Bankless - Why Banks Suck, The Great Taking & How To Prepare | Mel Mattison

Starting point is 00:00:00 So all these global central bankers, they get together at the Bank for International Settlements in Basel, and they decide exactly what they want to be doing. And then they go out and they sprinkle the jawboning in the fairy dust, and they act in coordinated ways. Welcome to bankless, where we explore the frontier of internet money and internet finance. This is Ryan Sean Adams. And David's at a conference, so I'm not here with David Hoffman, just me today. And I'm here to help you become more bankless. The question today, a timeless bankless question.

Starting point is 00:00:35 why do banks suck? I think banks suck is kind of the reason we started this bankless thing. And it's never been because we hate banks. It's just we feel like they need to be disrupted. And crypto is the technology that's going to disrupt the existing banking system. The current state is banks take too much and they give too little. But we've never done a podcast focusing directly on the question of why banks suck until today. Our guest is pretty clear on the reason that banks suck. He thinks they've become far too centralized, that they're unbalanced, that they're short-sighted, that they're corrupt and getting more corrupt by the year. He thinks that power is tilted away from the people and into the hands of this

Starting point is 00:01:19 central banking cabal, as he calls it. He thinks the relationship between sovereign governments and private banks, that is governments and banks, is an unholy alliance that needs to be unwound. and further, and most importantly, he thinks the incentives at play right now mean that we're headed for what he calls a great reset. That's going to happen very soon. A few things we talk about on today's episode. Number one, the history of banks. Why Jefferson said banking establishments are, in quote, more dangerous than standing armies. Number two, we talk about the BIS, that is the bank for international settlements. This is a bank for the central banks, and it forms, the existing bank in Cabal. Number three, we talk about the big reset and the great takening.

Starting point is 00:02:06 And finally, we conclude with how to prepare and how to invest why it makes sense to have an exit plan. I got to say, my conclusion at the end of this episode, buy crypto while you can, make sure you're holding your private keys. It's going to be a bumpy decade. Let's get right to the episode with Mel Madison. But first, we want to tell you about the sponsors that made this possible, including our recommended crypto exchange, the place. to go buy your crypto assets. That is Cracken. Go get an account today. If you want a crypto trading experience backed by world-class security and award-winning support teams, then head over to Cracken. One of the longest standing and most secure crypto platforms in the world. Cracken is on a journey to

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Starting point is 00:05:07 Bankless Nation, very excited to introduce you to Mel Madison. He is a writer. He's a founder. He's a former Wall Street asset manager. He's spent a lot of his career in TradFi, which is very interesting. And more recently, he published a book called Quas. This is a fiction book about the annihilation of the global economic order. It includes some characters like AI and corrupt bankers.

Starting point is 00:05:29 and blockchain, I don't know if blockchain is kind of in cryptocurrency as a protagonist, but they feature prominently in the book as well. And Mel is probably the perfect person to tell us all the reasons we should go bankless, because he's got a lot of context for the history of banks that we're going to cover today. Mel, welcome to bankless. Well, thanks for having me, Ryan. I appreciate it. So I called your book Quas Fiction, but it also seems heavily inspired by the knowledge you have and the way you see the world and the way you see the world.

Starting point is 00:05:58 and the way you see the current economic world, let's say. So how much of that book is based in reality? Yeah, so I tried to, number one, actually write a good story. It is a novel, and so, you know, first principle on it is I want people to enjoy the narrative. But the second principle behind it really was to embed within it some factual information that's interesting and I think very relevant to our times with what is going on, with our monetary history as a country and also globally. and what some of the trends are pointing to. So as you mentioned, there's kind of a cabal of corrupt central bankers. They're trying to put in kind of a backdoor global central bank digital currency. Our protagonist is a guy who used to be in kind of traditional finance, and he's since kind of left that world and is a crypto trader living on the shores of San Juan, Puerto Rico, who has to come in and essentially save the world from a financial Armageddon. So I tried to make it relevant, interesting, a good read, the title quad.

Starting point is 00:06:58 is kind of a play on Quantum Oz. There's an area in the Bank for International Settlements where this AI supercomputer is located that has like a green glow to it. But I also wanted to make a little bit of a homage to The Wizard of Oz, which is, you know, one of my favorite books, and as you may be aware or maybe not, it's really looked at by a lot of people as a monetary allegory. You know, in the book itself, Dorothy doesn't wear ruby slippers. That was something done because the movie was being done in color, and they wanted to

Starting point is 00:07:28 wanted a bright red color. She wears silver shoes in the book. And it's really talking about the yellow brick road and the silver shoes. You know, she picks up along the way the agrarian workers, the scarecrow, the factory workers, the tin man, the cowardly lion, kind of the military kind of enlisted guy type soldier. And they make their way to the Emerald City, which is really emblematic of the dollar, the greenback. And, you know, the Wizard of Oz himself, in a sense, is like a fraudulent central banker behind the curtain, and it's kind of revealed to be what it is. And a lot of people don't realize that this was really relevant at the time because of the debate going on in the country of whether or not to allow silver to be part of the monetary system.

Starting point is 00:08:13 Oh, interesting. Okay, I'd forgotten that. I feel like I had been told that. I've never actually read The Wizard of Oz book. I'm sure, like, a lot of people listening, they're more familiar with kind of like the movie presentation of that or, you know, like something on Broadway. But, this book was about, you know, he's written in, I was just looking this up, the year 1900, and the economic monetary backdrop of the day in the U.S. was there was a debate over the gold standard versus the silver standard to back the U.S. dollar. I'm actually not super familiar, and I'd like to get more educated on that era of U.S. monetary history, but I understand like the late 1800s and early 1900s, there was some questioning over which standard we should adopt,

Starting point is 00:08:54 and there were gold proponents and silver proponents. Fill in some of the historical details for me, if you know them, Mel. Yeah, well, I think really what was happening was a discovery of large silver deposits in the Western United States and silver, which historically was part of the U.S. monetary system. So when we started out, Hamilton put in place a biometallic standard. So gold and silver were both the monetary metals initially at a ratio of 15 to 1. it was later changed to 16 to 1. But silver was always legal currency. You know, for most of the beginning of American history, we actually used the Spanish dollar. That's why we call our currency the dollar. There is a Spanish silver coin called the dollar that wound up being like 80% of, you know,

Starting point is 00:09:40 currency in early America. You could always take silver to the mint. The U.S. Mint would freely melt down and mint your silver into U.S. coins. But most Americans, you know, silver is gold, they didn't care if it was Spanish or whatever. There are details with that. I don't want to get too much into ways, but it's kind of fascinating Gresham's law type stuff and how we wound up almost entirely in circulation in the early Americas with fractional Spanish silver coins

Starting point is 00:10:07 because of slight differences in the gold content and silver content of U.S. minted coins and Spanish coins. But to get to your coin is in 1873, there was a law passed that the Coinage Act of 73, which became known as the crime of 73, and it essentially took silver out of the monetary system. And again, the addition of silver was kind of a threat, especially to the European banking establishment,

Starting point is 00:10:34 which was based upon gold. And we had these silver deposits in the Western United States, and essentially they were pulling in a monetary supply that the Europeans were not keen on. And the U.S. eventually kind of came over to the European side of things, as they often did, due to international financial influence, and took away this. And this was a major issue in the United States. And there was these people called Silver Rights. It was the Free Silver Movement. Yes, that's right. In 1896, William Jennings Bryant

Starting point is 00:11:07 did a speech on... The Cross of Gold speech. Yeah, do not crucify us on this cross of gold, which was basically saying, look, the people's money is silver, and you're trying to take that away from us. And, you know, you wanted to all be gold, which is essentially a European medal. And so there's been monetary issues, monetary crises, you know, going back to the revolution when we went from printing two million fiat dollars in 1775 to fund the revolution. These were called Continentals. By the end of the war, we printed over 160 million fiat Continentals. And eventually, they were redeemed by the Treasury at one continental to one penny. So, it was devalued by 100 times by the end of the war, the original currency of the Continental Congress.

Starting point is 00:11:54 So, you know, these types of things, monetary collapses, fiat money printing, influence of European banking establishment, really go back to the founding of our country. And we've constantly been in these battles, these monetary battles. And sometimes they're at the forefront of things, like they were in the late 1800s. They came back kind of a little bit into the picture in the 70s when Nixon took us off the convertibility of gold. but now they're coming back again. And so I think we're in another one of these moments where the average American is starting to wake up to the importance of the monetary system again.

Starting point is 00:12:25 That's right. Okay, now you're giving me some flashbacks to my U.S. history classes and the Cross of Gold Speech and Williams Jennings, Brian, and all of those details. What's interesting, I think, we'll pull this up often as we go through this podcast talking about banks and where they are today

Starting point is 00:12:42 and where they're going in the future is these monetary decisions have always been political, haven't they? And they've always been about control of, you know, they're winners and losers in these types of monetary decisions. And they also always exist in kind of this geopolitical game theory. Of course, the reason we don't talk about silver today is because in, you know, the 1900s, gold basically won, didn't it?

Starting point is 00:13:09 I seem to recall it was like maybe China was a holdout for a while on some sort of silver-based standard. but they were like Europe had kind of the gold standard. The U.S., it sounds like, was sort of playing with maybe a silver standard being like the people's money and to like push back against the Europeans and the elites in the U.S. society, but they eventually lost the European gold standard kind of won out in China. I believe they also had to relent at some point in time. So there's also this geopolitical game theoretic, you know, monetary dominance type of aspect to all of these decisions as well.

Starting point is 00:13:42 And so a society like the United States can't just. make monetary decisions in a vacuum. Anyway, those are some themes I think will continue to tug on, but do you have any reflections on that, Mel? Yeah, yeah, I mean, it's fascinating. I mean, China dominated the world really in the 1500s. I think most people would consider the emperor of China at that time, the most powerful man on the planet. And I think it was in 1591. He demanded that all taxes be paid in silver. So China has a long connection with silver and China doesn't have large silver deposits. And at one point, golden silver traded one for one in China. And what really happened was the Europeans, once they discovered the new world, they set up this global trade loop of

Starting point is 00:14:24 mining silver in the Americas, taking it to China, getting Chinese goods, spices, tapestries, silks, and then bringing it back. Eventually, they got tired of bringing silver to China. And they literally like got together and said, we need to start giving China something other than silver. What they want and the Chinese emperors are like, we don't need anything. And so the Westerners eventually got them hooked on opium. And so this was the start of the opium wars. And it was really the British East India Company who came up with this idea of if we can get the Chinese population hooked on opium, we'll be able to, instead of having to give them silver, we'll be able to give them drugs, basically. And it was a huge thing. It started what eventually became known in Chinese history

Starting point is 00:15:10 is the century of humiliation, where they were dominated by foreign powers in a way that they'd never been. And in some sense, I think the Chinese that's still relevant to them and they still remember it. And it wouldn't surprise me if there's people who are like, hey, if people are using our chemicals in Mexico to make fentanyl, well, you know what, it was good for the goose is good for the gander. They did it to us for a long time pumping drugs into our society. if drugs wind up going into the United States, manufactured in Mexico with, you know, input products coming from China, you know, so be it.

