Part 1: Pomp On Balaji's 90 Day Bitcoin Bet, Digital Catastrophes, And Failing Banks

so biology comes out and he says i will take that bet you buy one bitcoin and i'll i'll send one million dollars to an escrow to be clear this is forty to one odds so he's basically saying not only is this unlikely to have like if this was even odds it would've have been like dang ball is gonna lose a million dollars because bitcoin is not likely to be worth a million dollars then he added in ninety days which is already a radical move then he said but and by the way the million dollars versus one bitcoin bitcoin is currently at twenty six thousand at this at the time you made the bet because that's forty to one odds that i'm laying you alright we got an episode here with pom anthony pom who you may know as the bitcoin guy he's huge all over youtube twitter everywhere else he came on we're actually gonna do this as a two part episode because at the beginning it was all business and we were business in the front we were talking about this crazy million dollar biology bet where he's betting that bitcoin is going to a million dollars in the next ninety days we talk about that why ba thinks it what we think about the bet and pumped does a you know i don't know econ one zero one where he explains what's going on with the banking system from his perspective that was good and but here's the thing though in that episode the whole episode is about something that's gonna happen inside the next ninety days so if you're gonna like it is a little fearful listening to it and so actually listen to the whole thing because and do it now because we're talking about something it's happening in ninety days and then go ahead the second episode was way more fun and it was pretty wild go ahead we talk about his business empire you know what he's building and why he's building it that way why he gave back all the money from his fund and shut that down why he it's huge turned off all his advertisers millions of dollars of advertisers what he's doing instead so we talked about that and then we talked about it was then it went off the wall and the the pod got a little crazy but in a great way i think people are gonna you're gonna love part two he broke down like all of his businesses and how they work it's very impressive it it was pretty wild and it was it was he's he's impressive significantly more impressive than a lot of people think i think because there's way more post scenes pretty funny stories which pump is usually he's pretty buttoned up on his on his main channel because he's talking finance he's talking serious but he tells him pretty funny stories so the second part two is the more fun episode part one is a more serious episode i think you'll like them both and we have to remind you guys that our episodes we work really really hard and unlike every other type of podcast podcasts out there our stuff's not free but you don't pay with money all you have to do is go to our youtube page we call this the gentleman's agreement what is it the ladies understanding the ladies understanding you go to our youtube page and the reason it's called that because it's an understanding it's an agreement we can't be there behind your screen to check this otherwise we would but everyone's doing it so just go ahead and do it and click subscribe on youtube and then just go ahead and do that on spotify and itunes because the more you do that the more our volume goes up and we get more downloads and we could do keep doing this set of stuff pop ain't gonna come on episodes like this if if we don't have a big listener ownership same with all the other guests alright enjoy pump we're live by the way we we always just jump right into this thing no some small talk let's go what do you guys wanna about dude you're i'm so glad you're here you are you are the r christ of the of the industry you are the hardest working man and content entertainment i'm so glad you're not doing your like five am show anymore i'm sure you're also pretty glad not do that every morning how does it feel to get some sleep i've always slept pretty well but the content stuff is it's the best way in the world to learn you put information ideas out there and the people who agree or have like things to add they're super constructive and they respond to emails they tweet at you they do all that stuff and then the people who vehemently disagree they make their voice heard you know very well and so you like quickly figure out like good ideas bad ideas and then you also get all these like rabbit holes to go down and i think that probably the reason why you know youtube myself and many of the other people that we all know and spend a lot time talking to we enjoy it like the internet is this amazing thing that we all get use on a daily basis and so creating content i found is just this great way to to elicit like minded people and and to learn so i was pop i we have a lot to talk about them i'm we'll do like a proper intro in a second but i was talking to my friend jason yan who you guys used to work together he works for you now he has his own company and jason works pretty hard he told me that you are the hardest work so it's used to work for you he he him and his partner mike poll toledo they were the two guys who help me start the podcast initially they they tricked me they literally came to me and they were like hey you should have podcast i was like what's a podcast and they were like you know like all these other examples and then i was like i don't know how to do that they're like what we do and little did i know they had no clue what they were doing they instead convinced me to do a podcast and then they d i'm pretty sure in gary vaynerchuk like podcast guy and i was like hey we're gonna start a podcast like what equipment we it's like kudos knows so those guys that was pretty good hustle and now they have a media company it does tens of millions of dollars whatever it worked out and jason works pretty hard jason told me that you're the hardest working person he's ever been he said that they used to work at your office seven days a week and that you just were non nonstop but then when i went have to dinner with you recently you told me your schedule it didn't sound very hard it sounded just normal so which is it which is true i think it's probably both so one of the things i always use as a framework is there's kinda gas and brakes in life and so at certain points you need to hit the gas and other times you can kinda like let your foot off the gas coast as the car and other times you need to hit the brake and knowing when to hit the gas when to hit the brake it's pretty important actually you don't wanna kinda be hitting the gas when there's a wall in front of you like you wanna make sure you are able to kinda go all in when when it's necessary but the second thing is you gotta last right you can't just sprint all the time and no matter how athletic you are you gotta have some level of endurance and so that's probably one of the things that i've really learned to do over the years i wasn't great at the beginning now i'm probably pretty good at it but you know we're recording this on monday yesterday was sunday i record