Loading summary
Transcript19 lines
- [00:00]
A
The 250 year anniversary of this country. The celebration is well underway and vibes are high. Vibes are high. John was just going on a rant. We're eight minutes past our set time to hit record and he was just ranting about the great men of history and where we may find ourselves. And something we may have to come to grips with is that history is written by a few great men each generation.
- [00:24]
B
Look, it's a poetic timing. Coming up on the 250th for the everyone could probably guess our opening topic here, the SpaceX IPO. To be very clear, with everything we talk about, none of this is investment advice or an endorsement to go around and buy the stock. I have no opinion on, or no educated opinion on the valuation. Finger in the air maybe seems a little high, but certainly I think we're going to make the argument that SpaceX is a very meaningful company for the US so don't interpret this as investment advice one way or the other.
- [00:56]
A
But.
- [00:57]
B
But yeah, everyone's eyes last week were on the IPO that the market has been waiting for for years of Elon's company, SpaceX. And the big headline that was blared across all the chirons and the various news channels was Elon Musk is now the first paper trillionaire, at least based on where SpaceX priced and closed on Friday. There's a lot that I think we could say, we're not going to say here about the what does being a trillionaire mean in 2026 relative to 100 years ago, 200 years ago? The quintillion effect, which every bitcoin podcast in the world has talked about, the debasing value of fiat currency and how that leads to these larger and larger numbers. We'll probably have a quadrillion error in 20 years. That's all relevant. Not really going to talk about that, but I think the two big pieces to pull out of this are actually, before we get into that, I included this picture here because I just feel like this is Elon famously looking at the wreckage of Falcon 1. And if you go back and look at just the story of how they got to where they are today, it's a classic eating glass and getting kicked in the groin over and over again dozens of times and just getting back up again and going, I think anyone who looks at this combination of headlines, the trillionaire thing and the history of SpaceX and still comes away thinking, you know, that that is unearned wealth or unjustifiable wealth is, you know, really just exercising A loser mentality. Like, we can, you know, you can debate all day, like, what Elon does with his wealth. Does he use it in a good way? Like, fine, but I think I'll just say, like, definitively on this show. Like, that is very much not our view, but I think that, yes, here you go. This is, this is a tweet. Marty's saying it succinctly, better, better than I can. And the Robert Sterling tweet is one for, for the books for people to go read. But to Marty's point, on Great Men of History, I think it's hard to argue that Elon is not one of those at this point, at least as it relates to advancing industry and advancing human capability, to say nothing of his personal life, to say nothing of a lot of his viewpoints. Certainly we've had our disagreements with his view on Bitcoin's energy use and proof of work, and I think he's misguided on a lot of that stuff. But I think this is a relevant milestone for, and is emblematic of what we're dealing with right now that we've been talking about for the last year on the show. Because, number one, it shows you the value of having an Elon on your side and an Elon in your country. There are 20 Elons, 20 Rockefellers, whatever, are worth 20 million podcasters. There's very disproportionate value that can be generated by certain people in history. And for anyone who looks at the US's current manufacturing backdrop and says, we're so far behind, we've lost these decades to China and others and there's just no way to catch up. I've said this before on the show, but I really, really recommend everyone go read the book Freedom's Forge about US industrial mobilization heading into World War II. It's a common, I think, misconception that the US was already this industrial powerhouse going into that, it could not be less true. We were extremely unprepared as late as 1940. And you had a couple guys, Bill Knudsen being one of them, hen Kaiser being the other, that really just decided that we were going to mobilize in an insane way that no one had ever thought would be possible. They were throwing out Elon level projections to the government or in some cases being asked to hit those projections, and they came through, they made it happen. And that was on a basis of industrial unpreparedness and massive labor strife that we can't even imagine today. So all this is just to say, you look at having some elons in the country. You look at history of how analogs like this have played out in the recent past, recent enough for your grandparents to remember. You look at the depth of American capital markets that enabled SpaceX to 15 years burn a lot of capital, raise huge dollars and finally get to a point where they are today, where it increasingly looks like they've achieved legitimate escape velocity and really remade a category. You look at all that and you say, well, I don't know that I want to short that.
- [05:08]
A
Right?
- [05:08]
B
This isn't even just rah rah America stuff, right? This is. I don't really know that I feel comfortable declaring that it's a foregone conclusion that America's dead, we lost the manufacturing race and the world is China's now. So I'll pause there, but I thought it was a really emblematic event for every single thing that we've been talking about the last year just kind of boiled down into one single headline.
