Mark Yusko on a coming recession and why governments should embrace Bitcoin

Transcript

GM good morning welcome to the milroad show The Daily crypto show where we bring updates as exciting as the White House crypto Summit on Friday I'm your host Jay Hamilton it's Wednesday March 5th and today we are super excited to be joined by Mark YCO one of the best crypto and macro investors in the space he's also the founder CEO and CIO of Morgan Creek capital which has about two billion in assets under management today you guessed it we're going to talk about the White House crypto Summit on Friday we're going to talk about the US strategic Reserve Bitcoin other assets what's going to be in it what are Mark's thoughts and also we're GNA zoom out and get Mark's thoughts on the macro State China the US economy where he thinks

everything is heading and how you can position your portfolio to take advantage of all of that before we jump in we have a telegram group for everybody here where you can talk to myself and my team every day about the guests we have on so please join our telegram group if you haven't already today's episode is brought to you by definitive Advanced trading on every chain also by coin shift powering top crypto treasuries with their yield bearing stablecoin CS usdl without further Ado Mark welcome to the mil Road show no thanks for having me on excited about the conversation and uh let's get to it pleasure to have you okay let's start off with the Strategic Reserve is

taking all the attention this week uh earlier we had some uh speculation that uh well first I should say actually we'll roll back even further over the weekend Trump tweeted that he was going to do a strategic reserve and it would include five assets Bitcoin ethereum salana xrp and cardano and then Howard letnik the Commerce Secretary yesterday said that he thinks that I want to be clear here he said he thinks that Trump will execute the Bitcoin strategic reserve on Friday at the crypto Summit uh let's step back for a second Mark what what do

you think might happen this Friday yeah so look we have to be careful about words you know president Trump isn't always the most careful with his words I mean he he you know I I I tend to like that he's prone to hyperbole I I resemble that remark I I kind of speak in hyperbole sometimes um but the reality is you know he said in Nashville you know back a year ago that he was going to do all these things and and why did he say all these things right why did he talk about a Bitcoin Reserve why did he talk about Bitcoin why did he talk about you know free Ross thankfully he did that that

was amazing so he talked about because someone told him that there were a whole bunch of people that owned this asset that were one issue voters it's like oh really so I could get them if I'm if I'm nice to them and I loved you when he was in Nashville and he said on day one I will fire Gary gendler and the crowd went crazy and I loved watching his face I mean he was like literally shocked at how excited people I'm gonna say that again on day one I will fire Gary Ginza and you know he didn't have to resigned but you know I think what he said then was Bitcoin strategic Reserve well then he's like well I'm assign executive

order well it doesn't work exactly that way an executive order was able to be drafted for a strategic um a bit strategic crypto stockpile no I'm sorry crypto asset stockpile not strategic crypto asset stockpile well all that meant was the stuff they've already seized which included like seven coins um that was now not going to be sold because Democrats before a right after Nashville they're like oh we're gonna sell this stuff before you get here and he's like well all right no more selling so everyone got all excited about that but that was not a strategic Reserve that was a crypto asset stock

pile was basically labeling something that already existed okay then um you know a whole bunch of stuff happens up and down people start talking about it and you know last week we had this massive dump well why well you had the unwinding of this Arbitrage that's been going on where the big dogs and I mean super big dogs big hedge funds M Millennium and Citadel and others were basically buying black rocks ETF but they weren't buying it to go long I love when people report oh you know Millennium has2 billion yeah but they're at least two billion maybe even a little more short the

future why well the Futures price and the spot price are not the same the Futures price on average is about a 10 11 12% annualized return but over the course of the month you roll down the yield curve okay and those prices become the same and so you then do it all over the next month and you can Arbitrage this risk R lessly you know 11 12% you can lever it up and make even more than that well the problem is over time if so many people do that it goes from 12 to 11 to 10 to nine well it got it it gotten down to like sixish percent and so if your cost of funding is five and

you're only making six me there's other stuff I can do with my Capital so people started unwinding and so there were outflows from the Bitcoin ETF and people freaked and the price collapsed well then you got tariff Wars and macro stuff going on and and people are getting margin calls when you get a margin call you don't sell what you want to sell you sell what you can sell the most liquid thing and in some cases that was Bitcoin or ETFs so we had this spiraling down so on on Friday morning we got the first like Saving Grace the lifeline is Larry think says oh we're going to put one to 2% in all

of our of our own you know our own ETF in all of our model portfolios so the price stopped going down you know went from 107 down to 79 stopped going down and actually rallied and then people were like well but that's going to take time and and wa we still had outflows because people were still unwinding because it was Triple witching on Friday so that didn't really work so then on Su day you know the Donald says we're gonna have this strategic reserve and he said Bitcoin ethereum uh xrp salana and cardano and every was like Oh yay and

