A Bitcoin Evangelist Tries to Convert Me

22:19Ross Douthat:All right, so let's talk about where we are now. We've been going through and sort of elaborating on the ways in which Bitcoin has succeeded. It is something that corporations are investing in. It is something that governments are using. It's a real part of the landscape. At the same time, it has behaved much more like a speculative asset than like a safe store of investment that has a stability that the U.S. dollar lacks, right? And I mentioned earlier the fact that you can go in a very brief span of time from one Bitcoin being worth$120 ,000 to one Bitcoin being worth$70 ,000. That doesn't sound like a great deal as an alternative to the slow depreciation of the dollar.

23:03Ross Douthat:It sounds like something that you invest in if you are interested in sort of playing around with volatility and hoping to get returns. So if Bitcoin is supposed to play the stabilizing role, why is it instead leaping and dancing and swinging wildly and most recently collapsing? Because Bitcoin's alive and the other assets are dead. Stability is the single biggest lie in financial markets. And even if you don't like Bitcoin, want to learn about Bitcoin, I do think that there's an entire generation. I call it the volatility generation. They understand that you need volatility in your portfolio in order to protect yourself.

23:42And so I'll give you a couple of examples. If you go talk to a financial advisor in the United States of America and you ask them, I want to have a very safe portfolio, they will take your money and they will pretty much put it in cash and treasuries. Those are the only two assets in financial markets that are designed to lose money. So by definition, they are not safe. And so now what you're starting to see is, well, forget for a second individuals. Let's go and look at maybe pension funds in America. Most pension funds in America are underfunded. They do not have the money to pay. Social Security does not have the money to pay.

24:18And so why is that? Well, they all pursued what we were told was a safe, stable approach. And they put the money in treasuries. They put the money in bonds or fixed income and these different instruments. And now what we're learning decades later is actually that was a horrible decision. We did not keep up with the pace of inflation. We do not have the money to pay these promises. What do we do? And so the reason why I say that Bitcoin is alive or volatile assets are alive and the other ones are dead is because if you as an investor go and put majority of your money in those assets and you wait, you are going to end up like 50 % of the country, which is you fall further and further behind and you end up on the wrong side of this K-shaped economy.

24:58Instead, if you look at what are the assets that are volatile? Well, we know Bitcoin is. We know that certain technology stocks are. Right. And you just go through this list of all these volatile assets. they are the best performing assets in an investor's portfolio over long periods of time at this point.

25:14Ross Douthat:And so ultimately - But that seems like a different argument to me than the argument that Bitcoin has a stability of value that the dollar under inflationary conditions lacks, right? Like if Bitcoin is behaving like a tech stock, then it is by definition and not you know it's a non-stable asset now as you say yeah obviously like non-stable assets can be good but they come with a you know a risk premium right like you invest in tesla and you aspire to have elon musk's wealth go to infinity right and pull you along with him and that's great but you're also accepting a high level of downside risk and it seems like the initial case that you made to me for Bitcoin is that it shouldn't have that kind of downside risk to the same degree.

26:09I think the argument that I'm saying is the entire financial system is engineered around assets that have 100 % downside, zero upside. Dollars have no upside, all downside. Bonds have no upside, all downside. So those are 100 % risk assets. These other assets, yes, of course there is if Tesla doesn't work or something like that. But you're getting paid for that risk that you're taking because Tesla can appreciate. Now, Bitcoin is very unique in that the reason why people think Bitcoin is volatile is not because Bitcoin itself is volatile. One Bitcoin equals one Bitcoin. Always has, always will.

26:45It's actually the exchange rates where people start to look at the volatility. But Bitcoin is the same Bitcoin that it's always been. And if you were to go back and look over three, five, 10 years, anyone who was given the choice of put your money in dollars, put your money in real estate, put your money in Bitcoin, you were much better off buying assets of real estate, Bitcoin, gold, etc. than you were putting it in dollars or treasuries.

27:10Ross Douthat:No, I agree with that. But what's not clear to me is why I'm better off putting assets in Bitcoin as opposed to buying an index fund of the S &P. It just seems more like people are going back and forth between treating it like gold and treating it like a tech stock. And when the market is going up, they put money in Tesla and they buy a lot more Bitcoin. And that just seems like a fundamentally different kind of behavior and one that explains why, at least up till now, the patterns like Bitcoin has not generally spiked in times of inflation. It spiked in times of stock market enthusiasm. Would you agree?

27:53Okay. Tell me why that's wrong. So before we get to the stock market enthusiasm and inflation, I would say that I always get very nervous whenever the market assigns a consensus view that is very black and white. If we go back to 2020, a lot of people forget, we had COVID, everyone gets locked in their home, and the government basically steps in. And it was very scary, I think, for a lot of investors, right? The market had sold off significantly. Bitcoin went down 50 % in a day. There was all these kind of problems. And when the government stepped in and they basically brought these monetary bazookas and said, hey, we're going to print trillions of dollars, the Bitcoin community was probably the single loudest group on the internet that said, you cannot print trillions of dollars without getting high inflation.

