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Inflation is the biggest form of institutional theft in the world.

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If you just receive parback as a credit investor, you are in a very, very vulnerable position.

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You can deliver superior financing terms to borrowers that are embracing Bitcoin as a capital asset with a modest amount of it,

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can dramatically improve the credit risk and position the assets to accrete value in inflationary periods rather than to dissipate into nothing.

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If we integrate some of these Bitcoin incentives into our public institutions, could we not expect that these institutions might flourish and change?

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I mean, all you have to do is read an English language newspaper and your front page article

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is that people are losing faith in the dollar.

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Andrew Holmes, we go again.

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How are you doing?

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I'm doing great.

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Thank you.

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Good.

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Thank you for having me in Philly.

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My pleasure.

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Delighted to have you here.

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It's been fun doing a little tour today.

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Yeah.

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We've seen all sorts, seen the good and the bad of Philly.

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Yeah.

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It's interesting.

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I had a really incorrect perception of what Philly was going to be like.

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All I've really seen of it is the documentaries where you see the drugged out crazies on the street.

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And we did have a drive and go and see that area of the town.

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And it's depressing.

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It is depressing.

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But the actual city is really nice.

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It's lovely.

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Yeah.

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I really enjoyed it.

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It was cool having a bit of a tour.

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You showed me the first central bank in US history.

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Yep.

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First bank of the United States.

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That was very cool.

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And it's just over the road from the building that you did your Bitcoin backed lending against.

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That's right. It was good symbolism.

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It was very cool. They're literally right across the street from each other.

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So I think maybe we should start there. Do you want to explain what you did?

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Sure. We provided a financing solution to the owner of a multi-family asset

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in Old City in Philadelphia.

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The building was originally built,

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well, there are three buildings that are joined together

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around a courtyard in the back.

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And they were built at various times in the 1800s.

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They were old industrial buildings.

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So nowadays, they're loft-style living with exposed brick

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and nice architectural windows and wooden floors.

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It's been owned by the same family investor for,

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at this point going on almost 30 years so it's been a good asset for them they've upgraded it

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from time to time and they had a loan that was coming due on the asset it was about a nine

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million dollar loan buildings worth about twice that and we provided them with a refinancing

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solution which enabled them to pay off the existing mortgage the then existing mortgage

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to invest about $2 million of additional capital into the building to make routine repairs.

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They wanted to renovate some of the common areas, recarpet the hallways,

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replace the cabinetry and the kitchens as the units turn over. And then importantly,

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we added another million and a half dollars of value to the financing, which was used to buy

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just shy of 20 Bitcoin, because at the time, the Bitcoin price was a little bit higher than $75,000.

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So our collateral for our loan is the combination of this nice building located across the street from the Museum of the American Revolution and just a short walk away from the First Bank of the United States.

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Nice neighborhood, lots of restaurants and boutiques and art galleries and whatnot.

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it's secured by that building and it's also secured by 20 Bitcoin. And if something were to

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go wrong with the asset, we think we're in a lot better position than a conventional lender

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because a conventional lender has to recover only against that asset. And as nice as it is,

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it's idiosyncratic. You need to find somebody that wants to take on that specific asset that

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It has the means, the ability to do so.

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It's not liquid.

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It's not divisible.

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You can't just take on a little bit of it.

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You have to take on all 63 units, all three commercial spaces.

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And it's good collateral, just like any physical collateral, but it has limitations, just like

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any physical collateral.

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We have the ability to recover against that, but then we also have the ability to augment

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our recovery with the Bitcoin, which puts us in a far more robust position because the Bitcoin is

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liquid, it's fungible, it's divisible, it's universal, and it tends to go up over time,

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meaning that our loan-to-value goes down over the life of the loan, which is a unique feature for a

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loan. And that's obviously already happened if the strike price when you did this deal was 75k.

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Yeah. You're already up quite big on that Bitcoin. Yeah. So the loan-to-value

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has already declined by several hundred basis points, which is remarkable because the loan

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itself is actually in an interest-only period.

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So, I mean, just think about that for a second.

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You know, we made a term loan.

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It's in an interest-only period.

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Normally, you would think the LTV is going to remain stable until the borrower starts

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paying principal, which doesn't come for a few years.

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But because we added the Bitcoin to the financing package, our loan to value has already diminished significantly.

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So how big was the entire loan that you did?

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About $12.5 million.

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$12.5 million, which $1.5 million was Bitcoin.

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OK, so they would have had the option to go out to a regular lender and get the loan against the property.

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But instead of doing that, you've actually given them a larger loan than they would have otherwise got and added Bitcoin to it.

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Yeah. OK. And then at the end of that period, what happens with the upside of the Bitcoin?

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We share it. You share it. So the person at the end of the term will

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be debt free in terms of the loan and also get the upside of Bitcoin.

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A portion of it. Yes. So why isn't everyone looking at doing this?

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It makes perfect sense. Everyone is looking at doing it. OK.

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I mean, everyone who's tuned into the frequency of Bitcoin, which is not everyone in the world.

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I mean, Bitcoin, as much as you and I interact with people all day long that are focused all the time on this asset and its many, many interesting elements, the vast majority of people are not yet tuned into the frequency.

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But everyone who has tuned into the frequency, we've gotten a huge amount of inbound demand, several billion dollars of organic borrower demand after having announced this first loan package.

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Is that when you announced on CNBC?

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Yeah.

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Yeah.

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And I mean, we've gotten, you know, it's a commercial real estate asset.

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So we've gotten a lot of commercial real estate, a lot of multifamily apartment buildings, a lot of office buildings, hotels, but also logistics facilities, some seasoned assets, some assets that are in development.

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Also project finance assets like wind and solar and other energy facilities.

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A huge number.

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Small businesses, medium-sized businesses,

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large businesses have reached out to us

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seeking to integrate financing into their collateral.

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It makes total sense.

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And so the risk really is just down to the volatility of Bitcoin.

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But because these terms are over multiple decades,

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you can just ride that out and almost write it off as a risk.

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I mean, we've designed the financing facility, Danny,

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to not have mark-to-market risk on the Bitcoin.

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That's a really critical element.

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Most, basically all other Bitcoin financing

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that's available from any provider in the market

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except for what we're doing

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has embedded mark-to-market risk.

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And with the volatility of Bitcoin being what it is,

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it's very difficult to finance a long-term project

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with an asset that is subject to mark-to-market risk.

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You either have to dramatically over collateralize it, which is not a great use of Bitcoin from a financing potential point of view, or you run the risk of getting liquidated, which is not suitable.

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So what we do by fusing the Bitcoin with a physical asset, a conventional asset that has its own cash flow profile, we're able to underwrite it in such a manner that we can take the Bitcoin to the worst possible hypothetical outcome, which is that the Bitcoin goes to zero, as implausible as that is.

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And we can say, OK, this loan is still capable of satisfying its interest expense based on the cash flow coming from the traditional asset.

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And we don't need to maximize interest as most lenders do because we also have this Bitcoin sharing element of the arrangement.

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So we have flexibility on the conventional loan terms, interest rate, amortization schedule, interest only period, prepayment penalty.

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We don't need one.

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And that flexibility is driven by the sharing of the Bitcoin upside over time.

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So that's the essence of the proposition.

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So if the person who takes out this loan wants to close early, you said there's no prepayment penalty.

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What happens on your end?

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Do you change the amount of Bitcoin upside that you take as a company?

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Yes, we encourage borrowers to stay in our loans for a longer period of time.

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because we have a very constructive view on the long-term value of Bitcoin.

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And we want to work with people that have a constructive view on the long-term value.

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And so as the years go on in our financing structures,

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the borrowers stand to earn a larger and larger share of the Bitcoin appreciation.

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And we get a lower and lower percentage of the Bitcoin appreciation.

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That's OK with us.

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Our LTV is going, our loan-to-value is going down.

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Which means your risk is going down.

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Which means our risk is going down.

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So we're still getting a very nice current return for that credit risk.

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And we have a gradually reducing share of the Bitcoin upside.

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If the borrower has circumstances that lead them to prefer to pay early, those circumstances

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could be anything, really.

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It could be a life event that has a change or a business decision that makes a change.

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or maybe interest rates have moved to such an extent that the borrower wants to refinance or

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wants to whatever, whatever the case may be, they can pay off whenever they'd like. And we release

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the real estate, we release the mortgage on the conventional asset, but the Bitcoin, it has to

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stay in place for at least four years. If you're already self-custody of Bitcoin, you know the deal

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It was super smooth

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With the current, I know you've only done one so far, is that correct?

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What is your share of the Bitcoin upside at the end? How is that split?

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Well, you know, just like any loan, it's dependent upon the credit characteristics, the overall leverage.

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the other terms of the loan, the interest rate, the amortization structure.

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And so we don't have a one size fits all appreciation sharing.

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Generally, I would say that at the end of the life of the loan,

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we aim to share somewhere between 40% to 60% of the Bitcoin upside with the borrower.

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That's very cool.

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When I saw you on CNBC, it was quite like we've, as Bitcoin, spoken about Bitcoin being

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sort of the ultimate form of collateral for a long time.

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But watching you tell those people on TV, you could see the like cogs turning in their

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brain as they were trying to figure this out.

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But maybe it's worth getting into like why Bitcoin is actually the ultimate form of collateral.

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Yeah.

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Well, I mean, I think CNBC has done a great job on covering Bitcoin.

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And I think that Joe Kiernan and Becky Quick and Andrew Ross Sorkin have really-

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Joe Kiernan's great.

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He's great.

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Yeah.

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And they've really carved out an expertise in covering this within the financial markets

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that is not just recent either.

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I mean, this has been ongoing discussions now for some years.

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So I think we have to acknowledge legacy media and the leadership that Squawk Box, I mean,

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it's amazing.

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They're actually celebrating their 30th anniversary as a television program this year, as a matter

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of fact.

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So long history at Squawk Box.

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Look, Bitcoin as ideal collateral, I mean, it's so good.

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It's finite.

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It's limited to 21 million.

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Already, we're at 95% of all Bitcoin that has ever been issued has been issued, which

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makes new supply extremely scarce. It's fungible. No Bitcoin is different than any other Bitcoin.

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It's just Bitcoin. It's the same in Virginia as it is in Vietnam. It is divisible. You can

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effortlessly divide Bitcoin into 100 million units, which means that at today's prices,

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there's the smallest unit. There's about nine of them in a penny, which is pretty finely cut,

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if you think about it from that point of view. It's weightless, so it's very easy to transport

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from place to place. It's extremely secure, protected by the largest computer network on

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earth with extremely powerful encryption. It is liquid. It's trading 24 hours a day,

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seven days a week. It's probably the most liquid asset in the world, as a matter of fact.

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And for all of these reasons, it is a superior way to store value across time and space.

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You compare it to some other forms of collateral.

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Like, let's just go through a couple.

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You can think of precious metals, gold, silver.

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You could think of real estate, maybe collectibles.

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Collectibles are sometimes collateral, like art or wine.

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financial collateral like stocks or bonds. With gold, gold is scarce, but it's not finite.

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Actually, as a matter of fact, gold is growing in volume about 1.5% to 2% per year, depending on

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the intensity of new mining. And if something grows at 2% per year, that means that the quantity

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doubles every 36 years. So think of it. If you received an ounce of gold in 1989

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and you retrieved it from the drawer in 2025, it's still beautiful. It still has the same gleam

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and the same design. But in gold terms, it's about half as much of the purchasing power of the gold

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network, even though it may have appreciated 10x in dollar terms. And so you think you may have had

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good dollar return, in gold terms, it's dissipated half of its energy. And if you hold it for another

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35 years, it will probably dissipate at least another half of its energy, but maybe more.

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Because as price of gold goes up, gold that was previously an economical to mine is now

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economical to mine and supply comes online. Yeah. And also, if you think like artificial

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intelligence is making almost everything easier, isn't it plausible to think that it's going to

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make mining gold more effective, that we'll be able to pinpoint where the gold is located,

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or that robotic machinery will be able to more easily retrieve the gold from the Earth,

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or underwater machinery will be able to retrieve it from the seabed, or outer space machinery

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will be able to retrieve it from an asteroid.

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Absolutely.

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Or synthetic gold.

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I mean, we have synthetic diamonds now.

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So what if we were to have ersatz gold?

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and indistinguishable for all intents and purposes from physical gold.

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Silver, palladium, platinum, they all have the same risk factors there.

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And when you come to something like real estate, real estate is good.

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I mean, it's good, but it's not scarce.

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If you look at an overhead map of Boston from the 1670s versus one from today,

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it's a completely different looking city.

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You know, like back bay, like a bay, right?

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Nowadays, a neighborhood.

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And you look at the same thing for New York City.

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You look at it for Los Angeles and Philadelphia,

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anywhere in the world, especially you go to Dubai.

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Oh, you see the pictures of Dubai and places like that in the 70s,

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and there's nothing there.

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And now there's huge megacities.

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Megacities, but not just on the same land, new land.

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Yeah.

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Right, land that's been created.

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And even if it were scarce,

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it's still subject to quite a bit of restrictions on its use because you have local zoning rules,

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you have taxation, you have risks related to weather, hurricanes, you know, local direction

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of economic development could take many different paths. And so real estate has been good collateral,

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but it's not timeless.

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It's not timeless collateral.

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I mean, if you made a loan in the Athenian Agora

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in, you know, 2500 BC,

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it would have gone through quite a lot of changes

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between now and then, you know,

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even though it's still right there on top of the Parthenon.

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So, you know, on top of the Acropolis.

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And so, yeah.

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And then, you know, you come to things like wine,

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not fungible. No one wine is the same as any other. Art, not divisible. You can't just cut

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the corner off the Mona Lisa and get 10% of the value. You've ruined the entire value. So you have

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to sell the whole thing. It's not at all liquid. No liquidity yet. No liquidity whatsoever. I mean,

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wine is liquid, but it's actually not at all liquid, right? So when you start to think about

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it from a collateral perspective, Bitcoin really presents superior characteristics that can serve,

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especially in combination with physical collateral that produces cash flow, can really serve to create

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a nice blend of cash flow to support debt service, appreciation potential based on Bitcoin's growing

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adoption and use cases and strong recovery characteristics or strong recovery capabilities

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driven by these characteristics that Bitcoin possesses.

