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- [00:00]
A
Okay, Pomp, we had two hot inflation reports this week, and you have been writing a lot about how affordability and cost of living will be the biggest thing for the political side of the economy. What's going on here?
- [00:11]
B
Well, I think that cost of living is what people actually care about. They don't care what's going on in Iran, they don't care what's going on in the geopolitical conflict between China and the United States. When it comes to technology, how does that put food on my table? How does that make sure I got more money in my bank account? How does that make sure that I feel like I can do the things I want to do on a day to day basis? Right? So all about the lived experience. And while plenty of people in Silicon Valley or in Wall street, you know, we talk about all of these, you know, kind of much bigger ideas, these longer term trends, the data, the competition, geopolitics, these like, intellectually stimulating ideas. At the end of the day, if you're living anywhere in this country, whether it's on the coast, in the middle of the country, if you're living in the south, anywhere, all you care about, can I put gas in my truck to go to work? Can I feed my kids? Can I take my wife out on the weekend to go on a nice little date? If I see something on the Internet that I want, can I buy it? And do I feel like I got enough money in my bank account that I'm going to be all right? If you could do that for people, they're very interested in your policies. But if they feel like they can't have that life or have that security or have those opportunities, then they want change. And I think that affordability right now is a huge debate. And unfortunately, a big part of the country is turning towards socialism because they're basically saying this system doesn't work for me in terms of capitalism. And so I think right now the Republicans have a very specific mandate. Affordability is getting worse. You're gonna get your clock cleaned in November unless you get affordability in a better spot. And the hard part about affordability in a short period of time is the data might get better, but the psychology doesn't. And so you saw this with Biden is even after inflation had turned over and come down a little bit, people are slightly, this stuff is expensive. I don't care what your data is telling me what you nerds are doing with your calculators, right? All I know is I go to the grocery store and I buy not A lot of food and it's 100 bucks. That used to not happen. And so psychologically, people are just saying it's too expensive. And they don't care about the inflation rate. They just care about what is the nominal price I'm paying. And I think that that is a huge problem here going into the second half of the year. And so we got to get inflation to subside and we got to get affordability in a better spot for every single American.
- [02:29]
A
So I think one disconnect here too, is that President Trump, whatever he may be doing on the affordability side, he is talking about the stock market and crypto prices and saying, hey, it's time to buy assets. And for a very small slice of the population, that's a great indicator. And you want to be long assets when President Trump's in office. But the fact of the matter is, the midterm elections will not go his way in if he cannot. Probably get some rhetoric into the airwaves here about affordability, cost of living, things like that.
- [03:00]
B
Well, I would say it's not even so much him talking about the affordability like we live in a country now where most people, myself included, when the politicians start talking on either side of the aisle, immediately you're skeptical, you just listen. Show me. Right. And look, I think that if you look at the Trump administration and their current progress, if we go back to end of last year, economic boom, prices were starting to turn over. Inflation was coming down. The deflationary forces of deportations, tariffs, AI and robotics were swallowing the US Economy. It was high growth, low inflation, environment that is like a central banker or a politician's dream. Now with the war in Iran, you go right at the heart of energy prices. Oil spikes, energy's up, gas at the pump is up, all this stuff. Well, 40% of the jump in CPI came from gas prices. So you look at that and you say to yourself, okay, without Iran happening, these guys, it was a free walk. They were going to dominate the rest of Trump's time in office. Now we're talking about what, in three months, literally 100 days, we went from that environment of high growth, low inflation to, whoa, hold on a second. CPI spiking, PPI spiking, et cetera. Now, what I've said since the day that this war started, if it is short lived, inflation's not gonna be a problem. Cause the deflationary structure is going to overwhelm it. But if we have a prolonged conflict, then the analysis changes. I think that right now we're kind of at the turning point, this is about as long as the conflict can go on without this being a much more structural inflation type issue. So if this thing doesn't end in the next two, three weeks, you're going to see me go from, hey, I think this is going to be short lived and I think that inflation is not going to be a problem to oh boy, here we go. We saw this story before. Inflation's going to spike, right? And I think that is what the American people are looking at is because whatever happens in the next three weeks, that's ultimately going to determine November.
