bitcoin can be a life-altering experience
in a negative way.
and there's enough upside here
that you don't need to use leverage.
I mean, if you want to play around
with 5% or 10% of your money
in a levered way, fine.
If you blow up, you blow up.
But this is asymmetric enough
that you don't need to use leverage.
100%.
Can we talk a little bit
about MicroStrategy?
Because Saylor's been getting some heat
over the last few days about Stretch,
and I saw today the price of Stretch
went down to $83,
which is pretty insane.
um it really is i was i was actually buying a little this morning um i mean it makes sense if
you think it's going back to par this is a great time to buy it it will go back to par i mean it
definitely will i mean i um jesse mayor you probably saw it had a good tweet on it where
he talked about it it felt like a leveraged cascade you know like somebody was getting
liquidated i mean somebody probably borrowed cheap and and gone in there and to get the 11
percent and levered themselves up and you know guess what they just got a gut check a big gut
check. Um, yeah, I think it'll come back to par over time. Um, I think, you know, the dividend is,
is very well covered. Um, I think all the strategy hate, I mean, it's, it's sad to see. I mean,
there are a lot of Bitcoiners that I know, like respect, et cetera, who've gone negative on,
on sailor. And I, I think they're mistaken. Um, when people call them deceptive, I just don't
think that's true. Um, you know, I, I think he's been aggressive. Um, but you know, he wants to
win. And, you know, I think he's evolved the strategy, no pun intended, but he has evolved.
And, uh, you know, um, that's okay. And in my way of seeing it, conditions change, it's a war,
you know, you change. I mean, he's, he's fighting the fiat lords and he's, he's, he's really running
a speculative attack on the dollar. He won't say that, but he is. Um, and so, you know, you do what
you got to do. Um, you know, my view is it's, it's a thousand dollar stock in a few years.
you know the the only way it doesn't work i mean if if bitcoin adoption stops and bitcoin arr you
know stops going up at a very nice rate well then strategies leverage bitcoin it's going to fail
before bitcoin fails but i don't think bitcoin's going to fail and i do i strongly believe that the
arr is going to continue it to be you know north of 20 you know i mean 30 or 40 very possibly
and so to pay you know to pay a boomer 11% dividends on a preferred and strip out the
volatility some of the volatility not all of it because you can go down 20% you don't have if
you're not patient but uh strip out some of the volatility um you know that's that strikes me as
not unintelligent that strikes me as intelligent now he's got to be careful not to get too far out
over his skis I mean I think you know how far he pushes stretch is is a question mark and uh
because as we do know, there are these drawdowns.
But my partner and I, David Pollard, we've battle-tested this thing.
We've done all kinds of scenarios.
I mean, you can't break this company.
I mean, it's going to be totally fine.
And all this sailor hate to me, it's just a bear market phenomenon. And if I look at what he's done for the space overall, you know, this drawdown wouldn't have been just 50%. It would have been 70% if we hadn't had, you know, the strategy purchases that have taken place. And, you know, his activities have encouraged others. And I mean, it's, look, it's becoming institutionalized.
And for those who say, well, I'm a purist, I mean, I think you should just hodl and encourage others to hodl and it's money and all this other stuff is noise.
That's just not realistic.
I mean, the fact of the matter is we have an existing fiat financial system and we need to, you know, the transition from a fiat financial system to a purely Bitcoin system, which I believe is taking place, but will probably, you know, take more than my remaining lifetime to complete.
But, you know, I think in 10, 20, 30, 40 years, it will complete.
You know, it's, you've got to go through, there have to be fiat related products that are Bitcoin backed, like strategy.
And to me, that's okay.
That's a positive.
So I'm not in the hate sailor camp.
I respect sailor and I think what he's doing is smart and correct.
And like the odds of him failing at it are quite low.
So I'm a big strategy shareholder and comfortable being so.
yeah i mean i i agree with the vast majority of that i do think for most people you're better just
owning the asset rather than owning you know exposing to the asset by something else i don't
disagree i mean my actual cold storage bitcoin holdings are much much larger than my micro
strategy holdings but my micro strategy holdings are not trivial i mean it's it's a meaningful
it's a meaningful number um and because i think it can and will outperform bitcoin and and i and
by the way, I may trim it at some point in time. I mean, I think in an upcycle, you know, it may go
back to an MNAP premium of, you know, I don't know, one, three, one, five, one, seven, one, eight.
