The Pomp Podcast - #1012 Joe Carlasare & BitcoinT.I.N.A. On Changing Paradigms In Our Global Financial System

Episode Date: June 20, 2022

Joe Carlasare is a Commercial Litigator at SmithAmundsen and BitcoinT.I.N.A. is a Bitcoin personality. In this conversation, we discuss the massive changes we're seeing in our economy, how long a recession may last, why this period can be good for Bitcoin holders, and how to navigate this economic landscape. ======================= Brave Wallet is the first secure crypto wallet built natively in a web3 crypto browser. No extension required. Store, manage, and grow your portfolio, get NFT & multi-chain support, and more.    Download the Brave privacy browser at brave.com/Pomp, and click the wallet icon to get started. ======================= Today’s episode is sponsored by Abra. Based in California and backed by top VC firms, Abra is an all-in-one simple, secure app that allows you to trade over 110 cryptocurrencies, get 0% interest loans using your crypto as collateral and earn interest with up to 14% APY on stablecoins and 8.15% APY on Bitcoin.    Join nearly 2 million users by downloading Abra from the Google Play or Apple App store. If you download the app today, you will get $15 in free crypto once you fund your account.    You came, you invested — now conquer. =======================

what's up everyone this is anthony pompliano most of you know me as pomp you're listening to the pomp podcast simply the best podcast out there now let's kick this thing off joe carlosar is a commercial litigator and bitcoin tina he's just into bitcoin in the macro environment in this conversation we talk about everything from the federal reserve interest rates all sorts of macro movements, Bitcoin, the housing bubble, and much, much more. I really enjoyed this conversation with both Joe and Bitcoin Tina. I hope you guys enjoy it as well. Before we get into this episode, though, I first want to talk about our sponsors. Today's episode is brought to you by Brave. Brave Wallet is the first secure crypto wallet built natively in a Web3 crypto

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slash pomp and click the wallet icon to get started. Again, go download Brave at brave.com slash pomp and click the wallet icon to get started. Today's episode is sponsored by Abra. They're based in California and they're backed by top VC firms. Abra is an all-in-one, simple, secure app that allows you to trade over 110 cryptocurrencies get zero percent interest loans using your crypto as collateral and earn interest with up to 13 apy on stable coins and 7.15 apy on bitcoin you can join nearly 2 million users by downloading abra from the google play or apple app store if you download the app today you will get 15 in free crypto once you fund your account You came, you invested, now conquer.

Abra, conquer crypto. Go check it out today. Anthony Pompliano runs Pomp Investments. All views of him and the guests on his podcast are solely their opinions and do not reflect the opinions of Pomp Investments. You should not treat any opinion expressed by Pomp or his guests as a specific inducement to make a particular investment or follow a particular strategy,

but only as an expression of his personal opinion. This podcast is for informational purposes only. we have two special guests. We've got Joe and Bitcoin Tina, who are joining us. And my goal here is to talk about the macro environment, Bitcoin, and a whole bunch of different things that kind of seem to be somewhat interrelated. And Joe, maybe we'll start with you. You've got this framework that I think you've been using for a number of years to analyze and evaluate the macro environment, maybe you could just walk us through like, what is that framework that you use to understand kind of how the system is working? Sure. Just for those that don't know,

I'm Joe Carlos. Sorry, I'm a commercial litigator with the attorney at Smith Amundsen. I'm not a professional investor. None of this is financial advice, obviously. But I am I've been investing in trading since I was in high school. And what I've noticed, and if you just zoom out, take a big picture approach on this. My view is that the overall system, the credit based system that we've been in for decades now is an inherently unstable system. It requires constant credit growth, or you have these spasms. You have increasing volatility. And the really helpful thing so far that we've been in this favorable period for the last several decades has been one where we've generally had low CPI inflation. We have not had significant issues where people are

really feeling the pain at the pump and feeling the pain for groceries. That may be changing. you know, the times may be a changing. And I think we're entering potentially a paradigm shift here whereby volatility is going to increase. Whenever there's a paradigm shift, whether it's in society, markets, economics, it generally increases volatility. So my framework that I think you alluded to, and I'll let Bitcoin Tina speak to this as well, is that we should expect the next 10 years might be very different from the last 10 or 20 years. We should expect a framework whereby you will see these rapid upswings, rapid downswings as the system struggles to figure out what comes next. Central bankers attempt with desperation to push against the tide.

