How to Build Wealth (And Survive Failure) with Anthony Scaramucci

26:37And so this technology has the ability to transform finance. We will have perpetuals. The CME is not happy about them, but we will have those. We just saw OKX do a deal with the New York Stock Exchange. We just saw Kraken do a deal with the NASDAQ. And so put simply, this is a technology that's going to able us to bypass costs and make things secure and very efficient. Now, Bitcoin is different. It's a property. And you'd have to really do the homework on it to understand it. But it's a volatile property. And like all tech, you mentioned Amazon. Amazon went down. if you held it,$10 ,000 went to$14 million.

27:19But boy, you had to have a stomach for it because it went down eight times 50%, one time down 85%. And Bitcoin has been tracking other tech where it is not yet fully adopted. There's heavy skepticism on it. And so every four years, you'll see a 50 % to 70 % dip in Bitcoin. And we're seeing that right now. We're halfway through the cycle. There's halving cycles of Bitcoin where the network is spitting out 450 coins a day right now. In about two years, it'll go down to 225 and then four years later down to half of that. So when that happens, you have these technical disruptions and selling pressure, but you either see it and believe it, or you're a Bitcoin skeptic like many people are praying forward to go to zero.

28:10But I think this is an asset that's here to stay. So let's touch on that point about you saying people are skeptical. Obviously, you outlined in 2017 when you became a believer that was nine years ago now. I mean, how many people are still skeptical, do you think? Or is that not a shift a lot? Yeah, I would say, listen, I think I would say there's five-ish percent of the investor population that I would qualify as Bitcoiners. If you just look at the number of wallets. When I first looked at Bitcoin in 2017, there were probably 50 or so million wallets. There's probably nine or 10 times that now.

28:46And if you look at our population, it's only 4 % or 5 % of the overall global population. But remember, in stable countries like the UK or the US, even though we have pockets of inflation and we are using inflation as a way to monetize our debt, which we can also discuss the problems of that. Most of the world has defuncted sovereign currency. Most of the world is either in a dollarization situation in some of the Latin American countries or Africa, or they're shifting to things like Bitcoin. China doesn't like it. They've banned it. And yet 10 % of the transactions and 10 % of the Bitcoin mining is still happening in China.

29:31So it's here. I've done the homework. I'm a believer in it. I think I have it sized right in the portfolio where if we're right, and again, I'm not saying it's going to go to a million dollars a coin like Michael Saylor is saying from strategy, but I do believe that it could trade to half of the market capitalization of gold, which is sort of a 10X from here over the next test gate. And let me just say one last thing. I have a son who's 34, went to Stanford Business School, and I was with him on Father's Day this past Saturday. He's an astute investor. He bought this Pokemon card for$16.5 million.

30:09He's creating this sort of physical asset, treasure company called Treasure Trove. And he said something to me about Bitcoin, which people should listen to. He's 34. Bitcoin is in the top 15 market capitalized assets. Last year, it was in the top eight. It's dropped because of this fall in Bitcoin. I just want you to think about the durability and the sturdiness of that. And I want you to think about a 34-year-old being 44 in 10 years or 54 in 20 years. That generation of men and women are going to own Bitcoin. It's the generation that I'm in, the 60 generation, that lights gold and they have a disdain for Bitcoin.

30:51But the future is going to be digital and the future is going to have a form of digital stored value or digital scarcity. And I'm a believer in that long term.

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31:47Touch for me on your outlook for inflation. I mean, you mentioned deflation over the next decade. Yeah. In the next year or two, do you think inflation is sticky? And what's your views on the transition that's gone on at the Fed? Look, you have to be very careful with inflation. Jerome Powell called the COVID-related inflation transitory. It was more secular than transitory. I think that they missized a few things. This is the butterfly effect in life. If you really studied what the Fed was looking at, they were making an assumption that the Chinese were going to turn on the supply chain in China, coincident with the West.

