The Wolf Of All Streets - Michael Kimelman, Author Of Confessions Of A Wall Street Insider on Being at the Epicenter of Covid in the US, Government Irresponsibility, The Mainstream Media's Role And More

Episode Date: March 17, 2020

Michael Kimelman and Scott Melker dive deep into the coronavirus crisis, the role of the government and mainstream media, preparedness vs. panic and how to be ready for what's to come. Both Mike and Scott were sounding the alarm weeks in advance of the virus spreading to the United States. They also discuss Mike's experiences with the judicial and penal, going to jail for a crime he did not commit, and the failures of criminal justice in America. This is an important episode that is not to be missed. --- ROUNDLYX RoundlyX allows you to dollar-cost-average into crypto with our spare change "Roundup" investing tool, manage multiple crypto exchange accounts in one dashboard and access curated digital asset content and services. Visit RoundlyX to learn more about accumulating your favorite digital assets when making everyday purchases. --- VOYAGER This episode is brought to you by Voyager, your new favorite crypto broker. Trade crypto fast and commission-free the easy way. Earn up to 6% interest on top coins with no lockups and no limits. Download the Voyager app and use code “SCOTT25” to get $25 in free Bitcoin when you create your account --- If you enjoyed this conversation, share it with your colleagues & friends, rate, review, and subscribe.This podcast is presented by BlockWorks Group. For exclusive content and events that provide insights into the crypto and blockchain space, visit them at: https://www.blockworksgroup.io

What's up, everybody? This is your host, Scott Melker, and you're listening to the Wolf of All Streets podcast. Every week, I'm talking to your favorite personalities from the worlds of Bitcoin, finance, trading, art, music, sports, politics, and basically anyone else with an interesting story to tell. So sit down, strap in, and get ready, because we're going deep. RoundlyX.com is one of my favorite companies in the entire crypto space. What they do is they take all your small purchases and they round them up to the nearest dollar and invest that money into any of 25 crypto assets of your choice.

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right, free Bitcoin to try out my favorite crypto trading app. Use promo code SCOTT25. This podcast is powered by BlockWorks Group, the only events and podcast production company I trust. For access to the premier digital asset conferences and in-depth podcast content, visit them at blockworksgroup.io. I promise you will not be disappointed. Today's guest has a life story worthy of a movie. A true survivor, this guy is tougher than nails. He went to prison for a crime he didn't commit for almost two years and came out the other side stronger. I can't wait for you guys to hear his story today. I am honored to welcome my friend, Mike Kimmelman to the show. Thank you so much for being here, buddy.

Great. Great to be here. So for some quick context, you are presently at the epicenter of the Corona scare in the United States. You're in Westchester, New York. So let's dive right into that. You've been one of the few people I speak to regularly who predicted that things would get really bad. Tell me your thinking now on the situation. Yeah. And again, I don't bring any incredibly special insight to the equation, as I mentioned. And I wrote a Medium article about a week ago that got some good traction. You know, I'm not an epidemiologist. I'm not a virologist or a doctor.

I have family members who are. But at the same time, I am a person who used to manage money professionally and, you know, ran a hedge fund that had about a $250 million in assets. And what I did for a living was basically analyze disparate pieces of information and try to synthesize that into a cohesive investable thesis. And doing that, especially in markets where you're competing against literally the best in the world in the most complex environment out there, helps you sharpen those types of analytical skills and understanding exponential trends in math and everything else you can bring to this type of analysis. So all I was was sort of a little bit more curious and observed what I was seeing on Twitter. And by virtue of I'm a partner in a blockchain advisory

firm, Charlie Shrem is my partner, and we have a lot of clients in Asia and all across the world. So I was able to get a little bit of a deeper dive maybe the most into what was going on in Asia. And what I was seeing was, you know, absolutely terrifying and like nothing we had seen before. And I think we have this view of China in the West, at least outside of Silicon Valley and some other areas, that it's still this backward country and it's nothing like us. When in reality, from a technological point of view and many other points of view and it's nothing like us, when in reality, from a technological point of view and many other points of view, it's almost equal to us in many ways. You know, China does some amazing things. When this thing broke, they were building hospitals in two days. If you go to

the West, we can't do anything in two days. You know, it took us, what did it take us, 14 or 15 years to rebuild the Freedom Tower in downtown after it got knocked down? China probably would have had that up in six months or less. So, China has a very sophisticated technological understanding, very sophisticated healthcare. They're smart, they're motivated, they don't have all of the obstructions that we have here in a democratic environment. And that's, you know, there's a lot of negatives about that, certainly, but there's a lot of positives in a crisis, as we're seeing in our culture here. And they were just completely overwhelmed. I mean, you took the world's largest economy and brought it to its knees in a couple of weeks. And literally, the entire country was on lockdown. So,

knowing that, knowing some of the numbers coming out about the spread of this virus and the mortality rate, it was clear that it was much more contagious than the flu and much more deadly. And those factors, along with obviously, we have a very mobile society now that's compounded by the amplification of social media. So, on Twitter and elsewhere, where things used to just die out pretty quickly or there would be some time to observe, now it's an outrage culture and things spread like wildfire. I knew this was a very bad combination and started warning friends

and family in very late January, early February to start hedging positions or get out of the market entirely. I knew this would hit. I knew we had already some slowdowns and some warning signs flashing on the economy. And when you see something like a billion people told to stay home and under lockdown, and the fact that this was going to spread over here at some point, and then Italy confirmed it, it was a very obvious trade in retrospect. Yeah. I mean, clearly the market was already overheated. I don't think there's any debate, you know, QE and rates and all of the things that the government's been doing to prop it. So, it sounds like you were already feeling the urge to sell or exit even before the virus. Is

that accurate? Yeah. I think there was enough risk on the table. You had potentially, you know, at least a socialist of sorts that was looking like he might get the Democratic nomination. In this type of environment, anything can happen. If you remember three years ago, and you know, I pride myself on being one of the few people to have predicted Trump and to have actively positioned myself ahead of that. It's still a similar environment. There's incredible unhappiness with the status quo. I think people understand that our current system is not working for a lot of people. And that's the type of environment where even before this, you know, good economy, low unemployment and everything else, but there were a lot of

