But I think that's kind of why I write that way is just argue ferociously and then you'll get the ferocious response. But if you get new information or you see a critique that you're like, oh that's actually a great point and you're willing to change your mind, then you can very quickly iterate, you're way closer to the truth and that will help you get to the food faster. I feel like I can rule the world. I know I could be what I want to put my all in it like a day's travel, never looking back, aren't we got an episode here with pomp, Anthony promptly on? Oh, who you may know as the
a coin guy. He's huge all over YouTube. Twitter everywhere else he came on. We actually got to do this as a two-part episode because at the beginning it was all business. We were business in the front. We were talking about this crazy million-dollar. Balaji bet. He's betting that Bitcoin is going to a million dollars in the next 90 days. We talk about that. Why Balaji thinks it what we think about the BET and pomp, does he, you know, I don't know econ, 101 where he explains what's going on with the banking system from his perspective, that was good.
But here's the thing though, in that episode, the whole episode is about something that's going to happen inside the next 90 days. So if you're going to like it is a little fearful listening to it and so actually listen to the whole thing because and do it now because we're talk about something is happening in 90 days and then go ahead the second episode with the way more fun and it was pretty wild. Go ahead and talk
about his business Empire. You know what he's building a. Why he's building it that way? Why he gave back all the money from his fund and shut that down? Why he's huge turned off all his advertisers millions of dollars of advertising what he's doing?
Instead it would then it went off the wall and the Pod got a little crazy, but in a great way, I think people are going to, you're going to love part 2.
He broke down like all of his businesses and how they work. It's very impressive. It was pretty
wild and he told some pretty funny stories which pops is usually he's pretty buttoned-up on his on his main Channel because he's talking Finance, he's talking serious but he told some pretty funny story. So the second part two is the more fun episode part one is the more serious episode. I think you'll like them both
and we have to remind you guys that are episodes. We work
Really, really hard. And unlike every other type of podcast out there are stuff's, not free, but you don't pay with money. All you have to do is go to our YouTube page. We call this the gentleman's agreement. What is it? The ladies understanding, ladies, go to our evening, you go to our YouTube page and the reason it's called that is because it's an understanding, it's an agreement, we can't be there behind your screen to check this, otherwise, we would, but everyone's doing it. So just go ahead and do it, and click subscribe on YouTube, and then just go ahead and do that on Spotify and iTunes because pump ain't going to come on.
Two episodes like this. If we don't have a big listenership, same with all the other guests. All right,
enjoy
pomp, we're live. By the way, we always just jump right into this thing. No, small talk, let's go. We just won't talk
about, dude, you're I'm so glad you're here. You are. You are the Ryan Seacrest of the industry. You are the hardest-working man and content entertainment? I'm so glad you're not doing. You're like 5 a.m. show anymore. I'm sure you're also pretty. Glad you have to do that every morning at. How does it feel to get some sleep?
I've always slept pretty well, but the content stuff is the best way in the world to learn. You put information ideas out there and the people who agree or have like things to add, they're super constructive and they respond to emails. They tweet at you, they do all that stuff. And then the people who vehemently disagree, they make their voice heard, you know, very well. And so you like quickly figure out like good ideas, bad ideas. And then you also get all these like rabbit holes to go down. And I think that probably the reason why, you know you to myself and many of the other people that we all know,
And spent a lot of time talking to we enjoy it. Like the internet is this amazing thing that we all get to use on a daily basis. And so creating content I found it's just this great way to elicit like-minded people and
to learn. We have a lot to talk about and we'll do like a proper intro to second, but I was talking to my friend Jason, you know, it's who you guys used to work together, he worked for you now, he has his own company and Jason works pretty hard. He told me that you were the hardest worker, so
it's used to work for you. Him and his partner, Mike dippolito. They were the two guys who helped me start the podcast initially, they tricked me. They literally came to me and they were like
You should have podcast, I was like, what's a podcast? And they were like, you know, like all these other examples and then I was like, I don't know how to do that. Like, what we do and little did I know they had no clue what they were doing. They instead convinced me to do a podcast and then they deemed, I'm pretty sure Gary vaynerchuk's like podcast guy. It was like, Hey, we're gonna start a podcast like what equipment we need, it's like, kudos to those guys. I was pretty good hustle and now they have a media
company. It does tens of millions of dollars, whatever it worked out. And Jason works, pretty hard. Jason told me that you're the hardest, working person he's ever been with. He
Said that they used to work at your office, seven days a week and that you just were non-stop. But then, when I went out to dinner with you recently, you told me your schedule, I didn't sound very hard, it sounded just
normal, so which is it, which is true. I think it's probably both. So, one of the things I always use as a framework is, there's kind of gas and Brakes in life. And so at certain points you need to hit the gas and other times you can kind of like let your foot off the gas Coast as the car and then other times, you need to hit the brake. And knowing when to hit the gas, when to hit the brake, it's pretty important.
Actually, you don't want to kind of be hitting the gas. When there's a wall in front of you, like, you want to make sure that you are able to kind of go all in when it's necessary. But the second thing is, you gotta last, right? You can't just Sprint all the time, no matter how athletic you are, you got to have some level of endurance. And so that's probably one of the things that I've really learned to do over the years. I wasn't great at the beginning. Now I'm probably pretty good at it but you know, we're recording this on Monday. Yesterday was Sunday, I record a podcast Sunday morning at 11:00 in the morning. After I did a two-hour meeting with a friend at 9 a.m. and a lot of people like that sounds
Crazy. Don't like know. What did you do? You like went and did all your hobbies? I have no Hobbies. I literally hang out with my family and I work, but I do it because I enjoy it. And so if you enjoy doing it like, this isn't hard. I'm like looking forward to today talking to you too. Because I'm like, you know what? They're probably going to be ridiculous. Probably have a lot of fun. I'm going to learn something from each other. Like how lucky are the three of us? Two out of three. Ain't bad,
a quick break to let you know that today's episode is brought to you by the side, hustle Pro podcast, it
Cast hosted by Nicola Matthews, a comb a which is also on the HubSpot podcast Network. So the side hustle podcast is focused on people bringing their side hustles, into making them their full-time. Gigs, making them big businesses and so she's got a bunch of really interesting episodes. Her most recent episode is about a woman who was popular on Instagram and create a bunch of products and brought it into Target and get it into retail stores, which is really really hard. She has a few other episodes on changing the relationship with money and building a healthy emotional.