a podcast sunday morning at you know eleven o'clock in the morning after i did a two hour meeting with a friend at nine am and a lot of people were like that sounds crazy but i'm like no what did you do you like went and did all your hobbies i have no hobbies i literally hang out my family and i work but i do it because i enjoy it and so if you enjoy doing it like this isn't hard i'm like looking forward to today talking to you youtube because i'm like you know what they're probably gonna be ridiculous probably gonna have a lot of fun and we're gonna learn something from each other like how lucky are the three of us two out of three eight bad so let's we gotta get to this crazy biology bet and then i'm gonna ask you what you're doing with your life after that because i think do do you gotta need a little empire you have to set the stage for who he is right who pump is okay guess so let's start with who pump is so i think you're known as like the bitcoin guy i would say that's the that's kinda how you built your brand you've obviously done a lot more than that before that i think you worked at facebook and even snapchat for a little quick lunch and and and so you worked in tech you started to build a big following on twitter around crypto and bitcoin built one of the bigger like newsletters and brands in that space and since then launched a bunch of like you know businesses around it so you had a you know a vc you sort had your own you know vc fund or you worked at be fun then lunch your own you have like a kind of like a crypto jobs company you have a bunch of things in that ecosystem since then i think you've you've you've made some changes now so it's so i wanna hear about those in a in a bit but then we have this biology bet and pop why don't you just give us the quick sixty second on who biology is and then we'll we'll frame what this what this crazy bet is and then i have some inside info also alright so i don't wanna be a spokesperson for bella so and everything i said is my opinion this is my description of him this is my description of the bet but bella sri boston it's probably best known now for being one of the more kind of public figures to have predicted a lot of what happened for covid he was very early calling out hey this is a risk if this risk becomes a reality here's how bad it could get and you know again as with predictions a lot of it was right some of it was wrong but generally i think people point back in and they're like man we should listened to that guy he then went on like a two or three year heater where he kept making predictions and kept being right about a lot of things and so the internet kind of rallied around this idea of like the worst words ever hear was was right and so when you build that type of kind of following and that type of reputation now people put a lot of weight when you say something and so his latest thing is bitcoin is going to hit a million dollars in the next ninety days which sounds absolutely insane bitcoin trading at twenty seven thousand dollars it's like you know what forty x from here and to do it in ninety days like we've never seen an asset really ever do that before now i don't agree that that is highly likely i would put it out like maybe i don't know five percent chance which is actually much higher than probably most people would put it but to me the most interesting part is like the reasoning behind why he's saying this and you know i think it's important to call out the bella bet is like the best meme of twenty twenty three he was able to essentially create a meme that has caused millions of people to now talk about this idea of hyperinflation bank failures and bitcoin and i think that's ultimately what he was trying to do so if you asked him in a private room like hey do you really think bitcoin is gonna be a million dollars and ninety days he's putting two million dollars on the line so like he definitely thinks there's a chance but i don't know if he's at like ninety nine point nine nine nine percent likely or if he's what it call what's two million to him is that a big dealer no it's hard to tell so bla before he became known as the like bla was right guy he built and sold a number of companies i think at least two that i know of had nine figure exits like he's like real right he he's a great entrepreneur he worked at an interest in h for a while he was that coinbase base as the cto like he's a very real entrepreneur and investor and so he he he's done well from himself financially but like i don't care how rich you are like you don't go publicly bet people two million dollars on twitter unless you have some degree of confidence because in some way like two million may or may not be a big number but like your personal reputation is you know critical priceless and so like that's basically what he's staking here is he's using the money to draw attention to what he's saying but really he's staking his reputation on something that a lot of people think is absolutely insane at the moment and the bet started because this guy met lock i actually don't know who i i figured forget his first name but he basically tweeted something and said like hyperinflation is not going to happen and then biology replied and said i actually think it will happen and in fact i'll bet i'll take your million dollar bet that hyperinflation is gonna happen in in the next ninety days and this is related to the bitcoin or that's another bet on top of the bitcoin one then you won't wrote this post and you had one line you had a couple lines in there that i hated in i hated i mean it was like it's stung me one of them was you quoted lennon you know one of the folks who ran the soviet union you said there are decades where nothing happens and then there are weeks where decades happen you said that and then you had a few other lines and i started reading this and i got scared i i was legitimately scared and i texted and i was like this real and you're like maybe maybe not i i forget exactly what you said but you wrote this in such a way that i was i i was fearful yeah so i definitely don't wanna fear mon but i do think that there have been two points now in the last three years where it's like kind of a shake people and wake them up and be like hey pay attention right now the first was during march of twenty twenty i wrote a couple of different pieces people had similar of reactions to it and you know one of the pieces was like i i basically was arguing that unemployment was going to be double digits and millions of millions of people were gonna lose their jobs and i had people like i privately emailing and it'd be like you are insane please stop fear mon like this is crazy and then the next week six point six million people filed unemployment claims right and so like if bella is like a plus i'm like d minus maybe in in analyzing some of this stuff but at least what i wanna do is call attention to like hey this is serious and like you should pay attention because if this goes the wrong way it could be catastrophic not only for people with the personal finances but also like as a nation and i think it's also important to call out that like yes it is important but i don't think most people want this