Peter Schiff vs Raoul Pal Debate: Bitcoin Going To $0 or $1 Million & A Great Depression Coming? PT 2

Summary

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Podcast Summary: Impact Theory – Peter Schiff vs Raoul Pal Debate: Bitcoin $0 or $1M & The Next Depression? (Part 2)

Date: March 13, 2024
Host: Tom Bilyeu
Guests: Peter Schiff (Investor, gold advocate) & Raoul Pal (Macroeconomist, CEO Real Vision, crypto advocate)

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Episode Overview

The second part of Tom Bilyeu's high-stakes debate features Peter Schiff and Raoul Pal clashing over the future of Bitcoin, the economy, and the dangers ahead for investors. The panel explores whether Bitcoin is destined for zero or $1 million, the risks of a large-scale depression or apocalypse, and the right way to position yourself as currency debasement accelerates. The hosts dive into mimetics, meme culture, the macroeconomic tightening noose, the role of AI and new technology, and societal anxieties around the future. The tone is critical, sometimes adversarial, but also philosophical and introspective about the paradigms we use to interpret uncertain times.

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Key Discussion Points & Insights

1. Worldviews on Assets: Tangibility vs. Technology (00:45–06:42)

• Peter Schiff’s stance: Advocates for assets with intrinsic value (dividend stocks, real estate, gold). Sees Bitcoin and crypto as speculative, lacking tangible backing or long-term safety. He consistently avoids advocating what he perceives as speculative bubbles, holding gold as a foundational asset in times of crisis.
• Raoul Pal’s stance: Sees network adoption, memetics, and technology-driven excitement as crucial. Adopts a much more flexible, narrative-driven investment approach, seeing "meme culture" not as folly but as a universal, human force driving belief and value.

“Everything is based on storytelling...Gold is part of storytelling. Everything is storytelling.”
— Raoul Pal (04:48)

2. Bitcoin as Meme, Religion, or Fool’s Gold? (06:42–09:20)

• Schiff draws a direct line between Bitcoin's memetic appeal and religious belief — stating that unless new believers buy in, the price collapses. He presents Bitcoin as hyped, “the latest iteration of fool’s gold.”
• Pal counters that belief drives value in all assets, including gold.

"It all sounds good. We can all just believe in something, and because we believe it, so it is...but I’m not going to bet on that. It’s the latest iteration of fool’s gold."
— Peter Schiff (08:05)

3. Michael Saylor & MicroStrategy as a Bitcoin Proxy (09:20–22:12)

• Schiff sees MicroStrategy as no longer a software company but a leveraged Bitcoin fund, risky due to its leverage and at the mercy of Bitcoin's price.
• Pal admires Saylor’s boldness, admits the risk, but credits him for executing—notes the potential upside if Saylor can build new tech on top of the Bitcoin stack.

“He took a very brave bet with a corporate balance sheet and the shareholders came along with him for a ride...If he can now build something on top of this, then he’s taken a ex-growth tech services company and turned it to something very interesting.”
— Raoul Pal (12:12)

• Both agree the final verdict isn’t in. Schiff criticizes Saylor’s “never sell” mantra and warns, “eventually, he has to sell to repay the debt” (17:52).

4. Systemic Debt, Debasement, and the “Wile E. Coyote” Economy (22:13–32:51)

• Schiff grimly describes the US economy as long over the cliff, sustained only by optimism and ever-increasing debt.
• Pal asserts the real collapse already happened in 2008; since then, governments have merely hidden it via currency debasement, likening this to an unseen inflation tax.

"We are paying the debts by printing money. Pure debasement. The system broke in 2008."
— Raoul Pal (26:52)

• Schiff argues that this is merely staving off the "inevitable," and predicts hyperinflation or a sovereign debt crisis.

“It is inevitable that it’s going to happen. The only thing I don't know is when.”
— Peter Schiff (24:24)

5. Historical Context: Can We Print Our Way Out Like Post-WWII? (30:57–33:02)

• Comparison to post-WWII financial repression; Pal sees echoes in today’s strategies, but Schiff notes key differences—America then paid down debt honestly due to massive tax hikes and surplus. Today, with populations aging and indebted, there’s no such easy fix.

6. AI & Robotics: Wild Card for Productivity and Economic Transformation (35:42–44:06)

• Pal posits that AI and robotics may completely upend productivity, creating "infinite productive units" and rendering current economic worries moot.
• Schiff agrees on potential but is skeptical that technology alone can undo the burden of past debt sins, emphasizing the importance of how society manages transitions.

“AI and robotics has the potential to dramatically increase the supply of labor, intellectual thinking and processing...but I also don’t think it’s necessarily a get out of jail free card for the sins of the past.”
— Peter Schiff (38:35)

7. Human Experience: Wages, Malaise, and Intergenerational Angst (44:06–69:21)

• Bilyeu raises the concern about cultural malaise, declining optimism, and the difficulties of the younger generation. For Pal, youth’s refusal to engage is rational given demographic headwinds and tech disruption: "Maybe those young kids are dead fucking right—they should not be doing any of this stuff because it’s all worthless." (67:49)
• Schiff and Pal both highlight that political and economic malaise has built over more than a decade due to stagnant wages, rising costs, and “unofficial depression” (63:46).

8. Final Macro Realities: Printing is the Only Play, Death by Debasement (73:55–83:39)

• Both agree that regardless of political leadership, the government will keep printing money to stave off collapse, favoring slow debasement over collapse.
• Schiff advocates for buying gold and real assets as a life raft, but maintains they’re only mitigating losses in a broken system.
• Pal’s view: "He who owns assets wins" in a debasement scenario. Only if policymakers actually do the right (painful) thing and stop printing does disaster (for asset holders) strike.

9. Philosophical Reflection on Models, Bias, and Open-Mindedness (48:34–53:55)

• Pal warns against being trapped by one’s mental models, acknowledging that his own bearishness failed to capture the opportunity in asset inflation post-2008. He espouses openness to being wrong and re-evaluating in the face of new paradigms.

“I realized I had the wrong mental model. And the moment I changed it, I felt liberated because the world kind of makes sense.”
— Raoul Pal (48:34–49:10)

10. Short-Term Predictions: Bitcoin Price in 6 Months (85:27–85:44)

• Schiff: Bitcoin will be lower, under $61k, maybe even $20k or less.
• Pal: Higher, possibly around $75k, following historical election year and halving trends.

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Notable Quotes & Memorable Moments

• On the reality of financial repression:
  “We are all getting fucked, but it’s how you’re going to get fucked. Are you going to get fucked in one go because it all burns to the ground? Or are they going to fuck you so you don’t really know you’re being screwed, but you’re just going to get angrier and angrier?”
  — Raoul Pal (33:10)

• On asset value in crisis:
  “If you go to a hyperinflation, he who owns assets wins. Fact.”
  — Raoul Pal (83:41)

• On the pain of inevitable outcomes:
  "It will be slower. Yeah, it'll be a slower death, but it will be a more painful death."
  — Peter Schiff (85:21)

• On the spirit of open debate:
  "We need to ask ourselves why we think that. I think that's really interesting."
  — Raoul Pal (52:23)

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Timestamps for Major Segments

• Worldview analysis & mimetics vs. tangibility: 00:45–06:42
• Bitcoin as digital gold, hype, and narrative: 06:47–09:20
• Michael Saylor, MicroStrategy, leverage risk: 09:20–22:12
• Debt spiral, Wile E. Coyote moment, systemic risks: 22:13–32:51
• WWII, historical financial repression, key differences: 30:57–33:02
• AI, technology, and future productivity: 35:42–44:06
• Mindset, modeling, embracing uncertainty: 48:34–53:55
• Hyperinflation, investment strategy, asset preservation: 73:55–85:21
• Bitcoin 6-month price prediction: 85:27–86:19

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Final Reflections

This episode is an in-depth, at times combative but ultimately searching meditation on the risks of our era and the tools for surviving it. Schiff and Pal serve as archetypes of hardened skepticism and dynamic opportunism, with Bilyeu as the earnest Socratic guide navigating between them. The core insight: in a world where belief itself drives markets, refusing to question your paradigm is the biggest risk of all.

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Transcript

[A]

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[A]

Welcome back for part two of the crypto debate with Raoul Paul and Peter Schiff. I just want to plant flags in world views here for everybody tracking this. So Peter, the way that I read where you're coming from is there is a safety measure that you put in when evaluating an asset, whether it has, if it's a dividend paying stock that has a real profitable business behind it, there's a level of safety there that you can count on that it's going to pay out. When things are potentially bubbles, you're certainly going to avoid that. Real assets are going to get a real good look from you. There's something physical, something tangible about it. Gold as a world currency that feels good because if the dollar hyper inflated or whatever, you have an alternative place to go that, that all makes sense. Whether people agree with it or not. There's at least an internal world view that I can track everything that you're saying about integrity. Again, whether people agree with that or not, at least it tracks it that the what's going on in crypto does not meet your criteria of something that you would advise other people to invest in. You tend not to invest in things minus the time machine that you would not recommend that other people invest in. You didn't say that, but I'm taking that much away. So same thing with what was going on in the early.com days. Just there was, there was a lot of madness happening. That all tracks for me. Raoul, you see the network adoption being a big part of this technology, a big part of your thesis, looking for areas of volatility where you see liquidity moving into the system, you see people adopting it. Yes, there's going to be high volatility, but there's some excitement to that. There's memetics, which I think is a big schism between the two of you. Raoul, I know that you are very much a part of meme culture. You enjoy meme culture. It's fun. And I think that that is a bigger part of what's happening in crypto than people give credit to or, or maybe just that they, they don't internalize what a big part of all of that that is. And what people believe in is not something that you place a judgment on it, just something that is. And as a, as an investor who's looking for that, I can buy here. And it's going to go up over time. You see huge opportunities in that. And your core thesis would be to advise people the quote unquote, don't fuck this up idea, which we will certainly get to later, rather than stay away from this new space because the volatility is there because so many people are going to get wrecked. Just stay out of it. You take a very different approach. Do either of you fail to recognize those characterizations?

