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You're listening to te i.p. Hey, everyone, welcome to our Wednesday release of the Investors podcast where we're talking about Bitcoin. On today's show, we have a tech titan who built a half a billion dollar business from the ground up, and he's also a best selling author.

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Jeff Booth, for anyone not familiar with Jeff, I would highly recommend you go back and listen to our episode Teip two ninety four, where we go through a lot of important ideas around Jeff's book, The Price of Tomorrow, which is all about deflation and inflation and what's causing these crazy policies we're seeing all around the world today. On this episode, we're talking more specifically about his opinions on Bitcoin. Additionally, we talk about what the world would look like if a fixed peg money like Bitcoin would supplant itself into the global economy.

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This was a really fun and interesting discussion. So sit back and enjoy the show.

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And you're listening to Bitcoin Fundamentals by the Investors Podcast Network. Now for your host, Christine.

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All right, so, Jeff, I want to just start off, I sent you a text this morning and you immediately acted on what I sent you. I'm kind of curious your thoughts. So it was a Jack Muller interview, and I wasn't real familiar with Jack. I've seen him on Twitter. I've seen a lot of people talk about how smart he is and how he's a huge contributor to the space. But to be honest with you, I just didn't really even know what he was working on.

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And I'm kind of curious to hear your thoughts on Jack and what you listen to this morning. Yeah, I thought the whole lightning network and how fast that's developing and is using Bitcoin as kind of the second tier of payments and everything else, and I think before we can go into that, I'm surprised at how much innovation is actually moving into the space. You know, because I have a piece coming out pretty soon that you read as well. You can project all of the innovation going forward.

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But even with realizing how much innovation is moving to Bitcoin, some of those things, how fast it's moving shocks you. I was listening to it and I was just like, this is totally nuts what he's doing. And when we're doing all these interviews right now, we're all really kind of hyper focused on store of value, protecting the meltdown of fiat currency. But we're not really talking about actually utilizing Bitcoin in a transactional kind of way by going and paying for stuff at Target or wherever.

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And after I listen to this conversation with Jack and what he's building, he's way beyond the store value piece and now he's into the transactional piece and doing it with no friction at all. And it's instantaneous. I mean, I was just blown away when I was listening to is just insane.

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And I think there's a bunch of debate in the Bitcoin community. Is it a store of value first or will it move into the greater economy? And Jack's working on moving into the greater economy. And Bitcoin right now is more of a store of value. So depending on governments reactions and what happens, kind of in a bigger picture, you can see all of the next steps that are going to happen in Bitcoin. If you look at the entire existing system and what the existing system has to do to protect itself or adopt Bitcoin, you can see all of the next moves.

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It's just wild. It's like watching a sculptor, you know, when they when they start off with a big giant hunk of rock, they're not they're sculpting out the nuances of the nose. They're knocking off all the big pieces. And then they're gradually getting it down to what you see is this finished piece of art and work. And when you look at what's happening, I think that a lot of the arguments that we hear as to whether it's a store value, whether it's a payment, I think the community is naturally knocking off the big chunks first.

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Just this just naturally happening. It's not like it needs to be decided. We're collectively as a society, as a human race, just knocking off the large chunks that are the most important to solve the problem.

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Let's look at this from and explore this paper that I have coming out pretty soon. Let's talk about it from a what a business looks like. So can starting a business. And I've seen tons of startups and successful in the across the board. And I think to the general audience, most people think a startup that is successful tackles a giant problem that's really wide and goes after everything that a monopoly goes after. And I can tell you, it doesn't look that way at all.

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It looks exactly the opposite. It looks like the startup might have intention of going after everything, but they typically start something so narrow that everybody dismisses that. So if you look at it when you're raising capital at 10x advantage, 10 times advantage in a narrow space that people want to dismiss. And when I look at Bitcoin as a store of value against gold, that's what I see. It's a 10x advantage against gold as a store of value that was dismissed not by the Bitcoin community, and that if Bitcoin said early on or tried to compete everywhere, it would have got shut down and people would have tried to shut it down earlier.

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And now that it's moving so fast in that range and the network effect on it now, it can broaden what you're talking about, kind of what Jacksboro is the next Brodney. You have to win the first hill first. And I use this example. Tesla started the Roadster with broad ambitions, but if they tried to do all cars, they would have been killed. Monopolies would have killed them and to capital, but they would have needed Amazon started the books.

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Google started a free search before you could monetize. Search all of the successful companies that go up and win against monopolies start in a narrow spot. It doesn't mean that they're going to win, but it gives them an outsized advantage. If they have a 10x advantage in a narrow market, then a lot of people talk about a lot of people adopt. And that's what's happened to Bitcoin as a store of value first. And as it's moving is a more a better store value.

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But I don't think anything can stop it now from being the best store value. And then it's logical next step to do all the rest. But we don't need to get over our skis on all the rest. It's just a function of a whole bunch of people who want your entrepreneurial talent doing what Jack was doing, what Square's doing, everything else, realizing, wow, once this starts hitting, everything else is easier to build to those roads. And I just wonder how many other people out there are like Jack, that are building something that isn't even on my radar or anybody else's radar, it's just it's mind blowing.

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You know, the part for me at the end of the discussion I was listening to and he was talking about MasterCard and Visa and how they're getting their two point nine percent or what businesses basically have to cough up for their costs for clearance is really what it is. It's a cost to ensure clearance, plus whatever profits being made. And I mean, when you look at what he's doing on lightning and it basically makes that go to zero, it was just this mind blowing moment for me.

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Like, you get immediate clearance, you take the cost to settle down to nothing. I mean, this is mind blowing.

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That's why Square grew so fast, the square, instead of focusing on the big businesses, that Visa was after the square, worked on the lowering the cost so much. That's how innovation works. It typically starts at the bottom where the technology lowers the cost so much that nobody else cares about that market because they can't make margin. And so a lot of entrepreneurs focus on essentially democratizing something through that piece, lowering the costs so much that they can open up a new market and then by opening up that new market and so that they attack the bigger market from the bottom up.

