The Pomp Podcast - The End of America in 2029 | Porter Stansberry

Episode Date: May 26, 2026

Porter Stansberry is the founder of Stansberry Research and the author of “2029: The End of America.” In this conversation, we discuss why Porter believes America is heading toward a great financial reset by 2029, the Social Security collapse, currency debasement, Warren Buffett's struggles over the last 20 years, and how to build a portfolio to survive what's coming — including gold, bitcoin, timberland, and his Honeycomb Portfolio strategy.======================Need liquidity without selling your crypto? Take out a Figure Crypto-Backed Loan, allowing you to borrow against your BTC, ETH, or SOL with 12-month terms, 8.91% interest rates, and no prepayment penalties. Or check out Democratized Prime (https://figuremarkets.co/pomp) and earn ~9% APY on real world assets, paid hourly. Unlock your crypto’s potential today at Figure! https://figuremarkets.co/pomp Figure Lending LLC dba Figure (NMLS 1717824). Loans subject to approval. Crypto collateral may be liquidated. Terms apply - see full disclosures at figure.com/disclosures/======================Arch Public is an agentic trading platform that automates the buying and selling of your preferred crypto strategies. Sign up today at https://www.archpublic.com and start your automated trading strategy for free. No catch. No hidden fees. Just smarter trading.0:00 - Intro1:00 - What is the Fourth Turning?3:21 - Why 2029 is the year of the great reset9:57 - How past monetary resets happened (1933 & 1971)12:58 - Both parties grow government — there's no off ramp21:52 - Currency debasement & the real wage collapse35:50 - Is there any way to stop the crisis?42:53 - Warren Buffett's 20 years of mistakes51:43 - The permanent portfolio explained1:01:28 - How to price gold vs. bitcoin1:06:39 - Bitcoin's biggest mispricing in a decade1:10:16 - Why Timber belongs in your portfolio1:13:42 - Honeycomb portfolio strategy & closing

The mispricing today in Bitcoin is as large as I've ever seen before in the model. My Bitcoin model has average price of Bitcoin today at $134,000. And if you look at hedge fund allocations and things like that, all of the fast money has gone into tech stocks and it had to come out of somewhere. So I think we're seeing a great opportunity today in Bitcoin. Certainly the best opportunity I've seen in Bitcoin in a decade. What's going on, guys? Today we have a conversation with Porter Stansberry.

Porter is the founder of Stansberry Research and Porter & Co., a boutique investment research firm. In this conversation, we discuss why Porter believes the end of America as we know it will happen in 2029, what the math is to drive his beliefs, how he thinks that you should be able to navigate all the volatility, what his portfolio looks like today, why he has so much conviction in Bitcoin, gold, timber, and many other assets that you probably don't own today. And then we get into what Porter believes is on the other side of a great reset and why he thinks that the fourth turning will actually put America in a better spot in the coming years. Here's my conversation with Porter Stansbury.

Porter, you believe that we're in the fourth turning. Can you explain that concept and why you think it applies to America today? Yeah. So the fourth turning was sort of a theory of history that these two scholars first put forward in the 1980s. And it's kind of evolved, but it basically boils down to the fact that all of human history rolls in 80-year cycles, because that is the longest normal human lifespan. And the idea is that over the course of a person's lifetime, the things that they believe evolve, reach maturity, and then fade. And so if you look at the history of the United States,

the revolutionary periods come once every 80 years. If you go back and you study Roman history, same things. human beings human culture human history all follows this 80-year cycle and they first um the uh let's see with their neil and uh neil strauss and uh and how their book um was called the fourth turning but the first one was called generations and then and the fourth turning they they theorized that america would go through a fourth turning that would begin and around the year 2000. And these fourth turnings typically take 20 years. And so we're, we've been in this process. And if you think about what happened at COVID, if you think about what happened at the

GFC, and you think about what happened in the internet revolution, we've definitely lived through about a 20 year period of tremendous dynamic change. And unfortunately, these fourth turnings tend to end in a ultimate crisis where everything gets reset. And so I kind of put that idea together with what I see happening in finance, and particularly with the deteriorating financial position of the US Treasury. And it just occurs to me that all the Western democracies are going to need a massive monetary reset, because we can't afford all the promises that we've made. And if you look at it closely, we can't even really afford the debt we have now. And so I think that that's what's going to happen. This fourth turning is going to evolve

and then ultimately culminate in a giant global financial monetary reset. And that's what the book is. So the idea here is the fourth turning is really a social, economic, and political kind of these trends come together and create this scenario. And you obviously described a number of crises that we've had. I think that there are a bunch of folks who will show, oh, wait a second, we've navigated those well in their mind, right? They'll claim that we actually got through those. And so therefore, they're not actually contributing to any sort of issue. You have specifically identified 2029, the year 2029, as the year that the end of America as we know it. And you recently published a book under the name. I spent the weekend reading that book. And you lay out a pretty strong mathematical argument as to why 2029 is that great reset. Can you just walk us through the math and why 2029 is that year? Yeah, it's really simple. If you think about it, the peak of the stock market in early 2000 was really the peak of the post-war American social and economic order. The price of gold at that point was under $300 an ounce, and the Financial Times was calling it a barbaric relic and saying that it would play no further role in the economy. And if you measure the value of, say, the Dow Jones Industrial or the S&P 500 in terms of ounces of gold, that was the peak of our financial wealth.

And since then, it has been in decline. And, of course, now gold was recently trading around $5,000 an ounce. And so people have come to believe that their wealth is measured in a currency, the dollar or the yen or the euro. But if you really measure your wealth in money, if you measure your wealth in gold, we've all gotten much poorer. And that is because the Western financial system is failing. The currencies do not keep pace with growth to productivity.

And as a result, people's after-tax real wages have continued to fall. So while company owners and tech titans have become vastly wealthier, the average American, the average Briton, the average Japanese person has actually seen their way of life and their wealth substantially decline. And so those two factors have to come to an end at some point. At some point, the average American is going to go, f**k this. I'm now working two jobs, I'm paying more taxes than ever, and my life keeps getting worse and worse and worse, and I don't understand why. And if you look at everything we've seen since the GFC, not just the Black Lives Matter movement, but the Occupy Wall Street movement, if you look at the absolute growing disaffection of people under the age of 40, if you look at the age at which people have been able to start families, the age at which people have been able to buy their first homes, all of this shows a economy, a culture, a way of life that's falling apart. And I first predicted this back in 2011 when I wrote the first edition of the End of America book. And what I said was that we had begun to paper over the problems in our economy instead of dealing with them would lead to a debasement of our currency, which we've seen. But more importantly, it would lead to a debasement of our culture, a debasement of our society.

And I said you'd see three things in particular that would mark this. You'd see a huge increase in deaths of despair. So what is the leading cause of death of men 18 to 34 years old today? It's fentanyl. I said you'd see a huge increase in gambling as people would lose the ability to earn money through normal commerce and instead would begin to take enormous financial risks because they don't care about losing the money because it's not worth anything. And so what's happened?