Starting point is 00:15:44 Do you know the story, by the way, to tie that threat off of why China had to sort of, like how long they were on the silver standard and why they had to kind of capitulate to something else and move off of it? Did they capitulate to gold? Or did they, you know, skip that step and go directly to kind of a fiat system?

Starting point is 00:15:58 I'm just not familiar with the history here. Yeah, I'm not a massive expert on, like, what I would consider a 20th century Chinese monetary policy, which is when this would have had to happen. Obviously, there was a big, you know, revolution there. And I can't say this, which is kind of also interesting. Just, you know, their system has always been, you know, kind of monetary focused.

Starting point is 00:16:20 And the PBOC, the People's Bank of China, is an interesting central bank, in my opinion. It's a central bank that plays in the global central bank system. They're members of the Bank for International Settlements. You know, they go and they meet every two months. Jerome Powell, Christine Lagarde, the head of the PBOC and like 60 other. central banks, but at the same time, the PBOC is different in that it is not in any way independent. It's directly answerable to the party. And they do a lot more than just setting like an interest, like a Fed funds rate, like the Federal Reserve does. They're able to set actual rates in the

Starting point is 00:16:55 market. They're able to set like the prime rate, the mortgage rates. So it's done by, you know, Fiat where, you know, the central bank decides this is what the mortgage rate's going to be, whether or not that makes sense for market conditions. So there's a slightly different monetary system in China. It's obviously much more centralized controlled, but definitely gold has been building on their balance sheets. And a lot of people do not realize that in 2007, China surpassed South Africa as the world's largest gold producer. They do not allow for the export of domestically mined gold. and many people believe that the Chinese hold a lot more gold than they publicly released. They state they hold around 2,000-some metric tons.

Starting point is 00:17:39 You know, if you look in America, we claim we have 8,000 metric tons or so. Some people believe that the Chinese holdings of gold could actually be over 30,000 metric tons, and that they're accumulating it essentially under the radar as they incorporate gold more into their reserve asset basket. other central banks outside of the West began increasing the gold holdings on central bank balance sheets. Luke Roman was recently on our podcast, and he was just talking about, and this is even with the public data, you know, just kind of the record of China accumulating gold and how that has accelerated in recent years.

Starting point is 00:18:17 But since you used the B word banks, let's turn our focus to them. So we've talked a little bit about money systems across the last few hundred years, and, you know, the U.S. itself was born on a, you know, like a bi-monetary metal system of gold and silver-backed in kind of the early days for its fiat system. But then we skipped forward and we talked about the People's Bank of China, the PBOC, right? And that brings into the conversation, this new entity on the block in the last 500 years or so, the bank and the modern manifestation of that when you max power the banking establishment, you get a central bank like the People's Bank of China. And of course, the Fed is all powerful. It's various banks in the European Union that are

Starting point is 00:19:00 very powerful as well. Can you give us the context and the history of banks? And maybe we could start with a Thomas Jefferson quote. I don't know if this is apocryphal or he said this in a documented letter at all, but I know it's one that you are a fan of, which is, he said this, Thomas Jefferson. Banking establishments are more dangerous than standing armies. What do you think Jefferson meant and then tell us, like, pointing out the danger of banks, and then give us some history of banks and how we came to be in the system that we presently are in. Yeah. So it's not impocryphal.

Starting point is 00:19:34 It's from a letter he wrote. I think it was in 1812 or 1816 to John Taylor. And there was obviously big debates around central banking in the formation of our country. Jefferson was adamantly opposed to a central bank, as were most of what were then called the Republicans. This was a different party than what became what we now know is the Republican. Republicans, but essentially the first two parties were relatively known as the Republicans. These were Jeffersonians and the Federalists, people like John Adams, Alexander Hamilton, who were more globalist in nature.

Starting point is 00:20:06 But I think that really what's happening and what he's talking about there was he understood, and I think it was actually broadly understood at the time, the influence that central banks have and how they essentially manipulate the system in order to siphon wealth from the people. into government hands and allow for the government to do things such as fund foreign wars or or other activities. And this goes back to the beginning of central banking, which was the original purpose of it. So I think there was a shift that took place kind of 15, 1600s where you had essentially total dominance of political, social, economic power in the aristocracy, in the kings and the dukes, and they didn't need to hide things. If they didn't like what a village was

Starting point is 00:20:56 doing, they could send in the army and, you know, burn down the town and take the grain, they could act unilaterally. And what began to happen is that the sovereigns began running into money problems. So they weren't obviously printing fiat at the time. You know, money was gold and silver at that moment. And so William III, he was the king of England that put in place the bank of England, and the forerunner of all modern central banks. In the late 1690s, he had wanted to continue a war with France. The treasury was dry. He had essentially overtaxed his people already. He knew that if you continue to raise taxes, there would be revolts. He also had borrowed heavily from wealthy Londoners and bankers and had defaulted. He wasn't able to pay them back. And so his credit was no good. He had no way to get money. And he talked to the banking class and he said, look, I knew. need golden silver to manufacture ships and pay soldiers who will only accept, you know, coin. And the bankers basically said, well, look, we're not going to give you our money, but give us the exclusive right to print paper notes, make it illegal not to accept these notes for

Starting point is 00:22:04 transactions, enforce that, and, you know, charter us a bank. And this was the Bank of England was chartered. It was owned by private bankers, and what they did was they went out. They essentially forced the people to turn in their gold and silver to get these paper notes, pass the gold and silver to the king, and then collected interest. And so the bankers were able to, instead of putting up their own money, which is what they had been doing in the past, they found a better way. They could put up the people's money and collect interest on it. And that is what our central bank, you know, still does to this day.

Starting point is 00:22:38 You know, people put their money into a bank. You're loaning money to the bank. and the bank is, especially if they're a big bank like a J.P. Morgan, they're giving you almost zero interest. They're taking that money, and they're either putting it with the Federal Reserve, where they get paid interest on reserves of five plus percent right now, or they're loaning it out for more risky enterprises that should those risks go bad, they know that people will come bail that out. So it's essentially, you know, a heads they win, tails they win situation. And that is what banks do. They take in people's money. They loan it out. and they collect interest, and it hasn't changed since 1694. Interesting. So your lens on banks, in particular central banks, is almost that it's an unholy alliance between sovereigns and governments and kind of like the private banking industry.

Starting point is 00:23:27 It's sort of interesting that banks weren't really started by governments. At least, like, there was a market need for private banks, right? These institutions that would grow up, these kind of money lenders who would provide you a loan if you needed a loan to do something or a way to store your wealth in a vault where it's protected. And that was kind of the private market force that started the institution of banks.

Starting point is 00:23:51 But you're saying very early on there came to be this unholy alliance between sovereigns and governments and private bankers that went a little bit like this where the sovereigns and the governments were like, hey, we need more tax money to fund our things. Maybe it's a war,

Starting point is 00:24:06 it's some sort of a crisis moment. And they go over and they look at the banks and they say, well, you've got a lot of the money present of the population. Perhaps we can strike a deal. And the private bankers are like, yeah, that sounds good. We want to, you know, create an alliance with the state, become sort of a quasi-sovereign entity, give us special rights, special access.

Starting point is 00:24:27 And in return, we will, you know, allow you to control elements of society. And that was sort of the unholy alliance that happened early, not at the moment private banks were born, but early in its childhood, I suppose. And you're saying that that relationship, the private bankers get wealthy, central bankers get more ability to tax and control. You're saying that relationship still exists today. And you're going even further.

Starting point is 00:24:53 You're saying that that's kind of the point. It's almost the genesis of this entire system. Yeah, it's the raison d'etra. It's the reason for their existence. It's what their fundamental purpose is. Everything else is ancillary. And it goes back to the beginning. I mean, you can go back to 1066.

Starting point is 00:25:09 to William the Conqueror, when he unified England, there was one area of England that he was unable to subdue. And it's what is now known as the City of London, the Wall Street of London. And he was unable to essentially take that over. And I think part of it was he didn't want to take it over. And you've seen this throughout history. You saw it in Europe in the 1940s, where whether a country had declared itself as neutral or not, Hitler was going to go in and take it. it over. The one country he didn't go into was Switzerland. Switzerland, home of bank for international settlements, this was the conduit of Western money feeding the Third Reich. These things are documented.

Starting point is 00:25:52 We can get into the details on how this actually occurred. But basically, there's always been this unholy alliance. And to this day, the city of London, within London, there's different neighborhoods of the city of London, but there's two what are called cities. There's the city of London, which is a one-square-mile area where all the banks are headquarters, where the Bank of England is headquartered, and then there's the city of Westminster, which is where the government is headquartered. And both of those cities within London have different rules and regulations than anywhere else in the country. In the city of London, believe it or not, it's not people that elect the mayor of the city of London. There's this guy called the Lord of London. He's Lord

Starting point is 00:26:31 Mayor of London, and this is just for the one-square-mile financial district, and is actually elected by the corporations to this day. So the banks vote in the political power. It's not an individual that lives there. And they have different rights and legal things. There's still an annual parade. I think it's on November 11th, which is an important day for the city of London, where the Lord Mayor goes around in the old English stuff, and he's got these statues of Gog and Magog being paraded, and there's all kinds of weird, you know, paganistic type rituals around it. And this stuff is in the law. And you're like, are you serious? And I'm like, yes, I am serious that these central bankers are almost an unholy alliance. And I think almost is not actually necessary. I think it kind of is.

Starting point is 00:27:17 Okay. So you take, Mel, a very dim view of banks, maybe even more dim than David and myself on the bankless podcast. This podcast is literally called bankless because we think it's important to restore some of the power back to the people. And we see crypto as a way to sort of do this. But your dim view of banks, is there anything you would concede that they do well? Like, they must be providing some value, right? There's liquidity, there's credit, they're able to help us move money faster. I think if you, you know, asked a banker why they exist, they would extol the virtues of why they exist. Would you cede any ground to them on this?