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So, Jeff, I want to talk about some fun stuff that you normally don't get asked, but I'm going to throw this out here because I think it's going to be fun to talk about the price. So right now, we're at twenty thousand and the previous all time high was twenty thousand. I'm looking at it from a psychological standpoint and I'm looking at it from the cast of Wall Street actors that have now thrown their hat in the ring and said, yeah, I own this.

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The Stan Druckenmiller. You're seeing big firms, a hundred billion plus assets under management firms now saying, oh, yeah, we think you should own some of this as well. Anywhere between one to 10 percent. We're at twenty thousand. And I'm pretty sure you buy into kind of the direction this is going in the coming year. Call it one hundred thousand or whatever that number might be.

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What happens as we go beyond this if it goes to thirty thousand watts from a psychological standpoint? We're seeing it on CNBC. Every single segment on CNBC is bringing up Bitcoin. It's amazing to watch, isn't it, and that we're still so early. Most people, if you talk to 10 people, they don't really understand it. So I'll give you a couple of for instances then we can talk about price if you want to. So two of my friends run hedge funds.

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I won't say the names, but are founders of hedge funds. And I've been talking about this for a long time. As you probably know, a long time before I wrote the book and recently both said to me, how do you buy this? What do you do? And these are giant hedge funds that are just now starting to take this on in their personality and thinking about it in their hedge funds and part of an organization called Why President's Organization.

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And it's not because I'm young anymore, but I've been in the organization for 20 years now. The organization. Twenty five thousand members around the globe that run about 10 trillion dollars, their businesses 10 trillion dollars of the global economy. The CEOs I'm speaking to multiple chapters almost every week. I'm speaking to the entire Canada chapter next week on this topic because people care immensely, but it's just starting so early. Do you buy into the idea that a lot of the times Wall Street isn't creative or doesn't take a contrary position, especially when you have the types of people's names that we are throwing around?

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And so it almost becomes this. You mean you don't have Bitcoin inside your portfolio, at least one percent kind of thing? It's almost like it just jumped a 180 from being you're this weirdo that has this to. You mean you don't have it? Do you think that that's happened at this point? Not yet.

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So it's still the leading adopters and it's still that's how it's going to come fast, because as it runs up in prices, more and more people can accumulate.

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You know, what happens when price do you think something like that would happen? Where are we talking to?

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I believe it can be 20 one to idea to believe it was over one hundred thousand dollars and twenty twenty one. Yes, I believe that. Do I believe that that brings on many more people and it could go to the stratosphere? Yes, I believe that. Do I believe after that to correct? Yes, I believe that. And then ironically, if I think about this on the way through, there's a chance that it just keeps going. I think a very low chance.

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I think it corrects along the way kind of into the next, having just followed us. What's more interesting is what people will say when it corrects, because people will say and they'll bias it because at the same time, you're going to see governments starting to clamp down KYC or something else, and they're going to bias the reason for the correction to that and missed the entire next run of. That's your base case. That's the base case. So if you're asking for me, I don't think I will ever so I may take a loan against it sometime, but I don't think I will ever.

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So I'm continuing buying right now and I'm not selling. Talk us through that, because what you just said can be very taboo for some of the really hardcore maquilas out there, that you would take a loan against it. So there's different companies out there that offer this type of service.

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Talk us through how it's even done, because there's people that are hearing this like, well, how would you even do that? So I'm not actually saying right now the roads offer, there's so much innovation coming to the space, it's probably not even worth getting into. But imagine take any other asset. I own a whole bunch of real estate free and clear. If I wanted a loan against that, be able to make investments, I can do that all day long.

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And so that will exist on Bitcoin. Do that exist on Bitcoin? If kind of door one happens and it's a reserve currency and each currency is pegged to it, if Bitcoin actually turns into what Jack Mueller is working on and everything else as well, it becomes the foundation and payment layer, then it'll look different or it could look different. How do you address the concern that people have, because this is so different than what we're used to when it comes to fiat money, as far as you know, if you don't have the private keys and somebody mismanages that?

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Is this a red herring now as technology got to a point where it's much safer than it was five years ago to trust other entities? Or do you think we're still in the wild, wild west and people need to really guard against trusting others to manage their keys? I personally would manage my case. Anybody I talked to, that's what I say to do over time, there might be better options, greyscale. There are other options that are better than they were five years ago.

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And so you can assume that there's going to be better options moving forward. That seems like too much a risk for my risk or tolerance, and I wouldn't want to put that. One of the things I love about this Bitcoin is they are your keys. I love the decentralized nature of this. So let's pull on that thread a little bit, because Brian Armstrong, the CEO of Coinbase, he came out with a tweet storm saying that there's talk that there might be some type of legal documents about self custody.

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And I'm just kind of curious to hear some of your thoughts on that and where you think some of that might be going. I suspect that there's no way people are going to shut himself this, if they did, it would be like closing on ramps to Bitcoin and they'll just move. So in game theory, there's just not going to be enough countries that are going to because, you know, this No. One, if they did that, I don't know how they would do that.

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How do you make that happen? Number two, if they did that, you'd get on a plane. I know I would. Yeah, I think a law is only as good as the enforcement behind it, right? Exactly.

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So the one of the things that a lot of people wanted to know because I sent out a tweet that you and I were chatting, I think there was almost two hundred questions that popped out. But one of the common themes that that I saw was people were like, explain what this new world is going to look like. If anything, if I could explain it in physics terms, I think what they're asking is we're about to be sucked into a black hole.

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What's it look like on the other side of the black hole or the light side of the black hole? What is this world look like, assuming Bitcoin does reach this state of adoption that we're using it not only as a store of value, but even as a payment layer? What does that look like from a social political worker's unemployment, business owners, residential real estate, like, all that kind of stuff?

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Oh, just that question, that's all. What does the whole world look like under an entirely different paradigm? But that is the most important question, because if you can actually paint a picture today, the existing Fiat monetary system, structurally, there's no way to save it against technological growth. So if you just looked at innovation itself and if you said society keeps learning and makes better and better products more and more, unless you're creating entirely new industries that are bigger than the ones you're destroying and everything you're talking about in an entrepreneurial process has to be deflationary.

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Now, you add technology to that and it becomes exponentially deflationary. So you know that that's the thesis of my book and it's coming up against monetary policy. But the monetary policy side, I just cannot believe people actually can defend because all it is, is I'm going to cheat. I'm going to just keep on printing money. And so just pause there and think about that. I know for Bitcoin they know this, but most of the world doesn't know this.

