TFTC: A Bitcoin Podcast - #583: Is Trump’s Tariff Blitz The Right Move? with Porter Stansberry

Episode Date: February 10, 2025

Marty sits down with Porter Stansberry to discuss Trump's first few weeks in office. Porter on Twitter: https://x.com/porterstansb 0:00 - Intro 0:36 - Trump's tariffs 4:00 - High taxes won't fix the debt crisis 8:55 - America’s trade deficit 12:45 - Fold & Bitkey 14:40 - Rate cuts 18:37 - Liquidity crisis may throw in a wrench 23:23 - Breton Woods 2.0 26:23 - Social security is doomed 32:53 - Unchained 33:54 - Microstrategy's regulatory arbitrage 39:13 - Uncovering fraud 50:37 - Peak grift and Biden laptop 54:12 - Nat gas and coal prediction Shoutout to our sponsors: Fold https://foldapp.com/marty/ Bitkey https://bitkey.world/ Unchained https://unchained.com/tftc/ Join the TFTC Movement: Main YT Channel https://www.youtube.com/c/TFTC21/videos Clips YT Channel https://www.youtube.com/channel/UCUQcW3jxfQfEUS8kqR5pJtQ Website https://tftc.io/ Twitter https://twitter.com/tftc21 Instagram https://www.instagram.com/tftc.io/ Nostr https://primal.net/tftc Follow Marty Bent: Twitter https://twitter.com/martybent Nostr https://primal.net/martybent Newsletter https://tftc.io/martys-bent/ Podcast https://www.tftc.io/tag/podcasts/

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. Porter Stansbury, welcome to the show. Man, great to be here. Thanks for inviting me. Well, I'm very happy to have you here today. We've had to reschedule this a couple of times, but I think the backdrop that exists today, February 3rd, 2025, is much more exciting.

we're two weeks officially two weeks into trump's second term as president and it's been an all-on blitzkrieg in terms of him just getting into office and and spouting off executive orders and throwing the tariff word around um pretty pretty uh liberally the first two weeks columbia obviously over the weekend we had canada mexico looks like this morning mexico's president she conceded that she would send some National Guard, Mexican National Guard members to the border to help protect it. I think starting there with the tariffs, I think that's a big question in everybody's mind. Is this a good strategy? Is it simply a bargaining tactic that Trump is using, or will he go follow through and actually apply these tariffs and have an effect on the U.S.

economy? Yeah, a great question. And I just can't tell how much of it is bluster and how much of it is sincere. I don't think it's going to be possible to replace the income tax, for example, with a tariff regime. I think if we try to do that, it would cause massive economic problems because of the supply chains, how complicated they are in this day and age. And I just, I'm concerned that most people don't realize that tariffs are taxes. And what we desperately need is less government, not more government. And I was kind of surprised to see so many otherwise conservative people celebrating the creation of a new government revenue entity, you know, and Trump says he's going to start

the external revenue group. And I was like, whew, you know, I hope that doesn't, I hope that doesn't really materialize. But I also would say that to the extent that if it were possible to generate enough revenues with tariffs, as opposed to income taxes, it would certainly be beneficial to the economy in one way, which is that it would be a tax on consumption instead of a tax on earnings and savings. And so, in that regard, it would be a very big improvement. But I just don't think it's practical because of the intricacies of supply chains. I don't think people realize how many times things go back and forth across borders in North America.

So tariffs with Canada and Mexico is a really bad idea for our economy overall. And it won't just hurt Canada and Mexico, although it may hurt them worse because they're smaller economies. It would be very bad for America too. So I'm hopeful that it's bluster and a negotiating tactic that will lead to a better trading regime between mexico and canada and not just more taxes for us to pay agree there i think a lot of people are hearkening back to the mckinley era late 19th century in america where most of the revenue was from terrorists but i think while that situation would be preferable

i think we have to recognize that the state of the u.s economy particularly our debt is such that they were implementing that in a quick fashion is not going to be easy. And I think that's the question that's been lingering in my mind. It seems like the debt situation that was handed to Trump, particularly with the national debts and how Janet Yellen messed up the treasury markets by overloading the front end with the 10-year and the 30-year trading where they are and all the debt that we have to roll over. It seems like Trump's coming into office fighting with one hand tied behind his back because of the situation.

That's just I don't think anybody has an exact exact answer, but it seems like there is a very small hole in a needle that needs to be threaded. If there's going to be any sort of, quote unquote, soft landing that that Trump hopes to manufacture. Yeah, I think it's going to be very interesting to see if they can refinance 10 trillion this year without resorting to quantitative easing or other kinds of tomfoolery. I don't – I wouldn't want to be the treasury secretary right now. That's a very difficult task. It implies much higher interest rates. It implies crowding out a lot of private investment. And given the weakness in commercial real estate, it's a particularly bad time to require so much capital to fund the government.