[C]

Yeah, I just want to just add a little bit to mine because I don't suggest, you know, there's a lot of my videos, and you've seen them where I talk about life, the value of lifestyle and other things. Right. So the value of a home, owning a home. So I'm not saying that those things don't matter. They do. That gives you the foundational layer of which to take more risk and then do these things. Another thing I just want to touch on is when you say I'm involved in mean culture. I've learned this bell curve, which is the mid twit bell curve, which is like, if you can explain the person who comes into a space, kind of like number goes up. That's how they think of it.

[D]

Right.

[C]

Bitcoin number goes up. Then there's a whole group of people in the middle, the mid twits, and they're arguing about every aspect of it, whether overarguing in its favor or overarguing against it. And then there's a person to the right side of the bell curve. Gold has exactly the same right. There's a lot of people who've done a tremendous amount of work on gold and will just say, well, over time, gold's a good investment. I get that. Memes help you distill something down to its simplest essence. And if you don't understand something properly, you can't get it down to simplicity. So I talk about metics, not also in terms of meme. That's kind of fun. But if you've read the book Sapiens, you'll understand that it Is the language of humans. It is the basis of everything. Government, religion, community, law, the legal system. Everything is based on storytelling. That's the one thing humans have over other animals. And we've created an entire civilization based on storytelling. Gold is part of storytelling. Everything is storytelling. So we can make it as complicated as we can, or we can understand that there's some mimetics to it, and that's why I kind of use that term interchangeably. But it actually is a much deeper level. It's how humans do things. I mean, the other thing that's very important in this whole space, and I think something you and I have talked about is everything in human society is contractual. Some are verbal, some are written, some are by purpose. And if you understand that all of everything we do, like me turning up today, was a contract. Now, it wasn't a contract for money or anything. It was like, I agree to come on with you and Peter, these things are really interesting because this is also part of what blockchain is doing within these things. So we need to understand the deeper elements of society and why this matters at a. At a larger scale. So there's a lot behind all of this. So it's not just a network adoption. It's like these are the elements of humanity, Much like gold has been an element of humanity in many ways, because it's lasted when we needed things to last, when things. We didn't store things very well, if you remember.

[A]

Peter, did you recognize yourself in my description?

[D]

I guess somewhere in there, but yeah, I just can't accept the idea that we're all just going to pretend something and that's going to make it so. I mean, I recognize that religion, it can work for a while. Yeah, look, I mean, yes. I mean, religions have been around for thousands of years. I guess so. Yeah. I mean, if you're going to say, well, this is a religion, but it's not because. Because, look, people are going to want to spend their bitcoin at some point. The Hodlers are going to want to buy real things with their paper stacks of bitcoin. And so if there isn't a new group of converts to the religion to buy those bitcoin, then it's a crash. And so, yes, it all sounds good. We can all just believe in something. And because we believe it, so it is so kind of like the field of dreams. But I'm not going to bet on that. I mean, that's a long shot, and I'm not going to put my confidence in that. And it's really got nothing to do with gold. I mean, the only reason that gold comes up with bitcoin is because bitcoin is trying to pretend that it's gold. It's trying to be a counterfeit of gold. I mean, it's depicted as a coin. When it's not a coin. It's depicted as the color gold. It has no color, it has no substance. It doesn't have any of the properties that gold has. You know, it's not a metal. Right. So you can't use it instead of gold in any of the ways that gold is used. But yeah, you can divide it like you can divide gold. You can exchange it from one person to another. Like you can exchange gold. But that doesn't make it gold. That doesn't make it digital gold. It doesn't make it anything. But you know, but there are people are trying to claim its gold to give it value. It's like what gives bitcoin value? Well, it's the new gold, right? We don't need actual gold anymore. We have bitcoin there. That, that, that's, that, that's the, that's the selling point. That's the, the spiel that you, you know, you, that you, that you're out there promoting to get people to, to own it. I just don't believe in it. I think it's a bunch of hype. I mean, you know, it's again, it's the latest iteration of fool's gold. That's what it is. Fair.

[A]

Okay, very clear. I want to ask you guys both your thoughts on Michael Saylor. So he is rapidly becoming one of the biggest micro strategies, is becoming one of the largest companies in the world. Uh, last check it was at 5:34. So just outside of the Inc. 5, the S&P 500. Obviously you'd have to make meet other criteria, but that's all based on the rise in price in bitcoin. Now you want to talk belief, perhaps even religious belief. He certainly represents that. Never selling, only ever going to borrow against it, et cetera, et cetera. What, what do you guys think about

[D]

that at this point? I don't think MicroStrategy is a software company. I don't think the shareholder base even cares what MicroStrategy. I think it's a bitcoin proxy. It's kind of like a closed end bitcoin fund or something like that. I mean that's really what it is. So it's just going to rise and fall with the price of bitcoin and I know they have borrowed some money. So it's a levered bet on bitcoin. So it's ultimately probably riskier than just buying a bitcoin etf. You're levered up a bit. But I think the Market cap of MicroStrategy is a fiction. I think it's going to collapse. I don't care where it waits in the S&P 500. I remember years ago, Michael, strategy, he had a conference, Bitcoin for CEOs and he was trying to convince CEOs to put Bitcoin on the balance sheet. I don't think any of them did. I mean, maybe one did, I don't know, but I haven't heard of anybody that did that. And he's not even out there trying to sell that anymore. But he loaded up his own balance sheet with it and yeah, now that bitcoin is back at 60,000, I think his average price is about 40,000. So he's got a gain. But a year ago he was sitting on billions of dollars of losses and we'll see what happens. I think he's going to lose a lot of money in bitcoin. I think the shareholders of MicroStrategy, but I think that these people that actually bought it as a software company, they're long gone. They probably made money off of this. They were able to sell out to a bunch of bitcoin speculators. And so I think when the price crashes, it's just bitcoin speculators who are going to lose.

[A]

Raoul, what's your take?

[C]

I won't get into the personal elements because again, there's no reason to be personal about Michael and his position he holds within the community. He took a very brave bet. He saw something. I think I was the second person ever to interview him. He saw something that nobody else in the corporate had seen. And look, let's face it, microstrategies was a kind of going nowhere business. And he saw a way out. It was sitting on cash and he was worried about his cash, as we've all been, and he decided to put some of his cash into an asset. And that proved out to be really good. It was a risky bet and it worked. And then he thought about, well, why don't I just use my company to accumulate as much of this asset as possible? No issue with that. There's been several people in commodity world who've done very similar things. It's a great strategy. He took more risk than I probably would have done. I don't really like leverage With a volatility of like that. But it paid off. It could have gone wrong. I know that there was, you know, there was a relative layer of comfort, but in the market like crypto, you don't really know. So he took a very brave bet with a corporate balance sheet and the shareholders came along with him for a ride. For the reason Peter said, because it became a proxy to something in the end it's. Does he turn it into something more? Which is now he's talking about, can he turn it into a whole kind of bitcoin technology business? Okay, that's interesting. That's another call option on top. Because if not, it's just a bitcoin holding company and there's an etf. But if he now says, hey, I'm going to do what Jack Dorsey is trying to do and start using building technology around Bitcoin to solve many of the problems that we see in the world today, good on him. If he can do that, great. And if he can still keep adding bitcoin to the balance sheet, no different than if we found somebody who was a gold miner or had a company, they bought gold. If Michael Saylor had bought gold, Peter would love him and he'd done the same thing with his balance sheet. So look, he took a macro bet and he did a bloody good job of it. It was risky. I probably wouldn't have done it myself because of the leverage, but it worked. And if he can now build something on top of this, then he's taken a ex growth tech services company and turned it to something very interesting. So he deserves plaudits for that.

[D]

It's a little premature to just declare that it worked or that it was a success. Now it may have been a success for some shareholders who got out and made money. I don't know how many shares Michael Saylor has personally sold or how much money he's personally made off of this decision. But to say that it's been a success for MicroStrategy, it's too soon to say he hasn't sold, he hasn't paid off the debt, the money that he borrowed. So we don't know how it's going to end. He may end up with a complete disaster on his hands. The company could end up bankrupt.