28:33Right. Right. Now, there was two people in the world who kicked off what I call the Bitcoin bull run in the finance world. That was Paul Tudor Jones and Stanley Druckenmiller, because they came out in 2020. They went on national television. They said, you know, I'm buying an inflation hedge basket. I think the words that Paul Tudor Jones said is, and I like Bitcoin because I think it's going to be the fastest horse. And of course, that spread like wildfire online because the Bitcoiners were like, oh, we, you know, we went and we got real people. They like our asset now, right? But what it did is it removed the career risk for people all across Wall Street because, you know, hey, I probably can't get fired if I'm doing what Paul Tudor Jones and Stanley Druckenmiller, et cetera, are doing.

29:09But Bitcoin went from$10 ,000 in August of 2020 to$60 ,000 in March of 2021. Inflation did not move. Inflation was at 2%. We only got to, I think it was 5 % inflation in June of 2021. one. So people say, well, why did that happen? The key thing that most people don't realize about financial markets is they are forward looking. People do not wait for high inflation to come and then, oh, let me go buy an inflation hedge asset. They say, I think inflation is coming and they go and buy the asset in preparation of that. And so Bitcoin moving was actually an alarm system telling us high inflation is coming.

29:46It ended up being right. Inflation ended up going over 9 % according to the government numbers, probably much higher. And so Bitcoin continued with that. Stocks went up, real estate went up, everything kind of carried with that inflation. But Bitcoin was the first asset to say, hey, this is going up. Now, the reason why that becomes really interesting is if you fast forward to 2025 last year, Bitcoin was the asset that peaked at a new all time high and then began to aggressively sell off. And I think a lot of people say, why is Bitcoin going down? Gold is going up, stocks are going up. Why is Bitcoin going down?

30:19Well, now we can look at the data and realize that we started to get these massive deflationary forces swallowing the U.S. economy. Tariffs, deportations, AI, robotics, etc. And so once again, Bitcoin was the first to sell off as kind of an alarm system. And so when you start to see this, what you realize is Bitcoin's price is probably the most pure truth teller in financial markets, and it is the most sensitive to changing economic conditions. And so when Bitcoin runs a lot, you should immediately ask yourself, why is it running? What is coming that the market is telling me? When it sells off a lot, same question.

30:53What is it telling me as to why this is happening?

30:56Ross Douthat:So what does that mean then for the ordinary investor? Because it sounds like if that account is correct, then it seems like Bitcoin, yeah, might be an extremely useful asset for people who are comfortable making big trades, comfortable with the idea that, you know, you have this thing that's going to run up and tell you that inflation is coming and then collapse when you have a deflationary moment. But if you're someone who is not a big investor, right, who has their finances and is trying to, you know, presumably has a long-term time horizon, but is trying to save for basic expenses and save for college and so on, that seems like a tougher market to be in.

31:39Ross Douthat:So is there value in Bitcoin for the ordinary investor or is it just an instrument for larger players in the market? I believe that Bitcoin is a digital savings account. That's probably the best way to think about how this fits into an ordinary American's life. If you think in your traditional financial environment, you have a checking account for day-to-day expenses, you have a savings account for medium to long-term kind of capital that you keep, and then you have a brokerage account and you go and you buy stocks and try to outperform the market and drive a higher return. In the digital world, we have now recreated a checking account, a savings account, a brokerage account.

32:17The checking account are stable coins. They're just U.S. dollars that is now represented in a digital form. So no different than Bitcoin is a digital version of, you know, a gold. Now stable coins, you can use a dollar. Most people who use stable coins, they just see that they're using dollars. They don't even know there's a difference on the back end.

32:33Ross Douthat:Right. And the advantage there is just it's frictionless. You can't be debanked, right? It's cheaper. It's faster. There's a little bit more self-sovereignty to it. You know, there's also some things that you can do from a cross-border standpoint that is a little bit more efficient, et cetera. So again, it's just think of that as your digital checking account. If you want to go to the store and buy something, you can do it with stable coins. If you want to just hold cash, you can do that with stable coins. And you just take that - But you have no inflation protection. You just go with the dollar.

33:01Right. Okay. Now your savings account, historically, what did they have you do? You put dollars in your savings account and went down in value. That's not very good. Bitcoin becomes that digital savings account.

33:12Ross Douthat:But isn't it, again, more of sort of a part of a sort of brokerage portfolio? If it's your savings account, like I use my savings account to be prepared to do something like, you know, we have to buy a new car. We have a big, you know, some big purchase in the home or, you know, my bonus is not what it was, what I hoped it was because I interviewed that crypto guy and, you know, whatever, right? Like that savings account, if that dropped from 120K to 70K in six months, I'd be pretty upset in a way that I wouldn't if my portfolio did the same drop because that's understood as a long term and more speculative enterprise.

