The Exchanges

Q Is in that world, though, of have and have nots, whoever has the most coins, whoever's the best at mining?

A No. So, and this, this starts getting very technical. Um, one of the unique things about the mining structure is because of, uh, because of, uh, Moore's law, the people who are, who are bringing new mining rigs onto the network can, can perform if, if let's say you bought a mining rig four years ago and I bought one today. My mining rig can, can mine four times the amount of bitcoins than yours, than yours can because of, that's right, because of Moore's law. And so me stepping into the market, especially here at this halving event where the supply gets cut in half, you on that, that rig that was, that you purchased four years ago, you're literally going to have to turn the thing off.

AI assessment note: “No. So, and this, this starts getting very technical.”

Q I know we covered a lot though. Is there anything that you really want to chat out? You think other people, other interviews are just missing and no one's talking about?

A I'll say this on the Bitcoin thing. And this goes for any type of position that you hold. If you don't have conviction on the position, it's going to eat your lunch. Um, especially, especially when you deal with something that's very volatile, i.e. Bitcoin. So like, if you listen to this and you're saying, oh, that made a lot of sense. I'm going to go buy some Bitcoin. You go out and buy it for 7000. Like the price could go down to 5000 dollars tomorrow. It does that kind of stuff all the time. It's super volatile. I think the annual volatility on Bitcoin is like 60, 65%. Oil is like 30%. Just to kind of put this in context, it's like 30 or 40% or something like that. So you're stepping into something that is insanely volatile. So if you don't have conviction on a trade like that, meaning I, I really don't understand why I did it. I just did it because I heard somebody say they did it. And so I bought it. Like you're going to get tore up, tore up because you're not going to be able to emotionally handle it. So I think the best advice I could give somebody is you've got to get yourselves, if you want to buy Bitcoin, I would tell you the first thing you need to do is try to read at least three to four books on it and get yourself as smart as possible.

AI assessment note: “I'll say this on the Bitcoin thing. And this goes for any type of position”

Q a dollar pop from the vending machine. You know, a year or two years from now of hyperinflation sets in. Yeah, that stock might look great, but guess what? You can't afford no, it's now a can of Coke is not a dollar can of Coke. It's five dollars a can of Coke. So you're purchasing power for that same increase is nowhere near equal. That's the argument you're making.

A Yeah. So I would, if I was going to explain it as something that everybody can understand. So everyone's played pool, right? And I always way overestimate my skill when I play pool. I'll get down on the table and let's say I'm just trying to hit a solid into the pocket, but your, your stripe ball is there in the way. But if I hit my other solid ball into my other solid ball, I can maybe make that shot. So it's like this, this multi hit shot into the pocket. That's how I would describe investing in stocks because not only do you have to be, not only do you have to get the macro situation right, which I would tell you is hard enough as it is, but now you have to actually know how to do the proper asset valuation on probably a growth stock. To get both of those situations right and to outperform something that's just an easy layup kind of shot. The ball's sitting right next to the pocket and you can just bump it in, um, which, which is what I would describe as gold and Bitcoin. That's the easy shot. It's just like, it's just simple. But if you're trying to invest in Zoom, well, I can't tell you if Zoom's a good buy or not. I just know people are going to continue to use it. So to know if it's a good buy, now I have to dig into all their free cash flows. I got to look at their competitive advantage. What that competitive advantage is going to look like in three to five years from n…

AI assessment note: “That's how I would describe investing in stocks because not only do you have to”

Q 15 trillion. If you had to guess where it's like, that's a, that's what scares me about all of this is the second you start giving out checks, right? The second you start buying corporate bonds with no end date, right? These are things that are addictive, especially when you're trying to get reelected. It's going to be very hard to turn these things off. So when does it stop?

A They're not turning them off anytime soon. I can tell you that. Um, this is, this is the most interesting thing about money. When the amount of the money goes to infinity, the value of money goes to zero, right? And so you're in a position where, and it's not just in the US, this is literally across the entire globe. They're all printing as fast as they possibly can. They're going to start stuffing all this money into UBI now, because if they don't, they're going to have unrest amongst all the citizens in these nations. So they're going to start pumping this money into the bottom of the economy. So now what does, what incentive structure does that now create? And I'm not going to work.

AI assessment note: “They're not turning them off anytime soon. I can tell you that.”

Q Yeah, because what interest rate are they making on the treasury security?

