The Breakdown - The Breakdown Weekly Recap | April 11 2020

Episode Date: April 11, 2020

The full week's episodes in one convenient file: Monday | How Covid-19's Second Order Effects Could Make Humanity Stronger, feat. Emerson Spartz Tuesday | Exit Plans, Premature Rallies and Frontline Heroes feat. Ben Hunt Wednesday | The Questions We're Not Allowed to Ask, Feat. Hidden Forces' Demetri Kofinas Thursday | Rebuilding the Resilience Economy, Feat. Anthony Pompliano  Friday | Quantitative Tightening and 5 Key Questions for Our Changing World  

Welcome back to the breakdown. An everyday analysis breaking down the most important stories in Bitcoin, crypto, and beyond, with your host, NLW. The breakdown is distributed by CoinDisc. Welcome back to the breakdown. It is Saturday, April 11th, and as with every Saturday, I am bringing you the full week's episode in one convenient file for your marathon run in your driveway, which is something that I actually saw someone did.

Twitter. What to say about this week? You know, I think for me the big theme, the big overarching theme is there are a set of conversations that we need to be having that we are not having, most notably and most immediately about how we turn the economy back online in a way that respects the need for, desire for health outcomes, the not overwhelming the health care system, while also not putting us in this perpetual holding pattern. a huge amount of nuance. There's a huge amount of complexity here, but not discussing it and trying to just politicize one side of this or the other is just not going to work. So that's a theme that I saw quite a bit. We got some surprise additional Fed action on Thursday, where 2.3

trillion in new stimulus was announced at the same time as 6.6 million new job loss claims. So, you know, more of the same, basically for the last three weeks. So yeah, this is a really interesting week. I think there is some fatigue. You know, we're entering now the second, third, fourth week of lockdowns depending on where you are. And people are coming to grips with the fact that there's this new norm that they're just not sure how to make sense of and what they're going to do with it. So hopefully some of these episodes are helpful. On Monday, I had Emerson Sparts, who was the founder of Dose Media and MuggleNet, and just an all-around interesting, true polymath thinker, joined to talk about a project that he had initiated that has become a crowdsourced look at

second and third order effects of coronavirus. So things that will happen because of this virus and because of the shutdown that are ways out, but are kind of inevitable shifts. On Tuesday, we checked back in with Ben Hunt, who you guys know at Epsilon Theory on Twitter, who has been a prolific commentator on this crisis from an economic, political, and human dimension, he came back to talk about why he thinks this rally might be premature about this question of exit plans and about his peer-to-pe-purchasing network initiative called Frontline Heroes. So really positive, I think, ends on a positive, optimistic note interview.

Wednesday we had the host of Hidden Forces, Dimitri Kofinus, joined to talk about the questions that we're not allowed to ask. So as you can tell, that theme has kind of stuck with me. But it's a very wide-ranging conversation. Thursday, of course, we had Pomp shifting it, switching it up, having him in the interview chair, really telling us all of the thinking he's been doing about the market that we're in and the market that we're headed towards.

And then Friday, I did a quick little five questions to consider this weekend. So I hope that you enjoy these episodes. I hope that you're having a good Easter if you celebrate that or just enjoying your family being shut down with whoever you're shut down with. Until we speak again, guys, be safe and take care of each other. Peace. Welcome back to The Breakdown. An everyday analysis breaking down the most important stories in Bitcoin,

crypto and beyond with your host, NLW. The Breakdown is distributed by CoinDesk. Welcome back to The Breakdown. It is Monday, April 6th, and today we have something a little bit different that I'm really excited about. It has obviously been a tremendously trying time for the last few months as the real implications of coronavirus and the economic shutdown became clear. This is something that I think will leave permanent changes to big parts of our economy, our psyches, or society as a whole. And so today I have a guest who's basically been

obsessively thinking about what all those implications are. So it's starting to start. with him just trying to think about the second order effects of the coronavirus crisis. Take, for example, people buying shirts but not pants because they're on Zoom calls. It's a second order effect, or actually a third order effect after being on Zoom calls because they have to work from home. This is something that Walmart is actually seeing. Sales of shirts are up, but not pants. So my guest, Emerson Sparts, started a document on Google, got a friend involved, and

they got a whole much more people involved, and now thousands and thousands of people are contributing to this document around second order effects of this coronavirus that is across dimensions of family, business, and so much more. Emerson shares a little bit about his background at the beginning of our conversation, but he is a true, true multi-hyphenate, and someone who is just obsessed basically with learning. That, I think, is his hallmark. Now, he turns that into lots of really, really interesting projects. His real focus historically was virality, right? So he dropped out of middle school and started MuggleNet, which very quickly became the biggest Harry Potter fan site in the world. And that led him into create an entire media company based around virality and social media and

understanding that. So his background is kind of diverse and interesting, but it all comes back to trying as much as he can to learn about everything and develop new mental models. So he's kind of an interesting Sherpa or a guide to this conversation. But one of the things that makes this interview so different is that it's actually full of a lot of optimism about what happens on the other side. And at core, that optimism comes from, I think, a place of discovering what happens when all of humanity learns to use the tools of creation of the internet really well. He has a lot of ideas for how that might be a net good for us. And so, obviously, the phrase creative destruction, we're in the destruction phase right now, but there is something good that can come out of

this as well. As always, I want to make sure that we're never minimizing the real pain that people are feeling, the real dislocation on so many different levels, economically, psychologically, etc. This is a trying time and it continues to be, and unfortunately, I think it will continue to be for a while, right? There is no normal on the other side of this. There's only what's left and what we rebuild, and at least in this conversation, we're focused on that last part, what we rebuild. So I hope you enjoy it and I'll catch you back here soon with the wrap-up. Now, as always, these interviews are edited extremely lightly. There's some excited profanity capturing the actual energy. So, keep that in mind as you're listening and let's dive in. All right. I'm here with Emerson. Emerson,

thanks so much for joining. Excited to be here. Okay, so I'm super excited for this episode. I think, you know, you put a context around something that I've been thinking about for weeks and weeks in weeks now, which is, I tweeted out a few weeks ago, are you in the, this changes nothing or this changes everything camp, right? And it is purposefully binary. And obviously what I wanted to see is what people wanted to jump in with in terms of, particularly around the, it changes everything. And I've been in this kind of, it changes everything camp, not in some kind of glib way, but in these very specific ways. And so you've put together this project or kind of convened, I would say, this project around second order effects coming off of the coronavirus crisis.

And I want to get into what that actually means. But first, can you just give a little bit of your background for people who might not know all of your various enterprises extending back to middle school for you? Yeah. So I'll cover it a little bit differently, too, because I'm going to say a bunch of weird, and I'm going to make a whole bunch of wildly unsupported claims. And so if I establish a little bit more credibility in advance, it'll make a little more sense. Perfect.

So when I was 12, I convinced my parents to let me drop out of school and homeschool myself. Month later, created MuggleNet, which is the number one, Harry, Potter website. So that was my whole adolescence was running that. I built that to about 50 million monthly visitors and or monthly pages views. And then eventually I decided to go to college for fun, got bored, was going to drop out and start another business. But before I did, I set a goal of reading one nonfiction book every single day. And, you know, business politics, psychology, technology, basically just trying to build up the most robust, you know, category, like library of mental models possible. So that I'd be able to make a,

the best and highest fidelity large-scale predictions. And so I ended up building all these different systems, and maximum mobility, retain the information, and then eventually end up starting another business. I was always really obsessed with virality. To me, the ability to make things go viral was like the closest you get to having a superpower. And so I just really obsessed over understanding, wanting to understand how people think

and how systems work as much as possible. And then I just started experimenting like crazy with different types of virality engines. And some of them worked. And then fast forward, ended up raising $35 million, did that whole thing. End up building a media company with 50 million monthly visitors. And so I'm excited to kind of take some of those lenses and apply them to this current situation. Virality in particular, actually, a lot of my ideas came from studying epidemiology and virology. So I looked like the cookie guy who was referencing things like R not in totally inappropriate marketing context.

So it's been a fun confluence of interest. Okay, great. So perfect. This is the background you get maybe how Emerson joins this party. Talk to me about second order effects. How did you start getting thinking about this? What is a second order effect? And then what is this project that you initiated?

Okay. So in situations like this, basically when there's a tremendous amount of volatility, so we're going through one of those periods right now where most people think about time as happening on linearly. But time doesn't really work like that, especially with markets, right? So you have periods where, you know, years happen in weeks, and you have periods where weeks happen in years. So this is one of those periods where there is, there is just years of stuff happening,

you know, in, you know, every day. My actual, my favorite way, speaking of mental models, the most interesting one for this, which I've mentioned, I think, on the podcast before, but Stephen Jay Gould was a biologist, looked at evolutionary biology. and he popularized a theory called punctuated equilibrium. And basically what he went and found is that evolution didn't happen on this continuous scale, kind of like we thought, right?

It didn't just go up kind of at a very predictable way. There were these long periods of nothing happening and these moments of explosion, right, where tons and tons of stuff happened very, very quickly. And he called that punctuated equilibrium. And this is a punctuated equilibrium moment in so many ways. Absolutely. That's actually one of my favorite mental models. and yeah, so we're going through one of those periods right now.

And so if you literally just plot out how much area there isn't at the curve in these periods of punctuated equilibrium, like all the stuff happens in these brief windows. So that means it's very exciting if you're the kind of person who likes to, you know, if you're looking for leverage, basically. And I think of myself as basically being a hunter for the mother of all leverage points. So I just spent a ton of time researching a wide variety of different subject areas and topics and industries. and I just look for the white whale of mispricings, right? And so these are the windows where you could actually beat the market

because there is no smartest guys in the room who have everything figured out because too much is happening too quickly. And I see beat the market in a more metaphorical way. But anyway, so there's this window where tons of stuff are happening. Nobody has basically the better your mental model stack is, the more clear your picture of reality is. And I've spent a lot of time basically bulking up like crazy to build out this stack, just like you would if you were a weightlifter, right?

Building those muscles to be able to see the world more clearly in situations like this. So just for fun, I and my friend Michael Simmons, we just started like writing down tons of second order effects of coronavirus because I'd spent a bunch of time talking to other entrepreneurs and kicking around ideas and, I mean, the amount of content that's coming online every day right now. I mean, all of humanity is working on this to some extent. So it's, you know, people, everyone, and every industry likes to say that their industry has this, you know, tidal wave of information

just flooding in. But those now look like trickles compared to what's happening right now. As humanity has its collective sights set on a single common enemy for the first time in history. So we just decided we just started dumping ideas in a document. And then the ideas list got really long and we started sharing with some friends and then they started contributing to. And all the sudden, it just became this real thing where there's just thousands of people that are contributing to it and categorizing and cataloging as many second and third order effects of coronavirus as possible. And it's really interesting because there's so many things where everyone has their own

kind of unique skills and experiences and windows in the world. So the list is getting long real fast. Yeah, it's super interesting. So you posted about this, I think, on Fridays when I saw it. And I was like, okay, we have to do this podcast because it's fascinating. And like I said, it gives context to talk about all these different things, which I haven't had context for. right now there's more than like 75 people actively looking at the page as we're speaking, right?

I just saw a comment go up. So it's super, super interesting. Talk to me. What define second order effects, third order effects. I think that people have like an intuitive sense of what that is. But maybe let's walk through a specific example that gets people, gives people a context for that. And then we can just dive into, you know, I think our plan for this is really to just look across the spectrum of some of these second order effects and discuss them in the context of Corona. Yeah, totally. So second order effects are a super useful mental model. And I'll just give you an example. So a first order effect would be like cars are invented. So once cars are invented, then the second order effects of cars being invented would be things like, you know, manufacturing has a scale or like gas stations are now created. There's accidents that suddenly happen. Roads are paved. You know, people were complaining about how horse manure would pile up in the streets when horses were growing. But then cars obviously replaced the horse manure problem. So those are all examples of second order effects. And then third order effects are just one further downstream.

in the causal chain, right? So as you have more accidents, there are products like car insurance that are created. As you have more gas stations, there are gas station networks that are created. As you have more roads, then eventually you have more highways. And so it's really exciting right now with, you know, I mean, the chaos is a ladder, right? So obviously there's tremendous hardship and suffering happening in the world as a result of this, but there's also tremendous opportunity, like the, you know, Chinese character. So that's the way that I think about it.

So this is a, I think this is a relevant context for this. we're now firmly past the place, I believe, where we can expect things to just return to normal. Bologi last week said, he tweeted out something that just perfectly encapsulated this for me. He basically said, I don't think people understand that there's no normal to return to on the other side of this. And so in a lot of ways, this list reads like a set of what that new, that disruption to normal is going to look like. right? So you guys have organized it into personal business, investing, education, government, and other, which is kind of a grab bag of things at the moment. I thought maybe we could start at personal because I think that some of these are the most intuitive, just for people who are

still wrapping their head around this idea of second order effects, right? Yeah, absolutely. So let's look at family, right? So if you look at this, the chart, it's, you know, the second order impact is husband, kids, and wives spend 10x as much time together. Yeah. For sure, isn't that just an interesting start? So there's one really high-level pattern that's happening here is that basically humanity is in – so if you're confused about why, like, government responses seem to be so wildly inadequate, it's because if you think of humanity as a person,

humanity is basically in fight or flight right now, right? Fight-flight or freeze. So humanity is basically freezing, and no one knows what to do. And we're not using our humanity's prefrontal cortex to make rational decisions. yet. So we're doing all kinds of terrible things. And one of the effects of being in this freeze phase is that people aren't doing anything. They're going anywhere. They're at home, right? And so I'll just rattle off some of the interesting kind of implications of people being stuck at home together from a family perspective. So, yeah, obviously just way more sex is kind of an obvious

one. People have nothing to do. They're together. That just tends to happen, although not necessarily with other people, you know, not like promiscuous or cheating or things like that, but, you know, sex, like monogamous sex. So that would lead to more babies. which could lead to an overwhelm of hospitals starting nine months from now, especially hospitals that aren't especially in good shape to be able to handle that increased load. So that might lead to an increase in home births, right? And then people having to look up training for how to deliver babies at home because they don't want to go risk getting infected in the hospital

or entrepreneurs starting up like mobile clinics or, you know, there's just so many different things to think about. You've got abuse, increases in abuse. You've got increases in arguments, divorce rates, which could lead to more couples counseling, more divorce lawyers, virtual midwives. There's a lot of different angles to kind of to dive into. Well, I think one of the things that's interesting about this example as well that is relevant for our conversation more broadly is that a lot of these phenomena can have equal and opposite impacts, right?

It's just based on context, right? So for some people, you're likely to see, you know, coming togetherness, like you pointed out, right? Like more kids, more things happening. Re-evaluation of prioritization of families. Like, that's definitely a theme that I've seen a lot, right? I noticed that the first few days when everyone was locked down, all the tweets were about people complaining about how hard it was, right, or recognizing how hard it was. And then a few days later is mostly about like people's moments with their family, right? They stop complaining because it has just gotten normal again. And now, I don't want to be overly clear about that, but that's like one set of experience,

whereas we have seen in every place a significant increase in domestic abuse calls, right? And places like New York and France, places that have been locked down for a while are having to deal with that. So the point here being that same context can create wildly different outcomes in these second order effects. Yeah, it's like the way that I think about this is just like how, so every proverb that you've ever heard is people, you know, every proverb is true because it's basically proverbs represent compressed wisdom. like ideas that have been passed on, you know, for hundreds or thousands of years, but they're not true for everybody, right? So maybe 20% of people, like if you have two opposite proverbs, maybe 20% of people, like proverb B will be correct for their situation,

or like 80% of people, proverb A will be correct to apply to their situation, right? And this is a different kind of manifestation of the same concept where like you, as we're basically, we've taken like the global, we've taken all of our existing systems and we've just shaken them up, right? And so one way that I also think about it is like, there's really, really interesting data showing that when there are catastrophic events, it forces people out of their existing routines and they're forced to explore, right?

So people get stuck in these explore, explore exploit local maximus, right? Where they are just, they're doing one thing. For example, like people, what happens like you're going on your daily commute, right? And most people just kind of, they explore a little bit to find the best way to get to work, and then they don't ever experiment ever again.

And then, you know, they'll have, you know, something catastrophic will happen or they'll have to close down major highways. And then people are sort of forced to like go and experiment and try new things. And then fairly reliably, it seems, on average, about 5% of people find a faster route than the one that they've been driving their whole life when these things happen, which is when you think about it, you take that and then you generalize

that to all different types of systems at all different scales across the whole world, there's going to be so much more exploring that goes on because people are forced to because they can't just go back into their existing routines like they were before. And so there's just so much innovation that's going to come out of this as people are forced to confront new problems that they never had to confront previously or didn't know that they were supposed to try to confront previously. What are the most interesting examples of that that have started to pop up on this list? Or what are the domains that you find most interesting that you're seeing from this list? Okay, so I would say like 90% of all my thinking is basically about the implications of what happens when humanity merges with the internet, which is basically what's happening right now.

This is a very real, in a very real sense. What, you know, Ernest Klein wrote in Ready Player 1, humanity is merging with the oasis right now. As the world was crumbling, we were treated into. the oasis and it led to a explosion of art and creativity and beauty and pain and struggle and all things that make humanity humanity. So basically what are the implications of that? Because as people had increasingly shifted a larger and larger percentage of all their energy to their internet selves and especially the younger you are, the more you are, right? So what are the implications of that, right? So suddenly now we're in a situation where there's more free time for creative

expression than, you know, perhaps ever before in history. And by a long shot, as most people have, like, most of the world has a very simple, similar routine, right, where they get up and they basically do some reasonably repetitive, you know, manual, you know, task for, you know, eight, 10 hours or whatever. And then they go home and then they watch TV for about two thirds of their time. And then they spend a little bit time on other stuff and they go to bed, right? So there's only like two giant chunks of people's time. There's TV, which is basically where you teleport into the bodies of, you know, fictional characters and then you experience their work. And then you experience their world vicariously, or you're doing your manual tasks at work. And I happen to be of the opinion

that a large percentage of all the work that humanity does is not productive. And we could, you know, like greater bullshit jobs-esque kind of ways of looking at the world. And so one thing is being interesting is like, what are the implications as we see that a lot of people's jobs weren't actually creating value for the world and were make work in various ways? So, but anyway, but the main thing I think about is like, okay, so humanity is now spending all their time online. We're stuck at home. We can't make money at our current jobs because we can't go anywhere, right, we're frozen in place. So we have to, the internet is our, is our only way to interact with the rest of

humanity. So a lot of people are now finally in a position where they're like, okay, well, I guess I better learn how to use the internet and use it better, right? Not just use it at a base level, but like there's huge differences in the levels of how good people are using the internet, right? Most people don't even think to Google basic stuff. And they just spend a lot of time like solving pointless problems and humanity's already solved and they just learn how to remember to Google stuff, you know, tap into the global brain. So anyway, so I think we're going to see this like flourishing of human creativity in all kinds

of fascinating ways. So for example, one of the most important ways that you can create value for humanity right now is to learn to code. Obviously not everybody, but like just do the math on this at a very simple level and you'll see how significant the implications of this are. So there's about 20 million developers in the world right now. 20 million might seem like a lot, but in the context of 7.5 billion people, that's not a lot. So suddenly if you have, you know, let's say, just imagine like a billion people that are stuck at home and can't go anywhere. And I can imagine you know, you know, tens and millions of those people suddenly finding the motivation to learn a code. And then what happens as a result of, you know, doubling or even tripling the number of,

you know, programmers in the world, like think of all the, think of all the creativity that that could unleash, right? Or learning languages, like English, for example. So I travel a lot. And one thing that's abundantly clear is English is, well, it's the language of science, it's the language of business, it's a language of the internet. And it's the language of opportunity. Because if you're in a third world country, if you know English and you have internet connection, Like there are far more ways that you can make money. And so it really is like a, from a mobility perspective, like a wealth mobility perspective, you know, there are a few things that are more high leverage than learning to code and learning English.

And suddenly now a lot of people have free time to learn those things. So I'm just really, really, really excited to see what happens. Like this is basically like a giant like UBI kind of fantasy experiment, right? Where we don't have actual UBI right now, but we have something that's somewhat similar to it, where people have free time, right? Because that's where a lot of the UBI stuff gets, is interesting. to explore. It's like what happens when people have free time. Most people just, you know, they're specialists, right? They go to work. They do the one thing. And now they can actually go study all the other

things. So there's just so much, so many interesting things to think about. Yeah, it's the specialist to generalist thing is really interesting. It's something that I noticed in the, in the second order effects document, this idea that people have been kind of rooted via the education system and then work into highly specialized roles who now might find themselves with time to go explore other things. Yeah, exactly. Like basically, most people, you know, they're just, They're doing kind of like putting like one foot forward at a time to just because they're just struggling to survive, right? They're just trying to like pay the bills and keep the lights on and food on the table and so on. But this, obviously like anything else, like obviously the financial pressure is significant, but there's nothing else you can do, right?

You can't work if you're fired and no one will employ you because you don't have any skills that are valuable right now. So you have even more pressure to learn how to create valuable skills to contribute to humanity on the internet. And one thing to that's interesting is like, so I was homeschooled, obviously. And I think homeschooling is a really useful tool. It doesn't work for most people because it's difficult to structure it properly. And then there's tons of important socialization that happens in school. But there's a lot of kids who, like homeschooling was one of the best things that ever happened to me. And you can see that by the fact that I went from like just being a somewhat normal kid to like starting, you know, one of the internet's largest websites.

