Animal Spirits Podcast - Everyone Hates Inflation (EP.231)

Episode Date: November 17, 2021

On this week's show we discuss the highest inflation rate in 30 years, why this is a good time to be a borrower, why no one is happy about the economy right now, Michael got rugged in crypto and much more. Find complete shownotes on our blogs... Ben Carlson’s A Wealth of Common Sense Michael Batnick’s The Irrelevant Investor Like us on Facebook And feel free to shoot us an email at [e-mail] with any feedback, questions, recommendations, or ideas for future topics of conversation. Learn more about your ad choices. Visit megaphone.fm/adchoices

Today's Animal Spirits podcast is brought to you by Ground Floor, the wealth tech platform that allows everyone to build wealth through real estate. Michael, a couple weeks ago, you came to me and said, hi, I just got off the phone. I said, hi. Hi, Ben. How's it going? You talked to Ground Floor CEO, Brian Daly, who we had on the show a few months ago, and you said they've got this really cool new app called Stairs that can work as a savings account. Because we got like two or three emails, so I called him and I said, what's the deal with this? Yes. We never heard of it. I don't think they did any advertising. And you can get four to six percent interest as like a savings account. And you download the app. So I think it's called Stairs app or you go to Stairsapp.com and get four to six percent in a savings account like vehicle. It's a very cool app. It's really good user experience. I signed up for it immediately and started using it. Put some money in. We're going to have Brian back on the show to discuss exactly where this money comes from because of course it's not risk free. But after going through it, I feel comfortable. So I have money in this. And what's cool about the app is you see the clock ticking, like your interest accumulating.

It shows progress. It's like the U.S. debt, the ticking time bomb, but in reverse, because it's actually a good thing. So check them out, groundfloor.com or Stairsapp.com for more. And again, we're going to talk to Brian Daly again, the CEO in a couple months, I think, right? Soon. All right. Welcome to Animal Spirits, a show about markets, life, and investing. Join Michael Batnik and Ben Carlson as they talk about what they're reading, writing, and watching.

Michael Batnik and Ben Carlson work for Ritt Holt's wealth management. All opinions expressed by Michael and Ben or any podcast guests are solely their own opinions and do not reflect the opinion of Ritt Holt's wealth management. This podcast is for informational purposes only and should not be relied upon for investment decisions. Clients of Ritt Holt's wealth management may maintain positions in the securities discussed in this podcast. Welcome to Animal Spirits with Michael and Ben. Michael, everyone hates inflation. Except for you.

I don't love it. So we had our highest inflation reading since November of 1990, an annualized pace of 6.2%. It was 6.3% back then. Positive spin zone. I'm trying to get ahead of the narrative here. After that, in 1990, like, we had the greatest decade ever. So I'm right.

Maybe we're on our way to hyperinflation, but I think I underestimated how much people really just hate inflation. I think maybe we're going to, Don't deflect. Here's my other question, though. Not everybody underestimated it. What is the realistic economic scenario that would make everyone happy? Because there was no unhappy after 2008 because we didn't have inflation and we didn't have wage growth.

Again, you're deflecting. You're moving the goalposts. Now you're saying, well, there is inflation about what would make everybody happy? I'm not moving any goalpost. I'm saying, what would make everyone happy? That's not relevant. That's what I'm saying. There's inflation.

So let's talk about inflation. I'm just saying that's like one people that unites all people. Ben, I think what you're getting at. is that the alternative would have been way worse. And I agree with you. We got a pandemic that nobody asked for that put the economy on ice. The government acted appropriately, in my opinion. They sent out all these checks. They got everybody through it. And now as a result, demand turned on immediately. The supply chain issues are harder than we anticipated. And now we've got a demand shock, a supply, whatever you want to call it, we've got inflation.

This is much better, much, much, much, much better than them doing nothing and saying, Yeah, let's just see how it goes. Problem is counterfactuals. Do you know how sometimes in movies where someone's traveling through time and they go back in history and they save the world and then they come back to the regular time and no one realizes that like what they just did? Like, hey, I just saved all of humanity and no one knows it because I travel in time and then I changed the past. There's no counterfactuals like that for people. People can't experience that other timeline of, well, what if the government didn't do anything? So I understand why people are complaining.

And obviously, most of the people doing the most complaining are probably those who kept their job, frankly. But that's a greater percentage of the population than people that lost their job. I understand that. I do think that there was a huge messaging dropping of the ball from the White House and politicians on all this. And they should have said, listen, this time is way different than the last time because last time we had no demand after 2008. And we had this really slow plotting recovery. This time we have all this demand. And we're not going to step in the way of this demand.

What we're going to do is we're going to do everything within our policy. power to try to fix the supply. So we're taking the National Guard and we're going to go pull all those container ships in. All those tariffs that President Trump put on, we're taking all those off. Like, I can't believe that they're not doing more to try to fix the supply side of things. And obviously some of that, there's nothing they can do. Who is a politician who said, like, we're going to go here, they're going to go, woo. Do you know what I'm talking about? Yes. That's what Biden should be doing. Instead, George Stephanopoulos said, is there anything President Biden can do to address inflation?

and an advisor, Brian Dees, now I haven't watched this clip. I hope I'm not taking this out of context. He said, number one, well, if he said number one, I'm guessing that I'm not taking that out of context. He said, number one, we have to finish the job on COVID. Getting those shots out to five and 11-year-olds is going to provide a lot of comfort to American families. Hello, the question was about inflation. They really screwed this one up. And obviously, you wrote this piece about how, like, how much more gas is costing. What do you say it costs? The average family, $800 and more for gas a year or something? You feel. figured it out. Yeah, which to some people sounds like an awful lot of money to others,

whatever, it depends on your economic scale. But guess what? It's not just gas. Everything is going up. But my point, before you get to this, obviously, inflation is very financial when it hits your pocketbook. And if you could tick off all the different things that it's hitting right now, but there's also a psychological component where I think if people knew, if they could say, listen, for the next six months, we're doing everything in our power to reduce these supply chain shocks, and some of them we can't fix. And if people said, all right, six months, we'll make it through six months of this, but they're not. So I think the psychological component of inflation comes in when people try to think ahead, like, does this impact my future spending? Because

