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The Honest Money Show is your guide to understanding what money really is, and where Bitcoin fits in. Hosted by Anja Dragovic, Australia's female-led, Bitcoin-only podcast, it cuts through the noise to explore how money shapes our lives, why the current system leaves so many people behind, and what a clearer, fairer future could look like.
Expect honest, accessible conversations with some of the most interesting thinkers in the space, the kind that take you from "I don't really get this" to genuinely curious. No hype, no pressure, just money, made clear.
Whether you're brand new to these questions or already deep in them, you're welcome here.
The history shows, and there's
and there's a lot of evidence of it
n a couple different cycles,
hat gold is more widely distributed.
It tends to move first.
But then Bitcoin follows it and follows it even harder,
and goes up even more percentage wise than gold.
And by the way, gold went up 65% last year.
That's only happened like once or twice in history.
It was an amazing move!
In my estimation now, within the next
sixteen to eighteen months, something's gonna break.
And when it does, the Fed's gonna be forced
to print a lot of money to keep the system going.
And that's gonna be massively inflationary.
It's gonna be very good for gold
and it's gonna be very good for Bitcoin.
So that's kind of where I see the world today, in a nutshell.
So joining me today on The Honest Money
Show is a long-time sound money advocate
and the author of The Big Print, which I'm
sure many of you have read. Welcome to the
show, Lawrence. Very nice to be with you,
Anja. Nice to meet you. Thanks. Thanks for
having me on your show. You're very
welcome. I'm so pleased you said yes and
that we made this happen. So let's just
start with an easy one. What got you into
sound money to begin with? Oh boy, it's a
long journey. You know, I'm 69. So and
I've been an investor, professional
investor since the early 80s. And as you
probably, as most of your listeners
probably know, the U.S. went off the gold
standard or the international gold
standard in 71. And my grandfather was
very aware of that. My father was aware of
it. So I kind of had a background in
understanding that fiat was broken even
way back then when it wasn't nearly as
broken as it is now. And it's only kind of
gotten worse. So I guess I, and they were
gold bugs. So I guess I've always kind of
been a gold bug. But it grew, you know,
over time. And the book actually outlines
that, how with each step, things kind of
got worse. You know, we went off the gold
standard and then we bailed out Lockheed.
And then, I don't know, there were just
steps along the way. You know, the 87
crash and Greenspan printed money and, you
know, the Greenspan put got born. And
then, you know, Glass-Steagall was
destroyed and all these various steps. I
mean, you know, I mean, it actually
started way before 71. It started with the
creation of the Fed in 1913. But, you
know, what's been going on is it's just
kind of gotten worse. And I actually
didn't start out as completely 100%
devoted to sound money. When I started my
investing career, I was investing in
technology. My sense was that I was around
when the IBM PC was introduced in 1981.
And I remember the guy who was running
DEC, which was a big mini computer company
of the time, said, well, I can't say why
anyone would need one of these. You know,
if you have a computer, you've got to have
a big one. And I kind of looked at him and
thought, this guy's nuts. I mean,
everyone's going to want one of these when
they get cheap enough. And so I realized
there was going to be a lot of technology,
you know, changes as a result to
microprocessors and such. So when I came
out of business school, I became a
technology investor in the venture capital
industry. And, you know, I did that for
many, many years from the early 80s into
really almost until 2003. And in the
background, I was kind of a sound money
person. You know, I was watching them
debase the currency and I was stacking
gold and silver. But it wasn't like my
primary focus, right? I was trying to
invest in companies that would grow and
provide technological benefits. And, of
course, there was a lot of that, right? I
mean, you know, I was at Microsoft and all
these, I mean, look at all the tech giants
of today were little companies way back
when, when I started out. And so that all
worked and it was a good place to be. But
when the tech bubble burst in 2000, the
dot-com bubble burst, I'd kind of seen
enough and I was kind of frustrated with
where that industry was going and how it
was all working. And so I kind of, I
transitioned away from that and I, you
know, I started just investing in what I
call growth at a reasonable price,
wherever it might be, technology or any
other place. And I also took a bigger and
more strong interest in sound money. And
the reason for that is when LTCM blew up,
long-term capital management as a hedge
fund blew up in 1998. They really
organized a bailout and printed a lot of
money to do it. And then when the tech
bubble burst, you know, they took interest
rates down to 1% and they blew the housing
bubble. And you could see in 2000, year
2000, they got rid of Grant Glass
-Steagall, which was the law that
separated the investment banks from the
commercial banks. So the investment banks
could get highly levered up, which of
course they did. And that's what led to
the great financial crisis in 08, which,
you know, was what I call the first big
print. And so, so I kind of, you know, I
transitioned more and more, the more cards
I saw, the more I went like, holy shit,
you know, this sound money thing is more
and more important than I realized. I
mean, when Bernanke took rates to 1% after
the housing, after the dot-com bubble
burst, or I guess it was Greenspan and
then Bernanke, I was like, what? You know,
you can't have a 1% interest rates.
That's, that's nuts. And they made it very
clear that they were going to try and re
-inflate the economy by, you know, getting
a housing boom going. And they did. And of
course, then when that burst, you know,
they took rates to zero and not just one,
they had zero interest rate policy when
that burst. And so all these monetary
machinations are so out of the ordinary
and so extraordinary. And of course,
everyone today just looks at them like,
oh, that was just normal. That's just the
way things are. But it wasn't. I mean,
prior to this, if you told somebody in the
seventies, you know, the federal
government is going to take interest rates
to zero, they'd have looked at you like,
you're out of your mind. There's no
possible way that can happen. Capital
can't be free. But guess what? It did
happen. And so, you know, the first big
print was 2000. The second one, or 2008.
The second one was COVID. They took them
to zero again. And in the 2008 examples,
we know they expanded their balance sheet
by $3 trillion. And in 2020, they expanded
by $5 plus trillion. And so, you know,
this monetary debasement sound money thing
has become more and more and more
important, right? It's really front and
center right now. And I feel like we're
heading towards a climax where, you know,
we're going to, we're in something that I
call the fourth turning. We can go and
discuss that if you want. I think most of
your listeners probably know what that is.
You know, big societal changes are taking
place. I think they're taking place in
terms of, you know, how is this system
going to operate? And can we have a debt
-based monetary system, you know, without
it eventually kind of, quote, unquote,
blowing up? Because the U.S. is very close
to going through the $40 trillion debt
limit. Or, you know, and it took us 180
-some-odd years to get to, you know, $36
trillion. We got the last four in a
handful of years. So it's nuts, right? And
so, you know, it's very clear to me that
sound money is kind of the problem of our
age. And I don't think that many people
really understand it. Bitcoiners
understand it. Gold bugs understand it.
But, you know, and we all think that we
think, oh, everybody must understand this
because we understand. But if you really
go out and talk to your family and friends
and the person on the street and the stock
market investors, most people have no clue
what's going on with this stuff. And it's
kind of, which is kind of amazing to me
because it's pretty obvious. And so, you
know, in light of the fact that I think
it's going to lead to a lot of changes,
and I think a lot of people who don't have
a clue will get hurt in the coming, you
know, reset or revaluation of these
things. And that's why I wrote the book,
was to try to help the average person,
maybe somebody who doesn't have an
economics degree or not necessarily in
business. I mean, I wanted to write it at
a level that, you know, a blue collar, any
worker, anybody, anyone with a brain could
read it and go, oh, I kind of get it. You
know, the system is set up so that they
have to debase the currency and I'm
getting screwed by inflation and that's
why. And then, you know, the natural
conclusion is, okay, well, given that's
the case, what do I do to protect myself?
