TFTC: A Bitcoin Podcast - #245: Austin, trillions out of thin air, inflation, and a Bitcoin economy with Parker Lewis

Episode Date: April 23, 2021

Join Marty as he sits down with Parker Lewis, Head of Business Development at Unchained Capital, to discuss: - The Austin Bitcoin scene - The Fed opening the spigots - Systemic credit risk - Fiscal spending enabled by the Fed - Capital allocation under a Bitcoin Standard - Sam Houston - much more Follow Parker on Twitter Check out Unchained Capital Shoutout to this week's sponsors. Cash App. Start #stackingsats today. Use the promo code: "stackingsats" to receive $10 and contribute $10 to OWLS Lacrosse when you download the app. Lend at Hodl Hodl is a new non-custodial bitcoin backed lending platform, that allows peer to peer lending and borrowing between users, globally, anonymously & on your own terms. Create you offers & set your own terms on lend.hodlhodl.com Compass Mining. Compass wants to democratize bitcoins hashrate and give everyone the ability to strengthen the network while mining bitcoin profitably. Thanks to Compass, it’s never been easier to mine bitcoin. Check them out at compassmining.io Braiins. Braiins are leaders in the mining industry; running Slush Pool, creating firmware to make miners more profitable (Braiins OS+), and building out Stratum V2 to help further decentralize mining and make Bitcoin more robust. Check out their mining profitability calculator.

what is up freaks it's your boy marty bent here late night thursday post rhr rip post rip with parker lewis which you all are about to listen to always a great time to get parker on the on the mic pick his brain figure out what's going on a A lot of energy in this episode. A lot of energy in the city that we recorded this episode. Austin. Day 10. Day 10 for Uncle Marty.

Going well. Going well. I'm pretty, pretty well. The mind chair down here is pretty incredible freaks. Park and I talk about it as well as a bunch of other things. Last night, Parker and I spoke was 13 months ago before the official lockdowns, before the stimulus, before Kashkari on 60 Minutes, before all this madness. It was interesting to reminisce and then paint an optimistic future built around Bitcoin. I think you guys are going to enjoy it.

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A lot of opportunity, a lot of despair if you look at the world in some way, but a lot of opportunity and a lot of reasons to be optimistic. Bitcoin provides a reason to be optimistic. Parker and I talk about that in this episode. We need more strong men and women out there. Stand up, speak up. don't let the culture decay to a point where it gets it gets crazy we need good people we need strong people i think parker lewis is one of those people so enjoy this for it

you've had a dynamic where money's become freer than free if you talk about a fed just gone nuts all all the central banks going nuts so it's all acting like safe haven i believe that in a world where central bankers are tripping over themselves to devalue their currency bitcoin wins in the world of fiat currencies bitcoin is the victor i mean that's part of the bull case for bitcoin if you're not paying attention you probably should be Parker Lewis everybody it's been 13 months since we've recorded we've spoken since the last time we recorded coming to you live from Unchained Capital Studios great studio great vibe here it is day what is today the 22nd day 10 of my Austin trip what a city what a vibe here

what a Bitcoin mindshare you have in the city of Austin Texas a growing mindshare can we talk about last week a little bit your impressions about uh bit devs just uh the overall scene here yeah you knew it was good bit devs you had a probably like a 90 10 percent male to female ratio it was steamy because you had so many people uh in one place that feels like a higher percentage than uh like we're growing the 10 percent yeah on the on the rise yeah yeah um run very well by justin ben and ryan at the front of the room topics uh very good topics to talk about very good back and forth socratic summit uh seminar with the crowd yeah great vibe uh obviously barbecue after meeting bitcoiners in person eating good meats drinking good beer

some shiner how many run the numbers shirts were given out i mean there was at least 200 people here so i would garner to say 150 i don't think that's a nice estimate yeah yeah my brother picked one up i dragged my brother to the meetup trying to push him we're recruiting him too yeah we're he i mean he's he might be down here before i am yeah we're coming for all the bitcoiners he sold he uh i don't even think people knew marty had a brother no and i don't think people knew he looked like exactly like me too i might have done interviews with him before scared people got the whole family sister actually she's flying out right now she was here for a few days as well um so it was a good time brought the wife and the son with me obviously

as well checking it out we went to the park on sunday we did we went to the park sorry my son uh was acting up a little bit a little uh a little bit of a meltdown as it's 14 months old baby's will um but yeah went on a good hike with will his wife ryan gentry and adam adam alex leishman uh last saturday checking out the places i met up for some with somebody at loro for happy hour a couple days ago great spot good meets there i mean very walkable city i've been getting my 10 000 steps in very easily very walkable city it's very outdoors very outdoors trying to see i'm still trying to convince leishman to bring river to austin i i'm not i don't feel like i'm close but we get you here you get your brother more people get off the boat every day um we got

a lot of momentum i think we can get river and the government just talked about a 40 cap gains tax so sure we'll get into that but you know running businesses out in california is looking worse by the day 43 so you're alex your cap gains is going to be like 54 all in if this goes through And we know where Bitcoin's going, so let's make those decisions now. I hear the shitcoins are taking over, though. Shitcoiners. Alex, join us. Join us.

Yeah. My wife and I are already in contact with a realtor. We're going to rent. I'm not sure we're going to buy as soon as we come down here. Stack harder. Exactly. There's a dip today. 51.

My auto buy hits in a couple hours, too. I think I used to tell myself I was going to buy a house when a house cost six Bitcoin. But now I'm thinking that like when it's sat there's Bitcoin house parity seems more realistic in like the next couple of years. Oh, I've always had my mind like I'll buy a house when it's point six Bitcoin. Really? Six, 60 million sets. This is the pricing system. Yes.

The pricing system is the most important thing. And the people that own real estate are going to have a real hard time with Bitcoin. Yeah. that's the thing that's with austin particularly they had a couple of these conversations the last few days like with the mind chair that's coming here and not only in the bitcoin world in the tech space as well is this housing market going to outperform others but like you go to philadelphia uh suburbs of northern new jersey connecticut it's insane hamptons everything's going like i had a cousin buy a house went a hundred thousand dollars over asking a couple weeks ago in the

philadelphia area it's like what the fuck is going on out there fire sale on dollars is what's happening let's jump into it is there inflation is is is the cpi indicative of of price rises throughout our economy right now is it overstating understating i think um not not a far leap to say that cpi always understates inflation for structural issues I think that there's a reality that for every dollar that the Fed prints, it will show up in inflation. So if the Fed has increased nearly double the base money supply in the last year, that every single one of those dollars will find its way through to inflation. There's a reality that when you shut down a global economy and you have a system that's entirely based on or almost entirely built on credit allocation, that that creates a significant deflationary pressure. But at a fundamental level, that inflation is there.

It's just boiling under the surface. It's showing up in many places. It's showing up in asset prices. It's showing up in commodity prices. It's there. People are having to react to it because their wages aren't keeping up. And their wages is effectively – wages and credit expansion is really what dictates the inputs to CPI calculations. So it's all bullshit.

But if you start paying attention to things you buy in your everyday life – and I think that Saylor does a great job talking about inflation. Inflation is relative to things that you consume. And if the things that you consume are going up and you're having to substitute to lower quality items, whether it's food, housing, anything that it is in your daily lives, you might not, you know, that might not be how they measure CPI, but that's affecting you. Your quality of life is actually going down. Yes. I'm going to write about it in the bin today. Commodities prices going crazy. Lumber up over 200%.

