Latest / Simply Bitcoin / Greg Foss & James Lavish | Simply Bitcoin IRL

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Greg Foss & James Lavish | Simply Bitcoin IRL · Simply Bitcoin

0:06
Hello everybody. Welcome to another episode of
0:08
Simply Bitcoin IRL today, we have two very special guests, I
0:12
consider both of them, the macro, heavyweights on Twitter,
0:16
we have Greg Foss and James lavish, but before I bring them
0:19
on stage, I want to give a shout-out to the awesome.
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promo code simply anyways, no more delay.
0:46
I want to bring up James lavish and Greg Faust.
0:48
How are you? How are you gentlemen?
0:49
Doing you doing, man? Thanks for having to see you
0:51
guys. Yeah, and percent happy to have
0:54
you guys on the show. Well, we were talking backstage
0:57
and I had some questions prepared, but I want to jump
0:59
straight into that because I thought it was fascinating.
1:02
Thank you Opti for making some notes.
1:04
So James you said, About as you up I saw a post earlier and and
1:10
I'd like to get the source right so I don't mess with you guys
1:13
but you know it was something about JP Morgan's having a
1:18
larger short position in in gold and gold derivatives then their
1:24
whole deposit base which is a little bit alarming for me.
1:29
And I was asking if Greg had heard it and and you know what
1:33
he thought about that because it's well let's just do some
1:36
Math. Let's just, yeah, I mean, so
1:37
what do you think? That jpmorgan's deposit basis to
1:40
begin with. I mean, they're a trillion
1:41
dollar asset Banks. So, let's just say they got,
1:45
let's just say they got just to make the math easy.
1:47
A trillion dollars in deposits, which I don't think they have.
1:50
I mean, they might have half of that.
1:52
So A half a billion dollars, sorry a half a trillion dollar
1:55
five hundred billion dollar, exposure on 900.
2:00
Sorry on nine trillion, let's just say so that's a big short
2:04
that's 10% of the market. It.
2:08
I mean it would make something that that's what that's what
2:11
blew them up, please. They have been Cowboys in the
2:15
gold Square for the longest time if I remember correctly.
2:20
You know they basically developed the paper gold market.
2:25
So you know James when you manage institutions like that,
2:30
there's always a rogue Trader that's able to hide stuff.
2:33
You remember the London whale episode that It was a jeep.
2:36
That was a JPMorgan guy that had just gone and was able to fool
2:42
the risk management system to convince people that we, he was
2:45
within his bar limits and everything.
2:47
And that's the problem. When you have a traitor that's
2:49
making, you know, probably seven to ten million dollars a year
2:54
and you have the guy that's reporting on the risk of his
2:57
book. That makes there's no way that
3:00
kid makes more than half a million if not, probably even a
3:03
quarter of a million dollars a year, They don't listen to the
3:06
guy that makes a quarter of a million, if the guy that's
3:08
making 10 million a year, says trust me, everything's marked
3:11
appropriately and that's where always the problem is right?
3:15
Yeah, exactly 100%. So it was Reuters that was I
3:19
just saw that game was the one that was reporting it so it's
3:22
not just out of left field but yeah.
3:26
And you know, one of the things our Greg actually, you know, I
3:29
get this question a lot and maybe you could walk through
3:32
this because I think it would be interesting for the listener.
3:36
The derivatives Market, you know it's very difficult for people
3:39
to understand what that is and how you know, most derivatives
3:44
are offset internally like that. That's so it's hard to say that
3:49
like look if if Deutsche Bank has half a trillion dollars of
3:53
or let's say, let's say a hundred billion dollars of
3:56
derivatives explained they have six, just they have 60 trillion.
3:59
So let's start with that but that's over that okay.
4:02
Yeah, Deutsche Bank. Of course 6.
4:03
Yeah. So let's let's Start with that.
4:06
Most of that is, is offset internally know.
4:09
So that's interesting that you say that I'll take issue with
4:12
that. I mean, it's internally.
4:16
I think that next perfectly out internally, it's when they can
4:20
offset with a counterparty you still have to.
4:24
Well, let's be clear whether it offsets internally with a
4:27
counterparty who fails or if it offsets externally with a
4:31
counterparty who fails you're still on the hook, right?
4:35
In this is my point about JP Morgan, the gold derivative if
4:39
they're short, those derivatives?
4:40
That's a, that's a position on their book, right?
4:43
And so that's not offset, but when people hear derivatives, a
4:46
lot of that is offset. So this is this, this is
4:49
separate, that's why it's so totally separate.
4:51
And this is why we have to be careful.
4:53
Everything is fine and it's derivative is booked until you
4:56
lose your counterparty, and then you're naked, okay?
5:00
Because you know, you're reporting to your risk manager.
5:02
Hey, I bought this from lavish. I got protection from lavish and
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your guys. Is like house lavish doing and
5:07
you're like, well, he just filed and you're like, dude, you don't
5:10
have protection anymore, go out and replace that position.
5:13
And so, which is what happened when Lehman was going down.
5:16
There were reliably position, guys, guys, I had a position
5:20
where I had bought protection on Lehman and I think I had bought
5:23
it from bear Stearns or someone else who I'm like, holy crap now
5:27
I have to go in to replace my protection on Lehman from bear
5:31
Stearns because I don't think bear Stearns is going to be able
5:33
to honor my my insurance. Track on Lehman, you know what I
5:37
mean? So, that s how the yeah, so
5:39
first for the listeners for, you know, who don't understand is
5:42
like, look at derivative is just a contract.
5:46
It's literally just a contract between two parties, so there
5:49
the counterparties, and if one of them fails on that on that
5:54
contract, then that contract is literally.
5:57
It's just worth noting you're naked.
5:58
One of the other side, but then the one that you're hedged
6:01
against. So let's say, you think you're
6:02
short gold or know you've met it out?
6:05
Out your position where you have sold gold to somebody and bought
6:09
gold from someone else. And all of a sudden, the guy
6:11
that you bought gold from can't deliver it.
6:14
And now you're short it and you're like, damn it.
6:16
I need to go out and buy this thing and all of a sudden it's
6:19
running in my face, right? Exactly.
6:21
And so, here's the point, is that the look, the majority of
6:24
people who are doing swap trades, derivatives, so many of
6:28
them are doing them to hedge out risk, right?
6:31
So, they've got a risk that they don't want whether it's currency
6:33
risk, interest rate, risk, something they I want that risk
6:36
so they use the derivative to hedge that out and so what Greg
6:40
just said is like, that's exactly right?
6:42
So you've got, you've got a Trader who somehow short gold
6:45
because he's, you know, short, a gold miner or something.
6:48
But he just doesn't like the minor, but he doesn't care.
6:49
He doesn't want to be short, gold.
6:50
He just wants to isolate that one thing.
6:52
So he has to go by a derivative to offset that, right?
6:56
So then he's long gold. Well, what if his counterpart?
6:58
No, tree neutral gold? No, I mean, He fails.
7:06
It's exactly what Gregg just said.
7:07
Now, he's short gold again. So it's that's the stuff that
7:11
you have to take it that next step and but just for your
7:14
listeners, Nico to understand. We went right into it.
7:17
It's sort of fun. We jumped right into it but it's
7:19
sort of fun. But here's the there's a great
7:22
expression. So the listeners need to
7:23
understand this. There is no perfect hedge.
7:26
The only perfect hedge is a sale.
