The Last Trade E037: The Pensions Have Arrived with Sam Roberts & Glenn Cameron

Brian Cubellis (00:00.238) We've got a very unique setup for this show. Jesse and I are in Texas and Michael is over in London, joined by the Cartwright team. Glen Cameron has been on the show before and Sam Roberts, the CIO of Cartwright. Michael, I'll let you open this since you, Glen and Sam have been hanging out and talking for the last couple of days. What's going on over in London? You know, well, we took a red eye from Texas last night. you know, hopped over the pond and went to meet Glenn and Sam and had some good conversations, excited to roll into this. This is one of the ones that I think I need to say less of and with experts in the room, asset allocators that have been looking at Bitcoin for a very long time and excited to have a conversation with them. I am as well. And Sam, before you re -entered the room, I couldn't see you before, but I was telling, I thought I was telling you, I was just telling Glenn and Michael that the first time Glenn was on, he explained, how he joined Cartwright and the interview process he went through, which was essentially you making sure that Glenn understood Bitcoin and Bitcoin specifically. And I think for the purposes of this show and just building on the first episode we did with Glenn, it'd be really interesting to learn about your background, how you became so convicted on Bitcoin particularly. Yeah, sure. So brilliant to be here, by the way. And good to be live with you guys. I've obviously seen you in the past on previous podcasts. And yeah, that trick question I asked then was, what do you think of crypto? And I'm pleased to say you passed, otherwise you wouldn't be here. So my background is, I'll take a step back and then sort of take a run up into how I've ended up here. So I'm an actuary by Career Choice. That since started in 98, so. many years ago there. And I first started sort having thoughts about things aren't quite right in 2008. Brian Cubellis (02:11.086) And that, I was looking all over the place for answers to that. Found myself going deep into the Austrian School of Economics. I think it's a natural step from there, certainly in those days, to then end up as some kind of gold bug. So I think that's a commonly tread in the path. I was then focusing on my career for the next few years. and then came back to, I heard about Bitcoin in 2013. I did what I normally do, which is I dabbled. Obviously in hindsight, I wish I dabbled a lot more than I did, but sort of just tested it out a little bit and then forgot about it. I didn't really understand it in reality in those days. But then it rolls around to 2020. And obviously everything that was going on then, central banks taking action as they want to do. And into 2021 where I was then had the chance to go a bit deeper into Bitcoin again. And I took the path again, pretty well trodden I think. I had a slight diversion into crypto, which... I dabbled again. So again, there's an idea. Does it make any sense? I feel I have to test it out for myself, which is what I then did. I then very quickly realized that it was a dead end, essentially, to put it politely, which then helped me to come full circle back again to, okay, so it's Bitcoin only. So that takes us to sort of late 2021. And then... 2022, a key date in my mind was, it was 24th of February 2022. So that was when, that might have been when, I can't remember the exact date actually, saying that, but it was Russia had invaded Ukraine at that point. And it wasn't so much that, it was more the event of the US and indeed other nation states confiscating Russia's treasury bonds. And... Brian Cubellis (04:34.19) For me, that was a real inflection point. So I'd built up a Bitcoin -only understanding at that point and understood about, you know, lack of counterparty risk if you hold it in the right way, et cetera. And for me, that was, it wasn't about whether Russia was right or wrong or whatever thing. It was the fact that one nation state had confiscated another nation state's assets, just a stroke of a pen. And that for me was a turning point. So it was it was a couple of days later I had a team meeting and I said, okay I think they were a little bit shocked. I said, okay, we now need to be thinking more carefully about Bitcoin as a serious option for our clients my expectation which I think I told you Glenn actually at that time was that it's gonna take a couple of years for us to get to the stage where Clients are going to be able to invest possibly a bit longer. I So two years rolls on, we're almost at that two year point and we're very close I think to helping clients get into this asset class. So it's a very exciting time, it's been a long time coming, but we're very pleased that we're here today. Yeah, it's crazy. I think about somebody in your shoes too as the CIO of Cartwright and you have this duty to your end clients may not be doing as deep of research into these subjects as you have to make sure that you're getting them the right information. So leaning into your personal journey and having to basically come to grips with the fact that crypto is noise and Bitcoin is signal. As you mentioned, the confiscation of treasury assets is a very large event that really highlights this counterparty risk exists throughout the system and Bitcoin is the solution. And then having the wherewithal and the foresight say, okay, we've got to go on this journey to develop a thesis and a process internally before we can go get our clients into this years down the line. How, like how do you, Brian Cubellis (06:51.15) sort of pitch this to your clients now that you've spent this amount of time, two years building out a process, building out a thesis, finding the right counterparties to get you access and your clients access to Bitcoin. Have you been pitching Bitcoin along the way or is this a point now in time, February, 2024 where it's like, all right, we have everything in order on our end. We can then go begin telling our clients about this. So we started seriously telling clients in October, just gone. And that was in the context of an asset allocator, portfolio construction. These are people, our clients are people that look after other people's money. And I think that's a really key difference. Me personally, or anyone else personally, you can dabble, right? You win some, you lose some maybe. But you can dabble and you can test things out. to understand them better, that's fine. But that's not what our clients can do in the same way. They need to be much more confident in what they're investing and much more confident they can get the advice and the proper analysis around that. So we've very much pitched this as a small allocation to Bitcoin. And Bitcoin only, obviously. But the small allocation is also important. and because it helps them to dip their toe in the water. I think also what helps the small allocation sort of from our point of view, and maybe some we can dig into a deeper possibly, but in simplistic terms, I think we've got a couple of phases coming up. So we've got the monetization phase and then we've got the increasing in value in line with economic growth generally. So sort of what gold is. effectively done for a few thousand years, the old Roman suit idea. So you've got two distinct phases. And the advantage of that first stage is that you can justify putting a small amount in, two, three, four percent of a portfolio, and you know what your downside is, two, three, four percent. But you've got this massive upside potential. Brian Cubellis (09:15.918) And I think that is what is extremely helpful at this stage. Cause when you start plugging it into any kind of investment risk model, it looks very attractive. Yeah. To take a step back, I think it's always fascinating when Glenn first came on and Chris Kuyper and very senior professionals that are used to speaking the language of asset allocators. You guys have amazing positioning. There's a term inversion that Chris brings up. I was just talking the other day. It's not going to come off the top of my head, but there's this angle of being able to flip. What would cause Bitcoin not to work or what would cause it to not appreciate? But to go backwards, we glossed over the question to Glenn about... I think it was very transformative or very important to the whole process of you guys finding a person to lead this unit. And I say that because as we're coming out East, we're going to be in the UAE. There's folks that we're talking to in India and Dubai, Abu Dhabi, the Middle East. And this idea of counterparty risk is understood by them. and they understand that the ETF may not be the solution similar to what you're saying about the treasury's different angle, but similar concept of like, who's your counterparty? And when we met Glenn, it was top of mind all the way up the stack. What do you, what do you invest or what do you offer? What's the counterparty, the solution from a custody perspective, do you, you know, the delivery mechanisms, all these things that were important. And so going back to that clever question, you were, there was a test there, but I'm curious, like, how did you think about, why it mattered and how you had to find the right person for this whole journey. Because I think that's one of the most pivotal points to find the right person and the right counterparty to make sure that you could actually get the right solution. And we're fortunate this is a growing area. And therefore, these opportunities are more likely to come along than if it's a contracting area. And so Glenn's been fantastic. It was a bit of a coincidence. Brian Cubellis (11:31.342) in terms of the timing. So I mentioned February 2022, Glenn joined in May 2022. Obviously we'd had some discussions before February. So that worked very well in terms of the timing. And I think that our clients are looking at it partly from a counterparty risk point of view and partly from an inflation point of view. Brian Cubellis (12:01.166) And they're not mutually exclusive scenarios, economic scenarios, but in some ways they can be simplified down to that. So you have a economic contraction that increases your counterparty risk, increase your counterparty risk. If you own bonds, are they going to be able to pay you the coupons? If you own equities, what their profits going to be like? If you own property, are they going to pay the rent? So you've got, there tends to be a correlation with higher counterparty risk in an economic contraction. And then of course the flip side is that the central banks printing, creating inflation, the hard cap 21 million then really comes into its own. So you've got this fantastic combination of extreme scenarios where historically gold would have played that role. But of course now in a new world and Bitcoin is I think gradually gonna take over from gold in that role. Does that answer your question? Yeah, I think so. Yeah, you raise a really good distinction there that I don't think we talk enough about in this space of, you know, people often fall into the trap of like, well, if I'm going to hold a sound money asset, I might as well hold gold because it's proven. And like, that's going to be a better store of value and more reliable. So if