Latest / TFTC: A Bitcoin Podcast / #766: Gold and Bitcoin Are Your Survival Kit with Porter Stansberry

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#766: Gold and Bitcoin Are Your Survival Kit with Porter Stansberry · TFTC: A Bitcoin Podcast

• 0:00
  You've had a dynamic where money has become freer than free.
• 0:10
  We talk about a Fed just gone nuts.
• 0:13
  All the central banks going nuts.
• 0:16
  So it's all acting like safe haven.
• 0:18
  I believe that in a world where central bankers are tripping over themselves to devalue their currency, Bitcoin wins.
• 0:25
  In the world of fiat currencies, Bitcoin is the victor.
• 0:28
  I mean, that's part of the bull case for Bitcoin.
• 0:31
  If you're not paying attention, you probably should be.
• 0:36
  We're Stansberry. Welcome back to the show.
• 0:38
  Hey, good to see you again, Marty.
• 0:40
  Good to see you again.
• 0:40
  I had a whole slew of questions I was going to ask you to follow up last year and jump into your book, 2029, The End of America.
• 0:51
  And then I was sitting here looking at our Twitter account, and I saw a tweet you sent out yesterday about the fact that we're not actually celebrating our 250th anniversary as a country.
• 1:01
  We're going to be celebrating our 165th anniversary because the country changed during the Civil War.
• 1:07
  I think maybe starting there is a great spot.
• 1:10
  Sure.
• 1:12
  Yeah, I'd argue that what we're celebrating is the 165th anniversary of the end of our republic.
• 1:19
  Unfortunately, the government that our founders created didn't survive 100 years.
• 1:27
  The invasion of the South by the North in 1861 started a whole different country.
• 1:35
  The South was conquered.
• 1:36
  90% of its wealth was destroyed.
• 1:39
  And the entire structure of our government, the federalism that really defined how the
• 1:45
  government was kept in check and how the central government in particular was limited to a very
• 1:51
  specific set of powers was all cast aside through that terrible war, which I still don't think most
• 2:00
  Americans understand how absolutely catastrophic the Civil War was or how completely unnecessary
• 2:05
  it was. If you know anything about economics, you can understand that chattel slavery was not going
• 2:11
  to survive industrialization. It's not possible. And if you look all around the world, within a
• 2:16
  single generation, chattel slavery was eliminated, even in places that had no concept of civil rights
• 2:21
  like Russia and Brazil. So there was no way that slavery was going to continue. And of course,
• 2:27
  the other thing is, most people don't know this, is that the war wasn't actually about slavery.
• 2:30
  It was about the fact that the Southern states believed they had the right to leave the Union
• 2:35
  and the North didn't. So the North conquered them and won. And slavery was eliminated as part of
• 2:42
  that because slavery was at the time driving the South's economy. So it was really a war.
• 2:47
  It was a tactic of the war. It wasn't a political goal at the start of the war at all. But anyways,
• 2:53
  I think that it's really important that Americans understand what was lost in the Civil War in terms
• 2:59
  of federalism, and that Americans used to believe that they were citizens of their states.
• 3:05
  And that concept, I believe, is going to come back, in part because the central government
• 3:12
  has been off the rails for so long, has acquired so many debts, has destroyed our monetary
• 3:17
  system.
• 3:18
  And I think Americans are beginning to realize that the prosperity that we think we enjoy
• 3:26
  is really a house of cards and that the things that matter most to us, like our ability to
• 3:32
  have our liberties and control our communities through voting, has really been destroyed
• 3:41
  by an all-powerful Leviathan central government. And I think there's a lot of Americans that feel
• 3:48
  these things, but they may not really understand all the facts and all the economics behind why.
• 3:53
  And that's part of what my book 2029 is about. And it was certainly about it was certainly what was behind that long ex post I wrote yesterday.
• 3:59
  Yeah, well, it seems like the 1860s set in motion a cascading event of death by a thousand cuts of new acts, new laws, new sort of administrative state actors operating below this or as part of this Leviathan.
• 4:20
  And I certainly feel as a millennial, and I've been talking about this a lot as it pertains to this AI build out.
• 4:29
  I think a lot of people are looking at the T-lease, particularly as it pertains to anthropic and open AI having to have their models tested and approved by the government first and saying this technology is so powerful.
• 4:43
  Like, it's crazy. Like, we need the government to do this. And I'm looking at it like the government should have no no part in this.
• 4:49
  Now, it used to be there was a lot of First Amendment protections for software because
• 4:54
  software is a form of speech.
• 4:57
  And I think that's the proper rule of government is to ensure our freedom to write whatever
• 5:03
  software we want.
• 5:04
  And I think that's part of your right as a human being to create the software that you
• 5:09
  want.
• 5:10
  Now, if your software defrauds people, if it harms people, well, then those are the areas
• 5:15
  where the law exists.
• 5:16
  There's tort law.
• 5:17
  You know, if you if you create something with your property that destroys my property, you know, I'll have a legitimate claim against you.
• 5:26
  But certainly I don't believe in ever if there's a reason for prior restraint of speech.
• 5:31
  And that is what you see the government engaging in with its efforts to control software.
• 5:37
  Yeah. And why 2029?
• 5:39
  I mean, we talked last year, I believe we recorded in February when we talked about tariffs.
• 5:46
  I think it was right before Liberation Day.
• 5:50
  We talked about $10 trillion in debt that needed to be refinanced, elevated long rates, which are still relatively elevated, and the power crunch being driven by AI.
• 6:01
  I think all those themes have progressed over the last 14 months, some better than others, but I don't think they've gone away at all.