It doesn't mean to be scared. This is not a doomsday prophecy. That's not what we're into at all. But I think that the popular conventions and notions about what Bitcoin does or what markets do or how the stock market always goes up and to the right, they may continue, but you should be open to that, that there might be a paradigm shift here. So I'll let Bitcoin Tina speak to that as well. Hey guys. Yeah. I, I, I agree basically with Joe. When you think about that framework, Bitcoin Tina talked a little bit in terms of, so something that says basic as stocks always go up into the right, right.

Cause of the debasement of the currency. So, so it's, it's important. And I want to put a framing on this because it helps instruct me how I see the big picture. And I think it's important to try to understand what the big picture is. So for years, we went through the tech media, telecom bubble and busts, 2008-9, which was housing credit bubble and euro dollar bust. And I think we've been building a sovereign debt bubble. And I think that this, a long time ago, I analogized that to when I was a kid rotting down the hill on a bicycle, swerving back and forth because I thought it would be fun,

and finishing off crashing into the ground and pretty much breaking my teeth. Wasn't a good end. And then recently, I came across what Matthew Pines tweeted, what he calls a fugoid cycle, dynamic instability leads to, it's very wordy. self-excited divergent oscillations and exponential runway. It's a lot like my swerving on my bicycle and smashing my face on the ground. I think that's what path we've been going on. And you have to look at what the nature of a credit system is. Credit systems are inherently unstable and they go through expansions and contractions and the contractions, the

contractionary periods can lead to extreme contractions, and they often try to stave it off. Where we are now is an interesting place because CPI is at record highs. It's hard to know how aggressive they are going to be in trying to stave it off and whether or not there is or isn't what people consider before a Fed put. And I just don't know, and neither does anybody else. But my guess is it could be pretty extreme to the downside. And ultimately, I expect it to be pretty extreme in terms of response. Now, I don't think it'll just be the Fed response. I think it'll actually be a federal government response, ultimately. But we have a lot in the way there, too, because of the nature of politics in this country. So it may be hard to make your way through. So for me, it's about maintaining a viewpoint of optionality in how you approach this. I think we may have an opportunity to acquire a lot more Bitcoin, which is both good news

and bad news, because it may be in prices which none of us would like to see. But yet we'd like to see it because we can add to our positions. So it's very hard to judge. I'm trying to remember. What did Yogi Berra say about guessing about the future? I can't remember that quote, but it's a great quote. um so when you start to think about this this global macro environment for both of you obviously the federal reserve is continuing to increase interest rates as they increase those interest rates uh what we are watching play out here um is a very controlled destruction of demand to try to get inflation to come down uh we had nick carter on the show yesterday nick's viewpoint is that they just can't raise interest rates aggressively enough to get the inflation

down. He believes that they will pivot at some point. They'll wave the white flag. And when they do that, where we will likely end up is with high degree of inflation in the United States, which to Joe's point would be very different than what we've experienced over the last 10 or 20 years. Is that kind of like the base case that maybe, Joe, you are viewing here is that we should expect to have much higher inflation over the coming decade or so? One second. Can you put up the Matthew Pines tweet so people can look at what that full good cycle looks like? Can you put that up? Yeah. And while you're putting that up, I think the quote, Tina, that you're referring to is that it's tough to make predictions, especially about the future. That's the Yogi Berra quote.

But the key thing, Pom, to your question, which I think it is, that's exactly right. Because the inflation that we're experiencing, quote unquote, CPI inflation, that is not driven, at least from my view, primarily by monetary policy. It's driven by the fiscal spending, which was out of control coming out of the pandemic. They spent trillions of dollars handing out stimulus and the PPP loans and so forth. And at the same time, we have underinvested in our infrastructure. We've underinvested in development of various natural resources. So you have a structural dynamic in play where we're not going to get more of these goods and services. So the Fed can hike to ungodly rates. They can hike a thousand basis points. It's not going to fix the fact that there's not

enough oil coming out of the ground. It's not going to alleviate the energy shortages. So it's not going to solve these structural problems. What they're trying to do is they're trying to cave, in my opinion, to the political pressure, which every single senator and congressman is hearing from their constituents right now, how outraged they are about gas prices. They're not familiar with this. You've got an entire generation who's never had to deal with gas or energy costs at these levels. So they're hearing it and the Fed has to do something. So the only thing they can do is pretend to be able to push back against this CPI. And I happen to agree with Nick. I think he's right. I don't think you're going to fix this issue. You're not going to destroy demand

absent causing a real bad recession. That'll of course bring that CPI down, but I don't think that's what people want. Yeah. And then when you guys think about some of the interest rate hikes that are occurring right now are happening with the contraction of Q1 GDP, is your thought process that we are already in a recession? Is it almost a guarantee that we are headed into a recession? How do you think about hiking interest rates with contracting GDP, high inflation? This just seems like a complete freaking mess. It is a mess. And I'll let Tina speak to this. But my view is you can get bogged down in the term technical recession, whether NBER says this is a recession or not. In reality, we've never recovered some of the growth trends we had for the 90s and the early