Starting point is 00:27:51 Like, do they do anything well? Or is it, you know, completely a corrupt institution that's preying on the populace for control and, like, just taking a cut? Yeah, no, I mean, they definitely do things well. And it's analogous to meth, you know, it keeps you up, it gives you energy, you know. I mean, these things that are dangerous always do something well. They make you feel like you're on top of the world, you're the king. So there's good aspects to things like methamphetamines, but there's also downsides.

Starting point is 00:28:19 And there's good aspects to the banking culture and banking society. But at the end of the day, I think my, as you call it, dim view, is a dim view. But it's not a view without precedent. And that was actually common for a long time. I think there's a long history of people with this dim view. It's a view that Thomas Jefferson shared. It sounds like in the quote that we opened this. Banking establishments, he said, are more dangerous than standing armies.

Starting point is 00:28:45 That's effectively what you're saying here. Yes. What my argument is, if you really get to the base premise, is that money is the ultimate control mechanism of our society, so much so that we almost have a difficult time imagining a society where money is not in this central role. It's almost like a fish trying to imagine a world without water, to try to imagine a world that's not centered around money and the system in which we have money, you know, operating today as a government-issued type of currency with interest rates. Like, this is so fundamental to our society. And the truth of the matter is, is when you

Starting point is 00:29:22 really go back through history, you start to understand that this is a form of enslavement. And what it really is fundamentally is it's set up as a way to enrich the wealthy banking elite class, as well as a way to fund the government in a covert method. And this was done in the United States in the very beginning where, you know, the Constitution did not allow for an income tax that didn't come in until 1913, not coincidentally the same year that the Federal Reserve came into existence. But basically what occurred was Hamilton, who had restructured all of this debt, Hamilton had, you know, done assumption, which was taking the state debt. And he wanted to assume the state debt because he knew if the states had to pay back their debt, then they would

Starting point is 00:30:08 also have to tax. And Hamilton did not want states to become large taxers. He wanted the federal government to become the taxers, so the federal government could essentially rope in that power. And he restructured the debt. He made it such that only interest payments were made. There was a lot of shady stuff where debt that was issued during the revolution, most people thought it was never going to be repaid. By some estimates, over 80% of the U.S. public debt at the end of the revolution was bought up by around 300 families, mostly in New York and Philadelphia, that some of whom were also agents for European banking clans that had bought up the U.S. debt at 10, 20 cents on the dollar. but eventually were fully repaid that debt. And indeed, Hamilton allowed people with U.S. debt to exchange that debt for shares in the United States' first central bank, the first bank of the United States, which was our first central bank in existence from 1791 to 1911, which as soon as we got rid of it, you know, Britain basically and us got into a war in 1912. But basically what's happened is these banks and money and all these systems that have been put into place, They are the covert control mechanism. And as I said, in the founding of the United States, they're trying to find ways to create tax revenues. And they're thinking about tariffs, and that can be a little inflationary. And then they're also realizing that it promotes smuggling.

Starting point is 00:31:31 So they do some tariffs, but not a ton. And then they say, well, okay, let's tax items that the people don't need. Luxury items, things like luxury leather saddles for horses. And then the big tax they put on was on spirits on whiskey. and this whiskey tax led to the first rebellion in the United States called the whiskey rebellion. It had to be quelled by federal troops. And they realize, like, we keep trying to tax the people, and it's causing us problems everywhere. And there's this realization we can do it as an inflation tax.

Starting point is 00:32:01 We can do it by debasing money. People do not realize that they're being taxed. And to this day, this is the most common method of taxation, where basically, like, all the COVID spending was essentially paid for by the American people. people through the inflation tax. Yeah, I agree with that. And I agree that I would say just like 98% of the population is unaware that they're being taxed in that way via debasement. Like just a huge portion of the population is just unaware how the monetary system works today. But I want to steal man the case a little bit for central bankers because we've been shitting on central bankers this entire time. And there's tons of central bankers in the bankless fan base

Starting point is 00:32:41 that are wanting some pushback here. And so I want to ask you about the case for central banks, right? So, you know, you are more Jeffersonian, I suppose, in your takes and your dim view of banks, but there are the Hamilton supporters in the audience as well who say, you know, like, hear what you're saying. But central banks are actually a useful coordination mechanism for us. Like there are times during crisis where we really need to have elites make sort of the decisions and pool together our resources and just get shit done. So one common case for central banks is the Great Depression, right?

Starting point is 00:33:15 Like the idea that Central Banks got us out of the Great Depression, serving as a lender of last resort, restoring financial confidence, you know, even just playing the narrative game, the meme game, the high priest game that someone like Jerome Powell like plays, which is he comes out and there's, you know, cameras and microphones on him. And he restores financial confidence to the American people during times of crisis. Like, don't we need that, Mel? Isn't there, like, are you advocating for no central banks or should there be a balance here?

Starting point is 00:33:47 And can you see some utility in what they provide? Yeah. Well, I think first, I'm not here to personally attack anybody. And I don't know this. I've never met the man. But from what I've seen of Jerome Powell, I think he generally seems like a good person who I think is trying to work for the average American. I think that the institutional system is set up in such a way that even if he has these

Starting point is 00:34:10 correct motivations, eventually his actions get dictated to by the constraints of the system. And I think we will see that, and we can get into how that happens. I think he'll probably start lowering interest rates since September in a lot of ways because of what's happening overseas, especially in places like Europe and Canada. But you're just making the point that he has a lot less individual control than people might think. He's just in the system and he's a product of the system. Yes, exactly. And other people have brought this up, along with, you know, unemployment and inflation, there are other mandates that the Fed has. The Fed has five mandates on their website. They're clearly stated, you know, full employment, inflation, creating a stable market for long-term

Starting point is 00:34:52 treasuries, regulation of the banks, and providing and facilitating for payment systems like FedWIRs, ACHs. So they're involved in five processes. That third process, maintaining stability of the treasury market is also an important one, and that's what he's mandated by Congress to do. And if the Treasury market is going to collapse, and that means, you know, he needs to step in to do something, then he needs to do something. And it might be the fact that he knows he can't necessarily come out and say exactly what he's going to do because it's going to exaggerate the problem. And so steps often are taken behind the scenes by people like a poll that might have good motivations, but the end result is to kind of perpetuate the system. But to get back to your question, I do think that – so that was one point. I just wanted to make clear – I'm not saying that these central bankers are all twisting.

Starting point is 00:35:38 their mustaches, you know, trying to really, you know, just ruin everybody. Got it. Product of the system. And there are forces behind the scenes, for example, like who owns the Federal Reserve, right? You know, it's J.P. Morgan, it's Citibank. You know, they don't own the FOMC, but they do own shares in all of the 12 Reserve banks. And that was part of the way the system was set up as the Federal Reserve System. It's a, you know, you see Powell speak. It doesn't say Federal Reserve of the United States. It says the Federal Reserve System. And you have to look at who owns the 12 regional banks, the New York Fed, the Cleveland Fed, the Richmond Fed, and the shareholders of

Starting point is 00:36:13 those are commercial banks. They appoint the Board of Directors, which oversee the presidents of these reserve banks. And the reserve banks are where the action takes place, especially the New York Fed. So these are, you know, private institutions unquestionably. In fact, they've released cap tables. The New York Fed released a cap table a few years ago under direction from a FOIA request. And they said right at the top of the release, we're not a good. government agency. We're under no obligation to submit to a FOIA request, but in the interest of transparency, we will give you our cap table. It's so interesting. I guess this goes back to the unholy alliance we were talking about earlier, right? It's like they are private institutions,

Starting point is 00:36:51 but they're given this government mandated monopoly. And the reason the government gives these private institutions that sort of monopoly in special rights is because they get something out of it. The ability to devalue currency, the ability to control the ability to tax a new way. ways. And so, you're like, point taken on that. But let's get back to the Depression comment here. So I think there is this view among Americans. Leas I was taught this in history class that kind of like the central bankers and government coordination really saved us during the depression, you know, FDR, New Deal, all of these types of things. And the previous policy was much more austerity focused. Kind of like gold back failed us. What we really needed is

Starting point is 00:37:34 central coordination to like spend and get us out of the Depression. And we would have done that faster and better had we had more central coordination through mechanisms like a central bank. That is given often as a reason for the value of central banks and the necessity of them. And if you don't have a central bank in your modern nation state, like, what are you even doing here? Like you're living in the 1800s. That's not modern. You can't possibly coordinate your economy that way. So what do you say to that criticism?

Starting point is 00:38:02 So I want to fully answer that question and get into the Depression. but I also, just to finish up the last points too, is that I do concede that there are beneficial aspects to what banks do. So, you know, lending to businesses, facilitating payments, but you have to look that there are ways to do these types of things that also don't involve the more nefarious aspects. So if you look at the rise and say the private credit markets right now, right, so people have money, they want to invest in companies or real estate, and they give money to investment managers and the investment managers invest. And there you have private credit, people investing their capital, but it's not being done through this fractional reserve banking

Starting point is 00:38:45 system where people are taking in assets. So there are ways to achieve the beneficial aspects of banks that do not require them to be built upon the foundation that they're built upon. There's nuance to what you're saying, right? So your message is not that just like banks suck. Your message is more that like the unholy alliance that was in the early stages of our banking system and that now pervades and has kind of won out between governments and sovereigns and private banks leads to this corruption vector that makes them suck. But the concept of private banks outside of this unholy alliance, like you're sort of on board with that and their ability to provide a private free market value service to a population. You like that aspect of banks. You just are against the corruption element between governments and the banking system. Yes.

Starting point is 00:39:38 Essentially, what they're given is, as you mentioned, they're given these special powers, and they're able to print money, and they're able to have that money usage be enforced, right? Like, if you try to pay your tax bill in gold or silver or Bitcoin or Ethereum, you know, the IRS is not going to accept that, right? So you've gotten this requirement to use an instrument that is issued by a private institution. You know, if you look on your dollar bills, it doesn't say United States. It says Federal Reserve note. So you're having these private corporations issue paper or digital paper that we need to use.

Starting point is 00:40:16 And when you look at dollars, like, and you look at the Federal Reserve balance sheet, like any cash outstanding, that's listed as a liability of the Federal Reserve. And you ask yourself, at one point in time, that was a liability because there are, was a gold or silver backing, and so people could take paper money to central banks and requests gold or silver. At this point, we don't. And so I think it's important to look at the reason that I mentioned in the 1600s why William wanted it was he needed gold and silver.