• 6:08
  Well, look, those are a bunch of disparate issues, but they do have one thing in common,
• 6:16
  which is a bankrupt central government. And when you study the history of what happens when
• 6:21
  governments go bankrupt, they all do the same things. They monetize the debt, aka they print
• 6:26
  money, they enact tariffs, and they start wars. And the Trump administration has done all of the
• 6:34
  usual playbook. It's sad. I wish that people who were diehard Trump followers and believers in
• 6:43
  Trump would just do an honest assessment of objectively of what he has chosen to use his
• 6:50
  power to do. Did any of the people who are behind the January 6th hoax go to jail? No.
• 6:58
  Now, have we gotten out of foreign wars?
• 7:08
  No, we started another one.
• 7:12
  What happened to Doge?
• 7:13
  Remember how Doge is going to cut a trillion dollars in spending?
• 7:16
  Guess what?
• 7:17
  Deficit is larger under Trump than it was under Biden.
• 7:22
  So I think really the problem with politics is it's the same for every party.
• 7:28
  And that is the only thing you can be sure of is that whatever they promised to do when they were elected, they're going to do the opposite.
• 7:35
  And they're going to consistently do whatever grows the power of the central government, no matter what.
• 7:40
  And they have different ways of going about that.
• 7:42
  You know, the Democrats like to import a bunch of worthless immigrants to vote for them to maintain the power of central government.
• 7:50
  And the Republicans like to engage in incredible amounts of grift and fraud in the defense industries and start wars.
• 8:00
  You know, I'm opposed to both equally.
• 8:02
  And that, of course, leads me no friends online.
• 8:05
  Well, again, going back to the question of why 2029, because I think I've been, I think, very aligned with the sort of view of the world and the federal government that you just laid out there.
• 8:20
  But I was pretty convinced that all this would all this would come to a head much quicker than it actually has.
• 8:27
  And now I'm in my mid 30s and thinking maybe it'll last longer than than I expected.
• 8:35
  And I think that's one of the bigger questions around whether it's the deficit or the ticking time bomb that is the national debt and all these off balance sheet liabilities is like, OK, we understand that these things are a massive shadow over over the American economy, the American way of living.
• 8:56
  But it's hard to tell exactly when push comes to shove that these things will begin to falter.
• 9:01
  Of course. And I don't pretend to have a crystal ball. I quote my old friend Rick Rule, who says I have two balls and neither one of them are crystal.
• 9:13
  The ability of the central government with all of its awesome power to kick the can down the road is virtually unlimited.
• 9:20
  But there are two things that lead me to believe that there will have to be a fourth turning, a real genuine break with the past.
• 9:31
  financially speaking, with our monetary systems and the global financial system as a whole.
• 9:38
  And that's really, it's very, very simple. It's two simple things.
• 9:42
  Number one, over the last seven years, central banks have abandoned treasury bonds. So all around
• 9:49
  the world, central banks are acquiring gold, stockpiling gold instead of treasury bonds for
• 9:55
  use of their reserve assets and their banking systems. That is an enormous sea change. And that
• 10:01
  That is a reversal of a trend that had been ongoing since the end of the Cold War.
• 10:06
  And so this is a profound change that most people don't see in their day-to-day lives.
• 10:11
  But what undergirds the global banking system used to be dollars and is now majority gold.
• 10:21
  And of course, the central government of the United States cannot print gold.
• 10:25
  So that is a really important, huge loss of economic might.
• 10:32
  And I've been predicting that that would happen since 2011 when we printed roughly $5 trillion
• 10:37
  to get out of the global financial crisis.
• 10:39
  So this has been something that I said would happen for a very long time, and now it has
• 10:43
  happened.
• 10:45
  That gives the US Treasury much less financial flexibility because if the Fed were to simply
• 10:53
  resume large scale quantitative easing like it did during COVID, those central banks would
• 11:01
  see the value of their reserves grow relative to the dollar.
• 11:06
  And that would make them progressively more powerful than we are.
• 11:10
  So that is a huge change in gravity globally with our monetary base.
• 11:15
  The second thing that most Americans do not understand is that it is not currently legally
• 11:22
  possible for the government to inflate away its roughly $100 trillion in Social Security
• 11:30
  and Medicare obligations that remain off the books.
• 11:34
  So no, we're not paying interest on those obligations, but those obligations are absolutely
• 11:39
  real and they are coming absolutely to the fore in the next seven years.
• 11:45
  What my book says and what I believe is that by 2029, the reality of those debts will be
• 11:51
  impossible to ignore because they will be such a large and immediate danger to the current budget.
• 12:01
  So currently, the Social Security Administration says that the trust funds will run dry by 2032.
• 12:08
  But that, of course, is embedded in a lot of very rosy scenarios where inflation remains very low,
• 12:15
  employment remains very high, and there are no recessions. If anything changes about that,
• 12:20
  If we see inflation at 4% to 6%, like it is now, or if you see unemployment go back up to just say 10%, which is not catastrophic, but would result in a huge decrease in Social Security Administration income, then those things are going to run out a lot.
• 12:37
  They could run out of money by 2029.
• 12:39
  And people don't understand this, that there is an automatic cut to benefits when those trust funds run dry.
• 12:46
  automatically, the benefits will fall by an estimated 30%. Now, it all depends on what the
• 12:54
  cost of those things are by that time It could be more it could be a little bit less But America is not ready for the political firestorm of an overnight cut the 30 of Social Security benefits
• 13:06
  And so that is all baked in.
• 13:10
  And if you think that there is any kind of political will to either expand Social Security taxes or to cut Social Security benefits, I'm taking the other side of that bet.
• 13:22
  But I don't think that this is something that politically America is going to be able to solve before the clock runs out.
• 13:30
  What happens then?
• 13:32
  So what happens then is that the benefits get cut and there is a tremendous social upheaval in the United States.
• 13:42
  Tremendous.
• 13:44
  Yeah.
• 13:45
  It's funny.