A Well, they don't, they're not going to pay themselves, right? So they just, they're pulling it off the market is effectively what they're doing. So all those interest, all those debt instruments are sitting on the open market, and they're effectively clawing it off the market and stuffing cash into the hands of the people that had it. So you can continue to keep this farce afloat, as long as those instruments exist, To do that swap with. And so my argument now is once you push the rates down to zero percent, okay, you're running out of the instruments to do the swap with. And once you run out of those instruments to the, and when I'm saying instruments, I'm saying the debt, uh, all the bonds that they're swapping for, once they run out and you've pushed the rates down to zero percent, and now they're even trying to push them into negative percent, which is insane, right? Like, Give me a hundred dollars and I'll guarantee I'll give 95 back tomorrow, right? Or next year. Like it's insane. But that's what they're trying to do in order to continue to provide liquidity into the system. Here's where, here's where it gets interesting. And this goes back to my comment of the central banks having two vehicles to insert the cash to keep the velocity of money going.

AI assessment note: “they don't, they're not going to pay themselves, right?”

Q Yeah. So see, part of the big question I'm asking myself is like, fine, print money. If nobody can feel it, it doesn't matter. There's no repercussions. There's no negative incentives. So like, when will we feel it? When does somebody feel it?

A So you gotta, you gotta adjust your, your index for feelings. Cause if you're, if you're talking about, does it feel any different between today and a month ago? And right now with COVID-IX, that's probably a bad example. But like, if you're only measuring a one month duration of time on it feeling different, you're not going to feel anything. But if you would go back 20 years ago and ask your parents, are things different now than they were before as far as just how much you could just, you know, you could go out and work and make some money and come back and buy a Corvette, and you'd still have disposable income left. Like when you're, when your parents were in their thirties and forties, that was a real thing. Today, it's literally how much, how much money a person makes an entire year to, to buy a Corvette. So the thing that's changed and it's happened so slowly, and that's where I guess I get, I'm not saying that I'm sticking up for central bankers like Powell, who's, who's going out here and doing this. But he's a victim of literally 80 years, eight decades of decisions that preceded him that have now put him in this situation that he's got a gun to his head. And that's what, and you'll hear these, you'll hear these very myopic, uh, opinions as to, oh, well, this is Trump, or this was Obama, or this was George Bush, or all these, they always tie it to some type of politic…

AI assessment note: “if you're only measuring a one month duration of time... you're not going to feel anything”

Q use 10% of my 10,000 I have saved? Should I put a thousand bucks and try and predict Which equities the government's going to bail out and ride those things up. Now I'm choosing not to do this because I have no idea how to evaluate this and I have no insider information on what the government's going to do. What is your advice here? Do you buy cheap stocks?

A So I've got a very controversial opinion on this. And I think a lot of people in my community are rolling their eyes at me for not having stocks going through this because so much of it is dependent on government decision-making. Whether they're going to add more billions and trillions into the market and who's going to be the recipient of that because that's the one you want to own. I mean, it's just that simple. So, um, I'm with you and I'm with Dalio as well. In Dalio's opinion, just so people understand, and he wrote about this in his book, Big Debt Crises. Um, in that book, he talks about when you get into these, and I'm just going to say the word, hyperinflation type situations, um, Investing in stocks is a mixed bag because it really comes down to which types of businesses do well in a depression-like scenario, in a scenario that all heck is breaking loose in the economy. But you have companies like, I'm just going to say, Zoom, the one we're using, like, that's going to do very well through this. Um, you got to think of businesses like that that are going to do well. And if you do want to have equity experience, You need to think of a business that's just going to be able to handle the extreme volatility that's going to happen here in the coming, uh, year of the market next year to three years. It's going to be insane volatility. So you have to own those types of busine…

AI assessment note: “I'm with you and I'm with Dalio as well.”

Q Which is we want, which is, which is they want the prices to increase drastically over time. So people buy it now and not wait, right?

A Here's a perfect example. Look at Look at your education costs. It's gone up, like, 17, a hundred percent since, like, 19, 97. Well, it's because of the, the laws and the rules that are set in place for these lenders to, to that, like, if you default on your loan, you can't get rid of it, right? And so then all the traction and education that you have to get this degree and all that kind of stuff churns the market so that those prices go up. Meanwhile, a TV, the prices drop so significantly, That it's, it's insane due to technology growth. So again, Jeff does such a better job of describing this than I can do in his book. But, um, in short, what you get is this price deflation that is, is impacting some things in a tremendous way. And so now you're at this point where it's so hard for the typical person to step into the market and compete because Google practically owns All of those things are, they've taken so much market share because of this technological ramping that goes exponential that you're gutting, not only are you gutting the middle class, but you're gutting their ability to even compete in the marketplace with the skills that they have.

AI assessment note: “Here's a perfect example. Look at Look at your education costs.”

Q less efficient to produce them in the States, it's deemed a, a necessary asset to ensure the durability of the United States, so it happens. This is directly in contrast to Ray Dalio's very popular YouTube video, which argues for three main components of the economy. Productivity growth, short-term debt cycles, and long-term debt cycles. What people are saying now is sacrifice productivity and efficiency For durability. So what wins?

