The Pomp Podcast - Darius Dale, Managing Director at Hedgeye Risk Management: The Truth about Bitcoin's Future

Episode Date: January 6, 2020

Darius Dale is the Managing Director and Partner at Hedgeye Risk Management. In this conversation, Anthony Pompliano and Darius discuss the macroeconomy, monetary policy, the role of the Federal Reserve, China’s economic development, Bitcoin’s future potential, and the importance of financial literacy in today’s world.  BLOCKFI-----BlockFi allows you to keep your crypto, put it up as collateral, and receive a USD loan funded directly to your bank account. They do loans ranging from $2,000 to $10,000,000, and they're perfect for helping you reach your financial goals of all sizes. Visit BlockFi.com/Pomp to learn more about putting your crypto to work without having to sell it. UNSTOPPABLE DOMAINS-----Make your crypto currency payments simple and build censorship resistant websites. Visit unstoppabledomains.com and purchase your blockchain domains today! ETORO-----This episode of Off the Chain is sponsored by eToro, the smartest crypto trading platform, and one of the largest in the world. Join 11 million other traders and create an account at etoro.com and build your crypto portfolio the smart way.

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But then eToro came up with an even more innovative feature called copy trading. So let's say that when you find someone in those asset social feeds that you think is really smart or has a unique view on investing, rather than simply wish that you could invest like them, you can click the copy trader button and eToro will automatically mirror your portfolio to that trader's portfolio. So let's say that that person buys an asset, you automatically buy that same asset in your portfolio. Or if they sell an asset, you sell the same asset in your portfolio. So it's pretty cool to see a crypto exchange that has both social trading and copy trading all in one location. eToro is now up and running in the United States and continues to grow at an incredible rate. They're so impressive, I even invested in this one. So here's a little secret. eToro is actually larger than Robinhood, but don't tell anyone because that's not really that popular of an opinion here in the U.S.

So head on over to eToro.com and sign up for an account. Let me know what you think about their social trading and copy trading. When you hit eToro.com, let them know that I sent you. They really, really hate getting customer service tickets and social media mentions about me. So you guys know what to do. Lastly, Off The Chain. Finally, don't forget that it's not only a podcast. I really enjoy recording all of these episodes, but I also write a daily letter to our investors. Most people would keep these letters confidential or private, but I allow anyone to subscribe to read the letters

every morning. You can simply go to offthechain.substack.com and sign up today. All right, let's kick this episode off. What's up, everyone? This is Anthony Pompliano. Most of you know me as Pomp. You're listening to Off The Chain, simply the best podcast in crypto. Let's kick this thing off. Darius Dale is Managing Director and Partner at Hedgeye Risk Management. In this conversation, we discussed the macro economy, monetary policy, the role of the Federal Reserve, China's economic development, Bitcoin's future potential, and the importance of financial literacy in today's world. I really enjoyed this conversation, and I hope you do as well. Anthony Pompliano is a partner at Morgan Creek Digital. All opinions expressed by Pomp or his

guests on this podcast are solely their opinions and do not reflect the opinions of Morgan Creek Digital or Morgan Creek Capital Management. You should not treat any opinion expressed by Pomp as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of his opinion. This podcast is for informational purposes only. Learned each other for a while. He may be the only person I know who I'm willing to drink with, talk macroeconomics and then go on a football field and beat them but that that's a special place in my life uh thanks for coming to do this yo it's a pleasure man you even have the swag on absolutely man it's got the hedge eyes swag absolutely all right let's go through your

background first and then we'll get into macroeconomic stuff um you grew up where seattle yeah so uh uh i was born in uh kind of a podunk town called east st louis at the time it was the murder capital of the united states um so kind of have my fun running with that that old crowd uh we moved my family moved to seattle when i was um uh i think i was 11 years old uh-huh um and sort of got involved in sports and whatnot and that kind of kept me out of that those uh you know those those communities uh yeah we got to talk so you what uh went to seattle and played football only yeah play high school football at west seattle uh shot the coach burger shot the coach rugby listen man come on you can't be shouting on your high school team if they were

scrubs well my senior year i got a story for you i want to digress my senior year we were the first west seattle high school football team since 1954 i believe to make the washington state playoffs and you want to know the last play of the the league's city championships they called on fourth and six on fourth and goal from the six yard line they called a dive right to run right behind me i pick my d end up drive him in the end zone fall down pancake him in the end zone roll over and the running backs right next to me with the ball in the end zone all right fair so you guys want to say championship no no no you gotta bounce in the first round that's neither here nor there though listen listen we climb the mountain the mountain doesn't matter how big the

mountain is right all right so uh you end up going to play football at yale uh why yale i heard that school sucks yeah it's funny another funny story there so i um you know my family i grew up you know very poor you know for lack of a better word uh you know we didn't even have the internet in high school and this is back in the day where you just you know you just didn't have any exposure out you know when you don't have the internet and certainly I don't think a lot of people in the younger generation empathize with that now but information was not ubiquitous back then. I was getting recruited to play football you know for some Pac-12 schools the biggest probably being University of Washington which is our hometown school

so I was pretty set on going to University of Washington in fact it was the only school I applied to at the time and playing football there but my high school coach knowing the student that i was a student athlete that i was sent my vhs and this is tape for for younger viewers it's a it's a black rectangle that you stick into a vcr you used to have to make them yourself yeah there was no website that like all this kid blew up he used to have to stick these things in and record football games with these giant boxes anyway so he sent my tape to uh to the coaches at yale and they started recruiting me that you know when they first got there when i first met uh cotrino who's now the head coach at yale uh he flew to seattle to visit me when he left my school i i literally

my friend asked me oh who's that from because they were used to seeing coaches come in and recruit me I go I don't know some small school in Connecticut I had no idea I'd never heard of Yale I had no idea what the significance of going to Yale was I heard of Harvard and Princeton from the movies but I had no idea Yale was part of that sort of elite institution base so you know fast forward fast forward into my second semester senior year I'm still set on going to UW I'm still getting hounded by coaches at Yale Craig McGowan who's my AP marine biology teacher at the time in high school um he he was also the head of marine biology at the university of washington where i was sort of dead set on going to school he pulled me aside after uh after our final heading

in the second semester and goes if you don't like i i don't know what to tell you basically is what he's saying but i can make sure you don't go to university of washington you should go to yale but if you're too dumb to figure that out i'll make sure you don't go to university of washington that's when everything clicked so that was uh first time i got on a plane so uh the way the first time you ever got on a plane yeah what's the go my visit yeah really yeah so you said AP classes you wanna hear a great one no when I got to college a kid was showed me a schedule and I know we were freshmen and I was like hey man how come you ain't got a math class and he was and I thought like idiot you know

you didn't schedule one and he was like I don't have take any and I was like what do you mean he's like oh I took him in high school I was like what he was like yeah AP classes and I was like oh my high school didn't have that and he's like no i'm sure that they did you're just an idiot and i was like no we didn't have that like i would know yeah and so he's like well you should like maybe ask somebody so i called the smartest person i knew and i was like hey uh did we have ap classes they were like yeah i took all of them you were in none of them let me guess is everybody jamie no i wasn't jamie either we got a mutual friend who are at the high school but uh no and i remember thinking like oh wow man

like you could have taken classes in high school that counted towards college like and i was busy You're playing sports and all this stuff. I was like, damn. Look at you now. Yeah. Well, here's what's funny. So you went to Yale. I went to Bucknell.

And we would go play. I think we only played at Yale one year. And then we'd go play Harvard and Princeton, all these places. And Yale always cracked me up because they cared. Like at these other schools, students would come. They would leave, whatever. But at Yale, the fans cared. Totally, man.

We had a good fan base. We were pretty good when we were there. And I think that sort of fosters the community around Yale. And also, New Haven is a great town. New Haven's got a rich tradition around that Yale football program. Maybe less so today with the advent of this internet and TV and all these big TV deals for college football. But back in the day when it was just your hometown team,

Yale was big time in the 60s, 70s, and into the 80s. What's your biggest takeaway from being a student at Yale? Oh, man, my biggest takeaway from being a student at Yale, I don't even know if it's my takeaway. It's something I would go back and do had I known. I would have challenged myself more academically. I wouldn't have been afraid to protect my GPA as much as I was. I felt academically inferior coming from an inner-city public school.

It wasn't the worst school. I did get to go to a better school than I otherwise could have. But it certainly wasn't a good school. It certainly wasn't the quality of schools that a lot of people were going to. You're playing the game of school, right? Yeah, I was playing the game of don't look like an idiot around all these really, really smart people. yeah paul graham's got a great uh thing he just wrote where it's uh you have to learn to unlearn and it's the whole idea that like most kids when they go through college or high school

they're basically they've learned how to hack the test right meaning that okay so you want me to pay attention to all this information and at the end of the course of the semester or whatever i'm going to take a test yeah and if what you know i think the example uses like i don't know medieval history or something right he's like if school actually optimized for learning what you would do is you would go read the five best books on medieval history right and then you would walk away back i know the most about medieval history than i possibly could like i should pass this class but instead what they do is they have to watch for that test and that test is based on the notes and the lectures that that teacher gave and then so if you want to pass the test you shouldn't go read

the five best books and so you should read the teacher's notes and guess what in college it's always like half of the books are written by the professor that's their day job and the tests are all floating around which he brings up right and he's like you know the teacher who's been teaching for 15 years can only ask so many questions so they end up getting recycled by accident or on purpose whatever and so you end up optimizing for the test yeah and his point is when you leave college you end up optimizing for a test and you don't even realize it so when you're building companies right how do i fundraise well fundraising isn't the point of building the company absolutely it's just a test right how do i get that job how do i you know you start to optimize your life

around um the same thing school taught you uh but if you can unlearn that there's huge advantages Oh, my God. It's so you hit the nail on the head when it comes to companies and education. Like specifically on companies, your business should be principally focused on solving a problem that your clients face, that your customer base face. That that is that is the literal and single most important variable that determines, you know, successful businesses, sexual enterprises relative to unsuccessful ventures. To me, that's what you do when you left school. So I've been I joined Hedgeye. So let's let's backtrack in terms of how this all played out. So it's, you know, 2008, you know, the world's in financial crisis, financial ruin.