Gasoline up like 160%. 60%, heating oil up 104%, wheat, soybeans, not that you should be eating these things, but a lot of people do, up. I just look at ribeyes, okay? You know, again, not just because a lot of Bitcoiners eat meat, but a ribeye is a ribeye is a ribeye. Now, that's true and not true. I secretly believe that my local grocery store here

is both increasing prices and lowering the quality, um so shrinkflation and a substitution of quality goods correct plus you know at least there's a process by which a ribeye gets made a cow has a calf and then they raise the calf and that's proof of work so i think that it is a great benchmark for inflation um and when you see that happening it's just look there's a reality when the fed prints money the way that that transmits through the economy is starts with real estate and then feed because it basically starts with everything that's heavily dependent on credit allocation and then feeds its way through and and one producer gets a price increase from somebody in their supply chain and then it just

trickles down to the economy it doesn't all happen at once and that's why printing of money or actually even money destruction is incredibly destructive to the economic functions within an economy because prices basically get all thrown out of whack, not ratably, unpredictably, and ultimately supply chains break down. Yeah. So many factors here. At one point, I want to jump into the subject of Joe Weisenthal telling you, you don't know how money is created. I told him that he was out of his depth. I saw that. I like that tweet. I think I retweeted his tweet and I told thing i actually have failed at this um i will i'll start i'll start it back this sunday um but i told him that i was gonna i was gonna each week i was gonna run the numbers on sunday morning

and i was gonna comment out how many dollars were created each week and how many um bitcoin so i did it that one day but i'm gonna i'm gonna start doing it every week just to make a point you gotta set a cell phone reminder um but yeah so there's many factors here you have the shutdown of the economy which borks the supply chains you so when we last talked it was yourself kyle bass myself right after the bitcoin it was like march 13th i imagine right it was like right after bitcoin crashed the markets were crashed it was march 12th yeah it was that day it was basically oh the bitcoin crash later that night yeah it was bitcoin crash in the morning then the during the day it kind of stabilized and then we recorded our podcast and started

leaking low again and the dow the dow was down like 10 that day the fed came out with some emergency measures around noon or or noon or one o'clock somewhere around there where it was like 1.5 trillion in emergency repo funding some other measures that they took as well and initially the market bounced back but then the market started to leak off late in the day And then Bitcoin had that kind of 6K to 4K crash that evening. So that was a historic day. Historic day. And up to that point, our conversations on this podcast

particularly focused on the Fed and the monetary side. What's happened in the last 13 months as we've seen the fiscal side step in, obviously with the stimulus programs literally airdropping. creating dollars out of thin air and air dropping into people's bank accounts we've had the lockdowns i don't think we were fully locked down or even beginning to think about lockdowns when we last recorded and so i've been saying this for a year and actually today's newsletter which

was a retrospective on the newsletter i wrote april 7th of last year which is like hey it was right when the lockdowns were starting and the fed was announcing that they were going to expand the the operations and the facilities through which they could buy assets and the government was obviously trump administration talking about stimulus checks so you have the combination of locking down the economy so borking these supply chains sending everybody home from work airdropping money into their bank accounts then having them go into the economy and compete for goods that are becoming scarcer and scarcer because they're not being replenished because people can't go to work and so it's very similar to what happened in the weimar republic

where they had to pay reparations to the french and other victors of world war one and the french came occupied the weimar republic weimar republic politicians said hey factory workers stay home from work we'll print money and airdrop it in your bank accounts or back in the day you had to literally give them physical cash but not the exact same situation but very similar and on april 7th last year i said hey i hope i'm wrong but it seems like this is going to cause a pretty high inflation i think seeing where commodities prices are right now real estate prices are stock market i think that was the right prediction what do you think well you know if we kind of trying to recall all the measures that happened so we recorded i think on march 12th

And then on – I believe March 26th it was, the Fed came out and basically announced that they were going to do QE beyond infinity. And then that was around the time when Neil Kashkari came out, or I think he came out just before that, basically said there's an infinite amount of cash in the Federal Reserve. And then they come out with QE beyond infinity. and um and in those basically three months following when we recorded from the beginning of march to the beginning of june the fed printed three trillion dollars like three trillion dollars which isn't just it's just categorically insane and whatever inflation that we're seeing right now like we haven't seen anything yet in my opinion right um and i think that oftentimes so but if we fast forward it to today too, and just in the context of this year, we're all kind of going

about our daily lives. The $3 trillion was a shock and awe. I think that is really what woke up a lot of people to Bitcoin. Paul Tudor Jones specifically mentioned it in his letter when he announced that he had purchased Bitcoin. He called it the great monetary inflation. Michael Saylor has brought it up. Ross Stevens has brought it up. I think that moment, the fact that it happened so fast in such scale you can say what you will about the neil kashkari comment but it was a three trillion that just got flooded into the market where they basically said we are going to buy every credit instrument that exists to to keep this credit system propped up and and that was crazy and it was almost like they beat the dead horse and they just kept beating it and then everything kind of

calmed down at least in their world as they would measure it but if we just come to today this year From January, from the beginning of January to today, the Fed has printed $410 billion, which is about $110 billion a month, which is an insane amount of money in its own right. 50% of the monetary base in 2008. Before they started. That is, yes. And that is more cash than existed in the banking system in 2008. Of all the banks, because some of the monetary basics is outside of the banks, all the banks had $350 billion of cash in 2008. So just in January, February, March, and to this point in April 2021, $110 billion a month, which the height of QE3, which was the biggest QE program of all after the financial crisis, was $85 billion a month.

And so we've just entirely normalized this idea. And I like to say that only children and morons think you can print money and not have consequences. And we're going to find out. I think we are finding out. So let's dig a little deeper into the specifics of the facilities that, like you said, they can buy any debt they want. So they basically expanded the types of assets they could purchase last year,

and they started with corporate debt to save the failing airlines and cruise ships. They're bailing out cruise ships. fucking cruise ships um uh personal distaste for cruise ships but you know what don't go on cruises people it's a free market it's true if people want to go on cruise ships let the free market decide let's just not bail them out um but yeah so i think there's a reality that in 2008 they began by buying mortgages and no no they began by buying treasuries and and that was consistent with what the fed has always

done with the exception that they did it in greater scale and they also bought treasuries of longer duration yep and then and that was really qe1 and then as part of qe2 i believe it was they started to introduce buying mortgages and there was a lot of consternation within the Federal Reserve about the fact that that was more of an activity of credit allocation rather than interest rate targeting. And there were Fed presidents that were made uncomfortable by the idea that the Fed was effectively operating a hedge fund rather than just buying one government, whether it was a, regardless of the treasury, like in terms of the duration, they were just buying treasuries. That there's a reality that even that advantages functions within the economy

that are heavily dependent on credit by manipulating interest rates, but by going directly and buying mortgages post-financial crisis, that that started to cause people, even within the Fed, to be more uncomfortable with what should have made them all uncomfortable anyway, is just buying a trillion dollars worth of treasuries. But it shows you kind of, not necessarily a slippery slope, but like once you set a new standard, then it sets a precedent to do even dumber shit and even crazier shit

Because you've already normalized, well, we bought treasuries and we bought mortgage-backed securities, and there's a reality that when the credit system, because of the inherent degree of leverage that exists, and I always summarize it as the total amount of debt that exists in the system versus the total amount of dollars that exists in the system. And so pre-financial crisis, it was $53 trillion of debt and only $350 billion in the banking system. It's not all dollars, but I really think about it as liabilities in the banking system versus dollars that can fund those liabilities as a good metric to describe the health and leverage of the banking system itself. That today it's about $85 trillion and about $7 trillion. So in certain ways, you could look at it and say they've de-leveraged the financial system because they put more dollars in. But there is still so much leverage and still so few dollars relative to that debt, and that's what dictates that more dollars need to come into the system, that the Fed, whether they're consciously doing it – I think that their actions in March, April, May, June of last year indicate that they see this as well, that their function of QE is to prop up the credit system. And when the credit system starts to collapse, basically every form of credit is figuring out that there aren't the dollars there to repay them. And what we saw last March was investment-grade credit went down 25% in a matter of a week.