Starting point is 00:40:45 But now that there is no gold or silver that the government needs to get through or manipulate the money supply, you do not have that argument of the Depression argument. So the depression argument when we were on the gold standard is, well, if we would have had a central bank, which could have become a lender of last year. And I still think this is a straw man argument because you were able to revalue gold. When FDR confiscated people's gold in 1933, immediately after he did a dollar revaluation, he said, you know what? Gold is $20 an ounce. Now I'm saying it's $35 an ounce. And he immediately devalued the currency and the money supply, even though he didn't need to increase the amount of gold.

Starting point is 00:41:26 If gold could have been kept as a monetary system during the Depression and the money supply could have been increased by a devaluation of the dollar relative to gold, but that does not require a central bank. Wait, so you don't need a central bank to do what you just said, the operation you just said? No, and it wasn't done by the central bank, even though the Federal Reserve existed at the point. It was done by the Treasury, and the Treasury still has the right to revalue the gold on the Federal Reserve balance. sheet. And you think that's all fair play, though. Isn't that the same sort of like taxation by devaluing the currency sort of play that we were just criticizing central banks for having too much control in that area? Well, if you own the gold, so if you own, if you have the gold and silver, when that revaluation occurs, and the point is that you just want more dollars circulating,

Starting point is 00:42:17 then you can immediately revalue that and now you have, you know, more dollars circulating. And what that does is that deflates away the debt. So if you, borrowed money at, let's say you borrowed $1,000 in 1932, and you needed to pay back $1,000 in 1934, and you could pay back that loan with dollars, but the gold was simply revalued. You would now be able to get more dollars from those gold coins you might have to pay that back, and so the money supply could have been increased, whereas people that were holding gold would not have been hurt by it. I see.

Starting point is 00:42:51 But what we would have done was you would have reduced the real value of debts outstanding, you would have increased the money supply, and you would have alleviated some of the debt pressures and the deflationary pressures. And so a lot of people blame, like, the deflation that began occurring in the 30s is the problem, but you didn't need to solve it with a central bank coming in and printing fiat money. And so these things can then go to, you know, today's world, which I think even makes it a more ironclad case against central banks, is that now that there is no ostensible reason, where like we need wealthy people to deposit gold and silver at a bank that the government can then draw upon when it's in need. You now have a situation where, and I tend to, you know, lean towards like an Austrian school of economics, where the money supply is a primary driver of inflationary forces, as Milton Friedman said.

Starting point is 00:43:45 You know, inflation is always and everywhere a monetary phenomenon. And that control of the money supply could be handled directly by the Treasury. So, you know, we would not need a central bank where there needed to be interest paid on our debt. So, for example, we could basically state, you know, we are going to, and maybe it could be a constitutional amendment, it could be a whole different laws, different things, where we said, okay, from now on, we're going to begin issuing United States notes. We're going to begin issuing legal tender that is non-interest bearing. This is what the Continental was during the Revolutionary War.

Starting point is 00:44:22 This is what the Greenback was during the state. Civil War that Lincoln did, we can begin issuing United States notes, non-interest-bearing notes in order to pay our bills. We're going to put constraints on the amount of those notes that we can do. I don't know how much that would work, but I'm just kind of spittballing the idea here to get people an idea of how the world could operate in a post-central bank world. And what we could do, we could agree that we are going to continue to service our debt in dollars. We're going to continue to pay those off. But they're going to be created by the United States Treasury instead of the Federal Reserve, and that going forward, when the United States has deficits, we're going

Starting point is 00:44:57 to pay for those deficits out of these non-interest-bearing notes. And we're going to constrain our issuance of those notes because of the knowledge of the inflationary aspects of overprinting these. And you then can cut out that middleman and cut out that interest expense, which is essentially taking money from the people and paying it out to the banks, to the commercial banks, that are able to hold treasury bonds on their balance sheets, and they're working so that these are not even going to be counted against their reserve ratios, so that they could eventually at some point hold, relatively speaking, almost unlimited amounts of treasuries for which they're

Starting point is 00:45:34 getting payment of interest on, and then fractionally reserve loan out against those loans, and the American people are paying this interest, and there's not a good reason for us. And other governments have worked without central banks, and they usually, don't last long. Libya, Iraq, these were governments that did not operate within the central banking system where they issued money that was dependent upon loans. So the basis of our money system is not the dollar, it's the United States Treasury bond. If we change from the basis of our money system of the dollar to the United States note, a non-interest-bearing dollar, then we could eliminate the central bank. It would obviously be calamitous for the banking cabals,

Starting point is 00:46:15 and it would need to be done and phased in over time so that it doesn't. It doesn't, completely collapse the financial system. But I do think there's a path, a realistic path that would be much better for humanity that would essentially phase out central banks, which are no longer necessary in a fiat world. And if you did that, if you phased out the central banks, like so, what are the benefits to citizens? Would the government no longer be able to use this like backdoor method of taxation by devaluing currency? Would that be the primary benefit? Yeah, that's one immediate benefit. It essentially takes one more layer off of their obfuscation of what they are doing. It makes things a little bit more clear. People could very, you know, understandably understand that

Starting point is 00:47:02 deficit spending means that more dollars are just going to flood out there. And this is going to mean inflation. And, you know, you would have essentially a similar constraint to what you have now because I think most politicians, you know, at this point in time, they're not really, you you know, making any decisions based on debt or deficits, they're looking at getting elected in the next election cycle, and if that means that they're just going to pile on more debt, and eventually that's going to need to be absorbed through either quantitative easing, or it's going to need to be absorbed by inflationary aspects of putting that debt on bank balance sheets, and then them fractionally reserving loans, that would be a massive negative impact.

Starting point is 00:47:40 But I think the other main advantage to getting rid of the central bank is you eliminate this monopoly, this non-free market monopoly on money. And once you free up money and it becomes a free market good, and people can say, do they want to use Bitcoin? Do they want to use something else? And why do they want to use that? What is the benefits of it? What do people accept?

Starting point is 00:48:03 And you begin to have essentially a free market for money. I think that's the main benefit of getting rid of the central bank. I see. And you are distributing power from the banking class and the bankers and central bankers, like back to the people. people, maybe perhaps in this method. We said earlier in this conversation that all monetary decisions are like decisions, it seems to be, about politics. So there's going to be winners and losers and control and who maintains the control. And also geopolitics, like what other nations are doing

Starting point is 00:48:31 in reference to, you know, America, you know, your nation that you're currently in. And this is a point I just want to ask on sort of the Steelman case for central bankers and that Hamiltonians that are listening to this episode might say, okay, well, all of that's great, Mel, the idea of restoring power back to the people. But geopolitically, the U.S. is in a competition against nation states that are coordinated via central banks. And if there is a wartime type of scenario, and it's one nation state versus the other, and one nation state has the ability to print money and infinitely fund their war machine or war effort and in another economy, another nation state does not, then the one with a central bank, that technology, that social technology could beat the one that doesn't have this, right?

Starting point is 00:49:25 And so I want to ask that question about like kind of the rules of the jungle when we're talking about geopolitics and the game theory. Like if your country doesn't have a central bank and you get into some scenario that requires massive coordination, like wartime spending types of scenarios, central. decision-making, even New Deal-style infrastructure to outstrip your competition, are you disadvantaged geopolitically if you don't have a central bank? And so these Jeffersonian ideas of, like, distribute power and decentralized might be great, but they don't work geopolitically, would be an argument here. What do you say to that?

Starting point is 00:50:03 No, I mean, you're massively advantaged not to have a central bank because you still retain the unlimited power to print money. It's just not interest-bearing. So in my scenario, war happens and we need to pay Raytheon $500 billion, the United States Treasury simply creates and issues that. Understanding that this is going to have an inflationary impulse, of course, but that's what the cost is. The cost is the inflationary impulse created by the increase in the money supply, which we get through the creation of debt regardless.

Starting point is 00:50:32 But basically what I'm doing is I'm taking out that middleman, which used to be necessary because of the need to provide physical gold and silver and no longer exists. I see. So you still have nation. states with the ability to devalue their currency and print money if they need to. We're just cutting out kind of the banking layer of all of this. Is it possible to reform existing central banks? Not as drastic as, you know, and I'm sure you acknowledge that like abolished central banks, you know, would be just absolutely monumental in terms of political change. Probably a crisis

Starting point is 00:51:04 is needed to really precipitate that level of change. But how about reforming central banks, right we've gone through reforms of a different kind that were basically you know not democratic in nature when the u.s got off the gold standard for instance it was a massive reform of the fed and you know the central banking system no one asked the population about that but could we reform central banks in the other direction maybe limit their power in some way and if so do you have any like ideas or proposals for how we might do that yes i mean there are intermediary steps beyond just putting in a controlled phase out of central banking. It was around the financial crisis when the Federal Reserve just began paying interest on reserves.

Starting point is 00:51:46 So one step that we could take is we could return to a situation where banks are required to keep capital requirements held at the Federal Reserve, but they don't get interest on those. And so, you know, this is essentially a subsidy of commercial banks that was put in place post-financial crisis in order to help stabilize the bank. to begin paying interest on required reserves, which we never did before, which is billions and billions of dollars every year being paid out to J.P. Morgan and Citigroup and Wells Fargo on behalf of the American people for basically keeping a small amount of money with the Federal Reserve. Why does the Federal Reserve need these reserves, right? I mean, Federal Reserve creates money. I mean, it's obviously a scam. So there are steps that we can take to make the banking system less offensive.

Starting point is 00:52:32 But I think at the end of the day, the real issue is the control. of money in private hands and in the banking cartel. And so, you know, that's just one example. I think, you know, looking at how much money these banks are actually able to lever up and loan out, I think we could change leverage ratios. The argument against this, and this is what's going on right now with the Basel Accords, which they're called the Basel 3 endgame or, you know, they don't want to call it, you know, the BIS central bankers getting together and making the global rules, which is what it is. They all happen in Basel at the headquarters of the Bank for International Settlement. But the Bank for International Settlement, as I mentioned, its previous Nazi ties and

Starting point is 00:53:12 different checkered history means that everything with the BIS is normally kept in the shadows, even though that's where the euro was created before the ECB came into existence. That's where all these financial regulatory standards happen. We had Powell and Lagarde talking in Central Portugal the other week, but they don't talk about the fact that all the central bankers were essentially meeting in secret over the weekend at the Bank for International Settlements at their annual meeting. So all these global central bankers, they get together at the Bank for International Settlements in Basel and they decide exactly what they want to be doing. And then they go out and they sprinkle the jawboning and the fairy dust and they act in coordinated

Starting point is 00:53:50 ways. So, I mean, just shedding light on what the BIS activities are, you know, when these bankers are meeting, why can't we know the attendance roster? Why can't we be told what are the minutes of these meetings? Why can't there be a press conference after these bi-monthly meetings? For people who don't know, the central bank chiefs of the top 63 central banks in the world, every two months, they go to Basel, Switzerland for this two-day meeting. You know, it's Powell, the Guard, you know, everybody, you know, Canada, Saudi Arabia, PBOC.

