The Pomp Podcast - #1486 Anthony & John Pompliano | BlackRock & Metaplanet Buying Bitcoin

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, we've got a great episode with John Pagliano. John's in the studio and I'm on the road because I'm traveling. We didn't want to miss this conversation, so we

Starting point is 00:00:37 still got great topics for you. The first up is MetaPlanet, how they continue to buy Bitcoin and what's so special about their strategy. On top of that, we talk about the Bitcoin market, what I think is the single most important thing in 2025 for Bitcoin's price. We then get into topics like taxes and tariffs and how these things are interconnected, what I believe the administration is going to do, how reciprocal tariffs work, and why I believe that that's going to end up being an important detail for financial investors going throughout this year. And then lastly, we talk about Robinhood, what's going on with their business, why the rise of the self-directed investor is so important, and how that's changing financial markets. This conversation touches on a

Starting point is 00:01:09 lot of topics. I'd love to hear what you agree with and what you disagree with. Once you get done listening, jump on Twitter or X and let me know exactly what you think. Now, here is my latest conversation with John Pompliano. 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. It's no secret that Bitcoin ETFs have taken Wall Street by storm. With over $35 billion in assets

Starting point is 00:01:49 in just one year, it's become the most successful ETF launch in history. My partner Bitwise is the first and only Bitcoin ETF provider to openly publish its Bitcoin wallet addresses, allowing anyone to verify the fund's holdings. I believe this level of transparency is exactly the kind of innovation that only crypto makes possible. Bitwise is also the only ETF issuer that is a crypto specialist asset manager, meaning their team solely focuses on Bitcoin and they have the research, education, and support to help investors navigate the space with confidence. All of that is great, but what I love most about Bitwise is probably their commitment to developers. Bitwise donates 10% of their ETF's profits to Bitcoin open source developers.

Starting point is 00:02:29 Bitcoin developers are the unsung heroes, working tirelessly to maintain, improve, and innovate the blockchain. Their efforts ensure that Bitcoin remains true to its promise as a decentralized system that is built to last. Go to bitwisepomp.com to learn more about their ETF and other services. Once again, that's bitwisepomp.com. As always, remember investing is risky and carefully consider the extreme risks associated with crypto before you invest. 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 00:05:05 We're going to talk a lot about Bitcoin, but first, let's catch up. Why no suit? yeah i am uh currently in whistler canada i'm speaking at an event later uh today and i will be wearing a suit during the event but uh it's quite early here right now uh in whistler it is 13 degrees nice and cold and i'm used to being the one in the studio and somebody else being remote but i'm glad that we're uh we're switching places yeah for sure um let's just get right into it uh we got a lot of bitcoin news to talk about the first thing that i think is worth mentioning is Metaplanet, they are raising $26 million to go buy more Bitcoin. They are getting added to the

Starting point is 00:05:40 MSCI index in Japan. First, can you explain a little bit what is the MSCI index? And then is Metaplanet, they're going to keep going? They're going to keep buying Bitcoin? What's going on? Yeah. So first of all, we know that this idea of weaponizing your balance sheet by putting Bitcoin on it, this strategy works. Last year, Metaplanet was the single best performing public equity in the world. Out of tens of thousands of companies, Metaplanet outperformed all of them. It was up something like 3,200% in the last 12 months. So great performance. Second is the part of the strategy that people undervalue is not just putting Bitcoin in the balance sheet, but it's continuing to acquire more Bitcoin and get that Bitcoin yield up.

Starting point is 00:06:21 And for those that don't know, Bitcoin yield is essentially the idea, which Bitcoin am I adding to the balance sheet over the dilution that I'm taking? And so that's kind of a creative addition of Bitcoin, means that each individual share is getting more and more Bitcoin exposure, even though the company is technically selling equity, raising debt, all of those things. So the multiple that you get on the stock or the premium that people talk about is really predicated on the fact that the market believes this company is going to continue to buy more Bitcoin in an accretive way. If for some reason they came out and they said, we are not going to buy any more Bitcoin, those premiums or those multiples would

Starting point is 00:06:56 collapse and these things would trade much closer to NAV. And so a big part of the strategy is not just owning the Bitcoin, but continuing to buy more and more. And that's how you get that premium. So I think that MetaPlanet, along with the other companies pursuing this Bitcoin treasury strategy will continue. Another point that I think is important, which you brought up was this MSCI index. Now, the reason why public companies want to be in the index is one, they get a lot more awareness. Two, they get passive flows. People just buy the index and actually that gets put into the various stocks within the index. But then three is there's this legitimacy that comes with it. Hey, if we are in certain indexes, we can show up. So you see MicroStrategy talk about