A lot of my buddies aren't getting offered at their internships on Wall Street. You know, I'd only sort of late, you know, I'd only become a sort of good enough student kind of late in the game to even consider Wall Street, and I actually started to take it seriously. But I kind of missed that whole sort of, you know, Goldman Sachs internship whole ordeal. For those that aren't aware, Wall Street, get an internship, participate in the summer. That starts heading into your junior year of college, at the latest. Go to Brother Jimmy's on the weekend. Or Sidebar.

Yeah, whatever the new hottest intern bar is. But it's pretty competitive. It's very competitive, and that starts, you know, a lot of these kids have been groomed for life for these kind of opportunities. I wasn't even aware that the opportunities existed. But once I became aware, you know, they became very interesting to me. However, I was, you know, sort of just kind of late to the curve. So, you know, kind of kicking the tires, trying to look for an offbeaten path to get into the financial services industry.

I actually saw an ad in the YDN, the Yale Daily News, that says we're hiring. It's a full-page ad. I mean, I've never really seen an ad in the YDN. It was by Hedgeye CEO Keith McCullough at the time. This is back in 2008. It says we're hiring because no one else is hiring on Wall Street. Smart. And, you know, Hedgeye CEO, he also went to Yale.

He was the Yale hockey captain in 99. And, you know, he said, look, I'm going to start a company. I think he was 33 or 34 at the time. I want to start a company. I have a vision for where research is going to go, independent investment research is going to go. I have a vision for where, for the mediums in which finance is going to, you know, sort of change in terms of the communication mechanisms, the delivery mechanisms of information. I think that's going to change. And I need a bunch of young analysts that I really can't afford at Wall Street rates to come work for me. And so I was part of that first cattle class of analysts, you know, kind of, I guess, the longest surviving one. Others have gone off to business school, done some really great things around the world.

But, you know, it's a really centered vibe. What did you guys do when you first got there? Like, what was this pitch to you? Well, it's pitch to us was I'm employing you. This is 2008, 2009. So that was the first pitch. But secondarily, it was an opportunity to work at a startup. Like, you know, it was an opportunity.

I'm a partner now. I'm, you know, the co-head of the macro team with Keith. And, you know, I've been at the Hedgeye for 10 and a half years now. And the opportunity to build something was the pitch. You know, it wasn't going to be lavish. I mean, I remember plenty of days where the heat in our office when we were working, we were right on the office campus. So I kind of lived in New Haven for seven years or three years after college before I moved to New York. You know, it wasn't glamorous, but it was awesome because you could just see the wheel starting to turn as our collective knowledge base grew, our client base grew, and our feedback loop grew.

All those things kind of grew exponentially over the years. Yeah. And so talk a little bit about what you guys actually do, and then we'll get into the macroeconomics and what you guys are seeing this year. Yeah, so Hedgeye at its core is a sort of distillery of industrial-grade investment research. You know, kind of the whole genesis behind the name Hedgeye is sort of, you know, it's what you would see if you looked into, if a high-class hedge fund had transparency around their investment decision-making processes. So Keith, a former buy-sider, had a prolific career on the buy-side, you know, at some very big shops and some very big positions. had a really successful career and really

during his non-compete when Carlisle Blue Waves venture blew up he basically said I wanted to recreate my team I wanted to recreate my process but blogging is just as easy as managing money if not more. There's no competition in the investment research sphere I mean you talk about the people he's competing with

on TV and it's not much better on the sales side in terms of the traditional banks and brokers if only because of their conflicts of interest so what we're trying to do is effectively show world-class process in terms of investment decision making and then share that process with you know institutional investors hedge funds mutual funds pension funds and then we touch sort of investment advisors we touch retail investors you know there's a there's a product

set and a product solution for each of these people and a price for each of these people and it works and it's a great business and so as you guys do that like uh talk to me about what is the deliverable is it a um hey we've done work on this asset class in this country here's how we view it uh we're thinking that long over the next six months is a good idea here's the product to actually get that exposure um and like here's the ideas uh is it vehicles that they can invest in like how do you actually um interact with the clients yeah so it's mostly through uh sort of the various mediums i think one of the key scrape visions and i think um i'm actually shocked that No one has tried to compete in this arena that he's sort of kind of built is the fact that we create, you know, marketable, consumable content.

You know, traditional, no matter how good the research is in Wall Street, it's delivered in a very boring, very traditional sense. Here's a PowerPoint presentation. Here's a research note. We're going to do a conference call. We said to hell with all that. we still do all those things because that's kind of the, you know, the, the, the lowest sort of expectation. Yeah. That's the expectation. That's kind of lowest common denominator of communicating, but what's beautiful about Hedgeye is, you know, not only do we have world-class analysts and

world-class research that is as good or if not better than most, you know, and I don't mince words about that. It's the fact that we created and presented in a, you know, in a consumable format. So we have a video team, we have a lot of very expensive live full studio in our office. You know, we can produce video content, you know, consumable video content that's, you know, on par with anything you're going to see on CNBC and Bloomberg. And so when you sort of marry the fact that we have great analysts, great investors, you know, with repeatable, transparent processes and accountability, I think that's another thing that's unique to Hedgeye

is the fact that we're accountable to all of our calls. You know, a lot of investors, a lot of people kind of do what we do, or at least on the side of finance. You know, they'll pop up when something's going well for them and they'll go away when it's not going well for them. We're in our clients' inboxes every day. We're producing video content every day. I'm on Twitter every day.

You and I interact on Twitter. it is it is about you know just being there for the client if the client may be a portfolio manager at a very you know trillion dollar asset manager and would you have a couple of those if the client's a guy managing thirty thousand dollars in his pa you know we have a lot of those as well yeah um let's go around the world a little bit in terms of different asset classes and what's going on uh let's start here at home in the u.s what uh what'd you guys see in 2019 uh kind of from a macro viewpoint yeah so i mean you know 2019 has been a really interesting year it's It's probably the most interesting, chaotic year of my career in terms of all of the different sort of kind of macro things that happened relative to sort of some of the expected outcomes.

And I namely use the sort of year-to-date return. In fact, I'm not even sure what the year-to-date return is. To me, and just to us in general, investing is not about year-to-date. Year-to-date is a compensation scheme. That's how hedge fund investors get paid. That's how the people on Wall Street get paid. It's not about year-to-date. It's about when did you make this decision and how well did the decision do in terms of, you know, performance?

And so to me, the biggest call of 2019 was duration. Duration, for you losers that don't know, it's sort of the sensitivity to interest rates. So we had a view that interest rates would fall. Going back, this is going back heading into Q4 of 2018. If you recall, you know, for those who are in finance, you couldn't have a conversation in finance if it wasn't prefaced with, okay, so rates are going to 4% to 6% on the 10-year. What do you do from there? We stopped that conversation, Dan, in his tracks and said, okay, the economy is about to inflect and ready to change terms.

Inflation is about to inflect and ready to change terms. And it's very likely that bond yields get cut in half from here. That was a great call. But all the things associated with that making that call were also great calls, like being long housing, being long gold, being long the dollar. The dollar tends to go up when financial conditions are tightening, things of that nature. So that was a good year for us in that regard. It's probably a mixed year in terms of calling stocks because, I mean, I think we definitely got the sector and stock factor exposures right, but I don't know that we were sort of as exposed to sort of the quote-unquote year-to-date return as we could have been.

But we certainly weren't exposed on the downside in Q4 of last year. We actually made the call that the market would crack and be led to the downside by more cyclical sectors and stock factors then. Got it. And so how do you think about, let's just call it all of the Federal Reserve and the geopolitical slash just political stuff going on in terms of, like, the instability or the uncertainty, right? So you've got a president that is raging multiple trade wars, right, or at least threatening multiple ones and engaging in some of them. You've got a Federal Reserve that has chosen to cut rates, right? It looks like QE. Forced to cut rates.

Okay, so explain more. Well, the forced cut rate. So the Federal Reserve tends not to do what the bond market's suggesting. So you go back into, you know, what kind of catalyzed the rate cut and, you know, heading into the first rate cut in July. It was a summertime swoon in May. It was a degradation of economic data. It was the rise in credit spreads that we saw, you know, in the second quarter of this year. You know, the Federal Reserve, you know, Jay Powell, don't forget, is worth $100 million.

You know, we're at the Carlisle. He's a private equity guy. his singular first and foremost job as federal reserve chairman is to make sure the credit cycle continues to work and i actually think he's doing a fairly good job of it i think he sort of certainly elongated the business cycle with their actions they took this year um in terms of monetary easing but that doesn't mean the business cycle goes away somebody once said to me uh people think that the federal reserve job is to manage a currency and what they forget is their job is to manage an economy their job is to manage liquidity don't i i can we can talk about this

for two hours. Explain that more. Absolutely. I had a very, very important, to say the least, bond investor teach me this a few years ago. This is probably sort of 2016. And he said the most important driver

of economic activity, of inflation, of investor expectations, is liquidity. It's the supply and demand balance or imbalance between maturing debt obligations and the cash to invest in new ones. So the cash from the maturing ones and the supply or the lack thereof supply of new demand for credit.