7:28
So if you're long something and you want the perfect hedge, sell
7:31
that fucking thing. Don't try and hedge it and wedge
7:34
it with something else. As it's gonna blow up, okay?
7:37
So the best hedge is a sale. If you're long, or if you're
7:41
short, something the best hedge is a by unit that position.
7:44
Now it's done t plus to settle, bang bang you're done.
7:48
But here's what always happens. You either use Futures where
7:50
there's, you know, contango risk or you use all sorts of stuff
7:55
and you convince your guy that you're perfectly hedged but
8:00
you're not, you're hedged and wedged okay?
8:02
Because either the duration doesn't match up so this is
8:04
interest rate stuff. If okay, and you can say, I'm
8:07
short, this many contracts on long, this many contracts, but
8:10
you have basis risk. All of this is to say when your
8:14
counterparty falls down. All that beautiful hedging.
8:17
That works on paper. It doesn't work.
8:20
Okay, you're naked. Yeah.
8:22
Because now you've hit a Six Sigma then your yeah so yeah.
8:28
So here's that one, let's just keep going Nico, one more thing
8:31
here, the interesting thing because this is going to circle
8:33
around to Banks. As a Trader, which James and I
8:38
spent our life being, we would have to mark our book to Market
8:42
at the end of every single day. The funny thing about a bank is
8:46
they don't have to mark to Market.
8:48
They just put it on and if they want to hold this thing until
8:51
maturity, they don't even have to take, Mark to Market losses.
8:55
What a goofy fucking system? That is right.
8:58
Where, you know, you can be so far off site, imagine going to
9:02
your boss James and you're like, hey boss, I'm having a really
9:05
bad year trading. Let's Just assume that my book
9:09
is held to maturity and you're going to award me.
9:11
My bonus this year, not based on how good I trade based on the
9:15
fact that I'm sorta, I'm a pretty spry own treasury.
9:19
Yeah, this is why Banking and bank accounting is so goofy and
9:27
people don't understand it and you get some Knuckleheads like
9:30
Kramer saying well these guys are really profitable.
9:33
Jim. They're only profitable because
9:35
they don't Mark there. Welcome Market.
9:37
You stupid, fuck. Okay.
9:39
Like don't you understand you're supposed to Mark things to
9:42
Market anyway, and now, and now with the bank bank term funding
9:47
program that now they have them literally Mark to par.
9:51
Yeah. For collateral.
9:52
Yeah, at the Fed. So now for Quality as far as I'm
9:56
concerned, that's called QE James but we can argue over
9:58
there. Now, I mean, like I wrote I
10:00
wrote about this weekend, it's it really is.
10:03
And yeah, and for math for people just simple math, right?
10:06
Right? If you've got it, if you got a
10:08
treasury it's down, you know, 30 percent, right?
10:12
So let's say you own it, your bank, you want to treasure each
10:14
down 30% and and you want to go borrow against that.
10:18
So now that's about, that's about, you can borrow on $700
10:22
out of a thousand dollars. So if we can, you know, right?
10:24
So you've got seven hundred million dollars out of 100
10:27
million dollar portfolio. You can borrow against, right?
10:29
So you go to borrow against that, right?
10:33
And if it's if you're, if you're doing it in the Discount window
10:37
which you and I have talked about, it's super embarrassing,
10:40
it's a bad stigma but let's say you just go do that.
10:42
Well, you're going to take a five percent haircut for that,
10:45
right? So now you can only borrow 650
10:48
million dollars out of that, you know, 100 million out of that
10:52
billion. Yeah, so now your now you can
10:56
borrow 650 million well or 665 is with the actual numbers.
11:00
Oh, this is. Let's just put it perfectly and
11:03
then now with the If with the lending program you can borrow
11:10
all billion dollars worth. Yeah.
11:12
Let's 335 million dollars and Godin going to your like this
11:15
isn't even 11th grade math. This is like fourth grade math,
11:19
335 / 655, that's 50%. Yeah.
11:23
You percent more money that's going calling.
11:25
It Haley. James, I'm afraid.
11:26
I'm probably, that's why I'm not smart to, uh, bring back Nico.
11:31
Everyone's calling bring back knee.
11:35
No, I'm gonna let it go. Let It Go.
11:37
I love you guys are doing my job for me, which is fabulous.
11:40
It's great. No.
11:42
But just, you know, this is what SP live.
11:44
I mean, sbir l is all about just flow conversation.
11:48
None of this is scripted totally off the cuff.
11:50
So guys, could you explain in layman's terms?
11:53
You guys know you've been on the show before, just for everyone
11:56
who's watching right there, seeing Janet Yellen call for a
12:00
closed-door meeting. You know, we were seeing
12:03
Rumblings with Deutsche Bank could potentially be in trouble
12:05
over the weekend. We saw what happened with
12:07
Credit. Suisse Chi acquired by UBS, what
12:10
is going on with the banking system?
12:12
And while all of this is going on, right, they continue to
12:15
raise interest rates. So what's going on what should
12:18
people be watching out for? Yeah, well I mean to put it
12:22
super simply what has happened is when a bank I'm going to make
12:27
it super simple for everybody. This is not exactly the way that
12:30
the loans work, but let's we're going to, you know, make it this
12:33
way for sequencing. So you can understand it.
12:36
First deposit, their money at the bank, the bank turns around,
12:39
put some of that into their, into their own reserves, okay?
12:43
And then they, they loan out, the majority of it to other
12:47
customers, right? So they're left with just a
12:50
fraction of what, what was deposit in the bank?
12:53
This is fractional reserves, right?
12:55
So, but in that, what they do with that money is important,
12:59
right? They have to, they have to
13:00
manage their reserves in a way and so what they'll do is
13:04
they'll often go out and buy treasuries but But they have to
13:07
and Gregor get into this. But they have to match that
13:10
duration of their of that deposit base with the
13:14
Investments are making. So, if they, if they have a lot
13:17
of customer deposits that doesn't turn over that rapidly,
13:21
and in huge chunks that you can have a longer duration on your,
13:26
on your Investments. You can get longer, treasuries,
13:29
but if you have large companies, or if you have Venture Capital
13:34
firms, for instance, well, they can take a Chunks at a time and
13:38
you've got to manage that and make sure you have a lot of
13:40
liquidity to have that Capital base, ready for when customers
13:45
redeem their deposits. When they cash out, what
13:48
happened at SV B is they not only they watch the FED which I
13:53
don't know why. Anybody would believe anything.
13:55
The fucking fed says anymore because these guys are just in
13:58
Greg will go off on this but they're imbeciles, I mean these
14:01
people one year ago, December had plotted out there dot Plots
14:07
and said, oh yeah. We expect interest rates to be a
14:09
point 86 percent on average at the end of twenty.
14:12
Twenty two so they were off by 4% 4%.
14:16
Okay? Sign of four percent on a
14:18
30-year treasury is a Monumental loss why?
14:22
Because because over all those years, you have to account for
14:26
that, four percent loss. And so the in the market that
14:30
treasury will trade way down like at that 50 Bond points.
14:34
Okay? To make it clear, it would trade
14:36
On 50 Bond points, it would have lost 50% of its value because of
14:43
its duration, and convexity, right?
14:45
So, going back to the deposits in the reserve, so SVP.
14:48
Had those reserves that were, then they have these long-term
14:52
bets in there, right? These treasuries in there, they
14:55
expected. Well, the feds not going to
14:57
raise rates. Well, once you start raising
14:58
rates they're already losing money, that's it.