So those are big hurdles that he's going to have to face. I just don't think that radically higher taxes is the best solution. I think that Elon Musk is really working hard to root out a whole bunch of corruption and very wasteful spending that's going on. And I hope that he'll be able to reduce it by at least a trillion dollars. But I want you to think about how unprecedented that would be. When's the last time government spending actually declined in nominal terms? I don't think it's happened during my lifetime. So, that would be a really, really unusual outcome. I mean, I'm very hopeful. I wouldn't bet against Elon, but I just think that expectations are set right now so that apparently Trump is going to be able to put enormous new tariffs on trade without having an economic problem.

He's going to be able to somehow refinance $10 trillion without having to raise taxes or see much higher inflation. He's kind of like walking on water in people's expectations. And he does have a really good cabinet and he does have both houses of Congress. And if there's a way for us to thread that needle, maybe he will be able to. But I'm very concerned that this is all happening with a backdrop of equity markets trading in ways that are very, very unusual and very dangerous. So not only do you have sort of the U.S. economy and our government funding requiring a miracle to navigate, but you've also got 10% of, sorry, 10 companies in the S&P 500 that now make up something like 50% of the total index's value. You've got this enormous concentration of equity value

and a very small number of companies. And I do think that the top 10% is now actually 75% of the index. So it's not just the enormous valuation of the top 10 stocks. It's the enormous overvaluation of the largest companies in the index, which is really a consequence of the nature of index investing, where the larger the market cap is, the more of the index it controls. And when everybody hits the feeder bar into their 401ks every month, it's getting allocated so that the bigger stocks keep getting bigger. And of course, you can imagine that happens during a bull market, but eventually, eventually reaches a peak, and then there could be a really big problem. So, I'm hopeful that the new administration will be able to put our

country on a much sounder financial footing. But I don't think it's going to be possible for them to pull this off without some kind of major reset to the financial markets. I just think it's very unlikely and so i've been counseling people to be maximum conservative with their allocations including holding at least 25 in cash and and holding a you know a large allocation to gold as well yeah it's almost as if i mean i wish internally like it what you just described it seems mathematically that the chickens are going to come home to roost and we're going to have to confront this massive debt problem this large concentration of of capital in these these stocks that you just mentioned and it almost would be preferable but it's hard because of how markets

react uh in uh today to any small announcement by anybody but just be like hey the situation is so bad we're gonna have to eat some hard medicine and and stomach some volatility and some repricing in the short term and on the back end of that we're going to build out our energy infrastructure that's something you look over to china russia they are completely beating us when it comes to energy build out energy usage per capita and the amount of generation that exists within our borders and we need to catch up there because energy is the the base layer of all academic activity and so we just need like a hand up things are pretty fucked right now we need to reset get back the basics and then rebuild from there but that's politically untenable in many ways

yeah and you know we're not nearly as bad a position as europe is in particularly germany i mean they're they are getting destroyed um china's about to put germany out of business and it's because they didn't stop building coal-fired power plants and they they figured how to manufacture cars do you do you remember what happened to television prices once china joined the wto i mean yeah they were i mean for the the big screens i remember them being like five to ten thousand dollars when they were first coming out now you can get one for 300 bucks so yeah they they they fell something like 91 in 10 years and china's about to do that to the auto industry. And I mean, it's going to be catastrophic for Germany and very difficult for Japan and South

Korea as well. Of course, you know, Americans, our car companies are already shit, so we don't have that much to lose. But I don't think that most people realize what an enormous amount of America's power and wealth comes from our trade deficit. I mean, America is a very rare country where we get to print money and people will send us very valuable manufactured products and commodities and services for paper. And that's a really extraordinary advantage that we have. And that's why I'm just very nervous about Trump doing anything to damage the credibility of the dollar and global trade.

And you've seen previous administrations do stuff that was really dumb, like seizing the Russian central bank assets. And that's just a really bad idea. If you want people to hold dollars, which we do, then you need to treat them and their property with more respect than that. And I think that when you're the leading winner of the global trading regime, you should be the last people who are trying to find ways to tax it. That just doesn't make sense. But again, Maybe it's bluster, maybe it's just a negotiating tactic and all this will pass. But you can see this morning how the financial markets were reacting to the idea that these were going to be real threats and that there are going to be real impediments to trade.

Markets were going to crash. And then I guess something happened recently, just last couple of hours, where Mexico, we backed away from the cliff with Mexico and it looks like there's going to be further conversations with the Canadians at three o'clock or something. So I think everyone's sort of backed away from that precipice, but these are not good ideas. Sup freaks. This is Natty.