33:53Ross Douthat:Right. I guess I'm just I feel like there's a tension. I feel like I'm persuaded or at least partially persuaded by the crypto bull case as a long term part of a portfolio that's trying to balance things out in an inflationary environment. I think the signaling argument you made is good, but the savings account argument I'm not sold on. Well, savings, I don't think most people look at their savings account as they're worried on a, they're not using the savings account for a one week, three week, six month time period, right? Most people are looking at their savings as it's money they hope they never have to touch over a long period of time.

34:27And so if you have, let's say you're a student and you think that you're going to make a big purchase in three months, you should not take dollars and put it in Bitcoin, right? Obviously, it can go up a lot, it can go down a lot, it can go sideways, etc. I don't think anyone is advocating for that. Actually, what you hear most Bitcoiners say is you should dollar cost average into Bitcoin, and then you should hope to never touch that for the rest of your life. It is a true savings account. And the example I always use is if you go to the country of India, the culture there is the family basically acquires gold, whether it is in jewelry form or physical bars, et cetera.

35:01And then they basically pass that gold down generation after generation after generation. And you're kind of like the black sheep of the family if you sell the family gold, right? If you're like the third or fourth generation, you sell a family gold, your great grandfather rolls over in his grave type thing. If you look at America, look at the great families that have been building wealth over the last 50, 60 years. They did it with real estate, right? Somebody at some point started to buy real estate and they passed it down generation to generation to generation. I now believe that Bitcoin is, for the next generation, that new thing.

35:32And so I always talk about home affordability in America is horrendous. If you are a young person and you want to store value over your lifetime, the generation before you or two generations before you, they bought a home. Well, you actually do not have enough money for the down payment. You cannot afford the mortgage payments and you literally cannot afford the home. Bitcoin provides this savings account because ultimately, if you are able to dollar cost average into it and leave it there over a very long period of time, it is one of the best performing assets in the world, if not the best performing asset.

36:05Ross Douthat:But do you think, well, put it this way, from that argument, it seems like, I guess this is just what you're arguing, Bitcoin is just in a completely different class than almost everything else in the cryptocurrency terrain. I think it's completely different. I mean, because look, most of the other stuff, it's no different than the stock market, right? They all have kind of different bells and whistles. They all have different promises. They're serving different customers. They have a different monetization strategy. And they're all trying to differentiate each other. And they're basically trying to sell, whether it's the public, you know, kind of coin holders or the market on, hey, here's our differentiated product, and this is why we're going to accrue value over time.

36:42The beauty of Bitcoin is that it doesn't change.

36:45Ross Douthat:Well, not that it doesn't change. The value of it changes. Correct. The system underlying it doesn't change, right. One core component of my worldview is that we are entering something I call the age of automation. And Bitcoin is a prime example of this. Bitcoin is the very first currency in the world where we have automated the central bank. So if you think of the Federal Reserve, right, you, me, and millions of people around the world hold our breath when Jerome Powell steps up to the podium. Are they going to cut rates or are they not? What's the cost of capital going to be for the next 30 days?

37:17Bitcoin in 2009 laid out the monetary policy for the next 100 plus years. And it has done exactly what it said it was going to do every single day. The reason why that becomes really interesting is because now we have an automated central bank that is immune to increases in demand. Gold price goes up. We start trying to dig more gold up because more valuable. If Bitcoin's demand goes up, nothing changes in the system.

37:39Ross Douthat:But the built-in assumption is that the value of Bitcoin is connected to an inflationary future. And I think the case for an inflationary future is a reasonable one given, as we said at the outset, all of the money that governments owe. But there are deflationary futures that you can imagine. There's a deflationary future linked to population decline, which is going to be a big problem around the world. But Bitcoin will be successful in that. Under deflationary conditions? Because why is deflation happening? It's because we get an abundance of certain things. So, for example, abundance of intelligence, abundance of robotics.

38:22Those things drive deflation. Right. Yeah. There's a world where AI yields deflation. Yes. In that world, where do you store value? If everything is abundant, if with a snap of your finger, you can create companies and economic products and all these things, where do you store value? Scarcity. As we head into the AI future that I think a lot of people now are starting to recognize, you cannot have analog assets that end up being as valuable because what we're starting to realize is a lot of those things are not going to last. We now have these digital versions of them that are destroying what we previously thought were hard assets or, you know, productive companies, etc.

39:07And so it's very unique. And I think this is why people have such a hard time understanding Bitcoin is usually you do not have an asset that can benefit from inflation and deflation. But if you go and you look in the Iran war, if I had told you before the war kicked off, the war is going to happen. We are going to bomb this country. What do you expect to happen? Most people would say oil is going to spike, right? Right. Stocks will rally and bonds will rally and gold will rally because we're going to have to print a bunch of money. Inflation is coming. All these things. The war kicked off. And what happened?