And, you know, there may come a time where, okay, Bitcoin's up, you know, we're at the top of the
power law, you know, micro strategies way up, you know, we're trading at a big MNAP and I might sell
it because, you know, I know how these things work. I mean, it is cyclical. And, you know, I think
one of the things that I think that people were afraid right now, I think one of the things they
should do is they should go buy fred krueger's book on bitcoin 1 million and read it and understand
um how and and and look get on get on x and look at giovanni's work on the power law and just
understand how powerful this power law thing is um you know it's it's it's perfectly marked all
these bottoms and if we're not at one right now we're very very close and i you know could we
down into the 50s, maybe,
but we won't stay there a lot.
And my sense is that
once this bottom is in place,
the next leg up takes us
to kind of 180 minimum
and maybe up into the twos.
Hard to say,
but that's what the power law predicts.
Yeah.
I mean, with the,
how strategy you perform
in the next bull market,
I could believe it goes to 1.5, 1.6,
something around there.
What I don't understand
is people that think it's going to go back to like a 3x mnav like there's no way that those
shares don't get diluted before it gets there like that i don't see that ever happening totally
agree totally agree i mean those early days were kind of unique and and we won't ever see that
again but but you know it it should trade at an mnav premium to the degree that you can access
credit markets and and and source capital you know at well below the bitcoin arr i mean you know i
I mean, Hugo Stennis did this in Weimar, Germany, right?
I mean, he borrowed money cheap, and he used it to buy real stuff.
And then when the currency hyperinflated, he paid back the debt with paper, with hyperinflated currency.
And that's all Saylor's doing.
He's just doing a financial arbitrage where he can borrow money in the stretch case, 11 and a half.
I mean, it'll probably be 12 soon.
But he borrowed money relatively cheap, put it in an asset that's growing at 30.
It was at 40, now probably trending towards 30.
and the shareholders capture the difference. And so, you know, to me, that works. So it's not,
there's nothing more complicated about it than that. And, you know, look, if Bitcoin fails,
he's screwed. You know, if Bitcoin ARR goes down, he's screwed. I mean, how does that happen? I was
on another pod this morning. I said, there are only two ways that happens. One, if something
technically occurs that just proves that, you know, 16 years and 900 and some odd thousand blocks,
you know it's not going to work or adoption really slows and people stop buying it and there's just no
no growth in the underlying adoption of the asset and i just don't see that i you know i see i see
more and more groups entities etfs etc i mean it's just it's getting more and more broadly
distributed and and and it'll continue to do so so yeah i don't see that happening either i i do
wonder whether this sort of 20 drawdown i know i know he's had drawdowns from the hundred dollar
sort of part. Yeah, there were a couple of others.
If I look back, let me just look
at my screen here, I'll tell you.
This is definitely the deepest one.
Back in November, it got
down to like 90. Yeah, November
got to 90. Yep, and then he had
another one in
February, it got to 93.
Yeah, no, this is the worst one.
This is the worst one by far.
So, you know, like, the
real institutional investors far better
than I probably ever will. Do you think
this will put people off like the big money looking at this off Oh yeah Oh yeah Some of it put some of them off for sure i mean it uh you know it yeah i mean it uh i mean heck it it you know it it put it put me
off to an extent i mean i you know i own some um you know and i i i didn't sell it but then you know
it went down to this i was like no this is ridiculous i mean this is you know he's got this
covered. And, and I mean, you mean to tell me you're going to pay me 11% plus I get to buy this
in the eighties, you know, and it could return to par so I could pick up another 15% there.
That's just too good a deal. So, um, but I, you know, I, I kind of, when I bought it originally,
I always kind of knew that it was the sort of thing that if, if people got freaked out about
Bitcoin, it could do this. I mean, this is a, you know, it was kind of a correlation to one event
with Bitcoin. And it's a little bit of a sentiment indicator on Bitcoin. I don't think people fully
understand it. And, you know, let's face it, Danny, I mean, the sentiment right now in our space,
it's really bleak. I mean, it's really, really bleak, which historically as a professional
investor, having been doing this for 40 years, that's a very, very good time to be buying. But
it also doesn't feel comfortable. You know, I mean, I know that, you know, buying this morning,
is kind of like,
well, shit, maybe it goes to 70, right?
I don't know.
But no, I got to nibble at this, right?
I mean, in the 10 years I've been in Bitcoin,
I think the sentiment is the worst it's ever been.
And I've said this before on the podcast,
but I think it's because there's nothing to point at.
Not necessarily as tangible, at least.