Channel relationship with money, which is something we talked about here which is definitely challenging, mastering self-talk. And then also how to have a plan for the year and put it into action and much more so go check it out side. Hustle Pro wherever you, get your podcast. Alright, everyone on the podcast about last year, one of the best guests we've ever had, was this guy named Neil? Patel is kind of controversial because he said that he was spending two hundred thousand dollars a month, which is a ton of money. And the truth is even though it's controversial, everyone was asking
Him and if we can get them on again. Well, I've got good news because he has a podcast. And today's episode is brought to you by his podcast, it's called marketing school and it's a daily marketing. Podcast brought to you by Neil Patel the guy we had and his partner, Eric Sue. So they share all types of stuff about marketing business investing. And your friends will think you are a marketing genius. So check it out. You can just search marketing school on your favorite podcast platforms or on YouTube. Search marketing school on YouTube and check it
out. So
We gotta get to this crazy Balaji bat and then I'm going to ask you what you're doing with your life after that because I think you got an interesting Little Empire. So I guess I'll start with new pop is so I think you're known as like the Bitcoin guy. I would say that's the that's kind of how you build your brand, you've obviously done a lot more than that before that I think you worked at Facebook and even Snapchat for a little quick lunch and and so you worked in Tech. You started to build a big following on Twitter around
So in Bitcoin, built one of the bigger like newsletters and brands in that space, and since then launch a bunch of like, you know, businesses around it. So, you had a VC, you sort of had your own VC fund, or work to respond, then lunch your own, you have like a kind of like a crypto jobs company. You have a bunch of things in that ecosystem since then, I think you've made some changes now. So I want to hear about those in a bit but then we have this, Balaji back pop. Why don't you just give us the quick 60 seconds on who Balaji is and then we'll frame.
What this, what this crazy bed is and then I have some inside info also. Alright, so I don't want to be a spokesperson for Balaji. So and everything I say is my opinion. This is my description of him. This is my description of the bed but blotchy srinivasan is probably best known now. For being one of the more kind of public figures to have predicted, a lot of what happened for covid. He was very early calling out. Hey, this is a risk. If this risk becomes a reality. Here's how bad it could get. You know. Again as with predictions a lot of it was right. Some of it was wrong but generally
I think people point back in the like man, we should have listened to that guy. He then went on like a two or three-year heater where he kept making predictions and kept being right about a lot of things. And so the internet kind of rallied around this idea of like the worst words to ever hear was Balaji was right. And so when you build that type of reputation, now people put a lot of weight when you say something. And so his latest thing is Bitcoin is going to hit a million dollars in the next 90 days, which sounds
Is absolutely insane Bitcoins, trading at 27,000 dollars. It's like, you know, whatever 40 x from here, and to do it in 90 days, like we've never seen an asset really ever do that before. Now, I don't agree that that is highly likely I would put it at like maybe I don't know five percent chance which is actually much higher than probably most people would put it. But to me the most interesting part is like the reasoning behind why he's saying this and you know, I think it's important to call out the balaji's bet is like the best meme of 2023. He was able to
Really create a meme that is caused millions of people to. Now talk about this idea of hyperinflation, bank, failures and Bitcoin. And I think that's ultimately what he was trying to do. So if you ask them in a private room, like hey, do you really think Bitcoin is gonna be a million dollars in 90 days? He's putting two million dollars on the line. So like he definitely thinks there's a chance but I don't know if he's at like 99.999% likely, or if he's trying to call
it. What's what's two million to him? Is that a big deal? Or no,
it's hard to tell so blasi.
Before he became known as the like blasi was right guy. He built and sold a number of companies. I think at least two that I know of had nine-figure exits. Like he's like real right? He's a great entrepreneur. He worked at Andreessen Horowitz for a while. He was at coinbase as the CTO like he's a very real entrepreneur and investor and so he's done well for himself financially but like I don't care how rich you are. Like you don't go publicly bet people to million dollars on Twitter unless you have some degree of confidence because in some way like two million may or may not be a big number.
But like your personal reputation is you know quote unquote Priceless. And so like that's basically what he's staking here is he's using the money to draw attention to what he's saying. But really he's taking his reputation on something that a lot of people think is absolutely insane at the moment
and the BET started because this guy met lock. I actually don't know who I forget his first name but he basically tweeted something and said like hyperinflation is not going to happen and then Balaji replied and said I actually think it will happen. And in fact, I'll bet I'll take yours.
Million dollar bet that hyperinflation is going to happen in the next 90 days and this is related to the Bitcoin either. That's another bet on top of the Bitcoin one. Then you won't wrote this post and you had one line that you had a couple lines in there that I hated in my hated. I mean, it was like it. Stung me. One of them was you quoted Lennon. You know one of the folks who ran the Soviet Union, you said there are decades where nothing happens and then there are weeks where decades happen, you said that and then you had a few other lines and I started reading this
I got scared, like I was legitimately scared and I texted you and I was like, is this real? And you're like, maybe maybe not. I forget exactly what you said, but you wrote this in such a way that I was, I was fearful.