39:42Oil spiked. So people would have been right on that. Stocks, bonds and gold all sold off. Bitcoin did not. Why is that? Because, again, it goes back to it is a scarce, digital, non-sovereign, neutral asset. And in times of uncertainty, in times of chaos, that's what you want as an investor in the digital world.

40:01Ross Douthat:In times of chaos, but that's different from times of deflation. Well, that is chaos. Deflation is chaos. We're living through it right now. That's, I guess, one point on deflation. I want to come back to chaos and global politics in a minute. One point on deflation, which is, again, my literal-minded real-world brain, right? It seems to me that under conditions of deflation, what holds value are valuable assets that have value in and of themselves for being scarce, meaning something like land, beachfront property. In the AI future where you can build a factory in a day, whatever utopian scenario you want to spin, it's just a lot harder to create the Hamptons or the coast of Maine from scratch.

40:51Ross Douthat:but those things have value not just because they're scarce, but because people want them. People want to be in the Hamptons, right? People want to be on the coast of Maine, at least in the summer. But people don't want Bitcoin for its own sake. And again, this is where it's not beautiful, right? I mean, it's beautiful to you, but it's not gold, right? People want Bitcoin because it is a hedge against inflation, right? That's what they want. It's not like, oh, you own Bitcoin and - But take your argument that you just used. Yeah. Hamptons. Yep. Maine. Yep. It's very hard to make more. Yes. But we've done it.

41:27We're literally sitting in Manhattan. We've created more land. Not a lot. Yeah, you can. No, no, you can. And people will. Nova Scotia will be. The one thing in the world that cannot be created more of is Bitcoin. So the exact argument you're making, I completely agree, but that is why Bitcoin. Bitcoin is the hottest product in the world for rich people right now. Let's use BlackRock as an example. BlackRock has transformed themselves from a traditional finance company to a Bitcoin company over the last three years. The reason why that's important is they're not going and telling a bunch of hedge funds, hey, come and buy this exclusively.

41:59They also are distributing this product to everyday Americans that are buying this asset. And so it feeds back into this idea of in a deflationary environment, what do you need if everything becomes abundant? You need scarcity. So if you were to create like a two by two chart, assets that are scarce and digital, there's only one. And that is Bitcoin. And so people are coming to Bitcoin for different reasons. Half of or the sell off of Bitcoin is a bunch of people saying, hey, inflation, I was holding this for inflation. Inflation is not coming.

42:33Ross Douthat:But if you're right, if you're right, then it should be the case that over time Bitcoin becomes less volatile. You know, it would have its ups and downs. But as people realize that it's good for inflation and good for deflation and the only thing that's bad for it maybe is stability, then the volatility should diminish. Right. All we need for Bitcoin to fail in the world is actually to have a static world. Right. That is the worst case for Bitcoin because that means that we don't have inflation and we don't have deflation.

43:31Ross Douthat:I'm Vivian Wong. I'm a journalist at the New York Times. I've covered China for years, and it's really, really hard to get information. I go on plenty of wild goose chases. One time I went to meet a woman who said that she had been the victim of horrific domestic violence and was trying to get support from the legal system. She lived in a super remote part of southwestern China. So I took a three-hour flight from Beijing and several hours of train also. When I got there, local officials showed up, insisted on trying to interrupt the interview, and eventually they took her and her family away from their home, and so I had to leave.

44:11Ross Douthat:One of the things that makes The New York Times unique is that it's willing to pursue all sorts of stories, even the ones that might not go anywhere, because that's how you get the stories that no one else is telling. This kind of work is in decline, but that makes it even more important. If you think so too, consider subscribing to The New York Times.

44:41Ross Douthat:So let's talk about the institutions that are invested in, if not a static world, at least a stable world, which is governments, right? What are the politics of Bitcoin? How should governments be approaching the asset? Bitcoin did the politics what it's done to hundreds of millions of people around the world. It eventually made them cry uncle. Bitcoin has never changed. It did not matter if governments were going to ban it, not ban it, we're going to embrace it, hold it, buy it, sell it, tax people. It's just Bitcoin did not care. just continue to produce block after block after block of transactions.

45:15Politicians change their mind on Bitcoin. Why did they do that? Because they realized that their constituents wanted this. And I have this fundamental belief that although sometimes it is not as clear, there's not this like, you know, always right picture, the will of the people is eventually heard. And sometimes it takes a long time for that to happen. But ultimately in the United States, we now have Republicans and Democrats who agree this stuff is good. And so the politics of Bitcoin now is almost every single politician recognizes this thing's not going away. And if I don't support it, I may not be in the seat in the next election.