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Yeah, I've been doing some basic math in my head. Let's say that the Fed does engineer a soft landing. Let's say that Trump is able to cut taxes, cut regulations, spur investment, spur economic growth. I hope he does, of course. And let's say it works. Let's say he ends his first year with, say, 3.5% nominal GDP growth, and we've had inflation running at between 3% and 4% now for a while. So that seems like a normal outcome. So that would

get you to something like 6% combined GDP growth and inflation, something like 6% to 7%. And if you understand how the bond market works, what you get paid in a bond is what you could earn in the economy. So if you have the economy growing at 3.5%, you've got inflation at 3.5%, then your bond rate, your 10-year rate should be at 7%. And that's how the markets generally do work when they're not being manipulated. Can you imagine what would happen if we had a year from now, we have 10-year rates at 7%, you've got mortgages at 9%? I don't think you're going to see stocks trading at 28 times earnings. Well, you just flash back to 2023 and what led well what really exacerbated that crisis was the fact that bond yields were were high the par

value of those bonds which were the reserve assets of many of these banks were were underwater and you had just a little spasm in the banking system where people were asking for their deposits and it essentially led to a bailout with btfp and yeah there were a number of banks that failed because of they they did it's really dumb job understanding duration risk which is hard to imagine. And the biggest casualty of all of this will be Bank of America. I mean, the losses currently in Bank of America are something around $100 billion. And the bank is just pretending that the losses don't exist because they're, quote unquote, going to hold the bonds to maturity. Well, maturity is 15 years down the road. And you can only hold them to maturity if you're solvent.

And who in their right mind is going to leave their money at Bank of America getting paid 0.04%, which is nothing, while inflation is eating their savings alive? And they can instantly move that to an account at Interactive Brokers or anywhere else where you can get something closer to the two-year treasury bill rate, which is something like, what, 4.5% right now? So why on earth would you not do that this moment? And if your business model is that we hope our depositors don't notice that we're screwing them, that, to me, is not a real good business model. Yeah, and I've been loosely following your analysis on Bank of America, and you highlight not only is that like 0.4%, like you shouldn't depend on that, but aren't they treating foreign depositors more favorably than domestic depositors as well? Yeah. So, you know, foreign depositors in Bank of America are very large institutional clients and those people are not stupid. So, they're getting an overnight rate that's equivalent to about three and a half percent annually. You know. Yeah. So, I mean, when Bank of America has to go and actually pay for deposits, that's what they're willing to pay. But they would go out of business tomorrow if they had to pay that on their entire roughly trillion dollar domestic deposits. They couldn't afford to pay that. Yeah. And do you foresee a 2023 like banking liquidity crisis materializing at some point this year? I guess that's, you mentioned commercial real estate earlier. And that's

one thing I've been wondering is like, what could be the wrench that's thrown into Trump's grand economic plans and the liquidity crisis, which has been really, has existed since 2008, it's bubbled up time and time again, 2019, 2023, like how much time is left on the banking liquidity shot clock this time around before something happens? You know, so much of credit is just based on confidence. And Trump has done an incredible job of building confidence in the American system again. He has said, we're going to fix the government. We're going to fix the budgets. We're going to fix the debt. We're going to, you know, we're going to make America great again. And I think, you know, if I was a betting man,

I would not bet against him. I think that he can probably get a lot done just because people are willing to give him more rope than they're going to give a president who was like weakened at Bernie's. You know, he didn't instill confidence in anybody. So I actually don't think that we're going to have the kind of financial crisis that we could. But the point I make about all this is it's not clear to me at all how America is going to get the $10 trillion in funding it needs from foreign investors in our treasury market this year. I don't know how we're going to do it, especially not when we're threatening tariffs and trade wars. And if there is any inkling of a default, or if there's any talk about something like that, I mean, the financial markets would

absolutely crash, and the dollar would absolutely crash. And right now, the dollar is worth more against every other currency than it has been since the 1985 Plaza Agreement. The dollar is woefully overvalued. Stocks are woefully overvalued. I would argue that risk assets like Bitcoin are probably overvalued too. So there needs to be a correction. But I can't tell you how we bridge this chasm. If Trump executes perfectly, could you see stocks trading at a CAPE ratio of 35? Yeah. I mean, the bubble can keep growing. Who knows what the solution will be? He'll come out and say, we're going to have Trump bucks. This isn't quantitative easing. This isn't inflationary.

This is different because I'm doing it, not Jay Powell or something. It's hard to imagine exactly how he pulls a rabbit out of the hat. But I wouldn't bet against him. I wouldn't bet against Elon Musk. And look, there hasn't been a run on Bank of America yet. So maybe there won't be. And you can also – did you ever hear the story about what happened when the big bond trader at Goldman died? No.

Well, it was an amazing thing. He got to heaven. There was like some kind of a glitch. You know, St. Peter wasn't watching. And the guy, somehow a bond trader. Can you imagine a bond trader getting to heaven? I mean, that's a glitch. So somehow he got in there.

