The Pomp Podcast - Dylan LeClair On Central Banks Going Bankrupt #901

Episode Date: April 6, 2022

Dylan LeClair is the Senior Market Analyst at UTXO Management, a digital asset fund investing in the analog to digital transformation of money and the emergent financial system.    In this conversation, we discuss The Bitcoin Conference this week in Miami, Michael Saylor buying more Bitcoin, Elon Musk joining Twitter Board of Directors, and Central Banks losing control of their currencies. Dylan joined us in person at our Miami studio for "The Best Business Show." To see the video with the graphics referenced throughout, go to "The Best Business Show: LIVE" YouTube Channel. ======================= Bitcoin 2022 is the LARGEST Bitcoin event in the world that takes place April 6th - 9th in Miami Beach, Florida. All four days will be jammed-packed with exclusive content, exciting announcements and an incredible lineup of bitcoin speakers, artists and leaders. Day 1 is INDUSTRY DAY for enterprising bitcoiners who are looking to build a business or career within the ecosystem. Days 2 and 3 are general conference days featuring speakers like El Salvador President Nayib Bukele, CEOs like Michael Saylor, Elizabeth Stark, Jack Mallers, Adam Back and hundreds more.  The conference caps off on the fourth day with the world's first and largest Bitcoin Music Festival - Sound Money Fest headlined by rapper and fellow bitcoiner Logic, featuring artists K.Flay, MØ, Royal & the Serpent, Apashe, Asadi and more. Stay tuned for the upcoming lineup announcement! Last year’s conference SOLD OUT and this year’s is on pace to be 3x larger so make sure you grab your tickets before it's too late.  Visit http://b.tc/conference to learn more. Ticket prices increase on JAN 14th, use promo code POMP for 10% off and I will see you in Miami!ire ecosystem bringing utility to #NFTs. ======================= Brave Wallet is the first secure crypto wallet built natively in a web3 crypto browser. No extension required. Store, manage, and grow your portfolio, get NFT & multi-chain support, and more.  Download the Brave privacy browser at brave.com/Pomp, and click the wallet icon to get started. =======================

What's up, everyone? This is Anthony Pompliano. Most of you know me as Pomp. You're listening to the Pomp Podcast, simply the best podcast out there. Now let's kick this thing off. Dylan LeClaire is the Senior Market Analyst at UTXO Management. He also writes a newsletter with Bitcoin Magazine. In this conversation, we talk about Bitcoin, on-chain metrics. We talk about Bitcoin's price, the market structure, and what to expect in the coming weeks. I really enjoyed this conversation with Dylan, and I hope you do as well. Before we get into this episode, though, I want to quickly talk about our sponsors. This episode is brought to you by FTX US. FTX.US is the safe, regulated way to buy and sell Bitcoin and other digital assets. You can

trade crypto with up to 85% lower fees than top competitors. There are no fixed minimum fees, no ACH transaction fees, and no withdrawal fees either. FTX.US is also the only leading exchange that supports both Ethereum and Solana NFTs. Download the FTX app today and use referral code POMP to earn these free crypto on every trade over $10. The more you trade, the more you earn. Go download the FTX app today and use referral code POMP. Today's episode is brought to you by Brave.

Brave Wallet is the first secure crypto wallet built natively in a Web3 crypto browser. What's Web3? Web3 is freedom from big tech and Wall Street, more control and better privacy. but there's a weak point in Web3, your crypto wallet. Most wallets are browser extensions, a Web2 technology. That means the same old risks, app spoofing, phishing scams, and theft. BraveWallet is different. BraveWallet is the first secure wallet built natively in a Web3

crypto browser. No extension required. With BraveWallet, you can buy, store, send, and swap assets, manage NFTs, even connect other wallets and dApps, all from the security of the best privacy browser on the market. Whether you're new to crypto or a seasoned pro, it's time to ditch those risky extensions. It's time to switch to Brave Wallet. Download Brave at brave.com slash pomp and click the wallet icon to get started. Again, go download Brave at brave.com slash pomp and click the wallet icon to get started. Today's episode is sponsored by the Bitcoin 2022 conference. Bitcoin 2022 is the largest Bitcoin event in the world that takes place april 6th through the 9th in miami beach florida all four days will be jam-packed with

exclusive content exciting announcements and an incredible lineup of bitcoin speakers artists and leaders day one is industry day for enterprising bitcoiners who are looking to build a business or career within the ecosystem days two and three are general conference days featuring speakers like el salvador president naib bukele ceos like michael saylor elizabeth stark jack mallers adam back and hundreds more. The conference caps off on the fourth day with the world's first and largest Bitcoin music festival, Sound Money Fest, headlined by rapper and fellow Bitcoiner Logic, featuring artists K-Flay, Moe, Royal, and The Serpent, Apache, Asadi, and more. Stay tuned for the upcoming lineup announcement. Last year's conference sold

out and this year's is on pace to be three times larger. So make sure you grab your tickets before it's too late. Visit b.tc slash conference to learn more. Again, that's b.tc slash conference to learn more. Ticket prices increase on January 14th. Use promo code POMP for 10% off and I will see you in Miami. All right, let's get in this episode. I hope you guys enjoyed this one. Anthony Pompliano runs POMP Investments. All views of him and the guests on his podcast are solely their opinions and do not reflect the opinions of POMP Investments. You should not treat any opinion expressed by pomp or his guests as a specific inducement to make a particular investment or follow a particular strategy but only as an expression of his personal opinion

this podcast is for informational purposes only i'm here with two of my brothers joe and john i'm also here with an honorary pomp boy for the day dylan leclerc is in studio let's go we have all all kinds of stuff that we got to get through first is uh bitcoin conference week is this week hence why dylan is here uh how big is the place it's massive i mean i don't i don't know the dimensions but it's it's so much it's so much bigger than last year square footage read on the place yeah i mean i did get like kind of a you know a backstage view the past couple days but it is huge it's bigger than last year's venue yeah by far okay all right so second then is uh Are you two going to be there every day or just some of the days?

