← Tom Bilyeu's Impact Theory
Tom Bilyeu's Impact Theory
Arthur Hayes Predicts Massive Market Crash and Bitcoin Surge by 2030
00:59:25
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- [00:00]
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- [01:02]
Host (Interviewer)
Welcome back to part two of this incredible conversation. Without further ado, here we go. If we know that the government is going to print, if we know that Trump is doing everything he can to drive interest rates lower, and we know that, that both of those things are inflationary, they will drive up asset prices, they will make houses more expensive, they'll make rent more expensive. On and on and on. What does the world look like over the next three years as that easy money continues to flood the system?
- [01:35]
Arthur (Guest/Financial Analyst)
I mean, s and P 10,000, NASDAQ 100,000, Bitcoin 1,000,000, gold 15,000. Right? Pick your asset. They're all going up. Maybe some go up more than the others, but that is the state of play. And so then the question is, how do you take whatever savings that you have and buy one of those things, whatever it is you feel comfortable buying? Because those are the things that have to go up as a release valve for let's run the economy hot, let's allow wage inflation, let's reduce the debt to GDP on the government's balance sheet.
- [02:09]
Host (Interviewer)
Okay, so you've talked about how Trump would effectively take over the Fed. How does he do that? Because right now, obviously, he's not able to get the things done that he wants to get done. So how would he pull that coup off? And in a magical world where you have a wand and you can either help him or stop him, would you help him get control of the Fed? Is what he wants what you want to see happen, or would you stop him?
- [02:41]
Arthur (Guest/Financial Analyst)
So I answer the last question first. I'm a financial asset holder, so I want what he wants. I want cheap money, and I want it to be plentiful. Right. I own the things that are going to go up because. Because this works. Right? So. And no, that's. That's just the. The truth of it. If you own a house, you want what Trump wants to have. Have happen, right? He's going to pump your house price, too. Now, the, the situation is, you know, how does he gain control of the Fed? So, first of all, every single US President since the Fed has been created always gets the monetary policy that they want. This is not a news phenomenon where the president and the chairman of the Fed are butting heads. This is not new. And always the Fed chairman, whoever that is, caves, or the Fed as a political body. There's a great essay written by Arthur Burns In 1979, the anguish of Central Banking, where. Where he essentially says that because the politicians want to provide this free money to do stuff for the people, because the people have elected them to do this, we as a Fed, whether we like it or not, are there to facilitate that. And the thing that will let go is the value of the currency and sort of responsibility of what is the value of the dollar, and we will always do that is essentially the message that he said. This is the 1979. So people need to do a real little bit of history in terms of understanding that Trump, Biden, Clinton, Obama, Bush, Reagan, they all got the monetary policy that they wanted in the end, and so Trump will get it. I wrote an essay called 4 7, and we talked about the bureaucratic machinations on how Fed votes and how you get control of this board versus that board. Maybe that's something like that. Maybe, you know, everyone in the Fed is convicted of mortgage fraud and he replaces all of them. I don't know. It doesn't really matter. All I know is that there's. There's never been a president who's never gotten the monetary policy that they desire. Trump will get his monetary policy. How long it takes, I think sometime in the, you know, second half of 2026, he'll get another monetary policy that he wants, however he does it.
- [04:45]
Host (Interviewer)
All right, you painted a picture, or maybe I painted it and you agreed, of what's going to happen when Trump gets the economy that he wants or the. The Fed to do what he wants. And that's asset prices go up, but right now, asset prices are down. So what's going on with Bitcoin, Ethereum. Yeah. And other assets that we see struggling right now? What. What's the underlying cause?
- [05:15]
Arthur (Guest/Financial Analyst)
The Underlying cause is the Fed is not printing as much money as we thought they would print as fast. And the technical thing is the government shutdown. Sorry. The debt ceiling fight ended in July 4th, and the US treasury essentially had to pull a trillion dollars out of the economy to rebuild its checking account. And that's essentially in a very simplistic manner. Why Bitcoin all of a sudden caught up with that destruction of credit and is previewing what could happen to equities is if the Fed doesn't change course. Now, starting in December 1st, quantitative tightening, I. E. The balance sheet reduction of the Fed ends. The US Banking system is starting to issue more loans, and these are loans that are going to the industrials that the Trump administration wants to build things, whether that's weapons or nuclear or semiconductors or rare earths, what have you. The banks are starting to lend to those companies who are now getting government guarantees for contracts that only accelerate. So I think this little bit of period of weakness in crypto is very minimal. We'll keep going back up as credit expands. The quantitative tightening ends at the Fed. Trump gains control of the Fed sometime in 2026, and money is printed in some way, shape or form. There's also the housing market. A key policy of the Trump administration is to pump housing. It's a key part of every single administration. I don't care if it's Republican or Democrat. And so, again, I think people need to take out this partisan nature of like, oh, Trump's a Republican, he's bad because I'm a Democrat and I oppose these things that he's going to do. Well, put in Kamala Harris as a Democrat, he'd be doing the same stuff. And so I think once you remove all that, then you're saying, okay, well, why am I trying to fight this if I'm not going to fundamentally get politically active and change this system that puts this stricture on how I am as a financial person in this world, then I better just get with the program. And it's buy stocks, buy crypto, buy gold, don't use leverage and just wait and it'll go up.
- [07:29]
Host (Interviewer)
What does it tell us about human nature or the markets in general, that people just cannot bear to wait? They always panic like they didn't expect that it was going to go down. This whole notion of this time is different is so wild to me. So, yeah, what do you take away every time people start freaking out when the price dips?
- [07:51]
Arthur (Guest/Financial Analyst)
We're all human at the end of the day, and this is this Is human nature the, you know the market is not there to make you money if you're over, if you over trade. And this has always been the case as nothing changed. We're still humans, still these lizard brained mammals that live in this new computer age world. It's only been 150 years since we really have sort of emerged from pretty much like subsistence, basic subsistence. So I think that human nature is human nature and so the average human is impatient, wants the future today, is willing to gamble to get it and unfortunately the politicians play on that.