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00:21:36,020 --> 00:21:42,260
So you run a very successful hedge fund, but you now started Battery Finance to do this.

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I don't know when you started this, a couple of years ago?

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Yeah.

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00:21:45,920 --> 00:21:47,420
Why make that pivot?

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I think that we all have one life to live, and we have to do the things that are calling to us, and the things that best use of time is always something that's motivating to me.

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And for me, I've always been personally really interested in innovation.

294
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That's just been a focus of mine professionally over decades now.

295
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We've done a lot of first of their kind transactions in the structure credit arena.

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First geography, first asset class, first issuer type, first features.

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And around, you know, at the time of COVID, when the liquidity supernova was bursting over the earth,

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I really just became very focused again on inflation.

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and what historically inflation has done

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to different places at different times,

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and the sense that that was where this was headed.

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And as a credit investor, inflation is the biggest threat

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00:23:01,020 --> 00:23:27,740
because although it easier and it alluring because it becomes so easy to pay off old loans Because if you take a loan for in 2005 and you have to pay off in 2025 well everyone knows that what was 20 years ago is very different than what is today

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And so if you can just bide your time and pay the interest, then the ultimate repayment is much lower in real terms.

305
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But if you're on the other side of that, if you're the investor and you're getting back your principal in 20 years, you say, oh, I got my money back.

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But as a matter of fact, on a real basis, you've gotten much less.

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And the extent to which the inflation increases in terms of its rate, and it's not just the reported rate.

308
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I mean, everyone knows that what's reported around the world and in different markets are really quite artificial numbers.

309
00:24:02,220 --> 00:24:02,560
Absolutely.

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And it's important to take a broader view of what inflation is across different assets, different geographies, over different time periods.

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But to the extent that inflation increases, and I think that we're poised for a dramatic asset price inflation and increase over the course of the coming years.

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Well, if you just receive par back as a credit investor, you are in a very, very vulnerable

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position.

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In fact, I would say, look, I would go ahead and say that in my opinion, the large credit

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allocations that are persistent among pensions, sovereign wealth funds, insurance companies,

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20%, 30%, 40% in some instances, overall portfolio allocations to credit present

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the single largest risk, systemic risk, to those investment portfolios because they are so vulnerable

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to the effect of inflation. And so what are people doing? What they're doing is they're reaching for

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risk. They're saying, well, you know, I know that I have to keep ahead of inflation. And so the way

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I'm going to do that is I'm going to invest in riskier and riskier credit. And not only will I

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do that, but then I'll amplify it with leverage.

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And as a matter of fact, I think the market has been lulled to sleep in this regard because

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every crisis over the course of the last, my professional memory, going back to 2000

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when I first started in finance and I graduated from Wharton, every crisis, every time there's

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been a crisis that should have rationally manifested in significant credit losses, what

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00:25:52,080 --> 00:26:02,980
has happened is that the cavalry has rode in with enormous liquidity every time. And

327
00:26:02,980 --> 00:26:09,960
some of them are really easy to remember because they're high profile. Which one were you saying?

328
00:26:09,960 --> 00:26:10,760
I said 2008.

329
00:26:10,920 --> 00:26:11,100
Yeah.

330
00:26:11,220 --> 00:26:11,360
Yeah.

331
00:26:11,560 --> 00:26:12,720
Very high profile, right?

332
00:26:12,940 --> 00:26:13,420
2008.

333
00:26:13,920 --> 00:26:17,040
The next high profile one may be the European sovereign debt crisis.

334
00:26:18,140 --> 00:26:20,200
After that, you might think of COVID.

335
00:26:20,400 --> 00:26:21,600
That was very high profile.

336
00:26:22,080 --> 00:26:26,640
But even the lower profile ones, they all were met with additional liquidity.

337
00:26:26,940 --> 00:26:28,300
These are things like Silicon Valley Bank.

338
00:26:28,660 --> 00:26:29,020
Yeah.

339
00:26:29,120 --> 00:26:30,200
Or even Evergrande.

340
00:26:30,460 --> 00:26:33,540
If you remember those words, they're hard to remember now.

341
00:26:33,680 --> 00:26:34,160
I remember.

342
00:26:34,400 --> 00:26:35,280
That was a bank run.

343
00:26:35,500 --> 00:26:36,000
Is that right?

344
00:26:36,120 --> 00:26:38,380
Well, it was the Chinese real estate.

345
00:26:38,480 --> 00:26:39,220
Oh, of course.

346
00:26:39,320 --> 00:26:39,500
Sorry.

347
00:26:39,580 --> 00:26:39,780
Yeah.

348
00:26:39,780 --> 00:26:48,140
Yeah. And for two weeks, it was breathlessly commented on all financial media that this was going to be the canary in the coal mine.

349
00:26:48,160 --> 00:26:49,240
This was two or three years ago.

350
00:26:49,380 --> 00:26:54,000
Yeah. I think it was 2021 maybe, or I can't remember exactly when.

351
00:26:54,640 --> 00:26:58,380
But the PBOC came in with significant additional liquidity.

352
00:26:58,380 --> 00:27:12,160
And so those liquidity infusions, Silicon Valley Bank, Turkish lira crisis, Italian sovereign debt crisis, Evergrande, and we could name another five or 10 beyond that.

353
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What they do is they have the effect of making it way easier to repay old debt because the quantity of money has increased and therefore the asset values increase.

354
00:27:23,820 --> 00:27:32,100
And so people get paid off, but in real terms, they're getting paid off in greatly eroded amounts.

355
00:27:32,240 --> 00:27:43,840
And so it's lulled the market into this willingness to point toward riskier credit with leverage, because we haven't really seen the negative effects of actual credit losses.

356
00:27:44,380 --> 00:27:48,940
And they're essentially stealing from the population to keep these credit markets afloat.

357
00:27:48,940 --> 00:27:54,460
Yeah, I mean, inflation is the biggest form of institutional theft in the world.

358
00:27:55,900 --> 00:28:03,660
So when you think about, I don't want to be too hyperbolic here, but do you think that Bitcoin can actually save the credit market?

359
00:28:03,660 --> 00:28:31,120
Oh, definitely. I mean, if you integrate even just a modest amount of this profoundly scarce asset into credit contracts, and you position the underwriting in a way that you can make not a one-day journey or a one-week journey, but you can make a four-year, eight-year, 12-year journey based on the cash flow characteristics of the asset, let alone longer,

360
00:28:31,120 --> 00:28:39,200
However, the extent to which the Bitcoin is poised to appreciate is an excellent, excellent

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00:28:39,200 --> 00:28:43,480
counterbalance to the risks of inflation.

362
00:28:43,480 --> 00:28:48,800
And what it enables you to do as a credit investor is to actually be more virtuous in

363
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your asset selection in the sense that you don't need to maximize the return as a conventional

364
00:28:57,480 --> 00:29:05,000
investor must do by reaching for that biggest risk or amplifying it with leverage, you have a new,

365
00:29:05,000 --> 00:29:12,540
way more powerful tool, which is Bitcoin. And the name of the game is to stay in the Bitcoin position

366
00:29:12,540 --> 00:29:19,740
for the medium to long run. The best way to do that is to actually focus on high-quality credit

367
00:29:19,740 --> 00:29:26,640
investments, which you can achieve in part by delivering more favorable terms like reduced

368
00:29:26,640 --> 00:29:32,000
interest rates or longer amortization periods, longer interest only periods, no prepayment

369
00:29:32,000 --> 00:29:38,240
penalty. So you can deliver superior financing terms to borrowers that are embracing Bitcoin

370
00:29:38,240 --> 00:29:46,680
as a capital asset. And what that's driven by is this alignment of interests around sharing

371
00:29:46,680 --> 00:29:53,920
in the Bitcoin appreciation. It's pretty incredible. Just a very quick tangent. You said a minute ago

372
00:29:53,920 --> 00:29:57,060
that you think inflation is going to come back in a serious way over the next few years.

373
00:29:58,680 --> 00:29:59,820
Where does that come from?

374
00:30:00,020 --> 00:30:02,040
Because obviously inflation has come down from,

375
00:30:02,520 --> 00:30:04,380
I don't remember exactly what it got to in the US,

376
00:30:04,520 --> 00:30:07,940
but 8% or 9% or something like that, quoted CPI.

377
00:30:08,880 --> 00:30:10,940
It's back to around 3%.

378
00:30:10,940 --> 00:30:13,560
Where do you think that inflation is going to come back from?

379
00:30:13,600 --> 00:30:15,800
Do you think they're going to print a load of money again?

380
00:30:17,800 --> 00:30:18,200
Yes.

381
00:30:18,200 --> 00:30:27,060
I mean, look, plan A is to monetize the debt.

382
00:30:27,720 --> 00:30:31,020
Rule number one of plan A is that no one discusses plan A.

383
00:30:31,780 --> 00:30:36,400
And so you're never going to see the central bank president of any central bank stand behind

384
00:30:36,400 --> 00:30:40,900
the podium and say, I would like to report that the inflation has gone very well for

385
00:30:40,900 --> 00:30:41,600
the last quarter.

386
00:30:41,860 --> 00:30:46,020
We have ruined your savings by 6.5%, and it will continue.

387
00:30:46,180 --> 00:30:47,380
You're never going to see that.

388
00:30:47,380 --> 00:30:51,260
what you're going to see is they're going to say we're fighting it we're fighting it with everything

389
00:30:51,260 --> 00:30:56,520
we have we've brought in this tool this program this acronym if you look at this report you can

390
00:30:56,520 --> 00:31:00,500
see that it's improving if you look at this report this is the one that we're watching

391
00:31:00,500 --> 00:31:09,120
but the indicators are are are shifting and people are uh you know hanging on every uh syllable they

392
00:31:09,120 --> 00:31:15,780
even release a red line of the fed minutes and so oh well they you know they deleted the word very

393
00:31:15,780 --> 00:31:20,640
and replaced it with somewhat, what should we interpret from that?

394
00:31:21,160 --> 00:31:25,020
And what we should interpret from that is that the plan A is continuing

395
00:31:25,020 --> 00:31:31,480
and that the monetization of debt is continuing more or less uninterrupted.

396
00:31:31,900 --> 00:31:35,220
1981, we had a trillion dollars of funded federal debt.

397
00:31:35,660 --> 00:31:37,080
Now we're at $37 trillion.

398
00:31:38,080 --> 00:31:39,080
Maybe I haven't looked.

399
00:31:39,160 --> 00:31:40,300
Maybe it's already $38.

400
00:31:40,700 --> 00:31:41,560
Could easily be.

401
00:31:41,560 --> 00:31:50,160
But that's not hardly the story because we have $174 trillion of unfunded liabilities at Social Security and Medicare.

402
00:31:50,160 --> 00:31:57,200
Those are coming due 2034, but with cost of living increases could very well come due sooner.

403
00:31:57,500 --> 00:31:59,320
And that's just the United States.

404
00:31:59,320 --> 00:32:05,080
We're not even talking about similar circumstances in any number everywhere, right?

405
00:32:05,080 --> 00:32:11,160
You look at that big picture of, you know, indebted countries and the, you know, the ones

406
00:32:11,160 --> 00:32:15,700
that are properly capitalized are very small and the ones that have enormous debt burdens

407
00:32:15,700 --> 00:32:16,860
are very, very large.

408
00:32:17,880 --> 00:32:22,660
And then if you just take a step back and you think about this historically, I mean,

409
00:32:23,140 --> 00:32:34,100
you know, unfortunately, the power to produce money has been something that has been badly

410
00:32:34,100 --> 00:32:37,820
abused over long periods of time.

411
00:32:37,820 --> 00:32:43,760
And intervals of sound money are short, and they're few and far between.

412
00:32:43,760 --> 00:32:48,340
You look at the Roman era and the debasement of Roman coinage.

413
00:32:48,340 --> 00:32:52,520
I mean, it took 150 years.

414
00:32:52,520 --> 00:32:56,820
It debased at a slower rate, 5% or so per year.

415
00:32:56,820 --> 00:33:04,080
But that's because they were limited by the industrial capacity to obtain additional copper

416
00:33:04,080 --> 00:33:10,020
copper, refine the copper to a point where they could then melt the silver, mix it with

417
00:33:10,020 --> 00:33:15,320
copper, strike it as a new coin, and get it all the way back out into the population.

418
00:33:15,320 --> 00:33:20,260
Of course, they didn't have airplanes, and they didn't have trains to easily transport

419
00:33:20,260 --> 00:33:21,700
these coins or cars.

420
00:33:21,700 --> 00:33:26,640
They had to transport them with the technology that was available to them at that time.

421
00:33:26,640 --> 00:33:28,780
So it took 150 years.

422
00:33:28,780 --> 00:33:35,820
But as you look at all of the inflations in the subsequent periods, you look at the Spanish

423
00:33:35,820 --> 00:33:40,980
inflation that occurred after the discovery of so much gold and silver in the New World,

424
00:33:41,440 --> 00:33:45,060
it was basically limited by its industrial capacity at the time.

425
00:33:45,140 --> 00:33:46,600
What was its industrial capacity?

426
00:33:46,740 --> 00:33:51,340
The stowage capacity of the ships that they were sailing from the New World back to Europe

427
00:33:51,340 --> 00:33:56,440
and how long it took them to bring those ships back from the New World to Europe.

428
00:33:56,440 --> 00:34:00,480
And once they arrived, they were limited by the length of time that it would take.

429
00:34:00,620 --> 00:34:04,300
So actually, the inflation was worse at first in Iberia.

430
00:34:05,120 --> 00:34:05,680
And then-

431
00:34:05,680 --> 00:34:06,860
Because that's where the ships landed.

432
00:34:06,880 --> 00:34:07,860
Because that's where the ships landed.

433
00:34:08,040 --> 00:34:10,900
And then it radiated out through the rest of Europe.

434
00:34:11,540 --> 00:34:17,440
And when you come to the money printer, that was a big advance in terms, you know, printing

435
00:34:17,440 --> 00:34:17,940
press.

436
00:34:18,000 --> 00:34:24,400
I mean, that was a big advance in terms of making money, literally making money, right?

437
00:34:24,680 --> 00:34:25,480
Manufacturing money.

438
00:34:26,440 --> 00:34:31,600
But then again, you still had to transport it in bundled packages by cars.

