Big Money Is Leaving The Dollar And Buying Bitcoin

0:00Hello, everyone. Trust in U.S. institutions plummeting. Assets are flying higher. I went on CNBC this morning and I got grilled about Bitcoin and a new company just launched and they want to be a private sector doge. So the founder is going to join us to explain exactly what they're doing. We're live today from the desk of Anthony Pompliano.

0:27Before we get into today's episode, I need your help. My goal is to get to 1 million subscribers on YouTube. We're only at 28 ,513 of you. So hit that subscribe button and let's get into today's show. Citadel's Ken Griffin dropped an absolute harsh truth in an interview with Bloomberg yesterday. He said, we're seeing substantial asset inflation away from the dollar as people are looking for ways to effectively de-dollarize or de-risk their portfolios via U.S. sovereign risk. Now, it's not every day that you see one of the world's best investors say that people are de-dollarizing their portfolio.

1:00Usually you hear that about nation states. So why would these people want to de-dollarize? Well, Goldman Sachs says the story is very simple. Trump said America can grow its way out of the debt. What it really means is debasement. Shutdowns highlight the erosion of trust in U.S. institutions, and they believe that Bitcoin is the pressure valve. That's not bearish S &P, it's bearish U.S. dollar. Now, to me, those are the magic words. Erosion of trust in U.S. institutions. People don't trust the government. They don't trust the news, and they definitely don't trust the central bank. Why should they?

1:31Those three organizations have proven to be untrustworthy over the last decade. One of my favorite Satoshi Nakamoto quotes is, the root problem with conventional currency is all the trust that's required to make it work. The central bank must be trusted not to debase the currency. But the history of fiat currencies is full of breaches of that trust. Now, ain't that the truth? Satoshi knew the problem earlier than most. But now we are all seeing large amounts of capital flow to safety from this breach in trust. The crypto market saw$6 billion of inflows just last week. That is a brand new weekly all-time high of inflows.

2:06So how should we think about these inflows? Should we assume that this is just speculation from investors looking to capture a quick profit? Or is there something much bigger at play here? I don't know. Endgame Macro, one of my favorite people to follow on X, they say this$6 billion inflow into crypto is a warning signal. Big money is moving because confidence in the global financial system is starting to fray. Historically, surges like this have appeared when investors begin losing faith in traditional credit markets. What makes this moment different is the context. Global growth is slowing, debt loads are exploding, and the risk of a major credit event, something breaking in the bond or banking system, that is rising fast.

2:44So confidence is starting to fray. Trust is eroding. This leaves citizens like you and me with a simple choice. stay trapped in the existing system and suffer whatever consequences come from the undisciplined decisions of leadership, or take your assets and move them into a parallel system that was purpose-built to mitigate these disastrous policies. That's the choice in front of you, me, and every investor. Stay and suffer or leave and prosper. It doesn't seem like a hard choice to me, but here's the beautiful part about capitalism. Everyone from person to institution is financially incentivized to move to where their money is being treated best.

3:20First, it was the individuals. Then we saw the small businesses and private companies. Next, it was the public companies. And then they were followed by the large financial institutions. And eventually, I believe that we will see the central banks and nation states follow suit as well. Every dollar, every unit of economic value, it is all going to move into the new system and they're all going to be present in new assets. Some of the adoption is gonna happen by true flight from the old system into the new system. But some of the adoption is gonna happen by bringing the new assets into the legacy system via existing wrappers like ETFs and public companies.

3:53Regardless of how it happens, it could not be more clear that this transition is underway. The next decade is going to be defined by this trend. And I implore you sitting at home, please don't ignore it. I went on CNBC's Squawk Box this morning and I sat down with Robert Frank, Becky Quick, and Michael Santoli, and they grilled me about Bitcoin. I had a blast because I love talking to people who are a little bit skeptical. So here's the conversation. When we talk about crypto, with Bitcoin, you want to keep up to date. It's a big, important market now with massive participation, but the story is always the same, isn't it?

4:28I mean, it's sort of like store of value, more people know about it and want to participate in it. Is there anything that's kind of moving the needle on a fundamental basis or a flow basis at this point? Well, look, I actually think one of the problems with the traditional financial market is that people have to pay attention to it, right? If you think about what's going on in the stock market, I have to know what the company is, what products they're constantly coming out with, who are they selling them to, what's the latest earnings report, what's interest rates, all this information is very hard.

4:54And so if you think of the average American, they are getting punished in the economy, right? That K-shaped economy is really, really hurting a very large portion of it. And the beauty of Bitcoin is the very simple story. They are never going to stop printing money. So therefore, Bitcoin will never stop going up. And if you simply think of Bitcoin as savings technology, all you have to do is go out, work hard at your job, make money, spend less than you make, and then put the extra savings into Bitcoin and then allow Bitcoin to benefit from what we know is going to happen, which is they are never going to stop printing money.