- [08:33]
Host (Interviewer)
Yeah, that, that is for sure. So as you look out into the future, you know that humans are going to react that way. Do you see anything that can change the divergent economies? Because this is the thing that probably I worry the most about is given that human nature, given how busy people are, given that some people don't have the intellectual capability to understand it, given many have the capability but just aren't going to put the time into understanding it, they are going to be moved by policy decisions full stop. They are not going to go oh well, given that there's money printing, I know assets are going to go up. So let me go get an assets. Do you worry about that? Do you not think about that at all? Like how do you factor that into your calculus?
- [09:29]
Arthur (Guest/Financial Analyst)
Well, obviously you worry about societal breakdown. And I think we talked a lot about this sort of this AI battle that we're going to have versus should we have it, if we do have it, who should benefit from it or maybe we shouldn't have it at all. That's going to be the colossal defining sort of battle of this century. In the same way that communism versus capitalism, if you want to reduce sort of the imperialism, if you want to reduce the two world wars to those very simplistic terms, was the defining moment of sort of late 19th to early 20th century humanity. Right. And we're sort of living in that reaction to that in that post World War II, World War I situation right now. This is defining moment of what it means to be human. Are we going to blow ourselves up because we couldn't decide how to share AI? I don't know. I think that's the number one question.
- [10:19]
Host (Interviewer)
Taking a short break. But there's more impact theory after. Stay tuned.
- [10:24]
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- [10:39]
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- [11:10]
Host (Interviewer)
Thanks for staying tuned. Now let's get back to it. I worry very much about society tearing itself apart. Oh, this is another reason you don't live in America. So in America, man, it's really palpable and you can feel it. Like, I even have to think about, like, what advertisers are going to consider me speaking to their demographic. Certainly politically, everybody's on a team. When you listen to the way that people talk, everybody speaks in team talk. If I wanted my channel to triple in views overnight, I would just pick a team and just do the team talking points. It is crazy. I know how effective that would be because people want that team perspective. Everybody wants to be in their own echo chamber. They want the heuristics of just tell me how to think. They don't want. Like, I'm all about cause and effect. So I'm always trying to lay out what's the cause and effect and where does this go. And so when I look at this particular problem, which is that most people, either because they can't or they won't, they're never going to get into assets. And so that problem is not going away. And so, and then I have the belief, the base assumption that the only problem that's impossible to solve is the political problem. The other problems maybe, but the political problem I don't think is, is ever going to be solved. They will give things away for free because it is how you gain and retain power. And only on the other side of tremendous pain will a culture change. This is why every empire has fallen. So that's my big concern. So from why do I make the content that I make? I'm making the content in the hopes that I can make a simple set of choices accessible to more people so that at least more people will get on the life raft. But for that, people have to face what's actually going to happen. And yeah, man, I don't, I don't know how many people.
- [13:16]
Arthur (Guest/Financial Analyst)
I mean, I think the, the United States is specific because that's, you know, majority of your audience is not in the worst off shape of all countries that are highly indebted. There's no enemies. Right. There's two big oceans. Canada and Mexico are essentially vassal states of the United States. The United States is energy self sufficient at the right price. Right. Oil's too cheap right now. That's why shale is struggling. In some of these oil producers, there's plenty of offshore drilling to give oil and natural gas to the US to have enough energy to be self sufficient. There's plenty of food in the United States. Yes. Maybe it's not the best quality and there's too much high fructose corn syrup or whatever nonsense that is in the food supply in the U.S. but again, there is enough food in the U.S. so the debt is a problem, kind of. But from a holistic standpoint, I don't see this like zombie apocalypse hyperinflationary problem for the United States anytime soon. When you think about Rome, right? It took hundreds of years for Rome to fall after the underlying economic model didn't work. They couldn't import enough slaves to do enough labor and there weren't enough free, you know, Italian Roman citizens to do stuff. Took hundreds of years before, you know, Rome felt like the United States is not going anywhere just because the debt to GDP is 135 or 140%. Like there's, you know, an immense capacity to add more debt. In the US situation, life might not be the most fun and you know, pleasurable for a lot of people. But I don't see this as this sort of like, oh my God, the US is going to blow up sort of situation because again, there's enough food, there's enough energy at the right price and there's no internal, sorry, outside invader is going to come to the US and sort of like take over the country. Like why would you want to do that? Who wants to rule the United States? Like that'd be the dumbest thing I could ever think of.
- [15:04]
Host (Interviewer)
Okay, well then let me walk you through my thesis on what's going to happen next. So this is how I see this playing out. We're stuck in Thucydides trap. China's on the rise, we're on the decline. No declining power ever has just gracefully accepted that they were being surpassed. England being the most recent example, only accepted defeat because they just got battered so hard during World War II and just found themselves so indebted to us, they just didn't have an option. They were so fatigued, they had suffered so much for so long and they were so in debt, they didn't have a choice. So they obviously, they go through war. So now 12 of the 16 times that a declining superpower has collided with a rising superpower, they've ended up in open kinetic warfare. So it's like, statistically the odds are not in our favor. We're already doing weird things in Venezuela, doing currency swaps with Argentina from where I'm sitting, as a way to let China know, hey, South America is our hemisphere, it is not yours. You will stay out of it. Be a real shame if something happened to one of your ships in the Caribbean. So obviously China is now doing all kinds of shit off the coast of Japan to let people know where they're at with Taiwan. Japan clap back, China clap back, you know, to Japan, saying, all right, well, if you guys want to fucking test us, if you want to start talking that it's existential and that you're going to have to do something. If you're feeling froggy, leap. So it's like, I feel all that instability, then factor. On top of that, you've got the US right now choosing between essentially brands of socialism. So we both agree that there's going to be what I will characterize as additional stress put on the system. So if I'm China and I'm looking at America, I'm like, oh good, you fuckwits are going to like tear yourselves apart. Fantastic. I'm going to keep going. I'm going to build a gold corridor in South America. I'm going to peg the yuan to gold. I'm going to make sure that the US loses the reserve currency status. I'm going to weaken you guys. Yeah, I don't plan to invade you, but I am going to, by the way, take over Taiwan by 2027. You're going to do nothing about it. And so now you get in a situation where your biggest rival is picking off allies. Your biggest rival controls essentially your entire warfare pipeline. So they're going to be able to do effectively what they want because they can choke you off from rare earth minerals and drone parts and all kinds of stuff. And so the US Is going to be just put in a weaker position, like you. I don't imagine this isn't. You wake up one day and it's catastrophic. It's the US is just put in a weaker and weaker state, is in a worse off position in terms of who they can influence globally, which means things will get worse economically. You'll be in an economic battle with China for who gets to trade where, with who? With what? And given that we're already printing money ad infinitum, that just everything gets weaker and worse. And so that we are already doing political assassinations. We're already at each other's throat. You get the Venezuela vacation or the Argentina fication of the US over the next 10 to 15 years. That's what I worry about.