stuff to happen right like the united states of america is this amazing place there's millions of peoples around the world that try to come to this country and it's because we have democracy and capitalism and stability and like all the things that we know make this country great if we were to lose some of that stuff like this isn't about a financial product or an asset going up or down in price it's like if there is complete chaos in a country people don't care about what currency they're holding like they want guns right and like that's not a where we wanna live in and so i think it's less about kind of finance and and kind of investing and it's much more about like pay attention to this serious situation that's playing i think that's what blog he's doing with this bet that's why i tried to get across with the piece that i wrote last week you also had this other line where you said bodies keep floating or you said a friend yesterday told me bodies keep floating to the surface meaning the silicon valley bank that's just one body and we're gonna keep seeing more bodies and so you like used a language that i'm fairly on i mean i have a high level understanding of this stuff so nowhere close to a lot of smart people but you use language that that stung me and when i see people who like you who write like that it's almost like this is how i describe malcolm glad well when i read his books they're so convincing tucker max is not the guy who does this he's they're so convincing because they're such good writers and they're so so good at just explaining their points that i have to remember that when like a malcolm glad world book it's like dude this is all just a theory and i could probably find lots of examples of why he's wrong but he's so good and you are so good at writing about it that i i begin to believe you and i to like pinch myself sometimes like wait this is just his opinion and there's actually people that are probably equally smart and equally experience to have a different opinion and i find that to be that whole thing though i find to be very confusing and i and unsettling it's this viewpoint that like you want to argue ferocious one point of view so that the response both the critiques and the support is as ferocious back right if you write a piece and if people are just like yeah whatever like you know i've heard this a hundred times like nobody even takes the time to respond but on the internet like you kinda have to go all in and really argue a point but if you are intelligent hopefully if you get new information or you see a critique that you're like oh that's actually a great point and you're willing to change your mind then you can very quickly iterate your way closer to the truth it's hard to always get to the truth but i think that's kinda why i write that way it's just argue ferocious and then you'll get the ferocious response and that will help you get to the truth faster what's the best let me ask a more question about the sean really quick what's the best argument as well as the best person that you like to read that takes the opposite stance of view that you can see that you can you would say if i'm wrong i think this could be true like who do you who do you like to read that thinks you're wrong and they could be right so it's different on every topic obviously and and even in individual situations i have friends who i agree on ninety five percent of stuff with and then there's that one thing that they like vehemently disagree with me on and i actually pay attention more when they disagree than to the person who disagrees with everything right it it's like once somebody has shown that they're a clear thinker and somebody's able to actually think through individual ideas and they don't just succumb to like oh sam and i are friends we always agree on everything so like on this new topic i should just agree with him actually i want surround myself with people who they are very clear when they agree and they're very clear when they disagree and what you want to look for is like volatility in agreement so the more that somebody agrees with you you pay attention and put weight on when they disagree and then the more that somebody disagrees with you that you wanna pay attention when actually agree so it's that volatility or that kind of rev rev away from the mean that ends up being important to pay attention to but who who who who are those people in this case is there anyone right now i would say so it's less about like individuals i think there's a whole c cohort of people everyone has kind of a little bit different view but let me explain first kind of what's happening and then it'll help me under explain why i think that there could be a a counter argument to it as well so the main argument is that if you go back to the beginning of twenty twenty the economic and financial system was like pretty good right unemployment was pretty low inflation was under two percent like we're were kinda chugging along we've been in a decades on bull market everything seemed fine if not good obviously covid happens and the first kinda of big shock to the system was all the government lockdown downs right so across the world people said hey go sit in your homes when you do that what's called the velocity of money or or the amount of commerce goes down so if you used to go to the bar if you used to go and buy stuff at the store like you're just locked in your house now you're not spending as much money so when velocity of money goes down people get scared and when they get scared and they're fearful there ends up being something called a liquidity crisis and the best way to think of a liquidity crisis is just like you look at your portfolio of assets and you're like i want dollars i want safety and so you just sell everything that you can to try to get dollars so you keep didn't care if it was stocks bonds cryptocurrency if they had liquid you know real estate assets they could sell commodities anything they just sell everything and they want dollars and so if you go back and look in march lit literally meaning cash in a checking or savings account so that's like step one and then if you remember during march and april of twenty twenty people didn't know what's going on like i went to the atm and i pulled out a bunch of cash if you were literally pulling physical cash i and they're like well just in case right like who who knows what's gonna happen they also were like buying toilet paper and doing all like the crazy stuff because fear takes over and so when these liquidity crisis happen all assets go down and the dollar becomes stronger and central banks and governments have to make a decision they can say hey we believe in the free market we're just gonna like let this play out yeah it'll be painful in the short term but like the free market to kinda figure it out over time or they can what they normally do say we are gonna intervene we're gonna step in we can't let our people suffer and so of course like politicians in central bank acres they're very short term optimized because there's pain that millions of people experience on a day to day basis and it's hard to sit by and watch people suffer so it makes sense for like a human