Listen To This Episode:
In this episode of Twitter Spaces hosted by Bitcoin Magazine, P (@phjlljp) was joined by Jay Gould, Jimmy Song, Bitcoin TINA, and others to discuss the ludicrous government proposal of taxing unrealized capital gains, and how Bitcoin can help free humanity from government overreach.
Episode 19
[EPISODE]
[00:00:06] P: Hey, everyone. This is P. I am the Head of Programming at Bitcoin Magazine for the Bitcoin Conference. If you haven’t bought your tickets yet, you definitely should. It’s going to be fucking incredible. I asked a number of people, Jay Gould, John, Amanda, Bitcoin Tina, Jimmy Song, and a few others to join me, to discuss the absolutely ludicrous proposal that Yellen and the White House made recently, that unrealized capital gains should be taxed as income. Let’s dive in. Go for it, man.
[00:00:39] JG: Before we begin, I want to just read something. I think it’s important, because words have meaning. From the white house, to Janet Yellen, to Bernie Sanders, to Elizabeth Warren, to AOC, and all the way back to Barack Obama, they started saying something that they’re continuing to say it was on the website, actually, yesterday.
They always say something like, the rich must pay their “fair share.” These words imply that the rich are not currently paying their fair share. Otherwise, why would they say it? It is complete and utter, complete and blatant lie. I posted something today. It’s a little dated, from 2009. It was from mint.com. They show different cohorts of income in this country. They show collectively what percentage of the makeup of total income bracket you are, if you’re in that bracket. Then, it shows you what percentage of the dollars collected in tax revenue are. It’s significantly higher, higher income, collecting the majority of the tax dollars being collected. To say, it’s completely disingenuous and dishonest, to say that the rich aren’t paying their fair share.
When the 1.8% highest paid above $500,000 are paying 41% of all the taxes collected. 200,000 to 500,000 is 2% of income cohort. They’re collecting 20% of all the tax revenue there. That’s 60%. It’s somewhere like 80 something percent, and we only get to 10% of the people. It’s off the charts. It’s just completely and utterly dishonest, and that’s where we start.
[00:02:03] P: Yeah, I think you’re absolutely right. This is so clearly – it’s propaganda, right? It is a narrative that is being spun, in order to push the public opinion in a specific direction. It is unfortunately, fairly effective. I think that it’s the thing that is so disappointing to me personally, about this situation. Before we –
[00:02:22] JG: There’s also one more thing that is interesting. I found another stat here. In 2001, the share of the federal income taxes paid by the top 1% increased from 33.2% to 40.1% by 2018. They’re not paying less income tax over the last 20 years as a percentage. That’s actually going up, which clearly, the gross nominal dollars being collected are also going up, and just the vast majority of all the dollars being collected. It’s complete false narrative.
[00:02:47] P: Can you say again, what specifically was claimed in the White House article?
[00:02:50] JG: What she said, I don’t have it in front of me. I got to find that. What she said, here’s something she had said. She had Senator Shelby – this is different from the White House article. “I do support eliminating –” This is yesterday. “Stepped up basis.” By the way, I think this is, I think this is really where they’re going with this, to be honest with you. We’ll get to that in a second. I don’t think it’s unrealized.
[00:03:08] JF: It’s the only way they can actually get up that.
[00:03:10] JG: That’s right. That’s right. It would be a nightmare from an audit perspective, as John knows, to try to do this from across all income bracket categories, etc. She said, “I do support eliminating stepped up basis. The reason is that, a very large share of the income, words have meaning throughout this whole discussion tonight, okay. Income of the wealthy individuals is simply never taxed. Individuals hold onto these assets during their lifetime. That income is never taxed. Again, it’s not income. It’s appreciation.
We know that for some of the wealthiest individuals in the country, they pay very low taxes overall, because most of their income takes the form of unrealized capital gains. Unrealized capital gains are not taxable, people. Just to be clear. Capital gains are taxable, currently. The Biden administration proposed that at death, those gains be taxed. Currently tax law, when you die, and you have property per se, it is passed onto your heirs, and there’s a thing called stepped-up basis, which means their new cost basis is what the value of the property is at the time that they receive it. We’ll get back to that in a minute.
She says, “And with careful consideration, not in any way to harm the prospects of family-owned farms and small businesses, because they would have massive tax of all events on these events on death,” they’d have to sell their farms, or get a loan to pay the tax. It wouldn’t make sense. “There were substantial exemptions to protect them.” She’s trying to protect them from that. “Even if there is not actually taxation imposed that death, getting rid of stepped-up basis would mean that an heir would inherit the original basis of the asset.”
Even if they didn’t get rid of it, they’re saying, they’re going to go back to saying that your cost basis is now their cost basis, which I don’t think is completely unfair, to be totally honest. I’m not totally against all the things, but because you’re not – if that’s not a taxable event, unless they sell it. She’s just saying, why should you get a stepped-up basis on a cost basis? That makes sense, actually, in my opinion, but you could debate that.
When that person eventually sells that asset, the taxes would be paid and she didn’t say this, but it would be on the original cost basis that your parents bought it for as an example, okay. All of this is important, because they’re mincing words and they’re conflating things. She’s saying things along the lines that the large share of the income from the wealthy individuals is never taxed. That is not true. The current tax code is that you are taxed. There are ordinary income taxes, and there are long-term capital gains taxes. There are no longer short-term capital gains taxes, because there are now taxes, or ordinary income levels. They already fixed that one, so that means they’re taxing rich people – It is.
[00:05:45] T: I don’t think that that’s actually projected as 25%. Check it out. It’s correct.
[00:05:48] P: Tina? Let Jay finish.
[00:05:51] JG: Again, long-term capital gains, long-term capital gains have a special treatment, and they are to be taxed at a lower rate, because you’re imposing risk on the investor. This is why they have this. They define that guys by profit earned on the sale of that asset, which has increased in value over the holding period. Then asset, could be a tangible property, like a car, business, a stock, as well as intangible properties, right? Bitcoin, can touch it.
Then, ordinary income is just what most of you probably have. It’s if you have employment, you have a job, or it could be interest, or dividends, and then income from sole proprietorships, rents, royalties, if you’re lucky to have something like that. What they’re trying to say now is that if you have rents on a property, or royalties for some an asset, like you have a publishing deal for a book, or music rights or something of that nature, they’re going to want to look at that asset that is deriving the rents, the royalties, the dividends, the interest, and they want to tax that based on the appreciative value of it going up year-to-year, which could be forced liquidation for some individuals, depending on who they are. It sounds like, she’s also targeting, P, the top 400 richest people in the world today. That is the current narrative and rhetoric. I just wanted to get out some of the factual information here.
[00:07:00] JF: Yeah. P, can I just tag in a little bit, if you wrapped up on that point? One, short-grain taxes are our taxes, ordinary income. Long-term capital gains are based on your income. From zero to a certain percent, from zero to 50,000, I think it’s just for $0 or 0%, so there is no short-term. They just need long-term capital gains.
Then from 50,000, roughly 450,000, it’s at 15%. Then everything above that is 20%. The Biden proposal is to move it all toward ordinary income tax. Unless that’s changed in the last three months, I don’t believe it has – there’s any tax accounts there that want to correct me. I don’t think that I’m wrong.
The second thing I wanted to hit on Jay is what you talked about, is there’s not a real practical way to actually go after unrealized gains, because they also have to go on off of unrealized losses and they haven’t talked about that either, right? Literally, the methodology that’s cited in this letter is going off the Forbes list.
[00:07:51] JG: It’s ridiculous. I know.
[00:07:52] JF: It’s a joke, right? I tried to go through their technical, how they use the data to ultimately form their calculation and their methodology. It’s just basically a joke. The thing that I think that Jay, you hit on, I wanted to bring home, I think the way that they actually get this done, and just to further introduce myself, I worked in public accounting, I’m a reformed public accountant. I have not practiced in 12 years, so I don’t want to come and speak from a public accountant’s perspective. P asked me to talk about some of the things that are going on with institutional adoption. Since we’re talking about this piece of it, what I think is important is what can be, I think, the practical way of actually getting at a wealth tax, which is ultimately what this comes down to is eliminating stepped-up basis.
I’m not here to argue the merits for or against, whether or not that policy should take place or shouldn’t, but that’s actually how they’re going to get at additional wealth that’s trapped in these ways. I think, it’s a really great way to do it, right? If you want to further the Ponzi scheme and you know that you’re going to print – you’re at the printer of last resort, and where’s all that money, where’s all that wealth being created? It’s being created in assets.
If you’re going to continue to build them out to backstop it, you’re extracting more value to go into your Ponzi scheme through ultimately, measures like eliminating stepped-up basis. It’s a way to actually get more tax revenue from investments. I think, that’s where you were headed a minute ago, Jay, with how they actually practically implement these unrealized gains.
[00:09:10] JG: Yeah. I think they’re going to do it on death. It’s going to be a death tax. I think, the attempt is to eliminate the stepped-up basis to try to collect more revenue.
[00:09:18] JF: Exactly.
[00:09:19] JG: That’s what I think. That’s just step one, right? Clearly –
[00:09:21] JF: I think, that’s how they tend to meet up with the estate tax is really –
[00:09:23] JG: Look, all they have and definitely wanted to do, John, if that’s all they wanted to do, there’d be no narrative rhetoric, around about unrealized gains being capital gains, right?
[00:09:34] LW: That’s the thing, right, Jay? If you think about it, this is just the destruction of wealth. Because really, what they’re doing is they’re trying to rebalance everything. hey know they’ve printed way too much money. They know they can’t stop printing money. They know our economy is in the crapper, and the only way you’re going to really be able to save that is through some form of UBI.
The only way you can retrieve any of this money you keep throwing out there is to figure out a way to tax some stuff that probably even shouldn’t even really be taxed, just to get the money back. I think, that’s why they’re doing this, they’re really literally throwing darts at a dartboard, trying to figure out ways to pull money back out of the assets that they’ve inflated. It’s almost like, you blow the balloon up, and then now we need to come in and put a small hole in it so that we can pull some of the air out of the balloon, because we know next week, we’re going to put more around the balloon. They just don’t want the balloon to pop. They feel this is the only way they can balance this entire thing. Yeah. I think it’s crazy. No, not at all.
[00:10:30] JG: A 100% of the 400 richest people’s income. They took all their assets. You can’t pay this off. We just keep pumping afterwards.
[00:10:38] P: I think, it’s important acknowledge that this is a key tenant of modern monetary theory, right?
[00:10:41] JG: This is what I think this is. This has been going on for centuries guys. They come after the billionaires first. They take from them and the people say, “That’s not me. I don’t have to worry about that, so I don’t speak out.” They came for the unions, unionists and the socialists and speak out, even though I’m not a socialist. Then they came for the incurables and I didn’t speak out. Then they came for the gypsies and the Jews and the homosexuals, and I didn’t speak out, because they’re not me. Then they came for me, because there was no one left to speak out for me. Guys, wake up. They’re going to come for you.
They may not come for the poorest people in this country, but the richer people in this country, the middle class of this country, the upper middle-class of this country, they’re looking and saying, “Screw that. They’re the 400 richest people. Oh, I’m not them.” Okay. Then they slide it down, to the top 1,000, the top 10,000. Let me tell you something. Eventually, it’s you. they don’t ever change these rules. Like AMT, Obama Affordable Healthcare, the 3.8% tax. They never got rid of that.
[00:11:33] P: Yeah. A 100%.
[00:11:35] JG: They don’t ever get rid of any of these things.
[00:11:37] T: Just talk about putting caps on what you can earn in a Roth IRA. I don’t know other details on this, but there’s a guy from [inaudible 00:11:43] financial guy, Adam Bergman was at the Bitcoin Conference, who gave a presentation who has been talking with us. He’s a tax attorney, and he’s got a business, which caters to IRAs and the self-directed. Now they’re coming to you right now.
[00:12:01] JF: I have a great step for this fact.
[00:12:03] T: I guarantee you that in the course of the next 20 to 30 years, you will hit those caps if you have a Roth IRA.
[00:12:09] JG: Yeah, because [inaudible 00:12:09] about a 5-million-dollar cap. If you’re 25-years-old, you’re likely to have 5 million in your IRA in the future. Just do the math on a kegger with the amount of money that’s being printed and what your growth will be.
[00:12:20] P: What is it? 80% of all the U S dollars that have ever existed have been printed in the last 14 years.
[00:12:26] LW: Yeah. Here’s the thing, that 5 million is going to be worth –
[00:12:28] P: The 13 [inaudible 00:12:29].
[00:12:31] LW: That 5 million by the time you get there, it’s only going to be worth about a half a million. You keep printing money like this, it’s going to make even that wealth. This is what I feel like is going crazy in this country. Right now, this wealth destruction, the ability to compound interest, all of these different things that especially, which is weird to me, because it always comes from the democratic party, which always talks about the inequality and the wealth gap.
If you think about it, when you take away the ability for people to invest in assets and actually compound that interest without being taxed on it, you are a literally expanding the wealth gap, because the people who already have, they already have. The only way I’m going to be able to make it back is to actually invest in things, so that I can actually build compound interest, so that I can at least catch up in the gap in some form or faster.
But they wind up destroying that wealth possibility by bringing in things, like unrealized capital gains tax. Then, they take that out and put it to the bottom by doing something like UBI. If you think about that, all it is the government making us more and more dependent. See, the thing is that the democratic party, they always are a party of trying to create the goodness. Just look across the entire scope of what they’ve done, I’m talking about when they finally changed over, when they were the racist party, it was a little bit different. Then they changed over and they still might’ve been the racist party, because they wanted dependence and they wound up making the dependence, those people who didn’t have a whole lot, which happened to look like me back in the day.
Now, we’re in a position now where the dependents, they’re trying to make the entire middle-class dependent upon the government, because they understand that if they have a dependent body, what happens is that dependency makes people vote for them in the future. This is what I feel like is exactly happening right now in this country. They are establishing ways to make us more and more dependent upon government, and I think that if we have to fight back against it, and by any means necessary, and I truthfully believe, Bitcoin is the best way to fight against all of this bull crap.
[00:14:23] P: Yeah. I totally agree. I think this is all about systems of control. You remove people’s upside and then you force them to take the dog food you’re feeding them, and that allows you to have control over them. Jimmy, I want to give you a chance to comment, weigh in and then yellow, I want to hear your thoughts, because you’ve had your hand raised for a while.
[00:14:39] JS: I did write a tweet earlier today about how were cats, four times now, already on our income, and this is going to be tax number five, like unrealized capital gains. I think, there’s something really crazy going on here. I thought Lamar made some really good points about how it’s really a way to – They know that they printed too much money, that it’s in the hands of rich people. They’re trying to calm down some of the poor people by taking some of that back that and they’re doing that through taxation. Unrealized capital gains is, I’m not even sure how you force that, right?
Because Mark Zuckerberg is worth billions of dollars, but the way he gets money is he keeps his stock in Facebook and he gets loans against that stock. That’s how he operates. That’s the way in which he could continue to get upside on his business and so on. That’s how a lot of people in the US are. They don’t actually have that many liquid assets. They just borrow against the assets that they have. This in turn causes this Cantillon on effect of additional money printing, because all of those loans that they get against their stock or their assets, it’s all newly printed money. That in turn, causes even more money to be printed and go into the economy, that causes higher prices and stuff.
You do a wealth tax like this, they now have to liquidate this stuff. I suppose, they could take out a loan against that and hope that the tax goes away eventually, but they’re most likely going to have to sell. Now you have less leverage that these people have. You’re destroying this money creation avenue. You contract the money supply as a result of this. It’s not going to be pretty. You do this from some of the wealthier people in the – You really contract the money supply significantly. That means that the fed has to print even more and give out even more loans on even less of a basis. You get even more fragile. I just think this thing has disaster written all over it.
[00:16:42] JG: I got a question for you. Do you see a scenario, or possibility where, because a guy like John Malone from Liberty Media, he did this. He was the master at this. He never paid any taxes. He just borrowed against his holdings and he kept growing through acquisitions and his network kept going up and just kept borrowing against it and never had to sell anything.
He serviced the debt with the loans as well. Really genius, actually. Why not, in a low-interest rate world that we have, which isn’t going anyway, going away anytime soon, and let’s say, he has a 100 million dollars that he wants to borrow, and he’s currently borrowing it at 3%, just say, why couldn’t they just impose a very small tax on the amount borrowed, because otherwise, for him to get the 100 dollars, he would have had to sell assets. Then, he could just use the loan that he’s borrowing to service the debt.
Essentially, it’s increasing his interest rate, essentially. The interest rate from the bank, but then you have an imposed tax from the government, the tax from the bank, it could just be like, almost a library plus, right? He may have a 3% interest rate from the bank, and then the government says, if you’re borrowing money against your assets, we’re going to tax you 5% on the amount you borrow. They’re not going to not borrow to do that. They’re certainly not going to sell their assets.