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And so they actually accept that how much cheating or printing of money is happening to keep them happy. And inflation is just a tax on people that are most unable to pay it. Yes. So inflation is wage deflation. So if I actually wanted to play a game and drive inflation really high and wages don't keep up with inflation, then I can actually extend the game of technology because wages become less of the entire picture for longer and drive inequality. And then people come back to me and say, same government, say, OK, fix the problem you created by taking more of the money through socialism or something else and redistributing.

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That's where we're going. I haven't seen you know, I wrote the book now over when I wrote it. It was now over two years ago. It was released in January and it predicted all of these events. But I haven't seen yet, not one hard takedown of I'm wrong. That's kind of surprising that it's a best seller in multiple countries. I've had Hot Shots just the same as you get on Bitcoin and everything else. But I haven't had one takedown because fundamentally from first principles, these systems cannot work together.

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So you're either voting and cheering for manipulation and thinking government can fix it all through more manipulation or you need to find another way. And so beautiful thing about Bitcoin is, is it is that other way? I try not to get too deep in the argument on even in Bitcoin, there's attempts, but KYC is going through right now and everything else. Here's the biggest point. If you find it in the highest level, if Bitcoin emerges as a store of value, that is what we're talking about.

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And when I say if when it will, there's no doubt in my mind everything else fixes anyways. It's a forcing function. Governments get smaller because they can't get bigger. Everything that is enabled by technology and so broad based abundance is forced through that happening. And if governments tried to stop it, it'll move into the second layer. Let's take a quick break.

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All right, back to the show.

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It's more of a function of how long is it going to take them to figure out to transition into this new set of rules and new environment so that it brings the least amount of pain to the populace that they're all presenting? That's the real question, right? That's it, like when you talk to talking to some people get so angst about those people and there's bad actors in any system, there's probably bad actors in Bitcoin, but it's the system itself that's trying to protect itself.

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There's actually also a lot of really good people. There's a lot of good people in government that actually probably own Bitcoin themselves and are going to start pushing that forward because they realize it's actually the only way, because there's two ends of the spectrum. We kind of vote for more government control and totalitarianism on one side or the free market driven by bitcoin on the other side. And those are the two ends of the spectrum. And so no matter what happens on Bitcoin as a store of value, as it moves, it's going to force the free market.

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So now let's talk about some of the downstream consequences and everything else we don't see. We get caught up in a loop because we're measuring all of our outcomes by the existing fiat monetary policy and so is everybody else. And it's really hard to say what would it look like in the new world? And because you almost have to be too old to contradicting thoughts in your head and investigate them both concurrently and then see it. But it's really hard for people to do so.

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And that's why people get tricked into my house. Always goes up without realizing it took one hundred and eighty five trillion dollars of stimulus to make that happen.

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Or without asking the next question, it's going to take another hundred and eighty five trillion to make it happen again.

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So if you believe that that stimulus is coming, then housing will still go up. If you believe that stimulus is going to come without taxes going way up or the next step of what happens, then housing might be a good place. If you don't, there's better investments. Bitcoin, I believe, is a better investment. So now look at what would happen. Some of the kind of I call them false prisons today. Education's free. I put a tweet out on this, and when you and I went to school, it wasn't free.

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But today it's free. And I mean that we can learn anything from anyone, anywhere for an Internet connection. And I mean, top researchers top everything else. So if you have a curious, driven individual, I can see by your bookshelf behind you, you're that person. So am I. Right. So why do we spend all this time in school, 12 years in school and then four years and then four years paying all that money and time.

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And we complain about the cost of schooling us. Why do we do that when it's free? We do that from a past reality where I grew up and our parents grew up because that was the way to get the better job. That's changing really fast. I can tell you I've hired thousands of people and I can tell you who I would hire every time. So I'm not saying somebody that's not accountable. I'm not saying I'm not driven, but driven, curious person who's constantly learning.

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That's the person I want on my team. And so it's free today. So just where do you want to spend your time? And you're going to see a whole bunch of things we thought cost all this money that don't anymore and we don't mausoleums to be able to charge people more money for all of that, to be able to keep the system going, to keep inflation going at all costs, because if it started to crumble and we put tons of debt in it to keep it going because it started to crumble, the Wizard of Oz would pull you to pull the curtain back and you'd see what was there all along.

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And so that's where the society is now. So there's a whole bunch of those things that we don't even look at. Here's another one. I think it's important for the Bitcoin community. It's important for all community. Governments right now are going and I don't actually care what side of the argument you're on global warming, they don't care about that. And so I personally believe it is a problem. But even if you believe that it is not a problem and everything else and it's overcount, I'm going to give you something on both sides of that they will pick people to open their eyes to no matter what side of that issue we are on.

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You're on. The global warming is a problem. We have to solve it. Global warming is an order of magnitude bigger problem because of money printing. If inflation is required and you lower the cost of money to make sure you get inflation, then you have to constantly get more and more things and more and more things and more and more oil, more and more not real cost of oil and not in real terms inflated. And now you need more shipments.

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You may need more of this. You need more labor, you need more everything else all to keep it going. And then you have a whole bunch of money that's being printed to drive that process. It is deflating on the other side. It is taking technology and progress and everything else. So think that through so energy as one of these deflationary forces and solar and everything else in time that's cheaper and more innovation goes there and everybody in the energy thinks, wow, I'm solving the problem, I'm making the world better.

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What does government have to do to keep the inflationary system going? They've got to print more. Exactly, and they have to print double as much to be able to stop what you're doing. So it's a system that's creating the order of magnitude problem to the environment, not any of the contributes to everything else, but all of those costs would fall. We would not believe how far prices would fall without manipulation. It's so hard to even understand. And so it's a transition to that new world because they're totally different systems.

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That's really hard to fathom. And so that's why people, the NMT, everything else, when you're talking about really what you're talking about is a whole bunch of people can't pay for the food, can't pay for the housing, and they're going to go on the street. And in the US right now, it's like there's not fiscal stimulus. You're going to see it's crazy what's going on. So you have a whole bunch of people demanding from government to fix the problem the government created with more of the printing that caused in the first place.