viewpoint as to why they would step in although i disagree that many times they probably should not step in and so that's what they did they stepped in they basically dropped interest rates to zero percent which just made it incredibly attractive to borrow money right if people are borrowing money that means they're going and they're spending it they're buying houses they're buying all this kind of different stuff and then they also pumped between the central bank and the politicians trillions of dollars into the economy one key thing that a lot of people missed including myself initially is that regardless of how the money got into the system the money ended up in the banks so if they gave twelve hundred dollar checks to individuals whether they build out the airline industry whether they created all sorts of stimulus packages whatever when people received the money whether they spent it or they held it someone an individual or company put that money in the bank and so the deposits of these banks exploded silicon valley bank is a great example they had about sixty billion dollars of deposits to start they ended up having about a hundred and ninety billion dollars of deposits so kind of 3x x growth hundred and thirty billion dollars or so but what is the bank do when all of a sudden people show them like here's a hundred and ninety billion dollars they're in the business of making money and so in a zero interest rate environment they can't buy short term debt right all that means is like they're buying treasuries that are three months six month nine month twelve month two years whatever but all of that basically has no return because interest rates are at zero so instead what silicon valley bank did is they went and they bought ten year bonds meaning that they're gonna buy a bond today if they hold it for ten years they'll get back their principal plus whatever the return on the bond is now that bond that they were buying had about a one point five percent return right so you buy it today you hold it for ten years you're getting your principal plus the the one point five percent type return over that ten year period which is a conservative play super safe super conservative backed by the us government like everyone looks at treasuries and like that's the safest thing to buy right now that is all good and fine if the environment continues how it is what ended up happening is that all that money got pumped in into the system inflation exploded we had the highest inflation in forty years and so now all of a sudden inflation is at nine plus percent in the central banks like oh boy this is not good we have to bring inflation down because inflation actually doesn't hurt rich people rich people make money on inflation because they own assets it's the poor people the bottom fifty percent they're the ones who get hurt by inflation so let's try to get inflation under control and so the way they did this is they jacked up interest rates from zero percent to about four point five percent and then they started selling assets off their balance sheet they sold about a trillion dollars of assets when they do that basically they are tightening financial conditions making it harder and less attractive to borrow them money what what spend money what do they sell what do they sell the central bank this is actually a crazy statistic they had about a nine hundred billion dollar balance sheet coming out of the global financial crisis they tend bagged it they literally went from nine hundred billion to nine trillion between the global financial crisis in twenty twenty two right so they expanded by buying all sorts of debt and treasuries and and various assets and that's how they get money into the system is they exchange the dollars for these assets and then when they contract or they try to make tighter financial conditions they sell all of those assets right or or a good portion of it to kind of get to pull liquidity out of the system but when they did this the banks are basically left holding the bag and what i mean by that is the banks took that you know silicon valley bank hundred and thirty billion dollars eighty billion of it they bought these bonds that earn one point five percent which is great in a zero percent interest rate environment when they've now increased interest rates to four point a half percent that bond that you bought previously is no longer good it's actually cheap and so it trades lower so if you spend a hundred dollars on the bond now if you were to sell to someone maybe you could sell it for eighty cents you'd lose twenty percent on that bond the reason why that doesn't matter historically is because the banks actually get special accounting treatment so let's say that sean has a portfolio and in one of them he bought a stock now he spent a hundred dollars a share right so he's he bought a stock for a hundred bucks if he goes to the bank and now the stock is trading at eighty dollars and he wants to use that stock share as collateral they don't give them credit for spending a hundred dollars they're like hey more on it's worth eighty bucks like you get credit for eighty dollars not a hundred but the banks have a special accounting treatment where they can actually take some of the assets on their balance sheet and they can put it in a special area and they call it hold to maturity hold to maturity basically means we get to count what we bought it for not what it's worth today and the reason why they're allowed to do this is because they can hold the bond until the maturity the ten year period and they'll get the principal plus the return so as long as they don't sell it before it matures then it ends up being worth what they paid for it the only time that this does not work is if all of the deposit want their money back at the same time because now the banks have to sell all those assets and take that money to get back to deposit and that's what happened to silicon valley bank is basically there was a bank run when the bank run caused the bank to sell assets they lost billions of dollars which then scared more deposit so then they went and said give me my money back and it just became this reinforcing cycle and in twenty four hours forty two billion dollars was drained out of the bank which caused them to eventually be ins and the government took it over and ultimately great explanation that was awesome you killed it there biology and a few other people are betting that that's gonna happen to other more consumer base banks in the next ninety days is that right so it's already happened like this isn't just a silicon valley bank thing like a lot of the politicians they this was like a a softball served up to them down you know write down the plate they were like oh great the crypto and tech companies are a bank customer it must be their fault but like silver gate bank silicon valley bank signature bank now credit su like these are not you know crypto banks or or just tech banks this is a complete global financial system issue and now there's reports coming out that hundreds of banks are actually underwater in terms of holding these assets and so that's why you're seeing the central bank and the governments around the world step in