Yeah, so I definitely want to fear Monger, but I do think that there have been two points now, in the last three years, where it's like, kind of a shake people, and wake them up and be like, hey, pay attention right now. The first was during March of 2020. I wrote a couple of different pieces. People had similar reactions to it and, you know, one of the people
Pieces was like, I basically was arguing that unemployment was going to be double digits and millions and millions of people were going to lose their jobs and I had people like privately, emailing me be like, you are insane. Please, stop fear-mongering like this is crazy. And then the next week, six point six million people thought unemployment claims. Right? And so, like, if Balaji is like a plus, I'm like d - maybe and you know, I think some of this stuff but at least what I want to do is call attention to like, hey, this is serious. And like you should pay attention because if this goes through
On the way it could be catastrophic not only for people with the personal finances but also like as a nation. And I think it's also important to call out that like yes, it is important but I don't think most people want this stuff to happen, right? Like the United States of America is this amazing place. There's millions of people around the world that try to come to this country. And it's because we have democracy and capitalism and stability, and like, all the things that we know, make this country great if we were to lose some of that stuff. Like, this isn't about a financial product, or an asset going up or down in price. It's like
Like if there is complete chaos in a country, people don't care about what currency they're holding, like they want guns, right? And like, that's not a world we want to live in. And so I think it's less about kind of finance and kind of investing and it's much more about like pay attention to this serious situation. That's playing. I think it was blonde. She's doing with this bet, that's why I tried to get across with the piece that I wrote last
week. You also had this other line where you said a friend yesterday told me bodies keep floating to the surface, meaning, the Silicon Valley Bank, that's just one body and we're going to keep
The more bodies and so you like used language that I'm fairly on. I mean, I have a high level understanding of this stuff, so nowhere close to a lot of smart people but you use language that that's stung me and when I see people who like you who write like that, it's almost like this is how I describe Malcolm Gladwell when I read his books there. So convincing Tucker Max is not the guy who does this, he's theirs so convincing because there's such good writers and they're so good at just explaining their points that I have to remember.
Sure that when like a Malcolm Gladwell book, it's like dude, this is all just a theory and I could probably find lots of examples of why he's wrong, but he's so good and you are so good at writing about it that I begin to believe you and I have to like, pinch myself sometimes like wait, this is just his opinion and there's actually people that are probably equally smart and equally experience to have a different opinion and I find that to be that whole thing that I find to be very confusing. And I and unsettling
this Viewpoint that like, you want to argue ferociously one point of view.
That the response both the critiques and the support is as ferocious back, right? If you write a piece and if people are just like and whatever, like, you know, I've heard this a hundred times, like nobody even takes the time to respond but on the internet, like you kind of have to go all-in and really argue a point. But if you are intelligent, hopefully, if you get new information or you see a critique that you're like, oh, that's actually a great point and you're willing to change your mind, then you can very quickly, iterate your way closer to the truth. It's hard to always get to the truth, but I think that's kind of why I write that way is just argue ferociously and then you'll get the first
Ferocious response and that will help you get to the truth
faster. What's the best argument as well as the best person that you like to read that takes the opposite stance of view that you can see that you can, you would say, if I'm wrong, I think this could be true. Like, who do you? Who do you like, to read that thinks you're wrong and they could be right?
So it's different on every topic. Obviously, and even individual situations, I have friends who I agree on 95% of stuff with. And then, there's that one thing that they like, the idli disagree with me on, and I actually pay attention
More when they disagree, then to the person who disagrees with everything, right? It's like once somebody has shown that there are a clear thinker and somebody's able to actually think through individual ideas. And they don't just succumb to like, oh, Sam. And I are friends. We always agree on everything. So, like on this new topic, I should just agree with him. Actually, I want to surround myself with people who they are very clear when they agree and they're very clear when they disagree and what you want to look for is like volatility in agreement. So, the more that somebody agrees with you, you pay attention and put weight on when they disagree.
Agree. And then the more that somebody disagrees with you that you want to pay attention when they actually agree. So it's that volatility or that kind of reversion away from the mean that ends up being important to pay attention to.
But who who are those people in this case? Is there
anyone right now? I would say. So it's less about like individuals. I think there's a whole cohort of people, everyone has kind of a little bit different view but let me explain first kind of what's happening and then it'll help me under explain why I think that there could be a counter argument to it as well. So the main argument is that if you go back
The beginning of 2020, the economic and financial system was like pretty good, right unemployment was pretty low, inflation was under 2%, like, we're kind of chugging along, we'd been in a decades-long bull market, everything seemed fine if not good, obviously, covid happens, and the first kind of big shock to the system was all the government lockdowns, right? So across the world people said, hey, go sit in your homes. When you do that, What's called the velocity of money, or the amount of Commerce goes down. So, if you used to go to the bar, if you used to go and buy stuff at the store, like you,
Just locked in your house. Now you're not spending as much money. So when velocity of money goes down, people get scared. And when they get scared and they're fearful there ends up being something called a liquidity crisis. And the best way to think of a liquidity crisis, it's just like you look at your portfolio of assets and you're like, I want dollars, I want safety and so you just sell everything that you can to try to get dollars. So you people didn't care. If it was stocks bonds, cryptocurrency, if they had liquid, you know, real estate assets. They could sell Commodities anything that is sell everything and they want dollars. And so if you go back and look in March,
Literally meaning cash in a checking or savings
account. So that's like, step one. And then if you remember during March, and April of 2020, people didn't know what's going on. Like, I went to the ATM and I pulled out a bunch of cash. If you were literally pulling physical cash out like a, well, just in case, right, like, who knows what's going to happen? They also were like buying toilet paper and doing all like, the crazy stuff because fear takes over. And so, when these liquidity crises happen, all assets, go down and the dollar becomes stronger and central banks and governments have to make a decision. They
I can say, hey, we believe in the free market. We're just gonna like let this play out. Yeah, it'll be painful in the short term, but like the free market or kind of figure it out over time or they can what they normally do say, we are going to intervene we're going to step in. We can't let our people suffer. And so, of course, like politicians and Central Bankers. They're very short-term optimized because there's pain that millions of people experience on a day-to-day basis and it's hard to sit by and watch people suffer. So it makes sense from a human Viewpoint as to why they would step in. Although, I disagree that many times, they probably should not
Step it and so that's what they did. They stepped in, they basically dropped interest rates, 20 percent which just made it incredibly attractive to borrow money, right? If people are borrowing money, that means they're going in there, spending it. They're buying houses, they're buying all this kind of different stuff. And then they also pumped between the central bank and the politicians trillions of dollars into the economy. One key thing that a lot of people missed, including myself initially, is that regardless of how the money got into the system, the money ended up in the banks. So if they gave 1200 dollar checks to individuals,
Whether they bailed out the airline industry, whether they created all sorts of stimulus packages, whatever when people receive the money, whether they spent it or they held it, someone an individual or company put that money in the bank. And so the deposits of these Banks exploded Silicon Valley Bank is a great example that about 60 billion dollars of deposits to start. They ended up having about a hundred ninety billion dollars of the posits, so kind of 3x growth hundred thirty billion dollars or so. But what is the bank do when all of a sudden people show up in, like, here's a hundred ninety billion dollars.