And so as long as the Federal Reserve can have a policy setting that facilitates that in a really sort of productive manner, that's actually quite good for the economy. That's the virtuous cycle that we tend to see, you know, when the economy is doing well and stocks and credit are doing really well. When that breaks, and it's hard to, you know, a lot of these are private debt instruments. It's hard to understand when that could potentially break. and a lot of times that breaks just as a function of investor confidence you know investors you know if they think interest rates are headed lower they're more likely to hoard cash they're

more likely to sort of you know sort of um you know be in defensive assets and it's less likely to sort of extend credit and so you just sort of the sort of credit chain and we can talk about repo as well because i think this is what's happening in the repo market as well you know i think that whole process gets sort of there's a wrench gets thrown in that process when the economy slows which people start to get nervous at the margins repos repo oh man that's this is my top my favorite topic right now to me let's take a step back from repo and then dive into repo repo is only cool to talk about like once every three four five six ten years you know they call it the plumbing of the financial system no one ever talks about the damn financial system

it's plumbing like what what where are these pipes going this is the point of the global economy the world economy is a dollar a dollar credit based economy for better or for worse like we can argue to six ways to sunday if that's a good thing or bad thing um it's a it's inflationary currency that's federal reserve with the fractional reserve system yeah we credit all base those are all secondary considerations behind this beyond the statement the global economy is based on largely do not dollar denominator based credit and most of global trade is not only financed but also settled in u.s dollars my theory on that is because we probably have the biggest guns we exert the most coercive force around the world that could change but i'm

not making that call. So you take this back to the problem in our repo market. The repo at its core is really just overnight lending. It's people with cash that want to earn a yield and sort of lend on a secured basis to either repo transactions or sort of money market funds. Money market funds actually funding the repo markets. It's people with cash in terms of the liquidity in the credit system meets the demand for credit. It's that. So when there's less of that cash coming in for people who need the cash, who need the repo to sort of lever up. You know, I think of like big hedge funds, a lot of these big hedge funds, you know, sort of rely on repo to sort of grow their balance sheet. You know, so they might have a need for leverage to sort of to gross up, but they,

you know, they might not necessarily be an incremental supply of cash. And the reason there's no incremental supply of cash is because the U.S. dollar is so strong. The Federal Reserve, and this happens before every recession, the Federal Reserve takes the benchmark interest rate for the world's reserve currency for the currency that all trade and credit is settled in globally higher than all the other benchmark interest rates and you know that creates a series of a ton of distortions as it relates to the you know sort of the supply and demand for credit there's 14 trillion dollars of dollar denominated credit off balance sheet like not in the u.s not issued by u.s um domiciled sort of um borrower that that that credit has to be financed in dollars like

The banks who issue that credit, the hedge funds that issue that credit, the insurance, the pension funds that issue that credit, they have to finance in dollars. So when the dollar goes up, their ability to finance in dollars gets curtailed at the margin. So they have to issue FX swaps, all these things. And that's draining cash out of our repo market. And this happens every time ahead of a recession because what it's really telling you is that monetary policy settings are too tight for the liquidity. It's creating a supply and demand imbalance at that sort of integral juncture between cash and credit demand. And so should people be worried about what's going on in the repo market? If it persists.

Now, the Fed has thrown the – I mean, I wouldn't even call it the kitchen sink. They've thrown the bus at this issue. They've now – I saw somebody who recently put it in BTC terms. They said 70 million BTC. Yeah. So it's hundreds of billions of dollars now. been thrown out now it's important to call out that's not a hundred you know hundreds of billions of dollars of net new capital no that is some of the capital is being reused night after night

after night and so it's hey we're gonna put you know 50 billion but it's not 50 billion total it may be some smaller number used you know totally 10 billion five times whatever absolutely absolutely but their balance sheet has grown i i'm sort of quoting this off the top of my head and i could be wrong so correct me if i'm wrong on this i think their balance sheet has grown about 300 a billion dollars in the last four months um and it's scheduled is it qe no technically no because i think qe has a different intention let's take a step aside do we even have to call it qe it is what it is it's it's the federal reserve growing its balance sheet by sort of swapping cash swapping the reserves for short-term assets that are going to mature they're likely they're likely going to

be on a path until the foreseeable future until the dollar can really start to crack so you don't have to necessarily call it QE. To me, QE is a different dynamic. The purpose of QE and the reason they targeted longer maturities in the bond market is because they wanted to compress term premiums. They wanted to basically make bond yields as low as they possibly could be to simulate demand for credit, to simulate demand for levering up among households. They're essentially manipulating returns of various assets in order to change behavior in the markets. Yeah, QE is designed to change behavior, whereas this is really just designed to make sure this thing works and it's a lot of there's some technical factors in there that are

unnecessary discuss i think the only reason why the is it qe is it not qe uh becomes a conversation point it's because they specifically said it wasn't and then again don't forget jay powell's not a technical he's not a technocrat he's not a monetarist or anything like that so you know he's going to get himself in trouble when he starts talking about these really big here's an impossible job i think a very impossible job and quite frankly i think he's doing a fairly good job of what they set out to accomplish which is to extend the economic cycle you know we're at full employment we're probably going to remain at full employment for longer than we otherwise would have had they not cut interest rates had they not also authorized this sort of repo activity if they

hadn't stepped in uh really kind of what q q3 of this year for sure but even uh there were some troubling signs i think q4 last year right all the way up until now so over the last 12 months or so there's been various ways that they've stepped in for those that are uh not watching and just listening uh we've got some bud lights here yeah i'm on my third beer pardon me darius uh told me he said uh is this like a formal thing or is this like a bud light thing i simply texted back bud light both both yeah so so if they hadn't stepped in and uh enacted at all where do you think we would have been right so it's like we know what happened because they stepped in but is that a full-scale recession is that you know depression is that it would have been bad but it would have

been that bad? Like where were we headed before they actually stepped in? So we're definitely headed towards recession and we're still headed towards recession. I would argue that the Fed has bought itself some time in months and quarters to sort of kind of walk this sort of thing off the plank at a slower pace. But, you know, the Fed doesn't control the business cycle, the profit cycle. To me, the profit cycle is a dog with a tail that's sometimes being wagged by the Fed. But the dog is the business cycle and the profit cycle and the relationship between labor and profits you know for 10 years we've had this very slow sluggish recovery and what that's done is allow and a slow sluggish recovery and we can go into i think it's a really big topic we should

probably hit on is sort of the impact of monetary ultra easy monetary policy to me i think it's deflationary and put one of the reasons i think it's been deflationary is because you allow for industry consolidations you allow for established players in every market to get bigger to buy growth to quash competitiveness so this is one of the reasons why the economy has grown slower because smaller businesses are more dynamic and they grow faster, but it's also one of the reasons why wage pressures have been relatively subdued relative to what traditional economists would have thought based on the Phillips curve. But all those things are still moving in the direction of economic activity,

the business cycle maturing. It's just taking much longer. Yeah, it's lurching forward. It's taking much longer because of all these sort of what I would consider to be deflationary or disinflationary sort of policy stimulus. But we're kind of there yet. If you look at sort of there's a few things. You know, I don't like to talk about charts, you know, in podcast format, but there's a few data points that I think are really important to highlight for your listeners.

You know, so obviously, you know, 50, 60-year lows in unemployment, da-da-da-da-da-da. But there's some cracks underneath the hood in the labor market that are starting to suggest that the deterioration we saw in corporate profits that began in Q3 of this year and last quarter is likely to continue. So you've got private sector wage growth at 3.7%. That's at a cycle high. You have total nonfarm paywalls growth at 1.47%. You know, that's trending towards a cycle low. at the end of every business cycle, those things really start to diverge, i.e. employment growth starts to slow dramatically as wages stay high and sticky. The unit labor cost inflation is

hard to get rid of. It's the economic equivalent of fat. Yeah, it's fat. Bingo. You actually have to fire people to reduce your unit labor costs at this point in the profit cycle. That's the point. Yeah. And so as you kind of look at this, one of the things that I think is really interesting is somebody like a Ray Dalio, right? Because I think most people- I've learned a lot from him, by the way. Who he just, he's seen as a very kind of traditional guy, right?

In the sense of markets and kind of how he views. He's very professional, et cetera. And earlier this year, he wrote a thing that said, look, central banks have two tools. They can cut rates and they can print money, right? And they're unlikely to have the same impact if they do that now as they historically have had, right? So last two recessionary periods,

cut rates i think it's 550 basis points or more uh we obviously don't have that much to cut uh if they print money we're kind of addicted a little bit to it and so we're kind of used to the impact that that can have and so that impact is softening um and his prediction or kind of thought process was they're going to cut rates they're going to print money and eventually we're going to move into a world of modern monetary theory or this mmt uh and i don't think he really took a position on like is it good or is it bad but more of like it just is what it is right like like we're headed in that direction. I think we're already there. Okay, explain. I mean, don't forget that one of the

things that catalyzed the spike in repo rates in the Q3 of this year was the fact that the Treasury's, when the Congress authorized this sort of increase in the debt limit, it allowed the Treasury to start to reissue bills again. They have a very heavy bill issuance calendar for the second half of the year, so it started

to drain cash out of the market. The big dog eats first, and this is how finance works. So when the big dogs start draining cash out of the market, repo rates started to spike, and the Fed said, oh my God, there's not enough dollars to go around for the Treasury to get fed, for foreign commercial banks to get fed, for foreign hedge funds to get fed, for our own commercial banks to get fed, the ones that aren't flush with reserves, and they tend to be pretty concentrated.

So I think what the Fed's doing is effectively acknowledging, in so many words, that U.S. budget deficits are really big, and they're draining a lot of cash from the system. But what's also draining a lot of cash from the system is that foreign international banks, commercial banks, and all these different players, they also want to extend assets and because dollars have the highest yield. So now they're draining cash from the system via FX. There's all these different things happening around the market that are a mere function of the Federal Reserve's monetary policy setting

being too tight for the supply and demand balance of liquidity and demand for credit. China. What's going on there? Love China. China's in a secular slowdown, man. So China's been slowing for 10 consecutive quarters. One of the most important metrics we track in the Chinese economy, which is the nominal growth rate of secondary industries, that's the China dream.

That's the urbanization. That's all the stuff that kind of touches that stuff. And it peaked at 14% after the Shanghai Accord. Shanghai Accord was their massive fiscal monetary stimulus program that we saw in 15 and 16, mostly through 16, and led to the highs we saw in growth both in China and globally in 17. They peaked in Q1 of 17 and have been slowing ever since. They're effectively, from a signaling perspective in terms of their communication, but also from a signaling perspective in terms of their monetary policy settings, they're just managing a slowdown.

You know, so like every six weeks you'll hear they're pumped maybe 200 billion CMY in open market operations or, you know, they'll lend this medium term loan or whatnot. And this is the way the PBOC manages their liquidity policy settings. But on a trending basis, you know, almost coming out of the market at $100 billion a month, you know, the balance of the medium term lending facilities, you know, down 20 to 30 percent year over year. You know, they're basically acknowledging the fact that they can't get the dollars that they need to grow their credit base. So they're just going to allow it to slow until the dollar breaks, until the Fed cracks the dollar with some very aggressive policy. I'm not sure if we're there yet. What would that be? I think the Fed has to turn around and say, we're going to start to meet the incremental demand.