[00:17:46] LW: They will move, Jay. I believe, billionaires are going to move.
[00:17:50] JG: I think that’s true.
[00:17:52] LW: They’re going to be straight –
[00:17:54] T: Hold on. I just retweeted something that I learned about many years ago about lead trust in Harvard alumni. Go read what I tweeted. I sent it to John, to P, to Jay. Go take a look at that. Some of the things you have to understand about super rich people. One, they set up – Hold on. They set up foundations. Foundations enable you to take substantial amounts of money and keep it untaxed for centuries, certainly for decades. The power of having substantial wealth is the power of using it and having access to it. That money pretty much [inaudible 00:18:27].
There are many things in the tax code, which enable the super wealthy to very much mitigate the effects of these things. These things will fall down on upper income, not fantastically wealthy people. They will fall on people who might be considered rich, or not super rich, because the super-rich can do things that other people can’t do.
When Bloomberg has the giving pledge, whatever the hell he calls it, it gives substantial amount of money into a foundation. That foundation can be controlled by family members for decades, which is the real power of having money, because you have massive social influence, political influence. This is the power of real money. People will have tens of billions of dollars, can’t spend it, but they sure as hell like that political influence, and it’s serious.
I’ll look at lead trusts. The game is set up so that those who have well into the nine figures and above can do things that other people can’t do. If you have 20 to 30 million dollars, which sounds like a lot of money, you get screwed, because you can’t defend yourself from these things. When you have 500 million, a billion, 2 billion dollars, there are lots of things you can do.
It’s not going to be quite what you’re saying. It’s going to fall on the heads of people who are successful, who want to leave money to their family, and maybe to others, but it’s going to slam those people. It is not going to hit the super-rich. Really, if you want to change the tax code to change the consumption tax, eliminate all capital gains, all income taxes, because the consumption tax will capture the spending of the super-rich and there are plenty of things that can be done to mitigate the effects on substantially, lower-income people.
This was a game about power, and this is a game, when you can grant special favors and dispensation to people who were not hit by this tax code, that’s the real power that Congress has. The ability to grant special tax benefits to different groups and classes of people. I think, class is not an economic class. I’m talking about –
[00:20:32] JG: Tina, let me ask you a question. Let me ask you a question. I’m aware of this. You’re right. For the richest individuals in the country, the billionaires, this is a strategy. It’s really funny. The giving pledge with Warren Buffet and all these guys. It was really funny when I saw – it was Garrett Camp, the founder of Uber, decided and put 50% of his wealth in there. Just do some math on that.
Anyway, if you look, and by the way, they’re doing really good things. I’m not criticizing the effort, but there is a tax benefit to this. The billionaires are mostly all aware of it. I imagine, they’d have to be. They’re not, I don’t know what rock they’re living under. The politicians are mostly aware of it as well. The lobbyists are making them aware of it. They’re all aware, so why is there a rhetoric around this? What is the goal? Why do you think they’re doing it? Because to me –
[00:21:15] T: I didn’t think it’s [inaudible 00:21:17].
[00:21:17] P: Go for it, Jay.
[00:21:18] JG: Because it seems to me, I think it’s just, number one, they’re pandering to their constituency base, their voters. Number two, it’s a slippery slope that leads to the others like us.
[00:21:29] T: It’s the politics of envy. Here’s something you need to know. Everyone needs to know this. There’s no point in discussing rates, if you don’t discuss definition of income. Taxes are all about definition of income. When you start defining unrealized capital gains as income, that’s definition of income. When people talk about 80% and 90% rates from the 50s and 60s, the definition of income was very different. The 1986 tax reformat eliminated credit card interest as a deduction. There were all kinds of tax shelters people could engage in. People do not understand that definition of income is critical. You can’t have a discussion without it.
[00:22:05] P: I totally agree.
[00:22:06] JG: That’s where we started the topic to call.
[00:22:07] P: Yeah, I totally agree, Tina. That’s, what’s really going on here, to Jay’s point. Essentially, the government or, Yellen, the White House, they are basically putting a target on “wealthy individuals’” backs, because that is a politically acceptable way to shoehorn this, pass all the constituents.
[00:22:27] JG: They’re pandering to the bottom 50% of income earners in the country. This is a true fact. The bottom 50%, they only pay 2.9% of the tax revenue collected for the government for federal taxes.
[00:22:39] JF: There was a girl who wore a dress that says, “Tax the rich.” This is a really phenomenal way to raise money and pander to your base. If you guys remember, if you look at how Mitt Romney lost the 2016, excuse me, the 2012 election, he basically was pulling neck and neck. This is the point that, I think, Jay was raising. Then he goes, 47% of Americans don’t pay any income taxes. There was a secret video. Go watch the polling from that day through. This is an extremely effective way. It polls really well within certain demographics, a really large demographic and an increasing demographic, like, one where you can say, what’s wrong with society? This is another one of those pointing to the symptoms and not actually to the cause.
[00:23:17] P: I do want to give yellow a chance to speak, because he’s been extremely patient. Go ahead, yellow. What’s up?
[00:23:23] Y: Thank you for having me, first of all, I actually have a question for a Jimmy Song. I’m a huge fan. What’s his thoughts on banana bread?
[00:23:30] P: God dammit. Banana bread is an important asset to diversify one’s holdings into, as you and I have talked about for a couple of days back, bananas are actually, a really interesting token, which has a physical aspect associated with it. We talked about the seeds, the fact that the Cavendish bananas are all clones and that there’s a terrible fungus that’s attacking all Cavendish bananas.
[00:23:51] Y: I know it’s off topic, and I’m hijacking a little bit. I’m sorry about that. I just want to know this and I’ll be going that banana bread is a great store of carbohydrates [inaudible 00:24:01] through time and space. If you want to know more, you should read the banana standard and thank you for your time.
[00:24:07] P: I am going to bring us back around to this specific conversation. Let’s continue.
[00:24:10] JF: We left off in a Banana Republic, or how we’re leading to a Banana Republic. If that would get us to segue back to the wealth tax. I think, Tina, let a really sharp point that I think it was worthy of noting. This doesn’t hit people that have a nine, 10-figure net worth. This is folks that are going to be in that seven, eight figure net worth, which probably is going to comprise a lot of people in this room, in the next 10 or 15 years at worst, even if you’re really bearish like me, all joking aside.
[00:24:39] LW: It’s going to hit the people, too, bro.
[00:24:40] JF: I get it. I get it. I get it. Let me finish this thought, and then I’ll let you get any pertinent thoughts in. I think, it’s important to understand there are a lot of ways to manipulate this thing. By the time that this thing gets enacted, like most people have things figure it out before the actual tax laws get enacted.
When the Dodd-Frank tax after the bank said, after the 2008 financial crisis and the banks were the enemies, which they are, but any who, in terms of the political rhetoric at the time, literally of the 10 most important provisions of Dodd-Frank, eight of them, they already found work arounds for eight or nine of them, I believe, before the actual law actually was implemented. This is a function of making a lot of accountants richer. Let’s take a counter and a thought here and just like, I don’t actually see an unrealized tax bill being passed. I think, it’s political suicide and 70% to 80% of the country’s congressional districts.
I think, it’s a really effective way to raise money and to insulate your power for about 20% to 30% of the congressional political districts. The reality is, very few things can get passed in this country. Things like that, I think, are going to be really difficult to do. Not just from a political standpoint, but actually, from a pragmatic standpoint. That’s why I brought up the methodology they use. They’re literally relying on Forbes to actually find the 400 richest people that they’re citing in this particular report, or the 400 richest family.
The reality is, I think, Tina laid out that last point around where the burden will actually fall and it won’t fall on that next bracket. It won’t fall on the uber wealthy. This is one of those things, to bring it back to the conversation, I think, circles this all, this is what this is why Bitcoin matters. This is why you need hard money. This is why you need censorship-resistant money. This is why you need to start to build community, which I think is taking place in a much more sophisticated way in Washington than the entire time I’ve been. With Amanda’s efforts, with probably, Bitcoin Magazine, helping putting a lot of the content out that they are.
I know a lot of people personally that have been on the phone with senators, like Ted Cruz and Toomey and Lummis, etc. This is one of those things where we got to step up our game as well and be part of the narrative that’s up for it.
[00:26:44] LW: Here’s what’s crazy. The part I was saying is this going to hit the people with six-figure net worth, too, John. The people who might be custodians and been saving for the last 30 years in their 401k and barely getting up to a million. You know what I mean?
[00:26:57] JF: You’re not wrong, Lamar. I would actually say further, you’re going to wind up having for selling. You’re going to have a bunch of people selling assets, instead of accumulating assets.
[00:27:05] LW: Right. Then what happens when you started having for selling? What happens to the actual price of those assets, when you start having all of this –
[00:27:12] JF: All our volatility. You see it in [inaudible 00:27:13]. We’ve seen this with the point price every year in March or April, whatever, where the Bitcoin prize dips, because people have to sell to pay their trading bills, etc., etc. This is one of the things that happens with a lot of the estate taxes, even in current day, right?
Most people that are inheriting large dollar estates, aren’t actually receiving a bunch of cash in bank accounts, or money market accounts. They’re inheriting real estate. They’re inheriting, perhaps, shares in a company. They’re inheriting the family business, etc. This is where Jay was hitting in on, and Jay and I were talking about the stepped-up basis conversation. That will be the easiest way to attack it.
If you really wanted to increase revenue, especially from that targeted group of individuals, the way you do that is you basically increase their tax basis, or you remove the ability for the heirs to inherit the tax basis and you say, “Yo, this isn’t a taxable event. They don’t have to pay taxes necessarily then.” When they do, when you do die, or when you do give it to them, or when they sell it, then they’re going to have to pay it based on a different basis.
[00:28:14] JG: John, they’ll probably do one of the two things. They’re probably going to do that. They may also say that we won’t tax you on this liquidation event of your parents passing away, but if you pass away and still have it, that will be a liquidation event for your kids. You can’t just keep it. They’re probably going to prevent to push that down intimately and definitely.
[00:28:30] T: Hold on. You’re saying, there’s an unlimited elimination of the estate tax? Is that what you’re saying? Because I don’t think –
[00:28:37] JG: That’s not what I’m saying.
[00:28:37] T: [Inaudible 00:28:38] about eliminating the estate taxes. Hold on. The reason you get – Hold on. The reason you get a step up in basis is because you get hit within estate tax. As a quid pro quo, you get the step up in basis. If you own XYZ stock at basically zero, and now it’s at ,2000, you get the step up in basis, because for any estate over some amount, you pay a very large estate tax. You can’t forget that. You can’t eliminate –
[00:29:02] P: Tina, I just want to make sure that the audience understands what you mean when you say step-up in basis. Can you define that for us?
[00:29:07] T: Okay. The basis is the price you paid. You bought Microsoft stock. You bought it back in 1989 and you paid the equivalent of 20 cents for it. Today, it’s selling at 300 and some odd dollars. That’s a step-up in basis. You own 30 million dollars’ worth, in the state of whatever, which is in excess of the exemption. The exemption today is 11.7 million per person.
Together, a couple can leave twice that amount, 11.7 million dollars times two to their children, with as an exclusion, and without paying a state taxes on it. They’re going to drop that 11.7 to 5 million something, so you won’t get as much of an exclusion, and you’ll get hit on a estate tax over that amount and you’ll pay the difference in the gains.
The reason Warren Buffet likes the estate tax so much is that when all kinds of people have to sell their businesses, because they can’t meet the estate tax, because they may not be liquid, he gets to buy it on the cheap.
[00:30:05] JF: That’s the point that I was getting. Forcing the selling in those areas for people that [inaudible 00:30:09]. It basically distorts markets. Hey, Tina, just because I think, and you’re not wrong in everything you’re saying, but just to repeat it, because for people who don’t know what stepped-up basis is, probably got lost in the next two bullet points you are. Let me just literally recite this. [Inaudible 00:30:24].
[00:30:25] T: You do it, John.
[00:30:26] JF: Yeah, it’s fine. The tax code in the United States holds that when the person beneficiary receives an asset from the giver, the benefactor, after the benefactor dies, that asset receives stepped-up basis, in which market value at the time of the benefactor dies, a stepped-up basis can be higher than before death costs. Simply put, you when you’re inheriting an asset, you basically can get the market price of the asset as your basis when you receive it, because the person who likely has given it to you, this is assuming that it’s higher than what you received it at. If you’re getting a piece of real estate that is now worth a million, but it was bought for a 100,000, stepped-up basis now allows for you to own that real estate at a million. When you sell it for 2 million, you would now owe a million dollars in taxes, versus 1.9 million. Is that more clear, P?
[00:31:12] P: Yeah, absolutely.
[00:31:12] JF: Should I try that one more time?
[00:31:13] P: No. Thanks, man. I also want to give just a chance for Shannon, you requested to speak. You’ve been up here for a while.
[00:31:19] JF: Hey, really quickly, P. Can we let Tina finish that? I think he’s about to finish the last thought that I think it was really important. Tina, if I didn’t interrupt you. And then Shannon, if you want to jump in on that. I think, you were really winding a really important thought that I was trying to –
[00:31:31] T: I don’t remember what thought. If you do, you can fill in for me, because I completely forgotten what I was saying.
[00:31:37] JF: No worries, Tina. What I think what you’re doing is basically, tying the additive component of where you can extract more of more tax revenue, right? Just by using the illustration I do, so if you basically eliminate stepped basis, you’re able to actually hit that group harder, and more likely than not a bunch of people that don’t have the ability to pay that tax with liquid cash. What they wind up doing is they force sell assets, especially things that might not necessarily have huge market.
Imagine if you’re buying – you get a piece of real estate, because your parents have had the family home for 30 years. Cantillon effect of inflation, etc., and has now driven that price. This is a middle-class home, probably in Chicago. It’s now worth a couple million dollars, perhaps. Now, obviously, fast forwarding 10 or 15 years, the way that they’d be able to get more tax revenue is to obviously tax you on the basis that was the original acquisition of that asset. An example I used before, a 100,000 versus a million, obviously taxing 1.9 million makes that a lot more tax revenue, but also it distorts markets, right?
One of the reasons we have wash sale rules, P, and this is where I was trying to bring this thought home on market distortion, or perhaps, even more volatility, is that people are going to be selling for no other reason than to pay a tax bill, that they wouldn’t have had, if someone didn’t die, or someone didn’t hand them something.
It doesn’t allow for intergenerational wealth. It doesn’t allow for you to transfer your energy through time and space in the way that Bitcoin is perfected. I think that’s why it’s like, this type of thought is super, super anti-Bitcoin, and I think something that should be concerning, even though I actually don’t think that it’s super practical.
I think, the stepped-up basis attack is definitely practical. I think, the ability to start taxing people on appreciation is going to be much more difficult, not only politically to pass, but also from an accounting standpoint to enforce.
[00:33:37] JG: They’re going to try to tax you on the money you borrow against assets.
[00:33:42] LW: I think, also from a political standpoint, like you were saying earlier, if you even look at the whole idea of tax the rich, the problem is what I was saying earlier, I think, there is asymmetric information about what’s really going to happen. The people who are on the bottom rungs of society that actually need to save and start investing in assets to start building up their own net worth and wealth, they don’t understand that those same laws are going to be affecting them, because it’s not affecting them immediately.
The problem is as those laws begin to affect them, they are going to be further behind in the wealth gap, which is not good for anyone who is trying to actually grow generational wealth to pass down for generations, so that the next generations can stop being in the situations that they’re in.
I think, that’s the part from a political standpoint that it almost is manipulative, to be all the way – What politics aren’t manipulate? Let me rewind that. It’s just politics as usual to try to manipulate a base to make them believe that it’s us versus them. When the truth of the matter is, the us versus them is probably really supposed to be the government versus the people, the state versus the people.
I think, that’s what really, we need to start looking at and understanding that some of these policies and the things that they’re encouraging is not going to only affect these “billionaires” that they are targeting, but it’s also going to affect everyday people. I think, that winds up putting us into a far darker hole when it comes to marginalized communities in this country, man. That’s the part that makes me very passionate. That’s the part that just makes me very upset that they try to do things like this, because you never can get out of the hole if every time you get out of the hole, they change the rules about what the hole is, you know what I’m saying? And what income is.
[00:35:31] JF: I’ll tell you, it’s also probably worth just to bring this home a little, P, and I won’t be very long. This is just a Cyborg Yellen, pretty much. This is political suicide, I believe, for 70% of [inaudible 00:35:42]. Take a different position than me. That’s mine. It’s okay for us to disagree. Let me just say this. Right now, this isn’t a serious proposal that’s getting any traction. These are the types of things that have been talked about for years.
It’s not like, I’m just putting this out there from a perspective of anybody that’s sitting there and listening, worried about calling their accountant tomorrow and being like, “Yo, what am I taxed?” Take a deep breath. There’s no new tax done.