439
00:34:32,120 --> 00:34:40,460
And you saw in the 20th century exponential inflations, whereas prior to that, they really were not growing at that rate.

440
00:34:40,860 --> 00:34:43,400
And now we're in the 21st century.

441
00:34:43,400 --> 00:34:51,920
And our industrial capacity to make money at this point is at the lowest marginal cost that it's ever been.

442
00:34:52,060 --> 00:34:53,220
It's literally a click of a button.

443
00:34:53,320 --> 00:34:54,060
Yeah, a keystroke.

444
00:34:54,060 --> 00:35:19,820
And you can dramatically inflate at a trivial expense with CBDCs, which I think really deserve very significant political criticism and opposition and should be an area of focus for any thinking member of a democratic society.

445
00:35:19,820 --> 00:35:24,040
Because you imagine CBDCs, what do the central bankers say?

446
00:35:24,200 --> 00:35:26,120
Their only weakness.

447
00:35:26,280 --> 00:35:31,840
Their only weakness is that they have blunt instruments to manage the economy.

448
00:35:32,360 --> 00:35:35,400
The overall interest rate, it applies to everyone.

449
00:35:35,540 --> 00:35:42,800
And if they could just provide a specified interest rate to one set of employers or one

450
00:35:42,800 --> 00:35:48,480
region, well, I don't think that that's the reason that central banking has been a failure.

451
00:35:48,480 --> 00:35:52,380
I think the reason is that, you know, plan A, rule number one of plan A, we talked about that.

452
00:35:52,880 --> 00:36:04,380
But with central bank digital currencies, you're going to be able to say, oh, well, you know, we have a micro interest rate for even this person or this family or this city or this neighborhood or this segment, this sector.

453
00:36:05,780 --> 00:36:08,240
Or, you know, your money is expiring.

454
00:36:08,380 --> 00:36:09,480
We're already seeing that.

455
00:36:09,560 --> 00:36:10,740
That's already been the case.

456
00:36:10,740 --> 00:36:12,740
the Chinese yuan with the

457
00:36:13,740 --> 00:36:16,820
e-yuan experiment. The money

458
00:36:16,820 --> 00:36:19,640
expired after the Chinese New Year already.

459
00:36:21,100 --> 00:36:23,420
And that's like another way of stimulating the economy

460
00:36:23,420 --> 00:36:27,140
without actually debasing the people. Instead, you just say, if you don't spend your money by

461
00:36:27,140 --> 00:36:29,640
X date, then it's gone. Yeah, but I mean...

462
00:36:30,260 --> 00:36:33,380
I mean this in a massively negative way, by the way.

463
00:36:33,540 --> 00:36:36,420
There should be no one telling you when you can and can't spend your money.

464
00:36:36,420 --> 00:36:39,560
Right, right. But if you know it's going to go,

465
00:36:39,560 --> 00:36:44,080
then you're going to spend it. And so the ultimate effect is going to be deeply, probably

466
00:36:44,080 --> 00:36:50,300
inflationary rather than deflationary. And then again, you might have controls on how you can

467
00:36:50,300 --> 00:36:54,540
spend it. Like, oh, you've had enough red meat for this week, or you've had enough alcohol or

468
00:36:54,540 --> 00:36:59,380
people. I mean, I'm sure you've heard about that. What do they call it? A five minute city or a 15

469
00:36:59,380 --> 00:37:04,480
minute city or something that you should be able to do everything within a 15 minute radius.

470
00:37:04,480 --> 00:37:10,740
Well, now they say, OK, every 15 minutes more you go, your money loses 15% of its purchasing power.

471
00:37:11,060 --> 00:37:12,860
That's a disaster for freedom.

472
00:37:13,940 --> 00:37:30,580
And when you think about, though, the combination of how trivially easy it is to make more of this money and how profoundly easy it could be to control the manner in which people spend their money,

473
00:37:30,580 --> 00:37:34,840
it's a bad recipe for very significant inflation in the future.

474
00:37:35,060 --> 00:37:41,020
So I think even if you just like, you know, we could talk for a while about the current

475
00:37:41,020 --> 00:37:44,560
macro fundamentals and the level of indebtedness.

476
00:37:44,560 --> 00:37:50,900
But if you can just like elevate, you know, the altitude of the vantage point and think

477
00:37:50,900 --> 00:37:57,260
about it in terms of just the actual mechanism of how money is made and distributed into

478
00:37:57,260 --> 00:38:04,160
society and how technology could be used to adversely affect that, I think that it's very

479
00:38:04,160 --> 00:38:10,140
rational to anticipate that we're headed toward that kind of outcome right now.

480
00:38:10,560 --> 00:38:15,360
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481
00:38:15,360 --> 00:38:19,720
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482
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483
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I-R-E-N dot com. Well, it seems that we're certainly heading towards it. I saw in Alex

508
00:40:26,660 --> 00:40:33,380
Gladstein's recent paper, he did a small section on CBDCs, and I didn't realize that it's over 100

509
00:40:33,380 --> 00:40:38,620
countries that are actively looking into that right now. And obviously, they're live in a couple

510
00:40:38,620 --> 00:40:44,200
of places. But this isn't a far-fetched idea now. It feels like it's about to happen.

511
00:40:44,200 --> 00:40:54,800
It is. It is about to happen. I mean, Alex is a genius. He's a tremendous voice for human rights and a great advocate of Bitcoin's role in human rights.

512
00:40:54,940 --> 00:41:01,700
And the stuff you're seeing in the UK as well at the moment just feels like a precursor to it as well with the digital IDs that they're implementing.

513
00:41:02,940 --> 00:41:08,960
I think they're on a hugely slippery slope and it feels like they're just doing everything they can to replicate China at this point.

514
00:41:08,960 --> 00:41:16,960
Yeah, but before we go to the UK and China, let's just stick with Alex for a minute.

515
00:41:16,960 --> 00:41:25,200
So he wrote in this essay, this is a great essay that he just published, called Is Bitcoin

516
00:41:25,200 --> 00:41:26,200
Freedom Money?

517
00:41:26,200 --> 00:41:32,060
And it was published by the Journal of Democracy just in the last few days.

518
00:41:32,060 --> 00:41:39,420
And he wrote at one point in that essay that most of Bitcoin's critics are located in the

519
00:41:39,420 --> 00:41:50,300
United States or in Europe, where they enjoy enormous financial privilege.

520
00:41:50,300 --> 00:41:56,600
And the privilege that they enjoy is not necessarily how much money someone may have, but even

521
00:41:56,600 --> 00:42:04,300
just access to a range of financial products, like, for example, stocks or bonds, credit cards,

522
00:42:04,880 --> 00:42:10,420
car loans, small business loans, long-term mortgages. Even just a bank account. Even a bank

523
00:42:10,420 --> 00:42:16,000
account. And when you look at, you know, about a billion people in the world are born into what he

524
00:42:16,000 --> 00:42:22,620
calls a global reserve currency that corresponds to the US dollar, the euro, the yen, sterling,

525
00:42:23,380 --> 00:42:27,540
maybe the Canadian dollar, Australian dollar, Swiss franc,

526
00:42:28,320 --> 00:42:30,820
the other 7 billion people around the world

527
00:42:30,820 --> 00:42:34,720
are born into a currency that is practically useless beyond its borders.

528
00:42:35,260 --> 00:42:39,800
And if you look at areas that are less developed in the world,

529
00:42:39,900 --> 00:42:44,000
like Malawi, as Alex Gladstein has helpfully pointed out,

530
00:42:44,480 --> 00:42:47,000
the best way that those individuals have to save

531
00:42:47,000 --> 00:42:51,840
is through either local paper currency,

532
00:42:51,840 --> 00:43:00,120
which is debasing very rapidly, inflating very quickly away the value. Sheet metal,

533
00:43:00,680 --> 00:43:06,660
which is extremely cumbersome, extremely conspicuous, subject to rust, not really easily

534
00:43:06,660 --> 00:43:14,140
divisible, very heavy. Or cattle, which you literally have to feed in water, subject to

535
00:43:14,140 --> 00:43:24,740
disease. In order to recoup the value, you have to kill it. It's just not good. And now you take

536
00:43:24,740 --> 00:43:31,300
that person in Malawi, and as long as they have a cell phone with an internet connection,

537
00:43:31,860 --> 00:43:38,440
they now have the ability to invest and save in the best tool for investing and saving and

538
00:43:38,440 --> 00:43:45,240
protecting against inflation that humanity has ever known. And it's the same exact bundle of

539
00:43:45,240 --> 00:43:51,580
rights that someone would have if they invested in it in Minnesota. Minnesota is the same as Malawi.

540
00:43:51,680 --> 00:43:56,600
What else can you say that for? Nothing really, because there's nothing else around the world

541
00:43:56,600 --> 00:44:05,080
that actually spans that distance. And it's a profoundly democratic instrument.

542
00:44:05,080 --> 00:44:12,420
It has very, very strong implications for human rights and for global justice.

543
00:44:12,420 --> 00:44:21,240
And I think it gives every reason to be optimistic about the way that people are using it.

544
00:44:21,240 --> 00:44:26,860
And of course, his essay is not only about financial access, but it's also about human

545
00:44:26,860 --> 00:44:30,720
rights activists that are operating within totalitarian regimes.

546
00:44:30,720 --> 00:44:39,820
It's about places that are dealing with the residue of colonialism, like Togo, which he discusses vis-a-vis the CFA.

547
00:44:41,580 --> 00:44:49,080
So very, very thoughtful individual and a very good and important voice for Bitcoin, in my opinion.

548
00:44:49,380 --> 00:44:52,640
Absolutely. I'm going to record a show with him next week, actually, on that paper.

549
00:44:52,640 --> 00:44:55,620
And I was in Malawi with him a couple of years ago.

550
00:44:56,160 --> 00:44:59,800
And they do generally have mobile phones.

551
00:44:59,800 --> 00:45:01,920
We were in rural Malawi in the middle of absolutely nowhere.

552
00:45:02,180 --> 00:45:04,320
And still people do have mobile phones.

553
00:45:04,420 --> 00:45:06,460
So the access to Bitcoin is possible.

554
00:45:07,060 --> 00:45:13,100
Obviously, the biggest hurdle they all have saying, oh, that's a huge generalization.

555
00:45:13,280 --> 00:45:17,540
But a lot of people in these rural areas in Malawi have is just a capital problem.

556
00:45:18,040 --> 00:45:21,720
Like if you have no money, Bitcoin is not interesting to you.

557
00:45:21,720 --> 00:45:38,980
Yeah. But I think the democratization of, maybe that's the wrong word, the easy access to Bitcoin and how it's exactly the same for me as it is for anyone else in the world is truly revolutionary.

558
00:45:38,980 --> 00:45:46,180
Yeah, I mean, the divisibility is helpful because it means and when paired with some

559
00:45:46,180 --> 00:45:53,620
of Bitcoin's technology like the Lightning Network, facilitating lower cost transfers

560
00:45:53,620 --> 00:46:01,060
of Bitcoin instantaneously, you can invest and save in Bitcoin.

561
00:46:01,060 --> 00:46:08,100
And you can scale it to what your needs are.

562
00:46:08,100 --> 00:46:28,780
I mean for a large real estate developer in the United States that wants to integrate Bitcoin into their collateral package of a million portfolio of real estate maybe they buying million of Bitcoin collateral and they actually adding 500 Bitcoin or 1 Bitcoin into a structure

563
00:46:29,120 --> 00:46:35,780
That's obviously not what's going to be happening in Togo or in Malawi for an individual saver. It's

564
00:46:35,780 --> 00:46:39,620
not what's going to be happening in the United States for an individual saver. But the ability

565
00:46:39,620 --> 00:46:51,060
to gradually build 1,000 sats, 10,000 sats, 100,000 sats, I mean, pretty soon that will

566
00:46:51,060 --> 00:46:56,480
benefit from the overall dynamics of the broader Bitcoin market.

567
00:46:56,480 --> 00:47:03,540
You know, one sat is the same value as any other sat, no matter how many sats it's surrounded

568
00:47:03,540 --> 00:47:03,860
by.

569
00:47:03,860 --> 00:47:11,900
And that's a pretty profound statement in terms of savings technology.

570
00:47:12,320 --> 00:47:18,420
And when we actually went there, it was very unfortunate for everyone living in Malawi,

571
00:47:18,580 --> 00:47:24,080
but it was an interesting timing for us because about two weeks before we got off the plane in Malawi,

572
00:47:24,500 --> 00:47:26,840
the government overnight debased the currency by 40%.

573
00:47:26,840 --> 00:47:30,680
And so there's no easier incentive than that.

574
00:47:30,680 --> 00:47:38,040
Like anyone who has to deal with that, having their savings cut in almost in half overnight, like they're going to understand the properties of Bitcoin.

575
00:47:38,300 --> 00:47:38,380
Right.

576
00:47:38,520 --> 00:47:42,780
And there are a lot of little circular economies popping up in these places, which is really cool to see.

577
00:47:42,900 --> 00:47:43,720
It is. It's wonderful.

578
00:47:44,220 --> 00:47:45,920
Do you want to touch on the UK stuff?

579
00:47:47,120 --> 00:47:48,500
I mean, I don't know.

580
00:47:48,680 --> 00:47:49,920
I mean, I could tell you that.

581
00:47:49,940 --> 00:47:50,040
You don't have to.

582
00:47:50,480 --> 00:47:50,680
Yeah.

583
00:47:50,680 --> 00:48:00,980
I mean, I think on the UK, I would probably say that the tawny cut orange marmalade is my personal favorite, you know, with the larger amount of orange in it.

584
00:48:00,980 --> 00:48:20,540
I mean, that's almost the limit of my knowledge of, no, I mean, I'm being a little silly, but I mean, the circumstances are similar in the sense that you and I were talking earlier today about High Street, you know, what they call Main Street.

585
00:48:20,540 --> 00:48:25,800
in the United States, what they call high streets in the United Kingdom, center of town,

586
00:48:26,180 --> 00:48:31,940
where all the businesses once were, and where everyone in the town, I mean, it's more than

587
00:48:31,940 --> 00:48:34,640
just a place to conveniently shop, right?

588
00:48:34,660 --> 00:48:35,540
It's a place to-

589
00:48:35,540 --> 00:48:36,340
It's where community happens.

590
00:48:36,500 --> 00:48:38,000
It's where community happens, right?