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But when you look at those people, they have no idea this and they're struggling and everything else. And all of those prices shouldn't be anywhere near where they are now. Take the opposite example. If you're the existing system, what do you do? They have to supply the liquidity to the new transmission system, right? They've got to keep doing what they're doing. And, you know, is creating all this downstream consequences, so if you can print money and lend it out, if you can just make up money and lend it out at rates.

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Isn't that usery? I mean, because it's an infinite interest rate. So if a government can create money for free and then lend it out, isn't it just printing money out of nothing that any interest rate on it at all is used for? Because people are looking individually at a country like the US and monetary policy, the US. OK, so what if it was a different country and let's say it's China and I want to expand Thelton Road.

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Oh, I'm going to make up a whole bunch of money to lend it to a whole bunch of people, charge them interest. I'm going to own those countries through my economic engine of manipulating money. So if people could rise up a level and say this is going on all over the world and it's creating these powerhouses concentration of power and risk to the world, they would see that the US is best bet might be to adopt Bitcoin. It's just a matter of how long the figure that out.

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If you think about it, you want to solve the China problem, you want to move quickly there, the US as a society was founded on individual rights and freedoms. More people in that society think like that than most places in the world. If you were to think of a government that would think, OK, we're going to lead in a new currency regime around the free market, it might be the US. I get asked this question a lot, which is, so what does this look like if we all go to this Bitcoin standard?

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Right. I always like to go back to my roots of value investing and valuing a business when I'm thinking about things. And one of the things that I've noticed really quickly, just with my own company and then looking at other companies like Michael Saylor's company, if you're making free cash flows, you can stack Bitcoins onto your balance sheet.

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If you aren't making free cash flows, which is for a lot of companies out there, you're not going to be able to buy these things. And so when we just look at Michael's performance of his company just in the last quarter, and I think that this runway is just getting started. So I think that maybe this is a conservative performance of somebody who has turned Bitcoin into their unit of account for measuring retained earnings. That's what Michael did with his four hundred and twenty five dollars million.

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He's doubled it and a quarter effectively. Right. Like I mean, he's he's basically taken his twenty five years or however many years it took him to retain that. Four hundred and twenty five million dollars. Let's just say it's twenty five years. Took him twenty five years to retain that much retained earnings and in one quarter he doubled it. I just, I find that fascinating. But the concern I think is how many companies would you guess are not profitable, are not having free cash flows in order to retain earnings and do this?

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I would guess it's half of the businesses. Yeah, I would say probably at least that I'm going to back up No. One. What makes you such a great advocate in the Bitcoin community besides your even temporary everything else is you were a value investor who dug deep enough to realize, wow, a whole bunch of what I've been taught is wrong, at least in this new paradigm. Yeah, it's not wrong. It's just that the paradigm of printing money has changed the paradigm for everybody else and that people are seeing.

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So from our first conversation, when you talk about my book. Wow, OK, here's somebody who is a Buffett fan, understands everything, and then crosses the chasm and understands intellectually curious enough to look deeper on what's happening. Michael Saylor, same thing. I love the he said I was prepared to get killed. It go down, people take it out. I was prepared. I bought it. I told people that I was going to do I overpay, for starters, if they wanted to trade out.

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But I was going to do it. And I love people who at that accountability to look deep, to understand it at that level and then make a decision. And it might seem like a bold decision, but it's actually the best decision you could ever make. And so you've done that. He's done that and everything else. So, yeah, way more companies are going to do this. And the ones that can. Well, so people eventually.

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So will governments. Jeff, the reason I was bringing it up is because I'm looking at it from an employment standpoint, so if you and I both agree that the number of companies that are able to do this is half of the companies that exist today and then whatever employees that are associated with the other half that aren't able to do it, does this imply that we're going to just have massive unemployment when we transition into a Bitcoin standard? If this is everything that we're saying is valid and true and plays out in the direction that you and I both see it playing out, which is one potential.

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Right. I'm sure other people were hearing this and thinking that this is crazy talk. But the way you and I are seeing it, we're pretty much implying that to be true. Well, I'll go one step further, because you went through the book, so when I say inflation or what the governments are doing is they're trying to protect jobs, look at the Fed mandate, but they're doing it and they're making the jobs go away faster. If you do this as a government.

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If you think you create jobs as a government and you create jobs by manipulating money supply, then a whole bunch of companies will take you up on it. And those companies that take you up on it will be left needing assistance forever. Zombies and wards of the state, they'll have jobs, everything else. But if you cut off the money printing their debt and on the other side, the companies that don't pay that will remove labor as fast as they can because otherwise they'll need it forever.

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So if you let the free market work that abundance, yes, labor isn't needed. At the same rate, the prices would fall to match that labor not needed at the same rate and they would fall as fast. People would be blown away how fast prices would fall because entrepreneurs attacked industries to be able to make them more efficient. You would drive things free. You drive them lower and lower cost, and your time would extend. So there's a lot of business owners that are going to lose their businesses through this.

[00:34:09]

So that is going to happen anyway, changing the money supply doesn't change, that changes who controls a lot of Bitcoin or is giving high fives right now here?

[00:34:20]

And you see.

[00:34:22]

But but the businesses shouldn't be there if you require a never ending government stimulus or support to stay in business. It's not a free market. Yeah. I'll give you a personal story. In nineteen eighty one, my parents lost everything. We had tons of wealth, real estate, everything else. And my parents were both in real estate. The interest rates went through the roof to 20 odd percent in Canada and everything was gone and my parents had to restart.

[00:34:54]

And I know that as an 11 year old kid, what that did to our family, what it felt like as a family and what drove that on the other side was the same thing, manipulation of my interest rate. Now let's get ahead of it. And a lot of people don't see what's happening. So they take out more and more loans. They take out more and more debt because it's going to go up forever and then when things reset.

[00:35:17]

So even though I said those businesses shouldn't be there, I understand the pain that's coming to society and I feel terrible. Yeah, but the pain isn't caused by a whole bunch of people buying bitcoin pain is caused by a manipulation of money. Thirty years of decisions that preceded all of this, now, I think anybody who's listening to this knows that you're not saying it as good. They need to fail. I think everyone can definitely sense that the sentiment is this is going to be a very painful experience for so many people.