Like a month later because my wings were, you know, unclipped. And I think there's tons of other, you know, people out there that are like that. And this is like, this is just that nudge that they needed to like really express an themselves and pursue all kinds of weird, diverse interests that they normally don't have the time and energy to pursue. And then, yeah, there's, oh, yeah, and from a content creation perspective, oh my God, just think about, like, for a second, how many people, so ran a YouTube, or, so if you ask kids what they want to be when they grow up, it used to be not that long ago, like, that they want to be astronauts. If you asked them now, they say YouTubers, right? And what does

that mean? Well, it basically means on some level they want to be famous, but also they want to create. They're basically saying, like, I want to create. And I think that's really important that they want to create. Because, I mean, just look at what happened to China. Like, Once China finally, like, you know, once we, you know, back in the 70s and 80s, you know, we told essentially, you know, a billion people that for the first time they were allowed to dream, right, allowed to create. And obviously, that's been a extraordinary amount of wealth, you know, created from that. And so in some ways, there's something similar here where like, especially, again, you need to make money somehow. Uh, YouTube is a reliable way

to make money. And so I can imagine, you know, I can imagine millions and millions and millions of people who otherwise weren't quite motivated enough to, you know, dive into, content creation as a way to make money in a way to express themselves, suddenly, you know, being motivated to do that. And so I can see millions of new creators coming online, which interestingly would actually, I think, have the effect of having, you know, fewer ad dollars. Like basically, advertisers are spending less money because there's obviously the economy's, you know, kind of shut down. So, of course, advertisers are going to cut their ad budgets before they're going to cut, you know, other parts of the business. So I can see like ad rates

going down, especially when you factor in all these new contract editors coming online. But oh, my God, the types of new content we might see. And oh, it's just there's so many interesting parts of that. Yeah, it's, it's taking me a lot to not start a, like, podcast training type business. So one of the things that's really interesting about podcasts in America versus podcast in China is that there's a much more ingrained, like you pay for an educational program via podcast model in China, whereas obviously in the U.S., it's primarily entertainment and it's advertising driven. But that doesn't mean that that's the only thing that it's ever going to be. I mean, podcasting is still so in its infancy as a medium.

And one of the things that I think that's really interesting that people underestimate sometimes is that we have this model. Like, okay, so let's actually use this as a context to bring in the good news and the bad news for small business. The bad news is that small businesses are being wiped out, right? Like, I mean, just, you know, I was reading Dan Price runs gravity payments in Seattle. He got well known for figuring out basically how to give every, employee a $70,000 minimum salary. He's been in the news over the last few weeks because, you know, small businesses are their primary business, right? They have 20,000 small businesses. But those

businesses are just wiped out. Like it was like 50% overnight stopped, you know, being able to pay for their services. And so they figured out, basically they convened as a company. And instead of doing layoffs, everyone agreed to a 20% cut. So they've been able to preserve their whole workforce. Yad, yada, yeah, yeah. Really interesting guy. Really interesting company. But he was writing that most small businesses have 27 days of revenue loss before going bankrupt, right? Well, what day of the shutdown are we on at this point? I've heard it's even lower restaurants, I think, have something like 16 or 17 days worth of cash, usually.

So you have like this mass scale extinction of small businesses, even with these loans and stuff. Like there's going to be so many people who are just hanging on that they can barely come back, which I think has, speaking of second order effects, has impact on commercial retail or sorry, commercial real estate, rather. obviously a ton of those businesses are going to come back in, which creates a whole new cycle of impacts. So there's a whole lot of bad in that. The interesting thing about what you're talking about with kind of a creator economy is we're used to thinking about business models in terms of like actual businesses that have to support whole sets of teams and people.

One of the things that I think is really fascinating about podcasts and YouTube, et cetera, is that it is, it makes viable basically businesses of one. you know, small businesses of one for a lot more people than you would expect, you know, or it's supplements income for people, right? Because with a niche audience, right, like almost any interest in the world, if you're a really great podcaster, you can get to 50,000, 100,000, 200,000 people who download it, right? Which is absolutely enough, I mean, add, add cuts, add price cuts, notwithstanding to support an individual person, right? That's probably more than most average job. So there is like this interesting, people, I think, underestimate the viability of the business model of content for really,

really niche areas. Yeah, it's like the perfect quarantine business because you don't have to, normally, you know, if let's say hypothetically you wanted to make $30,000 to get by in a normal business, well, here, obviously the distribution cost being zero, make it such that you can afford to, and also the startup costs are so low because you're just making content. So it's just such a no brainer for people to explore. One thing that's interesting, too, is like, so in thinking about second-order effects of something like this, so it just gets really overwhelming really quickly, especially, you know, if you change the assumptions of your model just a little bit.

So, for example, if you seem, okay, the economy is basically completely shut down right now. And what that means is that no one's leaving their homes, which means they're not going to work, which means they're not making money. So if you want to, if you want to systematically catalog all the second-order effects, so what I started doing was I just started like literally imagining myself driving through the city and just, looking at all the restaurants and all the businesses that I had already memorized from where I lived in Chicago and in San Francisco. And then just you take everyone with those businesses and you're like, what if they didn't exist? Or like, what happens if they didn't have money, right? Because I mean, what's going to happen here? Like you said, with 27 days cash, right? Is that basically

just like any other market, right, the weekends get shaken out, you know, first, right? And obviously with just in time supply chains, one thing interesting to you about just in time supply chains is that they exist at all scales. It's not just inventory. And this is one of those like anti-fragile shocks that just that causes, you know, all the, the most fragile members of the population to die. So there's just going to be, oh, man, the number of opportunities for, like, new value creation as all those existing players get, get shaken out is just really, really, really, really interesting to think about.

So let's talk actually about the manufacturing and supply chains. I think it's actually a bridge to, you know, one thing that I want to be careful of is not being like, you're basically firmly on the creative side of creative destruction. but we're like, that's what you're thinking about, but we're living through the destruction, right? And I think that part of the reason to spend time focusing on the creative side is to help people figure out, it's almost like getting a preview of the future and figuring out what it's going to mean to make better decisions in the short term. So one of the things that I've been thinking about a lot, and I'm sure you've seen this too, is this is creating a major shift in people's thinking around, around manufacturing supply chains and just globalization in general, right?

You have so many people from, you know, blue states, red states, whatever, who are like, you know what, we actually probably need to be able to make things here, you know? Like the idea of having entire sets of goods that are important be made exclusively other places seems not to be working right now. And the interesting thing is that if that gets operationalized, right, you know, there's so many things that I think you're likely to see, right? Government creating new incentives to manufacture here and all this sort of stuff, right? what people actually work on might also change, right? You know, I don't necessarily think that it fundamentally ends the gig economy and side hustles and things like that, but you're going to see a lot more jobs of people actually building things, right? And that's going to have its own impacts in terms of what decisions they make about education.

I think one of the players, it feels to me, least likely to come out of this well as higher education. Yeah, I could not agree more with that. because it's also interesting thing. First of all, here's a really, really interesting fact. So supply chains have been so fragile for so long that I was, so when I first like started considering the implications of Justin Time supply chains and the coronavirus impacts of it, and I was, by the way, I was panicking back in like mid-January about all this. Can you define just in time supply chains for people to?

Oh, yeah. Basically, I used to me that you, if you had a manufacturing plant, you'd have like piles of there so that if your supply chains, for whatever reason, couldn't get you stuff, then you could just still keep operating, right? But as technologies like the shipping container were invented and became popularized back in the 70s, costs to ship things globally plummeted, right? Shipping costs went from like, let's say, 50% of the cost of the product down to 7% if you make it overseas. So what happened was, obviously, people just moved their manufacturing to whatever the cheapest place in the world was to make it,

because it only costs 7% extra to ship it across the oceans. So the result was that people didn't store inventories anymore because why would you bother store inventories if you can just order it from China and it's there like five seconds later, right? So the result is that we were able to move much faster because we had all this energy stored as inventories, right? You again, you have a pile of like stuff at your manufacturing plant, but that pile of stuff isn't creating value for the world, right? It's potential energy. It's not until you actually manufacture it and people are using it that it converts into kinetic energy where it creates value, right? Same thing with money, right?

Money that's sitting there not being used is potential energy, but once that money is loaned or spent, it converts into connect energy and it creates value, right? That increases the velocity of money, which increases wealth, right? And the faster the money moves, the more wealth is created in general. And so what's I started thinking about, the implications of just-in-time supply chains, which basically increases the overall fragility of the world because we can't withstand shocks to the system because we don't have supplies laying around. So it's like having no safety buffer, right? Like imagine if you're climbing Everest and you only have one oxygen canister and that oxygen canister, you know, breaks or something, right?

Then you're super f***. So you need to carry extra ones with you. And we basically got rid of all of our extra oxygen canisters because, of these technologies, which means that a lot of businesses are going to go under because they didn't have the reserves to get through it, right? So this is just a reminder of the importance of having those reserves and also having robust systems built. So for example, so even the supply chain, so I started like just consuming a bunch of supply chain content and I was going through all the trade websites and listening all the podcasts. And they weren't even talking about supply chain

implications. Most of them weren't talking about supply chain implications until shockingly late after it was already, to me, abundantly clear that supply chains were going to be a huge, huge, huge problem moving forward, which just shows like how little energy was really put into thinking through the implications of these things and how not ready humanity was for all this, which is why Taleb called this a white swan, right? Because like pandemics have been a thing humanity's been dealing with since forever, like actual forever. And if you were paying attention, you would have noticed that the CDC had a budget, a couple billion dollar budget, which is embarrassingly small, and that something like this was just bound to happen. It was a question of when and what scale. And thank God

this isn't Ebola or smallpox, right? Because we're going to get through this. This is going to suck, but we're going to get through it. So pandemics historically, obviously, are correlated with cities, right? Rise of cities, more population density, more people. I think cities are another really interesting thing to consider in the wake of this idea of, your first point of the internet merging with humanity, right? Now, I say this as someone who lived in Chicago for a few years, then was in San Francisco for a decade, and now lives in the Hudson Valley, right, a couple hours outside of New York City.

And that was a really intentional life decision to be, like, rooted in. in the geographic empire of one of the most important cities in the country, but also decidedly away from it, right? And that was a decision that came from just a personal bias and like style of life decisions. And also from the fact the viability of as basically an independent, you know, consultant, content creator, et cetera, I live on the internet, right? That's really where my business is conducted. I think it's interesting to consider how many people are, like how this changes the perceived essentialness of the city. Yeah.

So, okay, so my thinking on this is basically that you, there's two, okay, so cities are one of the most important technologies humanity's ever created for increasing the velocity of ideas and wealth. Basically what cities do is we, it's a form of concentrated energy, right? So when you're in a city, especially a dense city like Chicago or San Francisco, you just bump into other smart, smart talented people with resources all the time. And so you can go from an idea, can form it in your head, and then you can just bump into a whole bunch of people who are relevant to executing that idea in a really short period of time,

and you can find the capital and the people to execute on it. And so ideas go from birth to, you know, real world execution in increasingly short period of time. And that's why there's like fascinating data showing how basically the bigger the city is, the faster the velocity of all the socioeconomic and anything that's, any metrics that have to do with connecting with people, just increase by, so the exponent is 1.15, which basically means if you double the size of the city, then you increase the number of patents per capita by 115%. You increase crime also. It's not just a good thing.

It's also a bad thing. So crime increases by 115% if you double the size of the city. So you increase city by 100%. You increase how much investment capital there is. You increase wealth per capita. You increase everything that involves humans coming in contact with each other. And vice versa. The flip side is also true.

There's actually a 0.85 exponent on the resource allocation required. So, for example, if you double the size city, you increase the city by 100%. It only takes 85% as many roads, right? It only takes 85% as much oil and natural gas and wiring and pipes and all the other, you know, infrastructure that's needed to connect with people because it's just more efficient to have people closer together. So cities are super important for innovation. However, interestingly, there's like a secondary, there's like a whole separate world that was created called the internet, right, where you can live in virtual cities and not just physical cities. And that's basically what you're doing right now, right? So you're engaging in experiment, which is unusual for like smart and ambitious people,

don't usually typically decide to go and move to rural areas, but you can totally do it. You just have to be extra skill that like, you know, inhabiting as a citizen this new world called the internet where you can then Twitter is, you know, essentially like a giant city, right? It's actually, I would argue Twitter's more like a giant, you know, it's more like a country. And then each little tribe on Twitter is like its own city, except it's, it's just like you have in real cities where you have people that are into different topics you're the same thing on Twitter. And Twitter's just like this fascinating kind of intellectual potlop. where everybody kind of brings their ideas and things that they have discovered, they're interesting

to the table. And if you're really good at using the internet, oh, man, it's just a, it's a true cornucopia of, like, delight for polymaths and autodidacts. Well, one of the things that I think is really interesting is that I don't think that you, I don't think that a person could make the type of decision that I made without having done their stint in the city. Like, there's a part of me that feels like the, the cities that we choose to spend our 20s in are becoming kind of like an extended college experience.

especially in terms of the networking that used to be promised to you through college, right? Like part of the premise of colleges that I think hasn't necessarily held up as well as times have changed is that you get this really powerful network, right, that you get to be a part of. And maybe that's true, the higher up the, you know, the exclusivity you get. But by and large, it's the cities that you spend your time and that creates your professional networks that you carry with you for the rest of your life. I went really deep on, I mean, not just cities, you know, we both have, context in like the Summit Series community, right?

And these places that are themselves of a virtual kind of a network that connects people, that creates just more opportunity to then make a different like day-to-day decision because those networks continue to exist, you know, without daily or weekly maintenance being in a particular city. Yeah, absolutely. And the people who migrate from the physical, and most people obviously have a mix of like internet, you know, world and physical world, Adam's world and bits world. Obviously, the more skilled you are using both, the more effective you can be, but you can totally just use one or the other.

And many do, right? Typically, the older you are, the more you lean on the Adams world and the younger you are, the more you lean on the bits world. And it's pretty clear where humanity is heading right now. One thing I think is really interesting is seeing how humanity is organized to fight coronavirus. So as governments, you know, move slowly and plod and bungle things, at the same time, I've never seen. So I hang out in certain activist circles, and I just watch how the organization movements happen. and I try to intervene when I think there are opportunities to do so that are high leverage. But oh my God, the number of different organizations I've seen spring up just in the past couple weeks.

How many different individual people have become entrepreneurs overnight coming up with either novel techniques to create masks or ventilators or you name it, right? And I know people have been reaching out to me, like wanting to help, wanting to help with their projects and just seeing like infinite discords and telegrams and email lists and like Zoom calls and using all the new technologies that humanity has, these technologies have been on for a while now, but just the scale at which humanity is using them now as tools to think together. It's like, I sort of just kind of imagine it like, you know, everyone, so, you know, humanity has 7.5 billion neurons, right? We're all neurons in the collective global brain. And this is just, this is one of those giant shocks that's like causing us to, like,

reform all these new connections and use all these new tools available. It's just one thing that's crazy is like how many people have like gotten by in life so far, not figuring out, not knowing how to use these technologies. to engage. And now everyone's basically being forced to. And the result is that like as humanity, as, you know, let's say that 20% of humanity was just pretty bad using technology. They would, you know, a bit here and there, right? But generally, you know, good old fashioned handshakes and, you know, looking in the eye kind of people, right? And now they're being forced to use this technology. And they're, like, I can see it with my parents, for example, like my mom in particular.

My dad's always been excited about new technology. But like my mom is like now suddenly like really, it's starting to be really motivated to embrace these technologies. And it's really interesting to just consider what the implications of that are. Because each, of these technologies are basically thinking tools. They're all extensions of our mind, right? In the same way that the phone is like an extension of, you know, of your mind, because the phone is your gateway to humanity, right? So you can think with 7.5 billion people every time you pull your phone, and your computer is obviously the same thing. And, you know, like the screen is like an extension of your eyes. And so it's just, it's really, really, really fun to think about what that means.

One of the interesting applications, so I agree that I've also seen, you basically have people who thought that they were generation exempt kind of from needing to care about technology or just, you know, whatever, like basically our parents and our parents' parents who, you know, used the very barest minimum, but who are now discovering these tools and discovering that they're fun, they're interesting, they allow them to do things, et cetera, right? They're no longer intimidated by them. They've been forced through that fear barrier. I think that this is one of the things that I worry most about on the other side of this scenario has to do with retirement and retirees. To me, it just seems like we have an unfathomable perfect storm of destruction, right? I think that I'm not sure that

markets are really pricing in a lot of these second order economic effects yet, right? So if you see stock market declines, you obviously have people who have been promised that their retirement is predicated on stock market pumping out seven and a half percent per year forever, right? That's how their financial planning has gone. So you have that. For folks who have invested in real estate, which is that, you know, was previously at all-time highs, right? You are going to need to start selling that at a time that no one's buying, no one's able to buy, right? Millennials not being able to buy real estate just got an even bigger knock to it. Let's say that some need to get other jobs. Well, you can't get jobs because a lot of them are being automated away, right? I think that

certain types of quote-unquote low-skilled jobs, right, the checkout people, et cetera, are just going be, this would be a killing blow for them, right? Because people will be concerned about actual health outcomes. And then you have probably continued restrictions on senior citizens as we deal with kind of rolling waves of this over the next couple years, which seems like anyone who's plausibly looking into how the economy comes back online, you know, is thinking in those terms. So it's kind of this like very troubling set of things. And I'm not sure, I don't know what the path to, I don't know how the, the internet solves that, but I do think that at least there's some potential in the fact that,

like I said, or you know, you said, we're kind of over this fear barrier and people are discovering these tools. Yeah, it's, it's, so one thing that's going to be interesting to think about is, like, what are the implications from an inequality perspective? Because I happen to be of the opinion that we have if we're better at organizing the resources we have. Now, as far as how to do that, well, that's much harder, right? And I tend to decide with the simpler, more straightforward solutions like UBI versus like trying to do top-down really complex bureaucracy is required to integrate and, you know, distribute the resources. But it'll be clear.

I mean, it's going to be coming increasingly clear here the necessity of doing that because people need to pay the bills and then keep the lights on and they need food. So one thing. So there's a really great book called The Great Lever, which basically that there are four separate inequality leveling shocks. War, famine, or no, war, plague. revolution and state collapse. And then throughout all of human history, the argument is that basically those are the four things

that led to the, you know, when inequality would basically increase consistently for, you know, decades or centuries. And then one of those four things or, you know, plague revolution and state collapse would happen. And then there would be a giant leveling of inequality. And the reason why is because basically rich people have more to lose, right? So if you're only living in a subsistence level, you just, can't lose that much compared to somebody who owns, you know, one percent of the collective GDP.

And so this is clearly one of those situations where that's possible. And so, you know, if people can't pay the bills and can't feed their families, then that's when you get really, really, really, you know, problematic, like revolutionary conditions, right? And so it's just going to be necessary to distribute resources from the haves of the have-nots in some capacity, right? whether it's printing unlimited money and then doing it indirectly or it's doing it a more direct way of some kind of resource distribution. But so from that frame, this is clearly one of those moments in history where that kind of large-scale change is possible. And it's weird to be in that situation, although it does seem like it was inevitable for a long time now, but these things often are.

Yeah, I mean, obviously the Bitcoiners in the audience, audience, which is kind of like the core listeners here, a lot of this stuff feels like the acceleration of trends that were already existing that have their roots in 2008 and earlier, you know, in terms of the role of the government and the economy, largely speaking. You know, a phenomenal percentage of GDP this year is going to be government spending. You have, you know, these facilities being set up not just to backstop American business and American credit lines, but currency lines all around the world. You know, there's a really interesting thesis that I was reading from someone on Twitter that,

you know, basically the folks who are interested in Bitcoin are seeing the inflationary pressure on the other side of this, right, based on the world's demand for dollars, based on the shortage of dollars, and looking to Bitcoin, right, as this very clear alternative. And I think you are seeing some interesting anecdotal evidence of people getting interested in Bitcoin for that reason, right? having the halving happen at the exact same time as this mass quantitative easing kind of really reinforces that core narrative point. But someone pointed out that it may be, you know, the other thing that we're seeing is

USD pegged stable coins have exploded this year, right? Significant increases, billions of dollars of new inflows, right? New stable coins created. And it may be that part of that is not kind of, you know, U.S. hyperinflation or anything like that. But actually people around the world, world, right, who are in less stable monetary regimes, who want exposure to cash who can't get in. So it could be that Bitcoin becomes something that isn't just about, that isn't kind of

dependent on U.S. hyperinflation, but is in fact an answer for people who are trying to get out of their local currency regime, which is being devalued relative to the dollar. Yeah, I mean, one thing that always pops my head in these kind of situations. So I've spent a lot of time being very wrong about trying to predict future price movements of of cryptocurrencies, although fortunately I've gotten the macro trends largely, right? But basically, okay, so in times of extreme chaos like this, we're in a period of extraordinary punctuated equilibrium, that tends to be good for the incumbents or for the, you know, for the challengers versus the incumbents. And so there's all kinds of counter trends.

