The Pomp Podcast - How Bitcoin Outpaces Stocks in the Next Decade | Jordi Visser

Starting point is 00:00:00 If you pull a muscle, all of a sudden you realize how often you use that muscle. So the bladder is exactly like that. When it's working well, we don't think about it. But when it's not working properly, you're getting up at night, or in the cases of many men, you may have some leakage. If this is something that's affecting your quality of life, there are really good solutions these days. Depend makes the guard and the shield.

Starting point is 00:00:23 The shield would be if you have some leakage on occasion, if you have heavier leakage, you could use the guard. What's up, everyone? This is Anthony Pompliano. Many of you know me as Pomp. You're listening to the Pomp Podcast, which is my effort to find the most interesting people in the world and sit with them for hours while I ask questions in an effort to learn. So it would mean the world to me if you would subscribe to the show on your favorite audio platform, watch episodes on YouTube, and tell your friends and family about the podcast. My goal is to help millions learn from the world's most interesting people. So let's get into today's episode. Anthony Pompliano runs Pomp Investments.

Starting point is 00:01:01 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. Bitcoin has no time. It gets you time. It gets you everything you need. If you invest in a company, you're assuming that you'll have enough time to get in and to get out and make money. I don't think you have that time anymore. If you can stay in it for the time, really what you're watching is everyone else fighting to not become a zombie in their investments or their companies or anything.

Starting point is 00:01:42 And the easiest way to not be a zombie is to put it in something that's going to be here five years from now. It's the only thing I feel safely saying will be here five years from now and be higher in price than it is today. The only thing. What's going on, guys? The latest episode with Jordy Visser does not disappoint. Why? We talk about the Federal Reserve, interest rate cuts, the Jackson Hole meeting. Lisa Cook, she's in hot water. What's going to happen with artificial intelligence? Why can't young people get a job? Why is interest rate cuts with PMI rising going to be so good for Bitcoin? How can Bitcoin get that and much, much more? Jordy does not ever bring anything other than facts, insights, and a little bit of fun. This episode is just like that. So here's my

Starting point is 00:02:24 latest conversation with Jordy Visser. All right, Jordy, I thought a great place to start the conversation is the Federal Reserve, the Central Bank of the United States of America. They are all eyes, both in Washington, D.C., in the media, and now the average investor. Some people want them to cut. Some people think they're doing a good job resisting cutting. We just had the Jackson Hole meeting. Jerome Powell pretty much spinning on a dime, now saying that he's going to bend the to the pressure campaign lisa cook she's under pressure how do you find signal among all the noise that is coming from and about the federal reserve right now yeah i never thought we'd have the real housewives move into the federal reserve but we definitely have had chaos now for i mean

Starting point is 00:03:08 unfortunately it's been months it's been a uh a drum beat that's continued and it obviously escalated this week and now for the first time and i started hearing this last week when it was first talked about not the firing but the actual hey we might there's a problem here about how much of this is really basically a coup of the fed by the white house now again i'm saying that from the perspective of everyone can argue what's right or wrong but the chaos has been we believe rates should be lower. And we believe there is a bias with the people on the committee. Now, this has been a mainstay of Donald Trump's campaign is just, hey, we want to get rid of everything that has a bias towards anything, anything. We want to get this back to where

Starting point is 00:03:55 it's got more of a libertarian approach. And that may sound funny to people who are who are viewing this as a coup. But the Fed has become an important part of this whole story. And it fits in with this whole conversation that many people watching that follow Lynn Alden, follow Sam Callahan, this whole fiscal dominance thing. When the government gets so big, when the debt is so big, when the deficits are so big and monetary policy can't fix things, it can certainly have an impact on slowing the ability to heal. And so this chaos that continues in the Fed, as people watch this, what I would not get into the game of is what you think should happen. You have to really focus for making money on what is going to happen. So last week, as you said, while we were recording, Powell took a big pivot towards a cut. The markets are still up at 85 to 90 percent probability of a cut in September.

Starting point is 00:04:55 that is where the market believes and it never got below 50 even when we had ppi data that was hot all this stuff so for everyone focusing on the chaos in the fed and playing the game of this is what should happen this is what's not going to happen this is what the courts are going to say that the reality is we're already kind of pushing towards the fact that if a cut happens in september which he he moved towards all of the chaos in the fed is irrelevant and it becomes just like the tariffs. You and I sat here during the tariffs. It became a big drama fest. The Fed is getting everyone's attention. And Donald Trump seems to have the ability of getting everyone to focus on the chaos as opposed to the structural issue, which is rates are going lower.