[00:36:05] P: Great. Jay, before you jump in, I just want to comment and say, that’s a very – Lamar and John, you just framed a really eloquent way of thinking about this, which is that it’s ultimately an attack on what Bitcoin is designed to fix. Specifically, it’s an attack on low-time preference. It basically forces you to have a higher time preference. I think, that’s a really important frame for us to acknowledge, because that is the type of attack, the type of insidious attack that we are most likely to see on Bitcoin going forward.
Bans like the one that China has implemented, it’s comical at this point, right? We all laugh that price barely is affected from just yeah, trying a good fucking luck. These types of things where the narrative is being shifted and more importantly, the incentives are being shifted. That is really fucking dangerous. I think, it’s so important that we are – whether or not these are imminent threats as some of us think they are, or just proposals, John, as it sounds like, you think they are. I think we have to be hyper-aware of these things, regardless, because these are the types of threats that have a largest likelihood of undermining everything that we’re trying to achieve with Bitcoin.
[00:37:13] LW: P, can I say this really quick, Jay. Just really quick.
[00:37:14] JG: No, man. Because I’m trying to talk. I try to be respectful here.
[00:37:17] P: [Inaudible 00:37:17] Go ahead, Jay.
[00:37:19] JG: Apparently, it’s different in Spaces. You got to wait for everybody to finish. John, I agree with what you’re saying, but I don’t in a way. It’s dangerous to have this thinking of, there’s nothing to worry about. Joe’s in here as a listener. He’s not on stage. He generally does a lot of this.
[00:37:30] JF: No, that’s not my take. Just for the record, that’s not my take. That’s why I’m here to join the conversation. I didn’t want people panicking and calling their accountants and figure out, like thinking that this is a tax bill that we’re talking about, like the infrastructure bill a couple weeks ago or something. I just wanted to put some component of it. That’s all. Or some context to it. I do think it’s important, and I do think it’s a threat.
[00:37:50] LW: That’s my whole thing though, John.
[00:37:52] JF: Hey, Lamar. After you’re done, though, let Tina jump in, because he’s been waiting for a while.
[00:37:56] LW: Yeah. Quickly, go ahead, Jay. Man.
[00:37:58] JG: I didn’t asked you a damn thing. I just wanted to say, that I think it’s important to understand that I started the call off when we started this room, saying that words have meaning. they started this rhetoric in 2008 under Obama’s hope, whatever the fuck campaign he had, when he kept saying they’re not paying their fair share. the fair share line, I’ve never heard before. They’ve been pounding that drum and slowly introducing more and more overreaching tax strategies.
The first one was the Obama Affordable Healthcare Tax. Obviously, it made sense if you believed in doing the affordable care for the day, to try to have to pay for it what they say. They could just put in more money. They had the 3.8% tax. Then when Trump comes in and has his told tax plan and tax cuts, doesn’t cut that tax, right? They’re never going to take these things away, so they slowly creep these things in. They start with the rhetoric. They start doing it this way. They lean it. They do the same thing at the fed, right? Where they’ll say things like, “We’re thinking about tapering,” and then they want to see how the market reacts. If the market doesn’t overreact, they might actually try it. They try a few more signaling aside, a verbal expression. Then, eventually, they try it and they see how the market reacts there, then they push further and they push further. They’re doing the same thing here with this stuff. This is what their strategy is. They push it out there.
[00:39:11] JF: They tax the rich –
[00:39:11] P: Wait a minute. Hold on. John. John, John, John. John, wait. I do want to give David a chance to speak and also, Shannon.
[00:39:17] JG: Okay. Nothing’s changed, John. It’s always been the same, right?
[00:39:19] JF: No. The first time that said [inaudible 00:39:21].
[00:39:22] JG: John, it is a strategic words. Listen to the words. Listen to the rhetoric.
[00:39:26] JF: I get it. I’m saying, you just said the first time you heard it was in 2008 with Obama. I’m telling you that this goes back to the election of 1890 with –
[00:39:35] P: John, hold on, hold on, hold on. John. John. I take a point. It doesn’t actually matter when they are pushing this narrative. Jay’s point rather still stands, which is that –
[00:39:42] JG: It’s accelerating.
[00:39:43] P: It is accelerating. Absolutely. Jay, you and I were talking about how I feel foolish being continually surprised by how rapidly we are accelerating along this timeline. This is how it goes to your point. You’re absolutely correct. It’s narrative and it’s how does the public respond? Then, it’s basically, okay, they didn’t respond too harshly, or maybe only a little bit harshly. Great. We can lock us in and it will never be removed. You see this in every single aspect of our lives, including like, fucking bridge tolls. I live in the SF Bay Area, the Golden Gate Bridge, there was not supposed to be a bridge toll on that, and they have increased it every fucking year and every fucking year. It’s announced as being a temporary measure that is never going away. I think, that it’s so important as you said, that we are understanding these ideas as attacks.
[00:40:24] JG: The thing that gets me the most riled up, like I was the other day –
[00:40:27] P: Jay. Wait, hold on. Go ahead and finish this thought, and then I do want to let Shannon.
[00:40:31] JG: The thing that really gets me going is that it’s a class warfare. It started with Obama creating this class warfare of the rich and the poor. Yes, John, they’ve been doing this for many years, but not as strategically calculated as they’ve been doing over the last 15 years, 13 years, I should say. Very strategic. Now, it’s just dumping over into people, like Elizabeth Warren now, that are acting on the total polar opposite side of Donald Trump and the way the politics are, and they have AOCs, and you have multiple ones on that side of the aisle that are getting more and more radical.
It’s dangerous and a rhetoric that needs to stop. You need to have people step up in Congress and stop this shit, because it’s class warfare. It’s pitting the majority against the minority. I don’t care what the reasoning is and what those classes of people are. Whether it’s race, religion, creed, wealth. I don’t give a shit what it is. When you’re pitting people against each other and it’s a farce, because they’re the ones creating the problem with the money printing, they know they are, it’s completely and utterly disingenuous at best, what they’re doing right now. Because they’re blaming the rich. They’re not saying it per se, but they’re saying, they are paying their fair share. It’s an implication.
It’s very smart what Obama did and his team. They’ve latched onto it and they haven’t let it go, because it assumes to the average person listening, the rich people are getting richer and they’re using words like income. They’ve been doing this in the media, by the way, for at least a decade, when they would say, the stock market’s roaring and Mark Zuckerberg’s income last year was way up, and because the stock is up. It’s like, that’s not his income. They’ve been saying that. I’ve been correcting that on CNBC for years and they say it on CNBC, guys.
[00:41:56] P: To your point, and then I want to – I do want to let Dave and Shannon speak. I also want to welcome Dustin and Joe to the stage. This is a classic playbook. You take a minority that people are already biased against for various reasons. Then, you focus that ire and you focus that anger, and then you blame them for the things that you have, actually, the problems that you and by you, the government, or any specific entity that’s trying to amass power has actually created.
This is a classic scapegoat strategy. This is, I hate to fucking bring this up, because if you immediately are an idiot if you bring this up, but this is exactly what happened in Germany, and this is exactly what we’re seeing here. I’m not saying that – I’m not comparing Nazi Germany to America, but these are very tried and true tactics. Isolate groups, create narratives that divide them and then ferment anger between various groups. Then once you eliminate one group, you shift to a different group and you move them out as well, because the rules never go back.
[00:42:56] LW: We got a ton from Adolf Hitler, My Struggle. You can read the book and he can teach you things that do this.
[00:43:02] P: Yeah. Lamar, to your point, this happens with race and [inaudible 00:43:04] laws and everything.
[00:43:06] LW: No. I’m talking about race. I’m talking about, think about it, vaccinated, not vaccinated.
[00:43:11] P: Yeah. Perfect. Perfect example.
[00:43:13] LW: Think about it. It’s like, there’s a division constantly being had, because what people don’t understand is as long as they can keep you divided, they can keep control over you, period. I don’t care if it’s race. I don’t care if it’s class. I don’t care if it’s vaccine. Once you start to realize is these narratives, and that’s why, when John was saying it, I thought he was saying the same thing Jay heard. The truth is that these seeds that are being planted, man, these seeds are being planted over and over again, just looking for fertile enough soil to make people believe that even things, like potentially socialism is better than capitalism.
You got all of these seeds that get planted. Then, what happens is now you have people who think socialism is better than capitalism, who think capitalism is better than socialism. Whether you have what P said, a divide, the seeds get planted first, then the divide comes later. It happens over and over again, and we’re seeing it with this rhetoric of we need to go after this income.
When Jay said earlier about Mark Zuckerberg, the really wealthy in the world are not having income, because they’re borrowing against their assets, so there is no income. The only people actually making income are us. It’s not the billionaires. It’s us. We’re the ones making income. We’re the ones going to get tax for that income and the same way that large corporations don’t hardly ever have to pay tax, the same way large billionaires don’t ever have to pay tax. It’s always comes down to us.
[00:44:41] JF: Shannon, you better jump in right now, man. I’m going to try to block for you for three seconds. Do it.
[00:44:45] P: Shannon, go for it.
[00:44:46] S: I think, the moral of this story is that you need to have an off-grid Bitcoin mining farm that people don’t know about, instead of investing in other assets. More importantly, what are you supposed to do about it? That’s the big problem, right? The government tends to do whatever they want and they have a bigger voice. Tina’s loud, but their voice is bigger.
[00:45:03] JG: To me, it’s memes.
[00:45:05] T: I’ll chime in on an opinion on that, if you’d like. What I think, what’s really critical is Bitcoin needs to get big. Bitcoin needs to be in the tens of trillions and hundreds of trillions of dollars, because basically, the bigger Bitcoin gets, Bitcoin effectively almost becomes its own nation state. It becomes a weapon and they know it.
We need to get other people to own and hold Bitcoin, because that does become an immensely powerful tool. People usually like to protect things that they own. It’s not perfect, but it really does become very helpful when people have their own wealth to protect. You really want to encourage people. This is my opinion, and probably others disagree with that, but it’s an amazingly powerful tool. Bitcoin we’ll get to some size. Bitcoiners will be able to have significant influence on politics, because they’ll be extremely wealthy, and to be able to hire lobbyists and do the things necessary to influence the way things work in this country and other countries. That’s my personal opinion.
[00:46:11] JG: I think, you need memes. I’m not joking when I say that. The pay your fair share is basically a meme. You need taglines. You need something that resonates, that’s digestible and easily repeatable, so that people can understand. What that is, it needs to be telling the truth. It needs to educate people with the truth and taglines. It’s the only way to counter what they’re doing and their taglines.
[00:46:31] P: I could not agree with you more. Yellow and I are literally chatting in the background about how funny it was that he came up and made the joke about bananas. I think, that is so important, because one, humor is one of the most effective ways to communicate. Especially when it is strategically interspersed in super heavy, or dense topics. More than that, Yellow is part of, what is it’s like? The meme factory (This is not a real thing). I think, those types of initiatives are, they’re funny, but they’re also super, super important.
[00:47:04] JG: P, remember when Zuckerberg went to Congress and the Congress people asked him the stupidest questions and he’s divestment, we sell advertising, when they were like, “Where do you get your revenue from?” That’s an hour of talking about how they derive their revenue. Those kinds of things, we have to find that type of shit and make that viral, to show that the people that are actually out here proposing these ridiculous things, it is ridiculous, because look at all the other ridiculous shit they’re saying, and then you explain that. It’s got to be 30 seconds to a minute on those types of clips.
[00:47:34] P: Yeah, totally. Okay. Shannon, it sounds like you got your – you were distracted/forgot what you were going to say. David, what’d you got for us?
[00:47:41] D: Two things. One, is Ron Wyden has already taken the stance that it’s the billionaire income tax. That is the messaging now. It’s a billionaire income tax. The stat that I think everyone needs to remember with this is in 1913, when the 16th amendment went into effect, less than 1% of people paid a 1% net income tax. That was where income taxes started. It’s not going to stay with the billionaires.
[00:48:05] JG: Slippery slope.
[00:48:07] P: Yeah, totally. Again, this has nothing to do with facts or reality. This is a narrative game. This is about convincing constituents that a thing is true, that is not necessarily true. In this case, definitely not true. That is the terrain that we are fighting on, and I think it’s really important to acknowledge that. Joe, I want to acknowledge you and thanks for joining us. What are your thoughts? Then I want to go to Dustin.
[00:48:30] J: Thanks, P. Thanks for all the great discussion in the room. A lot of great points. I was really enjoying listening. I will say this. I believe that this is a threat to be taken seriously. I believe this creep towards additional taxation is not to be minimized, or just pushed off as something that’ll never occur. I think, it’s something that we really need to look at very closely.
That being said, I do think part of the messaging and the narrative that we’ve overlooked here is that people are seeing the real way to stay flat. They’re seeing a lot of situations where the middle-class, particularly the poor are trapped in these cycles, where they can leverage the Cantillon effect that a lot of other classes can. They are desperate for politicians to be relatable, to put on a dress and say, tax the rich and make them understand, or feel. It just shows some virtual signaling for why they understand their plight.
I think, that’s a big part of this. Because if you actually look, and Jay made this point earlier, the amount of revenue under most of these proposals, it’s not going to solve the spending. It’s not going to be budget neutral. This will be taken on a tremendous amount of debt that is essentially monetized by the fed. You have to look at really, what is the point of this? Why are you emphasizing these tax changes and going after the wealthy elites here, if it’s not going to solve the spending problem? In fact, in many respects, it’s going to actually be negative and it’s going to result in lower tax revenue for the reasons Tina said, because you’re going to just find more and more loopholes and way to safeguard that income.
I think, part of it is just to understand where we’re at in this overall fiat cycle, and why the politicians from a political standpoint, having their vested interests, the desire to go after and identify the boogeyman and blame that person and bring that person to task and say, “Now we’ve raised taxes on the rich.” It’s a common historical thing. You needed a bogeyman to point out that say, this is why you middle-class Americans and lower-class people are struggling. It’s an easy way to deflect from the overarching problem of the fiat standard and the nons-top money printing, which is in the words of Stanley Druckenmiller, has been the single greatest force for the concentration of wealth and equality in the last 50 years, has been the federal reserve and its monetary policy. I think it’s important to not lose sight of that context.
[00:50:37] P: Yeah. That’s a great point. Dustin, did you have any thoughts?
[00:50:40] D: I agree with Joe, which is, he says so much awesome stuff. It’s hard not to. Yeah. Honestly, I think Janet Yellen has been saying this over and over again, somehow it ends up getting the headlines. My own personal theory is that it’s hard to imagine Congress passing a law that would hurt themselves so dramatically. They’re all millionaires. They all have probably tons of unrealized capital gains. I imagine, if they do pass them like that, they have so many loopholes for themselves that hopefully, we have access to, too. I don’t know. I suspect, there is a demand like Joe is saying, for sounding like they’re doing something.
I wouldn’t be surprised if there’s a unrealized capital gains tax law that’s passed at some point. Then, actually doesn’t do anything, but it sounds really good. That’s on theme with what’s happening with these bills. They’re like, revenue neutral bills. Everyone knows they’re not, but it’s just this weird political theater that they’re playing right now.
[00:51:28] P: I don’t think it’s necessarily weird political feeder. I don’t think it is. I think, it’s they’re trying to push these narratives and see what sticks, see what doesn’t, and –
[00:51:37] JF: Yeah. Strategic. If it’s theater, it’s strategic. It’s calculated and strategic, I agree.
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[EPISODE CONTINUED]
[00:53:43] JG: I want to say something else. I viewed taxes a little bit differently when I was earning. When I was running my company and making a lot of money, I looked at it as well, I got to pay tax. I made a lot of money. That’s good. Then, when you’re done and you have money that you’ll die with and you’re wealthy and you’re not working and earning anymore, it’s a real drag when they have all these tax implications, and adding more taxes and they’re proposing the ideas of any more taxes, because you’re not out there earning anymore.
Earners, Dustin was speaking to the Congress people here, right? They are in the world where they’re going to go do speaking gigs and book deals and they’re making money off of their income from Congress, their job, they have their healthcare paid for. They’re not feeling the crunch where they have a net worth that’s flat, then now have to take all of that capital that they’ve made and been taxed on and push it into risk assets. They’re not quite there yet. I’m not saying they don’t have their assets in risk assets. I’m saying, that they’re continually earning and there is a difference there when you are an earner, how you view taxes.
[00:54:38] JF: Jay, because they’re part of the revolving door, and then they go work for the lobbying firm that was lobbing them, or the large corporation in their district that they were doing all those favors for. Yeah, for sure. Shannon, actually ask the question, so what do we do about it? Amanda’s on stage. I know there’s been a lot of conversations that we had early on with what feels like the reunion crew here from Bitcoin Club. I remember when I met you, Amanda, for instance, Gary Gensler just got appointed. We just got some declaration from the OCC about banks being able to hold digital assets, BNY, Bank of New York Mellon was not part of the conversation. [Inaudible 00:55:17] wasn’t part of the conversation, Tesla. There were all these things.