32:28but what they underestimated or they mis-underestimated. I like using that word because it's not a real word, but George Bush used to use it. So I like using, it's going to fire out the word mis-underestimate. Love it. It really should be in the Oxford dictionary now because it's just so crazy. But what they mis-underestimated in China were the hospital beds. And so what happened in China, very simply, they didn't have enough hospital beds and they looked at the situation with COVID and said, we can't have this international nightmare where we're exposing our healthcare crisis. We have elderly people in China.

33:01And if we can't get them into the hospitals during COVID, we can't open the economy. So they locked the economy way longer than the Fed thought. And this led to way bigger price fluctuations, supply fluctuations, and more inflation. And so I bring this up because the data that we look at, I think, is anachronistic. I think we have to look at data in a more transparent and more widespread way. So one of the metrics that I look at is something called trueflation.com. So it's truflation.com. And what they've done a very good job of is they're aggregating inflation data at the storefronts from the vendors.

33:45They're not using the traditional metrics of CPI or the things that the Fed is using. And so the bad story to tell there, if you go to trueflation.com, is that the U.S. dollar has lost 28 % of its value since January of 2020. And so we just pumped the dollars out into the system. Some of it was done for stimulus. Some of it was done to cover up some of the debt issues that the country has. and it'll eventually catch up with us. But what we've done is we've wildly overspent as a generation of political class and we've wildly undertaxed while we're wildly overspending. And so Milton Friedman had a great line for this and I'll paraphrase it.

34:31He said, you know, that deficit spending is unfunded tax liability. And so whether you like it or not, Piper has to be paid. And so we have figured out that we're gonna pay it through the most pernicious and the most regressive form of taxation, which is inflation. And so we've monetized the debt. And so this has created wild affordability issues in all of our respective countries in the West, because if you don't own assets, just think about my dad for a second. He got hourly wages. So the wages came in. He had no assets to speak of. We did own the house. It was a small house. He paid$16 ,000 for it in 1962.

35:09So you have this asset poor working class group of people. Well, they can't catch up. You know, Calvin Klein bought a house in the Hamptons in 1987 for$4 million. He sold it in 2021 for$85 million. It's being offered out right now, five years later at$165 million. So if you have the asset and you're doing this type of inflation, the asset will hedge you against the inflation. But the poor and the working families, they get crushed by this inflation. So that's happened, and we have to accept that. But what's happening alongside of that now is this major transformation in production, productivity, robotic technology, AI, which I think is going to transform the way we think about jobs, white collar jobs.

36:03We're going to move to a four-day work week for sure. It'll happen in our lifetimes, which will be a whole other set of jobs. But I think that's coming and that will create an offset to all the inflation that we've experienced. So weirdly, like most times in our society, failed political economic policy, we'll be overwhelmed by great technology and great human ingenuity and innovation, and we'll end up working our way out of the problems. You know, we had Thomas Malthus tell us in the 1840s we were going to starve. The population would not be able to create enough food for its exponential growth.

36:39He left out fertilizer and vertical farming and irrigation and all this. We had prior to Ozempic, well, if we had more people dying from obesity-related illnesses, in the 80s, we were told we were going to run out of oil. well, what about horizontal fracking and GPS and better drilling in more efficient places or places like the UK that don't use air conditioning, places like you guys that are saving of the environment? My point is we always have this apocalyptic vision of something bad that's going to happen. It doesn't happen because the ingenuity of innovation. So I think that's the story with the money.

37:17I think the money, I think we'll hit a huge pocket of deflation. But I think by and large, we've lost some trust in fiat currencies and things like gold and Bitcoin will continue to do well. Let's transition then to a little bit of political chat. You talk now a lot about the difference between Wall Street and Washington. Did you underestimate that before you went to Washington in 2017? Oh, my God. I mean, so badly. I mean, listen, if I'm to be guilty of so many different things, one of them would be a naivete about how Washington works. You know, Bob Rubin wrote, one of my old bosses wrote a great article leading up to this recent inauguration of President Trump.