Right. And then, of course, the book lays
out the case for both gold and Bitcoin,
with Bitcoin being a stronger case than
gold, but they both have a case for sound
money. So that's kind of the background of
how I got here. And, you know, right now
I'm just kind of pounding the table and
I'm very, I'm still very convinced that
what I've described is going to happen.
But to be fair, I mean, I've been early. I
thought it was going to happen like right
after I wrote the book. And I wrote the
book in February, it came out February of
25. So it's over a year and a half old
now. It hasn't happened yet. I mean, it's
kind of happening. They're printing a
little bit of money, but, you know, it's
not big yet. So, so there we are. Yeah. So
for people who haven't read your big,
sorry, book, how would you define the big
print? And how does it compare to the
little prints on the ongoing printing
that's happening? That's a, yeah, that's a
great question. And just so, yeah, I mean,
they're kind of money supplies expanding
all the time. And if you read the book,
you'll come to understand the money supply
expands when banks create loans and they
loan money into existence. And more
recently, I've just noticed that the M2 in
the United States is increasing at
something like five and a half percent a
year, which by the way, is higher than the
reported rate of inflation. I mean, to me,
the true rate of inflation is the money
supply growth, the growth of M2 over time,
which is averaged about seven or 8%. And
the CPI that the government reports is
kind of a lie. It's always understates
what the real inflation is. But, but in
any case, the government, you know, there
is a print going out all the time as a
result of the banks loaning money into
existence. And right now, actually, the,
you know, and the banks do that. And as
they do that, they get more levered. And
if they get too levered and they get out
too far out over their skis, they blow up.
And that's what happened in 08, right? And
so then the Fed had to come in and buy a
bunch of bonds and create a bunch of
reserves for the banks. And, you know,
until recently, until I guess sometime
last year, Jerome Powell, who's the Fed
chairman of the United States, was
draining reserves out of the banking
system, because they put so many in during
COVID. I mean, the Fed balance sheet
during COVID went from $3 trillion to $9
trillion, high $3 trillion. So they added
about $5 trillion of reserves. And when
that took place, you know, we had massive
inflation, right? We had 9% inflation here
at the peak in the United States. And they
realized that was a problem. So they
started draining reserves. They started
quantitative tightening to sop up all that
extra money. But they got to the point
where they couldn't do that anymore
because, you know, the credit structure
was crumbling a little bit. And so they
started something that they called, you
know, reserve management program, which
they claim is not QE and they claim is not
printing money. But both of those claims
are lies. They are printing money, just
not a lot. You know, that reserve
management program has kind of been
ranging between $10 and $40 billion a
month, whereas, you know, in the peak of
the QE periods, they were printing
hundreds of billions of dollars a month.
So, you know, what we got going on right
now is kind of a little print. Not a big
print. You asked kind of what would be a
big print. Well, a big print would be, you
know, and what would drive. First of all,
let's talk about what might drive a big
print. Generally speaking, these big
prints have occurred. If you look at the
last two, you know, I mean, they're really
kind of been more than that because LTCM
blowing up in 98 was a little bit of a
print as well. But let's take the two big
ones. I mean, the Fed balance sheet was
less than a trillion dollars until the
2008 crisis. It was like $890 billion.
And, you know, the banks failed. AIG blew
up. Lehman failed. You know, the whole
system was prepared to go down. And
Bernanke, you know, printed enough money
to keep it alive. And that dollar amount
was started off about a trillion and then
grew to three trillion over the course of
several years. And that was just raw
printing of money through the clicking of
a computer key and putting the reserves in
banks when that money did not exist
before, full stop. So that was a big
print. I mean, three trillion is a lot,
especially even over three years. It's
still a lot, especially when you started
at $900 billion as your balance sheet. So
you quadrupled your balance sheet in three
years. It's a lot of money. OK, so fine.
It's a lot of money. OK, so fine.
But then they started to tighten after
that. And Janet Yellen did start to
quantitatively tighten. And they raised
interest rates slowly. And after the
economy had somewhat recovered, although
they kept them at zero for a long, long
time. I mean, you know, and 0% interest
rates are really just a crime against
humanity. I mean, the whole notion that
capital is free is just like, what? You
know, if money is free, then it has no
value. I mean, if you can borrow money for
0%, it's a tautology. It doesn't make any
sense. But anyway, setting that aside,
things started getting tight again. And in
2019, the repo market blew out. And rates
shot up to 10% very quickly. And Powell
panicked. And he immediately turned
around. He was quantitatively tightening.
And he immediately turned around. He cut
rates. And he started quantitatively
easing. And then COVID hit. And it got
even worse. And, you know, if you think
the GFC big print was big at $3 trillion
over, you know, I don't know, three years,
three and a half years, you know, take a
look at the COVID one, right? It was $5
trillion over 18 months. So that's a big
print. So if you want to ask, when's the
next one? I think the next one occurs when
something breaks. Because the Fed really
has three mandates, right? The Fed is
supposed to be monitoring employment and
inflation. Those are the two stated
mandates in the Fed's charter, you know,
since they revised it in 78. And they talk
about that a lot. But they have a third
mandate. They don't really talk about, but
it's there. And it's the shadow mandate,
which is, I call, keep the system
functioning, you know. And even in his
recent testimony in front of Congress, the
new Fed chairman, Kevin Warr, said, look,
you know, I want to shrink the balance
sheet, all other things being equal. But,
and I'm summarizing this. These aren't
exact words, but just I'm summarizing it.
All the things being equal, if there's
some kind of a liquidity crisis, we stand
ready to print the money and grow the
balance sheet. And so really, the bottom
line is, at the end of the day, the Fed is
the lender of last resort, which is kind
of what it was set up to be, by the way,
when they set it up. I mean, they set it
up back in 1913, because of the panic in
1907, when J.P. Morgan bailed everybody
out. And they thought, well, the next time
this happens, there might not be a J.P.
Morgan around. We need to have the
government in a position to bail everybody
out. And of course, they immediately did,
you know, with World War I. And then they
did again after the Depression, and when
the stock market burst in 29. But the
point is, the Fed stands ready to print
more money. So something needs to break,
in my opinion, for the next big print. And
your natural question might be, well, is
anything breaking? And what are the top
clues? And the top clues are that Japan,
right now, is experiencing a real, you
know, increase in the rates and a real
decline in the currency. And, you know, if
you think we're overleveraged, you go look
at Japan. I mean, the U.S. has debt to GDP
of about 125%. Japan's debt to GDP is well
over 200%. And so, you know, and
everybody's used that since that was a
very cheap currency, and they kept their
interest rates lower longer than anybody
else. A lot of people borrowed in Japanese
yen, and then they used that money,
invested it somewhere else. And that was
kind of a one-way ticket to making money.
It was called the yen carry trade. And now
that's kind of, you know, unwinding and
reversing. And so that's a piece of
liquidity that's being taken out of the
market. And, you know, as a result of
that, I think one of the things that
happened recently that your viewers may or
may not be aware of is that about a week
or two ago, Treasury Secretary Scott
Bessent said, you know, we're concerned
about the Japanese yen. You know, we want
to help our good ally Japan. And, you
know, we're going to intervene to support
the yen. We're going to sell the euros
that we hold in our treasury reserves, and
we're going to buy Japanese yen to support
the yen. We're not going to let it go
through 164, 163, where it was. And they
jammed it down very quickly in a few days
into the 150s. They also said, and I think
this is even more important than just
we're going to swap some euros for yen. He
also said the Federal Reserve has a
program called FEMA. That's just an
abbreviation. But basically what it is, is
it's a swap line whereby the Federal
Reserve can send dollars to Japan. And you
might ask, well, why would you want to do
that? Well, as it turns out, Japan owns $1
.2 trillion of the U.S. debt. And the U.S.
interest expenses are now $1.3 trillion
gross. And to the degree that our interest
rates go up, our deficit gets even worse
than it already is. And it's pretty bad
right now. It's running at 7% of GDP. And
so the U.S. has a very strong interest in
telling Japan, please don't sell our debt.