Starting point is 00:54:23 Everybody in the West or the PBOC participates as well? The top 63 central banks in the world. Russia was suspended after their invasion of Ukraine. So Russia no longer attends, but no, pretty much every single major central bank head goes there. And almost all of the time, it is the actual head. So once in a while, like Powell won't go because of another commitment or something, and it will just be like the head of the Federal Reserve Bank of New York. You know, these meetings have been going on for decades.

Starting point is 00:54:55 So every two months, and you can go to like BIS. or you could Google BIS bif monthly meetings and it will talk about there's three meetings they have every two months they have something called the ECC which is the executive consultative committee and this is essentially the G20 it's the central bank chiefs of like the top 19 central banks in the world and the U.S. has two people on that committee interestingly it's not just our chairman that's part of that committee but it's also the president of the new york fed as I mentioned you have to look at the reserve banks in the United States to understand the Federal Reserve system. And in that ECC, they essentially set the agenda for what their marching orders are going to be to the rest of the world, central banks.

Starting point is 00:55:35 They have a very posh dinner in the evening on Sunday evening on the 18th floor of the BIS headquarters, catered in a beautiful dining room designed by the same architects that did the Bird's Nest in China. And then on Monday, there's two meetings. The first one is called the gem, the global economy meeting. and that's where this agenda that was set by the ECC gets passed down to the second tier of banks, and it's like the next 20 banks get to attend that meeting. And the final tier, kind of the last 20 banks, they get to watch the GM, but they don't get to vote or talk. And then once everything's kind of been coalesced,

Starting point is 00:56:11 then they conclude the meeting with the AG, the all-governor's meeting, where all 63 members get to attend and talk and discuss. But essentially, by that point, it's just a ratification of what's been decided in the ECC and the gym. the current chairman of both of those committees is Jerome Powell. Launching a token? Don't let complex legal and tax issues slow you down. Toku provides specialized support to optimize your launch and ensure that you as a founder and your team and your investors get the most tax-efficient outcomes. The Toku team understands the crypto space inside and out

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Starting point is 00:59:00 own goals and objectives, at least across the different countries of the world that have central banks, you'd have some degree of decentralization. But what you're actually talking about here is almost like this elite group of global bankers, this cabal, organized in institutions like the BIS, which is the bank for international settlements. I think a lot of bankless listeners, they'll be familiar with ECB or they'll be familiar with the Fed, less familiar with the BIS. Does the BIS really exert sort of monopolistic cabal type control, or do each of the central banks just kind of have their own agenda? Like what are really the power dynamics here and what makes this institution nefarious in your mind or potentially nefarious? What are the corruption vectors? What's their agenda? Well, the BIS,

Starting point is 00:59:47 The central bank for central banks, that's part of their mission statement. And there's a few functions that they provide. One of them is like they play host to things like the Basel Accords and things of that nature. So banking regulation, global banking regulation. They also provide these bi-monthly meetings for the central bankers to essentially discuss monetary policy, which, and this is their view, in a very confidential environment where they don't have to worry about the press, they can speak freely, They can, you know, get to know each other. There's a private golf course they have in Basel that's only for like BIS members, I guess. So they have this kind of country club, Vatican City type arrangement.

Starting point is 01:00:24 BIS is sovereign ground. It cannot be invaded by anybody without permission, even Swiss authorities. It's got embassy like status under an international treaty at the Hague. It pays no taxes. Its employees pay no taxes. Any actions taken by managers at the BIS are, immune from prosecution. They have a level of like diplomatic immunity in their actions. You know, there's all kinds of things that this organization has that most people have no idea. It even exists

Starting point is 01:00:53 in your listeners, I'm sure there's a lot of people who say, no, I've heard of the BIS, but they might not be aware of all of what's going on with it. But in the general population, it's literally an organization that most people don't even know exists. You say, to the average man on the street, have you ever heard of the bank for international settlements? They're going to say, hell no, I have no idea what that is, right? So this is a very important institution that completely acts in the shadows. And what happens, I believe, is, as I mentioned earlier, that the institutionalization of the financial system forces the hands of these people. So Powell comes in and he's got his American, you know, agenda, right? What he wants and thinks is right there. But then he has a conversation with,

Starting point is 01:01:33 say, the head of the Bank of England. And the Bank of England talks about, look, I'm going to have to lower interest rates because we don't do 30-year mortgages like you guys do in the U.S. In the U.K., everything's like a three-year or a five-year fixed rate, and then it resets. And, like, we're going to have massive mortgage resets coming very soon in the U.K. And if we have our interest rates where they are, it's going to be a big trouble. And it's the same in a lot of economies. Something like a 30-year fixed mortgage is very rare. I think maybe Germany might have them, but, like, other countries, I think France,

Starting point is 01:02:04 I think, you know, Canada, like all these places. they're essentially like what we would call variable rate mortgages. So all these foreign central banks are essentially saying in private where they know they can speak freely, we got to cut rates, right? Inflation be damned. If we don't, we're going to put our economies into a tailspin. But if we do that and you don't in the United States, what's going to happen? The interest rate differentials are going to start to drive capital. They're going to start to drain capital from our economies and then they're going to go into the U.S. economy, it's going to jack up the dollar in order to essentially meet other demands because we use the dollars reserve currency.

Starting point is 01:02:42 We're going to have to begin selling dollar-denominated assets, treasury bonds. This is going to jack up yield. So in order for you, Paul, to protect the American economy, you're going to have to cut rates too because we have to. And if we get too wide of a spread between where the ECB and the BEOE and the BOJ are at and their interest rates and what the Fed is at, it's going to cause all of these financial dislocations, and it's going to cause instability in the treasury market, which is also one of your mandates, along with employment and price stability. So you need to fulfill your congressional mandate by

Starting point is 01:03:17 cutting rates, even if that could be inflationary. And I think that's what we're going to see Powell do in September, is he's going to cut rates because he can't, you know, keep rates where they're at, you know, as the rest of the major central banks are entering, and many already have cut rate, such as the ECB or Swiss National Bank, Bank of England. So the BIS provides a platform for the coordination of all of the central banks and for the ability to act as one. But I want to ask the question here is like, what's wrong with that? Like, is there something necessarily wrong with that?

Starting point is 01:03:45 Don't we want those managing nation state level economies, central bankers of the world, to coordinate when they do something? So we don't have bad ripple effects. Isn't this just a sign of cooperation and everyone getting along? I mean, imagine a different scenario where you had like a World War III. None of the various central bankers were, like, meeting at all and, like, not coordinating because their countries were at war with one another. Is that sort of a scenario that we want?

Starting point is 01:04:10 I guess the question is, does the act of cooperating or coordinating, does that necessarily lead to nefarious outcomes? Or, like, what are the problems of this? I think in the short term, it leads to beneficial outcomes so that if people just were not coordinating and we had, like, the scenario I just laid out play out. out with uncoordinated moves, it would be detrimental to the financial system, it would begin to cause volatility, it would begin to hurt the stock markets, these would then lead to recessions, recessions would lead to layoffs, people would begin to lose their jobs. But in a way,

Starting point is 01:04:48 it's the same thing to take it back to a drug analogy. It's like, you know, you take heroin away from the heroin addict, there's a lot of bad outcomes that happen and that, you know, a different type of a drug that might simulate heroin can help, giving them heroin can help so that these negative initial effects are not felt. And what we keep doing is we keep doing things that forestall a fundamental reshaping that, as I mentioned, would be beneficial to the American people because what we would be doing, in essence, is beginning the process of cutting out this middleman of the central bank. And this is kind of the financialization of the world. So, I mean, you can just look at, for example, the United States and how much of our GDP at one point in time came from things like manufacturing and production and how much of it now comes from, you know, finance and these types of aspects.

Starting point is 01:05:40 And so the world would have a richer supply of goods and services, which would be deflationary, right? The real impulse of technology in progress is deflationary. But through the Fiat money printing system, we oppressed that initial and primary deflationary impulse with an inflationary impulse. And an inflationary impulse benefits debtors, right? I mean, creditors get hurt in inflation, debtors benefit. And so we're perpetuating a system which benefits debtors. And the largest debtors are, of course, corporations and governments. And so we're helping out the debting system by perpetuating this inflationary system.

Starting point is 01:06:20 And in the short term, we need this coordination to stop it off from unraveling. And that's why I say if we were to move away from this system, it needs to be done, you know, gingerly and well telegraphed. And it's still probably going to have some painful aspects to it. But in the long run, it puts us on, I believe, a more solid footing for growth and for actual deflationary aspects, positive deflationary aspects, which most people have a hard time comprehending. but it's basically turning the whole world on its head. And just imagine if we lived in a deflationary world, what that does. And the idea is that it would kill growth, but it would not necessarily kill real growth. It would essentially stop this tax on money that happens perpetually.

Starting point is 01:07:05 I think what's probably going to happen, Mel, is the central bankers and the BIS will keep doing what they're doing because it feels good in the short term. And, you know, like, I think there's probably good intention going into it, right? say we're trying to coordinate, we're trying to stave off a recession, you're like, we need cooperation, but you're saying sort of like similar to the meth addict, I guess, this compounds over time and the health effects of the long term are like quite significant, right, in the negative direction. And so where do you think all of this leads? Because so if we have, you know, banks and then we have central banks, which are the bank for the banks, and now we have the BIS, which is the central bank for the banks, what we have is a lot of monoculture, what we have is a lot

Starting point is 01:07:47 of coordination, I guess, on the good side, but another word for that is, like, ability to control, I suppose. And we all are running on the same playbook. Like, all of the world's economies are running on sort of the fiat operating system that is heavily fueled by debt. Maybe China's, like, on the side breaking off and, like, investing in gold and other things, which is, you know, so what an interesting side quest. But how do you think this ends? How close are we to the end game, some idea of a reset or a collapse. Do you see that as the end scenario to get us off this train? Yeah, well, I do think, you know, it does have these long-term, you know, negative effects,

Starting point is 01:08:27 even though these short-term fixes help things. And I think the clearest way to really look at it, like just take a sample period, let's say from 71 when we left convertibility of the dollar to today, you have seen real wages as a percentage of GDP get cut in half. And so when you look, we've had a great growth of GDP, but it has been very unevenly distributed. And the real wages being cut in half as a percentage of GDP is the eventual outcome of these types of processes, which essentially inflate financial assets. And the inflation of financial assets concentrates wealth in those that hold these financial assets, and you get more and more wealth inequality. And so this is kind of the payment for these short-term fixes.

