#715: $1.5 Trillion in AI Promises With No Business Plan with Gary Brode

Summary

Podcast Summary: TFTC #715 – "$1.5 Trillion in AI Promises With No Business Plan"

Podcast: TFTC: A Bitcoin Podcast
Host: Marty Bent
Guest: Gary Brode (Deep Knowledge Investing)
Date: February 11, 2026

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Episode Overview

This episode of TFTC dives deep into the dizzying capex surge in AI by hyperscalers, the lack of proven business models behind the trillion-dollar AI buildout, and what this means for capital markets, hard assets like Bitcoin, and societal trends. Host Marty Bent and repeat guest Gary Brode explore the fallacy of price over value, macroeconomic fragilities, the effects of government overspending, and the Bitcoin narrative amid turbulent monetary conditions.

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Key Discussion Points & Insights

1. Price vs. Value in Markets (00:41–06:00)

• Marty sets the stage with Warren Buffett’s dictum: “Price is what you pay, value is what you get.”
• Gary stresses that true investors look 5–10 years out, especially with long-term assets like Bitcoin, gold, and silver—not at the next 10% market swing.
  • “In the case of Bitcoin in particular, it reacted really badly to the Warsh nomination... but gold and silver recovered... Bitcoin hasn’t yet.” (02:53, Gary)
• Leverage and forced selling can drive prices further from underlying value, as margin calls and reflexive selling cascade.

2. The Warsh Nomination & Misreading the Fed (06:00–12:22)

• Gary rebuts the narrative that new Fed Chair Warsh is a hawk, citing his consistent pro-lower-rates stance.
  • “If their public comments match their private comments, you have a pretty good idea of where they stand.” (06:57, Gary)
• Emphasizes that the Fed’s power over long-term rates is waning.
  • “The Fed only controls the overnight rate. The bond market controls the rest of the yield curve...” (10:17, Gary)
• Even quantitative tightening (“QT”) is dwarfed by annual Congressional overspending.

3. Inflation – Real Drivers and Debunking Excuses (12:22–19:52)

• Marty probes why inflation expectations are sticky, with AI, electricity prices, tariffs, and reindustrialization all in the mix.
• Gary methodically debunks common inflation scapegoats:
  • Tariffs: “None of this happened... inflation did not spike... and it’s been almost a year.” (14:08, Gary)
  • AI-driven electricity: Hurts families, but “overall energy prices haven’t been rising.”
  • Reindustrialization: Not a main driver, but could be positive if it raises wages.
• Concludes: Congressional overspending is the real engine of inflation.
  • “Both parties overspend... you are paying for that... through inflation... housing that’s not affordable, lower marriage rates, lower birth rates.” (20:10, Gary)

4. Societal Effects: Casino Behavior & Economic Despair (19:52–25:28)

• Brode laments how relentless currency debasement has turned young people into gamblers—sports betting, meme coins, “high velocity trash economy.”
  • “It’s a casino. People understand the existing system doesn’t work for them... win big or die trying.” (22:09, Gary)
• Marty: “Everybody... particularly if you’re younger... they’re all speed-running to escape the permanent underclass.”

5. AI Bubble: $1.5 Trillion with No Business Plan (27:15–38:32)

• Hyperscalers (Meta, Microsoft, Google, Amazon) are spending over $600B/year on capex for AI, with no clear revenue model.
  • “...they’re not only spending hundreds of billions of dollars without a business plan... the spending has to keep going. Every six months it’s a new product.” (29:25, Gary)
• OpenAI projected to lose $125B in four years but has $1.4T in hard commitments to vendors—potential to destabilize markets if defaults ripple to Nvidia, Oracle, et al.
• “If OpenAI doesn’t have the money to pay Oracle, that’s going to be a problem…” (32:49, Gary)
• Marty draws parallels to the scale of bailouts in 2008: “Private companies that are $1.5T in the hole. It’s like, yeah, we’ll get to it.” (34:45, Marty)

6. Risks to Equity Markets & Potential for Bailouts (38:32–45:29)

• If AI spending stalls, market darlings (Nvidia, Microsoft, Google, Amazon) falter, risking a dot-com–style crash.
  • “If their growth slows... everything gets sold... it’s going to be a really unpleasant two or three days.” (43:54, Gary)
• Both agree the government will step in with bailouts (“AI existential for the administration.”).

7. Historical Context: Fed Meddling and Loss of Independence (45:29–56:09)

• Fears over Fed independence are “overblown theater”—unprecedented debt and executive branch pressure have always been features, not bugs.
  • “Why does anyone have faith in the US Government or the dollar? ... The dollar’s being debased into oblivion as all fiat has been through history.” (49:50, Gary)
  • “Do I like it? No. But nothing has really changed... The Fed has never been independent.” (55:08, Gary)

8. Trump Children’s ‘Investment Accounts’ – Policy Thoughts (56:09–64:02)

• Marty asks if this is a clever market bailout.
• Gary: Generally opposed, but says at least it’s investment, not consumption. Could be a generational nudge toward long-term thinking.
  • Personal story: His father’s $248 gift of 19 shares as a baby, grown to $15,000 over decades.
  • “If I invest and I’m patient, I can grow real wealth... I don’t have to treat my financial life like a casino.” (63:15, Gary)

9. AI’s Real-World Efficacy, Risks, and Bitcoin’s Role (64:09–73:06)

• Marty points out Google eying a 100-year bond—a sign of capex doubts.
• Brode: At some level, actual business models are needed; current web of circular deals (“Nvidia invests in OpenAI, who buys Nvidia GPUs”) echoes dot-com era.
• Discussion shifts to AI’s future: Agentic tools may be valuable—but carry huge security risks.
  • “If they have access to your email, contacts, photos... oh boy. Something bad really can happen.” (69:22, Gary)
• Bitcoin emerges as a viable authentication layer:
  • Marty: “There’s a protocol on Bitcoin’s Lightning network called Lnurl Auth... I was successfully able to get my agent to spin up a Bitcoin node... sign into a website... and put in a trade. And it did it successfully.” (70:43, Marty)
  • Both joke about Bitcoin passing the “coffee test” for real currency status.

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Notable Quotes & Moments

• On Investors’ Perspective:
  “That’s how you make a ton of money... returns in the hundreds of percent. Not trying to scalp the next 5 or 10%.” (02:30, Gary)

• On Fed Influence:
  “The Fed only controls the overnight rate. The bond market controls the rest of the yield curve...” (10:17, Gary)

• On Societal Impact:
  “[Easy money] is turning everybody into gamblers. That’s not what you want... you want people working and building and saving and investing.” (22:12, Gary)

• On AI Mania:
  "They’re not only spending hundreds of billions... without a business plan, the spending has to keep going... every six months, it’s a completely new product." (29:25, Gary)

• On OpenAI Liabilities:
  “They have taken on $1.4 trillion of... promises... they need $1.5 trillion of cash... and if they don’t deliver... could literally take down the entire stock market.” (32:10, Gary)

• On Federal Reserve ‘Independence’:
  “The Fed has never been independent. It is never going to be independent. I don’t like that. But that’s the way it is.” (55:08, Gary)

• On Generational Investing:
  “If I invest and I’m patient, I can grow real wealth. If I think across decades, I don’t have to treat my financial life like a casino.” (63:15, Gary)

• On Bitcoin’s Role in the Agentic Economy:
  “The agentic economy is emerging. Bitcoin is a good currency for that... the nature of the private public key pairs actually does set it up for interesting authentication credentials in the agentic world.” (72:00, Marty)