Now, we’re starting to see, I think, one of the developments that I’ve seen and you’ve been central to that is we’re actually starting to be a little bit more organized, and with a lot of effort from you and a lot of others putting in the ability to educate people who really have a massive education gap.
I’ve talked about this before. I have friends that are in various levels of state and the federal legislator, and a gas that at their understanding of this. Having said that, the infrastructure is developing, and I think, the other half of this is seeing more institutions come online that can ultimately sway the narrative in Washington in a more significant way. It was more interest that to protect, and more marketing dollars and lobbying dollars to support really tactical efforts by what feels just to decentralized group of cyber Hornets’ going after, Cynthia and crew to get them educated. I don’t know if you want to chime in, because I do think the question Shannon raised is probably the more pertinent one. What do we do next?
[00:56:19] AC: Yeah. Shannon’s been part of this too. Last week, we taught a staffer via Zoom, so anyone can do this, just about Bitcoin and have addressed some of the FUD. We’ve done this with senators directly as well. Becca, Jimmy, myself, and a few others, Joe, have been working on C4. We’re bringing that out into the world, just to focus on education in DC and then some grassroots efforts where it makes sense.
I think, a lot of it is just being naive and ignorant, but I at least, so, I think it’s on us to take the steps to focus on teaching folks on the hill and back home. I think, where you live is just in your local politicians are just as important as people in DC. That’s been exciting. I don’t know. I would love to hear if any other Bitcoin groups had submitted a Toomey proposal. Senator Toomey had asked for a response on guidance around cryptocurrency legislation.
We were able to submit that proposal, Monday night. Now, we’re just hitting the ground running, CJ and Alex Gladstein are going to be talking to a group of, I think, senators and staffers, probably the end of this, or yeah, in October. Then, some of us are going to go out to DC and November and just set up a bunch of meetings and start building those relationships.
It takes time. I think, it’s really important to offer education before asking for specific attention to things that they know that were going to be around for years and not just come and go. I think, that’s really important throughout this whole process. Thanks, John.
[00:57:57] LW: Amanda, quick question. Do you think that it’s more important to educate the incumbents, or those on the hill, than it is to educate the actual constituency? Because I’ve always taken the approach that educating the constituency will make the people on the hill get educated really fast, because that’s what happens, right? If your constituency, as a issue that they’re going to want to vote on, or that is really important to them, then that incumbent better figure it out really quick, or that next election, they’re not going to make it.
I think, we put a lot of effort into trying to educate the folks on the hill. I truthfully believe, it’s that old country thing where, when people say you can’t teach an old dog new tricks. I think, that to me has shown forth more than anything. I know Senator Warner, not Warren, but Senator Warner, I met him a long time ago, man. These people have had a chance to learn about Bitcoin. They’ve had a chance to learn about what’s going on in the cryptocurrency space. They’ve had no interest in it. Why they had no interest? Because their constituency has no interest in it.
I’m just wondering, do you think that the efforts of doing that are in someone in vain, if you don’t have a lot of money behind it? Because that’s how I always feel. Or do you feel like, that there are some efforts that are actually chipping away at their ideologies and the things that they believed for a long time?
[00:59:24] AC: Yeah, that’s a good question. I guess, we experimented with that on the infrastructure bill with so many people who called their senators, right? We were blowing up the hill. Sorry, this is bad. I don’t want to flag this. We were taking up the phone lines to an annoying point.
[00:59:38] T: 40,000 calls, right?
[00:59:41] AC: Yeah. Those were just the ones we know about. I think, there were probably more. That’s a great little, “Hey, we’re here.” If we can’t back that up with consistency and education, that’s a one-time trick. I think, now, you have to follow that up with, “Hey, we’re the annoying ones that called you. We’d like to talk to your staff and teach you about this.” That’s the most important part. I don’t know how many people actually followed up and called and taught. If we don’t have that follow-up, it doesn’t matter if we’re –
[01:00:10] JG: They never called.
[01:00:12] LW: That’s what I’m saying.
[01:00:13] P: Yeah. Jay, you have 45-minute long messages.
[01:00:17] LW: I guarantee, they call back their biggest donor. Guarantee you. I guarantee you. Did you see what I’m saying? I guarantee you.
[01:00:25] JG: Lamar, to your point. I think about marijuana as an example of some grassroots movement. I think, it wasn’t the politicians that came to us and said, “Hey guys. You know what? You need marijuana. I think we should legalize marijuana. What do you think?” No, it was the people. It was such a demand that they had to respond to the constituencies.
I think you’re right on that. I don’t know how you do that. That’s a grassroot movement. I think, what they’re doing, going to the senators and lobbying them, I think, you still have to do that. I do think, there needs to be a concerted effort towards getting people to be pushing on, like you did before. That was fantastic. When I’m reading that there’s 40,000 calls, I did not hear that on Clubhouse, guys. I saw that on CNBC or some shit, the website. A CNBC article. That’s amazing. That was purely out of the Clubhouse crew that did that. Congratulations. Fantastic.
[01:01:06] LW: Yeah, congratulations on getting it. Here’s my question. Here’s the thing, man. We’ve seen political efforts happen like this, grassroots people yelling, screaming. We’re getting a lot of people calling in, the whole nine. The question is, what are the outcomes? Yes, we were annoying. Yes, we were on the phones. What happened in that bill? What was the outcome of the vote? At the end of the day, no matter how many calls that you all made. That’s the part, right?
I think, that’s the part that we sometimes miss is that yes, it feels good to do all of these things and go about it in a standard political way and the whole nine. The truth is, just like what Jay said, we’ve talked about that before. With marijuana, it’s like, the people saying, “Look, man. We want this to be legal.” Until the people really spoke up loud enough and were like, “Look, we’ll vote you out, if you don’t make this legal,” or they wind up getting to the point where it was on the actual ballot.
[01:02:00] J: It was extraordinarily positive. I understand [inaudible 01:02:03] senators, you had a United States Senator on the floor of the Senate fighting for a Bitcoin. At least one, Ted Cruz. You had other senators trying to fix language and listening to reason. Because of an arcane parliamentary rule, they couldn’t get it through, because some other idiot wanted to get his priority passed. That’s essentially what happened, right? To make the note –
[01:02:22] JG: First time ever.
[01:02:24] J: All that activism is so silly. Lamar. I’m sorry. I just completely disagree.
[01:02:28] P: All right. I muted everyone. Okay, hold on. Lamar, please finish. Then I do want to hear Amanda’s thoughts. Go ahead, Lamar.
[01:02:35] LW: Yeah. Suddenly, he was quiet after I asked the man the question. I let her respond. She was like, I think it’s a – Joe disagrees. At the same time, Joe, that language that was put into those bills, regardless of what you’re saying, some of that language was not great for Bitcoin. It wasn’t great, period. It literally wasn’t great. Ted Cruz had the best option, period. He was like, “We don’t know enough about this. We shouldn’t be out here putting this in the bill.”
[01:02:58] JG: That’s not the point, though.
[01:03:00] LW: No, that is the point, because here’s the thing. No. Jay, listen, just listen. Let me land mine.
[01:03:04] JG: I’m listening.
[01:03:05] LW: The point is this, is because if you get the wrong institutions, the wrong people writing the bills and making these decisions within the bill, then even if we get something in there that says something about Bitcoin, if it is not the right thing, then all of a sudden, we’re fighting an uphill battle all over again. That’s what I’m saying. You’re literally running in circles, if people are not putting the right things in, and these people don’t have enough information.
[01:03:32] JG: We all agree. We all agree. A 100%. You should also celebrate that what Joe said is absolutely also true. There’s a guy, senator, standing there fighting for Bitcoin. Never had that before. Never had that before. It could go 100% favorably? No. It’s a stepping stone. It’s inevitable. It’s all inevitable.
[01:03:50] P: Hold on. Hold on. Lamar. Wait. Hold on. He’s fighting for Bitcoin, because many of the people on this stage put a ton of effort into getting him onboard with that. Hold on. I totally –
[01:04:05] LW: He’s not in freaking New York, bro. He’s in Texas. If he was in New York, he wouldn’t be doing that. That’s what I’m saying.
[01:04:10] P: Hold on. Jay, Jay, Jay, I got this. I got this. Lamar, totally agree with you. I think that it is also very important to acknowledge that this is a stochastic process, right? It is not something that is going to go from one to 100 instantaneously. We’re always in a situation where we’re doing three steps forward, two steps back, five steps forward, two steps back, 10 steps forward, seven steps back. That’s what it takes.
It takes the efforts of everyone, the plebs, and it takes grassroots efforts from the bottom up, constituents calling their representatives. It also takes companies weighing in. It takes lobbyists. It takes organizations like the one that Amanda and Joe and Becca and Jimmy and others are part of. It’s a multi-pronged attack. It takes all aspects. Again, it’s always going to be the stochastic step forward, but we are moving forward, even if sometimes we lose ground in the short-term. Amanda, I do want to hear what you were going to say. Go ahead.
[01:05:15] AC: Yeah. I think a lot of contexts was missed on how to get a politician from zero to grand-standing on the floor about Bitcoin, right? That took a month of prep. That took unrelentless follow-up. If we’re going to do this on pleb-powered and do grassroots orange pilling like that, then we all have to step up and you can’t just take, “Oh, they didn’t call me back.” You have to email, you have to call, you have to try 10 different ways to get a hold of them sometimes.
It’s like, how relentless are you going to be? I’m not picking on you, Jay. I’m just saying, I hear this all the time and I’m just like, “Yeah, you have to be relentless. You have to be relentless.”
[01:05:58] P: Jay, look, I did have you tattoo the message that was relevant on my back. I think, that’s the level of commitment that we’re talking about here. We took pictures. We sent it to the representatives in California.
[01:06:06] JG: On the small of your back.
[01:06:07] P: Oh, yeah, yeah.
[01:06:08] JF: It was a tramp stamp, is what you’re trying to get at. It’s all good.
[01:06:10] P: Look, that’s your word. That doesn’t align with my culture. But yes, we call it a tramp stamp, with an H in there, so it’s a different word.
[01:06:17] LW: This it he crew.
[01:06:18] T: I think, to validate Lamar’s thoughts.
[01:06:19] P: Lamar, go ahead.
[01:06:21] LW: No, I love Amanda. Because this is, that’s my girl. That’s my peoples. Anyway, Amanda, but here’s my question. I have a question to you. Would you say that in the political realm, matter of fact, I was talking to – what’s my man’s name? Regulatory Jason. He was telling me, if I put $500, if you might do too, bro. I’m saying, if you put $500 on, like basically donate $500, you’re far more likely to get a meeting with your Congress person. He was telling me that. He was explaining it to me one sec. Amanda, do you think that if Bitcoiners put their money together, that we would have a far better influential stick, we have a far better carrot, so to speak, to get people like Ted Cruz to get on the floor, if we had – Yeah, I know that.
[01:07:07] AC: You’d have to follow through. There are many approaches that are going on right now are basically, three entities. One’s a C4, one’s a C6, one’s a C3. There are three Bitcoin specific groups that are collaborating to get this done. Probably two super packs will come out of it, because you have a limit on how much you can donate to a campaign. Yes, Lamar. I think, that’s where the super pack thing comes in. We also want to be really wise with where you spend those resources, right? Some are just a lost cause. We’ve been running, and this is where it would be amazing to have help from Plebs. Feel free to DM me, or Becca, or Jimmy.
We’d love help from you, because we’re going to start focusing on data and targeting. There’s a lot that you can do if you understand who to target. The problem is, if someone’s one, let’s say I’ll just go with Dems, because they’re easier to pick on, because they aren’t as up to speed on Bitcoin. Let’s say, they won their area by a landslide. That’s probably not someone we want to target. What we want to target are people where they are in a tight race, or historically have been in a tight race, and where they don’t always vote with party line. They use their own brain a little bit.
We’ve actually made a tier system for probably, 70 Democrats on the house side and then, and rank them. We have five tiers. We should probably be targeting the first three tiers pretty heavily. Then, some people aren’t going to be running for election again. We need to figure out how do we get to those candidates before they’re actually running and teaching them?
I think, that’s huge. It’s really easy if there’s a seat opening to get to those candidates before they’re officially on the docket. I think that, yeah, sometimes money does speak, but also, so do companies that are employing people, like Bitcoin miners are employing a lot of people across this country. You have financial services companies that have just raised series A’s, for example, Unchained Capital.
Those are the companies that I think could have influence in these conversations. Also, if you’re just living in your district and there’s a negative policy coming down the pipeline, you probably want them to – staffers to understand where you’re coming from and teach them before you say, “Hey, I don’t want you to go after my IRA, or I don’t want you to do these taxes, or this is a backdoor on privacy.”
It’s really about building these long-term relationships and it’s a lot of work. I think, people can do it. I think we can do it. It’s just going for it. That’s what we’re trying to help with too, is some of that. That’s why folks like Shannon and some others from Colorado, we’ve done experiments. I grew up there. There’s so much that can be done on the local level, and then on the federal level.
[01:10:02] P: Becca, you were going to jump in for a second. Going once. Going twice.
[01:10:08] B: Right. Sorry, I’d stepped away from the phone. No, I think Amanda covered it great. I think, there will be a lot of opportunity for people to get involved according to their interests and their skills.
[01:10:20] JF: BTS to come on and talk about it a little bit. I don’t want to re-introduce the topic yet. I think, it’s important that we talk about the letter from Janet and how we organize. I would say that one of the things that also has to happen for us to get our way, and I know that sounds a really simple semantic delivery of our way, but yeah, getting this thing to 10 trillion, or a 100 trillion is going to change the way that Bitcoin is viewed, is going to change the sharpness of its tool.
I think, it enhances the game theory that we all know is built into the protocol. Tina hit on this a little bit ago. I think, it’s going to take further institutional adoption to get the lobbying power in Washington, much like other massive and influential lobbies. Map those strategies out from there. Then, I think, the letter that Michael sent in particular is really important for a lot of institutions. I’ll leave that there for now in terms of other steps that I think need to take place for us to have more of a voice in Washington.
[01:11:14] T: Probably, the biggest reason the NRA is effective is not just because they spend money, but because they have a hardcore base of voters who vote on that issue. Bitcoiners need to become a hardcore base of voters. We will become a huge base of voters.
[01:11:31] JF: Tina, that’s true. That’s absolutely true. 95% of their money comes from four gun manufacturers.
[01:11:37] T: They have a lot of interests. You have the miners.
[01:11:40] JF: Yeah. That’s my point. That’s exactly the point.
[01:11:43] T: The bigger problem is that there are a lot of Bitcoiners who think politics doesn’t scale, doesn’t matter. I’ll tell you all the answers I’ve heard in the last three years from people. It’s like herding cats. They think shit doesn’t matter. Bitcoin may be anti-fragile, but when an IRS agent is crawling up your ass and out your nose, you trust me, you’re fragile. I promise you, you are freaking fragile.
[01:12:08] LW: I’m going to bring this back around, though. Because this is what Bitcoin Tina just said. The reason why the NRA has an incredible amount of political power is because they have an incredible base of voters. You got to ask yourself, who are those base of voters? That base of voters are people who hold guns. That’s a lot of people holding guns. That’s why I’m saying, it’s going to come back around to this.
What we have to do is get more people holding Bitcoin, because the more people that hold Bitcoin and understand what Bitcoin is doing for them, the larger the base of voters becomes. Regardless of what politician is there, if their constituency is holding Bitcoin, they’re going to have some questions to answer when it comes to the town halls and the little pop-ups and everything that these politicians do within their states.
I think, that’s what it is. We got to do both, but I truthfully believe, we still have to still run the race of letting people know about Bitcoin, why it’s better, how it gives people freedom and the whole nine. I think, that’s going to be the foundation for which Amanda and Becca kill it, you know what I’m saying?
[01:13:16] D: Yeah. The other thing I would say is that, [inaudible 01:13:17] sometimes compared to the NRA, but they a single point message. They have a message. It’s never changing. Bitcoin, what we can do through Amanda, myself, give me others are doing is get that message home to the politician. Then, when the ownership of the Bitcoin is spread much more diversely, they’ll all have that same message. The message and the ownership will be widespread and the political impact will be much greater.
That’s why it’s very important to have a crisp message about Bitcoin to the politicians. Not to say that we shouldn’t sometimes it’ll go with the other with other groups, because we’ll need that, they’ll need that force on one or two issues that impact everybody, but ours is an independent voice that is large and honed in Washington.
