The Pomp Podcast - #1475 Anthony Pompliano & Phil Rosen | The Bitcoin Reserve Is Not What We Expected

Starting point is 00:00:00 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, I've got a great conversation with Phil Rosen. Phil is the co-founder and editor-in-chief of Opening Bell Daily. In this conversation, we talk about

Starting point is 00:00:39 President Trump's brand new crypto executive orders. We talk about David Sachs and what's going on in this working group that was just established, how stable coins and CBDCs are going to be treated moving forward, what's going on with regulation, and are we going to get a strategic Bitcoin reserve, or are we going to get a whole collection of altcoins that are going to go into the government's balance sheet. On top of that, we talk about Project Stargate, what's going on with the $500 billion investment coming from some of the great leaders in tech. And then we talk about why you should always have strong leadership and how weakness was exploited over the last couple of years and the tide may be turning now. I always enjoy talking to Phil,

Starting point is 00:01:16 and here's my latest conversation with Phil Rosen. 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. Today's episode is brought to you by Bitcoin OS. Bitcoin OS is the ultimate upgrade to Bitcoin. Bitcoiners can now experience the magic of the entire crypto world, including DeFi, scalability, privacy, and more. But you don't have to give up control of your hard-earned sats.

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Starting point is 00:04:01 on Digital Asset Markets. What's your take on this? Well, I think that the first thing is we put the Bitcoin president, the crypto president, into the White House. He made a lot of promises on the campaign trail. And we knew that he was serious about some of them because he named David Sachs as the kind of crypto and AI czar. So, okay, we put somebody that was obviously very pro-crypto, very pro-AI into a position of influence. From there, now creating the working group, this is kind of the group that's going to get things done. That's why it's called a working group. They're going to go to work.

Starting point is 00:04:31 And so there's a couple of things in this executive order that I think are pretty important. The first is right out of the gate, he immediately abolishes and bans any talk of a CBDC. And so the central bank digital currency, the big risk there is you do not want the government to have the ability to surveil your finances without having to go to a FISA court and go and get some sort of warrant to get that information. The second thing is you don't want the government to have the ability to create personalized inflation rates. You get a 3% inflation rate, somebody else gets 7% because the government deems that you need a lower one, they need a higher one. And then on top of that, you don't want things like social credit scores or their ability to block your payments kind of unilaterally.

Starting point is 00:05:07 And so the removal of a CBDC and the outlawing of that, I think is a very, very big deal, but people won't give it enough credit. The second thing is they specifically reference stablecoins and its extension of dollar dominance. Now, we know that stablecoins already are a very big player in international markets, both in terms of usage, but also buying U.S. treasuries. I think now collectively, all of the stablecoin issuers own, they're like the 15th largest holder of U.S. treasuries. So anytime that you have somebody who's a net new buyer of treasuries at a time when Japan and China, who used to be very large buyers, are actually decreasing, that is really important for kind of America's success moving forward.

Starting point is 00:05:44 And so if America then starts to say, wait a minute, let's start using a digital dollar, but it's not going to be a central bank digital currency. It's going to be these kind of private organization stable coins, and we can use it to get money all around the world much cheaper and quicker. Could we save money doing that? That seems like a pretty important deal. These people are going to be buying our treasury. So we're introducing net new demand there. That's pretty important. And so I think that whole stable coin body of work is going to be very important and worth paying attention to.

Starting point is 00:06:11 And the third thing that I thought was really important is the kind of study that he is now commissioning to go and look at buying. He lists it as crypto assets for a strategic stockpile within the United States. Now, I think that this one is probably the most controversial, not because it's in there, but because of the way it's worded. What we have seen historically is that he always talked about a Bitcoin stockpile and the Bitcoin community did a lot of work for Donald Trump. They donated a lot of money. They really, really got the word out for him. David Bailey and Bitcoin Magazine and many others really went to extreme lengths to help support Donald Trump. And so I think that there's a lot of people in the hardcore Bitcoin community that feel a little let down. That way, why are we not talking about a Bitcoin stockpile? Now we're also talking about this crypto stockpile. I have somewhat of a nuanced view, which is because it looks like the United States is not buying Bitcoin at the moment and instead is going to commission the study. What I think is sometimes there's bureaucratic steps you kind of got to go through, right? So if you go back when Micro