and say we will backstop a lot of these deposits because they don't want people to be so scared that they go when they try to take their money out of the banks because if everyone goes to do that that then basically creates a cascade of bank runs and so argument and wise is making this bet is that when the government steps in to protect the deposit that is an inflationary pressure and it's going to take trillions and trillions of dollars to do it and so at the same time you're getting trillions of dollars of inflationary pressure you also are getting this psychological awakening and people are saying wait a second maybe the dollar isn't in as strong as we thought it was i should look for an alternative and when those two things happen hyperinflation can occur doesn't guarantee it but it can occur and i think really if you kind boil down his entire argument and why he's created this essentially meme with the bit signal is that people in the united states we've never worried about this but this is not new globally there are people listening to this podcast right now they they'll tweet us afterwards like dude i live in argentina like inflation like seventy eighty percent year over year i live in venezuela i live in zimbabwe i live in all these countries where they live with hyperinflation on a day to day basis it's just that in the us we've never thought about it and then two is like you come you add complexity because the united states dollars the global reserve currency so if we screw this up so bad that we hyper inflate the dollar i don't even understand i don't think a lot of people understand like what happens globally when the global reserve currency hits high inflation or hyperinflation so then again it goes back to like we don't want this to happen but damn people should be paying attention right now to make sure that they understand what's occurring and kinda how to prepare for it i can find this client in full have you heard of hubspot hubspot is a crm platform so it shares its data across every application every team can stay aligned no out of sync spreadsheets are doing databases hubspot grow better so let me add a little color on on what you just said so there was a apology tweeted this out it which is a a an like a memo or a note from the kansas city office of the federal federal reserve and they had said there's kind of this like one section that he highlighted which it said at year end twenty twenty one so basically two years ago only four community banks were below the kind of five percent ratio of of their of their assets that they had available so they were basically only four four banks would be at the threshold that we would be worried about fast forward to today that's now three hundred and thirty three community banks in the united states so three hundred and thirty three community banks are essentially ins is what this what this means and could be if there was a bank on on any one of these we would have the same problem that we had first at silicon valley bank and then what was about to happen on you know last monday or whatever where everybody was gonna go to you know i know here in california first of republic bank was like you know the domino that was ready to fall before they came in and said no no everything's everything's safe all your deposits are guaranteed don't worry to try to stop that from happening because there are three three hundred and thirty three banks just in the united states the they say are below that ratio now what that would do to the next tier who knows and also overseas because the the dollar is the the the reserve currency overseas there's a bunch of banks that hold dollars and they're they're worried about what if there's a bank on us and so like you know just last night overnight on a sunday night you know it's bad when they're sort of working on a sunday night and you know making these announcements where they're like oh we're we're establishing this like swap line and i was like what's the swap line so swap line is basically hey we'll bail you out too so if you need dollars the central bank of the united states will give it to you to european central bank inc and all these other places and they basically established this overnight back channel which said if you need dollars because you're gonna get hit with a run we don't want you to follow and causes cascade of fear and panic and and withdrawals so we will also backstop you just like we backstop you know the community banks in the united states so that's to top technology's credit i think he is correctly identified just like he did with coronavirus that hey this might be a lot worse than you think and there's actually data to support that the conditions are worse than you think now what's funny is balls actually did this twice so he had like a v one of of trying to spread the word sam i don't know if he saw this one so the v one was he goes the bit signal he goes how do you raise ring the fire alarm on the internet how do show on a false alarm i'm putting up the bit signal he goes i'll put a million dollars in bitcoin to alert people about this stealth financial crisis i'll give a thousand dollars to the best thousand tweets that show a reply with a graph a stat a meme that will bring attention to what's happening because the central bank and the banks and the bank regulars have bankrupt us they're trying to hide the ins inc of the banks to you the deposit which is a weird thing to do right that's like it's helpful that he's he's trying to help but it sometimes that doesn't help right so this was a pure giveaway right there's not a bet he said i'm giving away a million dollars to the i'll give a thousand dollars to the thousand best tweets that will spread the word this tweet did pretty good thirteen thousand likes and he tried but then he he gets you with just like a bunch of like you know things that top is like light reading but to the rest of us is like oh man like i gotta you know i gotta hook up to an oxygen tank just to intake this amount of information so it's like this a this crazy thing so he'll tweet this table of like you know forty five currencies that have done hyperinflation he'll tweet out a thing that basically shows some random meeting minutes from the fed in two thousand twenty two that showed that they knew something right like all these these data points but it wasn't really going viral until this guy james med comes out and he goes i'll bet anyone a million dollars the us does not enter hyperinflation and james med by the way i think by the way he had it it was even scarier i think he said everything that we're talking about by the way it's in within ninety days of like last week right no first it was jason just said i'll bet anyone hype one million dollars high hyperinflation flush doesn't happen okay that was just that was that guy sweet apology just takes us brand the way i interrupted you say who he is say who he is i don't know who this guy is i don't know is bio a social democrat markets the marketing market socialist in the sheath don't know what this guy's guys talking about this guy's is like it's a meme account it looks like so you know like he's got a picture that i i don't know this is meme million