- [18:47]
Arthur (Guest/Financial Analyst)
I mean, there's a lot, a lot there to unpack. But I think the US Was transitioned from a hedge, you know, unipolar hegemon to a very powerful country. And I guess the question is, how does the American psyche handle that? Could be bad, could be, could be okay. People get like, hey, it, whatever. China is the number two and number one. We're number one and number two and you know, we deal with it. Right. And as you mentioned, right, China has railroads. The US doesn't have any that'll persist for how long? However long it persists. But it basically means that if China's not going to sell you itself to, you know, shoot the weapons and you can't shoot the weapons, which essentially is a really good thing because if the US had enough weapons to shoot, then this whole situation be probably a lot more scary in terms of the global sort of situation globally. But because they can't shoot enough weapons, then, you know, Trump has to stop the war in Ukraine. You know, as sad as the Israel, Iran situation was, it lasted 12 days because Israel started to feel what happens when you get bombed by another country? You don't have enough missiles to, to defend yourself. Right. And so again, this is all predicated on China is there to make money and trade. They're not there to supply the United States with car plastic, launching missiles at people, which the US Would love to do, you know, because that's just in the nature of the country. It's been at war for pretty much 95% of its existence. So again, I, I take a little bit more of a glass half full sort of attitude towards, you know, the declining, you know, empire of the United States, where there are limits, there are other countries that can enforce these limits on the United States. And there are internal problems that will be dealt with however they're they're dealt with. But hopefully we don't have a thermonuclear war. Everyone's shooting hypersonic missiles at each other. And you know, if we take that off the table, then, you know, if you don't like the way the situation is in the United States, there's a whole big old world out there, Leave. Yeah.
- [20:41]
Host (Interviewer)
That's easy for somebody like me. That isn't easy for the vast majority of people. That's the thing that I worry about. Okay, that's enough. Doomerism.
- [20:52]
Arthur (Guest/Financial Analyst)
Black pill.
- [20:54]
Host (Interviewer)
Yeah. So now talk to me about 2030. What, what does 2030 look like? This is only, you know, four years, really away from the time that we're recording this. What does that look like? What do we have to look forward to?
- [21:09]
Arthur (Guest/Financial Analyst)
I think that we have some sort of like massive market crash between now and then. Hey, the end of doom and gloom.
- [21:17]
Host (Interviewer)
Tell me about the market crash.
- [21:21]
Arthur (Guest/Financial Analyst)
But it is more predicated on, again, AI adoption is going to happen faster than we think and impact the structure of the economy in a way that people aren't really appreciating right now.
- [21:32]
Host (Interviewer)
But in the ways that we already talked about or something that we haven't touched on yet.
- [21:35]
Arthur (Guest/Financial Analyst)
No, the ways that we already talked about. I don't. But I don't think that's the common knowledge. The common knowledge is, you know, Facebook is going to be a $15 trillion company because they've created the best AI possible or, you know, tencent or whatever company, right? It's not. Oh, shit. What happens when all the bankers don't have jobs anymore? How does that change the society? I think we get to 2030, we have a larger installed robot, base cost of labor goes down. We have essentially a very intelligent prediction engine called an LLM. Maybe we have AGI or whatever that means or not. I don't think it really matters. But we do knowledge work cheaper and more efficiently and we take human intelligence. And instead of sending the spars of brightest people, you know, like myself, to study bullshit finance versus being an engineer or being a dancer or being a poet or whatever, we have more people doing creative things, whatever that means, creating sort of joy for other people, because there is no other option. You can't be a banker anymore because that's not a profitable sort of profession. But you can be a writer, you can be a philosopher, you can be a sports, somebody who does sports, whatever it is, right? And I think there is a better scenario where labor is cheap. We have a global conversation about what it means to be a productive human. We haven't killed each other as we've moved to this sort of much less scarce society is definitely not post scarcity by any ways, but we have much less scarcity and so we have much more creativity, intelligence, doing things that just make the human condition better. So I, I want to believe in that. And I'll be positioned in My portfolio for yes, aggressive money printing. Maybe there's a backlash to that because the inflation gets too unbearable in a lot of countries. And so you have to have political rhetoric that sort of at least tries to pretend that there's austerity. And then we have sort of this AI not miracle, but labor is cheaper, knowledge work is cheaper, and we have a better human existence in terms of more things to enjoy, of just being ourselves and, you know, commuting with each other.
- [23:38]
Host (Interviewer)
All right, so let's talk about the road to get there. So 2026 is here. Stablecoins, I think, is going to play a big role. I know the Trump administration is trying to do some interesting things with stablecoins. Do stablecoins become the new bank? Does that start happening in 26? Like walk me through what you see in that near term window.
