Big Technology Podcast - Doge, Bitcoin, NFTs, and Capital Gains: Ranjan Roy and Can Duruk of Margins Demystify Our Economy

Episode Date: April 28, 2021

Today's economy is a wild ride, and it's time to demystify it with Ranjan Roy and Can Duruk from Margins. Consider the following: Doge, a joke cryptocurrency, seems to be minting new millionaires daily. NFTs, tokens that enable the buying and selling of digital art, are going for millions. Bitcoin's price is volatile, up $10,000 one week, down by the same amount the next. The overall market, meanwhile, is cranking. In this week's episode, we go deep into what's actually taking place, and discuss whether Joe Biden's proposed capital gains tax increase will bring an end to the party.

Hello and welcome to the big technology podcast, a show for cool-headed, nuanced conversation of the tech world and beyond. Joining us today are two friends of the podcast, Ron Jen Roy, a return guest who helped us break down. The GameStop madness a couple of weeks ago. Don't worry. The economy has calmed down and is totally rational now. And John Durek, his co-author, co-host at Margins, one of my favorite financial and tech newsletters, which you should all subscribe to if you're not already, definitely worthwhile. John also is starting a new company. He says on his websites, it's about textiles, but word on the street is it's about software, so maybe we can get him to tell us a little bit about that, although, John, you're more than

willing to, you're more than welcome to keep that under wraps if you'd like to. you can give us a scoop here off the bat um sure it is something creative okay so i think that's like that so i mean i think the way we describe it is like more openly is that we're kind of working at a new creative medium it is not audio it is not blockchain so i can kind of like rule out a couple you know usual suspects yeah it's a cool creative medium and and and last time ronjan was on We talked a little bit about his background as a Forex trader. Let's talk about yours quickly. You've worked at places like Uber, you know, from Turkey.

Tell us a little bit about yourself before we jump into our conversation. For sure. I don't know how much you want to go back, but basically, you know, I used to play a lot of video. Yeah, do it in like a minute or so. Sure, sure. I used to play a lot of video games. And I think that's sort of how I got into computers. You know, I studied computer science.

got into Silicon Valley before things went haywire. My first job was at dig. I don't know if you're readers or listeners remember dig. It's like precursors. We dig, yeah. We dig, dig. Yeah, you do. And then since then, you know, I kind of, you know,

work at companies small and large. My like last big, big gig was at Uber. You know, I worked on like a couple other, couple different things. Then I took a year off from America, went to Singapore, did some business school. The same place like Ranjan went, which was actually kind of like a weird coincidence and then came back. It was around when I was in Singapore, Ranjan and I started margins.

And that took a life of its own. And now, you know, I run a small company. Great. Ranjan, welcome back. Glad to be back. You're three hours after your second vaccine. Are we allowed to say that on air? I just got my second vaccine.

So from what I've heard from everyone, it takes about 24 hours for it to hit. So hopefully, hopefully we things go smooth. We can get through this conversation. Okay. I'll raise my hand if anything goes bad. Yeah. Which did you get, by the way? Moderna.

Moderna. Okay. Yeah. And they just reauthorized Johnson and Johnson, although it'll be a couple days old by the time this airs. But exciting time. Progress. We're making progress.

Okay. So Ron John, let's talk about some finance stuff before you pass out on us. So the Biden administration, has, last time you were on, we were talking about the GameStop madness zero interest rate policy and how the government had basically cleared the way for speculative investments because, you know, essentially the idea is you're not going to make a lot of money with safe investments. So you just go to the next level of risk and so on and so forth. Well, now, after people had put so much money in things like Bitcoin and Dogecoin and NFTs and just basically gone wild on the stock market, the Biden administration seems to be interested in increasing the capital gains tax to pay for some of its new programs. So can you share a little bit about what's going on there and then what it might mean for our wild, roaring, speculative investment economy? Yep. So a big thing for me over the past number of years has been what could possibly cause this to end.

because every single little thing that I think might let this kind of... What's this, by the way? This being the mania, this being what used to just kind of be Uber, no offense, John, but losing a lot of money yet still IPOing into a $50 billion company. You know, it started there. We work beforehand, then morphinging into slightly more absurd things. And then now we're at the point that Doge quantity is... So we're living in a market unhinged from, yeah, unhinged from fundamentals.

Unhinge is almost a generous term, I feel. But the thing is, so raising interest rates always seem to be the thing that would prick this bubble. And I do think in like December 2018, when the Fed started to hike again, there was this big freak out, stock market fell, and then everything came right back. So this time around, it was very interesting to me, the Biden capital gains tax gets announced. You know, it seems like. Things are moving more away from the neoliberal utopia that they've been over the last two decades. But I didn't really connect that to the mania and whatever specific speculative bubbles there are.

You know, again, it's taxes. It's not fiscal policy. But then there's one Bloomberg article about connecting the recent drop in the price of Bitcoin to the capital gains tax increase. And again, this hasn't passed. this very well could not pass. If it does pass, it will happen far down the road. The capital gains tax will raise, the maximum capital gains tax will raise from 20%

to I believe it's like 43.4% all in. Now, just to be aware, I had always thought the long-term capital gains tax was 15%. I did not realize if you report over, I think, $500,000 income, it's actually 20%, perhaps some disclosure there but uh and this is all money that you're making by selling your equities at a like your stocks and equities at a gain so you pay tax on selling your assets is the key term because bitcoin would fall into there um and that that's exactly the key term so okay so so so again bitcoin's down i think what is it like eight 10 percent again not that crazy but if it is they think about the average

person who's up over a million dollars in Bitcoin, probably, to their credit, is a hodler and has been in from very early and almost the entirety of that sum is a capital gain. So if you sell that and you're going to lose 20% of that versus you're going to lose 44% of that, that's a big difference. So suddenly, you know, the utopian dream of, I'll hold this forever and it'll go to millions and millions of dollars versus 50K, you at least start to think, wait, something can change. And if it's going to 43 percent, could it even go higher? Could it even?