I don't know. I'm going for certain at 9.30 tomorrow morning. What? At 9.30. I'll be there at 9.15. There's this guy that I know that's interviewing someone that I want to hear talk. Oh, you're an idiot. All right.

You're talking to Mike Novogratz, who I want to hear talk. I'm cool. We get to hear you all the time. What? Yeah. My point. You got the joke. My goal yesterday or tomorrow is not to provide any insights.

It's just ask a couple of questions. that's what i said you guys should come up with a great question and then i'll ask it john and i are working on our entrance with jack mallers i talked to jack yesterday he didn't mention that to you no he definitely he actually told me the exact jack's a low-key kind of guy yeah he said uh do they want to be my mascot they could dress up in costumes all right he didn't really say that but they got real quiet here real fast uh michael saylor bought another $190 million worth of Bitcoin. What do you think about this?

Highest conviction trade ever on Wall Street? Yeah, I mean, I think so. I kind of jokingly was saying that he should lay down some limit orders, but it seems like he's just going for the market buy, which, you know, you got to respect. Super high conviction. It feels like this money, which I don't think it was confirmed, but the 205 million dollar loan that he got 190 million of it he's buying bitcoin the other 15

million is for expenses uh interest payments whatever so like i was trying to do the math 25 ltv yep he did it with 800 million or so he has another 5 billion give or take i'm not a mathematician but i think you could buy another billion dollars with a bitcoin if he posted the rest as collateral and only took 25% against it. Now, I don't think he'd post it all, but if he posts half, he'd post it 800, maybe he gets like 3 billion. That means he could post another 2 billion and change. You're starting to talk about another $500 million of Bitcoin he could buy.

Like that's like a pretty material, depending on what kind of leverage you want to actually take on. Yeah. I think I'm pretty sure, and I should know the specifics better, but the junk bond issuance, the 6.25%, I believe that he formed a separate corporate entity and that, I think like 20,000 or 10,000 Bitcoin, I should know the specifics,

but that's already collateralized so he can't pledge that again. But yeah, he is going leverage long and it is mark to market, but I think that loan's not callable until the LTV's 50% so he did it at 47K so unless Bitcoin goes to 23k he doesn't have to post any more collateral

relatively safe bet but yeah I mean he is literally doing everything in the book to buy more Bitcoin it is quite impressive what did you guys think when you saw him do it I mean it's just another it's not even a surprise anymore

it's like what took him so long like he got the loan three days ago when you see him get a 200 million dollar loan you know exactly what he's going to do do we know the rate on that is that known if I remember correctly and one of these guys can look it up

but I think it was the LIBOR plus I think like 3% maybe something like that there was some kind of floating rate plus I think it was like a 3% or something the fact that it's not the lowest financing costs

available and it's completely over collateralized mark to market every second globally liquid 24-7-365 that shows me we're pretty early because Bitcoin collateralized loans over collateralized loans yes, it's volatile, but as it becomes more liquid,

again, 24-7, 365, and it isn't re-hypothecated. That's one of the biggest problems in Wall Street. Part of the reason the great financial crisis was so bad, all this collateral was pledged multiple times over. And with Bitcoin, you can just verify that, that there's no problem there. It's inherent to the network itself. So just the fact that it's even still LIBOR,

risk-free plus 300 basis points, it's pretty early in my opinion floating rate plus 3.7 percent he posted 820 million dollars of bitcoin and took the 25 ltv um loan the uh your point about bitcoin being this like perfect collateral it's actually most likely let me let me caveat and leave myself a little bit of room it's most likely the single greatest piece of collateral that a wall street bank could lend against yep because of the structure in which they do it over collateralization low ltvs all this stuff your point about mark to market every second of the day important to high divisibility so i don't have to sell the whole asset i can sell pieces of it also highly liquid market

really important as well the rates on these are going to accelerate towards zero the question is just how long does it take for all the banks to realize how good the collateral is? Because right now, Silvergate, it's like pretty much the only game in town at a bank, a charter bank. You need the other folks to come in to actually drive the commoditization of the interest rate without the competition that you don't get any commoditization. And Silvergate's going to keep taking their, you know, 3.7% and be doing just fine there. It's kind of crazy. They're like, they're the only game in town though you know like the silver gets a fed member bank which is like you know that speaks for itself but it's it's i mean it's not risk-free because there's there's you know i guess

risks that are we can't see or you know aren't quantifiable but you know it's like it's way better than lending unsecured or a lot of the you know corporate debt we have out there that's collateralized by you know the equity or completely unsecured right and that's based on a credit rating like this changes the game and so i think not only from like the lending side but from the borrowing side, it's really interesting because the biggest game in town, the biggest driver, if you break it down in equity markets over the last decade, has been

share buybacks. They borrow money, buy back their shares. Saylor's borrowing money, buying Bitcoin, and then he's taking that Bitcoin, pledging it as collateral, and buying more Bitcoin. And I think history will look back at this and be like, hey, this is the fastest horse. He killed it. His share price reflected that.