2000s coming out of the GFC, we never recovered that trend. We have been in a, most of the world has been in a period with anemic, low growth, and we've kind of just gotten by with more and more fiscal stimulus here or there, more and more favorable accommodative monetary policy. That is not fixing the long-term problem, which is too much debt and very poor demographics in most of the Western world. Tina? Yeah, Joe and your prior guest, Darius Dale, said the same thing. Don't get fixated on the nature of recession. It's, again, guessing about the future is very difficult and it's hard to know. A lot of this is how do these various policymakers respond? Personally, I think that rates are already very high. I'm not talking about Fed funds.

I'm talking about interest rates. I heard somebody say the other day that around the time of Volcker, debt to GDP was in the neighborhood of 30%. We're at 130% now. So, if I assume that, you know, if I do some simple math here, if, where's the 10-year now? About 3.4, 3.5 percent? Right. If I do some very simple math, and I take 130 and I divide it by 30, that gives me a multiplier of 4.3 times. And then I multiply that by the 10-year, which is at 3.32, that compared to 1979, 80, 81, that we're already at 14.3% rates. People look at the absolute number and say, oh, 3% rates, it's so low. well it's only low relative to the size of the debt that you have to service it's very high

we're at 14.3 percent rates now and i believe that where people get a lot of stuff wrong is that prices get rejected in an economy at some point it's they hold on hold on hold on and finally get rejected when they're too high and between what we're seeing in food and energy and interest rates, I think you'll see prices rejected. I think it's going to do a lot of damage to the housing market, which I believe that the Fed has been targeting the housing market and the stock market for wealth effect for years already. So I don't know how this works itself out. I've always said there'll be some point at which the Fed gets religion. I know they got religion right now and i don't know how much of that religion we can take yeah i don't happen to

think we can take that much of it yes i would prefer to see the fed pivot but at some point the longer they continue on this path the sharper rates will decline and the sharper the various cpi do not think we'll end up needing a yield curve control unless they give up sooner in which case then the economy can start accommodating that and they will have to institute yield curve control. So a friend of mine said to me the other day that he thinks we've entered the suddenly moment, but suddenly could be six days or six years. And I kind of agree with him. And it's hard to know when you look at that Fugoid cycle, the oscillations going up and down, going greater and greater. At some point along that, we're going to be entering that

suddenly moment. But I think the amplitude of the oscillations continues to grow. Joe had made a comment. It may not be pertinent to the current period because we don't know how those oscillations go over the course of this decade, that you could see within the same 12 month period, $5,000 Bitcoin and $500,000 Bitcoin. So I think for me, the mental framework is to prepare yourself psychologically as well as financially for optionality. And those who are well-prepared for that optionality will make a lot of money. I'm heavily in Bitcoin, but I sold some because I'm old and I don't have an income. I don't work. So I had to, but I went from 100% Bitcoin or virtually 100% to like 80%. So I still have a lot of Bitcoin.

Bitcoin goes to half a million dollars, and I miss deploying that into more Bitcoin. I'm still going to be okay. But if things turn downwards, which they could, it'll give me a chance to buy a lot more and more than replace what I bought. So I think framing is just so important. And here's the thing that Bitcoiners must focus on, in my opinion. This is not about Bitcoin. This is about macro. And since 2009, we have not been in a macro environment anything like this. And I think it has the potential for being quite bad. I think it could be one of the worst environments the last 100 years.

So you need to be mentally prepared and financially prepared to take advantage of it. It's hard to know how it progresses. It's very hard to know and hard to guess how policymakers respond. And it very much depends on how they respond. And that's why you have to have a notion of optionality. But I think there'll be some people who will handle this very well and will grow incredibly rich coming out of this, owning Bitcoin. But you're going to have to figure that out for yourself. But don't use the model of how you think Bitcoin trades to be your framework. You have to

make it larger because Bitcoin has never been, and neither have any of us been in an environment like this, these are very high CPI levels. So do they cave, the policymakers, do they cave too soon, as some would say? And do we experience growing higher inflation? Or do they get that religion and crush it? And that will crush stock prices. It'll crush Bitcoin prices. we have a period right now where there's no relief. If you're a legacy investor, stocks and bonds, if you have a stock and bond portfolio, you've been hit very hard in your stocks and in your bonds. Now for years, bonds would act counter to your stocks. So there's a lot of damage happening to people. I believe there'll be a lot of damage in housing. I believe there'll be a lot

of damage in stocks and bonds. And I would highly recommend you're listening to an interview that Stanley Druckenmiller gave for the Iverson Conference. You can find this on YouTube. And he said some things which you should pay attention to. He's the GOAT. He's one of the greatest of all time investors. And he said some things which should scare you. They scare me. Like what? said he doesn't trust the bank's balance sheets. You know, I don't know if he's right or he's wrong, but if stock prices and housing prices go down significantly, he's going to be right. We could have a solvency crisis, you know, a financial crisis.