And so I tend to just, my head spins into and then explodes when I try to think about the secondary effects of all the macro, of the macro landscape in general. Because on one hand, you've got governments gaining, you know, possibility of extraordinary new powers and Orwellian police states, you know, the probabilities of those outcomes seem to be going up, these kind of situations, and all for very sensible reasons. Like, it seems like the authoritarian countries have done a better job of managing the virus response so far. And so it's hard to argue with their current success. On the other hand, there's all kinds of really alarming, you know, consequences of that, those, you know, giving up the liberties that usually come with those. But volatile, but, but

just chaos and volatility is just good for innovation in general. So lots of, lots of interesting things to think about there. All right. So we've kind of been very high level at a lot of these things, which I think is obviously where my perspective tends to sit and live. But like maybe let's go through just a few of these second order effects that are much more specific and tangible that have got you interested. Yeah. So one thing that pops on hand right away is there's this quote that I love, which basically that, you know, a real problem has the ability to eliminate all the, all the non-real problems, right? So it's easy to, like, create a bunch of fake problems that don't exist or exist all in your head. And this is true at the humanity level, too,

right? So there's a bunch of, like, low-leverage problems that we might be focusing on. And this is one of those shocks that forces us to confront the real problems, right? And so some implications of that are things like, okay, so, you know, we have an economic freeze, which leads to a decrease in fossil fuels, right? So we're going to get all kinds of really interesting data on what happens if you just shut down the global economy. And we're going to be able to make new decisions with that new data on what the best interventions are, right? Like how do we allocate resources efficiently there? Or like social distancing. So right now, you know, we're all engaged in social distancing. But in some ways that's not true.

What we're actually just doing is physical distancing. We're not allowed to be in person together, but we can still be social. So again, our having to use all these new tools. And so we're getting all these new skills using these new tools. And that leads to interesting new behavioral patterns, too. Like you can't see people in person, then you're using technology to connect with them, which means that you might connect with very different people than you would otherwise, right? You might talk to the same five people on a regular basis, like every day. But suddenly you're hanging on Facebook more and you're like, oh, maybe I should connect with these old friends because they're there. I see them on Facebook, right? Or things like, you know, like, okay, so loneliness,

right, is an obvious problem, mental health. There's all kinds of mental health issues that happen as a result of this. The more resilient you are than the more likely you are to do well in a chaotic time like this, but there's lots of people that are struggling for all kinds of different reasons. And so one thing I can see happening is that, you know, if you are feeling lonely because you're isolated, as many people are, and you're not as good at or as comfortable using technology to connect socially with other people, then you have to get that social need met some other way. And one way of doing that I think I can see hundreds of millions or billions people doing is just leaning more heavily on relationships with fictional friends, right? Like characters and TV,

movies, books. These are in a very real sense, like real friends of ours, right? Because when you're reading a book, you really are teleporting into the story. Like, you are teleporting into the protagonist, and you're seeing the world through the eyes of the protagonist. And so the protagonist's friends are your friends and so on. And then you obviously stop bringing the book and then you forget about it. You go back into your normal body. But one thing that can lead to is basically lines increasingly blurring between, you know, your internet friends and your fictional friends and your real friends. And so that's interesting to think about because that seems like an inevitability, if you think about the overall trajectory of technology throughout time.

And just like how I remember a long time ago, I got confused back in my Harry Potter phase. Like, I kept getting confused between fan fiction and like canon in the Harry Potter world. But it was really embarrassing. And that was like a really narrow version of it. But like this is how like a lot of Black Mirror episodes start, which is obviously depressing to think about. But obviously Black Mirror is designed to be cautionary tales to force us to think about the role of technology and how to not get up.

And so we can learn a lot of those lessons and make sure that we build the technology. to be able to, you know, keep these relationships healthy and effective. But it's going to lead to a lot of innovation in those things. I mean, it sounds like there's, if I had to pick like a meta theme in some ways, actually, let me take it from this angle. The end of these podcasts, I've been asking everyone kind of like, you know, reasons for optimism is reasons for pessimism. And I think that it's very clear just listening to you that you have a lot of optimism

coming out of this. And in some ways, it feels like that. The TLDR is when the entire world joins the internet and learns how to use the internet, some amazing things could happen. Yeah, exactly. That's the best way to put it. And part of the reason I'm optimistic is because, well, I'm an entrepreneur. So you just have to be kind of pathologically delusional about how great everything is

or you would never take the insane risks that being an entrepreneur requires. Also, people are so depressed right now that I feel sort of a moral obligation to try to help, you know, counterbalance that, the panic. Also, I already went through the panic myself as I have been thinking about this for a long time. And, and yeah, so basically this is, so as humanity merges of the internet, the implications of that are that, so for example, some people say, oh, this is going to lead to increases in nationalism, right? Because now we have to, we have to huddle up, right? We can't have open borders because open borders lead to more, you know, migration and, you know, foreigners coming in with their diseases and stuff, which is

totally true. That can totally happen. But a lot of people spend way too much time thinking about physical borders and none of time thinking about non-physical borders. So physical borders are very real thing. Obviously, countries are like very real entities and there's relationships between countries and there's people and ethnicities and groups. But I think it's actually what people will miss is like thinking about the other kinds of borders. Like there's, you know, we're connected in all kinds of ways that are very real. So for example, there's any given moment, there's about 5,000 cargo ships, you know, traveling the world, taking stuff around, right? And each cargo ship has like thousands of individual containers in it, which is like basically thousands of individual trucks on each cargo ship.

There's 300 undersea cables connecting every island in the world to the global brain, right? And so in some ways, and you think about all the other ways that we're connected to, via like pipes and wires and all the infrastructure, right, that we can't see that's invisible. It's below the ground, right? Or it's electromagnetic infrastructure that's also invisible to the human eye. And so as a result of this, humanity learns how to think together and how to create together as like it's really easy for, especially, you see this a lot when you travel. like people get in these little bubbles, right? And they see the same handful of people every day, they do the same things every day.

And their whole reality is very local, right? It's very like within a 200-yard radius of their, where they wake up, right? And then maybe another 200-yard radius where they go to work, especially in poor countries, where they don't move at all, right? They don't even leave their village. And so this is the first time that a lot of people

are going to be moving. Now they're not going to be moving their bodies, but they're going to be moving their minds. And when they move their minds, once you learn how to move your mind instead of just your body, you basically unlock the ability to move anywhere at the speed of thought, right, at the speed of light, because you can travel the world through your computer. And, you know, humanity first started learning to do this with, you know, with books and then

with radio and then with TV, right? And so if you think about, like, what is local to you, like, the people around you, so it used to be that, you know, the people around you were the people you could literally see with your physical eyes, right? And then obviously with books, you can then see with the writer's eyes. And then with radio, you could see with the, you know, the narrator's voice. And then with video, you know, basically the size of your name. neighborhood increases to include 7 billion people. Because when you watch a documentary, say,

about a tribe in the Andes, you essentially travel to the Andes, right? And then the internet, obviously, is the first tool that's two directional, right? Because you couldn't really, there was only one directional conversation between the content creators and you in the other three mediums. But the internet is the tool that lets you contribute to humanity. So basically, like, as far as like, you know, with the notion, like, how do we push the innovation out to the edges of the network? the internet is massively decentralized compared to these other technologies. Obviously, not as much as us, you know, crypto nerds would envision. But when you think about like a billion people suddenly like integrating into the global brain

and exploring in all these nooks and crannies that they typically didn't have time for previously or the motivation to do previously, I think we're going to see a whole lot of really interesting flows information in all kinds of ways that we didn't see before. Like memes, for example. Like one thing is fascinating when you watch memes evolve. Like it used to be that memes were like super localized and contained. And now, like, means get translated across languages so much faster. And, yeah, the rate of innovation in, like, in all different forms of memetics is accelerating rapidly.

So there's lots of reasons to be really panicked and freaked out right now. There's also lots of reasons to be excited about it as well. Perfect note to end on. Emerson, I think, you know, we've spent a lot of time on this show with folks who are, you know, concerned, justifiably so about the state of the global economy and what happens on the other side of this. It is nice. It is refreshing to have someone kind of walk through a number of these second order effects that aren't just disastrous, right? And that could actually unleash new creative capacity, though. Thanks so much for hanging out. This is fun. As I said at the beginning,

I never want to be minimizing of the pain that people are going through right now and the real travails that we still have to face together. But I do think it's important that we take some time to zoom out and ask these questions, not just of how the world will change, but how we want it to and how we can exert agency to create outcomes that we believe are better. In the face of adversity, we create new things. We create new opportunities. It's very cliche, but these are, the most trying times are where we grow the most, we learn the most, we become potentially our best selves, but that takes focus and that takes diligence and it takes a willingness to do it. So I hope you enjoyed the slice of Emerson's brain that we just had here. I'll link to the second

order effects document. I think it's super fascinating. And I hope you enjoy it as much as I did. For now, guys, that's it. Stay safe and take care of each other. Peace. Welcome back to The Breakdown. An everyday analysis breaking down the most important stories in Bitcoin, Crypto, and Beyond with your host, NLW. The breakdown is distributed by CoinDesk. Welcome back to The Breakdown. It is Tuesday, April 7th. And today, our main content is almost a follow-up to an interview from a few weeks ago. Those of you who are listening then, remember, I had Ben Hunt on to talk about narrative dislocation in the markets, right? And this was at a point at which the markets had only just begun to grapple with the potential implications of COVID-19. It was pre-shutdown. So a very different world, right? This was the before, in the before-after that I believe. that we're going to have when all of this is resolved, or at least through this first phase. Now, part of what's changed is that over the last couple days, markets have been absolutely surging. The Dow was up something like 7% yesterday and is up 3% at the time that I'm recording

this again today. And I think it's really interesting just how disparate the opinions on this are. So last night, I tweeted out, markets are, A, correctly reacting to positive signals around a potentially flattened curve, B, in denial about continued economic pain, or C, something else. There were some who thought it was A, right? We have the beginning embers of good news. It seems that New York's curve is flattening, and that has obviously been the epicenter of the outbreak in the U.S. It seems like some of the curves in Europe may also be flattening. So perhaps it is A, the market was incredibly fearful before and is returning to form. Now, what would make this make sense is that all of the stimulus that happened didn't really

have an immediate impact on the markets the days that it was announced, largely because it seemed that without assuredness that these lockdowns would end, that the economy would return to normal, there wasn't going to be that ability or that willingness to come bring money back into the markets. The reason that a flattened curve matters so much is that it provides that light on the horizon, right? Now, I think that there's a counterargument, which comes to be, which is in denial of continued economic pain. Scott Melker yesterday tweeted, the stock market is not the economy. Obviously, for those of you who have listened to this podcast before, know that I agree with that statement wholeheartedly. We're seeing, I still think, perhaps a little

irrational exuberance, a belief that there is a on switch where all of a sudden the economy can just go back to normal versus another month of people being out of work, more businesses shut down because of that and not going to just turn back on when it happens. And a fundamentally transformed landscape even when we do come back because we haven't yet dealt with just how difficult and staggered it's going to be, right? It's not inconceivable that we see a scenario where many types of activities, large gatherings, sports, you name it, are still prohibited, where entire demographic sectors of the population are not allowed to work, where there are extremely stringent testing measures and weird, new sort of controls that we didn't have before. So I don't believe

that there's really an on in the same way that Wall Street seems to hope there is. So I'm a little bit more in the B camp. My guest, Ben, is today as well. But I, you know, I'm open to being wrong, which is why I asked the question. Now, the C, the open-ended option, a few different people had a few different answers. One that I thought was interesting came from Jeff Dorman from Arka, who basically said that, look, the stimulus was doing what it was meant to do. It was absolving liquidity concerns. It was getting money into distressed hands, and it was restoring confidence in the market. He wasn't denying necessarily the downside and second order effects of what the stimulus might be and the relevance of that for crypto. He was basically just arguing that it's doing what it's supposed to be

doing and that's what we're seeing in the market. So there's a lot of interpretation around this, obviously, a lot of good debate to be had. And certainly I'd never want to be in a position of rooting for disaster because that's the perspective that I take. I'm fearful that we still have more pain that's not really being priced in. But then again, we're in such fundamentally new times that it may just be that no one has any damn idea how to price things in. The reason that this all matters is that it's context for why I bring really smart people with different perspectives onto the show. For those of you who listen to Ben Hunt the first time you know, he comes from a markets background but also a political science background. He thinks

in terms of narratives and how narratives shift. And he has a really great perspective on this, even an emerging patternicity around these kind of bear market rallies. which is what he argues this is. So I think it's worth listening to this and really trying to grok and see what he has to say. And now there's one other important part of why I wanted to have Ben on the show today. Ben has been basically helping organize a citizen network to get PPE into the hands of medical professionals

in an interesting way that doesn't actually compromise the ability of states and consortiums of states to negotiate directly with suppliers. Effectively, they use this network of applications. actual people who are on the ground in China who have access to retail PPE, effectively, to buy it and ship it back to the U.S., where it's distributed not in hospital-sized chunks, but in department-sized chunks of 50 or 100 or 200 at a time. So it's a really cool example of, I think, one of the best things which is coming out of this, which is the resilience and the spirit of people

around the world to come together, not wait for answers, not wait for governments to solve their problems and actually do things important. So I hope you enjoy this little. It's almost an interview recap, right? It kind of pairs with the first episode from a couple weeks ago. So without any further ado, let's dive in. All right. We are back with Ben Hunt. Ben, thanks for joining again. Great to be here. Appreciate you having me. We were just talking that, you know, this is, I feel like everyone has relearned the Lenin quote. You know, there are weeks that go by in decades and decades that go buy in weeks or whatever, whatever version of it you want to grab, right? And it's, it absolutely feels like that. The last time you were here, we were talking about basically how

we still hadn't recognized the severity of this thing that markets had only just started to move. We were still in the, it's just the flu stage. We haven't even gotten to the only the old stage yet. And, you know, here we are in a very different place now. I wanted to see how, you know, your take on how things have evolved since then, or maybe better because that's a huge question, where we are right now in the narrative cycle, you know, of this crisis. And then I want to come back to the, this idea of it being our finest hour, because it's something that I've really been admiring from afar what you've been building. Thanks, Nate. You know, I think you and most of your listeners are familiar with those Kubler-Ross-St stuff.

stages of dealing with loss, with death in particular. And so I think it's very fair to say that the markets right now are, you know, we've moved past the denial stage, but we're still very much in the bargaining stage. And what I mean by that is that it's happening in terms of of an economic shutdown and the, you know, enormous market impact of that, I think, entirely necessary and appropriate public policy to deal with a disease that's, or a virus that is two to three times more contagious and 10 to 20 times more dangerous, more fatal than the seasonal flu. So we've recognized that something big has to be done, and now the bargaining is, well, how long does this have to go on for? So what I would tell you just from a narrative perspective, that's what we see dominating the unstructured data, the messages that we are immersed in, both as citizens and as investors. It's a bargaining stage of, okay, I know this is going to be really painful, but it doesn't have to go on too much longer, does it?

Does it really? Right? And the hallmarks of that are, and I'll make some comparisons to the 2008 great financial crisis, the hallmarks of that are going to be these three-day rallies where you'll get a, a spurt of good news. You'll get some missionary, as we like to call them, you know, presenting a message that, all right, you know, it's green shoots or it's, you know, the second derivative, things are still getting worse, but not getting worse as badly or as ferociously as they were before, you know, whatever that message is.

And you'll get, you know, these things always take three days. It's always a three-day bare market rally. And, you know, that's very much par for the course. So it is just one of the stages, though, of dealing with loss. And this is a great loss for any investor, frankly, any citizen. The trauma we're going through dealing with this virus and the disease that comes from it. But right now we're in the bargaining phase. We're a long way from acceptance.

Yeah, you know, it was interesting. You guys had a great note last week noticing something that I was noticing and getting very nervous about as well, where there was an attempt to basically politicize health outcomes on the one hand and economic outcomes on the other, as though they were, as though they could be easily split into kind of left-right divide and just mapped cleanly onto that. And, you know, that's terrifying to me. It's also just insane. The idea that these are somehow mutually exclusive possibilities that are independent variables, right, is just nuts.

And it does feel to me a little bit like mostly because the leadership has backed off that message. It felt like that went away a little bit once Trump actually said that this is going to go through April, once he backed off. It did. It did. It absolutely did. And look, I want to be very clear. I mean, look, I've written pretty widely about. my views on the current occupant of the White House, and they're not favorable at all.

That said, I, Winston Churchill once wrote that if Hitler invaded hell, he'd find something good to say about the devil in the House of Commons. And so what I want to say is that this virus and this disease, this is our Hitler, this is our world war. And, you know, I think Donald Trump is a disaster as a president. But what I also think is that his initial, I'll call it, come to Jesus moment about a month ago, in early March was a sea change in his attitude. He still tries to minimize this, and I think it's injurious to our policy, the attitude that he's taking.

But I am relieved and, frankly, thankful that we are pursuing a nationwide essential lockdown through this month. I think that's absolutely, again, the necessary and the right policy to take. So I'll say that. But your larger point about this supposed trade-off between economics and death, right, and that we should run this essentially like an experiment, you know, well, the odds are, you know, it'll only be the olds.

And so, you know, why wouldn't we keep the economy open like this? it's reflective of a type of decision making that we're all familiar with, and frankly, in most circumstances, is the right format for decision making. It's an expected utility framework. It's playing the odds. It's trying to understand, all right, and I take this action, what are the possible outcomes? What are the odds of that outcome? And so, you know, let's measure, right? the relative pros and cons of this outcome with the odds of it coming to pass, and then let's do the one that has our maximum utility. And that's appropriate for so many things in life. It certainly is appropriate for investing. It's appropriate for gambling.

It's appropriate for really anything where, I'll use the gambling analogy here, where we're going to be dealt a lot of hands, right, where we can sit down to play blackjack and, the odds will even out in a predictable way because we're going to play, we're going to sit down and we're going to play for a while. But the decision-making around a single event, whether it's fighting a war, and the decision-making theory I'm going to talk about really plays out most prominently in defense planning and war-fighting strategy. but when you only get one roll of the dice for a very risky thing

that that utility maximization framework really falls down because again I'll use a poker analogy if I'm just going to play one hand of poker for the rest of my life if I'm unlucky, if I get hit

with a bad beat even though I was playing the odds it doesn't matter. I mean, I'm wiped out, and I don't have an opportunity yet to ever recover from that. It is the same thing when we're talking about an event like fighting a pandemic or fighting a war against anything. We've only got one shot at this. And so the utility maximization decision-making approach, which is really underpinning all of this notion of tradeoffs between the economics and the lives of our fellow citizens, it's really misplaced. Fortunately, there's another decision-making approach.

It's called mini-max regret to minimize your maximum regret, which is really designed for these situations where, you know, you only get one roll of the dice here. You're only dealt one hand at the table. And so it's not really a matter of probabilities and odds. It's a matter of minimizing your maximum regret. And in this case, I think the maximum regret is pretty clear. I don't want to lose my mother. I don't want to die myself.

I don't want to lose any of those people that are closest to us to me. And I have empathy for the other families in our country and the world, frankly. And when you look at it in that perspective, I think it's very clear what we need to do. One, we need to protect our health care workers because the, the common denominator of all of the worst-case scenarios is when our health care system fails. And second, we need to develop really ubiquitous and quick testing so that we can have confidence that when we do go back to work and in crowds or in areas where with other people, we can have confidence that the contagious do not walk among us.

and until we have those two sine qua nones in place, protecting our health care professionals, having ubiquitous and quick testing for all, you know, we've got to lock this down. So I think that when you approach it with that minimax regret decision-making approach, it really leads to a moment of clarity, right, in what our national policy can be. And for the most part, there are important exceptions here, but for the most part, I think that's the course of action we're pursuing. You know, it's interesting listening to you describe this. You know, you started saying we've moved from denial to bargaining. But in a weird way, I almost feel that there is a new type of denial, that there's some normal to go back to, right?

That there's a switch that gets flipped. And it feels to me like we're losing time. having the conversation about exactly what you just described, which is, here's how we turn things back on, even though it's going to look very different than just a clean, we're reopened for business, because we're spending, we've spent now the last couple weeks debating when we can flip the on switch without even realizing that there is no on switch. So it's just interesting to think that way. What you're describing really are the second order effects of and third order effects of this attack we've suffered from the virus. And, you know, I'll flip it back to the

great financial crisis and what happened, you know, in 2008. Going into 2008, the, you know, one of the largest asset classes in the world was non-conforming, meaning it wasn't done things. through Fannie Mae or Freddie back, residential mortgage-back securities. So these were the Alt-A loans. These were the subprime loans. These are the jumbo loans. These are all of the mortgages that were then packages and resold as securities. This was a $10 trillion asset class, $10 trillion asset class going into 2008.

and in the aftermath of the great financial crisis, that went away. I mean, look, we still have some jumbo mortgages out there, and some of them still get packaged into securities and the like. But this is one of the largest asset classes in the world, and it all went away. So you're absolutely right that there's so much of our world, not just – investing aspects of our world that existed pre-COVID-19 that are going to be permanently changed post-COVID-19, everything from sports, right? I mean, this is the one that, you know, I was pretty early talking about this, and I got a lot of negative feedback on this, but, you know, you

privately, you know, sharing this with some of the NBA general managers and the, you know, the NFL play association, they were thinking about this pretty early on as well. What does it look like when we can't have stadiums and, and, uh, coliseums and sports the way we have in the past? Because I'll tell you right now, social distancing isn't going to work from an economic perspective. if you own, you know, the Staples Center in L.A. There are so many aspects of our lives. And again, our investment lives just kind of start scratching the surface. But the way we live our lives is going to change so dramatically going forward. And you're right, that is something that I don't think people are really wrestling with right now.

Have you seen the, there's a collaborative crowdsource document going around about second order effects coming out of COVID that it just started circulating end of last week. Actually, at Emerson Sparts, who started it on the show yesterday. And it's really interesting because he basically, he was, he sat down for himself because he started thinking through all these second order effects. He was like, there's got to be more. So he just threw it to a friend and then they put it online. And now there's at any given time, hundreds of people contributing to it. But it's fascinating. Oh, my God.