Like when they crashed in 2024,
whenever it was, 23 with FTX,
like there was huge fraud in that space
and you could point at why it was crashing
and be like, it's Sam Bachman-Fried's fault,
it's 3-Eros Capital, it's Luna,
and it's not that anything's wrong with Bitcoin.
I think now people are questioning
whether Bitcoin is going to do what we think it's going to do.
I'm not questioning that,
but I think maybe the broader market is.
And I think that's one of the reasons why sentiment's so bad.
But on the stretch thing, I've got one more question on this.
I assume you can short stretch, right?
I don't know.
Yeah, I would imagine you could.
Yeah, I mean, you've got to pay the dip band, right?
yeah so like if you obviously like funding rates might be high it might not make a lot of sense to
short it all the time at 100 but like are these drawbacks always going to happen because people
can short at 100 they know it's not going to go above that all they have to do is pay the funding
on on the contract maybe maybe i mean yeah it's you know it's you gotta you gotta pay the dividend
though if you're short the stock so you know you've got a negative 11 so you know um it's very
risky. Yeah, it's risky. I mean, but, but obviously if you, if you felt like you knew when, when,
you know, we're going to have one of these cascading events where everyone kind of freaked
out on Bitcoin, you know, or on strategy, well, fine. I mean, it's, you know, it's, it's interesting.
I mean, um, the, the big money has gotten into this space and, um, you know, uh, my sense is
that they're testing sailor, you know, at, at, at a lot of different levels. They're testing him
on stretch they're testing on mstr um you know i think he's gonna pass the test with flying colors
um and i you know i think there are gonna be some people who are gonna be on the wrong side
of these trades are gonna get their faces ripped off but you know there's a lot of capital out
there that can you know play this game and um you know it's uh you know it is what it is i mean it's
it's a very volatile asset i mean i the way i look at it we math it out i mean
$120,000 Bitcoin, $200,000
Bitcoin is an $800 stock.
I mean, it's, you know,
you can buy it right now for $116,
$112 today.
It's down another $4.
So, you know, to me,
it's a very, very
leveraged play.
Do I think Bitcoin's going to go up 8x
in this next run? No. I think it'll probably
go up 4x.
But, you know, you take
Bitcoin from 60 or 3x. Take
Bitcoin from 60 to 180.
And you've got a three bagger.
You know, you take Bitcoin from 60 to 180.
And I think micro strategy is a five to eight bagger, depending upon what happens to MNAP.
So, you know, that's what you're playing for.
But in turn, you know, you've got the outside.
Yeah.
I mean, you could say Bitcoin is going to go up 2x or Bitcoin is going to go up 100x.
And I'll agree with you.
I just, the timeframe changes at some point.
Look, I think the cycles will continue.
This will be, you know, I mean, look,
I'd like to have it go up 8x on the next uprun.
But if you kind of look historically at the upruns,
the multiple cuts has gotten progressively smaller
as it gets more widely distributed.
And that makes sense, just like the drawdowns have gotten smaller.
So it's totally logical, right?
I do think, though, if this is a stress test for a sailor,
that's got to be a good thing.
Whether you love sailor or you hate sailor,
someone holding that much Bitcoin,
they need to be stress tested to the highest degree.
And assuming he comes out of this well,
which I think he probably will,
Like, that's good. That's a good thing.
Absolutely. Absolutely.
I mean, that's, look, it's amazing to me that more people don't see it.
And it's amazing to me how much hate there is out there.
And I just, I don't get it.
You know, I just don't get it.
I do think some of the hate comes from the position where maybe they don necessarily hate Saylor They don necessarily hate what he doing But I think a lot of people don like that retail is being dragged into buying MicroStrategy or Stretch over just buying the underlying asset And I think maybe some of the hate
is to try and address that.
I'm sympathetic to that.
I mean, I think retail,
retail, you know,
look, if you really want to protect yourself financially,
your absolute first move
has got to be to buy the native Bitcoin
and cold storage full stop.
Because, you know,
they can 6102 you with an ETF
and, you know, all the other stuff.
I mean,
you know, you got it as a Bitcoin or you got to start off owning native Bitcoin in your own self-custard.
That's, that's, I always believe and preach that.
Now, if you then decide you want to do some other stuff, you know, for the obvious reasons that I've just talked about, you know, with a smaller percentage and okay, fine.
I mean, I, you know, I, earlier I said, don't use leverage.
And of course I'm here.