unhappy people. And whenever you're promising free stuff, that's a pretty good message, I think, for the populace. So, as I said, you're literally living this right now on a level that very few people in the United States are outside of perhaps Seattle. So, what's going on in New York? What do you think is coming? How are you preparing? So, it's a little maddening. I feel like one of those people who's been screaming at the top of my lungs that we better get moving for the past month. And only recently are we starting to see a little movement on our end. I think there's been a huge failure in leadership at nearly every level. You know, we have the CDC and Trump certainly bears some of the blame for

what's going on, but you can't just blame him for things like not being enough testing kits around. I mean, he's not, you know, sitting there at home watching Fox TV and then, you know, before bed saying, hey, I better order some more tests. I'm not sure we have enough tests and, you know, I'm going to make sure the Acela is running the train from Washington to New York. And, you know, while I'm at it, I'm also going to monitor, you know, some troop movements in Iraq and so on and so forth. When you have a federal bureaucracy, and our bureaucracy is enormous, it is a Leviathan. Those of us with experience with the government understand that it's ineffective at best and probably broadly incompetent at almost every single level, you have to be able to delegate to agencies, underlings, and decentralize some of those

activities to get any type of effectiveness. So, we have the CDC. That's literally their one job. They had one job, to prevent a pandemic, to monitor if there was a breakout, to deal with it, mitigate it, and suppress it. And the fact that we don't have any testing kits and that we're not testing people, so how do you stop something if you don't know who has it? And that they weren't more on the ball with what was happening with China and understanding that is a mega failure of almost incalculable proportions that will have a terrible effect here, both economically and from a human perspective in the States. You know, you have Italy as well. I

mean, we had warnings of months to get moving, to do something and just stood there. You know, it's classic ant grasshopper dynamics, if you think about it. If you remember that parable where the ant works all summer, all winter, you know, all summer building and preparing and saving and storing up and grasshopper parties. And then come winter, grasshopper is going to starve to death unless the ant helps him. So, you know, we've been the grasshopper while this whole thing has been taking place. And now, you know, I am sort of in a peculiar state where I am right at the epicenter of all of this. So, New Rochelle is where I live. That's where they just put a containment zone on.

And, you know, that containment zone is a soft containment zone, but it's still a soft quarantine. There was a breakout here. They say there's about 100 official cases. That number is light by a factor of probably 5 to 10x at minimum. And it's, you know, again, New York is a scary place and it's probably no different in San Francisco or Seattle. It's a very dense urban society. I mean, people are on trains, they're on subways, they're face to face. If the R0 of this virus is as high as people think it is, and that's anywhere from two to six, meaning for every person that has it, they could spread it to two, three,

four, five, six people. In a dense urban environment without social distancing measures, this thing is going to be everywhere and probably already is. So, I am within that containment zone. I've seen incredible complacency from everybody within that zone, except for a few people. Like I mentioned, I wrote that article last week, asking people to prepare, shop, do all that, things I had done a month ago or more. And it was, you know, greeted with mockery and derision and everything else. And people thought I was nuts. You go out now, people still don't wear masks. There's no gloves. People are mixing everywhere. Mamaroneck School District has refused to cancel classes yet to date. They're waiting for

one person or one student to have it. When in reality, by the time one student has it, and again, kids can carry this without any type of symptoms for weeks or maybe forever. So, you know, they can spread it everywhere. Once you have one, it's already too late. And we do have families who have been positively contaminated and they have children in the system. And, you know, those children were said to stay home, but at the same time, they've already been in school. They've already been everywhere. So, people, you know, like most Americans, there's this normalcy bias and you can Google normalcy bias and understand that

people expect because things have usually worked that they always will work. So, we don't take the measures that we need to take to protect ourselves. And, you know, people are going to be in for a rude awakening. I hope we can recover quickly. I hope we can start taking the necessary precautions. And again, the precautions we're talking about are economically difficult, but they're not going to destroy the economy. They're not going to have a permanent, long-lasting effect if done right. We're talking about a two to three-week vacation, what most people do anyway. Watch some Netflix, drink some red wine, read a book, learn a language, spend more time with your family, do the things that you would love to do if you had more time. We have the opportunity to take

that time right now, take a two-week break, test, contain this thing, and try to slow so that when our healthcare system gets, when the cases start kicking in, that our healthcare system will be able to deal with it and it won't be overwhelmed like Italy, like China and other places. So, you believe we should just shut everything down effectively for two weeks preemptively, stop the spread of this thing and then re-evaluate and reassess and move on from there? I do. I think we should have done it two to three weeks ago and it would have been the least bad choice out of a whole host of bad choices because of how we reacted to this. But at the same time, it's survivable with a two to three week shutdown. You can, again, at least get a grasp for how far it's spread, who has it, isolate those people, treat them, and then have the

healthcare system in a position to be able to deal with it. And a lot of, you know, there's a lot of fluff in the economy. A lot of people, thankfully, can work from home or have remote learning ability, whether it's schools or colleges or whatnot. And, you know, there's going to be a pretty dramatic restructuring of the economy when this is done, as people see that there was a lot of fluff and maybe a lot of the travel and entertainment and even some of the schooling, you know, do you need to spend 75 grand a year plus other expenses and whatnot for a college education when you really could do this online at home? So it'll be like anything else, an incredibly tough battle. The longer we wait, the tougher it gets.