37:59It was a January Wall Street Journal article where he said, oh, my God, you know, we were so ridiculously naive. us Wall Streeters were walking the 1993 inauguration of President Clinton, and we were going to come down to Washington, and we're going to change Washington. But Washington changes you. You don't change Washington. And it was such great insight there. I didn't have that insight. I thought that I was going to go to Washington and help to be a problem solver. But the difference Washington and Wall Street is very clear to me now. On Wall Street, we have a green team. But what I mean by that is American money is green.

38:40Your money is all different colors of the rainbow. When I'm talking about American money is green, we have a green team. So if Wilf and I, if we hate each other, but there's a billion dollars to split up, could Wilf and I pretend to like each other for six months to split the billion dollars? I'm pretty sure Or Wolf and I can do that. But that's not Washington. Washington, there's a red team and a blue team and a yellow team. And they fight over positioning of the seat on Air Force One or the location of the staff member's office relative to the president's office or the House Majority Leader's office.

39:15And somebody said to me, Washington, they'll pick each other's eyeballs out because the stakes are so small. President Trump said something to me which I want to share. Because whatever my disagreements are with him, he has great political instincts and he's also a great comedian. I was at lunch with him and we were in the study off the Oval Office and we were eating. He was like pouring gallons of Diet Coke. And he looked over at me and said, you know, this is a very tough place. And I said, yes, I'm becoming aware of it. Because let me tell you something. I was in New York. I was a seon of real estate.

39:54I thought these real estate billionaires were a bunch of killers. He said, the assistants down here in Washington could destroy these real estate billionaires. He goes, I've never seen anything like it. Quote, they could pick your eyeball out with an ice pick and drop it in their martini glass. You're bleeding at the table and they're still talking to you like nothing happened. And I was like, wow, Trump is so right about this. I mean, that's the viciousness of Washington. But it's also misalignment of incentives between Wall Streeters and Washington that the Wall Streeters get very wrong. And of course, I got it colossally wrong.

40:30You also have referenced another conversation you had with him. He asked you if you were fiscally conservative and socially liberal. Yeah. Yeah. Explain that to me. There were two big seminal things that he said to me in March of 2016. So I joined the campaign after Jeb came out of the race and now I'm traveling with him and I got to see a side of America that to me was heartbreaking. You can talk about that if you want. But these specific conversations, one was I was reading in May of 2016 a research report prepared by my team at Skybridge. And Trump looked over at me, said, what are you reading?

41:10I told him what I was reading because you're an idiot. I know I'm an idiot, but why am I an idiot? He said, you're an idiot because that report says that it's economically a bad decision to Brexit, that for the UK to leave the EU. It's the 10-year anniversary today. Exactly. And this is May of 2016. And he says, so your report is saying that the UK citizens are going to vote to remain in the EU. And I looked up at him. I said, you know, sir, that is exactly what this report says. Well, that makes you an idiot because this is an emotional thing. And this is something related to British or UK nationalism, and they're going to vote to leave.

41:53And that was about a month before the election. So that's, excuse me, that's 10 years and one month ago, right? Because today's the anniversary and Trump got that right. I got it wrong. I was on television telling people, there's no way that they're going to leave. Second thing he said to and we were coming back into the plane. We were in Youngstown, Ohio. And I was looking around and I turned to the president. I said, you know, you're actually talking to my dad. And this is something that as an investor or just as a citizen of the world, I want to caution everybody about. And again, it doesn't reflect well on me.

42:28I lost my way, Wilf. I grew up in a blue collar family. I went to Tufts Harvard Law School. I entered the salons of the wealthy via Goldman Sachs. I ended up at the World Economic Forum, CNBC, hedge fund community, SALT conferences. I started to get the confirmed biases of the people that I was hanging out with. And what Trump taught me on that campaign is that the people I grew up with feel left behind. Many of them didn't go to Tufts and Harvard. They are putting in sheetrock or they're working a crane or they're digging clams out on Long Island. And their inflation, all these different things that have happened to them, their purchasing power has gone way down.