591
00:48:38,300 --> 00:48:46,820
Friendships, new ideas, sorting through important administrative matters for the town, and, you

592
00:48:46,820 --> 00:48:47,740
know, socializing.

593
00:48:47,840 --> 00:48:49,760
I mean, just relaxing.

594
00:48:49,760 --> 00:48:51,460
all of these different elements.

595
00:48:51,460 --> 00:48:58,460
And with the ease of getting packages delivered

596
00:48:58,460 --> 00:49:00,640
to your doorstep and shopping online,

597
00:49:00,640 --> 00:49:07,520
and with the hangover from COVID and the social distancing

598
00:49:07,520 --> 00:49:12,280
and these broad factors, we've seen a very, very significant

599
00:49:12,280 --> 00:49:18,880
reduction in those kinds of vibrant urban corridors.

600
00:49:18,880 --> 00:49:25,820
There are some. They attract a lot of foot traffic because people are yearning for that type of connection.

601
00:49:27,200 --> 00:49:29,060
You know, but there aren't enough.

602
00:49:29,060 --> 00:49:39,940
And when you get out of the big cities and you get off of the main streets in the smaller towns, it's really hard to find a robust main street or high street environment.

603
00:49:41,340 --> 00:49:43,620
And, you know, I guess what are the options?

604
00:49:43,620 --> 00:49:47,040
Well, one option is that we could just bemoan it and say, well, that's that.

605
00:49:47,540 --> 00:49:49,500
And, you know, ready player one.

606
00:49:49,800 --> 00:49:54,880
At least we can walk down, you know, a virtual high street and shop in Amazon and see the

607
00:49:54,880 --> 00:49:56,900
avatars of other people as they shop.

608
00:49:57,500 --> 00:49:59,000
I guess that's an alternative.

609
00:49:59,360 --> 00:50:00,820
It's not a good alternative, in my opinion.

610
00:50:00,860 --> 00:50:03,160
Yeah, yeah, but not the best alternative.

611
00:50:03,480 --> 00:50:10,300
But another alternative would be to strengthen communities with Bitcoin.

612
00:50:10,300 --> 00:50:26,060
And I think that it's incumbent upon local governance councils, local business leaders, local voters, local politicians to say, how could we attract more vibrancy to this community?

613
00:50:26,060 --> 00:50:32,520
And one way to do it is to really lean in on Bitcoin, to encourage the businesses that

614
00:50:32,520 --> 00:50:37,580
are in the area to accept and save and integrate in Bitcoin, to maybe provide them with savings

615
00:50:37,580 --> 00:50:43,980
on permits or savings on business licenses or business taxes, create a Bitcoin free zone

616
00:50:43,980 --> 00:50:51,680
where people that are embracing the protocol are able to put more money back into the businesses

617
00:50:51,680 --> 00:50:53,160
because Bitcoiners want to build.

618
00:50:53,160 --> 00:51:01,840
I mean, there's a deep yearning within the Bitcoin community to make a mark on civil society and on the built society around us, the built landscape.

619
00:51:02,800 --> 00:51:09,680
And then obviously, on top of all of that, thinking about Bitcoin integrated financing solutions is very, very powerful.

620
00:51:09,680 --> 00:51:34,540
I mean, if you have a small restaurant or a gift shop or a service business like a dry cleaner, and you want to borrow $50,000 or 50,000 sterling for working capital or to purchase some equipment, and your interest rate is 8%, that would be 4,000 pounds of interest per year.

621
00:51:34,540 --> 00:51:43,740
Well, what if you did 60,000 pounds of a loan with an interest rate of 6%?

622
00:51:43,920 --> 00:51:51,020
That would be 3,600 pounds of interest per year, so less interest per year.

623
00:51:51,680 --> 00:52:03,200
And we use the additional 10,000 sterling to add Bitcoin to the balance sheet of that dry cleaner or that butcher or that cheese store or that clothing store,

624
00:52:03,200 --> 00:52:10,480
whatever the business might be, that accountancy. And now that business has an uncorrelated treasury

625
00:52:10,480 --> 00:52:19,120
asset, the Bitcoin, which gives them the ability to manage through different economic circumstances

626
00:52:20,000 --> 00:52:26,480
in a way that is way different and way better. It's likely to appreciate over time, which is going

627
00:52:26,480 --> 00:52:31,120
to give them the ability to reinvest in that business, give them liquidity, whereas the

628
00:52:31,120 --> 00:52:38,960
business itself is hard to obtain liquidity from. And it can all be done while at the same time

629
00:52:38,960 --> 00:52:44,320
improving the cost of capital for the business motivated by sharing and the Bitcoin upside.

630
00:52:44,320 --> 00:52:49,440
And so now you could say, well, what if we articulated a more comprehensive approach?

631
00:52:51,440 --> 00:52:57,520
The Massachusetts Economic Development Authority, MassDev, or the Pennsylvania

632
00:52:57,520 --> 00:53:06,140
you know, Industrial Development Corporation comes with a program to say, we're going to

633
00:53:06,140 --> 00:53:12,940
revitalize main streets across the Commonwealth by infusing them with Bitcoin.

634
00:53:13,800 --> 00:53:20,680
And you just let time do its thing because the incentive structure is very powerful as well.

635
00:53:20,920 --> 00:53:24,280
And so you're going to start to see people are going to repaint their facades.

636
00:53:24,280 --> 00:53:30,080
you're going to start to see that they're not going to tolerate graffiti at all.

637
00:53:30,620 --> 00:53:34,320
And when people, when it's nice, people don't want to put graffiti on it.

638
00:53:34,880 --> 00:53:37,240
You know, it's the broken windows theory.

639
00:53:37,720 --> 00:53:40,140
What was the name of the police commissioner in New York?

640
00:53:40,280 --> 00:53:41,500
Bill Bratton or something?

641
00:53:41,680 --> 00:53:44,740
And, you know, he had this idea that, you know,

642
00:53:44,780 --> 00:53:47,500
you have to repair the window quickly.

643
00:53:47,760 --> 00:53:50,880
Because if the window's broken, it just invites the next window

644
00:53:50,880 --> 00:53:53,340
and the next, you know, and it's a slippery slope.

645
00:53:54,280 --> 00:54:02,620
And so when you can keep things up in a nice condition, then it's a virtuous cycle, but it requires maintenance.

646
00:54:03,200 --> 00:54:07,140
And I think the societal benefits of something like that are huge.

647
00:54:07,400 --> 00:54:17,800
There's a huge culture war going on in the UK at the moment over really what I think English and British people are thinking of as like a loss of a shared culture in the UK.

648
00:54:18,260 --> 00:54:22,060
And I don't think you can discount how much losing a high street can do that.

649
00:54:22,060 --> 00:54:23,940
And high streets across the UK are dead.

650
00:54:23,940 --> 00:54:29,300
Like if you go through any major town or even small town, like it's just all boarded up shops.

651
00:54:29,300 --> 00:54:32,900
Like there's the same, you know, 10 shops in every high street that have managed to survive.

652
00:54:33,680 --> 00:54:39,700
But if you could bring back like real business and real community, like that has a pretty profound impact on society as a whole.

653
00:54:40,020 --> 00:54:40,200
Yeah.

654
00:54:40,600 --> 00:54:48,860
I mean, I think the only high streets, main streets that are really thriving these days, practically speaking, are tourist destinations.

655
00:54:50,140 --> 00:54:53,100
And, you know, they thrive with specialty shops.

656
00:54:53,100 --> 00:54:56,460
and they don't really serve the local community.

657
00:54:56,880 --> 00:54:59,740
They're really designed, for the most part,

658
00:55:00,400 --> 00:55:02,740
to serve people from away that are visiting

659
00:55:02,740 --> 00:55:08,420
and spending money on a bauble or a trinket or a piece of art

660
00:55:08,420 --> 00:55:11,340
or something that if you live two blocks away from there,

661
00:55:11,400 --> 00:55:13,100
you don't really need on a regular basis.

662
00:55:13,100 --> 00:55:16,940
So even the ones that are quote-unquote thriving,

663
00:55:17,140 --> 00:55:21,320
they're thriving for reasons that I think are more superficial.

664
00:55:21,320 --> 00:55:27,720
and what we really ought to be thinking about is how to build stronger communities.

665
00:55:28,900 --> 00:55:33,040
Of course, there's a space for specialty merchants, right?

666
00:55:33,160 --> 00:55:36,140
That's wonderful, too, and that can be part of a good retail mix.

667
00:55:36,140 --> 00:55:41,920
But we need to think about how to serve the needs of a community in person

668
00:55:41,920 --> 00:55:47,220
because with technology these days, so many things are becoming less and less in person

669
00:55:47,220 --> 00:55:50,540
that I think we have to be intentional about bringing people together.

670
00:55:50,540 --> 00:56:07,080
So back to this product that you've built, you've done one building so far, one commercial building. You said you've had a ton of inbound, but so far it's still just the one that's actually out there live in the world. Why have you not been able to move quicker? Is there a problem on the capital side?

671
00:56:07,080 --> 00:56:11,040
Yeah, we have several that I anticipate that we'll finance over the next few months.

672
00:56:11,420 --> 00:56:13,120
We've been working on them for some time.

673
00:56:13,220 --> 00:56:15,060
But I mean, you've hit the nail on the head.

674
00:56:15,260 --> 00:56:29,260
I mean, basically, there's an incredible imbalance between borrowers who have already tuned into the Bitcoin frequency and realize that their assets that they hold are not growing as quickly as inflation.

675
00:56:29,260 --> 00:56:35,640
and that this is a tool for them to re-denominate some of the equity in the assets that they know

676
00:56:35,640 --> 00:56:37,920
and like out of fiat and into Bitcoin.

677
00:56:38,020 --> 00:56:38,980
Very powerful tool.

678
00:56:40,360 --> 00:56:46,280
So there's an enormous amount of demand, which lends itself to exceptionally good credit

679
00:56:46,280 --> 00:56:48,000
selection and everything else like that.

680
00:56:48,000 --> 00:57:02,220
And it's just been met with not the right degree of engagement on the part of large institutional credit investors as of yet.

681
00:57:02,220 --> 00:57:19,680
No, I think that's going to change due to factors like the enormous political embrace of Bitcoin that has unfolded over the course of last year by the Trump administration, but also elsewhere around the world.

682
00:57:21,780 --> 00:57:26,100
I mean, it's like night and day compared to where we were two years ago or three years ago.

683
00:57:26,100 --> 00:57:31,460
You look back and it's just, it's, you know, and just to be clear, you know, that was night

684
00:57:31,460 --> 00:57:32,320
and this is day.

685
00:57:33,660 --> 00:57:44,120
And, you know, then again, there's everyone realizing more and more that, you know, the

686
00:57:44,120 --> 00:57:47,300
inflation is accumulating and wanting to find a solution.

687
00:57:47,900 --> 00:57:50,980
But people don't, you know, people don't like to talk about inflation.

688
00:57:51,260 --> 00:57:53,220
It's a very uncomfortable topic.

689
00:57:54,420 --> 00:57:55,660
It's not very pleasant.

690
00:57:56,100 --> 00:57:59,140
There's nothing that you can do about it.

691
00:57:59,140 --> 00:58:00,140
I mean, there is, right?

692
00:58:00,140 --> 00:58:02,580
You can integrate Bitcoin into your life.

693
00:58:02,580 --> 00:58:07,540
But there's nothing that you can do to stem the tide of inflation.

694
00:58:07,540 --> 00:58:13,860
So it lends itself to this Kafkaesque fatalism.

695
00:58:13,860 --> 00:58:22,820
But I think that for the credit investors in particular, what credit investors need as

696
00:58:22,820 --> 00:58:27,820
as an industry right now is moral courage.

697
00:58:27,820 --> 00:58:32,040
They need to be able, we need, I'm a credit investor too,

698
00:58:32,040 --> 00:58:37,340
we need to be able to say, yes, our portfolios

699
00:58:37,340 --> 00:58:40,680
are marked at par.

700
00:58:40,680 --> 00:58:45,860
Yes, it appears that our value is intact.

701
00:58:45,860 --> 00:58:52,200
But unfortunately, it's not really intact due to this

702
00:58:52,200 --> 00:58:57,820
exogenous factor of inflation that doesn't have to do with the credit decisions that we've made.

703
00:58:57,920 --> 00:59:04,180
It doesn't have to do with the specific assets that we've selected. It has to do with this broad

704
00:59:04,180 --> 00:59:11,720
cloud that's hanging over everything and just raining down more money as time goes on.

705
00:59:11,720 --> 00:59:24,540
And if we fail to pivot, we are baking in the cake a very substantial erosion in the real value of these portfolios.

706
00:59:24,740 --> 00:59:30,800
And it's a problem because people need credit investments as institutional investors because they need income.

707
00:59:31,060 --> 00:59:33,240
And there's nothing wrong with that.

708
00:59:33,760 --> 00:59:37,260
People need income because life is not forever.

709
00:59:37,260 --> 00:59:41,500
and you have to pay income associated with pension beneficiaries.

710
00:59:41,660 --> 00:59:44,720
If you're a charitable foundation or endowment,

711
00:59:44,840 --> 00:59:47,160
you have important projects that you have to support,

712
00:59:47,280 --> 00:59:49,900
research and scholarships and things like that.

713
00:59:50,580 --> 00:59:52,080
If you're a sovereign wealth fund,

714
00:59:52,140 --> 00:59:56,420
maybe you're making payments for medical care of your population

715
00:59:56,420 --> 01:00:00,960
or public buildings or schools or whatever the case may be.

716
01:00:01,140 --> 01:00:03,220
If you're a family, you may just need income

717
01:00:03,220 --> 01:00:06,220
to balance your own household finances.

718
01:00:06,220 --> 01:00:13,260
So you can't just invest exclusively in non-income producing assets.

719
01:00:13,380 --> 01:00:14,780
That's not a rational response.

720
01:00:15,540 --> 01:00:29,920
So with that as a frame, the question is, OK, how do we repair credit in order to be adequately defended in this inflationary setup that we have?

721
01:00:29,920 --> 01:00:40,240
And I think that the institutional investment community is going to be coming to that question more and more and more frequently.

722
01:00:40,240 --> 01:00:44,500
And the ones that come to it faster, and there are good tools and good approaches.