And Japan's like, well, you know, we need
to sell the debt because we want two
things. We want to defend our currency.
And two, all the oil we're buying is now
getting more expensive because the yen is
depreciating against oil. And so we say to
them, no, no, no, don't sell your bonds.
Hang on to your bonds. And we will pledge
them to us. And we will send you newly
created currency. Well, where did that
newly created currency come from? It's a
mouse click. They literally say, here,
here, Japan, have $100 billion on the swap
line. Now, the swap line is $60 billion,
which is a big amount. I mean, that's, you
know, that's a large number. And the thing
I think really freaked the market out is
that, and I'm not sure, I think he'd
probably regret having done this.
Secretary Besant said, yeah, we've got a
$60 billion swap line with Japan that may
get used. And by the way, that may need to
get bigger. And everyone's like, what? You
know, $60 billion is not enough to solve
this problem. $60 billion is a lot of
money. And so I think, you know, when he
said that, you know, gold went up 7%. The
week he said that, gold went up 7%. Gold
miners went up 17%. This was either last
week or the week before. And it was kind
of like, whoa, that's a big deal. And so,
you know, to my way of seeing it, the
debasement trade, which is what I'm in,
and a lot of people who are in Bitcoin and
gold and silver and gold and silver miners
are in, had kind of taken it on the chin
since, you know, we did very well last
year, right? Gold was up 65% last year.
Silver went up 4x. I mean, silver, at some
point last year, silver was at 30. In
February this year, it was 120. That's 4x.
And Bitcoin, by the way, until October
last year, was doing great. It was at 124.
That was up a ton, but it was a big
number. And then, you know, Kevin Warsh
got nominated. And he had written an op-ed
for the Wall Street Journal. And he talked
about how, you know, basically in the
past, and this was a few years back, but
he thought the Fed expanding his balance
sheet was a mistake, that that led to
inflation. So I think the world
interpreted him as being a hawk, and that
he was going to come in and jack rates and
get inflation under control. And certainly
all his rhetoric says, oh, I'm going to
get this all under control. But in fact,
those of us who know how it all works
realize that he can't be a hawk. I mean,
yes, he wants to be. And of course, he's
going to jubble on the fact that I'm going
to get inflation under control. That
doesn't mean he will. Right? So, you know,
and I think what happened with the beset
comment a couple weeks ago is everybody
kind of woke up and said, whoa, this is
different. You know, the Fed's going to
print money to support Japan. Well, that's
not getting inflation under control.
That's printing more money. And so that's
what led gold to take off. And then, you
know, all the Bitcoin holders, you know,
who are still unsatisfied because we
haven't broken through 64. You know, my
comment would be just be patient because,
you know, the history shows and there's a
lot of evidence of it in a couple of
different cycles that gold is more widely
distributed. It tends to move first. But
then Bitcoin follows it and follows it
even harder and goes up even more
percentage wise than gold. And by the way,
gold went up 65 percent last year. That's
only happened like once or twice in
history. It was an amazing move. And it
occurred to it occurred in my mind because
what happened when Trump got elected, he
created this Doge, the Department of
Government Efficiency, you know,
department, and they were going to solve
the budget deficit. Remember Elon Musk and
the Fed? Remember all that? And they were
going to take out two trillion. Then they
were going to take out one trillion. They
were going to balance the budget. And
everyone's like, why do you need gold and
silver? Why do you need Bitcoin? You don't
need that stuff. The dollar is going to be
good as gold. I mean, they're going to
balance. The Fed's going to. And of
course, as we all know now, Doge was a
spectacular failure. I mean, three or four
months of it, you know, Elon looking at it
and he was like, it's ridiculous. I can't
fix it. Hands up. I'm out of here. You
guys are broken and I can't fix it. I'm
out of here. I'm going to go make rockets.
So he left. And when that failed, in my
view, that was kind of what, that's what
lit the fire under gold. And everyone
said, oh, I get it. These deficits are not
coming down. And as long as they're
running big deficits, they have to issue
debt to support, you know, to pay for
things. And the debt burden keeps getting
bigger. The interest burden keeps getting
bigger. And I'm sure you and most of your
listeners are familiar with the concept of
a doom loop, which is if rates go up,
interest costs go up. If interest costs go
up, deficits get bigger. If deficits get
bigger, you've got to sell more bonds. All
else equals, same number of buyers, more
bonds being sold, rates go up higher. And
this is, you know, it's a doom loop. It's
a death spiral. And this is not unusual.
This has happened historically in smaller,
poorly managed countries. I mean, this is
not a pattern that's unknown to macro
analysts. I mean, it happened in
Venezuela. It happened in Zimbabwe. It
happened in Weimar, Germany in the 20s. It
happened. It's happened hundreds of times.
It happened in Ecuador in 2000. I mean,
there are a lot of examples of it. It's
never happened. It hasn't, you know,
generally speaking, it hasn't happened in
a big country. It was the world's reserve
currency. Okay. So it's a little different
and it's going to take longer, but it's
kind of like, you know, it's kind of like
a formula. If you do the same things,
ultimately, you're going to get the same
result. I mean, if you keep running a big
deficit and you keep printing money to,
you know, to pay for it, ultimately,
you're going to have a lot of inflation
and it's going to become a doom loop and
you're going to have a problem. So, you
know, that's where we are. Now, you know,
where things don't work, where I'm wrong
is if the U.S. federal government gets
sane and balances its budget. And
everyone, I say that to people and they
laugh and I do too. I mean, the odds of
that aren't high, particularly when you
got guys like, you know, the Department of
War guy, Hegseth, you know, recently said,
you know, if you want me to win this war,
you got to give me a trillion five instead
of 900 billion. Well, that's an extra 600
trillion. And we're already running a $2.1
trillion deficit right now. And, you know,
we need another 600 to win the war. I
mean, it's just, it's crazy. And there's,
as you can, if you don't live in America,
but if you did, you would see there is
zero political will to balance the budget.
And it probably won't get done until
something breaks. And so, you know, my
thesis, the book's thesis is sooner or
later, probably in my estimation now, I
mean, I feel like we're in 2007, maybe
2008. In my estimation now, within the
next 16 to 18 months, something's going to
break. And when it does, the Fed's going
to be forced to print a lot of money to
keep the system going. And that's going to
be massively inflationary. It's going to
be very good for gold. It's going to be
very good for Bitcoin. So that's kind of
where, you know, where I see the world
today in a nutshell. Do you see any other
potential events other than the Japan
breaking? Could there be anything else
that you've kind of... Yeah, that's a
great question. I mean, there are a lot of
little things on the margin. I mean, you
know, so let's just go back and look at
2008. And, you know, the 2008 example, I
mean, 2020 was slightly different because
you had this, you know, worldwide shutdown
due to a disease or, you know, a
manufactured disease. In 2008, you had an
over-leveraged system that was just crazy
over-leveraged, but you could see it. You
could see it in the banks. You could see
it in the insurance companies. You could
see it in the housing market. All of it.
It was all nuts. You could, you know,
Michael Burry saw it. I saw it. A lot of
people saw it. We all made bets about it.
You can kind of see it now, but it's
gotten... It's a little bit better hidden.