We now have a casino in everyone's pocket, and look at the revenues from online gaming and from other kinds of gambling and from things like crypto, which is really, in my opinion, and a lot of times, just another form of gambling, okay? And then the one that's most tragic is I said you would see a huge rise in prostitution, and prostitution always goes hand in hand with collapsing cultures and collapsing economies. It's their oldest profession in humanity, but we should not have one in 10 American college females with accounts on OnlyFans. That's crazy. That's true. It's frightening. And a lot of people don't see this yet because as the Trump

administration likes to say, stock market's at a new high. Well, the stock market is denominated in dollars that they keep printing. It's not a fair measure of our wealth or our success. So if you look at all these factors, they're all going to come to an end. And it seems to me that in every crisis that we have, we have to print more money. It leads to more social dislocation. It causes bigger problems. And then the biggest problem of all is going to be social security. So the social security trust fund is what's responsible for paying benefits to everyone who is involved in social security and Medicare. Those funds will run out. They have been running at a deficit since 2010. The government says they're going to run out by 2033. I think that's

very optimistic. If inflation is worse, if there is a collapse in employment because of AI, all these things could lead to a quicker collapse in those funds, as could simply increasing COLA payments. So by law, social security payments have to match the government's version of inflation, which is CPI. And so my prediction is that whether social security runs out of money by 2031 or by 2030, by 2029, it will be so obvious that it is going to happen, that that will lead to this climactic situation where the government has to decide that it's going to default. The government cannot pay those benefits. It does not have the resources. It's impossible. And that default is going to lead to, I believe, a restructuring of the entire

Western economy. Now, when we go through that default or this great reset, your prediction is 2029 seems to be the year. Some of that is Social Security. Some of that is a number of other kind of metrics that are all lining up. What is a great reset or monetary default the United States look like? Well, we've had them before. The two that are most recent was in 1933. The government went broke because of the Great Depression and most particularly because of the Smoot-Hawley tariffs, which really destroyed the global financial order. Nobody was able to earn dollars anymore because of the size of the tariffs. And so all the banks that owed dollars defaulted and it set off a chain reaction that people have studied for a long time. And how the government

reset the economy was they seized all the gold in the country. They stole it. They stole all the money they needed to pay their bills. And then they reordered the economy so that the government was sort of the central economic actor going forward. In 1971, the same thing happened. And the details are in the book. It's really extraordinary how fast the government went broke between about 1965 and 1971. As a result, our foreign creditors were demanding payment in gold for all of their trade receipts. That's when Nixon defaulted. He said, we're not going to pay you what we promised we would pay you. Instead, we're going to print dollars and pay you in dollars. That, of course, set off a huge inflation in the 1970s. How our monetary system will be

reset this time? I actually don't know. What I do know is that bankrupt governments do very, very bad things to their creditors. And the number one creditor of the US government today is a retiree. And so I think it's very important that Americans, especially if they're in retirement or near retirement, really understand what the government owes them and the government's inability to pay. And it's so easy for people to say, Porter Stansbury is crazy. Doesn't he know, the government will never default because they can always just print the money. Well, those people have not studied the law. They don't understand how coal adjustments work. The government cannot print the money because that will just lead to more inflation, which will lead

to higher payments and higher interest payments. That's a doom loop. That will not work. And that will become very obvious in the next several years. And by the time 2029 arrives, it will be an inescapable reality. And so then the question is, how do we reset the world? We can't all live off the government. The government, if you look at it today, Anthony, the government is in direct control of about 60% of our entire economy. So that's federal, state, local spending, plus all of the direct regulated medical expenses. That's way too much. Nobody can afford that. I saw you and Peter Schiff both agreeing on this idea of we have two political parties in this country, the Democrat Party, and then we have Republicans. But the Republicans,

you guys were talking about how they are Republicans in name only. We essentially have two versions of Democrat Party, which is two parties that believe in big government, just different forms of socialism that they both are pursuing. Can you describe a little bit in terms of, regardless of which political party is in office, it sounds like you still believe that this is kind of the end state of America, regardless of who's in power. Sure. So just look at the size of government. It doesn't matter who's in power, the size of government always grows. It's more and more spending, and it is a larger and larger section of our GDP. So there hasn't been anyone, there hasn't been either party that has been for actually draining the swamp or

for actually restructuring the government. Even Ronald Reagan, who talked a beautiful game, the size of the government still grew. And the reality is, is that the American people want more government. And it's not hard to understand why. Look at who pays for government. The people who pay for government is a very small section of the population. The people who receive net benefits from the government, it's a very large segment of the population, well, they're going to win every vote. The trouble is, of course, is that that doesn't scale. There's a great comedian, a British guy who said, you know, we're all communists and our families, right? We all will do whatever we can for our children, right? To each according to their needs and from each according to their

abilities. Works great. And your family, it might even work okay. You might be a socialist when it comes to your neighborhood. You might be willing to mow your neighbor's lawn for a week while you sick because it affects your property value. It affects your quality of life. Most neighbors are happy to roll in their neighbor's garbage cans and things like that. When they're sick, we take them food. Socialism works great in a community. It doesn't scale, right? You take those same principles and you apply them across a very complex, large economy, and it always fails. And I don't think that many people realize how socialistic America has become. most of the most of the people in the united states are receiving substantial government

benefits and they're being paid for by the very few what i find interesting is uh in the recent couple of weeks we've seen jamie dimon we've seen ken griffin uh jeff bezos they've all come out and said some commentary about taxes and government spending and usually these guys are very well media trained they don't really talk about this stuff because they understand it's kind of a a hot button issue and they'll get backlash. But I think that the general talk track has been, I actually don't mind paying more taxes if I knew that it was going to help people. I donate a lot of money to philanthropy. I actually try my best to help a lot of folks either through my business and the way we employ people and pay them or in things I do from a social perspective. But actually

the problem with paying more taxes is you're just sending more money to Washington. And so you see wealthy people talking about my dollars are being misappropriated in Washington, even to the point where Jeff Bezos is talking about the bottom 50% of Americans who are responsible for about 3% of the federal budget. He's saying, why are we even asking them to pay anything at all? Just go no income tax whatsoever for the bottom 50%. How does that play into your worldview? Well, this is sort of a much broader discussion and I can get into the economics of why it doesn't work, but I'd rather just ask people to look at their daily experience. Do you do anything where you interface with a government agency of any kind that is a good experience? The answer is,

of course not, right? The worst thing you have to do as American is go to the DMV every five or seven or 10 years and get a driver's license. It's the most humiliation ritual that exists in our society. Everything the government does sucks, every single thing. Amtrak has a monopoly on east coast train travel right it's ridiculous if most americans have never been on a train because what amtrak runs is garbage cans and they still lose billions of dollars a year there is no government solution that works there is none why so then why do we pursue government solutions and the answer is because it's good for the people in power it's good for the elites and it's also good for the people who don't have to pay for it so a really shitty train is still

better if you don't have to pay for it. So that's a huge problem. And I think most Americans would be like, yeah, we need to have some kind of a social safety net. We need to have armed forces. We need to have a secure border. But I think most Americans would say, if you've been on welfare for more than five years, get a fucking job. That's ridiculous. And I think also we should say, if Amtrak can't make money, then let's sell it to a business that can. And so I just think that we're approaching a point of time, particularly with people under the age of 30, where they've had enough. They see that this is no way to live. It's no way to allocate scarce resources. It's no way to run our economy. And I think you're going to see a

massive, massive shift in what most Americans believe in when it comes to government. The boomers all saw government as the solution, and people under 30 all see government as the enemy. Now, how much of that is just because of the Internet and the ability for people to communicate and kind of expose some of the nonsense going on? I'm very interested in watching like a Spencer Pratt in L.A., right? And whether he wins as the mayor of L.A. or not, he is definitely taking a approach where he's essentially saying, I am not right. I am not left. I'm just common sense. And what I find maybe most fascinating is the group that he seems to be targeting the most are the LA moms. And the reason why I find that fascinating is because usually people would think

of if you are a mother living in Los Angeles, you most likely are in the heart of a blue city and you are voting blue almost automatic. You're not even thinking about it. But what he is essentially saying is open your eyes. You don't feel safe going to the local park. You don't think that you can afford groceries or name the problem. And it seems to be resonating with people. Can I just take a break and talk about public safety in America? Yes. Is there any reason at all, any actual reason the most powerful nation on earth has a crime problem? It's absolutely absurd.

We have the ability through facial recognition, through cameras, and through police to put every single violent person in America in jail in the next 60 days. We could easily do it. Why don't we? Why do we put up with it? Why do we tolerate it? It's absolutely unnecessary. I've got the best criminal justice reform idea ever. It's real simple.