I am advocating using leverage, but, but I want to point out that, you know, my micro strategy position is probably less than 10% of my Bitcoin position.
position so you know i'm playing around at the margin not not betting the farm on microstrategy
yeah exactly it's all about how you position but i mean and who who am i to tell anyone what they
should do with their money i just think there's nothing more powerful than owning self-custody
bitcoin that's what people should be striving for absolutely i mean it's it's it's it's what you know
and we need to do it um and more people need to do it and yeah you know the etfs are good but
they're not great and you know i mean i get a little worried and we haven't talked about this
it all, but I get a little worried about what happens if and when, you know, we get a blue
team instead of a red team and, you know, they start to, you know, tax the hell out of, I mean,
just say Illinois put a tax, they're to tax it. They want to grab it. They want to, you know,
outlaw. I mean, you know, they're not particularly, um, you know, friendly to this stuff. And, uh,
and so, you know, I mean, they could grab the ETFs like they did with gold, et cetera, et cetera.
So, you know, I like knowing that, you know, 12 words, I can go to any country in the world and live and tell the U.S. government to pound sand if they want all my money.
So that's still the original and best use case for Bitcoin.
So, I mean, 100% agree.
Why do you think SATA has done reasonably well while Stretch has been struggling?
That's a great question.
You know, James Lavish, my partner at BOF is on the board there and I haven't talked to him about it.
I think, I think it might be, they're not as big a target as a, as a strategy.
Um, I think it also might be, they're not as leveraged.
I don't know.
I haven't even looked at that.
I could be wrong.
Maybe they're more leveraged, but I think, you know, I think strategy, one of the things that I think this might be informing Michael about too, is he might be looking at us and saying, okay, we probably push this just about as far as we can go for now.
in other words you know i mean well one he doesn't want to sell it you know down this cheap but
but i mean it you know this i mean the the balance he's always trying to figure out is
how leverage does he want to get right i mean he can always add leverage but in a very volatile
asset there's a certain amount of danger to that and you know based on how stretch is
is performing right now market might be saying hey dude you kind of got to the point where you
got enough leverage we don't want you to get any more you know what i mean yeah i think
Strive, their product,
they might not be quite as leveraged, and that might be
why it's holding out a little better. I don't know.
That's a hypothesis. I haven't checked that.
For all I know, they're more leveraged. I don't even know.
I think they do have very
low leverage, but I could be wrong on that as well,
to be honest.
Larry, I always love talking to you, man.
Well, thank you.
What's the key takeaway from this?
Is it the Fed's trapped, they're going to print,
buy self-dustinable?
Is it as easy as that?
I think the key takeaway is, you know, let's go back to, you know, first principles 101.
You know, what Saifedean taught us with a Bitcoin standard.
You're in this shit.
You got to have long time preference.
Full stop.
Anybody who's complaining.
And look, I mean, I know the feeling of wanting more money faster.
We all, that's human nature.
I mean, I, you know, I manage a gold and silver fund.
I mean, the fund was up 175% last year, right?
And this year we're kind of flat.
I'm like, geez, I want that to happen again.
You know, and it probably will, but not instantly.
Do you know what I mean?
And so, you know, this, I mean, this is a decade-long trade, this monetary debasement trade.
We will be proven wrong if the government becomes responsible.
So that's what I'm watching for.
I mean, you know, entitlement reform, cutting back on stuff, balancing the budget, all that kind of stuff.
Hang on a second.
We got to slow down here.
But I don't see any of that.
And so, you know, my view is just take a multi-year view of this thing.
You know, we're in the right place.
And, you know, I know there are a lot of people and I've got investors in my fund that I put into Bitcoin.
They're like, God damn, man, it's at 60.
I can't even bear it.
And I know, you know, that two years from now, it'll be 180.
And they'll be like, oh, God, it's 180.
I should buy more.
I'm like, well, you could, but, you know, you really should have been buying it back at 60.
You know what I mean?
And so it's just it's very hard.
I mean, so, you know, dollar cost averaging, you know, understanding the power law.
I mean, compared in the power law model and compared to its 200 day moving average, Bitcoin has only been this cheap about 10% of the time.
So with that, if somebody came to me, when somebody comes to me and says, should I buy some Bitcoin?
I generally say yes but you can only buy what you willing to have a 50 drawdown on and DCA the rest But actually if somebody came to me and said how much should I buy today I say you know shoot your WOD shoot a big piece of your WOD today because we in that band where it cheap
And that's what's hard for people to see.
I think 60,000, that's not cheap.