Starting point is 00:07:10 Strategy started to buy Bitcoin, what did they do first? They let all shareholders know, hey, we are considering, and they listed out a bunch of assets. We're considering real estate, gold, Bitcoin, blah, blah, blah. And they went through all these things and then they bought Bitcoin. And so that may be what's happening here. It's unclear as of right now, but maybe they're just doing a broader study and then they'll go and they'll buy the Bitcoin stockpile. If not, then the question becomes, hey, what happened? Why was there a promise of a Bitcoin stockpile? It changed into something else. What are those other assets? Who is benefiting from those other assets being in there? And I think that we have to remember that Bitcoin is a store of value. It has, you know, kind of gold with wings. But these other things are more akin to a kind of technology company. And so the United States came out and said, hey, we're going to put the MAG-7 stocks in, you know, a strategic stockpile.

Starting point is 00:07:57 A lot of people would be like, do we need to do that? Are we now speculating? How does this work? What's the valuation? Like a lot more questions come up than, hey, we're just buying gold for the central bank reserves. I think Bitcoin is kind of a safer, less more controversial thing than trying to add in a bunch of the other assets. Well, it's funny because I wonder, someone like Michael Saylor would say, well, there is no second best. Why wouldn't you just use Bitcoin? And I agree that if you're

Starting point is 00:08:20 going to do the stockpile, it would probably be best if it's only Bitcoin. Can you talk about some of the trade-offs you see if it was, let's say, Bitcoin versus Bitcoin and a mix of other assets? Well, I think that there is no second best sounds good, but it's not right. Obviously, there's no second best. And in many cases, if you look at some of these assets, they've actually outperformed Bitcoin, right? And so again, it's not all about performance. Actually, I think the most important thing for the strategic stockpile, which very clearly I think should just be a Bitcoin stockpile, is all about resilience. It's not about how high can something go. It's about, is this the thing that will be resilient through up and down markets for the next 20, 30, 50, 70,

Starting point is 00:09:00 100 years, right? And so resilience, if you're optimizing for resilience, then it's very clear who that stockpile should be filled with. Now, there are pros and cons, obviously, of adding other assets. The pro would be if you're picking certain assets, and let's say that there was active management, and somebody was in there trying to swap between these things or whatever, could you outperform and create more value? Sure. But we're talking about such large amount of money for this to be material. Are you going to go put $100 billion in an altcoin? stop it right these markets aren't even big enough to do that right and so i think that that is another kind of component of this is that bitcoin may be the largest most liquid asset that can

Starting point is 00:09:43 actually take this amount of capital these other things don't even fit yet and so i think that most of the pro arguments for adding something other than bitcoin into the stockpile are actually very quickly negated by i see that that could potentially be a pro but there are either are operational hurdles or there are significant downside risks that kind of come with it. And in my opinion, the risk reward trade-off probably isn't worth it. So I've seen some discussion of, okay, Trump is just pandering to the crypto community, Bitcoiners, all that. How much of this do you think is just symbolic? Like, could he just be doing this to appease a certain demographic of his voting bloc?

Starting point is 00:10:29 Well, every politician does that. Right. And so if you look at Republicans or Democrats, they both make promises on the campaign trail and some portion of them get filled. Some portion of them don't. Now, Donald Trump, I think, really surprised a lot of people. He signed something like 200 executive orders on day one, you know, sitting in the Oval Office, holding court, doing the whole thing for 90 minutes. Definitely. He was having fun. Right. But yeah, it was a complete show. Right. But he was actually signing things. And some of the executive orders, frankly, from all presidents are things that are more kind of symbolic of like, we should take this seriously versus I'm giving a full and unconditional pardon to Ross Ulbricht. Like the Ross Ulbricht thing really tells me that, you know, promise made, promise kept. He's serious. So putting David Sachs in a position, right, kind of promise made, promise kept. And so I do think that there is a much higher likelihood that we are going to see him take action. I think what you're going to find, though, is there's going to be a ton of debate, especially within the community, about all of the nuances. So it's like to people outside of the community, they're going to be like, oh, Trump is super pro crypto. They already think that, right? More than 50 percent of his net worth is in crypto. He's already talking about doing this stockpile thing. They already know he sold NFTs in the past.