There's they're in the business of making money and so in a zero interest rate environment, they can't buy short-term debt, right? All that means is like they're buying treasuries that are three months, six months, nine months, 12 months to years, whatever. But all of that basically has no return because interest rates are at zero. So instead, what Silicon Valley Bank did is they went and they bought 10-year bonds, meaning that they're going to buy a bond today if they hold it for ten years, they'll get back, their principal, plus, whatever. The return on the bond is now that bond that they were buying
Buying had about a 1.5 percent return, right? So you buy it today, you hold it for ten years, you're getting your principal plus the the 1.5% type return over that 10-year period. Which is a conservative play Super safe, super conservative backed by the US government like everyone looks at treasuries. And like that's the safest thing to buy right now that is all good and fine. If the environment continues, how it is, what ended up happening is that all that money got pumped into the system. Inflation exploded. We had the highest inflation in
Years. And so, now all of a sudden inflation is at nine plus percent and the central banks like, oh boy, this is not good. We have to bring inflation down because inflation actually doesn't hurt. Rich. People rich people make money on inflation because they owned assets. It's the poor people. The bottom 50%, they're the ones who get hurt by inflation. So let's try to get inflation under control. And so the way they did this is they jacked up interest rates from 0% to about 4.5 percent and then they started selling assets off their balance sheet. They sold about
A trillion dollars of assets when they do that basically, they are tightening Financial conditions, making it harder and less attractive to borrow
money would spend money. What do they sell? What do they sell
the central bank? This is actually a crazy statistic. They had about 900 billion dollar balance sheet. Coming out of the global financial crisis, they 10 bagged, it, they literally went from 900 billion to nine trillion between the global financial crisis and 2022, right? So they expanded by buying all sorts of debt and treasuries and and various assets.
And that's how they get money into the system. Is they exchanged the dollars for these assets? And then when they contract, or they try to make tighter Financial conditions, they sell all those assets, right? Or a good portion of it to kind of pull the quiddity out of the system, but when they did this, the banks are basically left holding the bag. And what I mean by that is the bank's took that, you know, Silicon Valley Bank hundred, thirty billion dollars, 80 billion of it. They bought these bonds that earn one point five percent, which is great and zero percent interest rate environment when
They've now increased interest rates to four and a half percent that bond that you bought. Previously is no longer good, it's actually cheap and so it trades lower. So if you spend $100 on the bond now, if you were to sell to someone, maybe you could sell it for 80 cents, so you'd lose 20% on that Bond. The reason why that doesn't matter historically is because the bank's actually get special accounting treatment. So let's say that Sean has a portfolio. And in one of them, he bought a stock
He spent $100 a share, right? So he bought a stock 400 bucks, and he goes to the bank. And now, the stock is trading at $80, and he wants to use that stock share as collateral. They don't give them credit for spending $100, they're like, hey moron, it's worth 80 bucks, like you, get credit for $80, not 100. But the banks have a special accounting treatment where they can actually take some of the assets on their balance sheet and they can put it in a special area and they call it hold to maturity, hold to maturity basically means
We get to count what we bought it for, not? What it's worth today. And the reason why they're allowed to do this, is because they can hold the bond until the maturity, the 10-year period and they'll get the principal plus the return. So, as long as they don't sell it before it matures, then it ends up being worth what they paid for it. The only time that this does not work is if all of the depositors want their money back at the same time because now the banks have to sell all those assets and take that money to give back to deposit.