If you get arrested for a violent felony, now, do you know how difficult it is to actually be convicted of a violent felony? Every DA in the country is going to plead this down to a misdemeanor. They're going to let you go the first time, the second time, the third time. Okay? My point is by the time you've actually been arrested for a violent felony, you've been a criminal for years. So if you get arrested for a violent felony, you go to jail and you stay there until you're

eligible for parole, but you do not get out of jail. You do not get out on parole unless there is a non-felon American citizen who is willing to vouch for you. You have to have someone who is your sponsor. And if you commit another felony, your sponsor has to pay for the damages you cause and goes back to jail with you. problem solved. No one who's an actually violent person would get out of jail again ever. And that's where they belong. If you can't learn to keep your hands to yourself in our country,

you go to jail and you don't get out, period. If we did that, can you imagine what the property values would be in Baltimore? What the property values would be in Detroit? What the property values would be in Memphis? Why have we allowed our greatest cities to be utterly destroyed by crime. Hello, everyone. Sorry to interrupt this conversation, but I wanted to tell you about CFO Sylvia. This is an AI product that we built to help you better manage your finances. I had a problem. I wanted to use the latest artificial intelligence technology, but it didn't have the context of my personal portfolio. That's why we built Sylvia. Today you come in, you can attach your accounts, you can start to ask Sylvia questions. And the more you use Sylvia, the data

suggests the faster you will grow your net worth. CFO Sylvia is the most powerful personal finance product that i've ever used and our team is hard at work making it better every single day go check it out today at cfo sylvia.com again that's cfo sylvia.com and if you start using this product and you let me know how we can improve it we'll make the changes right away well you talk about in this book uh that you wrote about the end of america like the breaking of the social compact of america right and i think that um i could go through example after example of everything from graffiti, to violence on the subway in New York City, to the homeless and drug problem in LA. I mean, this stuff has been well-documented, I think, at this point in terms of people talking

about the problem. But when you get the breakdown of the social compact, it almost feels like people are mostly saying, I know that's a problem. It's not worth my time to try to solve it. And that feels almost like the thing that, again, it gets tied back into the economics of, You know, if there is a degradation of purchasing power, if there is a loss of wealth, all of a sudden, all this stuff starts to fall apart. You talked about gambling, prostitution, et cetera. But at the same time, it almost feels like people then start to become somewhat insular and say, listen, I don't have the time, effort or energy to go try to solve community problems. I can't get ahead here because I'm getting paid less every single day because the dollar is getting debased. Nobody understands this. If you want to know why Americans were able to live very good lives on one paycheck between 1945 and 1970, the answer is really simple. We had a very sound currency. It was backed by gold. And we didn't allow the government to run big deficits or to owe big debts. Talk real quick, just because you break down in the book pretty well. What does that mean? Live a good life on one salary? What does that look like for those that either don't remember or weren't alive? Yeah. It means that, you know, usually the father goes to work in the morning. He works at Sears. He works at Ford Motor Company. He works for the telephone company. And he has a salary or he gets paid by the hour. But his wage is enough to easily buy a home, easily provide for his children to go to college, you know, easily provide health care, all this stuff. Vacations. I mean, you know, people would get in their big Buick station wagons and go to Disney World. Right. And the father worked and the mother typically worked in the home.

And one thing people don't understand about this, who benefits when the wife goes to work? And I'll be really clear about this, Anthony. I'm not saying that women should stay home. I'm not saying that. Everyone should do what's in their best interest. For a lot of women, that is having a career and having a job. Of course, I have no problem with that. But what I'm saying is, more broadly speaking, looking at culture, looking at our economy, who wins when the woman goes to work?

And the answer is the government wins. The government wins because it makes the woman a taxpayer. It makes the woman far more dependent on government services. If you're looking to understand what has gone wrong in the black community with black families, look no further than the welfare state. the the women don't need the men anymore because they can their their husband is the government so all these things all this destruction of our culture and our economy has been very good for one group in our society and that's the government it's been very bad for people and i i think that that is just more and more evident to people now especially post-covid when people see that the

price of eggs go up you know sixfold they're like what is going on and um i think the other big thing is, most Americans don't really realize how badly they've been lied to about social security. And when the truth of that comes out in 2029, there's going to be very big ramifications. Most people actually believe that they have an account, that their money has been invested, that it's their money. They don't know. It's just a tax.

It was never anything but a tax, and all the money's been spent. Do you think that it's a Ponzi scheme at this point? Oh, it was from the very beginning. Yeah. Now, one of the things that you wrote that I'd never thought about this before, and it made me question some of the assumptions that I had before I read your book, is the debasement of the dollar and the fact that I struggle to get some of our employees, particularly young men, to come to the office five days a week to work a number of hours that we think are necessary, right? to do the things that we think are necessary. I think every single person I know who runs a business, whether they are, I call it kind of the boomer mentality of like, oh, the next generation, they don't work hard, or it is young people who run businesses who are saying, I literally cannot

get X, Y, Z people inside of my organization to do the things I need them to do. You tie that back to the debasement of the dollar. Explain this. Of course. Yeah. Well, if you look at what the real average wage was, and I'm sorry, I don't have the numbers off the top of my head. If you look at the real average wage in 1971, and you divide that by the cost of an F-150. Why the F-150? Well, the F-150 is the most popular passenger vehicle in the United States, and it has been for the last 50 years. And it's a manufactured product that incorporates everything that goes into our economy, right? You've got labor, you've got capital, you've got technology, you've got marketing, you've got distribution. It's a great measure, basic measure

of a simple, well-known good in the economy. And it's something that most young men at some point in their lives are going to buy. It's the most commonly owned passenger vehicle in the United States. So how long in 1971 did you have to work at the average pay to buy an F-150? And the answer is about three months, okay?

Now it's 18 months. So what happened? Is Ford gouging everybody, right? Is that what's going on? No. What happened? Our currency was debauched, and therefore, the real value of your wages has been debauched, and that's why people are not dedicated to their jobs anymore. If you told those employees, I'll pay you three times as much if you come to work every day, what would they say?

Yeah, they'd probably show up. Exactly, and that's what's happened. So, the real value of your wages have fallen by about 75% over the last 50 years, and as a result, people are simply making wise economic choices. One of the things we discovered- That part right there, I think, is the part that made me question some of the assumptions I had. And frankly, it may change the way that I manage some of our companies, right? You make the argument that actually the individual, let's just take a 25-year-old male who says, you know what? I know that my grandfather or my father, he used to go to work five days a week. He'd leave the house at 7 a.m. He'd come home at 7 p.m. And he got paid what he got paid, and he built a life that I was able to enjoy growing up. Now, I'm not going to the office five days a week. I'm going three days a week. I'm going Tuesday, Wednesday, Thursday.

And on Monday and Friday, you're lucky if I get a little bit of work out of me. But you still got to pay me. And actually, you need to pay me more. You're claiming that he's a rational economic actor. He is. You're pretending to pay him and he's pretending to work. That's exactly what's going on. And the thing we found, I had a large group of employees at MarketWise.

And what we found is when we went to the COVID policy of no one had to come to the office, how many people got second jobs? Probably a lot. Yeah. Yep. They were mailing it in and then they were building a second income stream. I don't blame them. They had to survive. And now how much of that, so some people will hear that and say, well, why don't business owners just pay them more money? Yeah, because we can't. Because the entire productivity economy has fallen apart. We are paying as much as we possibly can because we have to earn a return on our capital too. And so the breakdown basically comes from,

okay, these people are feeling like as a rational economic actor, if I go to work, I am being paid less. Now, you know, what's interesting is my father-in-law grew up in Bulgaria and he lived through two hyperinflation events. And one of the first stories he told me as he, you know, as him and I were getting to know each other years ago is that during one of the hyperinflationary events, he was sitting there one day and he started to do the math and he realized he was being paid essentially the equivalent of about 30 cents in US dollars. Well, I go to work. So he stopped going to work.

Yeah. But you know what the reaction was from all of his colleagues and coworkers? You're not loyal. You're not loyal. Yeah. What do you mean you're going to stop working? They looked down on him for not coming to work, right? And his point was he was being a rational economic actor and saying, I'm coming to work, but I'm not getting paid.

Theirs was more of a social, like, you're supposed to go to work. And so he told me that story. I'd kind of memory hold it, frankly, right? And then when I was reading what you were writing, I said, oh, my God, it's the same thing. Of course it is. Anthony, I've been telling people for 20 years, if you use their money, you will be their slave. It's that simple. They're not using money.