• 13:46
  Again, I'm aging myself as a millennial in my mid-30s.
• 13:50
  I think we talked about this last year too when you're on, but I think it's always important to
• 13:55
  remind people like my generation, we basically convinced ourselves or we've become convinced
• 14:01
  just looking at the numbers like I'm never going to see social security. I never will either. And
• 14:06
  I'm 54 this year. It will not exist in another decade. It's not possible.
• 14:13
  And why is it such a third rail if there's so many of us and maybe we're in the,
• 14:19
  a very small minority of people are actually paying attention and looking at the numbers.
• 14:24
  But it's obviously a Ponzi scheme, quite literally.
• 14:28
  Always was.
• 14:29
  Yeah.
• 14:30
  And it's like, when do we have a conversation, why is it such a political third rail?
• 14:34
  And I think I know the answer is like, people like their jibs.
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  And if you're going to get free stuff, you're going to hate when that free stuff gets taken from you.
• 14:42
  Well, the federal government is very clever when it seizes power.
• 14:44
  So the federal government found a way to get 12% of the national income under its direct control.
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  How did they do that?
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  Well, first of all, they told people, it's your money.
• 14:58
  You're going to pay into the system, but it belongs to you, and you'll get it back when you need it.
• 15:04
  The other way they did it was they said, and we're going to make your employer match your contribution.
• 15:09
  So, Marty, you don't mind if I take 6% of your money as long as I make your employer give another 6% of their money to your account.
• 15:19
  So it was a perfect lie.
• 15:22
  I mean, you know, I've often wondered what's a better lie, the promise of eternal life or Social Security?
• 15:29
  But anytime someone's promising you, you know, your most fervent wish for nothing, it's only going to be a lie.
• 15:39
  And, you know, as you know, there's no ambiguity in the law whatsoever.
• 15:45
  Social Security is simply a general revenue tax.
• 15:47
  There is no account.
• 15:48
  He is not your money.
• 15:50
  That's been adjudicated in court many times.
• 15:52
  It doesn't belong to you.
• 15:53
  It never did.
• 15:54
  And the money has been spent.
• 15:56
  There is no there is no investment.
• 15:59
  There is no account. There is no lockbox. All the money was spent by the federal government and replaced with a paper from the Treasury that says I owe you. But guess what? The Treasury is owned by the government. So it's a complete Ponzi scheme.
• 16:17
  And I don't think most Americans realize that.
• 16:21
  And I also don't think they realize the enormous economic harm of giving the government 12% of our income for the last 75 years or however long spent.
• 16:33
  Sorry, a bit longer than that, 90 years.
• 16:35
  I mean, catastrophic capital allocation.
• 16:39
  Do you know how rich we would all be if our Social Security was simply invested in the S&P 500?
• 16:45
  the average value of people when they retire would be $5 million.
• 16:52
  I mean, but it doesn't matter all the facts you tell people.
• 16:56
  They'll say, oh, that's too risky.
• 16:58
  We have to give it to the government.
• 17:00
  Well, look, it's true.
• 17:01
  If you put the money in the market, the market may fail.
• 17:05
  But if you give the government the money, it will definitely fail.
• 17:09
  Well, I think going back to the first part of the conversation,
• 17:14
  going back to the civil war even before that like the the republic that the founding fathers set up
• 17:21
  and what triggered them to fight against england to take their independence and i think they would
• 17:29
  look at how much were taxed i mean social security just being one of the reasons obviously income
• 17:34
  tax being the big one and it's like what are you guys doing it's just amazing that we put up with
• 17:40
  The idea of withholding is completely a violation of due process clause.
• 17:45
  The government takes your money and then they says, guess how much you owe and maybe we'll give it back.
• 17:51
  That should never happen. These things are all completely insane.
• 17:55
  And I think that after the the fourth turning, after the reckoning of twenty twenty nine,
• 18:02
  I think Americans are going to have a whole different view of what happened in America over the last 90 years.
• 18:08
  I think they're going to look at it as the period of time where communism came to America.
• 18:14
  And they're not even going to believe it.
• 18:15
  They're not going to have anything to do with it going forward.
• 18:19
  You know, in 1930, the federal government was 3% of GDP.
• 18:23
  3% of GDP.
• 18:25
  Today, if you include the healthcare industry, which is so government regulated, it's essentially
• 18:31
  a part of government.
• 18:32
  Government is about 60% of GDP.
• 18:36
  Okay?
• 18:36
  There is just no way we can afford 20 times more government than we could in 1930.
• 18:43
  Nobody is that rich.
• 18:45
  And so there has to be a reckoning and there has to be a full scale reconsideration of what the proper role of government is in society.
• 18:53
  And fortunately, the American founding fathers thought of all this 250 years ago.
• 18:59
  Go read the Federalist Papers.
• 19:00
  It's absolutely brilliant.
• 19:02
  they realized the only way to keep the government in check was to set up competing governments.
• 19:08
  And that was the whole point of having the sovereign states, the whole point of having
• 19:12
  the Senate appointed by the state legislatures, having all of these checks and balances and not
• 19:19
  depending upon either the wisdom or the, you know, either the wisdom or the ethics of legislators,
• 19:24
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  slash Bitcoin. Check it out. So what does this reckoning look like in your mind? Because it seems
• 21:42
  like depending on where you look, vibes are either very low or very high. Obviously the AI
• 21:49
  energy infrastructure build out the the re-industrialization effort that's been put
• 21:56
  underway by the trump administration has a lot of people very excited about the future prospects of
• 22:01
  technological innovation and productivity and efficiency gains in the u.s but then again you
• 22:07
  have that that lingering sort of backdrop of the federal debt and then not only that if you look
• 22:13
  at private credit private equity markets a lot of them look like they're going to be massively
• 22:18
  disrupted by my AI making them obsolete and making the companies that they invested in obsolete.
