Episode Transcript
[00:00:01] Speaker A: Hello. Welcome to the Money Adjustment. I'm your host, Dr. Mark Kramer, D.C. i am a chiropractor who loves investing and trading. Are you interested in what's moving markets and your money? Great.
[00:00:18] Speaker B: And speaking of money, how about the 20 bucks you owe me? Oh, yeah. Well, I only got 10, so here's 10. I owe you 10. Thanks. Hey, Mo, you owe me 20. Well, here's 10. I'll owe you 10. You owe me 20. Here's 10. I owe you 10. Here's the 10 I owe you. Here's the 10 I owe you. Here's the 10 I owe yoU.
[00:00:34] Speaker C: Good.
[00:00:34] Speaker B: Now we're all even.
[00:00:35] Speaker A: I just want to. I'm going to start to kind of get the audience oriented to what we're doing here. Earlier this week, got a push notification that Darkside 2030 was hosting in Open spaces about something related to bitcoin. I didn't even know what it was until I saw there was, like, bitcoin in there. I just. It's one of those things when I get a push notification, if I have time to check in on something that interests me, I will. And if I. And if I don't, I don't. But on this particular night, I'm really glad that I got to check in because I was privy to a very enlightening conversation. And after listening to, I think there were 700 people in this room, the host, I thought, was really cool, and I wanted to see if he wanted to come on and do my podcast. And he graciously accepted to do it. And I'm actually very excited to have him on because my framework is I'm a retail investor. Like, I don't have a Wall street background. I just have a strong interest in money and understanding how the financial system works. And I've kind of wound up in this space where with investors and traders and people who are thinking about these things. And I'm very excited to have our guest today, and he's going to give us a little bit of his history because this is really the first time he and I are speaking together. Without further ado, I'd like to introduce you to Darkside 2030, and he's going to share some insight into who he is.
[00:02:12] Speaker C: Good day. Dr. Mark. Thank you so much for having me. Look forward to the conversation. So, just to give you a little background on myself, I'm a longtime tradfi. Tradfi guy. I started on the Philadelphia Options exchange in 1989. Not to date myself, but I was a four trader, traded throughout the 90s I moved out to San Francisco and traded on the Pacific Stock Exchange back at the beginning of the Internet. Traded in Netscape, Microsoft, a bunch of other products. Met my wife out in San Francisco. She was from the Midwest. She wanted to move to Michigan. I said no to Michigan, but yes to Chicago. Ended up on the floor of the CBOE trading. Whole bunch of different products kind of in a really exciting time. In the late 90s, we had Y2K, we had the Internet bubble. I traded on the floor for a bunch of years, then moved upstairs and for lack of a better description, traded as sort of an upstairs hedge fund. Yeah, in about 2001, actually it was nine. Eleven was kind of a serious date for me. I lost a lot of friends, friends and decided to just kick back and take a couple years off. Came back onto the street in 04 with a brokerage operation, basically offering agency options brokerage to a bunch of my really good friends of the upstairs world.
And you know, it was interesting in, in 0708, you know, as we kind of fell into the GFC, the world was becoming extremely electronic and very digital.
And you know, when I started on the floor, we wrote paper tickets, we had runners, runners grabbed those paper tickets and stapled them together. And that was a trade. Now by, you know, as we get into the 2000s, everything's digital. All trades are matched electronically.
As the markets became electronic, I just become extremely disgruntled, for lack of a better term, with the lack of transparency available in the options markets. Again, going back to 89, when I started, there were four options exchanges.
By 09, I think there were 14.
What was the purpose of having 14 options exchanges? The answer is that it's a lack of transparency. And without transparency, you really don't know what price you're paying for specific options. As an example, the SEC best price rule, which says that if exchange, a, let's say ARCA exchange, is offering an option at a dollar and NASDAQ BX is offering an option at a dollar, well, it doesn't matter which exchange you buy it on, you meet the best price rule. But the reality is that on one exchange there's a make or taker rule. So that means that there's a fee to, to take that option at a dollar. On the other exchange, they pay you a rebate if you take that option at a dollar. So there's really a big difference between the best price rule and the true net price. So I set out to build a options algorithmic platform that was fully transparent that Had a dashboard that you could log into, see why we routed your order to a specific exchange and what was the true cost of that execution. And then as a true agent to my client, I would pass back any rebates or credits or payment for order flow or any other kind of nuanced scheme that the different exchanges had come up with for pricing. And that firm is the name of that firm's Dash Financial. It's still one of the largest options execution houses on Wall street today.
But yeah, I built dash.
I built it inside of a large broker dealer and then we took it outside of that and we were a self clearing broker dealer, OCC members, DTCC members. And we built that up to doing enormous volumes. 2013, we were doing just off the chart volumes and had really become sort of a known entity on Wall Street I think today. I don't know, I haven't been involved since 2013, but my guess is Dash is one of the largest, still one of the largest options execution houses on Wall Street.
[00:06:34] Speaker A: This is. Man, I am, I am so lucky to have you on because I think for context here, I, when I say I'm a retail trader, I'm a retail trader. My, I'm educated as a chiropractor, I had a chiropractic practice. I'm a Main street guy.
And I've always just had this kind of, I would say my interest in stocks in general.
A little bit of influence came from my grandmother back when I was like in high school and she hooked me up with my first broker to just buy a stock which is like nowhere on scale in terms of what you're talking about. Then it was in 2008 financial crisis, I was on the losing side of that and I had a lot of consequences as of that. That was very educational in the realize that there are things that there are larger forces at play that I need to understand. And so at that time I got interested and indoctrinated I would say through Investors Business Daily, ibd in terms of starting to learn about what is the stock market and how do you trade stocks. And like and then it was in 2020, I mean I, I had, I had, I was a dabbler until 2020 and then in March of 2020, witness what I kind of experienced in 2008, but didn't have any skin in the game and just was reading headlines and then, then in 2020, because I'm watching CNBC and you're just seeing like stock prices roll back five years and all of a sudden it's like you know that five years you missed on capital appreciation. This might be a window of opportunity for you. And I always think of that was like a moment of vulturism. It was like a moment where people certainly from the, from my vantage point, it just, there was so much, so much, so much uncertainty. Like not quite maybe 2008 level but, but near. Like I hadn't felt anything like that since about 2008. Whereas that visceral. But at the same time I, I was a little bit further along in my life and I actually had some money to play with. So then I was like okay, now let's, let's play. I missed out on these five years. Let's, let's like start playing. And I'm watching YouTube videos and learning about technical analysis and reading charts and bars and all of a sudden I'm getting this new education and I'm self educating and I'm also paying a tuition to the market because with every big high I was getting these like devastating lows. And just every time I thought I was figuring something out, I wasn't, I wasn't. But through the whole process I'd be just, I can't, I don't know as you're a professional so like as someone who's like seasoned in the industry, that's a very different coming experience versus someone who is. They think oh I just see these stock market people and they, they do well, they seem to have money and I don't, I'm not, maybe I'm not a real estate guy. So I want to do the stock market and then they, they throw in whatever, whatever money they have to throw in to, to play basically. And then it's like, oh, it's just gambling and all this kind of stuff. But when I hear people like you just, it reminds me that there is like a whole industry behind this. It's institutional. And when you talk about the FL and then you talk about the upper level, it's like there is a hierarchy of things happening. And I think this is actually going to be a good lead in to what I wanted to talk to you about and what you came on I think expecting to talk about, which was, I'm just going to jump to the term, but it's the Bitbonds. At some point I do want to start talking about the Bitbonds because this past week was the first time I had ever heard of it and I had only recently, within the past year. Even though I was familiar with microstrategy, I didn't understand what MicroStrategy was doing until this past year, where I'm like, holy crap, this is, this is genius. And the simplest way that I can think to express it, and I'm going to love your take on this, the simplest way that I can think to express what MicroStrategy is doing is they are selling a depreciating asset to purchase what they expect to be a significantly appreciating asset. So on the one end they're diluting paper, but they're offsetting that highly speculatively at this point. But it is a real product that's on the market, which is MicroStrategy or Mr. And then I guess the call to spaces that you did that I happened, that I stumbled upon really is, was Misty, which I was not familiar with. But Misty is an interesting product because Misty, from my understanding is to offset some of what it's. To somewhat capitalize on the potential boom in whatever Mr. Is going to do. But it's hedging that bet with calls against the stock. So it's like another layer of complexity.