[01:14:11] S: Donna, and everybody, let me ask a question back to the group. How do we do that effectively? How do we get this uniform block of Bitcoin voters, when we know, Bitcoin is supposed to be available to everyone? It’s people all over the spectrum. How do we both, to Lamar’s point, really focus on getting Bitcoin into the hands of the most people possible? Because that’s the end game and that’s what wins in the end. How do we encourage that adoption broadly and quickly, while still creating cohesion and this voting block, which ultimately ends up encouraging tribalism?
[01:14:47] D: I think, it has to be, small groups in small communities, little lessons on how you get it, how you buy it, how you hold it, why it’s powerful in everywhere, your little community groups, on mothers talking on the playground. It’s a grassroots effort.
[01:15:04] JF: I got an idea. What if we just ran Clubhouse and Twitter Spaces rooms 24 hours a day, just talking about Bitcoin? Would that be an effective –
[01:15:13] P: Don’t be ridiculous. No one would be willing to commit that much time for free to education. That’s just an insane proposition.
[01:15:20] NVK: Yeah, who would do that? I guess, crazy. To be honest, I think that it’s actually helped a lot though, because I look at PlebNet.
[01:15:27] T: A 100%.
[01:15:30] NVK: Look at PlebNet, look at the Black Bitcoin Billionaires. You have 120 –
[01:15:33] JF: Don’t let me not agree with you. Stop trying to not let me agree with you.
[01:15:36] P: John, please –
[01:15:37] JS: Okay. Can I say something?
[01:15:38] P: Yes, Jimmy. Go for it. I think the biggest and most obvious way in which you get a lot of people involved is number go up. That is how you get more people. Because every time number goes up, there’s way more people that come in. This latest round, I think we’re estimating something like, 40 million people in the US. I’m not sure. I’ve heard estimates between 10 and 40 million, yeah, that own Bitcoin. That’s a lot of freaking people.
Imagine that. The nice thing is, time is on our side. I think, a lot of these politicians come to us, not the other way around. They’re going to be like, “Okay, we know you guys have money. What can we do for you?” I’m expecting that in this next bull market, where a lot of people come seeking us out and not the other way around, which is I think, going to be a lot better, because we are going to get a lot more adoption. It’s nice, because we’re on the winning side and we’re going to be.
[01:16:37] JF: Jimmy, I’d argue you’re right, even if you haven’t realized that already, but that’s what Ted Cruz did. Think about the politics of this, just the politics, okay. Forget all of the implications of the tax bill, etc. What Ted Cruz did, he’s likely to run for the presidency in 2024. What he may have just did is tried to get a first mover advantage in a community that he thinks is likely to be a lot wealthier, and a lot more powerful, and a lot more – Some of the conversations you’ve had, so I shouldn’t say that I fully know, but some of the people that were in a conversation with you and [inaudible 01:17:13]. All joking aside, but tell me some more thoughts. I think, that was the –
[01:17:16] P: John, wait. Let Jimmy finish.
[01:17:18] JF: The concept. No, I think he was, and I let him jump back in here. Jimmy, go. By all means.
[01:17:22] JS: Basically, I made all the arguments that I could to get Ted on our side. I think, he heard them, and I think he’s very convinced. Let’s just put it that way. If you want to know exactly the arguments I gave him, I don’t know, DM or something. I’ll be on Clubhouse later. I just don’t want to say it.
[01:17:39] JF: It’s all good, but I think that it worked is what I mean to say. I think, and it’s been incredibly effective, because the thing is, he has nothing to lose by going up there. No one’s going to remember in four years. Anybody that wasn’t going to vote for him already, isn’t going to remember, “Oh, remember when Ted Cruz went up during the infrastructure bill and spoke up to propose an amendment in a committee?” That cost him nothing.
[01:18:02] P: I disagree, man.
[01:18:03] JF: I think, it’s signal to – Oh, I shouldn’t say, take it back. I don’t want to say, it cost them nothing, but I think the calculation is that he signaled to a lot of people that are going to have a lot of power and money, and he did it before any other major candidate likely for the 2024 election did.
I don’t want to pretend it was a zero-risk piece. Generally, I think, he knows that it helped them more than it hurt him. I gather the conversation, Jimmy, Amanda, CJ and others had with them probably helped to eliminate that.
[01:18:31] AC: Which some of it, John, I regret a little bit. I think, it just happened with timing that he was voting that day. I am genuinely concerned that this becomes a single, a one-party issue, or Republicans take hold of this. I think, it’s really important that this is a bipartisan issue. Then we’re just swaying back and forth on a pendulum, depending on who’s in power. If we can take the Lummis approach and take the bipartisan approach, I think we’ll far we’ll fare much better jumping on this.
[01:19:03] JF: Oh, a 100% agree.
[01:19:05] AC: Also, why is he running for president? He wasn’t even born in the US. It’s just a show for this guy. I appreciate what he did. I know a lot of people are working hard. at the same time, it’s really in such a divided country right now to keep this bipartisan and let the game theory on. Lefts wants this more than right. The right wants this more than left, versus just honing in on this being a Republican-only issue. That’s what I’m concerned about.
[01:19:33] B: I don’t belong to a political party, by the way.
[01:19:37] LW: Did you see the hippies? Bitcoin is for the outright for them to get around some stuff. Come on, bro.
[01:19:44] AC: Yeah. That’s why I think when we talk about trying to be like the NRA, let’s be more like AARP. They are even more terrifying on the hill. They’re bipartisan and they support. People pay a membership fee, 40 million members. We have 46 million Bitcoiners in the US, so I try to point us in the direction of trying to draw more similarities between AARP, because we’re already getting painted in that corner.
[01:20:10] JF: Yeah. Amanda, I agree with that completely. I would even argue to say that to maybe summarize that, and this is something I’ve argued and get beat up for all the time. Bitcoin is no doubt, political, but in my mind, it is not a partisan – Both parties hit the print button and have been hitting the print button. Both parties have had power in different forms for the last 50 years since we got off it.
In fact, to the point of just the Republican point that you brought up, just because Ted Cruz is Republican. We had a Republican president when we got off the gold standard, right? There’s all types of this stuff that I totally agree. It’s no doubt, political. The game theory is certainly political. You’re right. This would be so much more effective. It’s probably going to be really difficult in 2021, 2022 American politics to cultivate a non-partisan piece. I think, the AARP example is a great one, and certainly applaud your perspective and try to focus that in. It’s awesome.
[01:21:03] LW: Plus, I think people with AARP cards get discounts on Captain D’s the seafood place.
[01:21:11] JS: Here’s the problem with this partisan thing, because the Republicans are the ones that are actually more open to it and the Democrats are the ones that are demonizing it. You have warrants saying stupid shit. You have people like AOC that are clearly leaning in that direction of vilifying anybody that disagree.
[01:21:33] BA: I hear that, Jimmy. But why would we just lean back and encourage that polarization down that road? I agree with everything you just said. I think right now, the narrative is going in a very hardcore direction that aligns with party lines. To me, it’s really upsetting, because to me, Bitcoin is changing the distribution of wealth. I think, that’s something that taking away the power from the elite and giving it to the working person, that’s how the left view themselves, whether it’s how they view them or not, it’s how they view themselves.
I think, it’s just an afront to Bitcoin, that they don’t understand that Bitcoin is about justice and about equality and about fairness. These are messages that are complimentary to them. I think, when you build up the right, the Bitcoin hero, and you strengthen that narrative that the right is from the Bitcoin, they’re not our friend. They’re politicians.
[01:22:32] Jimmy, two quick examples. Ro Khanna, who I didn’t know who he was, literally gave a really – I didn’t even know who he was until you made this post. Ro Khanna made a really eloquent argument for defending energy use for Bitcoin, saying that it’s not a bad use for energy. That he is basically fighting the FUD.
Then the other thing I would point to, by the way, I totally agree with the trend line that you’re talking about, and If you were to stack them up. Remember, it was Richard Shelby from Alabama, a Republican Senator that basically shot down the amendment that we were looking to have. I just don’t think it’s that clear.
[01:23:02] JS: Can I finish my thought? Because the thing is, right now, the Democrats are in power. That’s my point. They’re not going to listen when they have power. They’re going to listen when they’re desperate. That’s where the Republicans are there. They know that they have an opportunity and that they’re going to need people like us. The thing is, it’s okay to seem a little partisan at certain points, because the pendulum does swing.
Republicans are at some point, I think, will be in power and then the Democrats will come falling. That’s when you say, okay, here’s all the reasons why you should support this and why you should condemn this. It’s that, which, I think, a lot of the really effective lobbying groups do, which is, just okay we’re always going to back the winner.
[01:23:44] JG: Contribute to both sides.
[01:23:45] JS: Yeah. Yeah. This is the fine art that we have to figure out how to play, which I’m not so sure that – It’s not obvious what that path is, because I don’t know, I suck at politics.
[01:23:56] JF: Jimmy. I think you’re not wrong. I don’t think you’re wrong about that at all. I think you’re right. They backed [inaudible 01:24:00]. If you look at most large banking companies are donating to both the district. They’re maxing out on both. Energy companies are doing it in different ways. All types of lobbying organizations will back both horses, and then they just donate to the person that they think that’s going to win at the end and double down on them.
For the most part, you’re right. I would just say, and I think, the strategy of finding the person, or the party that needs you more is certainly not something I would disagree with or endorse. I don’t know. I’m not a lobbyist in the room either. I think, it’s important to be partisan. I actually predict one day, we’ll all be a 100% partisan, because Bitcoin will be the party. It’ll be the single issue. Now, how we traverse from here to there, I think is more akin to how you just laid it out.
I do think, the more macro point that I think Amanda and Becca are saying, I think is still important, to be able to make this a non-partisan issue. The AARP is such a great example, or that’s why Medicare and social security cuts are the third rail of politics. It’s the fastest way to lose your seat, no matter how long you’ve been there. I just think the more macro point of being able to attract both sides and neutralize them and not make it an abortion issue, or a gun rights issue, or just any of the other things that we wind up being divided about, which is going to be hard. I don’t even know how to do it, but I do think that goal is noble.
[01:25:17] JS: Can I offer some analysis here?
[01:25:20] P: Wait a minute. Just because he hasn’t –
[01:25:22] NVK: Those people vote. Most younger people who are –
[01:25:26] P: Tina.
[01:25:27] AC: He’s right. Old people vote.
[01:25:28] P: I love you, Tina. That’s a great point. I do want to hear Jimmy’s thoughts, though.
[01:25:31] JS: What I was going to say is that, the way you get that loyalty from both parties is that you punish them when they go against you, right? That’s essentially what AARP, even the gun lobby and everybody else that does effective lobbying, that’s what they do is they punish the people that go against you.
Right now, you have people Warren and Sherman that are going against us, and they both happen to be Democrats. If you punish them, guess what? The next Democrats are going to be a lot nicer. They’re going to start being more conciliatory towards you.
The way to, I think, get the Democrats on our side is to punish the bad ones. Not necessarily woo everybody. Although, hey, I would love to see Erica Riordan beat Brad Sherman. I think, that would be amazing. Punishing those people that are against you, and purging them from the party through whatever you’re able to do, that’s ultimately, I think, how you’re going to get them to come around. Once you show your strength, they’re like, “Okay, maybe we should be aligned with them.”
I think, this is what AARP plays masterfully. Anytime anyone in either party talks about social security, or Medicare, or something like that, they punish them if they speak out against it and it’s perceived as bad.
[01:26:50] DR: Can I just add one thing on that? Is, I thought that the conversations that we’ve had, let’s say, with a couple of, we’ll just make it more widespread with a couple of the legislative people, where, they met you Jimmy, and they met CJ. Those people became real people. They were not Bitcoin, which they didn’t even know what Bitcoin was. These were their constituents that had businesses, that had opinions, that had kids that are all of a sudden, there was a face to Bitcoin, which was a human face to Bitcoin. I think, that’s very important. When AARP that there are certain a person. There’s an older person.
All of the legislative persons know what that person is. They have a grandmother. They have a grandfather. The gun people also have an image. We are just building ours. We need to introduce ourselves to these legislators, whether they be Democrats, Republicans, it doesn’t really matter. To see that we’re their constituents that have businesses, that are professors, that are doing all these kinds of interesting things with families and schools, and we have Bitcoin. That’s our most important issue, not withstanding the health of our families. That is also tied up into Bitcoin, because it gives it the potential for economics. I think, that once they have an identity, they understand that there are people behind this, they feel more comfortable to be an advocate for it, because it’s not understandable to mirror. These are their constituents talking to them. I do think that’s important.
[01:28:29] JS: I know what we can do. Just hit me with what Donna just said. Let’s invite politicians to a Bitcoin meetup.
[01:28:34] AC: Yes. Yes. Can I tell you something I did once?
[01:28:36] T: Bitcoiners are all over the country. Invite politicians to Bitcoin and meetups.
[01:28:40] P: Go ahead, Amanda.
[01:28:40] AC: Tina is a 100% right. When they meet us in person, all those fears, those uncertainties, all that FUD in the media just is noise, and they can focus on the signal of the person right in front of them, teaching them. I think, that is huge. What I think is the most powerful persona that they can come away with is Bitcoiners are innovators that are going to allow America to compete at the global level. Because right now, we’re losing that foothold.
[01:29:11] P: Interesting. You’re saying that basically, it’s easy for politicians to get lost in the rhetoric. If you put a person in front of them, a potential constituent that they can see their face, understand their excitement, it transcends the specific issue and they can see that the person is genuine and be convinced.
[01:29:28] AC: Yeah. It’s going towards building those relationships, right? I think, that’s the most important thing. So many times, people just come to politicians when they have a problem, or when they want something. If you can take a different approach and be a resource and then show them a different view, I think that’s extremely powerful. Tina’s right.
[01:29:46] JS: Can I Jump on that point exactly?
[01:29:48] T: They look for places. They look for places to connect with constituents.
[01:29:53] P: Definitely.
[01:29:55] T: These meetups take place organically. They’re going to be in Congress people’s districts. It can be incredibly effective.
[01:30:02] A: I wanted to talk exactly about that. I also live in Wyoming. In addition to Cynthia Lummis, we have possibly, one of the worst people in the house, and that is Liz Cheney for Bitcoin. Not specifically, but privately, she’s extremely against it. That aside, the people of Wyoming definitely do not like her and there is going to be a pretty big battle about it.
I have been working very closely with at least prior to Harriet Hagerman becoming tapped by Donald Trump, the previous front runner, Anthony Bouchard, who, when I moved here, he was about as anti-Bitcoin as you could get. In fact, the local conservatives were trying to undo, or were thinking about trying to undo all of the Bitcoin laws that were passed here in Wyoming.
I met them at a political event and I said, “Actually, guys, I’m a Bitcoiner. Let me talk to you.” They had me and Caitlin Long there for two and a half hours. 50 people came in the room, including Anthony Bouchard, thinking that Bitcoin was the devil. By the end, 30 of them were asking how to buy it. Now, Anthony Bouchard is about as close to almost being a Bitcoiner as I think he could be, without actually being there yet. He’s definitely off. He’s off the mark of disliking it. Yes, talking to these people, one-on-one, talking to their constituents, educating people, it’s a big piece of leverage that people don’t expect.
[01:31:19] AC: Yeah. Find a couple people and just start trying to contact them, and where are you get a little traction. Just keep moving with that traction. If anyone wants to talk about this or reach out, I have to run to a dinner meeting, but feel free to message me. Message me here, because, I think, this is what folks are doing at the grassroots level. It adds up Find the candidates that are coming in to replace others and start teaching them before they’re a big deal.
[01:31:46] P: Love it. Okay. I do want to acknowledge, we’re at about two hours now and I really appreciate everyone who’s jumped up on stage and who has joined this conversation. This has been recorded and will be released on the Bitcoin Spaces Live Podcast, which you can search for, and whatever you want. You can also find it on YouTube under the Bitcoin Magazine Channel. Just want to give, if anybody needs to jump out, you absolutely can, but let’s keep going for those who want to stick around. I can go for another half an hour or so, and then we’ll call it. How y’all feeling? You want to keep going?
[01:32:17] JS: Yeah, sure. I don’t know. There’s something about politics, where we’re at the stage, where the margins of politicians are interested, but we’re soon going to get to the mainstream ones. I think, we just have to be patient, because I really do think they’re going to come to us, and we need to be prepared when they do. They’re like, how it is in every bull market is that you have people from all over the place coming in, contacting you every day.
Your third-grade best friend calling you and saying, “Hey, should I buy this thing?” That sort of thing. Same thing. I think, it’s going to happen at the politician level. They’re going to be like, “Okay, I need to really find out more about this thing. What am I going to do?” We’re at the edges right now. The politicians that we’re getting to talk to, they’re not top tier ones, right? We’re not getting to talk to the president, or the speaker of the house yet. It’s people like Ted Cruz who lost the primaries on the edges of the Republican party, or Erica Rhodes who’s running against a 20-year incumbent. That’s what happens.