dollar bets yeah exactly you'll see email is at at mastodon dot lol okay so like that's be real what's going on there so biology comes out he says i will take that bet you buy one bitcoin and i'll i'll send one million dollars to an escrow to be clear this is forty to one odds so he's basically saying not only is this unlikely to happen like if this was even odds it would've have been like dang ball is gonna lose a million dollars because bitcoin is not likely to be worth a million dollars then he added in ninety days which is already a radical move then he said i'm and by the way the million dollars versus one bitcoin bitcoin is currently at twenty six thousand at this at the time he made the spend because that's forty to one odds that i'm laying you and he says all we gotta do is find so you know a mutually agreed on like escrow or custodian and he look again he tweets out this bit signal graph and so he's like you know i'm doing this again now this this tweet goes viral this one gets eleven million views because it's more provocative it's it lets anybody and a at first the wave of tweets myself included was like apologies nuts he's gone crazy like this doesn't make any sense and and so you know because it was like not only was the bet unlikely to prove in his favor it was a perfect bet for mister yeah james med over here the social the democrat and the streets and the socialist and the sheets all he had to do was buy two bitcoin right he could buy one that he's putting up for the bet and if he's wrong and bi and the dollar does hyper inflate bitcoin becomes worth a million dollars all he had to do is buy a second one so if he could for fifty two thousand dollars you could guarantee himself a million dollar payday so it was like an absolute no brainer and and you know the poker player in me was like ba what are you doing that's a you've given this guy like a you know a no lose bet and so i messaged him i was like you know hey ba this is crazy what are you what are you thinking and here's what he here's what he replied i i think i could share this because it's not not anything that he's not tweeting out he's tweeting all this stuff out anyways so it's not it's not overly crazy but here's what he said so he goes he just replies all the banks are ins that was the first first reply he goes have you seen the big short where one guy figured something out early and everybody else thinks he's crazy that's what that's what's happening here he goes people think this was a single bank issue like silicon valley bank it was a central bank issue all the banks are dead ten day days ago there were no dead banks today there are five and if people realize this and the they'll start to pull their money out they'll realize that the banks don't have it it's uncle sam bank free not uncle sam which is what basically what hack with people realized the money's not in the the money's not in the in the bank with with and then that caused you know the the extreme crash and then he tweeted out a bunch of stuff and he goes he goes i'm not doing he goes yes i'm not doing this to make money because i pointed out that the guy could just hedge and win the bat he goes yes i'm not doing this to make money he goes if i had the beliefs that i do and i was just purely selfish i would simply just take the million dollars of buy forty bitcoin i'll take you another million dollars by another forty bitcoin and i do it quietly because i believe that the us the that the million dollars is gonna be worth zero in ninety days i'm doing this to alert innocent people and to send a message get to the exits and so i wanna bring up a couple of like cases here so that that's the hold on really really really quick there was also this other thing apparently right around this time there's a picture of him so this guy ideology he's like as this like we got type picture on the youtube video got throw throughout the picture so he's got the stereotype of being like you know like the forgetful scientist of like he's just the guy who only cares about being brilliant and oftentimes he's right and he's el whatever there's a picture of him it looks like he's giving a seminar at like a university and the someone tweeted he goes boundaries saying get the f out of the us and it's and it's very scary and he's sitting there giving this presentation in front of like a class and he's wearing pajamas like like a pajamas looking in hoodie basketball shorts and nike air jordan flip flops with his laptop sitting on top of like two cardboard boxes and so if you needed like this this any more of this stereotype of this like brilliant like you know of this the the the image that we have of mark zuckerberg you know just sit in a hoodie coating eating pizza and drink and red bull biology is going all in on that image and it that it almost makes it worse when i see this picture but i think a lot of why he has so much credibility is that he has been able to identify a number of these like exponential situations and if you really think about what he's saying here it's almost an exact overlay to covid right he saw very early on a couple of data points and he was able to extrapolate from a couple of those data points hey this isn't a linear line like this is literally an exponential curve and the top of the exponential curve is really scary like let me go yell scream and like call attention to it he's doing the exact same thing here and i think that's what sean was reading about like hey ten days ago there was no dead banks now there's five like he's just trying to put a couple of data points and be like if this goes exponential like this is really bad and i think that one of the the components that's important to call out is like i don't know what the percentages of americans but most americans don't know that if you go and you deposit your money in the bank it's not your money anymore right like just that alone like the the lack of financial education of the average american is astonishing and so yes there's fdic insurance that covers up to two and fifty k like there's all these different things but if you go look right now like the fdic does not have enough money to backstop every bank in america i think they use that money or something i think it the twenty percent of it was used to help silicon valley bank yeah that's silicon valley bank yeah silicon valley bank is like the twentieth largest bank in america yeah so it's like not not very big compared to the big big ones what one other thing that i think is important to understand these situations is this idea of like a digital catastrophe and this is a concept that frank i i out a little bit to come up with like a good name for it but i think digital catastrophe kinda really articulate it as best as i can which is you need to understand this concept because it is going to become very very common in our lives over the next you know twenty thirty forty years but the way that i define a digital catastrophe is it's an event that occurs that is negative usually plays out in the analog world kind of the real world but it is drastically accelerated by the speed of communication and action online and so silicon valley bank is like the prime example right if you think