You bought it at 10,000.
That would be cheap.
Well, it's never going there again.
Okay, so, you know, and I'll wait till it gets to 40.
Well, then you won't buy it
because it's not going to 40.
You know, 60,000 using the models,
the sophisticated model that's got a 95% R-squared
that Giovanni built and that Fred Kruger has elaborated on, you know, tells you that it's
cheap right now. So buy it. So, you know, and then, I mean, the rest of it is just like,
like go live your life. I mean, I'm, I've dialed back a little bit on these shows. I've dialed back
on, you know, making appearances and stuff. I mean, I'm, I do the pods with people I really
like like yourself and, you know, I mean, I'm focusing on, you know, my family and fitness
and you know because i just want to make sure i want to be around to see the failure of the
central bankers like i live for that okay i mean you follow my ex feed you know i hate central
bankers absolutely hate it and and i want to i want to i want to be around to see them with egg
on their face and yeah we need you around for that larry you keep up the crossfit keep it going
I'm telling you, man, I'm aiming for it.
My mom's in her mid-90s.
I'm turning 69 next week.
God damn it.
I'm aiming for 100, and I think by then we'll see it.
So let's hope nothing happens and I can get there.
But the point is that you've got to dial out here, guys.
I mean, it's going to be fine.
This is all going to be fine.
I mean, as early as December, we could be high-fiving each other.
I mean, you know, six weeks from now, the Fed's going to meet again.
You know, his task force is going to have some great report and he's going to blame it.
He's going to follow it, maybe, and say, you know, we actually need to reduce or be thinking about reducing rates.
They'll probably have a couple of good prints between now and then because housing is soft, you know, particularly in Florida and Texas, and energy will be soft.
and so you know and and right now you know the fed fed watch site is saying there's like an 80
chance of a hike this year well when the market wakes up and realizes they're not going to hike
that in fact they're going to cut what do you think is going to happen to this ship it's going
to explode you know we're gonna i mean you're going to see bitcoin at 120 before you can blink
your eye you're going to see gold at 7 000 before you can blink your eyes so so you know am i willing
to wait till December for that to happen? Sure. Yeah. I don't care. What have I got? I got nothing
but time. I mean, am I impatient and frustrated? Sure, I am. And I blew the call. I really wish,
I thought he was going to be dollars and I was wrong, but they're pretty smart and they decided
to change the game. Oh, let's go to this no guidance and let's reiterate how serious we are
about tackling inflation.
And, oh, and we're going to,
we're going to,
a new strategy.
We've got a committee.
We have a task force
that's going to figure out
how to solve this problem.
And we're going to rely on them
and you're going to believe in me.
Good God, what a bunch of crap.
You know what I'm saying?
Can't people see through this shit?
It's just, it's just total horseshit, Danny.
You know it.
I know it.
So, you know, like,
Let's all just chill and stop attacking each other because it's all going to work out great.
We're all going to be rich and eventually we'll have a sound money system and we won't have to deal with these jokers anymore.
Let's go.
I look forward to that future.
That's where I am.
You know what I mean?
Hawkish now, dovish later.
It's always the same.
Tell everyone where they can go and buy your amazing book.
Thanks for putting the book up.
Yeah, so the book is available on Amazon, hardcover, paperback, audio, Kindle, all that stuff.
And, you know, I wrote it to try to help the average person understand how and why they're being screwed and how to solve it.
And I've gotten feedback that it works, not for everybody, but for a lot of people it works.
And so if you like it, please pass it on to your friends.
I mean, we got to develop, we need a sound money army in the world so that, you know, we, we vote for, push for, advocate for, make noise about, and eventually return to sound money.
Because when we do, things will be so much better.
I mean, so many of our problems will go away.
That's, that's my strongly held belief.
So hopefully we'll do it.
That's some first turning shit right there.
And I can't wait for the first turning.
Let's go.
You'll have, you'll be married.
You'll have kids.
it's just going to be great, Danny. It's all
going to be great.
I'm still married to more kids, hopefully.
Oh, I'm sorry.
I didn't realize you were married.
Do you have a child?
Yeah, I've got a daughter.
Oh, I didn't realize that. Oh, I'm out of date.
I'm sorry. I didn't realize.
That's all good.
So more children. That's what I'm going for.
Yeah, exactly. There you go.
Alright, Larry. Appreciate the time, man.
You're one of my favorite people to speak to.
and we'll do it again soon.
Anytime.
I love it, Danny.
Thank you.