Bankless - 52 - The Crypto Milkshake Theory | Brent Johnson

Episode Date: February 15, 2021

🚀 SUBSCRIBE TO NEWSLETTER: http://bankless.substack.com/​  ✊ STARTING GUIDE BANKLESS: https://bit.ly/37Q17uI​  🎙️ SUBSCRIBE TO PODCAST: http://podcast.banklesshq.com/ ​ 👕 BUY BANKLESS TEE: https://merch.banklesshq.com/​  ----- 💪BECOME A BANKLESS PREMIUM MEMBER: http://bankless.cc/membership​  ----- GO BANKLESS WITH THESE SPONSOR TOOLS: ⭐️ AAVE - BORROW OR LEND YOUR ASSETS https://bankless.cc/aave​  🚀 GEMINI - MOST TRUSTED EXCHANGE AND ONRAMP https://bankless.cc/go-gemini​  💳 MONOLITH - GET THE HOLY GRAIL OF BANKLESS VISA CARDS https://bankless.cc/monolith​  📈 📱 DHARMA - MOBILE ONRAMP DIRECTLY INTO DEFI https://bankless.cc/dharma  ------ 52 - The Crypto Milkshake Theory Guest: Brent Johnson Brent Johnson, known for his “Dollar Milkshake Theory,” is a macro-focused wealth manager. We discuss crypto from his broad perspective, focusing on the Federal Reserve, the Dollar, and our take on his ideas – The Crypto Milkshake Theory. We observed the Federal Reserve coming into the limelight in the past year, with increased attention on Jerome Powell and other central bankers as they become more like players than referees. Brent lays out how our system (and all fiat currencies) are built for exponential growth. An exponentially growing market will be increasingly susceptible to larger and more frequent volatility. This calls for stronger central bank action, which accelerates these fundamental issues. Interestingly, Brent believes in the strength of the Dollar (at least in the short-term), expecting it to be the last fiat currency to get knocked out. The COVID-19 Crash in March 2020 was an example of this deflationary volatility, and Brent views the system’s current narrative as ripe for another market crash and dollar bull run. On the crypto side of things, Brent sees assets like BTC as a valid store of value, and the advantages of non-sovereign wealth stores merit serious consideration. His concerns about the space involve the difficulties of using crypto as money and the power of governments to curb blockchain use. However, blockchain technology is a “genie out of the bottle” and is here to stay. ------ Brent on Twitter https://twitter.com/SantiagoAuFund?s=2  Brent's Presentation on The Dollar Milkshake Theory https://youtu.be/2qTOWuL7Zco  ------ Don't stop at the video! Subscribe to the Bankless newsletter program http://bankless.substack.com/​  Visit the official Bankless website http://banklesshq.com/​  Follow Bankless on Twitter https://twitter.com/BanklessHQ​  Follow Ryan on Twitter https://twitter.com/ryansadams​  Follow David on Twitter https://twitter.com/TrustlessState ​ ----- Not financial or tax advice. This channel is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. This video is not tax advice. Talk to your accountant. Do your own research. Disclosure. From time-to-time we may add links in this channel to products we use. We may receive commission if you make a purchase through one of these links. We'll always disclose when this is the case.

Welcome to bankless, where we explore the frontier of internet money and internet finance. This is how to get started, how to get better, and how to front run the opportunity. I'm Ryan Sean Adams. I'm here with David Hoffman, and we're here to help you become more bankless. David, how are you doing today? Absolutely fantastic. Feeling a little bit more educated about the state of the dollar and what the world, what this crazy world of the 2020s is going to bring us. We had Brett Johnson on, who you guys might know as the formula, the guy that put together the dollar milkshake theory, which has been going around, especially in crypto Twitter,

especially in macro-tweeter, macro circles about, it's a mental model for understanding how the dollar is going to behave moving forward in, in sort of this new paradigm that we all find ourselves in. Brent did a really good job kind of laying out what he thinks as the future of the relationship between the Federal Reserve and the people, the Federal Reserve and the dollar, the dollar and the rest of the global politics, pretty decently wide-ranging conversation, focusing on the macro conversation. It was a good sequel to the Lynn Alden conversation. And so, you know, getting people that, that, you know, macro is not my core competency.

So getting people like Brent onto the podcast to hear what they have to say, I think is really valuable. Yeah, it's interesting. He's dollar bullish, despite money printer going burr. And he explains why. And I felt like it was very much the same message we've heard from Lynd Alden and Ray Dalio and others. But it had this asterisk beside it, which is like, hey, the short run, maybe it's bullish for the dollar. And he goes into the case why. We also talked about, we proposed the crypto milkshake theory to him and asked his thoughts on crypto. And he talked a lot about having assets outside of political jurisdiction, non-sovereign escape routes, those sorts of things. and we got into the case for why crypto.

He's, I suppose, not bullish on it, but he's got kind of a mixed review, I would say, about crypto up to this point. So it was good to discuss that with him as well. David, we also talked about GameStop. That is a stock. Maybe we should give some background on what's happening with GameStop right now because we get into the details. I'm not sure that listeners will be as tuned into the details as we have been.

this week. What's the background on the GameStop thing that we get into later? Yeah, it's already turning out to be one of the crazier stories of, well, I guess we're just into 2021. So 2021, starting off with the crazy story in the world of financial markets. For those that have watched the big short, there is that character that had his feet up on the desk that was calculating and drawing up on the whiteboard. And he's the guy that predicted the housing crisis. And so he shorted the housing market and it took forever for him to become right, but then he ended up becoming right. And this is what that movie was, he wasn't the main character of the movie, but he played a central role in the story of the big short.

This same guy looked at the stock price for GameStop. And this happened not too long ago. So the same guy that the big short movie wasn't about him, but featured him, the same guy in the real world, the guy that the actor played, looked at the value of GameStop the company by tallying up all of his assets. And then he looked at the GameStop price and then said that, well, the value of the company should be way higher than what the value that the share price indicates, right? And the share price of GameStop is famously one of the most shorted stocks of all time. It's like kind of a blockbuster 2.0.

Like no one is going to a retail store to buy or borrow a game. And so it's been heavily shorted. And the branding power, the meme power behind this call that this very savvy investor made worked its way into subreddits like Wall Street bets and FinTwit and some other internet platforms where typically it's a bunch of retail traders. And so people, retail traders piled on the Wall Street Betts trade by buying spot markets by putting just buying shares of the company, even buying calls of the company to get a short squeeze on GameStop. And what happened was a bunch of retail investors, retail speculators,

caused a short squeeze that ended up bankrupting a large, a pretty large fund and causing other financial harm to other funds that were on the short trade. So really, it's a story of retail versus fund. And we fit this conversation in with Brent about, you know,

what we've been talking about on the fourth turning or what we've been talking about on the bankless podcast, which is the fourth turning, which is something that Brent has also talked about. We go into those details. as well. That's the background on GameStop. I think the listeners will find that part of the conversation would be very interesting. All right. Super cool, David. Well, before we get into our episode with Brent Johnson, we want to tell you about the fantastic sponsors who made this episode possible.

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Okay, bankless nation, we want to welcome Brent Johnson of Santiago Capital, who manages money for high net worth individuals who are looking to grow and preserve their wealth. Brent, welcome the show. You are a macro thinker known for your dollar milkshake theory, which we're going to talk about. And I love on Twitter that you are willing to push back against maybe Austrians, Bitcoin Maximilus, and other dollar bears.

Brent, it's awesome to have you on the show. Thanks for joining us. Thanks for having me. Always happy to talk to new people, and I'm looking forward to it. This is going to be a lot of fun. So I think you just came from the Jerome Powell meeting. You tuned in, as a lot of folks do. What is Powell thinking these days?

What are Jerome's updates for us? Well, I think it's pretty interesting because he was, listen, he was very doveish. He really couldn't have been a lot more doveish other than to say they were going to increase QE. But you know, the markets kind of were having a tough day anyway and they didn't exactly rally on his comments. So I kind of find it pretty interesting because I think it kind of plays into a number of different themes that we see in the market right now. And some of these things I don't necessarily agree with. The fact that stocks only go up and that, you know, the Fed prints dollars and it gives them to the banks and the banks go out and lever up and buy stocks. and therefore, you know, just, you know, short the dollar and buy equities and everything will be fine.