If you don't know the terminology. These are, this is just kind of what's already happening in terms of a market sense. And I'm like, again, I'm a retail investor and I, I try to stay educated and think about these things thoroughly. I'm not just like hot stock picking it out there. But what really fascinated me and this kind of ties into the bit bonds because I wanted to make that connection because bit that we didn't just go from, from bitcoin to Bitbonds. It was like there was tears of things happening. It's already too complex, somewhat complex things to understand Bitcoin and then bonds. But then it's putting those two things together. But when I started to think about in terms of what MicroStrategy is doing, so MicroStrategy is a corporation and they are, they have a Treasury and part of their treasury and they're the first to adopt this is to just make their Treasury. I think it's like, if it's not entirely. It's like 90% Bitcoin is, is what they're reserving.
[00:12:36] Speaker C: 99.5. Yeah.
[00:12:38] Speaker A: Not. Yeah, like, like they're all in. It's all in. All in, all in. But like, I get excited here because then I. Because here's the exciting thing to me, it's taking that strategy and then applying it to what's happening with the government and what's happening on a national level for our country. And then when you really expand out globally. Because bitcoin is a, is like a real. It's a global phenomena. It's not like an American thing. And the people that understand it and are faster to maybe adapt to it, the countries that understand it, which is kind of. I don't want to. This is one of those subs you can already tell. And I, and I, I know you're, you're probably biting at the chomp to jump in here too, but this is like one of those areas that are, it's, it's tricky because you have to have some understanding of what the bitcoin narrative is. And the easiest bridge of that is, is gold. The digital gold is for gold people. But even with the gold, you have to understand what gold is. You have to understand what money is. And then you have to realize, like these bigger problems that we have as a country where we're. Our national deficit is. What's the number on that? How many trillions is on that?
[00:13:48] Speaker C: 37 trillion.
[00:13:49] Speaker A: 37 trillion. So I think I'm trying to give this very broad stroke to give context for why Bitbonds, what could they potentially offer us?
[00:14:04] Speaker C: Okay, so let's just step back a minute and talk about Bitcoin versus dollars, right? So dollars are created by creating debt, right? So every time they print a dollar, they create a debt instrument, right? U.S. treasuries.
In order to understand a debt based monetary system, what you need to understand is that for every debt to be able to pay back the interest on the existing debt, you have to issue new debt.
So let's just back up. I'm going to kind of go with Simon Dixon's example here. If you and I started a debt based economy and I create $1,000 debt and I issue it to you, and I give you a 10% interest rate in a year, you have to pay me back $1,100.
But our economy only has $1,000 in it, right? So the hundred dollars doesn't exist.
And the only way for the $100 to exist is for someone to create a new loan, right? And create more debt.
Let's say now you created $1,000 debt and you issued it to your friend. Okay? So now there's $2,000 in the economy, right? There's enough for you to pay back the $1,100, but there's not enough for him to pay back the 1,100. There's only $2,000 that exist. So the only way your friend's gonna be able to pay you back is if someone else creates Another thousand dollars of debt, right? And onward and onward and onward.
[00:15:41] Speaker B: And speaking of money, how about the 20 bucks you owe me? Oh yeah, Well I only got 10, so here's 10. I owe you 10. Thanks. Hey Mo, you owe me 20. Well, here's 10. I'll owe you 10. You owe me 20. Here's 10. I owe you 10. Here's the 10 I owe you. Here's the 10 IOU, here's a 10 hour. You good? Now we're all even.
[00:15:58] Speaker C: And you can see how that goes exponential at some point. And we're at that point where we're completely exponential. But every loan that's ever been created needs another loan to be created in order for the money to be available to pay back the interest. So any concept that we're going to pay down the national debt is, is laughable. In order to pay down the national debt, you'd go into a deflationary spiral a la 1929. And there wouldn't be enough money to pay back the debts. The interest payments would not. There'd be not enough cash out there to pay back the interest on the existing loans. People would fail on their loans and the entire system would implode. That's a debt based Ponzi scheme, for lack of a better description. And that's what the US dollar is. Along comes Bitcoin, right? And Bitcoin is a finite asset, right. That at every level is better money, right? Like you know, I could spend hours talking about proof of work and you know, all of the different protocol, why it's a protocol and why it's not a technology. And you know, I'll, I'll spare, I'll spare you the lecture. But ultimately we've got this proof of work based money that's infinitely scarce. So the exact opposite of US dollars which require more dollars to be created at all times so that you can pay back the interest.
Bitcoin is an infinitely scarce asset. There will never be more than 21 million bitcoin that ever exists. And the creation schedules is completely predictable. And it is what we consider hard money, right? Similar to gold. Gold served the purpose of being very hard money. If you go back to Florence and I think let's call it the 1200s, they introduced the foreign. Their economy exploded. They had an economy of abundance because they were all using this SC Ferris metal gold. Yeah. But you know what flourished. Arts flourished. Music flourished.
The very fabric of society was very strong because when you use hard money, you end up with abundance, right? They still had merchant banking, the Medici family was able to lend gold and sponsor trips, you know, and to get spices and all the different things that were going on back in, in the 12 and 1300s. But look, hard money, you know, so far supersedes the capabilities of fiat money, right? Money that is essentially not worth the paper it's printed on. Another example I would give is just very simply this. What makes a hundred dollar bill worth ten times more than a $10 bill? It's certainly not the paper it's printed on. The paper is worth the exact same, right? So the only thing that makes the $100 bill worth 10 times more than a $10 bill is because you believe it is faith, right? I like to say the US dollar is by far the largest religion that's ever existed. It's a faith based religion, okay? Now if you have access to 10 Bitcoin, you know that you have 10 more than if you have or 10 times more than if you have one Bitcoin, but you actually have 10 times more of something.
And that's not true with US dollars. So kind of laying the framework for where we are in this debt based Ponzi scheme, we have this fiat money that is really faith based. It's because you believe it, it's because somebody will accept it. And then now in a parallel system, we have gold on one hand and we have bitcoin on the other hand. Now, gold has served as hard money for thousands of years, but unfortunately we now know because of 1971, 1933, that gold is not trustable, it's not verifiable, it's not auditable, it's counterfeitable, right? Like all of these characteristics of what should be hard money, gold fails. When we look at those characteristics. If you can't verify it, you can't audit it and you can counterfeit it, then, well, is it really hard money? And the answer would be, well, not really, right? It may be harder than US dollars, but it's not really hard money, okay? And then along comes bitcoin. And bitcoin, by the way, comes out of the 0809 financial crisis. These cyber funks get together and they say, hey, check this thing out, it may catch on, right? And they create a hard money, a digital hard money that is essentially a protocol, right? It's auditable at all times, it's verifiable at all times, it's never been counterfeited. So at every kind of test on the money scale, it so far outperforms gold that you see this all of a sudden Move. And we call it Gresham's Law, where money or wealth finds its way to the hardest money that exists. Okay? So right now the hardest money that exists on the planet Earth that's ever existed, in my humble opinion, is Bitcoin.