Starting point is 00:05:38 So it's interesting because if you think about Trump, at least the narrative around him for decades has been he is very, very good at marketing. He is very good at getting attention. He's very good at using the mainstream headlines. And in a way, one of the strategies they have employed both in the first term and still today is chaos, circus, whatever you want to call it. But it's almost like the more that they can create the uncertainty and the chaos and the velocity of change, the better they do. And it's reminded me of when you're a kid and you're arguing with somebody and your

Starting point is 00:06:14 parents tell you, never argue with a fool because they'll drag you down to their level and beat you with experience. Same thing kind of here, right? Is like, who in their right mind is going to try to compete with Trump in a world of chaos? Like, he's the master of chaos. He creates it, he understands it, and he uses it. And so, in a way, if you think of like maybe the Lisa Cook is a good example, like they've

Starting point is 00:06:39 created this chaos. There's now lawsuits, there are firings, there is pressure, etc. You want to know who I think the smartest person in the entire situation is? Jerome Powell. Jerome Powell he's not he's not taking the bait I haven't heard him say a single thing about it I haven't seen him come out like in a way the people who are the best adversaries I'll kind of put that in air quotes is like the people who are the best across the table negotiating with Trump are the people who don't take the bait and there are a lot of other people taking the bait but

Starting point is 00:07:11 Jerome Powell actually right now is not taking the bait and so it does now create a situation where like somehow Lisa Cook is the one who's filing the lawsuit. Lisa Cook is the one who is fighting for the governorship. And I think that it just comes back to that is probably why Powell has been able to resist this this entire time, is he has the ability to say, I don't care what chaos you create. I'm just focused on what I think is the right thing to do. Now, it doesn't mean he's independent, doesn't mean that he's not listening, all that kind of stuff. But I do think Powell's not getting enough credit for his ability to ignore the chaos. And Trump's not getting enough uh credit for his ability to create the chaos time and time again to his advantage and

Starting point is 00:07:49 it's kind of like we're watching a chess game play out right yeah and i i think it's important for people because i i reading x after this whole thing i don't know how many posts by uh very followed macro people comparing what was going on with the fed to turkey okay so erdogan going through the whole thing and that this was an emerging market and then the feeding frenzy that starts, the people who are bearish, the people who want to be bearish, they go through it. What you just highlighted, remember, at the end of the day, he's using social media, and he's done this since he got elected the first time, to get the emotions going, to get the polarization going. People don't like it. Behind the scenes, Scott Besson meets with

Starting point is 00:08:29 Jerome Powell every single week, and he talks about this openly. Now, for those people who know Scott Besson, and I know him, he's a nice guy. He's very thoughtful. You can't sit in a room and not listen to him and realize that he knows what he's talking about. He wants rates lower, not because Donald Trump says rates should be lower. He believes rates should be lower. I believe rates should be lower. And the reason is only because of AI, an unprecedented situation. And I think for people out there, especially the people who are posting that this is Turkey, and I saw one person post, yeah, rates should be flying higher. Bond yields are down. They're down over 13 basis points now since monday of last week during which is before this cook thing started

Starting point is 00:09:14 and we haven't any data to justify rates being down so the bond market is sending a signal to everyone who wants to believe that rate cuts shouldn't happen they're saying rate cuts are going to happen that's the first thing it's not the same as september of last year and this is the point that i've said both or the last two weeks on here the most consensus thing i hear is that if the Fed cuts rates in September with PMIs going up, with inflation now pointed back up, we're going to see the long end rates shoot higher and this is going to turn into a problem again. This is very different than last year when people are worried about the SOM rule and worried about a problem in the economy. Now, all of a sudden, everyone thinks rates are going to shoot higher.

Starting point is 00:09:55 So the fact that they were down this week on what would arguably be a bad thing on a U.S. look and what's going on is really represented that they're going to lower rates. And the reason I feel confident saying that stocks have been up and at the same time the dollar is getting hit and one more thing we don't talk about this too often i'm very focused on china my weekly videos because their stock market has been on fire but the chinese yuan now is stronger by one percent this month and this is all leading into the fact that the fed's going to cut rates and china's letting their currency strengthen a little bit at this point all this stuff starts to feed in the same thing get away from normative statements with regard to the fed this is what's going to happen

Starting point is 00:10:32 unless something changes dramatically, they're lowering rates. Now, let's talk about, you said that you believe rates should be lower. I believe that. I don't know if we believe it for the same reason or not. You said because of artificial intelligence. Explain what you're seeing from artificial intelligence and its impact on the economy as to why rates should be lower. Because I think a lot of people are looking at the relationship between interest rates and asset prices. They're looking at interest rates and home affordability. they're looking at interest rate and inflation. I don't hear a lot of people talking about artificial intelligence and interest rates. So this is the biggest problem. I think that

Starting point is 00:11:08 people, all people, I spend my life talking to very intelligent, experienced macro people on a regular basis to say to them, the economy is weak on one side, which is anyone from the, you know, the median income person, the actual median person down is suffering. They've seen inflation go higher, but they've also with the inflation going higher, which has now come back down, they've moved rates down a little bit. They haven't moved it back down. So if you're someone that has a lot of cash in the bank, and that's not just wealthy people, that is Microsoft, Apple, it's the mag seven. Those companies are receiving interest on their money. It's compounding for the people that need lower rates to go buy a car, to go buy a house, this is part of the affordability

Starting point is 00:11:59 thing. If rates were at zero, then people could afford to go buy a house. They may not have all the money and they may have to get into some situation where it's low, but their payments would come down. And that's obvious to people. So when you hear the comment that people make or the conversation from economists about a K-shaped economy, we absolutely have a K-shaped economy. And that has come because of innovation to start out with. But it has worsened with AI, and it's now impacting the job situation. And as more and more data is coming out, it's hurting the younger people more than the older people at this point. The people that own houses are not getting hurt in the same way that people who own houses.

