The Pomp Podcast - #1451 Anthony Pompliano & Phil Rosen | Why Bitcoin Could Go Up Forever!

Episode Date: December 9, 2024

Phil Rosen, the Co-Founder of Opening Bell Daily, and Anthony Pompliano, Author of ‘How To Live An Extraordinary Life’ and CEO of Professional Capital Management, discuss why markets are broken, how the federal reserve has made sure investors will make money forever, why bear markets have been outlawed, and outlook on asset prices.  ====================== Meanwhile is the world’s first licensed and regulated life insurance company built for the Bitcoin economy. Protect your loved ones with sound money built to manage life’s uncertainty and a broken financial system. Their BTC-denominated Whole Life Insurance policies allow HODLers to pass more BTC on to their loved ones and a tax-advantaged way to access BTC for liquidity during their lifetime. Visit their website at https://meanwhile.bm/ to join the waitlist for a policy and to learn more. ======================= Xapo Bank, the world’s first fully licensed Bitcoin-enabled bank, offers military-grade security with an unmatched blend of physical and digital security, as well as pioneering regulatory oversight, so your funds are always protected. Beyond secure storage, they enable you to grow and use your Bitcoin. Earn daily interest in Bitcoin, spend with zero FX fees using a global card, and make instant payments via the Lightning Network for unrivalled access and convenience. Visit https://www.xapobank.com/pomp to join. ======================= Pomp writes a daily letter to over 265,000+ investors about business, technology, and finance. He breaks down complex topics into easy-to-understand language while sharing opinions on various aspects of each industry. You can subscribe at https://pomp.substack.com/ ======================= View 10k+ open startup jobs: ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠https://dreamstartupjob.com/⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ Enroll in my Crypto Academy: https://www.thecryptoacademy.io/

What's up everyone? This is Anthony Pompliano. Many of you know me as Pomp. You're listening to the Pomp Podcast, which is my effort to find the most interesting people in the world and sit with them for hours while I ask questions in an effort to learn. So it would mean the world to me if you would subscribe to the show on your favorite audio platform, watch episodes on YouTube, and tell your friends and family about the podcast. My goal is to help millions learn from the world's most interesting people. So let's get into today's episode. What's going on, guys? Today, we've got Phil Rosen. He is the co-founder and editor-in-chief of Opening Bell Daily. In this conversation, we break down why markets are broken, how the

Federal Reserve has made sure that investors will make money forever, and why bear markets have been outlawed. This conversation breaks down not only where we've been, what's going on in the market today, and how asset prices are impacted. If you watch the full thing, you will learn a ton, including my personal perspective on why investors who are taking tons of risk are more right than the traditional investors who are scared that we may be in an asset bubble or a market top. Here is my latest conversation with Phil Rosen. today's episode is brought to you by meanwhile meanwhile is the world's first licensed and regulated life insurance company built for the bitcoin economy operating on the bitcoin standard

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insurer. Again, that's meanwhile.bm. Go check them out today. Today's episode is brought to you by Zappo. Picture this. Every time you trade Bitcoin, the spread determines how much value stays with you. That's why securing top tier Bitcoin trading fees is key to growing your Bitcoin wealth. But what if I told you that there's a platform that lets you save up to 90% on your Bitcoin trading fees? Now, here's the kicker. Not only do they save that money, They also are dubbed the Fort Knox of Bitcoin, Zappo Bank. They're the world's first fully licensed and regulated Bitcoin and banking group, and they have been delivering a unique blend of physical and digital security for over a decade.

From military grade Swiss bunkers to cutting edge digital protocols, they've got you covered. And now they're bringing you the kind of competitive Bitcoin trading fees typically reserved for institutional giants, right in the palm of your hand. With Zappo Bank's ultra competitive spreads, more of your Bitcoin stays where it belongs, in your pocket. Whether you're trading big or small, every move you make is designed to boost your gains and fuel your financial future. Head to zapobank.com forward slash pomp to join. That's X-A-P-O-B-A-N-K dot com slash pomp. All right, Phil, what's the first thing you got? So this has been an extremely good year for investors across the board. Bitcoin's up 130%,

the S&P 500 is up 28%. And since 1874, the S&P 500 has only gained 30% or more 12 times. So 7% of the time, and we are right on the cusp of that. In your view, what's been the biggest driver of asset prices this year? I love that you went in your bag of data since 1874, only 12 times. That's a fantastic stat. I think that investors finally realize the game has changed. If you go back and you look at the last 16 years since the global financial crisis, the Fed has stepped in and they have broken the financial market in terms of how it used to work. It no longer works the same way.