And God was like, bro, I don't know how you slipped in here. But since you're here, what do you think interest rates are going to do next year? You know, and the moral is that nobody knows what interest rates are going to do next year. It's just too complex of a market to even come up with a reasonable forecast. Usually, if you look at economic growth and inflation, you add them together, you can get a 10-year yield. But there's lots of things that can be different, like all the manipulation we've seen over the past decade. So, I don't know. And if Trump is able to cut $1 trillion from spend, let's say the government's budget deficit goes from $7 trillion to $3 trillion.

Okay, well, maybe that just alone, the reduction in spending, maybe that does put us into a recession. Not like a grinding recession, but just a very slow growth economy where we're growing at 2% and you've got inflation at 2%. Well, then long bond is at 4% and then Bank of America isn't in trouble and then stocks can go higher because rates are lower. i mean that's that's certainly a reasonable outcome too yeah that's um you can't predict the future and that and going back to what you're recommending people 25 cash holds them in gold that's what i'm this is a bitcoin focused podcast and that um bitcoin is something that i view it's external to this once you see the government start printing a bunch of money weaponizing the treasury markets something that is a neutral scarce asset in bitcoin or gold makes a lot of

sense and you mentioned the plaza accords and i think that's one thing many pundits have been basically saying maybe maybe in the works is particularly with scott percent in the position of treasury or secretary of the treasury he's openly talked about the need for some sort of monetary reset um at some point in the near future in the next few years and is that what is being set up here is um to basically coming to the table whether it's like the plaza accord or bretton woods where um china russia the u.s particularly get to the table it's like all right what concessions do we need to make to to sort of reset things and get back on sounder footing and where did gold and Bitcoin fit into that situation?

Yeah, these are all great questions. And I can't prove it, but I see the big rise in gold in particular as a sign that there is going to have to be a global monetary reset. You've seen central banks around the world stop buying treasuries and start buying gold in amounts that we haven't seen for a very, very long time. I think maybe even we've seen the most amount of central bank buying of gold ever in the past three years. And that really got started, again, because of the Russian sanctions and the decision to confiscate Russian central bank assets. I think the other central banks around the world were like, holy moly.

I don't want to own a monetary-based asset that somebody can steal from me. No. that was the dumbest move in geopolitical in in my life i think when it comes to financial markets and geopolitical moves um the freezing of russian treasury as well it seemed like the um like the rah-rah thing to do in the moment just a complete cell phone that how can anybody ever trust those markets once they know the u.s government has a button so actually you don't have that i think it's 300 billion dollars worth of reserve assets anymore and the um what's i gonna say the uh the the reset um i think how would that be manufactured what concessions would

be made there was another thing i want to mention but completely just slipped my mind um nobody nobody's gonna no one no one's gonna come out and say any of this but it seems very apparent to me that there will need to be a restructuring of the US treasury debt. I do not think it's plausible that we will ever actually repay 150% of GDP debt. So, they'll either have to be financial repression where we engineer inflation well above interest rates. So, we're going to wipe out the middle class, which has already been wiped out since 08, as you know. I mean, I don't know politically how you can survive that. I think there would actually be a revolution in this country if real wages fell another 50% because we were monetizing 36 trillion in debt. And rich

people kept getting richer because the real estate prices keep going higher and asset prices keep going higher. Meanwhile, wages keep going lower. That's kind of what's happened in Canada, by the way. And they're at their wit's end. The middle class has just been destroyed the last decade in Canada. So I don't think that we're going to be able to do that politically. And then on the other side, if you tried to do it legitimately, how would you finance it? If you doubled income taxes, we'd still be running a deficit. And then you look at the incredible increases to payments that we owe under Social Security and Medicare in the next 20 years. None of this adds up. So there's going to have to be something, somebody is going to have to eat it. And I don't, I mean, it's a

real quandary. And what I think is interesting is, is let's say, you know, Trump is a lame duck president. He can't run for reelection. So let's say that, you know, with enough rah-rah and bluster, he just keeps kicking the can down the road just far enough where it doesn't collapse. And then we end up in four years with, let's say, $50 trillion in debt. And at what point do we have the Greece moment? Do you know what I mean by that? Nobody doubted Greece's accounting or their bonds for a decade, even though they were clearly bankrupt. And then one morning, everybody woke up and said, ah, and started dumping grease like it was on fire. And next thing you know, there's riots all over Athens and people

are dying and burning buildings. I don't want to wake up in the United States one morning and the ATM machine doesn't work anymore. And the banks are closed. And everyone loses whatever, 40% of their 401k or 40% of their bank deposits, and I have seen that happen. I've done a lot of business in Argentina, and that's exactly what they did in 2001. And truly, people were impoverished overnight because all of the money that they held in the banks, they held dollars, and overnight, all their dollars are gone, and they were replaced with worthless pesos. Yeah.