Starting point is 00:07:31 the fact that they're in the NASDAQ 100. You see MetaPlanet now is going to start talking about they're an MSCI, Japan Index Company, etc. And so it's a pretty big deal if you're into the nuts and bolts or the nuances of public markets. But overall, nothing really changes for the company itself in terms of its day-to-day operations. I think that Simon, Dylan, and the team over at MetaPlanet do a fantastic job. And something tells me that they're going to continue doubling and tripling down on this strategy, again, because it works. And so anytime you see something working, you're going to get a lot of copycats around the world. But the company needs to stay focused and make sure, hey, just keep buying more Bitcoin, right? Just whatever you can do, figure out how

Starting point is 00:08:07 to get as non-dilutive capital as possible, buy more Bitcoin, and the stock price will be taken care of. If I owned a company, what do you think the best way to raise money to buy Bitcoin is? Or should you not raise money and then just use the cash flow from the business? So I go back to MicroStrategy and MetaPlanet, right? Is it better to do a convertible note for some of these organizations? Or is there something else that could be more advantageous? And obviously, each company will act a little bit differently? Yeah, I think that's the answer, right? Is each company is on a case by case basis. So MicroStrategy had $500 million of cash on their balance sheet to start and they took $450 million of it and they bought Bitcoin. So they had the

Starting point is 00:08:41 benefit of being able to do that. MetaPlanet did not have $500 million on their balance sheet. Instead, they were a former hotel company where it wasn't really working. But one of the advantages they have is they have about $80 million of tax losses that are sitting on that balance sheet that they'll be able to use to their benefit in the future. And so each company, I think you have a look at, hey, what are the strengths that we have? What are the weaknesses that we have? Let's lean into the strength. Let's try to mitigate those weaknesses. Now, what's really interesting also is that MetaPlanet success widely is attributable to the fact that they're doing it in Japan. A huge part of that strategy is that you're able to arb between the dollar

Starting point is 00:09:15 and the yen. And so there's some foreign currency components to it. And then they were able to become the most heavily traded from a volume standpoint stock in Japan. So now you have all these Japanese stock investors who are looking for volatility. Japan is not necessarily known for volatility in their public stock. By introducing that volatility, what I think these companies that are operating on a Bitcoin treasury strategy have figured out is that traders and investors want volatility. Historically, the kind of financial advisor universe says, oh, we don't want volatility. Volatility is risk. We want to mitigate risk. We want kind of steady Yeti, 5%, 10% returns a year. But actually, what a big eye-opener was for a lot of people is,

Starting point is 00:09:57 no, investors want volatility. Volatility equals, when it goes up, returns. And so having that volatility has really drawn a lot of capital into these businesses. And so I think that they're going to use every tool available to them. They're going to raise equity. They're going to use these converts. They're going to issue straight debt. They're going to do whatever they can. I believe MetaPlanet is even selling options on some of their Bitcoin. Don't quote me on that, but I'm pretty sure they are. And that's driving some income. And then are you able to use that to buy a coin? And so every single one of these levers that they can is ultimately in the pursuit of how do we get as much Bitcoin on our balance sheet as possible. Do you see it? I see it as a

Starting point is 00:10:32 few different stages, right? It's how deep in the pool do you want to go? You can obviously use the operating cashflow from your business and just buy Bitcoin, hold on your balance sheet. There's people that get paid in Bitcoin and have it on invoices. But then there's this world where it's like, hey, do we want to issue more debt? Do we want to just continuously going down? And then it's like, almost, is it a bet on Bitcoin going up? Yeah, of course. You definitely benefit from Bitcoin's volatility here, right? And so this strategy, think of real estate. Real estate 100% has a comparison to these Bitcoin treasury strategies. A real estate company goes, they use debt to acquire a building or a home or whatever. They have some equity in the deal,

Starting point is 00:11:12 but they also have debts that are levered in that acquisition. And a huge part of it is continue to pay down the debt, allow the equity value of the real estate to grow. And then over time, you refinance, you use that cash out repot to then go acquire another building. And so what you're essentially doing is you're using your balance sheet and the appreciation of the assets on your balance sheet, and you're financially engineering a way to acquire more and more assets over time. As you do that, you obviously see the equity value of the company go up. And so really what Bitcoin has done is Bitcoin has replaced that kind of real estate strategy and says, well, what if we have something that's more volatile, we have something that's more liquid, and we have something that for the first few companies that do this, you can now give exposure to very large pools of capital that they can't get anywhere else. So these debt investors, as an example, are corporate bond investors. They have no ability to buy Bitcoin. That's not their mandate. But they can buy bonds from a public company. And now they understand that the underlying exposure is to Bitcoin. And so it's kind of a window in time where these companies early on are able to go and do this. And I think that you're going to continue to see more and more companies do it because they realize it works.