I mean, there's a lot of stress. I mean, a
lot of the leverage today isn't
necessarily in the public market, although
margin debt's pretty high compared to the
size of the market. You know, you can see
it in private credit, which has become a
big thing in the United States. And, you
know, it's interesting to me that there's
a lot of leverage and obviously private
credit is borrowing. And so a lot of
companies have gotten levered up with
private credit. A lot of people invest in
private credit. It's interesting now. You
know, I think there are problems there
because most of the large private credit
guys have said, sorry, we're restricting
with rules. You can't take your money out.
And what that tells me is that the marks
aren't accurate, that the stuff is
overvalued. And so, you know, there's a
problem there. There's a problem in
commercial real estate in the United
States. I mean, what we're doing here with
a, you know, StreamYard or Zoom, you know,
and, you know, I mean, as we now know,
post-COVID, you know, the demand for
office space declined, you know, not to
zero, but a lot. And so there were a lot
of office buildings in the United States
that were worth a fraction of what they
used to be worth because people weren't
going to the office and people didn't need
as much office space. And, you know, so
there's a commercial real estate, you
know, credit issue. Although, again, a lot
of that's owned by insurance companies, a
lot of it's owned privately, a lot of it's
owned in banks, you know, it's somewhat
hidden. And then probably the mother of
all these, which you're probably waiting
for me to come to, but it's very obvious
just because it is out there in the
public, is AI and all the hyperscalers and
the amount of money that we're putting
into AI. And it's just, you know, look, I
use, you know, chat, GPT, and I use cloud
almost every day. And I find them
incredibly productivity enhancing in terms
of information. I'm doing my job, you
know, correctly. And I'm sure many other
people do too. And I'm sure they will
change the world. But just as, you know, I
remember very clearly the internet bubble,
you know, and we put a lot of money went
into, you know, Global Crossing and, you
know, WorldCom and all these people were
laying fiber. You know, those weren't the
companies that benefited from it. There
was a lot of overcapacity. And, you know,
it was other companies that benefited from
those early investments. And I see that
same kind of thing going on today. People
are just throwing money at hyperscalers.
They're throwing money at data centers.
They're throwing money at the AI providing
companies. And yet, you know, there's some
evidence that that money isn't necessarily
being well invested. And that the demand
for it, you know, the revenue piece that
makes those good investments will be
slower to show up than people think. And
it'll probably show up in a way that
people don't entirely see right now. I
mean, when the dot-com boom happened, you
couldn't really see that, you know,
Facebook was going to be a thing or that
how big Google was going to become or how
big Amazon was going to become. I mean,
Amazon was just selling books. You know,
now it's the largest online retail in the
world, right? So those things weren't
obvious at that time. And I suspect the
same is true with this AI boom. There will
be big, important businesses, huge
changes, great productivity enhancers. But
not, you know, the people who invested in
it right now aren't necessarily going to
be people who reap those rewards. I think
that, you know, at some point in time,
this credit creation thing, and by the
way, you know, the US GDP, I think now is
growing about 2% a year. But there's some
studies that I've read that show that if
not for all this AI capex, all this AI
investment in chips and data centers and
so on and so forth, you know, we would be
shrinking. The US economy would not be
growing. So, you know, we're making a huge
bet on this stuff and it better work. And
my sense is at some point, it'll be
obvious maybe that it's not working as
expected. And these stocks will start to
turn over. I mean, I think it's even
interesting. I mean, you kind of saw a
little bit of that, you know, where, you
know, SpaceX came out at, you know, an
offering price, traded well above it on
its open, you know, shot up to north of
200 and then, you know, crashed and lost,
you know, over half its value. Now it's
kind of coming back a bit. Probably now I
see it back up above its offering price,
just barely. But, you know, the point is
that all these businesses ultimately have
to be supported. The valuations have to be
supported by revenue and cash flow.
And, I think a lot of assumptions have been made
that may not come true. So that's another,
you know, potential, you know, risk issue
slash problem. You know, it's hard to
know. It's hard to know what snowflake
will trigger the avalanche, right? But I
think that there is a lot of credit in the
system. There is a lot of debt in the
system. We've, you know, the stock market
is trading at nosebleed valuations on any
historical basis. And all the old timers
who've seen a lot of bubbles, guys like
Jeremy Grantham and others, have just
said, this is the biggest bubble I've ever
seen. And it will end badly. But, you
know, to be honest with you, I don't know
when. And I've tried to short the stock
market from time to time. It hasn't
worked. I mean, it just keeps going. And,
you know, the S&P right now is at 76.91. I
mean, who am I to say it won't go to 8
,000, 9,000, 10,000? It could go to 12
,000. I mean, who knows where it goes? I
mean, certainly what the administration is
trying to do is run it hot. And, you know,
these asset values going up does, you
know, they keep everybody feeling good
about themselves and feeling good about
their retirement accounts and feeling like
they can keep spending. But if it ever
gets working in reverse, as we saw in
2008, you know, or 2000, the leverage
works the other way, too. I mean, you
know, from peak to trough in 2000, all the
technology companies, the NASDAQ
Technology Index lost 82% of its value.
So, you know, that's not good. That's a
lot of money going to money heaven. So,
you know, that could happen with AI. And
I'm not saying I'm not predicting it will,
but I'm just saying, you know, it has a
little bit of a same feel to it. Yeah.
Well, many expected a big spending spree
in the lead up to the midterms. Yeah. But
that hasn't really happened. Like, how do
you read that? Well, they did do the big,
beautiful bill, and they have spent a lot
on the war. And, you know, I think the
interesting thing that hasn't happened, I
think pre the war, you know, Kevin Wors
was setting everybody up to cut interest
rates. He made a strong argument that he
said multiple times that the productivity
coming from AI was going to increase
output in such a way that he could cut
rates without it being inflationary.
That's what he said. He also has had a
supply side view of the world, which says,
if we cut rates, that'll lead to more
capital expenditures. CapEx leads to more
supply, more supply, all else equal, leads
to lower prices. So the right way to
actually fight inflation is not to raise
rates, the old model that Volcker used and
Powell used, but it's actually to cut
rates and grow your way out of it. That's
what we call a run it hot strategy. And so
I think, you know, that was kind of where
they were. Now, he said all those things
before we declared war, and we sent the
price of oil up a lot. And now all the
inflation prints really suck. And so, you
know, he's kind of caught in a bit of
between. The market is saying they think
he's going to raise rates. I don't think
so. I think he will make an argument not
to raise rates. And I, by the way, you
know, three, five governors voted to raise
rates in the last minute. I mean, to me,
that's all just theater. They just want to
make it seem like there's an incredibly
intelligent, thoughtful, and deliberative
body setting interest rates, when frankly,
they're just pulling it out of their ass.
I mean, and, you know, seriously, they
really are. They're just making this shit
up as they go along. And their job is to
gaslight us and make us think there's not
going to be any more inflation. And we all
know there's going to have to be more
inflation. So I think there's some chance
he'll actually cut rates, you know, before
the midterms in September. I know that's a
very out there opinion, but I think it's
possible. And the way he would do it is,
you know, he's got he's created this
interesting device. If you've watched him,
he says he's going to create all these
task force. Right. And so he's got an
inflation, you know, inflation measures
task force. And so he can get a bunch of
experts in a room who say, you know what?