Starting point is 00:12:40 And I'll just give one more thing to people. Remember, there's a lot of student debt out there. Again, the debt on the other side. So whether it's trying to buy an asset as you have kids, when you're in your 30s and you want to go buy a house and you can't afford it because it's four or five times medium income to get to the payments, that's a problem. And that's why higher rates to me are hurting the lower end. And I think they should go lower. When you think of those young people, there's a couple of different studies that have recently come out. one that you and I were going back and forth on is there's this brand new study that shows

Starting point is 00:13:15 they take different age cohorts and then they go and they say, okay, let's categorize by job things that are highly exposed to AI, meaning that they could be replaced easily by AI, things like clerical work, software developer, et cetera, all the way down to things that are not very close to AI. And what this concluded was that using, I think it was ADP, the largest payroll software, it concluded that young people between the ages of 22 and 25 that have jobs that are easily replaced by AI have seen a relative 13% decline in their job prospects. And what maybe is most interesting is pretty much every cohort is seeing job growth in the economy, except for 22 to 25, where AI can do their job. So it's entry level roles. And then the 13% is on a relative

Starting point is 00:14:09 basis, because some is going up and they're going down. But if you normalize it for just pure negative growth, I think it is 6%, if I remember correctly. So you have a 6% decline in the job prospect for a 22 to 25 year old with a job that could be replaced by AI. That seems like quantitative proof of what you've been talking about for a couple of weeks now, which is AI is taking these young people's jobs. Yeah. And for those people who haven't, I mean, it's a 57 page research paper. If you go to the wall street journal and you go look, look up, you'll get an article on it and it'll show two of the charts there for two separate sectors or two specific jobs. And there's no way to refute the fact that they don't just highlight, you know, the 22 to 25

Starting point is 00:14:57 pretty much by age all the way up. It just you're getting hurt more at a at a younger level than you are higher level. And that's not the way you'd expect it in an economy like this. Now, China's been in this situation for a while and it doesn't get as much here. But unemployment for young people in China is has been a big problem now for, I think, at least seven years. And in the U.S., it's just kind of starting. And so the data, and we've talked about it, as these payroll numbers come out, aside from healthcare jobs, we have negative jobs in this country right now the last three months. It's an impossible statement to say. We're not in a recession, but we have negative jobs if you just exclude the healthcare sector. So the diffusion index, which shows jobs being

Starting point is 00:15:42 created or lost by industry, of which there's a lot of industries in here, forget the sectors. And on the industry level, we're below 50%, which has been a recession. We just had the consumer confidence number come out from the conference board. Within there, they have jobs plentiful and jobs hard to get. It's continued to move in a bad way. And historically, this will put the unemployment rate up closer to 5, 5.5% just based on an overlay, which matches up with what's been happening, which is without the labor participation rate, which has gone down sharply in the last three months. We'd have an unemployment rate at four point nine. We wouldn't even be talking about the rate cut situation. So the job picture related to AI is making it worse. So the question is, would you rather run inflation up at three and a half percent as opposed to two and a half and try to keep young people's ability to get a house and get a job for stability and chaos? because nothing brings a country down faster than the youth not able to participate and have hope

Starting point is 00:16:46 in the future. And that's worsening by the month. And that's why, again, I'll keep saying it. They have to find a way to get affordable housing and they have to find a way to get rates down. I just don't see any way around it at this point. Today's episode is brought to you by Figure. They're the largest non-bank mortgage lender in the United States with over $15 billion unlocked on their lending platform. They've just lowered rates on their Bitcoin and Ethereum backed loans to 8.91%, improving their already industry low fixed rate 50% LTV loans. They keep building as well, being the only major CBL player to launch decentralized MPC custody to protect against single entry failure. And they just removed interest deferral fees entirely so you

Starting point is 00:17:28 can let Bitcoin price appreciation pay for your loan over time. What is MPC decentralized custody? It's a Bitcoin or ETH on-chain wallet with multiple key shards to protect you from single entity custody failure. You can always see your crypto ownership in a segregated wallet and verify your collateral hasn't moved. Whether you're funding a major purchase like a down payment on a home, investing in new opportunities, or even buying more Bitcoin, Figure makes it straightforward and transparent. Visit their app or click my link below to take out a Bitcoin-backed loan with Figure today. So you want an anecdote that I think a lot of people have forgotten about, um unless they are a little bit older but uh in iraq there was when we were engaged in the war

Starting point is 00:18:08 there there was two major turning points in that war uh the first was what they called the surge basically they had a huge surge of troops that they sent it was basically like look we're you know we went in did a really good job of invading the country now we're kind of on our back foot let's just send so many people there that it is going to tilt in our favor okay great they realized We still don't have enough people, though. There is a lot of people in the country of Iraq that are fighting us. And so what they did is they created a program. And that program was called the Sons of Iraq, SOI. And SOI was basically them saying, we cannot do this by ourselves. This is your country. You young men are going to have to

Starting point is 00:18:52 become the protectors of your local towns. And so they would train them, they would equip them, they would do all these things, but it was the young people who they gave a job to. So they, they helped them get paid to do this. And then basically what they did is they set up security checkpoints right in and out of their towns. And they said, Hey, if you see anything, here's what you do, blah, blah, whatever. And the whole idea was like, you know, if Al Qaeda shows up to your town, you're supposed to kick them out. Right now you can imagine how effective was it if Al Qaeda showed up different story, but at least there was job creation. You're, you know, making these people productive. You're giving them pride in their town, you know, all these components,