And he's showing everybody what to do. And MicroStrategy's relatively small. I mean, that's like, you know, right now it's 5.3 billion they have 5.9 billion on their balance sheet so basically what they're doing is they're get they're essentially assigning negative value to the operating business which doesn't make sense uh or you can look at it as they're actually discounting the bitcoin on the balance sheet and gbtc obviously is obviously trading at a huge discount as well but that 5.9 billion of bitcoin in your company's trading at 5.3 billion like you don't have to be a genius here

to just say, I'm literally buying something that is worth $1 for less than $1. That's probably a pretty good purchase. Now, what happens from here in terms of the price of Bitcoin, whatever is up for debate, but just in terms of a value investor mindset, every value investor in the world would love to buy a dollar's worth of assets for whatever it is, 90 cents.

Yeah, and they do have liabilities, but essentially it's like, I mean, you know, they, they're spinning off cashflow. It still is a software business, but it's somewhat of a leveraged Bitcoin ETF. Like there's obviously corporate risk and all of that. It's not, it's not an ETF product, but it's trading like beta Bitcoin, which is, you know, crazy. Something that's related to this is, uh, I just saw the news before we came out. So I don't, haven't looked at all the details, but Stillmark, uh, which is the Bitcoin focused venture fund. Uh, they now are trying to raise a $500 million credit fund specifically to lend capital to Bitcoin companies. And it's a little unclear in terms of

what all of those mechanisms would look like. Is it just lending against Bitcoin? Is it lending for operating purposes? Is it more like venture debt? We've got to figure all that out as more news comes out. But I do think that everything in the space has been equity based for pretty much the entire existence of Bitcoin. Now we're starting to get more credit market exposure, whether it's for the companies or for the individuals with the assets. And that's really kind of started two, three years ago and now it's exploded in popularity.

Once the credit investors from Wall Street start to figure out how to play in this game, like game on, right? They just have so much money and equity investors have other options, right? There's plenty of companies that went up more than crypto companies went up over the last two years. There's plenty of other assets that went up,

you know, more than Bitcoin even went up. In the credit markets though, you're screwed right now and so if they can find attractive yield and attractive risk return it feels like that's a no-brainer for them to go to The interesting thing is I talked to some of the guys at Unchained Capital

and other Bitcoin lending businesses to try to wrap my head around why these rates were still so high I was like, hey, this Bitcoin collateralized lending business it's in theory a no-risk, a no-loss business at the very least you break even you liquidate the collateral and you come out breakeven.

Usually you always will get those interest payments you come out on top. So why are these rates still 8%, 9%, 10%? And Unchained Capital, which is a pretty base team of Bitcoiners over there, they told me, they're like, hey, we're a Bitcoin business, we're denominating things in Bitcoin. We're not going to be giving out 2%, 3% interest rates

because we're trying to stack more sats. And so the interesting thing is, It's going to be when the people that aren't thinking as a Bitcoin unit of account, Bitcoin standard come in and are used to lending at 2%, 3%. The junk bond market's at 6% while inflation's at 8%. The world's upside down in credit markets right now. When they come into this collateralized Bitcoin lending business,

I think that's when it gets really interesting and it'll probably accelerate this adoption and monetization process. Do any of your guys' friends that hold crypto Are they borrowing against it at all, John? No, none of my friends are borrowing against it. I think they're all, one, it's a little, they're skeptical, right? They don't know where the market's going to go.

They don't want to over-leverage. And a lot of them are just unexperienced traders, right? They don't want to go long on something or leverage long on something that they don't know what's going to happen, and they don't have the experience of ever getting a margin called. Yeah, it's pretty crazy. Another thing that has recently transpired is that the country of Lebanon is now stating that they are bankrupt, like game over, checkmate, we're bankrupt. The central bank is declaring bankruptcy, and we've got some data and some information here. If we take a look at what's going on.

So this is from a Reuters article. We've got kind of a synopsis, if you will, of the situation. So they're in the third year of financial implosion caused by decades of corruption and bad policies. It's the currency to crash in value by more than 90 percent. And most banks have locked people out of any of their hard currency accounts. So currency drops 90 percent. Banks lock out their users. And the World Bank estimates that Lebanon's economy is contracted by nearly 60 percent in the two-year period between 2019 and 2021.

Then our favorite economist, Steve Hanke, has a great tweet, says since basically the end of January, their FX reserves have fallen by $837 million. Most of it can be attributed to selling USD reserves to try to prop up the Lebanese pound, and the government's incompetent in tanking Lebanon, which he seems to yell about every government around the world. And then we've got two quotes here from the deputy prime minister of the Lebanese government. He says the losses will be distributed to the state, the central bank, the banks, and depositors, and there's no specific percentage. Unfortunately, the state is bankrupt, as is Bank of Lebanon. We want to come out with a result.

The loss occurred due to policies for decades, and if we did nothing, the loss would be much greater. Basically saying, hey, look, this would be way worse if we weren't doing what we were doing, maybe. And then he continues and says, we're in the midst of negotiations with the International Monetary Fund, daily contact with the IMF.