everything went up and you know the the bitcoin's up 10% and and the other stuff is up 20 plus percent cardano went up 60% there was no there's no action by Congress there was no he just said it and then his you know son repeated but here's the problem why did he go beyond Bitcoin we all know that Bitcoin is a better form of money what is money money is an asset that exists in the absence of a liability that's been gold for 5,000 years Bitcoin is digital gold now the thing about gold it's the only thing that's both a commodity and a currency right I mean silver too but but B basically it's gold well Bitcoin is

that but on steroids because it's more divisible like let's say I had a gold bar under my desk like Kyle bass literally has a big giant gold coin under his desk in a safe that he shows off to people let's say I had that and I wanted to you know break it in half and and and send you half J well I'm not strong enough to actually break that gold bar in half and what if I wanted to break it into lots of pieces and send all the listeners couldn't do that but let's say I could I couldn't stuff it in the computer and send it to y'all well with a couple clicks on my phone I can send Bitcoin anywhere to anyone without any intermediary that's why gold is being replaced timately by

Bitcoin well because more divisible and more portable and equally scarce all right well that's great well what does that mean well it means central banks which use gold as the base layer of money remember gold is money everything else is just credit everything that we think of as money is just currency currency is backed by debt well those sit on top right we got we got paper currency up here then we got Visa like I don't carry paper currency I use a Visa card and every 30 days I settle up on AC to my bank and they you know take the money out of my account and then they settle up on some periodic basis to fedwire which then sits on top of the gold at Fort Knox assuming the Gold's there so all of that is based all the

total monetary system is based on gold ultimately I think that'll be based on on bitcoin it'll be the base layer okay so swapping gold for Bitcoin that makes sense strategic Bitcoin Reserve let's do it well then why all this other crud why ethereum why salano why okay especially Sal I mean not salon and ethereum salon and ethereum kind of get a pass because they're active and smart contct they have adoption there is there some use cases it's kind of like maybe they could be those intermediate layers like fedwire and and and a maybe they could be the the the second and third layers on top of Bitcoin maybe but but bottom

line is fine but the other two xrp and cardano why okay Charles and Brad and I'm not casting aspersions this is facts it's been reported paid a lot of money to both sides right they started with the Democrats now they're going to the Republicans they're paying because they want their chain but here's the funny thing and I I mean this semi- respectfully but I've been doing venture capital in the space in the digital space now for seven years which is not all the time in the world but we were the third firm there was panta there's

blockchain capital and then us and then all these other and a lot of more successful but but we're there and we've been around a long time and so I've been doing this not once not once have I ever had a team come pitch me a deal building on either one of those chains look I've had lots of people pitch me on ethereum I've had lots of people pitch me on salana tons and tons of people pitch me on bitcoin not one on either one of those two chains so maybe there's some there there maybe there's some tech there they seemed like they were just big pre- mines and people get rich by selling them to the plebs but

okay so why does Trump say these other things well because if you look at the thing that his Affiliates and I don't know if it's his son or the friends or whatever own they own everything but Bitcoin so they own all those things in that Liberty digital thing and so every time Trump tweets about it the price goes up he likes to make money he really likes to make money a lot so that's a long long-winded way of saying I think on Friday they'll announce a strategic Bitcoin Reserve Bitcoin only they'll say some nice things about the other coins like maybe they'll say you know Ma in

America coins you know magga then uh or Mack I guess uh then no no taxes now they might say no taxes on all crypto that would be pretty amazing no no capital gains taxes um but here's the thing right Donald Trump is really good at passing laws that make him and his family wealthy full stop if you go back to his first term you know all other llc's except real estate have to pay this tax but real estate which he happens to be in doesn't have to pay this tax inherit and all these things he he's pretty good at it and okay fine I

don't begrudge him that um but he owns a bunch of crypto now of different variations do I think he's going to do his best to make sure he pays the least of course it's like when the Secret Service stay at his hotels seems like a conflict to me but but no one seems to care so whatever so anyway that's that's where I think we're I think we get the spr I think the other people paid enough money to make nice although it was interesting I I guess money does buy anything because you know Trump was pretty pissed off at garlinghouse for supporting you know his opponent and

pretty big money to her to you know for her campaign and at one point in a meeting at the White House he or know Mar Lago he kind of said dude where were you when I was running for president now suddenly you want favors so I thought that was interesting so if he's paid reparations shall we say to get back on on Trump's good side that would be interesting um yeah I think it's clear that if he is going to announce the Strategic Bitcoin reserve on Friday this was his one chance to talk about these other coins for that after he announces this on