Starting point is 00:12:19 Let's talk about Goldman Sachs. A recent article came out that they hold over $2 trillion of crypto, specifically $1.6, or excuse me, $2 billion of crypto, specifically $1.6 billion of that is Bitcoin. I think about $1.3 billion is going to be BlackRock's ETF and then another $300 million of Fidelity's ETF. What's going on with all these asset managers? Are they just going to keep buying it and this is now mainstream and here we go? Or is there kind of something underlying there that no one's thinking about? Yeah, I mean, people on Wall Street know this, but for people that don't live and breathe this stuff every single day, one of the things to remember is, you know, Goldman Sachs is the name of a large business. It's kind of the name on the front door. But within Goldman Sachs, you have an organizational structure where there are different teams.

Starting point is 00:13:04 And so you have obviously wealth management, you have investment banking, you have asset management, you have kind of all these different components. And then within, let's say, asset management or prop trading, you're going to have different teams with different mandates. In some cases, they are kind of friendly competitors with each other. They're all trying to make as much money as they can because their individual bonuses and compensation is tied to what they're able to do. And so naturally, even if, let's say, Goldman Sachs isn't into Bitcoin, you may have a team that says, well, the best place to go and invest is in Bitcoin ETF. You may have an investment banking team that's really looking to go and work with Bitcoin

Starting point is 00:13:40 or crypto companies in the public markets. But you may have another investment team that says, you know what? This isn't for us. we're more focused on emerging market, you know, value investing. And so that is the beauty of some of these really large financial institutions is that they actually have different teams, different divisions that they don't agree with each other, or they're optimizing for different things. And so it doesn't surprise me that there are people at Goldman Sachs on some teams that hold the Bitcoin ETFs. And then you're also going to see like custody companies, right? They're

Starting point is 00:14:07 going to come out, they're gonna say, Hey, look, we actually don't have a directional opinion on any one asset, but we hold, let's say, Bitcoin for the ETF, or we hold it for our company. And so you're going to see a lot of the financialization of Bitcoin. And so you're going to see people want to play in this game because this is where capital is going. This is where users are going. And ultimately, this is where energy and attention is going. And anywhere on Wall Street where there's energy and attention, there's people making money. And I think that these firms have a financial incentive to go ahead and embrace this stuff. And that's why you see Goldman Sachs and many others saying, look, we may take a different approach to play in this

Starting point is 00:14:40 kind of pool, but we are going to play. And so whether that's holding the ETFs, whether that is providing investment banking services, the financial advisors helping their clients participate, all these different components, this is where revenue is. And wherever there's revenue, there will be Wall Street institutions that want to play. How do you think about owning the ETF versus owning Bitcoin, both for the individual, the individual using these banks and these asset managers to kind of hold it on their behalf? And then also these corporations that are going out and buying MetaPlanet, obviously Michael Saylor as well. Should they just hold their private keys and multiple people in the organization have a word or something like that? Or should most people

Starting point is 00:15:16 just go buy the ETF because it's easier and it's more accessible? It's a good question. I think it really depends on who you're talking about, right? It's kind of like when people ask me for personal finance advice. I say, well, look, I don't know anything about how much income you have. I don't know what your monthly expenses are. I don't know what your risk profile is. I don't know if you're married with kids, you're single, how old you are. There's so many different factors that go into this. But when you think of Bitcoin in particular, I always tell people that the first thing you should do when you get into Bitcoin is you should go read the white paper. Go understand, hey, what did Satoshi say when they went and they published this thing? The second thing you should

Starting point is 00:15:49 do is you should learn how to buy and hold Bitcoin in many different ways. So you should go onto an exchange and you should buy Bitcoin. You should move it between an account, put it on a wallet, take that hot wallet, put it into cold storage, move it, hold the keys, do all these different things. Get familiar with how the actual asset works and do it with a small amount of money. Do it with $5, $10 worth of Bitcoin. If you lose it, you're probably not going to be happy about it, but you only lost $5 or $10. And so being familiar with the asset builds confidence. Confidence ultimately leads to competence, in my opinion. And so I think that's where you're going to see a lot of people go and play around. Now, the ETFs are interesting because you have