Starting point is 00:11:41 He's got a meme coin out there. He's got David Sachs. He's done all this stuff. people are like, this is the most pro Bitcoin and crypto president ever in history. Actually, the only one I would argue. People in the industry are like, did he launch it on Ethereum or on Solana, right? But if you go and you actually look, most of the people who had never held crypto before, but came in to buy the Trump meme coin as an example, they don't know the difference. Same way when I go to Google and I'm using Google, I don't know what all the protocols, like, dude, I asked a question, does it give me an answer or not? Right? And so I think that that is kind of a huge piece of this is there are going to be two different conversations. There's

Starting point is 00:12:16 going to be kind of a conversation at the national level. And then there's going to be kind of the insular, you know, kind of community conversation. That insular community conversation is going to only get, you know, kind of, frankly, more annoying because people are going to start nitpicking each other. They're going to all be debating all these really small little details that they probably do have some significance, but they're not nearly as important as like the binary Trump likes Bitcoin and crypto or he doesn't. Yeah, I think that makes a lot of sense. And to your point on all these groups are sort of falling in line behind Trump and his Bitcoin or crypto push, and Wall Street is a big part of that. And I think in the last few days, we've seen Ray Dalio come out and say something about Bitcoin, Bank of America, Goldman Sachs, and BlackRock.

Starting point is 00:13:00 All their CEOs have come out and said, essentially, Bitcoin is either on their balance sheet or they want it on their balance sheet. um where does all of that momentum lead with you know you got the white house you got wall street what comes next bitcoin is the hottest thing on wall street and what i think a lot of the banks realize blackrock's making money fidelity's making money how do you have the best financial product launch in history and the banks they don't have etfs they're saying wait a minute we gotta get us some of that. And so the thing is, as the banks embrace Bitcoin, it's going to get them more customers. It's going to get them more deposits and get them more revenue. You think they're interested? Of course they are. And so the question is going to come down to who is first?

Starting point is 00:13:50 What do they do? Do they say, hey, we'll custody, pay us a fee? Do they say, we'll custody and then we'll lend against the Bitcoin? Do they say that we'll use it as collateral for mortgages? Do they say, hey, we're going to issue a credit card that pays in Bitcoin reward? I mean, there's all these different things that they can do. And so like most things, they're going to take a little bit of time. They're going to make sure that they got all their risk, you know, kind of mitigated. They're going to get the sign off from the regulators and their internal kind of legal teams. They're going to probably dip their toe in the water. And my guess is they'll start with custody. It's the easiest thing. It's kind of once you get the custody, then you can add all

Starting point is 00:14:23 these financial products on top of it. But it's going to be a big deal. Like how many people would love to give their Bitcoin and have it sit inside of the same institution that holds their cash. Even though Bitcoiners, again, it goes back to Bitcoiners, they don't want that, right? They're going to say, hey, you should self-custody. And there's a very strong argument for why you should self-custody. But there are some subset of people who say, I don't trust myself. This scares me. I don't like having a bare asset. There's security concerns. I want JP Morgan or Merrill Lynch or Bank of America or name your bank. I want them to hold it for me. Put the risk on them. Well, that's what banks do, right? They're happy to sign up for that. You just got

Starting point is 00:15:02 pay some money yeah and i i think all these banks falling in line in one sense they're getting behind trump and sort of bending the knee to his views and what his administration will do but also as you said it is the top performing financial asset right now so there's really no excuse for a financial institution not to get behind it well and it also goes back to this idea of the reason why the banks now are going to be able to do this like trump didn't say anything about the banks right um but you hear all these bank folks coming out and saying this they want to do it but previously they were held back by something called sab-121 sab-121 is uh kind of this rule uh that made it very difficult for the banks to actually hold crypto uh and it had to do

Starting point is 00:15:43 with the accounting treatment of the deposits would be counted as liabilities on their p l etc and so uh politicians that are the representatives of the american citizens previously went, they listened, they voted to repeal SAB 121. So the people's voice was heard through their representatives. President Biden vetoed it and said, no, I'm not going to let you guys repeal this. So he kept the banks out of the game. Well, Trump steps into office, SEC changes, bam, SEC, one of the first things they did, repeal SAB 121. So it's not just people getting behind Trump. It's also, there's a sea change, a sentiment kind of transition here where people see America is open for business. We're entering a golden age of innovation. Get the regulators

Starting point is 00:16:33 out of the way and allow the entrepreneurs to go and build. Now, it doesn't mean that we should have no regulation. If you commit a crime, probably should get in trouble. But it does mean that stupid rules that basically are just made up, invented things should be removed so that we can, you know, kind of grease the wheels of commerce. We should grease the wheels of capitalism. We should grease the wheels of economic activity. And as you do that, you should see GDP grow. As you see that productivity going up, then naturally that should put us in a better position to handle the debt that continues to go up at $100 billion, you know, or $1 trillion every 100 days. And something that Trump is going to try to do to accelerate all of that is control