Friday which he you know we all know Trump he goes into a big event like this he is he he wants to make some big announcements he wants the media attention he needs that so we can expect that so I think yeah he strategically knew he had one shot to fire here to help out his buddies to help out his family and so he did that but the other thing is Howard letnik said that it he thinks Trump will treat Bitcoin and these other assets SE separately or differently in some way so it feels it feels clear that what where we are headed is a likely strategic Bitcoin Reserve as you said that also it's easier to to make that a reality than to try to convince the treasury or Congress

or the steps that would need to happen in order for a Reserve at the scale that we're talking about to become a reality to convince those that many people and that that we should be spending us tax doll is tough it's really hard in my mind to have a chain that isn't proof of work be a reserve asset that doesn't mean a non- proof of work chain can't do other things in the decentralized world that we're moving toward but a permanent immutable purely decentralized chain for me like if I own anything of

value I have a like I won't say a silly I but I have a a pfp right I'm part of the onchain monkey community and I love the onchain monkey community so I don't mean to say it's silly but but some people think pfps are silly some people think nfts are silly I think nfts are amazing right non-fungible token just means a line item on a ledger I think every asset every stock every Bond every currency every commodity every piece of art a piece of real estate every private business every everything every collectible will ultimately be an entry and a ledger an nft now I would like to call it personal property rights or or digital property rights instead of you know non-fungible token but we are where we are but I have that that thing and it's a one of one and there are only 20

out of this 10,000 collection so you know now people say well who cares they're ugly right whatever you Everyone's entitled you know no accounting for Taste art is a unique thing you know I like the picture behind me some people don't um and it is a one1 so to me it has value But ultimately um like I don't know if you saw the video of the kid that opened the Lord of the Rings one of one magic the Gathering card no like literally you know Magic Gathering cards are cool and some of them are valuable and you know they they did a a collab with with uh the Lord of the Rings and they printed one card with with the ring and this kid opened it and it's like hands like

shaking because it's $2 and a half million dollars people like no it's a piece of cardboard there are people who would pay him on the spot $2 and a half million dollars or more to have that one of one it's like why are sports teams worth so much because they're they're scarce but long story short where do I want my scarce assets in the digital realm do I want them on a chain that's a pointer to an aw server I want them on a chain where they're onchain verifiable by proof of work so for me do we get to using the Lord of the Rings you know I used to have this view that you know in web one we have five and web two we have five protocols we

got tcpip which you and I are using right now to talk we have FTP to move files we have H https for websites we have SMTP for uh email and then we got ww w dot that ties it all together I was like well in web three are we going to have that same kind of five and is Bitcoin the base layer and is filecoin like FTP and is ethereum like www do but then it kind of breaks down like what's email is that Cosmos or polka dot or salana I don't know maybe and then people like no no we're gonna have all these chains all these l1s and we're gonna have links or Bridges like but the bridges suck and that's where all the exploits oh but then chain link says oh we fixed that maybe okay

but I'm starting to lean to the one chain to rule all chains like like Bitcoin and then we have l2s and l3s and l4s kind of like gold and fedwire and acch and and Visa Network yeah it's uh it's very difficult to predict the future the one thing that I think is so clear right now is that Bitcoin has clearly solidified its place as digital gold and it makes a lot of sense for a government that holds a lot of gold to start to reallocate some of that gold to bitcoin end of story and you can have both right you can have both people like oh you need to sell no

there's a world I don't want to live in this world but there is a world like where electricity doesn't work and the internet's down we're having physical gold like the Mad Max kind of thing I don't really want to live in that world but but there is a you know there stores are people you know getting out of a of a war torn country by you know giving people their earrings and look physical gold has a role and it has had a role for 5,000 years I mean it's not an accident that it's been a perfect store of value and a single ounce this is a crazy thing a single ounce would buy you a fine person suit for 5,000 years from Cleopatra's time to a suit of armor to a zoot suit in the 20s to savil R today you go to savil R you get give them an

ounce of gold and they'll give you a very nice suit man or woman doesn't matter so that's real so you can have both but if you think about a strategic Reserve ultimately you want to have real assets that are scarce provably scarce and that's why we use this thing stock to flow which means the the flow of an asset relative to its underlying stock you want to be low or you want the stock to flow to be very high and the amount of gold that's produced every year roughly equals the amount that's lost or stolen or use in industrial purposes so the the stock to flow is very high Bitcoins is actually a little higher because we provably know how many new