Starting point is 00:19:28 huge win. And so if you look at that SOI program, I say, okay, hold on a second. That was America realizing that the young people are really important. You can go to a lot of places where there's been significant social unrest, including in the United States, but in many countries where they've toppled the government, et cetera, it is the young people rising up. It is the young people who say we, we cannot live with this regime. We cannot live with this economic condition. And so I think that it ties back to a couple of weeks ago, you and I talked about socialism and the rise of Zoran Mamdani. And, you know, I do think that in America there is there's a very strong line that I think may not exist in some other countries when it comes to the crossover into violence. and so there's a belief that in america you can advocate for change without resorting to violence in most circles so there's some extremism but but in most circles i think a lot of other countries

Starting point is 00:20:20 if they were experiencing what we're experiencing in america like there's just full-on riots there you know there's all that kind of stuff and so i guess the question then becomes what do these young people do right if you don't have a job prospect yeah the easy answer is like hey go learn how to use ai and you know create a job for yourself but like what else you know i mean you've got people uh you've got kids who are somewhat in this age cohort right like like what is the advice that a parent can give to them or what can an adult do to help these people so that we don't end up in a situation where they just feel like they've been completely ignored yeah and and this is a major problem um i think the reason and we talked about this one of the first episodes that

Starting point is 00:20:58 we did together i was blown away when i met people and i'm going to briefly answer the question by kind of bringing it to Bitcoin just for a second, because when I went to my first crypto event, that's when I really saw and understood that young people at all levels of occupation, lawyers, doctors, you know, my kids are in the most of them are in the ones that are working in the health care field and they can't live where they live or want to live because they can't afford it. So the way that I've dealt with them is I mentioned it strategic Bitcoin reserve. I got to give them something that brings them hope. But I keep basically going through them and trying to get them to live day by day and

Starting point is 00:21:39 not spend a lot of time on social media, not to spend a lot of time on this, to go socialize, to go hike. Those sound like very Buddhist answers. But the reality is, I don't know the situation other than developing a skill and realizing, and this is the hope part for everyone, this is all deflationary. There's just no way around it. AI is accelerating all of the problems that you mentioned. The difference in the United States is we've been able to print money.

Starting point is 00:22:08 So the way that we've handled the problem is to do transfer payments and give people money. And that only works when the deficit doesn't keep growing and the debt doesn't keep growing until it becomes a problem. We can't just keep handing out money. We can't let kids not pay their student loans. We can't do this. So what's going to have to happen is AI is going to have to bring a lot of positive things down

Starting point is 00:22:31 the road, which it will. But we're in that period. And that's the thing I would say to people. You got a five-year period here that if you want to be a capitalist, you have to go learn AI. If you want to be someone that is going to enjoy life and make it through this point, do not get sucked into getting on AI or on social media and every place you want to get into and think that that's going to solve the problem. Get out with friends, go hike, go get in the air, make it through the five years as best you can because the cost of things is finally going to come down there will be affordable housing in five years they're going to be made differently they'll be humanoids the cost of everything will start to come down and then you'll be on the other

Starting point is 00:23:09 side and that whole dream that you had of getting through it'll be there so for the next five years learn breathe and have a better time enjoying life it's not going to be found on social media All right. The rising PMIs is a sentence that you sent me. The rising PMIs will likely mean the Fed is cutting while PMIs are rising above 50 for the first time this century and also with core CPI above 3%. Unprecedented. We get a rate cut in this scenario. What are the things you're worried about? What are the things you're excited about as they cut rates given rising PMIs and core CPI above 3%? Well, let me do it this way.

Starting point is 00:23:54 If this had happened in the past, what would I be worried about? And then I'll get into the AI window because for the people that are watching this that work in the hedge fund industry that are sitting there clamoring and yelling inflation's going to go higher. I ask everyone, does it really matter if inflation is 2.9% or 3.4% relative to unemployment going higher? There's not even a comparison. People being out of work is a lot worse than inflation being 50 basis points higher than what it would be for three years. And that's my whole belief in this. Now, in the past, you would have had a situation where you absolutely would have got

Starting point is 00:24:35 a problem in inflation. Now there's three components of this. So number one, we have an issue with people yelling about this. Wages are not going higher. So wages did go higher and they are, they're like inflation. They go higher every year, but we're now down at the bottom end of where we've been. And we're actually on the, on the Atlanta fed median wage component. We're down to 4.1%. Before COVID, it was in that general area. It had been banging around between three four. The reason I bring that up is if inflation is three and change and wages are going at four and change, I think we've got to worry more about the wage rate getting below inflation and trying to keep that elevated a little bit. So keep the labor market a little bit tighter,

Starting point is 00:25:17 move rates down. Let's just keep this thing growing. Second thing is gas at the pump is just not going higher right now. And as long as gas at the pump is not going higher, it's barely up from where it was a year ago. That's not going to feed through. I know electricity prices are going higher, but gas at the pump is a much bigger deal in terms of the change of it going on because you're driving around, you need it, you get it all the time, you see it. So gas at the pump's not going higher. Those two are not higher. Historically, when PMIs are going up, you're going to start to see wages go higher and you're going to start to see gas go up, which means the inflation is going to feed through. We don't have that problem right now. And so when I look at this

