Why Saving Died, Markets Became Casinos, & Young People Are Trapped | Jeff Deist

Jackson Mikalic (00:01.268) All right, we are back. How are my audio levels? Are they all right? I hope everyone can hear me. Jeff Dice, welcome back to The Last Trade, or welcome to The Last Trade for the first time, I should say. It's great to have you on the show. Just real quick before we get into today's conversation, you are currently the general counsel at Monetary Metals, the former president of the Mises Institute and former chief of staff to Ron Paul. Thanks for joining us today. How are you doing? Jeff (00:29.923) Doing great, how are you gentlemen? Jackson Mikalic (00:32.972) Doing great. Yeah. And we have Michael and Brian from OnRamp as well on the show today. Gentlemen, nice to see you too. Brian Cubellis (00:33.129) doing well. Brian Cubellis (00:39.699) Likewise. Michael Tanguma (00:40.526) Good to see you. Excited to have Jeff on the podcast. I don't know if it was during the COVID times or even previous to that, but the amount of insanity that ensued, I think a lot of the takes that you and the team at the Mises Institute were calling out the craziness. A bit of a big fan of you guys' work and everything you've been doing to articulate soundness back in an irrational world. Jeff (01:05.109) Well, that feels like a million years ago. Those are like dog years or something since COVID. And that's what only five, five and a half years ago. I guess it was March of 2020 for most of us. Jackson Mikalic (01:18.38) That is, that actually is wild that it's been almost six years. And that's actually when the Mises Institute first got on my radar, I'd imagine was sometime in 2020. And it's a great segue to start the show, Jeff, because I think all three of us in the audience would be curious just to hear more about how the Austrian school was first on your radar. How did you start? How did you find out about this concept of sound money? Take us back to the origins of that for you. Jeff (01:46.243) Well, I suppose for me it was just my personal and family background, having some of that, the kind of literature maybe laying around the house with my older brothers and my father, you know, something like Ayn Rand or Hayek, and finding out about Ron Paul's presidential campaign when I was still in high school, his first one in 1988, it's a long time ago now, and starting to read about... political stuff mostly and of course Libertarians, to use that term very broadly, very loosely, who don't understand econ are generally bad libertarians. And that's what I was. In other words, I thought, well, you know, we should worry about things like drug legalization or, you know, stop having taxpayer funded stadiums or something. In other words, a really superficial worldview, I think, because I really, without econ, I think that's where you end up. And so, In the early 1990s, I learned about the Austrian school a bit and started reading that probably 93, 94. So I just was a process where I met people, came across some students of Rothbard's at UNLV, one of whom has been a lifetime friend of mine and developed that way. Jackson Mikalic (03:09.46) Interesting. OK, so maybe I could just ask the follow on question then to get to get a full picture and understanding. So you mentioned reading on ran and authors to that degree, libertarianism in your upbringing. But you said initially you didn't necessarily have like the economic lens or didn't have a deep economic understanding. So how did you kind of pair the two libertarian mindset with actually starting to understand economics and having that sound money principle worldview? Jeff (03:39.543) Well, economics and libertarianism are two very different things. They seem to, you know, a lot of people consider them part and parcel, at least the Austrian or the free market perspective on economics usually goes along with libertarian worldview, but they're actually quite different things. mean, political liberty, I think, is a good thing, but that has to be rooted in property rights, first and foremost. when government is devaluing currency, then the sands are shifting underneath you. Whatever you own, if that happens to be denominated, and it usually is in your own government's currency, then you unfortunately are forced into a political mindset. You have to care about that because that is literally, you know, your time, your energy, your savings, perhaps your family's future. So I think libertarianism has become a meaningless word. As Orwell termed it, it's just become a cul-de-sac, this idea of, you know. self-actualization or individual liberty that, you know, people just can do whatever they want as long as it's consensual. Well, I no longer agree with that. I think that that is at odds with human nature. think that's deeply at odds with human history and that we do, in fact, owe something to our ancestors. That's why we wake up in these incredibly wealthy Western settings where there's hot and cold running water and electricity at our fingertips and, you know, Starbucks on every corner. think we do owe someone something. to the people who created all that, and I think we owe something to our progeny as well. And so this hyper-individualist libertarian mindset, think, is wrong. Whereas the correct view of economics, I think, flows from basic Austrian insights. First and foremost, it's about social cooperation, that it's about making choices within a framework of scarcity. Jeff (05:36.709) And so it's not about GDP, it's not about statistics, it's not about math, it's not about modeling, it's not about econometrics. And because the economics profession has gotten so far afield, I think, from just understanding human action and social cooperation and this idea of choice within a context of scarcity. I think it's really just become a muddled field. It doesn't really help humanity much. It doesn't make us happier, healthier, wealthier. Certainly doesn't predict anything correctly. And I think a lot of what people, lay people or average folks consider economics, what they're really thinking about in their mind is finance. In other words, what they term economics, they think of as the skillful use of money or the management of money or, you know, and that's not really what economics is. Economics is about human beings and their actions and what we could call causal realism, understanding those actions based on certain axioms and observing certain things about human nature. So it's a very different field. It's a scientific field, yes, but it is not. a hard science. not talking about molecules or atoms or things with physical properties in the natural world. We're talking about human beings who get up every day, what, eight billion of them or so, they're irascible, irrational, willful. They have volition, unlike those aforementioned molecules in nature. they, know, understanding what they do and why they do it and how to... benefit everyone in a socially cooperative way. That to me is what economics is all about. And it's not about measurement or GDP or public policy or state planning or any of those things. I think economics is something that everybody needs at least a little bit of, at least some basic knowledge and understanding. But I'm afraid most of what passes for economic knowledge today is either Jeff (07:47.861) wrong or actively harmful or both. I would view macroeconomics in particular as mostly astrology and I'm not a big believer in macro. And so, you know, we have to rethink economics. I think we have to relearn it and I think we have to start to teach it to our kids. I think coming out of let's say high school knowing, understanding zero economics would be or ought to be viewed as akin to not knowing how to do basic math or reading. And that's not really where we are, but we push forward nonetheless. And I think, you know, the rise of Bitcoin has done a hell of a lot to draw people into learning more about economics, sound money, history of money, nature of money, the functions of money. mean, Bitcoin's brought a lot of people to the Austrian school, no doubt. So, you know, that's something I really applaud about some of the pioneers in Bitcoin, like Safedin, almost, we were talking about him off air. You know, that's that has been, I think, important and, you know, side effect, a great side effect of the Bitcoin revolution. Michael Tanguma (08:59.851) Yeah, that was a really well said really there's so much unpacked there. But I think one of the main things from to start is like we really embody a lot of what you shared on the Bitcoin side when you talk about factions or changing of language, right in the gold side here, the gold bug camp and there's different forms of that. And so you have these negative connotations similar in crypto or digital assets or Bitcoin. These terms that people hide behind a great example of what you're referencing in the libertarian camp is crypto you have these people that reference being libertarian or anarcho-capitalist and they miss your point around understanding of economics and scarcity but also that like proxiology around