15:00
So, if they go to hedge, they've hedged in a loss, right?
15:03
So they have to hedge right away or else your your losing money,
15:07
right? So but they didn't hedge right
15:09
away. And so they had losses and the
15:12
losses got worse and worse. And worse than people started
15:14
hearing that. These, these reserves were way
15:17
down and got worried that. Well, if there's a run on the
15:19
bank, I'm not going to get my money.
15:20
So they what happens when you have that kind of mentality set
15:24
in. Well, you have a run on the bank
15:26
and so they had to go and either sell these treasuries at a loss
15:30
or just say, look, we're we're we have Walk of Shame.
15:33
They had to take the Walk of Shame to The Last Resort.
15:36
It's called Discount window. It's the it's the window that
15:39
the FED sets up to allow for liquidity, spigot for the
15:43
banking system in the event of essentially a run on the banks
15:47
but there was a time Nico where the discount window was the Walk
15:51
of Shame. And I remember I've said this
15:53
with James before when I was at Cornell in the end of the late
15:58
80s and I take a very serious banking class.
16:02
The professor Maureen, O'Hara, I still remember her clearly she
16:06
was an Zuri to the fed. And she told her students.
16:09
She basically said, don't you ever borrow from the discount
16:14
window? Because that means you've done a
16:16
horrible job of managing your risk.
16:19
Well, all of a sudden they lent 150 billion dollars to the disk
16:24
from the discount window, to the various banks that had done a
16:28
horrible job managing their risk.
16:30
So, these are the exposures that you have right now and just to
16:34
go back on what, what James Said, I mean part of it has to
16:39
fall at the feet of the FED. They started off two years ago
16:44
saying, interest rates are going to be lower for longer and then
16:47
they created inflation. So they said, yeah, okay, well,
16:51
now inflation's going to be transitory and then they went 20
16:56
rates are going to be higher for longer, right?
16:58
So, all of this is to say you have the blind leading.
17:02
The blind poor risk management. Interest rate risk.
17:07
My understand listeners very different than credit risk.
17:12
And this is the risk interest rate risk that has largely blown
17:16
up the capital base of the banks.
17:19
And we haven't even got into the credit concerns within the
17:23
banking system. So I don't know.
17:26
We could talk a lot about this. I'll just tell you the Wall
17:29
Street Journal on the weekend. Put out a really good article
17:33
that I found amazing. They said 12 Charts, that will
17:37
explain the precarious nature of the banks and they were 12
17:41
amazing charts. And I said, if I had read this
17:45
15 years ago, it would have caused the entire banking sector
17:49
to be down 10 to 15 percent. And today, people just brushed
17:54
it off, it was like a non-event so either no one reads the Wall
17:57
Street Journal anymore. Or people are just all, don't
18:01
worry, yelling and yelling and Powell are going to rescue us
18:05
which I wouldn't trust that. So just make sure you understand
18:10
where the risks are in the banks and how they're developed and
18:13
there's interest rate risk, there's credit risk but this was
18:16
a great article with 12 charts that Focus.
18:19
There's one Nico focusing on credit risk in commercial real
18:24
estate. So we could talk about all of
18:26
this but all I will say is people, the banking system is
18:30
sick and it's always been sick. It's just that people are wising
18:35
up to To the true realities right now.
18:38
So here's here's something interesting on, you know, where
18:42
we are. Sorry, go ahead and Nico, and
18:43
I'll come back to my point, go who?
18:44
No, I was just going to add to that and I'll let you guys run
18:47
with it, right? Do you think that what's
18:49
happening the insecurity in the banking sector is responsible
18:53
for the current run-up of Bitcoin, right?
18:55
It went from 20K to 28k in a very, very short period of time.
19:00
Well, I think that it's it's isolated how Many people are
19:07
really buying it on that, you know, it look, it's kind of
19:11
straddling between being the, the the leading risk on asset
19:15
and being the Lifeboat, right? So you've got this portion of
19:18
people who are buying it. You know, they're like this.
19:21
I'm getting out of the Fiat system.
19:23
I'm buying Bitcoin. I'm putting my life savings into
19:26
and that is happening. There's no doubt about and you
19:28
could and, you know, I've read some of the newsletters and
19:32
reports on just who is actually, you know, active and What
19:36
wallets are active and these are longtime holders, right?
19:39
These are the hard lers and then you've got the the hedge funds
19:43
who are just ripping it around, you know, and they're expecting
19:46
to use it as that risk asset and these, you know, the people who
19:50
don't understand yet that put it in the same category as as
19:54
aetherium or whatever shit coin that you want to put in there.
19:56
They just don't understand it yet.
19:58
And then you've got, you know, the challenge that the
20:01
regulatory environment is making it difficult for them to really
20:05
understand it perfectly. Lee and and take that, take that
20:09
that risk, you know, that career risk that they're going to put a
20:13
portion of their portfolio into this asset, that hasn't really
20:17
been defined by the regular Regulators yet.
20:20
And so they're those problems are going.
20:21
I think they're going to get solved.
20:22
They're going to get sorted out soon.
20:24
But you know this this should be this should be what happens.
20:29
This, you know, honestly, with everything that's going on.
20:31
Bitcoin should be at 50,000 right now to minimum.
20:34
Like this is just nuts. So But that's my another okay,
20:37
so let's build on that. I'm going to be more adamant
20:40
than James. Is that a lot of the marginal
20:44
buying is because of people who are finally waking up to the
20:47
risks and the banking system that being said, and I truly
20:50
hope that it's a'ight. Well, well, here's the funny
20:52
thing. I'll make sure that we both
20:57
stress that this is what Bitcoin was designed for.
21:00
So don't forget in 2008 2009, the Genesis block basically
21:05
said, The Chancellor's bailing out Banks again, right?
21:08
So, this is the second coming of a bank crisis.
21:12
That is the result of not solving the First Banking crisis
21:15
properly. So, let's understand that
21:17
Satoshi had a vision that he needed to have a Lifeboat.
21:21
And luckily, we do have that Lifeboat, is it all the marginal
21:25
buying doing to that node? Can't possibly be.
21:27
But I'd like to think that a good chunk of it is because
21:29
that's what Bitcoin was designed for and it's performing like it
21:34
should. Now here's the crazy thing.
21:36
King James says, Bitcoin should be at 50,000.
21:40
I'm going to be like I can't believe it's not a 250,000.
21:43
And by the way I'm even going to go on record saying this guy
21:46
balance. She like, or Balaji however, you
21:49
say his name. I didn't even know who he was
21:50
before. But man, I like his style
21:52
because why even though I think it's a low probability that he's
21:57
right? It's not zero people.
21:59
Just please understand what a distribution of possible
22:02
outcomes looks like and he's focusing on a tail risk.
22:06
In this case of tail opportunity, because if the
22:09
system does come down in magnificent fashion, Bitcoin
22:13
will be at a price of greater than 1 million dollars.
22:17
When that's the key, is it going to be a 90 days unlikely, but
22:23
not impossible but let's talk, let's talk through that.
22:25
Here's a problem, here's the possibility possibility, is that
22:29
the treasury market completely locks up and we get Q E
22:33
Infinity, right? I mean like we talked about Out
22:36
the they printed about seven trillion dollars last round.
22:40
They could print in the 20s this round without even blinking to
22:44
have to save this Market. Well how does that happen?
