What Bitcoin Did - INFLATION, THE FED & BITCOIN w/ Lawrence Lepard

Episode Date: January 10, 2025

Lawrence Lepard is an investment manager and author of upcoming book The Big Print, which covers the broken monetary system and how Bitcoin fixes this. In this episode, we discuss the Federal Reserve���s role in economic inequality, the effects of inflation, and how unsound monetary policies have led to repeated financial crises. We also get into Bitcoin as a solution, its impact on the traditional banking system, and how it empowers individuals. MASSIVE THANKS TO OUR SPONSORS: IREN: https://www.iren.com/ RIVER: https://river.com/wbd CASA: https://casa.io/ LEDGER: https://www.ledger.com/

The amount of pain that the Federal Reserve and their mismanagement of interest rates in the economy has caused, it's just, it's gargantuan. This is the core problem. You know, this isn't, this isn't a blue thing or a red thing. It's not a, you know, it's not a liberal thing or a conservative thing. This is a underlying monetary thing that is causing enormous, unnecessary pain for millions and millions of Americans. It's been going on for a long time. And unless we diagnose the core problem and solve it, you know, it's going to continue to go on. All right, legends, welcome to the What Bitcoin Did podcast.

I'm your host, Danny Knowles. And today we have the amazing Lawrence LaPard on the show. Larry's about to drop a new book called The Big Print, which I managed to get a sneak peek of, and it really is brilliant. In the book, he gets into all the problems created by fiat currency and Bitcoin as the solution. So I asked him to come on the show and discuss this. So we got into why America, and really the entire world is in a state of degradation. inflation is the root cause of this, the Federal Reserve, and why Bitcoin is the answer.

Larry's amazing. I think you're all going to really enjoy this one. And if you do want to support the show, the only thing I ask is if you can subscribe on your podcast app on YouTube, and if you can leave a review, it really makes a huge difference. All right, enjoy this one. And if you do want to get in touch, you can get me on Danny at what Bitcoin did.com. Good to see you, Larry. How you doing? Great, Danny. Very nice to see you. I'm happy to be back on your show. Miss Peter, but I'm sure you'll be just as good or better. Yeah, he's crushing it. Did you see he's just changed the name his podcast? He's gone back to the Peter McCormack show now. Yeah, I did see that, and I can't wait to

see him interview Liz. I haven't had time to listen to that one yet, but I heard from a few people. It's really good. Yeah. So I'm looking forward to that. I think what he's doing is brilliant. That was a pretty special interview, I think. Liz got such a bad rap in the UK, but I actually quite liked a lot of the policies she stood for. I don't know enough about her to comment. I really don't. I hesitate to get involved just because I haven't followed it, but like I said, I'm really looking forward to listen to Peter interview. Yeah, it was a good one.

Anyway, you've finished your book. Congratulations. The big print. It's done. Thank you. Yeah, it's finished in terms of the manuscript being written. Right now, it's in a process called Layout, where you have graphic artists, make sure the charts and the spacing and all that is good.

And that should take another, you know, seven to ten days. I published, it's up on Amazon for pre-purchase at Kindle. I've announced the announced launch date is February 14th, but you know what? I bet I can beat that because it's now what, you know, the eighth and, you know, maybe give me another 10 days. I'm thinking this is probably a late January launch, you know, last week of January kind of launch. I don't know. The Valentine's release day sounds pretty good. A true love story.

Look, I mean, it's got to be good. I mean, it's got to be right. But the content, the content's done and I'm convinced it's as good as I'm capable of giving. The layout's got to be good. I want it to look good, and that's what we're working on right now. Well, I got a bit of a peek at the manuscript, and from what I've read so far, it's brilliant. Oh, thank you. What was your idea in writing this book?

Why did you want to approach it? Yeah, thank you. So let me just kind of give you the background. I've been saying this on other parts. I mean, I sat around sometime last year, and I watched some program that had the blue side and the red side debating about the election. I started the book in June of last year, so it took me six months to write it. This is probably April or May, and I watched people.

talking past each other. And I was just so angry because nobody was focusing on the deficit or spending or any of the problems that were just so obvious. And I thought to myself, you know, these people are all missing the big obvious problem, which is the money is broken as we know. And somebody needs to write a book about that. And I thought, well, you know, Safe wrote a really great book about that. And Lynn wrote a really great book about that. And maybe that's enough. And then I thought, no, you know, people aren't going to, sadly, people don't read books that much anymore and people definitely don't read books that have a textbook like quality to them, which both of those have a little bit of that in it. Maybe if I told my story and made it more of a

narrative and spiced it up a little bit, maybe that would encourage more people to read it. And so, you know, they'd read the story and learn about sound money at the same time. So, when I set out to do it, the goal was to write something that's very understandable for anybody. You don't have to have a finance background. You could be any average citizen doing, you know, It doesn't matter what work you're doing, you know. And know nothing about money, nothing about finance. But read this book and go, gosh, now I understand why I'm suffering. Now I understand why they're screwing me.

And now I understand what I have to do about it. So as you know from having seen the manuscript, it's really divided into two sections. The first one is the problem, which is the history of how and why they're doing what they're doing to us and how bad it is. And then, of course, the second half is the solution, which leads everybody to Bitcoin. and then fully explains Bitcoin from a beginner's point of view, I mean, things you know and most of us know, but to somebody who's just, again, knows nothing about finance and knows nothing about Bitcoin and to kind of walk them into it carefully and completely and tell them the risks and explain to them all the issues, explain to my concerns, etc. And try to provide a credible argument that, you know, this really is not, you know, magic internet money or something insane to be to be involved with. it's actually extremely rational and very protective of their own financial condition.

And therefore, they should be, you know, they should start to accumulate Bitcoin. So that's the goal. And, you know, as I think you and I discuss pre-show, the Bitcoiners are going to love this. I mean, you know, it's all, it's red meat for Bitcoiners. But that's not really the goal. I mean, the goal, and that's why I didn't even put Bitcoin on the cover. I just said sound money. The goal is I want everybody to love it.

I want average citizens to love it. I want it to get passed around. I want those hard. to orange pill cases to read it and go, gee, you know, I think this guy has a point. Even though I've been against Bitcoin, boy, given all these arguments, maybe, maybe I should take another look. So, so that's the goal of the book. It's a, it's a little bit of a simplified version of Lynn's work, SAFEs work, Luke Groman's work, you know, Jeff Booth's work, etc. It's, you know, it's explaining it for every man, you know, why this is so important.

So it's a long-winded answer, but that's a complete answer. Yeah, the kind of narrative approach to it, though, I think is going to be really good. From what I've read so far, this seems like a book that I want to send to my, like, friends and family who don't really understand this. Because you bring in stories about, like, your grandfather and your father and how they've kind of been impacted by the Fed's decisions. And it's really enjoyed it. We all have been impacted. I mean, yeah, go ahead. So you started the book with kind of talking about America being fundamentally broken right now.

And I think that's something that everyone sees. Like even people who don't understand why, they see that things are getting worse, not better. So do you want to start by explaining why you think there's like a degradation across, I guess, the entire world, really? Yeah, that's a great question. Yeah, it's not just America. We see it worldwide. I mean, you know, the political systems are failing. The governments are failing.

The money is failing. The economies are failing. And many, many people are hurting. And it's terribly sad. And I try to bring that out in the book and explain all of that. And again, that's part of what drove me to write it, just the knowledge that all this is going on. And a deep memory of what it was like to grow up in America in the 70s and what a great country it was, you know, at that time. And it had problems where, you know, the Vietnam War was going on, so forth in 60s.

But it was so much better than it is today in so many ways. I mean, today is different. We have better technologies than we did back then. But the point is, you know, things are clearly broken. And the thesis of the book is, in my opinion, that the underlying cause that far too many people don't understand it or missing is inflation. And the inflation occurs very simply from government policies, the monetary policies run by the government.

And there were lots of steps along the way. I mean, you can go all the way back to, you know, founding of the country. And I do a little bit. I bring a history of monetary thought all the way from 1789. present. But of course, I drill down much more deeply on, you know, the foundation, you know, Civil War Foundation of the Fed going off the gold standard in 71. And then all the things that have happened since then, like, you know, throwing out Glass-Steagel, the GFC, the COVID crisis, etc. You know, Silicon Valley Bank, as we were talking about. I mean, it's just like, you know,

what is this is, Morgan Housel's book said something. History is a long story of just one thing after another, you know, one problem after another. And that's, that's what's happened. I mean, we we started down the wrong monetary road and we slowly but surely it's just gotten worse. And until we solve this underlying monetary problem, the fact that the money really is broken, it's very unsound and getting more unsound. I mean, there's a quote in the book about exponential inflation, which says that, you know, inflation basically has to keep getting worse to have the same impact on keeping the economy running forward.