I'm going to do anything, I'll include a little bit of gold. But they're making this mistake. this fallacy of assuming that Bitcoin and gold are in a similar sort of point in their life cycle. And I think you're right to call out that you want that end state stability in this asset, but that's not where we're at right now. Instead, there's a huge asymmetric upside opportunity as we get to that eventual place for Bitcoin, which is many, many, many trillions away in terms of monetization and total asset value. So, you know, I think that's a unique lens that I haven't heard. And I think it's probably coming from your role in trying to communicate this opportunity to pensions of don't think about that end state. Think about where you're at right now. And the end state is, you know, where you'll eventually get. But the real exciting part is, you know, the monetization process that Bitcoin is still at the very beginning of. Brian Cubellis (14:31.438) Yeah, that's right. I mean, we've got a saying in the investment community, which is variations on it, but the future is not necessarily a reflection of the past or something similar to that. So the idea that gold's done what it's done over the last 5 ,000 years, it's obviously impressive, right? It should be given credit for that. But I can't invest in the past. I can only invest in the future. And so... I need to look at when advising clients, what's the future? What's the likely future scenarios that we can foresee or test out or envisage? And also, if Bitcoin in April is gonna have a better stock to flow ratio than gold by a long shot, double the stock to flow ratio. Right, so. If you look historically at what's happened when a harder form of money entered a society, well, then all of a sudden that slowly kind of eats away at everything else. So actually holding gold is a risk, right? Because if Bitcoin eats gold's lunch, if gold becomes demonetized, you certainly, that argument of like, oh, well, if I'm looking for an asset that's a store of value, I'll just go with gold. What if in 20 years time it's been demonetized and now it's an industrial metal? So you definitely don't want to be making a mistake of saying, I need to store a value asset in my portfolio. It's obviously gold because that might be the worst thing that you can do. And then also nobody's saying that the probability of Bitcoin doing that is 100%. But it's some percentage. I like to think it's a quite a large percentage probability that it's going to do that given Bitcoin's properties. And so if you give me, you know, a hundred opportunities with high probabilities that they're going to come true and with huge upside, I'm going to take every single one of those bets. It will make an allocation to all of those things. Brian Cubellis (16:59.982) The trouble with this is that you can't rely on the law of large numbers because you've only got this one bet. But there's also the danger that, like we discussed I think the last time, is that because everything's denominated in these fiat currencies, that essentially, I remember Marty joking about black hole insurance. like Bitcoin acting like a back hole and like sucking all the value out of these other assets because as it monetizes that value has to come from somewhere. Right. And as people and the biggest asset class where that's going to be the case is bonds. Another one is property. Probably the last one if it would happen would be equities because. you know, there you kind of, I mean, essentially, because your revenue is going up as the nominal terms, you kind of protect it. I mean, equity has been a good long -term, like inflation sort of protection kind of asset. Bonds, definitely not. properties overvalued, right? So it's, you know, the idea that, oh, well, if I want to store a value asset in my portfolio, I'll just put gold in there. Okay, so what are you expecting? A zero real return, right? That's what you're expecting. And at the same time, it gets demonetized. And how much of your portfolio are you going to put in gold? Right? Whereas you can put... 2, 3, 4 % in Bitcoin, right? And it kind of, it's going to have a material impact on the race of your portfolio. You know, so, and especially like with different types of investors, right? You can't afford to be using huge chunks of your portfolio as kind of a long -term store of value. You've got different objectives. You need to grow the capital. Brian Cubellis (19:23.182) or you need to hedge liabilities or something like that. Whereas with this thing, it's just kind of like the sprinkle of salt that you put on top of the meal. And you can get busy with everything else that you want to do with the portfolio and just have this thing there kind of. Yeah. It's so interesting that you guys marry this, the first principle thinking that is necessary to understand the value proposition of Bitcoin, but through an actuarial lens where you guys are evaluating this in terms of probabilities, numbers, and how this works out in different scenarios. And then finally, having to filter that through the fiduciary obligations that you have providing advice to pensions because of, and specifically with regard to the mandates that those pensions have to take care of people's retirement money. And that combination is kind of unusual, I think, in the Bitcoin space. There's a lot of people who are in similar roles that we've yet to really see find Bitcoin, but maybe whatever circumstances it was that you guys in particular had that allowed that combination of three things to line up just right to see it, to get it. And I think to solve such a big problem in pensions of you want to have that sound money safety, but you don't want to set aside a huge portion of the portfolio to provide that protection. Cause, cause Glenn, you're right with, with gold, you'd have to, if you want to protect the portfolio, you got to have like 50 % of the portfolio in this, in this asset that's going to generate, you know, no real return versus two, three, 4 % in an asset that can provide the same function of protecting and, you know, in terms of the sound money properties that it delivers because of the growth in this early stage in the S curve monetization phase that it also comes with. And that insight, I think, comes from the combination of those three lenses that you guys are bringing to the table and that every other pension, every pension allocator, every pension consultant sits in the same. Brian Cubellis (21:47.97) role and has yet to like really put together those dots. But I think that, you know, we're going to see a greater trend of that because once you, once you really understand Bitcoin and that's the first principle, heavy lifting that has to happen first, then the conclusion is this, that like, if you want, you know, it's the most attractive thing to include in any portfolio. If you have the right, uh, position sizing and that's just two, three, 4%. And. So I think the built, oh, sorry, Sam. I think there's something else that's needed as well as those three things you mentioned, which I agree with all those three. It's willingness to think outside the box. Or if I put it another way, the willingness to see outside the bubble. I think we look across our industry in the UK and look at the actual profession and all that kind of stuff. and they're doing lots of hard work in lots of areas and some of it's quite useful, but it's within a bubble and you need to get outside of that bubble and you see the bubble for what it is. I suppose another way to describe it would be a fiat bubble and all the things that go along with that, that I'm sure you talked about before. You've got to step outside and see it for what it is and then realize that it's fine for that to be. 98 % of a portfolio, but you also need something outside of that bubble as well. And that's what gives you that diversification, being out, having something. The exact percentage, it almost doesn't matter, but having something outside the bubble. And to build on this line of thinking, I think I have a three part. I do have a three part question. How do we settle on this particular allocation? Two to four to 5 % whatever it may be. What sliver of a portfolio allocation does it fall under? What bucket does it fall into? And then three, at which point do you think it becomes abundantly clear to everybody that this is the strategy that needs to be employed? Brian Cubellis (24:04.564) some sort of allocation towards Bitcoin. Maybe it's not even a decision that's made willingly. Maybe it's forced upon market actors via benchmark or something like that. So I mean it really depends on the type of client. So if it's a corporate treasury, if it's a pension scheme, if it's a charity, if it's a funeral trust, it depends where they are in the investment journey. Are they... Do they have a shorter horizon? Do they have a much longer horizon? But initially, it's kind of like the first thing that you normally come across when you approach a client and you say, hey, I want to talk to you about this thing called Bitcoin. Isn't it too volatile? So when you're thinking about the percentage you should put in a portfolio, you're thinking, how much can I put in this thing without there being any sort of perceptible effect on the overall volatility of the portfolio, right? And what you find is you can kind of do rolling sort of four or five year periods where you kind of put 2 % in you backtesting, right? And you're saying, would I have noticed the volatility both from a kind of a... standard deviation or normal volatility portfolio or from a maximum drawdown kind of perspective in the overall portfolio. And if you put two in, you can't even feel it, right? You can't see it, you can't feel it. It's like, you know, why wouldn't I do this, right? You put three in, it's kind of like, again, not persuasive. Once you start getting to five, right? Then, because you know, you find that like, so for example, in March 2020, when they locked us all in our houses, right? They, you know, everything becomes correlated, even Bitcoin, right? So, but Bitcoins drawdowns are like, you know, 60, 70%, right? So if you got 5 % in a portfolio, it's about. Brian Cubellis (26:30.862) you know, it makes about 35 basis points difference to the drawdown, something like that. If you put like, no, sorry, no, it's about three and a half percent of the drawdown if you got 5 % in a portfolio, right? So that you start to kind of notice, whereas 2%, 1 % extra drawdown takes no longer for the portfolio to recover to its previous high. It kind of feels like, that point where you can kind of, you know, everybody stays calm. You know what I mean? You don't want people like, if there's you when you're introducing an entirely new asset, an entirely new concept, all of these ideas and whatever, you want it to be at a level where everybody's like, you know, I mean, 2 % is sort of like the allocation that are. bang stock might have in their portfolio, right? Just one stock. So it's kind of like easy to introduce somebody at that kind of level. Whereas if you start talking about higher allocations, it's a more complicated conversation. And you just want to kind of get people off zero rather than asking them to do a lot more than that. I mean, this may be