Starting point is 00:16:26 a cohort of people, I think generally they're kind of older people, a little bit more successful who say, look, I got a brokerage account. I wanted to buy this Bitcoin thing. I'm not going to go, what's this Coinbase company? Sounds like, you know, I don't know what that is. I never heard of them. I'm just going to buy a brokerage account. Okay. Now I can go and I can buy Bitcoin. And I really don't care about kind of the critical Bitcoin ethos. I don't care about self-custody. I don't think the banking system is going to go down tomorrow. I just want price exposure. And so price exposure from Bitcoin can be accomplished through those ETFs. I think a lot of people, especially people who are worried about the self-custody and they feel like they

Starting point is 00:16:57 don't have the confidence to do that, then that's a solution for them. Now, if you go and you talk to most Bitcoiners, they'll say, hey, look, actually a huge component of the value proposition is that you should hold Bitcoin in private keys, right? Take self-custody, become sovereign with your assets. And so I think that that's a pretty well understood, you know, kind of path of Bitcoin ownership. And then when you look at these companies like MetaPlanet and MicroStrategy, in some cases, like we previously talked about, some people can't buy Bitcoin or can't buy the ETFs. And so buying the equity is important. But there's other people who say, well, look, these companies are actually much more volatile than Bitcoin. If I'm going to seek out volatility,

Starting point is 00:17:31 Bitcoin's good, but these companies are great. So they want to go play there. And so again, it's almost like now we're creating a buffet. You show up and hey, what do you want? You may feel like salad today, but your friend may say, I want steak. That's okay. You go to the buffet and anyone can get whatever they want. Now, what I will say is, I do think that as the banks begin to be bigger and bigger players in the Bitcoin world, you're going to see more and more people using Bitcoin, holding Bitcoin via the banks. And what I mean by that is, you know, if you take somebody like me, right, I own some of the ETF. I have, you know, kind of third party, hyper secure custody. And so you look at that and you say, OK, well, why are you doing some of that stuff?

Starting point is 00:18:12 Well, it depends on a variety of factors. But if all of a sudden, the bank that I use for personal wealth comes in and says, Hey, look, we actually can custody this stuff, or we can help you do certain things with this asset. Obviously, if you have a relationship with that organization, they may not do 100%, but they may start to do some for you. And I think that's really kind of a big unlock. The ETFs obviously had a massive impact. But I also think that there is quite a bit of inflection point that will be driven by these banks starting to participate because they have trust. They're really big into big marketing, budget, sales forces, etc. And they are salivating. They want to be able to help the people who are playing in this asset. Historically, they just haven't been able to do that.

Starting point is 00:18:55 And I think that's going to change in 2025. Yeah, I love that analogy, the buffet. When you compare it to real estate, there's multiple ways to get exposure to real estate. You could buy the actual asset. You could go buy a REIT. you can go buy other things. You can invest in corporations that are managing real estate or owning it on your behalf. So I think that analogy makes a lot of sense. Let's talk about Robinhood. Let's talk about these exchanges and these brokerages. Obviously, they love volatility

Starting point is 00:19:20 because it just nets trading fees for them. Robinhood just posted their Q4 earnings yesterday. They had over a billion dollars of revenue that's up 37% quarter to quarter. Crypto was a massive part of that. I think crypto was their crypto trading fees. They grew over 500% to a record 358 million. This is becoming a large part of their business. Is this going to be similar to what we saw in 2021, where their business ramped up a ton because of crypto and then kind of had that fall off as crypto fell off as well? Where do you see this kind of playing out? And how do you see Robinhood being a player in this industry? One of the funny things about humans is we like to chase returns. And so the higher that a price of an asset goes, the more attention,

Starting point is 00:20:06 the media talks about it more, word of mouth spreads, people want to buy it. You can see Nvidia, you can see Bitcoin, many assets like this. And so as attention goes, then what happens is trading volume follows. And so whether it is, you know, order flow stuff or various other revenue sources that Robinhood has, you're going to continue to see that where the attention is followed by revenue for these organizations. Now, what I do think is pretty interesting is Robinhood has really pioneered a very important component of the market, which is the rise of the self-directed investor. So if you go back and you think, you know, 20 years ago, pretty much all the news somebody got was via mainstream media. They would read the newspaper, they would watch,