And we've seen the value of bitcoin from when I got involved in 2013 today just absolutely explode. Okay?
[00:21:24] Speaker A: Yeah.
[00:21:25] Speaker C: All right. So with all of that in mind, the question becomes what, what happens as more and more wealth kind of transfers its way to Bitcoin? Does that threaten the US dollar? Of course it does. Right. It's a natural threat. Gold has not served as a threat to the US dollar because we went off any gold standard in 71. They've rehypothecated gold, meaning they've created paper gold and synthetic gold. They've essentially counterfeited it. The going thesis on Wall street is that for every ounce of gold, there's probably 500 claims, three to 500 claims on every ounce of gold. Right. So they've just created a fake counterfeit gold market. Right. And you can't do that with bitcoin.
So now let's kind of move forward to your question, which is about Bitbonds, which bitbonds really is, and microstrategy, which are really the integration of hard money into a fiat money system. So what happens when you have a debt based fiat Ponzi scheme on one hand, and on the other hand you have the hardest money that's ever existed. And how do the two of those things live in the same universe? And the answer is they don't. They don't play. Well, I like to say not all fish swim, get along together in the same ocean. Right? Like some fish eat other fish. Well, well, Bitcoin will eat the US Dollar, right? Like that's just a fact. And that's what the microstrategy kind of proof case, like the test case has been. He's been able to convert US Dollars into Bitcoin and to do so in an accretive fashion. He essentially has a stock which is every, every stock is, is a form of a currency. He's able to, at the very simplest form, he's able to sell his stock which trades at let's, let's call it a 2.5 multiple to US dollars. So he sells that stock and he buys Bitcoin with the proceeds.
And the more you do that, you're acquiring Bitcoin for essentially a two and a half times discount. Right. Like you're essentially converting fiat to Bitcoin. And the market, if US dollars were very strong and people really wanted to own them, well, instantly the market for MicroStrategy would collapse to a 1 times multiple and he wouldn't be able to do that anymore. But that hasn't happened. Right? It's actually the opposite. The multiple has gone higher. Which means that there's this tremendous demand to be in non dollar denominated security. I mean, one could argue that MicroStrategy is a non dollar denominated security, although it is a dollar denominated security. And we'll get into that as we go along.
MicroStrategy is a US dollar investment on US dollar rails. It's a, it's a US security.
As such, when you buy MicroStrategy, you're really making a US dollar investment in a US corporation that happens to hold Bitcoin.
[00:24:33] Speaker A: So I want to stop you right there because that just makes me think of the retail investor like an onboarding process. If you're someone out there and you, I don't know what the heck Bitcoin is, I don't understand what's happening. But maybe you're someone out there that's like, I don't understand all of this, but I know that this one company comes up a lot when people are talking about it. So when you're talking about it's a fiat base, it's a dollar base, it's bringing in that portion, has the potential to bring in that portion of the population that wants to dip their toe in the water. Or people who maybe gold people even like, or I just say gold people because gold people tend to philosophically be on the same page as Bitcoin people. They just may, may or may not disagree about what the hard asset quality is. But in terms of understanding the fiat deficiencies and the challenges we have with regards to the fiat, I think there's agreement there.
So, so my, I only wanted to stop you to say like, I like this because, because this would be the onboarding. It's like you don't have to understand anything that we just said or you just said or I just said. And you could just take your dollar, your fiat currency and go buy a share or a fractional share of MicroStrategy. And in a sense you're onboarded. In a sense you're onboarding. Maybe not psychologically, but you have now just taken that paper and you're now playing in a bigger. And you're playing a different game.
[00:26:02] Speaker C: No question. Right. Like one of the great accomplishments of Michael Saylor is he has created an on ramp onto the bitcoin kind of universe of understanding. Right? But it is not an onboard into Bitcoin, Right? It's an onboard into a company that owns Bitcoin. But more importantly, it's an on ramp, right? Ibit the creation of the ETFs, GBTC, those were all on ramps, right? And we see every day more and more on ramps are being created. We now have GameStop which has a tremendous following, right? Like the board just approved that they can now buy Bitcoin and they went out and sold a billion dollars of zero coupon debt. Now think about that for a second. It's not just GameStop. Let's go back to MicroStrategy Strategy is able to sell zero coupon debt, they're able to borrow money at zero to buy Bitcoin and people will give him that loan, you know, using convertible debt. Debt that converts into MicroStrategy shares at a higher price. Right. Who else?
[00:27:09] Speaker A: Right.
[00:27:09] Speaker C: Who else in the financial world right now can borrow money at zero coupon, right. With no interest rate?
Right. And with the upside conversion into their stock price to buy anything?
Right. JP Morgan can't, Amazon can't, Google can't, but MicroStrategy can, GameStop can, Marathon Digital can, right? So these bitcoin companies, there is so much demand for what we call trapped capital or capital that can only invest in bonds or capital. That's another great example, is capital in your ira, right, that you want exposure to bitcoin, but it's fiat capital, right? It's trapped.
[00:27:55] Speaker A: When I hear trapped, I think illiquidity, no.
[00:28:01] Speaker C: So no trash capital.
So I'll give you an example. There are huge pools of money on Wall street that have charters. So let's suppose I start a bond fund, a good example. Let's just use a pension fund as an example. Right? A pension fund may have in its charter, right, as its core rules that it cannot invest in bitcoin, it cannot invest in currencies, it cannot invest in commodities, it can invest in bonds, it can invest in preferred stocks. Right? As an example, these may be hard coded into the rules of this pool of capital, albeit an extremely large pool of capital. So if you have a pool of capital that can't buy bitcoin, it can't buy oil, it can't buy what you're.
[00:28:52] Speaker A: Saying by trap money, that's the part that's trapped in terms of where they can allocate the resources. Okay, I got you. That's a good distinction.
[00:29:03] Speaker C: That's a really good example of TRAP capital. So if, if I'm at some teachers fund and pension fund from the state of Wisconsin, I believe is. Is invested in MicroStrategy. I believe. Don't quote me on that.
I know they have Bitcoin exposure. They look at the. They look at the universe of their potential investments. They're trying to seek the highest return possible for their pensioners. And they see Bitcoin going up at a compounded annual growth rate of 40%. They want to get exposure to Bitcoin. They can't buy Bitcoin. They can buy MicroStrategy. They can buy MicroStrategy convertible bonds. They can buy MicroStrategy preferred shares. So they're saying, okay, well, I'm going to go buy these MicroStrategy preferred convertible perpetual shares that he's just issued Strike STRK. And they're going to say, well, I'll allocate $100 million to. And I'm going to allocate $100 billion to MSTR, right, because that's what they're allowed to buy.
[00:30:02] Speaker A: Right?
[00:30:03] Speaker C: And the world of Wall street is extremely segregated in as much as you have bond funds and you have preferred equity funds and you have all of these different pools of capital. What Saylor at MicroStrategy has done is he's come along and he's created products which are purposefully fit to certain pools of capital so that they can get exposure to Bitcoin.
So what we're really ending up in is a world in which you have financial engineers creating products to give fiat capital pools of money. Right? Exposure to Bitcoin. They can't buy Bitcoin. They're not allowed to buy Bitcoin. But they can buy MicroStrategy, right? They can buy GameStop, they can buy Marathon. And where we've ended up with, when I got into this game in 2013, I like to tell the story just to back up a little bit. I'm a gold bug. I never bought stocks and bonds. Well, I was on Wall Street. If stocks and bonds did well, I was going to make a ton of money.