No, I'm not familiar with that. I can't wait to dig in. That sounds fantastic. Okay, so I do want to come back to frontline heroes in our finest hour. That's where I want to end and with the whole intention of this was. But I do want to have one more quick detour into perhaps less fun topics. So you've recently switched catchphrases for a certain type of person. It used to be they're not even pretending anymore.

now it's burn it the fuck down. So I'm guessing that you, let me ask it this way, is what we've seen from, from kind of the bailout perspective, the stimulus perspective, just, was it just completely predictable?

I mean, is there anything that surprised you, I guess, is a better way to put it? Surprise, no. I think it's still early to tell, too early to tell what the, what our response, is going to be to all of this as citizens. What I mean by that, you know, why does it not, you know, does it surprise me that the raccoons, as I like to call them, are out in force to, you know, to get their share of the, you know, the good tasty food that's being thrown, you know, out for all to enjoy?

No. No. But what I'm struck by is that we have the opportunity, I think, to, A, recognize that all of our institutions have failed us in this crisis. They've all failed us. And this isn't a left-right thing. This isn't a Democrat-Republican thing. This isn't even a boomer millennial thing. This is all of our institutions have not just disappointed.

They failed. And so what do we do about that? Do we put it on a dimension of, oh, well, if we either vote Trump out or vote Trump back in, that fixes it? it goes so much deeper than that. And what I'm hopeful is that for all of us and everyone listening to this podcast, our reaction to this crisis is that our political participation increases by an order of magnitude. And the smallest, itziest, bitciest piece of our political participation is who we vote for. for, which party we vote for, right? If you think that's the extent of your political participation or what your political participation can be, you've been co-opted by the institutions that have failed

us. And so I think there's going to be a real opportunity coming out of this to forgive, yes, in some circumstances, but never to forget and to increase our political participation and make for real change in the way our institutions are structured, not at the surface level, not on, oh, did we vote for, you know, Coke or Pepsi, but to really change the way we think about what it means to govern and be governed. So that's my hope. That's what I'll continue to try to write about. And that's what I hope that we all really wrestle with coming out of this. You know, it's funny, actually. There's these two almost completely opposite forces happening simultaneously. On the one hand, we're seeing this need among the business community, the financial

community, and certainly people who are out of work because we're asking them to stay home, for the government to backstock everything. But at the same time, we're seeing a, you know, a characteristic, I think, in many ways, surge of people saying, I'm not going to wait to take action. And I'm going to figure out what I can do about this. You know, what is the resource that I have, whether it's someone I know or something I can organize, or what is the, you know, what's my little piece of audience and attention that I can throw to this, right? And so you're seeing a massive mobilization at the same time as you could have, everyone just expect that they're, you know, now dependence of the state, basically. And that's not what we're seeing, right? What we're seeing is as mass scale, a resurgence of citizen action, uncoordinated, messy, all over the place, but moving, right? And figuring it out as we go, which brings us to the point. So you have made an argument that there is good to come out of this. I want you to share with our listeners.

specifically frontline heroes and what you've been doing around health care workers and getting PPE to health care workers. Sure. You know, I do think that it's important, first of all, not to compete with our emergency authorities at the federal or state levels and in making these massive purchases of PPE. So I'm not going to do that. You know, I'm not going to get out there and try to bid on a million masks or the like. but I also think as important as it is not to compete with the necessary work of these emergency authorities. I also think it's so important not to wait on these emergency authorities to do these massive purchases and then trickle it down into the hands of the frontline soldiers,

because that's who they are in fighting this war against the virus. We can help. and by we, I mean everyone. And the way to do this, I'm convinced, is in a decentralized, in a bottom-up fashion. So the way we've approached it is to work with different groups. So, for example, the employees of Intel in China are buying equipment, masks in particular, in China, where it's plentiful and cheap, shipping it over here to us in Connecticut and other places where we repackage it. We pay for it.

We reimburse them for what they spend out of their own pocket. And then we repackage it and we ship it directly to doctors, nurses, EMTs, first responders. We're trying to source, pay for. and then distribute down to the last mile medical supplies. You know, we're not ever going to be able to do ventilators and, you know, we're not going to get into test kits and the like, but a mask, an isolation gown, hell yeah, we can do that. Hell yeah, we can't.

And so it's a matter of connecting with well-meaning people all over the world. to participate in this sort of effort. And it doesn't require a lot of work. You know, we found an organization where we're able to set up a 501C3 to take in donations. I say we've found partners on the ground in China and Singapore and all over the place to source the PPE. And then we ship it over here and we've got a, you know, we've got a form online. where we ask for those frontline heroes, and that's what they are,

who are dealing with this virus every day, to let us know, do you have an urgent need for masks, for gowns? And by God, we'll get them to you at no cost to the recipient. So that's the project. We call it Frontline Heroes. If you're interested in making a donation, It's frontline heroes USA.org.

So all one word, frontlineheroesusa.org. You can go to the Epsilon Theory site. If you are or you know of, a doctor, a nurse, a clinician, you know, these aren't orders of. We're not going to get 50,000 masks to a person, but we can get 50 and 100 masks, 200 masks, to a clinic, to a department. They are on the front lines to help them out. So, yeah, that's what we're doing, Nate. And, you know, so far we've raised a little over half a million dollars. We've got a pipeline that we receive about 2,000 masks a day that we get out in, you know, batches of 50 and 100 to those frontline heroes.

It's really happening, man. And it is just, I can't tell you how gratifying it is to. to work with so many other human beings who still have empathy in this world and still are committed to doing something. So that's what we're doing. It's all bottom up. It's all grassroots. And that's how real change happens, Nate.

It never happens from the top down. It always happens from the bottom up. And I think we're just getting started. I think so too. And, you know, for me, part of why I want to make sure to highlight these things is it's so easy right now to get lost in frustration in anger. It's so hard to living with fear. I often feel that fear is a much more complex and uncomfortable emotion than anger. And so as soon as it can turn into anger, it does.

And I think it's really important to highlight these things, right? Like no one effort like this is going to fix the problem, quote unquote, because it's an infinite number of little problems together, right? But people still have to go live and do this thing. And, you know, I'm in New York State. I've got something like 22,000 healthcare workers from around the country getting their cars and drive here from all over. You know, like that's amazing. So I really appreciate what you're doing and what the whole community is doing. And I think, you know, the thing that is making me most inspired and optimistic is all of these pockets of little groups, right?

The fact that it is exceptional but not unique. That's giving me a lot of confidence right now. Well put, brother. Well put. Exceptional but not unique. And look, there will be time for the righteous anger. There will be time for that. Right now, the time is to save our brothers.

and sisters and mothers and fathers and daughters and sons, we can do this. We really can. And we'll come out the other side and then we'll get cracking on building a better world. Love it. Well, thank you again, Ben, for taking a little time to hang out with us again. My pleasure, Nate. Anytime. So just to quickly wrap up, I really want to hammer this interesting dichotomy. On the one hand, context for people being more resolved to the government solving their problems has never been higher. We have come so full circle from the beginning of 2008 where businesses are just going to expect, I think, from here on out, or at least this is the fear that if they perform badly,

the government will bail them out. This is the precedent that we're setting. Now, individuals are also getting those bailouts, but they're basically being paid, or I think you could argue, that they're being paid to voluntarily stay home. There is an economic trade-off here where they are being asked to participate in a public health outcome outside of their own ability to determine risk for themselves

because it's important to the collective and are being backstopped, right? But either way, whatever your interpretation of it is, whether you think bailouts are right or wrong, there is no doubt that the time has never been higher in terms of the potentiality of people just opting out and assuming that the government is just going to do things for them. But we're also seeing, or what we're

actually seeing, I believe, at least in the citizen community, is the exact opposite reaction, where people are organizing, they're mobilizing, they're figuring out what they can do to help. They're using whatever resources they have, whatever attention they command, whatever little slice of the world is theirs to actually try to do some good for people. You're seeing it over and over. I can count a million different ways. And, you know, Ben's frontline heroes initiative is a great example of that. But as we said in the episode, it is exceptional but not unique. And not only is it not unique, these exceptional examples are plentiful.

So, you know, yesterday Emerson Sparts was on to talk about the optimistic side of second order effects coming out of the coronavirus. I think one of them is just a return and a rise of citizen agency and citizen action and not waiting for people to solve problems for us. And if that comes out of it, it would be one good thing among so much bad. So I hope you enjoy this episode and this interview. I'll be back tomorrow with another episode of The Breakdown. Until then, stay safe and take care of each other, guys.

Peace. Welcome back to The Breakdown. An everyday analysis breaking down the most important stories in Bitcoin, crypto, and beyond with your host, NLW. The Breakdown is distributed by CoinDesk. Welcome back to The Breakdown. It is Wednesday, March 8th, and today I'm excited to share with you a conversation with Dimitri Kofinas, the host of the Hidden Forces podcast. Hidden Forces started as a way for

Dimitri to connect or expand his love of markets with numerous different disciplines, right? To try to understand markets by looking out at different domains from art to science to psychology and beyond. It has turned into, I think, one of the most unique podcasts in the business space because it comes at business and markets topics, but with this really interesting, broad, kind of polyglot lens, which I find just really, really powerful. Now, the last few weeks, few months have been a really chaotic time in markets, obviously, and trying to understand them.

I've turned to numerous different experts, have invited people on the show, just as a way to have a different lens on the world. I wanted Dimitri to come have a conversation about what conversations we weren't having enough of yet, or even more specifically, what conversations it felt like we weren't allowed to have. So this conversation is a lot about the dimensions of the economic crisis that are taboo in some way or have become so rotely politicized so quickly that they're crowding out space for other types of conversations. Dimitri has a perspective that is informed not only by his own research, but by the hundreds and hundreds of guests he's talked to. So I really enjoyed this conversation, and I hope you do as well.

One note before we dive in, as always, when I do a long interview like this, we edit it extremely lightly, try to keep it as much like the original conversation as possible. So without further ado, let's dive in. All right, welcome back. We are here with Dimitri. Dimitri, thank you so much for hanging out today. My pleasure, Nathaniel. Listen, you know, regular listeners of this show will know followers of Twitter

of mine, Hidden Forces is my absolute favorite podcast. And the reason that I love it so much is that it is almost willfully in between and looking for the connections between industries, spaces, ideas, people, rather than comfortably settling itself into one. And so, you know, for people who don't have that context, I'd love to start, by asking you how you started it, what your background was to get you there. And I guess just for framing, and so people know why I was so excited to have you on the show, you know, I know that you have changed your regular routine around the podcast

in an attempt to just try to keep track of everything happening in the world around coronavirus and the response to it, as have I over here on this podcast. And I thought it would be super interesting to spend some time talking about what we think is not being discussed enough, right? So these silent spaces that are important and being overlooked either willfully or unintentionally. So that's kind of the goal of the conversation. But maybe we can start with just how hidden forces came to be. Great question.

Well, Hidden Forces started, I guess, officially in the very beginning of 2017. It came out of a summer's worth of research that I was doing on a book that I had signed an agreement to write with an agency here in New York. and the book was about, it was basically a supposed to be a continuation of an article that I wrote for the Atlantic's Quartz magazine about my experience living with dementia for about six months. I had developed dementia from a brain tumor that I lived with for about four years. And during the time that I had that tumor, from the moment I was diagnosed until I developed Symptoms, I created a radio show that I ran that was, that I hosted in New York on 9-1-5, drive time 7 p.m. It was a financial show called Covering the Spread. That was built off of my

blog. That's where the name came from. My blog was called Covering Delta, which was, again, covering the spread. And then I created a television show. So I had experience in media. That was my first experience in like content creation. I was blogging on the side when I was working in application development and design and product development for cable vision, like next gen UI, U.S. Interactive app type stuff for the set top box. And so like I just, you know, I really loved it. You know, I really loved writing. I don't write much now. I can't wait to do that again. I really got to find out how to do that because it's such, it's an incongruity between like doing the episodes, preparing for someone else, really getting in someone else's

head and trying to figure out how to extract from them as much information as possible. It's very different than, you know, being in a place to really have a view and express it in writing. And also writing for radio or writing for podcasts is very different. And it actually degrades your writing skills. So that's a challenge. But anyway, Hidden Forces was really the result of my not wanting to write a book about my experience living with dementia. It was something that I signed on to do because I thought it would be a great opportunity. I was getting a lot of offers and interests from people to write the book or for a screenplay. But the truth is, that's not what I wanted. And so researching for the book besides writing and researching my own past, it got me into reading. about the sciences again, starting with neuroscience and then social science stuff and philosophy and eventually brought me all the way back to financial markets. And I put all that together and I realized that the reason that I didn't want or I hadn't been inclined since I ended my TV

show in 2013 after my brain surgery or right before my brain surgery to create another financial related podcaster media outlet, which was always the actual intention after I ended Capital Account, which was my show, was that I just didn't feel called to doing something that was just in finance. And Hidden Forces took what I loved about financial markets, which is that it's this very complex data set that has a surface phenomenon that you try and understand by going as deep down into the source structure as possible and apply that across the entire spectrum of human understanding.

One, two, I was in a place of, you know, I've gone through these cycles at least three times in my life where I just fall in love with learning. And the first time this happened to me was when I was in college, I think junior year. I was studying foreign policy, international relations. Foreign policy was a class. I've talked about this guy, David Deneune. And that sort of continued into my time living and working in Italy about a year. year and a half, I was reading a crazy amount of books. And this was like the whole progressive awakening movement after the Iraq invasion. And a lot of guys like Chalmers Johnson and Namchomsky

and Glenn Greenwald and all these sort of folks and Howard Zinn. And I read a lot of stuff on war and the history of war and all that stuff. And your point about you had studied imperial European imperial history, Nathaniel. I read, you know, Henry Kissinger wrote the book, Diplomacy. He relied a lot on Bismarck and Realpolitik. And so all that stuff was really interesting to me. And I went and up through another cycle like that after the kind of failure of my video game startup in 2007. It was like a long winter for me. And I just read and read and read and I read a lot of colonial history, a lot of Latin American history. And I can't remember what else now.

A lot of really interesting stuff. And now I went through this one, which was in the summer of 2016 ahead of summer and fall of 2016 ahead of creating hidden forces. And it was just like this period of like wonderment and like, you know, innocent love with learning. And it was heavily focused on technology. science, philosophy, and everything else. It was just, you know, the result of after so many years of learning, eventually, you know, you hit a certain inflection point. And that's what Inforces was.

And that's why the early episodes reflected that. You know, I did episodes on philosophical mathematics, volatility, postmodernism, religion, art and architecture, central banking, genomics. Like, it was all over the map, you know. So that's, and so that and then also, you know, I thought people, I was tired of all of the, the vitriol and the politicization of media. And I felt that we, and this is something I've talked to you about, which is I think we live in an answers based society and an answers based culture that rewards people who are able to give you an answer, even if they have no idea what they're talking about or if the answer is correct. You can't say, I don't know. That's not how we're not an inquiry-based society. And so I wanted a show that was

supportive of that. And I also wanted to do these long-form conversations. I believe that people really wanted to hear long-form conversations. And I think, you know, I think I've been on some level proven right. You know, it's not, you're not ever going to get everyone in the world, but people like you and there are many others who have reached out to me over the last few years. And when people reach out and they tell me how much they love the show or what it's done for them, it's, it's, it's really like maybe the best part of doing the show. So that's my long-winded answer for you. You know, it's interesting. A bunch of thoughts. But One of the things that I think is really fascinating, and I think about this all the time in the context of the show and, you know, Twitter personas and things like that is the incentive structures to be extreme are extreme, right?

The incentive structures to be firmly within a single tribe, whatever that tribe is. And I'm not just speaking politically. It's like everything walls itself off into tribes and own that are extreme. But I do think that there's a lot more space and a much bigger, quiet majority of people who are interested in lots of things and open to lots of perspectives than I think sometimes the incentive structures of particularly social media and just media in general make it seem, which is why it's so important, I think, to call out and create space for those conversations. I also think, too, going back to this idea of an answers-based, rather than an inquiry-based society, one of the things that has been really challenging, I think, with the response to COVID, is that it has followed a similar pattern to me of trying to get politicized isn't even exactly the right word, but to try to find its way into these firmly entrenched camps that are diametrically opposed to each other at the same time,

rather than understanding that we're dealing with this fundamentally new phenomenon that has massive second order implications that we can all have, you know, it's like we need a confidence interval on every tweet, right? Let people tweet whatever they want, but say, what's your confidence interval on all of these things? Which one of the, you know, yeah, it's been one of the hardest things, I think, to wrap my head around with this is that how, quickly it's tried to warm its way into the political discourse and this tribal discourse as well. Have you observed something similar where as people try to discuss COVID, it falls into similar patterns of debate that have nothing to do with COVID, right? It's just become the latest political football or social football or ideological football for entrenched battles that already existed.

You know, I'd be curious to get your take on that, Nathaniel, because partly the reason is I've stayed away from the conversation for the most part. What I will say is that what I've observed both in having had one guest on who I had on to talk about COVID, and unfortunately, we weren't able to make much progress, at least, you know, maybe he thought we made progress, but, you know, for me, it wasn't really constructive or in what I've seen from people like Mike Green, for example, who has taken a very different approach to this. He has a different view on this issue. I think at the very least he's skeptical about the effectiveness of some of these measures that are taken. And I share his views or I share his skepticism. And what I do see is it's very difficult to be a skeptic on this, right?

because the framing of this conversation in the public domain is that either you want to make money or you want to save lives. I've seen people in the Bitcoin community do this as well. This is the way that it's framed. And I think that framing is incorrect. And in many cases, I imagine it's disingenuous because what we're debating here is not anything clear cut. We don't know that all we need to do is stop economic activity for a month, you know, print, print money to purchase outstanding corporate loans and issue small business loans and then it also issue a $1,200 check every week or every month or whatever, that we just need to do that and then everything will be all right. That's not what we're being told at all. In fact, that's a whole other

conversation. I'm happy to have it because that is one of the big sort of conversations or questions. But I think, you know, to the extent that it's similar, again, bearing in mind that I really have, I've steered away, right? I do a lot to stay away from what conversations that I think are poisonous or stupid, you know, or mindless. But to the extent that it does remind me of the sort of the typical political correctness stuff or social justice stuff or left, right, damn Republican stuff, I think it's the same insofar as there's a lot of, there's a lot of of moral indignation, a lot of moralizing. A lot of people who are in the more at-risk demographic, older, you know, men or women who are also affluent and have jobs that don't require actually

going somewhere. They can work remotely. These people are in positions to, you know, moralize about what the right strategy is. And nowhere do I hear people. really talking in great detail and emphasis on the millions of people that are like in a really bad situation right now. And it's not really clear what they're going to do about it. I know lots of store owners. I know I'll give you one great example, a couple from France that I know that opened a coffee shop right next to my apartment in New York. They opened a bar a few years later down on the Lower East Side, like very, very high energy, good entrepreneurs. They have a daughter, their French immigrants, a family of three. What are they going to do? So what does this family do, right? And so anyway, that's just kind of one observation. No one's really talking about that. Everyone's focused on how do we stop the spread? And I just, I find that to be lacking. That's all. Well, it's interesting. So being in the Bitcoin community, I think that there's a much higher

tolerance for and even interest in skepticism, right, to a fault in many, many cases. So I think my perspective is probably a little bit warped on that. I will say this. And I want to actually maybe break apart response to the stimulus. You had a great tweet that I want to get into where you basically said we passed the political and economic event horizon this last month. I think that's a great discussion I want to have. But let's talk about this first part that you're talking about where there's been this idea of a diametrically opposed health outcome to an economic outcome. And that you're in one of these two camps. I actually think, so my concern, I watched this narrative happen the beginning of last week.

So, no, because there's two weeks ago now, so almost exactly two weeks ago. And this was when Trump started tweeting about the cure might be, can't be worse than the disease. And we had the, we'll come back before Easter. And that set off, that immediately put this in an extreme way into a left-right dialectic in American society, at least, where the left was for health and the right was for economics. And the problem with that and why I was so frustrated in that moment, is that that conversation is much too important, too scary, too ambiguous, and too full of hazard and danger to be just let into the realm of, you know, you vote this way so you look at this way or you vote that way, so you look at it that way, right? We can't have a conversation

about there's no way to bring this economy back online with a switch, right? And so you have one side who thinks you can hold out indefinitely. You have another side who is, acting like there's an on switch, which there isn't, even with the amount of time we've been offline at this point. And I felt very frustrated that we were losing weeks to the right conversation, which was, what does it look like? How do we deal with waived lockdowns again? What does it look like to actually design the testing facilities to have? Like, there are lots of very good questions that have absolutely nothing to do with even an assessment of how the administration had dealt with things, you know, before now. I know some of the fiercest critics.

of this administration are 100% right now willing to absolutely abstain from caring about that in the face of getting things done and being smart about it, right? And we lose that conversation as soon as we surrender it to the same political territory. Now, I will say that I feel a little bit as though it got better. It got better basically as soon as Trump said this is going to go on through April, right? As soon as we gave up the Easter thing, it took it a little bit out of that realm. Now, it's still there to some extent, right? You have the fringes who are trying to keep it politicized, but there is at least now an openness again, I think, to talking about how do we turn the lights back on. But I would say that for me, the number one most frustrating thing is that the

second that the shutdown started, we needed to start having a national conversation, including business and health officials and everyone else around the really difficult set of things and procedures we're going to have to put in place to make it work. Yeah. So a lot of thoughts, great points, many great points, Nathaniel. You know, one just immediate observation is that on the news today, they were reporting that numbers, the growth of new cases in New York. has been starting to slow, right?