Because right now it's like, oh, I'm licking my finger and putting it in the air, mimicking Jay Powell. Here's $60 billion a month. But I don't think they really know what's really demanded by the market. I think what would be an incrementally dovish step is saying we're going to automatically increase our supply of bank reserves to take out liquidity from the market, or to supply liquidity to the market, rather, and commensurate with the step-ups in demand. Or they can actually start to move out of the maturity curve and say we're explicitly targeting term premiums. We want to do this whole QE thing again. How much demand do you think is unmet right now? Oh, I don't know.

What are you talking about size-wise? You know, so I haven't done this analysis myself, so I don't want to put too much stock in it. But I did see a paper floated around the street. You know, clients email people's research all the time, and they kind of want to get our take on it. Because we have a very quantitatively oriented investment framework, and we can talk about that some other time. But, you know, they want to see how this means, you know, what some of these sort of key takeaways mean in the context of our quads. So, you know, I did see a paper that said there's a $1.4 trillion hole relative to the amount of sort of dollar-based liabilities that global commercial banks have to fund their U.S. dollar assets relative to the size of their U.S. dollar assets that are on their balance sheets. Wow.

So $1.4 trillion is a lot, a lot, a lot of liquidity, man. What, that's two times the— That's over $100 billion a month if the Fed has to supply that. yeah well the way i think about what is that that's two times right because i think it's 700 million uh 700 billion was the tarp uh yeah oh dude we're bailout what is what the hell it's a billion amongst friends at this point we're talking in trillions now brother yeah come on now i mean yeah this is why by the way this is why bitcoin exists i don't know that bitcoin is a tradable good and we can talk about whether it's a commodity whether it's a currency whether it's money you

know i think i have my views on all right let's just go right into bitcoin what's your thoughts on it yeah before we go back into bitcoin this whole game that they're trying to keep and we're going to bitcoin this whole game that they're trying to keep going this dollar-based credit game it's clearly broken obviously we wouldn't have had a 08 we wouldn't have had the sort of political unrest that we see globally we wouldn't have the sort of the sort of inequality that we see domestically and globally it's clearly broken that's my biggest they're scrambling to maintain this game my biggest thing is the wealth inequality that uh when we break preaching to the When we break from the gold reserve and we basically go into a system where, okay, I can print money now.

What a lot of people don't understand, and actually to me it's an education problem, right? We don't financially educate young people because they grow up and they still don't have the financial education. I wrote this thing a few weeks ago that said money is too dangerous of an idea for school. Because if people actually understood how money works, right? It's the Henry Ford quote, right? If people understood banks, there'd be a revolution before the morning. Yeah, absolutely. Right, which is the whole idea of money is that there's inflation, that inflation will ravage your wealth if you leave your wealth in dollars.

Totally. Right, and so people who are quote-unquote intelligent or financially literate, they understand this, they get out of dollars, they get into real assets, stocks. Liquid assets. Yeah, all stuff. Well, 50% of Americans don't understand that game or aren't in a position to play that game. You think it's as high as 50? I think it's way lower than that. Oh, that don't understand.

No, no. You think the proportion of Americans that do understand is 50%? Well, here's where I get 50%. I think the proportion of Americans that do understand is somewhere around 10% to 20%. That's probably true. I'm giving people – the metric I'm using as to get to 50% is that 50% of Americans can't afford a $400 or $500 emergency bill. So those are people who for sure are living paycheck to paycheck. Yeah, for sure. Have no cash, have no assets.

It's just paycheck to paycheck. in that world those people are one usually also not um they don't benefit from having a inflation adjusted wage contract so they're getting paid their 15 bucks an hour 10 bucks an hour every single year year in and year out they think they're getting paid the same obviously not absolutely because of inflation but also then they're leaving all of their savings in cash that cash is just getting if they have savings exactly you can't be balls to the wall long equities making 400 a week and you got to you know pay the light bill of course and so i think that that's a world where um at the wealth inequality is so obvious right you can look at

very explicit charts that show wealth inequality has gotten way worse nothing chaps my ass more by the way i grew up very poor uh two drug addict parents been evicted probably seven or eight times lived in a van for two months yeah nothing chaps my ass more than the wealth equality these people are perpetuating so you're already a bitcoiner right whether you know it or not because the whole idea in my opinion around bitcoin today right there's a lot of people um who will say it's a savings technology right what that basically means is today we ask people to be experts at what they do for a living so you know uh whether you're a research whether you're a marketer whether you're a teacher a fireman uh you're just an accountant you know whatever you do you have to go and be

good at it so you can get paid to make a living you make that money but then we ask you not only do you have to be good at your job we also need you to be a good investor because we need you to understand when you get out of that cash, if you're smart enough to understand to get out of the cash, do you go into equities? Do you go into gold? Do you go into bonds? Do you go into real estate? Do you go into private markets? Can you go into private markets? What are the laws, right? All this stuff that it takes to invest, the everyday American has no fucking clue what's going on there, right? And so we're asking you to be good at your job, plus we're asking you to be a good investor. And so- That's where HedgeRite comes in.

Well, so one, there's professionals who can help, right? So some people just say, I have no clue. I'm going to hand over my money or the ideas to somebody else. the second thing is that people try and they actually screw it up yeah right and so then what they do they go they invest in some dumb stuff right and actually lose their wealth faster and so what ends up happening is well what if there was a currency that allowed the world to operate in such that when you earned your living you could leave your wealth in that asset that you earned it in and that asset was not inflated away was not debased away yeah no i i i'll push back a little on that because i agree i agree what you're saying what i disagree nobody ever

comes in here pushes back i want some pushback no absolutely and again it's and it's it's coming from the perspective of someone who's kind of like not from the sense of someone who's deep in the knowledge of crypto and bitcoin but more just someone who's you know kind of deep in the knowledge of kind of how the global economy works there's bitcoin can be one of three things it could be a commodity like you speculate in and it has a use in a in use and a cost of carry and a cost of production it could be a currency a medium of transaction or it could be money which is supposed to be a store of value like gold was money for the gold and silver or money for the vast vast majority of human history why do you separate money and currency because money is a

is a medium of exchange money is how how the how the person who manufactured this delicious but light i'm drinking can can get the stuff that i have that i so i don't have to carry gold to to oh currency currency is the way that you currency is how yeah currency is how i physically transfer my wealth to him so I can get to purchase a good or service. And money is my ability to purchase that good or service. And so I think when you separate those things, I think Bitcoin kind of touches on all three. But the one thing I think that it has that it doesn't satisfy the money criteria, and this is my own personal view, at least not yet, is the fact that it's very volatile. Money at its core, and based on what you just told me about people not wanting to watch their

wealth get inflated away, you cannot afford if you're making, let's call it a thousand bucks a week, and you have a two-bedroom apartment with four kids, to have your value, your light bill, your rent, go down by 15% or 16% in a day or in a week, that's not money. It's very much. That's a speculation. Yeah, it's very much. So there's two buckets here. One is, where are you in the life cycle of adoption, right?

When there's very low levels of adoption, it's much more volatile. As you get more and more adoption, it becomes less volatile. We know that it's becoming less volatile, but it's still volatile. It is. Right? And then the second is there's definitely various wealth levels as to how you are affected. So if you only have $1,000, you put all $1,000 into it and then it fluctuates 30%, well, that's 30% of your wealth. Yeah, totally.

If instead you put 1% to 5% of your wealth and it fluctuates 30%, not as big of a deal because the risk is kind of contained to an allocation in your portfolio that is for what you would think as risky assets. Right. So I think a lot of that is kind of where we are on the stage of adoption and also who is participating. But quick question. Yes. Why? And this is a very dumb question. You know way more about the macro economy than I do. I probably know more about Bitcoin than you. Probably. You're being very modest. You know, you're one of the world's leading experts in blockchain. Darius is Satoshi. so what i don't understand and this is more just this take me out of the the the don't talk to me about the white papers and stuff take me to like the whiteboard explanation of why the price of

bitcoin changes at all okay so um well a couple of again uh relatively elementary or simplistic things but uh still important to state i think is just to remind people about price so one price is a function of supply and demand of course right uh two is um it depends on what you price the asset in so the whole idea of amazon stock well one amazon stock equals one amazon stock no we price them in dollars yeah and so the the dollar value is is moving same thing with bitcoin right it's the dollar is priced in dollars so you end up with one dollar equals one dollar inflation is kind of the hidden tax right and so that that purchasing power is changing but one dollar equals one dollar with bitcoin one by the way that goes back to what i said on the dollar-based

credit system one dollar only equals one dollar because we all agreed to agree to use us dollars the basis for the entire global financial system so bitcoin if you live in a bitcoin world right i always describe like there's two financial systems there's an inflationary fractional reserve system that's dollar uh based and that's how we all know and we and we uh denominate everything in dollars then there is this deflationary kind of automated software driven world that let's say that bitcoin is what you're going to denominate everything in yeah actually in the bitcoin denominator world one bitcoin equals one bitcoin it has forever just like one dollar equals one dollar now where you see the price volatility is what is the dollar worth

versus bitcoin and bitcoin versus the dollars and so uh there would be some people who are i'm not going to argue this but some people would argue that the dollar is being devalued against bitcoin right now systematically and over a long period of time sure i'm all in on that but the price volatility in dollar terms of it went from a thousand dollars in you know january 2017 to 20 to 3 to 14 to 7 i mean that's a lot of volatility right in dollar terms and so i think what ends up happening here is you get one hyper hyper retail driven markets historically because there's not a lot of electronic trading there's not a lot of the structures that are in place in in kind of wall street yeah in terms of smoothing price right they can't stop markets and valuation based frameworks

all this stuff right so you have a relatively small amount of people who hold an asset it's very human driven and so all of a sudden everyone gets excited price shoots up all of a sudden everyone gets really uh scared right price goes down a lot so that's one aspect of it the second is like the price discovery of this thing is um it's kind of natural right if you think about it hey there's this new asset it's 10 years old people are trying to figure out what is it worth right gold we pretty much know right i mean gold over a 10-year period it's basically not moved right it's kind of yeah it's had fluctuations in between but for the most part it's been like dead money for about 10 years when you look at bitcoin over 10 years it went from a dollar to

90 000 in the last decade right i mean nuts in terms of if you put one dollar in and what it's worth today right so you put you bought one dollar of bitcoin 10 years ago today that one dollar is worth 90 000 right huge in terms of price uh uh appreciation right or bitcoin appreciation in dollar terms but it's all because people are trying to figure out what is bitcoin worth totally Right. And I don't think anyone has an answer yet. Now, the one thing that I do think is really interesting is so we go back to what's happening in repo markets and federal reserves and demand liquidity, all stuff. We don't actually know exactly what they're doing from a supply like you or I couldn't tell anyone how much dollars is being printed today. Right now, we can we can look at bank assets and we kind of triangulate our man, but we don't know an exact number with 100 percent certainty. They're re-hypothesizing three-month T-bills five, six, seven times.