723
01:00:45,260 --> 01:00:47,020
We've seen them firsthand ourselves.

724
01:00:47,240 --> 01:00:54,020
But the ones that come to that question faster and engage it with intellectual seriousness

725
01:00:54,020 --> 01:01:00,820
and with an open mind are the ones that are going to benefit their beneficiaries and protect

726
01:01:00,820 --> 01:01:01,600
their beneficiaries.

727
01:01:02,420 --> 01:01:10,220
And the ones that wait until it's too late, it's going to mean that, you know, there are

728
01:01:10,220 --> 01:01:14,840
police officers and firefighters and teachers, especially teachers, that are not getting what

729
01:01:14,840 --> 01:01:15,720
they signed up for.

730
01:01:15,720 --> 01:01:16,060
Yeah.

731
01:01:16,440 --> 01:01:20,040
And, you know, I'll just mention one other thing, which is that sometimes you hear, you

732
01:01:20,040 --> 01:01:22,520
know, everyone gets Bitcoin at the price that they deserve.

733
01:01:23,000 --> 01:01:29,600
But that doesn't extend to the pension beneficiaries, the teachers, the firefighters, the police

734
01:01:29,600 --> 01:01:39,900
officers, and anyone else who gave their lives in service to others, in part motivated by

735
01:01:39,900 --> 01:01:44,740
the safety of retirement and a secure retirement.

736
01:01:45,140 --> 01:01:51,860
And since those individuals are not actually making the decisions associated with how those

737
01:01:51,860 --> 01:01:59,080
pensions are being invested, but in fact, they are placing their confidence in the professional

738
01:01:59,080 --> 01:02:05,860
asset managers that are responsible for deploying those large pools of capital, it is in fact

739
01:02:05,860 --> 01:02:11,620
the responsibility of those professional asset managers to seriously engage on the topic of

740
01:02:11,620 --> 01:02:19,620
inflation and to ask themselves, how can Bitcoin help? And if not Bitcoin, then what is the strategy

741
01:02:19,620 --> 01:02:27,260
to defend against inflation? I mean, let's all meet in the arena of ideas and chat about it.

742
01:02:27,360 --> 01:02:34,660
But what we can't do is just not talk about it at all. I mean, somebody might say, well,

743
01:02:34,660 --> 01:02:38,020
gold is better. I mean, I don't think it's better for the reasons that we talked about earlier.

744
01:02:38,180 --> 01:02:41,640
But at least it's a strategy. At least it's a strategy. We can start there. Someone might say,

745
01:02:41,720 --> 01:02:48,160
well, equities are the way to go. Okay, well, let's talk about the right proportion of exposure

746
01:02:48,160 --> 01:02:53,780
to different inflation combating strategies. Timber, timber. Timber historically has kept up

747
01:02:53,780 --> 01:02:58,640
against inflation. Okay, well, maybe timber. But maybe the way that people are living will change.

748
01:02:58,720 --> 01:03:04,260
Or maybe, you know, I don't know. But that's at least a strategy. But I think that Bitcoin is a

749
01:03:04,260 --> 01:03:11,620
very good, timely and compelling strategy and one that with a modest amount of it can dramatically

750
01:03:11,620 --> 01:03:17,940
improve the credit risk and position the assets to accrete value in inflationary periods rather

751
01:03:17,940 --> 01:03:24,420
than to dissipate into nothing. And if these people aren't taking Bitcoin seriously,

752
01:03:25,300 --> 01:03:28,020
they're just not doing their jobs at this point. They're not doing their jobs.

753
01:03:28,020 --> 01:03:33,940
It's going to be really interesting to see how this plays out.

754
01:03:33,940 --> 01:03:39,700
When it comes to these Bitcoin backed credit products, you think that this should be at

755
01:03:39,700 --> 01:03:44,420
every single level from personal mortgages to commercial property, and then basically

756
01:03:44,420 --> 01:03:47,380
all the way through the stack up to government level.

757
01:03:47,380 --> 01:03:48,380
Is that correct?

758
01:03:48,380 --> 01:03:51,460
It's a very adaptable financing instrument.

759
01:03:51,460 --> 01:03:57,940
I mean, we talked about the BitBonds back in March, which has gotten a lot of attention

760
01:03:57,940 --> 01:04:03,180
attention, especially among the Bitcoin community, because I think it just resonates.

761
01:04:03,180 --> 01:04:04,180
It makes so much sense.

762
01:04:04,180 --> 01:04:07,700
This was when you did a presentation at the Bitcoin Policy Institute Summit.

763
01:04:07,700 --> 01:04:08,700
Yeah.

764
01:04:08,700 --> 01:04:09,700
It was incredible.

765
01:04:09,700 --> 01:04:10,700
Yeah.

766
01:04:10,700 --> 01:04:11,700
BPI is a great organization.

767
01:04:11,700 --> 01:04:13,820
But your presentation there was brilliant.

768
01:04:13,820 --> 01:04:16,640
Maybe it'd be worth, obviously, not doing the presentation, but going through some of

769
01:04:16,640 --> 01:04:17,940
the key points from that.

770
01:04:17,940 --> 01:04:27,580
Well, the basic idea was the credit markets are driven by credit ratings.

771
01:04:27,580 --> 01:04:32,900
And many buyers of instruments require a minimum credit rating.

772
01:04:33,700 --> 01:04:38,920
Now, some buyers are targeting AAA or AA or high investment grade.

773
01:04:39,360 --> 01:04:43,200
Other borrowers, they have a cutoff at investment grade, BBB.

774
01:04:43,360 --> 01:04:45,020
Some are speculative grade assets.

775
01:04:46,040 --> 01:04:52,120
But those ratings play a very important role in facilitating capital flows because many

776
01:04:52,120 --> 01:04:58,440
Many buyers have regulatory capital requirements that are keyed off of those rating levels,

777
01:04:58,440 --> 01:05:00,740
banks, insurance companies.

778
01:05:00,740 --> 01:05:06,720
The amount of equity that they have to hold against individual positions is in part determined

779
01:05:06,720 --> 01:05:11,940
by the credit rating of the assets to which they take exposure.

780
01:05:11,940 --> 01:05:15,480
And so it governs their overall leverage as an institution.

781
01:05:15,480 --> 01:05:21,180
The United States enjoys a high credit rating, not as high as it used to be.

782
01:05:21,180 --> 01:05:23,220
I was going to say it was downgraded earlier this year, I think.

783
01:05:23,360 --> 01:05:25,480
Downgraded, but still very high.

784
01:05:25,560 --> 01:05:27,640
It's very liquid, the Treasury market.

785
01:05:28,460 --> 01:05:44,360
And Secretary Besant articulated a very important goal of spreading out the maturity of future Treasury issuances beyond just the short end of the curve and out toward longer points on duration.

786
01:05:44,360 --> 01:05:52,120
Because what Janet Yellen did, which is really just terrible financial management, is when

787
01:05:52,120 --> 01:05:59,300
interest rates were extremely low, instead of terming out as much debt as she could for

788
01:05:59,300 --> 01:06:03,600
longer durations, which, for example, was done in Austria with that century bond.

789
01:06:04,080 --> 01:06:05,120
I mean, what a great bond.

790
01:06:05,200 --> 01:06:08,980
They issued a 100-year bond in Austria when interest rates were very, very low.

791
01:06:09,040 --> 01:06:13,180
That's very low cost of capital for the government of Austria.

792
01:06:13,180 --> 01:06:18,260
And instead of doing like 30-year bonds, Yellen did like three months, one year, five

793
01:06:18,260 --> 01:06:19,260
year.

794
01:06:19,260 --> 01:06:20,260
Yeah, like three-minute bonds.

795
01:06:20,260 --> 01:06:22,680
Let's get it as cheap as we can.

796
01:06:22,680 --> 01:06:24,620
And we'll just keep on, keep on keeping on.

797
01:06:24,620 --> 01:06:27,420
And it's such a fiat mentality.

798
01:06:27,420 --> 01:06:33,620
And when the Trump administration came in, Secretary Besant said, look, he really wants

799
01:06:33,620 --> 01:06:35,840
to term out the debt.

800
01:06:35,840 --> 01:06:44,000
But he inherited the problems of the Yellen approach, which was that a lot of short-term

801
01:06:44,000 --> 01:06:44,900
debt was coming due.

802
01:06:45,040 --> 01:06:51,580
Interest rates were still elevated based on the Federal Reserve.

803
01:06:52,120 --> 01:06:55,640
It turns out that they were thinking about thinking about raising interest rates when

804
01:06:55,640 --> 01:06:58,560
they said that they weren't thinking about thinking about raising interest rates.

805
01:06:59,580 --> 01:07:02,680
And it's put them in a box.

806
01:07:02,680 --> 01:07:04,860
So what can you do with the BitBond?

807
01:07:04,860 --> 01:07:08,620
Because he's not managed to do that, has he? Even though he said he wanted to turn out a debt, he's not managed to do it yet.

808
01:07:08,640 --> 01:07:21,220
Well, it's very hard to take on 4.5% 10-year debt, because you look at the interest expense of the funded federal debt now exceeds the defense budget, and it's not feasible to lock it in.

809
01:07:21,660 --> 01:07:27,180
So what you really need to do is you need to bring down longer-term interest rates and then term it out, right?

810
01:07:27,180 --> 01:07:28,740
Which is why they've been pressuring Powell so much.

811
01:07:28,800 --> 01:07:31,540
Pressuring Powell, yeah. Now that's on the short end of the curve.

812
01:07:31,540 --> 01:07:36,700
So what if we had a market-based structure to bring down interest rates, hence the BitBond?

813
01:07:36,820 --> 01:07:44,320
So we all have seen Bitcoin's powerful impact in capital markets over the course of the

814
01:07:44,320 --> 01:07:49,800
last 12 to 24 months with the leadership of strategy, first with their convertible preferred

815
01:07:49,800 --> 01:07:53,060
instruments and more recently with their perpetual preferred securities.

816
01:07:53,060 --> 01:08:09,020
And other issuers as well have used similar securities to less liquidity than strategy, but nevertheless, building out a robust market, capital markets for Bitcoin-infused credit products, which is excellent.

817
01:08:09,920 --> 01:08:14,220
And I think that if you added, so what was the proposal?

818
01:08:14,340 --> 01:08:15,540
The proposal was straightforward.

819
01:08:15,820 --> 01:08:20,320
We said, OK, look, let's do a treasury bond.

820
01:08:20,320 --> 01:08:28,120
and the use of proceeds will be 90% goes to conventional government spending,

821
01:08:28,220 --> 01:08:30,160
whatever it is, 10% goes to Bitcoin.

822
01:08:31,600 --> 01:08:37,840
The overall interest rate is much lower, let's say 1% instead of 4.5%.

823
01:08:37,840 --> 01:08:42,460
And at the maturity of the bond, let's say 10 years,

824
01:08:43,380 --> 01:08:47,200
investors split the Bitcoin upside with the bond issuer,

825
01:08:47,200 --> 01:08:49,880
in this case, the United States Treasury, 50-50.

826
01:08:50,320 --> 01:08:59,860
And if you start to plug in historical Bitcoin performance, CAGRs, it produces exceptionally attractive returns.

827
01:09:00,280 --> 01:09:11,000
And if you say the Bitcoin goes to zero, well, investors are still going to get paid back 100 cents on the dollar because they have the full faith and credit guarantee of the U.S. Treasury.

828
01:09:11,380 --> 01:09:13,040
So there's no principal risk.

829
01:09:13,040 --> 01:09:21,300
And from the US Treasury's point of view, if they're saving 3.5% per year on interest over 10 years, that's 35%.

830
01:09:21,300 --> 01:09:37,400
So even if that Bitcoin goes to zero they still have a net savings of 25 relative to what their debt cost would have been And so it really it a win And it taking advantage of

831
01:09:37,400 --> 01:09:49,260
the position of the U.S. Treasury bond as absolutely central collateral in so many financial

832
01:09:49,260 --> 01:09:54,880
contracts. So many people post treasuries to obtain liquidity and post treasuries for many,

833
01:09:55,000 --> 01:10:00,000
many different reasons. Right now, they're saying, OK, I'll post the treasuries and get that

834
01:10:00,000 --> 01:10:04,800
4.5% yield. OK, that's one approach. But here, you could post to get this 1% yield,

835
01:10:04,940 --> 01:10:11,220
but then have the possibility of generating a 10%, 15%, 20% return. While at the same time,

836
01:10:11,640 --> 01:10:15,840
the Bitcoin on the balance sheet that the government obtains through this bond issuance

837
01:10:15,840 --> 01:10:23,180
is poised to appreciate over the life of the bond issuance way faster than the debt is otherwise

838
01:10:23,180 --> 01:10:31,440
going to increase. And so you effectively defease the liability on the balance sheet of the federal

839
01:10:31,440 --> 01:10:44,920
government by adding Bitcoin through ongoing debt issuances. It seems like another very obvious win

840
01:10:44,920 --> 01:10:46,460
as something they could actually implement?

841
01:10:47,320 --> 01:10:48,100
Because like you say,

842
01:10:48,140 --> 01:10:50,040
they can potentially defease the debt with this.

843
01:10:50,640 --> 01:10:53,320
Likely, if you're someone who's looking to buy long-term bonds,

844
01:10:53,760 --> 01:10:56,840
at the moment, inflation is the biggest risk in that.

845
01:10:57,080 --> 01:10:58,880
And if you think you're going to get 4.5% back,

846
01:10:59,020 --> 01:11:01,720
you're probably not going to be incentivized to buy a 30-year bond.

847
01:11:01,900 --> 01:11:04,200
But with a Bitcoin kicker on it,

848
01:11:04,200 --> 01:11:08,040
the upside of that would almost certainly outperform inflation.

849
01:11:09,000 --> 01:11:10,120
What are the risks to it?

850
01:11:10,220 --> 01:11:14,460
Is there a optics risk in the sense that if the US did this,

851
01:11:14,460 --> 01:11:16,280
it looks like they're losing faith in the dollar.

852
01:11:16,480 --> 01:11:18,800
Look, I don't think that that's an optics risk

853
01:11:18,800 --> 01:11:21,280
because, I mean, all you have to do

854
01:11:21,280 --> 01:11:23,040
is read an English-language newspaper

855
01:11:23,040 --> 01:11:25,560
and your front-page article

856
01:11:25,560 --> 01:11:27,380
is that people are losing faith in the dollar.