So suddenly realizing that into U.S. dollars becomes a slightly more urgent thing. So maybe there's some percentage of people who actually sold Bitcoin for the purpose of worrying about the taxes going up. Yeah. And is that a commentary? Is this a commentary on Bitcoin? particular or is it something that could, you know, I mean, if you look at Bitcoin as a speculative investment, you could potentially look at like the rest of the market as having some speculative

premium over it. So is this something that could end up like reining in on the parade of Bitcoin specifically or do you think it could have market wide effects? I definitely think if that thesis is actually true that this simple announcement is enough to kind of start to prick Bitcoin a bit, it can definitely have market-wide ramifications. Again, it's something, like what could prick this bubble? You never know what exactly it will be. And again, normally a rise in the capital gains tax, I would not necessarily equate to something that would, you know, quell a speculative bubble.

But in this case, I mean, maybe that's what it is. If everyone starts to slowly pull out with the worry that their 20% will turn to 43.4% on some massive gain that's already life-changing money for them, I mean, then you start, you start to want to get out, and the more people who start to want to get out of everything, you know, the downward spiral begins. But again, I've been wrong on many of these thoughts about what could stop the mania. And now again, Doge is at like 0.34, whatever it is, and NFTs are selling. So, who knows? Yeah. And is this a signal that just,

about how about the mania around the market like if bitcoin can loot can go from like in the 60,000 range per coin to less than 50 just on an announcement that there might be a capital game and we know the US Congress. All right. They don't pass stuff. So, you know, is this just a sign of like how skittish people are because they've ridden this wild roller coaster that's unhinged from fundamentals. And do you get the sense that there's a latent feeling among people who have ridden this all the way to the top that it could all just blow up at any second? People in this current market don't know how to take profit. That's the main thing, because no one's had to yet. You haven't had to. And that's a skill onto itself. That's like a

major skill in any kind of trading. And taking profit means just selling at a gain and saying I'm out now. Selling it again and saying I'm out. Exactly. Again, like the entire thesis of diamond hands I'm going to hold till the end of time. It's, I mean, it's saying that I will never sell no matter what, which is the exact antithesis of how you invest. So as long as that's the case, we, I mean, so much of the speculation that you see so many, even the way like equities and Robin Hood or whatever, public.com and all these things are marketed, it's towards the idea that democratizing finance is good because you you know like you make money no matter what everyone makes money and you have not been allowed to make this money so I'm going to help

you make this money that but with the assumption that there's no risk that nothing ever goes down so so to watch things go even down a little bit it'll be very very interesting to see but I actually had forgotten about this I looked at a chart do you remember where Bitcoin was in October 2020, just six months ago. Was it like, like, I'm going to guess like $8,000 to $10,000 range? 10K. Yep, that was it. 10K.

I honestly, like, I think I've like blacked out during this entire last six months because maybe it's not the vaccine shop, but I had forgotten it was at 10K six months ago. So again, there's no reason it can't go back there in the next six months. And all of this NFT craze, all this has just hit during this insane rise up. So all the kind of like technical rationalizations and explanations of everything, everything's happened again in the last few months when it's on this insane ride up. Right. And we're going to get to NFTs in a moment.

And I want to talk about Dogecoin. We can't let you guys off the show without talking about Doge. But just the last thing about Bitcoin and Ranjan, you've written about this and we've spoken about it. it seems like it's largely functioning as a speculative asset because you can't, you know, it's a currency at the end of the day. And yeah, of course, it's like scarce, like gold, right? There's only a certain number of, or even more scarce, right? There's only a certain number of Bitcoins.

But people aren't using it. I think your thesis is in order for it to be actually valuable, people have to use it to transact. And maybe it's because of this volatility or maybe because it's been a speculative asset. they simply are not using it as a currency. So can you elaborate on that a little bit? What do you mean by that? Well, if you will allow me to then go directly into Doge, because I think this kind of like, I will not, thank you, thank you.

I will not prevent Doge conversation on this podcast, but you have to explain a little bit what Doge is because I know what it is, but I'm still trying to wrap my head around the fact that it's become what it's turned into. So the floor is yours. All right. So Doge coin and was. started. Billy Marcus is one of the co-founders. I was listening to him on a podcast recently. But again, it was made as a complete joke. Doge is an internet meme, a Shibu

Inu. Is that the name of the dog? Shiba Inu, yeah. Shiba, you know, Japanese fox. It's a very cute, Japanese fox, as John said. And so, so again, the entire coin was made as a joke. And while Bitcoin supposedly derives its value from its scarcity, Doe can be issued infinitely, I believe. It's like, it's some, I don't know if it's an insane number or if it's actually infinite, but the idea, everything is the opposite of why Bitcoin is supposed to have value. So Dogecoin, this joke currency has gone up. Who's it like, I mean, the numbers are almost like there's, they're decimals of decimals.

It's was it point zero zero zero six, but now it's around point three, which is, I believe I'd read, if you actually had bought Doge at any point over the last seven years, it's actually been an even better investment than Bitcoin. It's an astronomical rise in price. But the thing is, you don't hear the crypto community celebrating this necessarily, especially the serious crypto community, the Coinbases, the Fred Wilson's, the people who are trying to say no, like, crypto and Bitcoin and Ethereum, these things have genuine value that will transform the financial system because Dogecoin has been positioned as a joke, yet everyone is making a joke out of it, but speculating on it and getting rich. So to me, that's actually the same way that

Bitcoin has developed. And that's what's always troubled me. I've wanted to believe in it, but I've just never been able to really use it. Like sure, Elon Musk said you can buy a Tesla with it. But even when you look into that, there's like you take on the, the currency risk if you buy in Bitcoin that when you buy it and when the car comes, if the price moves against you, you have to then pay that difference. Whereas if the price goes in your favor, Tesla keeps that difference. Like it hasn't actually developed as a currency in any way and no one uses it to buy things really. So in the same way, it's just become this purely speculative asset with this beautiful story about utopian finance decentralization and, you know, like we're going to

get rid of the evil Federal Reserve, yet in a way it's just behaved like Dogecoin. And Dogecoin going up reminds us of this other like example of just pure, beautiful speculative mania, just in all its absurdity. Yeah. But Dogecoin actually went down a bunch after this capital gains announcement. I think big time. Yeah. I think in the same. I think it was like 10, 15% or so. Okay. Yeah. Let's talk a little bit about yoloing. People in the GameStop sort of yolode their money in order to hammer the shorts. And yolo is you only live once. And it seems to be an investment thesis where it's like, well, screw it. The system isn't treating me well. So I'm just going to yolo my money into these insane speculative investments, stuff like Doge. And then hopefully it will go up. Is yolowing playing playing a role? role here? I go back and forth on this. Like this whole, the speculation is like a rage against the financial machine thing. I don't know. I mean, people like to make money. People like to have fun. Trading is fun. If you, if it's easy because everything's going up, it's even more fun.