Starting point is 01:09:11 And these are what eventually tend to get to such distorted levels that you risk civil unrest. But what I think is probably the endgame, like what's the solution for this, is that I believe we're coming to a bit of a crisis moment. Now, I've been listening to people for decades, talk about how there's dead at levels that and all of that. You know, people will say, Mel, I've heard it all before. You know, I could play you a video of Peter Schiff or some guy from 15 years ago saying this is all going to come crashing down in the next two years. I think we're getting close because the actual signs that we're getting close are starting to appear in ways that they never appeared before. So, for example, yeah, we were printing a lot of money after the financial crisis, but our debt to GDP levels were not anywhere near what they are now. We're now at those max points.

Starting point is 01:10:00 We're now surpassing the 120% level that we saw at the end of World War II, which, by the way, at the end of World War II in 46 and 47, we had about 40. percent inflation, cumulative inflation in those two years. And that's how we reduced our debt levels the last time we got to high inflation, or to high debt to GDP levels, was we essentially inflated away the debt in 46 and 47 the war debt. And so that's just one example. Another example is interest expense. You can look at countries throughout history. When do they start getting into trouble? Interest expense starts surpassing defense. Interest expense starts growing exponentially. So it's not just that we're doing $2 trillion in deficits. It's that this year, yeah, we have to issue $2 trillion in new treasuries, but we also had to

Starting point is 01:10:47 roll over like $10 plus trillion in treasuries that needed reissuance at higher rates. And so when you look at the monthly treasury statement that comes out every month where it breaks down like gross interest expense year to date, and you look at what's our gross interest expense fiscal year to date versus last year. It's up by almost 50%. And so in one year, our interest expense has gone up almost 50 percent because we're repricing our debt that was at one and a half, two and a half percent at five percent. And we're doing it five percent for a lot of political reasons. The Treasury gets to decide what debt we issue. And Yellen is issuing a lot more bills than notes. You know, coupons is a good way to describe it. So there's Treasury bills a year or less. There's notes a year to 10 year. And then there's bonds 10 to 30. In the financials, nomenclature, a lot of people call bills versus coupons, right? So bills are bills, notes and bonds are coupons. So she's issuing a lot less coupons, and she's doing a lot more bills. And what that's doing

Starting point is 01:11:47 is it's suppressing the longer term rates. So I believe, like, the yield curve is no longer giving an accurate signal on the market. I think a lot of people have talked about this inversion of the yield curve. I think that were these suppressing mechanisms not in place, the yield curve would not be inverted, and that's why we haven't hit the recession. You can look at things like mortgage-backed securities, which are also backed by the full faith and credit of the United States, and they're trading around 7 percent. If you look at an equivalent of a 10-year treasury, and if you do that, and you have a 10-year agency-backed security trading at 7 percent, and the front end is 5 percent, then you've got a 200 basis point spread between the front end and the long end, and so the

Starting point is 01:12:29 yield curve is not inverted. I don't think the yield curve has ever been inverted. The treasury curve, has been inverted, but the true risk-free rate curve has not been inverted. And so that's an idea I got by a guy I want to give credit to named George Robertson, who just done a lot of work on that, and it's excellent if you want to learn more about his view of the true risk-free yield curve. But basically, I think a lot of this stuff that's going on is now starting to come to a head, and they're using these last rabbits out of their hat to keep the system going. And as that begins to break down and start to crumble where things are going to start to happen, where people are going to realize, okay, the Fed's having to lower rates, but the government's still running these wartime-type deficits.

Starting point is 01:13:11 And then in 27, 28, you're going to start getting close to the evaporation of the Social Security Trust Fund, that we're going to have these kind of come-to-Jesus-type moments in the next few years where it's going to really start to enter into the political consciousness, much as it was back into the 1800s with, you know, the Free Silver Movement. And I think Jeffrey Gunlock, a great bond manager, said, you know, debts and deficits may not be a huge issue in the 24 election, but they will be the issue in the 2028 election. And that we're coming to this moment where I think there's two paths. Like, we can get together and work to fix these. And I think the end result is going to be a prolonged inflation and debasement.

Starting point is 01:13:54 But that's kind of the good scenario. And it's going to be good for things like Bitcoin, gold, and silver. But then the worst case scenario is that we do not fix this in a manageable way. And more civil unrest begins to boil up. And we start having real issues. And I think even in the last few weeks, we've already begun to see the first casualties of the global dead bubble in Kenya, where Kenya was trying to raise taxes to pay off IMF loans. The people protested and dozens were shot dead on the streets.

Starting point is 01:14:25 So we're already seeing people lose their lives because of sovereign debt. Wow. Okay. So you're painting a picture of one we've heard from other bankless guests like Lynn Alden has talked about, you know, the slow motion train wreck of fiscal dominance that's coming and kind of starting to crescendo. You're talking about yield curve control, which is like very interesting in a mechanism that central bankers will use.

Starting point is 01:14:46 And just like the civil unrest, monetary policy starting to be top of mind again as it was in the U.S. and in the late 1800s. where we talked about that cross of gold speech earlier. So that's coming into consciousness. And this could be explosive in some ways in ways we can't anticipate, which is perhaps the scariest scenario. And maybe that's part of the genesis for your book. Or we could have a less explosive unwind,

Starting point is 01:15:11 but it would be, you know, 1940s level inflation sort of unwind where it would feel very uncomfortable, particularly if you were invested in certain asset classes. So this could unwind and unfurl in a variety of different ways. One aspect I want to touch on, though, is another element of all of this, which is kind of financial repression. This is something we saw in the United States in kind of the 1930s, with you mentioned FDR's executive order to like get all the gold from American citizens,

Starting point is 01:15:40 which is like somewhat successful and other forms of capital control, financial repression. We talked about this a little bit, you know, recently on the bankless podcast. And we actually had Luke Groman who talked about this book called The Great Taking. I still have not read it. This is on my list of things to read, Mel, but I understand you've kind of read this and your subscriber to the great taking concept. Could you tell us about just financial repression in general what that might look like as we enter this new era of change and the concept behind the great taking? Yeah. Just to tie it together on somewhat of an optimistic note before I get to the great taking is I think what we're going to go through is something that's going to be essentially new to everyone that's alive, but not new. in our country's history or in world history.

Starting point is 01:16:27 We're going through a very large period of monetary change, which is very normal and happens on a regular basis, especially kind of almost every 80, 100 years, you start to see some of these major monetary economic shifts. We actually are literally 80 years to the day that Bretton Woods was going on. It was going on in July of 1944. It was a multi-day conference. And so it's been 80 years since this monetary system kind of got put in place and changed. We're about due.

Starting point is 01:16:55 And we're about due. So I'm not saying we're heading towards World War III and this apocalypse is coming and it might be a non-zero probability, but I don't think that's the most likely case. I think the likely case is we're going through a major monetary reset and it will be shocking and uncomfortable at times, but we will get through it the way we've gotten through these types of situations in the past. Now, with the great taking, this is a work by a guy named David Rogers Webb, who is a former hedge fund manager. He's very concerned about the financial system so much so. He's moved his family to a farm in Sweden. He's originally from Ohio. And he basically did a lot of research and uncovered some very startling changes that were made to U.S.

Starting point is 01:17:39 and also laws around the world regarding securities and who actually owns securities. So talking mostly about stocks and bonds here. And so in the U.S. we have something called the UCC, the Uniform Commercial Code, which is essentially a code that all the states kind of pass on a state level, so it's not a federal law, but it's uniform so that all the states kind of can operate on the same page. And so all 50 states have passed this UCC code that changed things from essentially if you buy a stock, like you buy Apple stock in a JP Morgan brokerage account, at one point in time you own that stock. So what do I mean by you owned it is that as a public company, they need to know who owns their stocks. you know, the Apple Treasurer would have a list of who owns stock. And at one point in time, it was the individual, right? At a certain point, brokerages started getting, you know, so big,

Starting point is 01:18:30 they started doing something called street name, where, okay, you buy it through J.P. Morgan. J.P. Morgan is going to be on the Apple Treasurer cap table as owning certain amounts. But J.P. Morgan is going to have to segregate your client funds from the bank's funds or the brokerages funds. And in the case of a bankruptcy of J.P. Morgan, these are separate legal entities. and you have first claim on that Apple stock if JP Morgan goes under. Well, in the 1970s, really was where the process started. Things just started getting too overwhelming. The volumes got too big.

Starting point is 01:19:05 A lot of times in the 70s, they were shutting down trading on the New York Stock Exchange on Wednesdays so that paperwork could be caught up. And this guy named William Densner was brought in. He was a former CIA operative. And that's in his Wall Street Journal, Bituary. Former CIA operative helped unsnarl Wall Street's paperwork problem. And he founded this company. He gives us, W.S.J. William Densner, CIA operative, Wall Street's paperwork problem. And he came in no real banking experience. He'd been working in Latin America on behalf of the CIA.

Starting point is 01:19:40 He spent a short period of time in a financial-related post appointed by David Rockefeller, the then-governor of New York. And then he's brought in to create this thing called the DTCC, the Depository Trust Clearing Corporation, which is now the legal owner of $88 trillion worth of assets in the United States. And so basically all of them, yes. Basically all of the assets. All of the assets. Unless you take the trouble, there is a secondary system that can allow you to directly

Starting point is 01:20:05 own your stocks or bonds. But what's concerning is that in the law, what you own if you own Apple stock is you own what's called in the law a securities entitlement. And what David Rogers Web points out is that while under most cases, if these financial intermediaries go bankrupt, your claim as a securities entitlement holder is good enough that you're going to get paid out. But there are certain instances, and they would essentially be a calamitous type of a crash, where various financial intermediaries, like people that are doing derivatives, business and stuff like that, these things all go under, where they're going to be senior to you

Starting point is 01:20:40 as a securities entitlement holder. And in other words, there is a legal framework that would be in place in the result of a massive crash where the stocks, the bonds you might think you own in a broker's account could legally be claimed ahead of you in seniority in a mass bankruptcy of financial intermediary type institutions. And so he has worked to try to spread the word on this because what he's worried is he's not thinking that this is necessarily being done on purpose and people are planning this. What he's worried is that if we get to a state of a massive collapse, and we start having this, that the legal framework is going to lead interested parties, people that might be on the other end of a derivatives contract. Let's say somebody does a swap,

Starting point is 01:21:22 and J.P. Morgan goes under, and the swap is being cleared by one of these international clearing organizations like the DTCC, and the DTC goes under, and J.P. Morgan go under, and I'm at the other end of this swap, and I want to get paid. It's those types of circumstances where, theoretically, that creditor could come in and take DTCC assets, which are going to be your Apple stock or your whatever security is being cleared through the DTCC and claim those and you don't get them. And so this is what the great taking is. He's gotten it on the radar of people like North Dakota state legislatures who have gone in

Starting point is 01:21:57 and tried to amend the UCC and they just can't do it. They get close. They pass resolutions to amend this and return ownership to the individual in Tennessee. Webb has a YouTube video where he talks about working with this Tennessee state senator, and they're ready to pass a law to change it and make things like it used to be. And the Tennessee state treasurer comes into an office and says, we cannot do this. Tells the governor, you cannot sign this bill. If you do, Tennessee will be the only one that has this.