So I always hedged all my risk by buying gold and silver. In 2013, I'm on a flight to Spain, right? And I was going to see. I was still running Dash at the time, and I was going to take the Banco Santander traders out to a Barcelona Real Madrid game. I'll never forget it. And I get on this flight, it was an afternoon flight. Weird, weird kind of flight timing. And I'm not Tired. And I bought a whole bunch of magazines. And in the middle of one of the magazines, it was like a. You know, this. The cutout in the center was the bitcoin white paper. And I read it, like, eight, eight times. And I'm like, you know, I'm a technologist. I design algorithms. You know, I love technology. I'm like, it took me eight times reading that white paper to digest it, to have a really, what I would call basic understanding of bitcoin. I landed on the ground, I called my wife at the airport, and I said, honey, I just saw the most incredible thing. I've never seen anything like it. I'm going to buy bitcoin. She's like, what is bitcoin? I said, don't worry about it. I'll explain later.
So I downloaded this app called local bitcoins. Okay? And it was an app, like, it went online. We're probably in the iPhone2 world or iPhone3 world, right? And it's an app that shows you people based on your GPS location that are close to you that want to sell bitcoin. So I go to the local ATM machine, and it wouldn't let me take out more than €500. So I take out €500. I met some random Spaniard outside of the hotel in Madrid, and I handed him the €500, and he beams my phone, you know, bitcoin. I'm like, wow, that's cool, right? Like, that's pretty amazing.
And, yeah, two weeks later, I left Wall Street. When I got back, wow. And I set out on this journey of gaining what I would call a very deep understanding of DLT technology, Distributed ledger technology, which is the basis of blockchain. Blockchain technology, kind of. I went on this journey, and a bunch of my engineers left with me, and we started a cybersecurity firm that was based on distributed ledger technologies. We got, I don't know, 12, 15, 17 patents, foundational patents in distributed ledger technologies.
And, yeah, that firm Alter software solutions, extremely successful today. I left in 2019. I've been retired since 2019.
And as you can see, I'm in my RV bus right now. And my wife has spent a lot. My wife and I have spent the last five years traveling 165,000 miles, 47 states, just touching grass, meeting people, learning about America, loving just the real fabric of our country. You know, the flyover states.
Just amazing people, amazing experiences, breaking down more mechanic shops than you could possibly imagine. You know, there's just something about breaking down in Tucumcari. New Mexico or Red Bay, Alabama. I mean, I could throw you, you know, just so many different places that I've been that you just meet regular people. And you know what? Regular people are really smart. They're really smart. You know, don't believe, don't believe what you. You hear from the coastal elites, man. This country is made up of people that get it right and they.
[00:34:35] Speaker A: Yeah.
[00:34:36] Speaker C: And they understand the problems. They're very intelligent and. Yeah. What, what an experience it's been for us to, to meet Americans. You know, I love this country story.
[00:34:46] Speaker A: I think that's a really. It's a cool. It's inspirational for different reasons.
But I, but I, but it. I like the fact that too, that you're. You said you're retired, right? So it's like when you're retired, you're not. You're not looking at things in the same way.
I frame things from the retail perspective, the retail trader perspective, because that's the only thing I can claim to be, is a retail trader when it comes to finances. Even though I try to really stay educated, you know, I try not to be such dumb money. You know, I try to have like a little intelligence about me. And to your point, like, if you listen and try to understand what somebody's saying, and that's kind of this conversation that we're having now is just for lack of a better term, like an onboarding, in a sense that you. It's interesting to me, your story with onboarding, with regards to bitcoin is you actually read the white paper and had enough frame of reference to know to see the value in what the proposal was. And then the wherewithal from my onboarding onto bitcoin, even though I became aware of it in 2008, I just watched and I just remember, like, people were saying, either bitcoin will be around in 10 years and it'll be worth a million dollars, or it won't exist. And so neither one of those is true except for that it's definitely still exists and it's worth a lot more than it was. Like you say. It's funny, there's a lot of rabbit holes you can go down when you start to talk about this stuff, because there's a lot of layers to it. So I want to just kind of bring it back because we're moving towards the bit, the bit bond.
[00:36:19] Speaker C: We're now at this point where we have this hardest money that's ever existed, bitcoin, and we have this paper money that really gets depreciated at an alarming rate. You know, like Saylor likes to use the example of a house, you know, a house in Miami on the beach, you know, 40 years ago was worth a million dollars. Yeah, I'm just throwing numbers out there. Maybe today it's worth $50 million. But that house hasn't changed, right? The house really hasn't gone up in value. The dollar has gone down in value. People view inflation the wrong way, right? Like they view the depreciation of money as in value being created, not value being destroyed. And it's really, it's really more about the destruction of value of the currency.
[00:37:04] Speaker A: Look, I think debasement, like debasing gold, when they would debase gold, they would used to be a gold coin, was a gold coin and then over time it was replaced with other metals till nothing about a gold coin to your.
[00:37:16] Speaker C: Point was gold until they were using rocks. Rocks. And that's the story of Rome, right? Like Rome started with gold coins and ended with rocks. And eventually it fell. And that's the history of the world, is that these things always end up sort of falling because they debased the currency too far.
[00:37:29] Speaker A: So I mean, if that doesn't hit the, to the heart of the issue right now with America, because when you bring up Rome, global leader at one point in time, it's, you know, America has been. And for now still, like, I think I still feel like we're holding on to some form of leadership in the world, but because of the fiat currency, because like the, what do you keep calling it? The Ponzi scheme. Right?
[00:37:53] Speaker C: Like, because of like debt based Ponzi scheme.
[00:37:55] Speaker A: Yeah, debt. Because of the debt based Ponzi scheme. We need a solution. Basically. We need, we need, we need to evolve beyond the consciousness that we currently have to reach that higher level of consciousness to solve the current problem that we have, to quote Einstein, you can't solve a problem with the same level of consciousness.
[00:38:14] Speaker C: Okay, that's right. And so let's first define the problem. We cannot pay down the debt. We've sort of walked through why a debt based Ponzi scheme needs more debt. Right? So what can we do? What as Americans can we do to maintain the value of the dollar and to kind of keep society moving forward and not risk utter collapse of the currency. Right. And that's where we kind of graduate into a world in which we have to tackle our balance sheet. It's not just the debt, it's the revenue side and it's the asset side. Right? Like if you look at a Balance sheet, you know, debt inside of itself is not the worst thing in the world.
Debt. When your debt to GDP crosses that 130% level, where we are, I believe now, right, like now, you have a real problem.
So interestingly enough, a group by the name of New Markets Capital came onto the scene about, I don't know, it was about a month ago and we've been talking about, about this now for four months, five months, but the New Market Group came on with an actual proposal for a bit bond for the U.S. treasury to issue bitcoin backed bonds. And their proposal, I'll just kind of simply lay it out there, was for them to, for the US government to issue $2 trillion or refinance, because it's not, we don't, let's skip the issuing part. This year we have to refinance estimated around $9 trillion in debt. So our main problem is that interest rates have gone up.
Our interest expense is already greater than our defense budget at over a trillion dollars.
If we try to go out in duration and sell 10 year bonds, which the US government would like to do, it can't because the interest cost is too high. With interest rates at 4.3%, a lot of that debt that we're refinancing now was issued back when interest rates were close to zero. So we're gonna, we're already gonna take a hit.
[00:40:19] Speaker A: Okay, Right, right.
[00:40:21] Speaker C: So, so like our interest expense is gonna continue to get worse, which in turn damages the balance sheet. So the question is.
[00:40:31] Speaker A: Can I just stop you, can I just stop you for one second? Because I want to make sure I get this because this is the part where it gets interesting. I hope whoever's listening to this can follow along with a lot of what we're talking about because I'm trying to bridge things here a little bit. Like I, I'm a retail investor, so I'm, I'm being enlightened by what you're saying, but I'm also a knowledgeable retail investor, so I'm, I'm also familiar with a lot of what you're saying and wanted to have you on because I appreciate what you're saying and I really want to think through these things. And so now like when I'm thinking about the bond and the refinancing, like we have $9 trillion of debt coming up that we need to refinance. To whom? Like who are we? You know what I'm saying? Like I was like trying. Yeah, okay.