I mean, the $37 trillion off-balance sheet, you mentioned the off-balance sheet, so Medicare, medicare medicaid social security as a millennial you're looking at that it's 190 trillion dollars of liabilities that have been accrued in those those um welfare systems alone and it's like as a millennial it's like let's just why is this a third real issue i get why it's a third real issue but we need to rip the band-aid off make it not a third real issue and i would be happy draw a line in the sand at some age cutoff and say you're going to contribute up to here and um after that you're not getting social security like and you guys have two three decades if you're in your 30s if there was any way to opt out of social security everyone would have already opted out of it yeah

no one would willingly be a part of that system no it's a literal ponzi scheme yes it is it's an intergenerational ponzi scheme and all the money all the people who made all the money from it are already dead and that like that going back to trump lame duck like that's one thing i would hope he can at least plant the seed to potentially begin that conversation at some point in the medium term which is this is something we have to confront there's no way anybody's getting that's that's an issue for congress and there is no way that any congressman is going to get near that issue because he'll immediately lose his next election yeah it's funny i was in uh in the gym yesterday and i overheard two older gentlemen definitely at or already retired or

near retirement discussing the tariffs and openly asking the question what's this going to do for social security for my 401k and you can tell some some of the older generation is worried about what's going on and somebody's young it's i definitely feel bad for people in that position if they're not well positioned if anything bad were to happen which i think the probability of something bad happen is just increasing as we expand the debt um but for people like who are my generation i've got a young family it's like all right we need to confront this and try to figure out how to fix things over the next two decades while i'm still working age i think anybody who's stupid enough to believe one fucking thing the government ever tells them

is going to get what they deserve good and hard yep i don't i don't have any fucking sympathy how could you have lived in our country for the last 50 years and every single fucking thing the government told you about vietnam about you know about covid about about anything it's always a fucking lie always a lie and for you to believe one fucking word they say you must be the goddamn dumbest person in the whole fucking universe so when the government tells you oh uh oh my favorite obamacare remember you can if you like your doctor you can keep your doctor remember that like every single fucking thing they say is a lie yeah and that's exactly why bitcoin has been so popular and exactly why it'll probably continue to go up because their debt is your

problem until you own Bitcoin. And then the moment you own Bitcoin, their debt is your greatest asset. Because everyone's going to have to flee from that system at some point, and you're ahead of them. This rep was brought to you by our great friends at Unchained. As Bitcoin's role in the global financial landscape evolves, understanding its potential impact on your wealth becomes increasingly crucial. Whether we see measured adoption or accelerated hyper-Bitcoinization, being prepared for various scenarios can make the difference between merely participating and truly optimizing your position. This is important, freaks. This is why Unchained developed the Bitcoin Calculator, a sophisticated modeling tool that helps you visualize and prepare

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insurance companies can't hold it yet but you see you see like you squint you can see things like Allianz from Germany buying 25% of one of MicroStrategy's convertible note offerings. Like they're beginning to get into it. And I think reinsurance. MicroStrategy is making a killing on regulatory arbitrage. It's very smart what they're doing. Yeah. Well, whether it's them or companies like Tether, they're literally weaponizing credit

markets to accumulate more Bitcoin. MicroStrategy with the convertible notes and the out-to-market offerings and now their preferred stock offering. tether simply just holding short-term t-bills and rolling the uh the income from those straight into bitcoin um i mean that's and that's part of the bitcoin thesis you have this speculative attack of the fiat credit system people are just going to take out debt by bitcoin and the amount of capital that exists in treasury markets real estate corporate bond markets like that is the potential total addressable market for bitcoin so let me ask you a question about all that

microstrategy has spent x amount of billions and their average price of bitcoin i believe is now sixty five thousand dollars wouldn't it have been a much better investment for them just to mine the coins yeah no mining is mining is the most ruthlessly competitive market in the world somebody's been in it for six years and so i think they've raised i think close to 50 billion at this point maybe 40 billion and so if they were to mine bitcoin they would have to spend a considerable amount of that that cash raised to buy mining equipment transformers electric whether power purchase agreements and then you have the time dilation um from when you get that capital to when you can actually acquire all that equipment plug it in start mining bitcoin

and you have to get paid back uh taking that cheap debt particularly since it's um zero percent interest over five to seven years that's pretty good gig isn't it where you can get money for free yeah yeah i mean i might even be able to make a living if i could get all the money i want it for free well that's that's what they've they're like micro strategy michael's talked about this publicly that's i think they i don't know i don't want to say they stumbled into it but i think when he made his initial bitcoin buys in 2021 he didn't envision the access to these structured credit instruments that he would have yeah and he he didn't he couldn't have known how valuable the regulatory arbitrage that he can perform for other companies has become yeah and