They're using currency, and they print it. It's not hard to get your head around that. It's just not. And so what are they going to do with that power? They're going to abuse it until they collapse the system. And the system is very, very close to collapse, much closer than people realize. And people don't realize it because they think, oh, you know, I got a raise last year. Oh, the stock market went up.

Yes, all those things are denominated in dollars. I mean, look, I've been talking for a long time. If you go back to 1971, you denominate the stock market in gold, it's basically flat to down. If you go to 2000 to now, it's definitely down, right? And I think that using gold just as 5,000 years plus of human history there, it is definitely true that these assets are not doing as well if they are not priced in dollars. At the same time, if you look, one of the things I love to argue with what I'll call traditionalists from the finance system is they'll say, well, stock market delivers 8% returns. I said, well, how much of that is inflation? And they'll sit there and they'll

tell you, you know, inflation has been 2% or whatever. I say, okay, well, in the last couple of years, what has the return been? It's been much more than 8%. Well, has inflation ticked up? Of course, right? And so from that standpoint, you know, there's a very good question as to if you are an equity investor, you actually are not benefiting whatsoever from productive assets. Well, okay. So no surprise, the same people who do all the counterfeiting are the same people who measure inflation. So what do you think they're going to say about it? So what do you think inflation really is? And your experience and your lived experience, how much on average has inflation gone up the last five years? Yeah. I think take out the last 12 months

with all of the AI robotics and deflation, we can talk about all that. But I would say that inflation is probably somewhere in the like 5% to 7% range on an annual basis. So there's an economist who actually twice a year goes out and measures 150 items and their standard items like airfare on Delta from New York to LA, a pound of ground beef, dozen eggs, goes out and measures the actual prices twice a year of 150 items. And inflation for the last decade on average in American cities has been 11%. Wow. Yeah. 11% for the last decade. 11%, yeah.

And obviously, if the government is saying it's 2%, but it's really 11, you get this massive bifurcation. Now, what I find maybe most interesting is you've made the point that what people are being told may be different than what they feel. And the reason why that's fascinating to me is because Scott Besson, when he became the Treasury Secretary, he sat down with Chamath Palapatiya and David Friedberg, and they did an interview. And he has a pretty big interview for these guys with the treasury secretary. And at one point, Chamath asks Scott, he says, do you believe the economic data? And Besson says, without thinking, no. And then very quickly starts to massage the answer and professionalize it. Yeah. Now, in his he's way too smart to believe any of that. Well, in his massaging of the answer and kind of, you know, maybe gift wrapping of it, he basically makes the argument that, look, when the data was telling me one thing, but I would go and I would talk to people, they would tell me something else. And we have to listen to what people are saying, sometimes more than when we look at the data. If you're in the financial markets, you do. But if you're if you're if you're in the government, you don't have to. Well, Jerome Powell is now infamous. I mean, we for months talked about back and I think it was in 2020 or 2021. He was asked, you know, do you think that inflation is hurting the affordability or, you know, whatever the question was. And he literally his response was no one has come to my office and told me that. No, geez.

Yeah. Right. You know, first of all, and then we would pull up a picture of his office and say, you know, this is where his office is. Good luck finding it. Right. So let me make another point for people about this. If you know that the real underlying rate of inflation in US cities is between 8% and 12% a year, and you know that you can borrow large amounts of money for 5%, what's the rational economic actor do? What do you think? The answer is you borrow as much money as you can, and you buy the assets that are inflating. And that has enabled a lot of people to get very, very, very wealthy. But the average American doesn't have any idea how to do that. And I've been doing it, and I have made a fortune.

But I actually think it's deeply unfair, and I don't want that kind of economic system. I don't want a world where the speculator wins, and the hardworking, middle-class American gets destroyed. There's no future in that society, for me or for anyone else. and there's a whole lot of people that have made a whole lot of money and now live in Switzerland or live in Singapore. And they didn't leave America because they hate America. They left America because they hate what America is becoming. We're losing 7,000 citizens a year now. And these are not poor people who are leaving. These are the very wealthiest Americans who are leaving. We are approaching a crisis. And unfortunately, by the time it comes, all the

media will say, no one could have ever seen this coming. When in fact, everyone I know in finance France understood the housing bubble in 2005 and 2006. Everyone I knew, it was obvious. Media says that no one could have seen it coming, right? And we are approaching a crisis that is the most obvious crisis we've had in America since 1971, and everyone should see it coming, and no one does. Before we talk about how to invest through this crisis, let's talk about, is there an off-ramp? Is there some way to put the genie back in the bottle or to stop the crisis from actually occurring? Of course, but have you ever seen a politician do that? Well, what do you think they would have to do? They always do the very worst thing. You can count on it. So, I mean, think about it.

When inflation toked up in 2020, what did Joe Biden do? He passed the, what was it called? The name of that, the coffee-esque name of that bill. George Orwell named the bill for us. It was the anti-inflation bill or something like that, wasn't it? Yeah, yeah, yeah. And what did it do? It created more inflation.

So, no, I have no, unfortunately, this is the easiest bet that you can ever make. If you just bet the government will do the wrong thing, you're going to win every single time. So what we need to do is stuff that is politically absolutely unacceptable. We need to cut government spending in half. We need to lower taxes. We need to get regulation out of the way of the schools and the police forces so that people can make their cities livable again and so that public education can work again. Those are all things that are absolute must-dos, and they're not going to happen, unfortunately. Absolutely. Now, when you say cut government spending, obviously, President Trump ran as this is one of the key components of his campaign. Elon Musk, who is probably the best in the world, I think people would or at least one of the best at cutting costs. Remember, they're going to cut a trillion dollars in spending it. Well, and here's the part. I was somebody who was very bullish and optimistic on their ability to do it, mainly because they were going to take Elon. He was going to go in and do the things that no one else was going to do. Right. That was kind of the pitch. That was the promise of it.

And we saw that in the beginning. I mean, they were literally inside of buildings and the politicians were at the door, like banging on the doors. Right. As I recall, he got a black eye and got kicked out and no spending got cut. So describe a little as to is that because there is no ability to do this? Like, do you think it was the Trump administration saying, hey, we actually don't want to cut the spending?

Or do you think there's some big blog? K-bono. K-bono. Who wins with the spending? All the people who have all the power. Who loses with the spending? The regular American. So what's going to keep happening? They're going to do what they always do. They're going to keep spending until they can't spend anymore. And then they're going to find a way to blame it on speculators like Nixon did in 1971. He said that the break with gold was temporary. He said it three times. And he said that it was because of speculators. Talk about Loudoun County. I think this is something people really don't understand. Loudoun County, might as well just call it DC, right? It is the wealthiest county in America. Describe, how does that happen? Well, you know how it happens. All these people have all these side deals. They have all this money that gets sent to them. Government procurement process is absurd. Yeah. And by the way, should it be that way? In 1930, which is the year that Warren Buffett was born, the federal government total spend was 3% of GDP. now federal government's toll spend is 35 of gdp it's not making our lives better it's making all the people who live around the beltway lives better um it's it's it's not the way we should organize our society or our economy and unfortunately it it because there is no market mechanism there is no self-correcting mechanism it's it's it's going to cause a really big crisis

And it's going to arrive right on schedule. Yeah. Well, the Cantillon effect of just like whoever's closest to the spigot, they get paid. The Cantillon effect, yeah. And what we're essentially seeing is those people in Loudoun County, they are the ones who run the NGOs. They're the ones who run the defense contractors. They're the ones who are doing all the kind of receiving the money from the procurement

process of the government. And so if somebody says, hey, I've got $10 million, $10 billion that I now have for a program, where's that money go? It goes to the people they know, they like. they see around town, et cetera. And that money somehow never actually makes its way to the end impact zone. It gets siphoned off along the way. We get the money last. Think about this. The fiscal deficit this year will be 6% to 7% of GDP. We have full employment and we're relatively at peace. This is unprecedented in American history. And where does all that money

go. It goes to government contractors. They get the money first. They are able to buy assets and property and investments before the inflation hits. They've got it over on all of us. And they're not going to give up that power. And if you look, look at what happens to anyone who tries to actually control government spend. What just happened to a congressman from Kentucky last week? Thomas Massey. Yeah. He got primaried by his own party because he had the audacity to question whether or not the Trump spending programs were really in the best interest of the country. One of the things that I do think will change sentiment, I hope this does not happen this way, but I could foresee. So there's now essentially two different groups of recipients

from government spending. There's the old guard, which are all of the traditional primes on the defense side, many of the NGOs, et cetera, there is a small but fast growing segment of Silicon Valley that has realized, well, hold on a second here. If the government is going to give out money. I want it. One, I want it. But also two is imagine if we can be more efficient with it and actually produce positive things. Now let's put aside for a second, whether they're going to be successful in actually delivering the thing that they're saying. But I do think that the same way, you know, the average American hated wall street over the last, I don't know, 40 years or So at different points, there is quite a bit of backlash now pointed towards Silicon Valley

and big technology, et cetera. And so if big technology starts to become the recipient of government funds, you could see easily people starting to yell and scream about this program. I mean, I think that in many ways, what, for example, SpaceX has done has been great because it has shown the absolute failure that is NASA. No surprise. You know, government can't handle the mail. Let's not put them in charge of space.