[00:41:17] Speaker C: Yeah, that's a great question. Right? Who's going to buy $9 trillion worth of our debt. And the only way to really do it the way that Janet Yellen did it, was to move the duration, meaning the duration of debt ever shorter and shorter and shorter. Right? Because when you buy a bond, if you buy a three month bond like a cd, that's three months, that's a lot less risky than buying a ten year cd because quite frankly, nobody knows what's going to happen over the next 10 years. Right. Would you loan money to the U.S. government 4.3% for 10 years? The answer is probably no. If you thought it through, you're like, well, we just went through one bout of inflation. The currency's in trouble. We have all these trade problems, we have all kinds of wars on the horizon. Now. I'd rather not loan money for 10 years. I'll loan money for three months.
[00:42:15] Speaker A: I want to go back just one second because now that you got me thinking, because we were, you said we're at 0%, right? Our current rate is.
[00:42:22] Speaker C: We were, we were, we were at 0%, right. So a lot of the current debt that's being refinanced is, let's say, you know, three tenths of a percent, four.
[00:42:32] Speaker A: Ten of a percent, who funded us? It's zero percent. Is this just globally? Is this like when I think of like other countries buying into our Treasuries.
[00:42:43] Speaker C: The way the US System has worked for all of these years is we export to the world. Well, let's say for the last 50 years, since coming off the gold standard and the increased, the sort of introduction of globalization, we moved all of our production overseas. China, right? We get oil from Saudi Arabia. We, when, when we buy oil from the Saudis, we send them dollars, they send us oil. Well, what are they going to do with the dollars? They then take those dollars and they buy US Treasuries. And that's, that's the definition of the petrodollar. Right? We talk, we call that the petrodollar.
[00:43:21] Speaker A: Petrodollar, like, like, yeah.
[00:43:24] Speaker C: Meaning it's oil dollars. Yeah. The money that we send overseas for oil gets recycled back into U.S. assets, right. They take that money and they buy our debt with it. Right. Same thing with China. We would send money to China to buy cheap Chinese goods and they would take those dollars and they would buy US Assets. Not just bonds, but also US Stocks. Right. US Assets buy US Real estate, whatever they could do they wanted to. That was that whole kind of recycling of US Dollars that we export to the rest of the world. Make no Mistake. The largest export of the United States is the US Dollar. That's what we export all over the world. Okay.
Those dollars then find their way back into the U.S. economy through the purchase of U.S. treasury debt, U.S. corporate debt, U.S. stocks. Plus, when the trade war kind of started, the tariff program by Trump, you saw what happened to the stock market, right? It absolutely grew a fit. Because if you're not going to. If we're not going to export those dollars and all of these countries own US assets, well, what if they sell them? What if they get so upset with us? Right? And then that's what you saw, right? Interest rates. You had a situation where the US Dollar came down in value, the US Stock market came down in value, and the US Bond market went down in value and yields went higher. What that tells you is that the foreigners were selling everything, right? Like, they weren't just.
[00:45:01] Speaker A: Yeah, so.
[00:45:02] Speaker C: So that's not normal. Like, that's not usually when the stock market goes down, the bond market goes up. Right. Money comes out of stocks and goes into the safety of bonds.
[00:45:10] Speaker A: That's with like the 60, 40 kind of. Is that where that mentality comes from? It's like, that's. Your hedge is like, okay, if I have the bonds, I have the stocks.
[00:45:18] Speaker C: Okay, so we're now in a scenario where you have stocks going down, bonds going down, and the value of the US Dollar going down, gold going up, and bitcoin sort of hanging in there pretty well, right? Not exactly going up, but not going down.
[00:45:36] Speaker A: And for context, because I have to remind myself of this, Bitcoin at the beginning of 2024 was, I think, what, 30,000, 40. We're still like double from where we're at today because we're down from 100. From the peak, right?
Yeah. No, no, from that, like the context to what you're saying, it is holding up. It's volatile in terms of the numbers moving around. The size of the numbers might seem like a lot and even the percentages of moves. But you're talking about something dropped 50%. Yeah. But it went up 250%. So it's like these things are relative, right?
[00:46:11] Speaker C: Yeah, all relative. So important to understand we're now entering a new world potentially. Right. Where the US Government recognizes that if we continue doing the same old thing, let's call it pre Trump, this concept of running twin deficits, not just a fiscal deficit where we spend more than we take in and that we can talk about, but we're also running a trade deficit where we spend to foreign nations. So much more than we spend locally. Well, the net result of that is to absolutely devastate the bottom 90% of Americans. Right. So the top 10% that own significant assets, well, they benefit from this whole petrodollar kind of recycling of dollars. We send our dollars overseas. They buy U.S. assets. Well, if you own a lot of assets, well, you're doing great. But 90% of America doesn't own a lot of assets. They're living paycheck to paycheck, and they're getting absolutely destroyed by this system that has now accelerated at such a fast pace because of the need to create more and more dollars. Right. Asset prices are going through the roof, but at the same time, you have food prices going through the roof. And if you don't own assets and you need to eat food, that's a bad combination, right? So in comes Donald Trump, who says, I've got to stop this. And by the way, that's called Triffin's Dilemma, right? When you are the world's reserve currency, you run into Triffin's Dilemma. There's no way out of it. Eventually you get to this point where only a very few and the very wealthiest people in your society succeed and everybody else gets destroyed. Right, because of inflation.
So where are we today? We're at towards the end of Triffin's Dilemma. We're trying to reverse it. It. We're trying to onboard and bring back manufacturing into the United States. We're trying to tamp down inflation, but this is all theoretical. It's never been really done before and never been done successfully before.
So we're really stuck.
Just the idea of, hey, we're going to tariff the world, we're going to do this, we're going to do that sent financial markets reeling, right? Like they didn't know what to do, because the writing on the wall is clear. If all of these dollars of all of the people that own foreign assets decide, you know, I'd rather buy, invest in my country than in the United States, and they sell US Assets and start investing in their local economies, then it's game over for the United States and for the US Dollar.
But if we don't do that, if we don't create this problem, right, then you just continue down the road of as soon as it goes from the top 10% to the top nine to the top eight to the top seven, and eventually you're left with 1% of the people owning 99% of the wealth. And that leads to social unrest and pitchforks. And one could argue look, the suicide rate's never been higher than it is today. We have young Gen zers shooting corporate CEOs in the back and then being celebrated on TV. All of these things, you can take any one of them and explain it. But when you combine the suicide rate with all of the social unrest, with inflation, with social programs, with the kind of unease in our country, you realize we're not far away from civil unrest. And I think if you probably ask the average person in the average small town in America, how close are we to civil war? They would say, well, we're really close, right? It's like scary close. Because at some point it just doesn't make sense anymore. Why are these people in New York and Massachusetts and California driving around in the, you know, living the life of luxury when we're out here, you know, and we can't, we can barely make money, you know, working two jobs.
Those two things don't work well. And eventually it ends, right? Eventually. And it ends badly, right?