[00:35:48]

And the one thing that's going to allow all of us to get through this, whether you've got Bitcoin or not, doesn't matter. It's we've got to take care of one another as humans and have humility for each other and be kind to each other. That's the only way we're going to get through this. Exactly. There's a whole bunch of people in Bitcoin that are going to be celebrating the price rising and everything else, and they should. And the thing I love most about Bitcoin, though, is I say when it works, it forces accountability in a free market.

[00:36:19]

So there should be a whole bunch of people that instead of wanting empty, it should want this to work because that would be the best way to drive abundance into society. So for the typical person, let's just say they have a three hundred thousand dollar house and were in this new world for this new environment, and they bought it at three hundred thousand. They have a huge loan on it. Let's just say they have 10 or 20 percent down on the house.

[00:36:45]

So they've got a lot of interest to still pay on the house. It's a fixed rate mortgage at a very low interest rate. Let's just call it three, three and a half percent or whatever in denominated in fiat currency.

[00:36:58]

Very key and important point here. You can see the look of both of our faces right now.

[00:37:07]

Talk us through the price of the house. They bought it for three hundred. What happens to the price of the house? What happens to those payments that they have to make on this house? And then talk to us about the demographics of the people that are able to make payments because they have a job versus not even having a job to continue to make payments. What do those people have to do that they have to sell or whatever? Just walk us through some of that.

[00:37:32]

We're comparing two systems again. So what is likely going to happen? There is going to be a ton of easy. I cannot see any world where there's not more and more easing. And so that loan with more easing in real dollars will go down because it will inflate away. But that's going to create more pain, a lot more pain. And one day that the music's going to stop, you're going to have this crazy. It's going to eventually move into hyperinflation at some point.

[00:38:01]

So that's what I would say. My base case. Is that what's going to happen? And so if you're paying back your loan with money that's hyper inflating or devaluing at such a pace that it's somewhat unfathomable. And you had a lot of debt on this house, of this person you just described, you're winning in a major way.

[00:38:19]

You're winning in a way, in fact, and that's what's created most of the paper wealth and all of the people that think that they're winning and that's what's happened. All of this has been happening for the last 30 years. And if you're into these asset classes here, it's a one way ticket to win. And if you're not in those asset classes, you're going to killed. Your wages are going down in real terms and you're not able to catch up.

[00:38:42]

So that's what's happening. Effectively, this is loan forgiveness. It's long for goodness, so it concentrates that wealth further and remember any side of this, when there's a loser on the other side, the loser is the person working for wages. And even if you say to that person working for wages here, we're going to give you money, they're still a loser, but they're still losing out on that equation because the assets are inflating faster. And that path, a whole bunch of people might believe, wow, this is really great for me, but it's not.

[00:39:18]

Now, the other argument, if you just let it deflate right now. So if you didn't print any more money today and deflation took hold, that loan that you're talking about would go up and up and up and up. You would never be able to pay back. The house would fall in price and the loan would go forever higher as everything deflate in real terms. So that's why these systems are completely different from the path to the new system.

[00:39:45]

Could be messy. And what you're describing is if the loan is denominated in this deflationary currency, but the situation we have today is everyone's got their loan denominated in the old currency, that's going to continue to be debased relative to the new currency. You know, I guess what I'm getting at is let's just say there is no Bitcoin and deflation took hold could be disastrous. Why that fundamentally that can't happen is there is no money in the system. It's all based on credit.

[00:40:14]

So people would see there's no money in the system and it would collapse and it would collapse. All the banks and all the entire system would reset a different way. So I don't expect that to happen. So that transition to Bitcoin, you could have a whole bunch of people could use this to acquire Bitcoin. And over time, you could transition to a system that is a forcing function. But at some point, if there's going to be tons more printing and that is a byproduct of printing, I would imagine there's going to be a whole bunch of people taking on more loans to do that, a whole bunch of people thinking, wow, this is great, because if there's a whole bunch of inflation, I can pay back that loan with cheaper dollars tomorrow.

[00:40:56]

So the whole problem is getting worse by an order of magnitude at each step or kicking the can down the road. And we're making it really, really bad. And so that risk that you see sometimes on the winter is coming. Winter is coming. How does a deflationary world look or help or not help an entrepreneur? I don't think makes a difference, what I would say as entrepreneur goes and sets, I have this point of view on a market that looks inefficient and I'm going to make it better.

[00:41:31]

And remember, an entrepreneur only wins when they provide value to you. I think that's where people miss that part of the free market. All of the money is destroyed, the entrepreneurs time is destroyed, everything else, unless they provide value for society. So it's not those bad entrepreneurs trying to compete. They only win when you're providing value better than the status quo today. So that doesn't change at all the human innovation and drives and everything else. It doesn't change at all.

[00:42:01]

In fact, that's kind of the point. Imagine now as a value investor and you have the bunch of Bitcoin and you have cash flow from your businesses and everything else, and an entrepreneur comes to you and says, I have this idea, I'm going to go up against this. Would you not give it a look? If you like the idea, would you invest that money? Absolutely. Yeah. It doesn't have to be a credit money. It could be from your balance sheet.

[00:42:25]

I do it all the time. I make these investments all the time. I help entrepreneurs get to the next step. I know the path well, so it doesn't change that one iota.

[00:42:34]

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[00:44:19]

So earlier you were talking about this 10x advantage, and that's something that you really look for when you're, you know, investing in a startup or identifying a startup that has potential to succeed in a very difficult and competitive marketplace. I don't think you and I have ever talked about this before, but when I look at a etherial, it fails this test for me. Right. And I guess let me state my opinion and I want you to shoot holes through it.

[00:44:48]

I want to hear your thoughts. So when I look at a theorem versus like Bitcoin Bitcoin's case for why it's a 10x value add to society is it's putting a peg to a global economy that has no peg anywhere in sight for any country anywhere. So that's a huge value add. When I look at a theory, it doesn't have a limit on the number of coins that are there. I bet it does this quote unquote smart contract thing.

[00:45:16]

But when I look at the big buzz right now is this decentralized finance? I don't need to have a decentralized platform to own stock securities.