But I have confidence we'll come through this in the end. And there'll be some positive changes, hopefully, after all, perhaps to our healthcare system and elsewhere. So, you touched on the fact that you were met with quite a bit of derision, mockery. I think I've had somewhat a similar experience when I've been, not what I feel was alarmist at all, just somewhat realistic. And I think people don't realize that there's a difference between being prepared and being panicked. You know, one doesn't have to go with the other. And I don't really see the downside or why you'd be met with mockery when you say, hey, listen, I'm going to go get some extra food and, you know, toilet paper as everyone laughs at and just be prepared for this thing if it comes,

whether you expect it to or not. Absolutely. And it's, you know, you hit the nail on the head. Preparedness is the opposite of panic. And that's leadership and that's planning in advance. It's the old Boy Scout motto of, you know, you sort of prepare for the worst and hope for the best. And it doesn't mean that you're defeatist or giving up or anything else. It means that you're now taking care of your family and not relying on somebody else to take care of your family. To me, that's the most basic test you have as a man is can you care for yourself and your family without hoping the government shows up, without hoping that science comes up with a cure for this. So, to not do that and take care of these things that are firmly within your control, and there's not much within your control, but that's one of the things in this type of situation to make sure you have food, water, medicine, you know, ammunition if you need it or anything else is the basic test of a man as far as I'm concerned. And it was obviously doable. Panic becomes when you wait too long. And as I mentioned yesterday on social media, you know, once there's a quarantine and once you're in lockdown,

then it's too late to go shopping. Then it's too late to grab water or do anything else or try to get, you know, extra medicine. Now you're stuck. So that's what panic is. Preparedness is the opposite. And again, it would go a long way. You know, you and I both know in tech and elsewhere, we have redundancy systems exactly for these reasons. You don't rely on one, you know, one thing and hope it works. And if it doesn't work, then you're toast. You know, there's an old saying in special forces and elsewhere,

where it's called one is one is none or two is one and one is none. Meaning you always expect something to break. You always expect something to go wrong and have a backup. I mean, it's that simple. Yeah. I mean, that makes a lot of sense. And I think a lot of what I've been hearing as well kind of touches on the inherent lack of trust in the system, the government itself, but then even more specifically in the media. I think we're at this interesting place where the more the media reports on something, the less people trust it because they say that the mainstream media is blowing it out of proportion, it's just the flu. And that inherent lack of trust actually means they don't believe the information that they're being fed, even if it's true, which I mean, to me is just a huge problem. There's no way to really

disseminate information anymore. And so it leads people to be unprepared. It's yes, enormous problem. And, you know, to some degree, it's the chickens coming home to roost. And what I mean by that is we've had three years of a media who has lost almost all credibility that they once had. And whether, you know, you're a conservative or a liberal, and, you know, I think some of the left side has seen some of the media's deviousness and corruptness in the most recent primaries where there's clear favoritism being played out for certain candidates. Other candidates are being entirely suppressed or disappeared. You saw the Yang blackout, you know, if you run social media or elsewhere, where they would just not include him in polls or put a picture of somebody else where he was

supposed to have a picture, disinvite him from debates. And we saw the same thing happen to Bernie Sanders vis-a-vis in favor of Joe Biden recently. And in favor of Hillary Clinton. Yes, absolutely. In 2016, it was not exactly a new thing. No, it was incredibly pronounced in 2016. It was very dirty. And Republicans, or at least Trump people have seen it firsthand as well for the past few years. And you see just blatant publication of things that aren't true. You know, if they finally recall that it's days later, and it's a small apology, whereas it was front page news, the original incorrect story had three years of a Russia collusion hoax, which serious papers, serious journalists made the argument that Trump was actually an agent of Putin in the Russian state,

and they hacked our election and all that, when in reality, they paid, what, 100 grand in Facebook ads? And that was supposed to have tilted the election when you had Michael Bloomberg just spent $600 million to try to get some traction and couldn't get more than a few percent and dropped out of the race very quickly. So in reality, what you have is an entire side of the political spectrum on the right, completely lost faith in the media. And now you've had the left starting to lose that same faith in it. So it's the boy who cried wolf when for three years, you've been tossing out fake news and saying it's literally the end of the, you know, society, end of the Trump presidency, end of this. It's when there's a real crisis now,

nobody listens to them because they always assume at this point that everything out of their mouth is fake or nonsense or not to be believed. And that's a huge problem. That is one of, and I've written about this in the past, that's one of the core institutions of America, you know, along with religion and politics and some of these other things. And slowly, piece by piece, every single main institution of our country has been completely annihilated or is no longer trusted now. We're just polarized. Yeah. Absolutely. Stuck on a single narrative and unable to see the other side. Absolutely.

And so we're really in unprecedented times. And it makes it, like you said, very difficult to have a cohesive message in times of crisis. And that's a very dangerous thing. I mean, that's such a powder keg when something like this hits. I mean, as you said before, the government was unprepared. But I think you could argue that the government remains unprepared for what's coming with the coronavirus. I mean, it doesn't seem like they're taking it very seriously. The CDC still doesn't seem to understand the gravity of it.

I mean, what are the odds here in your mind that we go full, you know, Will Smith, I am legend here? Which they've been playing on local TV for the past few days, I've noticed. You know, and my son rented Contagion on Netflix. I'm like, you don't want to watch that stuff. Yeah, that's not a good time right now. Go get an outbreak of Contagion. I am legend. Do the full trifecta and get yourself ready.

But you've done, you've raised a great point. I mean, this is, today is Wednesday, March 11th. They've, the WHO about an hour ago declared this a pandemic, which just shows you how corrupt and how incompetent these non-governmental agencies are. These organizations that are tasked with these types of things for it to just now say, hey, you know, it's a pandemic. Anybody who's been awake has known it's been a pandemic for six weeks or longer. I literally just tweeted something about that today. I was like, in other news, the sky is blue, water is wet.

And that's, you know, these are the people who are supposed to lead us and protect us through this. It's tough. You know, I have very little faith. Fortunately, I've had very little faith in the government for quite a time. So, I've done my best to prepare on my own. But this is scary for people. You don't have, again, it doesn't seem like people are taking this as serious as they need to. Part of that comes from the tone at the top and the lack of competence and confidence that we feel is up

there. And a lot of it is also just, you know, in individuals. I mean, I've seen healthcare providers who are putting out their false messages of, oh, it's just the flu, wash your hands and you're fine, or other simple messages, which it's just not the case. You know, I would understand that if you were just a regular guy and trying to read a newspaper and grasp it. But if you're a healthcare provider and you're still espousing those types of falsehoods, you know, that's negligent. And it's negligence that's gonna end up costing lives in the long run because the longer it takes to wake people up and this is like anything else it's usually in the beginning there's a few first adopters smart money piggybacks on them and then eventually it gets mass adoption but until we get to that mass adoption and we're all focused on

this faceless enemy and and trying to figure out a way to defeat it and move on. It's going to be, you know, you've got two people pulling a rope in opposite directions. Yeah. You touched very quickly on your personal lack of trust in the system. And I don't think people have context for why that might be the case. So let's now go back and talk about your time as a trader, your time as a hedge fund manager, how you ended up in jail as a result. Could you just go ahead and start from the beginning and tell that story? Yeah, I'll do a very quickie episode on it because it's out there in other measures. The book's out there, which I highly suggest you get if you have any interest in Wall Street or criminal justice reform or anything else.