• 22:27
  And you could see the beginnings of another credit crisis beginning to emerge.
• 22:31
  Of course. So every boom and bust cycle has the same basic dynamics. And that is
• 22:36
  when there has been so much credit created that the resulting gains in productivity can no longer
• 22:42
  support the debt payments, there's a crisis. And you definitely see that in software today.
• 22:48
  Huge amounts of leverage was applied to building software companies.
• 22:53
  And great.
• 22:53
  It was wonderful.
• 22:54
  Now software is so cheap that no one can afford the debt service payment.
• 22:58
  So there's going to be a collapse.
• 23:00
  And I think the best model for this is to look at the railroad buildout after the Civil War.
• 23:05
  Between 1965 and 1865 and 1873, the amount of track miles in the United States doubled.
• 23:14
  So we've been building railroads since the 1820s.
• 23:17
  And in more or less a five-year period, the amount of track miles doubled.
• 23:22
  And it happened because there had been a huge inflation.
• 23:25
  The government had printed money to finance the Civil War.
• 23:28
  And that inflation had run its course through the banking system and led to an enormous increase in lending, all of which went into railroad bonds.
• 23:36
  And the railroad's built out everywhere, including railroads to nowhere.
• 23:39
  And I think that Elon Musk is a brilliant entrepreneur.
• 23:42
  But the idea that we're going to Mars is a quintessential railroad to nowhere idea.
• 23:49
  There is no economy on Mars.
• 23:53
  And so you see these kinds of ideas get funded during periods when credit is very easy, very cheap.
• 24:00
  And if you look at credit spreads, they have been the lowest of all time for about the last, well, since the end of COVID.
• 24:06
  So credit has never been cheaper in our economy ever.
• 24:09
  and it's going to produce excesses.
• 24:12
  And eventually those excesses will not meet their debt service payments.
• 24:15
  And there will be a rush for liquidity.
• 24:18
  What I am saying with the book 2029 is all about is that for the first time since 1971,
• 24:24
  what is considered liquidity will have fundamentally changed.
• 24:29
  People are going to run towards gold and towards Bitcoin,
• 24:32
  and they're not going to run to treasury bonds.
• 24:35
  And that is what will bankrupt our government.
• 24:38
  And that is what will force an entire reordering of the global financial system.
• 24:43
  And lots of people have predicted this before, and it has not happened.
• 24:46
  But we're in the middle of the longest bear market and the bond market ever.
• 24:51
  And that is a result of the other central banks abandoning treasury bonds and going into gold.
• 24:57
  Those trends are going to continue.
• 24:59
  And in 2029, when the government cuts Social Security and talk about a K-shaped economy,
• 25:05
  Think about how many people make money from welfare payments and from Social Security payments.
• 25:11
  All those things dry up, and you're going to see a huge spike in default.
• 25:16
  It'll be the biggest debt default ever in the entire history of economics.
• 25:22
  And people are not going to want the dollar anymore because they're going to just print it.
• 25:26
  And so people are going to rush into things like timber.
• 25:30
  I don't know if you've read the book, but I have a whole chapter on a timber strategy
• 25:34
  that I think is very important for investors to understand.
• 25:36
  They're going to rush into gold.
• 25:37
  They're going to rush into Bitcoin.
• 25:39
  They're going to rush into foreign real estate in particular.
• 25:42
  And it'll be a big reordering.
• 25:45
  And a lot of people who are very, very wealthy today on paper
• 25:47
  will find that they're not nearly as wealthy as they thought.
• 25:51
  No.
• 25:52
  And it's funny that you brought up the railroad boom and bust
• 25:55
  because I fell in love with James J Hill a couple of years ago Oh he the best read as much about him and watched as many documentaries And he was the one who refused the government debt in the build out of the railroads and wound up being one of the most successful railroad titans because he focused on building railroads financially in a financially responsible way
• 26:19
  Can I tell you what else he did?
• 26:21
  He created the largest forest in the United States.
• 26:26
  I didn't realize that.
• 26:27
  So he was next door neighbors with Friedrich Weyerhauser in Minneapolis.
• 26:33
  They lived next door to each other.
• 26:35
  And in 1901, he sold all of the land that he had been granted for building the Northern Railroad.
• 26:43
  Sold it to Weyerhauser, as I believe, I might have my tracks a little bit around here,
• 26:48
  but for around $7 million, which was the largest real estate transaction since the Louisiana Purchase.
• 26:54
  And that forest is now what runs Weyerhaeuser, which is the largest timber products company in the United States.
• 27:02
  About 30% of every single piece of timber that you see in America comes from Weyerhaeuser's forest, which is 11 million acres.
• 27:11
  And that's all because of the capital that was aggregated under James J. Hill, where he took federal government land that was being wasted, and he turned it into a huge forest.
• 27:23
  And this happened maybe two or three years before his death.
• 27:27
  I can't remember exactly when he died.
• 27:29
  But when the papers asked him, why are you doing this?
• 27:31
  Why are you selling this enormous trophy asset?
• 27:34
  And he said, you know, I'm not doing it for me.
• 27:36
  I have all the money I need.
• 27:37
  I'm doing it because we need a steward of this land who can make it valuable.
• 27:41
  This is for my grandchildren.
• 27:42
  And I think that kind of nobility is very much lost from most of the successful entrepreneurs in America today.
• 27:51
  and in part has been lost because of estate taxes.
• 27:54
  It doesn't do you any good to make investments for your grandchildren
• 27:57
  when you're going to have to give half of them to the government when you die.
• 28:01
  So anyways, I love James J. Hill too, and it's a big part of my book
• 28:05
  and a big part of a good way for people to think about a safe place
• 28:10
  to hold their wealth through this monetary reset.
• 28:13
  Yeah, and that's, I mean, if you haven't read up on James J. Hill, go do it.