Starting point is 00:20:45 you know, television, and then they would have to call and there was an intermediary, whether it was a stockbroker, a financial advisor, a big institution, whatever, but there was somebody else that was executing the trades for you. What Robinhood did is they kind of positioned themselves perfectly. They said, well, with the rise of the internet and social media, these investors now are becoming much more educated. They don't have to call the stockbroker and say, well, what do you think we should buy today? They're reading the content for themselves on Twitter or X,

Starting point is 00:21:10 reading it or watching on YouTube, reading newsletters, all that kind of stuff. So if you are informed yourself, now you're saying, well, I want to go execute myself. I don't want to call a stockbroker and hear his opinion. I want to call and just go execute myself. And so Robinhood shows up, public.com, WeBull, eToro. You know, there's a lot of these companies that have kind of come into this section, allowing for a self-directed investor not only not to be self-educated, but also self-reliant on the execution.

Starting point is 00:21:38 And so naturally, if you remove an intermediary, like a financial advisor, and people are able to directly interface with the market, you would expect that to continue to grow over time. And so that's exactly what you're seeing here. Now, they've also done a great job of, you know, starting public equities. They then added crypto. They now have a subscription service. They've got a credit card. I mean, they're really pushing into a number of things, a debit card, not a credit card, but they're really pushing into these different financial services. And so I just look at these businesses like the public.com, Robinhood, etc, as a beneficiary of the rise of the self directed investor, that coincides with the rise of Bitcoin, where Bitcoin really was a bottoms up story. It was individuals who first adopted it, and then it was corporations, now nation states. And so I think that we should continue to see this happen. One of the areas that I think is going to become really interesting when it comes to Robinhood in particular, probably public.com, others will enter this at some point, is they are going to start to go horizontal in the other types of assets that they offer.

Starting point is 00:22:36 So look at, let's say, crypto. Stocks was very simple. Hey, we're going to go offer US public stocks. With crypto, it started with like two or three different assets. Now they're starting to push the long tail, so you're able to buy more and more assets on there. If you go and you look at the asset buckets, Robinhood recently announced a brand new partnership with Kaoshi on prediction markets. And so Kaoshi is a US regulatory legal prediction market provider. And so they're using Robinhood for distribution. So it's a nice partnership there.

Starting point is 00:23:07 And so I think that you're going to see these guys say, look, we have a direct relationship with the self-directed investor. What do they want? And whatever the answer to what those people want in financial markets is Robinhood is going to go and try to continue to build this as will the public.coms, the eToros, Webulls, etc. And so I think that really is the bet in a company like that is what is ultimately going to be the self-directed investors kind of desire. These companies will service that. And naturally, if they continue to do that, well, then revenue will follow. Well said. Let's talk about something that's probably on a lot of people's minds now. I know it's on mine. Taxes. Tax season's coming up. What should Bitcoin holders

Starting point is 00:23:45 be thinking about i assume your answer is going to be do not sell your bitcoin uh but i am curious what your thoughts are around uh taxes given that bitcoin's risen over the last few months yeah i mean look there are uh a number of different components the first is obviously you don't pay taxes until you sell and so if you don't sell that is kind of the quote-unquote best tax strategy because it minimizes taxes because you pay zero um the second thing is uh people need to live though, right? You can't live in your Bitcoin, you can't drive your Bitcoin, you can't eat your Bitcoin. And so there's plenty of people who are going to see gains in their investment account and say, hey, I need to take some of that, convert it to something I can consume with.

Starting point is 00:24:26 And so when you have to do that, obviously, there are a number of tax incentives in the United States between short-term and long-term capital gains. So waiting a year after you purchase versus is not, is a huge component. I would tell people to consult their tax advisor or their accountant on things like tax loss harvesting. So if you came in and you bought Bitcoin at $109,000 and it trades down to $92,000, there's certain things that you can do to benefit from tax losses that could potentially be helpful to you depending on your situation. But also, I think that there's a number of products. We recently had a guy on who was talking about your retirement account. And so if you're able to actually put capital into those retirement accounts, say Bitcoin IRA as an example, then what you're able to use Bitcoin IRA for is you can actually go and buy Bitcoin inside of a tax advantaged account.