- [24:00]
Arthur (Guest/Financial Analyst)
So I think for stablecoins is a way. The reason why the Trump administration supports stablecoins is they see it as a way to shove treasury debt down the throats of the global population at very attractive rates. And so I think that in 2026 you're going to start seeing big tech platforms and the large banks have their own stablecoin or be distribution platforms for things like Tether and Athena and Circle USDC to get these stablecoins out there. So you will be more familiar with sending each other a stablecoin than you are with going on to your online banking system and sending somebody a bank wire. I think that's going to accelerate very, very quickly, especially for Gen Z and millennials who already are comfortable with online online banking. And that's going to lead to a proliferation of stable coins. And people are going to be using defi. They're going to be comfortable with these solutions. And then there will be a lot of banks that no longer are relevant. There'll be some like AP Morgan and Goldman Sachs who are agile enough to survive. But your average bank, I mean, go on. I mean, I go online, I use a lot of banks. Most of their technology is trash, right? And now you're going to say, oh, I can literally like move my money from my bank to this app where it does everything. I got an AI assistant to help me. I don't have to deal with humans at work nine to five, only five days a week, and who are very, you know, annoying to deal with. I've got this awesome thing called smartphone and an AI assistant. I'm going to use that. And the stablecoin, I can send money 247 no 365 great I'm using that. I'm not going to use my pick. Your you know, small little bank that is pretty. So they're going to face existential, you know, demise. The large space will still exist. They'll offer their own solution to that. But I think we're going to be very comfortable with using Stable Coins and then very comfortable with using Defi. Whether that's a lending platform, that's trading and you know, some of these protocols, you know, like Athena, like Pendle, like Etherfi. Obviously I'm all invested in these things and this is why we'll do well in this scenario. But again we're just going to move to this post banking world and the banks either adapt or they die. Either you adapt to this digital first native way or you die. Yes, there'll be some banks for the boomers who still want to walk down this Dutch branch like my mother, there'll be that cool whatever. But the fun stuff's happening over here and the money keeps getting printed and crypto keeps going up but and we sort of crescendo in sort of the 27, 2027, 2008, 2028 timeframe where you're going to have at least a back on. Hey, there's an affordability crisis and maybe there will be some negative rhetoric to money printing towards austerity and they might gain some support which will spook investors and like oh is XYZ countries United States, is China, is Europe, is Japan? Are they really serious about stopping the money printing and allowing the credit to contract and putting out of business all these over levered, you know, businesses and financial intermediaries? Maybe I should take some chips off the table, right? Maybe Nvidia 20 trillion market cap with all this accounting nonsense that they're doing with these deals. Maybe I'm done with that. I'm going to exit stage left. And that's when I think we get a massive collapse in all these over levered markets. And by that time maybe the AI sort of effectiveness and usefulness will start to catch up with the hype. If we think about 2001 when all these massive fiber optics companies like Cisco and all them crashed that they built out this amazing substrate that created social media in the next decade it'll be much faster with AI so there'll be a massive crash in all these hyperscalers and you know, model builders like OpenAI and Anthropic and then in the wake of it we'll get whatever useful application that entrepreneurs create to essentially make labor super cheap and make Knowledge super cheap. And what are we going to be able to do with that as a human society?
- [27:55]
Host (Interviewer)
The pressure that you see that's going to make that happen in 27, 28 is inflation due to money printing giving us that K shaped two tale of two economies. People get pissed off enough that they begin speaking up. The speak up then makes the politicians go, huh, maybe we need to start signaling that we're going to tighten. And just the hint of that signal is potentially going to spook the market and that causes the drop.
- [28:25]
Arthur (Guest/Financial Analyst)
Yeah, I mean think about 2021, right? We had, at least in the United States you had what, 10% inflation or whatever it was. Again that's not Zimbabwe or Argentina or Weimar Republic television. They just high inflation and just the act of the Federal Reserve in December saying hey, we're going to start a tight knee program in three months time was the thing that, that popped all the bubbles. Crypto, stocks, housing, whatever.
- [28:51]
Host (Interviewer)
Right.
- [28:51]
Arthur (Guest/Financial Analyst)
And so that's when we got the, the bond market. Worst performing bond market since 1812 in the United States from 2022 to 2023 or five three year rolling average. Right. So it doesn't take much when you're a highly levered economy. And the levers are going to get even more insane because people are going to print that much more money because they believe that that's the way to win elections. And so when somebody stands up and says, hey, maybe we should try something different, just the threat of it actually happening, just factoring in that probability, even if it might never happen, is what takes investors to say guess what, I'm going to exit stage left and maybe I'm just going to sit in cash for now.
- [29:28]
Host (Interviewer)
Give me the scale of what you see happening. Is this 2008? Is this, you know, 80s minor downturn, is this 1929? Like what scale are we talking about?
- [29:44]
Arthur (Guest/Financial Analyst)
I think we're talking 1929, 2000. Because the AI CapEx build out is as big as, or maybe I should say 1907, the railroads on the railroad. So 1907, 1903, whenever the crash due to the robber barons and the railroad trust in the United States, the build out of AI Capex is as big or bigger than the build out of the railroad infrastructure in the 19th century, which was one of the largest, if you look at percent of GDP Capex buildouts in modern human history. That is what we're doing right now with AI hyperscalers, whether that's in the United States or in China. And guess what? Railroad business is a shitty fucking Business to be in as a long term investor. And sooner or later investors will realize oh shit, I'm investing in the new age railroad. I don't want to be the new age railroad. Google's not the new age real world they are now. But Google wasn't the new age you railroad in 2001. They were the thing that used the cheap fiber optic connectivity to build their service. Same with Facebook, same with Amazon. Right. They did well after the capex boom. So investors will re realize that situation situation be like oh shit, I'm investing in new age railroads. I don't want to be in that. Let me get out of that.
- [30:56]
Host (Interviewer)
So this is interesting, I've not heard this before. So basically there are business types that are so capital expensive but people get hyped about them so they invest in them but they're not going to make their money back ever maybe or certainly not for a long time. And so bad risk adjusted return. They finally realized that they get out and then we realize oh like we had a whole lot of capital tied up in something. They got spooked, they pulled out, presumably at a loss and now we're basically sucking liquidity out of the system. Is that how that would play out?
- [31:33]
Arthur (Guest/Financial Analyst)
Yeah, I mean it's, yeah. If AI is a thing that powers the American and Chinese forward economy and literally all we're doing is building out essentially a railroad for other awesome entrepreneurs to build something on top of. Well again the railroads are not great businesses long term. They're a natural monopoly if you want
- [31:51]
Host (Interviewer)
to call it that utility. What I'm trying to figure out is okay, fair enough, but England would go into a country, the first thing they would do is build the railroad so they could extract all of the resources and England becomes a gigantic empire on the back of railroads. So I get why it might not be a good investment for a small number of people that put a ton of money in, but overall it's so transformative. I'm trying to figure out why you think this brings like a full blown crash like 1903, 1907, whatever the year was.