And from what I understand with the convertible notes particularly is those credit funds love the volatility of the MicroStrategy stock because it creates potential for outsized credit returns. And he said this in his 2024 annual investor presentation. presentation. And if you look at the performance of those convertible notes, they outperform Bitcoin, not only other credit products, but I think one of them returned like 94%, which in the world of credit instruments is extremely high. It's funny to me when I see him announce a big convertible debt deal and the stock goes up. I'm like, I don't think those investors understand how the instrument works. well that's i mean that's the uh the big fear-mongering around micro strategy these

days is they're completely levered and they're going to blow up at bitcoin tanks but if you actually look at how they've structured the convertible notes and the durations more importantly right now their leverage ratio is like seven percent i believe and if bitcoin would have to if bitcoin fell to thirteen thousand five hundred dollars they'd be able to sell it all and pay back their debt um and that's the like the convertible nature of the debt too into equity like because the stock's so volatile because it's tightly correlated with bitcoin's volatility um that converts equity at some point and then you're deleveraging on the way up as the stock is increasing in value and you can just go tap the market again and the market's there to provide

the zero percent interest rate debt because it's performing and you have your credit benchmarks and at some point you have this sort of tipping point where it's like i've got to outperform the benchmark so i need access to a stock with this volatility profile that that actually converts to equity at some point and gets us a return yep i'm very familiar with how that works i just don't think most of the equity investors are yeah that was basically what the convertible bet does is gives you as gives you a free call option on the stock which allows you to short it completely impervious to risk yeah and you know if it goes up it doesn't matter you can convert later if it goes down then you can make a fortune yeah i think that's what they're doing right

because um but bring this back to whether it's bitcoin or gold this flight to neutral reserve assets that can't be controlled by governments uh i remember what i wanted to bring up earlier what slipped my mind was what's happening between lme and comex um over the last two weeks we're seeing this sort of supply crunch from lme with people calling their gold many the pundits and headlines are saying that people are trying to call call their gold in kind from from london because they want to avoid the ramifications of tariffs but i wonder if that's just a um a bad headline and whether or not people are literally just calling their gold because they they view this geopolitical atmosphere as something that's too risky for them they'd

prefer to hold it in person but the fact that lme doesn't have the gold or at least isn't delivering it in a timely manner is is a big signal i think yeah i'm not quite sure what the connection is to all this and what's going on at usaid either but it just seems odd to me that that the largest global money laundering operation is being shut down at the same exact time that cryptos crash and that everybody wants gold now i listen i'm no conspiracy theorist but uh i don't think that's a coincidence no i mean the u.s that's a shock to the system the usa oh yeah you have elon in the office with five gen zers just running through all the databases shutting everything down and then not only usa you had the long-term quasi head of the

treasury at least internally quit abruptly because they simply asked the question we need to know We need to pause all these payments and we need to know where they're going before we restart them. He had to resign because he was like, ah, how can you take this power from me? You got to trust us. It's like, oh, we actually want to verify what's happening here. Yeah. It reminds me of when I went back into my public company as chairman about a year ago now. And I learned that you'd be surprised that there's a lot of fraud in online marketing.

Shocker. Shocker. And I learned that we were routinely paying people. So we would sell a $99 newsletter through an online marketing partner. And we would immediately give that partner $149 because it costs more money to get a new subscriber than you get an initial payment. And you hope to make that up over time with renewals. Well, if you're going to give an online marketer $149 in cash every time somebody buys a $99 newsletter, what do you think he's going to do? Spin up a shell company and begin buying.

No. You think that he would go to India and pay people no dollars an hour to buy things at $99 and then fund their accounts with the money? And so we ended up with a lot of people who had never once opened an email or registered on our website or used any of the products. Like about 60% of the people we claimed that we thought we'd sold a newsletter to were actually just fraud. And so when I came in as chairman, again, I was like, I'd like to see how this works. And I said, look, we're not going to have any more marketing partners unless we have

met the people in person, unless we know their place of business address, right? Because they're all just fronts. And when we looked into it, they were like, oh, there's 12 different online marketing companies. These businesses were incorporated at the same day in the same law factory at the same time. And somehow within six weeks, they were able to grow their business assets to be worth 40 million dollars in our marketing spend huh a little fishy a little fishy yeah yeah meanwhile all the all the employees of course were in on the deal because these terrible contracts it's that the previous management had made where you know you're gonna get you're gonna give your marketers a percentage of the new business that you get so they weren't asking

any questions no no they're getting commission checks every quarter okay yeah you can imagine how popular I was around the office. Well, it is crazy how this high velocity trash economy has created these perverse incentives too. I'll give you just one last fact about this. It was so outrageous. We had an entity that I later had to shut down because of just unbelievable amounts of fraud. But this entity spent $95 million in 2021 on marketing. Normally what happens in a business like ours is you put a lot of money on the street and then the next year you make it back because your advertising revenues go up your renewal income goes up the upgrades drive a lot more business right if you're going to invest 95 million dollars in marketing you

expect to make a whole lot of money the next year yep we invested 95 million dollars in marketing and we supposedly sold 500 000 plus subscribe subscriptions and how much money do we make the next year in that business, that would be zero. That would be zero. And people were very, very hurt that I alleged that maybe there had been gross mismanagement. So anyway, I've seen how this happens in just a relatively small business, like market-wise. I mean, we're not the washington post we're not the new york times this is a pretty small publishing business and even in a very small publishing business you didn't have any there were just no adults in the room all the people who were supposed to be watching the hen house were the fucking foxes