coins are going to be created for the next 140 years before they stop being created and then we go to transaction based so this provably scarce asset that is digitally Superior right more divisible more portable is the next 5,000 years or 10,000 years or however long we survive as a species but I I don't think we need to ditch physical gold I have a little bit of both um well I have more Bitcoin than gold but um and and I like Bitcoin because it is not only an amazing store of value but it actually is people well it does

you know it doesn't do what it said it was going to do you know the the white paper you know peer-to-peer electronic you know digital electronic cash system well no it is if I want to send you value I can with a couple clicks on a phone send you Bitcoin through the network no peer and it's peer-to-peer meaning if I want to send you money I have to have a bank account you have to have a bank account and we pay a wire fee and because it's across International borders because you're in Canada at least International for now right um we have to pay the Rothchilds because their bis has to get paid because of a 400y old treaty which seems silly to me but that's crazy when I can use this technology

better technology and look the banking system that everybody hates right oh fractures are banking it's awful that's people all the time name a place you would live that has a bad or absent fraction banking system I'll wait because you can't do it and so banking is not the devil it's the extraction of fees for trust that's the devil right seven trillion with a t and no one even knows what a trillion is right but a trillion you and I have to sit here and talk for 31,700 years and as much as I enjoying this conversation um you know I'm not offended we have to spend a dollar a

second that's one trillion so seven of those babies are extracted from us around the world for trust and I use a simple example all the time so let's say I lent you money back you know and I'm old so I write my Papyrus tablet that you owe me a 100 bucks you come back a year later to pay me 110 and I'm an unscrupulous guy I was untrustworthy I changed the number from 100 200 you come back to pay me I say you owe me 220 you you trusted me and that was a mistake because the Ledger says 200 so the medich 838 years ago came in and said well Jay you keep a ledger Mark you keep a ledger and we the

benevolent medich for a small feet we'll make sure the Ledger match but here's the thing while you're away working for the 110 I go to the medes and I say you know what I'm G change mine to 200 I'm gonna give you half they're like done easy so you come back to pay 110 I say 220 hey Michi and they're like I'm sorry jay you must have written the number down wrong so we shouldn't have trusted them and look the trust system has worked really well most of the time except for when the banks get fined for 838 years but now we don't need trust now we have truth we have a third Ledger this permanent immutable beautiful Ledger verified by proof of work where

we're converting energy into value which is what we do every day right fuel our bodies make so that's what life is about and now we have this perfect immutable Ledger that says Mark writes down 100 Jay writes down 100 Ledger writes down 100 51% say yep that's what happened can't be changed I can't change it I can't say no it's 220 you come back pay me 110 and we're done truth is better than trust and Truth is freeish it's not completely free but the people people who get paid are the people securing the network the miners through this thing called block rewards and transaction fees rather than you and

I paying the trust institutions to you know guarantee that that the money is where it is I want to uh shift gears I I completely agree with everything you're saying uh I want to shift gears to to macro and yeah us and China and get some uh bigger picture Outlook because you know Bitcoin jumped to 90k today I think we're sitting just below 90 K as of right now but everybody's feeling good but it feels like there might be some more pain still to come and so I want to get your take on that before we do we just need to take a quick moment here for our sponsors who make the show possible if you're only trading on centralized exchanges you're not going

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very nice uh let's talk about the the macro state right now what are your thoughts on where we are currently in the macro regime yeah I mean macro can be summed up in in in a simple word two simple words money supply right so so money supply which actually why we're talking about all this other stuff right why bitcoin's so great the money supply has been growing at uh a truly astonishing rate for for a very long time and it's because of you know my generation the Boomers uh the Boomers create a bunch of entitlements what's an entitlement it's a promise you make to yourself that you don't fund that you ask your kids to pay for who wouldn't vote for that so the Boomers voted for

all these entitlements and turns out the only way to get them was to issue lots and lots of debt so we have this massive debt overhang 36 trillion in Rising and then then there's that t word again so what does all that mean well what that means is in order to service the debt right in order to create GDP when you have so much leverage you have to increase the circulation of of money so money supply has grown about 8% since the creation of the fed and and all this boils down to the difference between okay real money right money that

that doesn't devalue and devaluing paper currencies Fiat currencies so from 1776 to 1913 a dollar was worth a dollar a little fluctuation in value around Wars and and depressions but a dollar was worth a dollar there was no such thing as inflation so then the Fed was created in 1913 well why is the Fed created in 1913 well if you go all the way back right who had the first world Reserve currency Portugal interestingly enough well how a little tiny Portugal right about the size of you know uh New Jersey have uh World Reserve currency well they had the fastest most powerful navy because they