sacrilegious for this show, but the right allocation for some pension schemes is zero. Yeah. And I think ultimately it comes down to, normally it comes down to time horizon. So if they are different types of pension schemes, you know, you've got DB and DC over in the States as well as, you know, we've got the same over here. So DB actually, once it gets well funded enough, a final salary scheme or defined benefit scheme, you can pass the whole lot over to an insurer. So you actually your time horizon to invest. is until you can afford to pass it to an insurer. And for some schemes that might be, you know, might be six months. So actually they won't even have any, particularly with the rise in bond yields, generally, that has actually improved the funding position of a lot of final salary pension schemes. So a lot of them in a good position that actually they just want to lock down as much risk, they shouldn't be having equities, they shouldn't be having any growth. Brian Cubellis (28:53.164) Which to your question Marty, that's where it'd fit in the growth allocation for final salary schemes. And so you just want to move them across to insurance and low risk and all you're trying to do though is make sure people get the pensions they've been promised. You're not looking to do anything fancier than that in a secure way as possible. However, there are other schemes where they might have 10, 15, 20 years to go. In which case, then they do have some equities. They do have a growth portfolio, in which case then some kind of allocation to Bitcoin within that makes sense. And I think that's probably the, that's the category where it makes sense to get off zero. That's really interesting that two very notable things you include there that what the conclusion that you guys have come to is that this fits in the growth. category of any portfolio. And I think I certainly fall into this, this reflex, I guess, at this point of, oh, it's, you know, it's a sound money asset. It's a scarce assets, a hard money asset. It's its own thing, really. It's a 60, 40, zero, like that zero should be higher. You know, you have your equities, your bonds, your hard money. And everybody overlooks that category. It should be its own thing, but you guys are cleverly putting it in a growth category. So you're thinking about it as a replacement for like a growth company stock. And that's very notable and informative for anybody who's trying to think about how to justify where to include Bitcoin in their portfolio. And then the other thing that I want to follow up on is So it makes sense that, you six month timeline, six month horizon pension scheme, Bitcoin doesn't make sense. It's too volatile. The possibility of like a March 2020 event is non -zero and you can't have that. 10 years plus, the growth will bear out, you know, if the thesis is right with Bitcoin. Where do you draw that line though? Do you subscribe to a four year cycle? Brian Cubellis (31:17.646) is what you need to live through or is it different in your minds? So we've said the minimum is four years, right? So that, but obviously if it's longer, it's better. Ideally you'd want longer than eight years. So two cycles, right? But, but four years at a minimum, I suppose it would also depend on where you started, right? So if we have a massive bull run now, in the next 18 months, which is kind of what I guess we're all hoping and expecting, that if then a client came to us, then we'd probably dollar cost average in and we'd probably kind of do that, put in, we would space the kind of entries. wider rather than kind of doing them quite quickly. And if it's going to take like two years to get them in and they've only got four years total horizon, then it kind of doesn't make sense, right? So then you need a little bit of a longer horizon because definitely, I mean, I think it's, you know, it's we, we talk a lot about investor behavior and psychology. and stuff and with an asset like this, it's definitely going to bring out the greed, right? So we're going to have that blow off top at some point and then it's going to, you know, crash to, you know, a level which is much higher than the last time it crashed, right? But nevertheless, if you're getting at the top, it's not going to feel good and it's not going to be good for the portfolio. So I think you, you know, like now, and we've even kind of said this in our communications to our clients, it's ideal, nobody knows what the future holds, right? But it's ideal if you really like an asset and it's had a bit of a tough time, that's the time to kind of make an allocation, not kind of when everybody's going, everybody and their dog saying. Brian Cubellis (33:40.558) I've got to get some Bitcoin, right? Then it's probably the time to say, okay, well, it's kind of, you know, get in, but very kind of gradually and slowly. We might be getting too much into the nuances possibly, but I think it's not just what you think the time horizon will be. It's also how certain can you be that it will be at least say four years or whatever number you pick. So there are, if you've got a defined benefit scheme that's taking lots of investment risk, you think the time horizon is 10 years, but actually you turn around five minutes later and equity markets have done really well and bond yields have shot up and they're fully funded, they can go to the insurance market straight away. Or they're close and the company suddenly has some cash and throws it in. and then you can go to the insurance. So if you've got these kind of uncertainties around the DB scheme, then it then creates uncertainty about the time horizon. So it takes a lot of thought to make sure that it's right for each particular scheme, and that's DB schemes in particular. And then there were other types of scheme as well, where I think it also gets quite interesting, and I think comes back to your point about sound money. So if we move... to define contribution we call them over here or money purchase. So the company and the employee throw some money in a pot and the pension is whatever it buys whenever that member retires. In that scenario, a small allocation can make a lot of sense. And in fact, often they're not buying an annuity at retirement, they're continuing to invest it. So actually the time horizon could be not just the, you know, 20 years until they get to retirement, but maybe another 20, 25, 30 years after then. So we're talking about a really long time horizon there. Yeah, this actually important part because you're referencing the time horizon and whether it's explicit or implicit because you guys fundamentally understand what's happening. I feel like you're educating beyond any time horizon and wanting them to think much longer than whatever's on their benchmark. Be curious like how you guys. Brian Cubellis (36:00.75) try to navigate that because historically like institutions have been effectively exit liquidity for the system, right? They see it running and then that's when they get in and then they're burned and they're like, what did I do? And so it has to be at the, you know, in the back of your mind is you guys have been educated and be curious, how have you thought about that and try to get in the under, the underside of something we think about a lot at OnRamp, it's about these institutions are made up of individuals. And so it took you going through a way to Glenn having his background. We'll maybe save that one for beers. I don't know if we need to discuss publicly how he got to be the way he is. But, um, but this idea of it starts at an individual and it feels like as much as it's talking to the pension, it's also the individuals that are there and helping them see it. Um, anything you guys can share there, I think is, is helpful because there's a lot of people that listen that are having these conversations across the board, whether it's family members, their treasury. at institutions and they're all trying to figure out what is the right, and there's no silver bullet, but you guys are navigating this in real time. So anything you can share there would be nice. Yeah, sure. I mean, so it's always interesting, right? Because there's that moment where you say, okay, Bitcoin could be right for this client and now you've got to contact them and it's usually an email, right? So you've got to kind of... you know, in this email say them, I want to talk to you about Bitcoin, right? And I've been pleasantly surprised, right? Because you, I would say nine times out of 10, they're like, okay, let's have this conversation. You know, I think maybe, maybe what it is, is they're like intrigued, interested, you know, just curious, want to learn more, right? There have been instances, like with the head of corporate treasury, where we contacted him, and he sent us back a chart of Bitcoin and said, look at this thing, it's so volatile, whatever. So then we sent him one with a logarithmic price axis saying, actually, you should think of this as like something in the adoption phase, and that like, you know, you wanna look at, Brian Cubellis (38:23.156) percentage changes in the pricing. You can see in that logarithmic kind of price curve how it's slowly being adopted over time. And then he came back and he was like, we don't want anything that isn't backed by anything or something like this, right? And so you don't always win, but nine times out of 10, they're willing to have the conversation, right? Well, the important thing there is that he didn't just ignore your email. he came back with questions. So I think that's where a lot of people are at. Everyone goes through their own journey and learning about this. And sometimes that'll be, what do you mean, it still hasn't died yet. And that will get their interest. So it's quite interesting how different people will take different routes in there. And I think whilst we're in the monetization stage, which I mean, it could be. Who knows? A couple decades maybe. Could easily be, yeah. But equally no one knows. So things could happen. Actually, I find quite interesting the impact something else can have on itself in a circular way. So actually it might speed up the adoption of Bitcoin because it exists. I know that sounds a little bit circular, but that's sort of the point. Because there is an exit route, it means that people run faster towards it, which then leads more quickly to the collapse of the existing system into Bitcoin. So I've seen some people say it could take three generations and that's to do... It makes sense. It's about people, it's the psychological way that people think about these things and are they used to it and so on. But I suppose, yeah, I'd like to be alive for the end of it. So, in some ways, quicker the better. I was thinking about the points Sam's making about maybe happening, like Parker Lewis says, gradually then suddenly, right? You remember when it was like March last year when all the banks were kind of in trouble and Credit Suisse basically went to the wall. Brian Cubellis (40:50.702) And I remember, I can't remember if it was on this podcast or one of the other ones, Marty, where you showed that chart where the bank stocks all like going down and then at exactly the same time, Bitcoin going up, right? And we've been looking at like