And so investors, I think, kind of felt this. They had a hunch. They had a hypothesis that this was true. But in 2020, we proved it to be true because what investors felt through the 2010s was every time we get near a market crash, every time we get near a market downturn, every time we get near a potential recession, the Fed seems to become a little bit more aggressive. They begin to intervene. They begin to stimulate the economy. And so the central bankers invented this brand new tool called quantitative easing, where they were going to simultaneously suppress interest rates

they were going to print money. Now, when we get to 2020, we get to test. You had a hypothesis, but now we're doing the scientific process and we're going to go and we're going to test the hypothesis. There is no cleaner test than lock everyone in their homes and don't allow their businesses to operate. That's a pretty big crisis. And so what happened? Fear spread like a true virus. And all of a sudden, everyone was like, oh my God, asset prices are going to fall. And people just started selling everything. They're selling stocks, bonds, crypto, anything they possibly could, and they wanted dollars. In that moment, the Federal Reserve had to show their true colors. It's kind of like at the end of a poker hand, you got to lay the cards out. What are you

holding? Either you put up or you shut up. And when they laid their hand down, it was exactly what investors had hypothesized about, that the Federal Reserve will not allow the market to have a prolonged bear market. The Federal Reserve is going to suppress interest rates and print money, and they are going to ensure that asset prices continue to go up and to the right. And so that's what we did. Two emergency rate cuts down to 0% interest rates, and we printed trillions of dollars. That one moment of 2020 of actually confirming what investors already thought, told every single investor one message, get the hell out of the safe zone and push out on the risk curve. And so I now believe that it is nearly impossible

in the United States of America for us to see an 18 month or longer downturn. We can have three months, six months, maybe even 12 months. If you go back to 2020, we saw stock prices go down for about a year. They started to go down in the beginning of 2020, 2022, and they bottomed by the end of the year. And so then we went back up. October of 2022 was the bottom of the stock market. If you look at crypto, similar thing. I think it was like November, December was the top of the market in 2021. By November of 2022, bottom, we go back up. And so we didn't even really get a full 12 month market downturn until we bottomed. And so I don't believe that we can get 18 months or more. Why? It's because we are addicted to cheap capital. We have to have that

capital coming in. Now, what's fascinating about this experiment in 2022 was that they kept hiking interest rates, but asset prices bottom and went back to all time highs. So even though interest rates went to over 5%, we still got all time high in asset prices. Why? Because the Federal Reserve got overwhelmed by the fiscal policy of us printing hundreds of billions of dollars that then got pushed into the market. And so when you look at this, you say, wait a second, the Federal Reserve is in a position where they have to cut interest rates, keep them suppressed and print money through quantitative easing. But also when you add in the fiscal component, there's no way the central bank and the politician ever going to be on the same page. No way, because they are all

incentivized to do the same thing. So even when one corner of the inputs gets on the right page and says, hey, you know what, maybe we should chill out. We should raise interest rates and we should not print money. There's someone somewhere else who isn't on the same page and they're going to go and they're going to do it. And so investors now realize just get long, get long because they are going to make sure that stocks go up over the long run. Crypto goes up over the long run. All this stuff is going to go up. And so when you see a 30%, give or take year, you're like, that's a massive number. The NASDAQ was up 50% last year. These numbers seem like they are unsustainable.

But if I told you that the market actually broke and it took until 2020 to 2024 for investors to realize it, and now we're just seeing the impact, why can't it happen again? People say, well, maybe the market crashed. Okay, maybe it does crash. But do you think five years from now, the stock market is at all-time highs again? Yeah, duh. Like you would have a very hard time betting on a three-year or longer timeframe that the stock market is not higher than it is today has nothing to do with the stocks has everything to

do with the structure of the market uh the federal reserve and the politicians and so unless politicians central bank all get on the same page and say we're not going to push uh liquidity into the market it has to keep going up and so that's basically the investment decision today sure you can go and you can pick individual stocks try to outperform the indexes whatever but if you just say, hey, I'm going to just do indexes or I'm going to do cash. It's like a no-brainer, right? So there are a lot of very long-time Wall Street bears that have come out in the last couple months and suddenly turned bullish, and they're playing into exactly what you're saying. There's no way this market can fall because of what the Fed has shown that it's willing to do.