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Timestamps for Important Segments

• Price vs Value / Warsh Nomination: 00:41–12:22
• Inflation’s True Source: 13:21–19:52
• Social & Investment Behavior Shift: 19:52–25:28
• AI Investment Bubble: 27:15–38:32
• Equity Market Risks/Bailout Odds: 38:32–45:29
• Fed ‘Independence’ is a Myth: 45:29–56:09
• Children’s Investment Accounts Debate: 56:09–64:02
• AI, Security Risks & Bitcoin as Layer: 64:09–73:06
• Bitcoin for Authentication / End: 70:43–73:06

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Conclusion

This episode blends financial wisdom, macro analysis, social commentary, and a nuanced examination of the AI boom’s shaky underpinnings. Brode and Bent convey skepticism toward mainstream narratives, stress the necessity of long-term thinking, and highlight Bitcoin’s unique value proposition—especially as new “agentic” digital economies emerge in a world of mounting debt and experimental tech investments. Essential listening for anyone alarmed by the size of bets made on AI and searching for ways to position themselves for the next era of money and technology.

Transcript

[A]

You've had a dynamic where money's become freer than free.

[B]

If you talk about a Fed just gone nuts, all, all the central banks going nuts.

[A]

So it's all acting like safe haven. I believe that in a world where central bankers are tripping over themselves to devalue their currency, Bitcoin wins. In the world of fiat currencies, Bitcoin is the victor.

[B]

I mean, that's part of the bull case for bitcoin.

[A]

If you're not paying attention, you probably should be. Probably, should be. Probably should be.

[B]

Mr. Broad, welcome back to the show.

[A]

Thanks, Marty. Great to be here.

[B]

What a week. What a week. Thinking about. I've had a lot of time to prepare for the show today because we thank you for last minute agreeing. And this morning, where you are, night where I am, we agreed to this, to this recording early in the morning for me, you have since gone to bed, woken up, gotten your day started, and here we go. And I think to start off, this phrase has been in my mind for the last few days because my partner at 1031, John Arnold, he writes our newsletter. And on Saturday, the sort of line he ran with was the Warren Buffett line, price is what you pay, value is what you get. And I think we're in a market environment where people really need to dig into that first principle and understand where the value is, despite where prices may be, especially as it pertains to bitcoin. And you had that incredible tweet you sent out, I believe, yesterday or the day before about bitcoin. You've had some commentary on warsh, and I think this is a good framing to jump into. Where are prices and where's the actual value in your mind out there?

[A]

Yeah. So I think that's a key question for any investor. So many people say to me, where do you think the market is going? Or what do you think gold is going? Where do you think bitcoin is going? And when they ask it, they mean the next move. Where's it going to be tomorrow? It going to be next week, where's it going to be next month? And the answer is, I don't know. Nobody knows. I never know whether the next 10 or 20% is up or down. And people who claim they know, it's sort of like that old broker's trick where they send half the people something saying, buy the stock, and the other half sell the stock. And then the half that it works with, they send them something else, buy the stock, sell the stock, and they do it. And at some Point, they've given two or three good recommendations in a row to somebody, but it's not really predictive. And so the question that I asked them with things like gold and silver and bitcoin and these long term hard assets, I say to them, where do you think it's going to be five or ten years from now? Because I'm prepared to hold for a really long time. And that's how you make a ton of money. That's how, you know, you start to make returns in the hundreds of percent rather than trying to scalp the next 5 or 10%. And I think that's a key thing. And in the case of, you know, bitcoin in particular, it reacted really badly to the Warsh nomination. I mean, in fairness, gold and silver did, but they've recovered, you know, for the most part, Bitcoin hasn't yet. And I think the Warsh nomination was really interesting. First of all, the President surprised people. They were expecting an ultra dove with good reason. I was too, based on his commentary. That's what you would expect. The market generally doesn't like surprise, Marty. I mean, you know, you've seen it. When the market is surprised even it's a good surprise. And it's, they don't like, they don't like something they weren't expecting. Right. And so there was this narrative which I disagree with. But let's start with the narrative. The narrative was Horsh is a hawk. He's going to raise rates. And in doing so you have a higher yielding dollar against zero yield hard assets, gold, silver, bitcoin that don't have a yield but have a lot more value long term because they're not debased on an annual basis. And so the thinking is, well, wait a minute, if Warsh is going to raise rates, he's going to be a hawk, then that's the place where Fiat has an advantage over zero yield hard assets. And, and it'll extend that advantage. And so you add people that were selling hard assets, again, gold, silver, bitcoin and buying dollars. Right? That's effectively what they were doing. And I disagree. So that is what was happening. And then you had rounds of deleveraging, right? So a lot of people had, you know, derivatives products where they were very, very leveraged. There's a huge paper silver market that. There is a paper gold market. A lot of the people in bitcoin now are using financial derivatives. That effectively increases the tradable supply of bitcoin and allows them to push the price around. But they're on margin too. And so when prices drop, collateral is lower and margin requirements get tightened and people have forced selling, they have non discretionary selling. And so when you're talking about price and value, you had people selling regardless of the value, regardless of the price it was, you need to raise capital today. And so they sell. And then in what George Soros used to call reflexivity, that selling causes prices to drop. And then people will in turn say, oh no, I have another round of margin calls. And so there's more forced selling. And so the more forced selling and deleveraging there is, the lower the price will drop, the more for selling there will be. And that continues until there's either capitulation where new money comes in, or you just like people are deleveraged enough that they don't have to keep selling on a regular basis. And that's where you hit your bottoms. Now, the reason I think the Warsh take by the market was wrong. First of all, Warsh is not a hawk. He has come out publicly and said, hey, I favor lower rates. And as soon as he was nominated, I wrote a piece. I put it, you know, in our weekly five things, I put it on the DKI blog. But I basically said, look, Bush wouldn't have gotten the job if he wouldn't have promised President Trump lower rates because it wasn't going to happen. And then it turns out last week the President spoke with NBC News and said, yeah, Walsh told me lower rates, I wouldn't have given to the job otherwise. And so somebody might say, well, of course, of course he said that to the President. He wanted the job, but he doesn't really mean it. But Marty, what do you do in a situation where somebody's public comments match their private comments? Like that's. If their public comments match their private comments, you have a pretty good idea of where they stand. So that's point number one. Point number two, Wash may be sitting in the big chair, but he's not the whole Federal Reserve Open Market Committee, he's got one vote. So if Warsh is a hawk and the other 11 members are pretty dovish, and they are, he can't outvote them. He can only try to persuade them. He can't move the whole room. He just gets to sit in the big chair. But at the end of the day, when they vote, he only has one vote. And then the final thing, I don't know that there's a whole lot the Federal Reserve can do to really move long term rates. This is one area where I Do disagree with the President. President Trump is saying, hey, I want the Federal Reserve to lower rates. But that doesn't work. The Fed only controls the overnight rate. The bond market controls the rest of the yield curve, everything from one week to 30 years. And so for people who don't follow this on a daily basis, let's just give the the best, clearest, most recent example. The Federal Reserve started cutting in September of 2024 and over the last 16, 17 months they've cut 175 basis points. That's just a fancy finance way of saying 1.75%, just under 2% of overnight rate cuts. And yet the yield on the ten year rose. Now granted it's come down a bit since then, but over that time the yield on the ten year treasury actually increased. And so, you know, somebody might say, well wait a minute, why is this happening in the Wall Street Journal even said somehow, right, Somehow we're getting higher rates. It's not somehow the bond market is correctly pricing in higher long term inflation. That's exactly what's happening. So the President can put Warsh in wash, can say I want to cut, Warsh can cut, the Federal Reserve can cut. But the bond market is saying we don't believe you and we're going to, you know, set the real borrowing rate where the five year is, that's where corporates get priced the 10 year, that's where mortgages get priced, right? That, that gets priced off of future inflation projections. So there just isn't that level of control anymore. Now the one place where I think the Bitcoin bears have made a valid point is they've said, yeah, but you know, Warsh is in favor of qt. Okay, fancy way of saying quantitative tightening, which again, that's just a finance way of saying they're going to reduce the money supply. So what happened was the Federal Reserve had a balance sheet of about $3 trillion. They do need a certain amount for liquidity. Two, $3 trillion is what people generally think would be normal or reasonable. Let's just accept that number as true. During COVID that number ballooned to $9 trillion including trillions of dollars of mortgage backed securities which the Federal Reserve is not legally allowed to hold, right? Anyone wants to know why housing prices are so expensive, look to the Federal Reserve, right? It's not your greedy broker. They're not taking that much money. So what happened then was Powell's Fed started to cut on a monthly basis. And I was skeptical that they would cut very much. But to their credit, they took a good two, $3 trillion out of that total. And right now the Fed balance sheet is a little over $6 trillion. Okay, that was real progress. Now to the people who are saying, well, wait a minute, Warsh is going to engage in quantitative tightening. He's going to tighten the money supply. That's bad for bitcoin. Okay, fair enough. But over the last two years, Powell's Fed has cut almost $3 trillion off the balance sheet. We got record equity prices, record gold prices, record silver prices, and just last October, which is only a few months ago, record bitcoin prices. Clearly it's not everything. And then the final point I would make about that is, let's say Wash comes in and it cuts $3 trillion off the Fed's balance sheet on day one. Now that's a ridiculous example and I'm deliberately being extreme. But let's, let's say that happens. Okay? That's one year of congressional overspending. Give it 12 months and M2 will be right back where it was. Right? So the most he can do is offset one year of congressional overspending. And look, if you're trading bitcoin, if you care where the next 10 or 20%, which direction that's going to be, that matters. But if you're somebody with a long term timeframe, if you're looking out five, 10 years and you own Bitcoin because it's a better option than constantly debased Fiat, right? Or the dollar, the yen, right? Fiat is a government currency. If that's why you own it, then wait 12 months. And for real Bitcoiners, that's nothing, right? We've been through worse than that together.