But the point, and I think I don't want our remarks here to be mistaken because the issue here that I think Tina agrees with, and feel free to chime in if you disagree, Tina, but we're not coming on here to be doomsdayers, doom and gloomers, to try to get people depressed about this. We're trying to make people understand that a paradigm shift could be underway and you should prepare yourself. And part of that preparation results in you understanding that extreme volatility might be here to stay. And with respect to Bitcoin, you understand that Bitcoin mitigates not only against the debasement of your money, but all sorts of other policies that could be put in place. And maybe Tina can speak to this. Oh, absolutely. Policies that

people are underestimating in the marketplace. It offers you a unique asset that is unconfiscatable as many people identify. Tina, why don't you speak to that real quick? Joe's completely right about that. And that's one of the extreme values of Bitcoin, the fact that you can control your private keys. In my opinion, banks were invented as what I like to call a technological solution to the problem that existed. If you're a wealthy person and you want to, let's say you have $10 million, $20 million, $50 million, whatever it is, a lot of money. Well, you might put half of it into stocks and maybe real estate. What do you do with the rest of it? Well, effectively, in one form or another, you're putting it into a bank. So that's out of your

control. Bitcoin changed that. And that's a really big deal because now you can hold that wealth outside of a legacy system. And that's a huge, huge, huge shift. This is something which FinTwit legacy players really do not understand and do not understand the extraordinary value of. And I think people are going to learn a very hard, very expensive lesson in the coming years about why this is so valuable. We don't know what policies can come into place. Who would have thought that we'd be basically locked in our homes for as long as we were. I mean, I never thought we could be locked in our homes as a response to COVID. So we don't know what policy Or if you're a real estate investor that you wouldn't be able to evict or foreclose on someone

for a year, right? Right. These are crazy things. So Bitcoin's value is not well understood by most people in the marketplace, but I think they're going to come to understand it. Bitcoiners understand this. So how do you balance it? You got to figure out your own situation, what makes sense for you. But I think that where we are and what we're doing makes me more bullish in the long run on Bitcoin than ever before. But it's going to be a tough path. It's not simple here. And we've always known there's that meme of hodling, what people think hodling is and what hodling really is, well, it's going to be a tough path. And your guess is as good as mine, because I don't know. I don't know what the future is going to bring. And I don't know what

the policymakers are going to do. But I think all roads lead to Bitcoin, and all roads lead to very high price of Bitcoin. When you guys think about this idea of increasing volatility, I can't remember which one of you mentioned it, but somebody said, you know, $5,000, $500,000. That is a level of volatility that most people couldn't even dream of stomaching. And if you look backwards, you can see with Bitcoin, you know, in the last four years, there's been, I think, four or five different 50% drawdowns. But still, as we sit today, 65% of all Bitcoin in circulation hasn't moved in a year. And so in some ways, this cohort of the financial sector, they're used to more volatility than let's say kind of a traditional stock or bond portfolio, 60-40 portfolio. Is it your thought process that it could become even more volatile and therefore even the people today in Bitcoin who are used to some degree of volatility, they may need to prepare for even more than we've seen in the past?

Or would you expect the volatility of Bitcoin to actually go down in the coming years, and it's the rest of the financial market that would experience these high degrees of volatility? Personally, I think volatility for Bitcoin will increase. I think it's the exact opposite. And then I'll give you a simple reason why. You've had a very favorable environment for regular, traditional legacy market assets. You've had that favorable. I think that could be changing with what we talked about earlier with the dynamic between CPI and central bankers' ability to stimulate. But the reason most carefully, I think, is that what we realize in the pandemic is that stimulus itself is going to be necessary to get the system running again if you have