At its core, I was a hedge fund manager. I had a partner who worked for Rajesh Ratnam at Galleon. He was doing some things that weren't permitted and trying to get inside information, illicit information. He was very incompetent about that and had a long tipping chain and was then getting these ideas from, it was about two or three people away from a lawyer who was working on a deal, trying to disguise the information as his own information and research, and then telling other people. And this is before we went into business together. I made a trade based on a tip of his, and it turned out later that that tip was illicitly acquired. And the government made the argument that I should have known that, even though we weren't partners, even though there was no evidence whatsoever that that tip was illicitly acquired. And the government made the argument that I should

have known that even though we weren't partners, even though there was no evidence whatsoever that that was the case. But it was the financial crisis and there was a lot of people hurting and a lot of people who were willing to take plea deals because when the government comes in, as many people now know, but maybe it wasn't as well known back then, they can do things like stack charges. And basically, you're facing 10, 15, 20 years, you're going to cut a plea deal to a year plea. And they did offer me a plea deal. They said plea guilty to one count of conspiracy. So, not actually insider trading, but conspiracy to try to commit insider trading. And if you do that, we'll give you no jail time and no fine. So just move on with your life. And at the time I was very stubborn and didn't think

I did anything wrong. Didn't think I did anything illegal. Had built a business from nothing, employed about 40 to 50 people and said, absolutely not. I'm not going to take that deal. I'll take my chances with a trial. And again, I was a lawyer. I went to law school. I was under the impression that we still had this legal system as I had been taught and as I had seen on TV, that was this fair and objective legal system. And a objective and neutral judge sits over a fair and impartial jury of your peers and you weigh evidence and the government has the burden of proof and you're presumed innocent. And at the end of it, they make a reasoned opinion of whether or not you're guilty. When in reality, and again, there's probably minorities and people have been through the system who would have heard me talk about it back then

in that same way who would have been laughing hysterically. They know it's not that type of system. In reality, there are tremendous prejudices in the system. The government is overwhelmingly favored in every single way. Judges are all ex-prosecutors. So, it's a little bit like Bill Belichick refereeing the Super Bowl with the Patriots in it. And there's a hundred different ways that they can make it unbearable for you. From refusal of bail, from refusal to turn over evidence, from, you know, these so-called sort of turning up the pressure, dirty tricks. In my case, when I told them I would not take the plea deal, they shut my bank accounts. They canceled my credit cards. business accounts, which I thought was a particularly unconstitutional and repellent move because at the time, she was the only one putting food on our table for our family and young children. And she had nothing to do with this case, but they knew it was a way to put financial

pressure to try to get me to take this plea. There were a hundred other things that happened with that case that would be mind-boggling. If you didn't live through it, I talk about some of it in the book. Yeah. I mean, it was one of those things. Trial was right next to Occupy Wall Street during a very difficult time. I don't know if it was a winnable trial at any time, but it turns out our judge also used the wrong legal standard. He used a legal standard that was more favorable to the government where he did not require the government to prove knowledge. So, they didn't

have to prove to the jury that I had knowledge that the tip came from an illicit source. They were just able to basically convict without that. And unfortunately, I went and served my time and they took your money and everything else. I served about 21 months. And by the time I got out and had exhausted my appeal process, they ended up overturning three other cases before that same judge where he gave that same exact wrong legal standard. It was the same exact facts in my case. And they ended up overturning all those cases, the second circuit on appeal, because he was using the wrong standard. But like I mentioned, I had already served my time and unfortunately had exhausted my appeal process.

Was your conviction vacated? It was not. There's a different process to go through once you've already done a direct appeal. The burden of proof changes. So, and this is, you know, the story where most people flat out almost, you know, their mouths drop. I tell them for me to then appeal it after my direct appeal, you have to do something called a 2255 habeas corpus motion where you go back and say, hey, there is a clear outrage, miscarriage of justice. The judge used the wrong standard. The Second Circuit has now said he used the wrong standard.

This is the same exact case, same exact facts. They should overturn this. So that appeal, instead of going to the Second Circuit, goes back to the original trial judge who makes the mistake. And he gets to rule on whether or not it should be overturned. So you're basically asking the same judge who made the original mistake to overturn himself. So- He made his own mistake. Right. Needless to say, he declined to do that. So it was ridiculous in every single way. In many ways, though, it was a blessing. It gave me a chance to reprioritize myself, reprioritize my life, remember what's important,

stop chasing money and focusing on one thing and expand, you know, the time I had for my family, try to have a positive impact on people through some of the leadership and resiliency and overcoming adversity trainings and speakings that I do at conferences and elsewhere and refocus my life. And again, there were some positive physical effects as well. I stopped drinking for a while, got sober. I was a classic Wall Street, like go out after trading hours instead of hitting the gym and running to get rid of the stress of managing lots of money during the financial crisis. You know, I would knock back six or seven vodka tonics and whatnot. That's a lifestyle that eventually ends with your liver dying and, you know, you're probably killing yourself somewhere else.