am I going to pull more demand forward now and spend more because I think prices are going to be higher in the future? So that's where, like, the psychological component comes in, where if you don't get the messaging right, you can let it get more out of control than it would have, otherwise. This is year-over-year changes. Stay 24 percent. Bacon, 20 percent. Pork, chop, 16 percent, eggs, 12 percent, fish, 11 percent, chicken, 9 percent. People notice this. Yes, exactly. And I think the two biggest places are, for sure, the pump, the gas pump, in the grocery store. That's it. And we haven't even mentioned housing. And the news is just hitting you over the head every day with different stories about things

that are higher in price. We've said a million times, the genie is out of the bottle now. Anytime we have a recession, the government is going to send out checks. And we've also said, the only thing that could stop that is political will. And now that inflation is becoming a huge political talking point, I might have to come back on that one a little bit. And what if those checks in the future? What if there's other politicians who go, nope, we're not sending out checks. Remember last time we got inflation? I'm not going to put people through that again. So you wonder if the politicians will give pause in the future. It's going to be interesting because next time they're going to say, no, no, no, it wasn't fiscal policy that caused inflation.

It was the supply chain. This already is the talking point for the current administration. And who knows how much longer we're going to be talking about this. I suspect it's longer than we thought. So Colin Roche on his blog said, he thinks probably for at least the first half of 2022, we're going to see four to six percent inflation prints. So it's going to be. That's a lot, man. So six months in financial markets, that's a long time for people to live through this stuff. Now, here's the thing. The funny thing is, let's say 20 years from now, you could look back and this only lasts for 12 months. Let's say that's like, I don't know what's going to happen. Let's say it does. Looking back on 20 years, you go 12 months, you go, oh, that was nothing.

It's a blip on the long term. But if you're living it in the moment, that's a lot. long time for people to get angry and complain. You're talking about that 6% number was year over year. But even month over month, it was 0.94%, which was the highest since 2008. And people feel month over months changes big time. Like no kidding. I feel Starbucks prices going up. I wish I was hoarding coffee. I'm going to start making it home. See, so I'm actually living in deflationary environment because I don't drink coffee. So I'm coming out ahead here. That was interesting. So gold has been performing better over the past several weeks, highest level since June. As soon as the inflation numbers hit, Bitcoin skyrocketed. To me, that was super interesting. We'll get to Bitcoin

later. But it was interesting because whether or not we could debate if it's an inflation edge, guess what? If people think it is. The machines, I'm not kidding, there is obviously algorithms that are buying Bitcoin now on inflationary spikes, because it was immediate. My only positive spin zone here, it could be worse. Here's how this could be worse. I'm not talking to my pals of the Fed here. If they raise rates here and rates spike from here to match the inflation, I think that's a way worse scenario than we're now. So these are the yields back in 1990. Inflation was 6.3. Remember, it's 6.2 now. 30-year mortgage rate was 9.9%. Right now, it's 3.30-year treasury rate was 8.4. Right now, it's 1.9. 10 year was 8.3 right now, it's 1.6. And the two-year treasury,

two-year treasury, like basically a money market or savings account, you could have got 7.5%. Now it's 0.5%. Yeah, but I think people are happy to pay higher mortgage rates if they get a positive real return on their cash. So right now, real cash returns are deeply negative. And that pisses people off. Here's why this doesn't hold true. Okay. Because the top 10% owns 89% of the stocks in financial assets in this country, X housing. So that means the bottom 90% of course owns 10% or 11%. But the bottom 90% owns it 75% of the debt. They have way more in debt than they do in assets. So the fact that rates are low is a very good thing for people in the bottom and middle classes because they're borrowing a much lower rates. Yes, but pushback to your pushback. How much of

that debt is mortgage versus like... Okay, 70% of all household debt is mortgage. So lower mortgage rates are helping a lot. Here's the problem. You don't see that in a lower payment. Yes, inflation is eating it away because if inflation is six and you're paying three, but you see those prices at the store, you don't see lower prices in your mortgage. You see that payment saying the same. Inflation is like this mythical thing to you. You don't actually see it. People live in nominal terms. Yes. That's why the whole real return thing, like that's hard to wrap your head around, especially the stock market. If you're doing real returns this year and it's up 26%, but you have 6% inflation, is it really 20% in real terms because of used cars? It's so hard to wrap your head

around this stuff. People think and behave in nominal terms. It's funny because all of the people talking about inflation, including us, obviously are people that are financially okay and that can survive inflation. And they say, oh, but it's crushing the little man. Families on the lower income scale are getting crushed under the weight of inflation. And that's just not necessarily true. There was a piece in the Washington Post yesterday. They wrote, most families have more financial resources than they did before COVID, especially among the bottom third, even when accounting for inflation, disposable income has been roughly 9.5% higher in 2021 than it was before the pandemic hit in 2019. A quote, I'm sorry, I can't pronounce this person's name, and I want to butcher it.

An economics professor at the University of Massachusetts Amper said, it's safe to say the bottom 40% of Americans are definitely better off in the past year from a combination of rising wages and government aid even with inflation. So Lizanne Saunders tweeted a chart stunning. The lowest earning quartile is seeing incredible wage growth relative to highest earning quartile per Atlanta Fed. At 5.1 percent, it's the fastest growth since 2002. Now, this is all great. I guess the problem is if we continue to see four to six percent inflation prints for the next seven months, how much longer is the story that I just laid out going to continue to remain true? Getting back to the thing we let off with everything is amazing and no one is happy kind of thing,

Matt Iglesius postsies on Twitter. So he broke out wage growth by different quartiles. And the bottom quartile is growing the fastest. So we have people in the very low end doing well. And then, of course, people in the upper end are doing well because they have financial assets. It's the middle class. So if you look at the other ones, some of these other ones are falling, while the bottom quartile is receiving the most help from the government. And it's actually lower people, too. People that are aged 16 to 24 are seeing their wages grow the fastest out of any group. So you have young people and people in the lower end are doing well. Yeah, about time.