And there's a book that we both recently read called Lords of Easy Money by Chris Leonard. I'll read you a quote from this book. He said, when asset inflation gets out of hand, people don't call it inflation. They call it a boom. Can you explain that? So I read the book because you recommended it to me. One of the best book recommendations that I've gotten recently. The book basically can be summarized into two things. The first point is when the Federal Reserve decided that they were going to go and they were going to pursue quantitative easing, there's two things that they could have been worried about. They could have been worried about price inflation, like CPI, or they could be worried about asset inflation.

What they should have done has been worried about both of them. They should have said, hey, if we go ahead and we increase the liquidity in the market, we use quantitative easing, we should keep a eagle eye on both the price inflation and asset inflation. They did not do that. They were just worried about price inflation. And so that never showed up. in January of 2020, inflation was less than 2%. So a decade later, what happened during that period, though, was asset inflation exploded. And so these asset prices kept going up and up and up and up. And so that's where a lot of this showed up. But the Fed was focused on inflation in terms of price inflation. And so that kind of looking at price inflation and not paying attention to

asset inflation, one, the wealth inequality gap widened because the rich people had the assets, so they benefited. But two is the Fed kept with the quantitative easing because they were like, well, there's no price inflation. There's no price inflation. Look, there's not a problem. And so I think that kind of coming back to this quote is the idea of asset inflation is amazing for the people who hold the assets. The question is, does the asset inflation stop? But if the asset inflation just continues, then there's no problem. And so that's the ultimate question is, will the asset inflation stop? Now, here's what's fascinating. We're talking today about residential real estate and home affordability in America is the worst it's

been in like 40 years, right? If you go back to the global financial crisis, that quote unquote real estate bubble popped. Well, if you just held the real estate till today, you're good. So what ends up happening with these kind of larger asset classes is there can be corrections along the way. But people who just have a long time horizon, they're going to be fine. Because again, the structure is very different. And so what ended up happening in the real estate crisis is that they were manipulating the market. As they manipulated the market from the central bank, people took more risk. If people take more risk, then they start inventing all kinds of new financial instruments. The big one, as that book describes, is the CLOs and CDOs.

And so once you start to do stuff like that, where people are issuing risk, essentially, and then they're selling it to somebody else, so they are just in the transaction business, not in the risk-taking business, what do you think is going to happen? And so it all feeds on itself, but it comes back to the Federal Reserve.

And so they have now proven that there's a safety net. And so if you know that they are going to create, quote-unquote, inflation, what do you do? You want to benefit from it. Where is the inflation going to show up? it's going to show up in asset prices. So what do you do? You go and you invest rather than hold cash. And I think that's really the game here is that asset inflation is something that nobody was really talking about because they had these other names, booms and busts and all this stuff.

But how long does it have to go for? Right? Like I was talking to somebody, I said, oh, 18 month, you know, bear markets can't happen anymore. Like, oh, that's crazy. It was like, you know, classic traditional guy. And I said, okay, well, it's been 15 years, 16 years, whatever it's been. How much longer does this have to happen before you say you agree? 20 years? If we don't get an 18 month or longer bear market

in 20 years, do you agree? No? Okay, 25, 30, 50? Will you do it from your grave? Right? Like at what point do you wave the white flag? And again, it's not like we're talking about like, oh, it's been two years, it's been three years.

We're not talking about a decade and a half. And so I think that's really what we're starting to kind of talk about is like, The longer that this goes on, the more likely that the game has changed, that the market has changed. And so it just goes back to like, you can boil all this kind of, you know, super nuanced, sophisticated finance stuff down to like, invest, don't save. Like that is really just the answer at this point.

Yeah. And the reason that's the case is because the Fed, to sort of recap what you just said, the Fed has implemented what's now called the Fed put, which is basically they have a floor on asset prices. So even if assets start collapsing, then you can basically guarantee the Fed will step in and save investors. The other side of that, though, if assets go up forever, doesn't that necessitate a bubble at some point? Are we in a perpetual bubble at this point? Well, I think that as long as fiat currency exists, then they can keep the game going.