Starting point is 00:25:19 And so now all of a sudden you're saying, look, I'm a long term holder or maybe I'm a trader. Either one, I'm in a sheltered account. Now, there's tradeoffs to it because you can't access it for a certain period of time, et cetera. But I think those are the things that people really need to pay attention to. And one thing that I would call out, I forget who did this analysis, so I apologize to whoever I saw who did it, but they went back and they looked at the nominal versus the real return. And for some reason, I think it was Meb Faber, but I may be wrong on that, of the stock market. So they looked at from like the last 125 years, what was the return of the U.S. stock market? On a nominal basis, it's something like 9.3% or whatever, something like kind of just over 9%.

Starting point is 00:25:57 But if you go and you actually look at the inflation-adjusted return, kind of the quote-unquote real return of the stock market, it was actually closer to like 6.5%. And so now when you take a look at that, you say to yourself, one-third of the return of the U.S. stock market was actually eaten up by the official government inflation metrics. Now, I would argue that if you go and you take a look at inflation today, right now it was just reported that January's inflation number was 3%. That's a big number. We're growing 3%. It's 50% higher than the Fed's target of 2%. But actually, if you go and you take a look at the US money supply over the last 12 months, it has increased by 5%. So what number are you going to believe? Are you going to believe that inflation is 3%? Or are you going to believe based on the growth of the money? People will disagree. There's a bunch of debate. I'm not here to try to solve that kind of controversial debate.

Starting point is 00:26:46 But I do think that the number is probably higher than you would think. And so naturally, taxes are a very important part of investing because it can eat into, right? The US stock market, the real return is actually one third lower than the nominal return simply because of inflation. And so if you then also were not buying and holding for a long period of time, if you were buying and selling every single year, well, you're paying taxes on that. And so you're literally, quote unquote, disrupting compounding. And so I think that taxes and inflation, when you sell, all of these things play into it. And all we've seen over very long periods of time is the best investors who are able to compound capital for 30, 40, 50 years,

Starting point is 00:27:25 usually buy a great asset and they hold it for as long as possible. So you see Warren Buffett doing this. Another really interesting story is Ken Langone. A lot of people don't know who Ken Langone is, but he's one of the co-founders of Home Depot. He's a fantastic investor. He also happened to have gone to Bucknell University where I went, like every building on the campus after Ken Langone, because he's a great a financial critic and donor, but I was listening to an interview he did with Joe Longsdale. And Ken Langone said the average hold period for his portfolio is 42 years. On average, when he bought a stock, he held it for 42 years. And so you think about that and you say to

Starting point is 00:28:02 yourself, that takes incredible patience, discipline, long-term thinking, etc. And that really is... He's a multi-billionaire, but a lot of successful people I know, that is what they're doing. And so if you want to completely avoid taxes, then don't sell. Just be a long-term holder of a great asset. And that's certainly a strategy that a lot of people I know are employing with Bitcoin. People are obviously chasing returns. One thing I think is worth talking about is that as Bitcoin gets bigger, it is expected that the returns will be diminished given that the volatility will not be as great. You actually probably saw that with a lot of public companies as well. Amazon over the last 20 years has grown exponentially. But how much

Starting point is 00:28:43 more could it grow, right? And how fast can it grow? How do you think about both in the public equity market and Bitcoin about diminished returns given the size of the market? Well, we've definitely been seeing that with Bitcoin over the last couple of years, right? It used to be compounding at over 100% a year. Now it's compounding at like 60% a year. Eventually, I think it'll be compounding at 40, then 30, then 20%. When that happens is anyone's guess. But as you mentioned, it's kind of law of large numbers. The larger the asset, the lower the return usually is going to end up being. Now, what's interesting about Bitcoin is 60% compound annual growth rate. Complaining about that, right? That is still very, very high compared to stocks or other kind of traditional assets. And so I think that these compound annual growth rates can go on longer than people realize. So if it's 60% today, if in three years, it's only 55%, that's still pretty damn good, right? So how long can we kind of continue at a higher rate is a pretty important point. The other thing that I would say is, to me, the most important thing in 2025 is whether the United States is going to buy Bitcoin or not. If the United States buys Bitcoin, it will be an incredible explosion of interest, new demand, finite asset, the price goes much higher. If we don't, I still think that the price of Bitcoin goes up. It just won't have that rocket fuel tailwind of the US buying Bitcoin.