5:21And I think that that simplicity is actually very attractive to some cohort of investors. And now you see investors saying, wait a second here, this quote unquote debasement trade means that I don't have to go do all that work. I can simply just go and buy something like Bitcoin. And I think that really maybe the story of finance of this decade is that Bitcoin is becoming the hurdle rate, right? Historically, we've looked at things like the S &P. If you go back to 2020, the S &P is up 100 percent since 2020. Priced in Bitcoin is down 90 percent. All of the returns that people are talking about in traditional finance, most of them are negative because no one can beat Bitcoin.

5:53And so if you can't beat it, then we just say you got to buy it. And I think that's what a lot of investors are starting to do. That's true. Now, the vast majority of Bitcoin that an individual saver is buying is being sold by somebody who already owned it. Right. I mean, it's a massive industry that's essentially just kind of middleman frictional. It's mostly about trading. It's not about anything else. It's not about like, you know, opening up a savings account where the bank creates the asset. Well, there's always going to be trading volume in any asset, right? People are obviously going to constantly be trading an asset back and forth.

6:25But what you see is more and more Bitcoin is being taken into what we call illiquid supply. So over time, that percentage continues to increase where people, every Bitcoin that I buy, no one's ever touching again until I die. Right. And I think there's a lot of Bitcoiners who believe the exact same thing. And so what you're starting to see is that illiquid supply numbers creeping up. And so as more capital comes in, the only thing that can happen is if you have a finite supply asset, more people want that asset. But the people who hold it aren't willing to sell it. The price has to go up to clear the market.

6:51And that's why Bitcoin continues to go up over time. Gold has done better than Bitcoin this year. Do you think in the crypto community, they see gold as an ally or is it a competitor? You know, it's funny that on one hand, Bitcoin and crypto folks, they're brothers in arms, right, in the fight against currency debasement. On the other hand, I think that the gold bugs are having a field day because they're outperforming Bitcoin. I think gold's up 50 percent this year. Bitcoin's up about 33 percent. What I will say is that the average return since 2015 of Bitcoin in Q4 is 60 percent. So the gold bugs, you know, you're not at the finish line for the year yet.

7:24Let's see what happens. But if you go back just five years, right, gold is up about 100 percent. And during that time, Bitcoin's up a thousand And so I think that they both benefit from the same thing. It's just that you have a smaller market cap asset that's got a lot more volatility in Bitcoin. And therefore, that's kind of gold with wings is the way I like to think about Bitcoin. What's the difference between those investor pools or do they overlap? I think that you generally are going to have an older audience that's got gold. You're also going to have the central banks today, institutions.

7:49But very quickly, you're starting to see more and more people that own Bitcoin. They're getting older. It's been around for 15, 16 years now. But also, I think that people aspire to have the central banks eventually hold Bitcoin. The question is just when do they do that and what are the geopolitical things that start to transpire if all of a sudden you're saying we're going to go put Bitcoin in our actual treasury reserve? You have a kind of a purist's take on the utility of Bitcoin as this store of value and this anti-debasement asset. Where does then the kind of publicly traded crypto asset treasury companies fit in?

8:23And it just seems much more about kind of a financial engineering workaround that people are paying a premium for the asset they could just buy straight. Yes, I think there's going to be two different types of public market players. There's the category creators and frankly, in my opinion, the category winners, companies like Strategy and MetaPlanet, who they have come out and said, look, we're going to buy Bitcoin. We're going to hold that Bitcoin and we're going to use different capital market tools to go and buy more Bitcoin. We've got a business that we've created. ProCap BTC is the private entity that's going public, raised$750 million for it.

8:53And our goal is to not only hold Bitcoin on that balance sheet, we think it's a great treasury reserve asset, but then go build products and services on top of that to go get more Bitcoin. And so if you think of traditional financial institutions, they have a dollar denominated balance sheet. They build products and services to go and solve problems in the market. They get more dollars on their balance sheet. Well, we think that you can build the same type of financial institution, but rather than do it to try to get more dollars, try to get more Bitcoin onto your balance sheet. And so I think that generally what you're seeing is you're going to see some companies that hold the asset.

9:20And then you're going to see companies that say, look, we want to offer products and services in the markets that we can get more of that asset onto our balance sheet. And, you know, one thing about about gold is as it goes up in price, it becomes less tethered to whatever utility that the actual metal is used for. Right. The jewelry, the industrial uses. Bitcoin ideally is in that same category. Right. I mean, it's almost better if it's if we're not pretending that it's being kind of used in a transactional way for things, not asset based. Yeah, look, I think that, you know, Bitcoin, people used to always say to me, it's not backed by anything.