• 28:17
  Again, going back to estate planning, leaving a legacy, he's an example of patient capital.
• 28:24
  The way he would invest in the farmland around the rails so that we would have tonnage to actually put on the cars to deliver to some other part of the country.
• 28:33
  It was incredibly creative, smart, methodical.
• 28:39
  And bringing this forward to today, we've completely gotten away from that, where it's fast, fast money.
• 28:44
  thinking about how much you can squeeze out between quarterly earnings reports.
• 28:49
  Not everybody.
• 28:51
  I think you could look at, I would look at Jeff Bezos as the equivalent of James J. Hill today.
• 28:56
  You think so?
• 28:57
  Oh, incredible vertical integration, incredible patient capital, incredible foresight,
• 29:02
  building everything for what it'll be worth in 20 years instead of two months.
• 29:06
  I don't think there's a, I mean, you can argue Elon Musk,
• 29:09
  but I don't think there's been a better entrepreneur in American history than
• 29:13
  than business.
• 29:15
  Yeah.
• 29:16
  I can attest to the amount of Amazon packages I get on a weekly basis.
• 29:21
  It's a,
• 29:22
  it's definitely a service we use in the bed household pretty consistently.
• 29:27
  Think about that.
• 29:27
  They're going to be the first company to trillion dollars in revenue.
• 29:30
  Yeah.
• 29:31
  That's insane.
• 29:31
  And then they have the whole cloud hosting side of things,
• 29:35
  which is incredibly high margin for them as well.
• 29:38
  Yeah.
• 29:38
  And they've become a media empire as well.
• 29:40
  Yeah.
• 29:41
  Bring this back to 2029.
• 29:44
  I can see this going one of two directions.
• 29:45
  I'm sure you've noticed the rise of democratic socialists in the United States.
• 29:50
  And it seems like there is going to be a fourth turning in a discussion about the United States moving forward post-2029.
• 30:01
  There's going to be two sides to it, one of which is going to try to pull us even further into the communist tilt.
• 30:08
  and the other side, which I think you and I are on, which is free markets. How do you see that
• 30:12
  playing out? I think there's going to be a civil war. Yeah, I think it'll erupt at some point in
• 30:18
  the early 2030s. And I think that'll be part of the fourth turning. Fourth turnings are always
• 30:24
  the end of a commonly believed falsehood. So the last real big fourth turning was the end of the
• 30:32
  civil war, which led to a war. And what was the falsehood? Well, the falsehood was the chattel
• 30:37
  slavery was economic and it's not. And so that belief had to be completely dispelled and people
• 30:44
  fight over false beliefs all the time. The false belief in America today, the biggest false belief
• 30:51
  that I see is the idea of, they now call euphemistically equity. The idea that we're all the
• 31:00
  same. The idea that, and especially the impact of that through our legal system. You should read
• 31:10
  the Civil Rights Act of 1991. If you read it, I think you'll be shocked because what it says is
• 31:16
  that any law that produces a disparate impact and outcomes is on its face racism and is grounds
• 31:28
  for a lawsuit. So for example, if you are running a city fire department and you have a disparate
• 31:35
  outcome of the basic reading tests that you give to firefighters, and as a result,
• 31:45
  you only hire the people who can read, but that leads to more white people being hired than black
• 31:52
  people, then your fire department is guilty of racism and is subject to civil lawsuits.
• 32:00
  And so cities are going broke because they're trying to hire firefighters who can read.
• 32:06
  That same disparate impact legal theory is one of the reasons why public schools have
• 32:13
  fallen apart.
• 32:15
  If you have a code of conduct that results in more black students being suspended than
• 32:21
  white students, you have to redo your code of conduct. You're basically not allowed to suspend
• 32:26
  black students for violent behavior, even though incidents of black students being violent are
• 32:32
  multiples of white students being violent. Now, Porter, you can't say that that's racist. I'm not
• 32:38
  saying that they're creating violence because they're black. I'm saying as an objective measure,
• 32:44
  black students are more likely to engage in violence in public schools than white students.
• 32:49
  Therefore, a fair and non-biased discipline policy would result in more black students being suspended per capita than white students.
• 32:59
  That's how the law should work.
• 33:00
  It should be colorblind.
• 33:01
  But our society today has been completely turned upside down, where we're forced to engage in tilting the scales to produce equal outcomes.
• 33:12
  And that is going to produce and will produce more and more rage and anger.
• 33:16
  People don't want to see their children be denied opportunities and be denied recognition for their accomplishments so that people who don't deserve that recognition can be awarded.
• 33:30
  And that's going to cause really big social problems.
• 33:34
  Yeah, I mean, they're already starting to bubble up, right?
• 33:36
  Look at the whole DEI craze.
• 33:39
  I forget what publication.
• 33:40
  It might have been the New Yorker even.
• 33:41
  I forget what it was, but they came out with that piece last year.
• 33:46
  I think last fall or last winter, that highlighted the systemic prejudice that was exhibited
• 33:55
  against white males specifically, more specifically in the tech sector.
• 34:01
  I'm sure you saw that woman who took the trash can, the Nix-colored trash can, and dumped
• 34:06
  it out.
• 34:07
  People sleuthed what her job was, and she was an executive of J.P. Morgan for DEI, making
• 34:14
  300 grand a year and should not have been in that spot. But if you go back and you look at,
• 34:19
  you know, carefully done surveys, 30 years ago, there was no systemic racism in the United States.
• 34:26
  Racism is growing. It's growing because if you work in a large organization where you've had a
• 34:31
  whole bunch of people who don't deserve their jobs, who have been hired and or promoted,
• 34:35
  and you have to deal with them, it starts to make you really resent them. Your job gets harder
• 34:41
  because there's more incompetence and more roles in more places.