Inflation is really overstated. I mean, I
happen to think it's vastly understated
based on my personal experience, but he
can say it's overstated. There's this
measure called truflation, which is quite
low. And, you know, you can chat GBT. You
can see it uses some different inputs. And
I think, you know, and furthermore, this
this device of a task force is really neat
because what he can do is he can say, hey,
it's not just me. These experts told me
this, you know, and and he kind of remains
blameless. Right. So my sense is he can,
you know, he might come. His task force
might come back and say, gosh, you know,
rates are, you know, are in places not as
bad as we're saying, you know, this war
will get solved and gold oil will come
down. We're going to look we're going to
look through it and, you know, we're going
to cut rates. So we'll have to see. I
mean, it's, you know, we'll just have to see.
I have a community question.
Am, how do you think
about credit contraction and deleveraging
like GFC style deleveraging and China's
weak bank lending as an offset to money
creation? Well, yeah. I mean, that's a
great question. I mean, obviously, when
systems, credit based systems deleverage,
you know, things, usually it's because
debts are going bad and debts fail. And
so, you know, I call it the money goes to
money heaven, right? The money no longer
exists. I mean, if a debt is no longer
good, it's no longer in the system. So
it's a reduction in M2. And of course,
that's what leads to the massive printing
that they do to try and fill up the hole
that got created from the deleveraging and
the debt going bad. And the problem is,
you know, I mean, in an ideal world,
they'd match the two perfectly, right? And
they would create just enough money to,
you know, stop the deleveraging and not so
much money that there was inflation. But,
you know, the problem, the point here is,
how can any body of people sitting around
a table, you know, looking at numbers
historically, know what that correct
number is? Do you know what I mean? I
mean, the problem with this whole damn
system, you know, and I mean, you go back
to my youth and they were always joking
about the Soviet system. The problem they
had was they were setting prices by
committee. And, you know, if you set the
price of grain by committee and you miss,
you either get way too much grain because
farmers overproduce or not enough grain
because they can't make money at the price
you set. So what we're doing here is we're
setting the price of interest rates by
committee. And, you know, by definition,
they're always going to be wrong because
the committee doesn't really know what the
market needs. I mean, this is the argument
in my book that the interest rate should
be a market set rate based on the balance
between people who have savings and the
people who need capital. It should balance
the two out, right? And so it's a market
price, not a committee price. And that's
really the problem that these central
banks have, that they're trying to do
something that they can't really do. But
they pretend like they're experts at it
and it's all going to be fine. But in
reality, they just stumble from one
mistake to the next. And, you know, right
now, you know, he's trying to convince
everybody we got no inflation. And, you
know, look, inflation is lower than when
we're at 9%. I'm OK. I believe that.
That's true. I mean, Powell did sop up
some of the excess money with his higher
rates and QT. But, you know, at some point
in time, you know, the thing, the point I
try to make over and over again is that my
argument isn't really, it's not just a,
it's not an emotional argument. It's
almost a mathematical argument that if
credit continues to expand at a rate in
excess of the growth of the underlying
GDP, the only way to square that circle is
to have more money supply expand as well
or else the credit can't get serviced. I
mean, that's the bottom line. And that's
just math. There's nothing more than math.
And so with that as kind of a premise of
how the system operates, you know, what
happens is the Fed stumbles between, you
know, tightening and trying to get
inflation under control. And then things
get too tight. Something breaks. And then
they have to print like crazy. And then
they get another inflationary outburst,
right? And so we go back and forth. I've
said off in the past, it's like you're
driving a car on an icy road and you're
bouncing off the guardrails. You know, you
steer right and you go hit that guardrail.
Oh, too much inflation. Tighten up. And
then you steer left. Oh, too much
deflation. All the debts are failing. And
then you turn right again. You know,
that's kind of what's going on. I mean, a
chart of the Federal Reserve or the Fed
funds rate kind of shows that. I don't
have one right at my fingertips. If you
take a, you know, go to a St. Louis Fred
site and look at the Fed funds rate for
the last 20 years. I mean, you know, they
jack it up. Something breaks. It falls
down. They jack it up. Something breaks.
It falls down. I mean, this pattern
repeats itself. And, you know, my sense
is, you know, Powell jacked it up. But I
think we're getting close to something
breaking again. And at that point in time,
they're going to have to create more money
and we're going to get another
inflationary impulse. I mean, the other
point I would make is that, you know,
we've been in a period of deflation,
natural deflation. And by the way, the
world is naturally deflationary. I mean,
you know, look at your TVs are cheaper.
Your computers are cheaper. You know,
technology is getting better. I mean,
humans over time get better at doing
everything. And deflation is the condition
that an economy should operate in. But
because the monetary system requires
inflation and a credit based system
requires inflation, it's in conflict with
a deflationary system. And, you know, we
were when the money was sounder,
relatively speaking, from, you know, 1980
after Volcker eject rates up to 2020, you
know, we had kind of a generally benign
deflationary trend. And we had some things
that supported that. You know, you had the
you had the whole computer boom. Everyone
got PCs. Everyone got more efficient. You
had the Internet. Communication became
cheaper. I mean, there were a lot of great
deflationary things that happened in that
time frame. You had the Chinese market
open up in 2000. Suddenly you had a half a
billion or a billion people that were
willing to work for a fraction of what we
would work for. They made all kinds of
great stuff cheap. Right. So that was
deflationary. But but in 2020, something
really changed. And everyone kind of
thought, well, deflation is a problem. I
mean, I remember the Fed talking about in
2015 and 16, we failed at our mandate. You
know, our inflation rate is only zero or
one percent. We got to get it higher. I
was like, what? You know, and and so but,
you know, they got disabused of that
notion very quickly when 2020 came along
and they printed a ton of money and they
got inflation, not just a little, a lot.
They said it was transitory and the wrong.
And what we're now seeing is, you know, 40
years of a deflationary trend and
underinvestment in stuff and
overinvestment and financialization is
getting reversed. And so financialization
is going to get less valuable and stuff is
going to become more valuable, which is
why, you know, the price of oil is going
up, the price of copper is going up, gold
is going up, silver is going up,
everything is going up. Everything that's
real that you can, you know, molecules
that you can touch, they're getting more
expensive. Bonds that represent paper
commitments to give you money in the
future, they're getting less valuable
because those paper commitments are, you
know, are less valuable if they keep
printing money. So it's just kind of a
natural shift in the system right now. And
until, in my opinion, until this monetary
problem gets resolved, you know, we live
in an inflationary world and we just can't
stop that. Sometimes it'll be really high,
sometimes it'll be low. When we got to
nine, we come back to three, three, four.