First time this large mission has come, and we've made great progress with the IMF negotiations. like are these people delusional that they actually are uh not to call like they're not the reason why uh over the last three years basically 90 of the currency value has been eroded away the economy's contracted 60 and the average you know person in lebanon is just screwed yeah i mean it's devastating and then you'll see guys like steve hanky they'll rag on the government they'll rag on the central banks and they'll say what do we need better currency boards it's like we need we need different people you know we need we need

different puppets in charge. Kind of on this note, did you see the former head of Central Bank of Canada talk about inflation and monetary policy and Bitcoin? Basically, they were talking about the record high inflation and someone proposed

what do you think about Bitcoin because Pierre Poliev was saying Bitcoin is an opt-out of inflation. Essentially, the central banker was the most Keynesian propaganda you've ever seen. I've seen some pretty good stuff, man.

It was his next level and it was honestly quite delusional. But the sad thing is some people believe that. He's like, no, inflation's good because with, say, the gold standard, we had a Great Depression, which was caused by the lack of inflatable money supply. And it was just like seeing it from someone that I guess I would identify as being orange-pilled or maybe being a little bit out of the matrix in a way. It was just crazy to see. It's like, oh, yeah, prices are skyrocketing, but it's a good thing for you citizens.

It would be bad if we had hard money. Yeah, one of the things that I keep going back to is just like how much of this is pride, ego, like reputation stuff versus I fundamentally believe this is the solution, right? And so if you're in the central bank and you're looking around the room, maybe the best way to kind of visualize the challenge that they have is like I go in my – I'm working on something like, like manual labor and I'm, I'm assembling something and I go in my toolbox and I need a tool, but it's only two tools. There's a hammer and there's a screwdriver. Right. And even if the tool I need is maybe like a pair of pliers or something, I just have two tools. So what do I do? I like grab the hammer and I'm like, well, maybe I could like, you know, pop this out here. If I hit it at the right, like, and everyone's in some point

their life figured out like oh i don't really have the tools necessary to do the job but like maybe i can kind of just figure it out and that's kind of feels like what the central banks are doing is they're in a situation you know like all right there's a bad situation like what should we do and they look in their toolbox and it's like you basically can manipulate interest rates you can do some asset purchasing and you've got qe yep outside of that like you can pray like that's basically the only tools they have and so when you look at the actual solutions If you took it from a first principle standpoint, it's like, no, you got to go back and actually recreate what that means to have this currency. Yeah.

But there's no social appetite for that, political appetite for that, and possibly even an economic appetite because it would mean millions of people are going to get hurt in the process. But it feels like we're getting closer and closer to the point where some of these governments and central banks are going to have to say, I think it's time. Right? I do think it's time. I don't think them crashing the currency is intentional but what's the solution? I think in the long run they're going to try to tighten

and the funny, maybe not funny, funny is the wrong word the interesting thing is they're using these monetary policy tools right now to combat inflation when really the inflation right now is being caused by a shortage of real goods they're trying to tighten money to make up for, they can ease monetary policy, they can tighten monetary policy

and deal with traditional demand-driven inflation. But right now it's all a supply-side phenomenon with commodities, oil, energy skyrocketing. And so they're trying to tighten monetary policy, which at the same time you see credit markets rolling over, there's a potential for this to get really ugly. And I think if we're looking farther than just the short to medium term,

there's no political appetite for austerity, none, in a global fiat standard. The US is the dollar, every other country, or say like the EU, they have the euro. But there's no long-term appetite for austerity, which leads to what? Just perpetual monetary expansion. That's the end game here,

and that's why we continue to just hammer that point home, is because the money supply in this system, in this credit-based system, has to increase forever. They can raise the price of money a little bit, marginally, but still I think real yields can't be positive. there's just no way with this much debt in the system which is why we continue to say Bitcoin, Bitcoin, Bitcoin

because give me an alternative besides that Have you read Ray Dalio's book Changing World Order? I've actually started to get through that I watched the teaser 30 minute YouTube clip which is fantastic it's like a summary of it but yeah I mean I think

I agree on a lot of things and Ray Dalio is an extremely smart man I disagree with the conclusion which is essentially like you know the ccp you know the new world order is is the yuan and all that but i haven't got to the end yet i'm listening to it on audiobook it's very dense right in terms of just the amount of information uh it's done very well one of my critiques of the audiobook is that ray was reading it at first and then they rug pull you and then all of a sudden he's like okay due to time constraints uh so and so will now take over and i'm just like dude like and the

other guy's like so much harder to listen to than ray was i don't know about like his voice was like much more uh uh higher retention and so i was like first of all you get rug pulled half through the audio book like that's bullshit um but in it he talks about these cycles right yeah and if you've watched the 30 45 minute video whatever it is uh it's obvious that his point is like look we are transitioning between cycles and i think that his point around there's wealth that's created It ties in with power and military might. As people get more comfortable, they take on more debt to finance this lifestyle, and it happens at the individual and the nation-state level. And then eventually they basically get overextended, and then there is some other essentially more economically durable country that then comes along and replaces them.