So the idea that you're going to go from a cost-plus contract to a competitive bid contract for the government primes is a wonderful thing that would make our military much better and much more efficient. That would be great. The problem with that, though, is now that it gets much more efficient, what will the government do? It won't spend less. It will spend more. Oh, this is wonderful. We have now we can now our dollars will go further. So we should invest more in these in these kinds of programs. So, yeah, I'm unfortunately, you know, government spending does not ever stop and it won't stop until they have wrecked the economy. And the reality is you can plot that out on a chart. It's not hard to see. Now, we're going to talk in a minute about how somebody watching or listening to this should navigate or could navigate this crisis ahead from their investment portfolio. But before we do that, I want to talk about Warren Buffett. Warren Buffett is widely believed to be the best investor of our lifetime. He's built Berkshire into this massive trillion dollar company.

I think most people look at him as, you know, he's smart, he's hardworking, he's been very successful. But you recently wrote a book that highlights maybe Warren Buffett has significantly struggled to navigate the last 20 years or so of this entire thing. Everything we're talking about from the debasement of the dollar, the breakdown of society, the social compact, etc. Your argument is that Buffett is actually not winning in this environment. Can you just break that down? Well, I mean, it's just a fact. Berkshire used to outperform the S&P 500 by 11 points a year, not basis points, percentage points. That's incredible. And it was a great thing for investors because you didn't have to know anything about stocks. You could just buy Berkshire and you're going to beat the market every year and you don't have to pay for the manager. What a deal. Unfortunately, starting in around 2000, Buffett converted what was an insurance company with an equity portfolio into a conglomerate. And in the process, his capital allocation became woefully less efficient. But also, it's also true, he turned 70 years old in 2000. So I'm not saying that the 80-year-old Buffett isn't a brilliant person, certainly smarter than me.

But 80-year-old Buffett cannot hold a candle to 40-year-old Buffett. And I think that was a really big problem at Berkshire. There was no institutional control of the board whatsoever. And as a result, Buffett made a lot of terrible decisions. And I actually wrote a whole book about it called Warren's Mistakes, where I show you what would have happened if instead of, say, buying Dairy Queen and taking it private, he instead just left the $1.6 billion he had invested in McDonald's there. And the delta on that one transaction is $45 billion over the last 25 years.

And then the biggest mistake he made clearly was buying the railroad. And the worst thing he did was he bought it with Berkshire stock. I mean, this is a disaster. You take the highest quality equity that exists in the world and you exchange it for the equity of a railroad that maybe, maybe makes 1% a year on its asset value. Disaster, disaster. So anyways- What would his argument be?

So if you sat down and said, you know, Mr. Buffett, I think you're very smart, but you made this mistake. Yeah. This was a horrible- I've got a video. You can go see what he would say. Okay. Because one of my partners, Erez Kalir, his daughter drew the lottery ticket to ask a question at the 2018 Berkshire meeting.

Her name is Daphne Kalir, and if you go on YouTube and you Google Berkshire 2018 Daphne Kalir, you can see her ask this question. She gets up and she says, Berkshire Hathaway made its reputation and served investors well for 50 years by buying America's very highest quality publicly traded companies. But lately, over the last 20 years or so, you've been buying whole companies that are of much lower quality. Why are you doing that? And what Munger and Buffett said is, well, second best is still pretty good. That was their answer. That was their answer. And what he said literally is, we can't buy enough good companies at a good price, so we have to go to this lower quality business.

Do you agree with that? Of course not. It's ridiculous. Who did Buffett buy out of the GFC? Everything in the world was on sale. You could buy Amazon for $40. They knew what Google was. You could buy Google for nothing out of the GFC.

What did they buy? They bought IBM and Bank of America. Makes no sense. They bought our railroad. Makes no sense. They just made very bad choices. And luckily, they made one really good choice, which is in 2016, they bought Apple. That's the kind of thing that Berkshire should buy.

Berkshire should be the world's best insurance company invested in the very best companies in the world. And you see this starting to happen. They've established a big position in Google. But they've also really lost the plot when it comes to their strategy. What is Berkshire's strategy? It's use our insurance float to buy the very best companies in the world and hold them.

So do you ever see them selling American Express? No. Do they sell Coca-Cola? No. So why did they sell Apple? Two years ago, they started selling Apple at about $150 a share. Today, it's almost $300 a share. Why?

There was no sign that its moat was declining. There was no sign that it was investing too heavily in AI. Apple has been a fantastic business. There is no reason to sell it. Did it get too big? That's what they would tell you. But Coca-Cola at one point was almost half of Berkshire. Who cares?

It's a great business. It's a good thing. not a bad thing. So anyways, I'm very hopeful. And I wrote this book, not because I hate Buffett. I love him. He's an inspiration to me. I wrote this book because I want to see Berkshire restructured. Berkshire needs to spin off the power company. It needs to spin off the railroad and it needs to spin off its wild sort of motley collection of very average businesses like Borsheim's, the jewelry company and Mrs. B's Furniture Mart. These things are not great businesses. You want to talk about Delta. Buffett's so famous in 1985 for buying Mrs.

B's Nebraska Furniture Mart for $80 million, something like that. Imagine if you put $80 million into Home Depot. Home Depot is compounded at 23% a year. The Delta would be hundreds of billions of dollars. That's what I want to see Berkshire do again. Spend off most of the wholly owned businesses, focus on insurance. It should buy all of Chubb. It's been adding to Chubb. It should buy all of Chubb, grow the float, and then buy the very best publicly traded companies in the world. That's it. The number one thing you gain as an investor when you invest in a publicly traded company instead of building a conglomerate or taking a company private is you don't have to manage it. That's a really important thing. Buffett can do capital allocation for an insurance

company, he can't possibly manage 78 businesses. And you saw a management failure throughout Berkshire over the last 20 years. And you think that's specifically because Berkshire owned them? I know it's specifically because Berkshire owned it. So which is the very worst railroad in the United States? Berkshires. Which is the very worst auto insurance company in the United States? Berkshires. Which is the very worst utility in the United States? Berkshires. What do these things all have in common. It's not industry, it's ownership. They're very, very poorly managed, and they have been for decades. And that's because Warren is obviously not a manager. Now, when you think through this, how much of their struggles are bad decision-making,

misjudgment, whatever you want to call it, versus, no, there's just a debasement of the dollar, and they have not kind of- I don't think it has anything to do with the debasement of the dollar. This is a very simple to understand structural mismatch. At an insurance company, a property in couch of the insurance company has to be equity funded. The regulators demand it and so does the business model. You need a huge equity cushion so that when there is a cat, when there is a catastrophe, when there is a bad underwriting year, you can survive.