So in reality, it was probably a blessing, but it highlighted a lot of the inequities and unfairness in our system. And I saw literally how our government operates, you know, the by any means necessary that they use that are often unconstitutional to convict people, the horrors of the prison system. And that's why we have massive recidivism rates. And that's why, you know, we have such issues with a lot of other areas, economically, equitably, and whatnot. So it was a real awakening. So you got a 21 month taste of the prison system. Talk to me about what those first days were like. RoundlyX.com is one of my favorite companies in the entire crypto space. What they do is they take all your small purchases and they

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So you got a 21-month taste of the prison system. Talk to me about what those first days were like. They're not fun. I think there's this misconception that these are white-collar prisons. And the funny thing is, is lawyers have no idea about it either. Neither do judges or prosecutors. None of them have really ever been to prison. They shepherd the case through the criminal justice system, which means either trial or they're negotiating a plea. And once they lose, win, or conclude the plea agreements, it's like, good luck. So, they have no knowledge of what prison is like. And I used to be one of those guys. I used to open up the New York Post and see that some guy did something and he got two years or three years or five or one and be like, oh man, that's it. That's nothing. And then when you actually get there, you realize that, you know, three months is

probably enough, six months to learn any lesson that the punishment is supposed to give you. There's no rehabilitation efforts whatsoever that I saw while I was there. It's all punitive. Um, and, uh, you know, in a lot of ways, uh, again, that explains why there's such a great recidivism rate. I ran underground classes. I tried to do an official class at prison. I did teach GED.

They let people get their GED high school diplomas. Uh, but you know, a high school diploma only goes so far. What some of these inmates needed was more real-world skills, whether it was interviewing, whether it was resume building, whether it was analysis of financial literacy and real estate markets and all that. And I proposed to the administration that I teach a class like that. And I was told in no uncertain terms, not a chance. We like them dumb

just the way they are because we know they're coming back to us. So, that's sort of the attitude you get from the entire system. And it's a real tragedy because there are some incredibly talented, motivated people that may not have had the same chances that I had in life. And to be able to educate them and teach them and give them a second chance is what this society I would hope would be all about. But instead, it's very much everything about it is set up where it's designed to understand that America incarcerates 25% of the world population when we have 5% of the actual population. So we imprison people at about a five to six times rate as any other country. And there are more crimes that we imprison people for that some people don't even know

their crimes. Prison started out and punishment is for actual physical violence perpetrated on somebody or robbery. You know, you're talking murder, rape, robbery. I do believe people like Bernie Madoff who commit white collar crimes and who take advantage of people and create financial destruction should be held accountable as well. But, you know, I was away with people who made mistakes on their taxes, who had a divorce agreement that there was a mistake, who did something from political fundraising. You're talking about things where the laws are 30, 40, 50,000 pages long, the CFR. And again, there's a great book by Harry Slivergate called Three Felonies a Day that makes the case that we all commit about three

felonies a day if anybody watched. But the reality is we imprison far too many people. It's a huge drain on the taxpayer. People who go away for nonviolent consensual crimes, be they drugs or sex or anything else, you're putting people away, taking them from their family for years at a time when six months might be adequate, maybe a year tops, taking those people out of circulation. They don't pay taxes. They're not productive. And we're spending a hundred grand a year to house them. And when you go into some of these places, you know, if you're there longer than three years, a lot of people come out and they're institutionalized. They're a permanently

different person. They've had to deal with the most horrible circumstances around for multiple years. They've stopped learning or, you know, their significant others have left them or they're estranged from their families. It creates so much unneeded waste, depression, and emotional trauma, as well as financial trauma, that it's just a really bad system. But I've been encouraged by a lot of the reform movements. I've lent my voice to a lot of those and written and spoken about it. Especially with technology, there's a lot of ways to impact those numbers, the recidivism numbers of 60, 70% where two out of every three people who go away end up back in prison within five years. That's an outrageous number that no private or no compassionate society should ever accept.

Well, we clearly can't trust the system. Do you think that as a whole in this country, specifically, that we could trust our government? No, absolutely not. And I think that's for governments worldwide. I mean, I think we're in slightly a better position than somewhere like China, which is an authoritarian communist nation who lies to their citizens. And obviously, this latest crisis has illuminated some of the inconsistencies, to be nice, of what goes on there. You know, I think they're trying to say there's a couple thousand people that died from this. You know, there's videos online. There are people we talk to. There are things like mobile crematoriums and other things going on there. You know, those numbers of 2,000 or 3,000 dead are ridiculous. When you've got a society of 1.4 billion or however many they have

today, and you've locked down an entire country, they're not doing it because there's 2,000 people dead. They're doing it because there's tens or hundreds of thousands of people dead. And eventually these numbers will come out. Now, I understand the need to sort of prevent mass panic and whatnot, but that's just one example. China lies about everything. Of course. One of the credits I give President Trump is he's the first president in generations to basically confront them on that. I mean, they rose to power off the back of stealing our intellectual property. on trade that have sold out the American worker, have sold out manufacturing, have outsourced literally all of our critical industries to China. And that's benefited multinational corporations, a couple of stockholders, and certainly the elites, the American royalty. It hasn't benefited

the American public for the most part. And I'm a free trade guy. And I used to be a very adamant free markets, free trade and everything else. But free trade means fair trade. And I used to be a very adamant free markets, free trade and everything else. But free trade means fair trade. And when they can sell us anything, we can't sell them anything and they steal all of our goods. That's not exactly free trade. And that's a bipartisan approach. Trump's the first person to call them out on it, to do something about it. Bush, Obama, Clinton, they all sold us out in China. But our government has a lot of things that they don't tell the truth about as well. I love my country. I don't love my government. I think they can do a lot better. I think we deserve better as a people in the society.

And it's one of the reasons I've gotten into Bitcoin and other cryptocurrencies and blockchain and an avid advocate for decentralization. I think there's a better way. And I think, you know, crises like this tend to culminate and end with sometimes some pretty radical change. So, I'm hoping that this is one of those opportunities where we do pull through and we see that, you know, our current healthcare system that's run by the insurance companies and whatnot has tremendous advantages in R&D and the capitalist incentives for coming up with new medicine and new treatments are great. But Big Pharma and some of the mistakes they've made and we've sold out the ability for your average person to be able to get healthcare and not go bankrupt.