- [05:31]
A
Yeah, I think what you're doing is it's just recognizing objective reality. You can try to talk yourself out of this being reality, but there's, there's nothing you can point and it's there like it's happening. We have Starlink, we have satellites in space, we've. I mean, Colossus 1, I was at a lunch two weeks ago and we talked about Colossus 1. Nobody thought he could spin up that much generation behind the meter and get a cluster running in a year, let alone 100 days or whatever it took though, like it is inarguably, incredibly impressive. And objectively it's objective reality, like he's doing it. And I think there's, there's some, the universe, we're both Catholics, we believe God. I believe in divine intervention. And maybe there is a bit of divine intervention in the United States in this particular month in the lead up to 250, I don't know. The energy is just rising. I mean we had the World cup here, I'm sure everybody's seen it. But seeing everybody from around the world come to the United States and travel around and get a firsthand perspective on what the country is actually like, particularly outside of the coastal large metropolises that many people just assume is what all of America is like, your New York Cities, your Las, your San Francisco's, and you have people traveling around the Southeast, the Southwest and really immersing themselves in American culture. And I think really something that I believe, and I've been tweeting this out consistently for years now, is we're going to win. And when I say that, I think it's in the context of bitcoin and what we're doing on the freedom tech side. But I think it's seeped in sort of just American values that we've been born with, which is like, yeah, you can get stuff done. I think as it pertains to the commentary that I've been watching, particularly like Europeans coming to the United States. And one of the sort of side comments they make is like, the positive mentality that exists here is unlike anything they see in Europe. It's like, yeah, you can just go do things. And I, I think to your point, it's a fool's errand to short that. And we're talking about the great men of history. And I think you briefly mentioned Jack Ma, but I think we do have to recognize that despite the many flaws that exist in the United States, and there are many, but everybody's a sinner. Nations make mistakes as well. The ability to do this in the United States is unique. Like we were talking about Jack Ma, like Jack Ma, arguably, given the ability to run unabated in China, probably would have done things similar to Elon. But unfortunately for the political environment in China, he was basically disappeared for a few years for attaining too much success. And Neon, I think, is a great counterexample to that. He got all this stuff done, took SpaceX private, or, excuse me, public, and now is a trillionaire. And obviously we have many of the leftist politicians saying that this is unfair. There's people hungry and we have a trillionaire running around. We need to take 5% of his wealth so that we can pay for all the schools and all the health care. And I think we know that that is not the right way to go about things. And I actually think reading the tea leaves and the commentary around the democratic socialist calls for wealth confiscation because we have a trillionaire now. I think many people are beginning to wake up and say, like, really? Are you going to allocate those tax dollars better than Elon's going to allocate them? And in the free market? And it's highly doubtful.
- [09:06]
B
Yeah, the track record historically has not been strong for the US Government, frankly, by itself or any other. And anyone who wants to can go run the math on if you just outright seized literally all the wealth of all the billionaires that you hate so much and how long you'd be able to run the government for based on that, to say nothing of the downstream impacts that would have on anyone else's incentive to go create wealth. It's not wrong. Right. So in any case. Yeah, I think you said it well. I think they're brilliant people all over the world. To be clear, there are right tail people in every culture, in every country. But it's a question of which countries are equipping those right. Tail people to go do things like this. Right. And not putting them in a position, to your point on Jack Ma of being disappeared if they cross the wrong powers. And we got it up here on the screen. I'll just read it out for anyone who's listening, but it's a Bill Knudsen quote that I think just really captures exactly what we're talking about. And it's hard to quantify. But he says there is in America a spirit that drives people to want to do different. They are just ornery enough that they will not stay where the rule was laid down. In that I believe you will find the greatest hope for America's future. And again, this is the guy who basically, along with Henry Kaiser, kind of made sure that the US had the industrial armaments that it needed to win World War II kind of out of nowhere. So that's not just like, again, a rah rah America thing. But I think that all collectively frames up the geopolitical great game that is going on right now. And maybe to transition to that, we don't have to spend a ton of time on it. But this morning, Monday morning, we're looking at headlines that the US And Iran have now reached a deal of some sort with various points that are allegedly fully agreed on by both sides. Still not totally clear if everyone actually knows what they're signing and is agreeing to the same thing. But this Friday, we're going to allegedly have that signed. And oil is now down to its lowest level in the last few months, just hovering around 80 on WTI. On the back of that, this could be a big pivot point in the whole story. But tbd, hopefully we'll have a little more clarity next time we do the show.