setting up corporate treasures with access to Bitcoin and... actually having software to kind of plug into the normal corporate treasury systems and stuff. And the company that we're talking to, who's got the technology to do all of this stuff, like kind of told me without mentioning names, they've already got like companies with more than a billion pounds in Bitcoin, right? And so like, I was thinking when that stuff was going down, like, imagine you're a big company and you've got like a few million in cash in the bank, right? How? How do you get it out when the proverbial's hitting the fan? What do you do? Like, go and say, please give me like, you know, big, you know, I don't know, briefcases or something full of cash. I wanna get it out of the system, because I'm afraid, right? But with these kinds of systems, you can just say, just... buy Bitcoin with it and now you're entirely outside the financial system. There's no way that anybody can debase it. No one can. There's no kind of bubble outside the bubble. Right. And so I wondered if that is what caused because there was also this VC Silicon Valley bank. Yeah. And he put out this note to all his investing companies. Yeah. Like, um, you know, buy some Bitcoin for situations like this so you can still make payroll. So that's one of the things that quite interests me is the sort of escape route idea. So by and I suppose, so in corporate treasuries, for example, if they've got a smaller amount in Bitcoin, they've got the infrastructure set up to then make a quick allocation if they need to. If they start from scratch. Brian Cubellis (43:10.03) you know, it's not going to be five minutes to get their money out of the banking system or some of it, or, you know, just to reduce their reliance on certain banks or whatever it might be. So that escape route for corporates, I think, will be really important going forwards. Escape route for individuals. So in particular, you know, we're so we're investment advisors and employee benefit specialists. So we can, you know, there's loads of interesting things going out there, but we can only focus on what we can do, what our skill set is. So. On employee benefits, what we're trying to set up is a Bitcoin employee benefit system or ability to do that. And one of the reasons I like that is because it gives individuals an escape route. Also, if you've got no exposure to something, you've got limited interest in learning more. If you've got even if it's only a hundred quid, a hundred dollars, whatever. you suddenly you're interested in it, disproportionately so, but you're more interested in it and therefore you'll see the headlines, you'll read more reports, you'll maybe read the old book. Yeah, one thing just to anchor, like this is common practice from business continuity. When that Silicon Valley bank, I was with Marty that weekend when it was happening, I remember vividly thinking about like, holy crap, like they have to figure this out by Sunday because it was just gonna be anarchy on Monday and they did that Sunday night. But it's this idea of like, you gave enough people the time to think about what if I don't make payroll? Like what are all those things? It's almost negligent not to have some capital outside and everybody has their own balance sheet, whether it's an individual or a business. And so to have those rails, even if it's a river account in the US or a coin corner account in the UK and maybe start playing around like you're referencing, it's like, this isn't a conspiracy that the banks just like have. not giving people their money. It's true. They shut them down. There's no question about it. And so to not question or think about what is your options, whether it's a pension or an individual, it's almost just like, it's at your own risk at this point. I think we are seeing live the flipping of the previous view, which was, I don't want go anywhere near Bitcoin. It's too volatile. I've got fiducia duty. I'm looking after the people's money. It feels like gambling. Brian Cubellis (45:30.478) and we're sort of in the process, in the middle of flipping to a situation where it is actually irresponsible not to consider it. And I, well, the quicker that spreads, the better, I think, because we wanna protect our clients as best we can from these risks, and they're big risks out there. We were talking to trustees of a funeral trust, and what happened was, they got into this sort of quite tech heavy equity fund at the end of 2021. It was kind of like the beginning of the investment journey. To peak. Yeah. And then they, they, it literally like crashed like 40 % on them. Right. And then they're like kind of lay trustees. They're not like investment, you know, investment savvy. So they were like, this is too much. Peloton. Peloton is like peak 2021. Yeah. Yeah. Yeah. And then they were like, okay, we want our money back. So they took it out, right? And then they put it in the bank. And which bank did they choose? Metro Bank. And Metro Bank ran into trouble and had to get recapitalized, right? But there were a few days there where the money was in the bank and they didn't know if the bank was gonna be okay. So that was kind of like their experience was... They took the 40 % haircut and then they might have taken the rest of it if they didn't fulfill them. And it's like a whole theater adventure, right? Because you like put interest rates at zero, print a whole lot of money, hand it all out, right? All these tax growth stocks go through the roof, right? Then inflation roars, then you raise interest rates, then they all come crashing down again, right? Then you have all these banking crises and whatever. It can be more obvious that you need something like Bitcoin. Glenn, you got to be careful. You're going to get Marty all riled up. I'm thinking back to last March when this was all happening. We had a number of companies in our portfolio, 1031, that were exposed. I mean, the Bitcoin industry as a whole was probably the most exposed because of the lack of access to banking relationships and banking relationships that did exist. Brian Cubellis (47:54.478) The banks that failed at Silvergate, Signature, Silicon Valley Bank, First Republic, those were top three banks, the first three for the industry. And so people were moving quickly and a lot of them were buying Bitcoin and putting it in something like an unchained vault or holding it on river. And I think it's important to highlight here too, like, yes, you eliminate that third party risk as well, but diving back into like the long -term strategy, there's also, it's an exit. from this third party risk. But if Bitcoin does what we think it's going to do, particularly in the context of something like a venture backed company, it could extend your runway into the future. So you start by allocating the Bitcoin to eliminate that third party banking risk that exists. You hold Bitcoin on your balance sheet and then the price runs and you wake up for eight years from now. Like, holy crap, my balance sheet is five X or the Bitcoin portion. My balance sheet is 10 X, which has allowed me to have significantly more runway. And you can apply this to a pension or any type of fun for that matter in the future. Yeah. It goes from being defense to offense really quick. Yeah. You get. Yeah, you get a lot when when you buy Bitcoin, you're not you're not just getting gold You're getting gold plus growth Plus, you know something that sits outside of the bubble outside of the system and and benefits in in the event that there's trouble in the system and you know, and plus you're getting that you're buying a stake in the Internet of value in the early days of the the second part of the digital revolution, in my opinion, to compliment the internet of information that we already have and assume is everything, but it's actually half the story. There's so many things that you get when you make an allocation to Bitcoin. And I think that's part of like, when you guys are running it through your actuarial tables and seeing like, you know what, if this is two to 5%, not only is the volatility acceptable, but you get all this incredible performance out of it too. It becomes something that... Brian Cubellis (50:07.182) So long as your time horizon is long enough, it becomes a bit of a no brainer really. If not a no brainer, then at least a hugely asymmetric upside bet. Yeah. And what are we trying to achieve for our clients? We're trying to maximize the return for the same amount of risk or we're trying to have the same return and reduce the risk. You want assets with this kind of risk profile. Not all, but you want a bit. And that's exactly what we're talking about. But Glenn, I don't invest in crypto. I don't invest in crypto. What do you guys say to that? Because that comes... Rather do we. Yeah, we do that either. I would imagine that's the response, but can you expand on that? Because that's something we obviously get a lot when we're doing outreach or having discussions is I don't invest in crypto. So right up front, whenever I talk to people, I say... Everything I'm going to be saying today is not about cryptocurrency, right? It's We we need to make a distinction right a friend so that you don't make the mistake of me talking to you about this asset and you going away and Thinking I was talking to you about cryptocurrency, right? I was not talking to you about cryptocurrency, right? I told them if you hear any of these terms NFT Web3, blockchain, crypto, right? I am not talking about those things. And I suggest very strongly that you stay away from them because at best they're sort of dot com companies if you want to be generous and kind about them. But in reality, the very vast majority, if not all of them, are scams or there's some kind of way that the banking system or whatever is going to kind of co -opt them and then you're just going to have the same thing over again, right? With blockchain, private blockchains or whatever where they essentially like, oh no, it's all safe because it's a digital ledger and whatever, but there's only like, Brian Cubellis (52:34.74) three nodes on this ledger. And when they get into trouble and they need to bail the system out, they'll just create a whole lot more digital tokens. So we try and kind of separate. And then three hours later, we start the presentation. Yeah. But it's kind of making it clear that there's always to say to people that, All of this other stuff is just people copying Bitcoin. That's all they did. So the only real thing here is Bitcoin, right? Yeah. If you view Bitcoin as far out on the risk curve already, just by looking at just a pure market cap comparison, you'd have to be even crazier to allocate to broader crypto. It's way further out on... on the risk curve compared to the It actually helps, it actually helps Marty. It helps that our clients are more cautious as they should be because they're looking after other people's money. Because then it's, you've got, okay, cryptocurrencies and then you've got the one which is, well, I mean, obviously there are ones that came before it. Sort of known as the first, isn't it? But there were ones that came before that. But it's the one that works and has the. and the network affection, all the rest of it. So if you