That's what happened to Silicon. Valley Bank is. Basically there was a bank run, when the bank run, cause the bank to sell assets, they lost billions of dollars, which then scared more depositors. So then they went and said, hey, give me my money back and it just became this reinforcing cycle. And in 24 hours, forty two billion dollars was drained out of the bank, which caused them to eventually be insolvent and the government took it over
and ultimately great explanation. That was awesome. You killed that their biology and a few other people are betting that that's going to happen to other more
consumer-based banks in the next 90 days, is that
right? So it's already happened like this isn't just a Silicon Valley Bank thing like a lot of the politicians. They this was like a softball served up to them down you know right down the plate. They were like oh great the crypto and tech companies are a bank customer. It must be their fault. But like Silver Gate Bank Silicon Valley Bank signature bank. Now Credit Suisse like these are not, you know, crypto Banks or just Tech Banks. This is a complete global
The financial system issue. And now there's reports coming out that hundreds of banks are actually underwater in terms of holding these assets. And so, that's why you've seen the central bank and the governments around the world step in and say, we will backstop a lot of these deposits, because they don't want people to be so scared, that they go. And they try to take their money out of the bank's because if everyone goes to do that, that then basically creates a Cascade of Bank runs. And so balaji's argument, why he's making this bet is that when the
Government steps in to protect the depositors that is an inflationary pressure and it's going to take trillions and trillions of dollars to do it. And so at the same time, you're getting trillions of dollars of inflationary pressure. You also are getting this psychological. Awakening, and people are saying, wait a second. Maybe the dollar isn't as strong. As we thought it was, I should look for an alternative and when those two things happen, hyperinflation 10 occur, doesn't guarantee it, but it can occur. And I think really
If you kind of boil down his entire argument and why he's created this essentially meme with the bit signal, is that people in the United States? We've never worried about this, but this is not new globally. There are people listening to this podcast right now. They'll tweet it us afterwards The Bike Dude. I live in Argentina. Like inflation is like 70. 80 percent year over year. I live in Venezuela. I live in Zimbabwe. I live in all these countries where they live with hyperinflation on a day-to-day basis. It's just that in the u.s. we never thought about it. And then to is like,
You add complexity because the United States dollars the global Reserve currency. So if we screw this up so bad, that we hyper inflate the dollar. I don't even understand. And don't think a lot of people understand like what happens globally when the global Reserve currency hits high inflation or hyperinflation. So again it goes back to like we don't want this to happen but damn people should be paying attention right now to make sure that they understand what's occurring and kind of how to prepare for it. So let me add a little color on what you just said. So there was a biology tweeted this out. It was just a
Like a memo or a note from the Kansas City office of the Federal Federal Reserve. And they had said, there's kind of this like one section that he highlighted, which it said, you ran 2020, once it makes it two years ago. Only for Community Banks were below the kind of five percent ratio of their assets that they had available. So they were basically only 44 Banks would be at the threshold that we would be worried about fast forward to today. That's now
III Community Banks in the United States. I 333 Community Banks are essentially insolvent. Is what this what this means and could be, if there was a bank run on any one of these, we would have the same problem that we had first, it Silicon Valley bank. And then what was about to happen on, you know, last Monday or whatever where everybody was going to go to, you know, I know here in California. First, Republic Bank was like, you know, the Domino that was ready to fall before they came in and said no no, everything's everything safe.
Your deposits are guaranteed. Don't worry to try to stop that from happening because there are 3333 Banks, just in the United States that they say are below that ratio. Now, what that would do to the next tier, who knows, and also overseas. Because the, the dollar is the, the reserve currency overseas. There's a bunch of banks that hold dollars and they're, they're worried about what if there's a background on us and so like, you know, just last night overnight on a Sunday night, you know, it's bad when they're sort of working on a Sunday night and, you know, making these
He's announcements where they're like, oh we're establishing this like swap line as I was to swap line. Swap line is basically. Hey will bail you out too so if you need dollars to Central Bank of the United States will give it to you to European Central Bank and all these other places. And they basically establish this overnight back Channel which said if you need dollars because you're going to get hit with a run, we don't want you to fall over and cause this Cascade of fear and panic and and withdrawals. So we will also back stop. You just like we back
Stopped, you know, the Community Banks in the United States. So that's to biology's credit. I think he is correctly identified just like he did with coronavirus that. Hey this might be a lot worse than you think if there's actually data to support that the conditions are worse than you think. Now what's funny is Balaji actually did this twice. So he had like a V1 of trying to spread the word. Same, I don't know if you saw this one. So for V1, was he goes the pit signal. Hey guys. How do you raise the ring? The fire alarm on the internet. How do you show? It's not a false alarm. I'm
and up the bit signal he goes. I'll put a million dollars in Bitcoin to alert people about this stealth financial crisis. I'll give a thousand dollars to the best thousand tweets that show a reply with a graph. A stat, a meme that will bring attention to what's happening. Because the Central Bank of the banks of the big regulars have bankrupted us, they are trying to hide the insolvency of the banks to you. The depositor.
This is a weird thing to do, right? That's like it's helpful that he's trying to help, but sometimes that
doesn't look right, this was a giveaway, right? That's not a bet. He said I'm giving away.
Million dollars to the I'll give a thousand dollars to the Thousand. Best Tweets. I will spread the word. This tweet did pretty good thirteen thousand likes. He tried. But then he hit you with, there's like a bunch of like, you know, things have to Balaji is like Light reading. But to the rest of us is like, oh man, like I gotta, you know, I gotta hook up to an oxygen tank just to in take this amount of information so it's like this is crazy things. So he'll treat this table of like you know, 45 currencies that have done hyperinflation Hill, tweet out of the thing that basically shows,
Shows some random meeting minutes from the fed and 2022 that showed that they knew something right. Like all these, these data points, but it wasn't really going viral until this guy. James Medlock comes out. He goes, I'll bet anyone a million dollars to u.s. does not enter hyperinflation, engagement lock by the
way, I think, by the way he had it it was even scarier. I think he said everything that we're talking about, by the way, it's in within 90 days of like, last week, right?
No, the first. It was gentle. Just said, I'll bet anyone. Hi, 1 million dollars. Hyper flesh.