Then you have like the top 10%, but then the people in the middle go, what about us? We're getting screwed here. You might be raising our taxes. Those are the people that are angry right now is, again, trying to keep everyone happy. You're never going to be able to do it. But yeah, I agree. That whole narrative of people on the low end are get hit the most by inflation. That's like experts on an earlier version of the world.

That's what you think happens, but it's not this time around. It's people in the middle. So Matt Klein, who I pay for his substack, phenomenal writer on the account. and all things related to this. Maybe my favorite econ writer on the pandemic economy for the past six to nine months. I think he's just been all over this stuff from a variety of different angles. So he wrote an excellent piece called The Case for Patients on Inflation. And he did a few things in there. It's really worth, well, you have to subscribe to read, but let me just try and give you the TLDR. He said that a lot of these things, these prices rising are still pandemic related.

And if the supply chain returns back to normal, here's a potential problem, though, Ben. what if politicians don't wait? He's saying that politicians should wait, don't react, don't raise rates, but what if there is just this groundswell of the monetary policy people, the Fed, they have to do something. They have to do something that's getting out of control. How long can they wait? Here's the other thing. He also talked about the fact that I think he said one third of the increase comes from cars, like use car prices, rental car prices. Energy. Or new car, yeah, gas prices. But normal people on the street are not breaking out the inflation rate.

item by item like we're doing. They're not looking at it and saying, oh, that 6.2% is really a third of it has used cars. It's like, it doesn't work like that for people. I do think that you're right. The groundswell for this could get. He also said like inflation, the psychological component of inflation is people buy stuff because they anticipate that things will continue to get more expensive. So you buy a washing machine, you buy other durable goods. And he's saying that's not happening, at least not according to a survey, which whatever. That part of it was like, because the questions are, is now a good time to buy X, Y, or Z, and people said no, is that necessarily because they think that prices are going to come down, or because they think the prices

are up so much that you'd be an idiot to buy today? Yeah, I don't know how far ahead of the game people are getting on this, but I don't know. Let's say the Fed raises rates here. How is that helping our supply chain at all? That's the thing. It doesn't matter because the narrative is what matters. And if the narrative becomes they have to do something, maybe they cave, maybe they don't, I think raising rates right now is inappropriate, not because I don't think that the economy is overheating, which I don't, but because to your point, Ben, that doesn't fix anything. It's just going to nuke the stock market. The government should be saying, we're going to do everything in our power right now to help the supply chain as much as we can. We don't want to hurt demand. This is a good thing. Ben, get in there and do something.

Here's what I'm going to do for you. So a lot of people, I've been saying, so Sam Rowe had this great piece about the fact that all these corporations are passing. along. The corporations are doing fine. They're passing on all their higher costs to the consumer. Which, by the way, did you see Jesse Livermore's piece or his threat on why that's such bullshit? Because corporations say we're just responding to the inflationary environment. It's like, no, no, no, no. The government bailed you out. Don't take this to margin. Don't do it. That's the problem. Margins remain elevated at historic highs because all of the higher costs for corporations are being passed right through the consumer. And unfortunately, the consumer is saying, well, I'm doing fine. I'm going to pay these higher prices. They're not fighting back yet.

So I said, like it or not, this is why stocks are a great inflation hedge. And especially now when they have pricing power, and a lot of people said, well, what about the 1970s? So in the 1970s, inflation was 7% a year, and stocks did 5.9% anomaly. So on a real basis, you lost money. However, that's not always true. In the 1980s, 5.5% inflation for the entire decade, the stock market did 17% a year. Wow. 1940s it was 5.5%. That was a lot from the war. stock still did 9% a year nominally. So higher inflation doesn't always spell doom for the stock market.

And I think right now more than ever, because we are so addicted to buying stuff, so Bridgewater had a piece saying, like, this is more of a demand shock than a supply shock. Obviously, the supply stuff is better. If you look at the U.S. retail sales, see this chart I put in here, just took off like a rocket ship. I'm going to do my part. I'm not going to the movie theater anymore. Okay. But here's my solution for inflation.

Stop buying so much stuff. Ha, ha. But that's the problem is we're just all. buying so much stuff right now, that's in part causing all of the supply problems. I bought a new pair of dad sneakers. Jeff Mackey posts them. No, Crocs? By the way, one of the best performing stocks of like the last few years, which is just... I would have short of that. Matter of fact, I know I shorted crox. I'm positive I shorted crox at one point in time. Okay. If you're a dad, you have to buy new balance. I can't. Okay. No, that feels like throwing in the towel.

Okay, I bought a pair recently, but it's got the big end on it. It's like a more stylish new balance. I'm going to send a picture to Duncan to put it in the video here. All right, let's talk about crypto. We go with inflation? Yeah, well, let's move down to crypto. Crypto's going to solve it, right? Exactly. So Chris Dixon has been all over the Defi Web 3, whatever you want to call it, all that

stuff for a while now. He tweeted the Web 3 Playbook, using token incentives to bootstrap new networks. So I want to talk about... I'm sorry. Who do you think was the PR agency that said, let's move away from crypto and start calling it Web3? Because that was pretty ingenious. Web 3?

Yeah. There was definitely a PR agency that came up with that, right? It was probably 816 Zay. Probably. So I've been listening to a lot of these podcasts and a lot of the people in the defy world. I listened to bankless and the scoop with FinTech Frank. And a lot of these people sound very much like they come from traditional finance. The dude from Olympus Dow, who is pseudonymous, he sounds like a fixed income derivatives trader of some sort.

The thing about this is these people understand incentives. To get people to do something, you have incentives. And financial engineering. Yes. These are really smart people. I understand about maybe 15% of what they say. So last week, one of the things that was really exciting, Ben, I called you right after this, this thing called an Ethereum name service.

E&S is for short, my friend Justin Paterno told me about them. And Ethereum name service, when you go to the site, it says one name for all of your addresses. No more copying and pasting long addresses, meaning you're like metamask wallet. But use your ENS name to store all of your addresses and receive any cryptocurrency token or NFT. So Justin told me, go reserve michaelbatnik.eath. So I did this, I don't know, six months ago, haven't thought about it since. And they just did a $2 billion air drop.

$2 billion. They gave out to all their users. And it was based on things like how many domains you had, how long are you registered them for. I think I got like 40 tokens, which was the equivalent of around $2,500. something like that. Before you get into the rest of your story, can I hire a consultant to do this for me?