That's like the highest quality corporate paper. um and what the fed had to do was they had to inject money into the system into all these points of credit to prevent from basically mass defaults and and because of the nature of the degree of leverage if they didn't do that quickly the whole thing would just collapse on itself it would just feed and that's why neil kashkari basically came out he was an advisor to i believe Hank Paulson in the 2008 financial crisis, very clear by his interview with 60 Minutes and the Fed's actions this time that it was, they thought that their mistake last time was that they didn't go hard enough and they didn't go fast enough, and that they ended

up having to do more as a function of it. But really, it's this dynamic of debt and dollars, and when they shut down the whole economy, they had to say, okay, well, we can't just put money into the system via treasuries and MBS, we have to put it into virtually every critical function of credit to prevent certain pockets of credit from essentially causing knock-on defaults or waterfall defaults. And so that was, you know, just a certain summary. And I don't have an exhaustive list, but they basically started buying bond ETFs that could basically provide liquidity to, um, IG corporate bonds. And then I don't think, I'm not sure if they actually bought

high yield, but they, they created, I think a stipulation that said if like they bought a bond and that it, and then it was later downgraded that they could continue to own it. Um, and then they also created a facility to buy, um, to basically help fund the money market accounts that funded the, the credit in the paper that was, um, new, new bonds. Um, and then, and then they also, um, but you know, obviously they had a large program to fund small businesses, which is, you know, separate program, but, uh, but it was basically, they looked at every kind of major pocket of credit and said, Hey, we have to inject money here to prevent essentially defaults. Um, and, and that the, the, basically the whole fricking boat was bursting at the seams

And it wasn't – you couldn't just put it into one segment or sector of the economy because everything – if you just stop a $20 trillion economy for working for 30 to 60 days with as much leverage as it is, the plumbing gets mucked up real quickly in a real bad way. Yeah. It's crazy. hearing you describe that and like reliving that particular time of last year i've become numb to it like i forget like you forget like the the extent to which the fed basically blew open their mandate and expanded their ability to to push newly traded dollars into new parts of the market that were taboo to even approach conversation prior to this time last year well what they also did was they

there's i don't even say it's a mandate but i believe it's the charter that says that the fed can't directly finance the treasury um in the sense of they they can't just print money and give it to the the treasury and it's got to be like a treasury bond creation between yeah there has to be some credit instrument yeah and so a lot of people looked at it and there were certain of these programs where it was like the the treasury was going to take an equity position to i think it was 10 and then and then the fed was basically going to lend into these programs to 90 percent and the it's not even irony but what's the right term it's that the the treasury to raise the 10 percent had to go into the market

to to raise debt so people would be like oh it was like nine to one leverage like what are you talking about it's 100 leverage right 100 like uh robbing peter to pay paul it's the fed was giving money to like jp morgan buying treasury so that jp morgan had more cash so that jp morgan gave cash to the treasury yeah and then and then that money that jp morgan could give the treasury became essentially the equity piece that the treasury was putting in that then the fed was lending 90 on so it's just it's all it's just a whole house of cards just and and people looked at that and they said hey that doesn't that look like that's inconsistent with the fed's charter but they just structured it with a technicality to basically get around it such that the fed

could directly fund the treasury. It was like technically they didn't, but practically speaking they did. And in many ways it's similar to what they did back in 2008 where one of the things I think we've talked about in the past, but when we think about all of the bailouts that the big banks got back in the day or that AIG got from the federal government, It's like where did the federal government get the money to lend to the banks? It couldn't – it only got there because the Fed put it into the banking system in the first place.

Like that was the fund flow. The banks were all insolvent, but the banks were the ones who have to buy the paper from the federal government to then lend it to the banks. And it didn't exist without QE. And so it's all a racket. And I think that, I wrote about this in Ender's Game, but that when, you know, an honest review of history, I think we'll look back and luckily for us, history will be written by the winners, that this last 10 to 15 year period of time, that anybody thought that this would end in anything but disaster will be looked back on as clowns. I mean it's hard so that's the thing

like why they have to perpetuate this is it a reputation game for them is that why you think like Jerome like Kashkari last year like the bug man eyes he had on that 60 minutes interview

got me money printer go burr became a meme last year it seems like the public at large at least a good chunk of the public psyche of Dave Portnoy holding up a dollar calling it shrewd bucks is starting to call bullshit right you're saying like you're you're printing way too much money uh you got the fiscal side coming out dropping

money into people's bank accounts everybody's now waiting for that stimmy today stimmy stimmy attendees the fact that we're talking about stimmy attendees right tells you that like people one i mean it's funny it's a meme but but two that um not necessarily all those people but people are seeing that this insanity is going on. And then you have the sane people like Paul Tudor Jones or Stanley Druckenmiller or Michael Saylor or Ross Stevens. And it's not just them because I talked to a lot of people that run private businesses. They see it and they feel it themselves. They understand what it takes to create actual value in the world and to run businesses and they are taking measures to protect their interests and their businesses and their

employees because because they know i think before it was one of those boiling frogs you know and now it was you just threw a frog into a boiling pot of water yeah i mean so my parents are in a coffee shop in our hometown and my dad this year has been forwarding me emails from their suppliers like hey we're raising prices five percent raising prices six percent raising prices seven percent most recent email he sent me two days ago like hey we're raising prices on may 1st not even a percentage like they don't want to say what it is like that inflation is leaking to small businesses and last time i was at the coffee shop a few months ago like all the employees were asking me like all right how do i set up my blue wallet how do i how

do i move this from the exchange and like i know they're thinking as a small business about allocating to bitcoin just anecdotally obviously they're a bit biased because they're close to me and i talked to them about bitcoin a lot but like i guess the point i'm trying to like what do the death serves of this debt situations credit situation look like i mean again today you had biden come out 43 capital gains why are we paying tax if we're running three trillion exactly why do you have to pay i mean that's another question that came to the fore last year it's like why are we paying taxes i think it's just print money and give me fourteen hundred dollars a month like why are we giving stimmies you know you know and i think that it's just

happening on such a scale now that and it's impacting so many people and that it's impossible to ignore that if we were the conspiracy theorists and you know in the small number of people that recognize that this was a problem now very mainstream normal people you know can no longer ignore it and i think that um if i step back from the the dynamic of debt and dollars and there's a reality that the u.s financial system the u.s economy that it shouldn't be this way but because the money supply has centralized it's caused the banking system to become the bleeding heart of the economy, that everything runs through the banking system, and that the function of credit allocation is the primary way by which resources are allocated and the economy

is run. In a normal economy, and we can talk about this in a bit, I don't want to change subjects just yet. In a Bitcoin economy, the banking sector is going to have to compete for capital alongside each other segment of the market, and we're going to disarray intermediate banking such that the sectors of the real economy can interact more directly with each other and that essentially the pricing function within the economy won't be able to be distorted and that will result in a much more stable economic structure but if i key in on that for a moment with the with the credit system and the dynamic that exists there that dictates that trillions of dollars of new reserves need to be pumped into the system in order to maintain that system

because that system either collapses once they print too many dollars and people don't value them anymore, or if they don't do that and the credit system falls apart, then the supply chains fall apart and goods don't show up and the dollars become worthless. So it's damned if you do, damned if you don't. The Fed's in between a rock and a hard place. But on a fundamental level, if we think about the pricing mechanism because this is what your dad's talking about, what other businesses are experiencing of having the cost of goods and real goods go up.