another deleveraging event like Tina talked about. If the Fed is wrong here and they push really hard to try to combat CPI and they trigger a recession, and then QE alone is not going to be enough to stimulate and get the engine running again, you can expect more of those stimulus checks. I for one expect more of that. And once you have UBI introduced into the system, whether it's domestically or abroad or both, you're going to see a ton more quote unquote money printing. That's going to be a ton of stimulus entering the system and that can propel Bitcoin to unfathomable heights. But on the way down, right, for the next six months, 24 months, whatever, before we get this thing under control and before we figure out how this is going to all

unfold, you could see Bitcoin go much lower. Nobody really knows. And if you're trying to trade that, I think it's a fool's errand. Nobody's going to get it right. Most people are going to get it wrong if they're trying to trade it. And I don't know a single person at the bottom in the pandemic in March of 2020, when Bitcoin was around $4,000, who said that within a year, it was going to be challenging $60,000. That's incredible amounts of volatility for an asset like that. And I think it will increase with more and more fiscal stimulus, which is necessary in our system. We need to stimulate by basically giving cash out to people because of the leverage in the system. But Tina, what do you think? So I just want to find this to get the quote

correct because it's at the top of my Twitter. Let me just find this because it really fits. So, you know, as basically, you know, I have a very, very large Bitcoin position, particularly, you know, considering the various factors of not working, not being young. Max Keiser said, only keep money in fiat that you're willing to lose. Anything not in Bitcoin will vanish. Actually, he said crypto, but I'm saying Bitcoin, although I quoted it the way he said it. I'm prepared to lose my cash in the legacy system, you know, but I will look for opportunities if it goes lower to go add and rebuy all my Bitcoin back. And then some I'm prepared to lose that. I,

as I said, I'm very heavily in Bitcoin, but I need to be able to ride through this period and you have to have the mindset, you know, if you have no, no stable, you know, no stabilizers, If you don't have shock absorbers in your system, it's going to be a very bumpy ride. And so you need to build in those shock absorbers, whatever they are for you. It's highly dependent on who you are. Shock absorbers are taking a second job. The shock absorbers are things that will bring you in money to really add to your stacking.

I think I've always thought for a long time now, because of my framework of how I see the world, that all roads will lead to Bitcoin, and it will lead to extraordinary prices of Bitcoin. And I think the volatility will come down in that, what is that, seven, eight-figure Bitcoin, which I still expect to see this decade, and maybe into the 30s. It's hard to know exactly. But I think you'll still see extraordinary high prices, because I think the legacy system is fundamentally broken. I think the nature of the credit system is fundamentally broken.

And so I remain hugely bullish on Bitcoin with the recognition that the ride could be pretty bumpy. Yeah. And it's not just the legacy system, right? We've got political and geopolitical instability abroad. So why would we expect markets, any market to be not volatile when you've got All sorts of issues popping up across the globe, particularly with these commodity shortages, the war. You should expect very volatile markets to correspond to what's happening in the real world. When you guys think about kind of the average American, so obviously I think we all three spend a bunch of time talking about investors. And, you know, top 55% of Americans have investments, but the bottom 45% don't. Right now, inflation officially is at 8.6%, which on its face is bad by itself.

But then when you start to look at things like the inflation-adjusted average hourly wage growth, it's been negative for 14 months. And so it's very obvious that wages aren't keeping up with the increase in prices of those consumer goods. How bad can it get for the average person who – forget Bitcoin for a second. just has no financial portfolio to help them weather the storm of high inflation that we're currently experiencing. Yeah, they're going to have to lean on credit. And that's the problem, right? And this is not a new phenomenon with real wages, as you described. It's perhaps more severe. It's a difference of degree, but not one of kind. You can expect that customers and consumers, regular people that don't have a lot of assets, they're going to go back to the well,

right? They're going to try and get over levered. You're seeing some of those early statistics about credit cards. They're trying to return to the trend we had pre-pandemic where we're dependent on credit cards. We're dependent on short-term revolving credit to survive and make up that gap because you're not seeing real wages increase. So yeah, I think that's how they do it. I mean, it's been par for the course. So when you're in that dynamic where you've got the pressures of inflation and now you no longer have the Fed put, you no longer have the Fed at your back assisting it. Tell me how you think that, you know, consumers are going to hold up. I don't think they will. I think, you know, it's just a matter of time. When, how long, anybody's guess.