- [32:21]
Arthur (Guest/Financial Analyst)
I think you mentioned it because the return on capital is not there when you invest alongside the government. At first it feels great. Oh great. I got the government behind me. They're just going to like pump my bags. Right. People feel great that the United States government is now getting into industrial policy, that they're pumping nuclear, they're pumping AI, they're pumping semiconductors. Well guess what, go back and become a Chinese investor and look at the average return over the last 20 years who did really, really well. Yes, China built all this amazing infrastructure that helped the average person upgrade their standard of living. But as a, an investor, on a long term basis, you made no money in China, right? You invested on the government, you provided your capital. Tradesmen said, great, thank you for that capital. I'm going to build airports, roads, apartments, whatever. On a, on a macro basis, you made no money as an equity investor in China. Now they're great for society, bad for investors. We're going to repeat the same thing with AI in the United States especially. AI is great for society, hopefully bad for individual investors who hold these, these investments too long. Because, yes, it feels great investing with the government right now, but you know, maybe by 2020, not so great when, you know, Nvidia was up 10x, but now you're down 90% because you didn't get out in time. So I think that's the, the lesson. And as you said, right, these are great investments for the collective, but it's bad for the shareholder. Right now, you know, Trump and whoever else comes after him are going to be like, yes, we're going to support the shareholder. We're here to make sure that the private investor makes money. But guess what? Trump's a politician. What if you invest with Trump on some semiconductor fat on Fab and you want to reduce headcount by 50% because that's more efficient. But Trump says, huh, that's a district that's at risk for my, for this so and so Republican. No, no, no, you're not firing those workers. I don't care if your return on equity declines. I have an election to win. These people, you know, put me in power to make sure that they have a job. I'm going to make sure they have a job. And so that's the risk. When you invest alongside the government. The government has different goals than you do as a, as an investor. And that's where essentially the AI is transforming into. With all these massive deals that the US Government is now supporting, whether it's semiconductors, it's nuclear, it's data centers, it's permitting for the building out of electric capacity with, you know, natural gas and utilities, whatever, right, you're investing alongside the government. It feels really good right now. It's good for the stocks right now, but if you hold it too long, you're going to be, you know, best case at flat, more likely you're going to crash out. And you can look at China and you can look at this and see it happen over the last 20 years where, you know, the needs of the state came over the needs of private investors. It always happens this way.
- [35:07]
Host (Interviewer)
That's interesting. That one was not on my radar. I will definitely spend some more time with that. We're hitting pause for a moment, but there's plenty more ahead, so don't go anywhere. Thanks for sticking around. Let's get right back into the action. Talk to me about how you approach AI investing. Obviously, right now the stock market is effectively AI, period. Full stop. End of story. There's nothing else. And now you're saying that a huge part of what people are hyped about is going to get them in trouble. How do you approach AI?
- [35:39]
Arthur (Guest/Financial Analyst)
I don't invest in it. I'll wait for what comes after this build out of the hyperscalers after they spent the hundreds of billions or trillions of dollars. Really, these data centers create this amazing intelligence. Okay, what can we do with this intelligence after the fact? Again, I don't want to be in the railroad business. I'm not smart enough to know when to get off the train. So let me just not play the game. I don't own Nvidia. I don't own Google. I don't own the nasdaq. I know crypto. I know they're going to have to print money to sort of ameliorate the social pressures and the social dislocations created by knowledge work going to essentially zero in terms of price for intelligence. I know we got to print more money, so I'll just stay in crypto. Am I going to have the best return if I pick Palantir or Nvidia or whatever stock over the last two or three years? No, but I don't know when to get off the train. I'm not that good. I'm just not going to play the game. I'll wait till, you know, I want to buy Amazon in 2003 and 2004, not in 1999.
- [36:41]
Host (Interviewer)
Yep, that makes a lot of sense. Now, the conventional wisdom would be that it's not timing the market, it's time in the market. So while I get. You don't want to buy March of 1999 at the absolute peak, you actually are in some ways trying to time the market in terms of waiting. Is it because you think the signs will be so clear on the other side and or you don't mind missing an opportunity in an industry that you don't really understand?
- [37:18]
Arthur (Guest/Financial Analyst)
Well, let's say that Nvidia goes. Let's say that this the the AI think is using Nvidia goes from a 5 trillion market cap to a 20 trillion market cap. Right, because they just rock stars. Jensen's the man signing titties all over the place with his leather jacket. Right. $20 trillion Nvidia. So you forexed your money if you put your money in now, but then Nvidia goes from a 20 trillion company to. Let's call it, let's go say it goes, go back down to like five.
- [37:44]
Host (Interviewer)
Right.
- [37:44]
Arthur (Guest/Financial Analyst)
So it goes down where is that? 80% or whatever the math is the shaky on that right now.
- [37:49]
Host (Interviewer)
Sure.
- [37:50]
Arthur (Guest/Financial Analyst)
And then let's say that, you know, there's a period of lull and then Nvidia goes back from 5 to 10. Right. So I invested at 5, it went to 20, it went back down to 5 or even, even lower. And I basically done nothing over the last two years. And Nvidia is still a great company. Or I waited, I waited for the first real shakeout and then I went back into the, the, the really good companies that are still around and I bought their stock after the crash. Even if they don't get back to the market cap that they were when I first invested, I still make more money than I would have in the first scenario on a risk adjusted basis or just probabilistically. Right. So you always want to vest from, you know, from 2 to 10 gets you a 5x return. But from like 10 to 20, he's only 2x return. But I'm taking more risk because I already intrinsically believe that it's overvalued. But I feel like I have no other choice. I have to invest in AI. Well, just wait. You can make more money in a shorter period of time once things have actually crashed out on the rebound than you can investing in something when you intrinsically believe you're buying at the top. And so that's how I feel about AI. And you can look at sort of the Internet stocks that survive the crash, like Amazon, right. Amazon went down something like 95% from 2000 to whatever the low it was in like 2001 or 2002. And then it's up, I don't know, whatever, like 30, 40, 50x whatever it is from, from then until today. Yes. If you kept your money in from 1999 until the present, you've made money, but it took you 30 fucking years. So that's just how I look at things.