Starting point is 00:25:55 whole thing and I think about it, the third component is what innovation is going on right now, this is the most powerful deflationary force we have ever seen. Yes, goods inflation is going higher because of tariffs. But the reason I think the PMI is going to go higher, and it's already started, is because of what's happening in the AI buildout. So this is more going to be about the buildout. And the people that are funding this, the MAG7, they're doing it out of free cash flow at this point. So for everyone kind of involved and kind of learning about new things, like what a PMI is, just take this line, use it all the time. When a PMI is going higher because it's a diffusion index, which means it goes through the entire components of people surveyed and gets into

Starting point is 00:26:38 what percentage of them are benefiting, what percentage of them are not. So if you get up 60%, just think of it as, oh, 60% of the people in the survey are doing better. Right now we're in 48. If we get up to 60, you're probably are going to start to see oil go higher. But until that happens at this point, I think the Fed should be focused on cutting rates, getting people some kind of jobs and helping the situation with people sitting at home as opposed to helping the mag seven. Why is this good for Bitcoin? Well, we've all heard about how liquidity is good for Bitcoin. Well, historically, when liquidity goes higher, guess what else goes higher? Eventually PMIs go higher. It's the business cycle. So there's a bunch of things that happen. One of them is the

Starting point is 00:27:22 fact that as we start seeing PMIs go higher, it makes the strength of the liquidity situation good. If you add in the fact this time that we're going to be cutting rates, the whole thesis behind everything going on, if you take what has happened this year, the government is getting policies through for stable coins. We've had successful IPOs. When you and I, this year at the beginning, if we would have taken a survey of traditional finance people, what do you think about stable coins, I can't imagine that five out of a hundred people would have had an opinion on them as anything. Now they're an investable asset. They're investable through Circle and they're investable through Ethereum. And all of a sudden, everyone's doing their fundamental work on Ethereum going,

Starting point is 00:28:03 wow, there's things on here that remind me of the traditional finance world. So that's good for Bitcoin because the network effects are growing. So once you get through the network effects, which is the innovation side, which is getting more and more people to use it, you're getting into the AI side, the convergence between AI and stable coins. So the transactions explode. All of the AI stuff, which is directly related to PMIs, which historically is directly related to any kind of growth that's happening in the economy, is good for Bitcoin because people are willing to invest more because traditionally you start getting a tide that lifts all boats. And that's the line that I want to say for diffusion indexes is a tide that lifts all

Starting point is 00:28:43 boats means people have the ability of investing in a broader universe of things. And as I've said before, the biggest problem that's been for Bitcoin has been you didn't need to invest in it. It's a big behemoth asset now. It's one of the largest assets in the world. I don't need to buy it because it's just a beta of NASDAQ. It's just the MAG-7. Well, if the MAG-7 aren't going up anymore, which I don't believe they will in the rate that they had, and Bitcoin starts to outperform, which will come from the PMI because small caps typically do better. It's a tide that lifts all boats. And when you start lifting all boats, you don't need to have a concentrated portfolio of the three that are seven that are working. You can actually extend out. So I think

Starting point is 00:29:24 investors, traditional finance investors, 401k, all the things that we've opened up are going to start looking for something that acts like beta and growth in a portfolio. That's a big asset. And I think that's going to bring more and more money to it. How big do you think that Bitcoin can get in terms of market cap in the next year or two and the reason why i ask by market cap rather than price is um solana price per coin not at all-time highs right now saw on a market cap at all-time highs and so you just have like an inflation rate right that is creating the market cap now bitcoin has a finite supply over time but we are adding more bitcoin into the market right at the kind of predetermined rate and so from a market cap standpoint we've been fluctuating

Starting point is 00:30:13 somewhere two trillion two point three trillion you know kind of that range how do you just think about you know size right like gold's at 20 trillion bitcoin's at two yeah it's liquid but it's like this is like peanuts compared to the global you know financial system but then we see 80 000 bitcoin get sold on the market and it doesn't even you know really move so it's like almost like this paradox where it seems so liquid because it used to be so small but compared to even gold or you know u.s equities or something it is still peanuts yeah and this is the uh this is the million dollar question that people have spent time in fact the first time i even talked to anyone about bitcoin let's say it was probably

Starting point is 00:31:00 2015 and we were talking about how big this could get and the only way really to do it as a macro person was to do it related to gold, like what percentage of gold should it be, depending on where it fits in the belief system. If you believe it's becoming more of the belief, then great. But from a functionality basis, the answer that I'm always going to give to people on this, Bitcoin was the original cash creation. It was the invention for digital money. so if you start with that and you realize it's about 60 percent of the crypto market cap so you're right now crypto market cap somewhere just south of four trillion um the digital economy is going to grow exponentially now the digital economy has been growing exponentially for a while