Yeah, it's very unfortunate. And then I guess, if you're sitting at the Federal Reserve right now, what can you do? Do you just keep trying to hike interest rates and tame inflation and hope that everything works out? Do you say, look, we got to increase interest rates, but maybe we shouldn't do it so aggressively and we kind of slowly do it do you throw your hands up and say hey inflation is better than a recession and let's just let inflation run wild like what is your both of your opinions as to what the fed should do right now well first of all i'll let tina go first on this one it's not a fed problem it's an administration problem i mean with a lot of policies that were put in place we kind of shot ourselves and you can pick the body part that we

shot ourselves in, we kind of shot ourselves with our policies. So I can't tell you exactly what to do because I don't know exactly what to do. I remember hearing stories from World War II, you know, one of the things that the FDR administration did was do everything they could to cut any governmental red tape that was in the way of fighting World War II. I think that same attitude needs to be taken by the federal government, by the Biden administration. Cut any red tape that is standing in the way of getting the economy to function properly. I keep hearing stories of shortages. This is the United States of America.

I've never in my entire life heard of these types of shortages. It's crazy, stupid shit that there are shortages on. so this is not a fed issue it's an administration issue um and i can't tell you the details that uh what they need to do exactly i don't know the answer but i'm sure there are lots of people out there who do so um that i think it's the actual answer and there's a very basic thing that could be done which is fix our energy policy we have a flawed broken energy policy And the mere pivot from the White House on how we're treating that energy policy, I think could send the price of oil plummeting because we live in a very much an expectations driven market. So if you actually heard a message coming out of the White House that is going to go after more petrochemical supply, more oil supply, that's going to change expectations.

It's going to change the narrative. And that's what you need. I agree with you. I don't think the Fed can do anything. I think they should have been more honest with folks about these issues with supply, demand, and balances, and a recognition that there are limits to what they're doing. And you heard Chair Powell say that at the very beginning of that yesterday. I mean, he was asked explicitly, do you think we can still get a softish landing? And he said, kind of, sort of, maybe, but you know what? That's going to depend on external factors beyond the Fed's control. That's him finally getting the message that there are limits to this, the omnipotence of the Fed. I think so many people in traditional finance just look at

the Fed and say, they're the Wizard of Oz, they can control all things. And I think that's a misnomer. I don't think that that's actually true. When you guys start to think about a number of these policies, is it that they don't understand what's happening, or they don't identify the same things that you all are sharing? Or is it something where they actually understand it, but they're trying to play a confidence game. And so you kind of have to do what people expect you to do, even if it's not the right thing, because it keeps the confidence and kind of kicks the can down the road. Like, how do you think about the difference of we're playing a confidence game? Let's do what people expect us to do. Let's quote unquote, maintain credibility.

You hear thrown around a lot versus, you know, maybe a Paul Volcker style, like rip the bandaid off, do the unpopular thing, but it ends up being the right thing in the long run. Well, I don't think you can do the Paul Volcker thing, and I think we're already doing the Paul Volcker thing. To go back to, we live in a credit system. Credit system is fundamentally based on confidence. It's what it is. Are you going to lend money to someone for their business, any business,

if you're concerned about the future? And the answer to that is no, that's not how it works. because your upside is limited. Your upside is the interest you make on the loan. Your downside is you don't get paid back. So it's a fundamental flaw in the nature of a credit system. I think it's inherent. I think this is why we've seen what we've seen in credit systems

going back to time immemorial. Credit systems are fundamentally unstable. But with respect to the Fed, it's absolutely the latter about the confidence game that you pointed out, Pomp. What we have is a dynamic where the Fed started to pivot and turn hawkish late last year, early part of this year. And you saw them communicating that quite clearly. People took Chair Powell seriously and the rest of the FOMC. And what did you see? You saw a historic route in the bond market. The sell-off in bonds and the rise in yields was one of the fastest in history. And that tells you that the Fed's primary tool to set expectations is

paramount. That's their ability, their ability to get out there and set the expectations and push everything in the credit markets in the direction they want. That is all dependent on people still believing in the Fed. And I think what we saw with the CPI print is once you had that elevated print that came in even above the economist's expectations, the market, which has sold off really rapidly the last few days, it sensed the fact that there's no way these guys can pivot without destroying their confidence. They have to keep the foot on the gas with respect to future hikes. And you saw it, sure enough, they leaked to the Washington Post that they were going to do this 75-bip hype. That just tells you how they're operating. They're operating with the standard

that they have to communicate expectations to the market, and the market's going to actually tighten. Because you or I, we can't access the Fed window. We have to go borrow at the two-year or the 10-year. When you guys think about the US dollar versus other fiat currencies, is it the thought process that other fiats that are considerably weaker will devalue against the dollar, the dollar will strengthen on that relative basis, and the dollar and Bitcoin will both strengthen and thrive in the short term? Or do you think all fiat currencies end up getting lumped together and the relative comparison doesn't matter so we talk in clubhouse a lot about the euro dollar system and listen to and read a lot of things jeff snyder writes

your dollar system is much much larger than the u.s credit system when you're doing business overseas in a non-dollar country, which is pretty much many of them, most of them, and you borrow in your dollar market, you're borrowing in a dollar denominated loan. So what that means is you have effectively, you're effectively short the dollar when you take that loan. So if you're earning your revenues in pesos, Argentinian pesos, or whatever currency you're in, if the dollar gets stronger, you're now short because you're earning in one currency and you have to pay it off in the dollar. This strongly supports the dollar. And it goes back to understanding the nature of what the system is. So you can see the dollar grow stronger.