What ultimately happens is company A is having their prices increase and then they try to pass it on to their customers. And then ultimately their customers can't pay those prices and they start substituting and going somewhere else. And it's not just about substituting to lower quality goods, but at a certain point, a company is going to raise prices and it's going to cause their business to deteriorate and their business is going to be impaired. And that's – oftentimes when people think about hyperinflation, they just think about the side of it that is trillions of dollars being printed. But what's actually happening is the price system and the pricing mechanism that's coordinating the activity of hundreds of millions of people, if not billions of people, is sending all sorts of – not necessarily false, but all sorts of changing relative prices.

And that when you have a complex system such as the U.S. economy, whatever the current GDP is in dollar terms, like $25 trillion, I don't look at it on a day-to-day basis, but somewhere around there, that ultimately certain businesses fail because they can't respond to the changes in prices. And then when those businesses fail, that means that real goods and services don't get delivered to the people that have come to rely upon them. And real goods and services ultimately become scarce relative to money, which is the opposite dynamic that needs to exist for money to be functional. And so it's the impairment and the failure to deliver real goods and services that ultimately creates a run on real goods and services at the same time when money is being printed. So it's not simply a function of money printed, printed, printed until people don't value the money. It's that that function of printing money causes real economic activity to be impaired because relative price signals all start to fluctuate and businesses can't react or businesses make decisions based on those changes in prices that cause their underlying business to be impaired and their customers to go elsewhere. And that's when we see hyperinflationary events. It's actually the economic distortion and disruption and impairment paired with the money printing,

but it's the money printing that actually causes the impairment of economic activity. What makes this situation particularly scary is the lockdowns too, right? Let's say vaccines roll out, anybody who wants to get a vaccine gets a vaccine, and people feel more comfortable going into the economy and actually interacting, dealing with businesses spending money and getting about their everyday lives you have that factor into this situation as well which makes it particularly scary if you really think about it because again like you mentioned these are complex systems you can't just say snap your fingers everybody's got a vaccine go back to your your normal way of living and expect supply

chains particularly to be able to just get back to where they were january 2020 like that complex system too the supply chain is thrown into this equation and that's like a lagging thing right like it's going to take time for the supply chains to to get back to where they were and then you have a bunch of people getting back to work getting back into the economy they're getting income again so there's more people with more dollars competing for even more scarce goods yeah on top of the situation you just described like yeah and you know one micro example would be just the house think about all the inputs that go into a house and that's an incredibly complex supply chain and right now lumber is a big issue and but but just use that as one

microcosm and add up everything and so when the builder is building the homes and he's also having the price of the land. And, you know, he's having to set a price that's changing rapidly on him, that one day there's going to be, there's not going to be buyers there that can afford that price. And he's just, you know, got a bunch of inventory sitting there that he can't move because while dollars are being printed, they're not necessarily moving through the economy in a way that allows for them to essentially be recycled from in a, in a balanced way that that causes an economy to sustain itself. You can prove this with the velocity of money, correct?

Yeah, but it's not, that's one way, but it's not just velocity. It's that these people who run central banks, they think that they can just pull strings and that the economy magically goes. But the reality is they can put money in the system, but they can't make a sustainable economy function. And it's actually the changes in prices

that cause that system to break down, that cause the builder to take the rises in input prices and then ultimately sell a home for an increased level. And there's going to be certain people that can continue to pay that higher value of a home, but then people get tapped out and they go away and then all of a sudden a home builder can't move their inventory

and then they can't pay their employees. So it's just when you try to act God, essentially, act like a god and like think that you can control the economy a central command it fails to recognize that the economic systems are as complex as they are um and it's that it's that core principle i've mentioned before but i'll mention again central bankers can put money in the system but they can't make it go where they need it to go beyond that initial printing of the money it's crazy times it's fucking weird man it's uh somebody's got a big family and parents who are modest means like working like

a family of modest means working in a small town just trying to provide for their community and seeing it get completely borked like this like what what is like you talk about ender's game yeah i mean you wrote ender's game but like what is what do you see the next 12 months looking like you said inflation has been pretty high already but we haven't seen anything yet like it seems like the fed has sort of tried to just throw everything on the fiscal side now like hey you guys got to figure this out you got to do an infrastructure bill you got to drop stimmy checks on people raise cap gains taxes not that they're publicly posturing this way but it seems like they're like hey we've done everything

we can it's up to the politicians to raise taxes and do spending if you will yeah i don't know if i think about it you know there's oftentimes there's this discussion of monetary policy versus fiscal policy, there's a reality that the federal government can't be financed if the Fed isn't putting money in the system. So if there's a certain amount of dollars that exist in the system and a certain amount of credit that exists in the system and that system is in massive imbalance, that if you want the federal government to raise taxes to pay for something, that those dollars aren't there to ultimately get to the federal government if the fed doesn't put them in or if the fed or

if people look to the to congress and say hey we need a stimulus program we need to do an infrastructure bill it needs to be two trillion dollars again everyone's competing for those dollars and the system is far more than a few dollars short and so in order every time the federal government raises two trillion dollars that's money that's coming out of somewhere else in the banking system. And so one way or the other, the Fed has to finance it. It all has to come from monetary policy because the system is effectively redlining.

And so I don't think it's so much, it all comes back to the Fed. There's, you know, when the financial system is insolvent and there's a certain number of dollars that exist, there's only one, or a certain amount of dollar-denominated debt, I should say, there's only one way for those to get satisfied and that's via the fed and so what do i think is going to happen over the next um over the next 12 months i do think that the federal government's

going to come in with even larger stimulus programs to quote try to stimulate the economy and that that is going to cause the fed to have to pump trillions more dollars into the system and it's it's a vicious cycle and it basically can't end without people opting into basically ejecting out of the u.s dollar and that doesn't mean like on a geopolitical basis that means individual actors within the economy people that are looking to things like bitcoin and say hey like i don't have any i don't there's not i don't have a project to go invest in i'm trying to shore up my balance sheet i've got a debt problem here and i don't i've got a customer problem so So I think that we are going, and the principle is for every dollar that the Fed puts in,

it's going to find its way through to inflation. And so if the Fed prints trillions of more dollars or digitally creates them and puts them in the banking system, that that is only going to impair economic activity. It's going to give the appearance of normalization for fits and starts, but it's all causing a large buildup of imbalance. It's a good time to be bullish on Bitcoin, it seems. It says, like, to the name of your blog series on Unchained's website, Gradually and Suddenly.

Like, are we reaching the suddenly part of the dollar's ability to maintain purchasing power over short periods of time? People don't like the word hyperinflation. It's, like, taboo. Over the last year, you say it, you tweet it. It's never happened here. Reserve currency of the world will never happen. It's going to happen to many other currencies before the dollar.