had the tallest trees so they're the most you know lethal fighting force and they had the Knights Templar and and so they had the world Reserve currency well then the Spanish Armada overtook them and they became the world Reserve currency and then little Netherlands and about size of Ohio conquered the Spanish Armada how the hell did that happen they created the First Central Bank they created a bank where they could literally print money out of thin air before that money had to be earned or create you know created or held uh was commodity based gold and silver that's why Spain and Portugal explored the Seas to get the gold and silver to plunder to bring back to have money well the Dutch

said screw that we don't want to go find it we'll just print it so they created this bank and they funded a mercenary Force which took over the Spanish Armada well then Napoleon who was a pretty good General you guys all seen the movie took them over and they had it for a while well then some of the Rothchilds went up to the UK and they took the model from the Netherlands and and created a Central Bank in the UK and they funded steamship technology which defeated the uh french navy and then they were the world Reserve currency and they were the dominant superpower for you know 70 plus years the Sun never set on the British Empire and then in 1913 coincidentally

they invaded Mesopotamia incurred a bunch of debt the pound St collapsed the dollar ascended over the next 31 years we became the ascended power we were you know little Emerging Market before that and we had nuclear power so our Navy has kept us the world superpower but we also cut a deal in 1971 with the Saudis saying look as long as you price oil in dollars will protect you because that keeps the dollar the hegemonic world Reserve currency well now what's going on well we did all this we established the fed the de has been stealing 2% of our wealth or more every year I mean think about that who came up with an idea that

over a 30-year period half my wealth has been confiscated that's not good for me in no way is that good for me so this idea of inflation but it makes us feel good because our homes and our stocks and our stuff goes up like in I live in Chapel Hill North Carolina according to Zillow my house went up 50% in the last two years like but my house did not grow it did not get more efficient it actually wore out a little bit I had to put money into it what happened the money got worse and this is where why Bitcoin is so awesome and and how it all kind of comes back to macro and ultimately China is one

Bitcoin is one Bitcoin will always be one big and one of my favorite things there's this the artist and I I should get her name right she cartoonist Lena sa Sai maybe and she has this four panel cartoon in the upper left panel there is a Lambo in a mansion it says millionaire and homeless person bitcoiner that's you know 2009 then in you know 2015 you know you got the a nice house and a little Shack millionaire bitcoiner and then it says 2030 you got a little Shack millionaire and a mansion and a Lambo bitcoiner and then

2040 it's a castle and three uh girls saying can you believe he has a whole Bitcoin and so one Bitcoin is one Bitcoin so it's not about the Bitcoin it's about the amount of currency Yen euro dollar that keep getting devalued I mean here's a crazy stat 80% of all the dollars that have ever existed in the history of the world right 248 years as a republic and 80% in the last five years it's insane right that's just devaluation of the money so yes stocks look like they're at all-time highs when you price in toilet paper when you price in Gold they're the same price as

1996 because gold is money and everything else is just being devalued so what's happening and why is all this Macon why is this trade War nonsense well 10 years ago ish China said you know what from 1990 to 2020 we wanted to be a moderately prosperous socialism economy was called the harmonious rise so they took 700 million people out of abject poverty created a middle class and said we want to become a harmonious socialism moderately prosperous economy and they did they came back to become the second or or first depending on how you count uh

large economy in the world now remember for 1800 of 2000 years China was the dominant superpower then they had a 200e mistake with Communism and now they're back to prosperous socialism well their plan for 20150 because they plan a 30-year increments their plan for 2050 is to be the dominant superpower like whoa who hold on those two things don't go together hold on so how do you become a Domin superpower well you gotta have the most powerful navy because that's how it's always been ah no no no 10 years ago they're like you know what the next war and G me fought with ships we fought with chips because we're entering the digital age

so you know we graduate 450,000 engineers in the US they graduate four and a half million 96% of AI citations are in China they just came out with a new Quantum chip that blows away what Google just announced two weeks ago deep seek blows away chat GPT they are winning like my pin tweet on Twitter is greatest invest greatest wealth is created by investing in Innovation to invest in Innovation means you have to invest in something that you believe in before others even understand you'll be mocked and ridiculed for your non-consensus action but it's totally worth it that's absolutely true the greatest Investments come from investing

in Innovation ahead of other people and so China has been investing in ination and they're playing a different games so Trump comes in says well how do we how do we catch up we outsourced over 40 years our pollution and our low-wage jobs because we have become a consumer economy over the 80s and US Boomers right we became a consumer economy not a manufacturing economy postwar and so we wanted to get the cheapest goods and live the nicest lives like nicest lives so we wanted the pollution over in China we wanted the low wage jobs in China so we could have good stuff well now we're like oh well now they are becoming the largest consumer force in the world