moral morality and that if it's a free market everyone can just scam everyone and it's up to their own volition to ultimately decide that it's just not congruent with how humans are you know incentivized to collaborate and coordinate and So we really try to be on the other side of that and articulate a lot of these concepts to your points Safe is a real incredible proponent and advocate in crossing that chasm that a lot of friends of ours and probably you know, like the Larry Lepard's of the world that have been like really trying to fight a fight of sound money and articulating it have crossed. But then you end up in these ideologies on both sides where people refuse to look at the other and realize that they're the same concept, same principles. And so one of the things I wanted to call out was Oh, it's a sign of how crazy the world is today though, because Saif-E-Din as an example, I think we all hold him in a positive light like you shared, but he's looked at as, he's very polarizing. And obviously his delivery might, you know, is a little bit different, but we all have our own style. But there's just this reality that... Jeff (10:41.138) yeah. Michael Tanguma (10:47.965) It's crazy how right he's been over the past, call it decade, from whether it was the food. He has books on this. And these are like concepts that are now not taboo when you think about food and medicine and how they've been corrupted by fiat. And so he's just a great example of somebody that's crossed that chasm and then brought a lot of younger people into this understanding. And I look at it, and I think we look at it as this great renaissance, but we're still very early innings of those. Jeff (10:54.403) Mm-hmm. Jeff (11:13.601) Yeah, he's definitely a bomb thrower and a bridge burner, but I love him and it's not everybody's taste. That's OK. Jackson Mikalic (11:25.282) Yeah, I mean, I think I owe a lot to save like many do in this space. And I wouldn't have come across the Austrian school had it not been for Bitcoin. Like I said, I didn't find I don't think I found the Mises Institute until 2020. And that was about the same time I started to look more into Bitcoin had owned a little bit prior to that, but nothing really meaningful. know, like many people COVID in particular in the fiscal, the monetary policy, the coordination of the two, the liquidity bazooka around the world, you know, opened my eyes to quite a bit. And then, of course, everything that was happening from a Jeff (12:09.176) Mm-hmm. Jackson Mikalic (12:23.099) greater and greater rate and it's making life quite challenging for a number of people. And so I'm curious kind of how you think about the two, right? Because we also live in wonderful times, not only in the U.S., but in many, many countries where we have so much to be thankful for. But at the same time, you have so many people that are just getting crushed by the monetary expansion. So how do you kind of like parse these two things out? Jeff (12:43.884) Mm-hmm. Jeff (12:48.855) Well, first I think under 40s, which I take it as you guys, have it harder, have it worse for a variety of reasons. That's not imagined. And I think that's very real. Number two is that I do think wealth inequality and income inequality matter. That's kind of a left wing talking point about inequality. And of course, what we're most concerned with is the rising tide of all boats. So if we said that, let's say we offered a trade off, speaking of economics, there's never trade offs in the left's conception of things. if we said, we will make the baseline American. 10 % better off in some objectively measurable way. But as a result, the top Americans will be 20 times better off. So the inequality will spread. Well, of course, I would say, yes, let's do that. Great, right? Because we should always be concerned with the well-being of the economically or financially least among us. But I think a lot of people on left would say, no, we shouldn't take that bargain. So I don't mean it in that sense. But I do think that If economics teaches us anything, it's that well-being is subjective and it's relative and relational. So it's not healthy for a society to have, I think, wealth inequality. And that's what we've seen with, I think, boomerism, right? Gold bug and boomer are kind of, I think, synced in a lot of people's minds. And there is a lot about the baby boomer generation, which was simply being there at the right time at the right place. showing up and, you know, back in the seventies getting a 2.8 GPA at state U and, you know, running around, spending your 20s, smoking pot, backpacking through Europe and all that. And then you still came home and became a CPA or a doctor, a lawyer, an accountant, you know. And I think young people do have a legitimate beef today that that's not readily possible for a lot of them. I mean, you see the savage competition to get into top. Jeff (15:04.536) colleges. It's just unbelievable, for example. And then housing. We absolutely have to admit that houses have increased at least nominal prices, you know, way faster than incomes. And the gender war, the sex war between men and women is also something that the under 40s are really the first ones to have to grapple with. So a lot of that idea of well-being is tied up. that subject to well-being is tied up in, I better off or worse off than my parents, my grandparents, whatever it might be. And I fear that the millennials and the Zoomers are basically the first generations in American history to be economically worse off potentially. And I include romantically in that, know, family formation, birth rates, marriage rates, all that kind of stuff. So, you know, it's... It's a real thing. It's a problem. And a lot of it is cultural and spiritual, of course. That's beyond my pay grade. But a lot of it's monetary. We have to look at the perverse incentives that a depreciating currency creates for society. And that is high time preference in all things, whether that's leisure and consumption instead of saving, whether that is spending your grandkids inheritance on trip, you know, on Cunard. river cruises, or having a BMW when you ought to have an accord or something. A lot of these behaviors are incentivized by the fact that for an awfully long time in America, savings has been for chumps and debt finance has been the way to go because interest rates basically went down and down and down, in a linear fashion, basically went down from 1982. to 2022. So that's 40 years where it kind of made sense to borrow and spend. It kind of didn't make sense to save and invest in some ways. So that's got us in a pickle and we're not going to get out of that easily. And unfortunately, because, you know, the general public thinks a recession is something to be avoided. And so they applaud any politician or central banker or regulator who says, you know, we need to do X, Y and Z to make sure that number go up. Jeff (17:27.609) GDP go up. When in fact, I would imagine the five of us understand the recession is the cure, right? The recession is what has to happen to get us back on a more stable and real foundation for the economy. how we bridge that is, think, and telling that story is one of the real challenges for us. Michael Tanguma (17:52.438) Yeah, I have this I have this I don't know if it's Pestimistic or bearish but I'd be very curious because you've been at this a lot longer than I personally have and us as a group Because we advocate we run businesses around Bitcoin. How do you secure? do you allocate? and coming to the realization that this is fundamentally a True Renaissance in that a lot of people will leave this planet not understanding these economic concepts That they cannot be taught in you in whether it's gold or Bitcoin Brian Cubellis (17:52.925) I think. Michael Tanguma (18:22.332) They're fundamentally similar things. just have they manifest in different formats Jeff (18:25.155) Mm-hmm. Michael Tanguma (18:28.225) But there's the notion that you mentioned around scarcity because unless scarcity is understood, to your point, savings versus investing are fundamentally misunderstood by the majority of the market and they conflate them and that's how you get into the misaligned incentives. And to your main point, there's a spiritual problem because until somebody can get off the rat race, they can't actually reflect and think about what they want because they're too much tied to that. And that's why you see you may have all these things that somebody a hundred years ago didn't have, but you're still spiritually and from a happy and all those things worse off. Jeff (18:55.512) Mm-hmm. Michael Tanguma (18:58.225) And we're to tie this all together is I think of like one of the most pessimistic takes that humans have that are very positive. And I think about boomers because I have this conversation a lot is how the government we need the government to save us. And the best one is who will build the roads. Right. Because generally, if you pull somebody and it's like, well, if we have a broken road, live in a small town and I want my kids to get to