I'm one of the few people, fortunately, knock on wood, that can pay for private healthcare. And you've seen premiums go up 20%, 30%, 40% a year. You've seen coverage and care go down commensurately. It's a bad system right now. And I think everybody who's honest knows that. I don't know that any of the proposals I've seen from any of the sides fix that. I think turning over a complex, infinitely complex, you know, multi-trillion dollar industry to the government or to single payer on something like that is the exact opposite of what's needed. I think you need free markets. I think you need decentralization. I think you need accountability and the right incentives. Only free markets can handle complex organisms like healthcare. Again, with appropriate oversights, no one's talking about

laissez-faire, just do what you want. But, you know, to say that the government can run it when anybody, you know, who's been to the DMV, the post office or anywhere else understands that you're not going to get great care. You're not going to get great doctors or anything else if you turn it over to the government. But at the same time, people, you know, 50% of people have medical debt or bankruptcies are due to medical debt. So, that doesn't work either. There's got to be a better way. Well, my dad told me 25, my dad's a physician, first of all, but he told me 25 years ago when I was a teenager, never to become a doctor because he first saw, you know, way down the road, this sort of clusterfuck of insurance companies and

government thought that it would be a horrible place to be if you were actually a physician. So I've definitely been hearing that my whole life, but you kind of made a segue for me before that I was going to make anyways, which is, you know, we have this meme in the space, Bitcoin fixes this, right? For everything. You can just say Bitcoin fixes this, but we're talking about distrust in our government and their incompetence. How does Bitcoin fix this potentially? So it, again, I'm a Bitcoin maximalist to a degree. I think there's plenty of other technologies in crypto that will be advantageous and potentially still haven't even been created yet, which will impact the world. But the most important one right now is money. And I think me personally,

I have a tremendous invested interest, both morally, spiritually, politically, any which way you name it, financially. Like I mentioned before, during my case, before I had been, you know, before there was any proof offered that I had broken the law, you know, one of the core fundamental tenets of the Constitution is supposed to be presumed innocent, due process and all that, the government froze my accounts. So, money I had worked my entire life for and needed to defend myself and I thought was mine was frozen. You know, my wife's business accounts were frozen and turned off. That just shows you and it's, you know, there's another meme in crypto of not your keys, not your coins. And that's the case. If you have a bank account,

you think that's your money, you're nuts. The government at any time they want could come in and shut that down and take it. I had a friend recently who New York State came in and froze their account and took their money. And in New York State, they can push that burden of proof that you paid your proper taxes to you. So, they get the money and then you have to go and prove to them that you either paid the correct amount of taxes and deserve that money back. That's insane. That turns everything we know about private property on its head. And when the government controls the money supply, the government controls the population. So, we've been able to do a lot of economic and financial things that are lunatic, for lack of a better word, printing money out of thin air, amassing

massive debts that will never be paid back and are just going to be deflated away or inflated away. That is tragic because it hurts savers. They don't see interest anymore. We've got a zero interest rate policy. It just adds to so many different contusions in the economy. I mean, pricing is supposed to be a signal and you have no real pricing anymore in the economy because it's all manipulated. Markets all manipulated. Anytime you have, again, the Fed or elsewhere that can come in and just buy up debt or print to their heart's content or add money. It's not a real economic system. It's a house of sand that we've built. And Bitcoin can't, you know, if you properly run your, own your keys and own your coins, it can't be taken from you. So, people in Argentina or Brazil or Cuba or Venezuela who have experience with governments and government

confiscation and whatnot and inflation understand this intrinsically. The problem is the US, we've had, again, this normalcy bias where everything's been sort of okay. They slowly chip away at the value. We're old enough. I don't want to date us, but we're old enough where I remember a piece of pizza used to be a dollar. It's hard being 21, you know? Yeah. And now it's four or five dollars in certain places. I mean, I paid, you know, pre-crisis, I paid nine bucks, I think, for a slice of pizza in Grand Central. And I was a kid, I could have cost a quarter straight up. You put it in the machine, 25 cents. Exactly. So, people were like, oh, the dollar always works. And it does. But, you know, soon enough, you're going to have a dozen eggs. They oh, the dollar always works. And it does. But soon enough,

you're going to have a dozen eggs. They're going to be $17. And when you're on a fixed income, or you're getting a social security benefit, that's going to crush people. And we're on the verge of printing money like we've never printed in the history of the world. Unfortunately, one of the fallouts from COVID, you know, from the corona, because we haven't taken the necessary precautions and are going to have to have a hard stop in certain areas, is the government's going to have to step in and they're going to have to bail out certain industries. They're going to have to hopefully bail out or help the American consumer or citizen, you know, forget about consuming, help the American citizen and they're going to have to print money again. So, eventually this will matter. Like all markets, it doesn't matter until

it does. I was sounding the alarm in 2007 and most of 2008 that we were on the verge of just a complete collapse. And, you know, it took about 16 months longer than I expected, but it happened. And, you know And it's the same in tech, it's the same everywhere. Eventually it happens. It's very difficult to get the timing right. But Bitcoin will be the exit valve, the safety valve. I'd rather have it as a parallel track right now. I think Bitcoin would have done fine on its own without the crisis. When you have a crisis of this magnitude, you get a lot of disruption. You get people doing risk-off trades and just having cash and then buying supplies and whatnot with it. But I think Bitcoin comes out of this whole thing as potentially being in a position to be a replacement or at least a benchmark pricing mechanism for a global reserve currency.

And again, maybe it's not the sole one, maybe it's just perceived as a currency or a store of value along with the dollar and, you know, yuan and everything else, but it will definitely benefit in the long run from this crisis. I also think there's a difference in the price of Bitcoin at any given moment and the actual value of it. You touched on it, Venezuela, Argentina, these places, it doesn't really matter what the price is if you can actually use it to get your family out or to buy food or to do those things. I mean, obviously, most of the world isn't there yet, but there is real world use cases where Bitcoin is saving people's financial lives and

their actual lives. And again, you don't have to, there's nowhere else and this is repetitive from some of the other stuff I'm sure that's out there that we've done together, but it's the asymmetric bet. You don't have to put all your assets in it. If you put 1%, 2%, you know, even 5% if you want to be aggressive, that's enough where if things go pear-shaped or Bitcoin really enters this phase of hyper-Bitcoinization, you'll make enough from that ramp that it'll counteract all the other negative effects that you're seeing. So, 1%, it's insurance. It's the best hedge you can have. I do think it'll replace gold ultimately. In many ways, it is digital gold, just a far superior instrument. It's portable,

it's divisible. You can send it across the world. You can travel with it. No one's putting a bag of gold bars over their back and leaving or fleeing. If you do, you're going to get killed by somebody who knows that you have gold. This is a different instrument. It's the perfect digital currency for the digital age. And it gives me hope because it's one of the few things slightly outside of the government's grasp. You know, it's a longer conversation, but I'm not convinced it's

entirely outside of the government's grasp. I was about to touch on that as well. Yeah, there's way too much complacency, I think, within the crypto community and the Bitcoin community. I think we need real further decentralization of miners, especially now with China offline. You know, up to 50% of mining is done in China. We need more miners. I think that's a national security issue for us here at home. We need mesh networks where if communications go down or they try to seize it, you know, governments are powerful players.