I think a lot of financial media has loved to tell this story about and find, you know, these profiles about people who have grew up in the financial crisis and, you know, are using this new wave of mania to fight back against the Goldman Sachs of the world. But I don't know. I still feel a lot of this is more. I think, okay, I think it's twofold. I think one, people just want to try to get rich. And if you see everyone around you making a ton of money, if your friend just made 500K on a joke coin of a dog. Doge, yeah. Yeah, you're going to, you're going to feel like, yeah, like, why am I working for money?

You're going to feel like kind of a loser. But also, I do think there's this idea that even the tech industry itself, the idea of like, you know, 25-year-old billionaires and 30-year-old billionaires, that whole way in the past we're getting rich meant you had to slowly work your way up. And then at a certain point, you will achieve a level of financial. stability or even success. I think the way the tech industry has developed, the idea that getting rich quick is a very feasible, reasonable, reasonable goal, I think also does contribute to this again, that if everyone who's 35 is making in the millions, if all these people are,

then why aren't I? I think that's also contributed to it as well. Yeah. Did you guys see this article in the New York Times about how people have kind of like yoloed their careers and stepped off the career ladder and left six figure salary jobs in order to, uh, you know, sort of pursue non-traditional, uh, career paths or dreams or whatever. And, you know, Kevin Rue's friend of the program who wrote the story was talking a little bit about how, um, part of it is due to the fact that they've been able to save a lot during the coronavirus. And part of is because they've seen people do stuff like, I'm going to put it words in his mouth,

but like basically bet on Doche become rich and starting to think that taking risks is a much better way to do things than actually following the system as they've been taught. I'm curious what you think about that. This one, I think, is a slightly longer explanation because I definitely read this story. Okay, if I don't want to necessarily jump right into NFTs,

but I think that would be relevant here if we're just going to check this is awesome this conversation is just leading itself this is the best way to pod I have some thoughts after Ron John about that piece but I'll let's start well I yeah well let's actually John let's start with you and then and then we'll have Ron John go to the NFT angle because that will set us off to a whole new discussion I'm pretty sure so yeah I think yeah sure I mean I go yolo John YOLA, thank you. The funny thing is I contributed, I think, YOLO to Uber's Lexicon. Because I was like, we need to YOLO this. And we were like working on a project. And at some point, there was this decision that was sort of like stuck. I'm like, guys, we need the YOLO, like. And then I think that became a part of like Uber's Lexicon, which I apologize for.

But I think that piece was kind of interesting. But that thing, the thing that bothered me with that piece is, you know, after having made, you know, 300, 400, under K a year working in like one of those big tech companies or, you know, like, maybe like series B, series C companies, it seems sort of like unhinged from reality in a different way. They're like, now like I've made, you know, a couple of million, just basically just like, you know, pushing pixels around, moving spreadsheets around.

And now it's my time to actually, like, I've discovered that there's more to life. I think a lot of people will like to discover that there's more to life if you can kind of like, you know, have that sort of cushion, like financial cushion. So I mean, like I guess I don't really have a lot of empathy immediately for people. Like, oh, you know, after working for six figures salaries for years and end, it is my right to like live this unsustainable life that not everyone want to live that life. I would want to live that life too. Yeah. But it's just sort of like, kind of like, you know, make my blood boil a bit. So they got rich off of some of these. It reminds me a little bit of the financial independence

retire early. Fire movement. Listeners, I got to get the high priest of that movement, Mr. Money Mustache on the show one of these days. But I imagine that will be a fascinating conversation. But yeah, it has similar parallels where it's like people who are like saying I'm just going to live life, but probably either came into some money. I think isn't that what most people want to do?

like I okay but john let me let me push back on this a little bit because yes a lot of people want to do that and a lot of these people will probably make it back into the system but there is a way that um our system here in the states for sure has a way of like keeping you on a treadmill and you know milking the maximum amount of work from you and yes compensating you well but sort of presenting it as an as if there's no option but to remain in the system and climb the career ladder and essentially hand over, you know, your quality of life in service of the system. And maybe this, maybe this is a good thing. I find it interesting that people are saying at some point, screw the system. I'm doing it my way,

even though, you know, some of them might be privileged. Some of them might not have a chance to do that forever. But I find it kind of like a fascinating movement. I mean, I guess in my mind, removing yourself from the system after having benefited from its inequalities for that many years is not an altruistic stance. It doesn't really, it doesn't really, you know, I think the more altruistic and more beneficial to the societal society thing would be to like try to change a system for other people who haven't had the chance for those years. So I guess that's like where my like lack of empathy comes from.

It's like becoming a Facebook critic after making all your money from the early days of Facebook. and being like, this company is doing terrible things to society while, meanwhile, helping grow the thing from the very beginning. Yeah, exactly. I mean, like, why just give it back then? Yep, give it back. Or find some middle ground versus, versus make even more money by being a Facebook critic. That's a good grift.

I've, I, I, get taxed at 43. I mean, speaking of grifts, get taxed at 43%. One of my good friends are discussing about, I think in 2020, like, I think in 2020, like, Like, we're 2021 now. I think the fundamental thing is like every business needs to have a grift angle. Like, what is your, what is your grifts? And I feel like there's no business left then. Like, if you're not doing, if you're not grifting, you're leaving money on the table.

There's like so much money. So every business has to have a grift. I haven't really figured out what our grift is with margins. Like we tried to do, you know, affiliate sales and stuff. I think we made like four bucks. So that grift hasn't worked out yet, but we'll figure it out. Now that you mention it, listeners, I want to tell you about big technology diet pills. Have you been trying to lose weight on struggling?

A big technology diet pills developed with a proprietary formula will take care of all that for you. But you don't have to put in any of the effort. I think that's how Alex Jones does it. Yeah. Yeah, yeah. Algorithms will take it off. You'll be jacked and people will like, just take these pills. AI.