We’re at the edges right now. We reward some of these people at the edges that are helping us, and we punish some of the people that are more near to the center of power that are against us. Soon we’re going to be at the center. I think that’s inevitable, and that’s my thought on it.
[01:33:28] JF: Yeah. Jimmy, I don’t disagree. I think, the playbook you lay out is less AARP. Almost a certain extent, it’s more AIP. AIP is one of the most effective lobbying institutions. They’ll get both candidates to come up to, it’s the Alliance for Israeli Pack, I think, is what it stands for. Or American Israeli Pack. I don’t know. It’s a very powerful lobby for Jewish-American causes and maybe for Jewish causes overseas, too. I’m not really sure. It’s the one place where you’ll get both parties and both presidential candidates to go to the conference and basically say, “I support Israel.”
I do envision a day where it’s just it’s going to be like that. You can’t go against certain mainstream issues, whether it’s the AARP example with Medicare and social security becoming just such a death wish for a politician, or someone coming out and saying, “We don’t stand with Israel.” That’s a death wish for a politician. I think, the structure, or the infrastructure that’s taken place over the last 12 months for me, it’s been pretty significant.
Yeah. I’m familiar that AIP is pro-Israel. Just, I’m getting a bunch of DMs, so I don’t know if I misspoke. Yeah. The idea is that they’re really effective. If you come out against those particular issues that they are, they don’t go and necessarily to support the politicians that support them,
because most everybody does at this point. They have enough power. When you step out of line, they basically fund your primary opponent, fund the other candidate, take out really large dollar media campaign ads in your district, etc. I think, that strategy laid out is probably one that is going to behoove us not to pursue.
It’s probably going to be where game theory actually leads us. Yeah, I don’t disagree with that at all. I also just think that there is some tangential consideration of our interests that are tied to squares, and micro-strategies, taking those types of powerhouses that are able to write the letter that for instance, I’ve put up in the tweet of above to get accounting changes that are really practically needed, not just why changing laws, or a federal legislator. There’s some of the things that need to go to the SEC, some of the things that need to go to FASBI. Getting really marginal changes that really help the adoption of Bitcoin is also part of – I think, part of the formula.
[01:35:28] P: Donna, you’ve been quiet for a while. Do you have any thoughts?
[01:35:31] DR: I thought it was very talkative before. Tina agreed with me. That makes me twice as talkative.
[01:35:36] P: Fair enough. I apologize. I crave your indulgence. I am so sorry that I have –
[01:35:44] DR: But not my people. We had different people. No, I think it’s great that Bitcoin crowd has – the Bitcoin crowd has – that was Jay. That’s the same people, I think. The Bitcoin crowd has come around to have a conversation and to have a strategy and to be willing to participate and understand how important it is to get the regulators, at least, calmed down and educated and stuff like that.
Even though Bitcoin will be Bitcoin, we’d like to be there a little bit with greater grace and flexibility to make it put in our path, it’s some really big boulders. I think, any discussion we have, this is fantastic, and I applaud everyone for doing it and engaging and to coming with an open mind.
[01:36:25] JS: Yeah. The one thing I would point out is I know a lot of people here do not like Ted Cruz, or just are very turned off by him. I get it. There’s some certain things in which you might not like him, or maybe the way he’s portrayed in the media, or whatever. Regardless, you have to like, that what he’s doing up for Bitcoin is a good thing. He’s our defendant right now. Now, is he going to be president? Probably not. If he does, would that be a terrible thing for Bitcoin? I don’t know.
There are lot worse scenarios than that. I support the fact that [inaudible 01:36:57]. That’s all I’m saying. It’s, don’t just automatically say, “Oh, he’s too partisan and let’s dismiss him. Or, we need to get somebody on the other side, because I don’t like this guy and he’s toxic, or whatever.” Give the guy a chance. Let him prove his loyalty to us. You know what I mean?
[01:37:10] P: Corey. Terrence. Welcome to the stage.
[01:37:13] T: I support Bitcoin freedom over government servitude.
[01:37:16] P: That’s good. You’ve passed the test. If you’d answered incorrectly, we would have gulag you. Banned forever.
[01:37:22] JF: Thank you for the controversial statement, Terrence. We appreciate that.
[01:37:26] T: I believe in unpopular opinions to engagement farm.
[01:37:28] JF: I think, there’s something to keep in mind though about adoption of this by politicians. The reality is, they’re not going to be Bitcoin maximalist in my mind, because the politics don’t allow for that. A lot of jobs that they’ll try to “bring to their district,” or their state, or whatever their jurisdiction is. It’s going to be a bunch of VC money pumped into blockchain bullshit that will represent jobs that they can claim, and that’s good politics. They’re going to say, Bitcoin is great, and they’re going to say, oh, there’s all these other things, too. Just be ready for that, too. They’re going to be shitcoiners.
[01:37:59] JS: That’s the thing I’m much more concerned about than no coiners, that are trying to ban everything. It’s the altcoins. There’s such an easy path, too. We make it an innovation argument, then it’s, oh, then we should allow all these altcoins to price, too. We have to make sure we can thread this needle and make sure that they’re not no coiners, but they’re also not altcoiners, you now what I mean?
[01:38:19] DR: I think, Cynthia Lummis Senator Lummis has done a very good job at that. I would say, that she has supported the state and she has been an advocate for Bitcoin in Congress, and they have good Bitcoin mining laws there, and their hope to – Yeah, they do hope to bring business around Bitcoin to the state and also, the custody thereof.
[01:38:41] JF: in fairness to Cynthia, her son-in-law works at Unchained. She gets it probably better than most. Politicians are politicians, man. We’re going to see the acceptance of what I just laid out, or at least I predict that. There’s going to be too much money. I’d argue, even coin center. There’s not a Bitcoin lobbying organization. Probably get most of their money from shitcoin VC.
[01:39:03] PB: They just raised 3 million using an NFT.
[01:39:06] P: Wait. Sorry. Who did?
[01:39:07] JS: Coin Center. Coin Center raised 3 million dollars or something.
[01:39:12] BA: Yeah. Which is insane and problematic.
[01:39:17] P: Kind of.
[01:39:17] NVK: What was the valuation?
[01:39:19] LW: I’m dropping a Ted Cruz NFT tomorrow.
[01:39:22] BA: Yeah. That’s literally why it’s problematic. When I saw that. Yeah.
[01:39:28] P: What is the reference to Ted Cruz? Is that part of it?
[01:39:31] BA: No, no, no. Nothing with Ted Cruz. It was coin center, right Jimmy?
[01:39:35] JS: Yeah. It was Coin Center. [Inaudible 01:39:37].
[01:39:38] BA: They minted, as I understand it, they partnered with some artists to – minted some eth-based NFT, and then agreed to donate the proceeds or something like that. At the end of the day, they ended up with a crowdfunded 5 million. When I read it, first, my mind was blown, because it just as a marketer or whatever, that’s such an interesting thing. Then, the way that can change the world of almost, political donations and fundraising and open it up to abuse, or promise of different things. Yeah. I don’t know. I think it could actually be the first of many such things for political organizations to raise money.
[01:40:18] JF: Hey, P. This has been a fun space.
[01:40:21] LW: Would that be against the law if Ted Cruz –
[01:40:23] P: Wait. Hold on. Hold on.
[01:40:23] JF: No, what was against the law is you’re not letting me say bye to P.
[01:40:27] LW: Then I was like, I was thinking, and I didn’t even hear you talking. I ain’t going to lie to you, John. I’m sorry about that, bro. I was telling, can you really raise money for [inaudible 01:40:35] with the NFT?
[01:40:37] JF: P, this has been a great space, man. Lamar, I love seeing all these spaces. I know I haven’t hung out with a bunch of you guys on Clubhouse and stuff. It’s been a fun little reunion here. We can talk a little bit about Michael Saylor, and some of these more institutional adaptions another night, or at least some of these challenges. I don’t envision them going away in the near future. I posted the letter from Michael Saylor in the nest above about FASBI accounting changes, and the indefinite, or the intangible accounting issues, to the extent that people have questions, happy to follow up. I’m getting a bunch of DMs about tax and accounting advice, and I’m not a tax lawyer, or an accountant anymore.
[01:41:11] JG: Not for them. Just for me.
[01:41:12] JF: You’re out of the net worth of profile that even when I once worked in public accounting. Anyhow, your tolerable error is probably 80 million on your audit. All joking to another end, I’m not here to – I’m not an accountant. That’s not my business. Please stop DM-ing me about accounting questions. P, man. Fun time and I appreciate it, man.
[01:41:30] P: Yeah. Thank you so much for joining. Apologies. Originally, this was supposed to be half the stuff you can talk to me about it.
[01:41:34] JF: No, I’m glad we did it. We can do it another day.
[01:41:36] P: Yeah. We’ll definitely do it another day. John has a bunch to say about the challenges and strategies that need to be employed around acquiring Bitcoin as large institutions. Yeah, let’s definitely have that conversation another time, John. Thank you.
[01:41:50] JF: All right. For sure, man. Good times. Good to see you.
[01:41:52] T: Man, I think NVK in the streets?
[01:41:54] P: Oh, yeah. He’s been up here, man. NVK, what you got?
[01:41:57] NVK: Oh, I got nothing. I just joined in. I wasn’t sure what was going on, so I was just remaining quiet.
[01:42:03] P: How many boars have you haunted from horseback with knives today?
[01:42:06] NVK: None. There are no boars in the current location, but there were squirrels that had to be dealt with.
[01:42:16] JS: See, if I see NVK, I really need CJ in the same room, so I could see them doing the accents against each other. Yeah.
[01:42:22] P: NVK, versus Bizarro NVK?
[01:42:24] NVK: Yeah, let’s get CJ here. By the way, I now make a fee. There’s a licensee fee involved every time CJ makes an impression of me, I get a cut. I support that. You have a NFT of I got you. I got a question for you, guys.
[01:42:41] LW: No, no. Questions are scarce. NFTs are not scarce.
[01:42:46] T: It’s a great deal of skill for an impression, not for an NFT. Is that what you’re saying?
[01:42:51] LW: Do all of this in crocs, though? That’s my only question, NVK.
[01:42:53] NVK: Depending on the weather, yes.
[01:42:56] T: Got you. You hunt squirrels and boars and license out your voice impression in crocs. Now, this is not a commercial for crocs, by the way.
[01:43:05] NVK: No, listen. I only have –
[01:43:06] T: We have negatives cancel each other out.
[01:43:08] NVK: I used to be a flip-flops guys, because I grew up in Brazil. Now –
[01:43:12] P: You check too much.
[01:43:14] NVK: I either do barefoot, crocs, or bloodstones. That’s it. That’s all I have.
[01:43:18] P: Did you say blood stones? Like conflict stones?
[01:43:22] NVK: Bloodstones. However you call those boots.
[01:43:24] P: Yeah. Conflict diamond. That’s fucked up, man. I know you’ve got a business to run and you’re producing some of the best hardware wallets in the market. Yeah, diamonds that are mined by orphans.
[01:43:34] NVK: P, we used a child labor, just because the parts are very small to solder on the devices, so then we need little hands.
[01:43:40] P: That’s what I’m talking about. Look, I’ve been petitioning to the Bitcoin mining council for months that we should be employing orphans, because their hands are smaller and they can shovel the coal into the steam engines, to power the miners way, way faster. I am told that I’m an insane person and also, that I should not waste anyone’s time. I’m going to do it on my own and set this advantage use free. Moving on, CK, I see you’re up on the stage. What you got, man? Silence.
[01:44:10] JS: I don’t think he’s paying attention. I think he’s –
[01:44:14] NVK: He’s counting his Bitcoin conference money.
[01:44:16] T: I think, it’s called –
[01:44:19] P: I did. I said – I was talking about mining Bitcoins with orphans, because they can shovel the coal into the steam layers.
[01:44:26] CK: I stepped away for a second and washed my hands and that’s when you caught me. Yeah. Honestly, it’s a great strategy. I heard they have a lot of orphans in Tennessee. We can check that out and see if we can put together an op.
[01:44:35] P: Yeah. Just to be clear, for every block that is mined, each orphan gets 10 Bitcoin. We’re actually losing –
[01:44:41] JS: This really is a reunion.
[01:44:44] NVK: Totally an orphan chain here.
[01:44:46] P: Now, look. We’re here to empower the disadvantaged. If we have to lose a massive amount of Bitcoin on each block reward, we’re here for it. That’s the commitment that we have to this space.
[01:44:56] NVK: Maybe cycling the orphans after?
[01:44:58] P: That’s a separate conversation. We can talk afterwards, NVK.
[01:45:02] LW: Hey, NVK. Did you hear what happened about the safety deposit boxes? I heard they stole everything, except for these two calculators.
[01:45:11] NVK: That’s awesome. I hope they left the cold card. Seriously, that’s why never leave your seeds on safe deposit box, unless they are split or [inaudible 01:45:21], or something.
[01:45:23] P: All right. I do want to bring us back around though. All joking aside. We’re not mining with orphans. That’d be fucked up. We’re all good Bitcoiners. NVK, I am curious, we’ve been talking about the – this conversation initially got kicked off around the claims that Janet Yellen made yesterday, and around the article that the white house published two days back, about the idea of, they just tried to slip in the claim that unrealized capital gains, or income.
[01:45:52] NVK: Yeah. This is fascinating, because I think, it has a little bit of a stench from either the math, or the world economic forum. Because I’d say, six months to a year ago, the liberal government used some arm organization here in Canada to run what’s called a balloon trial. They just released a study pretending that it was just a study, but really, just tasking the politics around doing unrealized cap gains on homes in Canada. People lost their shit.
I think, this is extremely unlikely to happen, because it’s absurdly hard to deal with this, it becomes selective enforcement, which governments love, but you totally be a legal shit show. Then, there is an upside to it. You also have unrealized losses, which you can do adjusting in your accounting.
[01:46:47] P: Wait. Are you talking about Canada or the US?
[01:46:49] NVK: No, in the US or Canada. We have very similar tax codes. It could get funny. If they do this, we’re all going to change our year-ends to whatever is the time of the year that Bitcoin dips, most commonly. Might even try to trigger Bitcoin to go to shit that month of the year, so we can know pull some losses. They might actually owe us taxes back.
[01:47:14] P: P: Wait. I don’t think it’s going to work that way, though.
[01:47:15] NVK: No, it does. If they’re going to do unrealized gains, it means you also get unrealized losses. That you can’t have your cake and eat it, too, when it comes to this shit. You could get pretty funny. It’s not going to happen. This is all stupid.
[01:47:28] CK: Yeah, it’s performative.
[01:47:30] NVK: Yeah. This is all silly. What they could do though, and this, I don’t put past this people, is they might come up with unrealized gains just for crypto, because they’re going to go and they’re going to say, “Can I say crypto, because that’s how they’re going to frame it?” It’s not just Bitcoin. They’re going to say that we have this evil thing that, it’s gambling and it’s also, polluting the planet and blah, blah, blah, blah, blah. Because it’s not going to affect 99% of the population, they are going to be “Yeah. Fuck, yeah. Let’s go get their money.” Then, could get tricky.
[SPONSOR MESSAGE]
[01:48:09] CK: Bitcoiners, I am so excited to tell you about the Bitcoin 2022 Conference. You guys, Bitcoin 2021 was absolutely a smash hit success. It was over 13,000 Bitcoiners coming together, breaking the barriers on who can come together and celebrate freedom, celebrate Bitcoin. The energy was absolutely electric.
Unfortunately, it was just oversubscribed. There’s just people flowing out everywhere. This year, we are learning, we are making the conference bigger and better. We are moving over to the Miami Beach Convention Center, and we are going to be throwing a massive four-day festival for Bitcoin, celebrating Bitcoin, bringing together the greatest minds in Bitcoin and the greatest businesses in Bitcoin and lastly, the culture of Bitcoin all together.
We had a four-day extravaganza planned for you guys for Bitcoin 2022. Day one is going to be industry day. It is a day where you can buy a special ticket in order to just mingle and make business deals happen. Day two and three is going to be a full-blown Bitcoin conferences. Our main conference is going to be on April 7th, and 8th. Then lastly, we have the sound at music festival, day four.
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[EPISODE CONTINUED]
[01:52:09] P: We’ve been talking about it for a while. Jay, I’d love to just, if you’re still around, I’d love to hear your thoughts on NVK’s comment. Jay’s already thrown this one in the trash. Yeah, I’m not so optimistic, NVK. I think, this has been – we were talking about earlier that this is a narrative that has been – it has been pushed for many years in the US, at least. They keep hammering it, because they’re trying to figure out ways to classic MMA, or MMT modern, going MMA. When they gut-punched the economy via modern monetary theory, which prescribes a massive liquidity injections, and then over taxation in order to curb it.