So look, that, you know, Triffin's Dilemma, you know, the dilemma of being the world's reserve currency and exporting everything, all of your manufacturing overseas and then having your asset prices go up, right? Like that's a main problem. And then you combine that with Gresham's law, which says that all of this money that's been created will look for the hardest money that ever existed, which is Bitcoin. And we see what's happening with gold as well because there's still a lot of older people out there that kind of see gold as the panacea. But I have a feeling they have a very rude awakening coming. Because we can talk about gold, you know, eventually what will happen with gold is that all of these. We talked earlier, three to 500 claims per ounce of gold. If that unwinds, yeah, gold prices could soar. But at the end, right, once gold prices are done going up and the system has sort of self corrected and people have covered all their short exposure to gold, well then what? Then you're left with an asset that has been proven a failed monetary asset, right? You know, you're left with an asset that's unverifiable, unauditable, counterfeitable. We'll find out that. You know, look, when Trump dropped that, hey, we should audit Fort Knox, right? What was he saying? Like read between the lines there, right? He's saying, hey, maybe the gold isn't there, right? Maybe we really don't have the gold. And if we do, maybe it's fake.
[00:51:55] Speaker A: We don't know, I'm going to tell you where my mind is going now because I think we're getting close to getting to the bit bonds here because now we've really told you the problem. We've explained the different assets that are involved. And I was thinking about this earlier today in anticipation of this conversation how my layperson understanding in terms of how we used to be on gold was the reserve hard money, which we used to have a lot of pre1970 and then Nixon took us off the gold standard. Part of it is we were having a problem then too. I don't know how directly that's related into gold not being that an asset as we'd like it to be or how much of it is like we gave up a lot of hard asset as a country to fund what, what we were funding, that we, we diluted it. We diluted what we were doing.
[00:52:49] Speaker C: And we don't know. Right. And we don't verify it.
[00:52:52] Speaker A: Right?
[00:52:52] Speaker C: Verify it. We can't audit it. They won't let us go.
[00:52:55] Speaker A: Right.
[00:52:56] Speaker C: You know, you and your friends go take a drive over to Fort Knox and say, hey, I'm here to check out my country's gold. It belongs to me. I'm a citizen. I'd like to check it out and see how far you get.
[00:53:05] Speaker A: So overly simplifying this. America in terms of our monetary system was in hard money was predicated on gold for a long, for a long, long time. So we're giving like this whole bag historical context.
But now we're trans in transformation. We are evolving conceptually in terms of if gold isn't doing what it was meant to do and bitcoin. And I'm with you on the math. And I, when I think about bitcoin, I think of a decentralized network of computers that has been mining and evol since at least 2008 and has now built a structure that's been time tested in that it was conceptualized and starting to realize in 2008. And here we are in 2025 and it's relevant and we're talking about it and it matters. And it seems like it's only kind of snowballing in terms of its relevance. And that brings us to Bitbonds. Okay.
[00:54:06] Speaker C: Right. So as I mentioned earlier, there was a group called New Market Capital that came up, I think through the Bitcoin Policy Institute, made a propos to the US Government that when you refinance your debt this year, why don't you try this one? Take $2 trillion, that you're going to refinance, refinance it at 1% for 10 years, not the 4.3% that the current market would demand. Kind of leveraging MicroStrategy's thesis here a little bit and then take 200 billion or 10% of the proceeds from the refinancing and buy Bitcoin coin, right. And put that, is that where we.
[00:54:42] Speaker A: Get the 200 billion?
[00:54:44] Speaker C: Yes, it's 10% of the $2 trillion that you'd be refinancing. So the 10% would go into an escrow account, right into cold storage and be held for 10 years.
In this already you can understand the attractiveness to the US Government. They're able now to put out the duration from six month bills to 10 year notes. They're able to do it at 1% instead of 4.3%. Okay, so that's a huge win for the US government. Now after 10 years, the proposal is that 50% of the proceeds from the Bitcoin will go to the investors and 50% of the proceeds from the Bitcoin will remain with the government. Now if Bitcoin grows at even in a muted cagrade, compounded annual growth rate of, let's just call it 20%. Right. You're looking at returns on that investment north of 10%, potentially could be 20% or above. Now that would be an absolute game changing scenario on a lot of levels. Right. Let's talk about the positives first. Okay, so the positives, the government's able to borrow money at 1% instead of 4.3%. This would bring down our borrowing costs and it would put out our duration because we're borrowing for 10 years rather than six months. That's a good thing. Okay, second good thing, the investors in the bit bonds, let's just assume that bitcoin does very well and those Bitcoin bonds end up paying off 15%. Okay.
The investors in those bit bonds, let's talk a pension funds that are underfunded. Social Security, that's underfunded.
You know, insert your investor here. You know, even grandma and grandpa, they're getting a 15% return on their capital. Okay, that's amazing. Right? So this, this bitbond concept not only fixes the government's problem, but it fixes the pension problem, the Social Security problem. Right. It fixes a lot of problems that as of now don't have any solutions. Okay, so that's a huge, huge net positive. Now the other thing that I'd like to add about bit bonds is that unlike any investment I've ever seen, the incentive of the borrower is the same as the incentive of the lender. Right. Because we're splitting the proceeds of the Bitcoin 50, 50. So we both want the same thing to happen. Right. If Bitcoin goes up and does well, we both win.
[00:57:34] Speaker A: Right.
[00:57:35] Speaker C: The government, because it still maintains 50% of the Bitcoin at the end, after 10 years, begins to build its bitcoin strategic reserve or the strategic bitcoin reserve.
[00:57:46] Speaker A: Wow. Yeah, right.
[00:57:47] Speaker C: Because they're keeping $100 billion. Remember of the 200 billion that was invested in Bitcoin, 100 billion stays with the government. Government. The government also guarantees the investor the current 4.3% rate.
Okay. And they guarantee 100% of the principal. So if Bitcoin goes to zero, the government's on the hook. Now the government can use the options market, much like MicroStrategy and other companies, and use the derivatives market to hedge that risk. And that would be very inexpensive over a 10 year time period. So it's not as if the government's taking the risk. Right. They're able to hedge that exposure.
So I just want to throw that out there. I don't want to get too complicated. That's where it gets a little complicated. So as a buyer of this bond, guaranteed my principal back, I'm guaranteed at least 4.3%, although I'm taking a 1% coupon and I have the exposure to five to a hundred billion dollars of Bitcoin over a ten year time period.
[00:58:52] Speaker A: Gotcha.
Yeah, just so again I'm like, I'm, I love this because I was really was thinking about a lot of this stuff earlier and you just really are like filling in a lot of holes for me. So the 1% is like, like this is the first word that came to mind but like the drip, like the 1%, like they the dividend or the cash that people. It's a coupon, a fixed income. Yeah. That they're going to get the 1% until. And is this is the 1% on top of the principal. So their principal is safe. They're still going to get the 1%. Yeah, they could probably. They can almost do anything and else and get more than 1%. But the 1% is enough in terms of if you need a safety portion of your portfolio and investment strategy, that 1% is nice enough to know that your money's safe. Safe as safe can be.
[00:59:42] Speaker C: Because to your point, it's the pre cost of money. It's the US Government, they have a Printing press. They can only know, you know, your, your money is money. Good.
[00:59:50] Speaker A: Okay.
[00:59:51] Speaker C: Okay, so, and so question.
[00:59:53] Speaker A: So the, the, the, and I'm kind of just trying to make sure that I'm even, I'm getting. This is like the 4.3% that's still there is the promise at the end of the term they are going to get the, still the full 4.3% on the money. So you're going to get your principal 4.3% at term, at the end of the term. And 1% drip or whatever. I don't know why drip came to mind, but like 1%. Yeah.
[01:00:19] Speaker C: Okay. That's a good way to put so.
[01:00:20] Speaker A: So that is more compelling than to your point. Who, because we said this earlier and you're like, that's the question. Who's going to buy the, who's going to buy the treasury bill at 4.3% for 10 years, out for the duration when they don't, when, when, when they don't know if they have so much certainty about uncertainty about the U.S. yeah.
[01:00:39] Speaker C: And the reason why they're going to, the reason why they're going to do it is because they're getting upside exposure to this Bitcoin price.