857
01:11:27,540 --> 01:11:27,720
Yeah.

858
01:11:28,200 --> 01:11:29,920
And JP Morgan this week came out

859
01:11:29,920 --> 01:11:31,400
with the so-called debasement trade,

860
01:11:31,540 --> 01:11:32,480
buy gold, buy Bitcoin.

861
01:11:33,480 --> 01:11:42,540
So, you know, now, if we had a government

862
01:11:42,540 --> 01:11:47,520
that was unwilling to think creatively about these solutions,

863
01:11:47,520 --> 01:11:49,500
then you would have an optics risk.

864
01:11:49,500 --> 01:11:54,220
If the response was, well, there's no problem here.

865
01:11:54,300 --> 01:11:55,200
Let's move along.

866
01:11:55,340 --> 01:11:56,680
There's nothing that we need to do.

867
01:11:56,840 --> 01:11:58,040
Everything is working fine.

868
01:11:58,480 --> 01:12:07,120
But as a matter of fact, we have such exceptional leadership on Bitcoin

869
01:12:07,120 --> 01:12:10,680
coming from the United States federal government right now.

870
01:12:10,680 --> 01:12:16,980
President Trump, Senator Cynthia Lummis, Congressman Nick Begich from Alaska, such exceptional

871
01:12:16,980 --> 01:12:25,200
leadership around the strategic embrace of Bitcoin by the United States government, that

872
01:12:25,200 --> 01:12:30,620
there's every opportunity to say, this is why we are strategically embracing Bitcoin.

873
01:12:30,820 --> 01:12:32,220
This is what it can do for us.

874
01:12:32,260 --> 01:12:35,040
So I don't think that the optics are the main issue.

875
01:12:35,040 --> 01:12:42,280
It also is, you know, going back to the community building discussion that we were having some moments ago.

876
01:12:44,480 --> 01:12:48,560
You know, there are a lot of patriotic people in the United States.

877
01:12:49,260 --> 01:12:54,100
And I'm sure that there are a lot of patriotic people in many countries around the world.

878
01:12:55,020 --> 01:13:06,260
But apart from flying a flag, there are not that many ways that the average person can advance the well-being of the country where they live.

879
01:13:06,640 --> 01:13:20,620
But the idea of creating, for example, a bit bond where you could say to a saver, and part of the original proposal, by the way, was that these bonds would be tax exempt for American families and American investors.

880
01:13:20,620 --> 01:13:26,200
so that this would become a really superior form of long-term savings.

881
01:13:26,200 --> 01:13:28,940
You know, they refer to baby bonds.

882
01:13:29,560 --> 01:13:30,920
You know, you want to do a baby bond.

883
01:13:31,000 --> 01:13:36,140
Well, why don't we do $1,000 in a bit bond, you know, for junior

884
01:13:36,140 --> 01:13:38,760
so that when junior is going to college,

885
01:13:38,760 --> 01:13:43,260
now it has the opportunity to grow over the course of this 18-year period of time.

886
01:13:43,340 --> 01:13:47,200
And in the meantime, you're defeasing the debt of the United States

887
01:13:47,200 --> 01:13:50,240
because you're splitting the upside with the United States government.

888
01:13:50,240 --> 01:13:57,800
It's an extremely patriotic expression of investing.

889
01:13:58,280 --> 01:14:05,040
And if you're the government looking at doing something like this, it's also a budget neutral way of acquiring Bitcoin for a strategic Bitcoin reserve.

890
01:14:05,040 --> 01:14:09,080
Yes. It's actually, it's one step beyond budget neutral.

891
01:14:09,080 --> 01:14:28,240
It's accretive because the proposal here is to reduce the current interest rate to such an extent that the net savings, even if the Bitcoin goes to zero, is greater than the current interest rate that the government is paying on marginal debt issuance.

892
01:14:28,780 --> 01:14:31,480
And in the proposal that you put forward, you did a paper.

893
01:14:31,580 --> 01:14:32,420
Was it with Matthew Pines?

894
01:14:32,540 --> 01:14:33,300
Yeah, he's great.

895
01:14:33,520 --> 01:14:34,120
He is great.

896
01:14:34,500 --> 01:14:38,640
What was the percentage of the Bitcoin kicker part of the bond?

897
01:14:38,640 --> 01:14:39,200
10%.

898
01:14:39,200 --> 01:14:46,380
10%, okay. Is there an amount of Bitcoin you could put in a bond like this that would actually yield 0%?

899
01:14:46,380 --> 01:15:06,860
Yeah, I mean, I think so. It depends on the investors. That's the beauty of capital markets, is that once you get into the capital markets, you can test out different tranches, different maturities, different pricing combinations.

900
01:15:06,860 --> 01:15:13,000
And quite organically, you discover where there's the greatest depth within the capital markets to distribute.

901
01:15:13,920 --> 01:15:20,400
And at some points in time, one part of the curve is going to be more efficient than the other.

902
01:15:20,580 --> 01:15:25,800
And at another point in time, it might be the other that's more efficient than where it was at the first measurement.

903
01:15:26,680 --> 01:15:35,580
And so within capital markets, the treasury function is to remain nimble, to remain oriented toward market feedback.

904
01:15:35,580 --> 01:15:39,780
And that's what we proposed, Matthew and I, in the white paper.

905
01:15:39,780 --> 01:15:53,520
We're not proposing like, oh, let's just put for sale $2 trillion of BitBonds, and they're all one size fits all.

906
01:15:53,700 --> 01:15:57,280
The proposal was, look, why don't we start with $25 billion?

907
01:15:58,600 --> 01:16:03,340
And let's try out, let's first of all make sure that we have all the systems in place,

908
01:16:03,340 --> 01:16:10,300
the systems for custody, for transparency, the right documentation, the right approach for investors.

909
01:16:11,300 --> 01:16:14,480
Now, maybe we do multiple tranches.

910
01:16:14,720 --> 01:16:17,800
We have one maturing in this year, one maturing in this year.

911
01:16:17,880 --> 01:16:18,900
We try out different prices.

912
01:16:19,020 --> 01:16:21,440
We basically build that market.

913
01:16:21,440 --> 01:16:30,920
And as we build depth in the market, have the capacity to offset more and more of our future interest expense.

914
01:16:30,920 --> 01:16:37,660
And thanks to Janet Yellen's approach, we have regular refinancings that are coming due.

915
01:16:37,880 --> 01:16:38,900
So it could actually happen quite quickly.

916
01:16:39,000 --> 01:16:40,300
So it could happen quite quickly.

917
01:16:40,660 --> 01:16:45,200
And, you know, I think that that's very rational.

918
01:16:45,640 --> 01:16:47,000
And it works, Danny.

919
01:16:47,100 --> 01:16:48,180
It works for states.

920
01:16:48,920 --> 01:16:50,620
You know, it works for the federal government.

921
01:16:50,760 --> 01:16:52,360
Yes, it works for states too, right?

922
01:16:52,500 --> 01:16:59,360
You know, I mean, there is nothing that is preventing the state of Illinois or, you know,

923
01:16:59,360 --> 01:17:05,720
State of Illinois last year, 20% of the budget was a pension stabilization payment at the state level.

924
01:17:06,220 --> 01:17:07,360
And, you know, people are leaving.

925
01:17:07,820 --> 01:17:12,760
They're leaving because they don't want to be under a repressive taxation regime.

926
01:17:12,940 --> 01:17:15,020
And they're seeing the writing on the wall.

927
01:17:15,460 --> 01:17:16,420
And so what does that create?

928
01:17:16,480 --> 01:17:17,840
It creates a downward spiral.

929
01:17:18,260 --> 01:17:23,540
I do not want to see Chicago enter into a downward spiral.

930
01:17:23,680 --> 01:17:26,100
Chicago is one of the great cities in the world.

931
01:17:26,100 --> 01:17:30,460
You know, I mean, it's just, there's such an entrepreneurial spirit there.

932
01:17:30,560 --> 01:17:33,000
So many great institutions, so many great neighborhoods.

933
01:17:33,800 --> 01:17:35,240
It's the capital of the Midwest.

934
01:17:35,500 --> 01:17:38,340
It's the second city on the third coast.

935
01:17:38,940 --> 01:17:44,600
And you look at California, you know, you have similar dynamics in terms of out-migration.

936
01:17:45,680 --> 01:17:50,140
And, you know, I would mention other places outside of the United States, but I'm just

937
01:17:50,140 --> 01:17:53,440
more familiar with what's happening inside of the United States.

938
01:17:53,440 --> 01:18:02,480
And you could see that individual states, which incidentally are authorized to issue tax-exempt debt, could easily pioneer.

939
01:18:03,120 --> 01:18:13,280
You could have the Louisiana Bit Bond, and that could go for the betterment of the people of Louisiana or the great state of Maine, the people in Maine.

940
01:18:13,680 --> 01:18:16,880
And I think that the states are a laboratory of innovation.

941
01:18:17,020 --> 01:18:17,720
They should be doing this.

942
01:18:18,140 --> 01:18:20,020
Municipalities should be doing it, right?

943
01:18:20,020 --> 01:18:32,980
New York City Mayor Eric Adams announced that he was going to issue a BitBond or start the study of an issuance of the BitBond.

944
01:18:33,140 --> 01:18:40,140
But political fortunes being what they are, he's not going to be in a position to do that.

945
01:18:41,340 --> 01:18:46,260
But other cities should pick up that torch.

946
01:18:46,420 --> 01:18:48,080
And it makes sense for them.

947
01:18:48,080 --> 01:19:05,020
And there are some cities actually that are really vibrantly humming with Bitcoin right now, like Nashville and Austin, Texas, and some rural areas where there's surprising connectivity to Bitcoin, like up in Wyoming.

948
01:19:06,260 --> 01:19:11,240
And you imagine you have a BitBond issued by some of those jurisdictions.

949
01:19:11,420 --> 01:19:13,140
It would be very popular and very powerful.

950
01:19:13,700 --> 01:19:18,820
How likely do you think it would be to see a Bitbond within this Trump administration?

951
01:19:19,560 --> 01:19:23,040
Because this may be my just massive naivety,

952
01:19:23,420 --> 01:19:26,460
but I just don't understand why they wouldn't do something like this.

953
01:19:26,460 --> 01:19:29,100
It seems to be just full of wins for them.

954
01:19:31,480 --> 01:19:34,720
I think it is full of wins for them,

955
01:19:34,940 --> 01:19:39,700
and I would be thrilled for them to issue a Bitbond.

956
01:19:39,700 --> 01:19:44,100
I think it's a playbook that is right there for, you know, let's run this play.

957
01:19:44,960 --> 01:19:46,780
You know, I mean, how do I handicap it?

958
01:19:46,820 --> 01:19:47,280
I don't know.

959
01:19:47,860 --> 01:19:51,040
But I think that it makes a ton of sense.

960
01:19:51,380 --> 01:19:51,500
Yeah.

961
01:19:51,700 --> 01:19:55,540
And so you think it's probably more likely that it starts at sort of a city municipality

962
01:19:55,540 --> 01:19:59,780
level and builds up to being state level and then federal level?

963
01:19:59,940 --> 01:20:01,200
Well, that's conventional thinking.

964
01:20:01,340 --> 01:20:05,700
But the unique element of the Trump administration is that they-

965
01:20:05,700 --> 01:20:06,500
They'll throw a curveball.

966
01:20:06,660 --> 01:20:06,900
Yeah.

967
01:20:06,900 --> 01:20:22,680
And there's also a high level of Bitcoin literacy among the members of the cabinet and many, many, many staff positions in the White House and in the Congress.

968
01:20:22,680 --> 01:20:32,440
So I think that it's a very rational way to use Bitcoin as a tool because what is the tool doing

969
01:20:32,440 --> 01:20:37,400
in this case? The tool is lowering the cost of the interest expense, which is otherwise

970
01:20:37,400 --> 01:20:44,200
really debilitating. And it is strengthening the balance sheet by adding an appreciating asset to

971
01:20:44,200 --> 01:20:46,440
to defease the liabilities.

972
01:20:46,440 --> 01:20:49,860
And you could just buy Bitcoin.

973
01:20:51,400 --> 01:20:53,540
I mean, you could just take some money

974
01:20:53,540 --> 01:20:55,100
and buy Bitcoin, I suppose.

975
01:20:55,100 --> 01:20:56,380
But we know there's lots of pools of capital

976
01:20:56,380 --> 01:20:57,360
that can't just do that.

977
01:20:57,360 --> 01:20:59,280
Yeah, they can't just do that.

978
01:20:59,280 --> 01:21:02,660
And thinking of it as a tool is just, it's a very,

979
01:21:04,080 --> 01:21:06,760
to me, it's a much more inspiring frame

980
01:21:06,760 --> 01:21:09,700
than just treating it as an asset.

981
01:21:09,700 --> 01:21:11,820
And do any additional laws need to be passed

982
01:21:11,820 --> 01:21:13,260
for the treasury to actually do something like this?

983
01:21:13,260 --> 01:21:13,900
I don't think so.

984
01:21:14,060 --> 01:21:14,340
Okay.

985
01:21:15,060 --> 01:21:16,780
I mean, I'm not an expert, but I don't think so.

986
01:21:17,460 --> 01:21:21,320
It will be probably the most oversubscribed bond they ever issue.

987
01:21:21,420 --> 01:21:22,420
It definitely would.

988
01:21:22,500 --> 01:21:22,720
Yeah.

989
01:21:22,900 --> 01:21:23,180
Right?

990
01:21:23,360 --> 01:21:23,780
It would.

991
01:21:23,860 --> 01:21:24,540
It's a good idea.

992
01:21:24,840 --> 01:21:26,220
I really do hope we see it.

993
01:21:26,600 --> 01:21:28,440
I have one more thing I want to talk to you about.

994
01:21:28,500 --> 01:21:31,740
But before we move on from this, is there anything that I missed in any of that that you want to cover?

995
01:21:32,840 --> 01:21:34,860
No, I mean, no, no, go on.

996
01:21:34,980 --> 01:21:35,240
Okay.

997
01:21:35,420 --> 01:21:37,980
So this is my curveball question for the end.

998
01:21:37,980 --> 01:21:41,120
When we were in the car before, we were talking a little bit about Bitcoin.