9:54Right. Right. And what I would always say to them, well, what's the most valuable commodity in the world? And five years ago, this used to be controversial. Now I think everyone agrees that the most valuable commodity in the world is computing power. And so Bitcoin is backed by computing power. And so if you think about it from that perspective, there is this kind of tethered to reality where there's mining and there's computational power and power generation, things like that. Now, to your point about gold, definitely the bigger it gets, the smaller the percentage of kind of the industrial use case.

10:16with Bitcoin. I actually think that what we are watching is something I've changed my mind on is Bitcoin is not competing with the U.S. dollar in the sense of transactions. Instead, with the rise of stable coins, now what we're seeing is in your regular traditional financial life, you have a savings account, you have a checking account, you have a brokerage account. Now in the digital world, your savings account is Bitcoin. Your checking account is stable coins. And then you're going to have a bunch of assets that you go from a brokerage account standpoint that you're going to try to generate more of a return so that you can go back into your checking or savings.

10:45And so I actually think that it's not new. It's just new types of assets that people are starting to figure out. But you don't want people talking about using it to buy a pizza or a car or a house if it's supposed to be a value, an asset that's climbing in value. Maybe that happens at some point in the future. I just look at the market data. Stablecoins are being used for that stuff in the digital world, not Bitcoin. And I think that that's good. Like, I don't want to spend an asset that I think is going to be worth more in the future today. It's still a big marketing thing. Like Grant Cardone, the big motivational speaker, he's selling his house in Miami.

11:13He's only going to take Bitcoin. and you just wonder, okay, A, he got pressed for it, which is what he wanted, but also, do you think, knowing the Bitcoin community, that anyone is going to trade, I don't know, I think it's$30 million or something like that in Bitcoin right now, given the price that we've seen for a house? Maybe he doesn't want to move. I thought, I may be wrong on this, but I think he sold it in a week, if I remember correctly. I think somebody actually came in and said, hey, I'm going to buy. So who that Bitcoiner is, I'm not sure, but I wouldn't be doing that. I don't know about you guys, but I always love going on and getting some tough questions.

11:48It makes it more fun. And I got to give it credit to those three people. I think they're all kind of cautiously optimistic. They see the reason why Bitcoin exists. They see why people are putting money in. Now they're just trying to figure out all the nuances. So I appreciate them having me on. Hope you enjoyed the conversation. A brand new company in New York City just launched. It's called the Anti-Fraud Company. And I saw their launch video and I immediately reached out to Alex Shea, the president of the company. And I said, you got to come explain to me what's going on here. So take a listen to this launch video.

12:15and then we're going to get into an interview with Alex. We just found$250 million in fraudulent government spending over the past month, but that's nothing compared to nearly$500 million that happen every year. And that's why we raised$5.1 million to start the Anti-Fraud Company, a private sector doge that saves your tax dollars from greedy corporations. Even universities and pharmaceutical companies, entities we trust with their children's health and their education, are participants in what we call organized crypto. And these aren't just one-off mistakes here or there. It's the system. And while they profit, you suffer the consequences.

12:54Higher prices, more debt, and less for the people who need it most.

13:04At the FCC, I work to stop Big Pharma from defrauding Medicare and Medicaid. And before that, I filed class-action lawsuits against Big Pharma for delaying generic competition and raising consumer prices. And I spent years of my life researching and writing a book about how Ivy League institutions fix prices, raising costs for students and their debt burdens, and this launched multiple congressional investigations and billion-dollar class action lawsuits. I emailed thousands of administrators at Brown University to ask them what they did in the past week and built an AI system to audit the university's budget.

13:35They tried to kick me out, but I ended up testifying before Congress about the Ivy League's antitrust violations, and they got subpoenaed.

13:45we are going to use our legal and technical expertise to track down fraudsters bring them to justice and protect our government programs we are the anti-fraud company and we know now that government buys organized money is just as dangerous as government by organized mob all right alex i thought a great place to start this conversation is you guys just raised a bunch of money and you want to build a private sector doge a department of government efficiency but do it in the private sector. Explain what are you actually doing here and why is it private sector versus just letting Doge be Doge? Right.

14:19So that's a great question, Anthony. And essentially what we're doing is we're trying to make an effective new business model that we can achieve government efficiency from the private sector. And I think as everybody knows, Elon Musk and Doge at the beginning of this administration set out to cut a bunch of government waste, fraud, and abuse. and they cut some waste, fraud and abuse, but to varying degrees of success. And I think that one of the big lessons and the takeaways from Doge is that it's really hard to change the government from within the government because there are just a lot of structural impediments.

14:54You're dealing with a million person bureaucracy. There's just inherently difficulty there. Now, we're trying to decentralize the process through decentralization and through a proper system of incentives. and there are government whistleblower programs on statute. And essentially what these programs stipulate is that if you're a private actor, like a private citizen or a company or somebody with some inside knowledge, and you find that a private company is ripping off the government by either overcharging them or overbilling them or sending kickbacks or price fixing, and you find out about this unlawful fraudulent behavior, you can blow the whistle to the government.