It can't happen to me is not a strategy, nor is it logic. I think we've had this conversation on a number of occasions. And there was a particular slide from my presentation that I did at BitBlockBoom that it's this core idea that the marginal cost of any, or the value of any good will trend towards its marginal cost to produce. The marginal cost to produce a dollar is zero. The marginal cost to produce $3 trillion is zero. The marginal cost to produce $6 trillion is zero.

And that people figure out, and the vast majority of them figure it out via changes in price signals, that their dollars purchase less. and a year ago or even i'd say when i was writing ender's game that i would have i would have said that it was it's likely the next finance it's not this financial crisis is likely the next financial crisis where the system breaks i think as a function of trying to play god shut down the global economy for a highly levered global economy for several months i'm less convinced today that this isn't potentially the last cycle now that doesn't mean that it plays out over 12

months but that it feels like it's just continuing to snowball that the insane people continue to get more insane and the sane people continue to come to texas or florida i mean it's hard to argue with you i mean i'm sitting up in the northeast in jersey people are going insane literally like there's no logical consistency there's no critical thinking there's no thinking for themselves for a lot of people not all people most people in this particular part of the country like we've had this conversation many times the last couple months i think you should tell the story of uh like retreating to texas and then attacking going back and attacking north like i like this is the heartfelt conversations we have outside the podcast and personal conversations

like i want to stay in philadelphia i would love to stay where i was born and raised and live with my whole family but i just honestly don't think i can with what's going on in the economy up there what's going on socially up there like i'm worried that it as a father now like is is that in the best interest of my son at this particular juncture or should i come down here where freedom seems to be reigning supreme and more sane heads seem to be meeting down here and game plan come down here chill out in austin for a few years and then figure out a plan to get back into the northeast and save the northeast a few years from now when when the dust begins to settle well you know i think about first on the economics standpoint i think about this

in a number of different ways but as people are reacting and being very rational and leaving places that are threatening people's either economic opportunity or civil liberties in combination of both practically speaking that people are leaving places like new york and california they're coming to places like texas and uh and florida other places as well but there there is a migration that people react to incentives and and that that has an economic impact that is there are local economies in those places that are that are having little energy sucked out of them and they're coming here to create value here and create value in in florida and that's not without consequences for the places that people are leaving

and it's causing economic disruption in those local economies as well. And when you have highly taxed cities or states and their tax base is leaving and their economic output is leaving, look at the Teslas of the world or the Oracles, many other large Fortune 500 businesses moving headquarters. If Tesla is bringing thousands of jobs here, there's thousands of jobs are going to create tens of thousands of jobs to support this economy and that that comes at a cost of new york and california creates a vicious feedback loop because you have already an overtaxed insane group of people that are destroying civil liberties and

it's just going to feed on itself um so that's the economic perspective one of the story that you're alluding to which because i also think about it as it relates to bitcoin that when people are opting out of one monetary system and opting into the other that is basically sucking energy out of one and putting it into another. And one's decaying and one's being built up. And for every person that converts a dollar out of the dollar system into Bitcoin, there aren't actually more Bitcoin and dollars that exist at that point of sale. But the Bitcoin monetary network gains energy as more people store value in it, and it actually becomes a greater utility, and then there's more mindshare to build it up. And one of the ways that I think about Texas,

and again, I think that many people feel this way about Bitcoin, is that Bitcoin is a great source of optimism, that Bitcoiners are not dystopians, that Bitcoin is the path not to prosperity, but it provides us a tool to live our lives and to preserve certain levels of freedom and certain quality of life. And so I kind of joke about it, but I'm actively recruiting Bitcoiners to Austin. And in certain ways, it's selfish because I think about Bitcoiners coming here to Austin

or to Texas, and I think about their physical Bitcoin coming here as well. And that the place that has the most Bitcoin is going to be the most prosperous. And so the story that you mentioned is a piece of history from the Texas history books. And there's a reality that, and one, I love the United States, love America, I'm a red-blooded patriot here.

But that a lot of our history, Texas was a republic. Texas was independent for, albeit about 10 years, that we were independent before we joined the United States. and that in the early 1800s, Texas was fighting for its independence from Mexico. And most people generally know the story about the Alamo and the Texans lost the battle at the Alamo and the Alamo became a rally cry. And the Texas military or army wasn't a well-formed military. They were outnumbered easily 10 to 1 by the Mexican military,

which was a more formal military kind of rank-and-file rather than the militia and that after after the Alamo and after a few other critical losses Sam Houston was leading the Texas Army and that he Sam Houston also was I believe a former senator a U.S. senator from Tennessee before he came down to Texas, and he's one of the founding fathers of Texas. But he was also leading the Texas Army at the time, and it wasn't a well-organized army, but he was basically retreating, or at least that's how it was perceived. But he was really just falling back to allow his troops to heal,

and it was part of his strategy. And there was a lot of consternation amongst the troops as they were falling back And in their minds, retreating, but it was really a strategy. And they kept falling back and falling back, and the Mexican army was on their heels. And then in the – I think it was before dawn, basically, it was a sneak attack. It was at San Jacinto, the Battle of San Jacinto. And they attack in the early morning under the fog, and they win the battle, kill – it was like – I don't know the exact numbers, but order of magnitude. They kill like 1,000 men and lose fewer than 10, something crazy like that.

And they won the war. They captured Santa Ana, and that was it. Like the battle – the war was over. And so it was really one of those – the dawn is – or the night is darkest just before the dawn, where most of the men that weren't in a well-organized military didn't understand the strategy, but Sam Houston knew that that was the only way that they were going to win. And I think about that with – in some ways it's joking, but it's like, all right, let's all fall back to Texas. Bring your Bitcoin to Texas.

We've got the best economy here. We've got oil and gas resources aplenty. We've got our own energy grid. We've got a very diverse economy, and we've also got people that love freedom and that it's – move down from Philadelphia, join the ranks. you know we'll we'll go back out and we'll we'll save the masses but uh we've got to get all the the like-minded bitcoiners here to uh to come up with a plan to to restore um and not not in a physical violence way but in a in a way to say hey we need to the things that are happening around us do not make a lot of sense and we need sane people to prevail and the only way that those

things happen is if people fix problems agreed it pains me it pains me so much to have to and Matt and I have to escape the Philadelphia area and come down here to preserve liberty from escape the place where the Declaration of Independence, the Constitution was signed, first or second capital of the United States. I think it was New York City or Philly. I mean, I can say I tried to convince you

to come down to Texas like a year and a half ago. I know. I saw the writing on the wall. I gave you time. But I really just, I gave up for a period of time. But now with all this stuff happening, So there's a window of opportunity now. And it's really, it's a function of responding to economic incentives

and to incentives that are derived from civil liberties and respect for them and that there's a benefit to being around people that have and think similar ways about that. Yeah. Sorry it took me so long, but I'm starting to see it. I just look at you as a, I mean, not only are you a friend and I want to go get steaks and have you come to our meetups and then recruit other Bitcoiners, um, to just keep the virtuous cycle going. Um, you're also a bellwether, you know, you're, you're a good, you know, Northeastern