• 34:46
  And, you know, the idea that you want women in combat roles is insanity.
• 34:57
  And there's just lots of this throughout our society, more than I can describe here.
• 35:02
  But I'll give you one clear example.
• 35:06
  Do you know what the Delta Force is?
• 35:12
  Yes.
• 35:13
  So the Delta Force is the most elite small arms fighting group in the entire world.
• 35:21
  Okay.
• 35:22
  How many black members have ever qualified for Delta Force?
• 35:28
  Not sure.
• 35:30
  That would be zero.
• 35:31
  So if you have impossibly high standards and you have very low wages, there are no qualified black people that want that job.
• 35:44
  That's fine.
• 35:45
  That's absolutely fine.
• 35:47
  I don't think it should matter what color the Delta Force members are.
• 35:50
  I do think it should matter that they have 130 IQ and that they can run 60 miles in a day.
• 35:56
  You know, these people are incredible warriors.
• 36:01
  And I think that's more important than whether there's a woman member or whether there's a black member.
• 36:06
  By the way, I'll be really clear about this.
• 36:07
  I'm not suggesting that a black person couldn't qualify for Delta Force.
• 36:11
  I'm saying that if you're that talented of a black person, there's such better opportunities for you in America.
• 36:17
  You're much more unlikely to want to join.
• 36:19
  And that is OK.
• 36:21
  It's completely normal for society to have distributions like that.
• 36:25
  And I'll tell you one more thing about all this.
• 36:28
  You think, oh, this is not a great myth.
• 36:30
  this is not going to destroy the country? Oh yeah? If you go back and you study what really
• 36:36
  caused the entire mortgage crisis, you're going to discover that the entire problem was DEI and
• 36:44
  mortgage lending. The entire problem was that people who are not creditworthy were deemed
• 36:52
  creditworthy because of equity decisions. And that is what destroyed the entire mortgage market.
• 36:57
  It only takes about 11% of all the mortgages going bad to destroy the entire banking system.
• 37:06
  Look at the percentage points that subprime borrowers ended up making of the total market.
• 37:15
  It was about 11%.
• 37:17
  And who were all the subprime buyers?
• 37:20
  People who could not qualify for a mortgage.
• 37:23
  Should have never been given a mortgage.
• 37:25
  And they were because of specific federal rules designed to increase minority homeownership.
• 37:32
  Man, I got no problem about any person of any color buying a house.
• 37:37
  But as someone who's a part of the banking system, they damn well better be qualified and they damn well better repay the loan.
• 37:44
  And unfortunately, they didn't.
• 37:46
  Hey, an old name for ninja loans.
• 37:48
  No income, no job.
• 37:49
  Yeah.
• 37:49
  So anyways, these these problems can have catastrophic social impacts.
• 37:55
  And we're well on our way to that point.
• 37:59
  Yeah, that's, I mean,
• 38:01
  you have the whole accelerate versus smooth sort of landing,
• 38:07
  but I don't think a smooth landing is possible on a timescale that is short enough to enjoy in your lifetime.
• 38:19
  The question for me is not whether or not this is a bubble.
• 38:23
  The question is how big it can get.
• 38:25
  and I'm not suggesting that I'm Nostradamus.
• 38:31
  I think 2029 is a fair guess,
• 38:34
  but the PE multiples in the market today are not obscene,
• 38:39
  and if you look at, I mean,
• 38:41
  Tokyo stocks went to 90 times earnings.
• 38:45
  The S&P was trading at 50 times earnings in 2000.
• 38:48
  It can definitely get,
• 38:50
  the bubble can get much bigger from here,
• 38:52
  So I'm not suggesting that any of these things will happen tomorrow.
• 38:58
  What I suggesting is that these things always resolve in the same way Eventually the amount of credit becomes so large it cannot be sustained And the result is a giant preference
• 39:10
  for liquidity. And the question is whether or not that liquidity will be treasury bonds or not.
• 39:15
  And I'm saying that it won't be. What's up, Freaks? When you take Bitcoin seriously,
• 39:19
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• 39:22
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• 39:25
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• 39:28
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• 39:37
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• 39:51
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• 40:21
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• 40:27
  going around me. You know why that is? I feel good. I feel taken care of. I feel blessed,
• 40:32
  healthy, happy. And that is because I'm a CrowdHealth member. My family and I have been
• 40:35
  CrowdHealth members for five years now, literally this month. Five years ago, we joined CrowdHealth.
• 40:40
  We've had two babies. We've had multiple health events and we're never going back to health
• 40:44
  insurance. CrowdHealth is crowdfunded healthcare. So you sign up for CrowdHealth, you pay a monthly
• 40:49
  fee. You help out with other people's bills. And it's significantly cheaper than health insurance.
• 40:55
  We were on COBRA. It's a family of three. When I left my last job before I went full-time with
• 41:00
  TFTC, went on the crowd health. Now as a family of five, we pay, I believe, $700 a month. It's
• 41:07
  significantly cheaper. They're going to negotiate prices lower for you. They've consistently
• 41:11
  negotiated healthcare prices as much as 50, 60, 80% in many cases. They help out with babies.
• 41:18
  If you have a pregnancy, you pay the first $3,000 and the crowd covers the rest.
• 41:22
  If you have a regular health event, you pay $500 and the crowd pays the rest.
• 41:27
  Go to joincrowdhealth.com.
• 41:28
  Sign up today.
• 41:29
  Use the code TFTC.
• 41:30
  Opt out of health insurance.
• 41:32
  I'm an insured baby and I love it.
• 41:34
  Use the code TFTC at joincrowdhealth.com.
• 41:36
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• 41:41
  in the community.
• 41:42
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• 41:44
  Now find sovereign health and sovereign healthcare.