school, it's like, we need the government because who else? Why would we ever be able to coordinate as a society when it makes zero sense? Because if we all live in the small town and we had kids and we had some means, it is in our best interest to coordinate to get that road built so everyone can benefit from that. And that is fundamentally missing from the substrate of most of Western culture, specifically in the United States, that we cannot actually coordinate. We need a third party. So we need to send our dollars out to DC so it can come back here. And obviously, that doesn't make any sense. But that whole notion is just so far baked into the entrenchment of the zeitgeist and the fabric of society. I don't think we can get out of it unless there's just net new entrants that come in and understand scarcity, meaning children. And then they basically grow into a new world understanding this. Because I don't think you can teach what we is taught to somebody that's 65 years old and benefited from what you just described, the 2.8 GPA. Jeff (20:15.757) Yeah, that's probably true. We have to ask ourselves whether there's dysgenic. birth going on. mean, are we getting smarter? IQ's dropping, our attention spans, the ability to read books, to concentrate. Are all those things dropping as well? I mean, think we need to, I think we need to focus on younger people, but maybe that's a vanguard of those younger people because it's a big ask, a myth, what I would consider pretty serious dumbing down of society. Brian Cubellis (20:56.391) Yeah, Jeff, I want to go back to something you said that was around sort of whether it's the growing inequality or the housing affordability crisis. I think there's a tendency for folks who don't have a deep understanding of money or Austrian economics to say, well, you that's capitalism's fault. That's billionaires fault. There's a lot of other scapegoats for why that is. And you sort of started to walk through why, no, it's the money that, Fiat is the problem. And I think that's the major disconnect for most people when they're thinking about these concepts is they don't tie those two things together necessarily. And maybe that's changing a little bit with sort of this notion of debasement trade that was more mainstream this year than it has been in prior decades, I would say. But how would you sort of concisely tie that together, saying like, what is the easiest way to explain to the average person who doesn't have the innate understanding of economics? that you're describing that the problem is actually with the money. It's not with the billionaires. It's not the capitalism in general. What are some talking points to try to elucidate those themes? Jeff (22:05.497) Well, when it comes to money, we think about the cost of money and credit should always be dear. Historically, interest rates have almost never been below 5 % and often been above 10 % in a variety of contexts. mean, you can go back to societies, you know, in even hundreds of years ago, trading societies. So the idea that you should be able to borrow money for, you know, or 2 % or something is entirely new. And it's also entirely a creation, I would argue, of the artificial increase in the money supply and suppression of interest rates. There's a reason why our, at least my grandparents, they, in their day, they were 15-year mortgages. Right? That was the norm. Now they're 30 years, and they're thinking about coming up with 50-year mortgages. And that's simply because People have become concerned only with the monthly payment. And the idea that they would just owe something every month and then they'll owe that and someday they'll die without any equity or something. I don't know. I don't know how people think about that. But that's certainly something that shifted fundamentally since the even, you know, well into the 20th century in America, less than 100 years ago. The concept of ownership of whatever was real. And I think that has a lot to do with monetary policy. I think it has a lot to do with... exporting inflation via our happy status as the world's reserve currency holder. imagine if we didn't have that, how things would look in America. So it's, unfortunately, I think the manipulation of money and the inability to simply save at a rate of simple interest above the real rate of inflation. To me, that's the measure of a healthy economy. Jeff (24:00.577) when someone like my grandparents who were not financially sophisticated can, through simple hard work and thrift, I'm not saying it's easy, I'm saying it's simple, through simple hard work and thrift, they can save some of their income. spend less than they make, put that into a simple readily available vehicle, you know, a savings account, a CD, a money market. You don't have to understand financial markets. You don't have to go chase yield by investing in Bitcoin or, or Nvidia or Tesla. know, grandma's not going to spend hours trying to beat algorithmic traders, right? But with, with just simple thrift and savings that they can actually get ahead. that the simple savings rate is higher than the true rate of inflation, which all of us know is way higher than advertised. And unfortunately, we haven't had that for a long time. And so that to me is the measure, one important measure of a just or workable economy. until you get back to that, until you beat inflation about the head and neck and get it back under its rock and... until we have a nation of savers who make capital available to people who want to borrow it, but they make it available at what ought to be a historical norm for, let's say, a mortgage. In my view, that would be maybe 8%, 10%, maybe higher than that. which would bring housing prices down for one, it would also encourage people to save more money if they were getting 12 % on their savings. And it would also encourage people to get out of debt quicker and borrow less, hence, know, reducing demand. So it would just be an absolute win-win-win. And we should actually, and we have a right to deserve a deflationary economy. A healthy economy is a deflationary economy where Jeff (26:00.409) prices naturally come down over time in real terms as productivity advances are made. And that's what we've come to expect in the West. That's what we've come to rely on in the West. And I'm personally quite worried that that's coming to an end and that this inflation genie is never gonna go back in you know, in the lamp. And I'm gonna have to figure out some way to... you know, protect my own savings and put something away from my kids that that's not just dissolved by this acid of inflation. it's a, you know, tough situation, but, there's definitely a huge monetary component to all of it. Jackson Mikalic (26:47.329) Yeah, that conflation, Jeff, of savings and investing, think, hasn't been clear or the difference between the two hasn't been clear to your point for at least three to four generations. You said your grandparents, I would say even my grandparents, they're on the older side. My one living grandparent is 96, God bless her. But she, to your point, like they worked hard, thrifty saving. But when I was growing up, my perception of savings was from my parents, predominantly my father, equating equity markets to saving. that's kind of like the boomerism, right? You know, we forget about saving because the currency is depreciating so quickly. So equity markets have become the de facto savings vehicle or homes or the de facto savings vehicle or investment properties. Right. And so to your point, though, I think unfortunately, this seems to be getting worse and worse. And one of the latest and greatest trends of the fiat degradation can be shown in the prediction markets, which we don't need to watch this. clip necessarily but I do fear that things are trending in the worst direction particularly because the currency devaluation is getting worse and worse and so this is the CEO of Robinhood and he was talking about the super cycle of prediction markets and so actually the first prediction market that they launched was just about a year ago with the U.S. presidential election. And now he was talking about how there's over thousand prediction market contracts on Robinhood. And so to your point, this just seems like the currency devaluation is getting worse. People don't know. People will. First of all, there's despair. Right. In terms of how do I ever afford the life that I want. And so we're seeing, unfortunately, the ills of fiat to an even further degree than maybe we thought possible five years ago. Jeff (28:25.102) Mm-hmm. Jeff (28:37.751) Well, there is despair, and think a lot of young people feel like they have to come up with some kind of Hail Mary, know, some kind of crazy high-risk gambit to... to try to beat what they think a system that's rigged against them. mean, the Robin Hood guy of all people talking about prediction market, it's almost like prop bets, except it's not sports, right? It's like prop bets for the culture or the economy or whatever, which is, you can bet on, I'm sure you can bet right now on whether Gavin Newsom will