[B]

That is a blip on the radar in the, on the large scale of things. And I wanted to touch back on the 10 year and the fact that you have the bond market pricing in inflation, elevated inflation, and obviously with qt, if it's still on the table, many people are saying like, huh, why, why did, why does the market think that inflation is going to be high? What do you think are the drivers of that inflation? Is it this, this mad dash for AI infrastructure having an effect on electricity prices, which is the raw input? Is this re industrialization tariff regime a sort of implicit acknowledgment that at some point there may be a liquidity crisis that forces the Fed's hand and the Treasury's hand to really turn on the monetary spigots? What do you think the market's seeing right now in terms of inflation?

[A]

All right, so we've got the proposed ideas. Let's take them all here. Tariffs, AI electricity. What were the other things you mentioned?

[B]

AI tariffs, electricity, re industrialization, potential liquidity crisis that forces the Fed's hand. What do you, what do you think the market's trying to say?

[A]

All right, so I have an opinion on this, but let's take these things one at a time, right? Let's approve or debunk each one of those tariffs. It's clearly not that. Right. You remember Liberation Day last April? All the fiat economists went crazy. Oh, no, he's going to crash the global economy. That didn't happen. Oh, no, he's going to crash the economy of the United States. That didn't happen. Oh, no. We're going to have a huge resurgence of inflation. Listen, I think inflation is too high. I think the CPI is understated. But when you look at the durable goods numbers, inflation did not spike. None of this happened. And then to the credit of the fiat economists, they came out over the summer, they said, well, there's supply chain issues. It'll take some time. We really won't know until September or October. Okay, you know what? That was a fair prime, right? Like to say, it'll take a while for this to work its way through the system. You'll start to see higher prices. Well, guess what? That still hasn't happened. And it's been almost a year. And if these fiat economists had any integrity at all, they would simply say, I was wrong. But they haven't done that. Right? Where's Paul Krugman coming out and saying I got it wrong? They don't do that. And listen, martyr, at Deep Knowledge Investing, we don't get a lot of stock picks wrong. But when I do, you better believe I write to my subscribers in very clear language. I was wrong. This is why I was wrong. I apologize for the error. Right? We lost money. I screwed up. And. And you have to own that mistake or you don't learn from it. But these Keynesians, these fiat economists, like, they haven't admitted they were wrong about tariffs. And so, you know, we can talk about the reasons why tariffs haven't caused inflation. And I have opinions on that. I actually think Pompliano put out a great piece on it last year. There are reasons to believe that it wasn't going to cause a problem. That was my opinion and it didn't. And people should admit it. On the AI electricity thing, I think that's a really big deal to families. I think when you own a home and all of a Sudden your electric bill is up 300, 500, $600 a month, you know, over where it was a year ago. And it's because, you know, Amazon and Google have bought up all the power in your area because they don't care how much they pay. And they have, you know, they have a bigger balance sheet than any of us do. I think that's really hard. I think that's brutal. But I also don't think that's been an inflation driver because take a look at overall energy prices. They haven't been rising and gas is insanely cheap right now. A lot of these prices have come down. And so, yeah, it's unpleasant to have a high electric bill, but the gas bill for your car to commute to work is down as well. So I don't know. I think long term what we're going to have is a gigantic increase in energy production capacity. I think we're entering a new golden age for nuclear power. The president has done two things. One is allocated $1 billion for 10 Gen 3 nuclear plants. Those are the big ones. We're also recommissioning three decommissioned reactors in the Midwest that's never been done before. And then I own a ton of uranium. And also, you know, an smart company, a small modular reactor company. The ability to start to build small nuclear reactors very quickly and roll them out and start to produce a lot of power is there now. Is that going to happen right away? No. But long term, I think, you know, as long as we keep building power generation, and I'm hoping nuclear is the answer there, I think we'll be all right. Industrialization, completely not worried about that. And the reason is the economy that we've had over the last 40, 50 years has involved outsourcing everything in the United States. We no longer make things we, except for intel. We don't have the ability to make our own semiconductors, we don't make our own pharmaceuticals. We can't build ships. More and more cars are being built overseas. Even the cars we are building in the United States. We're getting whole components, not just parts, like entire systems being shipped from overseas. There's a lot we used to be able to make that we can't make anymore. I, I think we need to reverse that. I think having a country where, you know, we only export dollars in financial services, that's not going to work. It's not going to work for most of the country and it's certainly not going to work for the rest of our lives. Right. That's not a Long term plan, you need to be able to produce things. So listen, even if that creates inflation, you do have a situation where people will have better wages because of it and the quality of life won't drop. So the thing that I'm left with, I do think we're facing a lot of inflation, but it's all related to congressional overspending. And unfortunately that's not a partisan issue. We can't vote our way out of it. Both parties overspend, you know, Democrats overspend and Republicans run for office saying, this is crazy. These Democrats are spending like crazy. We're were the, you know, the adults in the room elect us, will be fiscally responsible. And Marty, do they ever cut spending or do they take the crazy Democrat budgets and say, oh, that's our baseline, we're gonna spend more money from here, the latter.