[C]

That's absolutely fair. We don't know what he's going to do. Maybe he takes out a $5 billion loan and you know, we don't know. Right. Maybe he becomes too risk seeking and the whole thing implodes. I totally agree. It's possible but so far, what he's done seems to seem to have worked.

[D]

It seems to have worked for now because the price has gone up. It didn't look like it was working a year ago when he was upside down. Billions of dollars. So we'll see. We'll see where the price of bitcoin is when those notes mature and he has to repay them. So there's still a lot of risk in microstrategy stock. So, again, you should reserve your judgment. Yeah, he made a big bet. Whether it was just bravery or foolishness that he did it. A lot of the stuff that Michael Saylor says I don't like. I think he's led a lot of people astray. I mean, I've heard him talk encouraging people to take out loans, to take out credit card loans, to buy bitcoin, all kinds of encouraging people to speculate and go into debt to buy bitcoin. I think that's bad advice. You know, he talks about bitcoin, you know, as if it's energy. You know, I mean, yes, I understand that you need energy to create a bitcoin, but owning a bitcoin provides no energy whatsoever. I can't extract energy from bitcoin. It's not like it's a battery. You need energy to produce it, but all that energy is a waste because you've produced nothing. But he says a lot of things about it that I just think are completely deceptive to try to tout it up. Because obviously he has a big vested interest in the bitcoin price going up. And so every chance he gets,

[C]

he

[D]

wants to pump it up. But a lot of people have tried to get him to do what you and I are doing. A lot of people have said, hey, Michael Saylor, will you do a bitcoin debate with Peter Schiff? He's refused every invitation, but he likes to talk about me. He likes to bring up my name, but he wouldn't engage me the way you're doing. I even was at a conference. I went to a conference out of the. And he was supposed to be there. And so I agreed to go. And they were going to try to get me to debate him. And then not only did he not want to debate me, he ended up canceling. And he didn't even show up at the conference. I was there by myself. So, yeah, he doesn't want to have. Because there are a lot of things that he said that I've taken issue with that I wanted to challenge him on, and I've never gotten the opportunity.

[A]

Can you guys, help me understand his meme of never sell your bitcoin. So if he's buying on leverage, the only way I can wrap my head around it is as long as the price has gone up more by the interest on the loan, you could theoretically keep taking out a loan to pay the previous loan. Is there anything I'm missing or is that literally loan after loan after loan?

[D]

Yeah, eventually he has to sell to repay the debt. Unless he thinks the he can just keep borrowing more. Or if he thinks that his creditors will take their payment in bitcoin, in which case he can just give his creditors his bitcoin.

[A]

Raoul, do you have any insight?

[C]

Look, if your loan is this big and your assets got. So the loan is that your debt's this big and your collateral is this big. Right. It's the opposite of the financial system issue. Doesn't really matter. It's fine. It's only when your collateral is below the amount of, of the debt that you have. So yes, I mean, he can just sell a small fraction of his fraction, a percentage of his bitcoin to pay it off. What would normally happen is maybe people continue to roll it, maybe they don't. Depends what happens with his business. Does he build new cash flow? There's a lot of unknowns in this equation. So I think it's very difficult to know what that answer is until we see how he.

[D]

It's also possible that the collateral could collapse in value and the loan amount does not. Saylor borrowed a lot of this money in a zero interest rate environment. Now he didn't pay zero, but he got a pretty good deal. And when these loans mature to roll them over, it would be far more expensive than it was when they were originally.

[C]

Yeah, it depends whether interest really makes a difference in a volatile asset like this. But I mean that was the risk right in the bear market of crypto. Was, was his collateral going to be worth less than the debt and was he going to get called on it? And a lot of people were trying to work out that mechanic, but you know, he got it, he did it, he structured it well enough that he didn't get called on it.

[D]

Okay, so far, do you know when the debts are due, when he actually has to repay?

[C]

I don't know how the maturity length, but also don't forget a lot of them were from much lower levels. If he didn't get tests on it when it was down 75 at 15,000,

[D]

he's not out of the woods. Look, all these banks that would have failed Last year, what did they own? They owned Treasuries, they owned mortgages, and interest rates went up and they were insolvent. I think there's a lot of risk in the microstrategy balance sheet. It all depends on where the bitcoin price is.

[C]

Peter. I think there's a bigger risk. I think the bigger risk is hubris. If you think you can do. No, not you. But once you've taken such a big bet and it's worked and you've used leverage, you have a tendency to want to do more of it.

[D]

He may buy even more bitcoin, who knows? I mean, it's possible that would be

[C]

the bigger risk if he went out and raised another 10 billion in debt to do this trade again. You know, this thing, hubris is a big, you know, when people have a big successful trade. I've had many friends who nailed stuff like the financial crisis and the subprime and the sovereign crisis in 2012. They've never recovered because they've always thought that the next big trade is coming and. And they've blown themselves up doing it. I don't know. That's one thing is hubris would be my biggest risk here, that can he make a mistake or can he just say, I've taken the risk, it worked out, I'm going to build this new bitcoin technology business and we can all sail off into the sunset and be happy.

[D]

If he were to sell a bunch of bitcoin now and pay off his debts early and deleverage the balance sheet, then you could say something. But I doubt that he's doing that. I wouldn't be surprised if he's buying into this rally. I would not be surprised if we find out that he's bought more.

[C]

Oh, he had. I thought he has.

[A]

He just made announcements.

[C]

Yeah.

[D]

Oh, he did.

[C]

Two days ago.

[D]

I think at these prices, he's been

[C]

buying all the way.

[D]

Yeah, well, that's part of the reason it's going up because he keeps buying. It's like what happens when he starts selling. We'll find where the price is.

[A]

Yeah, I mean, we'll see. The stated thing is he is not going to sell.

[C]

Huh?

[A]

He has stated on multiple occasions he is not going to sell.

[D]

All right. Well, yeah, okay. He has to say that.

[A]

He has to say that. We'll see. We'll see. I don't know where that goes.

[D]

All right.

[A]

I want to move on to where the economy is going. So we set up in the beginning that we have this economic problem. I want to zero in on debt. So I am. Peter, one of the things that I really gravitate towards you with is that I can't shake. The more I learn about the economy, the more I find myself pulled into this sense that the economy is Wile E. Coyote. He's already run off a cliff and it's that moment where he holds up the sign, but he hasn't fallen yet. And I think I heard that actually from you, Raoul. So it's like, ah, what is happening? Like, we have so much debt. How do we, how do we get out of this?

[D]

I've been using that Wile E. Coyote analogy for like 20 years. So it shows you how long we've been off the cliff and nobody's looked down.

[A]

But does that just mean that we're crazy and that it's going to be fine?

[D]

Look, at this point, the numbers are just so big. The trajectory of the debt with the maturity of. We have a $34 trillion debt where in the next year 10, 12 trillion of it matures. It has to be refinanced. It was originally the money was borrowed at very, very low rates. The rates are many, many times higher. The structural deficits are higher. The Fed is selling Treasuries. The government trust fund, Social Security is selling Treasuries. Foreign central banks are either selling or not buying. The bubble is just, you know, it's so big at this point. You have households have record amounts of debt, credit card debt, consumer debt, all time record high in all facets of debt at record highs. The numbers are just so big. So can it go on for another 20 years? I just don't see how it's even remotely possible. Can it go on for another two years? That's a more pertinent question. I don't know. But yeah, I think at any moment there could be a sovereign debt crisis, there could be a dollar crisis. I mean, it is inevitable that it's going to happen. The only thing that I don't know is when. And obviously it's taken a lot longer than I would have thought. The bubble's gotten a lot bigger. I mean, the US has been able to get away with it. We've gone deeper and deeper into debt and we've been able to survive only because we can keep borrowing more. And nobody questions whether or not we can repay. Nobody even cares if we can repay because they know that we can print and they just assume that the dollars we print are always going to have value no matter how many we create. And that's just not True. At some point it ends. It's like how many straws can you put on a camel's back? We're going to find out. But you don't know until the last one breaks it. And something's going to happen and this whole system is going to collapse. And when it does, if you're an investor, you better have the right portfolio. I think I've been overly prepared for that for a long. I think the day will come where I'm going to be vindicated on that. Ra.

[A]

What do you think? There's no difference between getting the timing wrong and just being wrong. But let me throw out some numbers. By the end of this year, the national debt will be 2 trillion per year. In three to four years, the government will pay more in interest than they collect in taxes. So we're already bigger than national defense in terms of what we pay here in the us Just servicing the debt. How if it goes for another 20 years, somebody with my mentality is is just going to get slapped around the board because I'm acting like it's going to happen soon. But is it like, how do we. How do we make sense of these numbers? Is. Is there a nothing burger way out of this? Or is this a guaranteed slaughter and we just don't know when you are

[C]

being slaughtered and you don't realize it. It all happened already. It is underway and everybody's waiting for all the assets are down 90%. It can't happen. It simply can't happen. Because it all happened in 2008. In 2008 the world stopped. The whole debt system blew up. We had to have a debt jubilee of resetting all government debts around the world at zero so we could afford to service it. We've kept rates low. We've been then using the balance sheet of all of the central banks just to pay the interest on the debt from the previous cycles. This is this everything code thesis that you and I have talked about. So we are paying the debts by printing money. Pure debasement. The system broke in 2008. We then changed the financial system with the Basel III agreements which forced the banks to lend less and to hold more treasuries. Why? There's going to be a lot of supply of treasuries. The whole system, everybody's aware that it's broken. It broke. So what is going on now? Well, for it to actually broke the down 90%. It's all going to be 1929 again. Can't you just see it? You're missing the point. They're debasing the currency by 15% a year. It adds up to a staggering loss of wealth. It is a tax that you don't see. 15% a year debasement is easier than increasing your tax rate 15%, which is politically unacceptable, which is what they need to do to pay the debt. Because the printing of money just debases the currency. So you are paying it. We are all paying it.