AI. That can be a good grip. Just kidding. Hey, listen, FCC, that was a joke. It's not really. Okay, don't take me off of Apple podcast, please. Okay. Turn it to you, Ron, John.

You're about to tell us about NFTs. Well, one quick note, one quick note, I guess I would say, leaving finance to go to media in 2011 was probably the most yolo move ever in the vein, in the vein of what John is talking about here. I'm a little comfortable. I'm just selling ad tech and then went to media. I mean, I definitely made the wrong decision. YOLO. Yep. YOLO.

YOLO. All right. Okay. So this New York Times article, again, around this whole movement of people, you know, giving up their cushy lives to go do something crazy. I, and it was written by Kevin Roos of the New York Times, who. That's what you say when you're about to smack down. I'm loving it.

But one thing I think he. missed here. For those who don't know, the New York Times NFTed an article. And I guess to step back, an NFT is a non-fungible token. It is a crypto asset that basically I'm not even sure what exactly to call it, but it basically allows you to add provenance to a piece of media or art or content, and then that can be traded. So again, I

you take an article, you say this article is now a security the same as a stock, a share of Apple, and now we can all trade it together. If you think it's going to go up in value, you will buy it. The New York Times article that was NFTed was sold for $560,000. And again, all this means is the person who bought it has rights to it, ownership rights to it, whatever that means. Again, we can all go read it on New Yorktimes.com. It still lives on New Yorktimes.com, but this one person can say they have ownership rights to it. So again, this is a whole other world that we can definitely get into right now, but specific to the New York Times. It was bought by, I believe it was 3F music was the handle, but it's someone who is a collector of NFTs. It's a crypto

investor. And I also, the thing that really caught my eye was the people, was this record setting of $69 million, they sold 69 million dollars. It's not real per se. A digital art piece was sold for. Yeah, go ahead. Well, this is the thing. It was also another crypto investor who was in very early investor in Ethereum. And then you realize people, the people who are actually bidding these things up and buying

them are people who just are sitting on huge gains of Ethereum of Bitcoin in crypto. So here's one way you can transact that. But then this builds up such an interest that it drives up the price of that underlying currency, the Bitcoin and the Ethereum, even more. So the New York Times issuing this NFT, a crypto investor spending $560,000 real dollars on it, now has pushed up the value of Ethereum. It builds so much hype. Kevin Ruse is writing about it. and it inspires other people to want to go yolo and go do other things. And it's like the actual very act of the New York Times writing this article,

selling the NFT, it being bought by someone who's just trying to drive up the price of their own assets, it becomes effectively marketing for them. It's this amazing, self-fulfilling Ponzi-esque thing that's just there's so many kind of like feedback loops working together. What is feeding money into this? Is it ZERP? Is it the zero interest that is kind of like feeding this machine? YOLO investing. Yes, YOLO.

Anyway, so there's this Turkish digital artist called Murad Puck. He's been sort of famous in the internet scene. He's the guy behind the Archillette's like Twitter username. And he's been selling NFTs and then he sold a single pixel for a million dollars. Right? But if you kind of like go into like, how is this even possible. I mean, like, obviously someone paid for this. And now you kind of like, looking into the person who bought an NFT is another NFT person who made his money off of

NFTs. And now you try to like figure out like, okay, like where is the dollar? Like, where is the, where is the input to the system? Because like Ryan John's point, it just feels like there's like there's like a loop. But at the same time, this like the circle is getting bigger and bigger. So like something is feeding something into this. Like there's, there's got to be a money somewhere for people to be able to like buy this stuff. So I don't know if it's just like there's so much money coming in or is it that like no one is actually taking the profit out of the system that like nothing is ever getting like rationalized. But it does seem wildly sustainable when you can literally sell a pixel for a million dollars. I mean, I'm very happy for him. Like maybe like

you got to like do the grift while you can. Like I just feel stupid. Like I'm not like grifting anything. but uh ryan what's the yeah what's the answer where where is all that money coming from all right so i think john said it until anyone is selling anything and actually trying to realize those dollars to buy something this can all keep going again the the more i've thought about this so first of all there is so much money out there i mean uh for listeners i've been i was on the show earlier talking about ZERP, zero interest rate policy, federal reserve keeping interest rates low to spur economic growth by just pushing more borrowing and money into the system. But now, even with the stimulus, that is just this huge flood of more money coming to the system. So already the system is a wash and more money than ever. But again, when you start to think about it, like the fractional banking system, just the idea that a bank can take one dollar, lend it out and make more money on it and create more actual dollars in usage in the financial system is a pretty nice thing that's helped

drive economic growth and kind of is an underpinning of the financial system I'm happy with and it works. But now if one dollar, actual US dollars starting somewhere could have bought one Bitcoin back in 2011, which is now 50,000 US dollars equivalent, which then can split off into 20 different NFTs, which can then, you know, like there's so many screens showing graphs going up into the right, showing such an increase in wealth. Yet, when people go to actually try to do something with that, and this goes back to my whole thing about when will people actually be able to use this wealth to do something other than just watch it on a screen, what happens? Because the moment people start selling,

things move lower and then the downward spirals can begin but up till now and especially i would say this has been exacerbated by the pandemic because when you can't actually do anything the most fun thing to do is just watch that screen with your wealth going up because you're not traveling yeah it seems like a candidate i mean obviously we've seen explosive growth but it seems like a candidate for a crash which we've talked about in the past yeah but at the same time i've been like both you guys are like don't anticipate that crash too soon again i guess i guess i remember you know i had bitcoins i remember i was i had quite a few actually um and i was at a i went into like a bodega or something in new york

and i remember on the tv it's like bitcoin price jumps up to 350 dollars and i was like i think it's time to sell it is time to sell so i sold whatever bitcoins i had at like 350 and like made some money. This was when it was like Bitcoin was like 350. Now it's like, you know, 50,000. So I mean, obviously like this doesn't make sense that like obviously went from 350, like 50, like 50,000 is going to go up again. I just feel like, like I feel extremely uncomfortable and maybe I can attribute that to like, you know, having lost that money that I could have made. Just like, it seems I feel uncomfortable to say like it's going to crash. Like people told, said the same thing about like the tech stocks in 2015, 2016. It's like.

right about the crash, like it hasn't. Like, I don't know when it's going to crash. I don't really know how you could like time to market anymore. So I'm not going to go on record saying that it's going to crash. I will say, the more, the weirder it gets every day, the stupidity has legs. It can keep going. And we don't know where it's going to stop. I mean, again, six, I remember, I think it was last October when Tesla split five to one.