Starting point is 00:31:48 and so the thing that i believe is that bitcoin shouldn't be viewed relative to gold it should be viewed relative to the Mag 7. The Mag 7 right now is up near 13 to 15 trillion. It's a big number. The reason it's gotten so big is because people have owned it. It's a massive part of people's portfolios. If everyone goes into there, there's almost nobody on the planet that doesn't own NVIDIA at this point. It's 5% of the S&P 500. It's a major part of all benchmarks. So when you have stocks that are that big and part of the portfolio, we all make decisions in our portfolios based on returns. And what questions the returns is when we're not beating bonds or we're not beating some benchmark. If the mag seven stop producing the types of returns they have. And

Starting point is 00:32:40 my video last week, I went through that. I think we're at the inflection point in video reported last night. I'm going to go through why I think everyone in the mag seven should start to be thinking about the reality of what's happening, which is competition from AI is coming. You cannot invest in ideas the way that you have in the past. Ideas are stocks. Bitcoin is a belief. Beliefs last longer than ideas. There's no companies in the S&P 500 from, you know, 100 BC. Gold's been around since then. Bitcoin will be around for a long, long time. It's a belief at this point and people can fight it, but it's going to be around. I think you want to start shorting ideas and you want to be long beliefs as people move more money into the digital economy, which is just starting

Starting point is 00:33:25 now because of the government regulations. Stablecoins growth will represent it. But the other thing that's going to happen, AI agents are going to make intelligent decisions. And those intelligent decisions just start with what has the best Sharpe ratio, what has the most liquidity. Well, if you just do it that way, Bitcoin wins over every asset in the world, 24 hours a day, liquidity all day long i think that's what's coming hi this is matt hogan the chief investment officer for bitwise asset management each week i write a five minute memo outlining the biggest story in crypto in this week's memo i give a sneak peek on a new bitwise report offering the first ever long-term capital market forecasts for bitcoin want to know how bitwise thinks bitcoin

Starting point is 00:34:09 will do from a return, volatility, and correlation perspective over the next 10 years? Check out my memo at bitwiseinvestments.com slash CIO Memo. That's bitwiseinvestments.com slash CIO Memo. Carefully consider the extreme risks associated with crypto before investing. So although it's not a lot of sophisticated investors, there's a lot of people who have 100% of their net worth in cash. Usually it's the bottom 50% on a socioeconomic ladder. So there are some perma bears that sit with a lot of cash for very long periods of time. What do you think has to happen in society to get to a point where people start to say, I'm 100% Bitcoin?

Starting point is 00:34:56 And not from like, I'm gambling, or I'm speculating, or I'm looking at this as like, how much does it go up in dollar terms? but to me the people who sit with 100 dollars they're basically saying i don't have a better idea i don't have something to do with the money either because i don't have the education i don't have the time or i just literally don't know anything other than just let me hold the cash right 100 bitcoin to me is like beta exposure to what you're talking about now i'm not advocating for people to go do that but i know a lot of people who have very very high percentage exposure to bitcoin is it just time like i used to tell people they'd be like you know what has to happen

Starting point is 00:35:35 for bitcoin but whatever and i'd be like oh it's just time like you just need younger people to get older and like it to be around for a while what else right like like how how does this become something that is like kind of tech forward or digital native people on the internet yeah sure now we're starting to convince some people on wall street but like the average person what does it take to become a very material part of their allocation? So I'll answer this question with your average person comment. So yesterday I did one call yesterday with arguably the most famous Brazilian hedge fund investor ever who had a big impact on my career because I was in my 20s. I'd opened an office for Morgan Stanley down in Brazil. And he just taught me a lot of things

Starting point is 00:36:21 about how to trade markets. We were on the opposite side. I was the person making markets. He was the person trading. He's kind of like the Stan Druckenmiller of Brazil. And so we were talking yesterday and catching up. We hadn't seen each other in a long time. And I asked him how he was investing in AI.

Starting point is 00:36:39 And he basically told me a story. He went, no, you know why my returns have been so good over the long term? I stick with what I know. I'm a macro person. I trade currencies. I trade the S&P. I don't get into technologies because there's a great technology today.

Starting point is 00:36:54 There's not a great technology tomorrow. And it just goes. So we're talking. And at the very end, he goes, okay, so what should I leave from this conversation? What's the one point you want to make still? And I said, here's what it's going to be. I think people are underestimating the speed of change that is happening right now and that will happen in the future. That MIT report that came out about 95% of companies not benefiting from. So I'm talking about this this week because the report was BS, but here's a more important part to this conversation.

Starting point is 00:37:30 it really highlighted because the report was about incumbents it was about companies that can't change they can't get through the bureaucracy in their own businesses to adopt this stuff it gets stopped at some layer of the organization you and i have talked about how startups have a huge advantage in this if the innovation cycle is now sped up to weeks we're in a video game where your company never hits escape velocity and in that world how do you invest you don't invest you trade. And this is what I said to him. So the ability of waiting for these long trades, like I'm going to short bonds, rates are going to go up to 5% in the next, unless these things happen fast, you're dead. We're changing so quickly and AI is going to speed everything up.

Starting point is 00:38:13 So for the people there, other than time, there's a second element, which is if time speeds up too fast, what seems like five years used to be a hundred years. And so I didn't answer directly your question, because I don't like saying to people a target on Bitcoin. I think as AI speeds up and everything happens, what people are going to realize is that, number one, you're living far longer than you thought you were going to live. Everyone should go read about ChatGPT4B and basically the advancement they made from OpenAI on this. It's an amazing thing. It's all about age reversal. It shows where we're going. They talked about it on the Moonshots podcast, which was released yesterday, the final 15 minutes, I highly recommend people spending time on it.