And, you know, I certainly understand that logic. And it's certainly been hard to argue with over the last eight months. But I think it's going to be a little bit more difficult than that over the next couple of years. Can we talk about that for a minute? Because it seems like everybody in finance tunes into what Jerome Powell says. And I don't know if it's always been like that. But it's certainly true that what central bankers say these days carry a whole, lot of weight, maybe more weight than they ever have. Like, is that weird? Is Jerome Powell God of finance now? Is this kind of new and is it weird? Well, I don't know that it's new. I agree that it's a little bit weird. I think it's very weird that, you know, normal everyday people who otherwise wouldn't even work in finance actually know who the Federal Reserve chairman is, I think

is kind of odd because, you know, the whole central bankers as God have, it's kind of become a meme in and to itself. And the central bankers around the world is, you know, to a certain extent, become celebrities and rock stars. And, you know, I don't necessarily think that's healthy. But, you know, it is what it is. And at the end of the day, my job is to, you know, play the world as it is, not as I'd like it to be.

And, you know, that fact right there is something that I think is very important and that I think many people overlook, I think, especially when it comes to investing. I think many people invest for the world they would like to see rather than the world as it is. And I don't necessarily have a problem with that. If you're, you know, if you're trying to change the world and you're all in on your investments that you think are going to do that, then, you know, I can respect that. But if you're just, if your goal is just to make money, I don't necessarily think that's the right way to go about it. Brent, to me, the role of the central bank historically has been to be this like silent man behind the curtain, right? You know, maybe tinkering and

playing with levers and dials, but otherwise being hidden from view. And the attitude is that, a quiet or silent fed is a good fed, right? Like if they're not in the news cycle, they're doing their job. And that used to be the perception of the federal bank. And I think that has been decaying over time and has a trajectory of going elsewhere from that perception. Maybe you could give us maybe a brief history lesson as to like perhaps the trajectory of people's attitudes or perceptions of the Federal Reserve

from what it was in times past to where it is now, to where you think it might be going in the future. How does society changing their thinking around what the Federal Reserve does? That's a good question. It's kind of a very complicated one. I think you're, for the most part, right? I think it used to be that they were kind of the man behind the curtain. And, you know, I would argue that in the last 10 years,

they are no longer the man behind the curtain. They're actually the magician on the stage. And they're actually putting on a performance. and, you know, there's a certain group of people who like the performance and are trying to profit from the performance. And there's another group of people who are saying, you know, you just think he's doing magic, but what he's actually doing is a trick and this trick is going to come back and haunt all of us. And, you know, and so there's there's some friction between those two different, for those two different camps. And I think the fact that, you know, central banks have now, like I said, walked out on stage and, you know, they've even said that this is the trick. that we're going to do and the fact that they're trying to do it.

I don't think that that's a long-term healthy thing. I think it's a bad thing. You know, and the other thing I'll say is, you know, and I've said this before, I'm not a fan of central bankers at all. I am in fact, am very critical of central bankers. But based on the design of the monetary system, I understand why they're there.

And to, again, if you're playing the world as it is, and if you understand why, if you understand the design of the monetary system, monetary system, then you understand why they're there, why they're necessary, and nothing that they do will surprise you because they are, their job is to step in. Now, to your point, their job is to kind of be the man behind the curtain and kind of be silent, but the real role of their job is when there's a problem and when there's a crisis, their job is to step in and be the lender of last resort to provide, you know, whatever means necessary to to perpetuate

the system. So while I don't agree with what central banks do, and I wish there was a system that didn't require them, the system as it is today does require them. And so I'm never surprised when they do what they do. For the people who criticize central banks and say, well, I'm not going to buy equities because they're just propping it up, you know, through QE or whatever it is. And if it wasn't for them, you know, stocks would be much lower. Well, I get that thinking, that's fine if you don't want to play. But to think that, you know, that they're not going to do those moves and, you know, that they shouldn't do those moves. Well, it's fine to have that opinion, but they're going to do those moves. That's why they were pre. That's why they were put in that position. That's why they

were created. So I try not to get too critical of the Fed of making the moves they make as as as much as just as just kind of criticizing the overall system. But I, I still have to play against the moves that the central bank is making. So you can't just ignore it either. The lender of last resort, I think, could be a focal point of a conversation. Because I think when we talk about, you know, first the man behind the curtain and then the magician on the stage, what we're really talking about is that that last resort threshold is actually a subjective threshold.

That requires people to believe where the last resort is. And it seems to be that there is this marching, this creeping higher and higher and higher of where that line is crossed. And all of a sudden, like, what the things that end up on the balance sheet of the Fed are becoming closer and closer to like the spot markets for so many like U.S. equities. Maybe talk about that dynamic and how that has changed over time. Sure. Well, I think the first thing you need to know, and I'm not going to have time to go through

the whole reason for this. But I would say that, again, based on the design of the monetary system, ongoing crises are a guaranteed feature, rather than whether a bug or a feature of the design of the system. As the basic, long short, the system is one where you have some collateral and then that collateral is used. And then that collateral is money. And then that collateral is used to loan new money into existence. And so for the system to survive, it has to grow. And in the early days, that's fine because it's a very small number.

but like any exponential system, if you took $100 and you increased it by one half of 1% every year, initially it would look great and you'd get this nice little growth curve. But at some point, even if you only grow at 1% a year, that curve will eventually go exponential. And once it starts to go exponential, the amount of growth that's needed just to have it survive becomes an exponential number. And that's what we have them. But design of the monetary system is an exponential number. financial system. And so it is designed to grow. And if it doesn't grow, it crashes. Now,

you may think that's a good thing or a bad thing, but it just is. And it's just math. And it's not even difficult math. And so what I would say is when they first started off with the Fed, you know, 100 years ago, the problems were relatively low. The problem with the system was very relatively low because it was brand new. But over time, as you get, you know, it grows and it gets bigger and it gets bigger and it gets bigger and the debts get bigger and it's get bigger and it's get bigger. And then you start to have these crises. And then when you realize the only way to solve the short-term crisis is to make the problem bigger, it shouldn't be surprising that the next crisis is bigger and the frequency with which crises start to happen increases as well. As you start to go

up that exponential curve, the problems are bigger and they're more frequent. And I think there's reason that while, you know, the central bankers were largely behind the scenes for a long time is because we were on that kind of the relatively flat but steady part of the curve. But in the last, call it 20 to 30 years, you know, that curve has started to steepen. And in the last 10 years, it started to go up pretty rapidly. And then the last one year, it started to go straight up. And so it should not, if you, again, if you understand the design of it, the magnitude and the frequency of the crisis should not be a surprise to you. And the central bank reactions to these

should not be surprised to you. Now, I know I'm kind of going off on a kind of a wrong rant here, but the reason that we get into this big inflation versus deflation debate and which one are we in is the bigger the debt gets. debt is deflationary. If more money has to go to service debt and pay off that debt, then there's less money that can go for productive measures. So as the debts get bigger, it's setting up for a deflationary shock. Now, to counteract this, central banks do everything they can to generate inflation. And they have a number of programs and tools of which they can do that. And so you will see these periods of inflation expectations rising.

But so far, you know, whenever they rise, they end up crashing. And then they rise and then depression. And every time they start to go up, you get a number of people saying, this is it. this is the final time, hyperinflation, the dollar's going to be, you know, printed away and it's going to be worth zero. But every time that's happened for the last 30 years, it ends up rolling over into another big crash. And I think what's happening now is we're getting closer to the end game, quote unquote. So for the people who say, you know, this is all going to come tumbling down and, you know, it's the death of fiat money or it's the death of the central banks. And I don't

necessarily disagree with that. I think it will take a little bit longer to play out. than many do. I still think they have more tools in their tool chest than many do, but I don't necessarily argue with the idea that we are entering the end game or getting close to the end game because we've had a number of these little mini debt cycles, but now we're getting into this super debt cycle. And I think the super debt cycle is kind of coming to an end because all the debts of all the previous bailouts are now on the country's balance sheets and the central bank's balance sheets. There's really nobody else to go to unless they come up with some new supranational entity, the bad bank type thing where they can offload the debts

under that. And I'm not saying that's impossible, but my point is I think we're getting towards that endgame. I happen to think the path to that end game is going to look a little different than a lot of people who also agree that we're heading towards the end game. But we do have a reckoning coming. So we do want to talk about kind of the end game and help our listeners understand the dollar a bit more and through the lens of the dollar milkshake theory, which is a theory that you've coined to sort of describe what's happening. Before we do, I just want to echo what you were saying about central bankers. Like, I think people oftentimes are too quick to demonize the individuals when really what

you're saying is that these are just people stuck in the gears of the existing monetary system, It's almost like their decisions are preordained or inevitable. Their decisions are a product of the system already. So all of the criticism in 2020, we're talking about like money printer, money printer go burr the entire year, right? It was as if the central bankers were forced due to the system to make that a reality. There's political pressures, there's economic pressures, there's the cohesion of the system.