[B]

Even if it becomes apparent that a lot of the spending is overt fraud, which has happened over the last few months.

[A]

And I think people understand that it's wrong. But what I'd really like and what I'm trying to do is help people understand how that theft, that wasteful spending affects our quality of life. And it's really easy to say, well, you know, we should have pensions and Social Security. Okay, yeah, fair, okay, good, right. But you know, we also need to have free health care for everybody, okay? And now, you know, we're going to pay for everyone's housing and everybody's food and, you know, welfare payments. And it's really easy for people to say, well, you heartless monster, you horrible heartless monster. Why, you know, why are you against all of that? And you don't have to be for it or against it. What you have to do is tie it so that people understand that, that spending and the government waste and the fraud and the theft, you, if you're listening to this, you are paying for that. And you're paying for it through inflation. You're paying for it through higher prices. You're pay it through housing that's not affordable, which leads to a lower marriage rate, which leads to a lower birth rate, right? Our whole society is experiencing cataclysmic changes simply because of this. And if you want to say, well, hey, I'm still in favor of it. I still think we need all of these government programs and we need to spend $6 trillion a year. I think it's 5 trillion on balance sheet, another 3 or 4 trillion off balance sheet, right? And we should take care of everybody and pay for everything. And you're a heartless monster. If you disagree, okay, cool. But then own it and explain to every young person, just so you know, you're not going to be able to buy a house because we're paying for these programs. That's why everything is so expensive. And we're going to keep debasing the currency and make it impossible for people to save in dollars. So now everybody needs, Marty, the same skill set that you and I have. Or in the absence of developing that skill set, my case, you know, it came working 80, 90, 100 hours power weeks for years and years and years and working every weekend and studying and learning like that, that financial education doesn't come cheap, right? And so, you know, what we have instead is all kinds of insane gambling behavior. People said, why? Why are these people throwing money at, you know, at crypto, not bitcoin, crypto. Why are they buying dogecoin, which was set up as a joke? Why are they all on sports betting or prediction market betting? And the answer is because it's a casino. Because people understand that the existing system doesn't work for them, that they're not able to build wealth in it. They can't save in dollars. And so it's kind of like win big or die trying to. And it's turned everybody into a bunch of gamblers. And that's not what you want. You don't want a bunch of young people who are gambling. You want people who are working and building and saving and investing. When I talk about these things, these are not just financial changes, these are societal changes. And again, I can see it in the comments already. Hey, you're a heartless monster. No, I'm not. But own the consequences. Explain to people your lives have changed for the worse because we think this is worth doing. Explain it like there are trade offs. Because there are. These are all trade offs. You can't have guns, butter, bread, circuses and sound currency can't exist.

[C]

People need tough love.

[B]

Tough love is not a bad thing. It is a form of love. It's abrasive to some people, but it's all out of love. You have to ask the hard questions. And had a good friend describe the economy you just articulated. Well, the high velocity trash economy that is what we've gotten to, enabled by fiat, where I'm sure you've seen the meme, but everybody and their mother particularly, particularly if you're a younger millennial or Gen Z, they're all speed running to escape the permanent underclass. With the emergence of AI taking over, taking over the world right now, you.

[A]

Know what, Marty, you're completely right. And let me give you an example. One of my friends, he is a talented guy in his 30s. He's smart, well educated, has a really good technical skill set, very disciplined, he's a regular at the gym, he develops new skills, he's charismatic, socially adept. This is somebody, he's got a real job and he has the whole thing together. But it's so hard for him to build wealth that he's busy buying zero day to expiration options. And I've spoken to, he doesn't know anything about finance. He took like a few thousand dollars, I think like $5,000. Ran it up to $160,000, like okay, wow, that, that's, that's incredible. That's impressive. And I said, well then what happened? He said oh yeah, I lost it all. Like, okay. And he doesn't know why. He doesn't know why he made money. He doesn't know why he lost money. He just knows he was in the financial market, casino. And he's not thinking about how do I invest over the next 10, 20, or in his case 50 years. He's thinking about how do I make 40% in an afternoon.

[C]

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[B]

Put your hardware in that.

[C]

I have a tap signer right here. I got the silent cardholder replace my wallet. I was using Ridge wallet because it's secured against RFID signal jacking silent. The cardholder does the same thing. It's much sleeker, fits in my pocket much easier. I also have the Faraday phone sleeve which you can put a hardware wallet in. We're actually using it for our keys.

[B]

At the house too.

[C]

There's been a lot of robberies. They have essential Faraday slings, Faraday backpacks.

[B]

It's a bitcoin company.

[C]

They're running on a bitcoin standard.

[B]

They have a bitcoin treasury.

[C]

They accept bitcoin via strike. So go to slnt.comtftc to get 15% off anything or simply just use the code TFTC when [e-mail] patented technology, special operations approved. It has free shipping as well.

[B]

So go check it out. It's very pervasive. You see now with the prediction markets in the open claw AI bot craze that's taken over the Internet over the last few weeks, people are immediately, first thing they go build is a trading bot that can scour Poly Market for markets that have large arbitrage opportunities and trying to automatically flip these prediction market bets.

[A]

They're buying on Poly Market and selling on Kalshi, something like that.

[B]

Well that is like there's like weather markets. Like they're basically adding on the weather what the actual temperature in Milan will be at 12pm tomorrow. And they have, they have AI running the strategies for them. But again it's to your point. The economy and the individuals within the economy forced to think like this and it's incredibly acidic to social cohesion in society at large. And it's something that is becoming more and more apparent and more and more confusing. Maybe it's the fact that this environment exists isn't more confusing, but the way out, a clear way out is becoming more and more confusing. Especially again once you layer on AI specifically and the potential job disruption that can come if it is successful at replacing humans for white collar jobs. And that's one thing you wrote in your weekly letter this week was highlighting the capex spend that's planned for these hyperscalers specifically. And it's funny, I was actually talking about it earlier today with John from our team and it's Meta, Microsoft, Google or yeah, Google And Amazon, just the four of those based off their most recent earning calls from earlier this month, 600 plus billion in capex expenditure for this year alone. Insane numbers.

[A]