[D]

What they should do is default on the debt. That is the best thing to do because they can't.

[C]

They can't. Peter, I agree with you. I know that the Austrian thing. The Austrian thing is what they should have done. It was too late. And the reason being.

[D]

Look, they're not going to. They're not going to. They're not going to do the right thing.

[C]

Well, they can't because the baby boom

[D]

lay will do the right thing in Argentina at this point. We'll see.

[C]

Yeah, but they see the difference of the structure of the Western society is all the money's held by all people. The entire system is basically in the hands of retirees and all the wealth. So if you say all of their assets are down 75%, that is the wealth of the nation's gone. So nobody's going to lose.

[D]

Well, it's not all their assets, but yeah, they're debt, but they're going to lose it through inflation. Either way, it's either default or debasement. But I wanted to point out, you talk about the national debt. You know, official national debt is 2 trillion. But the actual national debt, the budget deficit they claim, is 2 trillion. But the national debt is already growing at 4 trillion a year. That's the rate that it's growing already. And during the next official recession, it's going to be on an even greater trajectory.

[C]

So the issue is why we all agree. Right, But I just don't think it can collapse. Why? Because of debasement.

[D]

But that is a collapse. That's a collapse of the monetary system and it could lead to hyperinflation.

[C]

Yeah, let me just play out my thesis here, which is, I don't disagree. You can't have assets going down 90%. The core collateral of the system. If they're debasing the currency because they go up optically, because the currency is going down, the Venezuelan stock market goes up in Bolivar terms and down in dollar terms. Right? So therefore, if your collateral keeps going up, which is what they learned in 2008, is we can backstop the entire thing by debasing the currency quickly. The collateral goes up and hey presto, my debts aren't so bad. Okay? Magic. It's not magic, as you know, it's a sleight of hand. It's not pure magic. What they're doing is robbing you in a different way. Okay? This has happened before. This is exactly what happened in the 1940s and 50s. Saddled with massive debts after World War II, the large economies did the same thing. Financial repression, that yield curve control, which is buying of government bonds, keeping interest rates low, which we've seen. And they just printed money. And over time, the value of the debt had eroded. And what they'd managed to do was create a productivity miracle which drove GDP growth.

[D]

One thing you're overlooking though, a key difference back then. So after the Second World War and the government ran up a lot of debt during the war, but they did it. They paid for a lot of the war with tax hikes. They had tremendous tax hikes, particularly the income tax, which tripled when the war started. In fact, they introduced the withholding tax in 1942 as a victory tax. So before the Second World War, hardly anybody paid income taxes. By the end of the Second World War, a lot of people were paying income taxes. And when the war ended, the government had all of this income tax revenue coming in. And they initially it was temporary to win the war, but when they stopped the war, they didn't stop the income tax. And so the government was flush with cash and so it paid down a lot of that debt. Debt collapsed in the years because the government ran huge surpluses and paid down a lot of that debt. So it wasn't all just inflated away. Yeah. When the 1960s and 70s rolled around, there was a lot of inflation, but the initial big drop in debt was an honest repayment because we stopped spending money on the war. The problem now is we haven't cut any spending. We're taxing people to the hilt right now and we don't have the type of economy. We had a real industrial economy in the 1940s. We had wealthy consumers that loaned money to the government that bought the war bonds. We sold the war bonds to China. Americans are broke. So we're a levered up country running huge trade deficits and we have no means of repaying the debt like we did in 1946. So the debt is now going to go straight up. It's not going to go down like it did during those decades. We're getting started. It's 125% of GDP. It's going to go to 150, 200%, 300%. It can't stop until everything implodes.

[C]

I don't disagree. I'm wildly, crazily bullish because I'm so bearish.

[D]

Bullish on what?

[C]

Assets. Because they're getting.

[D]

Well, in nominal terms. In nominal terms, correct. But in gold terms, a lot of these assets have to come down. Their real price has to come down.

[C]

I also believe that GDP growth equals productivity plus population plus debt growth. I think debt growth died in 2008 and all debt growth now servicing of all debts. And population has been shrinking, so economies have been slow and productivity is low because of aging populations. We're just bringing AI and robots into the workforce. It's infinite human. Infinite humans. So GDP growth driven by productivity and population growth is what I think is on the horizon, which is what rescues this. Rescues this. But after, what, 15% a year debasement of currency. You add 10 years of that and you've lost most of your money. So none of us disagree. We're all getting fucked. But it's how you're going to get fucked. Are you going to get fucked in one go because it all burns to the ground? Or are they going to fuck you? So you don't really know you're being screwed, but you're just going to get angrier and angrier. That's what we're seeing. Politics has gone like this because everybody's so bloody angry because they can't figure out who's screwing them and they're blaming each other. What screwed them is there was too many old people and they borrowed too much money. When you manage procurement for multiple facilities, every order matters. But when it's for a hospital system,

[B]

they matter even more.

[C]

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[A]

What I want to understand is the timeline on all of this. Because it seems like the debt is going to ratchet up so fast. And if we're only going to be able to print our way out of it, I get at first, maybe for the next three, maybe five years, I don't notice that I'm being screwed over. But unless you guys tell me that the amount that we can print before we break the Camel's back is 180 trillion or just Some unbelievable number that is so far from where we are today. This feels like if we're really in a race for do, do I get to that number of trillions of dollars before the robots come and increase productivity so much that I'm back to a 1946 place where I'm generating so much productivity I can actually pay the debt down.

[C]

I'm sure Peter won't agree with this, and you will half agree with it and half hate it, and that's okay. If I'm right that AI plus robots is infinite productive units, and you see how fast it's coming, you literally are not capable of understanding what an economy looks like beyond 2030. That's the problem I've got here. I'm not concerned about the cliff of death that we're going through. I found an asset that I can invest in crypto, or I could buy technology, and it's offsetting the mess of the debasement. So I'm fine. What's harder is to say, what the hell does an economy mean after 2030 when you've got endless AI and robots and AGI, what is a company? What value do you provide in that world? Or I provide. We sit there talking to people about it and thinking our way through it, but both you and I are developing AI tools of which we will have a digital tom and a digital rail, and we don't even need to turn up to these, and they'll do a pretty good job. We're both working on these things, right? But are we going to be just replaced? The point being is when you go to, like, Nick Bostrom, who is the key thinker about this at Oxford University, who wrote the book, I can't remember, the famous book about the whole kind of where the Future Is Going, there's a group there, an economics group there, who share the same concerns as me. It's like, if this is right, you could double GDP in a year, global GDP or a week. What do companies mean when AI. I have a theory that OpenAI is using AGI to build its own AI, which is why they're iterating so fast with, what, 500 people? It's fucking madness what they're doing, how fast they're iterating. I've never seen anything like it. Even Elon Musk is like, I've never seen anything like what's going on here. The more we have AI, AI to build, AI to build businesses, the faster and faster this goes. So in answer to your question, the explosion could be the other way around. It might not be the economy imploding, it could be the economy exploding in a way that we don't even know how to deal with it. What do humans mean? What is our job? All of this stuff you and I have talked about, I actually worry about very different things. I don't worry about the economy going down the toilet because I know how they're dealing with that. They've kind of set the rule book. I can make money from that. That's okay. It's this other bet that's the hard bit that's more scary.

[A]

What do you give the odds? Peter1 do you think that he's onto something or does that seem just completely sci fi to you?

[D]

Well, I mean, I think there's no question that over time artificial intelligence robotics is going to lead to a dramatic increase in human productivity. I mean that's just what capitalism does. And this is, I think, a potentially game changing innovation. The question is how long is it going to take to build out and scale up? And how are politicians going to react to the creative destruction which always comes from innovation? There's always somebody that loses, but net, net society gains. And eventually over time, everybody gains because we don't want jobs. I mean, we want stuff. I mean, that is the secret of an economy. It's the scarcity of things. We all desire certain things and the constraint is the ability to supply them. And supply is constrained by land, by labor, by capital. But AI and robotics has the potential to dramatically increase the supply of labor, intellectual thinking and processing. And so at the end of the day, we could produce a lot more with a lot less and we'd all be wealthier. I mean again, means work is a means to an end. You don't want your job, you want all the things that you could buy with the paycheck that you earned. If you could skip the job and go right to the stuff, most people would do it, right? Most people don't work because they like to work. They'd rather not work. They just like what they could buy with their paycheck. So I think that all of this could be good and certainly a lot of potential. I'm 61 years old. I'd like to think that this AI could figure out how to do something about that so I could be younger and live longer. And so that's another game changer. I mean, what if our life expectancy is dramatically extended too, right? I mean, maybe we don't live to 100, maybe we live to 150. I don't know. 200, who the hell knows? But yeah, there's a lot of things that could happen that I would be looking forward to. I'm not apprehensive about these things, but I also don't think that it's necessarily. It could be, but I don't think it's necessarily a get out of jail free card for the sins of the past that we're not going to have to deal with the debt.