So you have to fund an insurance company with equity. For things like a utility or a railroad or a retailer, you want to fund all those businesses with debt capital, not equity capital, because the debt capital is much cheaper and the pricing in those businesses is really very, very important. And so you cannot, since they've owned BNSF, the railroad, they have had to invest $22 billion above depreciation in that railroad. You cannot do that with equity capital. You're never going to make any money. why do you think they won't sell it? I think they won't sell it because of Buffett. And that sounds obvious, but let me explain. Buffett is a collector. He has been collecting things since he was four years old, starting with bottle tops, golf balls. And he also, of course, collects people.

And so he's a collector and no one is going to break his collection before he dies. So I don't think that Berkshire will be restructured until he dies. But let me just finish one last thing about the structure of Berkshire. The insurance company is the best in the world, but it needs to be funded with equity. All those operating businesses need to be funded with debt. That is a mismatch to have in the same parent company. Just a terrible idea. And eventually, it will have to be restructured because of that basic fact. Okay. Now, let's talk about the average person who is saying, okay, I understand the debasement of the dollar. I understand 2029 is this kind of magic year of all these things coming together. I understand that there's been

a ripping apart of American society, the social compact, et cetera. I am, let's just say a middle-aged person who is, I don't know, let's actually say between the ages of 35 and 50. So I've got a couple of decades in front of me. Maybe I've got a young family and I need to take whatever capital I have and whatever capital I'm going to earn in the coming years. And I got to navigate this. And I got a lot of people telling me a lot of different things. I got some people who were telling me you need to have a lot of cash and you should be saving. I got other people who were telling me just buy the S&P 500 and relax. I've got other people telling me about Bitcoin or AI or space or whatever cool industry. You point to this idea of a permanent portfolio. And in the

permanent portfolio, there are the general idea, if I understand it correctly, is there are four different allocations in the traditional permanent portfolio, and you put 25% of your money in each one of them. And those are stocks, long-dated treasuries, gold, and cash. And those four buckets have done very well if you've done 25% in each one of them over time, through cycles, et cetera. Talk a little bit maybe about the traditional permanent portfolio, and then we'll talk about how you've upgraded this or kind of innovated on it. So, my mentor taught me this back in the mid-1990s. Harry Brown was a libertarian philosopher and he was also twice a presidential candidate

for the Libertarian Party. And it just occurred to him, being an economist for 40 years, that the economy would go through seasons. And when there's a growth period, you want to own stocks. But there's a downside to growth in a paper economy, which is inflation. So you want to have gold be a big component of your portfolio so that you can convert that growth into real money. And then, of course, there's always winter.

Winter is coming. Sooner or later, there'll be a recession. Sooner or later, the economy will slow for a period of time. And in those seasons, you really want to have exposure to long-duration fixed income bonds. And then, of course, you need optionality. You need to have a buffer to all the volatility, which is why you have cash in the portfolio. So if every year you put 25% of your money into stocks, 25% of your money into bonds, 25% of your money into gold, and 25% of your money into cash, you'll weather any season with a plum. And if you do that, you find that you make about 7% a year, which is an equity-like return.

It's not the full 8% that you would supposedly get in equities. But you have much less volatility. In fact, volatility is less than half of the market. So if you think about this, if you were just to leverage that a little bit, you could get better than market returns at the same amount of volatility. And that's the real interesting application of a permanent portfolio for people. And that is exactly how Ray Dalio built the largest hedge fund in the world. He took Harry's idea, he tweaked it a little bit, he actually made it more focused on fixed

income, and it's done very, very well for people. That's the all-weather fund at Bridgewater. What I did was I took a look at this and I thought, well, unfortunately, Harry passed away in 06, so he never saw Bitcoin. And I also don't think he really could even really imagine how dire the US Treasury's financial position would become. So I personally do not believe that long-dated fixed income is investable right now. It's just, how are you going to make money in long-dated fixed income when even riskier

bonds are only yielding 10% and inflation, as I count it, is running 12. It's just a really bad outcome. So I don't think the long data fix is investable right now. And of course, gold has been a wonderful hedge to all of this financial mayhem. And then there's cash. So what I said is, let's bring this into the modern world. Instead of owning bonds, let's own property and casualty insurance companies, because there you have an underwriting unit, which is going to hopefully make you some money, but you also have the ability to actively manage the yield curve. And a great example of that is W.R. Berkeley. In 2020, when the Fed took rates all the way under 1%, W.R. Berkeley moved their entire bond portfolio from an average

duration of about five years all the way down to an average duration of 90 days. They said, if you're not going to pay us to take the inflation risk, we're not going to own that paper. And if you look at how W.R. Berkeley stock performed in 2020 and 2021 and 2022, as all that materialized, they are by far the best performing property and casualty insurance company. They did great for investors because they managed the risk in the bond market. So your argument is instead of just direct bond exposure, if you supplement that or replace that with these property and casualty insurance, you're still getting underlying bond exposure. You're getting the active management of bond exposure, but you're also getting the premium kind of cash flow component. So if you own WR Berkeley, it's a $30 billion market cap company. Their bond portfolio is $35 billion.

What do you own? You own a pile of bonds. If you buy Chubb, what do you own? You own a pile of bonds. If you own Travelers, what do you own? You own a pile of bonds. You own a pile of bonds with an underwriting group on top. And hopefully it makes a little bit of money on underwriting and then owns a big bond portfolio.

So you're owning bonds anyways, but you're owning them in a way that's actively managed with underwriting profits in addition. Okay? Now, I also don't think you should just buy stocks today, because when Harry in the 1970s was building out this model, the S&P 500 was broadly diversified. Today, there's like, what, four companies that make up 40% of the index? If you buy the S&P 500, you're really buying a pretty intense tech portfolio. And that might be great this year, but sooner or later, there's going to be a correction, and that might give you a lot more volatility than you were expecting. So instead, I came up with a different strategy for investing in stocks, which is that rather

than focus on the biggest companies or the tech companies, instead, what I want to do is I want to cross-section the economy where I own the oldest companies. And now, why the oldest companies? Well, because they have proven through many cycles that they're resilient. So this is, I call this Lindy investing. And of course, there's a whole theory behind it. So I don't want to just buy the S&P 500. I want to buy Lindy stocks.

I don't want to buy bonds. I want to buy insurance companies. And when it comes to gold- Just real quick before you continue, the Lindy stocks themselves, describe a little bit as to the oldest companies. What are you looking for? So who's the oldest semiconductor company in the United States? It's Texas Instruments.

They started in 1930. All right. Who's the oldest pharmaceutical company in the United States? It's Merck. Who's the oldest oil and gas royalty firm? Texas Pacific Land. So I go back and I just find the oldest stocks and we invest in 20 of those names. So we have broadly diversified, but we're selecting based on not just quality, but also

duration. And I think that's going to give me a return that beats the S&P 500, and it's also less volatile. Makes sense. Okay, gold? And then gold, the gold bucket. So I reallocate every year 200% to gold. But again, when Harry built this originally, the only way to really invest in gold was

to buy bullion. You don't really want to ever buy a gold mine, believe it or not, because gold mining is a very, very tough business, very low margin, very capital intensive. That all changed when Franco Nevada came around in the early 1980s. They pioneered the royalty model in gold mining. So I love gold royalty stocks. It's been one of my highest returns in my career. And Franco Nevada, of course, is the granddaddy of them and the very best managed. So I'm going to own bullion, I'm going to own Franco Nevada, and I'm going to own Bitcoin. I'm going to own three forms of sound currency, which gives me a little bit more diversification, a little less volatility,

but it's basically just sound money in three different forms. And then of course, we're going to own cash. And Harry, his idea was you'd always have 25% in cash. My idea is that you should vary that based on marketing conditions. On March 24th of 2020, I went on, I hosted a webinar for all the customers of MarketWise, and I was pounding the table on buying stocks. And I said, this is the very best buying opportunity I've ever seen in my life. Stocks had fallen 33% in 30 days. I'm buying. And so at that time, that's when you should use your cash. And so in my opinion, your cash should be somewhere between 25% and 5%, depending upon market conditions. Right now, stocks are very, very expensive and interest rates are rising. So today I would have

25% in cash waiting for a buying opportunity to emerge. So basically when the market is drawing down aggressively, if you've been sitting with 25% cash, you should be deploying the cash and drawing your cash down from 25 to 5%. And then obviously as stocks or other assets start to rise, you're basically taking some of those profits and restoring the 25% of cash so that if there's some sort of buying opportunity in the future, you can go and deploy that money. That's right. And what I would also recommend as a slight departure is I really believe very much in letting my winners run. So when you go to rebalance every year, you want to be careful about how you do that. You want to let your best stocks grow as a portion of your portfolio. And so that's my judgment.