22:47
Well US dollar liquidity is low. There's a need for US dollars,
22:51
right? So you have you have all these
22:54
international buyers, right? So the Sovereign buyers who are
22:58
not buying treasuries on the margin.
23:01
Well, what if they step away from from from one of these
23:04
large auctions or a number of these Auctions and the treasury
23:07
market locks up. We saw what happened the
23:10
two-year today? Did you see that?
23:11
Greg it tailed by 2.7 basis points to Year.
23:15
All right? Yeah.
23:16
To yeah. Okay.
23:17
Okay. So it was an awful auction,
23:19
right? So you know, that there's a
23:22
possibility that something that would be something that breaks
23:26
like that is a credit event. Like, that is something that if
23:29
the treasury market locks up, man.
23:31
We aren't, we have so many problems and, and they will have
23:34
to print until our all All of our eyeballs will bleed.
23:37
And that's, that's, that's not a nonzero event like nonzero
23:42
probability event. Yeah, that's the thing, right?
23:44
And that's why I wish I always like to look at things from an
23:48
expected value, potential outcome and you know, you way
23:54
your foot probabilities on different prices and then you do
23:57
your expected value, you do your expected value calculation?
24:02
That's statistics 101. How to calculate it?
24:05
An expected. Value.
24:07
But I'm very clear with everybody, I'm I have a price
24:11
target for Bitcoin over two million u.s. dollars.
24:15
And should it be there? Yes, it should be there today
24:19
and the fact that it isn't blows my mind because it's so damn
24:23
cheap. So I can't argue with Biology
24:26
saying that in 90 days, it should be in a million.
24:29
This is something that makes it the best asymmetric opportunity
24:33
I've ever seen in my life and that is Is all good because
24:38
asymmetric return opportunities are what Define careers?
24:42
Okay, hold on. Greg, let's I want you to
24:45
collaborate a little bit when you say that are you said, it's
24:49
so damn cheap, two million dollars is obvious to use your
24:53
words, it's just math, right? Could you elaborate about why
24:56
you believe two million dollar Bitcoin is cheap?
24:59
Okay, so well that's my price Target and it's not a limit, but
25:03
it starts with examining what total Global Financial.
25:06
Assets are in the world and how much Bitcoin can capture from
25:10
that total addressable market. So total Financial Assets in the
25:13
world are nine hundred trillion US Dollars, okay?
25:17
That includes all Global debt which is 400 trillion US Dollars
25:21
it includes three hundred trillion dollars of global real
25:24
estate. It includes about 100 trillion
25:26
dollars of global equities and then 100 trillion dollars of
25:30
other assets like Fine. Art, gold Commodities currencies
25:35
at the end. Of the day that's nine hundred
25:38
trillion dollars, right? So 400 + 300 + 100 + 100. + I
25:43
like to think that Bitcoin will capture five percent of that
25:47
addressable Market, what's 500, excuse me, which 5% of nine,
25:52
hundred trillion, that's 45 trillion, u.s. dollars in
25:56
today's dollars, what is 45 trillion US dollars divided by
26:03
21 million Bitcoins? That's over.
26:06
Two million dollars US per Bitcoin in today's dollars which
26:11
is to say as long as it's trading at less than that price.
26:15
I view it as cheap to my Target price.
26:18
Now there's other ways of calculating intrinsic value of
26:21
Bitcoin, including using credit, default swaps and everything.
26:24
All of this goes into a calculation where I just look at
26:28
Bitcoin trading at 25,000 US Dollars and I say thank God.
26:35
It's there. So I can buy some more and I can
26:39
get other people on boarded. Here's the question.
26:43
So what is keeping BTC price down?
26:45
According to Za is Zed logic. Just came across, look, that's
26:50
what makes a market, okay? A market is made by buyers and
26:53
sellers when it was trading at a thousand dollars of Bitcoin.
26:57
When I first got involved. I'm like I know this thing is
27:00
going to 10,000. Did I load up the boat?
27:04
Yeah. A little, but not as much as I
27:06
should have given. Now it's trading at 25,000 and I
27:09
figured it's going to go to 2 million, so manage your risk.
27:13
Don't put a time limit on your investment, I own this thing for
27:18
20 years at a minimum, I'm owning it for my kids and I'm
27:22
not going to sweat the fact that it's trading at a price that I
27:25
think is extremely cheap. Well, it was a lot cheaper than
27:29
that at one point in its time and it did get to 70,000.
27:32
But 70,000 is such a rounding error, right?
27:35
Just look at it and I'm like okay guys, if you're sweating
27:37
over the next five or ten thousand dollar move in Bitcoin,
27:40
you're managing your risk inappropriately.
27:43
You don't know how to manage risk.
27:45
Very simple. Beautiful.
27:46
James, you ever response that I was going to walk through the
27:49
probability? Then people ask about this to.
27:51
So what's the probability? What how do you, how do you get
27:54
to that? Well, Greg saying that, look, if
27:57
his price Target is two million dollars, right?
28:00
And mine is, mine is one as an investment It for institutional
28:06
investors, that's not my end Target.
28:08
That's just the starting point from when institutions adopted
28:12
widely but you know if you're looking at that and you say well
28:17
Greg says a two million dollar Target its trading it let's just
28:20
call it round numbers 25,000 well what is that?
28:24
What's 25,000 divided by 2 million?
28:27
That's like a 1%. It's like when it's just over 1%
28:30
and that's what I'm saying. Nico, the market is telling me
28:33
I'm 99% chance So, I'm wrong. And I'm like, hey, I'm not 100%
28:37
certain, I'm right, but I'll give you dollars for donuts.
28:41
I'm way more confident that I'm greater than 1% chance.
28:45
I'm right. And this is how you manage your.
28:46
Yeah that's it. Oh man.
28:49
All right boys. So since it took makes total
28:52
sense, the audience is loving it.
28:54
Twitter space is picking up the chats going wild.
28:57
Anyways I have a video for both. You both you gentlemen it's
29:02
about Powell trying to explain Lane 2 percent.
29:05
Inflation is about a one and a half minute Clips.
29:08
Let's check it out. I would love to get you guys in
29:10
stocks. Yeah.
29:12
For the general public for those Working Families of people, why
29:15
2%? Why is getting it to 2% so
29:17
important. So that's that has become the
29:20
globally. Agreed essentially, all major
29:23
Central bank's Target 2 percent inflation, one form or another.
29:28
And how does that help my Nevada Families?
29:30
How does have helped people in it?
29:31
I'll tell you how it does and it's, I guess it's obviously
29:35
not. It's not obvious how that is.
29:37
But what 2% inflation to have people believe that inflation.
29:42
To go back to 2 percent really anchors inflation there because,
29:46
you know, the evidence is and and the modern belief is that
29:50
people's expectations about inflation, actually have a real
29:53
an effect on inflation. If you expect inflation to go up
29:57
5%, then it will, you know, if everyone kind of expects that
30:00
because that's what businesses and households will be expecting
30:03
and and it'll kind of happen because they expect it.
30:05
So having a 2% inflation goal where which we had for many
30:09
years. Okay, I might not be a macro guy
30:12
but But what the hell? Did he just say nothing?
30:15
No clue. Yes.
30:16
He said nothing. He said that it's because it's
30:18
what we've always done. But the answer, their answer is,
30:22
which he cannot say. Okay, so what he was trying to
30:25
say was that, well, that's what it's expected.