43:11And I remember coming back onto the plane and looking over at Trump and saying, you know, you're actually talking to my dad. You know, my dad was born in 1935, but these are people like my dad born in 65 and 75. And then he said to me, yeah, he said, and you're really out of touch because you're fiscally conservative. You're a Wall Streeter. So you're fiscally conservative and socially liberal. Now, Wolf, how many people do you know on Wall Street that are fiscally conservative and socially liberal, Wolf? Well, in the UK, more than in the US, in the equivalent. But I get your point. So Trump said to me, my base, my base is social conservatives and fiscally liberal.

43:58They want the programs. And if you remember the Tea Party movement or even Trump's MAGA movement, they would hold placards up and they would say, get your government hands off my Medicare. But Medicare is a government program. And many of these people didn't really understand that, but they wanted the program. And Trump has never touched, nor will he ever as president. And he won't touch Social Security or Medicare because he intuitively understands this. And he understands this is a big part of the needs of his base of voters. It's such an interesting, when I was researching for this and I heard you say it resonated because I think it's what's going on here at the moment as well.

44:37I think reform are pursuing the same balance in that sense. Our countries match each other. It's like a match sailing race. You know, you're watching, we watch your sale and you guys watch our sale and we sort of sail towards each other in the race. The difference, and I don't know the answer to this here, is that it's coming a decade later. And I'm not sure we can afford it. And do we have the comeuppance before the innovation saves us all, which I hope you're right about? do we have the comeuppance that means you're promising to keep the spending going, deliver for those people, and that you don't then get the rewards of it?

45:18And I don't know the answer to that. Obviously, I hope the sunlit uplands arrive in time that we can all have a four-day working week and all the benefits, but that's where the balance might not hold. We'll see. Again, this is an observation as a non-citizen, but some of the travels here are a lot. The country is very hard on itself, and this country has a tendency to be very self-critical, but I would look to some of the things about this country that I admire. One is the system and the process. You're not getting the exigencies of the extremes. I predict Farage will not be the prime minister here.

45:50I just don't think your system is going to allow for it. The second thing that happens here is you have unbelievable innovation here. You've got great universities and you develop a lot of patents, But up against that, there's not a campaign or policies associated with venture capital spending or the appropriate tax treatment on venture capital. And so this is a constraint. It's sort of a socialist constraint on the economy. And so I'm just wondering if you can get that right. I'll give an example. Who has gotten it right are the Irish. The Irish have figured out that they can marry right-leaning tax policy with left-leaning social programs.

46:31So they floored the taxes. They've gotten them down extremely low. When I go to Dublin, you just see one colossal multinational after the next up along the waterfront in that beautiful city. And they're running, probably the only EU nation at this moment, they're running a budget surplus. us. And they're doing it because they figured out foundationally that they have the right tax policy that's bringing the capital into the country. So to me, I'm a big believer that we have to look to other nations. We have to look to what are the best practices. So as an example, the best practices on gun control came out of Australia.

47:11The US won't adopt them, but if we did adopt them, we would reduce our school killings and our mass shootings by a quantum. But we have a sort of, if it's not invented here thing, then we don't use it. But I think we just have to look around and look at some of the best ideas out there. And I'm just wondering if the UK, it's got the patents, it's got the brainiacs in the country, get the capital to match the brains, and it'll unleash a lot of economic growth. I totally agree with all the ingredients here. I think we're a cold spring if we can get some of the hard political things right. I think we can play catch up.

47:51It's not about the US leaving us behind over the last 20 years. I think it actually makes the catch-up, the early years of the catch-up perhaps a little easier. We shall see. We've done investment. We've done politics. Let's close out. We've only got a few minutes left with some advice for our listeners. And start, if we can, Anthony, with career advice. We've touched on a lot of them. You've taken a couple of big gambles in your career, whether we didn't go as far back as leaving Goldman Sachs to start your own business. what's your advice to any of our listeners who might be weighing up that moment in their their own career if they should take that gamble or not well you have to know yourself you know i had a roommate in college and law school actually who was a prototype goldman sachs partner and he was literally like if you were buying barbie dolls or ken dolls and you saw him you'd you'd pick him up you'd look at the the qr code on him it was goldman sachs partner he looked the part he acted the party.