combine that, and then we can help them through the sort of what is money angle. And then it's really, well, it's the perfect money as long as it doesn't get killed. So it's all about, so it's like the perfect asset for someone to do it. Okay, you've got to assess what are the chances of it getting killed? And if you get comfortable with that, I haven't found anything convincing myself yet, then it doesn't matter. Nothing else matters. So that makes it a bit easier. Brian Cubellis (54:48.526) Yeah, in that sense, it's the perfect asset for everyone to be holding and pensions in particular. Sam, you touched earlier on how I think this, that my understanding of it is correct, that for defined contribution plans, schemes, it can be a little bit easier to justify this type of asset versus defined benefit plans. And to me, it's almost a shame. Because I don't know if it's, I assume it's the same in the UK that here in the U S we have a lot of, uh, underfunded, um, defined benefit plans. Uh, and the, the U S government in particular has a huge, uh, burden of, of unfunded liabilities into the future. And from my perspective, I don't see any asset that helps close that gap except for Bitcoin. You know, and I think that, that. Bitcoin could be the only thing that saves a lot of these underfunded defined benefit plans if they can wake up to it fast enough and see the value proposition, which most of them won't. But you know, that the opportunity is there for those who can. Any thoughts on that? I think you're right. I mean, I think the underfunded schemes by their very nature will tend to have a long time horizon. because you expect it to take a long time to pick up the returns from equities or whatever other growth assets you've got. So they would naturally fall into that category of having a long time horizon and therefore should naturally fall into the category of a small Bitcoin allocation makes a lot of sense. So I'd hope that a lot of them pick up on that because we are going from a... one era to another era, I think, for lots of different reasons. But one of those eras is moving, and we have been doing it for the last 10, 15 years or so, is moving away from the defined benefit pension provision. Certainly UK, I don't know enough about the US. And in some ways that's quite sad because that industry provides a huge amount of... Brian Cubellis (57:11.416) certainty and benefits to a lot of people. It is not perfect by a long shot and you're relying on sort of a lot of investment complexity to try and beat your bond returns, beat your inflation to provide those benefits. But then that's where Bitcoin slots neatly in. there's been a move to the money purchase again over a similar sort of period as employers stop providing DB and they start providing DC. And that is a natural step. I think a flawed step, but I think a natural step because it's the company saying, I can't take this risk anymore. I need to pass it on to the employees. The trouble then is the employees are taking on the responsibility of investing. So. I like there's a fact that there's a video with you sitting next to him Marty. There's a great I think he said it a few times say for Dean has said talked about how not having a proper savings he says it much better than me by the way, but But it's along the lines of By not having a proper savings vehicle it forces people to invest I think also forces people to spend because they don't know what else to do with their money And people are then trying to understand stuff which, I mean, it's very, very complicated. It's complicated for a of investment professionals. And the whole idea of you go to work, you do your job as a doctor or a teacher or whatever it is, and then you've got to come home and you've got to be an investment professional in the evenings just to retain the money that you've earned. It is ridiculous. And that was... I guess there's a few things that I suppose really struck me. So I mentioned the bubble, I suppose I was thinking of Jeff Booth when I was thinking about that. And Saifuddin saying that about the investing and savings and having effectively, you need to have two jobs to get the money you earned. And I think that ultimately the truth will out. So if markets can be distorted for a long time, and I'm not just talking financial markets here, I'm talking about... Brian Cubellis (59:33.55) pension provision markets can be stopped for a long time, but eventually the truth will out. And the truth is that if you've got an asset that is the perfect money and doesn't die, and particularly once we get to the second stage, where she's just trapped roughly, obviously it's not perfect, nothing life is perfect, of course, it essentially tracks economic growth, then... that is like the perfect asset to have in a world of uncertainty that we all live in and we're never gonna get away with, that is life. So I can see, we could be many decades away from that, but I can see a scenario where the truth comes out through DB and DC and some of the hybrids that are being created which are even more complicated than are the DB or DC to try and mitigate some of the risks. And then you end up in a position where actually most employees, They want to get a work. They want to just focus on doing a really good job. They want to take their salary and maybe some of that is in Bitcoin. Maybe some of it is in the local currency, whatever. That will depend on the situation at the time. And that could easily be where we'll end up. Now there's a huge amount of vested interest to get through before we get to that stage because you don't need a lot of investment advice to be able to do that. But... you know, as I say, ultimately the truth will out. And I'd much prefer to be on the right side of history than to try and artificially keep the existing system in place or be part of that. Yeah. Sam, I think I agree with you. I think this is going to happen much faster than people imagine because you have all these forces at play, whether it's the macroeconomic headwinds. that are going to just hit markets globally. It is becoming abundantly clear that the Fed's rate hiking regime may be coming to an end. We had Jerome Powell on 60 Minutes last night saying it's probably going to happen. It's definitely going to happen at some point this year. You have the increasing knowledge of Bitcoin and understanding of Bitcoin globally. And then you have these systemic problems that exist throughout. Brian Cubellis (01:02:02.414) pension systems, fund systems, whatever it may be. And once the cat's out of the bag, people realize this, and they start flooding in, there's not going to be any turning back. And this gets back to the point at which Bitcoin becomes like a benchmark that forces pensions to allocate, which forces them to sell positions and other parts of their portfolio to buy Bitcoin, which hinders their performance. the assets that they're selling. And I could see just a crazy feedback loop, a sort of virtuous cycle to Bitcoin monetization happening rather quickly. And then on top of that, you have all the social developments in terms of people being more aware of inflation than they have in multiple generations and understanding that the institutions that are supposed to have our backs and looked after us, whether that's the government, the media, big pharma, The banking system are corrupt at their core and I think there's this incredible culmination of events happening to Produce an inflection point that sort of slingshots Bitcoin to the reserve asset of the world I would say in less than 15 years It's funny because Jesse you said it's gonna take decades. We're already decade and a half into this I think from launch to reserve asset would take like 30 years, one generation, that would be 15 years from now. And Sam said three generations, which is also possible. I mean, anything in that range would be incredible. I mean, one thing to add, though, Sam alluded to is this idea of the reference safe about people don't have a good form of money, so their habits, and that's like, That's the scary part and the pervasive part of it. It may take longer because that's like a psychological thing. And the way it manifests now is you need your yield. So like getting somebody into Bitcoin is only like half the journey, right? Maybe a little more, but then there's this idea of like the Bitcoin is the yield. You don't need to do anything with it. And we know how many people in 2022 and 2021 don't have any Bitcoin anymore. And that's going to be a long, that's already a distant memory. So the next cycle we're going to see, you know, Brian Cubellis (01:04:20.142) I think if we all probably agree, we're gonna see the animal spirits again. And so this idea is that it's an asset, but you're a sucker if you don't do something with the asset. And that's the concern of like, does it happen that fast? Because there's an education that goes in. And the thing that it's really like, it's kind of the annoying part of all this. And Sam, you alluded to, it's like this reality of getting to the other side of like, you just do what you were supposed to do, whatever it is that you were given from a like skills perspective and the money just protects you from it. Is a very like long thing to pick up and so most people like what do I do with it? What I got to go out I got to trade it even the even even Bitcoin like the whatever appreciation year over year and so that's the kind of part that I don't know if it happens as fast as we we want it to because it's still a Psychological thing that you just like hold it you don't go and do something else with it because that's what you that's where you end up losing the asset I think it's What it is is It's not so much about Bitcoin. It's about the race of the system So like. So in the UK, we had like, in the way the government likes to measure inflation, 13%. I don't know if you guys have seen this website, Truflation, where they kind of like create their own inflation baskets, right? And they call it 20%. Actually, there's no real inflation rate, because it depends what you put in the basket, right? So it's different for everyone. But the thing is, everybody felt it. in the US here, right? And so when those kinds of big systemic things happen, right? And everybody's like, hang on, what the hell's going on here? That's what I think more of that can make it make the Bitcoin adoption happen faster, right? Whereas if they're just stealing kind of 2 % or 3 % a year, then it's gonna take longer, you know? Brian Cubellis (01:06:22.958) And I also think that because of the four year cycles, you're gonna have these kind of waves of adoption, right? So, you know, like with each new cycle, you'll have like the people that kind of FOMO in at the top, right? And then it crashes and, you know, half of them or probably 80 % of them don't stick around, right? But you got kind of this next. But I think what can really speed it up is if... Because I think it is a very real possibility. We were at an investment manager, an LDI, a liability -driven investment manager, the other day. They were talking to us, and there was this one guy who all he does is, well, maybe not all he does, but he just looks at interest rates and inflation rates and swap rates and