They were openly saying that thesis was, if the stock appears cheaper in terms of numerical value, more investors will want to get into it. Again, I was like, no, but that doesn't make any sense because the actual value of that individual share has now been dilute, blah, blah, blah. Of course I'm wrong. And it just, that actually was an incredible driver of more people buying into it because $100, even if it's a much more diluted share, seems. cheaper than a $500 share. And that was an October. I mean, that was before pixels were selling for a million dollars, and we were all hearing about Doge again. So, I mean, again, maybe the capital gains tax increase starts to show a bit of a prick into this bubble, but it could get a lot, lot weirder. And I can't even fathom what that could look like, but I'm not counting anything out

yet. Yeah. Well, that's something I want to talk about after the break. So we'll get weirder. Let's talk a little bit about the impact of the stimulus and something that you guys call the emerging marketification of the U.S. economy, which Ron John, you and I touched upon a little bit, but I want to expand upon a bit when we get back. So we'll be back here in a moment on the big technology podcast. See you right after the break. Hey, everyone. Let me tell you about the Hustle Daily Show, a podcast filled with business, tech news, and original stories to keep you in the loop on what's trending. More than two million professionals read the hustle's daily email for its irreverent and informative takes on business and tech news. Now they have a daily podcast

called The Hustle Daily Show where their team of writers break down the biggest business headlines in 15 minutes or less and explain why you should care about them. So search for the Hustle Daily show and your favorite podcast app like the one you're using right now. And we're back here for the second half of the big technology podcast with my friend from the margins, Ron John Roy and John Dura. So, Ron John, after we spoke last time the U.S. government, you know, the economy was already rip-roaring and GameStop was, you know, going on its way to the moon. It's still pretty high, actually.

I think it's in the 180s now in terms of its stock price. And into this insanity, the Biden administration drops $1.9 trillion, somewhere close to $2 trillion. I think it's the largest stimulus of its size into a growing economy or the first time we've done a stimulus into a growing economy. And Ranjan, you've mentioned that stuff has gotten weirder ever since. So I'm curious if you can help us connect the dots here in terms of what that stimulus has done and whether it's helped spark more of this behavior. Yep. The past few weeks or even months, have definitely, you know, like every headline, that seems to kind of represent this mania has actually been popping up in real life.

On one side, someone was telling me about taking their stimulus money and putting it into yield farming in crypto, which is its whole other thing. There was a really good Pachy McCormick, not boring newsletter about explaining what yield farming it is, but again, it's basically just making like 8 to 10 percent magically from crypto, but again, taking their stimulus money and putting it into that. I know multiple people again, you know, in my just turned 40 and friends of mine are that demographic moving into the suburbs and the housing stories, the house buying stories I've been hearing again around the New York, around the D.C. areas of, you know, putting in an offer 20% above the asking price and someone coming in with an all cash offer well above that. This stuff is happening. And this is like made it well into my non. on tech, finance, margins, podcast circles, this is into the normal people now. Even friends, my parents asking about Bitcoin, that did happen.

I mean, we've definitely expanded into that place where there's just so much money out there right now that, you know, where this could go, I think is still, it remains a question. Right. And so let's get to this idea of the emerging marketification of, the U.S. So I actually kind of, we talked about it and I haven't stopped thinking about it actually since we did, Ron John. And I thought it would be a good moment just to pause on it because we do see the government sparking massive growth in the economy right now. And the question is, you know, whether that's sustainable, whether that's desirable and what the consequences might be.

So let's get into it. Can you tell us a little bit more about what it is and then we can dig in from there. Yeah, I mean, both John and I have kind of touched on this a number of times in a number of different ways. John being from Turkey as well, even me growing up, my parents being from India and kind of seeing how things operated. And it is this kind of mix of crony capitalism, economic policy trying to push forward a certain type of thing, yet it having adverse consequences, income inequality being absolutely sky high and through the roof, and just kind of a general sense of stasis where it's no longer like, you know, we can just accomplish and do anything, which I think is a uniquely American trait or was, and more this kind of, I need to get.

Yeah, I mean, and honestly, again, this is all of my family, my parents, everyone truly believes this, or at least believed it, versus this idea that I need to do. just get what I can. I need to protect my people. I need to protect my family. I need to like take as much as I can out of the system while I can. And I think and it's again, it's it's in the we write a lot about this in the way tech companies behave and the way financial systems have developed. But it's just the that utopian view of what America was that I think might have existed at a certain point. But now we're all just trying to like still pretend exists. That definitely reflects a lot in the stuff we talk about.

Yeah, I mean, one of the things that has really occurred to me in terms of like the system rigging, we had Alec McGillis on a couple of weeks ago. He wrote this book called fulfillment about life for basically not even life for workers in the Amazon fulfillment centers, but more just about the inequality that we have in the country and how it's a system that's essentially like you can fight against, but you can't beat in some ways. And you look at the differences in terms of education for the top, you know, a couple percent and economic opportunity. You know, you could be in a hedge fund or you can be, you know, working in a fulfillment center. And it used to be you have a factory job. You're doing okay. You know, or you're in a bank. You're doing well, but you're not so much different than the person who's in that factory job. And now just the changes have become kind of wild in the economy right now. Yeah. I mean, I think one thing that like Ryan Johnson sort of like hinted at like chronic capitalism too. What I can tell you, like the reason why I came to the States when I came,

which was in 2006, was this like, even then, I think even like in 2006 or so, you sort of believe like if you come to America and if you work hard, like it is sort of like a place where like it rewards a hard work. Like the system wasn't rigged because I think like in Turkey, there was this like sense of like, well, you know, like it is rigged to the core. There's no really way out of it. You kind of like may move within the bracket you're in, but like that's basically where you are.