And this happens in these like 80-year cycles, and we shouldn't be surprised. surprised i think is is kind of his point and when you look at it you're like yeah like that that pretty much is like that is a very strong argument there are nuances there's details that he misses there's obviously uh uh over generalizations but when you look when you listen to what he's saying and you look at the current situation like i think it's probably one of the most accurate takes i've seen on a longer timeline of like what's happening right now yeah Yeah, it's also, I think, and Ray refers to this a lot, it's not a coincidence that wars happen

at these kind of huge inflection points in history and also obviously because of the war, but really the monetary standards and when you're looking at say Bretton Woods or whether we've transitioned off of gold standards, why does it always happen at these huge debt bubble peaks? Why does a war just kind of come up? And there's obviously a ton of factors there

that we're just kind of glossing over, But COVID, this Russia-Ukraine conflict, I don't think it's a coincidence that we're seeing this when we're at record levels of debt around the world. And you're seeing increasingly people say, hey, is this kind of petrodollar monetary world order? Is this coming to a close? And a lot of people are kind of having to evaluate their stance

on the staying power of the dollar as a world reserve currency. Yeah, what do you guys think? Yeah, I mean, I agree. I'm curious what's going to be happening with interest rates right because if they uh start to rise too quickly in my opinion then we're going to have some trouble and then they're going to be in a really difficult position uh but the the side effect of this all is like what does this do for bitcoin right so i i think about that a lot but i don't know if anyone has like the right answer because we ultimately don't know what the fed is going to

do because when they're faced with that decision there's not really a good one and ultimately anything could happen from that so i think it's going to be a fascinating year or maybe even less right six to twelve months at this point and we're going to see how many times they end up raising it But my guess would be that, what did they say, seven or eight? I don't know if we're going to get that high before they start running into some problems. John? I think this is a perfect storm for Bitcoin. I've said it before, I'll say it again.

It's everything that has happened over the last six to 12 months is a great thing for Bitcoin, whether it's inflation, the geopolitical issues, the Canadian trucker situation that happened earlier this year. Basically, a lot that has happened should be driving the adoption and driving people towards the use cases for Bitcoin. And I'd be shocked to see over the next six, 12 months as the Fed raises rates, if people, whether they're going for liquidity or not, I would expect some people to put some of their portfolio into Bitcoin that don't already have it already. Yeah. Just changing topics real quick for something a little bit more fun. Elon Musk obviously bought the 9.2% stake in Twitter for about $3 billion. Yesterday we were talking about this. And I asked my brothers, it's Monday.

by friday do we get to friday and him still be a quote-unquote passive investor 14 hours later 16 hours later he's now on the board of directors uh and our point was like twitter should lean into this like literally make him the chief meme officer right like use it from a marketing standpoint uh and i think we said what do we say if you make him the chief meme officer then have him sign every one of his tweets chief meme officer at twitter like just like completely lean into this don't fight this guy it seems like they're doing that what's your read on elon twitter and like what this could mean for uh for tech do we get an edit button so do you want an edit button i was gonna say i have a side i have uh the opposite view i don't

think they should add an edit button i don't think they should either really yeah i don't know why the hell should you be allowed to change if if you made a mistake delete it and then repost i think you should have the edit button for about 20 minutes after you post it because that's normally when 20 minutes is too long yeah but you guys have twitter blue yeah you get like we're like you got like the little like loading button yeah you still make someone made a good point the other day they were like uh my twitter blue subscription ran out or whatever now i don't have to read tweets twice to read tweets twice before posting i'm like yeah i guess but it's helpful sometimes the sometimes like i probably shouldn't have sent that undo i i think that the edit button

should be uh something people pay for if i'm twitter like if everyone wants the edit button to have people pay for it yeah right so like how much would you pay to get an edit but if you really want it you'll probably pay five bucks a month you'd be surprised how many people are back i don't need another button of course but like that but that's the whole thing is like it's not a technical challenge to create an edit button right it's obviously a product decision and so i think as they try to move from twitter as we know it today where they tell us what features you get how your feed works whatever if they want to transition it to uh you kind of choose your own adventure like just put a paywall in front and guess what they came out with twitter blue guess

what my ass did i pulled out my credit card and i gave him the 2.99 a month and i said cool i can upload 10 minute videos on desktop i get a undo feature on the tweet and they had a bunch of other nonsense in there that i didn't care about like what color the icon is on my phone i'm not paying for that what i'm paying for is the functionality that i want but i think that that's the key to it and with their goal i think it's by the end of 2023 they want to get to 315 million daily active users be massive right how much could they get if you get one percent of those people it's three million people paying three four five ten dollars whatever a month like that's a real business yeah and so it feels like that's kind of where they're going but i do

think that elon uh do you think it was planned like do you think that he thought about this or do you think he literally was like last week he was like i wonder if yeah like how long did it go from i have an idea to i own three billion dollars of twitter stock yeah i mean it's tough to secure that large of a position like i mean he must have had something you know like a team do it you know like i can log on to robin hood and buy a hundred bucks twitter stock you can't go buy three billion dollars of twitter without 9.2 percent of the company like that's a big part of the free float like he was probably in the market for i don't know days weeks i mean and so when he ran the original uh when he ran the original poll i'm assuming that's when it all started yeah right

when he and then he tweeted he's like you know vote carefully this will have consequences we're like all right elon and then he's like no literally i'm now the largest shareholder elon elon's the definition of fuck you money like they're just just having that much capital how much cash do you we think that elon musk has just sitting around how much how much twitter did he he sold the top of twitter of tesla i'm sorry yeah he sold the top but he paid 11 billion in taxes so what do we know how much he sold total if he if he paid 11 billion in taxes let's just say tax rates 40 he sold all his houses too that gave him some cash not three billion but yeah the uh uh did you ever hear uh grimes what would uh what she said uh about living with him

or something she gave this interview and to be honest it made me respect the shit out of her because she said she uh in the interview it's the one where she's like oh yeah by the way don't like ignore that baby that's just the secret baby i have with elon but in it she said something like uh yeah the like that like uh bro just lives like he's poor or like so and they're like what she's like yeah bro's the richest dude in the world and uh lives in like you know a five thousand dollar house like whatever she said and she kept calling him bro and i was like all right this is like a weird relationship but they were she was basically talking about like i couldn't live like that anymore and so i think that he like legitimately has like a unique viewpoint on the