No one knows. No one knows. That's why the Fed is flying in the dark. Yes. Second is – well, I'll even give you a better stat. I forget the exact math. My partner Mark knows it. But there's like – the Fed has been trying to guess the next quarter's GDP for like 248 times or something.

They've never got it right. The Atlanta Fed, which was the biggest sort of advent in Federal Reserve history. This changed the way we think about forecasts. We're going to do this now-casting thing. And by the way, we've summoned some of their ideas in terms of developing our own now-casts, which are far more accurate. The Atlanta Fed's now-casts, and mind you, I have a lot of respect for these people. They're really smart people. They have an intra-quarter tracking error of 240 basis points and a number that can basically be 0 to 300 basis points.

It's crazy. It literally – this quarter, on November 13th, their Atlanta Fed tracker went to 0.36%. Now it's 2.36%. Like that – as an investor, I mean maybe that's great if you're an economist and you're a PhD economist. That is shit for an investor. I don't know if I can use profanity. Yeah, you can. We're drinking beers.

Literally Bud Lights. Sorry. But all right. So here's the thought process. If we don't know the supply of dollars, right, we can guess and get close, but we don't know for sure. And then we don't know demand either. So there's a bunch of models that let's model supply and let's model demand. But basically what we're doing is we're guesstimating on both of those things.

And we come out with price, right, or what the output of that equation is. So supply-demand, we end up with a result. With Bitcoin, we know with 100% certainty one side of that equation. So we know supply. Today, 1,800 Bitcoin were created and put out into circulation that previously were not in circulation. That happens every single day for four years. In May 2020, it's going to get cut from 1,800 to 900, right? And so that supply schedule is known as transparent, it's predictable.

When you add in the fact that if I can know with 100% certainty the supply schedule of the currency, now I just have to worry about modeling the demand side, right? So thinking about the future value of something. Well, let's say that you and I are really bad. We're just as bad as the economists, the Federal Reserve, et cetera. And all we say is we're going to be super simplistic about it. We're simply going to take the rate of demand that has occurred for the last 11 years, and we're going to extrapolate it out with no rate change. So no increase, no decrease. We're just going to say it stays the same.

We could be wrong on that, but just saying that. As you do that, what ends up happening is because you know the supply with 100% certainty, and you just extrapolate it out, what you get is a continued increase in dollar terms of the value of Bitcoin. Because artificially supplied asset demand increases, well, the US dollar value is going to go up. Totally. And so I think this is where you see folks in the macro economy world, they're too smart. I'm convinced that most of them, they're like, it can't be that easy. They're a lot smarter than I am. They're literally like, it can't be that easy.

Totally. But if you go back to just the pure basics of supply and demand, what occurs is that's the value. And this is the key piece. The value is pretty well documented in terms of a lot of these models and stuff because you have one input that you know with 100% certainty. you can just extrapolate demand to the price is what's volatile the price is what's volatile and the price is quoted in the unit of something else yes and this to me is the fundamental i don't want to use the word issue because it's not an issue it's actually not flawed i'm looking for a more elegant word i think this is the fundamental problem that bitcoin and crypto in

general still need to solve if you if you you either and there's two problems one you have to decide whether or not you're trying to usurp the dollar-based credit system or you want to compete alongside the dollar-based credit system pick pick your poison if you want to usurp the dollar-based credit system then you can no longer quote your price in dollars for obvious reasons so i think that this is the biggest difference between wall street and the hardcore bitcoiners the hardcore bitcoiners are denominating things in satoshi's which is the smallest unit right think of it as like you know pennies or whatever um or btc yeah the finance i want to put it in a in a portfolio with a bunch of other assets etc it's a dollar based yeah and so uh what's interesting and i

don't have an answer for this can it be both can it serve well here can it serve one purpose for one community and another community basically takes that same asset that's serving that purpose in the bitcoin world and then dollar denominate it and have it serve a purpose for them as well I actually think it can. What I don't know is how does that perform in down markets? How does that perform in these other economic-type cycles, not just the longest bull market in history where basically every asset is going up and to the right just because we're printing things to the moon? And also, you gave me a thought experiment. Let's play a thought experiment where the dollar is no longer the asset that settles global trade, that settles global credit.

But also, by the way, it's probably somewhere between $500 billion and a trillion dollars in global derivatives. If the dollar gets replaced by anything, I don't care if it's Bitcoin, empty cans of Bud Light, if anything, there will be chaos. There will be wars. There will be death. There will be people scrambling to replace the system. There will be big guns and tanks and nuclear bombs. This is the problem with – and again, I don't want to use the word problem because I think there's an elegant solution here that is well above my pay grade. But if you want to usurp the dollar-based credit system, you've got a hell of a lot of hay to bail and a lot of really angry people with a lot of big guns to piss off.

Well, it's basically you're essentially taking away the power of government. You're taking away the power of government. Yeah. They have a vested interest in remaining in power. So this is where you get deeper down the Bitcoin rabbit hole, right, which is – I don't think this is deep. I think this is topical. well so there's two components that i think uh most bitcoiners uh either one believe or think

is a higher likelihood chance than people would admit so not necessarily saying it's a 90 chance but just saying let's say everyone thinks that this is a one percent chance and they think it's five percent right or what is the chance here well let me tell you what it is and then i'll tell you what it is so the first is the separation of state and money so exactly what you're talking about right yeah the state the one of the most powerful weapons it has is the fact that they control control the currency but even more so the united states controls the uh global reserve currency totally right we've done a fantastic job of weaponizing and all this stuff yeah we do there's also a lot of noise internationally that people want to get away from the dollar

based system good luck whether it's russia china iran today was talking about it etc right good luck you know who the world's i don't want to cut you off the emerging market world's largest dollar-denominated borrower is? Venezuela. China. Oh, China. Oh, yeah, yeah, yeah. China.

These guys can't get off the system. Yeah, yeah, yeah. Well, so that's one piece of it is the separation of state and money. The second piece of it, though, is every global currency... Yeah, give me another one. Absolutely.

We're just going to go through... I'm on my 30s on his... I'm on my 40s on his third beer. ...is every global reserve currency that has failed has failed for one of two reasons. It was debased away. or there was conflict and they tried to extend themselves and well and somebody else basically

you know your country has all of the power because you have the currency i come in i basically kill all of your people now i'm in charge because i'm the most uh military power you know highest military power now i put yeah now i put my uh currency in place so debasing the currency every country in the in the world today is already doing that right now they're doing it in a very controlled manner right it's all these things but every single currency that is a fiat currency is being debased away uh so that's kind of the countries are doing it to themselves they're eating themselves alive in a very slow manner that could last hundreds of years right by the way one quick thing and now you keep going it's impossible to run a fraction of reserve banking system

and not perpetually debase of course you that's the whole point exactly when maturing credit You need somewhere to put the new money. You need inflation. You need growth because there are more people coming down the pike. There are more people with needs and demands for homes and demands for goods and services. Once you start that, once you put the can out of the worms or the worms out of the can, you can't put them back in. Absolutely. So that's one piece of it.

The second piece, though, is, and this was a thought I had about, I don't know, six months ago, whenever I wrote it. in the physical world the most powerful military has the most guns the most soldiers the most you know the the best airplanes the best ships all stuff in the digital world the best offense is the best defense yeah so what i mean by that is if i get in if i hack you or you're another country i'm an adversary i hack into your electrical grid your nuclear system whatever you essentially are under attack until you kick me out yeah right now you can attack me but if you can't get in yeah i'm the most powerful right if i get in and you kick me out then again you can retain power as long as you keep me out so if defense is the best offense in the digital world the most or the

strongest computing network in the world is bitcoin it has more computing power securing that one network than all other competing networks that exist so there's nothing more can i can i push back on that a little bit because one of the things i thought is so fascinating about bitcoin is just the sort of the energy intensity it takes to mine bitcoin yep if you cut off bitcoin power supply so this is uh when as you get into this right what you realize is okay there's a ton of computing power that's securing it very provable in terms of it it's nearly impossible to deny like human capital but what about the actual electricity no the machines so there's more computing power meaning the machines that is securing that network than any other computing

network in the world so you could spend billions of dollars if you're the united states china whatever you can't hack the system when i cut off your natural gas supply okay you from turning your lights on because and this is the key piece of bitcoin you couldn't not i yeah you couldn't do this any other way than the way that it grew it's so decentralized meaning that there's so much computing power in each area of the world you're right there's no attack well here's what the united states is cool we're gonna shut off all electricity in the united states we don't know Who's mining, who's not? You would have to do that.

We're going to... You would target large-scale mining or large-scale consumption operations. Even if you cut off everyone in the United States, Bitcoin would continue running, right? Now, let's say that two countries said, hey, we're going to do it. So the US and China...

It requires unprecedented global coordination and you would never get that from any of those. It's nearly impossible, right? You already have the two largest geopolitical powers in the world beefing and they're going to keep beefing until Obama still goes away. Even if they agreed to coordinate

along with a bunch of other countries, Bitcoin networks will keep running. They're not going to coordinate on this. Right, exactly. You know what I think they're going to do and our demographer, Neil Howell, is really thoughtful on this topic. I'm sort of sourcing some of his ideas. Governments are really good at playing copycat.

Of course. If this shit works, they're going to want to – Well, they're going to take all the greenbacks out of my wallet and out of your wallet and they're going to transition them to a digital currency. And I'm not sure whose technology they're going to steal or if they're going to enlist CIA types to create this. But we're moving in the path of Federal Reserve wanting full control over the quantity and price of money.