And then when you come to the States, you'll be able to like, you know, all right, like work a bit harder. Like probably you're not going to become a billionaire, but you're going to make a decent amount of money. And I, you know, like I guess like I've sort of like locked into some money by like having worked in technology and stuff. But kind of like, you know, inserting myself like deeper into like the states, you do immediately realize it's like, well, you know, like this place is.

is widely in equal, in equal. And I think what they really comes down, like what they really impact, like what they really does to the society is like no one trust in there anymore. And then like you basically like, you know, let's burn the entire like environment so we can build Bitcoin so we can have these like even like less trust like trust based systems. Like instead of like trusting the American government to do the right thing,

like I'm just got to like make sure I'm just going to get my news from like some Twitter accounts. Like instead of just like pay my taxes, I'm just got to like put everything on like Bitcoin because like screw the American government. Like now we have this like system that is like full of 350 million people that don't work together. There's just like 350 million people of individuals and there's nothing collective anymore in this country. You know, and then that just sort of like makes me like mad. Like I sometimes feel like like, did I like bet on the wrong course coming to the States from Turkey? But especially I think those feelings were like very strong when Trump got elected.

But it's like back in. 70s, there was this like Turkish presidents who very famously said they're like, like, we're going to make Turkey a small America because his point was like, America is like, hey, economy is doing great. Like, people are going up in like income and wealth. Like America is like where good things happen. Like you can't say that with a straight face anywhere in the world anymore. If you said it's like, we're going to make this country a small America, like, you'll be voted

out of the office tomorrow. You're like, no, we don't want to become America. And like, no one wants to become America. But, like, in 70s, outside the U.S., like, people looked up to the States. The counterpoint here is that wealth has increased across the board in the United States. And, yeah, you know, in some categories, it's increased far more than others. But everyone's doing a little better than they were. I mean, that's what the people make the counter argument would say.

So what would, is it just that people can't move bracket to bracket now that's the issue? Was that, you know, or is there something deeper in it that folks are missing? I mean, I'm sure the absolute numbers have increased, but, like, can you honestly say that, like, having, like, I had the sense that even growing up in Turkey, like, even my parents' generation, like, if you could get a job 15 years, you'll be able to buy a house of some sorts. Like, now, having worked in, like, technology field, which is, like, extremely lucrative, having worked in for, like, 10 years, like, buying a house for me is, like, seems to like, it seems like, it'd be, like, out of reach. I probably can do it in some ways or another. But like imagine if you're just like working for like, I don't know, Walmarts, like you let alone buying a house. You have to be on like EBT or like food stamps, right? I think this like sense that like, I mean, I think some numbers are grown.

But like I think the quality of life from generation to generation hasn't really like gotten much better in the States. Yeah, I can definitely say, I mean, in the 80s and 90s, when a relative from India would come, they would view things in a very specific way. like everything seemed very nice. Now other countries have caught up. I get in this argument with a lot of friends who haven't traveled very much, that, you know, they still have this view of the like 90s, early 2000s where America is just way ahead in so many ways, like, you know, infrastructurally than other countries.

But other countries have progressed significantly. Many others have over the last couple of decades where I think what you said, that word rigged is the key. Again, it's like even the way tech companies spend on lobbying, it's kind of this assumption that we are going to play the game because that's the way the game is being played. And it's going to be less about us just out innovating the other, out competing the other. We are going to get into the swamp with everyone else because that is a necessary part of doing business in this economy. And I think, like, that's just the way everyone looks at it now, that, you know, if things are kind of screwed up anyways, then I'm going to take what I can screw the rest of them. I sort of like jump in.

I just realized, so kind of like connecting, coming like full circle. So starting, I think, April 30, all the Bitcoin exchanges in Turkey are going to have to be shut down because they basically outlaw Bitcoin starting April 30th. And I think yesterday, one of the exchanges in Turkey, the guy who started it, flew to Thailand. Like, he shut down his company and flew to Thailand. And, like, all the people who had their bitcoins, all these crypto assets in that exchange are, like, you know, shit out of luck. So I don't know how much money he basically was able to extract. So he got, you know, he took the profits. But, yeah, I mean, you know, I don't know if like that's like anything.

any indication that something like that might happen in the States. But, you know, if like we, we, we, we, I think we got Trump earlier than you guys in Turkey. So maybe we'll also get that in Bitcoin earlier than you too. Yeah. And so how do you fix this? Because we, we do talk about the problems. And I think that, like, the word rig, like the system does feel rigged. And there's some truth to that for people that, like, yeah, I understand why it does feel rigged.

And honestly, from the stuff that I've read, you know, there's definitely things that are going on in this country that favor those who are already in good position and makes it harder for the American dream to be lived out. Is there a way to fix this system or is it just kind of the way it is? Perhaps a 43.4% capital gains tax. Well, actually, I want to ask, John, are you not going to start your company and continue on it if this capital gains tax? tax passes? I mean, I think, I guess my point is that, you know, I started it. I believe that, like, you know, some taxation is okay. So, I mean, I'm, I'm, I don't think it really changes, like, way I make my decisions

about it. You know, if the tax comes out to be more, I'll pay more. I think that's the end of it. I was going to say, maybe we go back to that. What I would say, I think what needs to be done is that, like, one of the, I do more, like, sort of fundamental things is that, like, one thing that shows. shocked me is how much money there is in elections in the U.S. I'm not saying that Turkey has like the most fair and free elections in the world, but like I think elections everywhere else

outside the U.S. is just like a couple month affair and there's not much money. I think it's incredible to me that like any small election in the U.S., like you have to raise money from these sources. And I think what happens with that is like not only you become beholding to those people, you change the way you think about the problems. I think you only start. thinking about, like, how can I make sure I fix those people's problems? And I don't think it's like nefarious. I think you lose touch with actually the people who are like voting for you because the people who are voting for you are irrelevant to elections. It's how much money you could raise that's relevant. So I think like if I could have like, you know, I joke about

with my co-founder. Like if you become millionaire, billionaires, like what do we do? Like I feel like I would spend a couple hundred million to remove money from elections. So I think that's sort of like a very big lever that America needs to do. Yeah, I know, rather than organizing money to fix the money in politics. Well, that's the game. It's a noble cause.