- [39:27]
Host (Interviewer)
Okay, so the investing that you do do is it entirely just. I'm in crypto because I understand it. I pay super Close attention or do you have a diversified strategy that how do you approach this moment if you think that the most popular asset on planet earth is overvalued?
- [39:47]
Arthur (Guest/Financial Analyst)
So my view is I believe in money printing. I think everyone does. Whether you are Warren Buffett or you're crypto degen in the basement, you believe that whenever there's a problem, there's going to be money printing. Okay, so if I believe in money printing, what is. And I, and I don't want to pick stocks, I want to invest in a broad based either equity index or something that is a broad appeal like gold or crypto or a house or whatever. Right. I'm not a stock picker. Yes, stock pickers can outperform the strategy that I'm talking about, but I'm not a stock picker. I just want to invest in the fastest horse. What has been the fastest horse from 2008 till the present, which has probably been one of the largest periods of money printing. Whether it's us, China, Japan, Europe, in human history, it's been bitcoin historically, hands down. So if I want to bet on the fastest horse, an asset that's in fixed supply, that cannot be debased by the government, that is digitally native. So you could imagine an AI using Bitcoin or people, because now they're more comfortable using their phone or the Internet to transact value, they'll prefer bitcoin over, say, gold, for example. Then I just want to own the fastest horse in this race, in this debasement race. It's bitcoin. So just buy bitcoin. That's it. That's all I got to do. The old, my whole job at Maelstrom and I tell my employees this is, we do investments to make a return, I pay you a bonus, I take my return and I buy more bitcoin. That's all I do. All I care about is stacking more bitcoin. Because I believe that in this debasement scenario, as long as I can have my pulse on the money printing, the banking system, and this is why I study. I read very boring reports about, you know, bank call reports and bank balance sheets. And I understand, you know, how the central banks print money in all the different major jurisdictions. That's what I study. Because I believe I get that right, then all I need to choose is the right horse. And the right horse, historically speaking, is Bitcoin. Obviously, his history doesn't portend to the future. It does advise the future. I believe that bitcoin is going to continue to be the best performing broad asset again, it's not like you pick paler and it went up 20x over the last two years. Great. If you can do that, you're amazing. I'm not. I'm going to choose Bitcoin and it's going to go up the most. Whether it's gold or stocks or houses or bonds, they're all going to go up, but bitcoin is going to go up the most. And that's how I approach investing. And so that's why I mostly focus on liquidity. What is the expectation of liquidity? How does reality conform to that expectation? And that's what informs you when you see me on, you know, when I write an essay or I'm on X and I post like, oh, I think bitcoin is going down to this level or I think bitcoin is going up to this level. It has nothing to do with me reading the chart of bitcoin and everything for me to read. Oh, I think the market's misinterpreting what's happening with the US banking system or with how China is printing money or the fiscal situation in Japan or how is Europe going to fund this war they want to fight with Russia, with defense spending. Again, these are all the things I care about. Because if I get that right, then I just have to pick the right asset and I believe the asset is bitcoin.
- [42:47]
Host (Interviewer)
So given all that, do you think Michael Saylor's strategy is perfect or is there something that you would do differently?
- [42:54]
Arthur (Guest/Financial Analyst)
Because he has access to the corporate debt markets? I think the initial strategy is perfect. He's able to issue an asset, borrow dollars that are going to be an infinite, infinite supply and buy something that's going to be in finance, supply. So I think as a fundamental level, it is a great strategy. Now the nuance is how is he able to do that in a price per share accretive way for the microstrategy stock? And obviously it was easier to do back when rates were lower, a little harder to do. Now I'm not really sure how if you are, have, have a dollar of capital today, if micro strategy is the best way to play that or to buy bitcoin. I don't really play in the stock market very much. I'll just stick with, you know, straight bitcoin.
- [43:33]
Host (Interviewer)
The thing that I've always found fascinating about what he's done, besides the just absolute gigantic brass testicles, is because I just could not do a single strategy like that, is that he basically pulled all of the like fancy gambling options that the stock market has on top of Bitcoin, so that people can do all the fancy derivative tradings and all that. But with Bitcoin as the underlying asset, is there any potential risk there? Given that on a long enough timeline, Bitcoin should. I mean, Bitcoin's already going down in volatility. His strategy requires volatility. Does he hit some sort of problem or is it just that people will slowly stop investing if what they want is volatility? What does that look like?
- [44:26]
Arthur (Guest/Financial Analyst)
So he'll have a choice at some point. At some point he'll have to, he'll have to take a lot more risk in the type of debt and structures that he issues, whether that's coupons or it's the date at which he needs to repay things. And he either makes him ignorant, either it's a, I'm going to take this, just add more leverage to my capital structure, and then I have to really hope Bitcoin keeps going up or it's okay, I'm going to stop playing this game. And MicroStrategy just becomes, you know, my 1x. Bitcoin doesn't go, it doesn't go up or down faster than Bitcoin. It just is Bitcoin. And if all you can buy is a listed stock, that's what you get. I don't think we're there yet. But at some point, if he gets big enough, he'll get to that decision. And then that's a corporate, you know, that's a corporate decision, what they want to do.
- [45:10]
Host (Interviewer)
It's interesting. What did you think when Michael Burry folded his hedge fund and said, I don't understand how people are pricing this market. I'm out returning the money back to shareholders or investors.
- [45:24]
Arthur (Guest/Financial Analyst)
I mean, shorting is hard. It's. I don't do it. It's a, it's a mindset, it's a skill. And if, you know, maybe he mentally just wasn't there to suffer the knocks. Right. He fundamentally believes AI is a bubble. I 100% agree. Would I ever shorten Nvidia? Never. But Michael Bur will do it. He's got the, the, the mentality for that. I don't have the mentality for that. And so maybe he was like, you know, it. I've already made so much money. I've got my own family office to manage. I'll pursue these strategies that I won't have to care what my LPs think about why these returns are lackluster. Until I get to that situation when Nvidia goes down 95%.
- [45:59]
Host (Interviewer)
Right, interesting. Okay. The thing that keeps me up awake at night is China. I know you've spent a fair amount of time looking at China. What is their economy actually like right now? I hear rumors that I want to believe and so I absolutely hit the pause button because I know it's what I want to hear. I hear that Xi is losing power. I hear that their economy because of the housing bubble is just in terrible shape. What's really going on, at least as far as you can see from the outside.