as a whole really required that. Can we talk about what decisions you think Jerome Powell and other central bankers are going to be faced with now? So this is, you know, 2021, just got off like, you know, Jerome Powell just had a call. 2020 was the year of money printer go burr. Is 2021 going to be the same thing? Is our Powell and the other central bankers going to be forced to print just more and more money or how does this play out? Well, the short answer is yes. You know, there's few memes that I hate more than money printer gober, but it's not going away. Why do you hate it? Well, because I think, I think it, I think it, in many ways, I think it's, it's not that it's wrong, but it's, it's kind of misleading. Because, and this kind of gets back to, you know, the magician on the stage is on the way. On the

one hand, Jerome Powell will go on 60 minutes and say, well, we printed a lot of money. Okay. Now, that's the smoke screen. That's what he wants you to believe. And the reason he wants you to believe that is he wants you to go out and spend money. Because if you believe him and you go out and spend money and take out that new loan and, you know, et cetera, et cetera, because you're afraid your dollar is going to get devalued. Well, then it can to a, if everybody did that because they believed him, then you can kind of get a self-perpetuating or self-fulfilling in prophecy because that is what you need to get inflation. You need people to go spend money. You need people to take out new loans. You need people to be worried about the devaluation of their dollar.

But then, on the other hand, he will come out like he did today and like he does in every other Fed meeting. And he'll say, now let me remind you, the Fed can't spend money. All we can do is lend. Well, now which is it? Are you printing money or are you lending? Right. And if you, if you, if the Fed lends money to the banking system and the banking system does not then lend money to mainstream, that money that they've quote unquote printed, which again is it's bank reserves, it's not actual cash. They're not actually giving the bank's cash. It just sits in the banking system and it does not become inflationary. And so, you know, again, I think it's like it's like the magician and the magician's assistant, right? They're doing these moves on stage. They're telling you that it's

going to be inflationary and all you got to do is wait and you're going to have this large inflation. But at the end of the day, they need you to do the trick for them. They can't actually cut the lady in half, right? They need you in your mind to just believe that they're going to cut the lady in half and put her back together. Because you, as a whole, when I say you, the public, is the one who creates the inflation. Now, one thing I would say is that, and so again, because all they can do is lend, all they can do is make the problem bigger. And as the problem and gets bigger, it becomes more deflationary, okay, which will end up being a bigger crash. And this goes to what we were talking about earlier, about how, you know, it starts off low and it

gets bigger and the crises get bigger. And, you know, the central banks have to come out and use more and more tools and do bigger and bigger policies. Eventually, eventually, the only tool left to them is to get the laws changed and no longer lend money, but start spending money. And once that Rubicon has crossed, that's when the inflation, the last, the last. long-term inflation that leads to hyperinflation happens. And that's why all Fiat currencies eventually return to their intrinsic value, which is zero. But it takes a very long time to get there. And for that to happen to a currency, the public has to lose faith in it, completely lose faith in it.

And I just don't think that we're there yet. And even if we are there, and this is the point I've made several times, but I feel like it just always falls on deaf ears. nobody really wants to listen to it, is that every other country is in the exact same situation that we are in. So if we were doing these policies and we had this design of the system, which was guaranteed to make the central bankers print, and all the other countries had different system or were in better economic shape and didn't have to deal with the same types of problems that we were dealing with. And as a result, their currencies were, quote, unquote harder or less prone to inflation, then I would completely understand the argument of

money printer go burn, therefore dollar goes to zero. But that's not the case. That's not the world that we live in. The world that we live in is that all the other countries, all the other major central banks are in just as bad a shape as we are. And they not only are they going to need to do as much as we are, they've been doing it for longer than we have been. And not only that, but you also have to understand that there's two dollar markets. Now, I'm kind of jumping around a little here, but it's important. There's the U.S. domestic dollar market, and then there's the offshore Eurodollar market. And just for listeners who are not familiar with this market, the Euro dollar market is not the same thing as Euros that are used in Europe. So euros are the currency

of the realm in Europe, but Euro dollars are just dollars that exist outside the United States. And the fact is, is that the euro dollar market is so big that it can't even be measured. And it's much bigger than the U.S. domestic dollar market. And entities outside the United States use and a need to use dollars just as badly as entities inside the United States. Now, that same dynamic does not exist for other currencies. Brazilian reals don't have a lot of value outside of Brazil. Japanese yen, more so than many currencies, have value outside of Japan, but nowhere near the same size as the dollar. So again, they're much more valuable inside Japan than they are outside of Japan.

Nobody needs Chinese yuan outside of China. Nobody needs South African RAND outside of South Africa. But everybody who operates on the world stage, even if they don't want them, needs dollars. again, want versus need dollars to operate on the global stage. And so everybody has the same supply dynamic problems. Everybody is going to have to increase the supply, quote unquote, of their currency. The problem is there's no other currency has near the amount of demand that the dollar does. So when all these programs get ramped up all over the world, the fact that even though we may print more and faster than other central banks,

And I don't think that we will, but even if we do, the demand dynamics of the dollar make it such that we can, quote, quote, get away with it better than these other currencies. And when that happens, the dollar will rise versus other fiat currencies. Now, it may fall versus gold. It may fall versus Bitcoin. It may fall versus wheat or corn or some other real estate or some other hard asset that is not getting debased. But the problem is, is if the dollar rises versus other fiat currencies, it puts enormous pressure on the entire monetary system. And it leads to huge, huge problems. I mean, the stronger dollar versus other fiat currencies is literally a wrecking ball for the global economy.

And that's why I say that despite the money printer go burr and despite the insane policies of the Federal Reserve actors, the dollar, the end game for the monetary system is not the dollar going lower. The dollar going lower perpetuates the system. The dollar going lower is what the central bankers want. But the end game for the monetary system is when you see the dollar going higher, despite the Fed's efforts to do otherwise. Synthetics is Ethereum's decentralized derivatives liquidity protocol. What does that mean? Synthetics is a platform for creating and trading synthetic assets, which are assets that are priced via an Oracle rather than bids or asks. Traders can use the Quenta Exchange, which hosts and trades all of the synthetic assets created by synthetics.

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deposit them back into AVE. AVE does all of this for you all in one seamless transaction. So you don't have to repay loans in order to change the collateral you have backing them. Check out the power of AVE at AVE.com. That's AAVE.com. So Brent, you made so many good points here. And we want to get into them. You know, one of the points that I think we want to flag to touch again is this idea that all of the central banks are in the same position, right, with respect to Fiat. And we want to raise the question about what about non-sovereign stores of value. So this is the question of crypto. But before we do, let me try to kind of summarize what I think you're saying. You're saying that the moneypreneur go burr meme is

overly simplistic because when somebody sees that meme and they see the picture of Jerome Powell in like memetic form and he's like turning the crank and the dollars are the $100 bills are spitting out, what they automatically think is, oh my God, hyperinflation. in the U.S. is upon us, right? And there's so much supply of dollars in this economy that, like, prices are going to increase. Inflation is going to, like, hyperinflate and this end of the dollar. And what I think you're saying is that, well, no, the end game is actually not that. The end game, because so much debt, worldwide debt is denominated in dollars, there's an interim step. And there'll be this, this sucking of a value and capital into,

dollars first before that happens. But it also does seem to align with some of the kind of the other macro thinkers in the space. Right. So we had Lynn Alden on a couple of podcasts ago. We're big readers of Ray Dalio. Ray Dalio talks about this modern monetary theory three. MMT3 is what you call it, which is kind of his definition of the end game of the debt cycle essentially. And I think you're saying that you do see an endgame of the debt cycle playing out, but you just think there's going to be this interim step where the dollar appreciates drastically in value, doesn't hyperinflate before we get to that final endgame scenario and citizens lose all faith in their fiat currency. Am I understanding you correctly?

Absolutely. That's completely correct. And the one of the, the way as I try to explain it is, let's pretend that, you know, there's, there's, there's, you know, 10 fiat currencies lined up. And then you have silver, gold, Bitcoin, and a couple of the commodities as well. Now, I can understand if, if all of the fiat currencies are going to be, quote unquote, printed, where the argument could be made, that the gold, the silver, the copper, the Bitcoin would rise in value in fiat terms. Okay, so let's go buy those for our portfolio.