be president in 2028 or whatever the prop bet might be. But yeah, it really is too bad that we don't have. a clearer path forward for young people which involves, you know, thrift and just putting money away. And you're so right, equities have become the savings vehicle. Real estate's become the savings vehicle. And that's not only risky, it's also bad for the economy because it props up, it chases money into equity markets that otherwise wouldn't be there, at least in my opinion in what we might call a free market. So it chases a lot of money into especially public equity markets and that money makes coal companies and whole industries perhaps appear to have more legs than they really have or they really should have. mean, we saw this with the dot com. We saw this with housing in 07, 08, you know. And so it just continues. It all, to me, represents a form of malinvestment. And what I especially dislike about equities, well, first of all, I mean, no offense, but God bless the average American trying to pick stocks. I mean, I don't do it personally. You know, I use index funds or whatever. I mean, trying to pick stocks in a time of algorithm traders is just Jeff (30:39.321) It's just crazy for one. And number two is none of these stocks, even the blue chips, none of them pay a dividend hardly. And so what that means is the whole concept of owning a company has morphed. It's no longer about, know, again, we'll go back to grandma's. They used to get meaningful dividend checks and that might be $50 a year or something. That could have very well been meaningful income in our grandparents' time or great-grandparents' time from blue chips, you know, like IBM or something. And today, the Amazon, it's been public since 1998, never paid a dividend. All these, the Teslas and the Apples and all these things. And so if you're not buying a stock for dividend income, you are literally quite simply buying it because numbers go up. You're gonna sell it for more. And if that's the only reason, that becomes akin to a Ponzi scheme. I'm buying this equity because I'm going to sell it to someone else for more. And I would argue that the public equity markets, the capital markets themselves have been distorted. Apple and Amazon, don't really need public equity markets to raise capital. It's just a way for people to trade between themselves. It's just liquidity for boomers, as they say. So I don't think capital markets are performing their real function, which is allocating money to its best and highest uses. And imagine if you were a typical family and you wanted to open a restaurant or dry cleaners or pizzeria, something like that. And you said, you know, we're just going to take all of the money we make and we're going to reinvest it. We're going to expand the menu. We're going to maybe open a second restaurant. We're going to do X, Y and Z. And we're not going to pull any income out of this family owned restaurant for 30 years. But in 30 years, we're going to sell it for a hell of a lot. Right? No one would ever do that because it would be like, well, okay, but in the meantime, in this 30 years, you need to pay your mortgage. You need to raise your kids. You need to buy groceries. You need to do all kinds of things. And so, you know, we've created this investor class that doesn't have to think like that anymore. And I think that's a real shame. I think we ought to get back to dividends. I think that would be, that's an important part of what equities should be. Jeff (33:02.487) the difference between investment and savings. Michael Tanguma (33:05.089) Yeah, I mean, it's 100%. Like you tie that back to first principles. So the equity markets and capital markets are distorted, which fundamentally distorts entrepreneurship. Because to your point, people aren't chasing the ability to deliver value when you look at venture capital as an example and the distortion from its origination to the size of that market, private equity, private credit. venture capitalists and the entrepreneurs are playing a game of markups so they can exit that liquidity, whether it's via secondary markets in private or going public. And so they fundamentally chase the wrong unit economics. And then because the denominator is fundamentally broken, they're getting squeezed on both ends. They have the wrong incentives, but they also are getting pinched by inflation and margin compression. So now their businesses don't even have the right fundamentals. Michael Tanguma (33:57.397) It's it's all around I had a the Robin Hood things funny because part of my story reading safe book was in 17 I was with Adam Newman in we work Lighting money on fire while I was learning what money is and I can't remember is I haven't gone back and reread it But I could have sworn in the Bitcoin standard, they talk about misallocation of capital and you ultimately overspend and then you end up with all of these buildings or that end up like not finished and they're just sitting vacant. And that's literally what happened at WeWork because there was a soft bank and all the different ways that they manage the carry trade and the capital they have to reinvest. And so they were investing in this real estate company that was valid at the top $48 billion that was just deploying capital to store in the market of the real estate market in New York City. Jeff (34:23.737) Mm-hmm. Michael Tanguma (34:41.859) as well as globally, had no fundamentals. And I always assumed that would be like the peak of like the poster child of this world we're talking about. And it might be Robin Hood and Vlad and what they're doing there because the way they talk about we're not gonna need money and everyone's gonna be a trader and that there's no reason, like with AI, you're never gonna have to worry about working again. There's just a complete distortion of capital markets and entrepreneurship across the board. Jeff (35:00.471) Mm-hmm. Mm-hmm. Jackson Mikalic (35:05.013) Jeff, I don't know if you've seen this before. I actually, I logged in or not logged in, but I actually went on Cauchy for the first time ever, a week ago. I guess I'm a boomer. I just never had the curiosity to take a look at what a prediction market website looked like. And you you threw out the example of Gavin Newsom president in 2028, but you may be surprised to see what you could actually, you know, place prediction market bets on. Jeff (35:05.236) yes. Jackson Mikalic (35:32.021) You know, highest temperature in New York today. I mean, it's actually crazy to me. Like, this is just gamble on whatever you want. yeah, Michael, you were kind of wrong on the the peak with WeWork. It seems like things are going to get way worse than that. Jeff (35:37.017) Mm-hmm. Michael Tanguma (35:40.769) Jackson, I do, I. Michael Tanguma (35:46.701) do have a question for you, Jackson, Jeff, I know you're not as familiar, but we talk about this every so often on the show. Jackson I think being the youngest here is looking to buy a home and he's been really priced out in the Philadelphia area and so he's always trying to figure out the Bitcoin price to appreciate so he can finally get his family a home and I'm kind of worried he's on cal she trying to you know hit it big once so he can buy that house I'm curious Jackson was this a you know for the podcast that you've logged in or are you doing some stuff behind the scenes trying to to get that home Jackson Mikalic (36:03.051) Haha. Jeff (36:08.247) Yeah. Yeah. Jackson Mikalic (36:18.635) Trying to pay the bills, my friend. Nope. Brian Cubellis (36:20.455) He's got insider information on the New York City weather. I'm giving him tips. So he's got an edge in that market. Jeff (36:20.482) Yeah. Jackson Mikalic (36:26.451) I just could, I could not believe it because, I don't, guess I don't even know when the company was incorporated, but, I just never piqued my interest to take a look at more deeply what a prediction market is. And I was shocked to say the least about just the, how intricate some of these, these bets are. mean, it's, remarkable. Jeff (36:48.577) Right, and it's also a nice example of spontaneous. information, right? I mean, those bets are based on the action on both sides of them. If it's a binary bet, like a sports book, for example, right? Everyone thinks that the odds are set by some brilliant football tactician in a boiler room. And maybe the initial odds are, after that, it's the money and the weighted average volume on each side of a trade. That stuff is, I don't know who has time and I don't know who thinks they have the insight to win at that. Jackson Mikalic (37:34.05) Yeah, I guess the idea is like, to your point, just getting so far away from working in on a job, being able to save, being able to provide for a family where it's just like, it's an act of desperation, right? It's like, what else am I going to do? I'm not equities are at all time highs, real estates at all time highs. Bitcoin once was at all time highs. It's no longer, but gold's at all time highs, right? And it's like, you you look around and what are you going to do? Jeff (37:41.42) Right. Right. Jeff (37:48.29) Mm-hmm. Jeff (37:54.253) Well, and also, yeah, I mean. If you have a, let's say a decent job and you feel like you're not going to purchase a home because of headwinds or against you, then you might in fact say, well, I'm gonna eat out more or I'm gonna go on vacation more or a more expensive vacation. Or I'm gonna lease a fancier car, whatever it might be, because I no longer have this thing in the back of my head that I need to be saving for. a house because I live in New York City and the worst condo in the most dangerous part of Manhattan is God knows how much, And so that's another example of the spiritual malaise that flows out of all this. Jackson Mikalic (38:46.593) Yeah, absolutely. Jeff, I would love to get your thoughts on on just what's happened in gold markets this year in particular, because, you know, I know you've been involved in where you're at monetary metals, but you've also been involved in the sound money space and precious metals for a while. And so we'd love to get your take on it just because it has been, you know, if you just take the very simplified view of the gold price. I mean, it's been an explosive year for the price of gold. It's been the best performing. asset, if you want to call it that, of the entire year. And I believe it added what, about $9-10 trillion to the market cap. So it's incredible for an asset of that size to move that magnitude this year. And I'd be curious just to hear your thoughts around that move. And do you think it's kind of a signal of what's to come for the broader economies and move back towards sound money? Or is it something else? Jeff (39:43.289) Well, I hope it is. And I hope it's also an indication that maybe not just gold, but commodities generally will shine the next 10 years. And unfortunately, I think that means if that turns out to be true, unfortunately, I think that means because we're in an inflationary environment for the next 10 years or beyond. But I would like to see commodities and stuff and the old fashioned analog world reassert themselves. I'd like to see some of this. You know, some of these AI companies maybe go under and lose some funding. I'd like to see more money put into stuff. And I know that doesn't sound that sounds supply side or mercantilist in that I'm not I'm not sure that manufacturing is just entirely a bad thing and that we should all just be thrilled when all the aspirins made in China or whatever. But the gold price, I have no idea. They could just as easily come back down to 3000 or 2800. You know, it's a fickle thing. But I do think that it's a sign that the gold retains some moneyness properties. The governments and treasuries and central banks have tried to tell us it's not money, it's not money, it's not money. It's just a commodity, it's not money. And yet it stubbornly holds on to a value I think that's wildly above its, let's say, industrial or jewelry uses. So there has to be an explanation for that premium above those use cases for gold. And I think the only explanation is that it retains some degree of moneyness in people's minds and as a store of value, as a hedge, however you view it. And I think this is decidedly more true outside the West in places where my company does a lot of business like Turkey and UAE and India and China. We do both leases and bonds. Our bonds are security offerings. mean, we go through all of the legal background to issue an SEC, an unregistered security. And our leases are a platform marketplace type product whereby we have gold investors on the one side, gold users on the other. And we arrive at an interest rate paid in ounces, not in dollars or whatever currency. Jeff (42:12.287) And so that rate for leases has decoupled mightily from the, in other words, the rate we go out and really find on the market, as opposed to setting it, having a Fed funds overnight rate or whatever it might be, having it set by bureaucrats, that's very much decoupled from interest rates in dollar or euro terms, for example. So that to me is pretty fascinating. And I think that gold in general is not just decoupling from the monetary system by virtue of, by demonstrated by these interest rates, the difference between interest rates on metals in physical form and paper currency. But also I think it's decoupling from the kind of things we always imagine gold tracked either directly or inversely. unemployment, GDP, jobs numbers, CPI, all these other things. mean, gold has just has not acted in its normal fashion for this run up to over $4,000 that we've seen recently. So this may just be a new normal, but I wouldn't go by gold because number go up. I don't think that's... Very smart, think. But I do think that a lot of people, including family offices, including institutional investors, are now starting to say that old allocation of two or three or maybe 5 % to gold should be 10 % or something now. I think that's probably what's happening in the investment community. Michael Tanguma (44:03.949) I mean, that tracks, right? You know, the 60-40 is fundamentally broken in real terms. Most people don't discuss that because nominally it's obfuscated. So we very much hold that opinion, whether it's gold or Bitcoin, in a 60-40 will continue to increase in exposure as quote unquote, sophisticated investors come up to speed and then it becomes the norm. Because to your point, there's objective properties to what makes a good form of money and that just takes time for the market to realize. I've always fascinated that gold's 30 trillion dollar. Asset and nobody knows how to buy it. That's that's on purpose right to your point that it's not a it's not a money It's something else. I'm curious how you think about that just from whether it's personal or Friends or just the market when you think about retaining purchasing power because I hear you talk about money market funds I think you kind of put Bitcoin closer to Jeff (44:40.206) Mm-hmm. Michael Tanguma (44:55.949) I don't want to say a speculative asset, closer to like a stock or something that's tied into more of like either risk on or tech bet. But how do you think about like gold and Bitcoin from a portfolio, either construction or just retaining purchasing power? Jeff (45:13.015) Boy, I don't know. mean, I don't have huge amounts of either, personally, but I certainly have more than the average person of both. But I don't want Bitcoin to be a speculative asset. I want it to to uphold its initial promise of being a digital form of money, a permissionless peer-to-peer money that's Issued privately that to me is the original foundational purpose of Bitcoin and the beauty of Bitcoin and the promise of Bitcoin So, you know, I understand that it's in many people's minds. It's acted more like this speculative Tulip mania or something, but that's that's not the point we should all always remember that and I think gold is is just It's it's just a canary Nicole mine, I mean It's just gold generally does well when governments are bullshitting us. Right. I mean, that's basically its purpose is to serve as a contrarian indicator. And so I think, you know, if you had to pin a reason to own gold physically or, you know, whatever it's flit your boat ETFs or some of the funds like the Sprott, you know, you can get GDX, can get GDXJ, can get Fizz, you know, there's all kinds of ways to own metal, maybe not, maybe in paper form, but whatever works for you. I think the argument is simply that. Western governments are never ever ever going to get their fiscal house in order. They're too far gone. The entitlement train has left the station and you can't tax your way out of this. You can't spend your way out of it. You can't borrow your way out of it. You can't vote your way out of it. And so. Since the future is uncertain. You know, and since none of us have the capability of knowing what those 8 billion people are going to get up and do every day, you know, gold seems like the least dumb idea that I got. Jeff (47:23.159) going, right? It's not because, you people buy gold and then it goes way up and then they act like they were some sort of sage. It's like, no, you're not a sage. It's just, I don't have a better idea. Michael Tanguma (47:36.588) It's a fascinating lens, especially somebody that's working actively in this space. think gold, I think we're a lot of the speculative investors in Bitcoin, because we very much hold the lens that you did, is that there's a potential for a global financial asset to grow based on the fundamentals. But I think what a lot of people miss that are allocated, even severely over allocated to BTC, is that They never really understood gold and its role in the world because I don't think you can really understand where Bitcoin goes until you actually understand gold, its properties, and then how it served as money for a very long time. And then ultimately how fiat came about because without that, it's very hard to establish like where we were, where we're at and then where we could potentially go. And so I think that's a fundamental just like myths that still exist. And then to your point, that's where a