I think this is going to be kind of the scary part, right? This is kind of like, I do this all the time. This is not necessarily the correct application. It's a bit of a stretch, but I just can't seem to help myself. Sometimes I just want to bring up Jose Konseco. And Jose Konseco has this famous quote where he said that the one thing that they don't tell you is that once you get to the top of the mountain, there's nothing there. And so what we've been doing here is we've been throwing.

the kitchen sink at everything, right? We've got to stop the spread. We've got to stomp the curve. That's actually Nick, Nick's profile, not stop the curve. Nick Carter, we got to, what's it called? Shorten the curve, flatten the curve. We have to flatten the curve. We've got to do all of this right now. Let's do it, do it, do it emergency. Okay, everyone's on board. Now we get the numbers they're dropping. Now what? Oh, shit. What are we going to do now? Let's say the numbers drop. Let's say the case numbers drop to zero. Now what? Do we lift the quarantine? What happens when we lift the quarantine? What evidence is there to suggest that when we lift the quarantine, there won't be a rise in the numbers again, right? No one said that that's not going to happen, right? I think the best explanation that I've heard for this policy has simply been that we need to prevent the hospital system from being overwhelmed until we get a vaccine. Okay. So what does that mean in terms of role, in terms of social distancing and people self-quarantining a little bit. What does that mean? What kind of economy are we going to have for the next, let's say, 18 months in the best case scenario,

or the next 12 months or whatever it is between when they start to develop vaccine to what we're going to get when they say 18 months? How is this all supposed to work? How is the economy supposed to work? Right. And I think that's a danger. The oh shit moment, the, the, the, the, crisis, right? Because people, I think a lot of people have just been expecting that this is all we got to do. We just kind of get through this. But what happens if we get to a point where people realize that this is not enough? And actually now there's more hardship to come or that they lift the quarantine and the numbers start going up. Is there going to be a panic? And we have an election that's supposed to happen in 2020. Are we going to have it? How is this all supposed to work?

Are we going to have crime waves in cities like New York where lots of people who, the majority of people who have, who work in the service sector or in positions where they need to be out in the world interacting with people are not going to have money and some of those people are going to go and try to rob people's houses? And how many people are going to be distressed emotionally and they're going to develop physical problems and get sick or die beyond what would have happened if you just let everyone get this virus? which is not what I'm saying that we should do. I don't know. What I've wanted to see is really robust arguments, and that's not what we've had. We've had one policy. Another sort of parallel that I draw is the Iraq War after the invasion. Once it was clear that the Bush administration and the coalition provisional authority had botched the occupation, what did we hear from Democrats? They started, and I'm not saying Democrats' Republic. I'm just saying it was Democrats because they were in the opposition.

We need to listen to the generals. The generals, we got to listen to the generals. What are the generals saying on the ground? It's the same way with the doctors. We've got to listen to the doctors. It's not the job of the doctors to dictate policy. If you ask a doctor, what do you need? He or she will say more masks, more gowns, more ventilators, more quarantines.

That's what they're going to tell you. If you ask a surgeon, what should I do, doctor, he'll say, operate. That's what these guys do, guys and gals, right? So, like, again, we're in full panic mode. We've just doubled down on this one strategy mindlessly, and no one is talking about the reality that we live in a world where we have to grow our economy. There is a future beyond the next few months. No one's talking about that. No one's explained how we're supposed to move through it.

And that's my concern. My concern is in the middle of an election year, they go to lift this quarantine, numbers start going up, and then people really start to panic. That's phase two. That's what I'm worried about. So a lot to unpack. One of the things that's been a recurring theme for this week shows is this idea of second order effects. A couple folks started last week categorizing or cataloging rather second order effects coming

out of this. And we're not just talking kind of the dimensions that you took in terms of social arrests and politics and business, but everything from what types of products are likely to be more in demand from years. And it started, so Monday's guest is a guy named Emerson Sparts who have known for a long time. He built, when he was 11,

he built MuggleNet.com, which became the biggest Harry Potter fan site and got into viral media. And he's really into mental models and second order effects are one of his favorite mental models. So he started doing this. He pulled in a friend.

They were like, there's no way we can think of all of them. They started open sourcing it. And it turned into this huge document that at any given time, hundreds of people are editing now. And these are all of the type of second order effects that there's no space for,

for exactly your point, that there's just nothing but fear. But the place that I want to take the conversation, I think, and one of the things that's been so frustrating to me is this idea, this recurring idea, and this is something that Ben Hunt talks about a lot, that when any elite class, and I don't use elites in the same way that, for example, a Bernie Sanders supporter might use it right here. I'm just saying, like, when anyone in a position of power goes for the strategy of denying something to buy themselves time rather than leveling with the public, it tends to go really poorly. And I think that we were experiencing a lot of that

with this case. Like, one, there's just a huge amount of denialism from leadership in power right up until the last possible moment, right? It took Tom Hanks getting in the NBA shutting down for us to get actual, you know, anything other than it's just the flu. So there's that whole set of issues. But I think even beyond that, this kind of incrementalism around the idea of a shutdown and what it's for and how long it's going to be and we keep extending it rather than just saying there was a moment and maybe this is putting too much stock in in the American people but you know there's a famous quote no one ever went broke betting against the American people or betting on this betting against stupidity of the American people I I you know maybe it's a I'm overly optimistic but

I also think that we tend to systematically underinvest in people's ability or willingness to try to think through complex situations 100% and if if we had had a a conversation, a national conversation where we said, look, we watched what just happened in China, like, you know, to the extent that we have any sort of reasonable data, and it probably seems to us that they didn't put people into quarantine lightly. And, you know, this is a pandemic, so it's likely to spread. Here's the real issue. We need to figure out how to contain the first wave so that we don't overwhelm the hospital system, because this now exists in the world. We will get a vaccine.

We will figure out treatment. We will do what we always do, which is innovate and figure our way out of it. But it's going to create chaos in the short term. And so we need to have an actual strategy for dealing with that. And it's about this. You know what I mean? And like this, even as I'm saying it, it sounds ridiculously over-optimistic, given the context that we live in.

But there's no reason that that should be the case. There's no reason that we weren't able to have that conversation. And the fact that we're now in April and there's not, you know, I'm literally on Twitter pulling from Germany's plan for what it looks like to reintegrate society so that people have some idea of what they might be looking forward to. There's just a, I mean, we've had a crisis of leadership. And, you know, obviously in a crisis of leadership, the top leaders tend to get implicated most. But I do believe it's been genuinely across the board, across domains, across dimensions here. Yeah.

I mean, you said a lot. I it's funny hearing you respond. I think I feel sympathy for all the people that listen to my long-winded questions. I don't know how they even begin to answer it. I mean, I totally. You know, I mean, I generally agree with what you said. I don't know if there's a specific question or. No, no, no.

Let's let's just, I'm sure, like I said, I wanted this to be more conversational, right? This is a, this is a trope that I've been finding that's important, which Actually, like, actually, like, going back to the very first thing that you said, falling in love with learning, one of the things that I think is so amazing about the moment right now is that while on the one hand, we have this, we have this, it's so difficult to figure out what is true, right? To actually go suss that out and get real information. At the same time, information is not only plentiful, people are willing to take time and share their perspective on it. So if you're willing to do the work, right? you can get this incredibly interesting experience and perspective. So, you know, my goal with having this conversation was to drive to any one point or another is more just to kind of riff, especially as another person who, you know, you get the benefit of going out and seeking people that you find as important sources of information and truth.

Yeah, look, I mean, I guess so one is something that I told you before, which is that, And one of the challenges, the word of the, the reason, one of the reasons that I think it's difficult to write the way I used to write and at the same time do this show is because doing hidden forces or doing it well requires that I am constantly aware of how little I know, right? And each of my episodes are opportunities for me to learn from other people. And doing the show has helped me get better at that. And, and so, So it's tough because I'm not in any way suggesting that I know more about epidemiology or the spread of viral disease than the CDC or Anthony Fauci, right? But I also come from a family of doctors. My father's a doctor. My uncle's a doctor. My cousin's a doctor. My aunt's a doctor.

So I know that doctors aren't, you know, ordained priests. You know, they don't know everything. They're not profits, and lots of them aren't particularly intelligent. And that's just the truth, you know? So just because anyone in authority is saying something doesn't mean I believe it. But I'm also not a knee-jerk, you know, disbeliever or, I don't know what conspiracy theories or whatever. It's a, the difficulty is the fact that, again, to this point about the way we frame conversations and how people have, lined up ideologically after this, you know, pandemic became a concern of the American people. Camps

divided based on whether you were, you thought Trump was doing a good job or a bad job. And the, the facts came afterwards. It's difficult to point out how little is known in our society. And I think when you do that, when you ask questions, I've got in trouble on Twitter doing this, by the way. And I'm not being cute when I do it. When I ask questions, I genuinely am curious, though I'll admit sometimes I'm dealing with people that I think are kind of trollish or malintended, but I genuinely ask questions because I'm curious. And I think that people have a very difficult time with that. So if you question the CDC or if you question the guidelines that I'd be putting up, or basically what we've, we've been talking about today. Like, what is the plan here? You know, people will think that you have

some kind of an agenda or that you're a Trump supporter, perhaps. I haven't had that personal experience with this, but I've had it with other cases with, you know, stuff that people think is like a Trump phenomenon. So I don't know, but I, look, man, I think it's serious, okay? Because how are we supposed to run a liberal, relatively liberal, Republican democracy or Democratic Republic with a relatively capitalistic economy? How is any of that supposed to function if the economy isn't working and the government is printing money to purchase outstanding assets, not just government liabilities, but also corporate bonds and facilitate loans through the banking system by forgiving those loans. How is all that supposed to work? How long can we do that before our

system collapses? I think you mentioned some tweet that I put out probably when I was in a very dark place. But like how long, you know, have we crossed the event horizon of that, right? We've We've crossed a series of rubicons in the past, whether it was the 2001 September 11 attacks and the invasion of Iraq, which I think was the most catastrophic error of American foreign policy in my lifetime. And then we had 2008. So 2001, the government told us that we need to allow the government to just take care of this. Don't worry, you'll be totally fine.

Go out and shop. That was actually what Bush said in 2001. and go out and shop, spend, support the economy. Greenspan dropped interest rates. We have a standing professional army. We've got bunker busting missiles. We have laser-guided, satellite-guided GPS missiles. Like, we are king.

We can do anything. We are boss. You don't worry American people. We have a professional army. They'll go and take care of this. Let us go invade Iraq. We're going to go kill the terrorists where they are so they don't come and kill us where we are. Let us do this so we can save your life.

lives, right? That was what we were promised after 9-11. After 2008, what were we told? The economy collapsed. Let's not worry about how all that happened exactly. Like, you know, people, yeah, Wall Street got drunk. That's what Bush said. Of course, we know that's bullshit. And so what do you got to do? Just give us trillions of dollars. Give us trillions of dollars between new treasury security issuances, liquidity facilities, purchasing back corporate stock, purchasing back MBS, just let us, just do this and we'll save the economy from collapsing, i.e. give us money or we will blow up this economy. All right. So that was the deal in 2008, right? Give us money or your economy collapses. Now it's 2020. And we have a confluence of those two impacts, right? We've got a political dynamic

or sort of existential threat of, quote, existential. This isn't an existential threat. What is the maximum impact of this virus, right? What are the worst numbers you've seen? I think I've seen 3 million people. Is that the worst number you've seen? Yeah, something on that order. That's not an insignificant number.

1% of the population, Dunbar's number, you're going to know someone personally who dies from this virus, if that happens. That is no small thing. But that is not a society ending or an existential threat to society. So we have to like put perspective on that, right? That's the first thing. And then the second thing is this is an economic calamity, a self-inflicted economic calamity, right, to some extent.

And so what is the government saying? Just huddle in place, stay home, shelter in place so that you can, so that to save your lives, right? This is again like the thing. But what is the plan after that? And so that's my concern. We're only in phase one. We haven't been told what phase two is.

We don't know what that is yet, right? Everyone's just been proceeding as if, like, let's just huddle in place and we'll be fine. No, that's not what's going to happen. They're going to lift the quarantine, and then we're going to figure out phase two. And that's what I'm concerned about because Joe Biden, and this is something I've talked about, as someone, I'm not a doctor. I'm not diagnosed in Joe Biden, but he sure looks like he's in cognitive decline. His health looks like it's deteriorating.

I think he's got dementia or something like it. How is he supposed to run against Donald Trump in the November elections? How is he supposed to be president of the United States? I mean, all of this is super scary, and I just don't know how it's all going to unfold. And that's my concern. And when I had Yanir Baum on the show, who was my only COVID-19 guest, I tried to raise some of these concerns, but he really wasn't interested in talking about them. And I feel like this is a common thing. You can't talk about this.

Just by the way, like you can't talk about Biden having dementia or seeming to have dementia, right? No one wants to talk about it. It's just like, shh, shh, let's not talk about it. We'll get by. We'll get by. Just ignore it. Just ignore it. You know, Daddy just had a long day at work. I'm now stealing from Jim Grant. He had some phrase like that, but it wasn't about Joe Biden. It was, I forget. It was something. So, Daddy, Daddy had a long day. It was a long night at drinking. Anyway, whatever. So that's, that's, that's, I. I hope something illuminating came out of that. Yeah, I think it's interesting. So I listened to the January episode,

and I think what my read of that is very interesting, actually, your episodes are usually so free-flowing and easy and productive that is kind of a jarring one. I think that you might have just caught him in a moment where he literally was, I mean, this is the benefit of the doubt version of this, where he was so frustrated at the lack of response, that that's all that was there, right? That's like, you know, but whatever.

That's neither here nor there. Yeah, no, I mean, it's possible. Though your reaction or the reaction of many other people, this sort of, this is an odd interview, you know, or kind of jarring was very common. I got a flood of emails from listeners really commenting on that. It was unlike other episodes for exactly that reason, you know? It did feel a little, it felt antagonistic.

And like it wasn't okay. I think that the biggest critique that I would have is that it felt not okay to not know enough yet about this. And I think that the problem with that is that it, you know, there's a weird reference. So you try to make a weird reference. I'll have one in response. There's an episode of the West Wing where Sam has to teach CJ about the census and what the census is and why they do it. And he's like, well, what do you need to know? And she's like, pretty much what it is, everything about it.

And he has this line that I never get exactly right, but it's more like, let's focus on celebrating the fact that you made it to the party rather than how late you got here. And he's very pleasant about it. And it's the kind of funny little moment. But I feel like there has to be space for that. You can't force everyone. Like, I live on Twitter, right? I mean, I got my start in some ways in crypto doing a weekly thread of threads of all of the Twitter threads.

Like, I've spent an inordinate amount of time here. My job is to help. I've seen those threads. Yeah, absolutely. Yeah, yeah. You put a lot of good stuff together on Twitter. Yeah. My job is literally to pay attention to narratives.

It can't be everyone else's job. That'd be ludicrous, right? Like, it's comparative advantage. People have to be able to do different things. And because of that, people have to be able to ask questions and not be shut down. So this is, you know, whatever, where I moved past the commentary on that particular episode, but I do think it's part of this larger point. But let's come back to this stimulus, right?

Because I want to talk a little bit about, I am interested. in playing out some of these second-order effects. And it is jarring how quickly the Overton window shifted on some things so much so that it feels almost as though the Overton window had already shifted on bailouts. Like, did you think, like I said, you wrote, we passed the political and economic event horizon this last month. You could argue we already passed it after the Iraq invasion or after 2008. but if either those two events didn't set off the singularity, the current shutdown and open-ended state funding of the economy have. That open-ended state funding of the economy is the point that I want to ask about.

Do you think that in the wake of 2008, corporations just assumed that in some cataclysmic event like this that the state would be there? Or do you think that they just hadn't thought about it at all? But when it happened, that was the only template they had. So they just settled right into it with ease. That's such a great question, Nathaniel. By the way, on this show, it is okay to say, I don't know, and then talk. Well, I most certainly don't know. Most certainly I don't know. But I think it's so interesting because we have like there's a whole school of game theory that's developed to whether

you access it directly or whether you're just kind of indirectly relying on some of the core assumptions of game theory. Companies, individuals, they try and make decisions. decisions without knowing what other people are going to do, what other actors are going to do, right? But I do think that since the 2008 crisis, we got a lot of data points to suggest that at the very least we should increase the likelihood, the probability that the government would do stuff, more stuff to help aid in an economic contraction. I also, something, a point that I made in, I think it was with Hari Krishna in a recent episode, it might have been in the overtime, I made the point that because we have moved to a place

where so much of the society is directly invested in the stock market, and because of the fact that we have relied on debt financing to continue this broken model of centralizing ownership, right? I mean, the disproportionate distribution of what? wealth to a smaller and smaller and smaller section of society is possible only because of debt, debt financing, right? And debt financing is possible at the margins only by lowering interest rates. And so we've lowered interest rates. And what has that also done? It's made it so that people can no longer save. Savers have become speculars. They've been forced out onto the yield curve, right? And so they're forced to go out and speculate in the stock market. And as a result,

Now, the stock market, to Ben points point, right, Ben talks about this, that the stock market is a political utility. The stock market is now a political liability, right? It isn't just a financial liability. It's a political liability because millions of Americans have their life savings invested in the stock market. If the stock market collapsed by 50% or 80%, God knows where the market would be if the Fed stepped away. Dude, I mean, that's not even thinkable, right? because we're long past that point. But God forbid the stock market dropped 50%. What's going to happen to these people? You know, their finances are already significantly impaired from the 2008 crisis.

So I don't know. Obviously, I think that at the very least, they thought it was more likely that the government would do something, knowing you exactly what the government would do. But I think that if we think about this in terms of centralization of power, corporations, individuals who are, are in positions of power, they work more closely. There are fewer of them. They have more wealth and they work more closely with government. And so I think what we have been seeing is a trend towards some type of public, private partnership across the economy. We saw this during the Gilded Age, during the period after the fall of the crash of 1929. And a lot of what happened And afterwards, the progressive area that came about was not something, it was a compromise,

but it also benefited in some ways, just given the economic realities, many of the oligarchs, right, who put a lot of their money in trusts and who got special treatment during that transition because they understood that, you know, there was only, there was no more raping could be done, as much money was taken as possible. And they had to set up a system that could survive politically because at this point, it was a political liability. So I think, yeah, it was a great question. Ultimately, I don't know, but I think that they have been betting on more government intervention, but they probably also made some contingency plans. But clearly not too many because they were using their money

to buy back their own stock, right? So when they could have been either not taking out that debt to do that or not using those cash reserves and having them for a rainy day. That's what's something. something else that we've seen here, right? Across the economy, savings are, I think, at the lowest point they've ever been, and people can't weather a storm. So they need the government to step in and start issuing checks. To your point about how many people are invested in the stock market and how it's become a political utility, not just, I mean, it's very clearly, as soon as this administration got in power, that was the scoreboard that they wanted to point to most, right? It's very, very clear.

And that's only just making more public, something that I think every other president has probably felt, too. But at the same time, it's more difficult to unwind in some way because you're not just dealing with what is the power dynamic and relationship between the private sector and government. I think there's a dangerous precedent that can get said of, you know, once one industry deserves a bailout, why doesn't every industry deserve a bailout? And then at what point does, do you actually let things fail? and why would you even let things fail if you want to retain power? There's a whole, you can wrap your head around that whole, Oroboros, if you want. But the really scary thing I think in this context is that there is a third leg to this stool in American society today, which is boomers, which is retirees, right? Who have been sold this story of, you know, the market's going to keep spitting out.

Like I know it in the context of my parents who retired and who, you know, retired on exactly enough to live. they made a bunch of like very clear decisions. And if the story that has been sold for the last 20, 30 years doesn't follow through, right? Like, it's going to be huge, huge societal consequences. So all of a sudden, we're in this scenario where everyone, it's bad for everyone to unwind this thing which feels like it can't possibly go on forever. Right. Everyone's invested in the Ponzi scheme, Nathaniel.

You know, so Chimoth was on Pomp's podcast this weekend. It was a really interesting conversation. And he was talking about how we unwind from this, what we have to do. And a lot of what he was talking about are themes that have been echoed by your guest, Peter Zayan. You know, one thing I think that a lot of people have felt through this crisis is, hey, maybe the idea of having, you know, localized supply chains is going to make sense, right? When there's these fundamental things that we need. And that's kind of across the political spectrum, more people feeling with that. Well, in that context, Chamatha is talking a lot about redesigning the economy for resilience

rather than efficiency, right? That we've kind of maxed out efficiency at the cost, at the expense of resilience. But, you know, how do you, how does one even begin to redesign for resilience over efficiency when this is the scenario that we're in right now? Yeah, that's a very interesting point, right? because there are tradeoffs between resiliency and efficiency, and we have been moving into a world of globalization of just-in-time manufacturing, of a world that really indulged to the extreme of Ricardian comparative advantage, right? And it's something that, an example I've often

used in other episodes has been the common agricultural policy in Europe, CAP, because as a Greek citizen, I'm familiar very well with what the implications of CAP were for Greek agriculture, right? Greek farmers were subsidized not to produce. And of course, interestingly enough to kind of to this point about Zahan, who had been on the program, and he identifies certain countries that are well positioned to kind of do exactly what you're describing, which is built for resiliency, countries like one of them is France. And France benefited from CAP insofar as they subsidized their domestic farming industry. because they had the experience of World War II and the famines of World War II, and they thought it was strategically important to be able to have a robust agricultural industry within the country's borders, which I think, I guess, the natural question there is why didn't other countries in Europe feel the same way? But the French have had strong political influence in the European Union. So anyway, I mean, I agree. I think that,

That's what we are seeing. We're seeing a rerouting of global supply chains. We're seeing just naturally countries trying to source products and goods and components closer to home, either geographically or fewer steps in the supply chain process. But I don't know how you can sort of strategically incentivize for that. You'd probably have to have a very competent government and legislative process. I don't know that we have that, but I do also just think that it's going to be happening naturally. And I think COVID-19, I just recorded an episode yesterday

that'll be out Thursday with Tom Derry, who is the CEO of ISM, which puts out the PMI number. And we discussed this. We discussed all of this, all the different impacts and risk mitigation strategies for companies and what companies are doing. But yeah, I mean, I think that's right. I don't think the measure of economic health or success should be growth.