[C]

Well, you probably all agree, Peter, that we are dealing with it now, right? We're all, we're all having the effects of this put upon us already.

[D]

Well, we're feeling it. And I've been saying for a while that's why Biden is so unpopular. It's not because of his mental gaffes. It's because the economy sucks. And the voters know this and they're blaming Biden because he's at the helm of the ship that's sinking. And so despite all the hype and all the statistics, the average American family is feeling the inflation tax in a big way. And yes, there's a lot of jobs, but there's second jobs and third jobs that people would rather not have. They're struggling to make ends meet and they hate having to take on these extra jobs. And this is going to get worse. I think the inflation genie is out of the bottle. It never was really gone. It's just that the government was able to cover up inflation by cooking the books. But the inflation is now so pernicious and the impact on prices is so great that even when you whitewash it with the cpi, it can't hide it anymore because the numbers are so big, the costs are rising so rapidly. People can see it. And there's a limit to how small they can make the packages. At some point, they can't keep shrinking stuff. They got to raise prices and make it even more obvious. And it's not just America. It's happened in Europe, it's happened in Japan. I mean, all these countries. That said for years, the problem is we don't have enough inflation. We need to create more. They now have too much inflation and they can't stop it because stopping it would require politically unexpectable things. They have to cut government spending. They have to default on a bunch of promises. They have to deliver a lot of bad news to the voters and nobody wants to do that. And so everybody is just going to continue and they think, oh, we've gotten away with it before. We did QE1, we did QE2, we did QE3. We did Covid so we could do it again. Right. Look, every time we get into trouble, we just print money and we're out of trouble. Well, all that is is inflation. And so if your problem is deflation or collapse of assets or whatever, and you think you can solve the problem by creating inflation, the problem is when inflation is the problem, when that's the source of everybody's misery. You can't solve the inflation problem by creating more inflation because that's been the solution to every problem we've had, is let's create inflation. That's our solution. We can call it quantitative easing and easy money, but what we're really doing is we're solving the problem by papering it over with inflation. Well, now we're at the point where inflation is the problem, so more inflation just makes it worse. So we're past the point of no return, and it's just a question of. Yeah, when do we look down and realize we're standing on nothing? And I think that applies to Bitcoin, too. You look down and you realize there's nothing there. There's a lot of false perceptions that are going to meet reality in the near future.

[C]

Just as a side note, what happens, Peter, if all of these value assets that are going to catch up eventually and haven't done for the last 20 years don't. What happens if gold continues to underperform? What happens if your model of the world is outmoded? I'm not saying it is, but could you possibly consider that not everybody's wrong, it's just the way that you assume that everybody's wrong. I just find that a little bit.

[D]

I'm not saying everybody is wrong. I'm saying that people that believe in Bitcoin are wrong, but that's certainly not everybody.

[C]

And the market's wrong and the technology price is wrong and that your source of truth is the truth and the market pricing is not the truth?

[D]

Markets get it wrong a lot. In the short run, it's a voting machine. In the long run, it's a weighing machine. And right now, I think people are making bad votes. And so I just think it's a mania. I mean, every time there's a mania, right, it means assets are mispriced. I mean, we've had plenty of bubbles and they pop, and that's that. I just think that this is another one. So I think the onus is on the people who believe in it to try to say why this is different. Of course, that's the famous words of every Bubble. This time it's different. I don't think it is. I think this time it's the same. And so I think that the same thing is going to happen. But as far as why you're saying why has gold not gone up? Look, in the scheme of things, when people look at a long term chart of gold, the fact that it's gone sideways for 10 years is immaterial to the thousands of years that gold has been around. And gold has been a store of value.

[C]

But that's over the period of the worst debasement that we've seen in the last hundred years. And gold didn't do it right.

[D]

So let's say gold all of a sudden has a year or two where it catches up and it goes from 1,000 to 5,000 or 10,000. It doesn't necessarily have to go there in a straight line. Gold could go up, go sideways, go up. And so, yeah, over a longer period of time, it's going to smooth its way out. Now the question is, why did gold not go up higher sooner? Well, remember, it went from 300 to almost 2,000. It had a very big move in a relatively short historical period of time. And so then it went sideways for a decade. And the reason, I believe is because investors have complete confidence in central banks. They don't believe that there's a threat of inflation out there or a debt bubble. And so they don't see the reason to buy gold. They would rather buy tech stocks. And so I think it's just people have a misconception. Just like you mentioned, the subprime. And I remember when I first found out about these subprime mortgages, a guy showed up at my office named Andy Lott, probably in 2005 or 6, and I was already bearish on the housing market. And he came to me with an idea to set up a hedge fund to short these subprime mortgages. This tranche, he explained it to me and I was like, well, why the hell would anybody buy these? These are obviously going to go to zero. I mean, how could people be buying them? And they were trading above par. They were actually paying more than par to buy these tranches that I knew were going to zero. And it's like, well, people just believed in this. And so the assets were mispriced, and they were mispriced for a few years until they eventually were priced correctly at zero. But I knew that they were worth zero the minute they were explained to me. And what the guy told me is he had gone to A lot of institutions with the same story. And everybody laughed at him. I was like the first guy that didn't laugh at him because I knew that real estate prices were going to go down. Everybody else thought real estate prices could never fall. And so as long as real estate prices never fell, well, then it didn't matter if anything defaulted. I was the guy that knew that eventually real estate prices would come down. You can have a period of time where a lot of smart people can believe something that's wrong. And so assets could be mispriced as a result of that shared delusion. And I believe that's the situation with Bitcoin.

[C]

And what happened to me was actually the opposite, because I was the macro bear that everything reverts to the mean that it was all terrible, and it is all terrible. And I realized I had the wrong mental model. And the moment I actually freed myself of my own biases and tried to understand what the fuck was going on and why were these assets going up? Why was this happening? I then could see what was going on and what the big game was. And as soon as I could see that, it became a game I could make money from and that I didn't have to be stuck wishing. And I've seen a lot of friends of mine do this, wishing that value stocks or small caps or whatever it is are going to work for them. And it's been 20 years now, and I've realized I had the wrong mental model. And the moment I changed it, I felt liberated because the world kind of makes sense. And I just urge all of us to just make sure that we don't get obsessed by our own mental models, because they will change and the world changes. And sometimes we can be dead wrong and sometimes we can be dead right. I mean, I nailed the financial crisis. I nailed the European sovereign crisis. I nailed Covid. I nailed all of these things by being a big bear. And something I suddenly realized is, yeah, but assets kept going up that whole period. I should have just been long and have made more money. And that made me ask the question of myself.

[D]

Buy the dip. Buy the dip.

[C]

That asked the question is like that dumb meme of buy the dip. I wanted to go all the way across the bell curve, go to the middle bit arguing it all, come to the other side and realize that buy the dip was actually the single best strategy to have ever existed over this period of financial mess. And I was stupid for not seeing it. So, anyway, I'm just saying be careful because, Tom, I can see that you're so allured by the black hole. The black hole that is there. It kind of comes to you and we have this conversation. I try and pull you back from the black hole and say, yeah, it's there, but there's an opportunity here. And you're like, but the black hole. Just be careful of the mental model because it will massively restrict you in what you do, even how you think about life and how you interact with people around you. So it's something I've learned the hard way is we've all got to be a little more open to, A, everyone's opinions and B, our own biases and how ingrained they are and have they become part of our personality just because it is or it's part of how we fear. Like some people fear risk, so they become a certain way and present that to the world around them. Or somebody. Some people have made money and then they're worried about losing it because their family didn't come from money. We're all set of our own human ridiculous biases. So just, we should just all, in all of these conversations, just step back a little bit.

[D]

You're looking at it from the vantage point of where we are. Everything is at record highs. And so it looks like, yes, that was the right thing to do to buy the dip, but we haven't had the crisis yet. That's the thing. We've been able to kick the can down the road and all of these structural problems have been growing the entire time that we've been ignoring them. And the question is, you know, how many more times can this work? Because we get, I mean, I think you got to watch the bond market, you got to watch the gold market, the foreign exchange market, but at some point it's going to crack.