yeah and nothing of that applied to the federal government it's oh my god can you imagine how much fraud there must be in those organizations because you know the further a dollar travels from where it was earned, the more likely it is to be stolen. So this is other people's other money. It's not like, you know what I mean? It's tax dollars, and they're not even the congressmen or the senators who are responsible for it. They're just the cogs in the machine, and I guarantee you there's massive amounts of

fraud. And then also this week, we just saw that Ukraine says, well, yeah, you did send us $177 billion, but we can't find $100 billion of it. We have no idea where it went. We don't know. You may want to check Burisma to see if it's hiding in there. So I wonder why Ripple crashed 40% this morning. That's one of the biggest scams in the world.

I'm actually excited that there could be some financial ramifications from this, but I hope. We're only two weeks in. But the momentum that has been built in this two weeks does seem like there's something there and it seems like we could potentially, closest we've ever been in my life to unveiling the rot that exists in the federal government. Yeah, that would be a truly life-changing consequence to this administration. If you could just make things like Social Security payments, if you had some way of putting them on a blockchain where you could eliminate fraud, it would be absolutely societally changing. Like, I mean, do you remember the Paycheck Protection Program? I remember the name.

I forget what the mechanics of it were, though. I was living in Miami Beach at the time, and every single two-bit hustler in Atlanta stole, you know, $100,000 from that program the first six weeks it was available. And then they all drove to Miami to act like gangsters and rap stars. And they had to close down the causeways because there were so many people from Atlanta. they were you know what do they call it wilding like just like raiding stores and and hotels and just destroying the town because you know they they saw people do that in a rap video so let's go do that uh the ppp oh it says ppp loans there was a great thread on twitter about this like they were atlanta they just spun up llcs took out all the money went to miami my neighborhood it was

like a crazy uh sociological retrospective on on free economics not only that if you look like the the king the alaskan king crab market went skyrocketed like literally almost drove alaskan king crabs extinct and casamigos was the uh the drink of choice of the people spinning up these llcs and taking the ppp money and casamigos i'm sure the prices of rims went out the right out the wazoo dude gotta get me some rims and there was a run on gold teeth it was

crazy and that's like an example of the government printing money and just doing something like oh this is gonna help stimulate the economy people just completely abuse it and one of my favorite things is when anytime there's a terrible stock fraud

you know inevitably some of my customers get caught up in it because they're active investors and they're on the internet and they get sucked into these things. And they, you know, they'll ask me if there's anything I can do to help, you know, because they think that there's, you know, I don't know. So, I get memos like this three or four times a year from people who have been longtime customers and they say, yeah, this guy was offering me 12% interest rates and he said it was all, you know, money good and blah, blah, blah. And they send me like the prospectus or like the slide deck that they got. And there's always a picture of the

guy and it's always immediately clear like this guy you gave your money to this guy no way huh weird uh strange he's from new jersey huh that's interesting he has slicked back hair wow he has a gold chain he's got interesting he's got his hand on his chin with his rolex flexing right yeah like huh that's very interesting he doesn't have a college degree that's interesting yes he's worked at a dozen different brokerage firms in 20 years. Huh, that's really unusual. Gee whiz. And if you go find three friends.

He has a lifetime ban from the securities industry, but he seemed like a nice guy. And if you bring three friends to invest in his fund, you're going to get a higher interest rate on your- Yeah. He has a home in Puerto Rico. Huh. Hmm. It's like you could just check all the boxes.

And it's like cartoonish. And you're like, huh, you didn't- None of this just, you know, didn't give you any pause. And again, going back to, like, is this the great unveiling where all this grift gets laid bare and we can get back to sound economics? Who knows? Probably not. Don't short degeneracy in the United States. Yeah, it's kind of like people ask me if they, you know, you should sell Hershey stock because of the fat shots.

And I'm like, I don't think so, man. I think fat is undefeated. i think fat people gonna be fat they might go on those shots for a little while you know get ready for the family picture i don't know maybe for the prom they're gonna go back to being fat as soon as they can yeah either that or at some point they're gonna go blind or um there's gonna be a shit build up in their stomachs because they paralyze them that they're gonna have to stop taking the medicine and get back to eating they're gonna be like i took my shot so now i can have my Hershey bar I don't know I just think I think fat's undefeated I think grift is undefeated

I would just love to see the federal government at least um not not just be run by people who are crooks yeah I mean there is no way you could have thought that there wouldn't be unlimited amounts of fraud in that program like the whole idea that the government's gonna lend companies money to keep people employed that's just a fucking bad idea you don't you're not set up to do that no you're going to get robbed no and i'm pulling this out the we we may have just hit peak grift and fraud this is the biden laptop report like if you had access to this and you you read through it like it's very obvious to anybody with more than two brain cells that the company or the family that was just in the white house was completely corrupt to their core and i

I hope that was, at least at the federal government, the peak of the blasé corruption that exists. The big guy. The big guy. The big guy's got to get his cut. Yeah. Had to pardon his whole family on the way out for reasons. By the way, he learned all that from Bill Clinton. Oh, yeah.