But this is another problem. Now we're getting into another issue, which is that we measure economic success by growth, in part because we have a monetary system that is built on credit expansion, right? And if we don't have economic growth, the model goes into reverse. You know, our economy can't work without expansion of growth. So, you know, this is, again, to point to an episode I did a long time ago, one of my favorite episodes was episode 19 with Jeffrey West, who was the founder of the high energy physics group at Los Alamos. And it was very much about this, comparing socioeconomic to physical systems, you know, scale in a biological or physical system like a city or an organization. How does that compare to the socioeconomic scalings of economies?

And when I say cities, by the way, I mean city infrastructure, whereas, as opposed to a city's economy. And those two things, they butt heads because socioeconomic scaling happens quadratically, whereas exponentially, whereas the scaling in physical systems is a diminishing returns to scale. Right. There are diminishing advantages to getting larger and larger. And anyway, so that's an interesting take. I just thought I'd throw that out there. And the rabbit holes are endless in this, right? I guess I want to, you know, I've talked to your ear off for about an hour now. I want to ask you about one of the things we were sharing some ideas about things we're not discussing. And one that you sent back is, I think, very different than a lot of the other ones.

You wrote, we live in a death-denying society. I think this is really interesting. I'd love you to share a little bit about that because I think maybe the context is probably a lot larger than COVID here. But maybe let's end on this big, this big grandiose note. Yeah. Well, that's something that I have some experience with personally because of having to go through that, really confronting death head on because of my experience with my brain tumor, which was formative. You know, I've talked about it. I talk about it here or there a lot,

but I don't really talk about it too much just because I don't, I guess I don't like about talking about it in too much depth anymore. Not that I can't, but I don't know, there's lots of reasons for it. But when I was working on my book, after I had written that article for Quartz, I read a lot of stuff. I read Edward, I read Ernest B. Deiniel of Death. I read Yalom's staring at the sun. I think it was staring at the sun or staring into the sun. And Atul Gawande and a lot of different writers who dealt with this issue of death, right? And kind of staring it in the face. And going through radiation in New York City, in a very kind of literal sense, all the people that are dying are pushed to the edges of the

city. Now, the hospital networks aren't at the edges of Manhattan by the rivers because they literally want to push people to the side. But real estate is cheaper there. I guess there are lots of reasons. But regardless, it does have, it's palatable. You feel it when you're there. You know, the rest of the city, life, everything, energy is happening in the middle of the island. And all the people who are sick and slow and can't move or can't be efficient aren't economically efficient agents, are pushed off to the side. And we have become, I think, in a much more cosmetically oriented society in my lifetime. I see more and more people with all sorts of cosmetic procedures, whether it's plastic surgery or Botox, filters on Instagram, you know, people trying to look younger.

And you've got this sick cult of people that want to live forever in Silicon Valley that have really bought into this bullshit, right? The Kurtzwillian ideas of, uploading consciousness to the cloud, you know, taking an insane number of supplements until you can kind of leapfrog to the next medical innovation, which, by the way, is more plausible to me. The idea that you might be able to forestall at great expense cell entropy, to me, is more plausible than this absurd idea about uploading your consciousness to the cloud, for which there is absolutely no foundational evidence that's ever possible. We don't even know what consciousness and this is. So I think there's been an embrace of this, of an idea of what we can do, what we can

accomplish with our technologies and our tools. And it's a, it's a common theme, this fountain of youth dream that repeats over and over again in mythology and in literature. And I think it's a, it's a mirage. And I think that the fact that we don't properly reckon with death, that we don't have ceremonies or rituals on a public level to really deal with it. The fact that I think more than ever before, old people have less value than ever before, I think nursing homes or old people home or retirement homes are really a phenomenon of the baby boomers' parents' generation. But, you know, I think that's only accelerated, not necessarily with retirement homes, but in terms of how little value you have once you pass a certain age. So I think that's a big part of this,

because I don't think people know how to reckon with dying. And it's scary. But we all die, you know, and I don't think that prolonging death or avoiding morbidity, the prospect of avoiding death or avoiding morbidity for some period of time is enough to justify the types of tradeoffs that I think this society is prepared to commit to. And that's where I get worried about the Rubicon, so to speak. I think that's what we saw in 9-11. People freaked out, and they were just willing to do whatever it took, and we got what we got as a result of that. And I think now, after all these years have passed, it's clear that most of that was a mistake. invasion of Iraq was a mistake. The Patriot Act was largely disastrous piece of legislation. The extrajudicial

killings are something that just continues to go on. And it went on, it accelerated under Obama, and it's probably accelerated under Trump. And, you know, I don't, I'm not convinced that any of those things are fair tradeoffs. But anyway, that's, I probably, I, I talk, I talk endlessly in the Daniel. I need to be stopped. Listen, I think it's interesting because it does get to the heart of this. If we're going to, I do think that this is a moment where we are going to have to reckon with some huge forces, right? And I don't know what part of society or enterprise will be willing to, but I want us to have the right types of conversations. even the hard ones, the scary ones. And I think, you know, we didn't even get into the,

the autocracy argument or our second-order effect of this, right? Things we're seeing, like, in Hungary. But I think that this idea that there are, there are trade-offs that we allow in moments of fear, and part of that fear is rooted in an inability to have conversations on a major level about death is a really interesting point that I just wanted to have you share a little bit. No, and I would say that, well, first of all, to this point about second order effects, a lot of other things can happen in the interim. There can be hurricane season is coming up in like August or September, right? What if we've got a hurricane Sandy? How does that impact this in the current environment we're in?

What if Russia decides to move into an Eastern European neighbor? What if China moves troops into Hong Kong? there's some type of international provocation? What if there's a cyber attack? All of these other things can happen, and we're all in a very weak place right now. That's another example of something that isn't properly considered when we do what we do. But I guess, yeah, I mean, I, I don't know, that's, it worries me. It worries me. Our society worries me a lot. in these moments, is there anything? This has been ending conversations recently.

I think, you know, clear where there's lots of pessimism or nervousness or worry or concern. Are there any things you've seen in these moments that are bringing you optimism? Yeah. In my personal life. And I think in the personal lives of lots of people, many of my friends have shared anecdotal stories like this where this, at first, this was not welcomed, but the experience of spending so much time with a very close circle of people. In my case, I've been with my girlfriend, my sister, her boyfriend, my parents. We've kind of stayed together in the same location and we have dinners, you know,

pretty much together every night. I mean, I knock on wood because I don't, I don't like to say this out loud because I feel very fortunate that we've been able to have this experience. But it's been on a personal level, despite the hardship that many people are facing as a result of these shutdowns and these quarantines, it has been a wonderful source of togetherness from my family. And a lot of friends of mine have shared that experience. Also, you know, I got a friend out here where I am who has a gym and he's had to shut it down. But as a result of shutting it down, he's innovated. And he's created sort of online classes, online communities, and it's worked, and people have taken to it. And I think that, you know, there's a resiliency in terms of community. So that makes me feel optimistic.

That's, I think that's primarily, primarily it probably. And I guess doing the podcast, I haven't, as you know, I've, I've never taken sponsorship money for the show. That's something that I've stuck to up until now. It's something I really wanted because I believe that that was the best way to build a really strong community. And it's worked really well, especially during this time. And, like, you know, people continue to subscribe to the Patreon. And it, that has, that has, like, made me feel a lot better about some of the media issues that I worry about. You know, like, I think Matt Taibi recently did the same thing. Exactly, exactly. So, you know, I think that's promising because we have we have a lot of issues with our broken media model. And many of those issues result from the fact that people need to earn a living through the ad model. And there are many ways in which that creates perversions for what people cover. And not because someone is telling them what to say, but just just the reality when your check comes from a corporation that sells ads on your platform in one way,

or another, then it influences what you write about or what you say, you know? So I think that's been encouraging too. I mean, it sounds like the common theme here is the perhaps rediscovery of these small networks and small circles and kind of the innovation and resilience within communities, which, you know, I think I've been finding this as well. I mean, you know, my family kind of designed their life for almost what people are experiencing now, right? We live in the Hudson Valley, a couple hours outside of New York City. My brother-in-law writes and also helps with stuff around our house and helps with child care for my daughter. His fiancé is now up.

She's working from home from New York City. And we've had the same experience of having this. Our quarantine is incredibly strong. And we've really enjoyed that. And I think, you know, I observed on Twitter a couple weeks ago that the first few days of people in New York, all of their tweets were just, you know, holy crap, this is so hard. And especially those with kids, like, this is insane and difficult and all this sort of stuff, which is true, right? They weren't wrong.

But then within the next couple days, it was turned almost entirely to people sharing these moments of joy that they never would have had otherwise. And then in the next couple days, I started getting messages about where to buy real estate in the Hudson Valley. So who knows what sort of good come out of this, right? Totally, totally. But listen, yeah. No, DeVis. I appreciate. I say one quick thing, too.

Also, conservation. I think that's a big thing that comes out of this. I mean, it's happened in our home, right? We did the best we could to prepare for this ahead of time, but there were unexpected things that we didn't realize how much we used and we've had to be, had to conserve. And I think that's just generally made us rethink about just how much waste, how much we waste as a family and how much we wasted as a society. I think that's a really positive thing.

And for the people that are concerned about carbon emissions, well, There's no international air flight. So there's that. Yeah. There's that. Well, listen, DeBi, I really appreciate you taking some time today. I appreciate all you do with Hidden Forces. I know it's, like I said, it's my favorite podcast. It's the one I look forward to most each week. So thank you for hanging out and just kind of riffing on things. I think right now everyone is just trying to make sense of it the best they can. And I think more perspectives are better than less right now. No, man, congratulations. You're a great host. This was really pleasant. I don't do these. very often. And you've had a lot of great guests on your program. It looks like you've had a number of guests that have been on Hidden Forces as well. And it clearly sounds like something you enjoy. So, you know, congrats. I'm really happy that you're doing it. Thank you, sir. All right. Well, stay safe and we'll talk to you soon. Okay. All right. Thank you, Nathan. You'll have a good one.

By way of wrapping up, I want to bring it back to the Bitcoin and crypto community and world for just a minute. One of the things that's so nice about this space that's so refreshing is that sometimes to a fault, there are really no conversations or positions that are off limits. Now, there's certain positions, there's certain takes, there's certain things that you can think or tweet about or whatever that will firmly pin you in one camp, one tribe, or another. But by and large, I think that this community has a bigger open space for people's opinions than most do. I think that's a good thing. I think that's a thing. I think that's a healthy thing. I think that's a unique thing, an all too unique thing in a world where people just find their way to the media that seems most like them and don't really kind of

challenge their views. So hopefully this space is one of those that you're going to hear from a lot of different types of people, including people you don't always agree with. Hopefully sometimes you don't even agree with me. But what I can promise is that this will remain an open space to ask hard questions and have difficult conversations and just try to be open to and as Dimitri said, saying, I don't know, throwing up our hands and going to figure it out. I think that's an important thing to do in uncharted waters like we're in now and in unknown times. Thanks as always, guys, for listening. I appreciate it. Be safe and take care of each other. Peace.

Welcome back to The Breakdown. An everyday analysis breaking down the most important stories in Bitcoin, crypto, and beyond, with your host, NLW. The Breakdown is distributed by CoinDesk. Welcome back to The Breakdown. It is Thursday, April 9th, and boy, oh boy, did we wake up to it today. Within about a half an hour of each other, two major announcements happened. First, that the jobless claims were, again, at 6.6 million bringing the total number of Americans who have filed these claims to something like 16.5 million over the last three weeks, which is 10% of the working population. We also got announcement of a $2.3 trillion stimulus from the Fed, which includes. not just more money, but new mandates to buy things like junk bonds that were not previously on the table before. So crazy things going on in the markets, as has been the case for a month. And today, to help us get through what they all mean, I have on Pomp himself, Anthony Pompliano, the host of the Pomp podcast, formerly off the chain, author of the newsletter of the same name.

and I wanted to have Pomp on for a couple of reasons. I think that right now, two of the biggest crises that we're facing are crises of media and trust and information and crises of economics and how we redesign the economy. Pomp's life kind of sits at the intersection of those two things based on the platform that he's built for himself in independent media and also for his work investing and allocating capital in the crypto markets. What's more, one of the things that is really cool about forcing yourself to do a huge amount of content like Pomp does is that it forces you to be learning constantly. And so I wanted to flip the switch for Pomp and allow him to be the one being interviewed to share just raw and filtered his ideas, not be just trying to get out ideas from his guests. We talk about a huge range of things.

I mean, obviously, as you would expect, we talk about the stimulus. We talk about the crisis and trust in media and what that means. We talk a lot about what it looks like to rebuild the resilience economy, which I think is going to be one of the major themes for our country and certainly for this podcast for the coming year. We talk about for those of you who are interested in the institutional take on Bitcoin, what actually happened with the Bitcoin sell-off and what it means for the Bitcoin narrative.

So a huge array of topics. It's a great conversation. I think you'll really like it. as always, when we do these long interviews, they're edited very lightly. So with that caveat, let's dive in. All right. We are here with Anthony Pompliano, Pomp, the man who needs no introduction. Thanks for hanging out. Absolutely. Thanks for having me. So right as we were about to record this, the Fed announced $2.3 trillion in new stimulus. It happened to do so almost exactly at the same time as the Jobless Claims report came out,

saying another 6.6 million Americans that filed claims. What do you make of this? I mean, at this point, is anything shocking to you? I mean, there's two specific parts of this, right? One is there's no coincidence that they announced this right as the jobless claims hit. 6.6 million jobless claims two weeks in a row. My guess is actually that those jobless claims are not indicative of the actual reality. One, because you obviously don't count, you know, gig workers, freelancers, self-employed, et cetera. Two, we know that the systems are log jammed and people are having trouble filing the claims. And what I'm starting to think is 6.6 million unemployed claims in a week.

That may actually be the upper limit of the capacity of the systems to process. Yeah, right? We've actually hit this, that threshold of our ability to track it. Exactly. So you basically just get 6.6. And as long as it's more than 6.6, we're going to keep seeing 6.6 printed week after week. I mean, two data points could be a coincidence or that could be what's happening. So I have to keep watching it.

But I think that's one takeaway from this morning. And then two is the Fed's doing exactly what they're supposed to do or what they're kind of backed into a corner to do, which is they need to instill confidence in the market. They need to look like they have unlimited money, which they're trying their best. And they've got to try to stabilize markets and prevent job loss. But what I continue to say over and over and over again is this is not a problem where you can print your way out of it. And I don't think that they've realized that yet. What actually ends up happening is they're just throwing money in a black hole and they're making the short term and in the

long term, they're making the problem worse. And the reason is the economy will not recover and we will not get stability in prices until people go back to work. And so the solution here is get Americans back to work. It's not how do we print as much money as possible. And so I think that they have to do that as the short-term Band-Aid, but I just don't think that that's a viable solution because no matter how much money they print, the situation gets worse and worse every day as people are sitting at home. I mean, I agree completely. It's been extraordinarily frustrating to not, like, the second we started to go into lockdowns, our next conversation needed to be, all right, what does it look like to bring this economy back online? Because I think there's a misperception that it's just like a

flip of a switch, right? Everyone goes back to work and pretends it didn't happen, but that can't possibly be the case in the context of there are real economic implications for every single day that this goes on. And so dealing with those, figuring out how we're going to live with this, I guess there's another magical thinking around a vaccine that somehow is just going to show up, go through human trials fast enough, or some other, you know, some existing thing that works. And it's just, again, it's kind of magical thinking. There's one of the thing real quick on this, right? And this is a somewhat controversial opinion, but we have to go back to the. the base of all of this, which is a virus, right? And the virus, regardless of what anyone says, the virus is not as bad as we originally thought. And I've been saying it over and over and over

again that the reason why the virus is not as bad as we thought is because we've been analyzing bad data. And so what I think is going to end up happening here, when it's all said and done, this is going to be literally months, if not years away. We're going to look back at this and we're going to say that it has the similar death rate as the traditional flu. And the reason why I say that is not because I don't think the virus is bad. I actually think that the virus is incredibly bad in certain demographics of people, old people, sick people, right, people with preexisting conditions, etc. We know that it kills those people at a higher rate. But when you actually start to test an entire population, what you find is in every country in the world, those numbers are coming down. And they're

coming down drastically to the point where some European countries are even reporting that the death rate is lower than what you see with the traditional flu. And so what I think has happened here is we're using data that we know is bad, right? At one point, I think last Saturday. So this is a week old data at this point. But last Saturday, the United States had only tested about 850,000 people out of 330 million. So all of our decisions in the United States were based off of testing less than 0.3 of the population, and the 0.3% of the population that gets tested naturally has a selection bias where people who feel sick go and get tested. And so when you start to understand that there's bad data and we're analyzing bad data, which you end up saying is I actually don't know

how bad it is, right? I have opinions, but I don't know. And so we're making decisions on bad data. And if you analyze bad data, it leads to bad decision making. That's just what ends up happening. And so we've decided to be overly cautious, which I actually think is the right decision. decision and let's go ahead and do the social distancing. Let's do the shelters in place. Let's do all of that. But at some point, it becomes, is the cure worse than the actual virus itself? And in that situation, what we've got to find is not a black and white solution. It's not let's shut down the health care system by overwhelming it with cases. And so let's shut down the economy, right? There's two things. The health crisis and economic crisis. What we need is we actually need a solution in the gray, right?

we need to be able to combat the virus at the same time, make sure that the economy isn't ground to a halt. And that's where kind of the holding grail, and we don't have that answer yet. And I think that's where people should be focusing on finding the solutions, not just on, you know, one side or the other of that equation. Couldn't agree more. I think that all of the time that we debate health outcomes versus economic outcomes is though there's some kind of mutually exclusive and binary thing, is time lost figuring out

exactly what you said, which is a very complex, probably set of protocols. calls, procedures, testing, phased economic redeployment. There's going to be a very complicated solution, but we're wasting time, not talking about that. So one of the things that I really like that you wrote about this is this idea of an economic circle of life, the idea that an economic circle of life had been broken in this. Can you explain that idea just a little bit? Yeah, so the economic circle of life is basically very similar like velocity of money, right?

So if you think of a manufacturer, actually manufactures hard goods, right, or kind of supplies, that then gets set to a supplier. The supplier and manufacturer, they create the goods. They send it to a business. The business sells it to customers. Those customers then go and pay for things. But that business then pays rent to a landlord. That landlord then has money that they owe for their mortgage to the bank, right?

The bank then finances the suppliers and the manufacturers, et cetera. So you almost get kind of this circular nature of the flow of capital and an economy. And so when I talk about it being broken, what the government essentially did is they walked in and they literally said to a number of types of businesses, you cannot operate. You have to shut down. You have to go home. And so what you do is you break that. And it has kind of an upstream and a downstream impact.

The upstream impact is almost like a dam in a river, right? You literally have stuffed the river. And so you get all this water that backs up upstream. And what that means is now all of a sudden the supplier is sitting there saying, wait a second, I don't have customers to send the supplies to anymore. So I'm left holding inventory that I was going to sell in the next couple of weeks, but I can no longer sell that. So food for a restaurant, for example.

Then what they do is they turn around and they say to the manufacturer. So in the food industry, it would be like the farmers. They say, I can't buy anything from you because I've no one to sell it to. And so you get this kind of chain reaction back upstream. where everyone gets hurt simply by shutting down a restaurant or another type of business. The downstream impact is now all of a sudden that business says, should I pay my rent? We see Staples and a couple of other companies saying, we're not going to pay the rent. And so what that does is now it puts a landlord in a position where they go to the bank and they say,

look, my tenants aren't paying my rent. I can't pay you the mortgage. And if everyone does that, all of a sudden you start to get solvency questions throughout that food chain. And so what I think ends up happening here is this is obviously unprecedented. where you have government mandated shutdowns, et cetera, and it all goes back to the solution is not, how do we print a bunch of money and just hand it to people to help them kind of get a band-aid solution? Instead, it's we have to come up with a solution on how do we get workers back to work, but do it in a safe and orderly way.

And so the thing that I think is missing the most out of all of this is there's a lot of mandating going on. There's a lot of we tell you what to do. And I don't think that that's the best way to handle crisis, right? In times of crisis, you need leaders who can inspire people to do things, right? Because when you inspire people to do things, they'll actually go above and beyond what you expected them to do. And to me, the best way to do this is to actually take the approach of we are at war with ourselves and from an economic standpoint and we need people to help us get out of this.