Matt Odell. You're, you're going to be a new New Yorker soon. Uh, we're going to get you to come as well. But, uh, but, but yeah, it's, it's, you know, if we get, if we get you, then, you know, there's going to be, it's going to be, it's going to send a single to a lot of Bitcoiners out there that, um, that, that it's fun being in Austin. It's fun being in Texas. Um, it's not, again, it's more of an optimistic view of the world and that, um, it's fun just if we think about Bitcoin singularly obviously bitcoin's a big idea um and it's a big phenomenon but that we when we when we have the type of energy that was here last thursday night for bit devs right that's fun when what we're building here at unchained it creates energy and we want more people around

to contribute to those ideas i was telling matt on rabbit don't recap today like it reminds me a lot of what new york was a few years ago with bit devs and stuff like that i like a thirst for that type of vibe that you guys had going here last thursday it makes me better as somebody who's writing about and talking about bitcoin like you need to go to that stuff to actually be able to speak articulately and and accurately about the subject matter that i'm covering and so like i i as a bitcoiner who's professionally in the space this content and then great american mining probably more so I think I have to be done

like literally unless I want to fall back in my career and there's just a there's a very natural there's a very natural feedback loop that happens when you put Bitcoiners together or when you put any group of people together that people need to be around each other

but particularly in Bitcoin that when you're talking about ideas and we ultimately our entire economic structure is one of trial and error and that if you're not having conversations with a lot of different people and you're not exposed to a lot of different ideas that the output in aggregate will be far less that if everyone's kind of fractured and not together and you can think about that from the perspective of a just just being locked down but when everyone's just away from each other and there's not you know a way to aggregate ideas and have a lot of people contributing to ideas you're naturally going to produce uh far less than than if that

were the case um and so i just know from from this last week and i experienced this this you know every time we have a meetup and just having people in town we had a lot of guys who i met for the first time that were um were in the oil and gas industry that you know have or have now come to the to the bitcoin world but they didn't come from the bitcoin world and then go find the energy world oil and gas or petroleum engineers or guys that work in the oil and gas space just um in the in the production exploration side that they're they're starting to learn about this and are excited about it and they have ideas and they have a knowledge base that i don't have but then that starts to get me thinking about things at unchained capital that i should be working on we've obviously

had a lot of conversations just between unchained capital and great american mining about ways that we could potentially help you or you could potentially help us but then when you start to get other people drawn in that that have a skill set or specialization that we don't have then they can actually help us physically do things that we wouldn't be able to do on our own and those are the type of things that happen when you bring people together and that this is also a unique place because we do have such rich natural resources and that is such so critical to the bitcoin ecosystem that when you put developers together with oil and gas professionals with capital um with a with a strong regulatory climate um and and uh an energy grid that is

deregulated then a lot of phenomenal things can happen yeah i mean and this is something that we think about a lot at great american mining and talk about a lot it's like the stack right it starts with energy you need energy to mine you do your proof of work you need to generate electricity to run the asics to do the proof of work there's a stack being built that's going to emanate from the energy industry go up to the mining industry up into what unchained is doing with lending and collateral collateral lending like you can see the disparate parts of the stack starting to come together and work together and like the new financial system is going to emanate energy mining lending capital financial services and beyond yeah and one one conversation that

highlights this too which i this is just a perfect example of something i hadn't even been thinking about. My mind wasn't even open to it. I mean, ultimately I would have gotten there, uh, but it wasn't one of the things that was, uh, one of the, the, the top five things that made me excited about Bitcoin was I was talking to, um, Andrew Myers from Satoshi energy and, uh, he was in town and, uh, he was in town actually the week before last and stayed in town for bit devs and talking about the idea of um the way that the energy markets are actually funded and so if we're thinking about mining and potentially miners becoming vertically integrated with energy producers and just the um the the intersection of bitcoin and energy as it's just a perfect

combination there's also this idea of paying for energy and the idea that you could potentially you know as a as an energy producer is providing energy whether it's to a bitcoin miner or anybody else could also be having payments streamed back to them in real time on the lightning network and whether it's conceptually real time or just in a way that the the energy fulfillment and the payment fulfillment are happening in parallel to each other and that an energy producer could basically take final settlement of payment for what has been delivered without counterparty risk. Like that as an idea is like, I don't know why I hadn't thought about that. But that is fundamental to the functioning of an energy grid. And so that that potentially being one of the early big applications

of payments, given that we know, the energy producers are starting to really key in on Bitcoin and what it can do for them that it's like, okay, well, if I start to understand Bitcoin as a medium is why it stores value, and that I can actually convert my energy more profitably into Bitcoin at certain periods of time, or maybe all times, depending on the source of energy, that I can then, for everything I do, potentially take a percentage of this in Bitcoin as a way to de-risk my whole funding operation. And so I do think that that, you know, that's just one example of the type of ideas that come about when you're around a bunch of people that are talking about bitcoin that the way that their minds work are slightly different than yours and they're focused

on different things and then when you put two people together in the same room um you're gonna you're gonna get um actually actionable um projects that that might otherwise not come about or if they do they might be further down the line yeah the mind share being in uh this is the physical shelling point the geographic shelling point of the bitcoin mind share in north america I feel it happening. I felt it last week. I felt it all week. I've been meeting Bitcoiners all week.

I'm coming. I'm coming. We're already looking. We got a realtor. But to go back to what you just said, though, what we see, Great American Mining, producers love this, mineral rights owners love this, especially if you...

Wait, can we pause? Yes. Great American Mining, not GAM. Yes. The Facebook. Parker Lewis, got to give him credit. he he gave us our drop the the moment we don't refer to ourselves as gam anymore we're green american mining a name that is worthy of the cause i agree i agree all right didn't mean to

interrupt you there no but we tom and i because you it was just myself tom and you on the call right and you're like todd was there todd was there too yeah it's like drop drop gam it's Great American mining. From now on. I literally went into all of our literature publicly and it was just like, control Afghan, change to the great American mining. But, like you said, the payouts particularly.

If you don't have to market your gas, if you don't have to take it from upstream to midstream, market it, get your net backs, and then wait N45 for your royalty checks to come in or your payments to come in, you literally convert the gas to electricity on site run your a6 point your hash at a pool and you get payouts literally daily if you want to as a producer as a mineral rights owner whatever it may be liquidate that for us dollars if you want to or just hold it in bitcoin immediately it's

game-changing in that regard and this is something i've been saying on this podcast other podcasts and i particularly want to get your viewpoint on because we talk about the fed its role in the economy and how it affects everything like my thesis is that the energy producers by proxy being bitcoin miners the largest bitcoin miners are going to replace the fed not in the sense that they control monetary policy or interest rates associated with bitcoin because they can't, but they replaced the Fed window, the place where the production and distribution of the monetary units happens.

It's going to happen at the Bitcoin mining layer, which is going to be at the energy producer level because they're going to be the biggest miners. And how do you build a financial stack on top of that? So I think I think about it a little bit differently. Good, I need some pushback on that. Yeah, Bitcoin maximalists don't all think the same on every single topic.