Starting point is 00:17:17 monetary policy, which he called for this week. And I want to ask you about that. So this is what he said to the global elites in Davos. He said, I'll demand that interest rates drop immediately. They should be dropping all over the world. Interest rates should follow us all over. And later the same day, this is what he told reporters from the White House. He said, talking about the Fed, I think I know interest rates much better than they do. I think I know it certainly much better than the one who's primarily in charge of making that decision, which would be Jerome Powell. And what do you think of that? This guy is trying to step in with the monetary policy. Maybe he does know better. You think Trump thought that inflation

Starting point is 00:18:00 was transitory in 2020? I don't know. But market participant versus much more kind of academic approach, very different. And so I actually think that Jerome Powell is doing the best that he can. but a real estate developer, their whole business is predicated on understanding interest rates, understand the macro environment, understanding supply chains, right? So at a minimum, Trump's not a dummy when it comes to interest rates. It's not like, you know, if you had a, I don't know, a comedian who ended up being the president and he walked up and was like, I know interest rates. We're talking about a guy who literally his entire career was based around this one number being, you know, one of the major inputs to his business.

Starting point is 00:18:42 And so, you know, it's kind of funny, like if you took away all of Trump's, you know, kind of flair and his presentation and all the things that he says, and you just looked at him on paper and you're like, all right, we got a guy who built this very large real estate business, blah, blah, whatever. Could he be the Fed chair? Again, I'm not saying yes, but I'm saying like, dude, there would be a conversation like, hey, like actually this person probably understands a lot of this stuff, right? Now, does he understand monetary policy? Like, you know, some of the inputs and understand the data like there would be a lot of debate there. But I think that that's like the first thing is it sounds like a crazy statement, but it's rooted in like some truth of like, yes, he does understand interest rates. The bigger question is like, forget Trump. Should the president be setting the interest rate? And I think that that is probably not a good idea, especially when you hear how he's talking about setting the interest rates of just like push them down all the time and then pull the rest of the world's interest rates down as well. um if you look at 2022 2023 like yeah it was painful probably a good idea that the fed increased interest rates and so what i think you actually want from a monetary policy standpoint is you want somebody who understands this stuff but also somebody who's pretty sober and can say look it doesn't matter all these other things that are going on i'm trying to set an interest rate that

Starting point is 00:20:01 is solely dedicated to you know kind of the um you know lack of volatility in the economy etc now ideally what you would really do is what bitcoin did which is just go to an automated monetary policy stop having humans intervene at all right go to an automated one let the automated system operate tell everyone well in advance what the interest rate is going to be let them plan their life their business etc i don't the federal reserve's not ready for that right they like having the person they like talking to the market all that kind of stuff but bitcoin is showing that you can have an automated monetary policy and it can work very well so my question for you know maybe Trump and Powell, is if Trump wants lower rates because he wants markets to boom under his

Starting point is 00:20:43 administration and Powell's trying to essentially keep stability in price, how much will the Fed pay attention to asset price inflation, which they really haven't done for a lot of years? Do you see that coming into play this year if Trump is trying to juice markets and the Fed typically looks at inflation, but now they're going to look at specifically, maybe they could look at asset price inflation this year? Nope. No? They're never going to do it. They don't even believe in it. They just think that consumer inflation is the boogeyman. Look at that. And by the way, it's hurting a lot of people. They should look at it. They should get it down. It's at 3%. Why is it not at 2? Your job is to get it at 2. I think there's a very real

Starting point is 00:21:21 conversation to be had right now. Why do we still have the same team that did what they did in 2020, completely screwed up, and now on the backside, they haven't been able to correct their mistake. they've had how long they've had two years going on three years get somebody else in there let's go and i think that trump and powell have had their you know verbal digs at each other um it's just it's a difficult hand i'm not saying i could do any better but if somebody's not performing you can sit around you try to figure out why they're not performing or you can say hey we got to go get somebody who can well trump built his uh fame on firing people essentially in The Apprentice. And he, I mean, he's already said he wouldn't fire Powell, I think, but I think