And if you kind of issue a call like that to a country that has entrepreneurship as its DNA, like the United States, I think you'll be surprised by the response, but instead what we're doing is we're basically just mandating it. Everyone go home and just sit there and it's going to be weeks, if not months until we actually come back and we're going to print as much money as we can, hand it to people and hope that we gave you enough money to survive. I just don't think that that's a good solution. Yeah. Well, it's, I mean, it's a never-ending black hole. I mean, what you described with this economic circle of life is a cascading set of issues, which takes a health crisis and turns it into an everything crisis across all dimensions, right? It's also

interesting going back to your point about mandating versus inspiring, right? There is already starting to be interesting evidence that shows that to the extent that we're starting to flatten the curve, and there's still questions around that, but to the extent that we are, it's interesting to look at what percentage of that has to do with mandated shutdowns, which is, by the way, a key part of it, but also like voluntary behavior shifts in the lead-up to it. So I can't remember his name, but a professor wrote an essay. I'll link to it looking at data from New York that suggests that some amount of the curve flattening happened in the reduction in MTA usage in the weeks preceding a shutdown, right?

And his conclusion was basically that like you have to just give people the real information, like the real facts. It's like not sugarcoat things, not pretend that they don't exist. but actually be clear with them. And they will often shift their behaviors in ways that have positive outcomes for the entire system. And I think that's one of the challenges of this, too, has been, you know, we had a huge issue with trust in media and a crisis of trust in institutions and traditional beacons of leadership before this. It feels to me like this might have been the straw that broke the camel's back just across media and institutional dimensions when it comes to just a catacly. of trust. Yeah, look, I think it's no secret that the virus was an accelerant for an economic downturn,

right? I'm not a perma bear by any means. I'm actually usually a permable when it comes to stuff. But last June, I started to write and say, look, there's too many alarm bells going off, right? There's too many signals that we are reaching atop. And the response from central banks is they're going to have to use the two tools that they have. They're going to cut rates and they're going to print money, right? And they've essentially done exactly that on an even greater scale that I thought possible. But the virus ended up being the accelerant in that situation. And if it wasn't the virus, something else would be blamed for kind of us paying off the debts that we kind of accumulated over time, given what we were doing for the last 10, 12 years.

Now, what has not yet been talked about is the virus as an accelerant in other aspects of life. And to be crystal clear, the U.S. government and other organizations that previously were thought of as experts or, you know, these great institutions, they are lying to the people, right? And what I mean by that is the CDC, the Surgeon General, WHO, they are outright lying to people. And it's sad, right? I mean, literally, there should be riots in the street of people saying, you're lying to us, you're getting people killed, and you should resign. These institutions, should be broken up. And the reason is because what they're doing is they are looking at it,

not from how do I protect the individual? What they look at is how do I protect the overall population? And so saying things like masks don't work, it should be a criminal offense, right? It literally should be a criminal offense because if a doctor said something that was wrong when it comes to medical advice, they would be held accountable for it. And then when you go as far as to then go into the economic side of this and look at things that. that the Federal Reserve is doing and saying, et cetera, it's just crazy to me. And so where I think this all ends up is people already had a distrust in media, large-scale organizations, you know, quote-unquote expert opinions, et cetera.

Now the virus has simply accelerated the fact that there's not a person that you talk to, right, in kind of a number of circles that I'm in that think they're not being lied to. And unfortunately, what that does now is it forces people to question everything, And when they question everything, I think the sad part is they even question the things that are true. And maybe that's a good thing or maybe it's not. But what it does is it just seeps into every aspect of life. And you get into this weird world where, you know, how do you even trust the video that you see online because you know that it's possible somebody could be faking it? Right. And it's just this really, really weird slippery slope that we're headed towards.

And it's because it's very provable with social media now that we're being. lied to by a number of these institutions. I do think that you get at something which is really important that we don't discuss, which is, you know, I think Bitcoiners in particular are much more comfortable living in a slightly more or perhaps even a lot more chaotic society in which you don't trust, you verify by just by nature, right? That is the kind of key principle of the jungle. However, the point that you're making, which I think is important, is that it's getting increasingly

harder to verify as well, right? It's not just having a clear-eyed sense of skepticism about the official line. In a world where there are really no sources of truth other than the ones you happen to curate for yourself, it just fragments everyone into a million tiny islands in this archipelago of mistrust. And then to add on top of that what's coming in terms of deep fakes and just actual outright manipulation of what our senses tell us is true creates a really scary dynamic. Yeah, and I think part of this is, you know, the way I kind of operate my life is even if I know somebody is lying to me, right, meaning one of these organizations, et cetera, I always kind of fall back on. I'm responsible for me, right? And that personal responsibility and kind of personal ownership, I think is very rare when it comes on a societal basis, if you were to look. And the reason why that's the approach is, just because organizations are misleading or manipulating, et cetera, doesn't mean it's the end of the world. You know, newsflash, it's been happening for decades and decades, right?

It's just now we're able to, you know, kind of prove it without a shadow of a doubt. And so two things end up happening. One is people go and find other information sources that they trust more. Again, doesn't mean those information sources aren't also misleading them, but just they find ones that they feel are more accurate or more aligned with the way that they think. And then two is you've got to understand that it doesn't really matter what they said. Like they can say all day long, hey, masks don't matter, right? But if you feel like they matter, put a mask on.

Right. It's kind of like there's a separation of the information you receive and the actions you take. You're ultimately responsible for the actions you take. And it's up to you to evaluate the information you receive whether it's accurate or not. So this is a really interesting point. It's something that I've been thinking about a lot in the context of this crisis. I think that you have two very almost countervailing forces. On the one hand, you have basically the entire business sector and unfortunately a lot of out-of-work

employees becoming economic wards of the state, right, which could in some ways lead to an expectation of dependency, right? A presumption that the government is always just going to be there to backstop it, so who cares, right? That's kind of one possible outcome. On the other hand, you're seeing this massive uptick. And I see it, I mean, right now it's anecdotal. total because there haven't been times to actually go out and look and study this. But all around us,

these people are taking individual responsibility. You're seeing communities and family units getting stronger. You're seeing networks of resiliency spark up all the time. And it goes from every level from, you know, Ben Hunt helping organize networks of peer-to-peer buying for retail commercially available, you know, PPE in China and having it shipped back and distributing it to hospitals, you know, 50 at a time as they're staying. States wait in these endless cues with bidding wars, or you see it in like the smaller level, right? I live in a tiny little town in the Hudson Valley where obviously it's, you know, it's predominantly older. It's not very wealthy, to say the least. And you have the restaurants

who have had to shut down or who are just going to delivery, even despite their economic hardship, are now doing free meals for the community, right? And it's being, as soon as they announce that, the people who are in the community who can afford to help have been coming in to help with that, right? And so you see these localized networks. of resiliency. And sometimes localized means just a type of person, not just geographically local. But I think that it's one potentially interesting thing is that I don't see people sitting back and just saying, like, I guess the government is going to take care of this now. I see actually a lot of people stepping up and taking on a different type of responsibility than they might have

before. Yeah, look, I'll bet on the American spirit any day of the week, right? But the key to capturing and empowering that American spirit is the government's got to get out of the way. And I think that's what's getting lost in a lot of this. And what I mean by that is we have one of the greatest advantages in the world, in that we have a capitalistic society that we've trained people for decades to solve problems. And the best thing that we can do is get resources in the hands of our entrepreneurs and our small business owners and give them the problem set, get out of their way, and they will solve it.

And so whether it comes to how do we get PPE, right, to how do we help these restaurants, et cetera. And some of my favorite stories so far are simple things like there's a, there's a small business, and I forget the name of it, unfortunately, who is supposed to set up all of the infrastructure for Coachella. Coachella gets canceled, goes virtual, right? All of a sudden, that same small business owner says, you know what? I'm going to start setting up tents for FEMA, right?

And so they're able to pivot their business and quickly go and be resilient, right? And I think that you see that, you know, we've got a number of companies that we know of that previously we're not in the business of making masks or any sort of PPE who quickly transitioned their manufacturing capabilities to start to do that, right? You see that with the car companies saying, wait a second, I think we can build ventilators, right? And when you go through all of this, what you end up finding is you can have one of two societies. You can have a centrally planned world where literally the guy, government plans everything, or you can have a decentralized resilience system where you empower the entrepreneurs and those with ingenuity to solve problems. And I think right now what ends up happening is the government is trying to actually be the century planned entity. And it doesn't

work. That's not how America has been built and it's not going to solve the problem here. And so instead, what we need to do is we need to empower these people, give them the problem set and get out of their way. And I tend to think that, unfortunately, our small business owners and our entrepreneurs are better positioned to do this than our large corporations. And when you get into things like the corporate bailouts, et cetera, what you see is there's a lot of peacetime CEOs running the large companies and there's a lot of wartime CEOs running small businesses. And we're in a war time. And so let's give them the resources and get out of their way rather than run to these large corporations that frankly aren't doing a very good job right now.

You know, it's really interesting this idea of central planning versus resilience. I think you could almost make the argument, too, that in the wake of the bailouts in 2008, 2009, it created an incentive for those big corporations to not prioritize resilience because of a presumption, maybe active or even in the back of their mind that there was this new, there was this actor, right, that was going to help. and fail. And so the incentives were pushing them to take these crazy risks and, you know, buyback stocks instead of having any cash for rainy day and all this sort of thing, right? Whereas, to your point, entrepreneurs and small businesses simply don't have those kind of options. So they

have to be more resilient to some extent. I guess my question for you, so this was a major theme of your conversation with Chamath last week, this idea of shifting back from an efficiency-based economy to a resilience economy. How optimistic are you that we can do that? What does it take to actually do that in the wake of this? Once we do get back to work, once we do figure out how to manage a health crisis that I don't think is going to abate, even if it gets a little bit better. I think the way that you build resiliency is you allow failure. And that sounds really, you know, kind of grim, right? But that's what needs to happen. We need to let companies fail. And the Companies that fail are the people who didn't do the hard, disciplined things in the good times.

And so when I go to, you know, I'll pick on the airline industry because they seem to be taking the brunt of a lot of this. They've spent, I think it's like over 80% of their free cash flow over the last decade on share buybacks. Now, share buybacks aren't bad, right? You can do them. They're actually a tax-efficient way to deliver shareholder value back to shareholders. That's fine. But what happens is if they hadn't spent the free cash flow on that, they would actually have almost exactly the amount of money that they're asking the government for a bailout for. So that's kind of step one.

Step two is the first rule of businesses don't run out of money. And if you're running out of money, you've got to figure out how not to do that. And so you have three options. You can either increase your revenue somehow. You can go to the debt markets or you can go to the equity markets. What corporations are doing right now is they're actually going to the debt and equity markets. but they're not going to find public or private investors. What they're doing is they're running to the government.

And the reason is because they think the government is the idiot in the room. And what I mean by that is they believe that the U.S. government will give them a better deal, a more attractive financial deal than they could get from the same public or private investors. And so what happens is they don't need to be resilient, right? To your point about the incentive, the incentive is not to be resilient. The incentive is who can get to the government and get them to give you the money, right? that's how you survive. And so the way that you solve that problem is you say, we are not going to bail you out, right? And there will be failures of corporations. There will be

people who lose their job, all of this short-term pain. But the short-term pain is actually what builds the resiliency, right? Things don't become resilient by accident. You have to test them. You have to build in the resiliency. And so an example I used the other day with somebody is it's like basic training in the military. There's a lot of people who show up to basic training and they come from all different walks of life. Some of them are tough. Some of them are weak, right? But everyone shows up and on day one, what do they do? They shave everyone's head, they put a uniform on you, and now you're all treated the same. I don't care who you are, how rich or poor you were, what you did in your life, how successful or not successful you were, you're all the

same. And for the next six, eight, 12 weeks, whatever it is, depending on the branch of the military, they break you down. They break you down physically and mentally, and then they build you back up. And when you come out of that process, you're incredibly resilient. But what we have right now is we're like in midair with a plane and we're not willing to let the plane crash. But actually, what ends up happening is you have to allow things to fail to build the resiliency. And so I just don't think that we have the fortitude to do that right now because what ends up happening is everything gets politicized. And politicians, the last thing that they want to do is have kind of what David Sachs would call like tough talk.

They always want it to seem like they've got your back. But really where the solution lies is for them not to step in. And so I think that's kind of the balance here is how do you do the right thing, the thing that's necessary to be done for the long term, but also when your election in November or in the next two, four years, et cetera. I think that that's just a sad reality of where we are right now. Yeah, I mean, I worry about this political will question, too. I worry that we've crossed this event horizon where it just will never make sense politically again for anyone to let any company fail or any group fail in any sort of way. And that's, I think we were on that course already, but I worry that this may have accelerated it. You know, I think to your point about the failure, one interesting little case study to look at this is just how inefficient. letting bad business survive is.

So, you know, came out of startup world. I was in San Francisco for a decade on the VC side and on the operating side. And one of the things that is unimaginable, can you imagine a startup financing ecosystem where bad companies just weren't performing still got to their Series A, their Series B, their Series C route, right? It's ludicrous to even think about, right? Because it's just, why would you do that when there are all these other options? And I'll throw a personal example. There was a company that I had for a while.

It was a classic example of something that happens in Silicon Valley where it's just close enough to working that you keep pushing, you know, you keep pushing that string. And it's not quite there. And when I think about the wasted resources of the people who spent, like, it's a company that should have either failed or turned into a consultancy rather than a venture back company after about a year. We held on to it for more like three or four years. That's two to three years for all of.

the people in that group, many of whom were really, really talented that could have been off doing other things, could do doing more productive things, right? It was a net loss, not just for us because we didn't make it, but for every employee who could have been contributing to some other company doing much better things. And I think if you scale that up across the economy writ large, the lesson still applies where there will be things, when we think about things failing, we don't think about what happens after, which is people go find and work with and contribute their talents to things that aren't failing, right? And that's better for everyone in the long run. Look, if they let the airlines fail, the airline industry will be stronger, better,

and customers will have a better experience in five years. Can you imagine the companies that would spring up to take advantage of that opening? I mean, it's like, from an investor perspective, you're like so, it's like salivating, because you know that what would come out of that would be amazing, you know? Of course. And what you end up, what you're seeing right now is, You know, in media, incorporation, like the corporate world, et cetera, there is an establishment. And that establishment has benefited not by traditional free market forces, but through all sorts of artificial barriers. So in media, it was, hey, we're just not going to give a voice or a platform to people that we don't approve of.

Right. And when you do that, no one will hear their voice. Social media breaks that down. Every person has now got a platform, a voice, and an audience. When the corporations, there's all sorts of regulatory monopolies or oligopolis that have been created. And what they do is they use the regulatory arbitrage to prevent others from entering the market. And so these are the opportunities to break down those oligopolis and to allow competition. Again, America was built on competition, on innovation, on ingenuity.

the best thing we can do is to give resources to the people who want to take that risk and see what they do. Because what I have seen, right, I think it was the Boeing CEO who continues to go on television and is like negotiating with the federal government on television. If he takes the bailout, I actually think what should happen is if you take a bailout from the U.S. government as the CEO of a corporation, you are barred from serving as a CEO of a publicly traded company for 10. 10 years. Not because I think that that's actually what the right punishment is, but because that level of deterrence will force the operators to go to the equity and debt markets that do not include the U.S. government and get the money that they need in order to remain solvent. And so what occurs in a lot of these situations is that we simply don't take the hard stance. We want everyone to feel good. We want everyone to walk away saying, wow, I really like.

that person. This isn't a time to be liked. This is a time to do the right thing. And what the right thing ends up being in many cases is not what the CEO of the large corporation wants. It's not what the other individuals in the market want. And so I think we just got to have a real conversation of like, what are we optimizing for? Because right now what I'm seeing across the market, this isn't a capitalistic society. This is socialism. Right. That is what we are seeing. We are seeing a ship from capitalism to socialism. And we've seen this play out over and over and over again in the world. This is not a path. I think that America wants to go down because 50, 100 years from now, we'll look back and say that was the turning point. I want to switch gears for just a minute

to something that I think you have some unique insight into. So over the last month, we've seen crazy volatility in markets, right? At one point, actually, the previous, the lagging 30-day in the stock market had been more volatile than the lagging 30 days in Bitcoin, which is obviously a hard thing to do. The narrative of Bitcoin has been in this interesting spot where the correlation of it, the fact that it was sold off at the same time as the market sold everything off, for some that changed the narrative or undermined the narrative. You spend a lot of time with those institutional investors who were some of those folks who had to sell off. How have you seen their perspective, right? So not the hardcore Bitcoin hodlers, but the institutional investors' perspective on Bitcoin shift, if at all, over the last month during this crisis. Yes. I think first you've got to separate. There's two types of audiences right now, right? There's what I just call the Twitter trolls. And I say trolls in a lovingly way because they're not all necessarily trying to be negative, but just all of the people on Twitter who may or may not have a lot of experience when it comes to finance, crisis, asset classes, etc. And then you get the institutional investors.

which in an over-generalized manner are experts at this. I think that there's a very big difference in understanding of what's happening in the market between those two groups. There's a lot of people I see on Twitter who keep yelling and screaming, Bitcoin's not a safe haven asset. Bitcoin's not a store of value. Bitcoin has, is completely correlated to stocks, all the things that everyone sees. What people need to understand is in the institutional world, they understand how

a liquidity crisis works. They realize that in times of liquidity crisis, asset correlations go towards one. Every asset with the liquid market is going to sell off, right? And we have historical example after historical example of this happening. You know, gold in 2008 is the best example. I don't think anyone's going to claim that gold is not a store of value. But in 2008, during the liquidity crisis, about six months, it sold off almost 30%. And then it ended the entire crisis up over 300%.

And so what ends up happening is it just was a liquidity crisis. But we're two to three weeks into this. And people are yelling and screaming about their analysis of Bitcoin has changed when this crisis is going to be months, if not two years long. And so you can't make an analysis on something in the middle of the crisis. And so what I think is happening is that a lot of people in the institutional world, they have one of two perspectives. if Bitcoin was a very big part of what they did. So take hedge funds that started trading Bitcoin a lot, et cetera. They sold the Bitcoin, right?

They just sold it off. We saw 50% drop, end of the day on Black Thursday down 30%. These people spent every day trading Bitcoin and cryptocurrencies. They just sold it. They needed the liquidity. They're actually a small part of the institutional world, a very small part. The majority of institutional investors could care less about, Bitcoin right now, not because of anything Bitcoin did, but because they have bigger problems.

And so if you're sitting there and you manage, let's say, you know, a $5 billion pool of capital, whether you're an endowment, a foundation, a pension, et cetera, Bitcoin at most was like 25 basis points of your portfolio. If it goes to zero, literally you've lost more money in the stock market than you lost if Bitcoin went to zero, right? And so it's just not that material to their portfolios. Now, the smart ones, I think, are the ones who are thinking two or three steps ahead. What they're starting to realize is, wait a second. We're in a deflationary environment. All assets are selling off, the dollar strengthening. The only way to stabilize markets and reverse those asset prices is to flood the market with dollars through quantitative easing.

We're seeing that start to happen. There's likely to be much more coming. In that scenario, when we switch from a deflationary to an inflationary environment, I need to protect my portfolio. I need to go into real estate gold, Bitcoin, etc. And so what some of them are starting to say is, wait a second, I'm not fully on the Bitcoin train where I'm going to go put 5, 10% on my portfolio, but I actually want to have the conversation now because in a world where we switch from deflationary to inflationary, I want actually to get exposure. And so I think it's encouraging that kind of the more sophisticated institutional investors

are realizing, wait a second, this is exactly what Bitcoin was built for. and I actually may want to get some exposure to this thing because I don't have very many other places to go to protect my portfolio in the world we're going into. A lot of people analyze where we are right now and they're saying, oh, Bitcoin didn't work, but that's not true because you have to look at it over the entire lifetime of the crisis. And actually, when we switch from deflationary to inflation, that's when Bitcoin should do the best. You also have this interesting narrative moment happening where Bitcoin's narratives are interesting because in some ways every narrative that we've seen was present at some point early,

right? It's just what comes into vogue at any given time. But one that has always been there that is built into the design of the thing is the fact that there's only going to be 21 million ever, right? And also built into that, the mythos of it is chance are on the brink of a second bailout, right? Although I tweeted this morning that that seems so quaint today compared to what we're seeing now. But you have this interesting moment coming up where as the central bank engine just revs up, you have the Bitcoin half-and-coming. And that contrast is, I think, a powerful metaphorical moment to prompt people to do that kind of second, third order thinking that you're recommending. I was on the phone with a couple of institutional investors the other day, and I said to

them, I don't want to be telling you this because it means that there's a lot of people who are in a lot of trouble. But I could not be more bullish on Bitcoin right now, because just like in 2008, we went from deflationary to inflationary and gold did incredibly well. Imagine if 50% of the gold miners in the world shut down their operations at the exact same moment, right? And that's what's going to happen with Bitcoin. 50% of the incoming supply is going to disappear right as everyone turns and looks for an asset where they can protect themselves from inflation.

And so to me, again, go back to last June, I was writing about interest rates, drop. Maybe they get to zero. I actually didn't think that they would get to zero, but they ended up getting there. There's going to be tons of quantitative easing. We've printed way more than I thought we would. And then you're going to have it all coincide around the same time as the habit. Well, when that occurs, it's rocket fuel for Bitcoin, right? Because you're getting the macro environment, pushing people into an asset. And right as you're having the demand shock of that asset, you also get a supply shock. And so both the supply and demand shock are, or are trending in a positive manner for Bitcoin.