Starting point is 01:22:25 Banks, nobody's going to do business in Tennessee. We're going to have companies fleeing Tennessee. It's going to be disastrous to the Tennessee economy. If any changes are made, they need to be made by like all 50 states at once. We can't do it. and it doesn't happen. And so people are aware of it. Things are being done to try to fix this, but they're running into roadblocks because of the setup. And it's a similar situation in Europe and Canada. There are similar laws on the books. That's interesting. So all the securities,

Starting point is 01:22:52 basically all the assets in the U.S. economy, like, they're not bare assets. So you don't actually own them. The property rights around them might not be what you thought they were, you know, because they're intermediated by the DTCC, which is somewhat interesting. I guess I have two reactions to that, as I hear you explain this. One, bullish critical. cryptocurrency for sure, because those are not obligations, those are not intermediated, those are actual bearer assets. And particularly if a great taking sort of occurred, then people would start to doubt the property right systems that we have in place in existing capital markets and allocate the capital elsewhere, I would imagine. But secondly, I guess one question I have about

Starting point is 01:23:27 this or a little bit of like maybe pushback on kind of the worst case scenario of the great taking is we're talking about technicalities that maybe could be like a push through in a crisis type of scenario. But I would think that the organizing powers that be of the U.S. government, including kind of the social layer and U.S. citizens and investors, would be very much against the great taking actually being fulfilled. Because if that was the case, the market reaction to a breach of kind of the social contract behind securities, property rights, and shareholders saying, like, well, actually, I thought I owned this, but apparently I don't. There would be just a massive amount of capital fleeing the U.S. capital system. And the reason U.S.

Starting point is 01:24:09 capital markets are so fantastic and, you know, the entire world wants to be in them is because of the precedent of excellent property rights, you know, fantastic rule of law system or if courts, shareholder laws and this sort of thing. So I would, you know, to do the countercase against the great taking scenario actually coming into place. Well, technically, this could be possible. Isn't it anti-incentive for basically everyone? one in the U.S. to actually allow this to occur. Like, wouldn't you get a system where there's such a public outcry that there's an executive order against something like this? Because, you know, to allow this to happen would be to basically torpedo U.S. capital markets and the confidence around

Starting point is 01:24:50 property rights. Well, this gets back to the problem of wealth inequality, because who would that hurt, right? It would hurt to people that own assets. But if you're poor and on welfare and don't own any stocks or bonds, it doesn't hurt you. So if your political motivation is to put in a socialist or communist type regime, this could be exactly what you're hoping for. And I think there could be aspects where, you know, there are large groups in our society who would welcome some sort of a financial meltdown as an opportunity to fundamentally alter the capitalistic leanings. Obviously, we're not in some sort of Adam Smith capitalist society anymore. But some of the capitalists that, at least, leanings that we have to try to erode those further. So I don't know if I'd agree that everybody would be

Starting point is 01:25:37 on the page of, well, the result of this is going to be so horrible. Let's not let it happen. I think there could be people that would be on the page like, this is our chance. That's a great point, actually. Very interesting. So we do see this backdoor being open. So this brings us maybe to the last topic that I wanted to cover with you today, Mel, which is, okay, what do we do? How do we prepare for this. And there's obviously, you know, societally how we can prepare, and that's maybe outside of the scope of this conversation and our powers to actually affect that. I'm more interested first in individually. So if we play this forward and, you know, like central banks continue to stay addicted to the meth and continue to make these short-term types of decisions and just one

Starting point is 01:26:21 foot in front of the other, where does that lead us? We've talked about where it leads us, you know, effectively, but like, how do we prepare for where it leads us as individuals? Like, what are you doing about all this? So I do believe that we're still in a little bit of the buildup of a bubble. I think the S&P is probably going to hit like 6,000 by the end of the year, 7,000 by the end of next year. I think gold and Bitcoin are both on sale right now, especially Bitcoin. On sale, you mean like super cheap relative to other assets? Yeah, yeah, super cheap. Yeah. I think the prices that gold or Bitcoin could get to are going to be surprising to people. But I think it's a whole other show to get into the details of that. So to more directly answer your question of,

Starting point is 01:27:00 you know, what am I doing? So what I'm doing is I personally have most of my wealth in real estate. Now, I think rental homes, which is what I own, are somewhat problematic in a severe recession. But the cash flow requirements, I have to keep those and get through that tumultuous period where rents might be a little lower, what have you, are okay for me. As far as my liquid assets are more stocks that don't have any bonds other than T-bills, which I invest through a T-bill E-T-F called B-I-L. But basically I have Treasury T-bills, short-term duration. I think the worst asset in the world right now is any type of a bond that's over a couple of years. Long-term bonds.

Starting point is 01:27:39 Yeah, long-term bond. Luke Grohman talks about this, calls them the sucker at the card table. People are going to start to realize. Feels bad. Pension funds, man. Yeah, the 4% yield is not going to – I mean, the yields on these things, and you can't trust the inflation numbers. I mean, it's like, look at the price of a home. Is it up 20% in the last five years? No, it's not. It's up at least double that. And you can go back decades and look at, you know, key items that Americans need to buy are up tremendously more than what the CPI would indicate. So real inflation is not what the CPI is. Again, these are a whole other podcast, but they're, everybody probably knows that like they keep messing with how it's calculated. They look at these

Starting point is 01:28:18 baskets and they say, well, a cell phone with like eight gigs costs, you know, a thousand dollars back then and an eight gig cell phone you can get for like 20 bucks and so it's deflation but you know people need the most modern cell phones so they're calculating things in all kinds of weird ways to tamp down on they've removed borrowing costs in the 70s they used to include like credit card rates mortgage rates in CPI calculations they took out all that stuff so we've got this massive inflation that a 4% yield on a 10 year is not going to cover so that's what I recommend especially if you're maybe taking care of finances for an elder parent and they're maybe in retirement and their broker has them like 50% in bond mutual funds that have like a duration of six or seven or eight years. Get out of those. I kind of recommend

Starting point is 01:29:03 maybe have a conversation with your parent or say, you know, mom, you know, maybe it'd be better if you've sold these longer duration bond mutual funds and moved it into T bills. Not only will you get 5% now, which is more than those bonds are going to be paying, but you're going to have liquidity. and if we get into a situation where you need to protect your purchasing powers and other ways you can do that. So what I'm doing is I still think the stock bubble is going, so I still have a good amount in stocks. But one thing I've done is I've wanted to make sure that I'm very liquid and I can act very quickly. So at one point in time, my wife and I had some 401Ks in different places. I consolidated everything.

Starting point is 01:29:41 I got everything in one place so that when I want to pull the trigger and get out of things, I can. You can be first out fast. Yeah, it can be out fast, don't have to be, you know, looking for passwords. And what I'm slowly doing is taking some percentage, some smaller amount. It depends on kind of markets and different things, removing it from the stock portfolio and investing it in a mix of precious metals and Bitcoin. And building up that percentage of my portfolio over time, kind of dollar costing, averaging into those and dollar cost averaging out of the stock market and also keeping cash on hand in the form of

Starting point is 01:30:21 T-bills and then I own real estate. And so these are what I'm, you know, doing personally. I think everybody's financial system is different and they're also different at different ages. And so what might be right for me, given my situation, might not be right for everybody. So I'm not making blanket statements. But what I'm really cautioning people is if they're in the stock market, you know, be aware of what you own and know exactly what you would need to do to get out of it if you ever want it to. And then if you're in bonds with long durations, my recommendation is probably to get out of it. And, you know, as far as Bitcoin and precious metals, I believe in both of them. I believe that Bitcoin is still going through a price discovery stage where it's being accepted as a monetary asset.

Starting point is 01:31:08 And that because of that, it's going to have high volatility, but it's also got potential for seismic gains in the sense. that gold doesn't. Gold is already a monetary asset, fully accepted by the financial community as a monetary asset. As Bitcoin gets adopted as a monetary asset, I think that its value is going to go up more than gold, but it's going to be more volatile than gold. I think there's some reason for concern with the kind of capture of Bitcoin by companies like BlackRock and things, and I think people need to be aware if they own Bitcoin through BlackRock, they don't really own Bitcoin. Yeah, it could be a DTCC scenario yet again. It is. It is. It is. It is. It is. It's through the DTCC, and it's not that. And so these are all things that I would just say on a personal front, you know, to be aware of.

Starting point is 01:31:51 Yeah, all of that makes sense to me. I guess you like that kind of the rental income because that's sort of cash flowing and your T bills because that's a great yield. It's highly liquid. But you're not going full great taking like David here, right? Because like if you fully believed that the crisis scenario where it ends in sort of a bad crisis was imminent, then I would imagine you'd be taking other steps here, right? Because like a lot of the assets that you just named, you talk about, you know, rental property income. You talk about even the stocks. Maybe you can exit those quickly. But like, like, you know, T-bills, even I would imagine the precious metals that you own, you're probably not custing like the gold yourself. You're not like buying gold bars. Imagine you're buying some sort of a certificate for gold. You're not betting that there will be. No. Oh, you do have, oh my God, there's a gold bar on screen, bankless listeners. So you're going full bearer assets. That's a hundred ounce of silver right there. But, well, look, I trade gold and silver through ETFs. Yeah. But I have a stockpile that I keep in a hidden spot that is not here. I have some, a very small amount in the house, and it's mostly a small amount of silver for things like using

Starting point is 01:32:57 a hundred-ounce bar of silver as a paperweight. And that silver bar, by the way, when I bought it, I think it was like 10 bucks an ounce. You know, now it's, you know, over $3,000 for that bar. But, you know, these things, I do worry about custody. So the gold ETF, which forever was only, allowed to custody gold, it was all being done by HSBC. Just recently, they added J.P. Morgan as a custodian, and J.P. Morgan is working to move some of that gold from Europe and other depositories to the United States. I think that's an interesting development of what's going on with the physical gold market, because the physical gold market has a whole bunch of issues with it, with the gold leasing market and the futures contracts. 100%. And so I do think that there's issues. And so I do think that

Starting point is 01:33:44 there's issues with like if you're like, oh, all my gold is in the gold ETF, GLD. Again, you're in DTCC territory. Vulnerable. Yeah, capital repression. You're very vulnerable to that. I was curious about kind of because I know you are excited about crypto, but also newer to crypto than maybe some listening to the bankless podcast. So like when you're doing the cryptocurrency journey, have you gone down the rabbit hole of taking custody of your own keys? Because that is the point at which you, it's not your keys, not your crypto sort of thing. It's similar to the bar of silver that you were just holding in front of your screen. That is the bare asset when you take custody of your own coins.