and I tell the story all the time that 20 years ago my friend told a story about his daughter came up to him and said hey Dad I thought you said Santa Claus brings the presence well honey he does why why why are they all say made in China okay because 20 20 years ago it was about made in China it was about exporting to get low wage stuff to import back so we could have good life Europe us everywhere now it's about made for China it's the largest consumer population in the world 700 million people in the middle class they are the largest most dominant consumer now you want to make

stuff for China so this idea of causing a trade War doesn't make any sense well yes it does if you realize that now we are at a less optimal position and all the stuff with you know Mexico and Canada has nothing to do with Mexico and Canada has to do with China right because when we passed naft and all this stuff so now China you know says well I can't send it to you directly so I'll just send it to Mexico or or Canada or Mexico I'll send all the parts to Mexico I'll assemble the car in Mexico create some jobs and then I'll ship it across and it's a Mexican car no it's not it's a Chinese car and so all of this is now trying to be unw but here's the problem we have 200 years of evidence this is

tariffs are dumb they've always been dumb Adam Smith was right right open free markets right comparative advantage right if if you're good at growing wheat and I'm good at growing corn you shouldn't try to grow corn I shouldn't try to grow wheat we should grow what we do and we should trade that's what makes life better better and if we innovate then we should trade that stuff so trade is good globalization is good de globalization Smoot Holly come to mind feris bu's day off bad plan and so I think a lot of the Bluster is just Bluster and what we are realizing is China is in this Superior they're on the inner Lane going toward dominance and

it's because you've heard the the story about well who's playing checkers who's playing chess look in America we argue about how to set up the checker board and Putin's a grandmas at chess but China's not even playing those games Checkers and chess are confrontational games that happen in the middle of the board right the key squares go is not a confrontational game it's a it's a spatial and comparative advantage game and you win by thinking about the future not about your current move and so they are playing a different game and I think we finally woke up and realized so we talk about tariffs and what happens is suddenly people are

freaking out well here's the problem we printed so much money and we've hyperv valued stocks right the PE Ratio The Price to Book ratio of us equities is the highest it's ever been worse than 29 worse than 74 worse than 2008 worse than 2000 and so when you're overvalued eventually you will fall back to a fair value now you can levitate it's like you know Wy coyote when he runs off the cliff as long as you don't look down you will stay levitated in theory gravity actually works but what's happening now is people bought stocks well then like well they didn't buy enough stocks so we'll lower interest

rates to zero and we'll give you margin loans so margin debt went up and people were buying stocks and then they were trading options and so we've got this hyper leverage Society gambling society and everybody thinks it's great because Nvidia is so high well but the reality is that no company can sell at 30 times revenues and make a good return going forward it just can't happen now can that stay high longer than you think sure but once it starts to go down once deep seek happens and you erase $500 billion dollar of market cap in an hour people get margin calls when you get margin calls again you don't sell what you want to sell because the stock went

down you sell what you can sell gold bonds stocks I'm sorry Bitcoin and so now you've got an unwinding of that and so in this whole I did a a presentation the other day called you know tariffs tariffs everywhere did anyone stop to think right on the old you know rhyme of the Ancient Mariner and I'm doing a followup in a couple weeks called you know tariffs tariffs everywhere is the investment Market starting to stink and so I do have concerns that we're on our way to a uh recession right because you seen the GDP now collapse from 4% to minus 2.8 so arguably we're going to

have a little you know ugly setback in in in growth Germany's already in recession Europe broadly is close to recession Japan's always been kind of hovering on recession we could be in recession that's bad and that's because global trade is drying up well if that happens there're going to be more margin calls and in the short run assets even like Bitcoin despite the Strategic Bitcoin Reserve I mean it could go down I don't think it will because Scott bessent said this yesterday on TV and Scott is amazing I've known Scott for 20 years he's a great pick for treasury secretary super smart and in fact what's interesting his

hedge fund was called key Square about the four key squares in in a chess game very interesting so um he said we're gonna get interest R down because we can't refinance the debt why why are interest rates going up remember the FED started cutting last year so why did the 10year rate go up because China's playing go they're selling their treasuries which they had been buyers of Treasury so when there's lots of demand then yields go down prices go up when they start selling prices prices go down and yields go up and so everyone thinks you know Trump's right Trump's saying is