[01:52:44] BA: Couldn’t both be true. Couldn’t the implications of passing something like this be absolutely terrible on so many fronts, but also, realistically, probably not get passed.
[01:53:00] NVK: Unless, they power through it.
[01:53:02] BA: This would be incredibly hard to pass.
[01:53:04] P: Wait, NVK. I just want to clarify. When you say, both things could be true, I’m unclear, when you say – you mean, they could try and fail? Or they could be trying to pass this, because of MMT style rhetoric and they could also fail at it?
[01:53:16] BA: You were saying that you – I assume the redirect was to me. You were saying that you are not so optimistic, meaning you’re worried, or you’re a pessimistic about this. I would say, you are right to be very concerned about unrealized gains being taxed. To NVK’s point, is that actually a realistic outcome in the short-term?
[01:53:38] P: Got it. NVK.
[01:53:39] NVK: Yeah. This stuff, this is a monumental change, right? This is not oh, we’re going to increase tax, or we’re going to start taxing carbon. It’s a truly monumental. It’s hard to convey how big this is. It changes everything, the same way that source deductions changed everything. It’s a whole new world of taxes and affects everything, from chickens to bananas, to houses, to your baseball card collection, everything. It’s huge. It’s practically unenforceable. That’s why it’s only selective enforcement. Now, they are not going to do this, because it doesn’t matter if you’re left or right.
The people who have any kind of power in the world, they all own stocks. Champagne, socialists all own stocks. AOCs of the type, definitely own stocks. Pension funds own stocks. They’re not going to want to have this. They’re going to get a backlash from everybody. It doesn’t matter which part of the political spectrum you are. You’re still sucking on the stock’s titty. They’re not going to do this.
[01:54:55] DR: I think, you’re just assuming that it’s going to be one gigantic movement.
[01:54:59] NVK: Yeah. My point, Donna.
[01:55:00] DR: There’s a red mark to market on regulated futures contracts on non-equity options, such as bonds, commodities and currency and exchange traded index options, so they could add crypto.
[01:55:14] NVK: Yeah. There was a thing before. If they’re going to do this, they’re going to just go for crypto only. They can’t just go after everybody, because you would be a massive flop.
[01:55:27] LW: Yeah. My only thing is, NVK, that’s you taking the approach that they don’t want it to be a massive flop. That’s you saying that they don’t want to put us into a position of dependency. That’s the whole thing. If they did some crazy like stuff this, which I truthfully believe is more of like I said, the seeds that have been planting a more – a ploy to move toward a certain direction, what would happen is that they would basically kill a whole lot of the wealth of this in this country. There’ll be wealth destruction. People will be forced to sell. We’ll wind up getting into a situation where the stock market’s on decline, and what happens?
You wind up getting everyone into a position, where they have to be more and more dependent upon the government, especially those people who at the bottom rungs of society. Because now, they don’t even have hardly any vehicles, because you should see what’s happening in a single-family residences, you see the freaking hedge funds are buying those up. Then, where in the world does the average person that is trying to come up in the world, actually build wealth to create generational wealth for their families? Well, they don’t. What? You’re not going to invest in stocks, because it’s what they would do with that.
They’re not going to invest in houses. Guess what? You’re going to be more reliant upon the government, which is what people who want big government won’t, bro. That’s the thing we have to watch out for. I think, it’s just these types of seeds that wind up being planted. You start to see, I forget, somebody said it. I can’t even remember who said the quote, it’s going to be at America, where there are a lot of people who own nothing. They have money, they own nothing, though. You know what I’m saying? I think that’s what [inaudible 01:56:57].
[01:56:59] NVK: You’re preaching to the choir here. Let me put it this way, okay. If I was alive and around when they brought in source deductions, I’d say, there is absolutely no fucking way they’re going to be able to put in source deductions and people are going to be okay with that. They use the war as an excuse, because they had to fund the war. They did get source deductions in and stuck around forever. It was going to be temporary.
It’s huge to make people to pre-pay. The evil source deduction is that people don’t know what they don’t already have. It’s a much easier trickery on people. Now, the problem with unrealized gains on normal people stuff, especially houses, is that it’s going to force sale on everything. You would absolutely, and America, Canada, or any country that does this in any scale, because people are up to their nose with debt. They’re not going to find a way to pay those gains at the end of the year. I doubt that very much.
I don’t think there is an appetite in any country in the world to be able to pass this stuff through, aside from places that are fairly wealthy. Say, Holland has wealth tax, if I remember right. I think, it’s 1.5% over your net worth. That stuff won’t work in north America. Although, can’t put anything past these people.
[01:58:24] A: NVK, when you said source deductions, what you’re talking about, it’s the Canadian version of –
[01:58:28] NVK: Income tax. Yeah. That’s right. Payroll tax. Source deduction is the technical name of that. It means that you take, for the people that don’t understand, what I’m saying is essentially, before you give people their paycheck, you withhold the tax. You take the tax before you pay them. This was a policy instituted, I think, it was in the 30s to pay for second world war. It was meant to be temporary, because nobody would ever go for the idea, “What do you mean, you’re going to take the money from my paycheck?” That’s insane.
[01:59:00] P: We were talking about this earlier, that these are all meant to be temporary measures, but they never are. They are always permanent. It’s evident from bridge tolls, to taxation, and basically, everything that’s passed that takes money from you and gives it to the government.
[01:59:12] NVK: I’d been bitching about source deduction forever, and I don’t even pay source deductions.
[01:59:16] P: I think, source deduction is basically the same thing as income tax in America.
[01:59:21] JS: Withholding.
[01:59:24] P: Got it. Interesting.
[01:59:24] NVK: From a Canada point of view, it’s quite brilliant, really. You take the tax before people have it in their pockets. They’re not going to feel as bad about giving it away.
[01:59:35] T: You never knew you had. Then when you overpay, you get a refund, so you’re happy.
[01:59:40] LW: This sounds so funny. Because I’m listing to NVK said, and I’m like, “Man, that’s how it’s been since I’ve been working.” You know what I’m saying? We’ve already bow down to that, you know what I mean?
[01:59:50] P: Oh, a 100%.
[01:59:52] LW: Fucking crazy.
[01:59:54] P: On my paycheck, I look through every time and I’m like, “All right, so that’s the amount that’s going to social security. Never going to see that ever again. That’s the amount that’s going to Medicare. Never going to see that shit ever again.” Every line item, I’m just like, “Yup. That’s just the government taking its cut and shoving it up their ass.”
[02:00:11] NVK: It’s absolutely crazy that people didn’t revolt after. Then again, when people fly out the idea of, “Hey, maybe we get unrealized gains,” and they’ll carve out this and these people are not idiots. They are in many senses, but not on this. What they would probably do, if I was putting myself in that evil mind, I will also carve out, say cars, or anything really that would affect say, 70% of the population of the country. Now, you have a great majority of the country that’s unaffected by these facts. Then, you have this 30% who’s going to whine and cry. They’re doing well in the eyes of the rest of the population.
Then, two, three years later, I encroach in into another segment of the population. Now, you have the people who already paid for two years saying, “Yeah. Fuck, yeah. If you’re going to charge me, you’re going to charge those, too.” Then you get to the other side of the population who is more on middle to poor side to go, “Yeah. Fuck, yeah. Charge those people in the middle, too.” Then, you have those in. Then, you get there through a couple more years and then you go after the rest, a few five, six years later. You can roll this thing out without much bullshit within 10 years.
[02:01:29] LW: We live in very weird times. Did you all see the attack on the Roth IRA as well? Where if you have so much in your Roth IRA, you have to cash it out?
[02:01:38] CK: I was listening to that and I felt vindicated, because I truly believe that the Roth, especially, and IRAs in general, 401ks, all of that stuff, for anyone who’s under 35 is, and maybe even anyone under 40 is just an utter and complete scam. Gosh, I don’t even know. Maybe even someone who’s under 50-years-old is an utter and complete scam. That’s why we got to hold our keys, guys. The whole end conclusion of this entire conversation is that, this is what Bitcoin was built for. Hopefully, we can use jurisdictional arbitrage to find a safe haven.
[02:02:11] P: I’m not currently clear on –
[02:02:12] T: Hold on. You can’t use jurisdictional arbitrage, because US citizens are taxed globally.
[02:02:18] P: I know. It’s so fucked.
[02:02:18] T: There is no jurisdiction, unless you plan on go living off planet somewhere.
[02:02:22] P: No. You can go to other jurisdictions. You can leave the US. Maybe in Holland. You can renounce your citizenship. Then, all you have to do is pay one – Yeah, exactly. You have to pay one-half of your earnings, as if you had just sold everything in order to leave the US. It’s like a Roach motel. You can enter, but you can never leave, at least financially.
[02:02:40] CK: Just like the 401k rules can change, all the other rules can change, too.
[02:02:44] P: That is true. Are you saying that as an optimistic angle?
[02:02:47] LW: You’re very optimistic. I like that.
[02:02:49] CK: Yes, absolutely. I know where the leverage is.
[02:02:52] NVK: The difference this time is if this guy’s go for retard, realistically speaking, people will leave with their BTC without ever being declared. They will renounce their citizenships and they will go live somewhere with their wealth and be happy, and just simply never go back.
There is a point of no return with this stuff. Most people want to do things kosher. You go, you pay your exit tax, or whatever. There is a point in which, people will be forced to go above and beyond what’s kosher.
[02:03:27] P: Yeah. Here’s the thing, right? We were talking about this earlier before you came in, but the shifting of the goalposts, and the narrative orchestration, the propagandizing of these types of concepts is so insidious and over time, extremely effective. The fact that people don’t understand that like in California, it’s fucking insane that you get taxed on income, sales and property. Everybody’s just, “Yeah. California has good schools.” It’s like, “No, it doesn’t. That was in the fucking 80s. We’re done here. It’s a fucking wasteland.” People are like, “It’s just where I grew up with,” and people just accept it.
When Yellen gets up and she makes the claim with a totally straight face, and Biden promotes this article in the White House with a totally straight face, that unrealized cap gains, our income, I got to tell you, 90% of people are just, “I don’t really even know what unrealized cap gains are. Yeah, fuck the rich.” It slowly becomes the norm. I think, that’s really the dangerous thing here. I actually don’t think that people will just revolt, because they’re not actually going to do a China bans Bitcoin style thing.
They’re going to make these incremental changes that slip under the radar for 80% or 70% of the population. Then suddenly, we live in an absolute hell hole and it’s “too late.” Then, people are resigned to it. They’re cynical and they’re like, “What are we going to do? Leave the United States and I have to give up one of my testicles and also give up 80% of my net worth?” You’re going to be like, “But it was 50% three years ago.” They’ll be like, “Yeah, but this is the world we live in now.”
[02:04:55] CK: The crazy thing is that, let’s just call it the people in the center of the IQ distribution curve, the midways, they embrace nihilism, right? The PhDs are like, “Oh, it’s nihilism. I’m nihilistic. This is just the world we live in.” It’s just insane that they don’t see a reason to fight back. That’s why I’m optimistic about Bitcoin, because it is that reason.
[02:05:17] LW: Such a dire painting right now, man. That is, we should all be leaving right now, because if people just go along to get along, if average people can no longer build wealth in this country to be able to pass down for generations, if at the same time, the average wage earner, their jobs are being substituted, they’re being actually get substituted for robots and automation, where do you see the future heading in this country, if you guys are all believing the painting you just painted? Right now, this painting is like the Mona Lisa with a black stripe over her face, you know what I’m saying?
[02:05:56] NVK: Lamar. Let’s put it this way. It’s still fairly early for Bitcoin. In another five years, say, maybe we’re talking about real mainstream, people start saving. If they are saving at 21 million supply, they will still find fairly decent wealth in a fairly short period. There is hope. It’s not fully dead. It goes down fast. I mean, Canadian healthcare system is absolute shit. People here fully indoctrinated to believe that this is what’s good, and that’s their identity. People identify themselves as people of public healthcare, no joke.
They’re told the stories about how bad it is in the US, which is not true for most people. Most people in the US don’t have to wait six months to get very basic shit. Anyways, it’s all a matter of stories.
[02:06:51] LW: That’s what I’m saying. What is the narrative? Because y’all know, I’ve talked all the time about this on there. I really believe that what we’re seeing is this shift into a government that makes us all more dependent. If that is the case, I’ve heard so many people say, “Lamar, I’m not leaving this country. You won’t ever get me to leave.” I’m like, “If Rome is burning, what do you do? Do you stick around and watch it burn? Do you play the violin?”
[02:07:20] CK: Lamar, what’s on your mind? Which jurisdictions are you thinking about? I’m just curious. What would be your plan if you’re going to get out of the US?
[02:07:27] LW: Man. You do think I’m going to docs my area? I’ve already done all my research.
[02:07:35] P: Look, I’m sorry, man, but I’m going to docs you. We’ve talked about your Willy-Wonka style elevator that shoots up into the sky, and I don’t think that’s practical for most people. For you, definitely.
[02:07:44] LW: It’s not. It’s not. You’re right. You’re right. Yeah. It is full of chocolate in the base. You swim in chocolate just to get up. Yeah, I got you.
[02:07:52] P: I know. Also, I think the –
[02:07:54] LW: [inaudible 02:07:54]. I’m just asking. I don’t know. I listen to us, right? I listen to us as Americans, see NVK excluded. He’s dealing with a public healthcare in Canada. I was thinking about us as Americans in this country. The whole thing is that in times like this in the past, there have been revolts. There have been people that have stood up. There have been people that marched on Selma, you know what I’m saying? Do we have those same people today, is the question? Real talk. Do we have people who are going to fight a system that is clearly not in the best interest of any of us? Period. Think about it. You say you tax the rich, but you continue to create money, which is at the chagrin of every person that earns wages. You’re killing them.
[02:08:48] NVK: Who’s going to rise against if most of the people are on the tits?
[02:08:51] LW: That’s the point of the dependency, right? Because if I make you ultimately dependent upon me, then there will come a point that you will not be able to fight me, because without me, you don’t exist. That is what I’m saying. That type of dependency is where control is, and that’s why we all need to be focusing on as much sovereignty as we possibly can have.
We need to get sovereign food, sovereign everything, because as we continue to move towards a state of dependency, you wind up getting yourself into a position where you can no longer even interact without being dependent upon. It’s the matrix. You’ll be plugged in at that point. You feel me?
[02:09:29] P: Yeah, a 100%. I think, what CK was getting at is you were framing it as a question like, “Man, y’all are some dark motherfuckers.” But I think we’re all on the same page that like –
[02:09:38] LW: Yeah. I think so. I’m just saying, I just wanted to enter that question to get that conversation going. What do you do? What’s the solution? We all hear the problem. We know the storm’s on the horizon. There’s a storm out on the ocean and it’s coming this way. The question is, what do we do, man? I know we all buy Bitcoin. That’s the first step of having sovereign money.
[02:09:58] P: You took the words out of my mouth. Yeah. I was going to say, I hear you, Lamar. I do want to give a Preston and – Yup. Yup. Also, Luke a chance to speak. Preston, famed Marmotcoin creator. Marmot herder, small dog attack vehicle creator. What are your thoughts?
[02:10:16] PB: Yeah. I’ve thought about this at length. Let me just say that I’ve been in bed for the last three days, because I screwed up my back. I haven’t gotten any client work done, which is really annoying. What I have managed to do is have a really good crack at learning Morse code, which NVK has been keeping track of my journey as I become a bigger and bigger ham radio.
How do you prepare? I think, one thing that people really haven’t considered about what we’re going through now is that it’s like this really weird, slow collapse, where we’re starting to see things get jankified, right? There’s some general jankification of society. The jankification is starting to manifest itself in really funny ways, like the fact that you can’t buy a car, or the fact that certain supermarket shelves are empty, or the fact that restaurants can’t hire people, despite the fact that there are lots of people looking for work.
Something broke in a weird way. We’re really only going to fully understand what broken – housing prices are ridiculous. They’re going up 20%, 30% a year. Something broke very badly. Nobody’s quite sure what. There’s some underlying sickness in society. I’m not sure what it is. People are angry. COVID-19 is part of it, but our response to – COVID-19 didn’t cause the price of cars to go up, or response to COVID-19. [Inaudible 02:11:39].
[02:11:42] LM: We’re missing the forest for the trees. That’s the conclusion of a long-term debt cycle. What we’re seeing now is in my opinion, just the thin edge of the wedge of what’s to come, and maybe zoom out to the last time we had debt levels this big in the 1930s and 40s. You’ve seen all the similar things play out here in the 2020s. Okay. You’re seeing gold confiscation with the FDR in 1933. In 1940s, they had food stamps, there was food rationing, all of this. It’s what they have to do with a debt bubble this large. It’s all part of a much bigger movement and a much bigger plan.