Just for the sake of argument for this example, let's go buy those for a portfolio. Okay, that's done. We can no longer talk about gold, silver, Bitcoin, or anything else. Now we are just focused on the 10 fiat currencies. Okay, let's say that they're all falling. Okay, fine. But one of them will fall slower than all of the others. They're not all going to go to zero at the same time.

It just doesn't work that way because they all trade relative to each other. So even if you hate all 10 of them, and that's why you already bought the other stuff that we're not going to talk about anymore, and now you have to choose out of the 10, which fiat currency do you want the most and which fiat currency do you want the least. Or should I say, which fiat currency do you need the most and which fiat currency do you need the least? and you start marking off those boxes, the last one you're going to get to is the dollar. So, you know, it's a, fiat is a relative game. You may hate the game. You may think the game is stupid.

You may want to exit the game, but if you live in the real world, you cannot do so. So it's, and, and even if you do, let's say you, you know, you have your Bitcoin, you have your gold. You're independently wealthy. You no longer have to work,

and you can move away to some amount. on top on Montana and you don't have to, you don't have to deal with the real world, so to speak. Well, that's fine. But if you do want to live in the real world or if you do want to profit from the real world that's taking place, trading fiat currencies against each other is a great way to make profit. Or at least it's a great opportunity to make profit. Now, you may not be successful in doing so, but the foreign currency market is the biggest market in the world. It's the biggest and most liquid market in the world. And if you can figure out

how those are going to trade relative to each other, and if everybody thinks you're wrong and you end up not being the potential for profit is very asymmetric. And it's my argument that it's possible I'm wrong. It's possible the dollar doesn't fall last. I'm pretty sure it will fall last. And because everybody disagrees with me, the asymmetry of the trades, should I be right, is compelling enough that it's worth taking a small percent of your portfolio and allocating to it. And so that's that. And, you know, I didn't come up with this dollar milkshake theory to convince everybody to go buy dollars. And I didn't do it to convince everybody to sell gold and sell silver and sell Bitcoin and just go hold on to cash. That's not the point of this. The point of this is to

actually make people aware of how the system actually works and what could potentially happen if your money printer go burr and the dollar goes zero mean doesn't quite turn out to be correct. And we kind of saw that in spades almost a year ago now in March. I mean, I always point out to people at the beginning of last year, the dollar was around 96 or 97. On March 9th, it was at 94. So it had fallen three or four percent. And you're talking about the DXY index. The DXY index, that's right. And then 10 days later, you know, on March 9th, it was a 94. On March 19th, there was a 102 or 103.

And the world was on its knees because the whole world was going through a dollar short squeeze. Every asset on the planet was getting liquidated because it didn't matter what you wanted, what you needed was dollars. And it came out of nowhere and it happened all at once. And gold went down a couple hundred dollars. the gold miners got cut in half. Bitcoin went down 60 or 70 percent. Bonds even sold off. Commodities got crushed because it didn't matter what you wanted. What mattered was what you needed. And that until the entire monetary system is redesigned, the potential for that type of very quick and very fast dollar move, which just wrecks capital markets, is still there. Now, you may think that the central banks have it under control.

You may think that Jerome Powell is Superman and is never going to let it happen again. I would caution you that perhaps the magician isn't going to be able to pull this trick off as easily as they have in the past. And as a result, I'm willing to bet against it. So, Brent, I kind of want, I think we can bring this conversation kind of full circle and connect some dots for our listeners. I want to talk about why there's so much demand for dollars. And part of this conversation is the petro dollar.

the globe runs on the dollars in order to consume petrol, the energy of the globe. But my question lies in the fact that it seems to be, and maybe I'm wrong here, and you can correct me, it seems to be that it's in everyone's incentives to have a lower dollar. Like the rest of the world wants a lower dollar because they have debts denominated in dollars. And so if a dollar is cheaper, that means their debts are cheaper. The Federal Reserve wants a lower dollar to increase spending. right? Boomers and people who are looking to retire want a lower dollar because that's inflates the price of their assets which they need to retire off of. It seems to be everyone

wants a lower price dollar. And so why are we why are you convinced that the counter forces that would create a higher dollar would actually outweigh the forces of seemingly everyone's incentive, which is to have a lower dollar? Well, so a couple of reasons. Number one is that They do want a lower dollar, but not a dramatically lower dollar. And the reason I say that is because if you get, well, it all depends on how you get there and the circumstances that took place for it to get there. But if you get a lower dollar, by definition, you get a higher euro and a higher yen, and a higher Canadian dollar, et cetera, et cetera, et cetera.

Now, a lot of those other countries, again, are in the same situation we are. they do have debts. Some of them are dollar-based debts. So the dollar going lower helps them service that debt better. Assuming, assuming that their economies are steady and growing, right? But if the problem is, is if their currencies are appreciating, because the dollar's falling, so their currencies are appreciating. And if these countries are exporters, well, those countries are now their exports have now become more expensive because their currencies have become more expensive. And if their currencies are more expensive, then the people who would normally buy their goods may go elsewhere and try to buy goods from them. And so, you know, if assuming the demand stays

steady and exports stay steady and growth of the economy stays steady or gets bigger and all the transactions that normally would take place at lower prices still take place at higher, currency prices for these exporting nations, then, you know, that's the ideal scenario where you get a growth of an economy, the dollar's a little bit weaker, these other currencies are a little bit stronger, and it doesn't hurt their exports. Now, that's a beautiful scenario. I don't think that the beautiful scenario is going to be as easy. Again, that's a very beautiful trick. If you can pull it off, you know, you're a magician. I don't think that the trick is as easy to pull off as many think. I think there is so many deflationary effects out there for these other economies.

And not just the U.S., again, we focus on the other economies. I don't think a rising currency allows their economies to grow. And so I don't think it's as easy as, you know, let's just get the dollar lower and everything works out fine. Again, because you've got to remember, the way that they have gotten the dollar lower is that they made the problem bigger. And we're going up that exponential curve. and the magic trick is very easy when you have a stable, you know, curve.

Imagine like you're standing on the top of your car and you're just going down a road. Well, you know, it's a little dangerous, but, you know, you can do it. But now you start going up a mountain. And so now you're going up a mountain and you're trying to stand on top of your car. And it's not quite as easy to do as it was when it was level. And not only that, but you're going up this mountain. Then you get a sharp drop and you go up again. And it's like, now not only are you going straight up, but it's a volatile.

It's volatile and straight up. It's trying to buck you off. And I just don't think the central bankers are in as much control as everybody else thinks that they are. See, and this is the point that I always like to make is that if you are short central bankers or if you, if your faith in central bankers are starting to wane, then you should be a dollar bull, not a dollar bear. because the dollar going lower is the central and as in a kind of a steady organized fashion that is the central bank's winning now if you believe that's going to be the case i have no problem with that but don't sit there and think that you're some kind of an anti central bank you know contrarian and they're going to fail and therefore the dollar's going lower that's not

that's them winning that's not them that's not then losing then losing is when the dollar starts to spike despite their best efforts to get it to do otherwise this is so counterintuitive Brent, and I'm glad you're bringing this as a mental model to our attention. And I want listeners to hear what you said earlier. I'm just going to kind of underline it a little bit. Really, the dollar milkshake theory, it's not a prescription for what you should keep in your investment portfolio. You're not saying that everyone should just hold dollars, right? You're saying that the theory basically describes how the money system works in these types of scenarios. And I think we very much saw the dollar milkshake theory at work in the first quarter and second quarter of 2020,

right? You could almost hear the slurping sound. It was definitely playing out with regard to the dollar. All the global capital was flowing into the dollar. I mean, there's really no question about that. Anybody who questions that is just, you know, kind of off their rocker. Now, the flip side is that for the last eight months, it's been the opposite. Yeah, that's what I wanted to ask you.

I'm not going to sit here and pretend otherwise. I don't think the problem has been fixed, but there's no doubt that the central bankers got it under control for the last eight months. So, you know, my hat's off to them. But my point in people I was asking, well, Brent, at what price would you change your mind? And would you give up on your thesis? And my answer is that it's not really so much a matter of price as it is of why the price went there. And what I mean by that is if they're able to get the dollars around 90 right now.