Yeah, more than half a trillion dollars. And here's the really interesting thing. I think, help me out on this. I think it was Harrison Kupperman who pointed this out. I think he was the one who called a bunch of people running these AI data centers and said, what's your business model? How are you going to make money on this? And all of them said, we have no idea, this doesn't make sense to us, but everybody's doing it. So we just figured somebody else had figured it out and this was the thing to do. And you know, it reminds me, you know, it's weird. In general, the hedge fund business tends to be guys who do a ton of work. They know their positions very well. But every now and then I find something where I talk to a bunch of hedge fund guys and they're all buying something and the thesis is just wrong. It doesn't make sense. Basic research would have uncovered it doesn't work and it's not what they thought it was. But they're all counting on each other. It's basically fund A is saying, well I know we're good because fund B bought it and they're really smart. And they're saying, well we bought it because fund C bought it and they're really smart and fund C, fund D is really smart. And then fund D says, well fund A bought it and they're really smart. And it ends up being a circular thing where if you basically research your way down to the bottom of it, you find out that it was some like 23 year old analyst at one of these funds who, you know, who's smart and hardworking but misunderstood something. They got one wrong piece of information out there and everybody is counting on everybody else to do the work. And I find these situations on occasion and then you want to take the other side of it. I think the same thing happened in the AI data center space where everybody's saying, well this doesn't make sense to me, but everybody else is doing, they must be right. The people at Meta are saying, well, Google's doing it. Google's saying Microsoft is doing it. Microsoft is saying, well it's working in Amazon, but is it really working? The thing that I find remarkable about this is these guys, they're not only spending hundreds of billions of dollars without a business plan to earn a return on that. It's not just that, Marty, it's that the spending has to keep going. Back in the 90s, there was this really interesting thesis on the companies that built out the infrastructure for the Internet or something like the cable companies running fiber everywhere. And the bulls were saying, look, this is incredibly valuable. They own these assets. The bears are saying, yeah, but they have to keep paying to roll it out. But the answer was once you rolled out fiber to a neighborhood, then you had that market, right? You owned the fiber to that neighborhood, you didn't need to keep spending for it. The issue with AI is every six months, it's a completely new product, right? Things move two, three months at a time. And so if you spend $500 billion, half a trillion dollars on AI, you have to keep spending or your model is irrelevant within six months, right? Anthropic will just take over. And the thing that really worries me for the equity markets, and this I think, is maybe the biggest risk to the equity markets today. We've all seen how much of the stock market return has depended on six or seven companies over the past few years. It's been, our returns have been incredibly concentrated. So let's take a look at what's going on at OpenAI. First of all, they came out and said that they expected to lose, I think it was $125 billion over the next four years. Ish. Okay, well, they don't have $120 billion, but that's not really the problem because if somebody wants to say, well, come on, they can do an equity raise, they can, they can raise $125 billion. My answer to that, sure, yeah, I, I believe that. I believe they can. But Marty, they have taken on $1.4 trillion of, of liabilities, of promises to Oracle, to Nvidia, to Microsoft. Right? So they need $1.4 trillion plus another $125 billion of losses. They need one and a half trillion dollars of cash to do what they've said they're going to do. And if they don't deliver, then you're going to have slowing growth rates at places like Nvidia, which could literally take down the entire stock market. Or, you know, you have situations. Oracle right now, they're spending real cash to build out data centers for OpenAI. Well, if OpenAI doesn't have the money to pay Oracle, that's going to be a problem, right, because the money is spent. And so, you know, listen, I pay my $20 a month for, for chat GPT, but that's, that's not going to get them $125 billion and it's certainly not going to get a one and a half trillion dollars. So I don't know where these guys are going to earn a return on, on any of this.

[B]

The numbers are insane. Just thinking back to the like TARP and the bailout of 2008, like what was it, 700 billion, 800 billion bailout was unfathomable back then. And then you have these private companies that are 1.5 trillion in the hole. It's like yeah, we'll get to it. And to your point about Obama was.

[A]

Oh God, Obama was talking, he was talking about bailing out the whole economy with a trillion dollars of shovel ready projects.

[C]

Right?

[B]

The trillion dollar coin was a meme. Like that's all we need to do is print the trillion dollar coin.

[C]

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[B]

TFTC sent you suffreaks.

[C]

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[B]

It'S insane. But to your point about these, these hyperscalers specifically in Oracle, that's the one. Because it's weird. Again, it's like this, like I said, it's very unclear what the other side looks like because I can squint and can see them. Maybe being able to thread the needle. Like I was telling you before we hit record, I've been using, we've been using AI here at TFTC and it's helped our productivity immensely. But as you said, these models aren't perfect. It can give you a objectively wrong answer with confidence. And what I've come to find is if you like, what makes we use Claude predominantly, what makes it very efficient and productive for us specifically is knowing how to feed it context to pull from. Like when we're doing things, it's like, okay, I want you to pull from this source, this source and this source specifically. Don't deviate from these things and help us do the work focused on these things. And it's very productive there. But I had a conversation with Mel Madison talking about what could sort of perturb this AI wave. And it's just people simply not knowing how to implement it. And so I think that's a big problem that they have either not knowing how to implement it or just not trying to because they understand that if they do it successfully, it could replace their job at the end of the day. And so you have this sort of psychological and implementation problem on, on one side too. And if those are solved, could lead to the revenue that could get a return on invested capital for them. But it seems like it is a needle that needs to be thread threaded. Very, very thin hole too.

[A]

Yeah. The other day somebody asked me if I thought my job was going to be replaced by AI. And look, everybody may be one day. But first of all, the way I make money is by taking the same information everybody else has and seeing it differently. That kind of vision as of today is unique to human beings. Could AI see patterns differently? Eventually, maybe. But the key thing is it's all right to use it for analysis, but you need to know where to check. And this issue of giving wrong answers with confidence is it's a really big deal. And you know, I had a situation a few months ago, I was In Spain, I was in actually Ibiza, and I wanted it, or Ibiza as they pronounce it, you know, And I was racing to get the ferry to Mallorca, and, you know, I was running a little bit late. And the harbor is really large. You, you know, it curves around. You have to find the right spot. And so I go to ChatGPT and I say, hey, give me a Google map link. Which direction is it? Because that. That harbor is really big. And it gives me a link and I'm following it, and then, like, I take a look. It's in the middle of the ocean. Okay, I. Idiot, I just told you I'm running late.

[B]

You.

[A]

Like, I don't care how you got it wrong, but if you give me a map link in the middle of the ocean, that's clearly not the right place to go. Right? That's the boat is not loading passengers. The port, the harbor is not in the middle of the ocean. So, you know, you get stuff like that. And then you also get, like, weird things. There's a whole agentic issue which hopefully will be solved one day. But, you know, I'll say, hey, I'm looking for a place to stay and I'm, you know, I'm going to go to this place for the weekend. And it'll say, well, here are the three or four places that I think are best. Okay, that sounds good. And it'll say, would you like me to email each of those places and see if they have availability and what their rates are for the weekend? Yeah, that would be great. And then it'll end up saying, okay, well, you know, or would you like me to call them? Yeah, go ahead, call them. Go do that. And it'll say, well, I can't actually do that, but if you want, I can give you the phone number. I can't actually send an email, but if you want, I'll give you the email address. I'm like, that's not. It reminds me of that really old Seinfeld episode where Kramer's phone number ends up being very similar to the number people called. Like, movie phone, right? You know, if you want this movie, press 1. If you want this movie, press 2. And then people would press the button and he wouldn't know what it was. And he would end up saying, why don't you tell me the name of the movie you want to see? Like, that's. I feel like I'm in the middle of a 90s Seinfeld episode when I'm talking to ChatGPT.

[B]

Yeah, I will say though the agentic stuff is getting better. Like I, I spun up one of these agents a few weeks ago, I gave it its own email and it can successfully send emails on command or I'll cc it on emails and it's able to basically give me a synopsis, I'll cc it on emails and at the end of the day be like okay, what do I need to respond to? And does a good job of highlighting that. So it is getting better into the point of threading the needle and the capex spend like that's the thing, they need to spend more to your point because these models are progressing at such a rapid pace and I think that's the big question and everybody's buying like when do we get to a point where the models are good enough to do everything and you can have confidence that you can build out infrastructure and acquire a, a sort of GPUs, a number of GPUs with a certain firmware, hardware or certain caliber and I have confidence that you'll be able to plug that in and run it successfully and profitably into the long run. And I have no idea what we're going to reach that point, but I think that's the big question that needs to be answered. But going back to your point on Oracle, that is the one chart I've seen floating around that does give me pause and makes me think that the potential for dot com like blow up in this part of the market is a serious possibility. Is the CDS value of Oracle's debt. So it looks like that spike and the yields on that debt spiking pretty high almost at dot com levels as well, which is, would not be good.