Starting point is 00:38:59 You're, you're dealing with changing the ability of thinking in time. Bitcoin has no time. It gets you time. It gets you everything you need. If you invest in a company, you're assuming that you'll have enough time to get in and to get out and make money. I don't think you have that time anymore. And so with your point on time to, you know, to just bring it all around, I think that's the key element that I learned in Bitcoin is that if you can stay in it for the time, really what you're watching is everyone else fighting to not become a zombie in their investments or their companies or anything. And the easiest way to not be a zombie is to put it in something that's going to be here five years from now. It's the only thing I feel safely saying will be here five

Starting point is 00:39:37 years from now and be higher in price than it is today. The only thing. Is that true of even the U.S. stock market? Like you think that there's a chance that the U.S. stock market would not be higher? Yeah. Five years. So two years, absolutely, because of profit margins. The reason I say I don't know, the societal impact in labor versus capital, the S&P 500 is not a representation of the country. It's 500 companies. There's a lot more companies in this. Most people do not work for a company in the S&P 500. I worked for one for almost 11 years, but that's it. Everything else was a private company. You can have a market where every company is private. If all of the winners never go public, then all you're talking about is a shrinking of the public market.

Starting point is 00:40:28 And I'm just telling you, that has already happened in the debt markets. It's already happened. Private credit is a big thing. So when I say the S&P 500, people should realize, I think tokenization is going to bring a new form of capital structure around. You'll be able to invest in that, and you'll be able to diversify. If companies are going up, they're going down, but you're investing in all of them and some kind of thing, you'll produce the returns that were representative of the economy. But I'm not sure that you can say that U.S. stocks themselves will be up significantly five years from now.

Starting point is 00:40:56 I think two years, yes. As we get further out and as AGI gets closer, I think it gets harder for public companies with regards to private companies. one other thing i've been thinking about and i like using you as my personal muse for uh for things that uh i don't have an opinion about yet um the valuation metrics on the u.s stock market right now i think we're at like 23 times or something like that um if you go back to past times where it's been 23 times not so hot for the next you know five to ten years on the afford return i think the numbers

Starting point is 00:41:29 seen are plus two percent minus two percent uh a decade out um if that plays out which again cat yacht is ai may be driving the valuations higher and you know uh earnings and all that but just put that aside for a second could there be a lost decade in stocks where your point about like bitcoin is where the returns are stocks essentially just go sideways private companies companies create and capture all of that. And now all of a sudden Bitcoin maybe is the only thing that an unaccredited investor has access to. So yes, but let me, let me just give facts so that most of the people watching this, I'm assuming are American. I'm not, not sure, but I'm assuming. If you look at all stocks outside the US, so the MSCI world X the US

Starting point is 00:42:29 in local terms to strip out the currency side, and you look at it since 2007, it's been more than a lost decade. It's been a lost 18 years. What people don't understand is if they go look at the price of a lot of companies in the S&P 500, Ford, I mean, I'm not going to go name them all, you got a bunch of companies which have not performed in the last 17 years either. So there is, there has been a lost decade. The reason it hasn't felt like it is because the MAG 7 have dominated the global situation. So they have been the ones that have produced the returns. That's why everyone owns them. That's why when people fade American exceptionalism, I always say, well, let's go through those companies. I mean, a good amount of the people that either run the

Starting point is 00:43:18 companies or work at the highest levels are not even Americans. They came over here. They happened to go to school in the US and then they moved out to Silicon Valley and they became part of something. So it's kind of a melting pot. And that's the thing about it is these are innovations. They dominated the planet. If you go look at all the malls across the country, they've been decimated. We've kind of been in a lost decade for stocks with an S. We've been in an okay decade for seven stocks. And then the S&P goes up with it. I do think people should just realize that the rest of the world already went through this in a major, major way. I don't think emerging markets can have the same kind of future that we had here because I just don't think. And again,

Starting point is 00:44:01 I'll say it over and over. When we talk about the stock market, it's a public investment vehicle. if every company remains private, there is no more S&P 500. There'll be something new. Tokenization will come and allow people to invest in these. But I just think people have to get comfortable with the fact that rather than focus on putting your money in something and you're going to lose over the next 10 years, you'll be forced out. And I think Bitcoin is the diversifier to make sure that you're making money in the next two years from stocks plus Bitcoin. But then going forward, I think Bitcoin is going to be your hedge against the things that I think are inevitable from AI. I'm going to leave you with this. Ryan Dietrich from the Carson Group

Starting point is 00:44:41 recently told me that one of their messages to their clients is diversify your diversifiers. So diversify your diversifiers. I said, well, you got a big brain there, Ryan, because I don't know what that means. What does that mean? And he said, 60-40. So your stock exposure, 60%, 40% is your bonds. Your bond's supposed to be your diversifier. He said, well, what if it's gold, Bitcoin, commodities, right? And he went through the whole thing. And he's like, actually, part of our message is we don't think we can convince people not to have stock exposure. So they're going to keep that 60%, but you can't rely on the bonds. And so how do you go and do that? And I think that's a very similar message to what you're saying is, look, you know, people aren't going

Starting point is 00:45:16 to go to 0% equity allocation, but you better be damn sure you got something else there, right? In terms of that diversified exposure. And I think you and I both think Bitcoin is a big winner on that category. Yeah. And if you're, if you're, you know, if you've been fortunate enough to make money and have the ability of saving money, having some money in bonds makes sense. If you're younger and you're playing the, how do I get a house game and how do I get out of this? If you invest in bonds and you put your money in bonds, the government is basically debasing all of that. Unless you believe we're going to go into a recession at some point and you get this magic trick to go buy stocks after they fall in because bonds have done so well for you.