[01:00:46] Speaker A: No, no, I get the bitcoin part. I was saying the other example to the contrast to just selling the treasury and not doing the Bitbond strategy, but just selling the Treasury. This is why, like, who wants that? No one wants that. But when you package it the way you just did, which a reasonable person can think through, that's what I love about all this stuff. No one's trying to get one over on anybody. It's like, let's just think through this through as people that have to really have a relationship with each other.
[01:01:11] Speaker C: It's the exact opposite, right? When I talk about aligned incentives, what I mean is that the government and the investor want the exact same thing to happen, right?
If Bitcoin does well and continues to grow at 30, 40%, man, both the government and the investor kill it. The government's balance sheet begins to heal because now they're gaining all of this income from the bitcoin.
The government's able to borrow money at 1%, reducing our borrowing costs, keeping our deficit down, Right? Like everybody wins. Now let's talk about who loses, because in a scenario like this, there are some pretty big losers, okay? And this is what we have to get through, which is that if you can earn 12.5%, let's just say the Bitbond ends up paying 12 and a half percent. Well, why would you buy a home?
[01:02:05] Speaker A: Well, real quick, though, just 12 and a half percent would be the appreciation of the bitcoin. So instead of getting your 4.3% at the end, you're getting that 50%.
[01:02:14] Speaker C: You're getting 12 and a half percent per year.
Per year.
[01:02:19] Speaker A: 12 and a half percent per year.
[01:02:21] Speaker C: Per year. Right, because the bitcoin. Because the bitcoin's growing at 20, 20%. Right.
[01:02:27] Speaker A: But you don't realize, you don't get that. I don't know if Keger is right to use here, but you don't get that till the end. No, that's not your drip.
[01:02:36] Speaker C: You do because the price of the bond, as bitcoin price goes up, the price of the bond will go up and you will see, you will get capital appreciation almost instant.
[01:02:47] Speaker A: It's 12% through capital appreciation, not in terms of the drip. Well, the drip is the 1% that's like, you can do whatever you want with that. But the other is like, yeah, the.
[01:02:57] Speaker C: Bond price will reflect, Right. The expected return and the respected annual return. So it's very possible you, you buy, let's say, just say the government buys the, The Bitcoin at 90,000 and Bitcoin goes to 150,000. The bond goes from trading at 100 cents on the dollar to 140 cents on the dollar, then 180 cents on the dollar.
[01:03:18] Speaker A: Right, right, right.
[01:03:19] Speaker C: And now, so you've bought this bond and you've actually realized, like, you have a paper profit and you can sell it, you can take profits.
[01:03:27] Speaker A: How easy is it to sell bonds? Look, so now I'm kind of putting, now I'm back in my, like, retail headspace, and then I'm like, who's going to buy there?
[01:03:35] Speaker C: The U.S. treasury market's the most liquid market in the world.
[01:03:39] Speaker A: Okay, so, but do a lot of retail investors do this or is this mostly like corporations and institutions and bigger.
[01:03:46] Speaker C: Players be able to. As an example, there will be a money market fund of bitbonds.
So yes, right. Like, there will be avenues to either buy the bonds directly through US Treasury.gov or you'll be able to buy the bonds through structured products, or you'll be able to buy the bonds through money market funds. But yeah, of course, absolutely.
Remember, the more of the bonds that we issue. So we do 2 trillion, then we do another 2 trillion. Well, as you continue to issue bit bonds, what happens to the price of bitcoin? Every time they issue $2 trillion of Bitcoin on bit bonds, they have to go out and buy $200 billion worth of Bitcoin and there's only 21 million Bitcoin that exists.
[01:04:28] Speaker A: How often would we issue these, how often would we reissue this?
[01:04:32] Speaker C: We have $9 trillion to refinance this year. We have to refinance, I think 27 trillion over the next three years. Now let's just draft into what are the knock on effects. What happens to like a company like Apple that currently issues corporate debt at 5%? Well, are they going to be able to issue corporate debt at 5% if the government is issuing bit bonds that are paying 12%? Well of course not. That means that Apple's going to have to issue bit bonds. That means that Microsoft is going to have to issue bitbonds. That means that the European Union is going to have to issue bitbond bonds. That means that everybody in the world. Right? So yeah, now let's talk about the downsides because it's very important to understand bits BIT bonds inside themselves. They begin to fix the system. We all. You're beginning to see how this heals a broken balance sheet. But at the same time, okay, you have another problem which is what happens to existing government bonds of which 37 trillion are out there floating around or some number, some large number, what happens to the price of those once you issue a bit bond? What happens to the stock market when you can earn 12.5% buying a bit bond? Are you going to buy some Dow Chemical or altria yielding 7% when you can get 12.5% without any risk?
[01:06:05] Speaker A: This is where I go back to what I was thinking about bitcoin before or what I've read and I know people think about is like it's a threat to centralized government was a concern. And so what you're saying is like it's kind of, it's interesting because it's two pronged. It's, it's a threat if you don't adopt. Because like you said, what's Apple going to have to do? They're going to have to issue it. So it's like people are just going to have to adopt.
[01:06:32] Speaker C: The real question doc, is how do you not adopt now that this idea is in the wild, now that MicroStrategy has proven that they can borrow money at 0% and other companies now like we are going to have private issuers of BitBots meaning not the government's. The government probably. Of course, I don't know, I'm not in those meetings. But my guess is that some institution and I know Pierre Richard has talked about it.
There's well known companies that are talking about bitbounds. So what if they just do it? They do the exact same thing.
They take a bond, they include government Treasuries, right? They, they struck, do a structured product and they issue a US Treasury 90%, 10% Bitcoin product. They guarantee the 100% principal. They pay a 1% coupon, they offer that same kicker. At the end, it's not the government that has to go first.
Once this idea goes and is in the wild and starts getting demand, well, good luck to you.
You are now competing with that product and that's free market capitalism. So it's not necessarily the government that's going to go first. The government may be brought into Bitbonds kicking and screaming, but one way or another, you know, it could be a smaller country that goes first, right. And that, that forces every other country to go, well, I'm now competing with, you know, I don't know, let's use Hungary or, you know, Czechoslovakia or one of the Eastern European countries or Russia or, you know, China or Saudi Arabia or the UAE that go first, right? Like we don't know who's going first. But this idea is in the wild. Okay? This idea, I don't see how you, like, I keep tweeting, you can't unsee this. Right? Like that, that's. Yeah, you cannot unsee this.
[01:08:34] Speaker A: I'm so grateful that you took the time out to talk to us about this and to talk with me about this because, like I said, pleasure, sir. Yeah. Because, because I had so many holes. Like I had a general understanding of certain things, but there were gaps that you really helped to fill. Because like, then to your point, once, once you are aware of that, how do you, how do you, how do you not know? How do you unsee that?
[01:09:00] Speaker C: So, so let's look at home prices in the United States. We know they're too high, right? If you want to kill the price of homes, introduce bitbonds. Because who in the world's going to buy a home, right. And pay potentially now the mortgage rates go sky high. Okay.
Because you have. Or you're competing with bit bond returns, right? Like in order to do this, wow, you can see the housing market drop in half. Well, that would be a good thing.
[01:09:30] Speaker A: Or a bad thing considering how high home prices are and how difficult it is for home ownership.
[01:09:36] Speaker C: So I've thought it through. Homeownership is really a function of a couple things, right? It's really more a function of the monthly cost than it is the price you pay for a home, right. Like when you look at your, if you're looking at a half a million dollar home and you have a 1% mortgage and the cost is lower than renting, well that's not bad, right? Like if your mortgage.
[01:09:59] Speaker A: Yeah, the people who got locked in in 2020, the goal like the golden handcuffs, like I don't ever want to leave my house because I don't think I'll ever get a rate like that.