45:52Ross Douthat:So if it doesn't really matter for Bitcoin, what governments do, is the kind of regulation that Congress is considering for crypto, good or bad? I don't think it really matters. I think that these assets are gonna be successful regardless. And if you look, they went from zero to three trillion without any of the rules there. really what these rules are designed for is they're not rules for crypto. They're rules for everyone on how they can interact with crypto. So they're rules for the banks. What can the banks do? What can they not do? What can the politicians do or not do? What can other types of companies or organizations do with crypto?

46:26But crypto itself is not really changing. And if you look, a lot of the debates yield on stable coins. It's not so much about is there yield on stable coins as much as it is who should be allowed to offer yield on stable coins? Because banks can offer yield. But if you're not a bank and you try to do that, then they want to come after you and say, hey, it's a security and there's all these rules and regulations, et cetera. And so the crypto companies are fighting very hard to say, why do the banks get a monopoly on doing this? It is better for the consumer if we can offer them yield. It's a competition in the market between companies.

47:07And so to me, again, it doesn't matter. Like the product will be adopted by the end consumer. The difference based on legislation is just where are they going to get it from?

47:16Ross Douthat:But what does it mean to actually build policy? What are the wise policy choices? Why do we need any policy? Well, if you're giving advice to ordinary investors, you can give advice to government officials as well. Is there an ideal regulatory framework for Bitcoin? No, he doesn't need one, right? Right. Doesn't need one. I always remind people, look, the laws still apply. If you commit fraud, then you committed fraud. You should go and get in trouble. Right. If you steal from somebody that's theft and you should get in trouble for that stuff. So there's no kind of like there's no rules. but I don't think that there's any policy that has been created around Bitcoin that anyone says is different today than it was 15 years ago.

48:00Now, there will be some regulators who say, hey, we classified the asset not as a security, as a commodity, but that's not a policy around Bitcoin. That's more so how did these regulatory bodies look at who gets to look at the markets and look at the players and have people come in and answer to them, et cetera. But there is no Bitcoin policy. And then sure, some people may say, oh, we have a strategic Bitcoin reserve or

48:20Ross Douthat:Well, so that would be one example. To me, that's not a Bitcoin policy. That's a government policy, like a balance sheet policy. Right. But, well, it's a policy of how governments should approach Bitcoin. So should governments treat Bitcoin basically as a store of value that, you know, enhances the balance sheets of governments over the long term? That's basically what your argument implies, right? If it's good for individuals, then it's good for organizations, right? Organizations are just made up of individuals. And so whether it's a government, a corporation, et cetera, if you have an asset that continues to appreciate, not depreciate purchasing power over a long period of time, if you have a balance sheet, if you have economic value that you want to protect, again, Bitcoin is not the only asset that you can go and look at.

49:04There's real estate, there's gold, there's all stuff. The United States government is actually pretty diversified. We own a lot of these different things. We have a lot of gold. We have a lot of buildings, that type of stuff.

49:12Ross Douthat:They say we have a lot of gold, but I haven't been inside Fort Knox. I don't know. There's some debate about whether it's still there. It's like the moon landing, depending on who you ask, right? A different approach. Well, we're moon landing believers on this. There's a lot of paranoia on this show, but not about that. But OK, but so it's an asset that governments should use to diversify their own portfolios. I mean, what do you make of the Trump administration's general crypto approach? Before we answer that question, the other thing I would say, though, is I think that you're seeing governments around the world say, wait a second, it's not just a store of value, though, right?

49:45There's been a number of Gulf states who have done partnerships with publicly traded mining businesses. They want to monetize their energy. They realize that it is more efficient and more profitable to monetize the energy by mining Bitcoin rather than transporting it somewhere, etc. Iran obviously wants to get paid in Bitcoin. We've seen a lot of countries. There's nefarious use cases. North Korea, many others are actually trying to hack to fund things, etc. So I think that store of value is the easy one that we usually all kind of are attracted to. In the United States, I think what you're watching is a very unique situation.

50:16You have an administration that, frankly, across almost the entire cabinet, they were outcasts who had tons of pressure, both legal, regulatory, etc. And so they have this personal experience in a way that most Americans don't have, frankly. I personally have dealt with numerous financial institutions to various degrees, whether refusing bank accounts, shutting down brokerage accounts, changing the rules, doing all these things. I've had many companies I've invested in who have been debanked, etc. I don't think people quite understand what it means to have a bank say you cannot have a bank account.

50:53It is a experience that in the American way of life is so foreign to us because we're used to not getting refused service at, you know, institutions that we almost think of as like public goods in terms of the access to the banking system. When you put somebody through that, right, in terms of the president or the cabinet, et cetera, and they come from that perspective, they naturally are going to look for things that are outside of the system.

51:15Ross Douthat:But their approach, and we're talking both about Trump administration policy and also about Trump family business, has not been what I think is the approach that you've argued for throughout this conversation, which is to focus on Bitcoin as a unique asset among cryptocurrencies. The Trump administration and the Trump family have sort of spread their crypto interests around and encompassed everything all the way to meme coins that frankly just sort of look like speculation, pump and dump schemes and so on. Right. So they're they're all over the map. When you look at that, do you think this is good for the part of crypto that you really believe in?