I mean, if they were able to get it to 85 or 80, and they were able to do it in a way that reduced the size of the problem and didn't make it bigger, and we're able to do it in a way that the world was now less dependent on dollars rather than more dependent on dollars, well, then maybe I would change my mind. But if they are just making the problem bigger as we go up that exponential curve, well, then there's not necessarily a price at which I'd change my mind. The other thing I would say is that, you know, on one hand, the milk check theory is extremely simple. On the other hand, it gets a little complex because ultimately what I think is going to happen is we are going to see the dollar, the Dow, rates, and gold all rise together. Now, we're not there yet, and we weren't there last a year ago either. we had the first part, which is that the dollar goes up, creates a crisis, and then once the crisis gets to a certain size, what I think will happen is the rest of the world will not only will fly to dollars, not just as because they need dollars, but because they're trying to escape

their own domestic crises. Now, the central banks were able to get the problem under control last year. So these local domestic, you know, non-U.S., but, you know, domestic to Brazil, domestic to China, domestic to Japan, domestic to South Africa, domestic to Turkey. Because they were able to get the dollar down, those domestic international crises were able to get under control. But what I think will happen is I think we will have another dollar move higher. Markets will fall. And the next time, I'm not sure that the Fed will be able to get it under control quite as quickly. And when those domestic crisis and those international markets start to take place, I think you will see a situation where sovereign bonds, meaning treasuries of non-U.S. countries, at least beginning, I think you will start to see rates rise. They may go down initially, again, on this crisis, but once the central banks have to start coming out and doing more of these QEs, and it's not just the United States, I think interest rates will start to rise on international sovereign bonds, counterparty reasons, not because of inflation expectations. And as interest rates start to rise and

counterparty expectations or counterparty risks start to rise, I think people will leave those economies and they will look around the world and they'll say, well, where should we go? And I think because they already have to have dollars, it will be easy to say, go to the United States. And as that global capital starts to leave these other economies that are now in peril, I think by process of elimination, again, remember when we had those currencies lined up against the wall and we got, we already got rid of gold and silver and Bitcoin, da-da-da, and now we have to choose what out of the next 10 who we're going to choose, I think people will choose dollars. And once they have dollars, I think they will choose U.S. assets.

And I think that will be a case where they start buying U.S. stocks. Again, if you're a Brazilian citizen, you may very much prefer to buy Coca-Cola that pays you a 4% dividend. than owning a Brazilian treasury, which is not only the currency losing value, but is paying you a similar or is paying you a similar dividend or a lower dividend. So, and you're worried about the counterparty risk of it. And so I think that capital will leave and come to the United States. And I think that will push U.S. equity prices higher. Now, I think in the short term, we are due for another pullback. We're due for another rise in the dollar fall in asset prices that will create this crisis. And then I think eventually we'll get into this second part of the milkshake theory, which is, you know, U.S. asset prices rising along with the dollar.

So I know that's kind of a convoluted explanation, but that's how I see it. No, I get we, I think that that was clearly articulated. And I think listeners are able to pick up the essence of what you're saying about sort of the dollar strength in the bull case for the dollar. I want to maybe pick off what you're saying there because you're saying, hey, in, you know, 2020, it looks like central bankers. were able to get this under control. And it seems like they were, although might argue that one of the casualties of getting things under control was the absolutely insane stock market rise. Like we could talk about wealth inequality.

We could talk about, you know, billionaires adding trillions of dollars to their bottom line. Well, mainstream in the U.S. didn't get very much. But let's focus in on this narrative. that seems persistent right now, which is, here's the narrative. This was the casualty of the central banker move to kind of stabilize things. Stocks only go up. That's what people believe right now, Brent. And like, even just this week, as we're recording it, we had this insane story about

about Game Stock doing like a 5X. And I know David was tracking that a little bit, but can we talk about this narrative of stocks only go up? Was that a casualty of the central banker move? Well, to a certain extent, yeah. I mean, I think, you know, GameStop is really fascinating to me on many different levels because, I mean, there's a lot to impact here because it literally sits kind of at the intersection of, you know, the pandemic and lockdowns and the bailouts and the subsidized checks,

you know, the unemployment relief, however you want to describe that, the PPP programs, and then the money printer go memeber and it also sits at the intersection of, you know, the dissatisfaction of the blue collar or the lower, however you want to describe the lower workers in society versus the elites. You know, the elites think that they have, you know, kind of a right or an entitlement. to make money at the expense of others. And the little guys like has gotten to a point where they're not putting up with it anymore and they're ready to grab the torches and the pitchforks and push back a little bit. And so GameStop is a way that you have all these people who, you know, are sitting at home because they can't go to work.

They've gotten unemployment checks. You know, they used to, you know, play video games or, you know, make sports bets or, you know, whatever it was. But now they've gotten money and they're home and they got nothing better to do. So, you know, they hear the money printer go mean for, well, let's go play the stock market. You know, the billionaires and the millionaires are getting rich. Why shouldn't we get rich too? And I think initially a lot of the, again, professionals, for lack of it,

but the professionals that eat kind of thought it was kind of a funny or silly little phenomenon with the Robin Hood accounts and stuff and the Wall Street bets accounts. but, you know, some of these guys who work out of their basements, just because you're working out of your basement doesn't mean you're stupid. You know, and just because you didn't go to Harvard doesn't mean you're not smart. You know, and a couple of these guys figured something out that the rest of Wall Street didn't. And, you know, I give them a lot of credit because they figured it out. They figured out a way to pool their resources.

And they did it. They, you know, they upended a Wall Street darling. And, you know, so far they're winning. Now, I would caution these people, the take of little profit, you know, don't give it all back. But it doesn't change the fact that, you know, these were very smooth. It wasn't just a fluke. I mean, I think, I think it was a well-thought-out attack. And when I say attack, I don't mean that in a negative sense. You know, maybe I should say a well-thought-out plan. And I think that they have so far executed it beautifully. Now, whether

that last or not, you know, again, I would say that in general, whether you like this or not, the system is kind of set up to help the rich at the expense of the poor. Now, I know even some of my friends will disagree with me on that, and that's fun. But I think that that kind of gets back to the whole central banker inequality narrative. I really do think the system is set up that way. And I would say that while, you know, the millionaire and billionaire class may have been slightly wounded by this episode, they're not yet dead. And, you know, don't be surprised if you find out in the next few days that these people, all these people that have bought in GameStop are no longer able to sell, either because they just say no more sales or their trade, no trading on that security or whatever. Again,

I don't know what it will be, but I don't think we've heard the end of this story. And I don't think it's a guaranteed victory at this point. They've definitely scored some points. And again, I give them credit and I don't take anything away from them. I just don't think the story's over yet. Yeah, I think GameStop could be a starting pistol or a catalyst for, I think it already is. is, at least for the, at the very least, conversation, but also for something perhaps much bigger than that. To me, the GameStop story is distilled down by internet native people who go on Reddit, specifically the Wall Street Betts subreddit, but then it's bled out into other domains of people that kind of just live on the internet and scrounge the internet for information.

And everyone kind of figured out that if everyone else who has, was also of the nature of people that would peruse Reddit for information, financial information. They everyone kind of realized there's this story of this potential short squeeze got proliferated around the internet. And these are all the people that are, you know, just the average Joe Schmoe who got their, got their stimulus check. And it was kind of this, to me, it's this story of coordination. A bunch of random people on the internet figured out that if they all bought the stock, they could short squeeze these massive funds. And as a result of, of what exactly, that's exactly what happened.

A bunch of people just like put it, put it in, you know, $500, $1,000 into, into Robin Hood on just to buy either at spot market, at the spot market or on option calls. And they all, they all short squeezed a bunch of these funds that ended up, some of them ended up going bankrupt because when you short something, there's no, there's no limit to how much risk you have. It's the nature of a short. And the conversations that have come out of this are,

about like I saw a funny tweet the other day saying like it was it was a satire on this whole episode saying like, oh no, the wrong people have manipulated the markets. Yeah, right. No, exactly. And the tables have turned. And now all of a sudden these funds are asking for like doovers. They're asking for like for the NYSE to shut down or to put to like you said to limit set limit sales. And this to me has been an extension of the politic. Oh boy.

The politicization of the markets where the markets are. now political tools and people that have influence can control the markets. And what we're seeing with the money printer go Burr meme and the stonks only go up meme is that there's a lot of political clout available to people close to tapped into the Federal Reserve and what they're doing who are close to the money printer. Yet there are these other people who I would say are the furthest away from the money printer, which are the people that are just receiving the stimulus checks. Because the stimulus checks, to me, it's the furthest away because the closest is the asset prices, asset price inflation.