• 41:46
  This gets to the point, like preparing for this. You mentioned Bitcoin, gold, timber, a big part of your book. And you can imagine that the AI trade is going to continue to some degree, at least for the foreseeable future. So there could be some irrational exuberance.
• 42:04
  How would you tell somebody who's my age, got a family, a house, a mortgage, right now has sustainable income three years out from 2029?
• 42:16
  Or even if it's not 2029, I think it's safe to say, looking at the off-balance sheet liabilities, that they're going to hit a wall relatively soon, how best to prepare.
• 42:27
  both on the financial side and then socially, because that's, I think, the needle that needs to be threaded,
• 42:33
  or maybe it won't be threaded, maybe it'll be messy, like you said, with the Civil War.
• 42:37
  But on the back end, sort of re-architecting how we interact with the federal government
• 42:42
  and getting back to sort of a federalist republic of independent states.
• 42:49
  Well, let me start with the Civil War idea, because people think that I'm talking about blues and grays
• 42:54
  and lining up and having pitched battles. That's not how most civil wars occur at all.
• 43:01
  I've been around civil wars. I spent some time in Guatemala in the 1980s. Civil wars are mostly
• 43:07
  insurgencies, and they're your neighbors, so you don't know who's on which side. Think about the
• 43:13
  civil war that occurred in Ireland for almost 100 years in the 1900s. That's the kind of civil war
• 43:18
  that I'm expecting. We've had the civil wars in America before. They weren't called them,
• 43:22
  But if you look at the French and Indian War of the 1750s, that was a civil war.
• 43:29
  If you look at the American Revolution, it was a civil war.
• 43:32
  There were loyalists and there were patriots living next door to one another.
• 43:37
  And that's the kind of thing that I think you're going to see again.
• 43:44
  I think there's going to be the people who want and who believe that government should redistribute even more wealth and power.
• 43:53
  And there's going to be people who believe the government should get out of our lives.
• 43:57
  And somehow political parties will emerge.
• 44:00
  Names will emerge.
• 44:01
  Groups will emerge to represent those ideas.
• 44:04
  You're seeing that happen, by the way, already in Europe.
• 44:07
  And it'll happen here, too, for the same reasons.
• 44:10
  And what will spark the violence is that at some point, the system will become overwhelmed so that people can't survive.
• 44:25
  And that's when the violence will emerge.
• 44:27
  Right now, people can't afford to buy a home and have children.
• 44:30
  But by 2029, they won't be able to get enough food to eat or something like that.
• 44:35
  And you'll see a complete change in the nature of our political system as a result.
• 44:40
  And how you prepare for that, I think, is not too difficult.
• 44:47
  You want to make sure that you keep about 25% of your net worth liquid.
• 44:51
  And this is a no one's playbook today.
• 44:53
  But by liquid, I mean gold, gold, streaming stocks, and Bitcoin.
• 45:01
  And then I think that you should have a big part of your wealth and stuff that is very safe and very stable.
• 45:08
  Historically, that's been bonds.
• 45:10
  I don't think that bonds are investable today because our government is just going to prep more money and devalue them.
• 45:16
  So I recommend people become experts in property and casualty insurance.
• 45:20
  And those are companies that own big piles of bonds but are able to actively manage them for duration risk.
• 45:27
  Excuse me.
• 45:29
  And, of course, they have underwriting units on top.
• 45:31
  If you look at Berkshire Hathaway, half of Berkshire's assets have been invested in property and casualty insurance for 50 years.
• 45:38
  So a good way of safely making a lot of money.
• 45:43
  And then I also believe that people should be invested in stocks.
• 45:46
  And I get a lot of grief for this because people are like,
• 45:48
  what, you're saying there's a crisis.
• 45:50
  Yeah, but I'm saying there's going to be a crisis,
• 45:51
  but people are going to still buy Hershey bars.
• 45:53
  They're still going to smoke, fill up more cigarettes.
• 45:56
  They're still going to drink Coca-Cola.
• 45:58
  And if you know how to analyze businesses
• 46:01
  and you're able to buy them at a fair price,
• 46:04
  Comet Stock has long been a great asset protection scheme.
• 46:07
  There were a lot of companies that never cut their dividends during the Great Depression.
• 46:11
  And there will be companies that don't cut their dividends during what happens in the
• 46:15
  2029 financial reset.
• 46:17
  So those are the buckets that I think are most important.
• 46:22
  So it's stocks via very conservative, very high quality businesses.
• 46:27
  It's bonds via property and casualty insurance.
• 46:31
  And it's gold and Bitcoin for liquidity.
• 46:34
  And if you're even more conservative, you can add a fourth bucket, which is cash.
• 46:41
  But I'm very, very unwilling to own the U.S. dollar.
• 46:50
  I just don't think that it is a sound store of value.
• 46:56
  So I try my hardest to use American Express for 30-day credit, and I try to hold no dollars.
• 47:04
  I say online all the time, if you use their currency, you'll be their slave.
• 47:09
  I believe that's true.
• 47:11
  Well, I'm in a very similar boat there.
• 47:15
  Somebody who has most of my liquid net worth in Bitcoin has for a while.
• 47:22
  It has worked out well for me.
• 47:24
  Not financial advice, but I think I completely agree.
• 47:27
  You don't want to be a slave to their monetary system.
• 47:29
  It's a great way to opt out.
• 47:31
  But on that note, we're talking about individuals.
• 47:34
  We've run some surveys on our audience.
• 47:36
  We have a lot of business owners in our audience as well.
• 47:40
  How would you advise those running businesses that are cash flowing at a certain level to manage their risk, particularly on the debt side?
• 47:51
  Well, I think that the more debt that you can get into with fixed long-term rates, the more debt you should hold.