Because you said, Ben, you should do this too. I looked into it. No. There was gas fees. There's metamask wallet stuff. You have to put in the time like I do. I'm waking up at 5.30 on the weekends to do it. I don't want to put in the time.

Just someone do this for me. It's so confusing in the gas fees and the metamask wallets. So Josh wrote a post today. Did you view Josh's post today? It felt like a giant sub-tweeted me. Just a shot across the bow. It was called No More SideQuest. It was basically stop paying attention to bullshit that is in the

periphery that's not core to your mission, your life. Josh is 434. He has kids that are whatever, 12 and 15, something like that. I'm obviously in a much different place in my life. I'm 36. I have a 2-year-old and a 4-year-old. So I still have time for bullshit. See, I'm moving into Josh phase rapidly. Yeah. You're ahead of me. So I just don't care. I don't know. I know. And listen, credit to me, I've never said like, dude, you got to do this. Have I ever? No, not at all. You've educated me on a lot of this stuff too. And I kind of look up stuff that I think is interesting from what you tell me, but I tried to do some of this stuff, and I'm like, it's just, no, it's a commitment. I spend a ton of time, and I still have no idea what's going on,

but I commit a lot of resources, like literal time, and time is the most precious resource, because I'm fascinated, I think it's fun and entertaining, but it's a lot of time. Like, literally, I'm up at 545 reading this shit. There's no time in the day for it. But this is why inequality in crypto, it probably already isn't, is going to be way worse than anywhere else. Because the people who have all the means in crypto already and already made a lot of money are going to be the ones who keep investing in the new projects. And I think inequality in crypto is going to make the regular world look like a joke. I don't know.

I don't know. It's a strong. I mean, obviously there are people who got in early who were young and tech savvy and like didn't have a lot of money and have made a lot of money. But the people who now control all the crypto wealth, they're going to control this space going forward because they already have all the money. Probably. Probably.

Probably. Okay. On with the story. So they did this $2 billion air drop. I was like, I get it. Finally, I have seen the light. we've been asking for the real world use cases, here it is. So immediately I thought of Twitter. Twitter has been a public company. So by the way, E&S is a Dow, and we'll get into the Dow in a second.

A Dow stands for a decentralized autonomous organization. Twitter has been in our life, I signed up in 2009. I've been on the service daily for the last decade. And just finally, they added this Twitter blue. For 299, you could change the app. You could change the app on your phone. You could change the image of it. You can sort of edit tweets where if you press a tweet and you have a typo. It gives you like 20 seconds to edit it. All of the sort of stuff people have been begging for for years. If Twitter was controlled by the people, all of these sort of things would be voted on. The service would be improved. And here's what I was thinking about. People have been talking about Twitter. How do you monetize Twitter? Well, they should

pay, I think Scott Galloway said Kim Kardashian and the mega influencers should pay a $50,000 a month for whatever the numbers are. I think that's backwards. What if Twitter paid its users? So Packy has this post, I forget which one, where in Web 2, there was the consumers, the suppliers, and then the platform, and all of the value accrues to the platform. In Web 3, all of the value will accrue to its users. So, for example, what if – Okay, but where does the money come from? I'll tell you, I'll tell you.

What if there was a Twitter token and they would settle up with you once a month for its power users, what if every thousand retweets that you got cumulatively, you would get .004 Twitter tokens? and they would incentivize its users to, A, make a better product, and B, capture some of the value. Instead of being a shareholder who has gotten their teeth kicked in repeatedly over the decade because all this stock does is gout down 15% after it reports earnings. So this is way, way, way out into the future. I have no idea what happens between now and then, but I really do feel like I saw the future with this ENS drop.

If you, like, steal someone's tweet and it's really thirsty and it's a dad joke that's been used 12 times, you get docked. You get docked. Exactly. Another bad meme, like a 420 joke from Elon Musk, he loses all his tokens immediately. So, you know what I did this morning, Ben? I bought a piece of the Constitution. Okay.

So Constitution Dow, let me just quote Packy. Packy wrote a piece this morning. He said, I first heard about Constitution Dow on Thursday when Graham Novak, Austin King, and Julian Weiser told me about the planet and I joined the Discord. It was a blast. But I was too busy writing to get more involved yesterday morning when Nicole Ruiz reached out and asked if I wanted to help out the contributors. My first thought was, I'd love to.

but I'm busy writing tomorrow's newsletter. But, like, three seconds later, my second thought was, you're not turning down the opportunity to contribute to a history-making DAW so you can write about Dow's, right? Who was I kidding? As Nick Cage set a National Treasure 2, Book of Secrets, those who have the ability to take action, have the responsibility to take action. Great quote.

My mind was made up in the words of Conair Nick Cage, well, baby, I was about to try and do a Nick Cage, Conair accent. I'm not going to do it. Well, baby, oh, it's not exactly my ties and Yatsy out here, but let's do it. Then he memed for Mean Girls, Get in London. loser, we're buying the Constitution. I scrapped the essay I was writing. Instead, I decided to spend the next 24 hours participating in and writing about Constitution Dow. So what the hell am I even talking about? For the first time in 33 years, a copy of the U.S. Constitution will go on sale

at Sotheby's. I think there was 500 printed. There's 13 that are still around. 11 of them are in museums like the Smithsonian. There's two that are in private hands. The proceeds of this are going to a non-for-profit foundation, and this Dow, which was spun up three days ago, is trying to raise $20 million to buy the Constitution from Sotheby's. Pretty cool. Pretty cool. So the implications for this are massive. Our Dow is going to replace corporations, not today.

But I feel like I see where this is going for the first time, and this is going to be massive. You're thinking the idea, this is the Green Bay Packers where people put their money together and buy a sports team. There's going to be a sports Dow. everyone's going to own the Golden State Warriors or something like that. It's going to take a long time, although who knows, things happen so fast these days, but the future is going to look very different. I'm also seeing the unintended consequences of this of...

Like what? Like what? A group of people who, remember a few years ago they had the naming rights to something in England and they named it Bodie McBoatface? There's going to be people who take this, who make it a joke. Like, the wisdom of the crowd is not always that wise, is what I'm saying. I thought you were going to say on intense consequences like idiots like me getting hacked. Oh, okay.