Right which is trade Wars are easy to win no they're not they're they're never EAS and there are no winners right they're just losers and so China I believe is winning and look at Chinese stocks they're going straight up you know Baba and and smart smart investors like David ER and Michael bur own a lot of them and we do too but I'm not in their class don't I'm not trying to say that I'm just saying we we happen to own a lot of Chinese stocks too but ultimately um I think we're in a place where the the the response is GNA be massively good for Bitcoin right we're going to have to cut rates we're

going to have to increase the money supply back to high single digits maybe even double digits and in that world one bitcoin's one Bitcoin but we don't price in bitcoin price in dollars so the price is going to go up yeah this is where we have sort of these two forces playing at the same time and Steve Cohen was talking about this yesterday or not yesterday but the other day as well where he was saying you know he predicts that second half this year we could get down to 1.5% growth right tariffs slowing immigration Doge obviously is going to have an impact in the short term the question I think is how long does this last yeah you know is this a is this a a short reset where we'll

quickly reset and then assets will rise again the midterms in 2026 are obviously going to be on Trump's mind Trump does well when stocks are rising he wants to support the economic growth and wants to support the the wealthy in that way yep what are your thoughts on the time 100% And and it's a great Insight because that is how the foure political Cycle Works you take your medicine in year one and you and you you beat down the market so that it can rise into midterms but really the important year is year three year three now it's less important for someone who can't get reelected but year three is usually the year where they throw everything tax cuts and money supply

growth and you get big and all the big boom years are in the third year of presidential cycles and most presidents have a recession in their first year now this is a funky one because he was President once and now he's pres so is it his second term or his first term it is technically his second term but it's kind of like a first term because he wasn't president you know the previous four years and on top of it the last Administration was a show I mean there's no other word to describe it I mean a complete and total show no no budget discipline fraud like I mean the whole Ukraine moneya laundering

thing is just it's just it's crazy I mean for someone to actually say well I I can only account for 70 billion of the 170 billion you sent me really I mean like a 100 billion just just vanished I mean well actually it didn't vanish because we know because you know with all the fires out in California a whole bunch of the homes that got burned down were owned by Ukrainian people that were in the cabinet I'm like that's weird so all kinds of weird stuff happening but the last one $4 trillion dollar deficits Harris's plan which was not a plan it

was I mean i' I'd like I don't like to speak ill of people but what she presented as an economic plan was the closest thing I've ever seen to brain death in the 61 years I've been on this planet I mean it was it was terrible and again I'm not saying that Trump is rocket scientist but what Trump does like Reagan he surrounds himself with great people I have incredible confidence in Scott bessent in lutnick in a number of the people in the administration particularly on the financial side and the people that are gathering for the crypto Summit on Friday I mean there's some really really smart talented people that understand economics and

finance and I think you know we'll end up with with some good outcomes now to answer your question I think it's a short-term reset I don't think we're going into a depression I don't think it's 1929 um there were a lot of tweets on Monday night you know that Black Tuesday was going to happen yesterday and thankfully it didn't but look the valuations are such that we could have a really meaningful long drawn out like 10 years of no return in US stocks that would not surprise me but I don't think it's like down 2% every year for 10 years I think it's probably a flush and then a response and then a and then a come back

because again I'm 61 I'm I'm the second to last year of the Boomers my wife's 60 uh oh no she has turned 61 too I'm about to turn 62 but we're the last two years of the Boomers and we still got you know a decade before we can take our our entitlements so you got at least another 10 years where you got to prop up that generation because all of our wealth the Boomers is in real estate and stocks so you can't let those two things go down and my guess is they won't and so even if there's a short-term flush which they're Pro Stevie Cohen's you know pretty smart guy um I think there will be uh economic data are pointing to it leading economic indicators are pointing to it so all that said I I

think think it will be shortly because I think the the response from the US government and mostly from China China is firing the liquidity bazooka like we've never seen because they can't afford to have what happened to Japan happen to them because Japan remember in the 70s and 80s was the economic Miracle they were going to take over the world we would send our people over to study under Japanese companies and then they had a deflationary debt collapse and they've been you know morban for 30 years China can't afford that because they got too many people so they are printing capital and they they're in a different position they have more

reserves they have the largest uh reserves in the world over three trillion dollars and so they have the economic power to recapitalize their Banks to you know sweep the bad real estate stuff under the rug and I'm sure you've seen the videos right or if maybe even been if you go to China it's unbelievable it's like living in the future I mean it's absolutely stunning what they have achieved and I love the pictures where it show you know shenzen 30 years ago and shenzen today it's like my God it was a field and now it's this Metropolis like right out of a science fiction movie so before we wrap here Mark what does what does this mean for invest when

they're thinking about their allocation for let's maybe take a couple of different scenarios first principles like you you said this best at the at the very beginning investors and investing has always been the same right everyone should have three buckets you have a liquidity bucket that funds your lifestyle five to 15% to pay the bills and pay the rent and travel and food and that needs to be liquid it needs to be high quality it can't have lots of volatility that's your that's your you know liquidity bucket then up here you got the 10 to 15% of the getrich bucket and that's where you're I would say