Right now, they have partial control over both. Well, and this is, I think, where there's this guy, Alex Gladstein. I'll send you a bunch of his stuff. So he's the chief strategy officer of the Human Rights Foundation, right? And so his life has pretty much been dedicated to what you and I would consider more philanthropic and kind of socioeconomic issues, et cetera, but in foreign countries. So things around freedom of speech, independence, self-sovereignty, et cetera, but not here in the United States for the most part, usually somewhere else. he's brought up the point which i think is a very valid point which is as these countries go and move to digital currencies pretty much every country in the world is talking about these

central back digital currencies right they want to create a digital currency same monetary policy they're in control they can print they can remove they can do whatever group of crooks making the policy settings what it does is it drastically increases their surveillance capabilities of course that's the whole point right you take cash out of the system now i know everything is i increase my tax revenue all this totally they're very incentivized to do this by And so when that happens, Bitcoin is the only digital currency that has the pseudonymity or the anonymity depending on how you use it and has the security to withstand state-level attacks and is not geographically constrained in terms of centralization, et cetera. And so what it's going to do is it's going to be the only way that people can opt out, use digital money without providing the surveillance capabilities to the state. So I completely agree with that, and this is cool.

We were talking, we're digging now into like revelation in Bible terms. You know, like this, this is, it's called the mark of the beast. And I genuinely believe, and my brother's a biblical scholar, or at least now he is. I genuinely believe, and I don't want to get too far into this topic because now I'm like a heretic. But there's going to be a mark of the beast. And I genuinely believe that it's going to be a centralized currency or a series of centralized currencies where you can only transact. You can only be, quote unquote, on the grid in a centralized currency. and something like Bitcoin will allow people

who defect from that grid to sort of stay or remain. It's a separation of state money. But don't forget, when you deny the mark of the beast, it says in the Bible, you deny your access to food, you deny your access to education, you deny your access to shelter. You're basically choosing to live in the wilderness just so you can quote unquote maintain your purchasing power.

I don't know how many people are gonna do that. And by the way, this is written thousands of years ago in the Bible. That may be the fairest argument against Bitcoin, right? So people always ask me two questions. What's the best argument against it? What's the most likely reason why? And mind you, I'm not arguing against Bitcoin.

Yeah, yeah, yeah. I'm just playing devil's advocate. But what's the best argument against it is actually Bitcoin does exactly what people think it's gonna do and nobody cares or it's too inconvenient, right? So basically, even though it's better technology above all this stuff,

it's just too inconvenient. People don't care, right? They're not gonna change. They can't mentally shift from dollars to BTC. I don't think it's a mental shift. I think you can't, there's gonna be a point where you can't physically shift.

If you want to maintain your status quo. It is possible. Your status quo that's being eroded by inflation. Yeah, it is definitely possible. So that's one. Two is what is the most likely cause that it fails. It's actually a self-inflicted wound. I don't think it's going to fail.

Well, so the developers end up creating some kind of bug, et cetera, right, that could fail. To me, that's the biggest risk. It's not state-level attacks, all this other kind of stuff. It's just somebody makes a mistake, right? Now, the beauty is that the process is pretty thorough, right, and quite extensive in terms of reviewing code, et cetera, and so it's unlikely that it happens. But to me, that's like the biggest issue.

Yeah, and again, like I wouldn't use the word fail. Like everything has an issue, right? Like we're humans. At the end of the day, we're talking about measuring, and I think this is the most valuable part of money and that I don't think Bitcoin touches, I don't think the US dollar touches, I don't think any of these things touch.

I think the only thing that really touches this is probably something that you can physically, I'm not a gold bug at all, But I do think it's got to be something that we all have agreed to agree on for thousands of years that this has some value. And this is why I think gold is probably the purest form of money is because money is really just a unit of human time. I'm basically amalgamating. Oh, you're a big winner. Yeah, I'm neither of these things.

I need to do more research to figure out what I think I want to be in long term. But I think there's a reason for all of these things in your portfolio. And I don't want to say portfolio like I'm trying to invest in this. I want to say like in your life portfolio. Like when I pay someone for something, it's not because I want it. It's because I'm acknowledging that it took him time of his perpetual human life that will eventually end to create this good or this service. And I'm transitioning some of my time for some of his time. So the best thing that I've told people that gets them immediately to realize that Bitcoin has value is one currency, which is the dollar, is inflationary in nature, and so it promotes consumption.

Get out of this, buy things, buy things, buy things. Yeah, yeah, yeah, totally. When you go to a deflationary structure with a disinflationary monetary schedule, all of a sudden you're incentivized to save. You're incentivized, my time is very valuable. My time is valuable. Pay me this, and I'm going to hold this, because that's how valuable my time is. and i think that mindset shift is really really hard for americans right just because it's consume consume consume yeah uh but also too it's driven by the dollar right in the structure

so i think look you're going to do more research we're going we're going to bring you back and you're going to be a full-blown uh bitcoiner because i could already tell you you think a lot of the same things that bitcoiners think i think that you just haven't spent the time yeah right to be to be frank i mean i've thought i thought about i'm a conspiracy theorist at heart who do you think satoshi is then uh oh i don't i don't know enough about bitcoin to say i mean i know who that is supposed to be i don't know that we know who he is okay i think i think it's a concept to be totally honest yeah i think it's probably a group of people but i think it's a it's supposed to represent like hey man you're looking for me i don't exist that's the fucking

point marty bent is a uh guy in the bitcoin world and um he uh he used to work at barstool sports you know he's a cool dude and uh and he calls it the immaculate conception yeah right it's the it's a religion money's a religion right oh this is religion i have i'm wearing it for the reviews i'm wearing a gold chain and the reason i wore the i'm wearing a gold chain is because when i grow up when i grew up all the people that had societal value to me were gold chains and these are rappers these are athletes you know i'm unfortunately not from the kind of communities that thought people like Bill Gates or people like Jeff Bezos had societal value.

I didn't know those people were. I didn't have the internet. So to me, that is what's valuable to me. But value is a transferable concept and it's a non-transferable concept. And what I mean by that is you can pay someone money to do something for you or currency to do something for you.

But also, what's also valuable to me is I have a letter from my girlfriend. That's only valuable to me. so you'll love this one of the things that I'm fascinated by is the cultural icons that you and I grew up with

we're about the same age and I remember like very distinct moments growing up so the first is when Jay-Z's Big Pimpin' came out and he had the music video

on the yacht right with the girls I'm not gonna lie to you two days ago in the shower after the gym I sort of was mimicking Jay-Z's dance

in that video when the song came on while I was in the shower in the shower not kidding this was two days ago by the way so we

yes we share a lot right so big pimple was a big moment the second was uh nelly country grammar yep and you just heard that that uh oh man and you just everyone just stood up in the room everyone kind of looked out yeah look around like okay who's the available chick in the room you so that was the second the third was first time i ever skipped uh school in high school uh carter two little wayne came out my buddy was like hey man carter two came out like what's that he's like it's a fire cd i was Like, I'm there. And we went and skipped school and bought it.

So those guys, right, who were these, like, cultural icons, right, Allen Iverson, all this stuff, now what's happened, I even tell Michael Jordan, like, all these guys. Yeah, for our era. This is our era, by the way. So, you know, early to mid-'30s. There's a very direct line in the sand where half of them made horrible financial decisions, right?

Oh, my God. If you look at Allen Iverson, Lil Wayne, all these guys. It's because they didn't have any coaches. Zero. When you grow up in these communities, there's no one saving you. How do I spend as much money? It's not even about how I spend money. It's I literally don't know how to invest money.

I don't know how to start a mortgage. I don't know how to open an investment account. I don't even know who to call if I want to fucking buy the stock market. It's literally a lack of resources and education. Take those guys, and on the other side of the line, Puffy, Jay-Z, right? All these guys who, Jay-Z's a billionaire. You know what the difference is between them? What?

They surround themselves with really intelligent people. Absolutely. One of my favorite things is that Jay-Z and LeBron James, both when they first hit it, called up Warren Buffett and said, I need to come see you. You're supposed to be the smartest guy in the world on this thing. Tell me what to do. That's the difference.

LeBron James, 18-year-old kid, who, by the way, to me. Legend. Never got in trouble. That's my point. 18 years old. He was 16, I think, and he was on the Sports Illustrated cover, the chosen one, all that stuff. from 16 years old till today he's played in the nba now for 17 the most minutes ever right the

dude you've never heard affairs fraud no tax issues the worst thing you can hear about lebron is that he's he's too nice of a teammate this guy let jr smith get the ball in the nba finals like my man like this how he's that's the worst and so carry on but that's the again i agree with your point and so when you look at that that's somebody who by the way grew up with a single mother yep right i actually think the last scandal he was involved in was when he was in high school he somehow got like remember he got with the two mitchell and ness jerseys and like a hummer or something like that there was something that happened and all of a sudden was freaking out and so what do you do he just said just take it back like i i didn't you know whatever if getting

stuff for free is a scandal then who are all these like and i don't want to be i'm not even gonna be gender bias anything there's a lot of people who are much younger than me who clearly don't work and earn the same level of income that people like you and I make that live in our buildings. And I'm like, how do you live here? And I don't mean like they shouldn't live there. I mean like somebody's paying your rent.

And this is a very New York City thing, but it is what it is. So my favorite by far is the individuals that at Ohio State took their cleats that they owned and sold them and got in trouble for it. Oh, and the tattoo thing?

It's like, my man, I'm friends with the guy who runs the tattoo shop. I can't get a tattoo. So my uncle can put $100,000 in stocks in my portfolio and that's fine. But if I get a tattoo,

you know, it's institutionalized racism. We don't need to go on the tangent on that. But that's what that is. I am, there's two things that are happening in the world right now that I'm incredibly happy over the last six months to come out.

One, the NCAA is going to allow athletes to start making money off their likeness. Off their likeness, yep. So you can't get paid to play, but I can go and I can go put my face on a poster or sign it

whatever so look you want to be famous be famous right and get paid that way but don't get paid to play fine I agree with that

second thing is the SEC is looking at opening up the accreditation laws to allow more people to participate in the private markets say that again

the SEC is the SEC is so you no longer have to be an accredited investor to do a private deal they're going to change the way that they define accredited investor

like lower the threshold from a million So that would be part of it. We'll see if they do that or not. But the biggest piece is that it would be education-based. I agree. Take a test. I've yet to meet somebody who doesn't agree with that.