[00:45:28]

Like last time I checked, Robinhood was doing this completely free. A person can open an account in the cost to conduct trades for equity is slim to none right now because it's so competitive.

[00:45:40]

So I guess I just don't understand what value capture is being created with this decentralized platform, which we could go down that path, whether it's even decentralized or not.

[00:45:53]

And it's not.

[00:45:54]

But yeah, it's give us some of your thoughts. And do you agree with my line of thinking? Do you see it differently?

[00:46:00]

I'm really curious to hear your thoughts on this. I wrote the article that way, and for those that's coming out in Bitcoin times in a couple of weeks, but I wrote the article that way to essentially say that I didn't want to point to the theorem or any of the other tokens, rather. But innovation like this to be able to capture value has to have a 10x advantage because otherwise you just never get seen. You don't break through the noise of the existing clutter.

[00:46:26]

Bitcoin was that 10x advantage and now where Bitcoin is and building a network effect more and more and more people onto it. Unless you have a tax advantage to Bitcoin, no chance. And Ethereum doesn't have a tax advantage to Bitcoin. So there will be a whole bunch of other clients. Maybe I'm wrong and some of them making in the short term, some of them won't do well in the short term. Their hype cycles will do really well. But over time, I suspect that Bitcoin continues its march and things are pegged to it.

[00:46:59]

Everything is built off of those rails. That's where I would say it's going. And that article that I'm talking about effectively lays out that case would be really hard to create another 10x some people before go on from here. You know, in the book I talked a lot about network effects and a lot of people now are looking at network effects. Why that makes such a difference. And sometimes they'll use MySpace, Facebook as an example of a network effect that was overtaken by another company with a network effect.

[00:47:28]

And what they missed as a key ingredient of that. And that key ingredient is the 10x advantage that Facebook had over MySpace was not this social networking tool was built for mobile for the same time. Apple came out and people wanted it on their phone and MySpace didn't have it. So it just moved really fast before MySpace could capture it. That was the innovation. So it was a 10x advantage because it's around you all the time. A lot of people think it was both just on the Web.

[00:48:01]

It wasn't. Look at when Facebook came out and look when iPhone came out over one mobile payment. You know, I want to highlight something that you had said there that I think is important for people to hear, you said in the short term may be a theory and would outperform Bitcoin, which I completely agree with you on. It doesn't mean that it fundamentally wins in the long run. But if a person who's listening to this, let's say their trader or their somebody who buys something with a time horizon of one month and they're just constantly in and out and all that kind of stuff, could a theory outperform Bitcoin?

[00:48:35]

Of course it could. But I think the conversation you and I are having is one that's that's a very long duration in something that you can pretty much buy and just on your hands.

[00:48:45]

Yeah. And that's ultimately getting at the root of a fundamental problem that's trying to be solved. Do you have any other comments on other alt coins that are out there or concerns or things that you find really important that Bitcoin does, that maybe these other ones don't do?

[00:49:02]

So Bitcoin, to me, is the only one that I care about because of decentralization, because of decentralization, because of its use case, and then where that takes it as a use case. I'm not saying there's not going to be a whole bunch of innovation in the space. I'm not saying that at all. I look at other big cases, but I have not seen anything that matches Bitcoin. Remember, if you had something with a 10x advantage to Bitcoin, you would know it.

[00:49:30]

It would take over everything so fast and the rate of growth would be so fast because that's the point. They cut through the clutter. They don't need marketing. Google didn't need marketing. Amazon in the early days, didn't need a lot of marketing. Your tax advantages cut through the noise and they don't require all the marketing because they're so valuable to users, they just take off. I feel like you're talking about Ripple in the Wall Street Journal article or ads that they run.

[00:49:58]

I'm not. I'm not. I'm not. Am I putting words in your mouth, Jeff? I could be, but I'm not.

[00:50:08]

Here's the thing.

[00:50:08]

I understand why some of those businesses are doing it. We are the business and you're trying to succeed. I get why the business is doing it. I'm saying is a fundamental breakthrough in technology. What I invest in, what I spend my time on. I look for the advantage for a certain reason and I just explain some of those reasons. I love it.

[00:50:28]

So I've heard this argument a lot. In fact, funny as it is and as ironic as you could possibly get, Mark Cuban, use this argument against me on Twitter one time. Don't you think it's an issue that is highly concentrated into the hands of a few? On top of that, if large companies are now putting on their balance sheets, doesn't it simply keep the same problems we have today? I actually cannot believe people say that I've heard the same thing because it's more broadly distributed than the current economic environment is today already and is a forcing function, people will sell it as it hits new highs, people will sell it and more people will come on.

[00:51:06]

You want the most fair thing for humanity because money, this fix is money and that downstream changes just about everything else. So I have a hard time when even if it looks like that today, I can imagine in the early days people could say Bitcoin looks concentrated. It's less concentrated today than the existing financial system. The argument that I like to throw out is so let's fast forward, let's say that we have this mass adoption and that you do have a lot of Bitcoin in the hands of a few.

[00:51:38]

I know personally, I'd be out there looking at equities, trying to find something that is giving me a better value for all the free cash flows that the companies are kicking off. And then I buy that and now somebody else has my Bitcoin while I have this equity. Right. And that's how it gets redistributed. Exactly. Yeah. I don't know. When Mark said that to me, I was just like, this is the richest complaint I think I've ever heard coming from you.

[00:52:05]

But hey, it's a fun space there on Twitter, I'll tell you. Have a really hard time, and that is one of the things that when I think about it, if a whole bunch of your wealth is because of monetary policy, that hurts other people. And you know that it's so incongruent to stand up there and say, I'm smart because it's not from smarts, it's not from anything like that is from manipulating money. And a whole bunch of assets went way higher than they should have been if you held assets up.

[00:52:38]

The difference for you, Jeff, though, is you're looking at this and you're saying there's something systematically broken with the world right now and I want to try to understand what it is. Well, I don't think necessarily some of these other people were saying, I don't think there's anything wrong with this economy that we have. That's not the issue. It's that this person or this policy maker made a bad decision. And that's what's the root. I think their diagnosis for a root cause is the issue.

[00:53:04]

You'd have to be pretty blind not to see that, because right now the Fed comes out every day and says, yeah, we want to print more money and we have to have inflation. And so we're just going to make more money and all over the world, we're just going to keep printing it. So you'd have to be living under a stove not to be able to see.