Hey, no, I'm going to let you tell your story. I will not be poking fun of you today about this. No, it's okay. Listen, it's funny. So for the past few, probably I guess for 12 months. So I started buying Bitcoin in like June, I guess of last year. And obviously since then I've been reading a lot more about it. Top shot, OpenC, minting, staking. So I've been playing around on this stuff in the morning, at night, on weekends. So you took the red pill, I took the blue pill, something like that? Yeah, pretty much. I'm like the target date fund guy of crypto, basically. Pretty much.

But, like, I'm more reading than participating. So, for example, whenever I buy an NFT on OpenC, I'm not shopping on OpenC. I'm not like doing all the, oh, how rare is this? If I see somebody tweet about something and I follow this person and I like this person, and if there's a mint, sure, I'll participate. But I'm not spending like seven hours a day. Obviously, I have a day job, but I'm dabbling. And mostly through the help of the community on Twitter that I follow.

And so one of the things about joining these things is you have to join a Discord. So Olympus Dow, which is, I'm a day. I certainly cannot explain that to the audience. I can't even explain it. Also, to buy some of these things, you have to join their community, basically. Yes. You have to join the Discord in order to get access to be able to do this. I've never been on Discord before, so I have no idea.

Discord is one hell of a place. I have no idea. I can never figure out Reddit, so Discord's going to be way over my head. Discord is basically Slack on Beth Salt. There's a million channels, a million users, there's bots all over the place. And guess what? I got botted. I got hacked.

So what happened was... Can I sell us from my print of you? Please, go ahead. This might be funnier. Go ahead. On Friday evening, we're kind of done for the day, and you called me, and you go, I got rugged. And we both started laughing, and I said, what do you mean? And you said, I had this money in my MetaMesquod, and I clicked on something, and it's gone. That was from my perspective. What happened? I'll get into the details. I had, like, I guess Microsoft alerts or whatever it was on my PC. I get alerts. So, for example, if I subscribe to a YouTube channel and there's a new video,

I get this noise and this alert on the bottom of the right hand screen. And I don't subscribe to a ton of things. So it's pretty rare that I get an alert that's actually meaningful. So I see on the bottom right hand on my screen pop up, Olympus Dow AirDrop. And like, you have to act fast on these things. You got the ENS one, so you were probably excited about this. Like, oh, this is going to happen again. Exactly.

I got the ENS AirDrop. So I jumped on it. The alert was from Discord. It took me into Discord. I clinked on a link. It took me to a place called Collabland that I've heard of before. I've never been inside of, and I connected my wallet and like an idiot, this is the part where like I just, I have no excuse other than I wasn't thinking, obviously, I wasn't thinking

smartly about this. I entered my secret recovery phase. So with Metamask, you have a password and a password just lets you into your wallet. But if you sign into a different computer, you have to enter your secret recovery phase. And they asked me for my phrase, which is basically giving the robbers, the keys to your house and the alarm code. Really and truly, as soon as I did that, I hit enter, it didn't connect, I said,

I knew what happened. I went to my wallet, and I see my tokens are gone. So I probably had, I had about $2,000 worth of, they're called homies, I think, OHM, the Olympus Dow tokens. And I see that they were gone.

Like, I immediately, I knew what was happening. I tried to refresh my password. As soon as I did that, it was all gone. I had like 0.1. ETH left. I don't even think I had that much.

I had like 40 bucks left. my E&S was gone. And so it was $5,000 in total, which, thank God, I'm very fortunate, and it doesn't have any impact on me in terms of any real sort of consequences, but it really, really hurt. Credit to you for sharing this because you could have taken this one to the grave. You didn't have to share this. No one would have known. You could have easily just said, looked around and gone, oh, geez, I just lost this money

and I'm going to take it with me. So credit to you, you tweeted out. And like, I told you this morning, I think one of the cool. parts about the crypto ecosystem is most of the people tend to be positive. They're optimistic, they're positive. Obviously, there are like the charlatans and people who are scamming and pushing stuff. But I think a lot of people who probably had your back. It's the traditional finance people who go, oh, see, look what you did. And like, this is... I got it from all angles. There was a Reddit subthread on me, and I made the mistake of clicking on it. And it was

credit to you for sharing and being transparent about it. The reason why I did, why I shared this was, let's be honest, it's a great story. We got a good laugh out of it. You would have after if this happened to someone else. Of course, of course. But I wanted to help people. Because I'm not the only asshole that ever has done this. I got a ton of people reaching out to me saying, hey man, write a passage. Same thing happened to me. This is why the whole like libertarian decentralized future, everyone's going to own everything. This is why traditional corporations and finance has to be involved here. Because you have to have safeguards in place so this doesn't happen because if you start hearing stories of this of your friends losing all of their

crypto if they first get into it. That stuff reverberates to rate other normal people who are going to say, I'm not taking part in this. There needs to be some safeguards here. That's why there's going to be traditional firms in traditional asset management and traditional finance that are going to be in this space to allow. So you talked about on Twitter blue, you hit the button and you get 20 seconds to edit or whatever. Traditional finance is going to come in here eventually. Aren't they going to say enter your code, we're going to give you 20 seconds to like make sure you want to do it. There's going to have to be that. There already is. So for example, if you send your money, if you send Eath from Coinbase to your MetaMask wallet, I have like a two-factor authentication, so I

open my authoritigator and I have to enter the code in order to send the money. For dummies like me, there are some safeguards. But listen, I guess the bottom line is, people are saying, well, this is why this is why you have to have a hardware wallet. I'm not getting a hardware wallet. I'm probably going to lose it. This is why, I guess the bottom line is never, ever, ever enter your secret recovery phase anywhere except for directly in your metamass wallet. I guess what this was is kind of like fishing. Is that what fishing is? Sounds like it. And also like don't speculate. with money like this. This isn't like money that's going to make or break your month or your paycheck. This is money that you had set aside to speculate. And this happens. And it sucks. But

you also going into it knew this was speculative money. Yeah. The interesting thing is it's not the money, but I kind of felt violated. And I was honestly disappointed because my sweet, sweet ENS, which I was so excited about, it just was a shitty feeling, like top to bottom, nothing good came of it. So you can't track where this went. It's just gone. I went on ether scan to see, I mean, it's like the matrix. I see 17 digits. I don't know what it means. I was like, There's my coins. All right. Gone.