Starting point is 00:45:54 Everyone who's been waiting for that magical recession thing, it just hasn't worked. The only time it worked was this brief period during COVID. And if you were able to get your money in real quick into bonds before the stock market collapsed and then move it right back out when they were printing money and everybody was locked at home, that's great. So I happen to agree with that. And I think every smart person you've had on the show who I think is calm about this and doesn't have a bias has basically said, I've heard Darius Dale spoke on this as well. he advocates bitcoin as part of the diversifier as well she can't hold bonds the same way you got to have gold and and bitcoin to replace a lot of that bond if not all of that bond

Starting point is 00:46:35 portfolio i think people should be thinking that way because i think it is the opposite of the bond market if you're bearish on bonds why not just get long bitcoin you make more money doing that in 2019 i went and we're raising money for a venture fund that was going to put 15 20 percent um in bitcoin and i met with a unnamed hospital system and uh they asked me you know okay well uh this all sounds interesting but what do you think we should do and i said well you know there's a range of things that you could do the most extreme thing you could do is you could go 60 percent equities 40 percent bitcoin drop bonds by bitcoin the look on the face of the person i was talking to. We did not get the allocation. Just out of curiosity, how old were you at the

Starting point is 00:47:23 time? Um, I was maybe 30. Yeah. Yeah. Maybe 30, 29, 30. How old was the person you were talking to? Not 30. Um, by the way, by the way, uh, I also married it with a very conservative thing to do could be like by one percent but you know like whatever but like i was trying to explain like hey there's like a pretty far thing here um and i remember joking because one of the another hospital system uh that this time one of my partners came actually both my partners came with me so it's like all right you know a little uh more maturity in the room might help um they have like 75 fixed income right i mean they were a lot of liabilities all this kind of stuff right and um they were just like we're addicted like you know they didn't explicitly be like we're

Starting point is 00:48:13 addicted we need this income to run this place and so i do think that people just forget like it's not always just what's the asset allocation it's you know what's the asset allocation with the backdrop of what are we trying to accomplish what do we need you know cash flow or capital appreciation like all the normal things that traditional sophisticated investors think about i think gets kind of lost in the conversation where people are just like why don't you just buy more bitcoin it's like well yeah and so the so you hear this and you probably know this and the people at home hear this when i would go out as a hedge fund person trying to sell them on returns of you know six to nine percent with a low volatility uh they told me well you can't

Starting point is 00:48:51 really compete with private credit private equity vc because there i can get those returns but you know the beauty is there's no mark to market exactly there's no volatility yeah so for everyone listening going yeah i can't believe people didn't want the bitcoin they don't want the Bitcoin. They not only don't want to have something safe, they want to have something that isn't marked to market because at the end of the day, it is a cover your ass job. And it is one where if you can get the returns and you don't have to deal with walking in because you had a drawdown, that's why the endowments are in the situation they are when they moved heavily into a lot of these illiquid markets. So a lot of the stories you're hearing from especially the Ivy

Starting point is 00:49:28 League schools about their liquidity problems, it's because of the decisions they made. Because the thing about no mark to market, it means there's no liquidity. Bitcoin's got the liquidity and the mark the market so i can say this now because i'm out of that game that's how we that's how we raise the money to buy bitcoin is we put bitcoin inside of a venture fund right so that's only 15 percent uh so uh you know anyone wants to borrow that alpha go ahead uh all right jordan where can we send people to find you on the internet uh my last day in maine they can go to my youtube and as you always say subscribe people it's fun help helps keep me going um And then they can find me on Substack.

Starting point is 00:50:07 They can find me on LinkedIn. And finally, for the institutional people, we didn't talk about it. I'll send it to you. But I wrote this very long form report on Tesla. Tesla is the most polarizing company with the most polarizing corporate leader on the planet. I am not, I've had a Tesla since 2012.

Starting point is 00:50:27 So I'm a huge lover of the product, could care less about the stock. But I believe the most important thing happening in the embodiment is happening right now as we speak with robo taxis i go through a lot of different things in there i think people should just check their biases and pay attention because the next phase of ai might be happening sooner than we all think if this man is successful with what he's doing in austin texas and spreading across the country and i'm getting the impression more and more just by connecting the dots that he is so then get me a 22v research for that

Starting point is 00:50:57 amazing maybe well next week we'll carve out an entire segment and talk just about tesla and robo taxi so the bulls and the bears can all tune in all right jordy thank you so much we will uh we'll do it again next week thanks bud see you in person next week

The Pomp Podcast - How Bitcoin Outpaces Stocks in the Next Decade | Jordi Visser

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