And when they perceive a threat, and this is, in my opinion, a threat, not to the American people, but a threat to a government that plans on devaluing the currency and spending and keeping control of a population. If you're in favor of freedom and liberty and owning your own money, Bitcoin is the perfect solution. If you're not a fan of that, which our government, I'm not sure they are, then they're probably going to perceive it as a threat. I mean, we're seeing countries like China, South Korea, India, even in the last weeks, really becoming more crypto friendly, even when they previously had bans or were completely against it. I mean, I think you could make the argument that right now the United States is

one of the least crypto friendly countries in the world. It is, if not the. And, you know, again, we live in a very different society than we lived in 20 years ago. 25 years ago, you know, you wouldn't go live somewhere else because you don't have air conditioning. You don't have Internet. You don't have, you know, cable TV. Now, anything you have in America, pretty much they have everywhere. So money and capital, whether that's human capital or financial capital is going to go where it's treated well.

And we don't treat that well here. Switzerland, Singapore, Japan, there are other countries that are literally rolling out the red carpet for cryptocurrency, for Bitcoin and whatnot, and are encouraging that type of innovation. We are not. So regulatory arbitrage means that people who want to create new businesses, new ideas and be involved in this movement, this decentralization blockchain movement are not going to do it here, which is a tremendous loss for our country. I mean, Silicon Valley has been one of the few engines of growth that we've had in the last 34 years that are not financially, artificially constructed. And if we have the potential to have another Silicon Valley here in a whole new age of innovation and growth due to blockchain and some other exponential technologies, and we're chasing those people and those ideas offshore

because we don't understand it, we're hostile to it, that is going to cost us in the long run tremendously. And that's really sad. Well, it's interesting. I don't think, as you touched on, not your keys, not your Bitcoin. I mean, no country can really make Bitcoin illegal, but they can make certainly, you know, getting your money out of it into dollars illegal or other ways. I mean, what other ways do you think that the United States could really stop or attempt to stop Bitcoin and crypto? I almost don't want to talk about it because I don't want to give them any ideas. Yes, I've given this a ton of thought and I've run, you know, hundreds of scenarios in my mind. And, you know, there's ways to do it. You can punitively punish people to a level where it makes it unattractive to hold Bitcoin or other cryptocurrencies. just leave for gentler climates that value freedom and personal property and liberty?

Maybe. But I'm a guy with three young kids. I have an ex-wife. Even if I wanted to go, my ex-wife's not going anywhere. So I would be stuck here. And most people are not going to risk a 10-year prison sentence. There's a lot of tough talkers on crypto Twitter about, you know, F them, I don't care, let them come for me and all that. Most of these people would piss their pants in the first two minutes if a government agent showed up or a SWAT team and said, you know, your crypto or your life, that's game over. And I know I would too. I, you know, certainly choose to give up Bitcoin rather than go back to prison. It's not a fun place. Trust me, you don't want to go there. So that's why we have to do everything as a community to head that off.

You know, and that means if it means playing by the current system's rules and co-opting the current system and employing lobbyists and education and meeting with congressmen, you know, just last month, I was down in DC meeting with congressmen and their staff to educate them on some of these issues. Play the game. In the long run, it's going to help us. In the long run, it's going to be much more advantageous for our country. We're going to bring some sanity back and a whole new economic system that will prize innovation and prize personal property. And there's a thousand different reasons why it will be beneficial. But if we just take that approach of, you know what, we're the honey badger, nothing can hurt us, let them come, they'll come. And trust me, like I said, 99% of crypto Twitter will give up their coins and piss their pants in the first 60 seconds. But you've been there and you didn't

piss your pants. I mean, the government rolled into your house, federal agents, dogs, right? 5.30 in the morning, if I remember correctly, they sequestered your children, your wife into a room and gave you a full perp walk in front of the media who was called in advance and your friends. And in that case, you basically let them take your money and said, you know, F you, I'm not guilty. And this is the situation. So it sounds like, you know, for you, you've actually been there. It's interesting to hear you say that once is enough. I refuse to cooperate. I refuse to play the game. But I also am a risk handicapper. And I knew, you know, my lawyers weren't correct. They told me, even if you get convicted, you'll do a year and a day because, you know, it's a victimless crime. They charged me with making $16,000. That's one six, 16,000. And I was running hundreds of millions of dollars. So, I knew that my sentence

wouldn't be horrific if I lost. Now, it turns out, of course, that the government is punitive. And despite offering me a deal of no jail time, when I went to trial to try to prove my innocence and lost, they came back then and wanted me to do four years. And that was the recommended sentence that they have. I'm not even sure I wouldn't have taken the plea if I really understood that four years might be on the table. But if they came back to me today and said, you're Bitcoin or you're doing 10 years, again, I love my children. I'm not going to go away from them again for 10 years. I would not take that deal. I'd give up my coins. So I don't think that makes me a coward. I think that makes me a sane person. And that's why I spend, right, all my time

now or a good portion of my time besides, you know, some of the other activities I have trying to educate people on crypto, trying to educate our leaders, our government, trying to, along with there's a lot of really smart people in crypto who understand the potential advantages this has for our country and for everyday people. And that's the important thing. It would tremendously benefit people, citizens. And again, people are pissed off. I don't think they understand entirely why they're pissed off, but they're pissed off. They understand that something has changed. This is a different country. It used to be a, you played by the rules, you work hard, you'd be able to retire at some point. You'd be able to possibly pay off your house,