lot of people look at it as a speculative asset. We have this podcast called The Last Trade because we look at it as a potential last Jeff (48:20.697) Mm-hmm. Michael Tanguma (48:33.975) where once you get into the right savings technology, it appreciates as a proxy for dollar liquidity, effectively. And so maybe you're just keeping par with inflation and some maybe small real return, but based on what you said, it's the least dumb idea out of everything else that exists. Jeff (48:54.167) Yeah, I mean, again, wealth is a relative feature. If if most people are losing 10 percent a year and you're losing two percent a year, you know, you're relatively wealthier than them. But I I think. This is a good time to hunker down. mean, if you look at the depression period in the U.S., which is something I think that they would never allow to happen again in the sense that they would do everything they could to reinflate whatever bubble in nominal terms. But still, if you look at it, there's some limits on government being able to stop deflation. If banks go under... that's deflationary. If people lose their jobs, that's deflationary. If interest rates rise quickly, no matter what the Fed does, let's say that is deflationary. Those are all deflationary pressures that really are awfully hard to overcome in a severe contraction. It's one thing in a lighter, let's say, recession. So if you look at the last truly deflationary event in the extended one, not 1987, but instead the Great Depression, the period of the 30s, then the people who came out of that better were the ones who were in a heavy cash position going into it. know, people who could buy assets on the cheap. so very, very wealthy families, a lot of them get wealthier. A lot of them lost everything, but a lot of them actually got wealthier coming out of the Depression because they had the dry powder to pick up those assets which had depreciated in price terms, know, enormously. so whole companies were bought, know, assets were bought, you name it. was, it was quite, quite a fascinating period in American history. So I think there's a lesson there. And, you know, I don't, I don't really want to own Jeff (51:01.433) Right now, in my opinion anyway, I don't really want to own the markets. I don't want to own the NASDAQ. I don't want to own the NYSE. mean, and let's forget that their performance, their upshot performance is usually driven by a handful of stocks. Well, 85 % of them go down. So good luck choosing the 15%. I just feel like the next 10 years anyway, it's going to be about preserving wealth, maybe not making it. I think that requires some sort of commodity investment, whether that's Bitcoin, whether that's physical precious metals like gold, whether that is other commodities, whether that could even be oil, who knows how we're going to power all the electricity that we're going to need. I'd be for burning coal and fossil fuels personally, it remains to be seen. But I don't think I want to be in average stocks and bonds and real estate. I think all three of those things make me very, very nervous. Jackson Mikalic (52:09.609) Yeah, I mean, it's such a challenging time, right? Because you you cited the Great Depression. That was a little over a decade after the creation of the Federal Reserve. And now we're well over a century of the Federal Reserve. And to your point, it seems like the government. Well, we know there's no incentive for politicians to get the fiscal house in order. There's only incentive for them to continue to kick the can down the road to get elected. And so the challenge that I think you really hit the nail on the head on is. You could sit in cash and wait for an opportunity to buy assets or businesses at lower valuations, but you may be waiting a very long time and you may be waiting so long that perhaps you just get totally destroyed from a purchasing power perspective because of the inflation in the interim. Right. And so that only seems to be getting worse because you have the fiscal situation that structurally gets worse with having to continue to monetize the balance sheet or monetize the treasury debt issuance entitlement payments interest expense through the roof but on the flip side your point natural state is deflation and artificial intelligence is a real thing and people are concerned about losing their jobs and technology to your point is naturally deflationary so I just don't know I don't think any of us really fully know how this story ends because You have the system that structurally needs to inflate at a greater rate. But the flip side of it is you have technology that's accelerating deflation at a greater rate as well. And so it's so challenging to preserve that purchasing power in the interim because you have these polar opposite forces. But me personally, I prefer to own assets, even if I think valuations would be outrageous, just because what I've seen, at least since the great financial crisis is every single crisis or every single turbulence in the economy or market is just met with more and more liquidity. And I just think that incentives favor that outcome 10 out of 10 times. So to your point is like at some point that breaks, I just don't know if that's next year. I don't know if that's five or 10 or 50 years from now. Jeff (54:23.533) Well, and to be fair, a lot of people thought that that would break a long time ago with the dollar. I it's been 50 years since Nixon. And a lot of smart people were back in the 70s were saying people like Ron Paul and Doug Casey. We're saying the end is nigh for the dollar, you know? And so when you say that the natural reflexive action of politicians and central bankers is to add more liquidity, I think that's 100 % right. That's the playbook. And we have to assume that next time and every time thereafter until they just can't. And so, you might be right that the day of wrecking, the deflationary day may be a lot further off than we imagined. And hence, you know, holding dollars could be a dangerous gambit. There are ways to hold dollars. to at least offset some of that. Obviously you can use money market funds, you can use big commercial houses like Vanguard. You can actually ladder CDs with your local bank oftentimes if you have above the FDIC limit. We all love that FDIC deposit insurance. So there are ways to hold cash in short term type vehicles that maybe ameliorate some of that. erosion due to inflation, but, and a lot of it also goes to where you are in life. mean, if you're young and you have kids and you have certain bills, that's just the way it is. If you're older, a lot of this has to do with the timing in your life, but for you guys and for anyone, Jeff (56:05.633) you know, maybe the best investment for any younger person is always to invest in your own skills and ability to work and go out and make a living. You know, in any situation to be flexible, be entrepreneurial, to have, you know, there's never been a time when it's easier. You look at something like Sailor Academy, which is free. You can go learn all about financial accounting. You can do all kinds of things to be improving and increasing your skills and also staying physically and mentally healthy so that you can be a productive person. That might be your single best fallback asset is your own competence and your own flexibility in... being able to go earn a living in different marketplaces, maybe even in different countries. Michael Tanguma (57:01.646) Yeah, I don't know if it was safe that I explained this, it's always stuck with me. The logical progression for a human when it comes to capital preservation and investment is to be able to say for the future that's what money's supposed to do, that optionality. And then once you retain enough of that for that optionality is to invest back in yourself because that's how you would be able to make more. everything you said is absolutely true, right? Like the ability between the internet, computers, AI, from somebody that has agency to really create and deliver value to the world mentally healthy. The problem is that you retain that value, need to preserve it in something that theoretically should increase in purchasing power. We have this strong stance that Bitcoin is that. And I'm curious like on your side, would, to kind of put you on the spot, is like what would make you feel confident, whether it's in yourself or just telling somebody else as an individual like that is something you could see persisting into the future to realize the vision of let's say what SAFE has put out and other people believe. Like where's that gap that exists for you to be able to really feel confident that that's something that would persist in the future to outpace what we're talking about. Jeff (58:16.972) Yeah, I, there's that famous saying, don't know to whom it is attributed that you can be too busy earning a living to make money. Right. And I often think of that in my own life. mean, I spent many, many years in and a doing, working for private equity clients and that, you know, we loosely term that deal work and It was oftentimes just so hectic or