51:58Ross Douthat:Or do you think that like the effect of the Trump era is for most people to just think of crypto as a kind of like Las Vegas, you know, kind of casino game? Where do you what do you think the effect is? My understanding of what they've done, and I'm going to talk more broadly about the entire administration, but obviously Trump family as well. They're involved in Bitcoin. They're involved in stable coins. And then they're involved in the meme coins. So let's start with Bitcoin. They basically created a strategic Bitcoin reserve. And then I think Eric and Don Jr. are involved in a company, American Bitcoin, where they mine Bitcoin.

52:31Right. So they've got a very kind of deep, I think, understanding, belief in Bitcoin itself. And you think that's very smart. Yes, obviously. I think generally that's a good idea. And, you know, there's always the murky waters of like whenever politicians are doing anything, everyone gets all up in arms. But like I think forget for a second it's them. Like that's a very smart strategy, has a lot of value at the end of that road. The second thing is the stablecoin. The critiques that I hear of World Liberty Financial, I don't hear anyone critiquing what they're doing in terms of the technology, the stablecoins, the fact that, you know, the market wants these things, the success of it, et cetera.

53:03So those two things to me are like no-brainer type stuff. The third one—

53:08Ross Douthat:Except for the question of whether there is inherent corruption involved in— So technology-wise, I don't think there's any questions. Maybe business development-wise, that's where I see the critiques. In the meme coin thing, I think that there's two things as I've looked into, you know, kind of how I think about this. Warren Buffett is the original finance influencer. The Berkshire Hathaway stock price has value. 95 % of that value is because they own great businesses with cash flow and productive assets and all the things that I think people understand. Maybe 5 % is because Buffett's in charge.

53:43And the reason we know that is because when he stepped down, it sold off 5%. Right. So there was like a Buffett premium. I call it Buffett meme, but Buffett premium that's assigned to Berkshire Hathaway. The Trump meme coin was basically, well, 0 % company and just 100 % meme. Right. So that that transition, people can argue whether that's a good or bad thing. But I think it's actually been happening now for a number of decades that we've just been moving more and more towards this like premium around personalities and brand, etc. on top of companies that. Well, it seems like a bad thing for people who think it's a great idea to just buy something whose only value is in the meme, right?

54:19Ross Douthat:Like if you buy, you know, a Melania or a DJT or whatever meme coin, it's purely an investment in vibes around Donald Trump. So now let's go to the second way that I look at this is I've looked into I know some of the people who are involved in all of this. Basically, what my understanding is, is that there is a licensing deal where Trump licenses names on all kinds of products. He's been doing it on hotels. For a long time. Yes. You probably even know more than I know about all of that. But this was a digital product that they could go in and do. Now, from that standpoint, what is unique about this digital product, if they were selling calendars or something like that, right, we would never, okay, he's selling stuff.

55:02We'll see what happens. But there's a ticker attached to it that has a market price. And that market price can go up a lot and go down a lot. And people are putting their money in. And so they are buying because they think it's going to go up a lot and they think it's going to go down. That's very unique. We've never really seen that in the past, right? Now, if you compare that to maybe a couple of other things that happened in society. recently a pokemon card sold for 16 million dollars and when people first see that they say that's insane why how does a pokemon card worth 16 million dollars whatever again i think it goes back to as a society we are moving towards this volatility type generation people are seeking

55:36Ross Douthat:these things out i think that's right i think you can absolutely see trump meme coins as like beanie babies for people who love donald trump but in a weird way it's got a ticker yeah but it's One, it's unwise to invest in Beanie Babies, I think, as someone who lived through that era and owned a lot. I was not a Beanie Baby investor. I bought them legitimately, or my family did because I had a baby sister who liked them. But we wanted them for the actual value, the little stuffed animals, right? But you didn't think you were going to go resell them on eBay or anything? I did not. But they retained that value, right, in a way that DJT meme coin, if Trump's brand goes to zero, would not.

56:14Ross Douthat:But so one, I think it's unwise for people to invest in those things. Two, when I observe sort of the crypto world over the last year and a half, it just seems to me that it's not just the DJT meme coin that's bound up in Trump's political fortunes. It's the entire world of crypto, and I think it includes Bitcoin, too. I think the Bitcoin rise and crash is not just about the fundamental market forces that you're describing. It's also that, you know, people are like, Trump's doing well. Trump is, you know, all in on crypto. And, oh, wait, oh, Trump's approval ratings are going down. Oh, wait, you know, bad things are happening in the administration.