And so you get like this multiplier effect of what Bitcoin probably would have done already is just now magnified because of that macro backdrop in which it's happening alongside. Yeah, I think it's a remarkable moment for sure. So this actually reminds me, though, another piece of yours that I really liked that I know you spent a ton of time working to formulate your thesis on was you wrote a what you you expect to be winning and losing assets on the other side of this? We kind of talked about a couple of them here, I think, but I'd love to hear the conclusions that you came to on that. Yeah, so what I basically did was I looked at, you know, a number of assets and I said over the

next, you know, two years, give or take, here's what I think the performance of assets will be and less about like, here's price targets or anything like that, just structurally, here's how these assets should work. And, you know, in kind of two minutes, one, when you switch, from a deflationary to an inflationary environment, you pretty much can close your eyes and buy anything, and it should increase in U.S. dollar price, simply because the dollar is being devalued and the asset is the asset. So that was kind of, you know, at the high level. I then looked at equities, and I said there's a number of equities that if you buy them at the right time and they don't go to zero, because they've fallen so much in value, they will rebound. Even if they don't

rebound back to their all-time highs, you will have multiple or attractive return profiles. Now, you can also just simply buy the indexes, and I think that you'll get a great return there as well at some point, right? So I don't try to time markets. I don't participate in the public markets for a whole bunch of reasons, but I rated that as an eight out of ten opportunity. I then looked at oil. Oil at the time was trading around $20. It then got pressed up to $25. It's dropped, it's kind of floated around the, let's call it, let's call it $10 to $30 range. And my whole thought process is I don't see oil surviving at incredibly deflated prices that put American shale oil producers underwater, right?

So at some point, we've got to have a return back, whether that's in the short term or medium term. I do see that that is going to return to, you know, again, depending on who you ask, let's call it $35 to $50 range, is where they end up breaking. breaking even. And so that to me is attractive from a return perspective, but there's a lot of complexities that go with that and a lot of geopolitical things that just provide uncertainty. So I think I ranked it like a five out of ten because of those complexities and uncertainties. I looked at gold and I said, look, gold's going to do well in this move from deflationary to inflationary

environment, just like it did in 2009, 2010, and into 11 when it hit its all time high. Now, gold is stable. It's been stable for 5,000 years. So when I talk about it doing quote-unquote well, I think that it's probably going to go from call it $1,700 it is today to $2,000 to $2,500. So it's going to do well. It's just not going to, you know, four or five X in value. And so I gave it a three out of 10, not because I don't think it'll do well. It's just that the upside potential of the asset is not in its favor because it is so stable, right? The volatility works on both the upside and downside. So when there's drawdowns, cold doesn't draw down. It's much. When there's upside gold doesn't go up as much. That then led me to Bitcoin, which I said was

very similar to gold in all the sound money principles, but it has much more volatility. So when it drew down, I think gold drew down 12% during this most recent liquidity crisis. Bitcoin at one point was down 50%. So it's much, much more volatile. Well, that volatility works against it in the liquidity crisis, but it works for it or behind it in the move to the inflationary environment. And so what you're going to see is Bitcoin will appreciate, I believe, hundreds of percent on the upside. And so I ranked at 11 out of 10, mainly just stating that, you know, I could not be more bullish. I've continued to accumulate more Bitcoin. And when I do that, I actually look at it as I am taking a inflationary asset, which is the dollar that can be devalued at any time. And I am converting it into a

deflationary structure with a disinflationary monetary supply. that protects my wealth. So I literally look at it as I am moving dollars into a protected status with Bitcoin. And I think that more and more people are going to start to realize, wait a second, there's an advantage to this. They'll size the risk appropriately in their portfolio. But you will see more people seek out this asset as they see the quantitative easing that's occurring in the macro economy.

One of the things that I love about our conversations, whether it's whichever side, who's technically the interviewer, is that you've spent so much time clearly thinking about this. And I think it comes out in part from not just kind of your main job of being an investor, but also the fact that you have to produce, you've set it up for yourself such that you have to produce a huge amount of content, which forces you to go be constantly in learning mode, right? In the last few months, or I guess it feels like years, but it's been weeks,

last few weeks, you shifted or kind of like it feels to me like you expanded the event horizon or just the horizon of the podcast. How has your sense of the importance of kind of independent individual media podcasting newsletters changed in the last year and a half since you've been doing it? And what are the cultural shifts that you want to be able to capture with the newly rebranded Pomp podcast? Yeah, I think I'm always pretty clear to people. I have no master plan.

It just, I kind of a long time ago decided I'm going to do the things that make me happy. right? And what I realized was I got tired of just talking about Bitcoin all the time. And there's a lot of friends that I wanted to talk about other things, whether it was macro economy, you know, business technology, et cetera. And I had a platform to do it. And so rather than keep bringing them on to kind of a crypto-only podcast, I said, look, I want this to be more than that. And so I rebranded it in the way that would allow for that to happen. On top of that, I then made a pretty conscious decision to be very intentional about getting non-crypto people on the podcast.

And the reason why I wanted to do that was two things. One, that's where my personal interest lied. But two, it's a way to pull more people into Bitcoin and cryptocurrencies by simply having them talk about the other things that they're doing and then asking the simple question, well, what do you think about Bitcoin during the podcast? And so I think that what it really does is it kind of opens up the total addressable market, if you will. And I've seen a really positive impact on obviously all the download numbers and that stuff,

but also the types of guests that are willing to come on. There's more and more guests who usually would not have been interested in coming just to talk about cryptocurrency for whatever reason. Now they want to come on and they want to discuss all sorts. sorts of different things. And I think that, you know, one, it helps educate an audience, but two, my real goal here is that I hope I can kind of pull more people closer to familiarizing or educating themselves around Bitcoin. Yeah, I mean, listen, you know, I've told you before, I completely support the move. You know, for me, with the, with the breakdown, the goal and the

intention is similar in the sense of, I think that Bitcoin is, it really is a lens and a gateway to think about different types of power systems in the world, right? Even beyond the economy, the nature of truth and information and all these sort of things, when people go down this rabbit hole, they start thinking about everything. And so why would the media that this community is creating space for be limited to just the asset when it is a red pill for the whole world, right? So I've been loving it personally. The interviews, the different perspectives have been great. So I'm really happy that you made that shift, and I'm sure it's going to continue to be great. But in honor, of the Pomp podcast. Why don't we wrap up with, I just have a few rapid fires for you today.

For sure. All right. One, what is your favorite meme right now? Oh, by far Jerome Powell sitting there with the money print. With the rock music, for sure. The creativity of the memesters has just gone through the roof, like, or just the quality of execution is off the charts right now. I completely agree. That one and the other one I got to say, is not necessarily a meme, but I do find all of the Tiger King content absolutely hilarious as well. There's a lot of comedy getting us through right now, for sure. All right. Speaking of Tiger King, best thing you've watched, read, or listened to during quarantine?

The best thing I've watched read or listened to. I recently watched, I think it's a four-part thing on Netflix. Netflix called Self-Made. It's all about Madame C.J. Walker. And she was the first female millionaire in the United States. And it's a cool mix between like informative and entertainment. But that's probably the one that I would choose. I really enjoyed that. Love it. Guest who doesn't make any sense thematically, but you'd love to have anyway for the podcast. Hmm. It's kind of hard because you just said you can have anyone.

That's kind of the operating principle. Yeah. Someone where people would be like, what? If I had to choose anybody in the world to have on the podcast, I would choose either Alan Iverson or if I could, Biggie. Probably one of those two would be the two that like, for whatever, I don't even know what I would talk to them about, but I just, hey, you're cool. Like, I'm down.

You literally like, you know, shaped so much of my childhood. Like, let's just shoot the shit. Love it. And last one, what's keeping you optimistic right now? It's just that none of this actually matters, right? Like at the end of the day, everything in finance is a game. And I think people take it a little too seriously sometimes. But we're all going to die.

Like, every person who's this podcast is going to die. And so you just got to remember that like the professional aspect of a lot of this is exactly that. But at the end of the day, everything else in your life is probably more important than this. And so, you know, that's a hard message. I think for some people when they're like, look, I just lost my job, you know, all that kind of stuff. But really what ends up happening is you realize that there's a lot more to life than just that. And it sounds cliche, but the reason why a lot of people say this is because it's true. Memento Mori.

Awesome, man. I really appreciate you hanging out. I'm sure everyone love the conversation. Keep up the good work, and I'll see you on Twitter. Awesome, man. I appreciate it very much. The idea that I think stands out with me from that conversation is this idea of resilience and rebuilding the resilience economy and what it takes in terms of allowing failure.

I think that there are these huge, interesting strands of resilience emerging. in terms of individuals and family and community networks. And I think that there is a possibility of extending that into the way that our economy is organized. But it's not going to be hard. It's going to be incredibly painful. And there are major questions of political will involved as we touched into. But I just can't see any scenario where we just try to do this merry-go-round all over again,

even if the Fed can print us out of this one more time. At some point, we are going to hit a crisis that brings us to our nation. knees unless we redesign for resilience. So that's what I'm thinking about going into the weekend, going into the rest of April. And I appreciate you hanging out and thinking about it with me too. So until next time, guys, stay safe and take care of each other. Peace. Welcome back to The Breakdown, an everyday analysis breaking down the most important stories in Bitcoin, crypto and beyond with your host, NLW. The Breakdown is distributed by CoinDesk. Welcome back to the breakdown. It is Friday, April 10th. And today I'm doing

something a little bit different. I'm actually recording this on Thursday, April 9th, right after I just did the pomp interview, which hopefully by now you've heard. I'm going to be off on Friday and Monday of this week. We're taking some family time. And so I wanted to record, though, a quick little almost recap episode of what I'm thinking about right now. And so I'm calling it five questions to consider this weekend, five topics to consider this weekend, that is maybe just a little primer on what you can go explore for yourself. So I'm going to talk about one crypto dollarization, second, quantitative tightening, third, what it takes to go back to work, four, what it takes to rebuild a resilience economy, and five moments of transition are moments of leverage. So let's do

this thing. All right, let's kick it off with something I've been thinking about a lot lately, which is crypto dollarization. Over the last month, as markets in obviously both crypto and traditional markets have been extremely volatile as they try to sort out what's happening with the coronavirus crisis and what the impact of economic lockdowns are going to be, one thing that has happened coming out of that is a surge in the supply of USD-backed stable coins. The supply has grown by billions, right, reaching new highs. And I think that there are some really interesting reasons for that.

Effectively, what we're dealing with right now is a world economic crisis in which the U.S. dollar is seen as the only true safe haven, the only true really stable value store that there is. And what's more, it's also the currency that the world's debt is denominated in. So combine those two factors and you have an extreme demand for dollars. and in some ways a shortage of dollars as well, right? There aren't physically enough dollars to actually meet all that demand. In that context, it starts to make sense why you're seeing billions of dollars being printed on tether and things like it. Now, this is something I've been watching, but Max Bronstine, who's currently at Coinbase and Avi Feldman, who works at Block Tower Capital,

wrote this phenomenal essay on crypto dollarization, which I will link to. But I actually wanted to to read a couple little excerpts from because I think it's so good. So this is a 21 minute long read. So I'm obviously giving you just a tiny little bit of it. It's called crypto dollars and the evolution of euro dollar banking. So this is a section called dollar 2.0. There's a massive supply demand imbalance in the dollar market today driven in large part by foreign entities without access to the U.S. financial system. The world increasingly needs dollars to trade and to service massive debt payments, but governments have strong incentives to stymie dollar flows. There's currently a strong worldwide demand for dollars, but it's difficult for individual to source those dollars,

so where do they go? Now, they can turn to networks like Bitcoin and Ethereum, which enable novel ways to acquire dollar exposure that are natively digital, globally accessible, and relatively more seizure-resistant. Furthermore, financial services and networks built on top of these crypto-dollars give them global distribution, and make holding them competitive traditional fiat methods, in a world searching for more free access to capital, crypto dollars are a unique solution that helps service a lot of this pent-up demand. As such, stable coins and crypto-backed synthetic dollars should see massive near-term growth as the world scrambles for dollar exposure. So that's what we're seeing, right? That's a key, key theme. Now, I want to read from one other part, which I think helps make this all

makes sense. Counter to prevailing mainstream narratives, the new alternative financial system being created on top of crypto rails is increasingly assimilating into, if not starting to eat parts of the traditional world. The unique aspect is that the assimilation doesn't resemble what everyone previously imagined. Dreams of the world ditching their fiat en masse and exchange for cryptocurrencies have been met with the same stark reality facing the entire global monetary system. Everybody wants dollars. Rather than squander the opportunity for ideological reasons, the crypto industry should rally around this dollar scramble to onboard new users. Unironically, it is demand that spurs growth and that's one area the crypto space has been lacking. What is a strong

dollar and increase crypto-dollar usage mean for Bitcoin? From a macro perspective, there's the argument that deflation induced by a strong dollar will be damaging to Bitcoin because the world perceives it as a risk on asset. That may be true, but it's important to conceptualize that a strong dollar likely leads to widespread currency debasement, and while the dollar is one refuge, there will likely be increasing demand in general for fiat hedges. Even more, servicing this demand will only further prove that financial alternatives exist for everyone, as Bitcoin has all the features necessary to be the most democratized store of value. There's also a strong argument for inflation in the United States. A strong dollar undermines the Federal Reserve's ability to keep

the global monetary system stable, which in turn pushes interest rates lowered combat deflation. As MMT takes hold and the U.S. government prepares to play a more dominant role in labor markets, labor costs could rise at the same time assets are buoyed by extra liquidity and foreign asset flows. Additionally, passive investing has seemingly distorted the structures that help keep markets in reality closely tied, making asset inflows the primary determinant of demand. If the government can issue debt to make sure 401k deposits continue unabated, there's real potential for higher asset prices. In the case we do see inflation, expect crypto dollars to be used as a seamless bridge to non-debasable assets like Bitcoin. Basically, what this comes down to

is that these stable coins, these USD crypto dollars are the right asset for this moment as the world is hungry for this dollar exposure, and they just so happen to be the perfect on-ramp for the asset of the potential next moment, which is an inflationary moment, which is Bitcoin. Which brings me to my second topic or question to consider for this weekend, quantitative tightening. So the narrative of Bitcoin has been a little all over the place in the last few weeks as people look to the correlation with equities markets and the sell-off that happened in tandem with those markets and say, well, that must invalidate the safe haven thesis, right? Now, there's a lot of different responses to that. Pomp talks about it quite a bit on my show

yesterday. But one thing that is interesting that's happening simultaneously is that as the proverbial money printer go burr of the Federal Reserve, and we see more and more trillions of stimulus in increasingly exotic ways, as Travis Kling predicted, what you have simultaneously is this asset which is basically the opposite, right? It is an asset that has only 21 million ever that will ever be printed coming up on its halting, which is a supply shock that will make it even harder to acquire at the same time as dollars are getting more and more plentiful, right? Fiat money is getting more and more plentiful. That contrast, the narrative that exists in the space between unlimited cash, infinity cash on the one hand, and reduced by half

supply of Bitcoin on the other is a very powerful narrative moment. And I think that this narrative moment finally has the right branding. The halving, the havinning, you know, it means something specific. And so it's useful in that way. But over the last couple weeks, people have started to discuss the idea of referring to it as quantitative hardening, referring to hard money versus soft money, or quantitative tightening, right, to make it directly contrast to quantitative easing. Now, I think both of these terms are phenomenal and do a much better job capturing this narrative moment. I kind of like quantitative tightening better because I think the parallelism of quantitative tightening to easing is so clear. And QT, not QE, is a very easy slogan.

This is a really interesting narrative to watch. It's a really interesting moment to see. I really encourage you to go listen to the interview with Pomp if you haven't. One of the reasons that I wanted to have him on is that he, unlike most of us, Jemokes on Twitter, actually has the context to talk to institutional investors every day, including many of those who had to sell off last week. His perception of where they are vis-a-vis Bitcoin is not that they've somehow lost faith, but in fact, it is on their horizons, on their perspective as they look across the second and third order effects of all of this new money printing happening now. So quantitative tightening is the second topic or question to consider this weekend. Number three, what it takes to go

back to work. So I wanted to give you guys the crypto ones first. We're going to go into now my COVID and policy analysis. Feel free to tune out. If you leave, I appreciate you listening. And we'll be back with more good Bitcoin and crypto content next week. But for those of you who are interested, I've spent a lot of time this week with guests talking about the things that we're not talking about. And the one that stands out in glaring, glaring relief is the lack of a plan to turn this economy on. because it is very clear from anyone who is intentional and thoughtful that it's not going to be as easy as just sending people back to work. If we do that, the virus continues to spread and we have another crisis that overwhelms hospitals.

It's going to be more complex. It is likely going to include massive upscaling of testing capacity, trying to figure out a way to trace people who have tested positive or who are asymptomatic without violating privacy, which is a huge issue on its own. there might be phases where certain demographics of parts of the population are in lockdown while others aren't. We're likely going to need to be able to be incredibly nimble about going into very temporary short lockdowns again as second waves and third waves happen, right? We're seeing even now in Singapore an uptick, a flare up again.

This is not a silver bullet type of moment where there's all of a sudden going to be some vaccine or some cocktail of medicines that makes it all work. And what we have to keep our eye on is just making sure that the health system doesn't get flooded and overwhelmed while also still enabling our economy to move on. That's a much more important conversation than the tit for tat right now or the politicization of health outcomes versus economic outcomes. And the reason that I say I added this to five questions to consider this weekend is that it's very clear that our leaders are not going to lead this conversation. So we have to do it from the bottom up. we have to start having the conversation and then force it into the mainstream. So spend some time thinking about what you think it actually looks like to turn this economy on in a meaningful way that respects the fact that we live in a society where we care about people not dying

and where we have an incentive in not seeing our health system overwhelmed. I think it's a really important space to play in nuance and let's do it. All right, my number four question or theme to consider for this weekend is scaling this conversation up to the highest level. What does it take to rebuild a resilience economy? Last weekend, Pomp's podcast with Chimoth, many people consider him our generation's Warren Buffett. Chimoth talked a lot about the fact that our economy had been designed for efficiency rather than resilience. It'd be designed to maximize gains, as we've seen, at the expense of being able to actually weather hard times. What does it look like to actually rebuild for hard times? This is a really important question that's

going to involve all of us because there's no world in which we redesign and rebuild for a resilience economy where there aren't implications to our personal lives, right? We have all benefited from just-in-time supply chains and from extraordinary organization of the global economy around competitive advantage and comparative advantage. That will be things that we have to give up. Certain things that we buy may get more expensive. We may have to downscale our consumption in certain ways for the good of the larger resilience economy. Now, the good news to me is that I think that the most resilient part of the economy is individuals and peer networks and small businesses that are rooted in communities right now because they're scrappy. They're not designed for resiliency in terms

of business model, but they're designed for resiliency in terms of the spirit of the people running them. And so I think that those ground up changes that we need to make are going to be easier, even if painful than some of the top-down changes that need to be made structurally in terms of how we organize business and markets. But I do think that if I had to guess a theme, an economic theme for the next few years, it's going to be what it takes to rebuild a resilience economy. So let's start to think about that now. Let's start to think through these second and third order implications and effects that may happen and ask what we can do to get out ahead of it and design it, which I think brings us to my fifth and final question or theme to consider for this weekend.

Moments of transition are moments of leverage. On Monday, I had Emerson Sparts on to talk about the collaborative crowdsource project that he was doing around second and third order effects from the coronavirus crisis. Emerson started by talking about how he was a hunter for the mother of all leverage, right? These moments where you can actually change things in a significant way. These kind of transitional moments that we're in right now, where things are so up for grabs in ways that we never would have expected, are moments that have the greatest leverage for us as individuals and as a society. Now, there are a lot of downsides to these high leverage moments. This is where power gets consolidated on the highest levels. And if you need an example of that,

look at the extraordinary powers that governments are trying to grant themselves in the name of solving the crisis. Some of it we may decide is necessary. Some of it we may agree to. More likely, though, unfortunately, will be just power claiming more power, and we have to hope we don't all turn into Hungary. And if you need an example of this, go look at what's happening in Hungary right now. But there's another dimension to this, which is the individual dimension. Moments of transition are moments of leverage for us as individuals as well. Right now, we have this mass scale shutdown, where everyone is sitting at home, and even the people who are working from home, and in some cases working even harder, still have this different context to ask themselves

what they're going to do at this moment, what they value that they didn't know that they valued before, what they want their life to look like going forward. I think that a lot of the second and third order effects that you will see come to fruition in terms of how people work and how people live will be from people deciding that the way that they did things before, they don't want to do anymore. The way that they designed their jobs, their economic lives is not something they want to do anymore. This is a moment for each of us to ask how we get to use that leverage for ourselves and for the future that we want. And I really believe that if every person in the world right now had that conversation with themselves about what they want out of this moment,

we'd be in a very different time. Now, I don't want to be glib about the huge numbers of people for whom this is so scary and economically devastating that the idea of clearing out mental space for something as ridiculous as asking about how to make sense of and take advantage of a moment of transition being a moment of leverage is just ridiculous. There are, there's a huge amount of that out there too. But I do think that if you're in a spot to be sitting and thinking and listening to this podcast maybe, ask yourself what you can do to fulcrum your way to the world and the life that you want coming out on the other side of this. That is as self-helpy as I will ever get on this podcast, I promise, but I do think that these extraordinary moments create extraordinary

opportunity as well. And like I said, I got to do a quick little podcast for you guys for the weekend, so here it is. Listen, I appreciate all of the listens. I appreciate all the downloads, all the comments. I hope you enjoyed this week's set of interviews and this conversation. Next week we'll have more kind of expansive thinking about Bitcoin, about business and beyond. So Until then, guys, stay safe and take care of each other. Peace.