And again, it's about, you know, it's about how, you know, we talk about two different facts about the dollar. It's purchasing power, but it's also the cross rates, the FX rates. So there's two different things happening and people often are casual in their discussion of it and don't specify the differences. Once you get to a period of massive spending, the dollar can depreciate in terms of buying power, maybe buying power versus houses or buying power versus stocks or buying power versus goods and services, and can still grow stronger versus other currencies. So I think because of the nature of the credit system, you can see both things happen. the dollar can grow stronger versus other currencies and grow weaker versus purchasing

power, which would be hugely beneficial for Bitcoin. So Bitcoin goes up and Dixie goes up. But the tendency is that when the dollar is getting stronger globally, it's said that the dollar tends to be a global wrecking ball. So it's not a simple answer. And I don't know that I can give you a great answer here. And maybe Joe can give you a better answer than I can give you. But absolutely, Bitcoin can go up and the dollar can go weaker and weaker in purchasing power, which is what we've been seeing for decades already with asset price inflation. Yeah, I mean, really quickly, if you had to boil down the world's problems into one word, I think you'd have to go with debt. There's too much debt out there. Sovereign states are over indebted.

And the reason that's significant to the dollar discussion is go look at the work of Brent Johnson, look at countries that aren't as privileged as the United States. They have to finance their debts by quote unquote printing, by expanding their native monetary supply, but they have to do what Tina was talking about, repay many of their obligations in dollars. So what you effectively have is you have this dynamic where many countries have to print quote unquote print their native fiat currencies, and they have to do a bid to the dollar because that's how they have to satisfy their obligations. So that dynamic where there's over indebtedness

and countries are going to have to continue to spend is just going to feed that. It's going to feed more and more of an artificial bid towards the dollar. So I happen to think the dollar is going to be the last one standing and probably strengthens over the foreseeable future. My last question for each of you, maybe each of you could take a stab at it. Global debt to GDP, 350 percent u.s debt to gdp somewhere like 130 i think at this point um everyone talks about the debt which i think is a very important part uh bitcoin as non-debt money uh is a potential first uh kind of principal solution uh to that issue it'll take a while i think for it to come to fruition but but definitely is off to the right start and uh continues to gain uh momentum and

adoption uh today the other half of the equation though usually goes undiscussed uh which is increasing economic output increasing the economic production and the idea of like can we grow our way out of the problem or is it simply a function of getting rid of debt and not taking on more how do you guys feel about kind of the economic growth component of this and is it possible to grow ourselves out of this problem well in the existing system i think it's going to be very difficult to grow your way out of the problem but if there were just certain discoveries i don't know what they would be maybe nuclear fusion there were certain discoveries that took place in coming years sure you can have a massive increase in productivity um but i think short of that no

i don't think you can grow your way out joe yeah yeah i tend to agree i think that uh it's going to be hard. And what I would add to the challenge of compensating for this with increased productivity is the demographic trend. Many countries, and it's a good thing, right, that you have an older population, but we have to find a way to put bigger segments of our population, larger segments of our populations globally to work. Even in some fashion, we have to change the nature of what it means to work and contribute to the workforce. The thing about productivity, I think you have some of these exponential technologies like AI and others that could change the conversation. The question there becomes, well, if you have that productivity, is that going to be widespread? Are

you going to see it disperse through the population or are you just going to have the few companies that have the dominance in AI? Are they going to accrue all the benefits? That's not going to be widespread and sustainable that would drive productivity over the long run. I do think there's a possibility though, and I won't discount it. I'm an optimistic person. And I think that's the way anybody who's managing money or trying to handle themselves in a personal financial decisions should focus on what could happen. And yeah, of course, if we have innovation, technological innovation, you could potentially see upticks in productivity. But I don't think that you're going to get out of this debt problem merely by growing your way out. Yeah. It's unfortunate. I