Live and learn. Live and learn. All right. Good story, though. All right. Let's do great quarter, guys. It was a busy week. It's going to be a busy week.

Next week. What do we have next week? Before we get to this week. I'm looking ahead. Maybe I'm skipping ahead, but whatever. Next week we've got a lot of retailers. We've got... Homebidipo Walmart.

Hold on, Ben. We work? We work is public? Yeah, as of like a month ago. Seriously? You didn't realize this? SPAC? Was it a SPAC or they used to go public? I can't remember.

What's a symbol? It's work? I think so. Holy shit. It did go through without a lot of fanfare. Okay. Casper mattress, by the way, up like 100% today? Biottox? No, they're going private. Going private.

Yeah. See, if you'd get your head out of crypto, you'd know what's going on in the real stock market. All right. A lot of retailers. We've got Walmart, Home Depot. What else we have? Foot Locker. Low's in Target. Okay. So basically, this week is going to be, what do we have in store for holiday season? How bad is inflation really? What does supply chain issues look like? So we're going to cover that all next week, but let's get into this week. What do we listen to, Ben? I listen to the Coinbase one. And this is interesting to me because a couple things stood out.

First of all, they talked about their Coinbase ventures. And I feel like that was the first question. Every new company coming out now has their own venture arm. And it makes a lot of sense because that way you can kind of understand the competition as it's up and coming and get to know them and potentially take part in their growth. And then, I don't know, buy them out and squash them before they come to compete with you. It makes sense that all these new technology. companies now have a venture arm. Not only do they have a venture arm, they are the biggest

and the fastest. I think they've done 90. Last time I read they were at 90 deals here today, it's got to be upwards of 100. Every chart we see where people say, this can't end well with private companies and VCs and unicorns and stuff, I don't think people realize how big this still is going to get in terms of money going into private companies and startups. It's still way early, I think. Jake tweeted to me, your book outlining how you made millions and lost it all in crypto is going to be a chart topper. All right. So the first question that they got literally was on their venture. And here's the response. I forget if this was Brian Armstrong or who said this. But they said one of the questions was about the ones we're most excited about. And we look at it as thematically, what is really interesting and popping and what teams that technologies are really interesting. So this includes everything from OpenC, which we invested in their seed round in 2018, because we thought NFTs was going to be interesting. Tax bit and CoinTracker, because taxes are so important in crypto, BlockFi for lending, uniswfer to centralized exchanges. And, And then coin switch because we think India and international is such important themes.

Wait, Coinbase invested in BlockFi? How do I not know this? Because you're not in the ecosystem. I didn't realize that. It's interesting. So let's get into some of the numbers. This is kind of like the NBA, how there's no competition anymore because they all played in AAU together. Like all these companies just invest in each other.

So there's no competitors anymore that hate each other. There's no like bad boy pistons versus the bulls. We had talked in the past about Coinbase tracking the price of crypto, which credit to you, you were wrong. I was right. But now I'm right and you're wrong because it was tracking it. until they were down 13% after their earnings report. They did mention they're buying a bunch of crypto, and they're going to continue to buy more and more crypto with their earnings.

Obviously, it makes sense that they'd want to be tied to the price of crypto. That's just going to make this company, this stock, extremely volatile. Maybe it's tied to crypto on a lag. So, for example, we found out that Q2 was the number. And Q3, revenue was down significantly because what was Q2? Was that Doge? That must have been Doge. The revenue was down pretty significantly since then.

They got into institutional, which is now a much, much, much, much bigger part of their business, at least in terms of number of customers. But retail is still where all the money is made. Making money off the suckers. Did you remark Rubenstein wrote a piece on crypto market structure? No, hit me. He said institutional customers make up 72% of Coinbase trading volume. That chair has been growing in the third quarter Coinbase 1 market share in institutional volume,

while its retail volume is performed in line with the industry. picked up new institutional clients, including PIMCO, and a survey conducted by Fidelity reveals that the share of institutional investors in the U.S. with exposure to digital assets will increase to 90% within five years, up from 27% to 2020. Okay, so here's what I was saying. Although retail contributes only 28% to its trading volume, it makes up 94% of its trading revenues. Jeez. Sticking it to the man. A lot of noobs. I just don't give a shit about spreads, myself included.

All right, let's talk about DoorDash. Did you listen to this one? I thought it was interesting. They said that they had over three months. million dashers that they call them working for them in a quarter, earning over $2.8 billion. I don't know. Is this new economy part of the reason that we're having a labor shortage? There's just different and more jobs you can do now?

I'm shocked. Three million people are driving for them. So we've been wrong on DoorDash, been bearish. The stock's on an all-time high. Obviously, it looks good if it's at an all-time high. $84 billion market cap. And the business still sucks. Talk about inflation.

How expensive their stuff is when you order from them. They add like 20% to the menu price items when you order from them. It still boggles my mind. I can't do it. I will get in my car and go get the food. I can't do it. It's like $30 for one person meal. But for $9.99 a month, you can become a member of DoorDash and not pay fees.

If you have a Chase preferred, what is it, Chase Saffire preferred? What is it if you don't have it? You get that $9.99 for free. They give that to you. Oh, wait. I'm an idiot. I need to get that. Yeah, sign up for it.

So, okay, this is also interesting. They said that over 90% of these dashers work fewer than 10 hours a week. the average dasher is under five hours a week. By the way, I think they have three million, wasn't three million or nine million members, I think three million, that pay for the monthly service. So anyway, the stock, it's an $84 billion market cap, which I guess, I mean, market caps don't matter anymore, but they lost $100 million last quarter. Yeah, but they're making important volume.

Now, listen, I guess they're trying to solve the last mile. They bought a company that's, I think it's pronounced Volt. It's spelled with the W, though. This is a Nordic company. I can't remember which country is from. $8 billion acquisition. I don't know. I don't get this one.