And that's why when you look at the Fed balance sheet, you know, Bernacki said the Fed balance sheet was going to go from 1.4 back to 900 trillion, you know, when he was, when he first started QE, and of course, the Fed balance sheet today is seven trillion down from peak of nine. And my opinion is the Fed balance sheet is going to go to 50. So, you know, it's, it's a broken system, but the underlying cause is the monetary system. And again, that's, that's what drove me to write the book, that I think we've got 330 American citizens and how many, you know, four billion, you know, first world citizens around the world or so that basically don't necessarily even understand what the problem is. And so you can't really get to fixing the problem until you understand what it is.

And so that's why I try to lay out a very compelling case that the money is the problem. What Bitcoin did is brought to you by our lead sponsor and Massive Legends, Iron, the largest NASDAQ listed Bitcoin miner using 100% renewable energy. Iron are not just powering the Bitcoin network. They're also providing cutting-edge computing resources for AI, all backed by renewable energy. We've been working with their founders, Dan and Will, for quite some time now, and have been really impressed with their values, especially their commitment to local communities and sustainable computing power. So whether you're interested in mining Bitcoin or harnessing AI compute, Iron is setting the standard.

To find out more, head over to iron.com, which is iran.com. So the root cause of this that you lay out in the book is all centered around inflation. Now, like I said, this is the kind of podcast and the kind of book that I want to send to my friends and family who don't understand this deeply. So can we go right back to the start and talk about why inflation drives sort of wealth inequality and has all these knock on effects? Yeah, absolutely. Well, so the monetary system is broken primarily because we've kind of got a two-tier monetary system. And the average person doesn't know how to make inflation work for them. You know, when the Fed went to zero percent interest rate policies, actually when it went to one percent interest rate after the bursting of the dot-com bubble, and then it went to zero percent interest rate policies after the 2008 crisis.

What they effectively did was they allowed wealthy people and financial players to borrow for zero cost and invest in assets that would go up in value. And the average person doesn't have that ability. And this is what we all refer to as the contillionaire effect. And so the average person, when they want to borrow money, they've got to go to a credit card company and pay 25%, which is egregious in and of itself. And that's an entirely different story. but, you know, which, I mean, all those laws got changed years ago.

There used to be usary laws in the United States. You couldn't charge that kind of interest. But, you know, the mob would blush. But the point is that this two-tier monetary system where the insiders and the people close to the monetary printer get an advantage over the rest of us allows them to amass great wealth, while the rest of us suffer the effects of the inflation that we really don't have a way to protect ourselves from. And so the average common man who works for a wage, you know, he's way far away from money printer. He can't borrow cheaply to buy assets that yield returns. And all he has is his wages. And by the time he gets his wages, all the prices have been driven up by the other people.

I mean, we saw this in the United States. BlackRock was out there buying homes and then trying to rent them back to people, which made it hard for first-time homebuyers to buy homes. And so that's an example of the problem. The fundamental problem is that the monetary system, the Fed, has a monetary system that benefits the wealthy and the intelligent who can game it as against everybody else. And so, you know, I mean, what people don't understand, I think, is that, you know, I mean, and the politicians try to say that the reason we have inflation is that because we've got greedy corporations, but that's not true. We have inflation because the money supply is growing and the Fed is growing the money supply by lending money to financial assets. actors at very low rates. And so, and that's happened again and again and again. And it's going to

continue to happen because the way the system is constructed when there's this much debt, you have to grow the underlying base supply of money or else the debt will collapse and you'll have a depression. And of course, that's, that's always what the Fed says, which is, you know, let us print more money or the economy is going to collapse. I mean, that's what they said in 2008. That's why they bailed out the banks. You know, if we're not able to print more money, the economy will collapse. It's like they've got us as a hostage. They got a gun to our head. And, you know, and of course, everybody, people were opposed to the bailouts in 2008. First time Congress voted it was a strong no. And then the bankers all went back and said, look, if you don't do this, the market is going

to collapse. The market was down 9% one day. And the Congress caved. And of course, then what happened is the cost of everything that everyone was buying went up. Gold went to 100, or I mean, oil went to $150 a barrel. Gasoline went to very, very high prices. Food costs went up, etc. trend, this pattern repeats itself over and over again. And we've seen it for, you know, for years now, but I mean, really decades going back, but getting worse with each, with each event, right? I think the blaming inflation on sort of greedy corporations, it's such a pervasive thing that I think a lot of people believe.

I'm sure. I remember Lynn Olden putting a great tweet out probably a couple of years ago now, where she basically highlighted on a chart of like a CPI chart, the fact that corporations have always been greedy, but this chart still going up. But inflation as quoted right now is something like 3% in the US. What do you think real inflation is? Oh, well, I think the best long-term measure of real inflation is the underlying growth of M2, which over a long period of time, with the past 53, 54 years, has been kind of in the 7, 8% range.

So, and I actually think it's running a little bit higher than that right now, because if you look at some of these labor cost settlements and certain sectors, I mean, look, inflation's a tricky thing. they're different. They're always prices of everything are always going up and down. And so you may be getting a benefit in one area, you know, as demand there becomes soft. But meanwhile, something else is going up. I mean, in the United States in particular, a very inflationary in last year,

year and a half, probably in Australia, too, has been insurance. My home insurance has won up 100% year over year. Wow. My auto insurance is up 30%. I mean, that's a lot more than the 3%. And that's even a lot more than the 8% that, you know, the money supply is growing. So there are different pieces to inflation, different prices, different things. I mean, I actually called up the home insurance people and said, hey, this is outrageous.

You went up 100%. They said, yeah, but for a few years, it didn't go up very much. And what we realized is we looked at the cost of rebuilding your house, and we realized that it had doubled. You know, we used to be able to build your house for $200 a square foot. And if your house burned down, it would now be $400 a square foot. So we need to double the premium. And I kind of like, okay, I get it. I mean, and so, you know, inflation is lumpy because, I mean,

I think prior years they've been going up five or 10 percent a year. And obviously, they fell behind the curve. And then they suddenly realized, oh, my God, if this guy's house burns down, we're in trouble. But to me, the long-term trend is just look at the money supply. I mean, you know, prices are set at the intersection of demand for goods and services against the amount of money that's out there in the economy. And so, you know, if you double the money supply, you know, all things being equal, citrus pair of us, you know, the prices are all going to double. But and I, what really the most

recent hit we all took and it was a great tweet on this was that, you know, in the COVID example, the money supply grew 42% in the space of a couple of years. And so, you know, I mean, I mean, imagine having your savings and all the, everything you worked for over your life, suddenly, you know, whatever you saved, you just lost 40% of it. It's just got everything got that much more expensive. And that's obviously why everybody's so unhappy, understands the system is broken, why they're so angry, and why politics is so contentious

because people are getting screwed. I mean, they legitimately understand they are. But the point, again, the driver for me to write the book was that I just don't feel like enough people really understand the how and the why. And so I wanted to write a book, as I said, that anyone could read. And I tested it on people who had no financial back.

background. And that actually led to a lot of changes. I mean, my wife made a great suggestion of putting in the skepticism section. And there are other sections that I changed. And I've got a lot of footnotes in there. And I mean, some people think, well, are too many. But I mean, as an example, one person said, what's the Federal Reserve? Okay. So one of the early footnotes explains what the Federal Reserve is. Because again, I mean, these aren't things that the everyday person, you know, if you're a plumber or whatever, you're out there doing your job. You know, you just, you do your job. You try and put food on the table. You work hard. But one day, you realize that your grocery bill has gone up 40%. You're like, what the hell happened? You know, and I can tell them, you know, the book is aimed at telling them what happened and then telling them how we can fight back. I mean, we don't, you know, and telling them the real optimism of this is going to get fixed. I mean, you haven't, I know we talked before, and you haven't completely finished the book at the end.

I've got a lot of policy prescriptions and I've got some really optimistic news about where we're going here because, you know, the internet, distributed computing, Bitcoin, etc. all of these things are going to solve this problem. We're not going to live with this forever. It's going to get fixed. I think it's going to get fixed in the next 10 years because the problem is kind of coming to a head. So there's good news here.

It's not all bad news. Yeah, and I definitely want to get into that because I probably sit on the side where I think it's going to get messy before it gets fixed, but we can get into that in a little bit. Well, yeah, there's some of that, for sure. But first, who do you think is actually at vault here? Because the incentives are wrong kind of across the board.