Doesn't happen. Okay. That was just, that was that guy, sweet apology. Just takes this
Brando. The waist by I interrupted you say, who he is, say, who he
is? I don't know who this guy is. His bio says Social, Democrat markets, marketing Market. Socialism the sheets. I don't know what this guy's talking about. This guy's like it's a meme account. It looks like so like he's got a picture that and of this is means our team is Million Dollar bets. Yeah, exactly. Like you know this guy? Well, is that at Mastodon .l? Ah okay. So like look let's be
Wilma, what's going on there. So Balaji comes out. He says, I will take that bet. You buy one Bitcoin and I'll send 1 million dollars to an escrow to be clear. This is 40 to 1 odds. So he's basically saying not only is this unlikely to happen like if this was even odds it would have been like, dang ball is going to lose a million dollars because Bitcoin is not likely to be worth a million dollars. Then he added in 90 days which is already a radical move. Then he said, I'm and by the way the
In dollars one Bitcoin, Bitcoin is currently at 26,000 at this at the time you made this bed because that's 40 to 1 odds that I'm laying you and he says all we got to do is fine. So you know a mutually agreed on like escrow or custodian and he look at me tweets out this bit signal graph. And so he's like, you know, I'm doing this again now, this this tweet goes viral, this one gets 11 million views because it's more provocative. It's it lets anybody, and if first the wave of tweets, myself included was like, apologies nuts. He's gone crazy like this doesn't make any sense.
Sense. And so you know, because he was like Not only was the BET unlikely to prove in his favor. It was a perfect pet for mr. Yeah, James Medlock over here, the social the Democrat, in the streets of the Socialist and the sheets. All you had to do was buy to bitcoin, right? He could buy one that he's putting up for the BET and if he's wrong and big and dollar does hyper-inflated Bitcoin becomes worth a million dollars, all he had to do was buy a second one. So if he could for fifty two thousand dollars, you can guarantee himself a million-dollar payday. So it was like an
No brainer. And, you know, the poker player and me was like, biology, what are you doing? That's a, you've given this guy like, you know, a no-lose bet. And so I messaged him and I was like, you know, hey Balaji this is crazy, what are you? What are you thinking? And here's what, here's what he replied. I I think I could share this because it's not anything that he's not tweeting out. He's tweeting all this stuff out anyways, so it's not, it's not overly crazy. But here's what he said, he just replies. All the banks are insolvent the first first reply because have you seen the
Short, where one guy figured something out early and everybody else thinks he's crazy. That's what that's what's happening here. He goes. People think this was a single bank issue like Silicon Valley Bank. It was a central bank issue. All the banks are dead ten days ago. There were no dead Banks today, there are five and if people realize this in the put the thought to pull their money out, they'll realize that the banks don't have it, it's Uncle Sam, Bank manfried, not Uncle Sam which is what basically happened, have two extra people realize the money's not in the
He's not in the in the bank with FDX and then that caused, you know, the extreme crash and then he tweeted out a bunch of stuff and he goes he goes I'm not doing he goes yes I'm not doing this to make money because I pointed out that the guy could just hedge and win the bet he goes. Yes, I'm not doing this to make money because if I had the beliefs that I do and I was just purely selfish. I would simply just take the million dollars of by 40 Bitcoin. I'll take, you know, another million dollars by another 40 Bitcoin. And I do it quietly because I believe that the u.s. that the million dollars going to be worth zero in 90 days,
I'm doing this to alert innocent people and to send a message, get to the exits. And so I want to bring up a couple of like cases here. So that's the
bailed on really, really, really quick. There was also this other thing apparently right around this time. It there's a picture of him. So this guy biology he's like, as this
like whatever type of picture on the YouTube video, Gotta Throw the picture.
So he's got the stereotype of being like, you know, like the forgetful scientist of like he's just this guy who only cares about being brilliant and oftentimes. He's right. And he's eloquent, what?
There's a picture of him. It looks like he's giving a seminar at like a university and the someone tweeted he goes biology's saying get the F out of the US and it's and it's very scary and he's sitting there giving this presentation in front of like a class and he's wearing pajamas, like up a like a pajama looking hoodie basketball shorts and Nike Air, Jordan flip-flops with his laptop, sitting on top of like two cardboard boxes. And so if you needed
Like any more of this stereotype of this, like brilliant, like the image that we have of Mark Zuckerberg, you know, just sit in a hoodie coating eating pizza and drinking Red Bull. Biology is going all in on that image and it almost makes it worse when I see this picture
but I think a lot of why he has so much credibility is that he has been able to identify a number of these like exponential situations. And if you really think about what he's saying here, it's almost an exact overlay to covid, right? He saw
Very early on a couple of data points and he was able to extrapolate from a couple of those data points. Hey this isn't a linear line like this is literally an exponential curve and the top of the exponential curve is really scary. Like let me go yell scream and I call attention to it. He's doing the exact same thing here and I think that's what Sean was reading about. Like hey 10 days ago, there was no dead Banks. Now there's five. Like he's just trying to put a couple of data points and be like, if this goes exponential, like this is really bad and I think that one of the the
The components that is important to call out is like, I don't know what the percentages of Americans, but most Americans don't know that. If you go and you deposit your money in the bank, it's not your money anymore, right? Like just that alone like the lack of financial education of the average American is astonishing and so yes there's FDIC insurance that covers up the 250k. Like there's all these different things but if you go look right now, like the FDIC does not have enough money to backstop every Bank in America. Yeah. What is this? Like a hundred and something billion.
You 720p or something? I
think the 20% of it was used to help Silicon Valley Bank that Silicon Valley Bank. Yeah. Silicon Valley Bank is like the 20th largest bank in America so it's like not not very big compared to the big big ones.
One other thing that I think is important to understand about these situations, is this idea of like a digital catastrophe. And this is a concept that Frank. I struggled a little bit to come up with a good name for it, but I think digital catastrophe kind of really articulated, sit as best as I can which is you need to understand this concept because it is going to
Become very, very common in our lives over the next you know, 20 30 40 years. But the way that I Define a digital catastrophe is it's an event that occurs that is - usually plays out in the analog world kind of the real world. But it is drastically accelerated by the speed of communication and action online and so Silicon Valley Bank is like the prime example, right? If you think about what happened there on Wednesday afternoon, they made an announcement by Thursday morning. People were scared by Thursday.