about what happened there on wednesday afternoon they made an announcement by thursday morning people were scared by thursday afternoon forty two billion dollars had been withdrawn from the bank and by friday morning the bank was dead right so like in forty eight hours it was the second largest banking failure in the united states history but in the old days what you would have to do in order to have a bank run is like sean would walk over to sam's house and be like y sad did you hear like the bank's probably not doing so hot and then like sam like that's kinda crazy and you would walk ride your horse maybe getting a car and like show up to the bank physically wave in line and be like when you get to the teller window can i have my money back like that takes a lot of time effort energy all that type of stuff now you can literally open a new tab on your browser click a couple buttons and move your money and so when the speed of information occurs that it does on the internet millions of people whether you a customer silicon valley bank or not like twitter knew that the bank was ins by like noon on thursday right and so if that happens that's how you get forty two billion dollars was withdrawn from a bank that is a digital catastrophe it's the speed of information the speed of action online has real world consequences consequences and so another way to think about it is like the internet was weaponized to create the second largest bank failure in history but it was in response to the knowledge of an ins bank that was caused by a fractional reserve banking system and an increasing of interest rates that basically left the bat the bag holders as the banks and so people were just operating out of personal incentive to get out of the way yeah the there's there's it was kind of amazing like a thursday morning i remember waking up and in our group chat sam there was like somebody posted silicon valley bank's stock was going down it was down like thirty percent forty percent and i was like oh wow must have had a bad earnings call right or you know that was kind of my assumption it wasn't anything too too bad you know by eleven or noon i'm scrolling twitter and i start to see you know if you scroll that this is just a general tourism if you scroll social media and you see four or five different sources talking about the same thing your brain is just like wired to be like this is now a this is a big deal topic x is a big deal marketers use this to their advantage when they want you to like funko buy a product or know about a movie that's coming out or whatever they do the same thing that's why they get why influencer marketing is a big deal but it also works just organically five people say the same thing on in one twitter scroll i know that something's up and so i remember being on the phone and basically in the manner of like fifteen minutes it was like i'm on the phone we're not even really sure what to do is like let's just be safe take it out sent an emails to you know sent an email saying hey we're taking it out opened up a new tab clicked wire the money took a screenshot of the wire sent it back into six group chats then went ahead and tweeted it out a a thing it's like wow like in fifteen minutes i just like propagated this more than i could have done if i if it had been my full time job you know twenty years ago which is kinda what to to your point and and the funny thing is people are mad that like well if there wasn't a bank run there would have never been a problem and it's sort of like it's you know they use this example of like what it was to called like screaming fire in a movie theater or something like that like then everybody runs the exits well the reality is if there's no fire in the theater every run of the exits and getting stuck there and then you know trying to get out like it's not that big of a deal there was actually a fire and so like you know i don't know how the blame gets shifted to the people who successfully got i got out of the fire versus pointing out that hey somebody causes this thing to catch fire which is cannibal ball point biology he tweets out this graph of the like the the balance sheet or whatever it's basically like goes up up up up which is like during the money printing era then the last year year or so it's been trying to tighten so it's been going down it's been contracting and then like overnight it just goes straight up vertical like no graph you've ever seen because it's two trillion dollars was basically a liquidity was added to the market now some people say no it wasn't really like put into the supply like pop might have an idea about this some people say well that two trillion dollars is not really being given out it's not going into the supply it's kinda just there as a borrowing facility in case the banks need it in order to like prevent any panic and other people say money per to go bird this is the same thing so you know what are you talking about here i don't know do you an opinion on that you know when you're in like high school and there's the like but actually kid in class who like sits there in the corner and no matter what anyone says like but actually and they try to tell you about something they read or this or that or whatever it's actually called barcelona exactly i oh you mean b you no know i mean b like that is those people on the internet right these people who they're the same people during covid that were like but actually and then they would go on some rant right like no the government locked us in our homes and literally printed trillions of dollars and created forty year high inflation and absolutely screwed millions of people i don't care what but actually you have to say and then you look at the same situation is like they're like but actually inflation will be transit and it will come back down right and then you're like no that's not how this works and so ultimately what you end up having which makes markets so like this is a part of capitalism is you have theory meat reality sometimes theory is a great primer and overlay reality and other times it's not and what i've learned over time is that the more complex the system the less likely it is that the theory overlays perfectly in reality and like there is no more complex system than the economic system of america let alone the world and so all these people who are like oh inflation will come down because the fed will do this or that well like the fed isn't the only thing that contributes to inflation their supply chain disruptions there's geopolitical war there's like all these different components to it and so i think that you've gotta be very careful just looking at theory and trying to impose theory onto reality but the other thing that i would say throughout this entire kind of cycle or or or new you know kind of news development man are we lucky we have the internet like the internet is the greatest place in the world and like sean did a great job explaining you know you can propagate some of this information but imagine being in the nineteen fifties or sixties and like you basically could read the newspaper and maybe you watch like the nighttime news and you have to listen to the talking points from the