world he obviously doesn't care that much about material things but to do this like how much of this is marketing a distraction from something going on at tesla versus just like he's like sitting up at night he's like huh you know i think we should change twitter and he goes i don't know what the answer is but it just feels very different than uh a traditional activist investor i don't think he cares about the you know the like the the share price or you know i don't think he's investing it to increase his capital like elon said multiple times it's like i'm not an investor the only share the only like stock i own is tesla and spacex um and so i think he's buying twitter because he said multiple times he cares about free speech

and all this, and he wants to hopefully transform it into more of a neutral platform. Obviously, they're a business. They're going to try to monetize it, but instead of the increasing amount of censorship we've seen, that trend, hopefully there's an inflection point there with Elon. I did see Trung, who was at the hustle but left,

one of the local meme gods on the internet. He said, scoop, Jeff Bezos just bought 9.3% of Twitter. Which does feel like people will, obviously now this is going to change the attention. Here's my call, is remember when Chamath did the first SPAC and it literally set off like a chain reaction and all these people ran and did SPACs and they were like, this is an amazing invention,

even though SPAC's been around for a long time. If Elon is even partially successful and creating change at Twitter, you're going to see a bunch of successful founders start to position themselves as like modern day activist investors. We're looking back, well, Elon could do that. Like, I don't need to do it at Twitter,

but like, look at this other company. And they're all going to start buying up stakes in businesses. And it's going to be this like very memetic response. If the richest man in the world does it, like I'm not the richest, but like I'm rich, right? Let me go do it at a different company. Yeah, like it's kind of similar to like what GameStop,

what are they like a gold miner or something um and it was like the shares went went parabolic after that it's like it's like the meme economy you know like twitter shares skyrocketed i don't know has it retraced since then uh as of like two hours ago it was up 33 percent since friday yeah i mean that's that's sending a message right the would you judge him if he sold the twitter stock like if he came out and he sold half the position now and he's like thanks for the half billion dollars guys i mean that'd be boss but i don't think that's what he's in it for but no i i don't think so either but like how does he have time to do he should he should sell 75 then it's all house money after that he's like i get my original investment back i got a billion

dollars this is great do you want to know what just would send the tesla like the tsl was it tsl aq right uh slack yeah yeah uh all those guys all the shorts all the elon haters in just an absolute frenzy is explained that he basically is pursuing the uh the meme stock portfolio and he's out performing all of them he bought bitcoin he now went and aped into twitter right like if you think about like what he's actually doing is he's not buying anything that uh kind of the value investors the the virtue signaling like you know we we buy value he's not doing anything he's buying the exact the opposite he's up huge on the bitcoin position he bought it at like 33 000 we're at 47 000 now and he took what 100 million dollars off the table right so there he's already up very big

twitter he's up 30 in like a week so you started to look at it you're like obviously he has ingredients that other investors in the market don't have in terms of his reputation and kind of following all that but like if he was an investor even though he says he's not like he probably could be one of the best investors in the world is twitter gonna buy bitcoin i'm gonna say that uh odds increased but still unlikely in the short term i mean it would be wild if they don't buy bitcoin under jack dorsey and then elon comes in and they buy bitcoin does is elon musk the uh the shadow ceo now i don't know i mean well again i think they should play into it but funny story i lost my twitter check mark the day that jag resigned as ceo

really yes did you get it back no hey hey frog what's going on well elon what's going on yeah we just go skip over the ceo now we don't talk to andy jassy on this show we just ignore him we go right to bezos bezos still runs amazon in our opinion we go bezos make it happen he you know he he has more time on his hands now because he's not he doesn't have direct reports like he's chilling chairman his word goes yeah he's andy jesse's boss we want to talk to the boss so the question now is does that mean elon musk is the boss of twitter and if so then we need to appeal to elon not to uh twitter ceo elon if you're watching this help a man out does elon carry more weight than i would say almost any investor in the world when he gets behind a company like this

like bill or bill ackman or car like they come out and they say hey we bought three billion dollars at tesla we're going in on it like we were very bullish on it i tweeted yesterday carl icon i love carl like i think that he is just like a special breed of a time in investing where just like he pioneered a whole different type of investing carl icon goes to sleep at night dreaming to have one-tenth of the effectiveness on something like this that elon musk does because carl icon doesn't have the notoriety the audience like all these different things now with the wall street crowd nobody other than bill ackman on cnbc years ago is playing with carl icon he's just not playing the game like if you see carl icon on the other side of the trade you're like i'm i'm gonna sit