But does the blame really lie with the Federal Reserve? Well, I mean, it lies in a lot of areas. I mean, it lies with the voters who want something for nothing and they vote for politicians who spend more than they can pay for. I mean, it's lots of little actions that lead up to big actions. And, you know, there's plenty of blame to grow around. I would say, I mean, probably, I mean, to me, the biggest causal blame, and when you read the book, you'll see that things really change.

changed after 1971. I mean, we had inflation in the United States post-World War II, but it would always kind of trend back towards the mean, and it wasn't terrible. Going off the gold standard in 71, there's a lot of blame. Nixon should take a lot of blame for that. He had a choice. He could have said, we're going to let gold float, and whatever his price is, that's the price. And that would have been inflationary, but, you know, that would have forced the government to have some discipline, and he didn't. So there's blame there. And then since then, there was blame in politics and as they changed the laws and, you know, they allowed derivatives to come in and they created, you know, the Fed got more aggressive. I mean, Greenspan decided that,

you know, the stock market was a metric that he wanted to manage. And then, you know, they blew the dot-com bubble that burst and they, Bernacki came in and he cut rates to one percent to blow the housing bubble. That burst. And, you know, we transferred a bunch of money for free to all the criminals that did it. And, you know, it's one thing after another, right? The story just keeps getting worse, as we've all seen and no. So there's plenty of blame to go around. And there's blame with voters, too, who vote for politicians that make promises that they really are irresponsible and they can't keep. And therefore, we run large deficits. You know, there's blaming the executive branch. I mean, Luke Roman did a great job in a recent pod with Preston, where he pointed out that,

you know, we wasted $8 trillion in the Middle East, $8 trillion to try and secure Afghanistan, which we then gave back and to secure Iraq. which now sells all its oil to China. I mean, this is, you know, that was an enormous waste of resources. Imagine if we spent $8 trillion, building, you know, infrastructure, high-speed trains, spending on our people here at home. I mean, that's a lot of money, you know. And it made, you know, defense contractors wealthy.

It made Dick Cheney wealthy. It made, you know, the entire military industrial complex wealthy. But it didn't do much for the average American. And the cost of paying for it has made the average American's lifestyle much more expensive and hard to afford. I mean, one of the things that I often have said is that, you know, if you think of all the technological developments, let's go back to when I was a teenager in the 70s, you think of all the technology that we've enjoyed since then, you know, the microprocessor and what has done the world, how it's made everything faster, cheaper, better. I mean, we all should be working 20-hour work weeks and enjoying fabulous lifestyles. We really should because of the efficiency that that has brought us. And yet due to these poor monetary policies and poor, you know, governmental policies like spending eight, trillion dollars on wars, you know, we're all suffering from inflation and not enjoying the full

benefits of the deflation that we should get as a result of these technological improvements. And so that's laid out in the book and explained in detail because it's, you know, it's just, it's sad. And, you know, I see so many people hurting. And then I look at my kids in their 20s, and I think, what kind of world are they going to inherit, you know, if we don't fix this, you know, it's not a good thing. But again, back to the positive side, it's getting fixed. I mean, nature really is healing because this fiat money stuff is going to fail. The Federal Reserve is going to fail.

And, you know, my grandkids are going to, you know, transact in Satoshi's when it's the base layer of money. So there's great news coming. But, you know, we're in a transitional period. And as you point out, I mean, we can all debate it. But there's no doubt that the transition could be bumpy and rough. I mean, you know, most of us have read the mandibles and, you know, it's a grim story, right? Yeah, right. It's an interesting book.

But it's definitely a grim story. When you say, I think you've highlighted something that's really important there with the voters who basically just want to vote for money, whichever party that's offering them the most money. And we still live in a democracy. So how do you get past that in this sort of transition period? Well, it's a democracy, but it's also, it's supposed to be a republic. It wasn't really a democracy in the beginning. But I don't really know. I mean, I think the only solution,

Dan, is to take the car keys away from the government. And I think, and then when the government doesn't have the money, you know, they're fail or they'll have to stay within their boundaries, you know. And I think, you know, back to the nature's healing thought, you know, they can only tax so much. And people are free to up and move and leave and go to other places. And so, you know, My sense is that America will get this right, but if it doesn't, there are other places in the world where one could live.

And the nice thing about Bitcoin is a form of money as it gives you a sovereignty and you can go anywhere. And, you know, you don't necessarily have to stay in a broken system. So I think countries are going to have to clean up their act because people are going to demand it. You know, there's enough dissatisfaction. I mean, there's a chart early in the book that shows about the percentage of the country that trusts the government most or all of the time. And in the 60s, it was like 70 or 80 percent. And now it's down to under 20 percent. And so people know that something's wrong.

They definitely know that. What they don't fully understand is what's wrong. But when the currency kind of slowly but surely fails, which I think is kind of we're in the process of, they're going to understand what's wrong. And then they're going to fix. They're going to address what's wrong, which is, you know, go back to a sound currency. And then suddenly things will be good again. I mean, you know, there have been a lot of currency failures throughout the

history of the world, you know, starting with Rome. And, but after, and sometimes they're quite bad and turbulent, but afterwards, when you, when you reestablish something on a sound currency basis, you know, you can recover pretty quickly. I mean, the key is to avoid war. And by the way, sound money, I think helps with that too. Because, you know, most of the wars, I mean, the book lays that up pretty clearly. Most of the wars have been financed via inflation. I mean, even I, as I was doing the research for this thing, I learned a lot. And even as far back as the war of 1812, I mean, they had to suspend specie payment as a result of the costs incurred in fighting that war. And so, you know, people don't like to pay for wars.

And people will only submit to so much taxation before they revolt against their government. And so, you know, it's a good thing. When we get to sound money, these wars will, I think, decrease substantially. I remember reading something about war bonds in World War I in the UK. And the Financial Times had run a piece basically saying that these war bonds are massively oversubscribed and people should be scrambling to get involved in them. And it wasn't until something like 2005 that they came back and said, okay, that wasn't true. Yeah.

And they ended up just printing money. It was all a complete lie. Yeah. Total propaganda. It's crazy. And the same thing in the United States. I mean, in the United States, that was the beginning. That was the first instance of quantitative easing.

And it was a subsidy of the bankers with the Liberty bonds in World War I were sold at three and a half percent. So a buyer of a liberty bond would get a three and a half percent yield. And the banks ended up being big buyers of those bonds. And the banks were able to borrow from the Fed at 3%. So figure that out. The bank's got a 50 basis point free carry for helping finance the war. So the government got its war finance.

The banks got a free carry. And what the people got was inflation because during World War I, and this is in the book, there's a nice chart and a table. Basically from the beginning of World War I until 1920, prices in America doubled. I mean, they, they want to, we had 100% inflation over a five or six year period, which, by the way, also led to a lot of interesting societal developments all outlined in the book. I mean, you know, Charles Ponzi started his Ponzi scheme in 2019.

I mean, just like SBF did his thing when on the COVID stuff. I mean, it's the parallels are amazing when the Chicago Black Sox was in 2019, or I mean, 1919. You know, they're, you know, when you have inflation, inflation ruin societies. It really does. and, you know, it ruined Weimar, Germany. It's ruined many societies. And, you know, frankly, it's close to ruining ours and might ruin ours if we don't do a monetary reset.

So, you know, it's pretty clear. And this is not the thing that's interesting to me is every, I think a lot of Americans look at us post-World War II. Well, you know, it's Joe Biden says, this is America, right? It can't happen in America. Well, okay, fine, except if you change all the policies and you do the same policies that have been done all over the, the world many, many times, you know, i.e. deficit spending, 130% debt to GDP, et cetera, you know, you're going to get the same results. I mean, it doesn't matter if you're America. You know, you're going to get the same result. So it's really a serious problem, sadly.

But, you know, I mean, like I say, on the optimistic side, we're going to fix it. So that's the good news. Hopefully this book is going to help fix it because we're going to get a bunch of people demanding that it get fixed. I mean, and voting for people that will fix it. because they'll understand what the issue is. I mean, you know, it was amazing. We had these debates for this presidential election here in the United States, and there was absolutely zero discussion about spending, deficits, debt, all that. We just wanted him to talk about.

I mean, nobody wants to go there. It's like the third, it's like the dog that didn't bark. Nobody wants to go there. But we've got to deal with it. You know, we absolutely have to deal with it. Do you think the politicians in those debates understand the nuance of inflation? Or do you think that's why they avoid the conversation? I think to some degree they do.