- [05:10]
A
And I think if we prolong this longer than we need to or should, these inflation reports are going to piss a lot of people off, even if they are 0.1% higher than expectations. Like, it almost doesn't matter what the actual numbers will be. It's just if it's moving directionally how people want or don't want.
- [05:29]
B
But you know, it's funny is I don't care about is it higher or lower than expectations, right? The reason, if you notice, I almost rarely tweet about the expectations because just because everyone is dumb and can't actually guess what inflation is shouldn't be an anchoring point, right? Instead it should just be, what's the number? Is it going up? Is it going down? How much is it going up? How much is it going down? Like, that's to me, 90% of the story. The fact that you got a bunch of economists who are bad at guessing the number, well, that's the economist problem that has no say whatsoever over the American people's life is that somebody else is good or bad at their job. Now I hope that they're accurate, right? That'd be great. It would give us more information earlier. All this stuff historically, they're just not that accurate. So, like, put that aside. The bigger problem is, no, dude, this stuff is jumping higher in the short term. There are these short term energy price things. And so I think that the administration Trump's been talking about publicly, he believes that if he ends the war in Iran, the price of oil is going to come down, energy will subside and everything will be gravy maybe, right? I don't know. Like, that would be the hope, right? I don't care what side of the political aisle that you personally subscribe to or if you're an independent, you want energy prices lower. Like that is good for America, that is good for business, that is good for people. Let's see what happens though, right?
- [06:47]
A
So I think the difference here between what Trump's done with Iran compared to, let's say, Liberation Day. He can't exactly unwind all of this with the stroke of a pen, like it's not an executive order thing, where suddenly the Strait of Hormuz is all resol and oil starts flowing and all the refiners get back online. So that's one big difference that I'm personally watching for energy prices. But I have to ask you, how does Bitcoin fit into this whole picture here?
- [07:13]
B
Bitcoin is an asset that gives you certainty in times of uncertainty. And I think that that is a lost value proposition of Bitcoin. What do I mean by that right now? What's the cost of capital going to be just in Q3? Forget two years from now, Nobody has any clue at the Fed there is so much dissent that some people think we should hike rates, some people think we should lower rates, some people think that we should keep them equal. So nobody knows. Okay, that's uncertainty. Is the AI boom sustainable or not? I think so. There's a lot of people who think not so. Right. Okay, that's uncertainty. Is the stock market going higher or is a big crash ahead because the PE ratio is at some level, blah, blah, whatever, I don't know. That's uncertainty. Are American citizens stronger than they've ever been or are they actually in pain? Are we in a rolling recession or are we just living life on credit? You can twist this data to tell all kinds of stories. Uncertainty. And so what do I want in my portfolio? I want to buy an asset and I want to hold it for the next 20 years. If you tell me right now, I got to buy one asset and hold it for 20 years. The asset that has the most certainty to me is a digitally scarce, a finite based asset that I can audit at any time that is resilient, that is non sovereign and is got the hearts and minds of an entire generation that is going to continue to make money and going to inherit the boomer generation's capital. So I like Bitcoin because it is simple, it is resilient and it is certain when you put those three things together, there's not a lot of things that fit that. Now go look at how did people make money before they did pretty much the same thing. They bought indexes, they bought real estate. Right? Like that's how families made money. And so I just think that Bitcoin has now stepped into this bucket of assets that you can buy and hold for a really long period of time. It's just that at certain times, you know, it draws down, oh, bitcoin's over. Like sure, they said that how many times before? Let's see.
- [09:25]
A
I mean the fact that it's Even at what, 82,000 right now, or 1,000 people are one, it's pretty unbelievable. So my question now, do you think the thesis changes at all with the acceleration of technology and maybe all the spend going into AI from the hyperscalers here?