A So in, in that scenario, what you're talking about is market manipulation, right? And what this whole thing is about is market manipulation over 80 years. So when, when the president comes out and says that, I understand why he's saying it. He's saying it because he, he doesn't want dependencies in critical areas that, that, um, become a strategic defense, uh, security type thing, right? So I understand the argument and that's his prerogative, whether that that's valid or not, or whether it's a real concern that's for the listener to decide. But anytime you step in and you manipulate the free and open market, there is a price to be paid for the manipulation. And so when you're doing more manipulation after eight years of manipulation, uh, based on how we basically controlled how powerful the dollar is through the money multiplier and then through interest rates. And now we're here at the end game. And you're doing more manipulation into the, into the quote unquote free and open market. All, in my opinion, all it's going to do is just accelerate the inevitable, which is a currency failure. It's going to accelerate that.

AI assessment note: “all it's going to do is just accelerate the inevitable, which is a currency failure.”

Q one of the line items is called the central, it's called central bank liquidity swaps. And over the past three weeks, over two hundred and thirty billion has gone to that thing that most people don't understand. You understand it. And as serious geopolitical ramifications, what does that mean when we see that central bank liquidity swap number increasing by hundreds of billions over a very short amount of time?

A So I don't understand this nearly as well as you might think I understand it. Um, but if I was gonna, if I was gonna, uh, explain what's going on, this is extreme dollar shortages happening around the globe. And if the US does not service that and provide that liquidity into their systems, they're going to start ripping things apart in these other countries. And so that's, those, those, uh, facilities were stood up in order to alleviate that, uh, because there's such a demand for dollars around the world. I, I told somebody on Twitter the other day, let me see if I can get the way I phrased it. I said, the dollar is not the, uh, oh, geez, now I can't remember how I, how I phrased it.

AI assessment note: “this is extreme dollar shortages happening around the globe”

Q of these bank stocks low, sold them high, and they got 3.6 billion in interest off the bailout specifically to the bank. So that money was essentially paid back. Is that, does that mechanism exist in this two trillion dollar cares act? And do you think it will exist if any other stimulus bills come out to try and, you know, prevent the future of, you know, COVID, COVID downturn?

A So that worked because the central bank stepped in and conducted quantitative easing for the next 10 years. That's why that model worked in oh eight. Um, but now that you have interest rates at zero percent, I don't necessarily know that that model is going to work because I'm of the opinion that the only way they're going to be able to keep social, uh, unrest unrest from happening is through the use of UBI. So When you use UBI and you start pumping all this money into the masses, well, your CPI index, your inflation index is going to potentially start creeping up. And guess what? Your, that's, that is not going to be good for the bond market because the bond market trades off of a premium of inflation. So, and, and same with stocks. So the stock market is based off of interest rates. Well, they're going to try to peg the interest rates at zero percent. They're going to try to do this UBI and you're just going to see In my opinion, you're going to see distrust break down in, in the, uh, in the fiat currencies. And when that happens, it's going to be this aggressive selling that's going to make it pop. For that to happen, for that to happen though, okay, and this is what I think is, Really important to this whole conversation. For that to happen, there has to be some other currency. There has to be somewhere else to go before that trust is going to break down completely. And so …

AI assessment note: “I don't necessarily know that that model is going to work because”

Q now exhausted. Five hundred billion for discretionary treasury spending. And then kind of who knows what happens with With the rest. Uh, the balance sheet today of the Fed is now 6.4 trillion for the person that has worked really hard to save liquid cash. It's money under their mattress right now over the past 10 years. What does this increase in the balance sheet mean for their cash holdings?

A So what I think a lot of people might be surprised to hear me say is all of this stuff that we've seen in the last couple months with the expansion of the, of the Fed balance sheet really isn't anything out of the ordinary from what we've seen over the last 10 years. So although the spike that you've seen in the last couple months has had a very significant jump, um, if you take the U.S. Central Bank's balance sheet, and then you take all the other major economies, call it the ECB, the Bank of Japan, the ECB, the European Central Bank, you take the People's Bank of China, you smush all of those central banker balance sheets together, and you look at the growth of how much the printing has, because that's what we're talking about here. They're just printing, right? They're taking cash, they're swapping it for the fixed income securities. Now they're doing it for For corporate debt as well. But if you would plot the growth of all those central bankers balance sheets for the last 10 years since the 2008 crisis, you would literally have a chart and I can send you this chart if you have like show notes or whatever that you want to pump out to, to your audience.

AI assessment note: “really isn't anything out of the ordinary from what we've seen over the last 10 years.”