The question is, can they do it for so long at such a degree of severity that they eventually hurt the currency? And if you blow up the dollar, then, yeah, the game can end. But at that point, are you better off holding the dollars or are you better off holding the assets? You're still better off holding the assets. So, like, it's kind of this weird thing is if you, like, take it all the way to the end game and you say, like, okay, fine, the U.S. hyperinflates the dollar. You're still going to want to own the assets, right? Now, I do think that the one caveat or the one, you know, kind of a perspective change that I would introduce is let's say you're somebody who's older in life and you're at retirement, in retirement, about to be in retirement. You don't have the luxury of 30, 40, 50 years.

So it does really matter what the entry price is for a 25 year old. If you buy the S&P 500, it doesn't matter if it's last year's price, this year's price or next year's price. Right. Like it's going up and it's going to go up for a long time. You have time. You know, you're good for somebody who's close to retirement. That's not true. And so now all of a sudden you got to be very valuation sensitive. And the question is, what are fair valuations? Now, here's what's fascinating is if you look at historical valuations, a lot of people would point to and they would say, NVIDIA is crazy. The NVIDIA multiple is off the charts, the price to earnings. Okay. But NVIDIA, I think the PE or the average PE of something like an NVIDIA is up 2x. So it's overvalued. But if you go and you actually look at the efficiency of the business in terms of its financials, it's 2x more efficient. So when you look at that, you say to yourself, hold on a second. Actually, on a ratio basis, it's the same. And so if you go and you look at all these companies, like imagine explaining to someone in the 1980s Amazon.

They couldn't wrap their head around how capital efficient, how much profit, multi-trillion dollar companies. This is insane compared to that. And so naturally, of course, you're going to pay more for a company that has a faster growth rate, more efficiency, more profitability, et cetera. So the last point I'll say is I also think that there is something called a monetary premium being assigned to stocks in particular, which is let's just say that you look back and you say, OK, there's a 10x EBITDA multiple on a certain business. Well, there's a lot of investors who are not just buying stocks because of the business,

the cashflow, the assets, et cetera. They are buying stocks specifically because they are trying to hide from inflation. And so if they're trying to hide from inflation, now all of a sudden some portion, let's say 80% or so of the capital invested in that company is because of the company. But 20% is actually people buying it from a monetary policy standpoint. So now you have this monetary premium because there's 20% of capital is not there to buy just the company. So now the valuation multiple has to creep up some because you have a monetary premium on top. And so a lot of people, when I first started talking about this a while ago, everyone's like, oh, like, what the heck does this idiot know? Oh, just stick to Bitcoin, you little kid, right? All this stuff.

Okay. Paul Tudor Jones recently gave an interview to Andrew Ross Sorkin on CNBC, and he explicitly said he believes that a lot of young people are buying the NASDAQ as an inflation protection. So don't listen to me. Paul Tudor Jones, if you think he's dumb, that good luck to you right but if that's what's happening and again maybe it's maybe maybe paul's wrong i'm wrong a bunch of other people are wrong but if that is what is happening now all of a sudden when you look at those uh historical valuation multiples it's a harder comparison doesn't mean that they're not valuable right they can still serve as a guidepost you can still look at them all stuff but you can't just sit there and say like well it used to be 10 now it's 14

oh it's overvalued i shouldn't buy it because actually what if 14 is with the monetary premium the efficiency of the capital, all these things is actually fair value. It's not a premium. It's fair value. Now, again, each company is different, each sector, growth rates, revenue, profitability margin. There's so much that goes into this. Why is games hard? But I just think that there's been very simplistic rules that people were able to operate under until 2010. And the game changed so massively in 2010-ish timeframe that quantitative easing broke the market. Investors now have to understand the ground shifted. We had a hypothesis for a decade, but in 2020, it was proven true. And now moving forward, why is it that the young people are outperforming

the older people? Because the young people don't have to unlearn what the older people already understood. The young people grew up in a QE era. All these kids know what the game is. get out on the risk curve why are you holding the assets that are not risky it sounds crazy but again it goes back to if everything goes up further out on the risk curve should outperform and so if you go and you look you know look at palantir done pretty well right and everyone's like oh it's overvalued this this is that whatever like maybe it's a hundred billion dollar company could it fall in price sure but all those young people seem to have gotten it right right and so you you start to look at you and you say to yourself wait a second here