all of this kind of stuff. He was basically giving us his kind of analysis of where the government is and how many guilts or UK government bonds they're going to have to issue. And I've seen similar analyses in the US and like the imbalance between demand and supply and, you know, all of this kind of stuff. And I think we could see a huge kind of a financial crisis in the normal system, you know, and then it's sort of like the response to 2008, but this time Bitcoin exists and then all of a sudden it sort of bursts into the consciousness of the masses. Yeah, we need to be careful there, don't we? Because we're not saying that Bitcoin is the reason for the existing system to... implode or explode. It's going to do that anyway. What we're talking about here is how can the least number of people be harmed when it does blow? And whether it's productive companies or whether it's individuals from a sort of a philosophical point of view, I want as many people to be unharmed as possible. And the way to do that is to have some exposure to it. And the way to do that is to have... Brian Cubellis (01:08:50.638) an escape route to have learned about that escape route. And yeah, no one knows the exact time in. But actually, so that goes back, let's go pre Bitcoin, because this goes back to 08. Can you walk through like, I think, and correct me if I'm wrong, you came to this realization before Bitcoin, about the system and inevitability. Can you walk through like, I think most of us, I mean, we're at least on the pod, come on regularly, we're very young. you know, to like have a full, obviously understood something was not right, but to know that it was a system that was, you know, born into and you're, you have to pay taxes and go into, but explain like what your realization was in that. Yeah. So it was, so it was a realization that there was, there was, there was too much debt. Um, the way that money was created, you know, a fraction was our banking, but also, um, from the central bank and sort of how that system operates. creates certain vulnerabilities to the system as a whole, which is why we get business cycles and all the rest of it. So it was an understanding of that and... I suppose it was sort of a realization that it didn't seem to be widely realized, which is maybe why the whole system was kept relatively together. Brian Cubellis (01:10:20.654) I suppose it was, gold was the obvious escape route in those days and obviously it was fairly well publicised. But even then that didn't get huge inflows. Brian Cubellis (01:10:35.63) What was the second part of your question? I was desperately trying to answer the problem in two parts. You know what it was for me, right, was that it was like, so you're an investment professional, right? And back then, so at Cartwright, we think very long -term strategic. So we're not really thinking about tactical asset allocation or anything like that. We're thinking, you know, 20 years or whatever. If it's short horizons, well, then... We're basically not in growth, right? We're just matching liabilities. But back then I was working and I've worked at a number of firms who were thinking more tactically, more kind of short term, right? And for me, it was the realization that no matter what analysis we do, no matter, it's all meaningless because at any moment, the central bank can just... pull out a massive money bazooka and make all of our analysis meaningless. So it was like the right thing was not to be invested in this or that or whatever. And then all of a sudden they just make us look like idiots because all of a sudden everything goes rocketing up because they've just kind of debased the denominator. There's a whole risk on risk off depending on what. each central bank said at that particular moment. I mean, it was a little bit silly. I mean, so I like Marty's optimism, if I can call it that, the 15 years. I think the mistake I made in 2008 was that the financial system cared at all about what I thought or when I thought it. So the mistake I made was, I've just found out all this stuff. I thought, oh my goodness me. I didn't realize this is how the system works. This is gonna fall apart. It feels like it should fall apart tomorrow. But of course it's clung together for, well, over 15 years actually. So will it cling together for another 15 years? So I think I'm a lot more skeptical about my own ability to predict timing on these things and hopefully get the direction roughly right. Brian Cubellis (01:12:59.182) I mean, it's also like quantitative easing, right? That was kind of the first time that I was like, what is this thing? Okay, I've got to figure out what this thing is. And then you figure out that they just creating money out of thin air and then buying, it's like, hang on. Like I spent four years at university and then another three becoming a child of financial analyst. Nobody told me this was going on. You know what I mean? And then you're like, you start to question everything that you've learned, right? And yeah. Yeah, in the actuarial exams, no mention of the Austrian School of Economics at all. Yeah, and no mention of the money bazooka that changes everything. And so you guys were living through this experience in 2008 of like, wait a second, all the value investing that's based on actuarial math. Uh, and, and, you know, actual numbers of like, what are future cash flows and what's that worth in terms of, you know, PE ratios? Um, all of that goes out the window. If suddenly there's a money bazooka and the, and risk on risk off is all that then matters. Is the bazooka turned on? Is it bazooka turned off? That becomes all that matters for, for, you know, portfolio construction. Well, that, and that's only one facet of the manipulation is the money bazooka, which is a massive. manipulation, but then like going back to 08, like another form of manipulation was rating agencies. Like you could make all the actuarial analysis that you want to based off the bond rating of the commercial backed mortgage or commercial backed securities you were buying. But at the end of the day, if you have one stakeholder in that flow, essentially lying, which the ratings agencies were just completely borks your models, no matter how good of an actuary you are. Yeah. Good film that, the big short. Yeah. I remember going to an interview at S &P where, so I'd, I started my career as a bond trader and then I worked at a investment consulting and investment technology firm, American firm called Wilshire Associates. And then I wanted to leave there and I started interviewing around and one of the places I interviewed was Brian Cubellis (01:15:25.518) at SMP to rate CDOs, right? And this was before the 2008 financial crisis. And I always remember that interview, because I would have been one of the guys at SMP rating these things full of subprime mortgages as AAA. You know? Because we had basically had all these tranches of, and they remember that. CDO squared, so CDOs that held CDOs and just crazy stuff. I mean, like, how can you not look at all that? You got into this industry thinking, I'm a clever guy, I've learned all of this really important stuff, and now I'm gonna go and add value and kind of use my brain and all this knowledge and stuff. And then all of this stuff just makes a complete mockery of the whole kind of thing because basically just buy anything because it's better than having the money in cash, right? It's and. But it's worse than that, isn't it? So I only know about the VAT agencies from watching the big shorts. So I don't have any inside information there. But if the big shorts correct, then it was pretty awful. But it's more than that. It's, you know, by. changing the interest rate, you're manipulating everyone's economic calculations and creating these boom bust cycles and creating these periods of hardship and distorting. So we wrote a, I say we wrote, we got someone else to write some of it and Glenn wrote some of it. We're most of the way through a series that we're running through, a series of articles. Called what is money? So what we realized was that we could go out there try and talk about Bitcoin But actually we've missed a stage Because most of our industry is very happy talking about equities and bonds and property and all the rest of it But don't actually understand what money is and so we felt that actually we needed some education there So we had we've got ten articles and we so seven. I think the seventh one comes out later this week three more to come Brian Cubellis (01:17:50.894) and it steps through various different things which you'd expect us to, I remember the more or now, but one of them is the Cantillon effect. And for me, that was a, when I learned about that, however many years ago, I thought that was absolutely fascinating in terms of how that works and just another distortion of what happens when you mess with the money and who benefits and who doesn't. And it's not a value judgment. It's for... each individual person should. What's that? It's an essay on economic theory by Richard Cantor. So it's, you know, each of these articles and each of the underlying theory behind them, they're not value judgments, you know, it is for each individual reading them or, you in their daily life, to make their own judgments. We're not we're not saying that they should. be thinking in a certain way. What we're all trying to do is say, look, there's some information here which you may not be aware of. It is up to you what you then think about it. And some people may be happy with those distortions in or manipulation of money flows. Other people will not be. So we're gonna have a variety of clients with a variety of views. The one we're putting out this week is how modern banking works. And so again, we're not telling people what to think. We're just telling them some stuff they might want to know and then they can make up their own minds, right? So, you know, do you realize that when you put the money in the bank that they're not keeping that money? In fact, they can. give it to other people and they can create as much money as they want, subject to demand given interest rates, because the reserve requirement is 0%. There's no such thing as fractional reserve banking in the UK and the US, because that fractional reserve implies they've got to keep a fraction of the money that you put, they don't have to keep any. So, Brian Cubellis (01:20:06.158) Just be aware of that. We're not telling you what to think about that. Maybe you think that's a good thing. Right. And that change happened in March 2020. And, you know, it was a temporary fix to provide liquidity to the markets that four years later, we still have. In the UK, they did it in the late 90s. Oh, really? It's been that way for that long. Wow. Do you guys feel like you're a little bit of a canary in the coal mine then with everything that happened with the guilt market recently and the intervention that had to happen to stabilize things? A little bit more volatility over there. Yeah, well, it was like so misreported that whole thing, right? Because it was like, oh, the pensions would have gone bankrupt. Right. We were like, no. The best thing that can happen to a defined benefit pension scheme, which is the large majority of where