[01:10:07] Speaker C: Like you can't leave, you can't even get a six and a half. You know, go, good luck going to find a 7% mortgage right now on a million dollar home. You know, you're not gonna find it. And now you have all these homes at extremely high prices. And, and as we were talking about earlier in the 10 problem, right now all the homes that are basically selling are cash buys by wealthy people that have tons of money, right. They're just paying cash for homes, right. And that, that just screws, you know, 90 of America because the wealthy people can afford to buy four and five homes and buy their kids homes.
[01:10:37] Speaker A: And that number you gave earlier with the 10 like 10% becoming 9% becoming 8%, like that's where it just keep, keep eating away at and then.
[01:10:46] Speaker C: Right, your assets. Yeah. As you give away your assets.
[01:10:49] Speaker A: I'm not laughing light heartedly because I have three children and I have one in each generation. So like I, I think these things through. I'm like, yeah, maybe I'm lucky, maybe I'm lucky in some ways and not lucky in other ways. But like I think about my children and like how are they going to manage, how are they going to navigate some of like with, that's a, that's a little bit of a digression.
[01:11:09] Speaker C: So let me give you a solution to the point problem. Okay? The government would not only issue bit bonds to refinance itself, that's an obvious one. But what about issuing bit bonds and then offering anybody who wants to buy a home a 1% mortgage, right? The government just comes in and says that's it, we're going to finance homes at 1% using, you know, Fannie Mae, Freddie Mac, whatever facilities they want. And we're going to underpin the ability for Americans to buy homes and then you could even come up with family friendly policies where if you have two kids or more and you remain married, we're going to make that rate a half a percent. And if you have three kids or more, it goes to a quarter of a percent. And incentivize people to stay married and to have children. Like crazy idea. But these are the types of things I think about, right? Like incentivize, incentivize good, healthy things that are good for America. Right?
[01:12:15] Speaker A: Yeah, I love that.
[01:12:16] Speaker C: So that's one way to protect the housing market would be to create incentive programs that the government's going to fund that. So massive fiscal stimulus. Right. And these programs would be funded with bit bonds.
[01:12:33] Speaker A: Okay. Because I was just going to say how is the government going to do.
[01:12:36] Speaker C: The one with fund these with bitbonds. And remember, the more bit bonds that are created, the more they succeed because there's only 21 million Bitcoin that exists.
[01:12:48] Speaker A: It's like a self fulfilling prophecy. In a good way.
[01:12:51] Speaker C: In a good way.
[01:12:53] Speaker A: I have so much more that I want to talk to you about, but I almost just want to end it on that note because that's what I want people to take away from this is the solution aspect of it. Because like even throughout a little bit here and there, like I could feel myself going to the dark side and like just thinking about what's the alternative is. But I'm like, wait a minute. If I, if we land on kind of what this when you think these things through and I think I'll be thinking about it more and maybe some people, whoever's listening to this, I hope they're like thinking about these things more too because the more people that think about it, we'll all are all going to benefit from this.
[01:13:28] Speaker C: So how about you part two?
[01:13:32] Speaker A: Yeah, we will, man. For sure. Like I'm so grateful that I had you on it. What's the best way for people to follow you?
[01:13:39] Speaker C: Yeah, just on Twitter, darkside2030erscore. Hopefully you can see it on the screen. Yeah, that's where I kind of hang out. And yeah, love to have you come follow me. And as Doc will tell you, look, I got into this because I want to make a difference. Like I want to help change the world, I want to help people. I love Americans, I love America. Right. I'm more interested in the common man than the wealthy elite. So yeah, like feel free to reach out, ask questions. Doc will tell you I answer. Right. Like I'm not one of those accounts.
[01:14:14] Speaker A: Totally did. I wasn't even expecting like we're recording this on Saturday. Like your, your spaces was I think on Wednesday and I just was at the spaces. I was like, this guy probably thinks I'm nuts because like when I just jump on the spaces, I didn't get on the stage. I didn't talk or anything. I didn't know anybody. I'm just like figuring out what's going on. But I'm in the text in the reply section and I'm going off because I was hearing you talk about these things. Like, I need to understand this better. This is really resonating with me. And then here you are. You know, I was like this, I would love to talk to this guy more. And I sent you the tweet and you replied and I have that posted on AD X. And I'm so grateful that you come from the X community too, because that's where I don't really have a presence on X. I don't really, I'm not going to get into my whole social media thing, but I do love how when clips from this podcast come up, I'm going to start like sharing as much as I can on X. That is like a broader conversation that's going on and give you some, give the listener some perspective in terms of a seasoned Wall street guy and with a Wall street background. And like the retail investor, like you said, I'm there for the common man. But just for, there's always when you, you said it earlier in something because you were talking about whether the buyer is a pension fund or some other type of institution or the retail investor. We're all participants and we all, if we're actively managing our own money or actively managing other people's money, these are the things that you're. We're thinking about about. So for our listens, for my listeners, our listeners at home, these are the things that may be going through your head and I, I hope you, I hope some holes were filled for you because they definitely were for me. And sticking with my money adjustment, alignment thing, like you helped really align a lot of thinking for me in terms of making more sense about what's actually being proposed. And I do think we're going to have a part two because I'm swimming with like the 200 billion and like selling more of these and like is the 200 billion just a test and then what are going to see from that? So I don't want to get into it because I'm glad that we landed where we did and go follow DarkSide 2030 on X. And I, I feel like I really have a friend on X now. So like when I see you on there and I'm messaging, I'll have know that we've had this experience together.
[01:16:32] Speaker C: Yeah, well, we're going to get you up on some spaces, Doc, and we'll, we'll do some more chatting up on X. So everyone follow us.
[01:16:38] Speaker A: I love it. Yeah, Yeah, I feel more comfortable now too, that, like, I've actually gotten a chance to talk to you to be able to do that. Thank you for watching and listening to this episod of the Money Adjustment podcast. Like, follow, subscribe and I, I'm going to hopefully do more conversations like this. And I, and I love being part of your network and you being part of my network because we're going to attract people around us that want to have these conversations. So goodbye to everybody else. I'm going to stick around with Dark side and we'll, we'll debrief and we'll see you on the next one. Bye, everybody.
[01:17:09] Speaker C: Yeah, I really enjoyed it. Think you did an amazing job. Really, you know, you get it. So, so I appreciate it. Really enjoyed the guy. I'd like to do it again. Request to come up. I'll see you. I'm following you now. So we'll get you, you know, I'll ask everybody to follow you. We'll get you a few thousand followers. Look, I've only been doing this since the day after the election, So I started November 10th of this year and I already have, you know, almost 12,000 followers.
[01:17:35] Speaker A: And that's awesome.
[01:17:36] Speaker C: Yeah, yeah. Like, I just decided, you know, I felt freer to speak with the Trump administration and I knew that the choke point 2.0 was dead. And I'm like, you know, fuck this, man. I was driving back from my house in Montana and I was. Gary Cardone was hosting a space and I hopped up and I started speaking and the next thing I know, here I am. So it just happened really fast now. Also, like, I think we should. Because of what, because of your kind of core expertise. I think we should talk about Misty the next one and we should talk about, we should talk about income generating strategies. So just to like, give you a heads up, up, I've been doing my own Misty. I'm a professional options trader. Right. So, like, you know, for me this is second nature, but I'm averaging 15amonth. A month.
[01:18:24] Speaker A: Wow. Wow, right? Like, that's awesome.
[01:18:26] Speaker C: Big. Yeah. Big numbers. And on real money, you know what I mean?
[01:18:30] Speaker A: Thank you for watching this episode of the Money Adjustment. If you want more, like comment and subscribe, you can follow me on X at Mark Kramer. Until the next episode, stay healthy and wealthy.