15:32And if they end up recovering money, you can get a substantial portion of that, 10 to 30 percent. Now, the government accountability office estimates that it's about 500 billion dollars every year that is going to this fraud. That's a lot of money. That's about 7 percent of the entire federal budget and distributed equally amongst the citizens. That's like about $1 ,500 per person. That's like a month's rent is just being stolen. And we really think we can put an end to that using new age investigative journalism combined with AI. Essentially, we're creating a better business model for journalism where the profit motive isn't solely coming from advertising or clicks, but instead we can invest more resources in sort of these in-depth investigations and also use AI to speed up the analysis using open source intelligence.

16:22And really, we believe that this is an effective way to tackle the budget deficit. And hopefully, we inspire other people to start up similar businesses and tackle the problem in a similar way because there are incentives to do so from the private sector. And we believe that the profit motive and free markets are essentially one of the best ways of tackling big issues like these. This is awesome. So let me get this straight. You guys basically say, hey, there's a bunch of fraud that's occurring. People are ripping off the government. They're stealing from the government. The government is okay at trying to find some of that stuff.

16:54But you guys think using artificial intelligence and investigative journalism. You can go and find the fraud. And then if you basically tell the government, hey, these people over here are ripping you off, the government will give you 10 to 30 % of the money that you save for the government. Is that right? That's exactly right. And it's a win-win because we get money and the government gets to recover money from fraudsters that they never would have recovered. So, I mean, having the incentives perfectly aligned is sort of what makes this business work. Now, a lot of these new age AI companies that are raising from venture capitalists are just SaaS, software as a service.

17:28And we think we have a different SaaS business model. We're snitching as a service because as opposed to what these other, they're selling software licenses. We only get paid when we deliver tangible results that you can measure in dollars. And we think ultimately this is a better deal for the government and a better deal for us. Snitching as a service. As soon as you started talking, I was like, man, these guys are snitches, but I guess, yeah, it is a business model. When you think through this, all right, so people are going to hear artificial intelligence. They're immediately going to be like, these guys are either geniuses or they're completely full of it.

17:59What does that mean? Right. Well, when you think of the technology that you can actually build, you mentioned open source intelligence, like talk through a little bit as to like how you can apply technology to this problem that maybe the government couldn't. Right. That's a great question. And so open source intelligence first is sort of a broad swath of techniques that you can use. One of the sort of most prominent examples of open source intelligence is about 10 years ago when that Malaysia Airlines flight disappeared. Just random Internet sleuths were looking through satellite imagery manually to see if they could find the wreckage from the plane.

18:31And again, that was a very labor intensive manual process. Now that we have tools like computer vision and stuff like that, you could expedite sort of a satellite search or that. But essentially, the bottom line is that there is a lot of public data that's out in the open that people just don't have the bandwidth or wherewithal to sort of parse through. And this is particularly the case with government contracts, like health care data prices, contracts with the government. There's a lot of structured and unstructured data that's out there. Really, you couldn't have done a business like this until about this year with the advent of LLMs, Because especially in this government contracting space, there's a lot of unstructured text data that exists in contracts and regulations and law.

19:14And finally, now that with the advent of LLMs, we can really apply them to these sort of problems and solve them in a way that hasn't really been possible ever before. Now, when you go through this, where do you think the most fraud or the most abuse exists? Like, do you guys have some verticals or specific types of companies that you're going to go and attack first? Well, that's a great question. So currently, we're focused a lot on health care because that's 20 percent of GDP is just health care spending, which is kind of ridiculous. One of our co-founders in that video, our CSO, David Barclay, he worked in the FTC and he was really instrumental in stopping sort of these anti-competitive practices by some of these big pharmaceutical companies.

19:55And so really right now we're delving into health care, seeing what we can find over billing drugs, sort of stuff like this. And and that's our first vertical. But we hope to expand to to defense, to education, because there's a lot of waste everywhere in the government. And we really think that that with a profit motive, we and others who are motivated by the same set of incentives can really be an effective change to rooting out the systemic corruption of our government. Now, this is not your first time playing this game. You previously did bloat at Brown. Explain what bloat at Brown was. Yes.

20:31So like the federal government, Brown University and all the other Ivy League universities are pretty inefficient bureaucracies. I believe the cost of attendance for, again, for one year of college at Brown University is$97 ,000 a year. Now, again, who can afford that? The median income is somewhere from like 60 to 70K. And so what you find out is that Brown is, it's mostly rich kids. It's 50 % of the student body is from the top 5 % of earners. And I don't think that's fair. I don't think that's meritocratic. And I guess it's sort of perverting the American dream. Now, sort of what I discovered through open source intelligence and AI-powered investigative journalism there was that you have a really large number of administrators.