Starting point is 00:22:05 there's only a year left in his term. So I want to ask you about this project Stargate thing. And that's a $500 billion project from what I understand. And OpenAI is the sort of leading the way with this. Do you think this is a meaningful step towards, you know, making the u.s innovation king or is it again a symbolic gesture that we don't know where the money will go it'll be a black box etc i don't even think they have the money 500 billion dollars a lot of money right um but that's okay like even if they have 10 or 50 or 100 billion like who cares it's a huge amount of money right um having some money is better than having no money and i think that the symbolic nature of Larry Ellison, Masayoshi Son, Sam Altman, and Donald Trump all saying big

Starting point is 00:22:57 investment, bam, let's go, seems pretty important, right? AI is the future. On a daily basis, I see AI creeping more and more and more into my daily life. I see it in tools I use. I see it in even when I talk to some of the people we work with, then I say, well, why don't we use AI to do this stuff, right? And you can just slowly see it becoming normalized, becoming more effective, etc. And so we have an imbalance. There's a lot of promise, but there's not as much that's been built to fill that promise. There's a lot of demand. We need the supply. And so we need a lot of money. We need a lot of money invested. Donald Trump assuming office, turned on the green light. Capital is flooding in. You see Saudi Crown Prince coming out, $600 billion. I think people

Starting point is 00:23:45 are just ready to go. They're saying, hey, if there's going to be a golden age, I'm not going to get left behind. And I think that Stargate is a good example where he's in office for three days and they're already announcing $500 billion. Anytime you get that type of velocity and movement, I think that the next four years are going to be a lot of the same type of stuff. He's sort of running things like a startup in a way. He's just doing a million moves a day. He's moving very quickly and everyone else is falling in line. The first time that he was the president, I think a lot of people saw that and they

Starting point is 00:24:25 said, oh, this is somebody who's ill-prepared and he's overwhelmed. It's chaotic. It's uncertain. People are leaving and talking bad about him, all stuff, whatever. And I liken that to a startup that had product market fit and consumed the founder. right like he just i can't keep up this is crazy i don't know what i'm doing he got a four-year time out catch your breath learn a little bit probably mature divine intervention in his words in terms of you know get shot at

Starting point is 00:24:54 re you know kind of engineer the way you think about things come back let's do it again same speed but he looks like he's got a lot more control this time he looks like he's kind of better prepared he's got people in places right like it's very different and so anytime you see that you can say to yourself that um that's probably gonna be pretty good right is you want speed you want somebody slashing costs along the way but you also want a leader who's got their kind of hand on the steering wheel and i think there's a lot of people who didn't feel like that the first time but now are saying themselves hey you know what let's see how this goes i feel like he's got a little bit more control um so let's hope he makes good decisions like i keep coming

Starting point is 00:25:35 back i say i don't care how you voted publican democrat or you didn't vote everyone should be cheering for the president united states regardless of who it is until they lose your confidence and i actually think a lot of people were cheering for joe biden and at some point both in both republicans and democrats and at some point whether it was the debate whether it was something else they lost confidence and a lot of people turned on them let's hope that doesn't happen to charlotte well i think there's a lot of reporting now that has come out about biden's inner circle really shielding him from the public eye because they sort of knew this confidence was going away this guy couldn't show up to a lot of things during the day he was you

Starting point is 00:26:18 know his age was showing essentially but the fact there was such a coordinated effort to hide that i think uh pretty troubling to read after the fact treasonous right if you are um If you know that the president of the United States is having a hard time doing his job, and rather than try to mitigate the risk or to call out the issue or to solve the problem, if your solution is, I'll just hide him away in the corner, thank God nothing insane happened. and the things that were like pretty insane like i'm talking about like you know nuclear war insane right but there was some pretty atrocious stuff hamas that you you pay attention for two minutes like it's disgusting what was america's response what would have happened if we had a different president in there russia ukraine does that ever happen if we don't have some a president that we've got to hide in the corner i don't know we can't run those experiments but it feels like

Starting point is 00:27:26 there's some stuff that happened where america's perceived weakness was exploited and so it goes back to you know strength is the deterrence i think that trump's administration um understands that they're going to try to use that to their advantage let's see you know it's always one of these things where you can be excited about a candidate they become you know the president the mayor the governor whatever and you got to see and you got to be very sober about it if they a good job everyone should say they did a good job if they do a bad job everyone should absolutely say hey they sucked get them out of here find somebody else let's see i think that's a that's a great point and thank you for your time pump thanks for doing it

The Pomp Podcast - #1475 Anthony Pompliano & Phil Rosen | The Bitcoin Reserve Is Not What We Expected

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