Starting point is 00:30:05 So it's kind of like, hey, we're in a good spot, but would be an amazing spot if the US went ahead and did this. So I think that's a kind of core component of this whole story is just what should we expect if the US buys Bitcoin? And really, the answer is like a much higher price. And the reason why I call that out and talking about kind of diminishing returns for a larger asset is there are still these external factors that can kind of reaccelerate an asset. And so a country like the United States buying and then that leading to other countries buying obviously could change the trajectory and preserve a higher rate for a longer period of time. And so I think that's really the stuff that Bitcoiners are looking at is saying to themselves, hey, how can we go and find new pools of capital? who want to buy this thing. If it's good enough for an individual, if it's good enough for a corporation and for a financial institution, it's probably good enough for a country. And I think that we're going to see not only the United States buy Bitcoin, but I think you will see a number of other countries over the next 18 or 24 months go ahead and announce the same thing.

Starting point is 00:31:01 I think once you get one big mover, everyone else moves in. El Salvador was the first one, but we'll see where we go from here for sure. So I saw some news recently about reciprocal tariffs. Can you talk about what this is and why it's important? Yeah. So first of all, tariffs obviously are a tax that is being levied against other countries, products or companies that are being imported into the United States. And you can think of them as an incentive system or a kind of punitive punishment system. Right now, the United States sets it up much more as a punishment system. So what we do, 0% kind of blanket tariff. So everyone starts off at zero, and then we pick certain products, companies, or countries to go ahead and to tariff, to increase the taxes that they have to pay when there is these imports.

Starting point is 00:31:44 I personally think that the United States should flip that. We should invert it, and we should go to an incentive-based tariff system, and we should start with a 10% blanket tariff across all imports to the United States. then what we can do is we can selectively go product, company, and country by country and say, okay, do we want to decrease or completely remove the tariff? So the default goes from no tariff to now the default is 10% tariff. And then we go in and we incentivize certain things that we want to bring into the United States. That to me is a much better system. And it is a more positive oriented system versus right now kind of punitive punishment system. Now, reciprocal tariffs are

Starting point is 00:32:23 kind of this interesting dynamic, because I actually think there's more agreement on reciprocal tariffs than there are on the existing tariff system that Trump is trying to implement, or even that kind of incentive system that I described. What a reciprocal tariff basically looks at is, okay, let's go around the world. Who's tariffing the United States? Okay, we make a certain product and we ship it to Germany. Germany has a 10% tariff on American-made products on X. Okay, we turn around and say, well, now any German manufacturer who makes that same product and tries to send it to the US, we're going to create a 10% on you. So it reciprocates. almost think of this as we take a mirror and hold it up to the world. We say to people,

Starting point is 00:32:59 hey, whatever you do to us, we're going to do back. And the idea is a lot of people are confused as to why I am so pro-tariff as somebody who is so pro-free market. You would think that those two things are at odds with each other. I'm very fond of saying the free market is the referee. The free market can really solve these problems. Well, the problem is we don't live in a free market right now as seen by the tariffs that other countries have against us. If you go and you look at, there was this great chart that I tweeted, the average US tariff is some of the lowest in the world. Most other countries have higher average tariffs than the US has. So that means that all American manufacturers that are exporting goods to these other countries are getting hit

Starting point is 00:33:39 with tariffs. And one way you can think about this is as we pursued globalization, countries started to take advantage of us. They started to say, well, we're going to tariff you, but you're not going to tariff us. And so naturally, the American manufacturers getting penalized, but the foreign manufacturers not. By doing reciprocal tariffs, it simply says, we're going to even the playing field. And you can almost think of this as we're bringing it back closer to a free market by using the tariffs. We're saying, okay, you're tariffing us 25%. In some cases, there are countries that are tariffing some of our products, two or 300%. And so we say, okay, you want to tariff American dairy products in Canada at 250% or whatever the number is? Well, anything that

Starting point is 00:34:19 comes from Canada to the US, we're going to implement a 250% tariff on your dairy products. Well, guess what happens usually is those other countries say, well, that sounds a little bit aggressive. Why don't we lower our tariffs on American products, right? Because it's reciprocal. So how do you get the US tariffs down? Well, you lower the tariffs on American manufacturers. And so those types of things become really interesting. And the reason why I say there's more buy-in, I think, for the reciprocal tariffs is because people feel like that's more fair. They say, oh, well, it is fair. If they're tariffing us, why don't we tariff them back?