56:56Ross Douthat:I'm going to sell my DJT meme coin, but I'm also going to sell Bitcoin, too. What do you think about that? Do you think that's what's going on? I think it's harder to prove, right? Doesn't mean it's wrong, just means it's really hard to prove. And if you look at, you know, Bitcoin is very unique in that it's hyper apolitical, right? It has been successful under Republican and Democrat presidents and administrations. It has done very well under Donald Trump. And it also at times has done very bad under Donald Trump. Same thing with Joe Biden, right? If you go and you look, when Biden first came into office, it crashed.

57:26But I don't think it had anything to do with Biden. I think it had to do with the Federal Reserve hiking interest rates. And so I think that in a weird way, you can think of crypto. Many people, I think, think of crypto as politics is influencing crypto. I think the opposite is true. I think crypto is influencing politics. And I think that's why you see, you know, if you're running for president of the United States and you need to go and get votes, what do you do? You start picking groups. OK, I'm going to go to libertarians, right? I'm gonna get the libertarians to vote for me. I go get the Bitcoin people.

57:52I like those Bitcoin folks. One of the things that, you know, if the president was sitting here right now, what I would tell him is one of the funniest things he's ever said. And I don't know if you remember when Elon Musk brought the Teslas to the White House.

58:03Ross Douthat:I do remember that. And Trump said, you know, everything is computer. Yes. I always remind people. That's one of the best. I don't know. I don't know how old he is, 78, 79 years old, whatever he is. I don't think he's the one who's like designing the crypto projects. Right. If you think everything is computer. And so it's this weird dynamic of, you know, look, we want our leaders to be focused on representing constituents and doing what's best for our country and for our citizens. Right. And I think that's an important piece. Frankly, a lot of this other stuff is distractions. And I think that's true of presidents, both whether it's Biden or Trump, all the way down to staffers.

58:37You look at the congressional stock buying. Like, I think the American people in general don't like this stuff. But I do think that it's not because politicians are influencing crypto as much as crypto is influencing the politicians.

58:50Ross Douthat:Isn't there a way, though, in which just the narrative of crypto that you're describing and the real world use cases mean that there is a way in which it's a it's a bet against America, against the American empire as we've known it? It just it seems like there's just multiple ways this is true. Number one, to invest in Bitcoin makes sense if you assume we're, you know, in your own scenario, we're headed for tons of inflation or tons of deflation, right? If the dollar was relatively stable and we were in sort of the Goldilocks low inflation zone, then Bitcoin would be less valuable. similarly bitcoin is you know is useful and so are i mean even even stable coins as i understand it which are you know are pegged to the dollar are very useful as means of evading the american government's control of the global financial system that's part of why iran wants to be paid in crypto it's you know you mentioned north korea it's just very easy to see a future where the spread and use of these things becomes part of the breakdown of a system in which the U.S.

59:58Ross Douthat:dollar has this kind of global dominance. And it seems like that creates weird incentives for U.S. politicians, right? You're betting on an asset that is associated with the weakening of U.S. power and that appreciates as the fundamental assets of American power, starting with the dollar, worsen, right? So there's a couple of things in here. The first thing, one of my favorite parts about Bitcoin is it is basically the American values and ethos digitized into money. So what is the American ethos and values? Basically, it is power to the individual person. It is their ability to have prosperity, security, to basically don't tread on me, you know, type mentality.

1:00:41Kind of a libertarian type, small government, et cetera. And so it's returning power back to the individual. I think that's a core American.

1:00:48Ross Douthat:And I think that the core people who adopted Bitcoin absolutely came out of that very American libertarian tradition. I know I knew some of them from the start. If you think of how the American government works, at the end of the day, Bitcoin is free speech. It is software code and it is the ability to express that in the market, which is a very kind of core American ethos. So I think that's one core component. The second thing is America has more power globally than it's ever had because of crypto, mainly stablecoins. The stablecoins have significantly increased American dominance, especially with the dollar.

1:01:27And it has driven that dollar hegemony in a way that traditional fiat currencies just never could do. And so in a crazy way, what we're watching is we're actually, I used to believe, and maybe it's something I've changed my mind on, I used to believe that the dollar and Bitcoin were competing with each other. And so for Bitcoin to win, that meant the dollar had to not win. Yes. Now, what I understand and what I see in the data is that actually they are rising together. The loser in the rise of Bitcoin and the dollar are all of the weak fiat currencies. Because if you come back to you have a checking account, you have a savings account and you have a brokerage account.

1:02:07The dollar goes in your checking account. Bitcoin goes in your savings account and then you'll have brokerage opportunities. And the reason why this is now possible is because historically it has been nearly impossible with immense friction to switch between currencies and assets. So if you hold dollars and you're going to Mexico and you need pesos, you have to go to a money changer. And that money changer, not only do you physically have to go there, they rip you off. Now I can change between currencies with the tap of my phone. And so what you do is you move from a world where people only have one currency to now we actually have currencies that are built for different use cases.