I'm a step down here. Like, you know, just go ahead, do your thing. Elon Musk could do anything in finance and has a very high probability of being successful simply because people assign him as a winner. So like one of my favorite, uh, distressed, uh, investors in the world, do you guys know about, uh, Elliot management? They, they're a big, they're a majority shareholder of twitter now they are um i think it's elliot uh yeah elliot management this is a crazy story elliot management uh and paul singer uh who who runs it at one point this is what year uh 2016 elliot management fought for 15 years with argentina to get paid back billions of dollars in debt payments that they'd never received so this was the first time in history a hedge fund

took on a sovereign nation wow and paul singer said we own your debt we're not absolving shit pay us our money and the country was like you're a dumb hedge fund we're a country we're not paying overgeneralized in order to collect the debt this is from the washington post and i made this in the conspiracy theory this isn't reddit alex jones didn't say this shit the washington post which is the the mainstream conspiracy theory said that they tried to take the money deposited by argentina central bank in u.s and europe bank accounts that was the first thing they tried to do so what the united states just did to russia central bank reserves elliot management 2016 tried to do to argentina because they said you owe us money you didn't get pay us and so instead

what we're going to do is we're going to take your central bank reserves and the banks in u.s in europe and u.s and european law was like ah i don't know if we're gonna play a game where we're gonna let hedge funds take on nation states and seize assets that seems like a little out of bounds so then they tried to seize two satellite launch contracts between argentina and spacex and they said those are our contracts now attempted not necessarily successful but this all had come after in 2012 elliot remember they're doing this for almost 15 years they were fighting with argentina trying to get this money the argentinian navy had a three-masted tall

ship that was pulled into a port in Ghana. The ship was so big, it had 250 crew members on board. They claimed that the ship was only worth a fraction of what the hedge

fund said Argentina owed them. 100-meter ship and Elliot management persuaded a Ghanaian court to seize the vessel so that they could then reclaim it. And they were using a Ghanaian court

that now had possession of an Argentinian ship as a poker chip to try to get paid back from a 15-year debt that they were going after. That's pretty base. Probably one of the craziest stories in finance ever play out is Elliott Management versus the country of Argentina.

But Argentina eventually, in 2016, they agreed to settle with the hedge fund. So all this nonsense that was going on, they finally agreed to settle. Elliott Management walked away with $2.4 billion for their bonds. the face value was 617 million and they'd been purchased for 117 million wow so they spent 117 million they walked away with 2.4 billion dollars but it took them a decade and they literally were

going to try to seize the country's central bank reserves they took over a fucking ship in ghana absolutely nuts story and so when i start to think about like i'm just gonna post this when you see this uh pull this up real quick mount when you see this photo of the ship you're like what dude in new york city sitting there being like yo the fucking ship is at port let's go get that elliott management has 480 employees the country argentina has almost 46 million and so when you start to think about this argentina argentina had defaulted on 80 billion dollars of debt most of the country's creditors 93 percent agreed to walk away with just 30 percent of what they were owed and elliott management basically they said we're not we're not walking

away we're not taking no for an answer i mean it's crazy but if you think about now in context elliott management was trying to freeze the central bank reserves of a sovereign nation 10 years ago and now the united states is doing it other countries there's the ship different game getting played in uh in hedge fund versus sovereign nation land what do you think some guy ran in the conference room was like they have a ship going near ghana we can contact them right now i i promise you what was happening was they were paul singer was probably sitting there saying i'm not gonna back down yeah and if you watch some interviews with him like this dude's a gangster he he literally i think that if you were like hey you get 80 you get your 80 billion

dollars of a debt paid but you have to go and do a uh a 12 noon draw at the okay corral he'd be like what are the odds that i get shot before i could shoot hit like like that's the type of guy he is right and so i absolutely think what they probably did was they mapped every single asset the country had and they were trying to figure out what assets can we seize seize not like oh we know where it is can we seize to use as a chip in negotiations with this country and then eventually they were somebody was probably like yo ghana probably you know that we probably could do some stuff in ghana that's going to be cool with us getting this ship a shareholder the shareholder letter was probably hilarious they're like yeah we got the ship ship secured yes i mean it's just uh absolutely nuts

and by the way of course this isn't the only country that he's uh tussled with in the washington post article they say uh the billionaire republican fundraiser which of course is like uh exactly what you would expect from mainstream media how about just financier also developed a taste for tangling with foreign governments including peru congo over the value of government bonds wow so i just like man uh and the hedge funds tactics in argentina case drew international attention the country launched its own campaign against what it calls the vultures and financial terrorists like all right hold on a second here so you sold them debt you don't want to pay them but they're the bad guys all they're saying is pay me the money you promise me you're gonna pay me and so

the country that this was the part i remember when i first heard about the country took out full page ads in the washington post and other publications and found some supporters on capitol hill they argued that giving the hedge fund what they wanted would expose it to a cascade of claims that it could not afford to pay so you're bankrupt basically right i don't know it's it's just uh it's crazy to think about how uh countries now in some way are being like brought down to the level of other hedge funds or individuals yeah it's been going on for a decade but like seems to be happening you like that story yeah that was cool i'm surprised they didn't actually seize the

assets in foreign countries dylan you got any like wild predictions around bitcoin that like maybe super far-fetched but if they came true you're thinking about them already um i mean i I think I've probably said most of the crazy expectations I have on this show before, but I definitely think in this decade we're going to see central banks, whether they announce it or not, just printing money to buy Bitcoin

in the same way they print money to monetize debt. Or for instance, the Swiss central bank prints francs, buys dollars, buys US equities. Just to devalue their currency makes their exports more attractive and they get dollar-denominated assets. The Swiss National Bank owns Tesla stock. They own Apple stock.

So I guess they already own in a way, they have some Bitcoin exposure, but I totally believe, and this is still somewhat of an outlandish prediction in mainstream circles and legacy finance, but yeah, I totally think that's coming. And definitely not priced in at a trillion dollar asset class. What would happen if that occurred?