But I also think they figure out poll-wise that it's just, it's a third rail. Why touch it? You know, I mean, it's like talking about peace in the Middle East. I mean, it's a dangerous subject. You know, so, I mean, and so they'd rather scrum about other stuff, you know, our team, your team, whatever. And so let them scrum about that stuff. I mean, I try and avoid all politics. I just don't want to be involved in any of that.

You know, what my, my mission is sound money. And I've known for a long, long time that sound money is the underlying problem in America and the world really faces unsound money, I should say. And therefore, you know, this is this is not a new and casual development for me. I mean, I've supported Ron Paul in the past. I've mine gold for 25 years. I mean, you know, pre-bitcoin gold was the only solution, right? I mean, thank God Bitcoin came along. But before Bitcoin, you know, you had to be a gold bug if you believed in sound money.

So, you know, it's very clear to me. I mean, I try, again, I try to lay that in the book, you know, all the moral implications of having unsound money and the times that unsound money has been tried in the past and what happened. I mean, it doesn't work. So that's the message. This episode is brought to you by River. There are many places to buy Bitcoin, but there's no exchange like River.

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Open an account for yourself or your business at river.com forward slash WBD, which is RIVR.com forward slash WBD. So let's do a bit of a kind of history lesson on the Federal Reserve. How did we get to the point where 12 people get to decide the cost of capital? Isn't it amazing? Well, there's a long story on it. And the deeper book, I cover it. Again, I borrowed information from other books.

So Edward Griffin wrote the best book on it, you know, The Creature from Czech Island. But again, the average American is not going to, you've read that book. I'm sure the average American is not going to grab that book. I've tried, but it was too heavy. Right. It's exactly. It's, you know, 600 pages, very detailed. It's hard slog, you know. So what I've done is I've condensed it. You know, I've grabbed the highlights, the things you really need to know, and that is the Fed was formed in 1913. It was formed in a very sneaky way. There's a lot of politics behind that. But basically, you know, the banks, the banks operate with a pretty interesting business model. They can print money effectively by fractional reserve lending. And they can, you know, they earn money on money they've printed. So they get interest on money that really. didn't exist. It wasn't somebody's savings. And that's all great. And so they can lever up, and the more they lever up, the more profit they make. So that's how bankers become quite wealthy. And as a result of that whole system, that's a great system, except when suddenly you have an

economic downturn and all those debts go bad. And if you're a bank, I mean, the one flaw that the banks had in their business model was that in a downturn, they could go bankrupt. You know, if they'd made too many loans and the loans weren't good, guess what? They were out of business. In fact, in the old days, you know, if you're a banker and that happened to you, you might be personally liable for the loan losses. Well, you know, in the panic of 1907, J.P. Morgan, you know, basically bailed out the New York banks, but it was close. I mean, everyone realized, holy, canola, this banking stuff is really risky. Yeah, we're wealthy when times are good, but bad times mean we're going to get killed. And so what they thought is, you know what, we need a backstop.

And we need the government to backstop us and let us control the currency so that when those bad times come, we'll just. just get them to print our way out of it. And so that's really what the Fed is. The Fed is a device for the banks to be able to print money to prevent themselves from going bankrupt so that they can make all the profits in good times and then be guaranteed against going out of business and the bad times because the government bails them out,

which effectively means the taxpayer bails them out because the government really is the taxpayer and the taxpayer pays either in the form of taxes or higher food costs. So that's kind of the genesis of the Federal Reserve. It got passed two days before Christmas in 1913 when most of the people weren't there. It's a fascinating story, all the politics behind them. It's too long for this podcast.

But as you can imagine, the bankers had a lot of smart people thinking about how to get this thing through. And they did. And so this was 1913. Well, soon thereafter, World War I broke out. And we started supporting the Allied side of it. And we needed money to do that, which the government didn't have because tax revenue wasn't there. And so, you know, the Fed, which originally was, you know, sold to us as a means of, you know, preventing bank panics and, you know, lending against good collateral at penalty rates, which is what Walter Baggett called it. You know, and nothing more.

And those loans would be paid back very quickly. That was the sales pitch. Well, the reality is the war broke out and immediately they needed a ton of money. And so they immediately amended the charter, Section 133 and, you know, started printing money. And as I described earlier, they did that. Liberty bond thing where they basically issued bonds and then gave the money to the banks to buy them. And, you know, they got their war paid for by inflation. And so, you know, right from the beginning, I mean, right, I mean, not even a couple of years after the Fed was established,

they started doing what they said they weren't going to do. And, you know, and then it's been just a long, slippery slope. Yeah, it's only got worse since. It just got worse. Roosevelt came along and then Dixon came, you know, it's right. So, so this is, this is the underlying problem that's been present now. You know, we've had over 100 years to watch it unfold and it's gotten progressively worse. And I think it's coming to a head right now. So that's why I think this book is relatively timely because I think this is going to be.

I mean, I call it the big print because I think the big print is coming. I mean, the math is kind of relentless. They have to print money. This debt structure is going to collapse. And the United States is $100 trillion in debt. So, you know, on a, on a, a base money supply of like, you know, six trillion. It's just, it doesn't work.

They're numbers that you just can't really fathom. But the Fed is meant to be independent. Do you think it actually is? Well, that's a good question. I mean, yes and no. I mean, it's a political. It is political. It's, it's, so, you know, the mandate is stated, you know,

in the amendment after 78 was, you know, full employment and, and, uh, stable prices, which they've defined as 2%, which I don't consider stable, but set that aside. And, of course, the 2% they cook the numbers. But leave all that aside. The third mandate, I talk about this in the book, that's really not talked about very much, is financial stability. And that goes back to the original one, you know, in World War I,

which is to say when things get really hairy, they're just going to turn the printer on because they know that's all they can do. And so to them, the printer is a hammer and every serious problem looks like a nail. And so, you know, they basically, are political in the sense that they're responsible for keeping the financial system going. And that's not a Democrat or Republican thing. That's just a country thing. And, you know, they really are kind of a branch of the government. At various times, they've been more and less political. I mean, Volcker was probably the least political of all the Fed chairman.

Burns was extremely political. You know, I think Powell is trying not to be political, but I think he ultimately will be and is. Brannacki was extremely political. I mean, it kind of varies. But they are locked into a system that they are responsible for. They don't want to be on the watch when the whole thing blows up. And so really at the end of the day, and I've got a big section of the book on the Fed and on some brave people at the Fed, Daniel Di Martino Booth and a guy named Thomas Honig

who at various points of time. pointed out that what they're doing isn't correct. And Martina Booth worked for Richard Fisher. And, you know, the Fed is extremely insular and they do not, you know, those people who've tried to push back on the Fed don't particularly do very well. You know, the Fed defends itself aggressively against any narrative that doesn't support them. And, and also they're, you know, they really kind of, some of the things they say are just absurdly untrue. And it's not just me saying this. I mean, Chris Leonard wrote a very good book called The Lords of Easy Money,

which I heavily excerpted in the book, talking. And I mean, this is a guy who's a New York Times reporter, very, you know, very mainstream and established. I mean, the book was reviewed by the Wall Street Journal of Financial Times and given very high reviews. And he more or less said, hey, you know, look, the Fed was lying about this. And I mean, I was kind of like, wow, it's pretty interesting to see somebody so mainstream,

coming to a conclusion that I've held for many, many years. So, you know, the Fed's in a lot of trouble, I mean, in my opinion, I mean, if I were a Fed governor, I mean, I think in 10 or 15 years, the Fed won't exist. I think the Fed's going to fail, you know. That's interesting to hear because I don't know when it was that you first kind of saw the writing on the wall for the Fed, but the end the Fed movement, like probably really kicked off in 2008 and then it's been really stronger over the last few years, especially amongst sort of Bitcoiners. Yeah, it was a Ron Paul thing.

It was, you know, the Occupy Wall Street and the Tea Party and all that. Ron Paul was always saying, and the Fed and et cetera. Yeah, I mean, he was saying it even before the crisis in 08, and he was always been an antagonist of the Fed. But the 08 crisis was really, as Ron Paul says, it was beyond the pale. I mean, and I have to say when 08 went down, I was just, I couldn't believe my eyes. I was just like, hang on a second. You're going to take interest rates to zero. I mean, that just makes no sense.