the assets and liabilities are in the UK, when interest rates, when yields on bonds go up like that, it's great for the defined benefit pension schemes. And actually, because with liability -driven investment funds, you're using leverage. So it's like when you're hedging the interest rate risk using leverage, you need to meet collateral calls as the price of the bonds falls and the yields rise, right? So that's where the issue came. But the thing was, then the Bank of England kind of stepped in, right? So everybody got knocked out of their liability -driven investment funds because they couldn't meet the collateral calls quick enough. Right? And then once they'd all be knocked out, then the Bank of England comes in and buys a whole bunch and drives the yields back down. That the problem. That was the problem. It would have been absolutely fine otherwise. Actually, a lot of pension schemes were licking their lips saying, this is awesome. I can buy bonds even cheaper. I want more bonds. And the Bank of England, if the Bank of England come in and said, we're going to, I think yields were... Brian Cubellis (01:22:27.502) about 5%, maybe just under 5 % at the point in time. If they come in and said, we're going to cap yields at 5 % or 5 .5 % or something like that, then actually it would have been all right. It would have played for time because the problem was when you got any leverage fund, call for cash, you need at least some time to get cash from A to B. That was the difficult bit. So if they just cap yields, They didn't, they just said, we're gonna come and buy some. So massive, as Glenn says, I mean, it's so frustrating how you can have such a big player who does not understand the market or how it operates and think, the worst thing is they think they're helping. Unbelievable. So the proof that they were not helping Define Benefit Schemes is that, I'm trying to remember the numbers now, something like they bought, bonds in particularly in October 22 and they bought around 19 billion pounds worth of UK government bonds and that drove the yields down by half percent or one percent or so. The plan stated by them, to be fair, was that they would always, they were short term, they would sell them back to the market. So they bought them for 19 billion pounds. They sold them for 23 billion pounds. So they made a profit, which goes back to the UK government because of the way it's structured. So we've got to ask ourselves, where does that four billion come from? So they basically manipulated the market. to take four billion pounds from UK pension schemes. There'll be some other entities involved in that as well somewhere, but we're talking primarily UK defined benefit pension schemes. And then they think they're helping. Unbelievable. And then the newspapers, I don't know who told them this or whatever, their story is the Bank of England saved the pension schemes. This is your life on central planning. Brian Cubellis (01:24:41.822) Yeah, definitely the headlines we got over here. It's almost as if when you're adding additional intervention into a market it causes problems Amazing right funny someone thought of that before. Yeah. Yeah. Yeah, no because you know, like when the Soviets did it in Vietnam it clearly works very well Yeah, the more you do have it the better things go So, yeah. And I wonder if, I mean, for the pensions that do come around and adopt Bitcoin and allocate a certain portion of their portfolios to it, does Bitcoin's performance give them ammo against the government that may want to stop Bitcoin or intervene to say, hey, either this is really helping us, you cannot ban this asset or try to prohibit its proliferation. It's literally helping us fund. pensions of the individuals that live in this country. And then number two, like, hey, we don't need your help. We've found something that's doing really well for us. Just leave us alone. We've got this figured out. You central planners don't understand. We don't need you. I wish that was true, but we're not at that point yet where they kind of like, you know, that that's my view. I know that's your view, Marty, but I don't think they're just thinking. Oh, okay. Well, we could get a really good return out of this thing, but they're not looking at it as a way to hold the government to account when say, Hey, if you keep doing this, then we're going to do that. What about the cousin of that in the sense of like BlackRock and the, the sec and large bodies approving it? How has that influenced? Have you seen any movement or just interests? I mean, when I mentioned it to people, so we. We've kind of, we actually, so we have investment monitoring reports that go out every quarter. And in there, we usually, we call them hot topics. Okay, so it's like three things that we want to get out to our client base. And in there, we did a piece, just 200 words, saying that the landscape of investment has changed because of the ETF launches. And we mentioned BlackRock. Brian Cubellis (01:27:07.63) Fidelity Franklin Templeton why because these are brand names that they know and that they trust and so it's sort of like and when I've had conversations with people and I mentioned the ETFs or Everybody that I've had a conversation with is aware that this happened, right? so I think that's kind of confusing people because it was like Every time I read about Bitcoin, it was used by criminals, it's bad for the environment, it's a Ponzi scheme, the government's saying stay away from it, da da da. And now BlackRock and Franklin Templeton and Fidelity have just launched these ETFs, so it's like, kind of like, nah, I don't know what to think, right? So I think that's helpful, because, yeah. There will be an inflection point at some point in the future, though, I think, to... which is helped by the BlackRock ETFs and I think to Marty's point as well. So each pension scheme, each pension scheme trustee board must think only of their scheme. They can't think about widening that. It's looking at the investment, advances, disadvantages of having a small allocation, et cetera. So that's what they must be focused on. Otherwise they're not carrying out their fiduciary duty properly. I think there's a wider point that the more pension schemes that do this for their own reasons, but the more widespread it is, the more it is difficult for then the regulator or the government to act, intervene I suppose in some way because they are hurting, whether it's the companies that sponsor those schemes or the members, they're hurting them by taking that kind of interventionist... Action. Which are effectively their constituents. They're people supposedly voting for them. Yeah, exactly. So you'd hope that the voters would recognize that. And this ties back into the Bitcoin employee benefits, right? Because if you're a member of a defined benefit pension scheme and the scheme rules say you get inflation, Brian Cubellis (01:29:33.134) as the government measures it, or they can stipulate it in the rules. They can say the retail price index, the consumer price index, you get that, but only up to 5%. If it's higher than 5%, you don't get the rest. But also the 5%, is that even real? So the defined benefit, the sponsor, the company behind that scheme, is only on the hook for the rules of the scheme, right? But the members are relying on that for 30 years of retirement, right? And so if real inflation is 10 or higher, and they're only getting five of the sort of metric that the governments come up with or whatever, they could be 5 %... poorer every year, you compound that over 30 years, right? All of a sudden, you're going to, it's very nice having a defined benefit pension scheme, right? But it's not near the end. It's not going to be nearly as good as it is in the beginning. And yeah, so even if we put Bitcoin in a portfolio, we're really only helping the company, the sponsor, because they're only on the hook for the rules of the scheme. So you want people to have access to this thing outside of the pension to make kind of To make up for what's gonna happen to think of it is a think of it as a 2 % right? So it's to go back to that 2 3 4 percent you know, maybe if we end up in a position where You know, they've got most of their pension provision At least over the next few years that most of the pension provision through DB or DC or whatever it is and then two, three, 4 % outside. Actually, that's probably quite a healthy position for a lot of individuals. I agree. I think to your points about it accelerating, or almost it's like, it feels like it's accelerating the sense of like high net worth individuals. I think of my mother -in -law who retired and I always like egg her on, because every year I'm just like, you have less retirement. Brian Cubellis (01:31:55.566) And like, you can feel it. You go on vacation, it costs X. And it's not 5%. It's 10 to 15, if not more. So you start to look at like, okay, I have this defined amount and it historically was enough because it was two to five and you felt it. Now you actually start, and that goes across the board. And that's not slowing down. Since 2020, that's just exponentially increased given money printer. Exactly. I mean, it's quite funny. Yeah. So the inflation in guilt. here, they used to be linked to RPI, well they still are linked to RPI, but I think it's, what is it, 2032 or 2030? They're changing the thing that it's linked to, to CPI -H, okay, which is consumer price index and housing. And then if you look at the level of RPI and the level of CPI -H, of course CPI -H is lower than RPI. Right? So, but it's like, the story is, CPIH is a better, more accurate measure of inflation. It just happens to be lower. Right? You know what I mean? So it's like, you know, it's like, you think about these things like a logical human being and you're like, come on. We just need to look at Rebiz. Like whatever the Rebiz is, it's a pretty good index. Oh, that's my basket. Yeah, it goes back to Glenn, what you were saying earlier of like the four year cycles. It sort of caused people to go through their own steps of the adoption process. You know, and maybe you get in at the top in one cycle, but you, you learn. And then the next cycle, you DCA. and then suddenly you are building a position and you're becoming a Bitcoin adopter, like in earnest. And every individual goes through their own process. And that also extends to organizations and to, you know, to pensions who are made up of individuals who are decision makers and folks like yourself who are providing advice to these organizations. But everybody in the world is going through their own... Brian Cubellis (01:34:15.468) adoption process. And it's a series of steps where at first you ignore it in 2013. Then, you know, 2017, you're like, dang, I should have gotten some. And then 2020 happens. They print a bunch of money. You're like, I don't know, this feels wrong. Or Sam, in your case, you know, Russia's foreign exchange reserves get seized. And that becomes like, all right, there's something wrong here. And I need to take Bitcoin more seriously. And then of course, you know, going into the future, there's not only the guaranteed mechanics every four years of the next having causing increasing scarcity, causing the next price run or, you