that's where you're doing the friends condo deal the brother-in-law's Venture deal the hot stock tip you got you're gonna lose it all so keep it small no I'm just kidding around but that's where you put you know things that you think have big potential to return lots and some of them go to zero but that's okay because that's that's where you take your big tail risk then 70% is in the stay Rich bucket I said well what if I'm not rich yet well then you got to have more in the get-rich bucket plus your income and and plus your you know you want to get some passive income so but that stay Rich bucket 70% that needs to follow you know the endowment model right which is a

diversified portfolio of high volatility assets and the the younger you are the more volatile right that are uncorrelated like I believe if you're under 65 it should actually be against the law to own bonds like literally it should be against the law especially in your 401k because you can't touch your 401k until you're 71 and a half so why would you put Bonds in there you should have venture capital and real estate and commodities and Bitcoin and all the most volatile things because you can't touch it bonds are for the liquidity bucket to spend nothing else so in the stair

bucket you want to have an equity orientation but Equity doesn't mean stocks it means private Equity Real Estate Equity commodity Equity stock Equity digital assets not Equity but digital assets Bitcoin should be a meaningful piece of that portfolio why well because it's the perfect asset it has eight 0 V which means it has a long-term High compound rate of return right has the same V as Amazon and yet it has twice the compound return now it's only been doing it for 16 years instead of 30 so bitcoin's number will come down and they'll probably have the same but they have the same v i I use Amazon all the time Amazon every year for 30 years has had a double

digit draw down including this year it's in one right now when was the right time to sell it never but who bought it on day one and held to today five people Jeff Mom Dad ex-wife Bill Miller that's it because everyone gets shaken out by the volatility but the beautiful thing about a stay portfolio by having uncorrelated assets why Bitcoin so perfect why Amazon so good they're not correlated with one another Bitcoin is 0.0 correlated to bonds and 0.15 correlated to stocks so every time you add it to the portfolio your risk goes down like Harry markwitz and I I was lucky I got to study under Dr Martz at University Chicago he won the Nobel Prize for the most genius thing of investing there is the riskiest thing

you can have is Cash the dumbest asset you can have is Cash because every day you hold cash it loses purchasing power now you want to have some to pay for lunch or pay for dinner or pay for your rent but anything above some is bad so how do you fix that well you can add bonds well bonds are riskier than cash right but the riskier portfolio goes down because you're not losing to inflation as much well then what if you add stocks well those are riskier yeah they could go down they could lose but the risk of the portfolio goes down when I add Venture Capital risk goes down add real estate add Bitcoin add any asset that's uncorrelated the risk of the portfolio goes down your return per unit

of risk the sharp ratio goes up so that's how you want to think about investing the younger you are the more heavy into the highest volatility assets Venture Capital like again Innovation there are four assets that you can own stocks bonds currencies Commodities that's it Mark what about hedge funds hedge funds are a type of holding like a mutual fund or a private partnership you can own stocks bonds currencies Commodities what about private Equity I own a common stock a preferred stock or a convertible Bond what about real estate I own the commodity the land or the equity or the debt of the deal stocks bonds currency com that's it but those four things are created by the

fifth asset innovation without Innovation none of that other stuff exists so you want to have exposure to Innovation to new ideas to agentic AI to blockchain technology to decentralized exchanges to all of the things basically when someone tells you that only the bad people are using it buy a lot of it if people tell you it rots your brain buy a lot of it if people tell you that it has no use in normal society buy a lot of it because those are the things that the current generation doesn't understand and when you add those to a portfolio your

portfolio gets better Mark fantastic advice this has been just an absolute pleasure and a treat to have you on the show today thank you so much no so much fun I I apologize for for talking too much but that's don't apologize I'm I'm excited just to sit here and listen I learned a ton as I'm sure our listeners did really appreciate your time today everybody thank you so much for listening in we will see you guys live again next Wednesday or we'll see you tomorrow every day we are here for you guys you can check out the show and as I always have to say none of this is financial advice disclosure disclosure disclosure this is for information and educational purposes only if you are going to make an investment you should

seek your own professional Financial advice stay informed stay safe and as Mark said have a solid allocation in where you are taking risks within your portfolio because when you make these Investments there's always one last thought on that investing is all about taking risks that you're compensated for if you avoid taking risk you're not investing right investing is about taking risks but don't take risks where you're not compensated like buying stock at 40 times earnings maybe you're not being compensated but buying stocks you know like Alibaba where it was trading at eight times earnings that that you're being

compensated for that so investing is about taking intelligent risks risks that you're compensated for very well said Mark thanks again for your time today really appreciate you joining us thanks for listen in everybody have a wicked awesome day