It's a totology. You can't have zero interest rates, which effectively is. zero interest rates are effectively saying capital is worthless. I mean, by definition, right? I mean, if capital only owns 0%, then why have capital? It makes no sense. And then on top of that, when it's like, well, we're going to, and by the way, we're going to, we're not just going to print a little money, you know, like the world, like

for World War II, you know, with financial repression, but we're going to print a lot of money, you know, with QE1, QE2, and QE3, which really became QE infinity. You know, that's, that's, I was shocked. I was totally shocked. And that was actually when I got radicalized for sound money, Danny. I mean, prior to that, I was an investor in technology. I spent my whole career in the venture business investing in growing technology companies that were very, very successful and particularly the Internet, which worked out really well for me.

And maybe that's why I kind of understand Bitcoin better than the average financial type, because I saw the Internet emerge. I participated in it. I believed in it. And I see this as just it's deja vu for me. This is all the exact same thing all over again. I mean, the Bitcoin I'm talking about is the Internet in its early days. So I, this is a little bit of a tangent, but I think it's worthwhile.

In the book, you tell a story of how you kind of got screwed by Fed decisions in 2008, because you were short at the housing market and then they changed your rules. Will you tell that story? Yeah, sure. I'm happy to. So most people have probably seen the movie The Big Short, and, you know, Michael Burry is a genius. and he very intelligently. Look, if you were in the financial world and you were paying attention in 2004,

when they took interest rates down to 1% or 2003 to counteract the bursting of the dot-com bubble, you know, and I mean, Alan Greenspan was out there saying, you know, go out and take a helot, borrow against your home. I mean, the Fed viewed it as their job to keep the stock market going up to keep the economy healthy, and they did it by blowing the housing bubble. And those of us who were watching could see it. And there's a good chart in the book that shows that. I mean, you know, how quickly subprime.

grew and they had these ninja loans, no income, no job, no assets. And, you know, it's just nutty what was going on. And anyone in the financial sphere could see it. Many of us did see it. I didn't even know what a CDS was. I mean, that was, we talked about a great way to play it. And Michael Burry did, and he played it and he ever got wealthy doing it. But I was managing a fund at the time.

And I could see that it was a very good area, you know, macro-wise to short the housing stocks and the finance companies that had gotten very levered up into the housing business. And so, you know, in 2007, a couple of Bear Stearns hedge funds blew up. And I realized, okay, this, you know, it's coming to an end here. And so I put those shorts on. And then in March of 08, Bear Stearns went under and Morgan Stanley bought it out with a $20 billion subsidy from the government. But, you know, I was still short. And it was all starting to work. And I was short, Lehman, and Amback and Fannie Mae and MBIA, just a bunch of companies. And the bottom line, you know, it got worse. I mean, over the summer, Indy Mac failed. And then in the fall, Fannie and Freddie

fell into August, Fannie and Freddie fell into receivership. And then September, really, September of 08, it really got intense. I mean, it was like, I mean, the guns were, I mean, everything was just blowing up left and right. It was very clear that most of Wall Street was going to go bankrupt, as Lehman did. And in the middle of that, so I had these shorts on and I was up about 50%. This is the fund I managed. And it was a lot of money. It's my money and my investor's money who I was responsible for. And so it was working for me. And on, I think it was September 21 or two, I don't know, you can Google and find it. But in the middle of September, mid to late September, the SEC came out and said, hey, you know what? If you're short financial stocks, that's illegal. You got to cover

your shorts. And they just put out a blanket. So again, they changed the rules. They didn't watch financial stocks to go down anymore. They were trying to protect the insiders. They were trying to protect the banks. And everything I held rallied 50% in a week. And so I was forced to cover out of my winning positions and gave back all my profits for that year. And had I been able to hold them to the end of the year, I probably would have about 100, 150% for the year. But they basically changed the rules in the middle of the game to protect the banks and to protect the bankers. So some people sometimes ask and say, well, you know, why are you so bitter about the Fed?

Well, because I thought I was playing a somewhat fair game, which was naive on my part, I'll admit. But it turns out I wasn't. And they've done this to Americans. And this isn't just me. I mean, they did this to my grandfather. They've done it to my dad. They've done it to, you know, millions and millions of Americans. I mean, they did it to my sister.

My sister bought a house in California. You know, she just thought she was buying a house at market crisis. Well, she was buying it during, you know, going into the housing bubble. She put 20% down. It wasn't subprime. She had a good job. Well, she changed jobs, had to move, had to sell the house. And suddenly the housing bubble collapsed.

And her house value was down 50 percent. Or equity got wiped out. You know, blah, blah, blah. So, I mean, this, you know, and there are hundreds, if not thousands of stories about that. If you're an American, you know, and people my age, I mean, they've had their, you know, a lot of people had their network hit, net worth hit twice. Once, if they were in the dot com thing and they got sucked into that, you know, the dot com bubble burst. The NASDAQ went down 80%.

You know, the SMP went down 50-odd percent, 47 percent. You know, in 08, the S&P went down, you know, housing stocks went down 100 percent, and the S&P went down 50-odd percent. And so, you know, this bubble blowing by the Fed has been, you know, there's a good quote in the book from Morgan Housel that says, you know, bubbles are extremely destructive. I mean, they, he said, quote, they ruin lives. And that's true. I mean, that's really true.

And so the amount of pain that the Federal Reserve and their miscellors, management of interest rates in the economy has caused. It's just, it's gargantuan. It's absolutely gargantuan. And so, you know, again, I wrote the book to tell the story to explain to people that this is the core problem. You know, this isn't, this isn't a blue thing or a red thing. It's not a, you know, it's not a liberal thing or a conservative thing. This is a underlying monetary thing that is causing enormous unnecessary pain for millions and millions of Americans. It's been going on for a long time. And unless we diagnose the core problem and solve it, you know, it's going to continue to go on.

Now, that's all the bad news. The good news, as I say, is there are systems and things happening. We talk about this in the book that are going to solve this problem. And that's the really good news. And, of course, I think the reader of the book, if they listen to my advice in the book, the book will come away and say, oh, okay, not only is the problem going to get solved, that's good, but I've got a way to maybe protect myself as that problem gets solved. And in my view, that's Bitcoin.

And I think, you know, the book makes a case for why that's a, you know, that's a true statement on my part. And I would just say that that's not financial advice for anybody. I've got to publicly say that. That's just my personal opinion. Everyone should make their own choices, do their own research. But, you know, obviously I am an investment manager. and it's true that I have a large portion of my investments in Bitcoin-related things for just this reason I've laid out.

I think one of the kind of lesser talked about things with Bitcoin, it kind of plays into what you're talking about there in the fact that it's a rules-based system. You can't distort the price signals. You can't change the rules. And if you had Bitcoin then, there would have been a way of hedging that kind of exposure with Bitcoin rather than with the housing market. That's absolutely right. I mean, that's the beauty of this whole system.

I mean, somebody recently, I think it was actually a Tradfai macro guy who's very good. I respect on Twitter said, hey, you know, this Michael Saylor is just like the Hunt Brothers. You know, he's just trying to corner the Bitcoin market and shove the thing up to the moon. And I responded to him and I said, no, you're wrong. And here's why. You know, one, the stock to flow on Bitcoin is a lot better than the stock to flow on silver. You know, we're going to produce a lot more silver. And two, more importantly, the reason the Hunt Brothers failed is that they changed the rules.

The CME came in and said liquidation only and did not allow new buyers and said only sellers. And the difference with Bitcoin, nobody can stop Bitcoin. Nobody can change Bitcoin. Nobody can change the rules. And nobody can outlaw the buying of Bitcoin. I mean, they can, but people with access to a computer all over the world can do it. And if any country were to outlaw it, then that country would be shunned. I mean, China's tried to outlaw it, although we believe there's still a lot of people in China buying it.

So, yeah, the fact that it is rules-based. I mean, look, the price of money, and the book talks about this, the price of money, in my opinion, is the most important price in the world because it determines capital allocation. And the proper allocation of capital is what determines human well-being. And so if we want to have higher standard of living for everybody in the world, we have to allocate capital properly. And we can't do that when we've got a Federal Reserve that decides the interest rates are either, you know, 20 percent. or 10% or zero percent. I mean, that's, you know, we're on the seesaw of just crazy rate moves in both directions. And that's not, that shouldn't happen.

If we had sound money, the interest rates would stabilize at a level that balances investment with savings. And that's, that's the key. You know, the interest rate should be the price of savings as against what's needed for investment. And then people, then capital allocators can make the correct decision as to where the money where things should go, where the money should be invested, to increase productivity and output for everybody.

And, you know, this, I mean, there's just been so much money wasted on stupid shit as a result of, you know, incorrect, you know, capital pricing, right? And that's, I mean, that's the bottom line. And, I mean, if we all want, I mean, look, everybody wants, I mean, I know the, in the history in the past, I mean, it was all about the American dream, right? You wanted to be able to live better in your parents. Everything's getting better continuously. And sadly, I mean, I kind of see that slipping.