- [11:09]
A
Yeah. And as we speak, WTI is trading at $78.74, so below 80. Now we'll see if this is actually signed and both sides abide by what is laid forth in the agreement. I do believe I saw confirmation from the Iranian side that the deal is real. So here's the hoping that we get this signed on Friday. We can sort of move on from the saga. But to your point of things we've called out in the last year, it will Be interesting if it is signed and there is no reversal on the ceasefire and calmer heads prevail moving forward, at least for the short to medium term. And it would signal, I mean sports started what, the end of February. So you have March, April, May, half of June, three and a half months of war in Iran. And I saw an interesting commentary on this. It's, it's not going to appease the libertarians or the war hawks, but it's just that it's not as tactical as Venezuela. But if we're anchoring to the national security strategy that we, that we've talked about that was released last November and if this does prove to be done on Friday, it would be a tally in the, in the, in the side of he's staying true to the national security strategy, which is we don't want long drawn out foreign wars. We want to get in, get out and just protect our interests. So we'll see.
- [12:37]
B
Yeah, hopefully I think I speak for both of us when I say hopefully that can actually progress in that direction. But I think it's like it's to your point of the national security strategy, it's, it ties back to the stuff we just talked about before. Because if you were looking at the set of constraints and opportunities that the US is looking at and many of which we've talked about on the show, you're trying to walk this tightrope. What would you be doing? Well, you'd be leveraging every tool that you have, one of which is unique capital markets, unique depth of capital markets. We talked about that. You'd be leveraging your Elons, giving them room to run and room to become the next Bill Knutsons and Henry Kaisers. You'd be leveraging your energy advantage relative to the rest of the world. We've talked about that a ton on the show as it relates to the Iran war and recentering a lot of energy infrastructure toward the United states, ramping up U.S. energy exports, getting WTI to be more and more of a focal point over Brent Brent crude. You'd be doing that to show the world that your energy poor allies and your energy poor neighbors need you. You'd be trying to leverage that. The next thing you'd be doing is you'd be leveraging your for now still dominant currency network effect. And I think we saw a couple interesting data points on that front last week with Besant kind of ramping up. Treasury Secretary Scott Besant ramping up talks of using seized Iranian assets to fund the reconstruction of the Persian Gulf. We'll see with the deal we just talked about to what extent that will happen. But I think the notable thing is that if they wanted to, the US is in a position where they have access to a lot of seized assets and the ability to freeze assets that they can go mobilize however they see fit in the limit if they want to. Not there aren't downsides to that. Not arguing for that. But I think a tweet like that is a reminder to the world that there is a lot of latent leverage that the US does not typically exercise but can exercise within the dollar system. And the thing on the right that here is a quote from the CEO of Payments Canada who last week gave a good speech, basically just acknowledging, as she puts it, payments are economic statecraft and they are instruments of economic power. She highlights how 4/5 of Canada's cross border payments are routed through New York and US correspondent banks and the vulnerability that presents for Canada. Then I think I'll just highlight on the next slide too briefly. We talked about it a little bit last week, but there was this really interesting article that I recommend people go read out of the South China Morning Post, which is an interesting outlet for this. It's a Hong Kong paper, but talking about just the practical frictions and difficulties of actually de dollarizing China, Russia, trade flows and all of the gaps that that leaves and trust issues that then need to be solved. And it's not as simple as pasting into an Excel sheet like use this currency system versus that currency system. Right. So if you're the US these are all like the things, these are among the things that you would want to be leveraging and kind of you want to be seeing if you were trying to recenter a lot of trade toward the U.S. and if you were trying to regain a competitive foothold on a lot of the fronts where you're weaker.
- [15:33]
A
Yeah, it's again the validation of why we're doing what we're doing here as it pertains to bitcoin. I think there's a ton of value in a incredibly distributed neutral settlement network and I think price is climbing back up. I think it crossed 66,000 this morning after hitting 60,000 last week. And I doubt it's because people are recognizing this, but I think it would be very, very silly to be short bitcoin as this multipolar world continues to evolve in front of us. I think the value prop of bitcoin is only going to be better understood moving forward. But we digress. We will get to how the United States has a unique opportunity within Bitcoin, specifically at the end of the show. But before that, another big sub theme of the last week is Claude's Fable 5, which is a sort of guardrail version of Mythos, which they announced a few months ago and, and held. Held back from releasing it to the wild because it was deemed too strong. They released Fable 5 last week and it was relatively short lived due to the fact that the US government was not happy with the. The guardrails that that Anthropic put in place because some of their competitors, or basically Amazon came out and said, hey, we found a way to jailbreak this and it can do all these things. They went to the government and said that. And then the government went to Anthropic and said, you need to take this off the market. We're using. What were they using? What was the justification? Sort of a weapons deep or.