Afternoon, forty two billion dollars had been withdrawn from the bank. And by Friday morning, the bank was dead right? So I can 48 Hours. It was the second largest banking failure in the United States history. But in the old days what you would have to do, in order to have a bank run is like Sean would walk over to Sam's house and be like, yo said did you hear like the bank's? Probably not doing so hot and then like Sam be like, huh? That's kind of crazy and you would walk ride your horse. Maybe getting a car and like show up to the bank. Physically. Wait in line.
Line. And be like, when you get to the teller window, can I have my money back? So I get takes a lot of time, effort, energy, all that type of stuff. Now, you can literally open a new tab on your browser, click a couple of buttons, and move your money. And so, when the speed of information occurs, that it does on the internet, millions of people, whether you're a customer Silicon Valley Bank or not like Twitter knew that the bank was insolvent by like noon on Thursday, right? And so if that happens,
That's how you get forty two billion dollars withdrawn from a bank, that is a digital catastrophe. It's the speed of information, the speed of action online has real-world consequences. And so, another way to think about it is like the internet was weaponized to create the second largest bank failure in history. But it was in response to the knowledge of an insolvent bank that was caused by a fractional Reserve banking system, and an increasing of interest rates that basically left the bag holders as the banks and
So people were just operating out of personal incentive to get out of the way. Yeah, there's a, it was kind of amazing like a Thursday morning. I remember waking up in an R group chat. Sam there was like somebody posted Silicon Valley Bank. Stock was going down, I was down like, 30 or 40 percent. It was like, oh wow! Must have had a bad earnings call write or, you know, that was kind of my assumption. It wasn't anything too, too bad. You know, by 11 or noon, I'm scrolling Twitter. And I start to see, you know, if you scroll to the that this is just a general truism. If you scroll
Social media and you see four or five different sources talking about the same thing. Your brain is just like wired to be like, this is now a, this is a big deal topic. X is a big deal. Marketers use this to their advantage when they want you to like, bunco. Buy a product or know about a movie that's coming out or whatever, they do the same thing. This, why they get why influencer marketing is a big deal but it also works just organically five. People say the same thing on in one Twitter, scroll, I know that something's up. And so I remember being on the phone and basically in the manner of like,
18 minutes, it was like, I'm on the phone, we're not even really sure what to do is like, let's just be safe, take it out, sent an email. So you know, sent an email saying, hey we're taking it out, open up a new tab, click wire the money took a screenshot of the wire, sent it back into six group, chats then went ahead and tweet it out a thing. It's like, wow, like in 15 minutes. I just like propagated this more than I could have done if I if it had been my full-time job, you know 20 years ago which is kind of what to your point and the funny thing is people
Or mad that like, well, if there wasn't a bank run, there would have never been a problem. And it's sort of like it's they use this example of like, but it was it called like screaming fire in a movie theater, or something like that. It's like, then everybody grunts the exits. Well, the reality is, if there's no fire in the theater, everybody run to the exits and getting stuck there then, you know, trying to get out. Like it's not that big of a deal. There was actually a fire and so that you know, I don't know how the blame gets shifted to the people who successfully got out. I got out of the fire versus pointing out that hey, somebody
D causes things to catch fire, which is kind of biology point. But would you he tweets out this graph of the, like the balance sheet or whatever? It's basically, like, goes up up up, which is like, during the money printing era, then the last year year, or so, it's been trying to tighten. So it's been going down. It's been contracting. And then like overnight it just goes straight up vertical. Like no graph. You've ever seen? Because it's two trillion dollars is basically of liquidity was added to the market. Now, some people say no, it
Wasn't really, my put into the supply, like, pop. You might have an idea about this. Some people say, well, that to surely knowledge is not really being given out, it's not going into the supply, its kind of just there as a borrowing facility in case the banks need it in order to like prevent any panic and other people say money particular bird. This is same thing. So, you know what he talking about here? I don't know. Do you have an opinion on that, you know, when you're in my high school and there's the, like, but actually kid in class who like, sister in the corner and no matter.
What anyone says like but actually and they try to tell you about something, they read or this or that or
whatever. It's actually called barthelona.
Exactly. Oh you mean buscetta like that is those people on the internet right? These people who they're the same people during covid that were like but actually and then they would go on some ranch right? Like no, the government locked us in our homes and literally printed trillions of dollars in created 40-year, High inflation and absolutely screwed me.
The people, I don't care what, but actually you have to say, and then you look at the same situation is like, they're like, but actually inflation will be transitory and it will come back down, right? And then you're like, no, that's not how this works. And so ultimately, what you end up having, which makes markets. So that this is a part of capitalism is you have Theory. Meet reality, sometimes theory is a great primer and overlay on reality and other times. It's not and what I've learned over time. Is that the
The more complex the system, the less likely it is that the theory overlays perfectly on reality and like there is no more complex system than the economic system of America, let alone the world. And so, all these people who are like, oh, inflation will come down, because the FED will do this or that. Well, like the FED isn't the only thing that contributes to inflation their supply chain disruptions. There's geopolitical war, there's like all these different components to it. And so, I think that you've got to be very careful, just looking at
And trying to impose theory on to reality. But the other thing that I would say that throughout this entire kind of cycle or you know, kind of news development man. Are we lucky? We have the internet like the internet is the greatest place in the world and like Shawn did a great job explaining you know you can propagate some of this information but imagine being in the 1950s or 60s and like you basically could read the newspaper and maybe you watch like the nighttime news and you have to listen to The Talk.