I don't, you know, I see, I think my kids are going to have a hard time buying houses right now. I mean, it's, I don't think, you know, the American dream that I grew up with is fading or it's, it's, it's, it's tattered. And, but, but that, but that doesn't have to be. I mean, you know, technology is a great thing. It's getting better, you know, et cetera, et cetera. And so, you know, we can return to that. And we, you know, every generation should live better than the prior generation because humans make progress. But sadly with a broken monetary system, we really dilute that progress a lot.

So that's kind of the issue. This episode is brought to you by CASA. For those of you out there who want to protect your Bitcoin, I want to tell you about CASA, the leading Bitcoin self-custody solution. If you're serious by protecting your Bitcoin, then you need a rock-solid security plan, and CASA gives you just that. With their multi-signiture security and key management services, CASA makes it easier than ever to take control of your Bitcoin without the risk of a single point of failure.

CASA also now has a private client option, which gives you a purpose-built security program with ongoing advisory, advanced verification inheritance, a 24-7 security emergency line, and lots more. To find out more about CASA's private client solution, go to CASA.io, which is c-a-sa.io. We should get back to the Fed, though, because I just have one more question on that before we move on. Do you think we can and will abolish the Fed? I do.

I think the Fed will fail. frankly, because I think there's a high probability that inflation will be so high that the politicians will decide to revoke their charter and return to sound money or we'll have hyperinflation and will return to sound money or we'll have a monetary reset and return to sound money. And if you have sound money, you don't really need the Fed. And the whole notion of a lender of last resort, it really isn't necessary. I mean, the banks have all convinced us that we need that. But if you don't have a, I mean, there's a policy in the back of the book, one of the chapters, and I've got the chapters right front, is chapter 26 is called policy responses.

And I actually, because a lot of people say, well, okay, Larry, you're talking about all this stuff, but, you know, what's the solution? You know, give me a solution here. And so I laid it out. I said, all right, here's what we need to do. And, you know, we need to get rid of the FDIC and we need to get rid of fractional reserve lending at the levels that we have it now. and we need to get rid of the Fed backstop of the banks. And guess what will happen? Responsible banks will emerge that won't fractionally reserve land

down to zero reserves or 10% reserves. They'll keep 50% reserves. And things will be sane again. And so if a bank wants to make more loans, they've got to find more deposits. And they've got to pay a higher rate on those deposits. I mean, that's the other thing that's happened. With all these interest rate moves,

and we talk about how these people, you know, are disadvantaged or, you know, the average person is disadvantaged because they have to borrow money at 25 and the insiders can borrow it for low rates. The other way the average person is disadvantaged, and this really hit after 08, you know, prior to 08, and this was, I mean, I know this is the case in some of the members of my family, you know, had savings and they could put them in a CD and get 5 or 6 percent, right? Well, when we went to ZERP, 0% interest rate policy, those CD rates went to zero. So somebody who might have saved up a million bucks over the course of their life and was put in it in it, didn't want to risk it in the stock. market, put it into a CD, got 5%, it's 50 grand a year, that plus Social Security, you know, they're okay, right?

Suddenly you take rates down to zero, you've just taken that income away from them. And they have savings. Those are hard-earned saving. That's maybe 50 years of work, you know, and one, they're going to be, those savings are going to be diluted because everything they buy is going to cost more money. But two, those savings aren't even going to earn a fair rate of return because the Fed's decided to set the rate of return at zero to protect the banks. It's like, what?

it's just incredibly broken, right? It's just incredibly broken, wrong and unfair. And again, this is what the book is talking about, right? So it's quite funny for someone of my age, so I was sort of 16, 17 when the financial crisis happened. And so my entire adult life until like the last couple of years, there's been no concept of interest rates. That's never existed for me. Yeah. I mean, it's another reason why I wrote the book, just, you know, because I see generations that don't understand, you know, I mean, I'm 67, right? So I just, I felt like, you know, I got to record, you know, what this place used to be like versus like what it's like now. Do you know what I mean? I mean, it's just, it's different. It's just, it's vastly different and it's

wrong. And it's wrong and it's unfair. And, you know, so these are the, these are the points that I try to make in the book. And what I'm hoping is to light a fire, you know, under the readers of the book. hopefully some politicians will emerge who, you know, realize that sound money is an important issue and they'll support this kind of thing. And the voters will then vote for them. And, you know, we can get this thing to happen. I mean, I'm pretty sure, you know, human beings are, you know, goal seeking for better lives. And, you know, the Brits used to say, we always do, you know, Churchill said, we'll always do everything before we do the right thing. But, you know, I mean, America, we'll figure this out. I mean, we will get there. I mean, this problem is, it's getting

acute enough now, Danny, in my view, that we've got to get there. Because just too, I mean, everybody, I mean, can you find anybody who's, you know, reasonably intelligent and plugged into the world and, you know, walking around and thinking, boy, this system we got, this is really great, you know, everything is just fine and dandy right now. I mean, that feeling just, I don't, I don't know anyone who feels that. Yeah, I just don't think it exists, right? So I definitely want to get into Bitcoin a bit more deeply, but before we do, let's talk about the debt. Because I had a look just before we jumped on this call, and right now, US debt is it like just under $36.5 trillion. Now, we know they're never going to pay that back.

It was 36 when I started the book, but go ahead, yeah. But in terms of like, is there anything they could do? I know they're not going to, but is there anything they could do to fix that? Well, the strategic Bitcoin Reserve might help because, you know, what, so the debt is measured in dollars, right? And, you know, there have been debt crises before, and there have been countries that have been over-indebted before. And, you know, the U.S. was one of them. After World War II, we had debt to GDP.

About the same level it is now. It was actually 115%. Now it's 125. And we got out of it. We got out of it two ways. They did financial repression in QE. They held interest rates down. And then we were fortunate.

The demographics were good. All the GIs came back from the war. They got married. They had a lot of kids. They bought a lot of cars. They bought a lot of appliances. And we grew our way out of it. Okay. Sadly, now the demographics are running the other way because that generation mine is all retiring.

And the generations behind didn't have as many kids. And so it's going to be hard to grow our way out of this one. But really the way to deal with the debt, Danny, is it's got to be marked to market against something else, which is not to say that it becomes worthless, but which is to say that we need a lot of inflation so that the debt becomes. smaller as a result compared to GDP. And that's just a mathematical fact. And so the losers in that are going to be the debt holders who are not going to get repaid in real dollars. I mean, if you own a 10-year or 30-year, the purchasing power of your bond is going down and already has gone down massively against both gold and Bitcoin. And that's only going to continue, in my opinion. And so, you know, when Trump says, for example, Bitcoin is the new oil, you know, in the 70s,

they dealt with some of these issues by marking up oil a lot and then establishing the petrodollary based on oil. And so what has to happen here is these other assets need to be written up against the debt. So the gold price needs to be a lot higher. The oil price needs to be a lot higher. The Bitcoin price needs to be a lot higher. GDP needs to be a lot higher.

And when all of those things occur, the debt won't be so unpayable. But if you read through the lines of what I just said, for those things to occur, there's going to be a lot of inflation. right? And the book talks about that. So, you know, we've had a 40-year deflationary trend, you know, buckle up. I think we just shifted gears and we're going in the other direction. And inflation is very much, in my opinion, baked in the cake. The issue is how much inflation? Is it disorderly? Does it turn into hyperinflation? And again, all talked about in the book. But, you know, without inflation, the system won't work. I mean, the system is built on inflation. It's built on

increasing inflation because, you know, and now, you know, the debt is getting so large that, you know, I think we're on the, on the cusp of another, you know, big print. Of course, therefore the title. But yeah, the debt, the debt can get dealt with. And you could really do it with a stroke of a pen. I mean, in theory, you could, you could issue the, you know, you could do the MMT thing or the Krugman thing of issuing the trillion dollar coin and just saying, you know what, we're paying off the debt with a trillion dollar coin. You know, but, but, What that does, that means basically what you've done is you've printed, you know, $36 trillion. The Fed balance sheet right now is seven.

So, you know, just think through the math on that of what the inflation would be if you decided to go in that direction. You know, okay, fine. We've got the debt problem solved. The problem is the prices of everything just won up 300 percent or something, right? I mean, so, I mean, the good news for the, in that scenario, by the way, though, the good news for the working person who doesn't have a lot of debt, maybe, and doesn't have a lot of assets. is, let's take the plumber example. I like that just as kind of the average working guy.