think that's the perspective of many people. I tend to be an optimist as well. And maybe there is some way to fix that. But it's a tall task. I think actually Bitcoin will fix it, I hate to tell you. But I actually think Bitcoin will result ultimately in a change of paradigm. But I think we'll have to go through a lot of the negative aspects of the existing system. I disagree with most of the world on this. There are very few people who currently agree with me, but I think there'll be virtually no credit in a Bitcoin world. And it'll be a world of equity investment and money, money being Bitcoin, because of the technological change of what Bitcoin is. And I think it will tend to create a world with much higher growth rates. And I think it will

reshape the way the economy works, ultimately. And a lot of people don't agree with me on this, but it's what I think. But I think we'll end up with that because of the inherent pain of the existing legacy system, of the credit system. And whether we were on a gold standard or not, we were still in a credit system. I think credit is fundamentally the problem, particularly bank credit, because it is with bank credit that you create new money. And that I think is at the heart of the fundamental problem. And I don't think people fully understand yet, including many Bitcoiners, the nature of and the power of what this technology is so actually bitcoin makes me hugely optimistic how long that takes i don't know and i

don't know that uh that i'll see get to the promised land because i'm not young but uh but i do think that uh bitcoin actually does fix this sorry i love it i love it uh both of you one of our sponsors is eight sleep i sleep on the uh the mattress every single night what is your guys sleep schedules. And do either of you guys have an eight sleep? I don't have an eight sleep. I'll have to look into it because I've been probably not sleeping as well as I should recent months and weeks. But that's the nature of life as a lawyer. You never get enough sleep. It's like a thermoregulated thing. I put it ice cold. You just fall asleep. And it's frankly so magical that I tracked down the founder and say, hey, man, I got to invest in this. This thing is

amazing. Tina, what about you? What's your sleep schedule? It varies. Sometimes I'm having too much fun talking to people on Clubhouse. Every time I ever went on Clubhouse, you were in there and you were just preaching. And I was like, man, this guy's all over it. I wonder what he does every day. And then when I met you, I said, oh, okay, I got it now. He's living the good life. I live on Clubhouse. That's what I do. We've developed a lot of good friends. I mean, i met joe from clubhouse and i consider him a great great great friend and he's somebody who very smart who i've learned a lot from and there are and there are other people too you know uh hodl is there all the time and i love hodl and john for cory and there's i don't want to leave

names out but there's a bunch of people who are just fantastic so it gets john seth is there all the time um and i'm good friends with him so there are uh i i sometimes fall asleep sometimes i fall asleep my desk so yesterday i fell asleep in my chair uh don't tell people i mean i need a better i need a better sleep schedule you're totally right don't don't tell people you're falling asleep at the desk talking on clubhouse all right where can i send people to uh to find both of you guys on the internet wait wait they they heard me snore a number of months ago it It was embarrassing as hell. I was snoring in the clubhouse. Joe, what are you doing hanging out with this guy, man?

Oh, I don't know. You know what? One of the great things, though, all this stuff we talk about, everything interesting here, it's great that we live in a time where we can chat in real time about this and have shows like yours and have Twitter spaces and Clubhouse and digest this all. I mean, it would be a lot more difficult going through all this if you just had to read about it and some dry black and white paper. and one more thing and actually two aspects one um twitter gave me this in the last bear market and twitter and clubhouse are giving me this now helping me with my own personal psychology because managing your own psychology is really important in this and having friends you can talk to and and and discuss things with and the second thing which my goal for this bear market is

crowdsourcing information about what's happening in the economy. And so we can do that because we're talking to people who we know, we're talking to them all the time, and we can start to better understand what's going on because we go through this process together and we talk. And so that is my goal, crowdsourcing and understanding. So we learn about the different things that are happening and can get information maybe a little more quickly and understand it better and analyze it. So I think there's a huge, huge opportunities here. I love it. All right, my friends, thank you so much for, uh, for your time today. I learned a bunch and I think everyone else seemed to have enjoyed it as well. So we definitely will have to do this again. Uh, but I appreciate your time

and, uh, uh, just keep going. It's a crazy times ahead, but, uh, we need each other. So I look forward to bringing you guys back at some point. Thanks, Pom. Appreciate it. Thank you very much, Pom. Thanks so much for listening to today's episode. I really hope you guys enjoyed this one. Make sure you subscribe on Apple, Spotify, or your favorite podcast player. And if you're looking to try to transition to get a new job in the Bitcoin or crypto industry, we've got you covered. Head over to palmscryptocourse.com. We've developed a curriculum with the top teams across the industry. It's a three-week intensive training program with over 50 events packed into that three-week time period. Go to palmscryptocourse.com to learn more, and I'll meet you guys

for the next episode. Thank you.