30:28
And what he, the quiet part was, that's what we can get away
30:32
with. That's what we can get away
30:34
with. If people expect to be 2%.
30:36
So go back to what is it really? Well.
30:39
It's greater than 2%. Give me a fucking break.
30:41
That Was not five, six seven percent this year.
30:45
There's nothing that I'm buying that's only UPS 5%.
30:47
I mean, it's unbelievable. How how they just manipulate
30:53
this number. The CPI number, just endlessly.
30:55
And so why do they do that? Because they need people to
30:58
believe that inflation is low. They don't want people being
31:01
super upset that they're getting this extra tax on them, right?
31:04
And then the question is, why why do they need inflation?
31:08
It's simple. They have that we operate in a
31:11
deficit. It.
31:13
We're perpetually operating a deficit.
31:16
So we need inflation in order to inflate the GDP nominally in
31:21
order to have a higher tax base nominally in order to tax that
31:25
tax base and turn around and pay off some of that debt that's
31:30
maturing with cheaper dollars. So they issue this debt to 5 10
31:36
30 years ago and then they have to pay it off and if they're
31:40
paying it off with dollars that are worth a fraction, what they
31:42
Or when they issued that debt, it's a total scheme.
31:45
Putin is calling us out on it. That's why everybody's talking
31:48
about the bricks. They're sick of it, they're
31:50
absolutely sick of it and it's just not going to end ever.
31:53
But that's the answer that he need that he won't ever.
31:55
He'll never admit to ever and to add on to that Eco.
32:00
It's important to understand that the banking system, which
32:03
is the transfer mechanism of the Fiat Ponzi requires inflation as
32:09
well. So even though technology is
32:11
Jeff Booth, If points out and a lot of people are talking about
32:15
now with chat GPT and whatever should be deflationary, the
32:20
banking system can't handle deflation because of the
32:25
collateral value that secures a lot of the loan.
32:28
So imagine if real estate didn't always go up in price, the
32:31
loan-to-value ratio of the bank's loan versus the value of
32:37
the property at Lens against. If it gets less than If the loan
32:43
is greater than the value of the property, the bank owns it.
32:46
So they need the value of the property to expect to appreciate
32:49
over time with exquisite with inflation.
32:53
So you see the Fine Line there, walking between too much
32:56
inflation, but they can't have negative inflation or deflation
33:00
because that would be the the death knell to the transfer
33:04
mechanism, which is the banking system.
33:06
So very, very huge dichotomy. We're heading in Too, but don't
33:13
worry people don't, don't get caught between inflation and
33:16
deflation all paths lead to Bitcoin in either outcome,
33:21
Bitcoin is the solution. So all I would say there was a
33:25
question flying across. What do I think about real
33:28
estate? I think commercial real estate's
33:30
in big trouble. I don't own commercial real
33:32
estate. I think the question was
33:34
relating to house prices house you, I maintain that a house is
33:39
a good hard asset that if you want to own your Was go ahead.
33:43
You don't have to own a hundred percent Bitcoin.
33:46
If you want to have exposure to residential real estate as a
33:49
homeowner over time, you should do.
33:52
Well, I'm not saying you'll do as well as Bitcoin.
33:55
And in fact, there's no way a house is as portable as Bitcoin
33:58
or is transferable as Bitcoin or is liquid is Bitcoin.
34:01
But as far as I have a hard asset goes own, a house before
34:05
you own, any fixed income, treasuries from the US
34:09
government. You're a knucklehead, if you're
34:12
Ending the Fiat Ponzi and you don't own a hard asset like real
34:16
estate or more importantly Bitcoin.
34:19
So James you mentioned bricks and that was the kind of the the
34:24
to me, right? You're seeing a lot of me or
34:27
Putin and zhi Jing ping a for life, right?
34:31
And they're shaking hands. And they had the full, you know,
34:35
the full State ceremony and I think was a hot mic right?
34:40
Where Putin was caught basically saying, No, we want to end this
34:43
100 year old rain, they're signaling that they're going to
34:47
use Russia specifically going to use the you want to facilitate
34:52
International Trade. So did the u.s. get itself in
34:56
trouble because they weaponize the dollar what's going on over
34:59
there, 100%? I mean, that they the when we
35:02
turn around and cut off Russia and and we seize their assets,
35:08
that that made every single country whose on, you know, in
35:11
the gray area from with the United States question, whether
35:16
or not they want to be holding. Treasuries like, do I want to
35:18
hold something The View s can seize, that's sitting at the New
35:22
York fed, do I won't do. What do I really want to do
35:24
that? Probably not.
35:26
Especially if I'm if I'm a country that's kind of On The
35:29
Fringe if I'm China. Definitely not.
35:31
You know, so this is it, it's a problem that nobody's talking
35:36
about well that nobody had been really talking about except
35:39
bitcoiners over the last year and then suddenly CNN.
35:43
And and Greg made a good point this morning.
35:45
If CNN is talking about it, man, this is, this is on, this is on
35:51
the the the minds of the White House.
35:53
This is not and, you know, and the treasury.
35:56
This this is one of the things they probably talked about this
35:58
weekend, like we need to, we need to shore up the treasury
36:02
because if you have, if you have large buyers internationally
36:08
that are stepping away from the treasury market, you're already.
36:12
Be crowding, out the, the private buyers, the Pension
36:17
funds, the endowments, like their balance sheets are only so
36:20
big in the banks are now. You know, they're in trouble.
36:22
They can't just be buying treasury.
36:23
So it's, it's kind of a perfect storm right now and it is, it is
36:30
alarming, it's alarming. So the question is, does do do
36:36
the other oil providers? The exporters like Saudi Arabia,
36:42
do they Do they join this new currency?
36:45
Its kind of being put together between Brazil, Russia, India,
36:49
China, and South Africa. Do they join and Iran and and
36:54
and Saudi Arabia because if they do man, that is going to be a
36:58
really really powerful. Blow - blow to the US.
37:01
Treasury by Greg, what are your thoughts on it?
37:05
Yeah, no. I like I have nothing to add
37:07
there but let's not overthink, this, this is happening, okay?
37:11
And you need to get, I'll take it one step further.
37:14
I think Putin already is planning to price oil and
37:17
natural gas in Bitcoin because fiat's are all debasing.
37:20
Okay? Whether you have the
37:21
best-looking horse that the glue factory, which is the US dollar
37:25
and the Petro dollar versus other even worse.
37:28
Fiat's they're all debasing. The solution is actually to sell
37:31
oil and natural gas price did Bitcoin.
37:34
So you get this Bitcoin digital energy as payment for your
37:37
natural resource energy, why? Well, because it's like a closed
37:41
loop. Okay, think of a physics, a
37:44
closed system in physics and open systems.
37:47
Don't work, which is to say a leaky hydraulic system that's
37:51
open where you can print more money, that's a leaky open
37:55
system versus a hydraulic system that's closed, where you pay
37:58
digital energy for natural resource energy, that's the
38:03
stuff that Engineer like myself or most some physicists, maybe
38:09
not all of them but certainly Michael sailor, eloquently
38:12
describes this. So this is just an interim step.
38:15
All fiat's are debasing people because all fiat's have the same
38:19
problem of the u.s. dollar. They've borrowed too much money
38:22
they have to print money just interest expense on the debt.