Starting point is 00:34:50 And so I think you're going to see a lot of buy-in to that. Now, it was supposed to be announced today, but instead, it sounds like the Trump administration is going to move this back until about April before they would want to implement it. But I do think that we are going to see more and more tariffs. Obviously, we got the Mexico and Canada announcement that got postponed for 30 days because they gave concessions. We've seen a 25% tariff on steel and aluminum. Now we're talking about reciprocal tariffs. I keep... I need to say this over and over again. Welcome to the new tariff era. I believe this is going

Starting point is 00:35:20 to be the single most important economic tool that Trump uses in geopolitical conversations, but people are just discounting this and saying it's only a negotiating tool. I do not believe that to be true. I think that this is an economic tool that is going to drive more revenue for the United States government. It's going to create more American jobs. We will see GDP growth off of it. There will be more American manufacturing capacity created because of these tariffs. And on top of all of that, inflation will not flare up because of the tariffs. They may flare up because of other reasons, but not because of the tariffs. And I also think that the American consumer prices they pay for these goods will actually go down

Starting point is 00:35:57 over time. And as I've talked about before in other episodes, and I also wrote a very long piece on this, is if you go back in 2018 and you look at the tariffs that Trump implemented, Both solar panels, washing machines, and steel all saw lower prices within 18 months. So we created the tariffs. The tariffs were supposed to be inflationary. Inflation went down from January of 2018 to January of 2019. Inflation didn't show up. On top of that, the prices of those three goods that were tariffed actually went down over the next 18 months.

Starting point is 00:36:26 There was an initial spike. And then because American production came, all of a sudden the prices went down. And then obviously the government was able to create more revenue as well. And so I think there's a very big misunderstanding of how tariffs work in the mainstream conversation. I think that there is a very serious approach to these tariffs. You're Scott Passant, Howard Lutnick, Donald Trump, J.D. Vance, many other people talking about this. I do not think it's a negotiating tool. I do think these are economic tools. And the reciprocal tariffs are probably the least controversial program that they could implement. And so naturally, if you have a tool you want to use, if the tool works, and you think that there's going to be more buy-in for that, then you should expect them to go ahead and lean into that. And that's exactly what they're doing. For the reciprocal tariffs, would it just make sense to eliminate tariffs on both sides? If you're going to tariff me and I'm going to tariff you in return, right, it may be a little bit one-sided depending on what actually is like the total volume of imports and exports of that country.

Starting point is 00:37:17 But like, would it just make sense to eliminate the tariffs completely as long as the other side is in agreement there? Yeah. So this is like, again, one of the paradoxes, people want black and white answers to these questions, right? If you said to me, hey, you get to draw the scenario from the start, and you can do anything, you would have complete free trade, right? But free trade would be coupled with a heavy incentive system for American manufacturing, American jobs, etc. So one of the big lies of global finance is that globalization was good for the American consumer. Globalization was great for the wealthy in America. They continue to solidify their position at the top of the food chain and their economic kind of hierarchy. But actually, globalization has been horrible. It has destroyed the American middle class and hurt the people in the lowest socioeconomic classes. And so who are the people who usually are talking about terrorists? Who are the people who are usually talking about globalization? It's the wealthy people. They control the media. They're the ones in finance, et cetera.

Starting point is 00:38:14 So they're all like, globalization is amazing. Why would you ever want to stop this? Well, I think that Donald Trump and J.D. Vance wrote a whole book about this. They are actually saying, look, the finance people are going to be fine. Globalization has hurt two-thirds of American citizens. We need to do something for them. And so again, it goes back to this idea of free trade is great, and you want the market to work. But every country is incentivized to not participate in free trade, right? Because you want

Starting point is 00:38:39 to be able to actually incentivize the production domestically. You want to create and protect jobs inside your country. Internationally, what do you do? You subsidize, which gives your producers an advantage in the global market. And then you also implement tariffs to put pain on foreign producers of those goods. And so, yeah, free market would be amazing. The problem is that no country is incentivized to actually participate. Everyone wants to protect themselves and have nobody else protect themselves. How a system works. Anytime you have an incentive system where everyone is incentivized to protect themselves, naturally, you're going to get subsidies, you're going to get tariffs, you're going to get all this stuff. And so I actually

Starting point is 00:39:17 think that the better thing to do is for the United States to kind of play out this reciprocal game and say, look, if you do it to us, we're going to do it to you. And I think that would drastically change the economic conversations between countries. Makes a lot of sense. All That's all I got for you today. Thank you for your time.

The Pomp Podcast - #1486 Anthony & John Pompliano | BlackRock & Metaplanet Buying Bitcoin

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