And points from the like public narrative or like the, you know, the government or the fed or whatever on a daily basis. There are things that are said by those who kind of set the public narrative and within seconds people in the internet, destroy the narrative and they're like, no, that's not true. Here's these five points. And like, I don't care necessarily who's right or wrong every single time as much as it's like I want both sides. I want what the people in charge are saying and then I want the people who like, think the
One charger idiots are saying and then I'll kind of like think for myself but the internet is what has empowered that. And so like wow what an amazing time for us to be alive to have that ability because literally two generations ago they didn't have when you can do, go to the encyclopedia, look up like what is a bank run, right? Or like how to Central Banking work is just amazing that we now have this capability.
So to I think we should wrap this segment up and I want to wrap it up by each of you and just a couple sentences saying what do you think is going to happen in the next?
90 days. And what are you? Are you guys doing anything?
Sean you go first. Okay? So I'm going to say two things I think in the next 90 days, basically, I think Balaji is actually correct on everything except for his 90-day point because I think that's too hard to know and he might end up being correct. That it something happens in the next 90 days or might take 900 days and I think either way the important part is he was right? It's just the time fat the time window I think makes things impossible.
The good news is you don't actually need to know the time window to act accordingly. I've said this for a very long time and I think what bothers you saying is a much louder better version of that which is for a long time. People thought, if you're buying Bitcoin you're trying to make a buck and from the beginning, once I start to understand what is this, I was like, oh, this is not about making money, it's about saving money. It's a savings technology, which is basically to say even when inflation was only two or three percent,
%. If you just look at two or three percent over a 40 or 50 year, period, the money that you have in the bank will still. If you put a hundred thousand dollars in the bank, it'll still look like a hundred thousand dollars but it will only have the buying power of something that's 60,000 dollars for example. And so why would you ever save your money and something that is designed to lose purchasing power? You wouldn't you wouldn't do that. And so I've always thought Bitcoins the core value of it is, it's a savings technology, it's a currency who's
Big feature is it doesn't inflate and so you know if you wanted to save your money you'd rather save your money in something that doesn't inflate. Cannot inflate versus something that either inflates slowly or quickly, right? Low inflation are high inflation. I don't want any inflation, if I'm saving my money and so anyways, I think that he is correct about, if you're going to save money, you should do it in a hard currency. That's not going to inflate. I've already been on this bandwagon. Obviously been the kind of crypto person that's, you know, obviously a believer in crypto.
It'll grow because I believe in crypto still believe in crypto it. So nothing has really changed their in the next 90 days. I would guess that Balaji looks like a fool because people are going to point out that it didn't happen in that time period. But in the next nine hundred days, I think that he will be proven
correct in 30 seconds. Pop, what do you think or 60 seconds?
I think that Balaji is correct somewhere to Sean. The timeline is hard to get there. I will put a higher probability on the 90-day timeline than most because I do think that there's tail
And mainly, it's because when hyperinflation happens, it happens very fast like in episodes of hyperinflation, everything's fine. 90 days later there is hyperinflation. So it's less about like has this ever happened and it's more about like, is it going to happen again? I'm like maybe 5% because I do think there's very systematic problems and issues. Currently in the Global Financial system. I do think that the banks are the central bank's when faced with save the bank, save the dollar will save the banks, which will lead to inflationary.
Pressures. But I would not bet a million dollars that Bitcoin will be a million dollars in 90
days. Whoo, you guys hyped up or what
ready to go get another fight. We should say. You say one thing, which is the the other take that people have on this which is that if Balaji has like a hundred million dollars of Bitcoin, he doesn't need to be right for this to be a profitable bet for him. So he's got a hundred million dollars of Bitcoin already Bitcoins Bitcoins up like 20% less week or something like that, but it's up.
You know, 45 percent right now, you know, he basically would only need to move it by like three percent or it only need to move up by 3% in order for him to be profitable, losing two million USD. If he's got a hundred million dollars a Bitcoin, which I suspect that he does have a hundred million dollars a Bitcoin. I think he had now has moved on. I think he said this, he's moved 99% of his net worth in to crypto and so I think he can lose the BET and still make money and be doing the thing, that's it, you know, to his beliefs, the right thing to do, which is alert people.
That the that the banking system is currently broken and you know, he is the Michael burry of of our industry. So we'll see if he's correct,
dude. I just feel like I drank just drank like a leader Mountain Dew. I'm just like drinking buckets of do. I'm just like, people want to stand out
when pom tweeted out these coming on. People wanted to know how you gonna sit in the room with the two of us and still be sitting there in cash ETFs and not own any crypto at the end of this segment. Well, hold on. Hold on. It's of hell. Are you thinking on?
To go buy Bitcoin or what
I own Bitcoin. I own
that I own it from 2015, a small
percent. Oh no, you know, I've made purchases and I don't have cash. I have real estate and I have. But here's the thing though which is in hyperinflation periods, I own equities. Those also go up the I don't you know, to get to a million dollars Bitcoin right now. Is that 27,000? You know, that's like what's that like 50 X or something? I don't know if equities will 50x but I mean, they will go
Go
up. Yeah, maybe but also all those businesses run in dollars and all their earnings are in dollars. If dollars are not useful anymore, right? Like the whole system, that's the thing. I'm a big one bowl and you don't want to see this happen because the world will be chaotic, absolutely chaotic. It will be bad for a lot of people. I think everybody, even, who's the biggest Bitcoin Bulls you said this would be yourself pump, you're not rooting for it to happen this way. A slow transition is really. The only thing you want a fast transition would create a lot,
Of damage and so you can only want that to happen. I feel like I can rule the world. I know I could be what I want to put my all in it, like a Vaso. Let's Travel never looking back.