Yeah. I like that. Yeah. Supporting a campaign. Well, I mean, I'm not. No, I think it's good. So, I mean, at a certain point, we do need to get to a point where

this money can't speak the way it does. I'm not accumulating it to start a new civilization or anything like Elon Musk is. But the joke is that I think, you know, I would vote for. someone whose platform is remove money from politics. I guess that's the more altruistic way to say it. I want to touch on one more thing about the emerging marketification of the United States, which is that, and correct me if I'm wrong, I'm probably wrong on this anyway.

But I think that there's a certain number of levers a government can pull to amp up its economy. And that will work for some set amount of time before it inevitably doesn't work anymore. and some of those bills become due. And, you know, I, and maybe this is something that I saw, but I know Turkey definitely liberalized its economy and the economy soared for a while, but then the currency ended up becoming worth like, I don't know, a fifth, a sixth of what it was worth compared to the dollar and the economy has slowed down a bit and there's just a limit to what the government can do and then it eventually catches up.

Are we at risk of seeing something like that happen here in the United States? I mean, I would say the thing that allows the U.S. to kind of drive this is just dollar supremacy. The dollar is the world's reserve currency. Really gives us more leeway than a turkey. Roger is an M.M.M.T. Well, no, but, but, okay, I buy the argument that to grow, to achieve the growth you need to, to help pay back that debt down faster, you still need some amount of money to invest. Again, why an infrastructure bill can be a good thing, why those $2 trillion are a better $2 trillion than a $2 trillion tax cut. I am full-on

MMT, new green what is MMT? Modern monetary theory. But basically the idea that the government, the way they spend, you don't have to look at it like balancing your own checkbook. I think there's certainly a lot of things that can be said about why you shouldn't look at it, like balancing your budget, like balancing your own personal checkbook is true. But I also do think that, again, the problem in the U.S. economy right now is not that there's not enough money. It's that there's, I mean, there's so much money yet it's not being invested in the right ways and the ways that would actually produce the best outcomes. I think, again, whether it's taxation, whether it's regulation,

whatever it is, it's actually redefining the levers to actually push those assets in the right direction. There's actually a really good capitalism podcast. John has gotten me on to this. I'm not sure if you listen to Alex. But basically, they're talking about how, whether the Federal Reserve drives inequality. And they're saying that, like the guest on there was saying that the Federal Reserve bringing interest rates low, you would think should actually make borrowing easier for lower income people because interest rates are low. But actually what happens is banks, the way their risk models work is they actually stopped lending because they're not going to make a profit because the rates are so low that is not worth the risk. So what instead happens

is they stop lending to lower income people and only lending more to large corporations and high-yield debt and other, I mean, into private equity and other privileged institutions. So it's like until we get all those individual levers aligned properly, I think it's less a question of that kind of like hyperinflation in emerging market. It's more where the money just keeps getting weirder and we keep selling pixels for a million dollars. Yeah. I mean, I think Ranjan is also right that like I think Turkey was able to get this almost artificial boosts economy because, you know, it's filled by like foreign direct investment and then essentially they, sold the country's biggest assets like one and you know one at a time and I think that sort of like

gives you just like artificial boost but obviously you know at some point like you do have to start like production you do have to have this product like productive assets and you know when did the foreign money dried up and there was not any like productive assets in the country that you see like economy like slowly collapsing so I think US is not this like foreign direct investment driven economy so I don't think it's at the risk of that but I think the more the The risk is, I think the similarity is more around like, what happens to a country when the entire populace starts, like, distrusting each other? Then how do you actually govern a country when, like, 25% of the people believe that the government is there to, like, get them? You know, how do you govern a country when, like, the most important person says that, like, wear masks and half the country says, no, you know?

I think you just, like, stop losing, like, you stop being able to operate as a government. Right. Okay. Let's hit the home stretch with this final question. Some folks have said the discussion that we've had today or some discussions along the lines of the one we had today that talks about market fundamentals, balancing the budget. The fact that folks are going yolo with money is sort of the concerns of the elites. And most of the people in this country just want essentially the money machine to go burr and people. It's proven to work. out and people should stop being such crab apples about it. What do you think about that argument? Maybe it's right. I mean, all right, to get a little bit controversial, I, my friend who runs the pizza restaurant from the DoorDash story has been complaining for weeks now that they literally

can't hire anyone. And he was kind of early on telling me this, but then... Wait, do you want to quickly recap the DoorDash story? Let's go to the greatest hits of margins. By the way, John, I'm calling it margins now, not the margins. I've learned. He's beating it into me, too. No article, the. So a very quickly friend of mine who runs a pizza restaurant, we had a whole kerfuffle

with DoorDash had written a piece and it went a bit viral about how DoorDash misprices things and uses venture capital money to kind of screw over small restaurants. But in the past, like, basically a couple of months. He keeps telling me, I think there's a 0% unemployment rate that actually, you know, the way we count this, and he'll ask me a lot, you know, like, how is this calculated? I don't get it because literally no matter what I put out there, I'm not getting anybody. So, of course, me being the person who just writes newsletters and does content strategy and doesn't actually have to run a restaurant, I'm like, well, just pay them a lot more. you know, why don't you just like there's some clearing price where supply will meet demand and you just have to find that and then everything will be fine. But then he brought this up and then

everywhere you're seeing this now, that labor shortages, I mean, it's this every single business is having trouble meeting this. Yet on the other side, we keep hearing, people are hurting, unemployment is still very elevated versus kind of a normal time. So, so I, do think like it's this reminder that we're in such a weird state right now. And this is actually the part that's kind of, again, the stupidity has legs and can keep going for as much longer than we think. But it's also the kind of scary part for me is that we're in such uncharted territory right now where, you know, are people sitting at home? The way we count things is not actually meeting the moment. Like the way the unemployment rate is counted, are people sitting at home

who are not actually actively looking for a job, saying they're looking for a job, but collecting federal and state unemployment and hitting a income level higher than what they would make, even higher than minimum wage, but around like 15 bucks an hour. We have no way of knowing this. Yet our policymakers are looking at unemployment's coming down slowly, but it's still much higher than it should be because those people are still counted as unemployed because they're taking unemployment. Like, it's just, that's, I think, the part that scares me the most is that we have no idea what is actually happening right now.