48:46He was like perfect, right out of central casting. And so he should be a Goldman Sachs partner. He was a Goldman Sachs partner. He got extremely wealthy being a Goldman Sachs partner. He's now a retired Goldman Sachs partner. But if you had me in a box next to him, man, I was not suited for that. I didn't have the personality for that. My friend Lloyd Blankfein, I interviewed him and I think you've had him on your show. I've got to go back and watch that one. but Lloyd and I are friends. We did the Bill Maher show together. And when I read his book, our upbringings are very similar. But you know what?

49:19He wanted to be an insider. He wanted to be part of that corporate structure. I never really wanted that. So I wrote in my diary, as soon as my school debt is paid off, I'm going to leave and start my own business. And I saw something intuitively. I just don't have the personality to shave the points off of my opinions or the hard edges off of my elbows. I just wanted to be myself. And I feel like you grow old, youngish, if you are comfortable in your own skin and self-aware. I think I would have been a poor... First of all, I don't think I would have made the partnership at Goldman Sachs. I didn't have the personality for it, but I think it would have been a really poor partner if I had done that.

49:58So first thing I would say to your viewers and listeners is self-awareness. Know who you are and know if you have the ability to take on the pain and the uncertainty of entrepreneurship because entrepreneurs jump off the cliff and they're trying to build the plane as they're descending to earth. You have to be able to do that. And I got launched into my own asset management company in the mid-90s. It was right after Greenspan, now the late Alan Greenspan's irrational exuberance speech. And we were getting our asses kicked and I was like, I mean, this is not going to end well. And the market lifted and we were doing quite well.

50:34And one of my colleagues from Goldman came to see me and he said, oh, this is great. You're running your own business. You're the master of your own destiny. I'm going to leave Goldman and run my own business. And I looked at him. I said, okay. He said, can I show you something? He said, what do you want to show me? I said, I want to show you my summer house in the Hamptons. Oh, your summer house? Yeah. I said, come down the hall. I walked down the hall. and I opened up the closet, Wilf, and there was a stack of servers and switches. Okay, it was$850 ,000 out of my own pocket, which was our trading network, Cisco Systems, all this different stuff.

51:13And I said, you see that? That's my summer house in the Hamptons. Are you willing to put your summer house in the Hamptons in a closet here in Midtown Manhattan? Because if you are, then you should leave and have your own business. But if you're not, You should shut the you-know-what up, and you should stay at Goldman and enjoy your career there. And so the big message is who are you, what are you capable of, and what do you like doing? And failure has never been an option for me, which is why I always have to dig out of my calamities in life. But that's the other thing. Expect failure. If you're taking exogenous risk, and I had to take exogenous risk as a kid to get to where I am, expect that your ass is going to get kicked.

51:54And so don't be a baby about it and don't play the victim. You know, when they fired me from the White House, I got torched by everybody. I got torched by the media, late night television. I think I was Tony Soprano on the Potomac. I was a Jersey Shore gas member. You know, Colbert was like running cartoons of me as like Tony Goomba. Did I care? No. I went on those shows, faced the music, and never played the victim. So you got to have that mentality if you're going to take risk. If you're not comfortable with that, then don't do it. I think it's a great place to leave the conversation, Anthony.

52:29We're out of time. Thank you so much for sharing with us all of that wisdom. It's been an absolute pleasure having you here on the Master Investor Podcast. It's great to be with you, by the way. Thank you. It's a bill of honor. Great to be with you. That was, of course, Anthony Scaramucci. Next week on the Master Investor Podcast, we will be joined by the Robin Hood CEO, Vlad Tenev. So make sure to hit follow or subscribe on your podcast app if you haven't done so already. But for now, our thanks again to Anthony Scaramucci.

53:22This podcast is produced by Paradigm Productions and Master Investor Limited in association with Birdline Media. If you've enjoyed the show, please do subscribe on YouTube or click follow on your podcast platform and you'll be automatically notified each time a new episode drops.