so many late nights or so many weekends or traveling to Europe and this and that that I sometimes think, if I just had a more normal job during that period, but I spent all my free time and energy on my investments. Right. And as opposed to just trying to make more money in a high stress job. And, you know, it's hard to say. so I find myself in the same boat now. It's, you know, of course, now it's more shifted to what I can leave my kids. And so it's continuous learning. You you can't evade it. You can't evade that responsibility for continuous learning. And there's just no shortcut. mean, AI, you're, on what AI platform you're using, depending on how AI evolves, depending on how skilled you are in prompting it, knowing what you're looking for, I mean, that might certainly provide a shortcut, but you know, when you read about Buffett and Charlie Munger, what they basically did was they read all day. Like they just read all day long, hundreds and hundreds and hundreds of pages a day. So you take this scary universe of uncertainty, none of us know the future, and you take those uncertainties and those variables and you shrink them down as best you can. Jeff (01:00:14.621) And by continuous learning, by continuous information, which is very tiring, by the way. mean, it's not digging ditches, don't get me wrong, or laying bricks. But I mean, just absorbing information in a serious way, in a methodical way, in a disciplined way is very fatiguing. At night, you might prefer to veg out and watch Netflix or something, right? I mean, we're all human. But... just constantly improving your knowledge base and your information and whatever, whether that's your chosen field or something else that you think is gonna help you make money or even something like, it doesn't have to just be investment, could be, again, you could go learn financial accounting, you could go learn, I wouldn't suggest learning programming anymore. but you could learn a foreign language that might enhance your marketability, whatever it might be. So what I'm doing personally right now is trying to really get a handle on commodities markets. So I started back with Jimmy Rogers book, Hot Commodities, which he wrote 2004. And he was just a little ahead of his time, I'm afraid, because we still had a lot of run up to the GFC. and then really learning about online commodities, not trading for my purposes, but understanding owning them. just because I have made a personal decision that I think there's too much fluff and BS in the economy. And I think stuff, what we can call commodities broadly, is going to have a comeback of sorts. And so that's my current focus in the spare time I've got. Michael Tanguma (01:02:02.477) Yeah, I it makes sense. Money doesn't grow on trees. I remember growing up hearing that, nobody would say that today because it feels like it does. you value can be printed out of thin air. And that's to your point. There's some proof of work related to any type of commodity. The track you're on explaining it really is rooted in a lot of, know, this notion of energy can either be created or destroyed. When I've talked with thousands of individuals now at this point that have adopted some form of Bitcoin for their personal wealth and wealth preservation. And the common thread for most people was 2020. And they generally come back to because of COVID and the amount of capital printed. And I have to explain if it wasn't the amount of money printed, yes, it helped. But what it really was is you were locked in a box. And to your point, you had nothing else to do except for look at the problem. because it doesn't matter if you're a billionaire or you're struggling at the 7-Eleven, we're all in a rat race. We don't know why we're on it to your point. The deals, they're coming, you just keep going. And by the lockdowns, we're obviously insane in nature. But that energy can never be created or destroyed. It put a lot of people basically with time to think. And you'll never put that box, put that canary back in the box, whatever, where people learned and they understood this problem that we're talking about. And so it's a function of time in that rat race and more and more people are able. that's part of the internet. A lot of these things weren't open to most people to be able to listen to a pod and at least get enough of a thread to start pulling on, well, what the hell were those guys talking about? Jeff (01:03:04.024) Yeah. Jeff (01:03:21.209) Mm-hmm. Jeff (01:03:30.883) Well, I don't think we've come back from COVID. I think the psychological damage will be, especially for kids, little kids, will be many, many, many decades in the unwinding. think Jackson used the term liquidity firehose or something like that to describe, you we talk a lot about monetary policy and in Austrian and Bitcoin circles, we're always talking about the Fed and monetary policies and the central bankers. We forget the treasury side, the fiscal side. And that's every bit as important and oftentimes more direct because the Fed's monetization of debt is a bit of a circuitous mechanism, which means there's a bit of a time lag and far away-ness to it. Whereas, what... Jackson was referring to as both the Biden and Trump administration just flat out, you know, putting cash money into the economy, into the bank accounts of companies, into the bank accounts of individuals. We won't talk about PPP loan fraud. That's a story for a different day. But let's just say a lot of trips were taken. A lot of cars were purchased. And so, you you can't just create... you can't just pump $6 trillion of the world's reserve currency out and expect that to smooth over in 18 months or something. So you start with the supply chains and the shutdowns on the supply side, and then you add $6 trillion on the demand side. and you're gonna have some real dislocations for a long time. you know, a lot of people, and of course the economists, even smart economists, they don't understand one of the core Austrian insights, which is the temporal element to the structure of production, right? You don't just say, and the inefficiency and waste and malinvestment. So you don't just say like, well, this factory was making gigantic V8, Jeff (01:05:34.935) Cadillac escalates. But now, know, gas goes up and oil prices spike and now gas is five bucks a gallon. And so nobody wants gigantic V8 escalates. So that factory should just start making little electric, you know, those little BMW I8s or whatever. That's not how it works, right? A physical plant cannot simply be retooled that simply and cheaply. And it may not be able, you may just shut it down and it might rot. And so this idea that you shut down production. due to COVID, which total bullshit in my view, by the way. mean, it was a novel virus, whatever, know, little dangerous to old people. There's a novel flu all the time, you And that when COVID is over, you sort of flip a switch and production comes back on like an assembly line. It's just so facile and wrong. I don't think we were really back. And certainly the... CPI is not back. Even the Fed and the Treasury and the Bureau of the various economic stats bureaus within the federal government, within Library of Congress, etc. Even they can't say it's below 2%, which is the Fed's so-called target. And so it's way above 2%, folks. Way. Michael Tanguma (01:07:04.354) Yeah, we don't let any feds speak around here, the 2 to 3%. We use a common steak or ground beef as our heuristic, and if it's going up 10 to 15 % annualized, that's not 2%. Jeff (01:07:07.551) So. Jeff (01:07:17.049) Which means if your income, and I don't want you to say your paycheck, your income from whatever source isn't going up five, seven, 10 % a year. you are losing ground at present. Michael Tanguma (01:07:31.587) Yeah, I mean, this is a side, real credit. I don't know how much you had spoken about it, but Tom Woods, not sure how close you are with him, but he was, I think, very courageous during those times. I remember being in the thick of it, and you're trying to reconcile what's happening. You know things don't smell right, but there's very few people that had the courage to be able to describe just how insane it was very early on, and I just remember him specifically. Heavy and often, when there was podcasts written for him, I think he started a whole different website, if I recall correctly. It was kind of hazy, that whole period. Jeff (01:07:52.557) Mm-hmm. Michael Tanguma (01:08:01.6) But it really takes speaking up like that because in a world that went mad effectively, if everyone's telling you that the sky is black and you're looking at it looks blue, it's the whole thing when you go into that. What's the study when they went into the auditorium and everyone's facing the wrong way and the person just faced the other way because everyone's just facing the wrong way. That's just what people did. And I still think people think it was normal what happened in COVID and that was a necessary measures. And just the small businesses, you're outlining some of the third order effects. The amount of small business