[00:53:21]

Got to say I have nothing. You're exactly right. I don't know how you could debase the money by 20 percent back in March and just not think that there's any type of long term impacts to that in 2009.

[00:53:33]

Now it just keeps on getting worse. Let's go to this next question, I'm looking at debt markets. Many Wall Streeters are buying long dated bonds because they know the central banks are just going to step in and bid the price. What are your thoughts on that trade? Because I have some really strong opinions about the street. I want to hear your thoughts on this trade.

[00:53:51]

I don't think the Wall Street traders are in there for the long bonds. I think they'll trade out of them before their term. But in the short term, I think they might do well. It's exactly the same traders we're talking about on the tokens, right? Yeah. So you're talking time horizon? I'm talking time horizon. And in a trading mentality, you might not care. So at some point that trade is going to unwind really bad and the counterparty risk and what's in it to just completely unwind everyone away.

[00:54:22]

Oil went to negative. So at some point that's going to happen. At this point, I would say it's highly likely that rates go negative. Totally agree. And so in the short term, there's a lot of that trade would do well. In the long term, it's going to fail spectacularly. Even though I think the probability of making money in the short term on this is, I mean, practically a guarantee, I just can't bring myself to do the trade because of just some type of, I don't know, moral high ground.

[00:54:53]

I know that sounds really like fruity for me to say, but like, I just don't want to participate in that crap. Is one of the reasons you're one of my favorite people and. It's funny because I think you and I shared that type of philosophy at a higher level, love to as there's many others that do. But you care about something deeper and what things should look like. We can make a lot of money. I would rather make the money and feel good and go to sleep at night.

[00:55:24]

I don't need any more money. What do you spend your time on? You should spend your time on things that advance causes you care about. Yeah, I think it's hard for a lot of Wall Streeters because they're managing other people's money, they have to perform, right. They have to put some yield on the sheet at the end of the quarter, end of the year for the people that are entrusting them to give them returns. So I can understand and I don't want to sound like I'm on a high horse and Wall Street's not.

[00:55:53]

I understand their incentive structure. I understand that to retain money for their clients. But yes, for me, I'm just looking at I'm just like, how the heck can somebody buy this garbage when they know it's a completely rigged game and you never know when all the cracks in the dam burst, like, good luck time in that one, because it's not gonna happen slowly. Yeah, and you're right, but in the short term is probably a good trade.

[00:56:17]

So when does that blow up and what blows it up, because I'm pretty sure I know what's going to blow it up, it's what we're talking about, right? It's interesting, it is what we're talking about, so we put the normal pattern look like without Bitcoin, there be debt research, Ray talks about it and what that looks like and he talks about the beautiful deleveraging. I completely disagree is beautiful deleveraging because it's looking at a historical format to how governments get out of this.

[00:56:47]

And Jeff, I think it's important to note it's a historical format where not every single country in the world is polarized in the same situation.

[00:56:57]

We're not all governments. That's right. One guy. So now how to all governments get out of it? It's virtually impossible to pull that off. Not only that, you have technology moving at a rate that is so unbelievable that people are looking for. So most of the deflation is in front of us, not behind us. And it means beautiful deleveraging or the amount of printing would have to be a staggering amount more than anybody thinks that it would be to keep up with the rate of deflation and the rate of deflation is going to take those jobs and everything else.

[00:57:30]

I could say in a normal world and before Bitcoin and everything else, you could kind of predict this forward and say how long this would take. I think the pace of what's happening in Bitcoin is going to be a forcing function. I don't want to put a time on this yet, but that is the thing because more people are opting out of the current currency structure. And as that starts to really drive on the network effect, the currency, the existing currency structure unwinds faster.

[00:57:57]

This was probably three or four weeks ago, and this is on CNBC, the head chief investment officer for BlackRock for fixed income at BlackRock was talking about how he thinks Bitcoin has a potential to start to replace gold.

[00:58:14]

And I was thinking about it and I was like, why is there fixed income guy on here right now talking this and not their commodities guy on here talking this?

[00:58:23]

I found that fascinating. And when you think about what's really going to blow up, like, sure, it's going to take some gold market share, whatever.

[00:58:30]

It's in my opinion, that's small potatoes. And it's funny you hear the Winklevoss twins keep running around talking about their valuation is based on taking gold smart. I'm looking at that and just be like, that's not even the tip of the iceberg of what we're talking about. Why is that tax foundation in the first thing? Gold is just the first hill and it's going to blow through that and then everything else and by the time it gets to that, look out.

[00:58:56]

So I've got an opinion. I want to hear what your opinion is. What's the magic number where everyone in fixed income starts going, oh, crap.

[00:59:06]

Probably around one hundred and fifty thousand, what's your number? Well, I was looking at it, a market cap terms, I think once it goes over a trillion in market cap, I think we're kind of in the same ballpark and I think it's going to be some round number in USD Fiat terms. I think you're at one hundred or one hundred and fifty thousand when the price goes through that everyone in fixed income is going to be that moment where they're like, oh my God.

[00:59:29]

So this is how this unravels. Yeah, and think about how many people start coming on like you, if you're a pension fund right now, you can't it's not a size. Yes. So this is not something you could buy right now. But you can tell a whole bunch of people are starting to talk about how am I going to own this? I think that conversation for all these pension funds is really going to start heating up. I mean, when the price goes through 50 K, I think you're going to have any large organization that's managing pension funds is going to just the funds going to be ringing off the hook.

[01:00:02]

I would expect maybe I'm biased because I'm dialed into this Bitcoin stuff, but I would suspect after 50 K seventy five K, I would think anybody and everybody is going to be ringing up the, you know, whoever manages their pension fund and saying, why in the world do I not have access to this?

[01:00:22]

Let's talk about the other side of this. How would you stop it? So imagine you're the existing financial system, country, whatever. How would I stop this innovation from gathering steam? I've given all sorts of thought, and I don't think there's a way. The entrenchment now that you have I mean, you've got Blakroc, you got Paul Tudor Jones, you got all these big hedge funds. So I was flying through Canada on my way back from South Korea.