From last week, the market is more forgiving than ever for companies that lose money. If you're still growing. And I say that is showing that the market now is becoming more efficient to software companies. Because this Rivian electric vehicle company that came public last week for $100 billion valuation that has never made a dollar, I guess, but has all these great backers and is going to have all these orders that are going to be fulfilled for Amazon and all these places, a lot of people said, this is crazy, this is euphoria. I think this is the market saying, we're going to price you as you're supposed to be priced,

but then we're going to give you a short leash. I still think that means the market is getting more efficient, not less in these things. If you would have told me that five years ago, I just had punched me in the face, but I think it's true. Revenue of $1.275 billion. Total cost and expenses, $1.3.75 billion. I don't know. And guess what? Their free cash flow positive, $48 million. That's nothing. I guess they're not free cash flow, negative. But, all right, this is an interesting chart crime. You see this one? They have a chart. Their percentage of existing consumers by monthly ordering frequency. So they're showing the last four quarters.

How many people were ordering less than one item between one and two and a half, two and a half to four, and over four items. And they show, Ben, put your eyes all the way to the right. They show that the number of people or the percentage of people that are ordering more than four items is going up pretty dramatically. Okay. Why is this a chart crime? Look at the Y axis.

It just has percentage of existing customers. Oh, they don't show. Okay. That's right. They don't have a Y axis. Hello. It's growing. It's growing.

All right, let's move on to Disney, which is in a 21% drawdown. Stock is down 12% year-to-date. Once last time you put on Disney Plus? This weekend for my kids? My kids love to re-watch stuff. For me personally, no, but my kids still love to rewatch stuff. I agree. They haven't had anything new in a while that's any good.

Here's what they've got coming up, which I don't really care about. They've got Hawkeye. They've got the book of Bubba-Fet. I probably won't be tuning it to either unless they get rave reviews. But they said on the Ernie's call, storytelling without boundaries in our own Disney Metaverse, which people were mocking. Guess what? the Disney Metaverse is going to be huge.

Yes. I feel like they are an announcement away from either NFTs or Metaverse. If they say something like that, their stock is up 10% in a day. Easy. I would not be short this one. Here's why I am hugely bullish on Disney. My family is taking a trip there in February, and it's going to cost so much money. Like, they've added all this stuff that you have to add.

Like, no one cares. Once you get in there, like, they have their claws into you, like, you'll pay whatever they tell you. Disflation. Yes. They spoke about the opportunity in online betting. which would have seemed so radical, it still kind of does, like five years ago, that Disney, which is like the most family-friendly organization spoke about this. The problem, though,

is that Disney Plus added 2.1 million subscribers. They had 12.4 million additions in the prior quarter. Dramatic slowdown. And look at the earnings. Okay, but back it up a little. They have this chart in here that says October 2020, they had 74 million subscribers at Disney Plus, October 2021, 118 million. They squeezed all the juice. There's no more juice. Yeah, they pulled some stuff Look at this earnings. Obviously, a lot of that is theme parks. I'm telling you, I'm going to make it up for him. You are, okay. So Deutsche Bank tweeted, Disney Plus and Netflix have both had soft net ads for three quarters. Netflix is guiding to a significant real acceleration due to rock solid

slate, while Disney's first full content slate is still a year away. This makes us more bullish, not less, which I found kind of confusing. Wait, so are they saying that Netflix has had a lot of stuff come out? Because tons. Yeah, but is that any of the good? Red Notice was. was very good. Actually, Red Notice with Gal Godot, Ryan Reynolds on The Rock, was the most streamed movie ever on an opening day for Netflix. Okay, I didn't watch it yet. It's cheesy, fun,

silly action comedy. What you'd expect? Exactly what you expect. No more, no less. I had fun. I thought it was very good. All right. All right. So that was great quarter guys. I'm not going to lie. Did we sign up more than we bargained for? There's a lot. The fact that they break it up for you into bite-sized pieces and then the transcripts. We're talking about the quarter half. They make it easy. I think I might have to. to dial it up to two times speed next week. One question from a listener here I want to get to real quick. They said they have two questions for the future.

One of them is about crypto and web three. We'll skip that. Michael's already gone down that metaverse rabbit hole. Do we figure out supply chain issues and write the world? There's everything 10 times worse. They're saying like looking out a few years. Look at this chart here. A few years.

Yeah, exactly. If that's still going on a few years. But look at this chart. You has personal savings rate. Remember how big this spiked to almost 30% at the height of the pandemic? It's now dropped well below 9%. This thing is going down as fast as unemployment. And don't you think that there's a lot of people that eat, I mean, there's a million reasons why people aren't working because there's COVID stuff and there's kids and there's people who are retired early. Don't you think a lot of the stuff that people are waiting on jobs now is because their finances were in such good shape? And now they're spending this down. And eventually they go, I thought that money was going to last me a lot longer. I need to go back to work. Don't you think this is a good sign for the labor environment in the future like labor market, people not having as much in savings anymore to fall back on that they're going to have to go get a job? I'm saying Ben Carlson forward-looking statement,

This is a positive sign for the labor market. People don't have as high of savings rates anymore. They're going to need to get back to work. I'm going to stay optimistic that this does not result in the dollar being worthless. But listen, I'm going to follow the data. I mean, if I had to guess, I would say that, yeah, Cullen's probably right. This is going to last easily a few more months, probably into hopefully not the fall of 2022.

Hopefully it's we clean it up in the spring of the summer. All right. So Barry put it out in his blog on the big picture. What is inflation like a year from now? It's 6.2% now. Can we bet on this, by the way, at Cal She? I think we can. By the way, I had a lot of people email me or DM me.

What is that? Cal She. K-A-L-S-H-I. They put their money where their mouth is and they said, we're predicting inflation over 0.5 and they were right, which is interesting. All right. Brian Chappata tweeted, Oof, Michigan Consumer Sentiment Index drops to a 10-year low,

which is very interesting. Consumer sentiment drops to a 10-year low. or low, while quit rates set a new record high in September. See, this is why sentiment is useless. So Joe Wisenthel put this out today on Bloomberg. They did- Yeah, don't ask people how they feel. They don't know.