- [46:32]
Arthur (Guest/Financial Analyst)
So I, I haven't been to China since mainland, since 2019. I've been to Hong Kong a few times. Obviously I live in Singapore with a large Chinese Chinese diaspora. So you hear what goes on and. Sure. And I think that there is some point. May I write an essay about this? I think that China is a potential future for a post AI world. Let me explain that. So China has been one of the most aggressive in installing robots, Right. They have the most installed robot capacity in an industrial sense of any country per capita in the world. They've been the most aggressive in terms of AI. Right. There is no sort of like individual data. The data all belongs to the state. The state says, I want to use this data and to create these, these AI services. Whether that's ride hailing, it's ordering your food, it's using your palm to pay for things on WeChat, whatnot, right? You go to China right now, it might feel like. And the tier one cities, I'm not talking about the countryside, I'm talking Beijing, Shanghai, Shenzhen, Guangzhou. The four tier one cities in China, they are the future. Right? Everything is seamless, everything is clean, stuff is fucking cheap, the quality is good. And this is the future. But youth unemployment might be 40%. You have, you graduate from university, you go to a top, you know, very. It's very difficult to get into university in China that you have to be very. And if you do get a university, you graduate probably 30, 30 to 40 of you will not have a job. And so you're literally living at home. You're doing odd jobs. They call it the lying flat movement. You have some like micro apartment in Beijing or Shenzhen or wherever it is. But you, you live, you, there's great entertainment, you've got, you know, WeChat, everything's.
- [48:16]
Host (Interviewer)
Are you getting ubiquitous kind of.
- [48:20]
Arthur (Guest/Financial Analyst)
It's your parents, it's the savings of, you know, one child policy. You have four, you have essentially you two parents, you have grandparents and so you have all these people contributing to you as this little emperor, right? So you're just living off of your extended family. And it works for now. Now she has a problem. Well, maybe he'll have a problem, maybe he won't. I don't know of dissatisfaction because he doesn't care about employment. He believes that AI is the future. Now when they get to that future, what will this Chinese state's policy be about? Taking care of the population? Will they increase the amount of social services that they provide? You'd be very surprised to know that the amount of social safety net in China is less than Europe and the United States, which is why the savings rate is so high in China. But Xi believes that the future is this AI manufacturing techno country with lots, basically a homogeneous Han Chinese population. And that's what he is creating. And right now it's no, it looks like it's succeeding. This might be the future where again, most people don't have a, you know, most people go to university, don't have the job that they went to university for, but everything else is so cheap, their services are so good. Does it really matter? They get by. Can you have a socially cohesive society when that happens? Obviously in China because you have a much more ethnically homogeneous situation, a culturally homogenous situation and scar tissue from, you know, the, the 50th 60s, 70s during the Mao era and then previous with the Warring States and you know, such humiliation. Right. Chinese people love the stability that Xi Jinping provides society. So all this talk about he's super unpopular is kind of off the mark. If you, because you haven't read Chinese history to understand the people like the stability and the control that is right now in China. And so again, but I also think the Miskins, they people think, oh, they want to go to war. Well, what parent wants your only child to be going to the military? This is what Chinese woman who's a very good analyst said like she does not have the juice with the average sort of parent who's going to want their son, their only son, only child. I'm going to ship them off to the PLA to go to war. Against who? For what reason? When you know from all ways to look at things, there's abundance of food, there's abundance of energy and there's abundance of services provided to the people. Why do you, what do you need to go to war for? So I think this whole sort of Western fear over this like Chinese army going to like going into Taiwan or like going into all these other Countries is sort of misplaced because they don't understand Chinese history and the demographic situation that they're in. They haven't been there to see these gleaming cities of sort of what AI and robotics can do and sort of mobile apps and ubiquitous data sharing between the government and big tech. Right. That is what China is. I think that the west is going to move more towards that situation than they might want to admit to themselves at this point. But that's sort of how I see the Chinese situation right now.
- [51:32]
Host (Interviewer)
Okay, very clear picture now on the economy. The economy easy enough to bounce back from. They have a lot more room to print money than we do. What's that feel like?
- [51:43]
Arthur (Guest/Financial Analyst)
Well, I mean they. Xi Jinping said houses are for a living, enough for speculation. I forgot was 2018 or whatever it is. And the other message is common prosperity. He doesn't care that people lost money in housing speculation. And as long as people aren't rising up in the streets, I think he'll continue to pursue this, this policy. The Chinese government has not stimulated as much as the west has to abate this property crisis. He is stimulating to build more AI to overcome the semiconductor embargo that the United States placed on them to make sure that their BYD car, electric cars, US$2,000 or whatever it is that they sell those to the emerging world. Right. You go to China, everything that you get in America is better and cheaper in China. And so it just is a fact. So that's what they've been focusing. That's where their credit has gone. Whereas the US Credit went to go blow up Muslims in the Middle East, China took their credit and we're going to build AI.
- [52:43]
Host (Interviewer)
I hate everything about that last few sentences there, Arthur. That, that was fantastic. Horrible, but absolutely fantastic. Okay, that's China in a nutshell. Give me Japan watching what they're doing, knowing that they have a birth rate crisis, knowing that they're eschewing imm. Knowing that the yen carry trade is unwinding. What do you see there? Are they in trouble? Are they going to have some sort of contagion effect on the rest of the global markets?
- [53:13]
Arthur (Guest/Financial Analyst)
I mean, Japan again is a very wealthy country. They have what, 3 trillion or 3 or 3 or $4 trillion of net portfolio assets. And so eventually what will happen is the yen will strengthen. The Japanese government will tell the Japanese people and companies, bring your yen home, invest it here in Japan. You know, stop funding the United States and Europe. And they're built out of AI. Bring this money home. Let's build Back Japan, I think the end goes below 100 and you have robots, right? Yes. Japan does not like immigration, but they've got robots. And so the robots will be there, the population will fall, but they've made a cultural choice where they don't care. They're not going to open up the spigot of immigration to essentially fix that problem with humans. They'll fix it with robots. And again, another culturally and ethnically homogenous country. And so they'll band together and they'll survive. I spent a lot of time in Japan, I love Japan. I don't see there's going to be any real issue. There'll be a lot of inflation to get there. But again, culturally and ethically homogenous society that is banding together to do what the government tells them to do for right or for wrong. And so again I don't see a problem because as a country they're very wealthy. And so as they sell their US and European assets to bring that home, they will rebuild Japan to be again a robot first society. That'll spell trouble for the United States and Europe to now need to fund all that capital. Leaving that just promotes more and more money printing. The same thing that we've been talking about over the last few hours.