tesla right reddit carvana like you can just go through all these companies and these are all the names people been highly debating but it's kind of like the new economy people seem to understand something one about trends and what's becoming popular what are people using all that kind of stuff but also they just understand like being long and having the stomach for volatility is okay and i don't remember the exact stats around carvana but i'm pretty sure carvana crashed like 90 and came back and so you look at that you say to yourself well hold on a second who in their right mind would hold well like if you're used to holding crypto Carvana is like a market crash for ants right it only went down 90 I'm just 99 you still got you

know think about like another way to think about this is if something crashes 90 I don't like to do public math but to get to 99 that's another really big crash right you still got a long way to go to get to 99 and so it's this kind of crazy thing where um it really begs the question are you using antiquated mental models or have you said hey structurally there's some timeless principles buy low sell high all you know buy things for less than they're worth all that stuff but you're now updating the model with modern data so we want an old school timeless framework with modern data and there's a lot of people that i see on the internet who they got the old school timeless principles and framework but they don't got the modern data and that's where i think

there's some disconnect. I think one easy way to look at all this is just look at the momentum. So we have essentially years and years and years of bull market. And that's from the Fed. And we had dips here and there. But generally, things have been going up nonstop. And there was a Yale survey that you wrote about in your newsletter. 46% of individual investors believe there's less than a 10% chance of a market crash in the next six months. And so about half. And that's the highest level since 2006, but that survey has actually doubled in the last two years. So I do think this trend of people realizing, okay, markets will go up forever, that is catching on, you know, old and young. I don't know what the demographics of the survey are. What do you think the risks are

of this perpetual bull market? So first on this survey, if you put Yale's name on it, immediately everyone thinks is really important what i didn't write today but i can say here is it's a bullshit survey right i mean think about this for a second uh do you think there's a 10 or more chance 10 is a made-up number like like it's not a thing that you can actually test right so i think forget for a second like the actual data and just take like people are becoming more optimistic and they're building confidence that the market's not going to crash the reason why i kind of frame that as the exact data points of the survey don't matter as much as the sentiment is because what I think is happening

is more people are becoming optimists. Those people are gaining confidence. So I was already an optimist. Now I'm a super optimist, right? And it's the severity of belief that actually is the more interesting thing to me than rather than like somebody, I'm not optimist, now I'm an optimist.

So the zero to one, sure, we should talk about it, but it's actually the people who are, okay, I was optimist, now I'm a super optimist. That to me is really telling because those are the people least likely to go back, right? It's kind of like if you're kind of a casual church attendee, you know, I kind of believe in some stuff, kind of don't, whatever. But if you're like the hardcore, you go to church twice a week and, you know, you pray, you carry around a rosary, all this stuff. Like there's no no matter what anyone tells you, you're not converting to any other religion like this is yours.

Right. So the reason why that becomes really fascinating. Go back to this book, Lords of Easy Finance of Easy Money is one of the stories I took away from there was Ben Bernanke was running the Federal Reserve. And at one point they started to talk about quantitative easing. And so they basically put out this message and the market said, oh, the Fed's going to go big, baby. Let's all get super long. And because they have the meeting minutes, Bernanke and the rest of the Fed governors were talking and they were like, oh, I think we kind of screwed this up. So the market thinks we're going to go super big and we were only going to kind of sort of do it. And we were like, you know, if you think of it as kind of like maybe if you go to McDonald's, you order a Coke like they were going to do the supersized medium, you know, large. And we were going to do like a medium has a big gap. So what do we do? And what they realized was that the market is their boss.

The Fed is not the boss of the market. So because the market expectations were that they had to go big, they felt like if they didn't go big, the market would be disappointed and asset prices would crash, which is what they were trying to prevent all along. And so market expectations dictate what the Fed does. And so now the Fed, they do these, you know, they try to preview their current things. They're trying to influence whatever. But if everyone on Wall Street came together and have like a secret meeting without the Fed and like, yo, let's all just like tell them we're going big, the Fed would have to do it. Right. And so if you go back to this optimism survey, if half or more, the doubling, like all the stuff, like there's more people who are optimistic and also they're super optimistic. Well, guess what? The Fed's going to step in the market.

The Fed's got to listen to the people. And so the people run the Fed. And so that's what I took away from that survey, is that now the Fed's like, oh, shit, if asset prices were to crash tomorrow, what do you think Fed's going to do? Like, anything other than suppress interest rates to zero and print trillions of dollars looks like you're bringing a water gun to a gunfight, because that's what we're used to now, right? In 2020, like, we breached the subject.