And especially at the aggregate level and the way we calculate inflation and unemployment and all these things is just not actually relevant to all the weirdness of today. But let me just ask one follow up then. but so so what do you think about this criticism that these concerns are those of the elite and you know the people who are getting that unemployment money you know have two middle fingers raised to the system and are thrilled to get the cash i i'm honestly okay with that i mean i in the sense that it's a concern of the elite i do think it's a concern of business owners the owners of capital policymakers like they are the ones who benefited so figure it out and yeah like like you Yeah, if I have no, the same way everyone has been told, like, you know, that the way businesses operated for the last 20 years is just a function of capitalism, then yes, if I can sit at home and make more money than going to some lower wage job, of course, the economically rational thing for me to do is to do that and to say, I'm unemployed. You can sit back and talk about the respective work and whatever. But I think this, again, goes back to this emerging marketification and lack of trust. Like, that's gone.

So I think, yeah, two middle fingers in the air and saying, I'll take my unemployment. That is the rational thing to do. And there's nothing wrong with that. So, yeah, I do think it's the people who have made the decisions and continue to, it is their responsibility to figure this out. Right. And I guess the worry is the one that we touched on earlier is that eventually it does crash. But, you know, who knows whether that will actually happen. Maybe this is something that can sustain forever, although saying those words to me just feels so wrong, feels so improbable. But here we are. Here we are. John? Well, you know,

like your podcast called like Big Technology. So I'll tell you a big technology. Big technology story. and sort of like the opposite end of like what Ranjohn talked about. So what I do right now is try to hire people too. You know, like we raise some venture capital. You know, we have like a project in mind, like me and my co-founder. We're trying to build a team to hire people. And then being in the Bay Area, we're in Auckland. Obviously, there's like big tech companies have a lot of people that were trying to like, you know, hire.

And then I think I've talked to, I would say, like, 50 plus people who work in like big tech, you know, Google, Facebook, all those places. And then I'll tell you like a couple of stories. It's just like, you know, we talk to people who work at, let's say, a big tech company that is not really known for its ethical business practices. Wouldn't be Facebook. You know, let's protect the innocent. And then this person, because obviously they need protection more than our capital.

But like, this person is like, well, he was like, he or she was like, well, I'm making 400, right now, $400,000. So you need to be able to offer me something similar for me to, like, continue the conversation, right? And it's just like, well, okay, like, that's not something that, that is insane. That number is insane to me. Or, and then, you know, we go into this conversation and be like, like, do you enjoy your work? Do you enjoy, like, working at just, like, ethically, you know, questionable companies? Like, well, I try, like, not to think about it too much, right?

That's what they, that's right, always here. It's just, you know, like, and I think, like, and then is that a rational thing? Because that person is not doing as much work as they could be doing, but they're making, like, bank. And because, well, because it's, you know, the company they work for is a monopoly. And, like, they don't need to worry about, like, competitive pressures of the market anymore. They're literally printing money practically, right? And then their employees, they don't enjoy their work. They think their company's unethical, maybe.

But, like, I cannot hire anyone either. So, like, I'm willing to pay six figures, too, just not that much, but I cannot hire anyone. So, like, it does feel like economy went off the rails. There's nothing rational anymore, either on the low end or on the high end. So I don't know where this ends, but it just seems kind of like we're just like uncharted territory, where it's just like unhinged. There's like a lot of money, but like where's the money? Like, is just everyone buying like pixels for a million dollars? Like, and where can I get some?

You know, that's like where I'm going to end it. Yeah, I mean, I think one thing to really keep in mind, and I've been almost trying to like yell this at friends, especially in finances, we, everyone has been conditioned to track economic success by a stock market ticker on the bottom right of a TV screen. Like, you know, everyone is, if stocks are going up, things are going well. And even Obama was very vocal about it in terms of the recovery. Trump clearly would. Trump never cited those numbers. Never, never. I think we

Mr. Trump, what do you think about the coronavirus? Well, if you look at the market, the coronavirus is over. I mean, but this is where I think we, like the media, especially the financial media, has to be really disciplined around how we communicate progress.

Because again, if if like Shopify, Peloton, Tesla, If all these come down 30%, is that really a significant change? If Bitcoin drops 90%, is that really a significant change? Yet, I mean, do we start, like, having a ticker showing the Ginny coefficient, which is this like a super esoteric economic indicator around income inequality? Yeah.

Income inequality. Yeah, around income inequality. Do we have the median wage of the average U.S. employee? I don't know. Like, do we, how do we represent this stuff? So it's in a way that if the stock market falls, because if policymakers decide, like, we need to reshape the whole way this is constructed, right now, everyone would freak out and be like, oh, my God, the roof is falling in, instead of actually having some kind of

framework to sit back and be like, all right, this is okay, this is right, this is good. And I don't think we have that yet. So I'm hoping we can figure that out. Yeah. No, I think that's a great idea. I just want to end on a story. I wasn't really planning on sharing it, but whatever, I'll share it anyway. I don't really remember my dreams too often.

And last night I had a dream that I was working either as or with a counterfeiter, we were just printing money and got caught and went to jail. And, like, as they were like locking me away, you know, I had a question in my mind, How is this any different from all the rest of the people burning money? Anyway, this has been an illuminating conversation. I appreciate you guys coming on. Margins is, again, one of my favorite reads. And I encourage everybody to subscribe it.

How else can folks follow your work online? You can find me at at Ron John, R-A-N-J-A-N-X-R-O-Y on Twitter. And John has a better Twitter handle than I do. that's that's so long how do you even find people to write first name my my yeah it's okay well my my Twitter handle is at

C-A-N like the word can because it's the Turkish name just three letters yeah that's all shorter than Jack Dorsey's shorter than Jacks yeah all right Ron John and John thanks again for coming on it's great having you here on the show thanks everybody for listening

thank you Nate Gwatra for editing, as always. Very talented editor. Appreciate you. And thank you to Red Circle for hosting the show and selling the ads. And if you're a first-time listener, if you want to hit subscribe, we do these every single Wednesday with Tech Insiders and Outside Agitators. If you're a long-time listener, you're already at hour and eight minutes or so. Was this a good show? If you enjoyed it, please give us a rating on Apple that will help us with the big technology algorithms. so we can keep this podcast going. All right, that's going to do it for us here on the Big Technology podcast.

I've been told to have a better sign off than just have a good week. So I will say, thanks again for joining us. We appreciate it as always, and we'll see you next Wednesday.