destruction as an example. is just an insane thing that still doesn't really get talked about. Jeff (01:08:35.723) Restaurants, I think, are a prime example. They're just not back. Their food costs have gone up. The food and the service are generally worse. The staffing is worse. A lot of them are, you know, the restaurants we used to enjoy aren't here anymore. My family certainly goes out to eat way less these days, not only because the cost is higher, but the experience seems worse. And that's the kind of third order effect. mean, restaurants are a common first job for young people, for example. So when there's fewer of them and they're not doing as well, I mean, there's ripples. Jackson Mikalic (01:09:17.383) Yeah, well, gentlemen, is there anything else we should cover before wrapping up today's episode? Jeff, anything you wanted to cover that we didn't get to? Brian, Michael, I'll leave the floor open. Brian Cubellis (01:09:30.504) did want to just touch on the piece that you authored maybe a month or two ago that got published in Bitcoin magazine around sort of the financialization of Bitcoin. And maybe you could just talk through some of those points around the arguments that you were trying to make. think we've sort of touched on some of the underlying tones throughout this conversation around sort of broadly financialization, whether it's the Robin Hoodification of everything, prediction markets. But I think what you were talking about was more around the Bitcoin treasury Jeff (01:09:53.667) Mm-hmm. Brian Cubellis (01:10:00.427) strategies and what Sailor's done and curious what your thoughts are on all that. Jeff (01:10:04.814) Yeah, I don't love treasury companies. I think companies should exist to produce a good or a service, not simply to manage their own treasury and grow it. You know, if you want to own a company whose raison d'etre is investing in companies, then go own Berkshire Hathaway, right? That's what they do. If you want to invest in micro strategy, they are a a software company, right? They make dashboard type software. You know, they're supposed to be a software company. And so I understand the argument that a company has a fiduciary relationship to its shareholders. And so if it can make more money investing in Bitcoin than selling the widgets that it was originally designed to do, then it should go pivot and invest in Bitcoin. I get that, but I don't. entirely agree. And this idea of the financialization of the economy, in the dictionary sense of the word, people think that that means that the financial services sectors become more more prominent in an economy and the more traditional sectors, know, manufacturing, whatever sector you want to look at, farming, ag, you know, sort of recede in importance in the overall economy and the makeup of it. And that is one way to define financialization. But I come at it a little bit more from David Stockman's perspective. He wrote the book The Great Deformation, which I still think is the single best description of what really happened. in the 08 crisis and how the contagion on Wall Street would never have reached Main Street, why we didn't need to bail out AIG or countrywide through B of A or all kinds of things. We should have let investors and a lot of management. Jeff (01:12:04.139) a lot of fat cap management should have paid for their own bad decisions, but we didn't allow that to happen. It was enormous crime against the American people. And so I really recommend that book, by the way, David Stockman's Great Deformation. he talks about the Fed funds rate, the overnight borrowing rate between commercial banks and Fed member banks as being the single most important price in the economy. And so many things flow from that, that when you tamper with that politically or bureaucratically with the Fed, that creates all kinds of problems. So I would argue that financialization goes farther than that. I would define it as when businesses change not only what they do, like micro strategy pivots to investing in Bitcoin rather than creating software, but also it distorts other aspects of their business. It distorts their capital structure, which is the mix of debt and equity they use to fund the capital of the company. And so when there's all kinds of ways that companies respond to government and regulatory incentives, right, when when interest rates are low, it's easier and better to borrow money. than to sell additional equity and dilute your shareholders, right? Hey, credit's cheap, let's go borrow. Plus, dividends, which we talked about earlier, dividends are not deductible to company, but interest payments are. So there's a tax incentive that distorts the capital structure of companies. There are all kinds of fiscal and monetary policy elements that make companies react and respond in different ways than they otherwise would. So I do think that When companies decide that they're just going to hold Bitcoin as their raison d'etre, I don't want to ban that. It's just not what I want. It's just financial engineering. Jeff (01:14:18.189) in responding to bad incentives. And it may make sense in a dollars and cents perspective, although right now, sailors hurting. It made a lot of sense up until a couple months ago for micro strategy on paper. But I just think that capital markets should be allocating money to its best and highest uses. Capital markets should be serving us as humanity, serving the market. serving the U.S. economy by punishing bad companies and bad management because their share price goes down and eventually nobody wants it they go bankrupt and rewarding good companies with more capital headed their way or a higher share price as they become more productive or more profitable. And that's what capital markets are supposed to do. They're not supposed to be casino. They're supposed to have a noble function. And I just don't think that having the micro strategies of the world just put, know, not produce a good or service for society, but only produce a, you know, a stock return for the shareholders that presumably rises faster than the Bitcoin price, because you could own Bitcoin directly, right? If you wanted to own it, if you wanted that exposure. The reason you own micro strategy stock in Bitcoin treasury is because you think it'll rise faster than Bitcoin. I just, I hate to see brilliant people spending their time on financial products as opposed to spending their time creating goods and services more productively that make all of us wealthier, not just their own shareholders. Michael Tanguma (01:16:06.859) Yeah, it's really well said. I'm not sure if you knew where our stance was, but we're pretty directionally in line with that. would say, to summarize, it's very inorganic construct of something like an MSDR. I'd go as far as to as to our friend, SAFE, the acknowledgement or the creation of micro strategy is the most fiat thing that could exist, because it's the ultimate angle of. You know leveraging credit leveraging financialization to your point. It's presumably Promising a higher return when theoretically you have execution risk It should trade at a discount to whatever it's holding based on management and you could just buy that and other forms. I think to your main point, why we've talked a lot about this, is that essence of it's a missile allocation of human capital, right? So whether it's the people that have spun off to do this again, the capital that's gone there versus just holding the spot and reducing that counterparty risk, it doesn't make much sense. And it ultimately will end up with people. being very hurt, TBD on how long it takes. Because there's also other inorganic functions around the centralization of it, of what happens if the asset's lost. There's other things that are second and third order outside of just the nature of a construct of a holding company that should theoretically rise in purchasing power where you have no claims on the underlying. Jeff (01:17:29.377) Yeah, and I know sailor is a mercurial figure. He's kind of beloved and disliked in equal measure and. I'm sure he's a brilliant guy. I hope it works. But I'm just not sure that that's what guys like him ought to be doing as opposed to saving us from cancer or something like that. But he would argue he's saving us from the financial system or the dollar system, I suppose. Jackson Mikalic (01:18:00.778) Well, Jeff, really appreciate the time. It was a pleasure getting to know you better. If anyone would like to get in touch with you or learn more about what you're currently working on, where should we send them? Jeff (01:18:10.777) Just follow me on Twitter at Jeff Deist, all one word. Feel free to DM me if you want, need anything. Jackson Mikalic (01:18:19.476) Thank you, Jeff. Well, have a Merry Christmas, enjoy the holidays, and thanks for spending time with us. Michael Tanguma (01:18:19.533) Appreciate it, Jeff. Thanks for coming on. Brian Cubellis (01:18:20.518) Awesome. Thanks, Jeff. Jeff (01:18:22.509) Yes, same to you guys, I enjoyed this. Brian Cubellis (01:18:26.556) Awesome. Michael Tanguma (01:18:26.794) Thanks.