- [54:45]
Host (Interviewer)
Interesting. Yen carry trade gets a lot of breathless coverage on X for sure that it's going to have some sort of big knock on effect. It doesn't sound like you share that concern.
- [54:59]
Arthur (Guest/Financial Analyst)
Well, I guess, I think as we had in. Was it August of 2024, whatever it was. Yeah. When that sort of kind of blew up, what happens? The Fed, the ecb, they all have to print money to make sure that the capital that's leaving because that carry trade unwinds doesn't, you know, destroy their bond and equity markets. And so we know what happens when there is financial disturbance. The Western authorities print money. When the Japanese Inc. Removes their money to repatriate it to Japan to build back better in Japan, the West will print money to plug the hole. So there might be a bit of sort of market dysfunction for a while, but it won't take much. The authorities will say okay, cool, we're just going to print the money. Yeah. Japanese investors, we get it, you got to leave yen. It's got to appreciate all that's cool and the Fed's just going to print the money.
- [55:47]
Host (Interviewer)
Printing is the eternal answer. It is. Man, that is so true and so depressing that that is just the solve for everything. Okay, very interesting. Now you've talked about France just to hit my. Another country that. But I'm very curious to see how this is all going to play out. You've talked about France backing out of the euro, that you think that would be a good idea. What, why?
- [56:21]
Arthur (Guest/Financial Analyst)
And the euro is a terrible thing. It should never have been created, but
- [56:24]
Host (Interviewer)
it was because it centralizes power and stops competition between the different currencies or something else.
- [56:30]
Arthur (Guest/Financial Analyst)
There's 20, 27 members of the euro. Are you saying that there is one monetary policy that's right for 27 different nations, 27 different cultures, 27 different desires?
- [56:40]
Host (Interviewer)
We have one monetary policy for 50
- [56:42]
Arthur (Guest/Financial Analyst)
states and well, it used to be 12. Right. There used to be 12 district Federal Reserve banks that had different discount rates in every district. Right. Again, I think that decentralization is better than centralization. The Euro is a centralized monster, but again, it's fatally flawed. And France is horribly in debt and very unproductive with that debt. They just spend it at the government level. That's coming home to roost because the United States and Japan will no longer fund them and Germany for that amount. So Germany and Japan are the largest funders of governments and assets globally. They have combined something like 8 or 9 trillion of net portfolio assets, a lot of that to Japan. And essentially they made that money off the back of the United States. The United States said, hey, you host our military to contain communism, AKA Russia and China. We will let you export to our market and we'll let you restrict our companies from going into your markets. And that essentially gave them an $8 trillion wealth bucket, which they then bought. US stocks, US bonds, and in the European example, Germany funded France. And so as that unwinds, as everybody tries to go their own way, because the population is like, hold on a minute, we created all this wealth and I'm still fucking broke. Fuck this. Print the money, give me health care, give me whatever it is that I want. Stop investing abroad. That money leaves France. France is like, oh shit, we have to fund this government. We don't have any real wealth to fund it with. Nobody's funding governments anymore. Everybody's funding themselves. Well, this euro thing, you know, Christine Lagarde and the ECB says we can't print enough money to do things domestically. Fuck you, Christine Lagarde. I'm going to print money and focus on France first and that breaks the euro. As soon as France says I'm going to change banking laws, restrict capital for movement across Europe or not do what the ECB tells me to do, whether that's greater than 3% of GDP, budget deficits, then the euro in all effect is over and capital is not flowing freely around the eurozone and that's what ends the Euro. And so France is slowly walking towards that situation. And you can take a look at the liabilities of the French banking system within the EU system called the Target 2 imbalance. It's deteriorated rapidly since 2021 and eventually whatever that is, this will come to a head and the ECB will be faced with a choice to print money to save the euro. And they'll print the money. And again, it doesn't really matter. Assets go up, money gets printed. Euros are there or it's not there, but capital controls are introduced. So if you're in France or if you're in Europe, get out while the getting out is good, get your money out of Europe, put it somewhere else.
- [59:22]
Host (Interviewer)
All right, man. There's, there is a lot of money printing going on, a lot of uncertainty in the world. Through it all you have stayed very sanguine. Tell people what is the one thing that you have as a core belief that most people do not that allows you to be very even keel through what is certainly in our lifetimes, completely unprecedented instability.
- [59:47]
Arthur (Guest/Financial Analyst)
I read books and when you read books you find out that everything that we're experiencing today, yes, of course there's an AI Money printing. Debt jubilee. Social discontent. Empires on the rise, empires on the fall. We've done this all before. We've done it in Rome, we've done it in Weimar Republic, we've done it in World War II, we've done it in pick your ancient civilization. They've all had the same problems, they've all had the same menu of solutions. And every time the politicians chose to print the money and every time math and the compound rate of interest and time worked against them. And every time if you own gold or certain other assets you did well, it's something that you could keep them from being confiscated from the state. So as long as you do that and you don't use leverage, you'll be okay. Because again, time, mass and human nature are on your side.
- [60:38]
Host (Interviewer)
Awesome, brother. I am grateful for every chance that we get to spend time together. Thank you so much for taking the time. Where can people connect with you online
- [60:48]
Arthur (Guest/Financial Analyst)
so on X at Crypto Haze, on substack at Crypto Haze as well. I write my monthly by monthly newsletter and yeah, you'll hear me on programs like yourselves and others across the the Interweb.
- [61:04]
Host (Interviewer)
Awesome. I love it. All right everybody, if you have not already Be sure to subscribe. And until next time, my friends, be legendary. Take care.
- [61:11]
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