[01:00:53]

This is back at twenty seventeen in the summer of twenty seventeen. And I'm walking in the airport and go into my gate. And lo and behold, who's sitting there? Newt Gingrich. And so no one was there talking to him.

[01:01:06]

And I was like, you know what, I'm just going to go over and talk to this guy, you know what in the world could it hurt? And so I go over there and and he says, well, what do you do? I says, oh, I do, you know, a little podcast on investing. And, you know, I have a real interest in finance. And this was in the summer of seventeen. And the very first thing he said to me, he says, What do you think of Bitcoin?

[01:01:29]

And I said, I just started laughing. I says, well, I think it's going to be really important. What do you think? And he says, you know, I bought the some coins for my grandkids. And I said, So do you think that this has the potential to, like, really kind of blow everything up? He says, well, I don't know. But it's some interesting stuff happening. Right. And we literally talked for twenty five minutes after we were done with the conversation.

[01:01:56]

I wrote down on my iPhone some of the notes that the things that we discussed. But I remember walking away from that conversation just thinking, here's a guy who's dialed in the political spectrum, probably more so than anybody I am. I am so political agnostic, Republican, Democrat. I just I always say that having a strong opinion on one of those in either camp speaks more about what you don't know than what you do know. And so the conversation was just unique for me to be able to have an interaction with a person who is deeply tied into the political structure.

[01:02:29]

And that's the very first thing he says to me in reference to finance. I found it crazy. It's really interesting, funny enough, on Thursday, I'm speaking the House of Commons in Canada, Finance Committee on this topic, their budget. And so this is everywhere. Everybody's talking about, you know, from your podcast, the amount of people coming to me, not just the public persona piece, but all your friends, all the people who didn't listen read five years ago that are now all over.

[01:03:01]

Can you explain this to me? Can you teach this to me? It's wild, and to answer your question, the root of your question, I don't know that I can when I look at the amount of entrenchment that has happened all over the world, I think the argument is how can we stop this and what happens if we do?

[01:03:18]

Because that's always the second question. What if we do? Stop it? Then let's walk through that scenario. Well, sir or ma'am, these other countries won't do that because they've been a victim of dollar dominance for the last 80 years. And you might be tripping in the fastest 100 metre sprint that you're ever going to race as a nation. Right. So I would be hard pressed to believe that conversation isn't also accompanying the conversation of how do we ban it?

[01:03:45]

And why would anybody want to then the reason I use that climate example, so right now you have a whole bunch of governments pumping tons of money into climate, saying to the population, we have to solve this. It's mankind's biggest issue so that we can spend more money to drive inflation.

[01:04:04]

Yeah, but if you're highly influenced by somebody who has very deep pockets, that's a fixed income person off of Wall Street. And they can come in and they've been donating to your campaign for years on end. I mean, I can see that scenario playing out. I can just see it as further manipulation. So I guess what I'm getting at is if you break down every different argument on the existing system, you can see the existing system completely falls apart without manipulation.

[01:04:31]

So every argument, climate change breaks down, every single argument about all of the fear in the existing system that keeps us locked into the existing system. They all if they keep on driving into them, they all break down against this. You fix money, you fix everything. So when I look at all of these things and I go a disciplined approach to first principle and I say, what are we really saying on climate? Because we're not saying fix climate, we're saying inflate.

[01:05:01]

So we can print more money, but we can make climate worse so we can have more control. Now, one side of me might say, wow, that manipulation and control who's at the top of this pyramid? So if I was a conspiracy theorist, you can really go down the black hole here. I don't actually believe that's the case. There might be some people that know what's going on, but I actually don't believe that that's the case.

[01:05:27]

I believe it's more likely they don't know how to get out of this. They have no idea how to get out of this climate. Looks like a place where we can gain jobs. We can keep this the merry go round going for for a long time could be politically popular with a whole bunch of people. We can keep this going without realizing that they're causing a whole bunch more problems. So now if you buy into the second thing that both of us agree on, it's not a conspiracy theory.

[01:05:53]

They don't know how to get out of this. And you give people a way out and you teach people. This is the way Bitcoin is a path out of this, and it doesn't need to look like this anymore. To vote for the free market, which solves just about all the other problems, not all the other problems, and the amount of time that that would save it to move into solving other problems would be staggering. So if we could teach more people that what that would look like, including political representation and pave a path for what this looks like, it's going to happen anyways, but it'll happen fast.

[01:06:30]

Last question, this comes from MIA, and if you were starting over today as an entrepreneur and I think Mia just got out of grad school or something like that, where do you see the greatest opportunities in the coming five to 10 years? There are so many opportunities, just staggering, if you think about problems in the world, think about opportunities to solve problems for people, and there's a whole raft of areas, largely through regulation, that have not been attacked by entrepreneurs, solving things with technology that you can see.

[01:07:09]

What's happening in the fintech space right now is that the regulation is breaking down as a result and it will break down everything else. Health is another area. Agriculture is another area. Giant industries that we take for granted educations, another area they always will look like they look like today. And so technology enabled into some of these areas can create amazing enterprises. What I would say to tackle that, get involved in some of the the startup programs, get involved in the community where the startups are, learn what the startups are doing.

[01:07:48]

Creative destruction, LAPO Trauma, a fellow and creative destruction love, has a number of different campuses around the world, some of what's happening, the the entrepreneurs kind of applying to get into that and mentorship through through that and some of the companies that are coming out of organizations like that, if you're just getting out of school, get involved in a company that you believe has a path in technology to tackle something like that, that you care, care about your learning rate will be so great that even if the company fails, you're learning rate.

[01:08:22]

You'll go to the next company if you understand how technology is changing world so fast, which is immense opportunity. Jeff, it's always a pleasure and people need to read your book, give them a handoff to your book, give them a hand off to your Twitter, handle, that kind of stuff. A book called Press is Tomorrow and Twitter handle is at. Oh, man, always a pleasure to have you here, thanks for joining us. Thanks, Preston.

[01:08:49]

Always a pleasure. Thank you for listening to Tity to access our show notes, courses or forums, go to the investor's podcast Dotcom. This show is for entertainment purposes only before making any decisions, consult a professional. The show is copyrighted by the Investors Podcast Network written permission must be granted before syndication or before casting.