[C]

Tom did this earlier and it was a very good question is what would make you think the opposite? And we all need to be able to do that because we can't keep saying, well, asset price have gone up. So therefore you don't know whether you are right or wrong. And this is no attack on you or anything. It's me thinking through this stuff is how do you know that? Maybe you have done yourself a disservice or I've done myself a disservice, or Tom is doing himself a disservice by thinking the way that we do. Have we held ourselves back? Have we lost an opportunity cost that we didn't imagine? Because we're so anchored in what we think we think or we project to other people? That's All I'm trying to get across, it's not about who's right, who's wrong. I'm saying at a human level, what happens if you had bought Bitcoin and bought the Nasdaq and were 10 times richer than you are today? Would you care about some of the things you think about now? Maybe not. Tom. If you hadn't made money when you were young and then fear losing it, maybe you wouldn't be worried about the black hole. Maybe you'd be more risk seeking. Maybe just think about it in a bigger context than fighting over what price and asset is. We need to ask ourselves why we think that. I think that's really interesting.

[D]

The point is, as long as the underlying problems continue to get worse, I don't think I'm wrong. So if we actually find a way to solve these problems, if we get dramatic cuts in government spending, if we start paying down the debt, if we get enough deregulation.

[C]

But Peter, Sorry, I just want to ask you a question. What is the end, the worst case scenario game? What is the thing that you fear that we are?

[D]

Well, the worst case scenario is we destroy the currency completely, right? And so the dollar has no power.

[C]

Okay, let's assume that happens, right? Let's say we do that, which we've been doing, but slower. But let's say it completely goes.

[D]

It hasn't got. There's a lot. There's a long way to go between where we are now and zero.

[C]

Okay, so let's assume it goes to zero. I'm long. Crypto and technology stocks, you're long gold, they all go up. We're fine. What's the fucking problem?

[D]

Well, first of all, there's a big problem because a lot of people, first of all, maybe crypto goes up, maybe it goes down. There's no way to know.

[C]

Explain to me what I'm fearing here myself.

[D]

When the dollar, because you're wiping out the savings of a generation, you're wiping out the retirement of people.

[C]

But I thought they were in debt. I thought they were in debt. You told me they're all in debt. So we're wiping out.

[D]

Yes, you're wiping out debt. But every time you wipe out one person's debt, you wipe out somebody else's asset, you wipe out the value of people's.

[C]

You said earlier that you wanted the big reset, that we should do this.

[D]

And when the money is worthless, you can't buy things with it. The farmer doesn't want to give up his food because you have nothing of value. That he wants. America can't import anymore because nobody wants our dollars. I mean, if we go through hyperinflation, I mean, it's going to be riots, there's going to be. I mean, it's going to be bad. It's not like something that I'm looking forward to.

[C]

I understand, but you've got your gold and your real estate and you'll be fine. And I've got my stuff. So what are you fearing? What is the fear?

[D]

Look, and the other thing is the government can become even more oppressive than it is now. And the worst case is they blame it all on capitalism. And the solution is that we become a complete totalitarian state and the government takes over everything. I mean, so there's. You ask me, what's the worst thing that could possibly happen right now?

[C]

What is it that you fear? So you're now fearing a totalitarian state where they seize all your assets? I mean, okay, well, what good is investing in gold and what good is doing anything?

[D]

I don't know. I guess if they throw me in jail or kill me, I guess it's not going to matter, but I don't know what they're going to do.

[C]

Tom, what is it that you fear? Tom, what is the fear? What is that? Black hole. Yeah.

[A]

So as somebody who is very practiced in staring into this, I'll walk you through. So, because I feel confident I will make it to the other side sort of come hell or high water. When Covid kicked off, I realized I was afraid for people that I know and love that don't understand money and that that began my journey of actually understanding what's going on. So, like Peter, I share exactly his concern. And I'm a little unclear on the only thing that makes sense for me for you to push on this is if you think it's basically impossible for it to happen. Because to me, it is self evidently horrific to go through something where it's either a war, an external war, or an internal war. Because like Peter is saying, there's just so much anger and resentment at the implosion of the debt, which to Peter's point is somebody's asset that now just went away. People won't do that quietly. They will riot. Also, when you get to the point where you can't feed your populace because there's no money and your money's hyper inflating and people walking around with wheelbarrows full of money to try to buy a loaf of bread, that suddenly the line of good and evil that Solzhenitsyn talks about in the Gulag Archipelago, you realize it really does run through every human heart. And all of a sudden, all those narratives and mythology that you're talking about that hold us together as a, a society, all of those crumble. And I'm sure all three of us are students of history. But when you become a student of history, you realize that the long arc that bends towards justice is punctuated with moments of such horrible cruelty, death and destruction that you just pray to sweet baby Jesus, you are not one of the people that are around for one of those moments of correction. And they happen. And they happen so predictably that the black hole I'm staring into, again, I don't feel like I'm staring into it for myself. And I mean, this is a glimpse into my soul. I've told the employees here, if it ever kicks off, come to the house. First of all, we have the high ground.

[D]

We are up on a hill.

[A]

I care about them all, and so I want to see them thrive. We will do better as a part of a collective. But the fact that I even have to say that out loud is, is unnerving. Now I bend towards optimism. So I actually think nothing is ever as good or bad as you think it's going to be. And so I believe there is sort of this stumbly, slow erosion of the dollar path that will end up looking something like what happened to England. Now, Peter, when you and I last spoke, you pointed out very rightly that World War I and World War II were some pretty bad things. And so since that was part of how they end up losing their empire and status as a reserve currency, I, I concede the point that, that, that is absolutely horrific. So I just know every empire of all time has crumbled. And I really do think a lot about how America becomes the next Rome. But the reason that becomes a meme and the reason that people think it's ridiculous is because the odds of it happening in the next two years border on zero. The odds of it happening in the next 10 years go up a little bit. Ray Dalio puts America being in a world war at 50% over the next 10 years. But like, maybe it happens in the next 20. And so if it's true that it isn't happen for 10 or 20 years, me or Peter. And Peter, I think, you know, you have this reputation, and I have a feeling I'm rapidly gaining it as well, is like I've predicted 10 of the last two recessions, right? So I'm so focused on the confluence of things that go bad that I end up potentially missing the all the opportunities that are present.

[C]

That's what I was trying to get in. I'm not saying you're right or wrong. Right. I'm just saying we should think about these things. There's another bias that I want you to think about is ask your wife if she shares the same views and her friends do because she's British and she won't. It's a quite a uniquely American thing. Doomsday prepping the fear of the decline of empire and the collapse of society is weirdly an American thing, even though the Europeans have gone through it twice. Two world wars where we killed everybody each other in the most horrific ways possible. Europeans don't think of the same way of the collapse of civilization that Americans do. It's just a really weird cultural phenomena and it's because it's the largest, most powerful economy and it's saddled with debt and everything else. So just again, there's biases in everything that we do that make us, as you said rightly, Tom, we project too far either way and it can still be pretty horrible in the middle. It can still be a terrible political environment, there still could be riots, there still could be kinetic wars. But it may not have to be the end game.

[D]

Yeah. Remember, the other thing that's uniquely American is the degree to which we depend on the dollar status as reserve currency to run trillion dollar a year trade deficits. So you know, we need to be supplied goods from abroad and if we lose those supply chains, we have no ability to replace them. So it could be a major collapse. But the other thing, you know, what

[C]

we sell the best at. What we did though, what the US did was really clever, is it created a dollar debtor system where the rest of the world owes so many dollars that they can't get rid of the dollar. It's like what we exported, what the Americans exported was debt and inflation.

[D]

Debt and inflation. But you know. Yeah, I mean there are people that think that, but you know, I don't think that the dollar is impervious because we have so much of them and have so much debt. But the point I wanted to make about recessions is one of the problems with forecasting recessions is the government gets to define them and the government comes out with the GDP numbers and like, I think we're in a recession now. I think we've been in one for a while. But the government just doesn't acknowledge it because of the way they keep score. I don't think the deflator is honest. I think GDP is going up because of prices. I don't think it's going up because the wealth of the economy is expanding. We're just paying higher prices for things, and we're borrowing a lot of money to do it. The debt is growing faster, faster than the GDP numbers. So all this is an illusion. We're not growing anything. We're spending ourselves in a bankruptcy. We. We're buying products. A lot of those products are imported, and we're paying higher and higher prices. So we could have been in a perpetual depression for years and years and years.

[C]

I think we kind of have.

[D]

It's just that the way that we keep track of it, we don't officially acknowledge it.

[C]

I think, look, once you're debasing the currency and people's savings by 15% a year, over time, everybody's going to feel like they're not getting ahead. Everybody feels this. And you're right. Somewhere hidden within all of this has been an ongoing depression from 2008 for the average person, not for a tech company, not for certain parts of society. But most people have been in a miserable mess for a long time. Their wages haven't gone up, their costs have gone up. It's been terrible. And they're, like, choked with debt. They can't pay their kids to go to university. They can't afford retirement savings. Yeah, I agree. That's. It's been bad for a long time.