So Joe Wisenthel did this thing where he looked at University of Michigan consumer sentiment for Republicans of the economy is now lower than it was in 2008 for the 2008 crisis. Throw it out. Throw it out. Throw it out. Yes. By the way, is now a good time to find the quality job? Highest ever responding, yes.

So this is a watch what they do, not what they say. It's an amazing time to find the job, but everything sucks, but the stock market is on an all-time high, and wages are growing. It's inflation. People hate inflation. Yeah, this is the thing with inflation. Inflation is awful for consumer sentiment. Yeah, that's it.

That trumps all. All right, real quick. Here's one from CNN that I want to debunk. Real quick, real quick. Okay. Howard Stern listeners will know what I'm talking about. Go ahead. Okay.

Sorry, culturally elitist. Americans have never been in so much debt. This is a headline from CNN. I would like to put this into perspective here. Go ahead. All right. This is true. Assets are also an all-time high, but credit card debt down from pre-pendemic levels by a lot, by like almost 25%.

U.S. household mortgage debt service as a percentage of disposal income basically at all-time lows. U.S. household debt service has a percentage of disposable income also basically at all-time lows. So yes, the debt is higher, but the debt will always be higher, like as long as the pie is expanding. And what does inflation do to that debt? Explain it to the listeners. See, positive spin zone here. Everything's fine. Oh, before we get out of here, Ben, or before we get to recommendations, I should say,

what do you want to say about making Twitter profiles searchable? Oh, okay. And how do NFTs fix this? I forgot it. Okay, I don't know how NFTs fix this. You can tell me that, but I said, I would love to go to all the people that follow me in search for words in there. So founder of a company or people do.

the hashtag Bitcoin or savor whatever. If you could search my Twitter profile words to find people in a group to figure out people to contact or DM or that would be amazing. I don't remember somebody emailed us. We joked about NFTs fixing recruiting. Yes, NFTs will fix how you hire people in the future. I can't remember what the explanation was. But here's how NFTs can fix like Twitter profile search. For example, if you want to buy a board ape, I was about to say board If you want to buy a board ape on OpenC or any of these NFTs, the more popular ones, you can scroll down. They have 50 different traits.

You could search for ones that have a green background, for ones that are wearing glasses, ones that are wearing a hat. If you could do that with Twitter profiles, I don't know how that's like an NFT thing, but you should be able to search by Twitter profile for what you're describing. Yes, exactly. That'd be great. At least by the people that follow you on Twitter that you want to scroll through. By the way, I don't want to come off across as a hater, but I think that the celebrities

and athletes buying these board ape and stuff is so thirsty. Come on. Isn't it? That's such a thirsty thing to do. They're not really part of this network or this community. Jimmy Fallon going in? Yes. I'm sorry. It's just thirsty. Let's call an ape and ape, right? All right. Recommendations. You gave us red notice. Okay. So my parents were in town this weekend. My mom had never seen 17. So I put that on because it was on one of the, I think, Showtime maybe. Have you seen this one before? That is a movie theater movie. I saw it in the theater. And I remember, I saw it my friend, and as soon as the lights came by, we looked at her still, we were like, holy shit. The part at the end where the guy starts running out of the, it's awesome, but...

Did he watch it on your iPhone? I watched it on my TV, and it was a great experience. I got my nice Roku soundbar. So I'd never talked to my parents about World War I before. Doing the math in my head, I asked my mom and dad, I said, technically that your grandparents would have been old enough to be in World War I, and I asked them. And my mother said that her grandfather, when he was 20 years old or something was in World War I and then whatever 20, 25 years later in his 40s went back to World War II at the same time that my grandfather went at age 17 to World War 2. So this guy, my great grandfather, was in World War I and World War II. Now imagine that

sacrifice for your country. And then we have people today who complain about putting a piece of cloth over their face to sacrifice or getting a shot in their arm. And the fact that those people did that back then give these idiots today the freedom to complain about that stuff. It is interesting because the people that are anti-mask, anti-vass, it's just because it's choice. This is America. We can choose to do what he want, but they put veterans up on a pedestal, as I'm fine with. But they didn't have a choice. They had to go to war. They were forced to go to war. And actually, yeah, wanted to. I would not have made it. I'm just going to say that. My grandfather was in Africa, but I wouldn't have made it. That's the kind of thing where you watch that movie

and you go, how awful that must have been, the trenches and the bayonets still. And, ugh, great movie, though. That scene with the bayonet or with the knife, I forget, that really, really, really, really hurt to watch. Yes. Okay. Did you ever watch? Exeter the first time around? I stopped after the third or fourth season. Okay, that was probably right. I stopped right before the John Lithgow season, which I heard was excellent. That's the best one.

So it was a show that for four seasons was awesome, and then it went completely downhill from there. And I think it went eight seasons, which was four too long. And by the end, even the finale was just awful. It was really, really bad. And it was a bad taste. I thought, man, this is a great show that overstated is welcomed by three to four seasons, and they never should have done it. And now they come back with a new season on Showtime, like this new blood, and they have a new

storyline anywhere else. and I got to say it's sucked me right back in. The first two episodes were good. My wife and I were both like, okay, we're going to give this a try. It's actually not bad. That's cool. Maybe they had some time to think about it. Are you up on Yellowstone?

I watched the first episode, the first two and a half hour one or whatever. We have Yellowstone and Succession on right now. And Kerb. Yes. It's too much. Overflowing. I can't even get to them all on Sunday night. Yes, I can't either.

So I have to play catch up. All right. Sorry you got rugged. Ah, happens. Oh, I forgot to mention. Next week we're talking to the fine folks from index co-op or index coop. I'm still not sure which one it is. So it'll come out a week from Monday.

I cannot wait to talk to them. It's a Dow. This is a Dow, yes. It's a Dow. You can invest in their DeFi Pulse Index, which is a DeFi Index. You can invest in a Metaverse Index, all using your MetaMask wallet. Don't connect. I cannot wait to talk to them.

This is a Dow that has raised half a bill. Half a billion dollars with no board, no CE. no nothing. It's pretty impressive. I can't wait to talk to them either. That's going to be fun. Animal Spiritspod at gmail.com. Thank you for listening. We will see you next time.