You know, the plumber, I mean, people are still going to need to have their toilet fixed. And that guy's got a very useful skill. And if he's young, you know, whatever the new monetary unit is and whatever it buys, people who have skills will then be able to work in that new monetary unit and get paid fairly and pay for food. And, you know, I mean, so what I'm kind of describing is a reset, a debt reset. maybe highly inflationary one time, but then on a go forward, you know, the question here,

and I put this out in the book, is are we willing to maybe live through that with the promise that once we've lived through it once, it won't happen going forward? In other words, we're now back on sound money and the inflation dragon will be slayed. That's really, in my view, the best possible transition from where we are to where we want to be hurting the fewest people, which is. certainly a huge goal of this transition. Now, will we be smart enough to do that? I don't know. In that scenario, I guess the people who own assets benefit massively, the people without savings who have like a productive job, they're fine. It's the people with savings in the middle

that get screwed. Is that right? I think that's right, because the assets will repricing the new currency. It's the people who hold bonds and pensions. They'll get screwed because the value of them won't be worth nearly as much as what they were. And the young people who have their entire career in front of them, they'll now be working for sound money and they'll be able to save and they'll be okay. But yeah, I mean, sadly a lot of boomers will get very badly hurt in that environment. I mean, you know, there's just, honestly, there's just no way around it because of the math and what the math is.

But, you know, it's, yeah, it is what it is. This episode is brought to you by Ledger. If you're serious about protecting your Bitcoin, Ledger has a lot of a solution you need. Their hardware wallets give you complete control over your private keys, ensuring that your Bitcoin stay safe from hacks, fishing and malware. With Ledger's easy to use devices and the Ledger Live app, managing your Bitcoin has never been more convenient. Whether you're a long-time holder or new to the world of Bitcoin, Ledger makes it simple to keep your assets protected. If you want to find out more, visit Ledger.com. If you want to find out more, visit ledger.com

and secure your Bitcoin today. That is L-E-D-G-R.com. So with the last sort of two big prints, we had 2008, which was the catalyst for that, was obviously the housing market collapsing. Then we had COVID. What do you think the catalyst for the next big print will be? That's a great question.

I just don't know. It could be CRE. It could be the failure of the bond market. I think the bond market is sending some pretty loud signals right now. I mean, here we are. The Fed's cutting rates, and yet bond rates are going higher. What the bond market is saying is we don't believe in the Fed. and we're worried about future inflation.

And so my sense is that the bond market is going to force the Fed's hand. You know, in September of 2023, the 10-year went over 5 percent, and 12 Fed governors came out and in chorus saying, we're, you know, rate hiking cycles over. And the bond market calm back down. But I don't think they can pull another one of those out of their hat. I mean, I think that I think the bond markets are going to continue to fall. interest rates are going to continue to go higher, and the Fed is going to be forced into some form of quantitative easing and or perhaps even yield curve control. And at that point in time, the bond market

is going to say, okay, Fed's sold to you. You know, you want me to sit here and live with a 3% yield in a 12% inflation environment? I don't have any interest in holdings. You can have it. So the bond market's $36 trillion. The Fed balance sheet is $7 trillion. There's how you get to a $50 trillion dollar Fed balance sheet. And of course, what the world sees is, oh, my God, we just created $36 trillion more of money. That's massively inflationary. I've got to own something the government can't print. And there are three choices, Bitcoin, gold and silver. And the prices of those are going to, well, there's a fourth choice oil, but it gets used up. And those are going to end real estate too, but that's got a lot of other problems. And those are going to go just berserk. I mean,

they're going to go nuts. And so, you know, that's why, you know, having something that's that the government can't print as your asset that you're holding, I think it's really absolutely essential for everybody. It's extremely important. And while you have those four options, there's probably going to be a winner. And I imagine Bitcoin will demonetize each of those other assets to a degree. I think Bitcoin wins massively over all the other three. I mean, and the reason it's got two things going on.

I mean, look, gold's going to go up. I mean, and Bitcoin is going to demonetize gold, but in nominal terms, gold is going to go up because it's better than Fiat. and it's only growing at 1% a year, 1.7% a year. But Bitcoin's going to crush gold. And the reason for that is that gold's fully distributed. There's a big lindy effect on gold. But Metcalf's law on Bitcoin, you know, I mean, Bitcoin is a peanut compared to the size

of gold today. I mean, you know, the gold market is a $16 trillion market. The Bitcoin market is two. So Bitcoin can go up 8x and just be the size of gold. And the total asset market, as Jesse Meyer put out in his great chart, is not a 900 trillion. So, you know, Bitcoin today is two-tenths of one percent of total global assets. I mean, that's just nuts. It's going to go up 10x. So it's going to go from 100 to a million. So then it'll be 2 percent. And then it's going to go from 2 percent to, you know, I mean,

it'll go much higher. And I mean, and by the way, gold is low at 16. I mean, they're both going to go much higher because, you know, the global bond market is just going to get annihilated, you know, with all this money printing until we reset. You know, when we reset, it'll be different. But in the meantime, you know, and I think we're a long way from resetting. Although I will say this, I mean, Scott Bassett, who Trump just appointed a Treasury Secretary, has said he understands this. He's actually a gold book, too, which is a positive. And he understands that there could be value of crypto, which to me means he understands Bitcoin. He has said that, you know, he can see some kind of a monetary reset.

I think he used those exact words, you know, a la Breton Woods, you know, and he wants to be at the table. when it occurs. I thought, boy, that's fascinating. I mean, and that's why, you know, I was actually in favor of his appointment as a Treasury Secretary. I mean, Lutnik would have been good, too. He's a big Bitcoin bull, but this is really going to be brain surgery. I mean, it's, this monetary system is, it's a tough mess. And to get us through this in a way that's fair, as fair as possible to everybody and back to a system that's based on sound money, this is no small task. You know, and how we get from here to there, I, you know, I hope for the best. But as you pointed out earlier in the show, it could be real messy.

I hope it's not, but it could be. I think everybody has to kind of prepare for that. But the good news is, again, you know, the key is to avoid war. You know, I mean, if the people are here and the assets are here and the technology is here, well, if we have a monetary reset, what does that mean? It means some people are going to lose and some people are going to win, right? I mean, rich people who own their money in fiat and bonds, guess what? you're not going to be as rich anymore.

You're just not. I mean, you know, but, you know, hard workers, people who get shit done, young people,

you know, people who own sensible assets. I mean, they're going to be protected. And then, you know, they'll be okay. And you come out the other side and it'll be better.

So, you know, there's, but there will be winners and losers, big time. But I mean, back to the Bitcoin thing. I think it really is important to understand just how asymmetric it is.

One point I did not make there. I want to make. It's just that, because we're on this adoption curve, it's just, you know, it's going to benefit from monetary debasement, but it's also going to benefit because right now we're at that less than 10% tipping point. And as we cross that tipping point, you know, I mean, it's going to go from 10% to 90%. And when it does that, I mean, that's how Sailor gets to $13 million of coin. He's not nuts. I mean, this is going to be at a million of coin and then two and then four and then, you know,

it's, and so, you know, everyone, I can't tell you how many people I encounter today who know I bought it a lot cheaper. And they say to me, I can't pay $100,000. You bought it for much cheaper price. Well, guess what? I mean, I sat with Max Kaiser recently to lunch. And he said, you know, look, when I was paying $2, I was mad that Trace Meyer got it for $0.25. I mean, right? I mean, it's all relative. Yeah. I mean, in 10 years when it's a million, they'd be looking back at people who bought it for $100,000, I think, God, you got a good price. And by the way, I don't think it'll take 10 years to get to a million. I think it'll be probably five years. It'll take it outside to get to a million. I mean, I have the same thing. People say

the same thing to me. And the thing that I always respond with is, like, I'm still buying it now. Like, it's not, I've not stopped. Well, that's right. That's exactly right. Yeah, I mean, for savings, there is, in my opinion, there is no better savings vehicle, no better asymmetric bet. I've been in finance for 42 years. Excuse me. And I can, and I honestly can say that I've never seen anything as good as, it looks like this. Nothing. I mean, it's, you know, there are companies that have done as well or better. But they had risk and they had management teams. And this is a system. It's a mathematical protocol.

And I mean, yeah, okay, there's a little bit of risk. The core developers all go rogue. But because the nodes are distributed and everything gets to vote on it, I think that risk has gotten to be very, very small. And so, you know, you're really talking about something that's just going to keep on running and there's going to be more demand. I mean, that's the thing. We haven't discussed this, but I try and emphasize the people we're looking at it.