- [17:17]
B
Oh, like export controls.
- [17:19]
A
Export controls, yes. And it seems like the Anthropic executive team had some consternation with the US government's posturing there. And I just thought it was a very poetic weekend for Anthropic specifically.
- [17:33]
B
Yeah, I think there's a lot more to be written on this story and I could be convinced that the face value story is true. I could be convinced that this is the next indication of the government maintaining its kind of overreach posture relative to the story we talked about a few months ago with the Dow and Anthropic. I could be convinced it's all coordinated kayfabe to justify greater regulatory capture of frontier models and to avoid open source distillation attempts. I could be convinced of a lot of different stories here. So I'm not willing to necessarily commit to one. And I think people should consider this kind of a fog of war scenario. And I think there's a lot we can get into. And I specifically think it's notable relative to everything we talked about just now. Because one of the other things that you would want to leverage if you were in the US's position would be frontier intelligence. Right. You've got largely like the frontier AI labs that live here, open source is making good strides. It's depending on who you talk to, three, six, nine months behind, whatever. But if you've got access to all of the giga brains who are driving this forward, they all live in your borders. The compute that they own or that they rent, whatever lives in your borders. If you're going to be taking the posture of the national security strategy that we've talked about that's an advantage that the US probably needs to. Yeah, this is a good article too. An advantage the US would probably want to leverage. And I think that there are. So I think it interplays nicely with everything that we're seeing and it's kind of what you would expect if we're right about the posture that the US is taking. I think that there's a lot that can be said too about Dario's post alongside the release of Fable and Mythos. I think it's very relevant to the constraints that the US faces as well. And so we can get into that. But I'll pause there and let you kind of drive from here.
- [19:32]
A
No, I thought Dario's post was actually pretty insane. It's basically saying the government moves too slow and we're going to release this stuff and they're going to have to catch up. That's how I took it.
- [19:43]
B
Yeah, I mean, I think so. There's all that. There's a lot. It's a long post. There's a lot to dig into. There's a lot of Dario at Anthropic is in the orbit of SBF and the effective altruist movement, which we don't really have time to get into here. Kind of a San Francisco oriented pseudo religion with some interesting viewpoints. But one of their big bugaboos has always been ubiquitous and the need to move to universal basic income. If you look at Arrow's post, one of the big things that he is proposing is the US government needs to do in response to things to Fable and Mythos and all these frontier models that are coming out that are only going to get crazier, we're going to get to recursive self improvement and we're going to have the paperclip maximizer that takes everyone's job. We need to have what he calls pro employment incentives, so payments subsidies, different tax incentives for companies to keep people hired even when they could make them redundant with AI. And then also long term, what is it called macroeconomic support. Basically just very broad based UBI to offset the impact of everyone losing their job or meaningful amount of people losing their job. And we've talked before about how whether he's right or whether he's wrong, those both have meaningful implications for the way that US capital markets and thus US national security run. But if you take him at his word that he's approximately right and if you look at how Elon has called for similar things, universal high income and Brad Gerstner, we talked about a Couple of weeks ago, talking about an AI dividend, we talked about Mamdani moving to seize private property in New York. It seems like you're really moving toward a world where there's going to need to be, rightly or wrongly or not there needs to be, but rightly or wrongly, there's going to be a lot more social spending happening against the backdrop of debt to GDP being where it is. We talked about that extensively. And against the backdrop of Social Security now coming out and saying that they expect to hit a shortfall one year earlier than expected. So instead of 2033, it's going to be 2032. You'll notice last year they said the same thing. So pretty much every year as we go forward, they move this up a year. So the convergence year works out to 2029. If that continues, you've got all of Dario's social spending points being brought up at the same time that the US is basically in a very bad position on the balance sheet side. Now, you could argue that if Dario is right, you're going to have massive GDP explosion and you can drive tax revenues off that to backfill and fund all of this. I'm not necessarily so sure that's exactly how it's going to work out. I think there's a lot we could get into to discuss that, but I don't know. That's a foregone conclusion. That GDP number goes up just because AI does a lot of stuff very efficiently. I don't necessarily think that's true. So all that being said, and that kind of hits on the one big constraint that the US faces relative to its advantages. And obviously manufacturing base needs to improve too. But the big constraint that everyone talks