When there's a crisis, put the interest rates to zero and print trillions. If you don't do that, you're not trying hard. Guess what? In my lifetime, I bet you they print $10 trillion in a crisis. Right? And people are like, oh, that's crazy, whatever. Like, okay, well, did you think that they'd ever print three? Like, it's not that crazy.

I'm not saying they should do it. I'm just saying that as an observer, not a predictor, as an observer, they have to do it. And so once you start to understand that, you say, literally, think of something worse for the economy than we are going to lock everyone in their homes for months. The velocity of money ground to a halt. People were selling asset prices. Bitcoin dropped 50% in a single day. What else could you possibly cut? The dinosaur is going to come back.

Are aliens going to visit us? Is a comet going to hit Earth? Like to think of like whatever crazy thing you could think of, it's probably still not worse than we're going to lock the entire country in their home for months. And so if you say to yourself, okay, if it can't be worse than that from a, what could happen to the economy? And we know what the response is. They're never going to let the asset prices go down for a prolonged period of time.

Doesn't mean asset prices can't go down, but if you're a young person and asset prices go down, you're like salivating. You're just like, just buy more. because these idiots are going to just pump the prices back up. And so that's, if you go back to 2020, that's what the smart people did. Asset prices fell, they didn't sell anything, and they just bought more. And by the end of the year, we're back to all-time highs. Genius. I think an interesting point you make is that the Fed is listening to the market and trying to meet the market's expectations. But I think it's sort of a new development with Jerome Powell that the

Fed can forecast or signal what it's going to do. So pretty much everyone always knows what the Fed will do now. And part of that is because Jerome Powell is a very clear communicator. And they always put out, you know, conferences or they put out speeches that essentially tell the market what's going to happen. So there's an interesting dynamic where, yes, the market has its own expectations, but the Fed is also more clear than ever about what's coming next. Allegedly. Allegedly. They lie.

Yeah. But a few decades ago, you had the Fed chairman would be super convoluted in their communication. So no one would ever understand what they were talking about. So then when they would make a decision, it just kind of happened. And to a lot of people, it was a blindside move. But now there's almost zero chance that any market participant is surprised by the Fed's. so yes and no um i agree kind of the alan greenspan fed speak you know they even talk about in the book a little bit um i just think it's hilarious right it's like we're too smart you guys don't need to know what we're doing uh we're just gonna you know come out here and like do the big reveal wizard of oz pull back the curtain type stuff um that don't seem too good right uh so the idea of giving some sort of guidance uh makes sense and the problem with guidance is if you don't follow through. So if you tell the market, hey, we are going to keep interest rates at zero for a prolonged period of time, years in advance, and then you jack them up

at the fastest rate in history at over 5%, you get Silicon Valley Bank going under. You get a bunch of banks holding the bag, and then all of a sudden, bank run, bam, literally three of the five largest bank collapses in history can be traced back with a dotted line to the Fed giving certain guidance and then not following through. Now, the Fed isn't fully to blame. There's also risk management at these banks. They didn't do their job. Right. They bought things that they weren't paying attention to, et cetera. There was obviously rumors that spread where people got nervous that caused the bank runs. Right. That's a whole nother thing. There's certain politicians that potentially even were involved in some of that stuff, et cetera. So you can't like pin the tail

on one donkey, but you definitely got some pretty big donkeys out there that, hey, you know, you does that really deserve a tail? And so the reason why that's interesting to me is because it then says, okay, guidance is guidance. It is not a guarantee. And so it calls into question, do you believe the Fed? Now, most people in sophisticated finance circles would say yes, but most people on the internet would say no. And so we have a bifurcation, a divergence in these two worldviews. The sophisticated finance people say, I want to know everything the Fed's got to say.

And the people on the internet say, when the Fed talks, either I don't listen or I don't believe them. Because you're like, okay, fine. They said that interest rates were going to be at zero, but asset inflation happened. And so we had to raise interest rates, one-time deal. Was it a one-time deal?

Because the Fed also told you that inflation was transitory. And guess who was calling out nonsense from day one was people on the internet. So now you have, again, two worldviews that are actually in contradiction with each other. It's much clearer to see around the inflation is transitory than it was around, you know, kind of the interest rate decisions. And so when you see that, you say, wait a second.