38:26
So the debt is growing organically just because of the
38:29
coupon on the debt. Same in every country in the
38:34
world. Because total Global debt is
38:37
four times as large as Global GDP.
38:40
It's simple math. Okay, go ahead.
38:43
Yeah, yeah. And then, here's another, here's
38:46
another, you know, thought of you were asking earlier Nico
38:49
about the banks in the bank situation in Europe.
38:52
Here's something there were, there were over fifteen trillion
38:56
dollars of - yielding debt. And that's, that's that's
38:59
nominal yield Out in Europe, not even two years ago.
39:04
So, just think through that for a second and all of these banks
39:08
with these rates have risen. So rapidly, how do you think the
39:11
balance sheets of Europe or doing, how do you think the
39:14
Pension funds are doing out there?
39:15
They've got these assets that are that are marked so deeply -
39:19
it's actually pretty scary. I would not want to be in the
39:24
European banking system right now that it's it there's a
39:28
disaster there waiting to happen we just don't know which one It
39:30
is. And when banks in North, America
39:33
are generally levered around 20 to 25 times their equity-based
39:38
Europe is over 30. And sometimes, as high as 40
39:42
times, their Equity based, which is another way of saying.
39:46
If the assets on the bank lose, only two and a half percent,
39:50
they're done. Okay, gone.
39:52
It's over there. Insolvent just like Credit
39:54
Suisse. So this is crazy guys.
39:57
Understand that banks are always Leverage.
40:00
Bird, especially when they bring off, balance sheet assets into
40:04
the equation, which are the derivatives?
40:06
We thought about everything it is so so severe that a couple of
40:12
little cracks here and there and the whole system falls apart.
40:16
Why do you think they were so nervous about csfb or Credit?
40:19
Suisse rather because when Credit Suisse waivers all their
40:23
counterparties like Deutsche Bank and the NP and you know the
40:27
big European Banks they catch. Cold as well.
40:31
And if Deutsche Bank goes down and the credit default swap
40:35
Market was saying, they had some some stresses.
40:38
If Deutsche Bank goes down, there's nobody that's going to
40:41
combine with Deutsche Bank. It has to combine with the
40:43
country of Germany, okay? It's that simple.
40:45
There is no other bank that's going to combine voice your
40:49
bank. So so so so we're you know,
40:53
we're witnessing this. I feel like it's a, it's a, it's
40:55
a catastrophe in slow motion. I find security because I know
41:00
my wealth is increasing. In Bitcoin.
41:01
I'm just well, I'm like the meme, the guy, eating the
41:03
popcorn, watching the fireworks, go off.
41:06
But at the same time, you know, a lot of people were
41:09
anticipating a recession in the first quarter.
41:13
It clearly hasn't happened yet right.
41:15
You know, the FED which I find comical at this point is
41:19
floating the idea of like no, you know, it's going to be a
41:21
soft Landing. So where's this recession?
41:23
Is it is it going to happen in 2023?
41:26
What's going on there? Did you see his?
41:27
His answer during the last Conference.
41:31
When somebody asks, for the soft Landing, he just fumbled around
41:34
and be like, there was just like, this is like, I don't
41:39
think it's totally changed and I bring this up in a different
41:42
way. Do you notice that?
41:43
He doesn't talk about inflation? He in fact, mentioned credit
41:47
risk or credit the word credit over ten times, as often, as he
41:53
mentioned the word inflation, but it'll just show you how the
41:56
focus of the FED is shifted. That's why I think the crisis.
42:00
Yeah. That's why the crisis which will
42:01
lead right. James.
42:02
A credit crisis, which will lead to a recession because when
42:05
richesse wench credit gets choked off Nico.
42:08
Like we're right within a rounding are not even a rounding
42:12
error with a statistical error of being in a recession right
42:18
now and all of a sudden you get hit with a credit crisis.
42:22
I'm well look, I don't even care because all paths lead to
42:25
bitcoin. I just don't care.
42:26
Like, just stop trying to fine-tune this idiot needle.
42:30
It is indifferent as to whether there's a true recession as
42:35
defined by the Bureau of Labor Statistics versus a, everyone
42:43
knows it's a recession, but we're going to redefine the what
42:46
a recession is. And by the way, a recession is
42:48
going to be good for us as soon as it hits, they're going to
42:50
make some reason. It's good for us because it
42:52
doesn't matter. All of this means that the debt
42:55
burden explodes even faster because there's no tax revenue
42:59
to pay. The existing debt burden, which
43:02
means they got a print more money, which means Bitcoin goes
43:05
up in value, relative to a debasing US dollar.
43:10
Hey, you want to start measuring Bitcoin and something it can at
43:13
least keep Pace with Bitcoin oil oil and Bitcoin.
43:18
That is going to be a much better pair to look at than oil
43:23
versus u.s. dollar or oil verse, excuse me, or Bitcoin versus the
43:28
US dollar. Yeah, I agree.
43:29
Totally looking. Something that's an actual
43:32
commodity, you know. And it's right.
43:34
I mean that that it's a great step of simplification.
43:37
So important is that there's there is no path that does not
43:42
lead to debasement every single path leads to the basement.
43:45
Just a question of I saw somebody asked like look, I
43:48
usually feel things are longer Mel was saying this and think
43:51
they then it then I then I expect and but right now, I feel
43:55
nervous. Well, I'll tell you a few
43:57
things, you know, part of me. I feel I I feel more nervous
44:01
about this environment than I ever have like more anxious
44:04
about it and part of me feel so at peace and calm because I own
44:09
Bitcoin so it was like I've got this thing going on.
44:12
Why I may be shell-shocked from my old days and Wall Street and
44:16
the 1998 long-term Capital Management and then 2001 and
44:20
then 2008 now too. And it's like maybe that's part
44:24
of it but there's just no way around it.
44:27
It's pure map. Then there is All going towards
44:32
printing more money and debasing the dollar that's just it has to
44:36
happen. And the question is how rapidly
44:39
and you know just the Balaji win his bet or not and and you know
44:43
because you're free in different the matter what its gonna happen
44:47
to either way, it's a great hunter happens at 90 days when
44:51
we win. Okay guys.
44:52
So just keep the path. Larry Lepard was on a great
44:56
spaces, group James was part of it today and I'll just say Like
45:00
just take it as if this is a marathon, not a Sprint.
45:05
Okay, keep focused on the finish line which is 26 miles in the
45:11
difference in the in the distance 42 kilometers.
45:15
We don't care what happens over the next kilometer or two or you
45:19
know mile-and-a-half we're in this for the next 20 years
45:22
because of the kids. This is the life raft and if you
45:26
have people who are not in Bitcoin yet, you're sort of
45:30
Happy. The price is staying at a
45:32
reasonable purchase price. That doesn't appear excessive
45:36
for the people who still haven't done their homework Nico.
45:39
Not everybody understands. Hey I noticed by the way, Big,
45:43
Sean Harris is in the house. Thanks for joining Sean guys.
45:47
Look up Tom. Yeah, all we can say is this all
45:51
we can say is we're trying to educate people to do the simple
45:56
mathematics and we're not trying to slow the Um, oh look.
46:01
It's not fomo. This is fucking education.
46:05
Okay, if I'm freaking you out because you don't own it, then
46:09
I'm doing the right stuff. If you don't own it and you're
46:12
too stupid to own it, get someone else to manage your
46:15
money, okay? Because this is truth, we're
46:17
talking not fomo, it's based on mathematics, it's not based on
46:22
anything else. It's 100% certain the US dollar
46:26
will be base. 100% certain you very rarely get Hundred percent
46:31
certainty in your life. Well, it's 100 percent certain,
46:34
the US Dollars going to debase plan, accordingly.