- [09:45]
B
Well, I think that there's a couple of things going on. One, I'm a big believer that the AI boom is going to be much bigger and much more prolonged than most people think. That's first of all. The second of all is if you went to your economics one on one class for the first day, you didn't have to go after that. But if you went for the first day, they talked all about supply and demand. And in the supply and demand conversation there is a ton of demand, insatiable demand. Dario Modi over at Anthropic talked about they planned in their business to like 3x and then the outlandish example was, okay, let's be prepared for 10x growth. And they 80x. Right. So like that is incredible demand. So where is supply lacking? Well, you can start going through. There's power generation, there's data centers, there's chips, there's chemicals, there's commodities, there's, you know, all of these things that end up being a huge problem. Well, all of those problems or shortages or likely to lead to higher prices over the long run. So if you are an investor, bitcoin scarcity go through every single thing. I just talked about the AI trade. Scarcity, right. That is what people ultimately want. So you see the memory stocks doing so well. It's like scarcity. And so to me that is a very simple way to invest is find things where demand outstrips supply and it is going to be a structural shortage in the coming years. And therefore, if you buy the asset now and the shortage persists, the and prices will be higher because price is the market clearing kind of mechanism to actually get these things to trade hands. Now with that said, how does bitcoin fit in? In a world of abundance, scarcity becomes really valuable. And so if I can now create music with a couple of clicks, nobody wants to hear me sing, but if I can create an AI song that goes to number one on the Billboard, well, what becomes valuable in music? It's probably things that are super rare, like I don't know, maybe in person concerts. It's hard to replicate for AI. It's unique. It's very small number of them. It's infrequent. It takes effort from a human, like all these components. Okay, well, go now to stores of value. Bitcoin is scarce. It also requires effort in terms of the mining process and the expenditure of energy and all these things. So I just think that all of these technologies are colliding. And there's one big trade. They're never going to stop printing money. And technology is going to be bigger and much, much more in demand than everyone realizes. And if you believe those two things, which I do, get long and chill. Just chill like they are going to make your investment portfolio explode in value over the next decade. So just chill.
- [12:28]
A
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- [13:52]
B
Their head's a bubble. That's what I think. Their head's a bubble, Right. Why? Because they got stupid ideas in their head. They've packed so many dumb ideas in their head. And you ask them, okay, explain to me why it's a bubble. And they literally will tell you things like in 1942, when horses were riding around, like, shut up, right? And then you go, and they'll say, oh, the PE ratio is this. And a decade out, it's the lost decade. Do you understand what the United States is doing right now? The United States is going from an antiquated industrial revolution. Then we went into what I call kind of the electronic age, which was Facebook and all this stuff. And we realized we do not have the infrastructure to support how much demand is coming. And the reason why I say that the bears heads are a bubble is because they cannot comprehend the fact that the AI agents are going to drive more demand than the humans. They do not understand exponential demand. They do not understand exponential growth. They literally sit with their spreadsheets and if you said to them, I can now do your spreadsheet, they would be like, no, I want to use my little feather and I want to dip it in ink and I want to do it myself. That is how crazy these people are. And so you look at and you say, okay, if AI agents are going to increase demand both in terms of they're creating more content than humans. So already the data shows AI agents create more content than humans create in a given year. What do you think is going to happen? You think it's going to reverse? All of a sudden humans, we're going to get like, instead of 10 fingers, we're going to get 20 and we're going to type on our computers more often. No. So that is just starting. What do you think is going to look like in five or 10 years? This is an explosion of demand. So you go back to, okay, what do they point to? They point to historical valuations. Guess what? We never had a trillion dollar company before. Now we got a lot of them. Okay, does that mean that is Apple overvalued? Right? Is Berkshire overvalued? Let's just go through all the trillion dollar companies. So, okay, put that aside. Valuation stuff is