[A]

So I agree with you and I actually think the problem is worse and here's why. If Oracle has problems because they spent money building out data centers and OpenAI doesn't have the money to pay for those data centers, that means OpenAI doesn't have the money to pay Nvidia for the next X number of, you know, Blackwell processors or you know, whichever one next. What happens to not only the valuation of Nvidia but the entire market index if the growth rate at Nvidia slows and people have to start reducing estimates? You know, we're used to these guys coming out like yeah, we beat revenue from last year by, you know, 100%. We beat revenue by last year by 90% and we're raising estimates right where you know, your guidance, your numbers are too low. We're raising guidance and that's, that's why Nvidia has such an incredible market cap. And to their credit, you know, they build incredible product and they've identified a segment of the market where there's a ton of growth and they are the unquestioned leader. It's an amazing company. But if all of a sudden they get on a conference call and they say, you know, our growth rate is slowing to 45%, which would still be incredible, and we're lowering guidance. You know, Marty, here's the question. What happens to Nvidia stock and then Microsoft and Google and Amazon and once that whole pyramid collapses, what happens? Like, at that point, everything gets sold. Intel, amd, Oracle, you know, all of these companies. And the tech sector, once that implodes, you know, everything but Deep value is going to go down with it now permanently? No, but that's going to be a really unpleasant two or three days.

[B]

Is that how long you think would last? And then the Fed would step in, say, hey, we're going to make sure. That's the other weird thing about this AI conversation, too, is that it seems to be existentially important to the current administration. I think they've implicitly signaled like we will not spare any cost to make sure that we win this AI race. So, like, a bailout of that sector seems very much on the table.

[A]

Yeah. So that's something that Alex McCrease has written about a lot. And the two of you share the same opinion. I agree with both of you. The administration has said we've got one bet, right? We're getting killed on the industrialization side. China makes a ton of things. We're not making a whole lot here except for dollars. There is that sense that the next thing is going to be AI. We have to win. And in fairness, right now we have the best companies in the world designing here in the United States. I think the US Companies are by far the best in the world. But China has one gigantic advantage, which is they've built out their power infrastructure and are doing so really quickly, and we're falling behind in that area. And I think that's a place where the Trump administration is correctly throwing a lot of assets at. Wait a minute. We not only need to win this AI war, but to do it, we're going to need real infrastructure. Not just bits, but actual power plants, actual nuclear generators, things like that. I think that's going to be a huge part of it. I also think your point on the Fed is really important. I was having a conversation with a friend of mine the other day. Really smart person but not a finance person. And he said, I can't figure out if we're going to have, when there's a problem, if we're going to have inflation or we're going to have basically so much debt wiped out of the system in a depression, not a recession, a depression that you end up with deflation like the 1929. You can buy this brand new, expensive car for $100. Right. We've all seen that picture. All right, $100, we'll buy this car. And I think the government, the Federal Reserve, they've given us the answer long before we get to that point. They will go to, you know, they'll all become helicopter men and start just spraying stimulus into the economy. We will end up with nominal growth, but real negative growth. And in a situation like that, Marty, what do you want to own? Right at start with bitcoin and then gold and then silver and then, you know, maybe a little bit of oil, although, you know, energy prices will be down in that scenario. But, you know, in a situation like that, you want to own hard assets.

[B]

Yeah, and that's, I think this is a good addition to the Wash commentary too, because that's another thing I think sort of flew under the radar of his nomination specifically is that obviously Bessant's been talking about being in this position of Secretary treasury because he wants to be sort of behind the wheel. We were going through a monetary reordering. And then in parallel, you have Trump saber rattling the Federal Reserve saying, I want more control over it. I want the treasury specifically to work in tandem with the Federal or vice versa. I want the Federal Reserve to basically go along with what the treasury says it wants to do. And then you have Warsh, who is an acolyte of Stan Druckenmiller, as is Scott Besant. And there's this sort of theme emerging that people are getting put in positions that have worked together in the past or are very similar or share very similar worldviews on the economy and where it needs to go so that they will have that sort of conducive cooperation between the Fed and the treasury as well. And so I think Wash is basically being put there because it's like, okay, you, you and Scott basically came up through the ranks via, via the same route, working with the same people with the same perspective of market. And so you're going to get in here and you guys are going to go to work together.

[A]

Yeah, and I think that's right. And the thing that's really interesting to me, you Know all these people saying, oh no, you know, the White House is meddling at the Fed. The Fed has lost its independence. You know, we've lost faith in the financial markets. Okay, let's take that apart. First of all, why anyone had faith in the financial markets a year ago is beyond me. Why would anyone have faith in the US Government or the dollar? The dollar's being debased into oblivion as all fiat has been through history. No fiat has ever survived, right? 775 of them in history. They all go to zero. This is the nature of the nature of the world. You know, why anybody looked at a US government with now $38 trillion in on balance sheet debt and another $200 trillion of off balance sheet. Let's do the math on that. We're talking about almost a quarter of a quadrillion dollars of liabilities, right? And people were saying, now we've lost faith in the system. Where were you last week? Right? Why did you have faith in this last week? Nobody's paying a quarter of a quadrillion dollars. Zimbabwe wasn't paying a quarter of a quad. Whatever. They, you know, this is insane. The whole thing is, is completely insane. Beyond that, right? People are saying, oh no, President Trump, he's acting outside of democratic norms. We've never seen meddling like this before. You know, we've lost faith in the Fed. This is going to kill the markets. What, are you kidding me? This has been going on since the creation of the Federal Reserve. President Trump has done only one thing different, which is he's had these arguments in public. He does it in a way that we can all see, right? That old expression, never look at how the sausage is made, especially in regard to legislation. The only difference is he's doing what had always been done behind closed doors in public. That's it. That's the only difference. And people who are saying, oh no, the White House wants control of the Fed, what do they think FDR had, he literally insisted that his treasury secretary also be chairman of the Federal Reserve. And the whole country went along with that for decades. You know, you had Lyndon Johnson slamming Arthur Burns into a wall, literally picking him up, slamming into a wall. And they're saying, oh no. You know, President Trump said mean things about Jerome Powell on social media. How will the Republic survive? Well, how did it survive? The Fed chairman literally being strong armed and shoved into a wall by the President saying, I want lower rates. President Nixon, same thing. He strong armed his again. It tried to put pressure on the Federal Reserve for lower rates. That didn't work out well for the rest of the 1970s, Janet Yellen shortened the duration of treasury securities. The reason we've had such large treasury security auctions this year is because Yellen was stacking the deck for her team. Right. Saying we're going to take the lower short term rates and not do as much long term financing, even though rates were relatively low. That was to help the Democratic Party try to win the 2024 election. Okay, you know, I get that the point is like, do. And again, I can see in the comments somebody say, oh, he's okay with this meddling. No, I'm not okay with it. It's never been okay. But it is going to continue until we get rid of the Federal Reserve. And if somebody wants to point out, that's never going to happen. Okay, great. Got it. Then you should also expect that the meddling will never stop either. This is, the Federal Reserve was created for this exact purpose. So, you know, if somebody wants to say, well, you know, the, the Fed will never be eliminated. Stop whining about it. Okay, then the White House will never stop meddling with the Federal Reserve. Stop whining about it like they're, they were always tied together. The only difference is we're now getting the show on social media instead of being reported a decade later by, you know, some staffer who happened to be in the room at the time and they write their memoirs.