know, the next, uh, supply demand price, equilibrium disequilibrium that forces a price discovery that causes, you know, a price run and people pay more attention to Bitcoin for that period, because that's how human nature works. There's that. guaranteed to happen every four years, but looking forward, what will be the macroeconomic events like Russia having its foreign exchange reserves seized, like the banking crisis and BTFP stepping in to save those banks, like the COVID stimulus or like, you know, 2008 and Occupy Wall Street. inefficacy, you know, because of it not addressing real problems. What are the what are the events going forward? There's recently there's been some major event every year that has awakened people like Sam to like, you know, at this is it's time to take Bitcoin seriously. So what will be the next like, series of events going going into the years ahead, in addition to the having that we have coming up in three months? You know, and it all points back to Glenn, what you were talking earlier about, about every cycle, there's some incremental slice of the adoption curve that comes into Bitcoin or progresses to the next stage of their Bitcoin adoption process. And the culmination of that is this like three generations of behavioral shift away from how things are today to eventually just save your money in Bitcoin so you can work on your career. Brian Cubellis (01:36:41.998) And don't worry about investing because it takes care of you because it's, you know, finite, absolute scarcity. And it tracks with overall GDP growth. Like that, you know, and we're in the early stages of this process. It's in the, that's the end state. Um, but you know, it's exciting that Sam had this series of events move him into a position of adopting Bitcoin for professionally. Uh, and who. who will be coming down the pike because BlackRock, maybe that's the event right now that's happening is suddenly Wall Street is switching from negative to positive on Bitcoin because of the marketing that comes with an ETF. And over the next year or two, there's going to be a lot more people pointing at that and saying, that was actually the start of me learning about Bitcoin and coming around to it. So there's this lag effect between events and then people becoming Bitcoiners. Sam's a recent example, I guess, of the Russia event triggering, you know what, I'm going to go on a two year long search for what's the right way to get my clients to take Bitcoin as an allocation. And, know, Glenn was the instrument of making this all happen. What happens going forward? What's the two year lag from the ETFs coming out now, the halving coming in April? and who knows what macroeconomic series of events into the future. So you know what we've been hearing a lot about lately? It's kind of bizarre, right? Is, so we had this government minister on Sky News, like with this very well -known TV presenter here in the UK, Kate Burley or something like that. asking him about comments that the general of the whole British Army had been making about potentially needing to get ready for a major world war and that we may need to start conscription again, right? And. Brian Cubellis (01:39:10.382) I was watching this and I was thinking, what the hell are they talking about? Where's all of a sudden this coming from? You know? Like, what are we getting ready for? Like, all of a sudden, like, this is the plan. Like, and he's saying, yes, we've got to get ready. Like, as if it's inevitable, you know, like they come in, like somebody's coming together. Yeah. And then. And I think what that's about is always when the system's collapsing, because you mentioned the unfunded liabilities. We got the same problem over here. It's just kind of different numbers, but relative to there, it's like a hundred trillion or you're 300 trillion. Here, it's like only like eight trillion, but relative to the side of the economy. And given that the total debt's only two trillion, right? It's like, you realize that if I'm a political party or a politician, right, there's no way out here because I can't tell people, oh, sorry, I know you put all that money into national insurance or social security, but I can't give you what I promised you. Well, then that's a... next politician, you know. So you realize there's no kind of way out and the game's kind of up, right? We're at that point now where the explicit liabilities are so high and then there's all the unfunded liabilities and whatever. And so you need to use a world economic forum term, you need a great reset. Right? And so, well, how did we have the last great reset? Right? Because what happened is we kind of, the British pound was the global reserve currency in 1913, and they kind of did the stealth kind of QE to fund the First World War. Then, because they lied to the public, they had to go back on the gold standard at the same rate. Brian Cubellis (01:41:32.91) They caused deflation, right? Then we had a worldwide Great Depression, right? And then we kind of did the New Deal and all of these kinds of things and whatever. But the game was kind of up and then we had a World War and then we had Bretton Woods, right? And then we ran that for 1970 till 1971, which was kind of a quasi gold standard, but really not a gold standard at all. Then we went from 1971 to today on the Spheret standard, but even the game with that is now up. So now we've got to create some huge calamity where we just erase all of that and then on the other side in the rubble, we'll create some new standard which will now be some CBDC or... you know, it'll be, oh, because of cyber attacks, you have to have a digital identity and you, you know, all this is what it's starting to sound like because they saying that Vladimir Putin is like now a rest to the whole of Europe, right? But he's still stuck in Eastern Ukraine, just fighting Ukrainians, right? So like, how is he all of a sudden a threat to Europe? So when... they say things like this on national TV and it's these very senior people and stuff and they're absolutely illogical. They don't make sense. Then I know there's a plan. So we're going to rename Glenn, Glenn Jones. I'm picking up what you're putting down. Marty's there like, yeah, yeah. The greatest jobs program he's ever known. I was going to go for something less extreme, but it sounds quite weak now. I think there's a shorter term. I think the next wave will come from the institutions. I think that is where it will come from. And that's what I envisaged a couple of years ago that we needed to get ready for. I think they'll be crying out for, OK, not very much, but the small allocation we've talked about. And what will trigger that? Brian Cubellis (01:43:57.952) I don't think it be the halving so much, although that might put it on the front pages a little bit more, which is helpful. I think it will be the next wave of inflation. So I mentioned earlier that what are the key risks that Bitcoin helps to protect against for institutions? It's counterparty risk and inflation risk. And we are obviously, I've got no... inside of knowledge on this, but just sort of applying some Austrian school logic to it, we are coming to the point where the interest rate rises we've seen are gonna lead to some kind of contraction, possibly serious contraction, you know, the tide goes out, et cetera. And then the government and the central bank, and not just in the UK, but I guess in quite a few countries, is then gonna be faced with the decision that it's been faced with quite a number of times before, which is... Does it allow the economy to, I was gonna say collapse them, but sort of return to a more sustainable position really, to unwind the excesses that shouldn't have happened in the first place? Or does it print to push the future out a little bit further? And I think we'll probably see one and then the other. And so therefore we'll see a... sort of a reminder of the counter -party risk that corporate treasuries, pension schemes, et cetera, face, institution investors generally, the counter -party risk that they face and also the inflation risk that they face and we'll see them in fairly short succession. Because I think that's what, I think that's why a lot of pension schemes and their companies were, more willing to take action in 2023 to lock in some of those high interest rates that we saw on bonds, is because 2022, when bond yields were very low, was recent in their memory. So I think it needs that. It needs for a general sort of awakening to a particular situation, it needs two events within recent memory. Brian Cubellis (01:46:22.606) And I think that's what there's a good chance that we'll get over the next, who knows, you know, but six, 12, 18 months maybe. And then hopefully that will mean that more people are thinking, okay, I think something doesn't feel right. It's going back, it's that feeling of uneasiness that, well, I don't know if it's the same for you, but I think it's probably the, I'd suggest it's the same for everyone. take action to do something you need to feel uneasy about your current situation and it's that which then forces you subconsciously of otherwise to take action in a certain direction to try and ease that uneasiness make yourself feel a bit better and one way to do that is of course for these kind of things to learn more about Bitcoin. Yes do not be paralyzed by fear act simple act just be reading. some information about Bitcoin to develop the confidence to then take another action, which is going to get on your personal or business balance sheet or pension balance sheet, whatever it may be. Yeah. And if, if you want to learn more from Glenn's understanding of the system, you have to come to the UK and visit him and take him out to dinner where I think we're getting kicked out of the studio, but looking forward to eating steak and hearing him expand on some of his Marty Jones. Let's go with what Sam said. I know what I said. I love Sam's pivot to the actionable. Yeah, yeah, yeah. There's the there's the short term and and maybe the long term, which are not incompatible between what you guys were presenting. But yeah, I would love to hear more about that over a pint of bitter with Glenn and Sam. I'm jealous. Yeah. Yeah. I think if we're allowed to leave you with a sort a key message from us, I think it's that this monetization phase that we've talked about, that is what creates the huge opportunity for institutions to dip their toe in the water. It's not going to be around forever. So act. Because Bitcoin is what it is and you can't stop it. Brian Cubellis (01:48:47.842) So it is inevitable. And if it's inevitable, it's gonna monetize. So we don't know how long over what period. It might be five years, might be 15, it might be 50. It doesn't really matter. Brian Cubellis (01:49:05.166) and they're not making any more of it. There's only 21 of them. Well, they are still, but only very little. Less and less. They're making less and less of it. Who's making them, Glenn? Well, I'm extremely jealous. The FOMO is real right now across the pond. You gentlemen go enjoy your dinner and the conversation around that meal. And it was a pleasure meeting you, Sam. Glenn, pleasure talking to you again. for everybody out there listening. We'll see you next week.