And I think there's this dynamic, this growing discrepancy between the little guy and the big guy that I think is using the markets to frame this conversation as there is a changing of the guard. There is a changing of what makes these markets tick. And Brent, I know that you are a fan of the fourth turning book, which is something or a fourth turning theory. which is something we've talked about a number of times on the bankless program. I'm hoping to get out of you. How do you fit what the story of stimulus checks, the story of the money printer gober, the story of GameStop. How do these all fit into the fourth turning, Neil Strauss, generational theory?

Yeah. So, I mean, it's a couple things here. First thing, to the listeners, if you haven't heard of the book, The Fourth Turning, I can't recommend it enough. There's probably no other single book that has affected my. outlook on the markets as much as that one. I mean, I think Neil Howe, I just think he's a genius because he wrote this, you know, 20, 25 years ago now. And, you know, it's almost like a playbook for what has happened over the last 10 or 20 years. You know, to touch back on something that

you just said, well, first of all, I do think we're in the fourth turning. The fourth turning is basically there's, you know, those four cycles to, to an empire or to a, you know, to a century of for a country's development. You know, you got the spring where everything's brand new. And if you've kind of come out of a crisis, and then you get into the summer and things are really nice, then you go into the fall, things start to get a little colder. And then you have the disaster, which is winter, right?

And that's the fourth turning. And so, you know, in the fourth turning, all the institutions that have been built up in the previous three turnings, you know, start to get torn at their fabric. And so a lot of them come down and you get the rise of new new things. thoughts and new ways of doing things. And so I think we are still, you know, in that fourth turning. I think, you know, the fact that the quote unquote underclass is starting to rise up is a hallmark of that stage. You know, the interesting thing about what you were just saying is actually

a part of my thought on the whole quote unquote milkshake theory. And let me see if I can set this up the right way because one of the biggest arguments against my theory is that the Fed will not only money printer go burr on the domestic assets and the domestic needs, but they will print whatever amount of money is needed for the rest of the world as well, for the euro dollar market. The Fed will bail out the euro dollar market. Now, I'm not saying that they won't do that, but I will absolutely say, I don't think it will be as easy for them to do as everybody else thinks. Everybody else thinks it's just,

B, control P, control P, and you just give them the money and it's no big deal. And I don't think that's the case. I think that there will be domestic pushback about that. You know, to your point, you know, this is, this whole GameStop thing is, maybe it's a small thing on the overall problem, but I think it's indicative of, you know,

the US populace starting to get fed up with the, you know, too big to fail, bail out the rich. And I think that they are pushing back. You saw a lot of this over the summer, you know, with the Black Lives Matter and the, you know, the other, you know, the other movements, you know, people aren't necessarily just sitting back and taking it, so to speak, anymore. And, you know, on the one hand, you could say, well, Biden's in charge now and you don't have the Trump who's the antagonist anymore.

Well, you know, you know, the Antifa crowd, which would, which caused a lot of problems over the last year, we're doing it subsequent to, you know, Biden's election. So I don't think these problems have gone away. And let's say that in the next two, let's just say that for whatever reason, in the next two weeks, let's pretend that GameStop goes back to 30 bucks. And all of these millions that all of these very smart and very resourceful, you know, Wall Street bets, you know, native internet, you know, population, let's say they lose a bunch of money. And let's say, they don't get bailed out. Well, have you ever seen what a bunch of unhappy, you know, young, teenage, you know, early 20s males, unemployed people do? That's not a, that's not a formula for

cohesion or for, you know, unity. That's, you know, that's, that's tender for pushing back against the man or the system. And so I don't think that society is just going to, sit by and let us bail out, you know, Bangladesh when Baker's Field has an unemployment problem. I don't think that we're going to be able to bail out, you know, Airbus, which is a French company, when millions of, or when thousands of people at Boeing have gotten laid off. I just don't think it's going to be as easy to do as everybody else thinks. And so, you know, yes, we, you know, to the point at the very beginning, that the central banker's job is to step in when it absolutely has to be done.

But that doesn't mean that they step in before pain is felt. And I think a lot of pain will be felt around the world before we step in and bail them out. And if we do bail them out, it will be on our terms, not their terms. And this gets into another part of the fourth turning. And I wasn't sure we were going to talk about this or not, but I think it's important to do so. Because this is another, I think, part of my theory that many people either get wrong, or mistake. I've had a lot of people call me jingoistic or an American exceptionalist saying that, you know, my dollar milkshake theory is nothing more than somebody who thinks America is the

greatest place in the world and is entitled to, for the sun never to set on our kingdom, so to speak. And it's actually the complete opposite of that. I think that the U.S. has committed many, many sins. And I think that we are going to have to pay for them dearly someday. But, you know, Any great empire, which I would argue that the U.S. is an empire, but, you know, no empire just rolls over and just hands away their power. They will fight tooth and nail and be the meanest sons of bitches you've ever seen before they give up that power. And I'm saying, maybe that's a crude way of expressing it. But, you know, the global reserve currency is something that the dollars have the world reserve currency for the last, call it 80 years. World Reserve currencies are

never handed over willingly. They're always taken from the new guy on the block who takes it away. And you may not like that, but that's just kind of the way it is. And there's all these arguments, well, you know, the global reserve currency, it's actually a burden for the United States. It used to be a benefit, but now it's an economic burden. Well, global reserve currencies are not about economics. Global reserve currencies are about power and political power and geopolitical power. And nobody ever, there's nothing more intoxicating. There's nothing more. addictive than power. Power is never ever, with the possible exception of George Washington, nobody ever gives away power. It's always taken away. And the idea that the U.S. is just going to

give away their power and not employ every last tool, which includes the U.S. military, before it gets taken away from us, I think it's just, it's very naive. Now, I personally don't like this. I don't personally like our foreign policy. I don't personally like that we have used our military to reinforce the dollar's, you know, role as the global reserve currency. But hey, that's a fact of life. They do do it. All you've got to do is look, you know, just in my lifetime, I can think of three or four different instances where some, you know, international entity or country or leader, you know, in some way or another, try to exit the dollar system and start a different parallel system. And those leaders just don't exist anymore. Now that's perhaps a little bit crude and

perhaps a little bit unwanted and, you know, unsavory. But it's the truth. And I think that has to go into your thinking a little bit when you're trying to figure out which currency survives and which currency doesn't. So I think, you know, and this is all part of the fourth turning, right? This is, you know, it's the fourth turning on a goal. It's not just the United States going through the fourth turning. This is on a global level.

You know, and there's some countries that are in a few different, maybe in the perhaps a little bit different stage. Maybe not everybody's on the fourth turning, but this is kind of a global phenomenon. And I just think that, I just think that the next, you know, call it five years, are going to be much different

than many of the other people who also see this fourth turning. So can we talk about that for a minute? You said so many interesting things there, Brent, like one of which is you think it's more likely for us to get, you know, for U.S. citizenship, get $2,000 checks each month in UBI, than for it to be politically tenable to bail out euro dollars, for instance,

which is somewhat interesting because I feel like through this, through even the GameStop thing, we're seeing so much behind the scenes of how the game actually operates. And there's this idea that the Fed is some apolitical like central bank algorithm, essentially. But like what you're saying is, no, it's actually very political, right? So they're going to decide to issue checks and print money for American citizens before they decide to print money to bail out other countries and and Euro dollars, for instance, right? So there's this like political machine. The GameStop thing showed us that all of these these banker games that are being played, they can actually be played by, you know, online communities and that sort of thing.

So I think you're saying that. And you're also saying that this fourth turning is going to make a very tumult. We want to get to crypto with some of the time remaining. But before we do, just general thoughts, how the hell do we prepare for the next five to 10 years? Like portfolios, you know, maybe just general life advice. It sounds like things could get dicey. Yeah. In short, yeah. And the funny thing is, is that, and perhaps, perhaps this is a little naive on my part. And so I'll fully admit that is I actually think I'll be able to navigate the, navigate the financial part of the next five years. Okay. I think I've kind of got a good plan for how to deal with that, whether I'm right or I'm

wrong. Again, I think I have a plan for me being right and I have a plan for me being wrong. So I think the financial part will be okay. The part that scares me or the part that I'm most concerned about, if that's the right way to say it, is the social aspect of this, because, you know, we're just not on a good track. And we're not on a good track in the United States and we're not on a good track, you know, anywhere else in the world either. And so I do think that, you know, this, the social aspects are going to be very, very hard to plan for just because they can kind of come out of nowhere. I mean, I think if people are thinking about this, this kind of thing, it's going to help, but for the people who don't think about this, you know, it can be rather shocking.