This is not some kind of bubble. This is a technical innovation. It's a technological innovation. And what these guys invented, whoever they are, you know, I'm looking at you, Adam, what these guys invented, because he's, you know, I mean, Chancellor on the Brink, he's British, huh? What these guys invented is digital scarcity. And so, in the past, every single commodity, every form of money has been subject to dilution for thousands of years. Gold silver doesn't matter. Here we have a form of money that can't be diluted.

that's different. That's significantly different than anything we've had in the past. So, therefore, the way this thing is going to perform is going to be significantly different. And I think, you know, in the, in 10, 20, 30 years, there are going to be, you know, our kids and people are going to say, well, you know, he was in Bitcoin or he wasn't in Bitcoin. And the difference on the outcome is going to be pretty substantial. That's kind of my guess. Just very briefly to go back to the big print. In 2008, The TARP bailout was $700 billion. In COVID, it got so crazy that they were doing that every two weeks, basically.

This time, do these have to get sort of an order of magnitude bigger every time they print? They do. They do by definition because of the laws of compounding and growth. I mean, look, at 71, the total U.S. debt, all-sector debt, this is, you know, corporations, individuals, the government was $1 trillion. dollars. Today it's a hundred trillion dollars, okay, and growing rapidly. And, you know, anybody who plays around with compounding and compound tables knows that, you know, what is the compound interest of the seventh wonder of the world? I think Einstein said that. I mean,

I mean, that's the same way. I mean, it's, but it's on the other side of it because you owe it. I mean, compounding your debt, it just gets bigger and bigger and bigger. And so, yeah, the next, I mean, in the 08 example, they printed a couple trillion over three years. And in the COVID example, they printed $5 trillion over 18 months. I mean, it's like, wow. It's scary. The next one, the next big print, in my opinion, will be, you know, I don't know, $7 trillion, $10 trillion, you know, I mean, it's going to be big.

It just can't be. I mean, and that's the thing. That's why I feel very confident in my thesis because I understand the underlying math so well. You know, now, where could I be wrong in the book? about this too. Where can I be wrong? If the government, if the U.S. government got incredibly responsible, incredibly quickly, then this thesis would not be as sound as it is right now. And that is to say, you know, they close on the military bases, they create peace all over the world, cut the military budget 50 percent. You know, they means test and cut Social Security and Medicare by 40 or 50 percent,

and they balance the federal budget. Well, okay, that's, you know, that changes the monetary debasement thesis that I'm investing in and that all Bitcoiners are investing in. But when I describe those things and you kind of consider the odds that those things happen, you know, some special factors. I mean, I would rate the odds of those things happening as being pretty low, right? Yeah, I'm definitely not going to be betting on that outcome, though, that's for sure. Right. I mean, it seems like a long shot. Yeah. So just to close out, because this is something I'm definitely going to send to sort of friends and family that are still trying to understand this. Just give us your pitch on why Bitcoin actually fixes this.

Sure. It's quite simple. It allows the proper allocation of capital. It allows people to save for their retirement without having their savings diluted. And it makes, one thing about being a Bitcoiner is you get really optimistic about how good the world could be based on this. And the longer you've been in it, you know, the more your savings have grown. And it starts to work. And you're like, wow, this is really great. It defunds the government because the government cannot take it away from you and they cannot tax it unless you sell it. And, you know, they can't benefit from diluting your money because your money is undelutable. And therefore, they can't easily fund wars. And so I think wars decrease. And then I would say there's a part of the book where I talk about Alex Gladstein's, you know, the third world case. where the unbanked and, you know, remittances and so on and so forth, I mean, you know, the financial system kind of worldwide is very predatory. I mean, they charge very high interest rates. They

don't pay much in interest in terms of returns. You know, if you're working in the United States and sending your money back to, you know, your relatives in some poor country, you know, between 8 and 12 percent of that gets raked off by the Western Union of the money transfer services. And, you know, there are people with a lightning wallet and they get their family member a lightning wallet and they send their earnings down to them and, you know, it costs a couple of pennies, right? And I mean, these are billions of dollars, the remittances. And so, you know, being able to do that is a real benefit for those people.

So in my view, it just makes the world a better place in a lot of different ways. You know, it decreases the size of the finance sector. I mean, the whole finance sector is built around, you know, know, kind of carry games and in ways of extracting rents. And, you know, it's let the wrong people get extremely rich, you know, the private equity people, et cetera, as a result of borrowing cheap and then, you know, extracting rents out of other people. That stops.

I mean, you know, and the best and the brightest don't want to go into finance because they think it's a great way to make a ton of money. I think maybe I should go into engineering and, you know, figure how to make things better and how more efficient. Because really, if you really look at what makes the world a better place, it's engineering and developments and its technology and doing things. You know, the way for human beings to live better is to become more efficient, to do more with less.

And that's generally a function of technology and engineering. It's not a function of financial crap, you know, shoving paper around, playing finance games. That doesn't necessarily make the world a better place. It might make some people very rich. and it has, but, but, you know, at the expense of others, you know, I mean, look at the whole, there's a chapter in the book on the private equity game and how all these people, you know, these guys went out and they bought up good, healthy companies, they levered the shit out of them,

they paid a, they paid themselves a dividend, they made a huge profit, the company went bankrupt, the pensions were wiped out, and the employees got fired. I mean, is that, is that good? Is that good for capitalism? Is that fair? Absolutely no. No. I mean, it's, yeah, and, but that's, that's, that's what Fiat money has allowed and encouraged. Do you know what I mean? And so that game, you know, that game will go away if the money is properly priced. There won't be, you know, those operators won't have the ability to borrow money at incredibly cheap rates to take over legitimate, healthy businesses and rob them, so to speak, right? So, so there's just, I mean, the book lays it whole lot. There are a multitude of ways in my view that the world will get much better on sound

money. And I can say that also because I remember, you know, the money wasn't entirely sound in 71, but it was sounder than it is now. And it was better. I mean, I, you know, I lived in a town that had a CEO of Ford Motor Company in it, you know, and he ran one of the biggest auto companies in the world. My father was a retailer. He did okay. And I bet that CEO probably made, you know, three or four times what my father made, which he obviously should have earned because he was running a huge multinational corporation. My father was running a furniture store. So, you know, but I mean, but today, you know, that ratio would be 400 to one, you know. I mean, there was a time when there was a middle class in this country. And, you know, the middle class has gotten eviscerated with this, all this

financialization. And so it's just, it's just not right. It's not right. And I remember how it was one it was right. And I, you know, I'm naive enough or idealistic enough to believe that we can get back there, that sound money will take us back there. I think that's, that's what's changed from then to now. And you can see the outcome now. We all know now is broken. So let's go back and try like what it was then and see if we don't get a better outcome. I mean, maybe I'll be wrong. Maybe we'll try it and it won't be a better outcome. I don't know. But I suspect, I think I've got enough evidence to support my view that it will be better if we go back to sound money. Yeah, I don't think you're wrong. Amazing. Thank you very much, Larry. That was great. I can't wait to get my hands on a proper book.

But where do you want to send anyone? Well, obviously, you follow me on Twitter. I make a lot of noise there. I would say if you go on Amazon, I mean, the book is out on Kindle for pre-order. It's $10.99. The Kindle has a bunch of, or Amazon has a bunch of algorithms. So if you want to support me in the book and sound money and so forth, you know, hop on there and spend $10 and buy one. It'll, you know, when it ships, you'll get it. I'll actually also on Twitter, I'll be posting when it's going to come out. If you really don't want a Kindle copy, at that point in time, you could cancel it and turn around and buy it in Hardcover or Softcover.

Softcover is going to be 1850, hardcover will be 2650. You know, so it's pretty funny. Maybe in the show notes, Danny, you can put a link to this whole thing because I went on Amazon and I Googled the big print Lapard, and it, came back with leopard prints. And so I got a lot of, you know, fabrics and, you know, pictures of leopard prints. So that was Google's, or that was Amazon's algorithm searching for leopard prints and not the big print lapart. So maybe if in the show notes you can put a link to the, to the Kindle thing, that would be helpful.

But, you know, or don't buy the book. Wait until it comes out in paperback or hardcover. But I'll try and be at the shows and signing them for free. I know for certain that I will be at Las Vegas Bitcoin, and I will also be in Prague next summer with my wife because we really want to see Prague. So maybe a few others, but I know I'm going to those two. I'm happy to sign books at those sites.

Brilliant. Thank you very much. Going by the book, appreciate you. Thanks, Larry. Yeah, thanks, Danny. Really appreciate it. Cheers.