[B]

Yeah, and I think the FDR example is the best because it just highlights the hypocrisy. He's vaunted as this hero of people that like social welfare programs. And he was, I think, before Trump, probably the most egregious of, with this meddling. Specifically, he came in, said, here's what we're doing.

[A]

You know, you're right. I also think it's really interesting that, you know, Democrats spent the last two years of the Biden administration screaming, we need lower rates. Elizabeth Warren, right, she was constantly saying, we need lower rates. The Federal Reserve has to lower rates. Okay, well, now we have a president who's trying to strong arm the Fed into lowering rates, which, by the way, I disagree with the strong army, and I disagree that, you know, that the Fed should lower rates. But the whole point is Warren is now getting what she said she wanted. But she doesn't seem happy. Why does she never seem happy, Marty?

[B]

She's a miserable old woman. What are the people in Massachusetts doing? That's what I want to know. That's my question with Elizabeth Warren. How, how can you keep Voting her back in. But I don't think we're going to solve that in this discussion.

[A]

I don't know. Right. But the point of all this is this was never about policy. It was about partisan politics. You know, and, and that's like, that's fine. But then admit, you know, you're cheering for Team Red or Team Blue and, you know, you're cheering for your team's colors and that's fine. But, you know, if we're going to go to real policy, the Federal Reserve has never been independent. It shouldn't exist. It's never going to be independent. I don't like that. But that's the way it is. But nothing has really changed now. And the same people who two years ago were screaming for lower rates, now that you have a president who's, you know, who's agitating for lower rates, again, something I disagree with. They're not happy with it. Right. So I can only draw the conclusion that this has nothing to do with policy. These are not people who understand finance and are trying to make a good decision. They just want to score points for their team. And again, they're entitled to do that. But I'm also not going to take them seriously.

[B]

Yeah. Another policy that I'm interested to get your thoughts on shifting gears a bit, but I was thinking about it earlier today. The Trump children, equities accounts or investment accounts. What are your thoughts on this? Is this a sly semi bailout of equity markets or is this a good, good product for American citizens that we should be happy about?

[A]

So you're talking about the idea that every newborn is going to get basically a stock market account paid for. He makes it seem like paid for by President Trump, but it's not. It's paid for by the American taxpayers through inflation. Right. So look, I have mixed feelings about this big picture. I am against it, everybody. First of all, he shouldn't act like the Trump account or like Obamacare. These guys act like they're paying for it. You have your 401k account or you have your kids trust fund account or your health care. It's because of the guy. Right? It's the same thing. I'm in Thailand right now. The first time I came here, somebody was telling me how much they love. This is, this Is more than 20 years ago. They were telling me how much they loved the king because he built them this wonderful highway. Oh, okay. You know, but, but at any rate, they act like I, I personally have bequeathed to you this, this wonderful largess. No, it is Being paid for by the rest of the country through inflation in general. I'm against these things. Now I know I said mixed feelings and here's why I have mixed feelings. Almost all of our spending now is for consumption. And that is a terrible thing. Rudy Havenstein, the pseudonym for one of my favorite X or Twitter accounts, constantly will write, where's our Hoover Dam? And what he means by that is the government is spending $5 trillion a year, but where's the infrastructure for that? Where's the investment? And the answer is we're not building infrastructure, we're not building investments. We're spending it on consumption and pretending that's an investment. And so the one thing, the only thing I like about this stuff is at least this spending is actually for long time duration investments. And I think, listen, our government spends too much and acting like you per you, Marty, you're getting something because I the President and bequeathing it to whether it's, you know, a Democratic president or Republican president, I don't think that matters so much. You know, I don't think that's the right way to go. But at a minimum, at least this spending is for investment instead of for consumption. So it's better than anything else they're doing with our money.

[B]

Yeah, that's a good point. As somebody with three young children, I mean, if they're going to offer it, I'm going to take it, I'm going to sign them up, fill out that, that form.

[A]

You might as well. You're going to pay for it.

[B]

Yeah, exactly. Might as well get some benefit from it, at least for my kids. And speaking of that. Oh God.

[A]

You know, just one other thought too. We were talking earlier about how our constantly debased, untrustworthy currency is leading young people to treat their financial lives like casinos. And you know, I want to be clear on something. I don't blame them for it. I think it's a bad decision. But they're facing pressures that don't make sense and they don't see a system that's working for them. If these, these basically trust fund accounts lead to less of that behavior 20 years from now, and people say, okay, I own stocks, I see the value of long term investing, then maybe we get less casino behavior from our young people because they'll see it through the course of their lives and maybe 20 years from now we end up with people making better financial decisions. On a personal note, do I have time to tell you a personal story on why this matters?

[B]

Yeah.

[A]

So years ago I was starting A hedge fund called the Key to Capital with a partner. And we agreed we wouldn't have any outside positions. And I had, you know, Atlantic Richfield stock that my dad had bought me when I was six months old. And I went and I, I took a look and you know, I contacted Atlantic Ridgefield and I said, hey, I need like the history of this account. And my dad had bought me 19 shares. This was, you know, six months after I was born. I looked at that, that's really weird. And I'm just staring at the screen. What, what really happened here? I would have understood 20 because it's a round number. You know, people think in terms of 10. I would have understood 18 because I'm Jewish. And 18 corresponds to the letter high, which means life. It's gifts are frequently multiples of 18. Right? Like here's like something to celebrate life, but 19, it was weird. I'm staring at it and then I saw it. It was $248. And all of a sudden I saw my dad is 27 year old young man with the weight of the world on his shoulders and a house and a young wife and a baby at home. And he had $250. He didn't have enough money for that 20th share. I called my dad and I said, dad, this is what I saw. And he's like, oh yeah, that's exactly what it was. He said, I still remember where on the credenza behind my desk that paperwork was sitting. He's like, I didn't have more than that. I didn't have enough money to buy that 20th share. But over time, that $248 investment, when I sold it, grew to $15,000.

[B]

Holy crap.

[A]

Right? Okay. And by the way, this was Atlantic Richfield. You know, it wasn't like my dad randomly fell into, you know, Apple stock or, you know, Amazon at the beginning where like it was just a normal energy stock, right? It's, it was just an oil and gas company. And so look, I am generally against government largesse. It doesn't go well. But let's, you know, let's actually put on our compassionate hats for a minute and think about the potential impact on young people who have thousand dollar accounts instead of $248 accounts when they're two months old. And then two or three decades later, they take a look and they see, oh wow, this is $50,000. You know, and like, maybe that's a down payment on a house, or maybe that's the ability to pay rent, or at a minimum, maybe it's just a really big reminder. We're not talking about generational wealth. It's not like nobody's going to work because they've got $50,000. But it certainly would be a generational reminder. Wait a minute. If I invest and I'm patient, I can grow real wealth. If I think across decades, I don't have to treat my financial life like a casino. And so there's a non crazy universe where it actually leads to better decisions being made by young people because it forces them to see the value of patience.

[B]

I love that. And you can see it paying off too. Maybe they could start a business, you know, with the proceeds.

[A]

Hey, the guys at Hewlett packers started with less.