999
01:21:41,120 --> 01:21:53,900
And I've been increasingly convinced that something has changed in the market with, I guess, the institutional adoption of Bitcoin and that we may no longer have the kind of four year cycles that we've previously had.

1000
01:21:54,400 --> 01:22:02,740
But you kind of faded the idea and you think we're still in for a potential big run up here coming up and then another huge bear market.

1001
01:22:02,740 --> 01:22:24,600
I think that the world and capital markets and capital markets participants are very unaccustomed to an asset that has a finite supply and has no elasticity.

1002
01:22:25,160 --> 01:22:28,880
Normally, when something goes up in value, what do people do?

1003
01:22:28,940 --> 01:22:29,940
They just make more of it.

1004
01:22:30,240 --> 01:22:31,880
And that goes for gold.

1005
01:22:31,880 --> 01:22:32,820
We talked about that.

1006
01:22:32,920 --> 01:22:34,900
It goes for art.

1007
01:22:35,140 --> 01:22:39,740
I mean, how many Mona Lisas are there in the world where there's one Mona Lisa, but there

1008
01:22:39,740 --> 01:22:43,980
are probably millions of imprints of the Mona Lisa?

1009
01:22:45,100 --> 01:22:50,620
Same thing goes for Warhol and all of these kinds of things.

1010
01:22:51,020 --> 01:22:53,660
And stock as well.

1011
01:22:54,100 --> 01:22:55,460
People just issue more stock.

1012
01:22:55,580 --> 01:22:56,760
They dilute shareholders.

1013
01:22:56,760 --> 01:23:03,300
You know, when a company goes up in value, management, it's a very human thing to think.

1014
01:23:03,720 --> 01:23:07,820
Management says, we think that we have a very good idea of how to spend more money.

1015
01:23:08,360 --> 01:23:13,540
Let's take advantage of our high stock price, issue more shares, and then we'll go use the money for something.

1016
01:23:13,600 --> 01:23:14,460
That's just their money printer.

1017
01:23:14,640 --> 01:23:14,860
Yeah.

1018
01:23:15,040 --> 01:23:15,180
Yeah.

1019
01:23:15,440 --> 01:23:22,640
And, you know, so it's very foreign in a sense, very new, very novel.

1020
01:23:22,640 --> 01:23:29,380
The idea that there's this liquid asset, which is fungible, divisible, weightless, finite.

1021
01:23:30,560 --> 01:23:36,680
And now the next thing to consider is that we're measuring its returns in something that

1022
01:23:36,680 --> 01:23:40,660
is uncapped, which is dollars, euros, yen, sterling.

1023
01:23:41,060 --> 01:23:49,380
If we were measuring Bitcoin future returns in gold, I do not believe that it will be

1024
01:23:49,380 --> 01:23:55,840
as volatile as it will be when measured in US dollars, because barring the possibility of a

1025
01:23:55,840 --> 01:24:01,280
massive increase in gold because of the meteor or synthetic gold or whatever, setting that

1026
01:24:01,280 --> 01:24:07,400
possibility aside, if gold just continues to chug along at 1.5% to 2% per year expansion

1027
01:24:07,400 --> 01:24:14,740
of the base, then it's expanding, but not that quickly. And the Bitcoin is not expanding at all.

1028
01:24:14,740 --> 01:24:29,080
And the Bitcoin in gold terms, the volatility may dampen somewhat because the gold will also be going from where it is right now, $3,900 to $6,000, $8,000, $10,000, and so on, $15,000, and so on.

1029
01:24:29,600 --> 01:24:32,460
And the Bitcoin, yes, the Bitcoin's going up.

1030
01:24:32,640 --> 01:24:39,220
But as a ratio gold to Bitcoin, there's some, I don't know if it's ever going to be asymptotic, but it's diminishing.

1031
01:24:39,220 --> 01:24:59,520
In dollars, if we go back to the idea that the inflation is more governed by the industrial limitations on the manufacture of money than by other factors, and we really take seriously that proposition,

1032
01:24:59,520 --> 01:25:09,920
then it's entirely plausible that the roughly $1.2 or $1.5 quadrillion worth of assets around

1033
01:25:09,920 --> 01:25:17,920
the world today balloons not to just 4 or 6 quadrillion of assets, but balloons to 860

1034
01:25:17,920 --> 01:25:24,880
quadrillion, which is then followed by 1.7 quintillion.

1035
01:25:24,880 --> 01:25:31,040
And now we're using new powers of 10 in our vocabulary.

1036
01:25:31,480 --> 01:25:33,440
It's just things that I can't even comprehend.

1037
01:25:33,640 --> 01:25:33,820
Yeah.

1038
01:25:34,180 --> 01:25:35,280
Sizes that I can't comprehend.

1039
01:25:35,320 --> 01:25:38,560
And maybe the words will be changed or maybe the zeros will be knocked off the end.

1040
01:25:38,640 --> 01:25:38,840
Yeah.

1041
01:25:39,480 --> 01:25:46,940
And if you measure Bitcoin in those terms, then I think that there's no reason to think

1042
01:25:46,940 --> 01:25:52,300
that we're not going to go through periods of astonishingly rapid increase because the

1043
01:25:52,300 --> 01:25:53,400
price is set on the margin.

1044
01:25:53,400 --> 01:25:55,340
The price is set by the marginal seller.

1045
01:25:56,000 --> 01:26:01,260
And if everyone is holding on to the Bitcoin and unwilling to sell, and no one is stepping

1046
01:26:01,260 --> 01:26:05,660
into the market to buy, and you have all of these new institutional buyers like the treasury

1047
01:26:05,660 --> 01:26:11,160
companies that are able to issue stock potentially at a premium to NAV, and they use that to

1048
01:26:11,160 --> 01:26:19,680
buy more Bitcoin, which then has a positive reverberation back to that NAV issuance,

1049
01:26:19,780 --> 01:26:22,000
especially at a moment in time when the market's going up.

1050
01:26:22,000 --> 01:26:24,860
Not to say that you won't see a similar effect in the other direction.

1051
01:26:25,100 --> 01:26:25,260
Yeah.

1052
01:26:25,860 --> 01:26:30,740
But I think that you could imagine, I can imagine, that we arrive, whether it's this

1053
01:26:30,740 --> 01:26:37,840
cycle or next cycle, surely over the course of the next 8 to 12 years, we are going to

1054
01:26:37,840 --> 01:26:43,360
see moments of extremely rapid price appreciation in Bitcoin.

1055
01:26:43,960 --> 01:26:51,020
And I think that depending on how that sits on the rainbow, right, the Bitcoin rainbow

1056
01:26:51,020 --> 01:26:59,340
chart or on rational route spiral graph, you're going to see drawdowns as well, because the

1057
01:26:59,340 --> 01:27:09,420
scarce nature of the asset, the finite nature of the asset lends itself to a manic increase

1058
01:27:09,420 --> 01:27:19,060
at that moment in time, which will get ahead of the intrinsic value, not intrinsic value

1059
01:27:19,060 --> 01:27:24,840
forever, but the intrinsic value of the progress at that moment, because after all, we have

1060
01:27:24,840 --> 01:27:29,080
a long way to go in terms of individual adoption, family adoption, business adoption.

1061
01:27:30,200 --> 01:27:32,760
But we don't have a long way to go in terms of supply.

1062
01:27:32,960 --> 01:27:41,100
And we have a long way to go in terms of the use cases of Bitcoin, energy, grid management,

1063
01:27:42,000 --> 01:27:42,880
heat recapture.

1064
01:27:42,880 --> 01:27:48,000
Those are all mining payments, cybersecurity, Bitcoin culture, Bitcoin art.

1065
01:27:48,000 --> 01:27:57,620
We have a very long way to go on many different use cases, which we haven't so much talked about on this interview, but maybe in the future.

1066
01:27:57,840 --> 01:28:03,540
But, you know, all of those are demanding more and more of this finite asset.

1067
01:28:03,540 --> 01:28:19,640
And as they come online, they're presenting another buyer for this very scarce asset, which is not motivated by its inflation use case, but it underpins the value proposition as an inflation protecting asset.

1068
01:28:19,640 --> 01:28:33,780
And so when you mix all of those factors together, I don't see any reason to think that we're going to have, you know, muted upside on a permanent basis.

1069
01:28:34,200 --> 01:28:36,140
I think that it's going to be cyclical.

1070
01:28:36,540 --> 01:28:47,040
I think the cycles are very hard to exactly say what the size of them are going to be because you're measuring in something that you don't have any idea how big it will be, which is dollars.

1071
01:28:47,040 --> 01:28:50,960
So hold on tight and the dopamine hit will come.

1072
01:28:50,960 --> 01:28:51,960
Yeah.

1073
01:28:51,960 --> 01:28:53,420
Followed by pure depression.

1074
01:28:53,420 --> 01:28:56,100
Well, I mean, if you take a long enough outlook.

1075
01:28:56,100 --> 01:28:57,100
Exactly.

1076
01:28:57,100 --> 01:28:58,100
Yeah.

1077
01:28:58,100 --> 01:28:59,100
I mean, yeah.

1078
01:28:59,100 --> 01:29:00,100
Yeah.

1079
01:29:00,100 --> 01:29:03,100
I mean, you should mentally compartmentalize as an individual.

1080
01:29:03,100 --> 01:29:04,100
Yeah.

1081
01:29:04,100 --> 01:29:05,100
Right.

1082
01:29:05,100 --> 01:29:12,300
You should have, you know, there are some things that look, some people buy a stock or an index

1083
01:29:12,300 --> 01:29:16,400
fund and they literally don't do anything with it for 20 years.

1084
01:29:16,400 --> 01:29:17,400
They don't look at it.

1085
01:29:17,400 --> 01:29:20,740
They don't sell it, maybe even 30 years.

1086
01:29:20,740 --> 01:29:26,340
Humans have the ability to say, OK, I'm going to set this portion aside for this period of

1087
01:29:26,340 --> 01:29:27,540
time.

1088
01:29:27,540 --> 01:29:32,240
But the problem with the Bitcoin is that it's so fascinating.

1089
01:29:32,240 --> 01:29:34,300
And you have it on your lock screen.

1090
01:29:34,300 --> 01:29:37,840
And you're constantly looking at the price.

1091
01:29:37,840 --> 01:29:40,860
And it's very gripping.

1092
01:29:40,860 --> 01:29:44,020
And it's such a rich environment around it.

1093
01:29:44,020 --> 01:29:46,940
And it's so engrossing.

1094
01:29:46,940 --> 01:29:57,220
But I think that this is definitely the best advice that I ever received in respect of

1095
01:29:57,220 --> 01:30:09,500
it was just to, when in doubt, zoom out, take a longer term perspective on what's happening,

1096
01:30:09,500 --> 01:30:17,980
try to mentally compartmentalize the object of how you allocate your own asset portfolio

1097
01:30:17,980 --> 01:30:24,220
so that you have the ability to make that medium to longer term voyage.

1098
01:30:25,020 --> 01:30:29,920
The one thing I always think is, I've been in this long enough that they don't really

1099
01:30:29,920 --> 01:30:30,940
affect me that much anymore.

1100
01:30:31,060 --> 01:30:33,520
I don't get emotional about price going up or down.

1101
01:30:33,640 --> 01:30:35,160
I mean, I get pretty excited when it goes up.

1102
01:30:35,160 --> 01:30:40,620
but um whenever you consider selling it's like what are you selling it for you're selling it for

1103
01:30:40,620 --> 01:30:45,080
those dollars because that seems like a dumb thing to do like if you're selling it to buy yourself a

1104
01:30:45,080 --> 01:30:48,760
new house or anything like that like improve your life makes total sense do those things like you

1105
01:30:48,760 --> 01:30:53,740
have to live your life as well but don't just sell it for more dollars right well i mean yeah

1106
01:30:53,740 --> 01:31:01,200
i guess you know the other um phrase that i didn't really know about before i you know got

1107
01:31:01,200 --> 01:31:07,560
so interested in Bitcoin, but I've come to appreciate a lot, and this is coming from the

1108
01:31:07,560 --> 01:31:14,920
1031 team, because they call their funds the low time preference funds. And at first, what does that

1109
01:31:14,920 --> 01:31:18,740
even mean? A low time preference, high time. And then, of course, you do a little bit of research,

1110
01:31:18,740 --> 01:31:25,040
you learn about it. But the idea is, okay, lower your time preference. Don't eat the

1111
01:31:25,040 --> 01:31:33,320
chocolate right now. You don't need that immediate satisfaction or just have a smaller amount.

1112
01:31:34,240 --> 01:31:41,680
Take a longer view on where things are headed. Put in the time for physical fitness. Put in the

1113
01:31:41,680 --> 01:31:48,900
time for a good diet. Put in the time for study. And what is so interesting, I would say, about

1114
01:31:48,900 --> 01:31:58,620
Bitcoin is that beyond a financial asset, I have seen firsthand the very significant

1115
01:31:58,620 --> 01:32:06,660
behavioral economics impact that Bitcoin has on many different facets of people's lives.

1116
01:32:06,820 --> 01:32:08,860
And it changed my life almost entirely.

1117
01:32:08,980 --> 01:32:09,420
There you go.

1118
01:32:09,500 --> 01:32:11,320
And it makes you wonder.

1119
01:32:11,320 --> 01:32:16,700
You might be traveling to a beautiful place, and you walk by a souvenir stand, and you

1120
01:32:16,700 --> 01:32:22,140
see this, you know, you know, this irrelevant tchotchke, which is for sale.

1121
01:32:22,320 --> 01:32:25,580
And before you might have thought, you know, I'll buy this thing for $2.99.

1122
01:32:25,960 --> 01:32:30,840
But now you're using Marty Ben's opportunity cost app in your mind, or

1123
01:32:30,840 --> 01:32:32,220
maybe even have it on your phone.

1124
01:32:32,220 --> 01:32:36,300
And you're saying, I definitely don't need to spend 2,500 sats.

1125
01:32:36,349 --> 01:32:43,829
You know, on that thing or 25,000 sats or, you know, whatever, 2,500, I guess it would be.

1126
01:32:44,549 --> 01:32:56,809
And soon, you know, soon it will be 250 and then, you know, 25 and then 2.5 because you have this opportunity cost in mind.

1127
01:32:56,809 --> 01:33:09,589
And it just orients people toward a much greater degree of savings and self-investment and self-improvement.