literally dumb. Second is if you go and you look at and you ask them and say, okay, explain to me specifically where if demand is outstripping supply, the only way you get the market to roll over is supply has to now be an oversupply compared to demand. Show me any single one of these shortages where the supply is growing at a faster rate. I'm not even asking you to show me a place where there's oversupply yet. I'm just showing, show me a trend line where the supply is growing faster than the demand. Commodities, chemicals, data generation, data power, energy generation, all this, there is nowhere. And so you go back and you say, your head's A bubble, because you have packed it with so much academic information and you are sitting staring at charts like you are an astrologist. Instead, think from a first principle standpoint. There is not one person that I know that thinks from a first principle standpoint that is even remotely considering that there is some big bubble that is ready to pop now in a year or two years. If all of a sudden we look at the data and supply has exploded, demand has slowed, and now there's some different story, 100%. But right now, look at the growth of anthropic. If anthropic all of a sudden came out and said, oh, we were growing $10 billion of revenue per month, now it's 1. People would now change your mind, right? You say, oh, wait a second. Demand may not be as exponential as we thought, but that's not what's happening. They're accelerating. So as of right now, given the data, there is no way that there's a bubble. And so then you go and you talk to the actual operators, go talk to the people building the data centers, go talk to the people that are at the large language labs, go talk to the people building the software, go talk to the people running AI agents, all this stuff. They're like, yo, I'm being throttled. I cannot use this enough. They're not letting me. I'll pay them more money. They still won't let me use it enough. And so every single data point is suggesting there is no bubble. And you go back and you say, why do these people think that? Because what I have found in my career is that they usually are the people who didn't make a lot of money. They just kept predicting doom and gloom, the next big bubble, and they kept promising that there was financial destruction. So what I think should have happened is every time you say that financial destruction's on the horizon, and it doesn't happen every single other time that you make a prediction, it should come with, like, a little scarlet letter on it, right? It should just sit there and it should say, hey, this person has predicted zero of the last seven bull markets, and they have predicted four market crashes that never materialized. Caution. Caution when you're listening to them. So their head's a bubble.
- [18:46]
A
Fair enough. You know, there's that saying that a bubble is any rally you're not participating in.
- [18:52]
B
1000%.
- [18:54]
A
And I can't tell you, if you just look at Micron right Now, it's about 750% in the last year.
- [19:00]
B
Bubble, bubble.
- [19:01]
A
If you tweet a chart of Micron right now, you will get so many people calling it a bubble, it is unbelievable. Even though talk about valuations trading at like an 8.8x Ford PE right now, which makes it one of the cheapest stocks in the entire stock market. Even though it's probably $800 billion market cap, none of it makes any sense. But because there are so many people that missed the Micron rally, and I still think it's going to run up much higher, but so many people miss that first leg, they can't help but say this stock's full of air and the company's built on a house of cards.
- [19:34]
B
You know, one of my favorite quotes of all time comes from a guy who maybe I don't agree with on a lot of other stuff, but Mr. George Soros has this great quote where he says, when I see a bubble, I rush in to push it higher. Right now why is that interesting? Momentum begets momentum, Returns beget more returns. The best day to buy stocks in the stock market is at all time high prices, better than any other day of the year. And so you look at that and you say, maybe all the momentum is just an intelligence test. Can you be humble enough to say the market is smarter than me? Paul Tudor Jones, he was talking on a podcast back in February saying he was a little frothy, he's a little nervous. He went out to, I think the Milken conference, went on cnbc. They said, what'd you do when you got back? He literally, it was like a, like a cackle. He's like, I'll buy more AI stocks. Ha ha ha ha ha. Right? Like that is the thing. It's working. Demand is outstripping supply. Keep it simple, stupid, and just relax. You are not smarter than the market. And if you think you are and you think you're gonna get at some movie made, remember that. Those guys, most of them were right one time.
- [20:55]
A
On that note, Pomp, thank you so much for doing this and we'll do this again.