You know, I do think that it makes sense to prepare and to the extent you can create your own sovereign escape route, for lack of a better word, right? Gold can be part of that. Bitcoin can be part of that, you know, some real assets, maybe some kind of an account or assets outside of your political jurisdiction. Now, I'm not saying that everybody should, you know, band together and leave the United States. I'm just saying that it wouldn't be a bad idea to have an idea of where you might want to go if you ever decided to do that. The flip side is that there's other people in other countries who feel the same way. And despite all the problems that we have, which they are many, I think if you went to a thousand different people around the world, you know, equally distributed around

the world and said, you know what, your life is starting over tomorrow. Here's a million dollars. The trick is you have to get on a plane and go live somewhere else. And it can't be in your country. Where do you go? I think the vast majority of the people would choose to come to the United States. So now, that may not be ultimately the best place to do it. But I do still think that that would gain, that the United States would win that quote unquote contest. So, you know, I'm not saying that part of your plan should necessarily leave everything in the United States and get out. But I am saying that you need to start thinking about that kind of stuff. Or perhaps you need to move to a different state or perhaps a different city.

Again, it all depends on what your personal situation is. But regardless of which country you live in, again, all of these countries are in the same problem. They built up these massive debts which can never ever be paid off. And so they are going to have to devalue their currency in some way or in. another to help pay these off. Now, I don't think leaving the United States for Mexico is going to solve that problem for you. I don't think leaving the United States for Europe is going to solve that problem for you. So I think you do need to have some kind of stores of value, you know, in your portfolio. And I think land, I think gold. We should probably talk about crypto because I think

people have mistaken my views on crypto quite a bit. I'm actually a fan of crypto. I'm a fan of Bitcoin in a conceptual sense, I do see, and I own some, and I think if you can afford to own some, you should own some. I do not think that people should sell everything they have, put it all on Bitcoin, because it's the greatest asset ever invented,

and there's only one way it can go. I think that's extremely, extremely naive. So let's talk about that, Brent, right? So you mentioned so many things there, and this is like kind of the, I guess, almost like the summit of our entire conversation, here is because we're on the same page with you with fourth turning and this kind of narrative issue and central bank, money printing, all of these things. And all of this leads us to a

conclusion that crypto is going to do quite well over the next 10 years. In fact, I might say, Brent, may I present you the crypto milkshake theory, which is basically the idea that this lack of faith in institutions that you're seeing, this generational distrust of the old financial regimes, this desire to break outside of the banking system that has essentially gamed and rigged our entire economy, right? Like, younger generations are feeling this pressure, right? And all of this is culminating towards something like crypto being the answer. Store your wealth outside of your political jurisdiction.

have a escape route from your sovereign. Invest in Bitcoin, invest in Ethereum, use decentralized finance banking tools rather than the Fidelity account they can just lock you out of when GameStop breaks out of the price range that that's not according to plan. This is digital. This is programmable. This is internet native. This is meme-based.

It's community basis. All of these things. Tell us your thoughts on crypto. And don't be. afraid, Brent, to bust our bubble, right? Because we're megables. We're ultra bullish on this asset class. And I know you like it, but you also have some reservations. So tell us the good and the bad here. Well, I mean, I'll start off by saying that, you know, I have been a big believer in, you know, becoming your own sovereign and becoming, you know, getting some assets, quote unquote,

outside the system for a very long time. And that historically has been gold for me. and I still think that gold is the ultimate asset. I know that many people in the crypto world believe that crypto is the superior asset. I do not currently believe that crypto is the superior asset, but I could be proven wrong. I don't really feel strongly enough about it one way or the other to, but if I had the choose between crypto and gold, I would choose gold. But the great thing for everybody is that you don't have to choose between the two. You don't have to put all your money into crypto.

don't have to put all your money into gold. You can actually own both and have a very good, successful, happy life. So if any of your friends are telling you you have to choose, you can tell them to go to hell because you don't have to choose. You can have them both. Okay. So now let's talk about crypto. So I first read, you may have heard me say this before, I first read the Bitcoin white paper in January of 2010. And if I remember right, the price at that time was around 25 or 30 cents. I had a two-year-old son. I had just changed jobs,

and he was just getting ready to start to go to this private school, which was fairly expensive. He was two or three. And, you know, at the time, I say that because at the time, I said, you know what, I should just put $5,000 in this

and forget about it. You know, this conversation would be much different today had I done that. I didn't. But the day I read that, the reason that I read it was because somebody sent it to me because at the time, and still, you know, I was a big believer in gold.

And I thought everybody should own gold in their portfolio. And so somebody sent it to me and they said, hey, you may like this. You know, it has a lot of the same aspects of gold, but it's kind of a newer way to restore wealth. So I read it. And, you know, I'm not a technologist. I'm not a technology guy. A lot of times when I hear about technology, a lot of it does go over my head initially. I really have to kind of think about it.

And but I remember sitting back in my chair and thinking, if the technology works, the way this white, paper says it works. In a million years, it will never be legal because it's the most powerful thing I've ever heard of. So let's break that down a little bit. Now, that does, you know, in hindsight, I should have just bought some anyway, right? But I didn't. But I've been following that since then. And I, you know, I owned a little bit of Bitcoin. I end up buying more between, you know, I think between 500 and, you know, more at 700 and more at 1,000. And then I didn't even look at it for years and years. I've sold some of it recently. I should probably tell you that. But what I would like to caution people about is it's not that I don't like Bitcoin.

And it's not that I don't think that it's not a worthy cause for you to pour your time and your resources and your energy into a system which promotes freedom and self-reliance and da-da-da-da. Okay. I get it. I understand all the positive aspects of Bitcoin. One thing I would just point out is that, you know, it was originally not just going to be a store of value. It was going to be a way a payment system to potentially be used as money. That has not happened. It has largely been quote unquote seen as a store value because recently the price has gone up.

But if you asked somebody in 2019 who had bought it in 2017 whether it was a store value, you would have gotten a much different answer. because they bought it at 20,000 and it went to four, right? So, you know, the history of Bitcoin is ones of many booms and minibus. And depending on which dates you pick as your timeframe, it has either been a spectacular success or a spectacular failure. Now, as of right now, it's looking pretty good. Now, it's down about 20%, 25% from where it was, or two or three weeks ago.

But it's still very high. And I'm not saying that it can't go much higher. But what I will tell you is that to think the idea that this is the greatest asset ever invented, that governments are absolutely powerless against anything, or they're powerless against trying to prohibit its use and its rise is just completely, completely wrong. There are many, many ways that governments around the world can curb Bitcoin's use. Now, I don't care if you believe me on that or not. I'm just telling you that it's a bigger risk than many people think.

And to automatically dismiss it. Now, if you say, hey, it is a risk, but we think we can win because of this and this and this, fine. But when you automatically dismiss it because you just think it's better or because you think that you have more power than the world's greatest military, you know, I just think you're not giving that risk a proper. assessment. You know, governments, one of the biggest tools that governments have is their currency. And they are not just going to let something else take it over. Now, my point is there will be a battle. Bitcoin may win that battle, but it may not. And my point is, is it's, you know, when I talk to people about it, they talk about it as if Bitcoin's Goliath and the U.S. government is David. And I just think that's a wrong analogy.

Now, it doesn't mean that I think it's the other way around. I think Bitcoin's David and the U.S. is Goliath. Now, it doesn't mean that David can't win. David can win, but it's not easy. And then the idea that, well, the U.S. outlaws it. And then it just, you know, Cameroon adopts it. Now Cameroon becomes the next global power because they have Bitcoin as their currency. Again, I just, that's not the way geopolitics works.

So, Brett. So, Brett, this is all good feedback. I think you'll actually find that David and I probably agree with aspects of what you're saying. Maybe more than on other podcasts that you've been on. In particular, this criticism of, hey, I remember, if you're around in 2010, you certainly remember the headline of the Bitcoin white paper, peer-to-peer electronic cash, right? And you're saying it's certainly not serving as that. I'm not sure how closely you've been tracking the Ethereum and decentralized finance ecosystem. But part of the bankless program is it's like Bitcoin, but also tracking some of the things that are going on in Ethereum and decentralized finance landscape. And that is starting to become closer to the peer-to-peer electronic cash, the bankless value transmission system. And I'm not sure if you've been tracking that so much.

But I would actually say that there could be an alternative path, call it a third path, right? Like you were talking about this collision course with governments. It's funny, we had Ben Hunt on the program. He said the exact same thing. He was like, you know, governments will just relegate you to a corner. Like you can't take on reserve currency status. They want money. It gives them power.