The Fed used to be the Wizard of Oz. All-knowing, omnipresent, it's just whatever they say is gospel. But to the internet age, trust has been falling in all institutions and no one's been more hampered by that than the Fed. And so you got a bunch of people on the internet who are like, nah, dude, when crisis comes, you're going to show up. You're the fire department. But the only thing is you created the fire and then you got to show up to put it out.

And we're not going to give you credit for putting it out. We're just going to make a bag of money off of you putting it out because we know you got to pump asset prices. And so I think that's really one of the stories of the 2020s is that the internet does not believe the Fed. And so as soon as that happens, you say, well, what are they doing? When the Fed speaks, they listen, but they don't necessarily hear them. And so that's interesting. But also they're competing to a degree. we have a human led monetary policy and the internet went and invented a algorithmic monetary policy and so far the algorithm has been more disciplined than the human monetary policy the fed has been highly inconsistent over the last 15 years bitcoin has done exactly what it said it was going to do bitcoin's monetary policy gives perfect guidance

the fed all over the place when you compare the two systems one is believable and one is questionable one is predictable and one is unpredictable and so when you start to see these differences you always say no wonder so many people on the internet who question the fed who don't necessarily believe what they're saying are also being attracted to bitcoin as an asset that has a algorithmic monetary policy. And so I think that's really what becomes fascinating is they call the bluff on one hand and they compete on the other hand.

Now, I did think that I have a theory that something has changed in the world and people haven't yet caught on. I think the Federal Reserve had a meeting about Bitcoin. Something changed. But they now have changed their tune and they're going to call Bitcoin digital gold. Jerome Powell said it at the Dealbook Summit.

They put out a paper recently calling Bitcoin digital gold. There was a meeting. A talking point like that does not show up in two places by accident. Somebody in the United States government, the Fed, Treasury, whatever, they all got together. Let's talk about this. What's our narrative? And they have decided that Bitcoin is digital gold. That's how they're going to describe it.

What I love about this is they're right. that is what it is it is a digital store of value and so now what we have is we have a point of common ground the internet believes that bitcoin is digital gold they believe that it's the best store of value the federal reserve is implicitly telling us they agree they can never come out and say it but by calling it digital gold and reiterating that talking point over and over and over again they essentially are saying the internet and us we're in cahoots together that's great for bitcoin it's actually great for the federal reserve because by finding common ground they now establish a common point of agreement which then establishes some degree

of credibility again with the internet so they say hey we know that you don't believe us about monetary policy inflation all this stuff that actually used to matter but you know what you internet people we're good on this one topic and so they say hey you know what okay cool we agree on one thing we still disagree on 90 of other things but like we got one together and i think that this is the road back to the federal reserve gaining some credibility with the internet age is you got to get wins on the board and so by finding that bitcoin is digital gold and talking about it that way i think that you can start to actually pull these things back together but it's gonna take a long time i don't think power will be there you know 10 years from now

and so you got to have it through different regimes as well as everyone's got to be on the same page. And unfortunately, it could take one press conference, one misstep, and you're right back to zero, no one believes you. But I do think that this narrative of digital gold came from there was some sort of, you know, talking point change. And I do think that although they're not like, hey, let's try to, you know, be simpatico with the internet. I do think that it is like an olive branch in a weird way, where now there's common ground, and hopefully it can help reestablish trust in the Fed, because I do think that's important for financial markets in general. is you want people to maybe be optimistically cautious, maybe, you know, skeptically

believable, right? Whatever you want to kind of, hey, we want to believe you, but we also want to think independently, rather than just be like, no, you guys are idiots and wrong, blah, blah, whatever. That's not good for the American financial markets either. So Jerome Powell calling Bitcoin digital gold, I think that comes at a very coincidental moment, because you obviously have Trump White House coming in pro crypto, Gary Gensler is leaving the SEC, and you're getting a pro crypto SEC. And you have a bunch of lawmakers coming out saying, hey, we're also pro crypto. So it's also the Fed is just getting on board with this movement, almost regardless if they're ready to or not. And yes, maybe that makes the internet

more confident in the Fed. But I also think it was kind of put up or shut up for the Fed. And it was just time to do that did you real quick did you see uh when trump went to the notre dame cathedral uh reopening okay when he when he went the whole world was kissing the ring right he's not the president united states right now but there's a feeling that the big boss is back whether you like trump you don't like trump you agree with policies you don't you voted for him you didn't there's strength there's a point of view and the point of view may be wrong but it's a strong point of view and it's very clear what the point of view is and so when that happens most people in government or government related you know type of activities they realize well

you're either on the side of the current administration or you're not and so if you think oh again very big generalization we've had certain presidents over the last 20 years that have been more pro-woke policies. A bunch of people scramble and they become more pro-woke, right? And there's a whole bunch of different, you know, kind of legislation and topics, whatever. Now we have an administration coming in

that's much more pro-business, free market, you know, things like Bitcoin, whatever. Like here comes everyone scrambling over here. And so actually it is set from the top. Now the Federal Reserve, I don't think they're like, oh, here comes Trump, let's change our language. But do I think that it feeds into it? Of course.