Yeah, totally. Just take a test. Just take a test. If you have – By the way, no one's going to want your $30 on a take private. They're not going to want it. But if you can, if they actually want – You can crowdsource $30 at a time.

You and I can go on Twitter and raise $2 million tomorrow if we needed to. So I wrote a thing literally today that basically says accreditation is violating the American dream and is discriminating against millions of Americans based on wealth. It's the definition. But tell me, guess who writes the tax code? It's Congress. Everybody in Congress is a millionaire. Everybody in Congress is a vested interest in keeping the game going the way it's designed. Come on, they all wrote books.

None of them did Insider Tree. Oh, yeah, of course. All right, listen, before we wrap this thing up, I got to ask you, aliens and dinosaurs, what's up? Believer, non-believer? Oh, yeah. I definitely believe in dinosaurs. I don't think you can argue with that. In dinosaurs?

All right. So here's my question on dinosaurs. Every dinosaur you and I have ever seen pretty much looked the same. So when they say pterodactyl, we know what that looks like. T-Rex, we know what that looks like. I think those are renditions. I disagree that they look the same. I think what we saw—

No, we've both seen the same model of what they tell us they look like. Yeah, yeah. They could be wrong. I disagree that the model is accurate. That's what I'm saying. So my big question is, and I saw this meme on the internet. Now I'm fascinated with it. You think that the dinosaurs had hair?

Like hair like you or I in terms of every dinosaur you've ever seen? None of them had like mullets or long hair or anything? Think about a dinosaur you've seen that had hair. None of them. Again, so I guess I'm probably – all right. I'm four beers deep here answering this. So just keep that in mind, a caveat. What's the Bud Light answer?

Did dinosaurs have hair? Okay, so yes. Dinosaurs definitely exist because we have the technology to sort of date carbon and things of that nature. So I agree with that. but again these are like when I used to collect rocks

as a little kid you know I mean I'm telling you when I said I was poor I was very poor we didn't have anything going on at home

you know I would literally go outside when I was like five to ten years old and just find cool rocks rocks that I thought were quite known

shit about them you couldn't look them up on the internet there was no internet back then at least not for us but when you grab things out of the ground

it's not like just one dinosaur is perfectly its bones are perfectly preserved in the position it died in there's thousands if not millions of years ago.

You're gonna get two or three bones most as an archaeologist and you have to freaking imagine what goes where, what it's supposed to look like. These are all renditions based on artists and archaeologists and their imaginations.

So give them some credit for trying, but don't necessarily say that's what a goddamn Tyrannosaurus rex will look like. We don't fucking know. The New York Post had an article the other day that basically said

that there's wide-held belief in the scientific community that dinosaurs became extinct because asteroids hit the Earth. So there's this big asteroid impact and a bunch of dinosaurs died. That's false. Well, that's what science believes.

So what the New York Post wrote an article, which by the way, credit to New York Post for doing hard-hitting journalism on the science. They found a report that basically said, now there's this study that shows there was a very large volcanic eruption and there was increased mercury levels,

which they believe actually was leading to the extinction of dinosaurs before the asteroids hit. And so they basically were calling bullshit on the science community, which I found quite funny. They're both wrong. nobody knows

I was going to say the reason they're wrong is not because that's not what the actual occurrence was it's because no one fucking knows it's like don't present

anything as and this is one thing that we were to take this back to finance and what not and I'll end with a question I have a secondary

question for you we're still talking aliens we're still talking aliens but before we truly conclude I'll go there

but no one knows man the biggest issue with what's going on and I think the coolest thing about bitcoin and crypto

and the information era that we live in now, which is 10, 20 years old, is that information is decentralized now. Not just currency and money and commodities. It's information. Think about where I am. If I graduated with what I knew coming out of college in 1989, I would be a freaking janitor. Do you know how much statistics and advanced theories on macroeconomic theory

I've taught myself just watching YouTube videos, just reading white papers. YouTube's the best university in the world. I probably have the equivalent of multiple PhDs in economics and statistics. And it's not because I majored in these things at Yale. It's because information is now ubiquitous and I can go learn it and I can teach myself and learn at my own pace for the last ten and a half years. Do people get mad if we both together put YouTube PhD in our Twitter bios? I am one of the YouTube PhDs, and I'm proud of it.

Yeah. I'm absolutely proud of it. Well, it's a self-starter. It's actually helped me. It's actually helped me. If I actually graduated from Yale knowing everything I should have remembered from economics and ivory tower, macro and macro peak, you know, all this gobbledygook that they preach, I would be fucking terrible at investing. these people don't understand how the real world works they understand how their models work yeah and that's a very different thing so i'm actually quite blessed i've grown up in this

information age and i've and sort of self-taught myself the shit that actually matters for sure there's only so much stuff that actually matters that's one of the great contributions ray dalio has made to our industry is that hey man you guys are looking at all this crap you're all being macro tours but these things actually matter i couldn't agree more speaking of things that matter aliens real or not uh again this is one of those things we can't we have no um empirical evidence to prove so the concept of real needs to be massaged a bit right they're real so much to they're real in the sense that if people believe they exist they exist because all of this is their intelligent life outside of earth uh oh well i'm very religious

so i believe you know if god's not on earth then yes but again that's i wouldn't need to talk about religion here let's go back into a more sort of existential concept something is only real in the human sense if a human can observe it and or believe it agreed if if a human being can observe and or believe it or actually i'll take this the other way around if a human being can observe it and or believes it then it is real because there's no other plane we only live in this dimension yeah it's our human it's our perspective we're we're viewing hearing touching tasting feeling things if we if there's no other playing where something can exist that we're not touching in one of those senses so to answer your question yes everything that people say is real

that they truly believe is real is real but it doesn't necessarily mean you can observe it empirically yeah you have to separate those what you're basically talking about is if aliens were invisible and they were all around us but no one ever realized it there's no scientific proof of it So you just have to find out what you mean by real. Is it real because someone believes it, or is it real because there's an empirical evidence of it? Do you believe that there's intelligent life outside of Earth other than religion? I believe it because other people believe it, but I don't personally believe it. There's obviously no empirical evidence.

I believe aliens—sorry, sorry, take this back. I believe aliens exist because other people believe aliens exist, not because— So you believe in the mental image of aliens more so. yes there's no other plane to discuss we only live in this universe we'll

there's no thing if someone in this universe thinks aliens exist then we have to acknowledge that aliens exist because we're talking about it right now aren't we

aliens do exist I talk about it every day you and I are talking about aliens right now so the reason why this question I ask every podcast episode is

because one day I was laying in bed and I was like fuck you think aliens got pets oh my jeez you were laying in bed

and thought of that randomly and i turned the plane and i said hey uh you ever thought about if aliens have pets and she's like go to sleep by the way congrats i don't know if you guys don't know i'm sure you posted on twitter but you just got uh engaged to beautiful woman awesome woman i don't know how the hell she puts up with you but darious is uh he's seen me at my worst and at my best so uh she's winning in this uh relationship for sure well actually i'm winning i'm winning by by uh by sure but she uh she makes me better um so yeah i was laying there and i was like you know what aliens everyone always looks at them as one type of homogeneous uh species right like

independence all these movies right why don't they have pets i bet you they have pets like is there not like a multi-species type uh i think people are uncomfortable drawing alien pets because in that by definition you now making the choice of who who or what type of joe's giving you the side eye we're in the we're in the 2009 post-09 era where you can barely say i drink butt light and not have people come at you on twitter you know i mean like if you believe aliens have pets then you are some you're you're now making a decision of what type of alien or what type of being is an alien pet and now you're talking about discrimination all these other things like mind you i'm a black dude from the hood like few people in the world have been

discriminated against me more than i have certainly in this country i get the discrimination thing but let's lighten up a bit folks i mean jesus christ like you're check your emotions at the door and let's learn how to make money together i uh i'm a really big believer in what they call bud light politics and bud light politics is basically if you think you disagree with somebody you have to drink three bud lights with them before you can agree that you disagree with each other i love that that's a good model to live by and so literally if you go and drink three bud lights with somebody and you walk away saying we still disagree with each other then you actually disagree but like i don't know by the way 20 30 50 percent of people would actually find out

it's okay to disagree just don't hurt anybody my my sink my i don't even i don't even necessarily believe it believe in the golden rule like like like just just do whatever the yo my man let my man cook my man you can cook as long as you're not hurting anyone yep and i think the concept of pain and hurt are fairly universal. I don't think we need to go too far into defining those. Just don't hurt anybody. If you want to do some weird, creepy stuff or do this or that, just let people cook,

man. China, China, let the people in, was it Wuzhan? What's the name of the province? Let the Muslims cook, brother. Let the people in Hong Kong cook. Let them cook. They're not hurting you. You're still in control. Let them do whatever they want. Alright, so before we wrap up,

I'm now being a podcast host. this is if darius had a podcast he'd be top 10 in the world easy i probably would i would also get fired by all my clients uh because i have a very very loose filter as you can tell by this uh but like consumption he brought blood lights to the first podcast hey man look i i drive better three to four beers deep but light specifically okay i uh i invest better one to two but lights deep because i'm less gun shy um what else do i do i do with some other wink wink things better when i'm six to eight but like deep uh all right what's your question all right all right question pg podcast pg podcast absolutely all right um so this is my favorite question i like to ask people

certainly and and i think you would be one of the best people out there in in our in our in our respective communities in our sort of co-joined community because you you understand hip-hop and the culture all right you know if you had to design a mount rushmore of hip-hop oh man who do you put on it how many people do i get four mount rushmore no no a's and b's no extra guy no no 1a no does a group count as one a group can count as one i'll give you that man it's hard huh no it's not hard at all nwa biggie tupac and lil wayne wow that is the quickest response and by the way i i uh honorable mention jay-z could switch with lil wayne in my opinion wow that is ladies and gentlemen i've asked this question to dozens

of people and i have never ever had anyone respond in under three to five minutes there's that's easy it's usually a two minute pause like oh man this is hard all right so let me explain nwa greatest group of all time anyone who says it will fight uh all right well i'm not gonna disagree with you biggie and tupac is probably the greatest rivalry ever and they had the perfect combination of entertainment uh the like kind of lyrics uh and kind of just their mastery of the poetic aspects of rap and then you add in kind of the the violent components the coast etc just like that's exposing people that's probably just like the the golden age of hip-hop right so you get those three Lil Wayne I put up there because Lil Wayne was probably the first guy at least of

my generation who really took what was more of kind of a raw underground hip-hop type community and pulled it into what we consider like the pop world today right or kind of the socially acceptable world today so nwa was the first time that there was like like somewhat crossover i think into um you had like white dudes who didn't live in the hood who are running around you know singing nwa lyrics uh eminem and lil wayne are probably the two that started to pull it jay-z's just the fucking goat though like like so when you put those up there holding it to force pretty hard because you can very quickly spider into all these other ones but i gotta go with nwa because i think they're the best ever uh tupac and biggie as just a a duo that co-existed in a

world where like we'll never see that again in our lifetime uh because the thing also was at that time when they said yo i'm gonna shoot you it was like 80 probability they were serious yeah and by the way we're not glorifying violence this is america folks people go to the movies to watch i'm using honest question because that's popular my day but like people go to movies to watch violence hip-hop is a depiction of violence that America craves. UFC, boxing, football. Yeah.