like public narrative or like the you know the the government or the fed or whatever on a daily basis there are things that are said by those who who kind of set the public narrative and within seconds people in the internet destroy the narrative and they're like nope that's not true here's these five points and like i don't care necessarily who's right or wrong every single time as much as it's like i want both sides i want what the people in charge are saying and then i want the people who like think the people in charge idiots are saying and then i'll kinda like think for myself but the internet is what has empowered that and so like wow what an amazing time for us to be alive to have that ability because literally two generations ago they didn't have what you can do go to the encyclopedia and look up like what is a bank run right or like had does central banking work it's just amazing that we now have this capability so to i think we should wrap this segment up and i wanna wrap it up by each of you in just a couple sentences saying what do you think is gonna happen in the next ninety days and what do you are you guys doing anything sean you go first okay so i'm gonna say two things i think in the next ninety days i basically i think biology is actually correct on everything except for his ninety day point because i think that's too hard to know and he might end up being correct that it something happens in the next ninety days or it might take nine hundred days and i think either way the important part of is he's right it's just the time fat the time window i think makes things impossible but the good news is you don't actually need to know the time window to act accordingly i i've said this for a very long time and i think what ball saying is a much louder or better version of that which is for a long time people thought if you're buying bitcoin you're trying to make a buck and from the beginning once i started to understand what is this i was like oh this is not about making money it's about saving money it's a savings technology which is basically to say even when inflation was only two or three percent if you just look at two or three percent over a forty or fifty year period the money that you have in the bank will still if you put a hundred thousand dollars in the bank it'll still look like a hundred thousand dollars but it will only have the buying power of something that's sixty thousand dollars for example and so why would you ever save your money and something that is designed to lose purchasing power you wouldn't that you wouldn't do that and so i don't think that it's a i sorry i've always thought bitcoins the core value of it is it's a savings technology it's a currency whose one big feature is it doesn't inflate so you know if you wanted to save money you'd rather save your money and something that doesn't inflate cannot inflate versus something that either infinite inflate slowly or quickly right low inflation or high inflation i don't want any inflation if i'm saving my money and so anyways i think that he is correct about if you're going to save money you should do it in a hard currency that's not gonna inflate i've already been on this bandwagon and obviously been the kind of crypto person that's a you know obviously i believer in crypto created the milk because i believe in crypto still believe in crypto and so nothing has really changed there in the next ninety days i would suggest that ba looks like a fool because people are gonna point out that it didn't happen in that time period but in the next nine hundred days i think that he will be proven correct in thirty seconds pop what do you think or sixty seconds i think that is correct similar to sean the timeline is hard to get there i will put a higher probability on the ninety day timeline than most because i do think that there's tail risk and mainly it's because when hyperinflation happens it happens very fast like in episodes of hyperinflation everything's fine ninety days later there is hyperinflation so it's less about like has this ever happened and it's more about like is it going to happen again i'm like maybe five percent because i do think there's very systematic problems and issues currently in the global financial system i do think that the banks or or the central banks when faced with save the banks save the dollar will save the banks which will lead to inflationary pressures but i would not bet a million dollars that bitcoin will be a million dollars in ninety days are you guys hyped up or what i'm ready to go get fight we should say you say one thing which is the the the the the other take that people have on this which is that if apology has like a hundred million dollars of bitcoin he doesn't need to be right for this to be a profitable bet for him so if he's got a hundred million dollars of bitcoin already bitcoin bitcoin up like twenty percent last week or something like that but it's up like you know four five percent right now you know he basically would only need to move it by like three percent or he'd only need to move up by three percent in order for him to be profitable losing two million usd if he's got a hundred million dollars at bitcoin which i suspect that he does have a hundred million dollars a bitcoin i i think he now has moved nine i think he said this he's moved ninety nine percent of his net worth into crypto and so so i i i don't think i think he can be directional i think he can lose the bet and still make money and be doing the thing that's you know to his beliefs the right thing to do which is alert people that the that the banking system is is currently broken and and you know he is the michael burr of of our industry so we'll see if he's correct dude i just feel like i drink just drink like a leader of mountain dew i'm just like drinking buckets of do i'm just like people wanna sam when pumped tweeted out these coming on people wanted to know how you gonna sit in a room with the two of us and still be sitting there in cash etfs and not own any crypto at the end of this segment well hold on on it's hell are you in on are you gonna go buy bitcoin or what i own bitcoin i own not that i own it from twenty fifteen as far so no you know i i've made purchases and i don't have cash i have real estate and i have but here's the thing though which is in hyperinflation periods i own equities those also go up the i don't you know to get to a million dollars bitcoin right now is at twenty seven thousand you know that's like what's that like fifty x or something i don't know if equities will fifty x but i i mean they they will go up yeah maybe but also all those businesses run dollars and all their earnings are in dollars if dollars are not useful anymore right like the the whole system that's that's the thing i'm a bitcoin bull and you don't wanna see this happen because the world will will be chaotic absolutely chaotic it will be bad for a lot of people i think everybody even who's the biggest bitcoin bulls you said this be yourself pump you're not rooting for for it to happen this way a slow transition is really the only thing you want a fast transition would create a lot of damage and so you you don't really want that to happen