be able to buy your grandkids nice gifts. Yes. Live off a pension. Same job for 35 or 50 years. And even if you didn't stay in the same job, you still had the potential to have a retirement fund, to be able to take some trips, to pay for your grandchildren, to help them with a wedding or your son, daughters with a wedding. That doesn't exist anymore. It's rapidly shrinking. The zero interest rate policy has killed retirees. It's killed people on a fixed income. The system is so gamed where you have, and again, I'm not going to go into it. There's tons of stuff out there, but even on Wall Street, we've got companies that have not invested in people. They haven't

done the right things. They've bought back stock and they've paid themselves. Now, we're going to see the prospect of a lot of these same companies who spent all their money buying back stock either retire and go live nicely somewhere else or come to the government for a bailout. It's going to be a very interesting time. I know we're running up against the clock a little bit. So I do want to go back to the COVID, to the Corona stuff for a few minutes. Just to reiterate, and again, I'm starting to see people wake up a little bit. The downside of actually preparing and doing some of the things that we've talked about and some of the things we've written about is so small. I mean, if you have some extra food left over or supplies, and this turns out that we get it under control, right, or that the weather improves, or we get a vaccine, great. You catastrophic when you look at Italy and China and some of these other places, and it becomes an economic casualty as well as a human casualty, that it's just such a no-brainer to do it. I think it was Tlaib who said, you know, if you're paranoid, you could be

wrong a thousand times and you're still okay. If you're not paranoid or not prepared, you're wrong once and that's the end of your family and the end of your lineage. So, um, that's the easy choice. And again, it makes it tougher because of what we've talked about with the media. Uh, but I've got some personal anecdotes that I'm going to share just to give you an idea of, uh, how bad the media has been and how bad our leadership has been with regard to this. So, one of the companies I consult for is a healthcare company. And the CEO of that company was in China, I believe in the Hubei province and in some of the areas that were affected in January for an extended period of time while this was happening. And he came back into the country, into New York, met with me because I was consulting and people came back with him

from China as well. There was a group from that same area. And when they came through customs, I asked him, did they stop you? Did they check your temperature? Did they give you a blood test? Did they do anything? And he said, not a thing, not a question, not a thing. Right through customs, right in New York, that means riding subways and trains and everywhere else. So when I saw that, that's when I started screaming on Twitter and elsewhere that we have to close the borders or at least start checking people. I know nothing got done. I have another, and it's kind of crazy that I'm at the epicenter in New York of this entire thing. But in California, I have friends of mine in high school who went on a ski trip to Italy and, you know, came back. They went with 16, 15 or 16 people, came back.

All 16 ended up acquiring the virus and being contaminated one of them is in the hospital uh or i think two of them are still in the hospital in serious condition but i asked one of them you know when you guys came back this was late february you came from an area in italy that we knew was infected and having troubles did they ask you anything when you came back from the airport? Did they test you? Did they do anything? Not a thing. It's so insane. Yeah, it's insane. It's insane. So, all the stuff about our borders are shut and, you know, we're testing and all that. And I'm sure you know about the testing scandal where we just don't have the tests and, you know, obviously our numbers are small because we don't test people.

Of course. So, that's what I mean about being wise. Can't have the disease if you Can't be tested, right? A hundred percent. That's the incompetence and that's, you know, what we're dealing with and trying to get this under control. It's terrifying. And I mean, I have to imagine that the path can only get worse from here. We know that this thing is exponential and we're just at the tip of the iceberg. I think it's going to be a tough two months. But again, if we make the right moves right now

and really take it seriously and move to a wartime footing and start dealing with it as we should have been dealing with it six weeks ago, it could be a big hiccup and maybe a minor recession. If we don't, then 10x everything we talked about. Those are huge ifs. Yeah, huge ifs. It doesn't seem like that level of urgency is there yet with our government. No, but I'm thankful that there are people out there on Twitter and elsewhere, you know, raising the red flag and screaming.

And hopefully more and more people I'm starting to see on social media and elsewhere are picking up that baton and understanding we're dealing with something we've never dealt with before. This is potentially, you know, the biggest existential crisis we've had as a nation since World War II. And, you know, you can mock that, but at least 9-11, we had an enemy to fight. We knew we could close borders. We knew it would be difficult for them to hit us again. This is, you know, this is not something that's easy to come together on and fight, especially when we're so fractured as a society politically. So, man, it's been amazing.

So where can everybody find you after this? I'm sure that a lot of people are going to want to follow you and keep up with your updates and ideas. Well, they can't because I'm barricaded in New Rochelle in the containment zone. But if they want to risk, you know, being shot by a national guardsman, um, no, in all seriousness, I'm, uh, Twitter at Mike Kimmelman. I've been shadow banned. So you're going to have to put in the exact name to find me. Um, and then on Instagram, it's at Michael Kimmelman, uh, or LinkedIn. You can get me on any of the social media, but Twitter's a little tougher cause they shadow ban me. So I don't show up on any accounts and neither do my posts anymore. And you know, but I'm out there. Come find me. I'm happy to talk to anybody, answer questions.

CryptoIQ, we do a lot of great stuff, Charlie and I, regarding education, trading and everything else. And then, you know, I do a lot of leadership and resiliency training for hedge funds mostly high achieving individuals and the funds and then also for some corporate clients but that's where i am i wish you were doing it for our government leaders man at this point i think they're the ones that need a good consultant now well man thank you again so much for coming on the show extremely uh enlightening and i definitely felt like i learned a lot and I'm going to go out and do even further preparation, even though I feel like I'm ready. Great to be here, Scott. Love what you're doing here. Love what you're doing on Twitter.

I think you're a voice that's needed and I hope you keep going. I appreciate that, man. Thank you again. Thanks. Bye-bye. Hey, everyone. Thanks for listening. New episodes go live every Tuesday at 7 a.m. Eastern Standard Time. Links to our Apple and Spotify channels are in the show notes. You can also follow me on Twitter at Scott Melker to continue the conversation. See you next week.