It's the same depiction of violence just in a lyrical art form. Oh, I'll take this a step further. Hip hop is a mirror of society and people don't like looking in the mirror. Oh, man. So what ends up happening is if you look at all,

especially the first three, right? So if you look at NWA, Biggie, and Tupac, they weren't making stuff up. They were literally just creating music about their day. It was truth. Right? It was, hey, this happened yesterday

or this happened a week ago, whatever. and what ended up happening was that really resonated because it was this raw authenticity and so uh if you think about that those like earlier days of hip-hop it's very different than today where i think it's more of people have figured out like the algorithm right they realize like okay here's the type of music i make here's the beats that i need to use uh here's how we're going to distribute it etc things go viral yeah music in general is a science now yeah and so i think that um but it's also why you see guys like i don't know a chance to rapper right uh some of these guys um did you watch uh what's the netflix um documentary that came out recently uh on uh

probably no because i don't watch tv but no no who uh it's the dude who's uh dating one of the kardashians um bro i live under a rock man what no it's not kanye it's uh um it uh west west world or whatever uh travis scott yeah i know who that is i there's no way i watched it on television So Travis Scott, basically, he's very similar in that, like, it's just go in the corner, right? So you want to know a fun fact? Yep. I talked to a very well-known producer recently, a music producer, and we were talking about something. And he goes, oh, man, making music is so easy today.

I go, what do you mean? He goes, dude, this is what I do. I send beats to people. They literally, like, are on their tour bus or they go in the bathroom at, like, a rest stop or something. And they record the lyrics on their phone. like literally go to like voice memo oh my god email it to him and he takes that voice recording and then mashes it up and bam you have a hit song there's so much technology to change it now and i said excuse me and he goes oh yeah dude i could just hit up three dudes and be like yo give

me a give me a verse uh here's the beat and literally they're just recorded on their phones and send it to him then he can mix it all up and then you got a song that nobody ever saw each other so literally everyone was in different locations they just send them the file and just So to quickly interject, what you're talking about is the information age, the technology age. It is just quicker and easier to do everything that human beings used to toil and struggle over. So guess what? To me, that's deflationary because you need less things to change that unit of time for. I'm going to end with – you've got to answer.

Who's on your Mount Rushmore? Oh, okay. Because I know you thought about it. Oh, I've definitely thought about this. To me, it's one of the coolest discussion topics out there, and hopefully it starts a good debate on Twitter. And I think you have to decide what your Mount Rushmore is. Oh, my God. No, no, no.

I'll be quick. I'll be quick. You have to decide what your Mount Rushmore is. My Mount Rushmore are the people who are the four most relevant people in hip-hop, but not necessarily the four most relevant people in hip-hop according to one generation. Because I do think now that we're seeing guys like Jay-Z turn 50 and we're seeing Diddy and Jay-Z be billionaires, we have to acknowledge that on the other side of that there's a whole community of people that are 14 15 16 that are listening to hip-hop and have no freaking clue where those 99 bricks went or 96

prints went you know that's a jay-z reference and they don't even know where those bricks are or where they were but so anyway my point is marcy projects marcy projects is marcy even projects now it's probably like a nice community that's what happened in my neighborhood in seattle not to digress um anyway so jay-z obviously yep jay-z was huge in the 90s um arguably one of the two or three best lyricists ever in hip-hop um in terms of raw talent the most raw talented mc second most raw talent mc's next one's the most talented jay-z's the most raw talent because he didn't write anything down he was very unique in that sense that he can come in and there's many savage there's many recollections of him like when when him and cam did welcome new york city

he said Cameron said quote Jay-Z walked in there heard the beat in the six minutes he was walking out of the studio he laid down in a whole one of the most classic hip-hop songs of all time in six minutes just thinking in his head and freestyling so I know you didn't listen to the episode so I gotta tell you so the music producer I was talking to is Ryan Leslie uh oh yeah Harvard guy right yeah Grammy nominated etc we're talking about something else yeah but he came in he did an episode he told me a story about Jay-Z so he was one of the producers on the Jay-Z Kanye album and they were in Australia and while they're in Australia

Jay-Z woke up he did like the Oprah show or something in the Sydney Opera House then he went he took Beyonce on like to some location they did whatever

goes through the whole day they have dinner all this stuff they start recording music it's Ryan Leslie as the producer Jay-Z as the artist and there's like

an audio engineer sitting in the living room in this house they rented in Australia it's three o'clock in the morning and Jay-Z's just going hard, hard, hard

and all of a sudden he stands up and he throws his headphones off and he goes who the fuck is gonna catch me who's gonna catch me i'm jay-z yeah and look what i'm doing now yeah and the whole thing was it didn't matter how much better he was than everybody he was still hungry and he is and this is 10 years ago 12 years ago now right and you know 2007 2008 whatever and ryan lez is that's when i realized jay-z's different yeah right and so it's the same thing

he didn't write anything down he could walk in and be out in six minutes like he's crazy his By the way, he learned this skill, and he de-glorifies it now as a responsible father and respected member of our community, of the U.S. American community. He's like, man, I had a lot of spare time sitting on project benches selling drugs, and I actually did something with my time, and I invested it in myself. So all you out there listening, no matter what your social circumstances are, no matter who's listening to this podcast or what your demographic is, but we all share one thing in common, and it's you have a ticking heart you have a thinking mind use that to your advantage

facts you know it's like we wouldn't you and I wouldn't be here if we didn't if we didn't use those to our advantage and take advantage

of the resources that we could pull towards us of course and then as we got further and further along the resources got grew and they become better

so anyway let me finish all right Jay Z you're gonna hate me or some a lot of your folks are gonna hate me for this and it's not a personal preference

but I'm gonna go Eminem oh he's definitely up there okay good so I personally He's top ten all time. I think he's the most talented rapper, lyricist of all time. No one has ever rapped like him. Big L.

It's hard to refute. It would be hard to refute he's not top three lyricist. Lyricist. So Eminem would tell you Big L is the best lyricist. I would tend to agree with that based on my personal preference. But Eminem has a substantially longer discography, unfortunately, because Big L was murdered. substantially long discography at what was the peak

and probably continues to be the peak of lyricism. They made a movie about him. Yeah, the purest form of rap, man. Yeah, and so like, and also that's beyond the point. That's me arguing from the perspective of a hip hop head.

Don't forget what he did for rap music. He took rap music from my inner city ghetto project, you know, drug dealing, gang banging area and put it in every suburban home in the country and in the world.

I remember when him and Dr. Dre came out And he was like What did he say And he's in the basement I forget the lyrics But I remember just listening to that over and over And over again for months What do you say to somebody you hate?

Anyone trying to make a show of your way? Yeah so yeah absolutely You gotta tip your cap because of what he did for hip hop He took hip hop from an urban art form To an international art form Single handedly almost Jay-Z, Eminem You're two for two.

Lil Wayne, you gave all the background on Lil Wayne. And this is something that pains me to say out loud because I am not a fan. I don't believe what he's done. I think he's part of the problem as it relates to what people in our generation think about hip-hop. But, dude, you got to give it to Drake, man.

Oh, yeah. The guy's been a legend for 10 years now. And people who are 14, 15, to 25, 26, they don't know who Jay-Z and Eminem are. They have no clue. They barely know Lil Wayne at the tail end of his once illustrious career. But so here's my thought on Drake.

Drake's the perfect example of the science at work. He is pure science. Yeah, which is wheelchair Jimmy. Which he understands. Here's what works. So I'm going to go do what works. I'm not going to just do what I want to do. No.

And he's definitely intelligent about doing that, which, by the way, makes him great. Which makes him great. Oh, I love that. Thank you, brother. Right? Like people will definitely hate that you said Drake because he's not a rapper. I get it. It's true.

but if you hate it you're a hater the haters are hating yeah absolutely all right man listen where can people find you on the internet all right so yeah um obviously my twitter i'm at hedge i d dale h e d g e y e d d a l e um it's just a lot of hot takes on finance alphabet soup over there well i mean i have a weird name darius dale um so hedge is obviously my firm my brand rep that die um yeah so look i'm a very accessible guy i like to engage in the debate I may not be the smartest guy in the room but I'm definitely going to be one of the hardest guys in any room I walk into

I gotta say where did I see you you were with Julia on CNN and I saw you and you were just dropping dime after dime and I was like yo my man is at the New York Stock Exchange

up on the catwalk and he is lighting a fire up there from the hood to the stock exchange where's next I love it. I love it. Yeah, White House. All right.

So, all right. People can find you on Twitter. I appreciate you doing this. We definitely have to do it again. Absolutely. We might have to get, we got a couple other friends that might liven up the conversation even more.

Totally. And next time we do it though, there will definitely be Bud Light here. So I appreciate you coming in. Of course, man. Thanks for having me. I appreciate you guys listening. Thank you.

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