• 47:57
  the very
• 47:59
  the only wise thing to do
• 48:01
  in the face of a monetary
• 48:03
  dissolution is borrow as much
• 48:06
  as you can before it dissolves
• 48:07
  I'm actually buying a house
• 48:12
  right now at Winter Park, my family is moving
• 48:14
  from New York City to Winter Park, Florida
• 48:15
  and
• 48:16
  I don't need to take a mortgage financially
• 48:20
  but I'm going to take one because I want
• 48:22
  a 15 year fixed rate
• 48:24
  bet that the value of the dollar declines
• 48:26
  yeah
• 48:28
  has that moved to Florida being driven by
• 48:30
  some communistic tendencies in New York City
• 48:32
  no it's just really a change
• 48:35
  of life for us
• 48:36
  my wife was working as a model
• 48:39
  in Manhattan so we really had to have an apartment
• 48:40
  here and we've just
• 48:43
  had a baby and her modeling career is
• 48:45
  on hold for an indefinite
• 48:47
  period of time so we don't have to be here
• 48:48
  and we never particularly liked the city
• 48:51
  or the people who live here so
• 48:52
  we're grateful to be leaving
• 48:54
  yeah
• 48:56
  Yeah, it's crazy times.
• 48:59
  Do you think we're in like,
• 49:02
  like reading the tea leaves now,
• 49:03
  do you think we're in like a lull period
• 49:05
  where people are hot on this AI trade
• 49:08
  and missing the forest for the trees
• 49:10
  of this ticking time bomb behind the scenes?
• 49:12
  Man, I hesitate to say anything about this
• 49:14
  in terms of short-term timing,
• 49:15
  but I really do think the bloom is off of the AI rose.
• 49:19
  What I've seen is the people who are paying for AI,
• 49:22
  their stock prices are now declining.
• 49:24
  And that means it's over.
• 49:26
  because the only way that they can fund these enormous build-outs is if their stock prices stay high.
• 49:31
  And so I think that the AI trade is in its last legs.
• 49:39
  I don't know what the next – I wish I did, of course.
• 49:42
  I don't know what the next hot trade is going to be, but it'll probably be whoever best figures out how to monetize the compute power of AI.
• 49:53
  So not the people who are building it, not the component makers, but the people who actually build the applications that make it work.
• 50:01
  A great example of that would be, I saw the other day, there's a new self-driving business where they just basically strap some equipment onto existing vehicles and it uses AI to do all the self-driving.
• 50:15
  I think that thing could make a ton of money.
• 50:18
  So I think the next big leg up will be physical AI, robotics, self-driving cars.
• 50:26
  I can imagine whole kitchens that operate with AI robotically, AI restaurants.
• 50:33
  I think that the application of AI is going to be the next big trade, not the build-out of AI and not the components of AI.
• 50:41
  Yeah.
• 50:41
  having been using any on the business operation side here at tftc there's definitely
• 50:49
  value if you know how to apply it correctly i think that's uh that's what everybody's trying
• 50:54
  to figure out right now and it'll be interesting to see how that manifests in companies new services
• 50:59
  that come to market do you view this as the next industrial revolution oh absolutely for sure you
• 51:07
  think about it who made all the money on the internet it wasn't the people who built the pipes
• 51:11
  It wasn't the people who built the Erbium dope lasers.
• 51:16
  It wasn't Corning.
• 51:17
  It wasn't the components makers.
• 51:19
  It was the people who built the applications that changed the world.
• 51:23
  It was Facebook.
• 51:24
  It was Google.
• 51:25
  It was Amazon.
• 51:27
  It was Netflix.
• 51:29
  And the same will be true with AI.
• 51:31
  The big winners will be the people who build the applications that capture huge percentages of consumer spend.
• 51:37
  Yeah.
• 51:37
  Well, this has been an awesome catch up.
• 51:41
  I know we got started late.
• 51:43
  I want to be respectful of your time.
• 51:45
  We're coming up on an hour.
• 51:47
  Anything we didn't touch on that you think we should?
• 51:50
  No, I just let everybody that I have a book out there.
• 51:53
  It's it's a whopping $10.
• 51:56
  It's it's called 2029 The Ed of America.
• 51:59
  It's an update to a book I originally wrote in 2011.
• 52:03
  And it really talks about the under
• 52:04
  lying economic and monetary trends that are driving the world that we see, especially the
• 52:11
  progressive bubbles and the big bear market that's ongoing in the U.S. bond market.
• 52:15
  I hope you'll take a look at it. I've had like 300 reviews, all five-star, and I think it's an
• 52:23
  interesting potential perspective on what happens next. I'm not pretending to be Nostradamus, but
• 52:30
  But whether these things play out exactly as I suggest or whether the future changes, which it will, I think it's still really good to look at these ideas.
• 52:39
  And there's a lot also just good finance in there.
• 52:42
  The timber strategy is valuable.
• 52:43
  The honeycomb strategy is valuable.
• 52:45
  The permanent portfolio that I learned from Harry Brown is very valuable.
• 52:49
  So there's a lot of good content in there.
• 52:50
  And I've gotten great reviews.
• 52:51
  So I hope you'll check it out.
• 52:52
  Check it out.
• 52:53
  in the end of America.
• 52:54
  It might not be the worst thing
• 52:56
  if America in its current state
• 52:57
  got away from the founding
• 53:00
  father's vision of what this should be.
• 53:02
  Maybe it a rebirth in a way Very good Thanks for having me Marty All right Porter Peace and love freaks Thank you for listening to this episode of TFTC If you made it this far I imagine you
• 53:13
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• 53:19
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• 53:24
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• 53:31
  podcasting platforms that goes a long way last but not least if you want to get these episodes
• 53:36
  a day early and ad free make sure you download the fountain podcasting app and go to fountain.fm
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  you incredible value so please consider subscribing via fountain as well thank you for your time and
• 53:58
  until next time
• 54:01
  Thank you.