1:02:45I spend my dollars. I save my Bitcoin. Never been possible in the world until these digital technologies. And that's what we see people doing now.

1:02:52Ross Douthat:But that can't that that happy relationship, I think, in your own account can't go on forever. You can have a period because in the long run, either the dollar weakens and Bitcoin increases or the dollar doesn't weaken as much as you expect it to. And then Bitcoin doesn't do as well. Right. I mean, there is some like, OK, yes, you can have a world where the dollar is inflationary, but not as inflationary as all the other fiat currencies. So over time, crypto dollars, stable coins, mean that the dollar replaces all those other fiat currencies. And so the dollar wins for a while. But then eventually there's a point where the dollar is the currency that's left and it's inflationary and it's ever more inflationary.

1:03:38Ross Douthat:And then Bitcoin starts winning and the dollar starts losing. Right. Starting to sound more and more like a Bitcoin. No, but I'm right. No, no. But that is. But that is. No, I don't think that's the next 20 years. Right. I think that that is over a very long period of time. But that is then a world where Bitcoin does gain at the expense of the dollar and U.S. power and influence. The one thing that I will say is in that scenario you described, which I actually think is fairly high probability, dollars become more sought after. They're losing value, but I don't want my local currency in X, Y, Z country.

1:04:13I want dollars. I now have access. That's good for the United States. Bitcoin is rising as this global store of value. So I have dollars and Bitcoin rising, everything else falling to the side. And that's actually what we've been seeing. right over the last five years or so. And so I think that that trend will continue. I think that that is a very astute observation. At some point, the dollar basically gets inflated away so much that it becomes not valuable. Again, I don't think that's 20 years from now. I think that's pretty far out in the future. I don't think the U.S. hits like a Zimbabwe style hyperinflation, but it could happen.

1:04:44But in that scenario, which the United States, regardless of Bitcoin success or not, is already headed towards that, right, because of our lack of fiscal and monetary discipline, what are we going to use? Bitcoin becomes really important for Americans, for our government, for our citizens, for et cetera.

1:05:02Ross Douthat:Yeah. I mean, I guess I'm thinking, you know, there's a very famous crypto booster, Balaji Srinivasan, right? When he talks about crypto, it sounds like he's starting from the place you start, where crypto is sort of an expression of the American spirit and sort of the libertarian impulse. But in his view, it's like a way for that to survive the collapse of America itself, right? It's like America's going down, but we will have this kind of virtual version of America around the world that anyone can participate in through crypto. But you think America is sticking around. Belash is a very good friend of mine, I think very highly.

1:05:39He's incredibly intelligent, probably the single smartest person. You don't have to flatter him. No, no, no.

1:05:44Ross Douthat:He's not going to listen. He's not the biggest fan of the New York Times, so he's probably not going to listen. I've heard, right? I've heard, yeah. Which, by the way, is good because I think that ultimately there's a competition of thought there. But the part that I think maybe where him and I disagree is the United States of America, in a weird way, is the strongest it's ever been and it's the weakest it's ever been. And you talked with Peter Thiel, so you did an episode with him. And one of the ideas that I've always really liked that he has is two things can be true at the same time that are usually counterintuitive.

1:06:15So the example that he'll use sometimes is that you can be both rich and poor at the same time. How does that happen? You can be cash poor, but if you're like a founder of a startup, you could be paper rich. Same time, two things are true. Well, if you think about America, like we have the strongest military that we've ever had that's ever been created in human history. At the same time, we have people who literally can't afford groceries and gas. We are the richest country in the world, yet some people are struggling. Two things are true at the exact same time. And so you get in this weird dynamic where, again, I always get very nervous when we say, like, it's black and white.

1:06:52You know, America is crumbling or America is succeeding. And so I go back to if you said to me, I get to wave one magic wand. I get to change one thing about this country that would have the most profound impact on the country. The single thing I would do is I would teach financial education to young people. and the only thing that you need to just sear into their mind, if you hold cash, you fall behind. If you invest in whatever you want, whether it's stocks, bonds, whatever, then you will have a much better shot.

1:07:21Ross Douthat:But especially in Bitcoin. All right. I think at the very least, the last part is definitely good advice. And so it's a good place to end. Anthony Pompliano, thank you so much for joining me. Thanks for having me.

1:07:58Ross Douthat:Interesting Times is produced by Sophia Alvarez Boyd, Victoria Chamberlain, and Emily Holsneck. Jordana Hochman is our executive producer and editor. Original music by Isaac Jones, Sonia Herrero, Amin Sahota, and Pat McCusker. Mixing by Pat McCusker. Audience strategy and operations by Shannon Busta, Christina Samulewski, Andrea Batanzos, and Emma Kelbeck. Special thanks to Jonah Kessel, Alison Brusek, Marina King, Jan Kobel, and Mike Puretz. And our director of opinion shows is Annie Rose Strasser. Thank you.