46:37
Yeah, so what indicators are you guys looking at, right?
46:41
So, you know, the house is on fire clearly, right?
46:43
You know, we're getting the Rumblings of a potential
46:47
disaster, right? What indicators do you guys have
46:50
your eyes on is there, is there anything specifically that you
46:53
guys are looking at that? You know puts the hairs in the
46:56
back of your neck up? Well I mean like you're watching
46:59
CBS and And Greg's a Greg is treated so many CDs.
47:03
I traded a lot of them but with different purpose than Greg did,
47:07
you know you're watching these things and you're you're you're
47:12
watching for the rate of change of them, you know, not just the
47:17
just not just where the actual prices, but how quickly, how
47:21
rapidly, they're? They're changing?
47:23
How quickly that move index is changing.
47:25
You know, that's the volatility of bonds index.
47:29
You know, you're watching that You're also, you're watching the
47:31
treasuries and the volatility of the interest rates.
47:34
And whether something happens there in the in the auctions or
47:39
the repo Market, but I got news for you Nico that.
47:43
The problem is that I feel that when we get an event, you're not
47:48
going to be able to react, it's going to hit you.
47:49
Like you're the bug on the windshield, like you're not
47:52
going to be able to react, you better be, you know, positioned
47:56
accordingly. Now don't wait to position, you
48:00
know. No.
48:00
And I'm not talking about position yourself to go make,
48:03
you know, a hundred million dollars in just put all and you
48:06
know, one spot. No, that's all I'm saying.
48:07
I'm saying position Yourself by owning some Bitcoin, you know,
48:12
making sure that you don't own a whole lot of long-term
48:16
treasuries that you can't get out of, you know, making sure
48:20
that you do have some cash for. When the bottom drops out, you
48:24
can react like that, you're not having to reposition your
48:27
portfolio or, you know, I'm not talking about holding cash for
48:29
10 years. That's idiotic.
48:31
I'm talking about just like right now being focused on,
48:35
there's going to be some huge opportunities because when
48:38
something hits man, it's going to be painful and then it's a
48:41
gut check. And God, I've lived through
48:44
these, it is not easy to live through that gut check where
48:46
you're like. If you don't feel a little bit
48:49
sick as you press that buy button, then it's not time yet,
48:53
you know? So and let me ask you to me.
48:56
I'm going to pass this to Greg, right?
48:58
So far Bitcoin, I mean, not Really anymore.
49:01
But it was behaving like a risk on asset for a long time if
49:05
this. And by the way, James, I
49:07
completely agree with you, but just for the sake of this
49:09
conversation, if and when this gut check happens, do you think
49:14
Bitcoin is going to perform poorly?
49:16
Is it going to be pulled down with the rest?
49:18
You know, with with, with the rest of the together?
49:21
Yeah, I mean, did you going to get hit with everything else?
49:22
When? Well, they look, when you have a
49:25
market event, a credit event and you have like a true, like a
49:29
dramatic Laughs, and you, and there's a crash.
49:33
There's, there's a saying we have that everything becomes
49:36
goes correlation one it. Get everything goes gets
49:39
correlated to 1. It means that they just sell
49:42
everything. Why does that happen?
49:44
Well, because in managers need to raise money everywhere, they
49:47
just they can't discern with like they're just sell 20% of
49:50
everything. I own 30% of everything I want.
49:52
I need cash, you know, and that's just what happens.
49:55
And so everything gets correlated to one but I do
49:59
believe that assets like bit. A coin that is not going to be.
50:02
I don't believe that that's going to be like something that
50:04
we trade sideways again for another three six nine months
50:07
that is going to be a v recovery type of situation like we saw
50:10
back in March of 2020. That's my that's my guess and
50:14
that's my probability analysis. What do you think Greg more
50:19
optimistic that people will understand it.
50:21
Bitcoins insurance and they will be selling other stuff to buy
50:25
the insurance because that's the only Lifeboat there is that
50:29
works. I'll And I think I think it does
50:32
absolutely does happen but I think that there's this reaction
50:34
Iceman work. Like I'm not gonna argue over it
50:36
because again I'm talking about 20 years here but look you asked
50:39
me what might you ask me? What my my dashboard looks like.
50:43
Okay. So I'm so proud that everybody
50:45
actually understands what a credit default swap is.
50:47
Now three years ago I came on the scene talking about credit
50:51
default swaps on sovereigns and using credit default swaps the
50:54
value Bitcoin and you know I got a little bit of Marty bent was
50:59
amazing. I got a little Bit of positive
51:01
feedback, but it's taken me three years to preach the gospel
51:04
of credit running the world. So yeah.
51:06
So always. Look at credit.
51:07
Default swaps understand it. We're going to move from
51:10
Financial Focus on CDs on financials and kick that up.
51:14
A level to focus on CDs on sovereign debt.
51:17
Because ultimately, it's only the sovereigns that are going to
51:20
that are going to guarantee the financials.
51:22
Okay, I found it interesting today.
51:26
Whether it's true or not, that CNBC feed has stopped providing
51:30
A default swap prices if you will or spreads on banks.
51:37
Have you seen that that's not on there CNBC because they felt
51:42
perhaps the, too many people. It started to watch it, credit
51:46
default swaps on Bank of America and the big Banks.
51:49
So I'll just say, luckily, you can still get that info on
51:52
Bloomberg but CNBC is taken it. Upon themselves to remove that
51:56
from the yep. You can only give on Bloomberg
51:58
Pro, right? It's well, Anyway, it doesn't
52:01
matter if they're right, but you can see sovereigns on the I'm
52:04
The Sovereign, which is cool. But listen, listen, here's
52:07
another one on my dashboard. Commercial mortgage-backed,
52:12
Securities and watch, CNB, s index.
52:15
Okay. And the value of cmbs, I think
52:18
real estate and Commercial Real Estate is the next shoe to fall
52:21
and when that falls we have another banking crisis 2.0.
52:26
So 2020 3.2 instead of 23.1 which was an interest rate
52:33
event, then it's going to be a credit event.
52:35
So watch cmbs, don't own bank stocks.
52:40
That's probably my best advice possible, do not own bank
52:44
stocks. Now particularly in Canada,
52:46
everybody owns Bank stocks because they pay a healthy
52:49
dividend, you guys haven't done the math.
52:51
You are not making a proper return on the risk.
52:54
You are taking owning Bank, stocks Banks can get bailed out,
52:58
but it doesn't mean that their stocks, Maintain value.
53:01
Look at what happens is Credit Suisse which James and I were
53:04
calling for 43 years that they were in trouble, okay?
53:08
The bank went from being worth 14 billion dollars to getting
53:12
restructured at three billion dollars which meant you lost 70%
53:17
of your bank Equity investment. And to accomplish that guys,
53:22
they had to write off, bonds, worth 17 billion dollars down to
53:28
zero. Now, notwithstanding the fact
53:30
that I believe that was an illegal move because Von should
53:33
always at least right, Kyrie pass through with the equity,
53:35
which means equal rank. They normally rank superior to
53:39
the equity. Anyway, the Swiss authorities
53:41
decided to write that down. Who's the biggest issuer of
53:45
these so called Coco bonds now. Oh, it happens to be doing to
53:50
your bank. Isn't that interesting?