I think the next wave up takes us into
double digits. We get to 10, 11, 12, 13,
you know, easily when they have to print
again. So, yeah, I think the thought on
everyone's mind is how long they can keep
kicking this can down the road. And I
believe Lynn Olden recently said in a
podcast that she believes it's going to be
more like a gradual ongoing print as
opposed to one big print. Like, what are
your thoughts on that? Yeah, Lynn's super
smart. She's a friend and I love her book
and I use parts of it to help me write my
book. You know, she could be right. I
mean, they could just kind of continually,
gradually kick the can. But even in that
scenario, that's inflationary and that
benefits gold and Bitcoin. I personally
think that there will be another big
print. I don't, you know, and I personally
think that it'll definitely happen, you
know, soon, you know, in the next year or
two. But I've been wrong a lot. I've been
wrong before. And it could be more than
that, longer than that. I mean, they are
good at can kicking. I mean, a good
example of that is, you know, Silicon
Valley Bank failed in 2023 when Powell
started raising rates and they had all
these bonds that were on the long side of
stuff. And so it became quickly, rapidly
noticeable that they were bankrupt. And so
they failed. And, you know, honestly,
there were 17 trillion of bank deposits at
the time. The FDIC fund, which insures
those bank deposits, 17 trillion of
insured bank deposits, was like 187
billion. So 187 billion doesn't really
cover 17 trillion. And, you know, Janet
Yellen was freaked out. And even though,
you know, Dodd-Frank and the laws from
Dodd-Frank had said, you know, you're
never going to be able to bail out the
banks again, they did. They violated the
law and they more or less promised all the
banks that they would guarantee those
deposits if need be. And then they found a
home for Silicon Valley and they found a
home for First Republic and they calmed
everybody down. But there was a moment
there when it was looking like it was
going to be a run on the bank system. And
so, yeah, they're pretty good, you know,
at papering things over, you know, and,
you know, Lynn could be right. I mean, it
could be a gradual print, but even a
gradual print's inflationary. So even in a
gradual print benefits our investment
thesis as against bonds. And I'm of the
opinion that given animal spirits and
given what I see going on in the markets
and given the nature of the way everything
works, you know, that there's going to be
another blow up. I mean, I mean, look at
this. Given also, I guess what's happened
in the past, because there have been some
like little big prints, if that makes
sense. So that's right. That's right. I
mean, there've been small ones. I mean, I
mean, you know, and the thing that's
interesting in today's world that I think
is different a little bit than 08,
although 08 we had the internet and all,
but is just how incredibly connected
everybody is and how much, how rapidly
things spread and how fast the information
gets around. I mean, you know, in this
2023, when Silicon Valley Bank, I mean,
what happened with Silicon Valley Bank is
they sold a bond below their cost and took
a loss and they recorded the loss. They
had to. And so that came out and it was a
public statement of that. And then some
sharp guy, sharp pencil guy in Silicon
Valley or financial analyst looked at this
and said, holy shit, look at these bonds.
They're really not worth what they're
carrying them for. Oh my God, this bank is
bankrupt. I mean, these, you know, if they
mark all this to market, you know, they've
got negative equity of $20 billion. And,
and then he called up, you know, some of
the big venture capitalists who had all
their money there and their portfolio
companies had all their money there. And
he said, Hey, you realize this bank's in
trouble. They, they, you know, they don't
have the capital they say they have. And
if I were you, I'd move my money out of
there. And of course that one venture
capital is called another venture capital.
I mean, the word spread. And within a
week, you know, basically the place was,
they had failed. And I mean, there was a
day, I think they had like 80 or 90
billion of deposits. There was a day where
they had $40 billion of withdrawals in one
day. It was like 40% of their deposit base
just disappeared, got vaporized in like a
day. And so, you know, I'm not suggesting
this will happen with a dollar. This will
happen with the U S bond market. But what
I am suggesting is that when, you know,
when, when everybody kind of figures
something out and, and, you know, it's,
it's like, it's like the fire in the
theater, you know, they, the, you know, I
mean, you're in a theater or a couple of
exits, you know, somebody smells smoke. If
you guys hit the exits, fine. Everybody
smells smoke, man. You got, everyone goes
to the exits fast. Right. And so, you
know, I mean, I'm just giving you a
scenario here. You know, you wake up some
morning and the Japanese yen has fallen 10
% and Japanese yields are up 10% and the US
Treasury yields are up 10% all at once.
You know, and, and everybody's like, holy
shit, what does this mean? You know? Oh my
God. Well, maybe, you know, there's a
pattern here. Maybe I got to get out of
this stuff. And then one person calls
another person. And before you know it,
off you go. And then, you know, what
happens? Well, the fed has to step in,
right? They have to step in to calm the
market down. So we stand ready. We've got
these lending facilities, you know, we've
got these swap lines. We've got all these
programs, you know, calm down, everybody.
There's no need to panic. We've got this.
And they do, they do have it. They, you
know, they can do it. I mean, in 2020
COVID, you know, the world was falling
apart. The U S treasury market had gone no
bid. And Paul came in with 10 programs and
he said, he did his best Mario Draghi
invitation. He said, we'll do whatever it
takes. And he printed tons of money. He
started off printing small amounts. And
then month by month, he had to keep
increasing those. Cause just they, they
did, they did whatever. And they want to
get ahead of it in a big way. And so in so
doing, you know, they're trying to prevent
a financial panic. And in so doing, they
print a shitload of money and, you know,
okay. So everyone, and, and so the thing
is, Anja and I mean, the thing is that
currencies fail when everyone realizes
they can never stop printing. That's if
you study all the hyperinflations of
history, when a majority of the people
realize, oh my God, this is a system that
can never stop.
Then everybody, this is
the, this is the, the, the smoke in the
theater. You know, this smoke, that fire
is burning. The smoke is, I'm going to die
if I don't get out of here. Right. I mean,
that's how currencies fail. We're not near
that point yet. Okay. Not even close. All
right. But my point is that, you know, and
this is the gradually that's then suddenly
that some Bitcoiners use. I mean, you
know, if, and when something big happens,
I mean, so we had a big print in 08. We
had another one in 2020. Each of those
brought more money into the sound money
camp, right? Each of those made more of us
aware of how broken the system is and how
it's designed to steal our wealth by
printing. Okay. I mean, you know, I mean,
I, I remember back in 80 and I talk about
sound money, 80s and 90s, people thought I
was nuts. I mean, nobody, there wasn't,
there wasn't half a percentage of the
population that understood the monetary
system like I did and thought I was right.
Okay. But now, I mean, you know, you got
to admit, we got a lot of Bitcoiners. We
got a lot of gold bugs. We got, I don't
know. I mean, what are we as a percentage
of the total population? 1%, 2%, maybe 5%
to be generous. Certainly not 50 or 90%. I
mean, it's a small piece. If you look at
your friend group, most people think
you're crazy, but, but there, but there
are a lot of us and it's growing. And
guess what? When they print again, that
10, that five or 10 will become 10 or 15
or 20. And then pretty soon that 10 or 15
or 20 will become 30 or 40. When that tips
over 50 or 60, everybody will be like,
what the fuck? They're just going to keep
printing forever. I'm out of here. You
know, I'm just out of here. I'm not
holding these dollars anymore. Right. So
that's, that's kind of where we're going
now. So like, you know, it's, it takes
time, right? It takes time. It takes
cycles and, you know, so forth. So it's
not, it's not happening tomorrow, but
that's the direction pretty clearly in my
mind. Yeah. Well, I got called a
debasement cultist, but one thing that I
always want. There you go. Yeah. I tried
five gentlemen on LinkedIn. But one thing
that I always wonder is if like, obviously
central bankers are aware of this. And I
wonder if this is the reason why they're
trying to implement CBDCs is so they can
actually program money to save the system
from collapsing. Yeah. Let's talk about
that. That's a really interesting point.
And it's clearly a piece of the puzzle.
And it also is to try and enforce dollar
dominance and to try and find buyers for
the treasury bills. I mean, as we all
know, tether and circle a large, the two
leading CBDC, well, the two leading, what
I would call stable coins, but I, you
know, we might as well call them CBDCs now
because they're both underneath the
government purview and the government now
knows who owns what. And it's proven that
it can seize that shit. So unlike Bitcoin
that the government can't seize unless it
gets your keys, the government can go to
tether, the government can go to circle
and say, Hey, this guy's a bad actor. This
is Iran. We want you to, you know, wipe
out these, you know, these deposits. And
so, and they can't. So that's kind of a
CBDC is a stable coin. But these stable
coin companies, as you know, a big piece
of their holdings, well, they hold gold
too, but a big piece of their holdings are
treasury bills. And so that's nice. I
mean, when you're, you're Scott Bessent,
you get a lot of treasury bills to sell in
order to finance the government. You know,
you want to see people use stable coins
and the original, in my opinion, the
original stable coin use case arrived
because when we seize the rest of Russian
reserves in 2022, a lot of countries, and
we shut down the SWIFT system to these
countries like Russia and Iran and so
forth, these countries were left without a
way to pay for stuff. And I've met Russian
businessmen and others in, you know, at
shows like at the Prague show that I went
to, Bitcoin show, who said to me, you
know, basically stable coins rose and got
used because if you were doing business
outside of the US SWIFT system, how are
you going to pay somebody? How are you
going to send them half a million dollars?