[B]

Yeah, I'm going to sign my kids up tomorrow. I'm going to do it. I know we got to wrap up but you said when you were, we were talking about this, you said long duration investments. It reminded me of something we missed during the AI conversation. I'm not sure if you saw today but Google putting out there that they're thinking about issuing a 100 year bond which is just another signal that may not be as well as being reported on the financial side for the AI hyperscalers specifically.

[A]

So in other words, the Google CFO department has figured out one, inflation is going to be higher than people think it is and two, they may not get the return on all of that half trillion dollars or $200 billion this year of AI spending. And if their credit rating drops, it'll be more expensive to issue debt the following year or five years from now. Right. Like if you were Google CFO and the market would buy 100 year paper, wouldn't you, wouldn't you vomit that out?

[C]

Yeah.

[B]

It's not a great sign though, Delta position that we're thinking long term. This is, this is a humanity scale project technology that will shift the, the tide of humanity if we need to make this long term investment. Now to be clear, like I'm very bullish on AI. Whether or not the spending and the capital outlay that we've seen over the last few years is sustainable I think is the biggest question out there.

[A]

Yeah, it's they're going to need to earn a return at some point. You know one thing, one thing where I did disagree with people a couple of years ago and I'm not sure I was right, I'm not sure they were wrong and people were overlaying the Nvidia chart over the 1990s 2000 Cisco chart and saying boy these look similar and I said, you know, I'm not buying that comparison because, you know, Cisco was selling to pets.com and you know, other Internet companies that had negative free cash flow where Nvidia is selling to, you know, Google and Amazon and Microsoft and you know, listen, if these companies waste a trillion dollars, then they're not going out of business. And so I said, this is completely different. And then, you know, we get to this last year and you start to see These, you know, 1990s style circular deals where you know, Nvidia says, okay, well we're going to invest in OpenAI and OpenAI says, oh, we're going to take Nvidia's investment and buy Nvidia GPUs. And I'm thinking, okay, so you're buying GPUs with your own money and marking that as revenue. And that does look really similar. So somebody's going to have to figure out an actual business model at some point, you know, and maybe it'll help when the market shifts more from training to inference that is cheaper. But you know, we're not there yet.

[B]

Yeah, I think that, I mean, I feel blessed being able to basically run these models ragged on the inference side for as cheap as they're offering them. It's like, I mean it's, it's very manageable. I would pay more for it. And that's, I think that's the big question out there is like you're gonna have to charge for the compute, the cost of the compute at least that's actually, the people are actually using because it's highly subsidized right now.

[A]

So Marty, you're right. And can I just insert one additional thing that people should be concerned about on that? So the place where this stuff is going to the AI is really going to have an impact on people. Isn't just like the vibe coding that you're talking about, which I do think matters. I think the ability of non technical people to design their own apps, their own websites is huge. Where people are really going to use it is agentic. I like you talked earlier about can it send emails for you, right? I talked earlier about can it, you know, make a hotel reservation for me or you know, contact somebody or do something. And the issue with that is that is going to be the thing that will cause people to say, yeah, I'll pay $20 a month for this or $50 a month for this or you know, order my groceries for me. But you're also going to run into huge issues with potential bad behavior and you could have bad actors using those agents to run up credit card bills on other people, to buy things, to send malicious code or send malicious photos or things like that. And so what we're going to need to make all of that work is some sort of security that will authenticate those AI agents. And when we talk about security, like right now, everybody's thinking, okay, username, password. The better actors are starting to use biometric security. Think about face id, but working at a much higher level, much, much more accurate. Instead of one in 100,000 error rate, one in a billion error rate, which is what you need for that. But now they're also going to have to authenticate these AI agents, because if they have access to your email, your contacts, your photos, your text messages, your credit card, oh, boy. You know, like, somebody takes control of that, something bad really can happen.

[B]

Yeah, it's almost like they need a. They need a digital identity built on an open protocol that runs on private public key cryptography to authenticate. No, it's crazy. And I think Bitcoin plays into it here. Bringing it back. Wrapping up with a callback to the beginning of the episode. Where's the value for Bitcoin specifically? I thought it was extremely poetic that the price was dumping as hard as it was last week, as I was exploring how far I could push my agent that I spun up a few weeks ago, and I was literally in the process of seeing if it could spin up its own Bitcoin wallets. And then to your point about authentication, there's a protocol on Bitcoin's Lightning network called Lnurl Auth. So it's basically like a sign in with Google or sign in with Apple, sign up with GitHub, but you sign in with the private key attached to your Lightning node. So I was successfully able to get my agent to figure out how to spin up a Bitcoin node, attach it to the Lightning network, or understand that it has a private key, and then sign into a website using the private key in its Lightning server. And then I topped up a balance with a little bit of Bitcoin. And so there's a bitcoin trading website called ln Markets that lets you authenticate with ln URL Auth. I was like, all right, send Bitcoin to this and put in a trade. Let me see if you can do this. And it did it successfully.

[A]

It worked.

[B]

It worked. Yeah. I'll show you when we're done recording. I'll show you what this thing's doing, but.

[A]

All right, Marty, that's amazing. But I gotta ask you, right? Were you able to use it to buy coffee? Because as everybody knows, that is the tricky test of any currency. It's not a currency unless you can buy coffee with it.

[B]

I bought a beer with it last week in New York at pubc.

[A]

But did you really?

[B]

Yeah.

[A]

All right. That counts.

[B]

It does.

[A]

So Bitcoin is a currency?

[B]

It is. It is. It's money. It's money. But the point being is like, price is crashing. Price is what you pay. Where's the value? And it's like, oh, the agentic economy is emerging. Like, Bitcoin is a good currency for that. And not only is it a good currency for it, but the nature of the private public he pairs actually does set it up for interesting authentication credentials in the syntic world.

[A]

Interesting, yeah. That's great. It's phenomenal you were able to do that. And now think about the expertise and the different ways you had to cobble that together. You know, somebody who's like the more technically advanced version of us is going to find a way to wrap that up, like in one API, you know, one package where somebody says, okay, here's my sign in, here's my, my wallet. And it does that for them. Right? You built it piece by piece. Somebody's going to piece it together where it'll just be a download this app and it'll work kind of thing.

[B]

It's brave new world. Gary, thank you for your time. It's been a pleasure as always, sir.

[A]

Thank you. I appreciate it. I was filming these with you. The conversation is always entertaining for me.

[B]

Well, like we said before we hit record, we'll have to do them more often. So we'll check in in a couple months.

[A]

Happy to. And, and by the way, you know, for your, for your viewers who are interested in deep Knowledge investing, we've got a coupon for your people. TFTC will get them 25% off of a Deep Knowledge Investing subscription.

[B]

Go check it out. I've been reading every week and it is deep knowledge. And your analysis is very, very much appreciated by me personally, because I think it is not like contrarian for contrarian sake, but when you see the market like wash, particularly misreading something, you're not afraid to call it out.

[A]

Thank you.

[C]

All right.

[B]

Peace of love, freaks.

[C]

Okay, thank you for listening to this episode of tftc. If you've made it this far, I imagine you got some value out of the episode. If so, please share it far and wide with your friends and family. We're looking to get the word out there. Also, wherever you're listening, whether that's YouTube, Apple, Spotify, make sure you like and subscribe to the show. And if you can leave a rating on the podcasting platforms, that goes a long way. Last but not least, if you want to get these episodes a day early and ad free, make sure you download the Fountain podcasting app and go to Fountain FM to find that $5 a month get you every episode a day early ad free helps. The show gives you incredible value, so please consider subscribing via Fountain as well. Thank you for your time and until next time.