53:53
Because everybody's worried about Deutsche Bank right now as
53:56
they should be. So the Jin risk exists.
54:02
Anything that monitors a contagion, whether it's
54:06
volatility index, whether it's move, whether it's a rush to the
54:12
US dollar strengthening of the dxy, even though the dxy still
54:17
the best-looking horse at the glue factory, it is a flight to
54:22
safety. That makes no sense in all of
54:25
these cases. I don't mind what Bitcoin is
54:28
doing in Fiat fucking One, Bitcoin equals one Bitcoin.
54:33
And that is your Lifeboat. Okay so I don't want the global
54:38
financing Financial system to collapse.
54:41
I need to be very clear about that but they're doing a hell of
54:44
a job at making it do so. Okay they're undercapitalized
54:48
there, miss managing their risk. You've got a clown called
54:51
Yelling supported by a clown called Powell and they can't
54:54
even get on the same page. Oh, we're gonna we're gonna
54:59
ensure all unsecured deposits. Well, we've decided we're not
55:02
going to secure all unsecured deposits when Powell is on the
55:06
podium. Mmm, at the very same time.
55:08
At the press release saying he's going to do it.
55:11
This is a circus act of monumental proportions and
55:15
yellin should be out watering her, petunias get that stupid
55:19
fool off of fucking television. I love Grandma's, but I don't
55:23
love grandmas who manage the US Treasury.
55:26
Okay? Go water your flower Grandma,
55:28
you are an embarrassment to Financial Risk Management.
55:33
All right, gentlemen, I want to take advantage of Greg every
55:38
single time. Pure entertainment, man,
55:40
education, education entertainment.
55:42
All right, so guys, I want to talk about you guys are, you
55:45
guys are famous, you made it on the Bloomberg Bloomberg headline
55:50
Bitcoin, which is so fitting. I love this headline.
55:53
Bitcoin fund seeks 100 million to capitalize on Market Mayhem.
55:59
Also part of the fun. Greg yourself core eclipsed in
56:03
Lawrence leopards in there as well.
56:05
I think Mark Moss Right. So what is the Bitcoin
56:07
opportunity fund? And again you know to Echo what
56:12
the with the with the headline was saying it is an interesting
56:15
time to to launch this but I think it is very fitting and
56:18
it's very fitting. I'm going to connect it with the
56:19
with the, the Genesis block message right to answer on the
56:22
brink of the second bailout for banks.
56:24
Anyways, let's be clear that Port.
56:26
The two important people in this whole thing are James and David
56:29
Foley so David is the co portfolio manager along with
56:33
James, he's Lottery the parts, current partner.
56:35
So I'm going to pass it over to Games to talk about this fun,
56:38
which is by the way yes the timing is amazing.
56:42
The I couldn't think of six guys in total or five other people
56:46
besides myself who I'd rather be in business managing risk with
56:50
right now. But this is not to say sell your
56:54
Bitcoin to buy our fund. This is to say, if you own 10%
56:58
exposure to bitcoin, maybe you peel off one or two percent
57:02
exposure of your Bitcoin and you put it into this fund.
57:06
We are not competing with Bitcoin people.
57:08
Bitcoin is the best investment you can make.
57:11
This is going to be a good investment.
57:14
What can we do? Hey, we can short traditional
57:16
Finance stuff and that's exciting stuff, okay?
57:19
Because the traditional Finance stuff is so overpriced, it's not
57:22
funny over to you James. Yeah.
57:24
There's some garbage in there. First of all, I need to say this
57:27
Nico and it's not my choice. It's just reality that the fund
57:32
is for credit investors. So if anybody wants information
57:36
about it, You can go to bitcoin opportunity fund to to get more
57:40
information if you're an accredited investor I wish it
57:42
wasn't but it's reality. It's a way the SEC works on
57:46
these funds and be very difficult for us to to get over
57:49
that hump, which we're going to try to do it just to be clear,
57:52
just to be clear. It's not you making this
57:54
decision, it's the rules and regulations that are set in
57:57
place. It is, I wish I could have
57:59
thousands. I wish I could have every single
58:00
pleb in there just for a few thousand bucks.
58:02
I can't, there's just no way to do it and we're limited to 99
58:05
investors. That's just real Leti, it's not
58:07
my rule that's because it's a, that's what the 3 c 1 SEC rule
58:11
is it's just what it is. But in any case, it what we're
58:16
excited about is you know what Greg just said like there's just
58:19
so much there's so much damage that's been done to this
58:23
ecosystem from these fraudsters, you know from FTX and Celsius
58:28
and you know the you know just there's been a lot of contagion
58:32
that's bled over into the Bitcoin ecosystem as we know the
58:35
Bitcoin price went down. Bitcoin miners got slaughtered
58:38
you know some of the some of the the startups.
58:41
The these Venture Capital firms have poured money into.
58:45
They can't get their next round of funding or they're having to
58:50
raise money, a deep deep deep discounts to their original
58:53
funding. And it's and it's making it
58:55
difficult for them. And so we can help you.
58:59
No. We can identify these
59:00
opportunities and we can help. We're a hybrid hedge fund.
59:04
We can, we can invest in both public and and private
59:07
opportunities. And like Greg said, we can use
59:09
shorts not too short Bitcoin but to short opportunistically and
59:14
specifically strategically to isolate the return.
59:16
We want, you know, whether it's because we're buying a Bitcoin
59:21
long type of play. And we're shorting a Western
59:26
Union which Greg likes to talk about because come on the their
59:31
their business model is completely destroyed and it's
59:34
disruptive buy Bitcoin or we can Things like we can buy a bond in
59:39
a in the Bitcoin space, you know, with a Bitcoin miner and
59:42
then short the equity against that in order to isolate that
59:46
return and and lower the risk of the portfolio.
59:49
So those are the things we can do.
59:51
We're super excited about it, you know?
59:53
And I'm happy to be investing in the Bitcoin space and like Greg
59:57
said, you know, it's a way to diversify into the Bitcoin
1:00:00
ecosystem further than just owning the volatile asset of
1:00:05
Bitcoin. We Believe that Bitcoin is the
1:00:07
future and it's going to completely take off in the next
1:00:11
few years and I cannot be more excited about the timing of this
1:00:15
kind of opportunity. So that's where we're at and
1:00:18
that we love it. Yeah.
1:00:19
So if people want to find out more about it where can they
1:00:22
find out more information if they want to contact you or if
1:00:25
they want to become an investor? What are the steps?
1:00:27
Yeah. So it you go to bitcoin
1:00:29
opportunity dot fund. You just have to check a box and
1:00:31
make sure that you have the tested that you're an accredited
1:00:35
investor and we can send you information.
1:00:36
Nation and that's in my link in my bio to so, and Twitter.
1:00:41
Yeah, awesome. All right, great stuff
1:00:43
gentlemen, think there's a link gentlemen.
1:00:46
Thank you so much for joining us today on SB IRL.
1:00:51
Please hang out in the back and I'll join you guys in a second.
1:00:54
While I wrap it up, guys. Thank you so much for joining
1:00:57
us. If you enjoyed the show and you
1:00:58
to do, smash that like button and consider subscribing.
1:01:00
You feel like we provided, you Bali, we back tomorrow for the
1:01:03
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1:01:06
I'm love you all. Catch you guys later.