You couldn't, but, you know, you could buy
a stable coin and do it as a crypto
transaction. You could, you know, it was
easy. You didn't need a bank, none of
that. And so, so that's why the whole
stable coin market came to be. It was an
alternative set of rails to the US SWIFT
system, which, you know, when we grabbed
the reserves, we proved that, you know, if
we don't like you, you don't want to be
there. And so, but yes, they are trying to
get the stable coins to solve the problem.
Here's the thing. They tout it as a, oh,
the stable coins will save us. You know,
it's going to create more dollar
dominance. Everyone's going to want to
transact in stable coins. US can be a
crypto leader, blah, blah, blah, blah.
Okay, fine. But here's the thing. US got
$40 trillion of debt. I think 30 trillion
of it's, you know, external. 10 is
internal. You know, we got to roll over
eight or $9 trillion a year. Okay, total
stable coin market right now is about $300
billion. So, and not all of that's used to
buy treasury bills, probably a big
percentage is. Let's say all of it was. So
stable coins buying 300 billion of
treasury bills when you've got to roll
over $9 trillion, that's not really moving
the needle. I mean, it's not, it's not,
you know, and by the way, the 300 billion
used to be growing pretty rapidly. That
growth has really slowed down. In fact,
the last time I looked, it was kind of
flat to shrinking a little bit. So, so I
don't think the stable coins are going to
solve their government debt problem. And,
and I, but I do think you pointed out,
yeah, they are kind of CBDCs and people
who think that, you know, gee, I'm just
going to hold my capital in a stable coin.
You know, I wouldn't do that. And the
reason I wouldn't do it is because the
government can grab it, you know, but the
government can't grab Bitcoin. So, yeah,
that's, that's kind of my view on the
stable coin market. Yeah. Now, objective
data. One of the things that I guess a lot
of plebs were looking at, and I'd love to
understand this better because M2 was
always so closely correlated with Bitcoin,
but now it's become decoupled. So why do
you think that is? Well, it's, yeah, the
correlation was a longer term correlation.
It wasn't, it wasn't perfect. Bitcoin to
me is a little bit of a liquidity smoke
alarm. And I think part of the reason why
Bitcoin is down, it has a little bit of a
tech component to it. It has a little bit
of a shiny object component to it and has
a little bit of a liquidity component to
it. You know, I mean, people are buying
gold. They know what they're buying. They
know why they're buying it. They tend to
take a long-term view. That is pure
debasement insurance. Bitcoin hasn't
really, some of us know, know it as
debasement insurance, but because of the
volatility, a lot of people don't view it
as that yet. They view it more as a
liquidity widget. And right now, liquidity
is tight. But that's also why, you know,
let's, let's assume I'm right. And at some
point in time, you know, we don't just
gradual print like Lynn says, we bigger
print or somewhere between gradual and
big. And we get going again on the upside
here. You know, that's why, I mean, gold
will probably go from, you know, call it 4
,500 today to 7,000. So, you know, what's
that, 70%? But Bitcoin's going from 60 to
180. I mean, you know, when the liquidity
spigots get turned back on, Bitcoin's
going to triple. I mean, I think it's one
instructive thing I think it's worth kind
of going through because I remember this
period very well. And I think a lot of
people don't understand, you know, what
happened. So let's go back to the COVID
example, right? So it's March of 2020.
World's ending. You know, treasury market
goes no bid. Stock market's down 20, 30%
in three weeks. I mean, it's just, it's a
horror show. Gold's down, silver's down,
everything's down. There is no bid for
anything. I mean, there is not enough
liquidity in the system. It's a mess. So I
remember very clearly because I was
sitting in my house, you know, Powell
comes in on Monday morning and literally
just says, you know, we are going to print
until our eyes bleed. We're going to do
everything we need to keep the system
going, okay? And gold just immediately
grabbed that. It was like, holy shit. And,
you know, gold shot from, you know, 1,200
to 2,000 in months, you know, probably two
months at max. I mean, just bang. Gold
stocks even more, right? They just went
straight up. But Bitcoin, which had, you
know, when the whole thing occurred, was
probably in the 7, 8, 9, 10,000 range. And
I'm talking average numbers. And some
people, you know, say, well, you're off a
little bit. But by memory, I'm just, when
the whole thing occurred, Bitcoin was call
it 8, 9, 10, and it maybe dipped down to
5, you know, when the whole liquidity
thing occurred and everything was
breaking. And then Powell came in and, you
know, sprayed money everywhere. Gold took
off. And Bitcoin came back to its 10,
where it was kind of before the whole
thing happened. But it sat there at 10 for
some time. So now it's March of 2020. And
by the way, gold topped out around 2,000,
2,100. And the stocks went up. And they
kind of, it moved first. And it moved
meaningfully. I mean, you know, 2,000 up
from 1,300. That's a big move, but
especially for gold. But it's not, you
know, enormous. So Bitcoin's just bumping
along at 10, you know, plus or minus 10,
10, 10, 10, 10. And I remember, because I
was in both, and I remember all my Bitcoin
friends going, what the fuck? I mean,
they're printing a ton of money. Gold's
taking off. Our shit's not moving at all.
It's driving me nuts. And then in October,
Bitcoin woke up, and it went from 10 to
60, right? I mean, you know, I mean, over
the next six, over the next eight months,
right? I mean, it did a six-bagger, right?
I mean, and that's because the liquidity
finally got into the system, and everybody
realized what was going on. Everybody
realized Bitcoin had a fixed supply. It's
like, holy shit. This thing is really
undervalued. And, you know, gold's had its
move. Now it's Bitcoin's turn. And so I
kind of think that's probably what'll
happen again here, right? I mean, gold
will, you know, they'll start to print.
Gold will smell it first. It's already
starting to smell it, in my opinion. It's
up off the bottom. I think the bottom is
in on gold for this correction. I mean,
from 5,500 down to 40-something, 4,000
-something, right around 4,000. And gold
will smell it first, and it'll start
moving, and gold will get more momentum,
more momentum, more momentum. Something
will break. They'll really print. Gold
will take off. Maybe there'll be a little
lag, but then eventually Bitcoin will, you
know, like I said, I think gold goes up,
you know, 50 to 70%. I think Bitcoin
triples. You know, we go to 180. So, I
mean, that's just kind of, you know, based
on past experience and the models that I
use, that's kind of how I see it playing
out. Can't say when. You know, I kind of
feel like we're imminent. I mean, this
reminds me, right now, kind of reminds me
of the summer of 07. Maybe, and maybe the
summer of 08. You know, it's kind of, I'm
kind of torn. Summer of 07, the housing
market was starting to crack. The Bear
Stearns CDS stuff blew out. The
Countrywide Mortgage, which is the biggest
lender, subprime lender, failed. In March
of 08, Bear Stearns failed. Summer of 08,
you know, Fannie and Freddie reported
terrible numbers and it became clear. And
then, of course, in the fall of 08, all
hell broke loose. So, if we're in the
summer of 07, you know, we've got maybe 14
months to wait. If we're in the summer of
08, we've got maybe three or four months
to wait. And I don't know. We're probably
somewhere between those two boundary
conditions where, you know, I think
something is going to happen in the next
year. I really do. It's going to force
them to print. It will be really
interesting to see how it plays out. But
for listeners who, you know, are like now
thinking how to invest their money, do you
have an opinion on the optimum kind of
portfolio allocation between gold, Bitcoin
and other assets? Well, sure. I mean, you
know, so this is very individual to every
person. I mean, I always tell people
thinking buying Bitcoin, look, the first
thing you've got to understand, this is
the most volatile asset in the world. And
if you can't handle that volatility, don't
buy it. And the way I always say what I
say is no matter where it is, you should
expect that it's gone down 90%, 80%, 70%,
60% historically. Each drawdown, by the
way, is getting percentage-wise smaller.