And that's why we talk about ideas. I think about – so there's certain parallels which I would say miners and nodes replace the New York Fed from a settlement layer. That virtually all large financial transactions that happen through the U.S. banking system, final settlement happens through the New York Fed. and that that final settlement now will happen as a function of Bitcoin miners for the entire global economy. I think probably where I would disagree is that they aren't deciding where capital gets allocated. They aren't able to say we're performing a function and we're selling our energy to perform this critical function of clearing and settlement as well as currency issuance, but they're just issuing currency to themselves based on proof

of work and a set of rules that they can't alter. So it's like, if you do X, we will do Y. And them doing X has to happen before they get Y, which is Bitcoin being issued. But if we fast forward to the future, where all Bitcoin had been issued, that it will be more so that the allocation of resources will be done just by anybody who has Bitcoin. And that if you want to get capital, that you'll have to knock on someone's door nicely and pay a fair market interest rate. And I think that applies to any Bitcoin holder. And then the way in which that Bitcoin gets transferred to the person that wants to go build a project is miners and nodes validating transactions and clearing them. I do think that there are fundamental transformative

dynamics that will that will come to be as a function of the integration with the American energy industry and Bitcoin, but I feel like it will be more impacting to the real economy than it will be a financial system, if that makes sense. Yes, it does. And it touches on something that you brought up earlier in this discussion, is the changing of the financial system under a Bitcoin standard, and the banking system particularly. how do you see like the the grand transition what is the end state of that look like in terms of like funding and like you just mentioned like individual bitcoiners will be funding this stuff

and investing in all this and it completely changes the dynamic of finance right yeah and i So I think about companies like our own here at Unchained Capital, and there's a critical fundamental difference between the bank-like entity that we're forming here and anything that maps to the legacy world. And the critical differences that are – the way that we help people facilitate custody is them holding their own keys. We refer to it as collaborative custody, but clients hold two keys, we hold one. I envision, just as an example, we have a relationship with GAM, and we've got a relationship with a bunch of Bitcoiners. Great American Mining. Fuck.

Are you kidding me? Great American Mining. That was a joke. That was a joke. I was joking that you guys at Great American Mining, the Great American Mining firm, needs a project completed. You want to go do something that is beyond just Bitcoin mining, but you're a vertically integrated energy company at this standpoint, and you want some Bitcoin to go finance a project. What happens in the current banking system is JP Morgan just loots its customers, rapes and pillages them, takes their money, doesn't pay any interest, and finances the projects they want to finance.

In our world, we have to, again, knock very nicely and say, hey, clients, A, B, C, D, E, F, G, we've got a project. Here's the profile. Would you like to finance it? These are the terms. But you have to voluntarily opt in and you won't do that if a fair market rate is being compensated to you or paid to you based on the nature of the risk that is being undertaken. and that there will be bank-like structures. But in that world, there's the Great American Minings of the world and all the people in Great American Minings supply chain, and you don't have to come through Unchained to access all those people in your supply chain. You can go direct.

And so that's why I think about it as if I was to visualize the U.S. financial system, the banking system sits at the center because of the centralized source of money and everybody, every other segment of the market has to come into the banking system and then go back out to communicate with each other and the banking system also has practically speaking all the monetary capital

captive to itself and it possesses and controls a lot of power as a function of that In a Bitcoin world, say Unchained Capital exists and we're operating like a bank-like structure but we're not holding deposits on behalf of clients but we are helping to allocate capital and we are performing a capital allocation function similar to as the banks operate today with that key exception of having to ask for permission and for fair market rates being compensated. that Unchained Capital itself will have to be competing on the same footing as Great American Mining for capital. So we'd be sitting alongside Great American Mining and all the people that sit in your supply chain or other segments of the market,

whether it's healthcare, water and waste management, anything, that it's all those sectors of the economy are capitalized. They can interact directly with each other. And if they need projects financed, they may come to the banking sector. But rather than the banking sector being at the center, it's sitting alongside. And it doesn't have all of the economy's monetary capital captive. It has its own monetary capital, but it has to compete. And if projects go south, Unchained fails. Or if another bank's projects go south, there are no bailouts in that world.

And when you have a world and an economic structure that doesn't have banking at the center of it, not only is the banking sector just intermediated, but you also have more undistorted communication through the sectors of the economy that deliver real value And that the capital that sits in the banking sector will truly only be the amount of capital that it earns from connecting people with capital to people that need capital. And that will be a fundamentally, that will be a paradigm shift in and of itself. And as you're describing us, I just can't stop thinking about like the visualization for node topography compared to like the traditional banking system. where you have like the spoke the wheel spoke the banks being at the center of the wheel being the central spoke that distributes capital to everybody versus the node topography which is more

not exactly spider web but like it's more distributed like the stereotypical visualization you get when you compare bitcoin nodes to like banking nodes and you extrapolate that too to the actual capital funding of businesses on top of the Bitcoin network. That's, yeah, that type of relationship between capital owners is very similar to the relationship between nodes propagating transactions and information, right?

Yeah, 100%. And, you know, if you think about it, there should be no reason. I mean, obviously, Great American Mining has its own node, but there should be no reason why if Great American Mining is just trading with the sectors of the economy.

Imagine today it's buying ASICs and buying power. In the future, you might own power and you might be selling power to the grid that you don't need a banking function to do that. You don't need to live in a world where I'm going to put all of my deposits for you to rate me with and lend out and not pay me market returns just to communicate with other sectors of the economy.

That because we have this permissionless network and disintermediated network that all of those functions that are just trade, which is really what money helps to facilitate, can happen on a direct basis. And there will be still financial services and there will still be financial intermediation and there will still be value delivered. But again, it will be a – the things that the banking sector – sorry, to be more precise, the capital that the banking center accumulates will have to actually be for value delivered, not just seniorage. Yeah, very modularized, granular, compartmentalized risk, if you will.

compartmentalize risk and then if if there are payments infrastructure that are helping to deliver value um it doesn't come with hand over all of your rights at the door um essentially it is i will pay you a fee for a service to do this and you'll pay me for a service to deliver your power yeah it's happening it's happening i mean we're seeing it at great american mining and you mentioned earlier like oil and gas folks coming to the meetup like people are starting to click i'm telling you i i got giddy seeing a petroleum engineer get giddy telling me the story about how one of his friends called him up one day and explained bitcoin mining to him and the way he describes the story to me is like look i'm a petroleum engineer i know all i know all the

economics as it relates to oil and gas supply chains and i can't i can't relay the story precisely but he basically is like you know i'm i basically have pen and paper out i'm doing all the calculations of the cost to produce power basically going from the the amount the mcfs to conversion to power what i can what it cost me to do that and then you know kind of describes you know kind of ideas around transmission and then and then he's and then he tells me he's like and then i'm converting it to bitcoin at what that would translate to in bitcoin and my immediate thought was this can't be right it's too good to be true this is too good most producers say to us really you're bullshit yeah and so he read reruns the numbers run the numbers he reruns the

numbers and he's just staring at it and he just gets giddy he's like i'm like this is the greatest thing in the world this is the greatest thing in the world and then and as part of that same conversation i'm talking to one of that guy's friends who's also in the oil and gas space not petroleum engineer but uh but but he's similarly kind of you know coming to understand bitcoin in the last six to twelve months and he makes a comment to me as he's as he's figuring out he's like i he makes a comment he says i read every piece of history he's like i love two things reading history about oil and gas and getting hydrocarbons out of the ground and as he's describing to me his path to bitcoin uh nod to nick batia this guy was a he layered

money hooked him boss um that that his comment was as he's figuring it out he's like i have this this this just hits me like a steamroller that uh i'm like holy shit there is no such thing as stranded gas anymore. And truthfully, we've had conversations about this. So I know enough to be dangerous, but not enough to understand the true economics at play. And I understand it in concepts. But when you have people that aren't like you and I

that have just been down the Bitcoin rabbit hole, that have been drinking our own Kool-Aid, obviously we do check our biases. But to see it in people that are coming at this directly from the oil and gas sector, that's where I'm like, okay, I knew this conceptually. and had an appreciation for it,

but seeing people that trade it actually is, looking at it from a different perspective, looking at it from the opposite perspective, and seeing more than I could possibly imagine, those are the things that get me excited. Yeah. It feels like we're at that tipping point, right? And then to parlay this into the transition,

like, it's never going to be a smooth transition to Bitcoin from the fucking clusterfuck that is the traditional monetary system. But it's giving me hope that enough people are figuring it out. It's the smoothest economic transition that could ever take place. Why do you say that?