Let's not pretend that the Democratic grift machine started with Joe Biden. No, what was it in the 90s? there was an airline that the Clintons were very close to. The Clinton Foundation was the grift machine. And, you know, an associate of mine, Frank Gistra, was one of the many beneficiaries of the grift machine. He would use Clinton to lean on small countries to give him mining concessions. Interesting.

And then he would funnel the profits back into the Clinton Foundation. Yeah, you wonder how all these politicians get rich on civil servant salaries. I don't wonder. How do you think they sell $50 million in books? Do you think it's mom and pop lining up at Walden at books or Barnes and Noble? No, it's corporations who buy millions of copies of those books, throw the books in the dumpsters, and give the checks to the people. It's just complete ridiculous. Same thing with all the speaking engagements.

You got paid two and a half million dollars to give a speech for Goldman Sachs, huh? Oh, really? You must be very, very wise. The bond traders desperately needed to hear from you. Yeah. No. A couple of weeks later, Goldman Sachs gets some favorable legislation passed. It is frustrating.

But Porter, we're bumping up on time. I know I only had 60 minutes with you. This has been fascinating. You're an incredible mind, and I think your perspective on markets and how to position yourself is very valuable, not only to me, hopefully my audience as well. And I think incredible personality, too. I love the jovial nature that you bring to all this. I just wanted to end with this. I think that natural gas is the most undervalued resource in the world.

And I think that there is going to be an enormous explosion in wellhead electrical generation facilities. I think you're going to see so much of this all over Appalachia. I think you're going to see so much of this in Texas. I also think, and this is probably, you know, my natural gas bet I think is fairly sound. This one's a little more speculative, which is that I think you're going to see a huge return to coal. I think that the demands for electricity are going to absolutely shock people because everything that we're going to want to do with AI and robotics is going to require baseload uninterrupted power. And there's just not going to be enough of it. I've been writing on X about the spice, the idea that the spice must flow and that the countries and the policies that can deliver the spice.

And what is spice? Spice is uninterrupted baseload electricity. The people and the institutions and the countries that get this right are going to become the leading economies of the next 50 years. Robotics is going to absolutely change everything about the way we live and work and communicate and travel. It's going to be the next automobile revolution, the same thing that happened in our economy after the railroads from 1910 to 1950. That kind of change is going to happen in the second half of my life, so over the next 50 years. And to drive all that, we need unbelievable amounts of always available, always on electricity. And the greatest resource for doing that in America is coal.

We have 250 years of known reserves at current production levels. Now, obviously, production is going to go up a whole lot, but there's a whole lot more coal out there. We're not going to run out of coal. There's enough coal in Wyoming alone, too. Of course. And so, you know, things like people haven't thought about this yet, but like there's a great business that owns coal royalties, NRP. You can look it up. It's a great investment.

Things like railroads, things like old coal facilities. There is a huge opportunity for people who are ahead of this game, private equity, venture capital folks, go get those old facilities back online and there will be somebody to buy your power. And it's just – I know the ultimate answer is nuclear. Of course, I understand that. But it's going to take us at least 25 years to catch up with the technology to make nuclear affordable and safe and distributed. And in the meantime, we're going to need 10 times more electricity than we're producing right now. It's got to come from somewhere, and it's going to be natural gas first and then coal. Well, you're speaking my language.

As somebody, I run a venture capital firm with partners as well, and a lot of our exposure, a material amount of our exposure is to companies building upstream oil and gas infrastructure to electrify natural gas generation specifically and then i sit on the board of another company we helped revamp a coal plant in north dakota basically telling them we'll buy your power off behind the meter to mine bitcoin um i wholeheartedly agree is that bring coal back the fear-mongering around coal being this dirty resource is complete bullshit the the facilities know how to actually combust the coal without without emitting too much gas and i don't even believe that co2 is really driving climate change combined combined cycle coal plant is the absolute

best cheapest way to generate electricity united states right now and someday nuclear will catch it but for now that coal and the combined cycle is the cheapest way yeah so that's what people are going to build yeah all you new york all you new york times journalists that were telling people to learn to code 10 years ago you need to learn to coal because that's where the that's right because you don't need you don't need to you don't need to know how to code anymore you just need to have power to drive your ai do you know how to use a shovel all right get out there and shovel some coal let's figure that out truck porter that that'd be fun to see porter this is great thank you so much yeah listen i'd love to come back i really enjoyed the chat so thanks

for having me yeah we'll definitely do it again uh peace and love freaks Thank you.