This one's about 54, which is if the 58
,000 low holds. So, you know, so it could
go down and it could go down 50% from
here. If we have a correlation of one
event, something blows up. Sure. Could
Bitcoin go to 20, 30, 40? Possibly. I
don't think it will, but it could briefly
until they print money. So I always say,
you know, the way to look at Bitcoin is to
buy a number where if it went down 50%,
you would think to yourself, this is on
sale. It's great. I'm going to buy more
rather than I made a mistake and I'm going
to sell it when it's down. Because in a
four to six-year context, you know, it's
always gone up and it's higher highs and
higher lows. So that's kind of the Bitcoin
piece. I mean, the gold piece is much
stabler. It doesn't go up as much. It
doesn't go down as much. And, you know,
it's analog sound money. Bitcoin's digital
sound money. And then stocks, I think, are
very highly valued. But, you know, they do
kind of protect you from inflation
because, you know, they grow with the
economy. I don't think they're going to
grow much in real terms when measured
against gold. But they can't, you know,
they can't print stocks, although stock
companies can issue more stock. You know,
housing, same story. I mean, they can't
print houses. But, you know, you've got to
pay taxes and, you know, you've got all
kinds of other issues with housing, you
know, maintenance or repairs. So I think
it's really specific to every individual.
But the thing I would say that's
important, I think, and I've noticed in
today's world, is it just such an
incredible focus on the short term and on
short term getting rich and on, you know,
these poly markets and gambling. And I
think that's part of the broken fiat
system. Everybody's just kind of like, how
do I get there fast? And, you know, having
been an investor for my entire career, you
know, and watching the people who succeed,
I'm telling you, they get the big trend
right and they place their bet on it. And
then they have patience and they let
compounding do its thing. And if you sit
with a financial calculator, I mean, I
think the Bitcoin ARR is going to be north
of 25% for the next 40 years. And so
whatever number you start with, if you put
that in, you put in a 25% IRR, you know,
you're going to end up very, very well
off. I mean, it's, you know, that kind of
a compounding compound growth of an
investment. You know, you just it's very
hard to find that. And one of the things I
really like about Bitcoin compared to
stocks is there's no management team. I
mean, you know, they can't fuck it up. I
mean, I mean, there's a I mean, there is a
free market. Yeah, right. Well, there's a
free market. But, you know, I mean, and
there's core, which is a little bit of an
issue. But the point is that, you know,
it's a protocol that's pretty set in stone
now. It's been ironed out for 16 years.
And it's just, you know, tick tock next
block just keeps running. So, you know,
now there's risks. I mean, you know, a lot
of people say, well, Bitcoin is going to
get, you know, captured and taken over
like gold. There's going to be paper
Bitcoin. And there is some paper Bitcoin.
But I think it makes it different than
gold is gold's never gone up 6x in eight
months. And so, yeah, people can sell
paper Bitcoin. But look out, you know,
because if they do and it goes up 5x,
they're going to get their ass handed to
them. So, you know, I think, you know, I
guess what I try to say to people who are
looking at this is everybody should have
some Bitcoin. The wrong answer is zero.
Now, if you don't like volatility, fine.
You know, put 5% in. Because if it goes
down 50%, you've lost 2.5% of your
capital, you'll live. But, you know, my
personal view is it's going to go up 10x
from here and then it's going to go 10x
again. Now, that may take 15 years. But,
you know, I mean, going up 10x twice,
that's 100 times your money. So if you put
2.5% of your capital in it, it becomes 250
% of your capital today. Now, the only
problem with that is that, you know,
whatever it becomes, I mean, one of the
things that's hard is I'm pretty sure
Bitcoin will be a million dollars in 2032
based on the power law model. But I also
am afraid that gasoline might be $20 a
gallon in 2032.
So, you know, but, you know, look, this is
the game we play, right? You have to find
something that beats inflation. Assuming
you have savings, right? You have to find
investments which will beat inflation. And
I think that the sound money assets are
your best bet in today's world. So
that's... Yep. Well, final question for
you, Lawrence. Thank you so much,
obviously, for coming on the show. And for
the listeners who have not bought and read
his book, I highly recommend it. It's a
really, really good read. But do you have
any final kind of words of hope for people
who... No, I really don't. I mean, look,
it's, you know, these are tough times.
But, you know, I think anybody throughout
history would argue that, you know, they
had a different set of problems. They
dealt with them. People dealt with World
War II and the Cold War. I mean, and, you
know, they're tough times. And it's the
worst of times and the best of times,
right? I mean, the beautiful thing is
we've got incredible technology. And we
can talk from other sides of the world. We
can broadcast to anybody. I mean, there's
never a better time to be able to educate
yourself online. You know, you don't need
a college degree anymore. You can get
online and basically become smarter than a
lot of other people who've got a degree.
And, you know, that's a beautiful thing.
You know, I think that it is accurate to
say that there will be some financial
turmoil in the next 10 years. And that
people who understand these issues and
prepare for it are going to come out the
other side a little better off than those
who don't. And that's why I wrote the book
was to try to help the average person. And
I think, you know, some people have said,
well, you're a doomer. And I'm like, no,
I'm not a doomer. I'm just an analyst of
the system and what is. And I think based
on that, you can kind of predict that
there's going to have to be a real big
change. The thing I would say that's very
optimistic and positive, and I view myself
as an optimist and a positive person, is
that we will solve this problem, Andrew.
We will get through this. I mean, sound
money is the problem of our age. You know,
there'll be some other problem in the
future. I mean, AI wants to take over the
world or whatever. But, you know, but
that's not today's problem. Today's
problem is sound money. And, you know,
it's going to get resolved, in my opinion,
in the next 10 years. And then we're going
to be back on a sound money standard
because everyone's going to realize the
alternative is worse. The bad news. So the
bad news is we've got to live through the
time when the alternative is a little bit
worse. And inflation is going to really
hurt a lot of people. The good news is
that once we fix it on the other side, my
kids and my someday grandkids are going to
have a much better world to live in where
they have a different set of problems. So,
you know, I would say that that's the
thing to look forward to. And, you know, I
wrote the book to try to push people to
understand these issues so they can
protect themselves, one, but also so that
they can become advocates. Because to the
degree that we all advocate for sound
money, educate people about sound money,
you know, explain to the world what's
happening. Then as these problems become
more and more apparent, we'll get more and
more people going, hey, you know what?
That really is the core issue. Let's solve
it. Because, I mean, let's not forget this
is not an unsolvable problem. And this is
a very solvable problem if we go back to
sound money. It's totally solvable. I'm
not suggesting that will be painless. It
won't. It'll have pain. But on the other
side of that, it'll be very good. So, you
know, I try to be optimistic about it. I
try and convince people to be positive
about what we're going through and
recognize this is just the set of
conditions we've got to deal with.
Excellent. Well, thank you so much for
your time. I really enjoyed this chat. I
really enjoyed speaking with you. And
hopefully we can do it again. Awesome.
Thanks, Lawrence. Okay, thank you. Okay,