and so they weren't talking about that way before november and so i think that it's just like little details like death by a thousand cuts right and you kind of end up in this spot and you look back you're like well how do we get here like well uh it was this and this and this and like you like list a hundred things but a huge one i think is you have a administration change where there's definitely a different perspective and so people kind of again even if they don't jump over to your perspective, kind of edge a little bit more so that they're not in direct contradiction with you. I think that's a great point. The one thing I want to ask you about, right now we have about $36 trillion in debt and markets and investors have gotten addicted to cheap capital. The Fed

is going to keep printing money. Is there a way or a risk that asset prices do fall and revert back to old times when bear markets were a little more regular? No. No, asset prices can fall, but we will not go back to multi-year bear markets unless the Federal Reserve structurally changes in some form or fashion. But asset prices falling is different than prolonged bear markets. So I want to be very clear and careful that I'm not saying that your favorite stock or even the stock index can't fall 10, 15%. We saw that in 2020, it fell. What I'm saying is it can't fall and then go sideways for two years, three years. It can fall and come right back. It's very reflexive. And so if you go back to 2020, when asset prices fell aggressively, sharply, crisis,

liquidity, et cetera, the recovery was just as crazy. Remember, is it a W? Is it a V? Is it a K? Hey, remember all those stupid debates? Well, if you go back and look, it was a V recovery, right? And the right side was a little bit more steep than the left side. And so that's what I'm arguing is that, yes, asset prices can fall, but you can't have the prolonged bear market because the Fed now is got the playbook in the global financial crisis. It was a big debate like, oh, can we do this?

How does it work? Whatever, like all this stuff, right? It's kind of like the first time that you go to drive a car. you're like okay well uh where is the ignition how do i change gears where's the you know gas pedal and you and you have somebody else there with you and they're like okay you know press this and take your foot off the gas right and they're like teaching you then the first time you get in the car by yourself you're like okay well i'm not as slow as i was when i was learning but like i'm not an expert but you know i'm pretty good 16 17 years old i can figure it out

By the time you're 40, you get in a car probably blindfolded, you could drive to the grocery store. And so that's where the Fed is now. We're 40. We got the playbook, right? Markets hit, bam, we're just, just do it. Like literally, you could just imagine Jerome Powell. He just wakes up one morning, markets are crashing. He just do it, right? interest rates to zero printing trillions we're right back and so like once that becomes a possibility they're gonna do it because we don't have people who have the ability to weather the storm if markets are crashing name one person who could sit as the chairman of the federal reserve and not step in as people's pensions as people's life savings as people like And it's all a non-economic argument in terms of humanizing these stories. And so it feels like, oh, shit, we got to step in. We got to help. And so it's like game over. Rule has changed. 2020 completely proved the hypothesis of the 2010s. And now it's just like, do you know the game has changed or do you not? So one thing to clarify, I think this is very unique to America, American markets, American financial assets, because most developed economy indexes that you looked at or even

emerging markets, they have underperformed the US by like two or three X. And that's just whether that's a structural issue or their central banks not mirroring the Fed, I'm not sure. I'm an American. I like a lot of other countries. I've been a lot of places in the world, But america is the only country that matters when it comes to financial markets so Other countries, can you make money? Sure other countries? Do they have great assets? Yes But at the end of the day, it's like do you want to play in little league baseball? Do you want to play in single a double a or triple a?

Plenty of people do that for their whole career But the big show is the major leagues. That's the american financial market. And I think that's why you see the outperformance That's why you see so much capital. That's why you see the best investors in the world all flocking to the big show that's what america is and so yes the others exist absolutely can you go and you know play and win and do all of course but america is the the only market i would argue that really matters over the long run well said uh thank you so much for your time pump thanks for doing it