about and they're right about is the bond market. Right. And so you're going to need to probably do things that would, in isolation, hurt the bond market if this AI future plays out the way that someone like Dario thinks it might, even if it approximates that. And so if that happens and you need to do yield curve control, you need to get creative with treasury issuance, whatever the case may be. If you need a pro liquidity future, a pro dollar liquidity future, and you see that coming, what would you do? Well, first thing would be like we've talked about before, you'd ring fence the dollar system, you put more controls on it, you'd try to make it harder for people to leave and try to draw them in further with swap lines, whatever, make it a geostrategic kind of issue. And I think you'd also probably want to consider, if you're doing liquidity expansion in some form that you would like for Americans to be the primary beneficiaries of what that could mean in terms of where that liquidity could ultimately flow and land. And also if people do, on the margin, try to defect from the dollar system, one place they may go would be gold, but another place they may go, I think increasingly would be Bitcoin. You'd ask, all right, if we're going down this strategy, thinking several steps ahead, would we perhaps like the US to be the primary beneficiary of both incremental liquidity landing somewhere and on the margin, people defecting from the dollar system? This is meaningful tinfoil hat stuff. This is meaningful 5D chess stuff that is perhaps not being thought of, but I just thought it's helpful to show and to land on where the US sits vis a vis the rest of the world in terms of our bitcoin holdings, hash rate, et cetera. This is some really good work that river did late last year. Some of the data may be outdated now, but basically this is all effectively still true. And so I just think, to end my rant, this is a really interesting data set to keep in mind as you consider the third and fourth derivative implications of everything we've been talking about here. I think this is like why we keep coming back to bitcoin. This is why we care about bitcoin. One of many reasons. But as it relates to all these macro threads, this is why we keep ending the show on Bitcoin. Because I think this can't be understated.
- [24:47]
A
It all fits together. For those listening and can't see, we're looking at some stats that river produced last year, but they pose a question. How dominant is the US in Bitcoin? Around 40% of the total supply of Bitcoin is estimated to be owned owned by American citizens and companies. 94.8% is the US market share of corporate Bitcoin holdings. 65.3% is US share of nation state Bitcoin holdings. 75. Excuse me, 70% is the US marketing share of Bitcoin venture funding and 79.2% is US market share spot Bitcoin ETFs 36% US share of global bitcoin hash rate. So we are dominating, and I think we touched on this last week or the week before, the fact that Besant is still talking about the strategic Bitcoin reserve despite the fact that we're about 50% off all time highs and the fact that they're trying to push clarity through is when the market's in the dump for not only bitcoin, but more so broader crypto is a signal that maybe behind the scenes the administration does recognize that bitcoin is a strategic asset, that in a strategic market that we need to lean into. And I think this is something that we've been saying, not only you and I, but Matt and I on rabbit hole recap myself on TFTC for many years now. Like if the US if you believe that the fiscal situation has gone off the rails and you need to think outside the box, think creatively on how to bring it back all the way the rails and maybe hit your wagon to something that's going to experience insane value accretion over the next few decades. There's no better wagon to hit yourself to than bitcoin. Considering all these data points that river highlights here, like if you lean into bitcoin and you foster the continued and accelerated adoption of bitcoin as a monetary network due to the fact that there will only ever be 21 million Bitcoin, that means that the purchasing power of individual bitcoins is going to go up significantly. And America is perfectly positioned to do that due to the fact that. And I think this is actually a good tying of the knot of the theme for the whole episode, which is I think Americans, due to that spirit that lives in our bellies of just innovating, being positive, leaning into new technologies as they emerge. I mean, bitcoin's a perfect example of that. I mean, the network launched in 2009 and by 2013 there was a pretty robust market. I mean, coinbase really led the way. And I think within the United States, individual adoption was, was happening at a rapid clip over a decade ago. And if the administration, the US Government in future administrations recognizes this, I mean, imagine if bitcoin were to go to a multi deca trillion dollar market cap or $100 million market cap, which I think we both believe is definitely in the realm of possibility. I would put high confidence in that happening eventually. The timeline varies depending on what happens. But if the US leans into this, as bitcoin is going through its monetization phase, it's going to benefit massively.
- [28:06]
B
Yeah, couldn't have said it better myself. So hopefully people will forgive us some of the Pepe Silvia work that went on here. But I do think, to your point, I do think it all fits together. So I think if you're bullish on Elon, be bullish on bitcoin we'll see
- [28:20]
A
you guys next week.