I look at Venezuela as an example. Imagine Venezuela existed and its currency failed and there weren't other functioning currencies around it to either get humanitarian aid or for people in venezuela to opt out into the the u.s dollar or any other local currency that might make its way through the venezuelan black market that as as devastating as the economic deterioration is that that's hit venezuela or hit lebanon um or soon to be argentina and turkey turkey that imagine each of those places if the

u.s dollar wasn't functioning currently as it is or the euro or the yen that these dominant currencies that that that still albeit in their impaired state are facilitating global trade because that is the that is the fundamental function of money coordinating human activity coordinating economic trade and exchange imagine if this is how bad venezuela is with functioning currencies all around it imagine that state if a functioning currency didn't exist and so that's where i think about bitcoin i think you know that it's the idea that you can't think about bitcoin in a vacuum you can't think about the u.s dollar in a vacuum the the dollar has structural problems as does every fiat currency because of the chicanery that is central banking over the

past 50 years and that all exists and that that has been made independent of bitcoin and so i think about it as like your systemic issues are are there and and whether bitcoin existed or not They exist, and we'd all have to suffer the consequences. But if we all had to suffer the consequences of that excess and impairment and disruption to come from it, and Bitcoin didn't exist, then we wouldn't have basically a backup switch to reboot the economy. We'd all just – the whole world would turn into something that's worse than Venezuela. The fact that Bitcoin exists is why I say that it's as smooth as an economic transition can take because it is a functioning currency, that even if there is economic disruption just as the Feds and the ECBs and the BOJ run a train into a brick wall, that if we didn't have that, then we'd have nothing to fall back to to coordinate economic exchange. And what we do have the benefit of is this transitionary period that people are able to consciously evaluate what Bitcoin is and to get it off the ground to a state that when those fundamentally flawed currencies truly do fall apart, that more people at least have a lifeline to – not necessarily a lifeboat. But it provides a foundation off of which to coordinate activity that if it weren't there would cause economic structures to collapse in a way that they otherwise wouldn't or that they otherwise would in a much more severe way.

Yes. Said another way. Thank God we have Bitcoin. Thank God for Bitcoin. Right. Thank God. Holy shit. We do have to get to dinner soon. Even though our dinner gas bailed on us. Our oil and gas friends. How are we going to change the world? Actually, I don't even want to change the world. I just want to have a medium for me and my friends to create value in the world and store it. I think that's one thing I hate about Silicon Valley, that I have this mentality in Austin with Unchained that it's just a bunch of sycophants that all want to change the world. It's like, just do your little thing. And that's how I think about what we're doing at Unchained,

what you guys are doing at Great American Mining, what everyone's doing in the Bitcoin space. It's just like, do your little thing, and those little things will add up to something big. And it would have been fun to have our friends from Dallas down to talk Bitcoin mining. We'll still talk mining. But yeah, it would have been fun.

It would have been a lot of fun. But this is, I mean, I think we're going to have plenty of fun either way. They're coming to Bitcoin 2021, though. They'll be there. They'll be there. It's going to be a fun weekend. I'm excited to move to Austin. What date can we get you to commit to?

It's going to be post-Labor Day. Okay. I'm going to miss the summer. I can't do the... Enjoy the beach. Enjoy the beach. Probably early October. We've got to make a shout-out for Prop B.

Shout-out to Prop B. May 1st. Vote yes for... Prop B. Prop B. to reinstate the tenting ban or take him back to the city. And you're supposed to vote no for two other props, correct? Technically, you could vote no for all others,

but the important ones to vote no for, vote yes, prop B. That's reinstating tenting ban. This is Austin, Texas we're talking about. If you're an Austin, Texas resident, vote. If you're not, tell your friends that live here. if you recently moved from california don't fuck us up so vote yes on prop b vote no on dnf dnf are trying to change the city to a strong mayor format basically consolidates pair or power in the mayor's office rather than effectively eliminates the city manager our mayor's not as

strong as uh mayor suarez from miami um but just in general it's a bad structure and then the other vote no on i get d and f confused but it's no on both of them f is trying to change the uh the election year from a gubernatorial year to a presidential year and that's a bad thing because you just have group think well if you have a group of people that elect a mayor that would remove a tenting ban that causes a homeless problem to exacerbate in a city you generally have a lot of liberal group think in in blue cities that if you if you elect a mayor during a presidential year that makes it almost impossible to have a sane person get elected.

Yes. I agree with that. So yes on Prop B, no on DNF. And as I told all the people that were at the meetup last Thursday, Faustin fucks this up, then I'll run for mayor. I'll win. We're already turning Austin into a proper bitcoin citadel but i'll turbo charge that and i'll fix it myself yes and that's a topic i'm going to cover tomorrow with will cole is the bitcoin citadel and when you run for mayor i'll be living here so i'll be able to vote for you and when we have all the bitcoiners here it's going to be easier to get elected yes and i said i'm going to move here after labor day i have to move here at some point in september i guess i'm going to just announce this right

Now we're throwing a Bitcoin mining and oil and gas conference in the beginning of October. Will it be here in Texas? It will. It will be in the Dallas-Fort Worth area. Wonderful. Thank you for your economic development. Hey, it's the least we could do at Great American Mining

for all the value and intellectual capital that the state of Texas has provided us as a company. Well, this is one thing that I'll mention it now. Safe Dean actually came here in 2018. I think it was after a BitBlock boom in 2018. And it was recently after the Bitcoin standard was released. And he signed a book for Governor Abbott saying how he enjoyed his time here in the state. I was supposed to get that to Governor Abbott, but I never did.

Dropping the ball, Parker. so if anyone out there is listening that can help me get him that book please reach out we're gonna get it to him feels like he needs to read it too we need to get we need to start getting

I mean this is something I've written about in the bent a lot lately it's an extension of part of our thesis at Great American Mining is that some of these states need to start using some of their precious energy resources to mine Bitcoin, to roll into permanent funds

that can, especially states that have no income tax and want to keep it that way, Bitcoin mining with resources within the state can certainly make that happen. You replicate the Alaska permanent fund, but you use Bitcoin mining as the source of those funds. Yeah, I think one of the benefits too here though is one of the things that makes Texas different

from a state like Wyoming or a state like Alaska is, and also why it will be the Bitcoin mining capital of the world, is that state and federal government actually own very little of the mineral rights in the state of Texas. I think it's something like less than 5%. But what they can do is they can create a regulatory climate that is open, that is clear, that attracts economic development. And I think we have seen recent movement from the governor's office to be very supportive of bitcoin and so now when i saw that from governor abbott it made me think you know what i fell down on this time to get back up and uh yeah so if anybody's out there you know governor abbott i've got a signed copy from

safety and himself is dated a bit 2018 but that i think just makes it a more valuable nft physical nft and actually conversations with the railroad commission they want to reduce flare but they want to do it in a way that's economically incentivized and not sort of top-down fiat dictated to to the producers and bitcoin mining is that economic incentive so i think the mining industry here in texas west west texas particularly is very bright in the future we've just got to figure out how we can cool those hash boards down in the middle of the summer

and it's a problem that's getting solved a lot of bright minds well Parker, it's always a pleasure let's go eat some steak let's eat steak peace and love freaks