[A]

Yeah. So just to gaze into the abyss a little bit further, and I'd love to get a sense where you guys think this goes. So I. I believe that society that's a little overstated. I believe that culture is becoming a toxic soup. And that toxic soup is causing kids to collapse inside of themselves. Eat terribly poor diet, they are having less sex, less babies. Just a general lack of optimism. There's a phenomenal meme that says, we'll put it up on the screen in the final cut, but it says, my parents in their 30s. And it shows these little sketches standing outside of a house. Let's buy a house. It says, me in my 30s. And it shows a guy just absolutely frazzled. And it's like your maximum bid of a $625 cheeseburger has been rejected by Wendy's. And that vibe, that meme, while funny, is real. And that really worries me a lot in terms of. I think that ultimately culture is a battle for ideas. And I think the ideas that are taking hold of people's minds are terrible. And I Have a feeling that to some extent, maybe a massive extent, this is an echo of what happened in 2008. And so this becomes a question of inflation, interest rates. And so if I'm right, that, that this isn't like, forget the doomsday scenarios, that that is just a malaise that is gripping the young and that that's going to ripple through society. I don't know how much you guys have read about the industrious revolution, but it's an idea that I find absolutely fascinating. That part of what made America great was that there was not only the industrial revolution, but there was a sense of the Protestant work ethic. I'm going to go ham, I'm going to work until I drop dead of a heart attack. And I know how silly that sounds, but like it gave birth to the America that leads in innovation, became the dominant global superpower, et cetera, et cetera. And, and man, as somebody who is hiring a lot of young people, I would just tell you, Jesus, like we have to filter through all of the people that just have that malaise of like, oh, companies are just taking advantage of me. Why would I run on the hamster wheel and make better widgets? It's like those ideas will cause a real problem. And when I look at. Okay, so how do we solve it? One, just combating the ideas. But two, solve the underlying problem and without solving the debt by I look, I hear you. I don't think inflation is the answer. Let me just say that I think that you have to have a period of austerity. I think it is going to be grotesquely unpopular, but I don't see a way around that. Even when you just take sort of that milk toasty like, ah, there's not going to be any big revolution. But we, we do have to make a societal change. What do you guys think about that? And if you agree, what is that path?

[C]

I just say again, I just think, I just think we're using the wrong framing. We have, I mean, the 76 million people in the United States who are over 70 years old now you've got a demographic cliff in front of your face. It's happening in Europe. What South Korea got to a.0.7 replacement rate right now, right? We've got a population collapse coming. Maybe those young kids are dead. Fucking right. They should not be doing any of this stuff because it's all worthless. Maybe you're wrong. Maybe they can see what the future is for them, which is they're going to be replaced pretty quick. The reason you don't want to hire these people is you don't need to. That's the dirty truth here. And we'll need to hire less of them. What is happening is a much larger disruption, but it's not in the way of the past. It's always so easy to say the past is going to repeat, sure, but in different ways. There is whole revolutions happening in front of us that are going to shape society in ways we can't yet understand. And we're looking back saying, well, maybe the dollar gets trashed. It's like, oh my God, can't you see what's in front of us? Now I'm an optimist. I think there's a path that we figure it out, but I don't think it's going to be without volatility, but it's going to be driven by that and not that. That is known.

[A]

And that is AI robotics.

[C]

That forward is AI robotics. Longevity, you know, so many structural changes cracking the entire human genome and figuring out medicine, so much to deal with that is, well, we spent too much money. We're debasing the dollar. We're going to have a hyperinflation. It's like, yeah, tell me something we don't know. Tell me something we don't understand. We don't understand that that's scarier. Now it could also be great, it could be amazing, a world of opportunity. But my God, it's not going to be a straightforward course, right? It's just not.

[D]

Well, first of all, you know, unfortunately, I think inflation is the answer. I mean, it's not the correct answer. It's not the solution.

[C]

And can you. Sorry, Peter, just to check something, can you. Inflation versus debasement, are they the same things to you? CPI versus no, I'm trying to make a point.

[D]

He said inflation was the. Well, he didn't think inflation was the answer. I'm saying it is the answer. It's the wrong answer. It's not a solution, unfortunately, it's the politically expedient choice. Because the right choice is too difficult for politicians to make. Because politicians, their primary goal is their own reelection. And so that's how they see every problem is, how do I get reelected? And so they're not trying to make things better for the country, they're trying to perpetuate their careers, which are often at odds with what's right for the country. So we're going to get stuck with inflation no matter what. Now, can we get an offset to that by a burst of productivity, which without the inflation would just be even better. Right, because the free market is trying to lower prices by increasing productivity. The government is raising them by creating inflation. And so it's a dance. But to the extent that we can have a huge surge in productivity that's driven by AI or robotics or a combination of the the two, that's actually a good thing. That's not what you'd be afraid about when it comes to AI. If you're going to be afraid about something. The fear is that AI decides to kill us all and it could actually do it. That's the supposed fear. Not that it takes away our jobs. We don't want these jobs. We want computers to take away our jobs. That's great. Then we don't have to do them. We still get the stuff without having to do the work. I mean, every advancement has reduced the need for human labor. I mean, if you go back to the beginning of society, everybody had a job. It was looking for food all day long. That's what you did. You had no leisure, you had nothing because you worked every minute of every day other than when you slept. But as we invented things and tools, we didn't have to work as much, and so we had more leisure. Ultimately, if we could replace all human labor with machines, we're all going to have a lot more leisure and we're all going to have a lot more.

[C]

Are we going to have a system of money? Because money is like expenditure of energy, whether it's human brain power, whatever. And in exchange for money, right?

[D]

And ultimately, in an ideal world, with complete abundance of everything, that we won't even need money. If I could just push a button and have everything I need, and I wouldn't have to pay for it because it just gets conjured into existence by some super intelligence, right? I don't need money anymore. Money just facilitates trade. Somebody has something I need or I want, how do I get it? Well, I got to give them something that they need or they want. But rather than barter, we exchange a mutually.

[C]

But if we're not bartering commodity, if we're not bartering our own services, intelligence, physical labor, how do we earn money?

[D]

Well, how are we going to earn money in the future? We may not need to, that's my point. But obviously between here and there, people have to find how did somebody who got put out of business with a shovel, A guy that was digging a ditch, and now somebody invents a shovel. And so we don't need as many ditch diggers. So what did that guy do he did something. And so people are going to have their jobs replaced by computers or robots and they're going to do something else instead. I don't know all these things like what they're going to do. But the problem might be if the government says, hey, you lost your job, so just go on welfare and here's a check because that's a big problem if that's what happens. And then people end up getting entrenched in that state of dependency where they don't go out and find something else to do because they just stick with the government check. And that check is offsetting the benefits of productivity because the government prints money to pay somebody to do nothing. So it's the government that would make the mistakes. It wouldn't be the free market innovating. It would be the government inflating and getting in the way.

[A]

Looking forward, we're in a big year, 2024, election year, obviously the having cycle, the debt restructuring all happens in the same year. What do you guys think the world looks like with a Biden victory? What does it look like with a Trump victory?

[C]

No different in the market terms. No different.

[A]

You don't think the market will have a response at all to one or the other?

[C]

Won't give a shit. It's really driven by liquidity and flows. It's going to be. They're all doing the same game. So no, I don't think it makes a single bit of difference. I've not seen an election that has turned markets because shock. Somebody's come in. Donald Trump, Huge shock. What did the market do? Sell off for exactly one evening, Brexit, Huge shock. What did the market do? Sell off? It just doesn't matter. Politics don't matter in the short run, but obviously they can change the structure of economies in the long run. But the market doesn't seem to concern itself with that. When liquidity seems to be the dominant factor that drives markets and that's driven by central banks, do you think they're

[A]

still going to be printing their way out of problems?

[C]

There is no choice.

[A]

Either one.

[C]

There is no choice. What are you going to do? You're going to bankrupt all the baby boomers? Blow up all the banking systems? Because for what justice? The right answer is to blow it all up. Nobody's going to do that. It's insanity. They will never do that. So they will do absolutely everything within their power to try and not let that happen. And that it goes back to what we've all been talking about is however you define Inflation, I don't think it's CPI inflation. It's asset price inflation via debasement is the game. Financial repression, let's call it that, that is the game. And they will do that. Now, Peter may be right. Maybe it ends up in hyperinflation. I put a very less probability.

[D]

That's the worst case scenario. I don't know that that's where we're going.

[C]

No, and again, I would say that's the worst case scenario. Impossible. I don't know what probability. But yeah, but yeah, that's what they're doing. They'll keep doing repression. Why not?

[D]

But in answer, it's not going to change the game. I mean, Trump's been president before. I mean, he didn't change the game then he ran up the debt when he was president. I think on the margin, you know, it's worse to reelect Biden than to put Trump back in office. But I don't think that Trump is going to, you know, change what's going to happen. We're going to have a currency crisis, we're going to have a sovereign debt crisis. You know, whether Trump or Biden is in office, whether it happens during that four year term, again, I don't know. I mean, maybe they kick the can down the road and it happens, you know, on the watch of whoever replaces them. Because whoever wins, we know one thing, they can't run again, right? You only get to run twice. So whoever wins is not going to be president in 2026. So maybe they get out of dodge and maybe they don't. But I would think that assuming we had the collapse during the term of whoever wins, right, we have a crisis, I would just assume have Trump there than Biden. Trump has a greater probability of doing the right thing than Biden. Biden maybe has no chance of doing the right thing and Trump maybe has a slim chance. So slim is better than none.

[A]

And doing the right thing in this case would be spending less at the government level.