What happens to price? How does it play out? I mean, for them to even secure a meaningful allocation, price is going to have to get bid like crazy. But when that's announced, I... To what? Like a million dollars, more or less? I mean, if a legit G7 central bank or ECB, Fed, BOJ,

I don't think that's here yet. But yeah, I mean, hundreds of thousands of dollars, high six figures, a million eventually. And then it's like, what's the purchasing power? What's the value of a dollar or a fiat currency at that point? never mind Bitcoin price your money and energy that's really what it all comes down to

is what's your purchasing power for a barrel of oil and something like gold over the long term really can kind of maintain that but I think Bitcoin is still completely underpriced in terms of energy and we focus on, like I talk all the time the marginal production cost of Bitcoin in energy terms or really anything

The marginal production cost of Satoshi's is programmatically designed to increase. Did you see Nick Carter going after some energy fud last night on Twitter? I mean, there's no one better than Nick in that regard. Just destroying fudsters and academics. Yeah, I mean, he's a champ in that regard. I just loved that he was like,

yes, I have a philosophy degree and I know more about energy than you do. PhD. He changed his name on Twitter. i'm looking right now to nick no credentials card that's so good i saw someone in the comments was like uh you know when the letters start coming out after your name you're already lost the argument if you're pulling out the uh the letters of the credentials that you have you're you're done no what do the guys say he's like i have a pa i have like a master's and a phd in energy and whatever

and then nick went and like of course did the research and he's like dude you talk about water resources like what do you know about energy right and and the other piece of it too is uh we've talked a number of times on this show about the idea that um bitcoin needs better critics but uh one of the keys to it is not just better critics but better critics who also have better arguments so like the quality of the people who end up yelling and screaming about bitcoin is like shaky at best and most of the intelligent people who even are skeptic their arguments are just higher quality and so it's like i wish those people were more vocal this is a tough question who is who is the most informed or best and this is best is a very subjective term who's the best

bitcoin skeptic brad sherman okay that's fair that's good that's you know why because he's He doesn't understand anything about today till five years from now. He understands the 100-year game. Yeah. That's why. What about Peter Schiff? Peter is a nice guy. Peter Satoshi.

Yeah, didn't you see? He revealed it. Yeah. Peter and Craig Wright are going to have to fight it out. What was the date he revealed it? Oh, April Fool's. That was the date. Yeah.

I'm joking about Brad Sherman, obviously. but I think it's a very good question. Who would you say? I think there's some directionally correct, I don't even have really anyone in particular but the people that say Bitcoin is somewhat of a risk on high beta asset that I actually respect a lot of people in the legacy financial system and their views on things

but they completely disregard Bitcoin and say it's a mania that's riding on the high liquidity tide of monetary debasement and central bank quantitative easing. And I think that's somewhat accurate, but at the same time they're missing the big picture, which is that for millions of people, and I think soon to be billions of people,

it's not a speculative risk on asset like Tesla or an equity. It's a monetary asset. So yeah, it trades like, I think some of the correlations with meme stocks, like someone ran the numbers, over the last two years it's pretty crazy when GME and Tesla go up Bitcoin has a positive day as well

so in that sense some of those skeptics who actually really respect their opinion on the legacy system are right just by looking at numbers but there's more to it than that in my opinion and so that's where obviously we come to different conclusions does it still shock you how many people just don't believe in the asset at all? it doesn't shock me

I mean it gets me excited because it's like okay we're still pretty early here I mean obviously 45k or whatever it is trillion dollars close to be maybe I think 900 billion dollar market cap 13 years in

it's like oh it's pretty late but in reality you see so many well informed really smart people completely dismiss it and you're like okay yeah we have some time alright we got other things we got to do But before we let you go, I have two questions.

You've now been doing Bitcoin for a year now, full-time? Yep. All right. What is the single best memory you have? And what do you think is the biggest surprise after working on Bitcoin full-time in the last year? Those are great questions. And I haven't really thought of that.

My best memory. I don't think anything in particular. I think just the amount of awesome people I've met. first mostly online and then meeting people in the meet space just like I am here today that's pretty awesome, I have a ton of awesome memories and in terms of surprises, that was the second question right? Biggest surprise?

Yeah, I just think the timeline's kind of accelerating in 2020 and 2019 when I was really becoming orange-pilled per se a lot of this stuff was hypothetical and now it's, I can only imagine being in the space for five, ten years but it's coming to fruition faster than I thought and despite all that it still seems like we're quite early

so kind of skirted around the question there but just met a lot of awesome people and excited for the future. I think that's fair. Do you two have any last questions? No. Are you going to come party with us this week? Yeah, can you hook me up with a SoFi after party ticket?

John's in charge yes let's go anyone who wants SoFi after party tickets contact John hit me up see if you can get them

only a few there's a few they gotta be following you right they gotta be following me if you tip him then maybe no no no

no brah no brah do not send me money cause I will keep it yes we can get you a ticket perfect we have no other ones that was literally

the last one everyone so sorry that we didn't get anybody else alright so if you're mad that you didn't get a ticket hit up dylan dylan is flipping tickets they're not nfts almost 150 000 let's go the rise the rise all right my friend appreciate it i'll see you at the conference and uh sounds like that the after party as well it's been a lot of fun see you buddy peace thanks so much for listening to

today's episode i really hope you guys enjoyed this one make sure you're subscribed on apple spotify or your favorite podcast player and if you're looking to try to transition to get a new job in the bitcoin or crypto industry we've got you covered head over to palmscryptocourse.com we've developed a curriculum with the top teams across the industry it's a three-week intensive training program with over 50 events packed into that three-week time period go to palmscryptocourse.com to learn more and i'll meet you guys for the next episode