So what do you do? You sell the losers? So I would rebalance by selling the losers, yes. Got it. And you mentioned in the gold bucket, gold streaming and Bitcoin as two other components. Describe a little bit in terms of the relationship between gold and Bitcoin and how you think of those two assets. Oh, that's a great question, Anthony. I don't think many people know how to price Bitcoin, and I know most people don't know how to price gold. So I got taught how to price gold by a very famous Austrian economist, Kurt Rischerbascher. I met Kurt in the late 1990s, and he was the last living member of what's called the Austrian School of Economics. So the von Mies,

the Hayek guys, he was part of that original crew, obviously a German fellow. And he had a beautiful, beautiful gold pricing model that he taught me. And basically, the way gold price works is it's directly related to the total amount of global credit. If you understand that gold is money, then you know that underneath every loan, there has to be collateral, there has to be money. And so as global credit grows, the ounces of gold are not going to grow that fast. So the price of each ounce has to grow in order to be the foundation of the credit system. And so there is a very good algorithm that can tell me what the price of gold will be within a range over the next three years because that credit has already been created and the gold

price will have to increase to match the reserves required by the credit that's been created. Most people look at the price of gold as the M2 money supply and gold. You're saying it's M2 plus all global credit as well. It's global credit. It actually isn't correlated to M2. uh bitcoin is different bitcoin is directly correlated to banking system liquidity so m2 and other forms of money and that is why bitcoin will react faster to monetary intervention so what happened at the bottom the covid bottom bitcoin just went absolutely straight up it took gold a little while about 18 months before it began to react to it because it took a while to restart the credit system. So you have gold that's very correlated to credit, and you have

Bitcoin that's very correlated to measures of monetary totals. Why do you think that they're correlated to different things? I think most people would say, oh, Bitcoin is just digital gold. Shouldn't they both be correlated to global credit? That is a fantastic question. And I really, I don't know the answer to it, but I have a theory. And my theory is that the banking system, the ultimate monetary standard is still gold. So what are all the central banks buying in the last four years? They're all buying gold. I'm not saying there's no central bank in the world that doesn't buy Bitcoin.

I'm just saying that clearly the global financial system still is anchored to gold. And so therefore, it is the ultimate guarantee for credit. Whereas Bitcoin has largely become a speculative asset that's very correlated to money. you need at around 8.91% interest, 9.9% APR, but you keep 100% of the upside. Now I know what you're thinking. Is my collateral safe? Figure uses MPC custody. It means your Bitcoin stays in its own segregated wallet. It isn't being rehypothecated or sat on some shaky exchange susceptible to rug pulls or other shadiness. Plus, they've got optional liquidation protection for when the market gets, well, like the Bitcoin market gets. So if you want to stop selling

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That's a key differentiator. Archpublic is an action speak louder than words type company. My type of people. They give every user access to their platform absolutely free. You get to test it, you run the strategies, and then you watch the performance in real time and only put your real money to work when you are 100% comfortable. That's it. No pressure, no hidden fees, and no gotchas. Go to archpublic.com right now to get started for free. Once you see how you can accumulate and manage crypto this way, you'll never trade the same again. Archpublic.com. Go check it out today. Now, when you think about Bitcoin in particular, it's been very interesting for a decade. Bitcoin significantly outperformed gold stocks, pretty much anything. Over the last

last five years, there are certain points depending on what timeline you choose where gold has outperformed Bitcoin, even stocks have outperformed Bitcoin. How do you look at Bitcoin today in the kind of buffet of assets that you could put into your portfolio? Is it something you say, look, you got to have it, but just keep it in a smaller percentage? Or do you think that maybe it's changed the way that people look at Bitcoin given its lack of performance compared to some of these other assets in the last five years? I think Bitcoin has matured as an asset class. I think it's going to be less volatile. And I think also people are going to understand it better and see what it correlates to so that there'll be a more efficient market for Bitcoin.

The reason why gold has outperformed Bitcoin over the, I would say the last three years is because there have been, there was until very recently, until last December, there was a concentrated effort to reduce inflation by reducing the growth in monetary aggregates. But there was still booming credit growth, absolutely booming credit growth. So it makes sense that gold would be outperforming over the last several years. That has all changed. People don't pay any attention to it, but the central bank is buying bonds again, resumed QE, if you will, in December. And it's very obvious to me that those purchases of the Fed's purchases of our government's bonds is going to have to increase dramatically over time

in order for them to achieve their financing needs at rates that won't strangle the economy. Mm-hmm. Now, when you look at gold, I think that you see, based on this global credit model, it going somewhere near $8,000 by 2030-ish or so? Yeah. So right now, gold is actually quite a bit above my model. My model for gold right now says prices should be somewhere between $3,500 and $4,000 an ounce. It's going to $8,000 an ounce over the next three years based on credit that's already been created. So that's already baked in. And the reason why gold would be above my model is because a lot of people, I'm not the only person in the world that understands the Austrian pricing model for gold. So people can see it's

going much higher. And so it's normal that it would be above the model at this current time in the cycle. Does that worry you that there could be some sort of correction to bring it back within the models? I've been buying gold every year since 2001 and I've never sold a single ounce. So no, it doesn't bother me. I'm looking forward to it. I would put half my portfolio in gold if I could get it at $3,500 an ounce. And then what about Bitcoin? Do you have any sort of price understanding or way to measure what Bitcoin actually should be worth in the future? Yeah. My Bitcoin model has average price of Bitcoin today at 134,000. So according to my model, Bitcoin is virtually as... The mispricing today in Bitcoin is as large as I've ever seen

before in the model. And I think that's because the tech stocks have been so strong that all of the risk capital has fled into NVIDIA and in the memory stocks. I mean, the performances of these stocks have really been historic. And if you look at hedge fund allocations and things like that, all of the fast money has gone into tech stocks and it had to come out of somewhere. So I think we're seeing a great opportunity today in Bitcoin. Certainly the best opportunity I've seen in Bitcoin in a decade. Yeah, it's pretty interesting. Another thing you talk about in your book, which I found fascinating is Timberland and, and, uh, what exactly, you know, the ability to kind of navigate these, um, cycles and crises just describe maybe why did you get interested

in this? And then how has this performed over the last century or so? I got interested in it because a business partner of mine, um, Steve Sugarwood, uh, figured out at about the same time Jeremy Grantham did, they, they did it separately, but they both arrived at the conclusions at roughly the same time, which is the late 90s, early 2000s, that as an asset class, timber had performed as well as equity, but in a way that was completely uncorrelated to stocks. And so if you understand the Markowitz theory about portfolio management, the ideal thing you can have is a bunch of assets that are fundamentally uncorrelated. So that if one goes up, The other one can go down and vice versa.

And what that does is it reduces your portfolio volatility so that the portfolio volatility is actually less than the individual components. And it's a really clever mathematical proof. He won the Nobel Prize for it in 1990. It's really an interesting thing that every investor should understand. And anyways, timber makes a wonderful diversification asset like gold does. And unfortunately, timber isn't correlated to gold either. So if you're building a permanent portfolio and you say to yourself, well, geez, gold's had a heck of a run and it's above the model price.

Is there something I could buy instead for now? Timber would be my second best choice. And the idea is basically that not only do you own the underlying land, you've got the trees. Those trees continue to grow, but you're not putting any money into it. Um, and then as those are, people say that money doesn't grow on trees, but that's only because they've never owned timber. Now, a huge part of this, I think is okay. So I hear, uh, I should own timber.