You're not going to do that crypto. So like stop trying. But there is one other way that I'd be like, I wonder your thoughts on, which is, that things like Ethereum, public blockchains, become so damn useful to governments themselves that the governments actually propagate their use. So if you look at stable coins right now on Ethereum, for instance, there's about $30 billion in stable coins on Ethereum. That's tiny, right, compared to the euro dollars.

But realize that number was like minuscule at the start of 2020 and just grew to $30 billion. Stable coins on public blockchains could be an export of U.S. monetary power. It could be something that the U.S. government wants. It could be a settlement network for all sorts of countries. If what we're building here, Brent, is an internet of finance, right? You know, all of the countries will want to adopt the internet of finance because it gives them an advantage, just like we adopted the internet of communication. So another path towards getting to,

adoption of crypto could be it just becomes so darn useful that countries, you know, have to adopt it in order to have the next Silicon Valley, you know, within their jurisdictions. Have you given any thought to that? Or do you have any takes on stable points by Ethereum? Yeah, so I think what you've said is very valid. And I think, you know, in the same way that I was saying for you guys, for you, and when I say you, I don't necessarily mean you personally. I just mean the crypto community.

In the same way that I said, you know, to just summarily dismiss the U.S. government's ability to, you know, do harm to Bitcoin would be naive. I think for me to ignore everything that you just said would be naive as well. I think the blockchain technology is a genie that's out of the ball. It's not going back in. And I think it's incredibly powerful. And I do think that blockchain technology, digital coins, digital assets are kind of here to stay. I do think that, you know, central banks around the world are going to issue. their own stable coins, their own currency coins, whatever you want to call them.

And so, you know, I kind of laugh. I kind of laugh. My, my, one of my biggest current problems with, with the, with the Bitcoin world or crypto world, however you want to describe it is, is tether. And this is not a new. I mean, I know everybody's, you know, sick of hearing about tether, but, you know, to me, tether is just, I, it's just such an anomaly to me because, you know, the, the, the, the crypto community is supposed to be one about verification, you know, absolute custody, custody

verification, you know, tracking of transactions, you know, very transparent, not opaque. But then you have a, you have tether, which in my opinion has kind of permeated the entire industry. And they are a central or central issuer of a fiat currency with no verification of any custody and no verification of any actual assets. And so, So to me, it's just, and whenever this is brought up, rather than saying, you know, you're right, I don't know why anybody does business with them. The answer is, oh, you're just paranoid, you know, get over and everybody already knows about it. Well, so, Brent, our answer is you're right. Nobody should do it.

Like, it's completely, it's completely opaque. It's completely, like there's no transparency whatsoever. No one knows whether Tether is fully backed or not. And that's a huge problem. Yeah. But the other thing I'd say is, let's say that the, let's say 12 months from now, there's a Fed coin, which I guess would be a U.S. dollar stable coin, for lack of a better word, right? Now, why would you choose a tether stable coin or some

other stable coin rather than the U.S. Fed coin? And what makes you think that the Fed and the U.S. government is going to allow another stable coin to compete with their stable coin? So we actually, the way that I view U.S.D.C., which is a much more regulated, much more transparent Fiat, cryptocurrency, a crypto token that's issued by a company inside the United States, that's Fed coin. You know, it's Fed coin by proxy. It's not actually issued by the Fed. And we had Jeremy Aller on the podcast not too long ago.

And he kind of, we talked about just like, you know, let's go back to core fundamental American values where we'll figure out how to export the brand of the dollar via the private markets, via private innovation rather than federal top. down control. Like, you know, we've kind of throughout different parts of this conversation, we've kind of been harping on the Fed's lack of ability or control. I think they could, if they want Fed coin, they should just put their weight behind USDC. I mean, they could. I mean, maybe that's their plan. Maybe their, maybe their plan is to just have a group that's studying this and then they will either, quote unquote, co-opt an existing stable point or issue

their own. But my point is, is that if they choose the other, if they choose to create their own rather than to collaborate, they're not going to let another currency compete with theirs. I mean, they're just not. They're not monetary, they're not open to monetary competition. They're monopolists. So I just think, I just think that's a risk that you can't ignore. It has to be, it has to be addressed and understood. But, you know, again, I think ultimately, you know, and again, my biggest current problem

with Bitcoin is the Tether, the Tether influence. I do think that Tether has an outsized influence on the price of Bitcoin, at least right now. I think if something were disclosed in an unfortunate or an unsafety manner at Tether, I think the price of Bitcoin would suffer and perhaps dramatically so. That doesn't mean that it would die. It doesn't mean that it couldn't actually go much higher than it is today. And so I'm not telling everybody to go out and sell everything they own and forget about Bitcoin by any means. And certainly don't forget about, you know, decentralized finance.

and, you know, all these other potential benefits of it. I'm just saying size your risk appropriately. Understand that there are serious risks out there. But, you know, Bitcoin is a legitimate, in my opinion, it's a legitimate tool to help you, quote, unquote, build assets outside the system. Now, I don't know that I would necessarily, unless you're like an industry player who's actively promoting it, if you own a bunch of Bitcoin, I don't know if I would be on Twitter telling everybody. because if you're going to be outside the system,

you don't want anybody to know about it. It's like a pirate standing over his treasure chest and saying, here's all my goals. You know, you know, just, yeah. I'm sure there are many who do. It's just the loud ones that get noticed. Yeah, yeah, fair enough. This has been an absolute pleasure.

Thank you so much for letting us kind of understand your mental model for central banks, the dollar, fourth turning, just everything we went through. I want to ask this last question to kind of close out. I know you're involved very much with kind of wealth preservation for high net worth individuals. I want to ask you a different question. We have a lot of young listeners who are kind of earlier in their investing career and attracted to things like crypto.

What's your best advice for someone who's young who's trying to grow their wealth during this decade? What would you tell them to do? Well, I think the simple answer is, you know, spend less than you make, you know, do whatever you have to do early, save some money early. you know, there's a famous line by, who is it? It's not Warren Buffett. It's, I think it's his sidekick. He said, do whatever you can to get your hands on $100,000. And then after that, you can kind of ease up a little bit.

And I think that's a very, very good advice. Now, whether that number is $100,000 or $10,000, not, you know, 100,000, for some people, $100,000 is an incredible amount of money. So if the number for you is $10,000, you know, make it $10,000. But I think the most important thing is to live within your means, number one. Number two, build up a little bit of a side fund or a nest egg, whatever you want to call it, not so that

you can invest it and become Warren Buffett, but that if in case you lose your job or you lose your income for a certain amount of time or some kind of crisis happens, you don't have to lose everything in order to get through that time period. And then the third thing I'd say is don't invest in something just because your friends are investing in it. You know, don't invest in something unless you understand it. Or unless you can afford to take a little bit of higher risk on something that maybe you don't understand.

And you know, but if you're just starting off and you're building the base of your portfolio, you know, start off with the less risky stuff. If you want to start a business or something, you know, bet on yourself. But think for yourself, only invest in what you want to. And again, this is initially. Think for yourself, invest in what you understand. And once you've kind of got some more assets build up, then you can start taking more risks. That's great.

Brent, it has been an absolute pleasure. Thank you so much for joining us in Bankless. Absolutely. Thanks for having me. Happy to come back anytime. Fantastic. All right. Action items, guys.

I think Brent had some fantastic advice at the end. That's why we often talk about education being so important to your crypto journey. We even say things like invest. in Bitcoin and ether, and until you understand why those are valuable, don't touch anything else. Very important that you understand this space as you go on the journey. We'll include in the action items a 20-minute presentation that Brent gave on the dollar milkshake theory. So you can get that in condensed form as well. And also, David, we should talk about our debrief. So right after this episode, you and I are going to talk about the episode and do a debrief. What is a debrief, David?

Yeah, I've already got my notes that I want to talk about ready to go when we get into it. The debriefs are for premium bankless subscribers. For those that just want Ryan's and David's reflections onto the podcast that was, it's an opportunity to kind of tap into our brains. Ryan and I would hop into Discord. We would call each other after the podcast that we would record. And then we would talk about it. But now we're recording these conversations, making them public for those that want to consume

a little bit extra bankless content in their lives. there is a link in the show notes for those who are interested in signing up to becoming a premium bankless subscriber. All right. So catch us on the deep briefs. Risk and disclaimers, guys, crypto is risky. Defi is risky. It feels like the 2020s are going to be a little bit risky as well.

You could lose what you put in in this Wild West, but we're headed towards the frontier. It's not for everyone, but we're glad you're with us on the bankless journey. Thanks a lot.