1128
01:33:10,289 --> 01:33:20,389
And it enables you to focus more time on the things that matter, spending time with your family, with your friends, focusing on the important things in life.

1129
01:33:20,389 --> 01:33:21,969
And for some people, that might be faith.

1130
01:33:22,069 --> 01:33:23,389
For other people, it might be fitness.

1131
01:33:23,609 --> 01:33:28,209
For other people, it might be friends or any combination of all of those things.

1132
01:33:29,269 --> 01:33:32,369
And we've seen that for individuals.

1133
01:33:33,329 --> 01:33:41,289
So now, what's exciting to me is what can we rationally project of those things onto

1134
01:33:41,289 --> 01:33:43,709
corporate adoption?

1135
01:33:43,809 --> 01:33:47,249
And by corporate adoption right now, I mean a little bit less treasury company and more

1136
01:33:47,249 --> 01:33:48,129
like small businesses.

1137
01:33:48,129 --> 01:34:06,369
And how about farms? What if we added Bitcoin to the collateral package of family farms across the United States or across Canada? Imagine what that would do to recapitalize the agriculture sector in those countries.

1138
01:34:06,369 --> 01:34:09,809
because now you have an uncorrelated asset on the balance sheet of the farm.

1139
01:34:09,989 --> 01:34:14,809
You have a liquid asset against which the farmer can draw resources to invest in new

1140
01:34:14,809 --> 01:34:20,949
equipment, new property, new working capital for seeds or fertilizer or labor.

1141
01:34:21,569 --> 01:34:28,829
And on top of all of that, you have a tool that is extremely attractive to the next generation

1142
01:34:28,829 --> 01:34:35,369
where they say, you know what, if I join the farm, this is actually my best path for wealth

1143
01:34:35,369 --> 01:34:42,329
in the digital economy. This is my best path to get one Bitcoin or to get two Bitcoin is to

1144
01:34:42,329 --> 01:34:47,209
take over the family farm. Whereas before I thought I was going to make TikTok videos.

1145
01:34:47,749 --> 01:34:52,989
Or go and sit in a box nine to five. Yeah. Right. Or do something totally pointless.

1146
01:34:53,729 --> 01:35:00,269
And so you imagine that for agriculture, and you can do that by integrating it into loan packages,

1147
01:35:00,269 --> 01:35:06,189
small businesses. You can integrate it into loan packages, obviously medium-sized businesses,

1148
01:35:06,649 --> 01:35:11,109
larger businesses. But then again, where we just were, which is governments. And a lot of people

1149
01:35:11,109 --> 01:35:38,709
have lost they don trust the institutions like they used to That what everyone is saying We all hear it we feel it We see it And maybe but things change quickly And especially in democracies where these institutions are comprised of us we are these institutions

1150
01:35:38,709 --> 01:35:51,929
If we could integrate some of these Bitcoin incentives into our public institutions, could

1151
01:35:51,929 --> 01:35:58,189
we not expect that these institutions might flourish and change?

1152
01:35:58,189 --> 01:36:04,709
And would we not then want to invest deeply in the well-being and success of these institutions?

1153
01:36:04,709 --> 01:36:10,929
I think that, you know, I'll look, I'll leave you with this, which is, uh, you did a great

1154
01:36:10,929 --> 01:36:14,309
episode recently with Brandon Quidham on the fourth turning.

1155
01:36:14,309 --> 01:36:18,709
And it's a really fascinating, uh, you know, story.

1156
01:36:18,709 --> 01:36:23,909
I mean, it's a little bit pop, pop, pop history, but, but very informative and very interesting.

1157
01:36:24,149 --> 01:36:27,169
And a lot of people are focused on the fourth turning right now.

1158
01:36:27,169 --> 01:36:34,689
And, and I think that's understandable, but what's really, um, interesting is to go

1159
01:36:34,689 --> 01:36:38,769
back and read that book and focus on focus on the first turning.

1160
01:36:39,429 --> 01:36:41,289
Because, you know, the fourth turning is almost over.

1161
01:36:41,829 --> 01:36:42,229
Yeah.

1162
01:36:42,229 --> 01:36:43,289
Three or four years left.

1163
01:36:43,289 --> 01:36:43,689
Right.

1164
01:36:43,689 --> 01:36:45,609
Or, you know, yeah, it's not a science.

1165
01:36:45,609 --> 01:36:48,729
So maybe, yeah, maybe three, maybe four, maybe one, maybe two, but it's

1166
01:36:48,729 --> 01:36:53,169
almost over and knock on wood, we make it and everyone who's listening makes it.

1167
01:36:53,509 --> 01:36:58,009
So now actually the name of the game is what's the first turning like?

1168
01:36:58,009 --> 01:37:00,089
Because that's the next 20 to 25 years.

1169
01:37:00,649 --> 01:37:02,809
And if you go back and you look at what that's like,

1170
01:37:02,809 --> 01:37:07,449
that's the environment that long-term investors should be positioning for right now.

1171
01:37:08,049 --> 01:37:12,689
And rebuilding institutions in a more positive way is going to be a very crucial part of that.

1172
01:37:12,769 --> 01:37:13,849
Very crucial part of that.

1173
01:37:14,249 --> 01:37:17,669
I love it. This has been great. Actually, just quickly, one of the interesting

1174
01:37:17,669 --> 01:37:25,709
downstream effects of recapitalizing farms in this way is maybe the food will increase in quality

1175
01:37:25,709 --> 01:37:30,069
drastically. Because in America, the food that you walk through a supermarket is pretty shocking

1176
01:37:30,069 --> 01:37:34,549
what you see. Like it's definitely worse than the UK, although the UK is not great. Don't get me

1177
01:37:34,549 --> 01:37:40,209
wrong. Um, but like, I wonder if there's a downstream effect of farms being more well

1178
01:37:40,209 --> 01:37:46,869
capitalized, improving the actual output of their products. High time preference leads to processed

1179
01:37:46,869 --> 01:37:55,529
foods and you know, it leads to, you know, fiat, the fiat mentality. You have to work as much as

1180
01:37:55,529 --> 01:38:01,789
you possibly can because the money is dissipating and it's harder to keep up than it was last

1181
01:38:01,789 --> 01:38:02,829
year and so on.

1182
01:38:03,309 --> 01:38:19,769
And so you know you might not have time really to have a nutritious meal because it is time consuming to cook Even if you not you know I mean of course if you buying inexpensive processed foods

1183
01:38:19,769 --> 01:38:24,289
that doesn't have a ton of nutrition and that's its own trap.

1184
01:38:24,469 --> 01:38:31,109
But even if you're buying expensive processed foods, you might have more disposable income

1185
01:38:31,109 --> 01:38:35,169
because you're, you know, you're working at a higher paying job or what have you.

1186
01:38:35,169 --> 01:38:40,169
But the foods are maybe marginally more nutritious

1187
01:38:40,169 --> 01:38:42,169
or maybe significantly more nutritious.

1188
01:38:42,169 --> 01:38:46,169
But if you ever look at a label, you see all these things

1189
01:38:46,169 --> 01:38:48,169
you can't even pronounce, right?

1190
01:38:48,169 --> 01:38:50,169
And I think that's a good rule of thumb.

1191
01:38:50,169 --> 01:38:53,169
Like, don't eat it if you can't pronounce it.

1192
01:38:53,169 --> 01:38:54,169
Yeah, that seems pretty straightforward.

1193
01:38:54,169 --> 01:38:59,169
Yeah, that was what MF Doom taught us on mmm food.

1194
01:38:59,169 --> 01:39:05,009
And, you know, when you cook at home,

1195
01:39:05,109 --> 01:39:10,889
it's actually thrilling to know that you can transform

1196
01:39:10,989 --> 01:39:14,949
just a handful of ingredients, five, six, seven ingredients,

1197
01:39:15,049 --> 01:39:18,949
a little olive oil, some spices, some vegetables,

1198
01:39:19,049 --> 01:39:21,149
maybe some salt, a little meat.

1199
01:39:21,249 --> 01:39:22,589
You don't need more.

1200
01:39:22,689 --> 01:39:26,189
And you can make a delicious meal.

1201
01:39:26,189 --> 01:39:30,469
And if you lean into that, you know, then you can do that.

1202
01:39:30,529 --> 01:39:35,809
You can develop meals and develop an understanding of how to cook a meal.

1203
01:39:36,049 --> 01:39:38,609
But it still takes 30 to 60 minutes usually.

1204
01:39:39,229 --> 01:39:41,209
But it's less expensive, actually.

1205
01:39:41,429 --> 01:39:42,649
But it takes time.

1206
01:39:43,289 --> 01:39:52,009
And time is this common denominator that, you know, that's really that's all we have in the end is time.

1207
01:39:52,209 --> 01:39:55,609
And how you use your time is the most important question.

1208
01:39:55,609 --> 01:40:01,169
And if you save, if you invest and save in Bitcoin, what you get back is time.

1209
01:40:01,649 --> 01:40:05,409
And how you use it, in the end, is basically everyone's choice.

1210
01:40:05,529 --> 01:40:08,909
Some people will use it to paint or write poetry.

1211
01:40:09,169 --> 01:40:14,709
And other people will use it to surf or whatever.

1212
01:40:15,209 --> 01:40:16,169
I mean, soccer.

1213
01:40:16,909 --> 01:40:20,829
And others will use it to work because work is their passion.

1214
01:40:20,829 --> 01:40:24,029
But they're working on something that they're passionate about or they're researching.

1215
01:40:24,709 --> 01:40:25,509
Others will cook.

1216
01:40:25,609 --> 01:40:27,429
spend time with friends or family.

1217
01:40:27,429 --> 01:40:33,109
And that is just, and it's imperative too,

1218
01:40:33,189 --> 01:40:36,769
because a lot of the jobs, and we didn't have a chance

1219
01:40:36,769 --> 01:40:38,969
to get into this too much, but we should.

1220
01:40:39,389 --> 01:40:42,429
A lot of the jobs are definitely going

1221
01:40:42,429 --> 01:40:44,349
to profoundly shift with robotics.

1222
01:40:45,369 --> 01:40:46,689
I mean, there's no question.

1223
01:40:46,849 --> 01:40:47,829
I think it's already starting.

1224
01:40:47,949 --> 01:40:48,689
It's already starting.

1225
01:40:49,069 --> 01:40:50,509
And I mean, you look at the Teamsters,

1226
01:40:51,449 --> 01:40:54,929
one of the largest unions, maybe the largest, I don't know,

1227
01:40:54,929 --> 01:40:57,689
but one of the largest unions in the United States,

1228
01:40:57,689 --> 01:41:08,369
truck drivers how many truck drivers are gonna be humanly driven How many trucks will be humanly driven in 15 years You have to guess none I think Probably none

1229
01:41:10,469 --> 01:41:14,329
And the only question, the correct answer is none.

1230
01:41:14,829 --> 01:41:18,309
The only question is, what length of time do you put in that?

1231
01:41:18,469 --> 01:41:20,029
Is it three years?

1232
01:41:20,109 --> 01:41:21,429
Well, that seems a little implausible.

1233
01:41:21,609 --> 01:41:22,649
Is it 30 years?

1234
01:41:22,689 --> 01:41:24,049
That also seems implausible.

1235
01:41:24,049 --> 01:41:25,269
So let's just say 15.

1236
01:41:25,369 --> 01:41:27,069
But it could easily be seven.

1237
01:41:27,189 --> 01:41:27,769
It could be nine.

1238
01:41:27,849 --> 01:41:28,549
It could be 12.

1239
01:41:28,889 --> 01:41:35,029
And if you have those jobs just dissipate, then that's a major political crisis.

1240
01:41:35,029 --> 01:41:43,989
And so now is the opportunity for the Teamsters and the Teamsters pension and every other labor union pension to think about, OK, time out.

1241
01:41:43,989 --> 01:41:56,249
How do we integrate an investment view that has some protections and some defense against

1242
01:41:56,249 --> 01:42:01,229
inflation and is pivoted toward the future?

1243
01:42:02,309 --> 01:42:07,849
And I think, again, I think that we can discuss multiple implementations.

1244
01:42:07,849 --> 01:42:16,249
But to me, it seems like Bitcoin is a phenomenal building block to begin to have that conversation.

1245
01:42:16,689 --> 01:42:17,009
Absolutely.

1246
01:42:18,369 --> 01:42:19,729
Andrew, this has been great.

1247
01:42:19,789 --> 01:42:20,329
Hey, thank you.

1248
01:42:20,449 --> 01:42:21,489
I've really enjoyed this.

1249
01:42:21,569 --> 01:42:22,409
Thank you for showing me around, Philly.

1250
01:42:22,669 --> 01:42:23,009
Absolutely.

1251
01:42:23,009 --> 01:42:24,089
We're going to go and get some dinner now.

1252
01:42:24,449 --> 01:42:24,909
That sounds good.

1253
01:42:25,049 --> 01:42:27,389
Is there any way you want to send anyone before we do close out?

1254
01:42:27,389 --> 01:42:41,229
Yes, I would like to send people to the brand new Calder Garden on the parkway.

1255
01:42:41,469 --> 01:42:47,209
The Benjamin Franklin Parkway has just opened up another great art institution.

1256
01:42:47,989 --> 01:42:55,809
I could also send people to Shea's Steaks, which turns out to be a very good cheese steak.

1257
01:42:55,809 --> 01:43:02,589
um and you know i would just say you know come visit philadelphia danny got here and he told me

1258
01:43:02,589 --> 01:43:06,869
you know this is not what i expected not at all not at all it's beautiful it's a beautiful city

1259
01:43:06,869 --> 01:43:14,109
it's got a lot to offer um very authentic place uh with you know great a great local culture

1260
01:43:14,109 --> 01:43:21,189
not without you know uh its own set of challenges like every city we've been talking about some of

1261
01:43:21,189 --> 01:43:27,829
them, but a lot of firsts, a lot of innovation, and a lot of interesting places to visit. So

1262
01:43:27,829 --> 01:43:31,269
that's where I would send people. There you go. Brought to you by the Philadelphia

1263
01:43:31,269 --> 01:43:35,229
Tourist Board. Andrew, thank you, man. This has been great. Thank you very much, Danny.

1264
01:43:51,189 --> 01:44:21,169
Thank you.