I get on, you know, I don't know, Zillow or, uh, any, uh, loop net or, you know, wherever. And I say, uh, let me find a hundred acres of land somewhere in the United States. It's got timber on it. Yeah. I'm already out. That, that seems pretty hard. Well, for a lot of wealthy families, it's not hard at all. It's a very sensible thing to do.

So there's a lot of different private investment groups that can buy and manage timber for you. For the investing public, though, it's very simple. Weyerhaeuser is a 100-year-old timber company. It owns 11 million acres of timber in the United States. It's by far the largest timber firm. And right now it's trading at a discount to its replacement cost, and it's yielding more than 3%. The key to being a successful timber investor is that the return on this asset is well known. a year. So you can map out what your return is going to be. If you're buying them at a discount

to replacement costs, then your effectual yield could be 8%, 9%, depending upon the price you pay. And then the most important thing is being able to effectively use leverage, especially when we have a paper currency system. So if you could get a 4.5% mortgage for 20 years on 10,000 acres of timber, you're going to make a heck of a lot of money. And that is essentially what Weyerhaeuser does for you in a public form. And it's how all the private timber groups work as well. So I would just, I'd say if you're interested in an asset that will definitely survive the reset, my two top choices would be golden Bitcoin and timber. Now, let's talk about the honeycomb portfolio that you've constructed,

which I think is a pretty unique way to think about investing. Just walk us through what is that? Well, if you study Markowitz, you realize that the most important single number in your portfolio is the pairwise correlation. You want to make sure that the different things in your portfolio are not correlated to each other. And if you can really eliminate pairwise correlation, you can have a portfolio that's very low volatility. And that's very important if you're going to use any kind of leverage. And what I've been saying sort of through the lines here is when you know the dollar is being devalued, you want to short the dollar. The very best way to short the dollar is to borrow against it and invest in high quality productive assets. People do this all the time in their home, right? Most people's down payment is 20%.

Most people carry a mortgage that's 50% loan to value. But when you tell them you should borrow money to buy stocks, they look at you with four eyes because they're like, well, that sounds really dangerous. and it is really dangerous if you don't know how to build a portfolio that has low pairwise correlations. If you can build a portfolio such that it has a volatility that's much less than the stock market, you can responsibly use a small amount of leverage, 20%, 30%. You're not going to have a drawdown that results in a margin call and you can greatly increase your average returns. More importantly, you can hedge the risk that you face from dollar to basement.

So how do you do that? And you do that by building a honeycomb. A honeycomb has something in the center that's utterly non-correlated to financial assets. Whether that's gold or timber, up to you. Some of both is fine too. And then around that, you ask yourself a fundamental mathematical question, which is how many circles can fit into a plane? And I know I just lost the whole audience.

The idea is there's an area of economic space in the United States. and that area of economic space are all of the different companies that are capable of earning an above average return on equity. And interestingly, there's some industries that aren't. So you're never going to find a gold mining company that has an above average return on equity. It's too hard of a business. You're never going to find an airline that has an above average return on equity. So we exclude all those. And S&P Standard & Poor's divides the US economy into 24 separate industry groups. So we throw out all the industry groups where there is not a well-established pattern of companies that can produce good results. And if you look

a little bit further, you go, okay, where do all the best companies reside? And so if you know the math behind all this. It's crazy how Pareto wall the stock market is. It's something like 3% of all the companies generate 80% of all the returns. So then I said, okay, well, which companies are those? What are the companies who've done the best over the last 100 years and what industries are they are in? And the top one is Philip Morris. Makes sense. Greatest consumer product company of all time. The second one is Vulcan Materials. How does Vulcan Materials make a lot of money? Don't they own a bunch of gravel? What's that about? And the way they made a lot of bunch of money is gravel is so expensive to transport that they end up with a local monopoly. If you want to

build a road in this county, you got to go through Vulcan Materials because they own all the gravel and you can't order it from a different state or from a different country. It's too heavy. So that's why they've had such a great business. So anyways, I went looking for all this kind of stuff. And what I found was there's about 10 industry groups that have power law winning companies. And then I just selected six of them because you can only have a maximum of seven circles in an existing area, seven equally sized circles in a plane. It's a famous geometric proof. And what I figured is that that would allow me to capture 100% of all of the available return equity that is non-correlated in the stock market. So then I went and made sure that each of these

industry groups are non-correlated. And what I built is a portfolio that only has a maximum of 14 positions. So it's two stocks from each of the industry groups so that you don't have as much single stock risk. And they're all non-correlated. So the pairwise correlation is less than 0.25, which is not very correlated. And it's, of course, focused all in a circle around gold and or timber. Those portfolios have performed extremely well with extremely low volatility. You end up with a volatility that's much like a permanent portfolio, only about half as volatile as the stock market, but there is no cash position. That's a pretty incredible structure for people to follow. I think one of the aspects just in reading the book, talking to you over the years

is you think very long-term, but you also think both in terms of the macro, the basement of the dollar and the debt cycles. And you just made the issues that we're facing the fourth turning, but then all the way down to like, why does this company in particular have an advantage, right? What is the, the, the Lindy of this specific company? And is that advantage resilient? Can that, will that, will that advantage still be here in 10 years or in 20 years? And so how do you, when you wake up in the morning, like, how do you think through, am I thinking about that macro? Am I thinking about the micro? Do you do it all at once? What do you check? Yeah. I spent a lot of time on my own portfolio. So I run a portfolio with quite a bit of leverage. And so I'm really

looking to see if my various positions are behaving and the volatility bands that I expect. And I'm following how they're progressing on my thesis for each of those stocks. So just as an example, I have a very large position in Merck, the pharmaceutical company. And everybody thinks that Merck has been, that they're going to patent cliff and that they're going to be out of business. Well, you know, Merck has been managing patent cliffs since 1890. And, you know, I'll take the four and a half percent dividend and one of the highest quality businesses in the world trading at 12 times earnings, you know, all day long. And so I like to just see that I like very low volatility, very high quality equity businesses. And I like to

apply leverage on that so that I can have outstanding returns. And my portfolio has been producing about 80% annual returns now for about five years. 80%. Yeah, annually. Yeah, it's pretty good. It's pretty good. And I'm telling you, I don't buy risky stocks. So I think a lot of people think that to earn really high returns in equity, you have to go buy the high beta, high volatility stocks. And I take a very different approach. And by the way, one reason

my portfolio has done so well is because gold has done so well. So I have a big exposure to gold and that's definitely a big part of it. And you have exposure to Bitcoin too? I do. Yeah. I own Bitcoin. For me, the big winners over the last five years have been Philip Morris, Franklin Nevada, Google. Google. And then gold. And gold. Yeah. And gold's been great. All right. Well, you've got two books out right now. You've got 2029, The End of America, which I spent the weekend reading. It's fantastic. I highly suggest people go and read that. And you also have this book, Warren's Mistakes, which I see people talking about it online already. And I think part of what's fascinating about that book

is you respect him, but are still calling out the mistakes, right? It's kind of a critique of a mentor almost to a degree. Yeah. And honestly, I think that Berkshire Hathaway, Americans need a Berkshire Hathaway. We need a single investment choice that is well run enough that we don't have to think about it anymore. Most people don't want to be professional investors. And for 50 years, all you had to do was buy Berkshire. And I'd like to see Berkshire run that way again. In my opinion, there's no reason why it shouldn't be. Yeah. Makes sense. Where else can we send people to find some of your writing? I'm on Twitter all the time. X now, of course. PorterStansB on Twitter. And I actually, every month I post my personal

portfolios results. I run all my money on interactive brokers and I use their portfolio analyst software. So they're doing all the calculations, not me. And I show you exactly what I did last month and where I'm at year to date. Yeah. It's pretty cool. And then if people want to subscribe to any of the newsletters, where can they go for that? I'd go to portersdailyjournal.com. Porter's Daily Journal. I write a free email every day. And I'm not real hard to find online. But yeah, I'd love to... Anyone who's interested in low volatility, high return portfolios, I always love to chat about portfolio construction. And I'm kind of a math nerd. So if you have any questions about all that, I'm happy to chat.

I think you're doing a great job. Thanks for taking the time to do this. Man, I really appreciate you inviting me. I had a great time.