[D]

Well, dramatic cut, right? They have to do the opposite of every political instinct because what they want to do when there's a, the economy is weak, they want to try to stimulate it with more government, they want to run bigger deficits, they want to cut taxes, they want to print money, they have to do the opposite. They have to shrink government, cut spending, they may even have to raise taxes. I'd rather them just do it all from the spending side. But they got to cut spending, they got to let interest rates go up, they got to let banks fail, they Got to let companies go bankrupt, they got to let people lose money. They got to allow a lot of painful things to happen to have a real recovery that is on the other side.

[C]

Is that what they should do, do you think?

[D]

Yeah, of course. They have to do the right thing. It's like if you have a drug habit, stop taking drugs. Yeah. It's not going to be good. You're going to be in withdrawal for a while. But you got to get the stuff out of your system. You got to be healthy. We can't keep drugging ourselves up and then we die of an overdose. That's where. That's what hyperinflation is. It's the equivalent of a monetary overdose. You destroy the currency and then you destroy the economy. And so I want to avoid that. We need to restructure the economy in a sustainable path. It's not on that now. It's a house of cards. And I don't want to keep the house of cards going knowing eventually it's going to collapse. Even worse. I want to let it collapse now so we can start replacing it with a structural. That's sound. A real house, not a phony one.

[C]

So we've heard clearly what you want to happen. What will happen?

[A]

What do you think?

[D]

They're going to keep on printing until the dollar collapses. Now the question is, when does collapse stop?

[C]

There a sec. So they're going to keep on printing. So given that information, what would you do? Investing.

[D]

I'm doing exactly what I'm doing now. But I'm hoping that they stop the presses at some point when it gets bad enough that they. Because once it's so bad, then all

[C]

of your assets go down. Right.

[D]

See, let me finish this point. Once it's so bad that everybody in power knows they're gone. Hey, there's no way I'm getting reelected. With the economy this bad, then maybe they'll do the right thing because they've run out of options. They'll do the right thing only after they've exhausted all the other possibilities. So we may be able to do the right thing and stop the presses before the dollar goes to nothing. There is no graceful way out at this point. We've long passed that there is no pain free solution here. You could hope that AI eases the pain and maybe it does. Hopefully it will. That would be good.

[C]

And I take this differently. I'm like, if we have an observable behavior which is most likely to repeat, however ugly the situation is around us, we can actually help ourselves get out of this trap as individual level. By investing correctly around this, this is what I strongly believe in. I think the world is truly screwed. But as you pointed out, there is only one way they will deal with this. Armed with that information. That is like the magic bullet. This is the everything behind this idea of the everything code is if you know this to be what is going to happen, you can look into the future and you know what the hell to own.

[D]

Except every time they've done it before, the dollar hasn't collapsed because people have maintain confidence.

[C]

If the dollar collapses, if the dollar

[D]

collapses, it's very different. It's going to look very different than what you've seen in the last 20 years.

[C]

Last time I checked, the Venezuelan stock market went up like a rocket. Shit. All I'm saying is.

[D]

Yeah, but Tom, you and I spoke

[C]

about this when we first started speaking back in 2020. This is the life raft, right? The life raft is what saves people. It could be gold, I have no issue with that. It could be bitcoin, it could be tech stocks, it could be whatever. You shouldn't be concerning yourself with any of this stuff, this apocalypse, because we know the outcome is financial repression and print more money, right? So we just get to hop on the life raft and we avoid all of that. That's what I don't get about all of the the doom arguments is I get it, it's totally screwed. But it's so predictable because we all agree what they'll do, right?

[D]

But the thing is, they've been able to do it and not precipitate a real crisis.

[A]

That only matters if we do a different thing in the face of what we've all said. Too much debt. Inflation's the only answer.

[D]

No, no, not a different thing. If we keep doing the same thing, eventually it's not going to turn out the way it has. The world is not going to accept it. The world is not going to believe. Our ability to stimulate with QE with inflation is predicated on the false belief that the Fed could shrink the balance sheet, withdraw the liquidity, normalize interest rates. We could pay off the debt. I mean, when the markets come to the unfortunate realization that that's not true, then the bottom drops out and we can't kick the can down the road anymore because there's no more road. And then we have to deal with the consequences in a way that we haven't had to deal with them in the past. We can't send out stimulus checks because they bounce or they don't buy anything.

[C]

Forget about the big picture, what they must do, what happens to humans in that level, you and I in investments and Tom. Right.

[A]

The individual, what is it?

[C]

What happens? Right. If. So let's play this out. And I've gone through this in great depth is when you play it out, if you go to a hyperinflation, he who owns assets wins. Fact. If you go to any of these,

[D]

lose a lot less.

[C]

The only way you do not win is if they do what you want the most, which is tighten policy so badly that you let the air out of everything. Then we completely get nuked and we are all poor.

[D]

What I want them to do, what I advocate that they do is contrary to my strategy because I don't invest based on what I want, but based on what I expect. I expect them to do the wrong thing. And so that's how I'm invested. But even if they do the right thing, I think I'll lose a lot less than everybody else, which means I might win because it's all relative. So if my portfolio goes down, but the things I want to buy go down even more, I'm wealthier. But yes, the best thing for my strategy is that they do the opposite of what I'm advising. But that's what I expect them to do. You hope for the best, but you plan for the worst. I hope they don't do these mistakes, but I'm pretty sure they're going to make them. That's just the most likely scenario.

[C]

I'd rather they didn't do what you want them to do because everybody is going to lose their entire.

[D]

No, they're going to lose more if they do what I expect. Inflation is going to wipe out more people in honest default and restructuring.

[C]

Slower. It'll happen slower. You can take your pains fast or take it slowly. It's all pain, right? It's all pain.

[D]

It will be slower. Yeah, it'll be a slower death, but it will be a more painful death.

[C]

It's all pain. I get that.

[A]

I have one last question for you and it'll be quick. Over the next six months, where do you guys think the price of Bitcoin is going to be?

[D]

Well, I would guess lower, actually. It's gone up so much at this point. Six months from now, my guess would be lower. It's about 60,000 now, right? 61,000. So I'd take the under for six months.

[C]

I'll take the over. Just on the historical pattern of election years, stuff like that tends to go up in a straight line. So my Time horizon is not really six months, but generally speaking, in these election years, this kind of bitcoin halving cycle, it tends to be higher. So significantly higher.

[D]

Significantly higher. So not just higher, how much higher?

[C]

I think I don't know. But you know, it wouldn't be surprised me if it's trading at 75,000 by July.

[D]

I wouldn't be surprised by that either. But I also wouldn't be surprised if it's, you know, 20,000 or less.

[A]

So I mean, gentlemen, I cannot thank you enough. I'm beyond grateful for the time that you gave all of us today to go through those ideas. I think it's really super useful. Hopefully this is round one of many to everybody watching at home. If you haven't already, be sure to subscribe. And gentlemen, where should they connect with you?

[C]

Easiest place to find me on Twitter, owlgmi. And if you want more of this kind of information, these kind of debates, realvision.com in fact there's realvision.com impact. It's free. Just sign up and start watching. Lots of incredible people. It's not my biases. Peter's been on, you've been on, everybody's been on and we have some great long form conversations. So realvision.com yeah.

[D]

So for me, if you want to cash in some of your bitcoin for actual gold, you can contact the reps at shiftgold on our website. Again, you can even take your bitcoin and exchange them for gold through Bitpay if you have a larger portfolio. Because again, I recommend that people invest, not just save with gold, but invest in productive assets. I have an asset management company based here in Puerto Rico, Europe Pacific Asset Management. The website is europack.come u r o p a c.com so check us out. You can give us a call, there's a toll free number on there and you can fill out a form and have a representative call you back and discuss the strategies. I have a new newsletter now that I'm [e-mail] so you can visit that website and sign up for my newsletter there. You can follow me on social media. My biggest platform is Twitter. I've got almost a million followers. It seems like it's taking a long time. I'm like 5,000 away from a million, but every time I gain a few, I lose a few. So it's been difficult this last mile. But you can follow me on Twitter, but I'm also on Instagram, Facebook, TikTok. I mean we put out a lot of content, YouTube I have over half a million subscribers. Been there for a while on my YouTube channel. But make sure to listen to the Peter Schiff show podcast. I do one or two a week, sometimes more, depending on what's going on and how much time I have. But you can [e-mail], you can listen on my YouTube channel, the Shift Report, anywhere, Apple, itunes, anywhere they have podcasts. You can listen to the podcast. There are a lot of ways to follow me and invest with me. And I've got mutual funds too, so you could buy my funds at Schwab or Fidelity.

[C]

I'm going to add a couple more since Peter did some money. One is my asset management business, which is a it's a fund of crypto hedge funds. We invest in the world's best crypto hedge funds. That's xpam, exp, aam, Exponential Age Asset Management. Also, all of my research I've been doing for 20 years, all of the stuff that I talk about comes from Global Macro Investor. That's the epicenter of my thinking. That's everything that I've done. So if anyone gets a chance, check out some of that stuff as well. I love it.

[A]

All right everybody, thanks for joining and until next time, my friends, be legendary. Take care.

[C]

Peace.

[B]

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