Starting point is 01:34:19 If you're still on an exchange like a Cracken or Coinbase or, you know, if you're in the Bitcoin ETF in some way, then you don't have that. Have you gone that far down your crypto journey to take custody yet? It would be a good question for you because I'm not very super up on this. So I have some good friends and colleagues that I worked with at a prior company. You know, we never talked about my background. I've been the CEO of three different SEC FINRA registered broker-dealer, have NBA from Duke. I've done a lot of different stuff in finance for over 20 years.

Starting point is 01:34:47 But some of my former colleagues who are really into crypto in Europe, they started a stable coin called GLO, USD. It's a non-profit stable coin that takes the interests from the T-bills and invests. They've heard of GLO, yes. Yeah. So the guys that I used to work with at a company called SECFI started at a guy, Jasper, is the CEO, another friend of mine, Harm Lucasen, a Dutchman, also involved with it. So when I was buying Glow, I could only do it on Uniswap. So if I'm using a Uniswap

Starting point is 01:35:15 wallet now, is that my custody? Is it? Yes. It is. Okay. Uniswap generally means custody. I mean, we could have another conversation about this, Mel, to just like make sure you're set up, because I do want to make sure that you're set up and you have custody of your own crypto assets, and you're doing so in a way that you're not going to lose them. So the biggest thing you need to learn to do when you're getting into crypto is if you're going to take custody of your own assets, great power, great responsibility. So the moment you decide to get off in an exchange and like do that, then you need to make sure that you have your backup keys, like you know what you're doing, you have like redundancy, if God forbid something would happen to you, you have loved ones that

Starting point is 01:35:53 can access those assets. It's, you know, probably similar in some ways to the level of effort, not quite as significant of like cussing your own gold. You know, like, what would that take, right? You really have to think about where you're going to store it and like, who, knows about it and what the access criteria is. So it's on that level, but a bit more simple. So I want to make sure you get set up. I want to get your reaction to sort of a crypto portfolio or sort of a portfolio construction of investing that at bank lists. I've been an advocate for. And I think some listeners are an advocate for. And you might think this is absolutely crazy because it's not sort of as diversified as, you know, traditionally is recommended. But it's

Starting point is 01:36:32 basically like the barbell strategy. T bills. So you have T bills. You know, the short-term treasuries, right, for your yield, the liquidity, all of that, in case markets go down, and that's one side of the barbed bill. And there's nothing in the middle. So no securities, maybe you have a roof over your head, but like just not a lot of property, not much in the middle. And then on the right side, it's all crypto, basically, completely crypto. And the advantage of this sort of portfolio is, you know, crypto, if you take custody of your own assets, it's all bearer instruments. So if something like the worst-case scenario of the great reset happens, you have the ability to just take it and leave it. You don't have any DTCC. You don't have any intermediaries. You don't have

Starting point is 01:37:13 anyone who can come in and steal the capital and take the capital forcefully. So benefits from that. And, you know, like if something less significant happens, similar to the 1940s where we have multiple years of like very high inflation, you know, the bet on cryptos, that crypto realizes some of that upside. And you said it yourself earlier that Bitcoin is on sale right now, potentially greatly undervalued. So I'm not advocating for bankless listeners. You know, obviously your case will vary, and this is not financial advice, but we always say at the end of bankless podcast.

Starting point is 01:37:43 But that's sort of at the end of these episodes, when I hear a message like yours, where I'm always left, I'm just like, okay, well, like I could buy stocks. I could do that sort of thing. But I'm sort of like, I'm very comfy in my crypto positions, and I'm very comfy in T-bills. And I'm comfy not owning, you know, multi-year government bonds. and not having to worry about the stock market. So, yeah, what's your reaction to that kind of portfolio strategy

Starting point is 01:38:08 other than to maybe recoil and say, like, hey, Ryan, you need to diversify? What's your take on this? No. And I think, you know, you said some key words there, which is you're comfortable, and you understand it. And, you know, you got a guy like me who is still a little new to this journey, although one of my great financial mistakes was I was really interested in getting my hands on some Bitcoin in 2012 when I first heard about it.

Starting point is 01:38:31 I heard an NPR story talking about this new thing called Bitcoin. And I did a couple searches and tried to figure out a way to get my hands on some. And it wasn't easy. It was so hard back then. Very difficult. I didn't know. And I kind of was like, all right, I just didn't think about it. And then finally, like, you know, I don't know, five, six years later on my first Bitcoin.

Starting point is 01:38:51 But basically, your strategy, especially with dealing with other coins, is I played around a little bit in the past with other coins. I really didn't know what I was doing. I was not comfortable. I didn't really understand the technology, and it wasn't very successful. And so for me, I just got comfortable saying the only crypto I want to own is Bitcoin, and that's what I'm going to have. Very, very small amount of Ethereum. I own some glow stable coins to support my friends, and I think it's a great idea.

Starting point is 01:39:19 But those are my three crypto coins and my uniswap wallet, and some USDC and some polygon matrix or whatever it is that I need to use as gas, as you guys call, right? So these are what I have. and I'm comfortable with that. If you're someone who really understands this technology, knows what these other coins do, knows what's going on, then I think you have a leg up. You know,

Starting point is 01:39:40 you have an understanding of an emerging technology that a lot of people like me don't have and you're able to see things and you've got a competitive advantage to be in that. So I think if you're comfortable with that, because there are all these issues with stocks. I mean, I'm saying I think the bubble's going to keep going for a couple of years, but obviously I have no crystal ball.

Starting point is 01:39:58 Some sort of a collapse or outside event could come in at any point in time and make my get out of jail quick scheme of, okay, I can go into one site and basically get out all my stock positions in a three-minute period. Like, yeah, I've got that set up where if I needed to do that, I could, but it's still got to settle. It's got it. The money's got to come. Like, you know, and the markets can move so quick. It happens. Something happens overnight. It's down 20 percent. I'm like, oh, I don't want to pull that trigger yet. It could come back. And then it goes, you know, so there are all kinds of issues with whatever you do. And this is kind of the problem with an inflationary world, right? If we lived in a deflationary world, we wouldn't have these

Starting point is 01:40:33 concerns. We could have whatever the money is and just, you know, know that it's going to go up in value just by being money, and that's the way it is. So I don't have any judgment on that negatively at all. And I think there's a very strong likelihood that's going to outperform some sort of a mix that I outlined. It's just also a little bit of a factor of how my path evolved financially. And what got me into rental housing was not necessarily like this idea that, I want to get out of the stock market. It was this idea that I found it nuts that banks were literally willing to lend me millions of dollars at two and a half percent. Yes.

Starting point is 01:41:10 And I was not going. It's absolutely crazy. This is the best retail arbitrage that you can get, isn't it? How can you lever up as an individual five or ten to one? Some of my houses are listed in a second home. Some of them are initial home. Some of them are investment properties where I had to put 20 percent down. You know, I had to do what I needed to do.

Starting point is 01:41:27 but I literally had a mortgage guy that I went to college with, and I kept pushing and pushing and pushing until I couldn't borrow anymore. And buying homes in 2019, 2018, my first rental property I got in 2008, but I only had one. And then as these interest rates got low, I started just to say, this is ridiculous. Like, why are they giving me this amount of money at this interest rate? So ridiculous. I can buy this house. I bought two houses in my neighborhood.

Starting point is 01:41:56 I'm like, I can buy this house and I can rent it out and it's not only going to cover the mortgage and escrow and everything else. It's going to immediately start cash flowing me like $400 a month. And that was like in 2020. Now it's like cash flowing me like double the mortgage payment. And it's like this is just crazy. And I almost thought it was too good to be true. But my financial mind kind of overread that fear and I had people, my mom telling me, Mel, stopped buying houses. And I'm like, as long as they're going to give me the money.

Starting point is 01:42:29 Yeah, it's free money. Like, the interest rates were so low back then, especially then. It's crazy. You know, there's this guy in crypto who's famous. Michael Saylor is his name. He owns a company called Micro Strategy. It keeps taking out, like, long-term bonds of various forms and buying Bitcoin with it effectively.

Starting point is 01:42:44 I see, you know, the 30-year fixed rate mortgage in the U.S., that is like the Michael Saylor play, like, for Normies for buying crypto. Because, like, the rates are absolutely insane. And effectively, in a way, you are short, you know, long-term duration bonds of the type that we were talking about and saying that they were toxic, you know, don't buy. You are the recipient of that on that kind of like a mortgage trade. Of course, people need to be careful, not take out too much debt. It is a form of leverage, all of these things. But the rates that you can lock in, even nowadays, just like, you know, given the prospects of the future, it just seems like free money.

Starting point is 01:43:20 Mel, this has been great. You know, thank you so much for walking us through this. You know, some other time, if you're ever having any trouble with crypto, want to learn about, you know, cussing your assets, please reach out to me. Like myself, somebody from the bankless team would be just, like, happy to help you and make sure you're on a good footing there. So you don't have an intermediated asset. You have actual bare crypto assets. But thanks for your time today. This has been absolutely fantastic. Well, thanks for having me.

Starting point is 01:43:43 I really enjoyed the conversation. Bankless Nation, we got two books that were mentioned today. One is called Quas, which is Mel's book that we mentioned earlier in the episode. so we'll include a link to that in the show notes. The second is The Great Taking, which is a book that I still need to read, but maybe you can, bankless listener. It'll be in the show notes as well for you. Got to end with this.

Starting point is 01:44:01 Of course, none of this has been financial advice. Crypto is risky. You could lose what you put in. But we are headed west. This is the frontier. It's not for everyone. But we're glad you're with us on the bankless journey. Thanks a lot.

Bankless - Why Banks Suck, The Great Taking & How To Prepare | Mel Mattison

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