I’m not sure if everyone’s familiar with [inaudible 02:12:16] thesis of essentially, a central bank, digital currency system being exported to the Western world. That’s what it’s all about. You were watching the world economic forum come out and say, capitalism has failed. We need to re-imagine capitalism. We need to adopt a, what did they call it? Stakeholder capitalism. This is all just part of a plan, in my opinion.
[02:12:37] T: Yeah. A very old plan.
[02:12:38] PB: I remember 2008 very vividly, because at the time, I was a law student, but I was joining a securitization group at a law firm in London. I joined them in 2009, having gotten the job in 2007. In England, it’s a weird system, where you apprentice and you’re hired years in advance when you’re still a student, whatever. I was paying super close attention when that happened. I remember, the issue was that there was risk built up in the system, but the big problem with the global financial crisis is because there was risk in the system that people didn’t know how to account for. They didn’t know who was solvent and they didn’t know who wasn’t.
As a consequence, there was a huge contraction of liquidity, because no one was going to lend to anybody else, because which entity was a house of cards and which one wasn’t. That caused a contraction of credit, which caused the contraction of the economy, yada, yada. It took years to work through all of that.
Now, we’re in this weird go-go economy where everything’s just money is just sloshing around. No problem. People are spending it hand over fist. There seems to be no end in sight. Everything’s doing really well. The stock market’s doing really well. I’m just going to have tangles of 2006 with rap videos of guys running around, throwing euros in the air, and all the rest of it. Yes, we’re in the middle of a pandemic, so maybe the consumption isn’t that conspicuous, but not-withstanding, the markets are clearly insane. Something is really wrong. I can’t quite put my finger on it.
What I do know is that I think there’s going to be a de-risking, or a de-leveraging at some point in Western societies. Whether that’s today, tomorrow, two years, five years, I don’t know. When that debt falls due, when it comes time for that debt to be paid, and some people say it never will. It will, one way or another. The US national debt is a prime example. That’s going to get defaulted on one way or another. They’re either going to inflate it away, or the country will collapse, or they will default, or whatever else. There’s no prospect to that, or the debt of any other major country is ever, major Western country is ever being paid back.
Then, there will be major consequences from that de-risking that they do, because it’ll basically be like, it’s a rubber band. You pull, and you pull, and you pull, and you pull, and you pull. Eventually, you let go and it snaps back. They’ve been reallocating risk constantly, social risk. There are two guys who really deal with this well. One of them is Jurgen Habermas, who’s a – he’s a Marxist German fellow. He talks about something called the legitimation crisis, which is where you have societies that just rack up risk, political, social, and otherwise in the form of debt, so much that eventually, it becomes overwhelming and it starts to affect the government’s ability to carry out programmatic demands that it sets for itself.
We’re seeing that, for example, would be in, I live in Connecticut, by way of example, Connecticut has a 100 billion dollars of unfunded pension liabilities. We’re a small state. That’s $70,000 for every man, woman and child in the state of Connecticut. Connecticut will never pay those back. They’re either going to default on its pension obligations, get bailed out by the federal government, or something else. There’s no way that they’re going to be able to rustle up $70,000 from every single person in the state of Connecticut to pay those dues.
That’s an example of something where we’re in the early phases of state failure. We know that something’s going to happen, but we’re just not sure what that thing is. It’s a time bomb waiting to go off. Joseph Tainter, he’s a collapsed theorist, and he talks about how societies eventually become too unwieldy and complex. Then, what happens is they disintegrate into more efficient forms, where you don’t necessarily need large bureaucracies to maintain them. I think that where we are now is that the government has constantly expanded for the last 120 years, and particularly after World War II and The Great Depression.
There’s just never been any retrace. It’s always been growth of the state. As a consequence, we have this thing that’s just not fit for purpose. There’s institutional inertia. Nothing has changed. The world is changing under its feet with the consequence that we’ve got this big, lumbering beast. We could pay off the debt if we automated away most of the bureaucracy and kept our tax receipts the same. No, there’s no political will to do it, so we’re just going to collapse. That’s my view.
[02:16:53] P: We keep coming back to this idea that I don’t think anyone on the stage, or I think there are probably aspects of what you said that some people disagree with. I don’t disagree with it, though. What do we do in that situation? We all own Bitcoin. We’re all hardcore Bitcoiners. We all have a knife that says Bitcoin etched on the side that we wave around wildly at parties and try to convince people to buy Bitcoin. Given the scenario that you just laid out, what do we do as –
[02:17:14] NVK: Get out too.
[02:17:15] P: Oh, go ahead, NVK. NVK.
[02:17:17] NVK: Oh, wait. Sorry. It was a tangent on supply chains. Maybe this helps people understand maybe what to do. I’m developing this theory that the problem really goes back a bit. There was even maybe slightly before 2008, there was no way we could come up with the proverbial deflationary prices for technology, without making technology just in time. Because inventory costs a ton.
For you to have all that opportunity costs sitting in a warehouse is unrealistic. Supply chains became just in time. That’s how you decrease cost. Slowly and surely, for many years I fought like, “Hey, it’s just maybe hard to get good timing on parts, because we’re not the size of Toyota.” That was how I thought about some of this stuff, because we share some chips that some those car makers use. I couldn’t fully comprehend that, why can’t I pay and get the stuff? It makes no sense to me. As we grew and could like, just, fuck it. We’re just going to stock bigger quantities of chips that we know we’re going to use for years.
It became clear. It’s just, there is no production capacity. Absolutely no production capacity. Products are overly complicated. Even a stupid little toy has hundreds of either parts, or steps to get made. It’s a domino of issues there. Then, all the stupid COVID lockdown shit did was just give us a glimpse, really, of what’s to come, which is we have incredibly fragile supply chains on a good day, and we have absolutely no production capacity to fill the demand needs.
I think, we are in for some very interesting supply shocks in the next coming years, if credit is cheap. Because still baffling to me, I was bitching about this maybe, six months or so ago. How is it possible that the world is literally ending in mid-pandemic for the average person in say, January this year, everybody’s going to die, but you cannot buy an overboard motor boat? That is probably the last thing people are going to buy if their world is ending.
It’s fascinating, because overboard motors are mostly made in Japan for any size that’s not a tiller size motor. You have a fairly constrained supply chain complexity, because it’s just in a single geography. Essentially, you have cheap credit. Everybody is bored and buying every fucking thing they can. Then, you have the checks going to people and they’re buying all this stuff. You have no production capacity. You’ll have essentially, the world’s just 50 ways the world economically could end. What I’d say is really, think about the stuff you’re going to need in the next two years and maybe stock it, because it could get tricky.
[02:20:47] CK: There’s going to be a compounding effect to that. I think what’s crazy is, I totally agree with you, NVK, that we’re going to see a lot of supply chain crises, but I also think that a lot of people are going to blame it on inflation. We’re going to just have a really fucking strong inflation narrative when it’s really just the complexities of globalization breaking down, really breaking everything else.
[02:21:09] PB: One thing I’ve seen – I got a taste of. I think that we are underestimating the effect that a rebalancing of consumption has had away from services and towards durable goods and consumer goods. I have never saved so much money as I did during the pandemic. It was amazing. Now, I’m doing stuff as NVK knows. I’m turning around and buying ham radios, because it’s just 1,500 bucks, because why not? It’s interesting.
A lot of my clients are in the chia ecosystem. I know this is a Bitcoin room, so I apologize for bringing up a shitcoin. One thing that we saw in the spreadsheet, it works by mining using hard drives, similar to filecoin, but not quite.
[02:21:46] P: Well, it’s more than that. It destroys hard drives.
[02:21:48] PB: It destroys SSDs, and it doesn’t destroy – You store the things on spinners and then you plot using SSDs. They’ve managed to get the rights way, way down on the SSDs. Basically, the original plotting thing that – just for everyone’s general edification, the original plotting program that they had wrote something like absolutely stupid, 1.8 terabytes of rights for a one 100 gigabyte plot, which will take a normal consumer SSD and wreck it in two weeks, which is insane. It took eight hours.
Some enterprising guy who was an early GPU miner and figured out how to cut that way down. Program’s called Madmax, if you’re interested in looking it up. Anyway, I digress. What happened was there was a bit of a frenzy in April, which has since died down, where the demand for hard drives globally, in the retail channel, which is about 10% or 15% of global hard drive demand, went up by 2% or 3%. As a result of that, hard drives everywhere completely sold out. Because the hard drive manufacturers planned this quarter a year ago, and they said, “This is what how many we need to produce now, and this is what our production capacity needs to be, and blah, blah, blah, blah, blah.”
Then all of a sudden, there was this unexpected surge in demand. Then hard drives just disappeared for three months. You couldn’t get a 20 terabyte, or 18 terabyte hard drive anywhere. Now that’s changed, as everything has calmed down and gone normal. That gives you some idea of how a very modest change, 1% to 2%. I think, that global drive market annually is something like a 100 exabytes, or a 150 exabytes. That was a 10 exabyte, resulted in a absolutely catastrophic disruption of supply chains, where people who are running servers couldn’t get hard drives for their websites. It was ridiculous.
[02:23:32] P: It was particularly funny. It was particularly funny, because the whole premise of chia was like, “We’re going to save the environment.” Purchasing hard drives is not the cheapest thing, nor is it the most environmentally friendly.
[02:23:46] PB: Yeah. There’s that. The e-waste argument didn’t go away. I think, they’re still holding onto the power consumption argument.
[02:23:54] A: Was that 10% of annual production, or is it 10% of total hard drives that are active?
[02:23:59] PB: 10% of the annual hard drive market worldwide. I think it wasn’t 10. I think, it was 1% to 2%.
[02:24:05] P: More importantly, let’s get back to Bitcoin.
[02:24:08] PB: Back to Bitcoin. Anyway, but just to give you some context. With that supply chain, there were a couple of things playing their chip shortages, various other things. Even a very modest rebalancing of demand wound up throwing the entire – then, that’s just a crypto related story, so I figure everyone can relate. That very minor change resulted in a massive change to the market itself. I think, with what we’re looking at, we’re also considering if crypto people looking forward on a five to 10-year, or maybe less, a shorter time horizon, you’ve got social things that could be an issue. You’ve got wars that could be an issue. Cyber-attacks are another issue. All of those can take out chunks of the supply chain and increase the general levels of gentrification in the society.
There’s a huge amount of disruption, which is capable of being done. COVID has just basically showed that the Americans, it should our adversaries, it should everyone else, all right, if you lean on this and you lean on this, you take this computer out, you take that computer out. How do you then affect a society, and what pressures can you put on that society as a result? It’s going to be a really interesting decade.
[02:25:12] LM: Don’t forget climate change, too. Who was the Democrat in the news the other week, saying that, “Oh, look out. Climate change is going to raise the sea levels and it’s going to impact ports.” Guess what? That’s going to cause inflation in the coming years. They’re all just narratives to disguise what’s really going on. It’s all monetary reset. This is all the whole unrealized capital gains. It’s just the thin edge of the wedge. If you go and read Klaus Schwab’s book, he’s the head of the World Economic Forum, he’s directly telling you, we need to re-imagine capitalism. We need to implement this social credit score communism model across the world. That’s how we’re going to do it.
Everybody’s going to consume the energy based upon their carbon credits and their social credit score. You’re even watching MasterCard come out recently. What did they come out with last week? Everybody’s got to have a carbon limit on their credit cards.
[02:25:57] P: I know. It’s fucking ridiculous. It’s so upsetting.
[02:26:01] NVK: COVID vaccines, right? I don’t care how people feel for or against, that’s not the point. That’s the first North American West experience with you’re good and you’re bad.
[02:26:12] P: I just want to let you know, NVK, you have successfully completed my bingo card. So far in this conversation, we haven’t mentioned vaccines yet, but –
[02:26:18] LM: That gets back to Lamar’s earlier point as well. What do we do? Where do we go? Do we have a large enough population who’s able to revolt? Obviously, you look at the population of the hardcore Bitcoiners like us, who understand all this stuff. It’s probably only what? 0.1% globally. When you look at the people who believe in medical and bodily autonomy, you’re looking at 20% to 30% of the population. They’re all Bitcoiners. They just don’t know it yet. I think, we’re going to be fine.
To Lamar’s original question, where do you go? This is this is a global debt problem. Every single country around the world has an absolute debt crisis. I just think, I think Shinobi was going to touch on it earlier. You get local. You get out of the cities. Klaus Schwab, and his cronies at the World Economic Forum and the IMF, they’re going to try and implement these central bank digital currency system on the other side of the failing one that we’re operating in at the moment. I think, it’s going to fail in the long run. You just need to wait it out in this transitionary timeline.
[02:27:12] P: Absolutely. I do just want to jump in. Shinobi has shown more restraint than I’ve ever seen him show. Shinobi, please give us your thoughts.
[02:27:21] S: Get the fuck out of the cities. Rodolfo said, stockpile anything that you’re going to need that’s part of a complex supply chain you can’t produce yourself. Start producing your own food, whether that’s grow a garden, whether that’s chickens, whether that’s cattle, if you have the land, too. Do it. If you can’t do that, find your neighbors who can and buy shit from them. We need to get the fuck out of the city and localize as hardcore as we can. Then hopefully, never actually have to pull the guns out. It might actually get to that point.
[02:27:57] NVK: What’s your opinion on hunting and eating nocoiners?
[02:28:02] S: No comment.
[02:28:02] NVK: Too salty.
[02:28:05] P: NVK: Ooh.
[02:28:07] LW: Good. Human meat tastes like squirrel, man. Not the good time squirrel. Like the good squirrels.
[02:28:11] P: I actually think that the higher economic value is in harvesting the tiers of the nocoiners and the altcoiners that flow freely down their face. That actually is an incredibly effective cooling agent for ASIC miners. I actually think that we won’t eat them, not because we have moral issues around it, but because the tiers are just so much more effective as I –
[02:28:34] LW: Those are electrolytes, man. That’s going to be like Gatorade. We just don’t call it Haterade, for all the people that hated on Bitcoin over the years.
[02:28:41] PB: Yeah. A little bit, in fact, it’s actually the only renewable resource that’s truly renewable.
[02:28:45] P: There you go. All right, my friends, we’ve been going for three hours straight. This has been an amazing conversation.
[END]
[EPISODE]
[00:00:06] P: Hey, everyone. This is P. I am the Head of Programming at Bitcoin Magazine for the Bitcoin Conference. If you haven’t bought your tickets yet, you definitely should. It’s going to be fucking incredible. I asked a number of people, Jay Gould, John, Amanda, Bitcoin Tina, Jimmy Song, and a few others to join me, to discuss the absolutely ludicrous proposal that Yellen and the White House made recently, that unrealized capital gains should be taxed as income. Let’s dive in. Go for it, man.
[00:00:39] JG: Before we begin, I want to just read something. I think it’s important, because words have meaning. From the white house, to Janet Yellen, to Bernie Sanders, to Elizabeth Warren, to AOC, and all the way back to Barack Obama, they started saying something that they’re continuing to say it was on the website, actually, yesterday.
They always say something like, the rich must pay their “fair share.” These words imply that the rich are not currently paying their fair share. Otherwise, why would they say it? It is complete and utter, complete and blatant lie. I posted something today. It’s a little dated, from 2009. It was from mint.com. They show different cohorts of income in this country. They show collectively what percentage of the makeup of total income bracket you are, if you’re in that bracket. Then, it shows you what percentage of the dollars collected in tax revenue are. It’s significantly higher, higher income, collecting the majority of the tax dollars being collected. To say, it’s completely disingenuous and dishonest, to say that the rich aren’t paying their fair share.
When the 1.8% highest paid above $500,000 are paying 41% of all the taxes collected. 200,000 to 500,000 is 2% of income cohort. They’re collecting 20% of all the tax revenue there. That’s 60%. It’s somewhere like 80 something percent, and we only get to 10% of the people. It’s off the charts. It’s just completely and utterly dishonest, and that’s where we start.
[00:02:03] P: Yeah, I think you’re absolutely right. This is so clearly – it’s propaganda, right? It is a narrative that is being spun, in order to push the public opinion in a specific direction. It is unfortunately, fairly effective. I think that it’s the thing that is so disappointing to me personally, about this situation. Before we –
[00:02:22] JG: There’s also one more thing that is interesting. I found another stat here. In 2001, the share of the federal income taxes paid by the top 1% increased from 33.2% to 40.1% by 2018. They’re not paying less income tax over the last 20 years as a percentage. That’s actually going up, which clearly, the gross nominal dollars being collected are also going up, and just the vast majority of all the dollars being collected. It’s complete false narrative.
[00:02:47] P: Can you say again, what specifically was claimed in the White House article?
[00:02:50] JG: What she said, I don’t have it in front of me. I got to find that. What she said, here’s something she had said. She had Senator Shelby – this is different from the White House article. “I do support eliminating –” This is yesterday. “Stepped up basis.” By the way, I think this is, I think this is really where they’re going with this, to be honest with you. We’ll get to that in a second. I don’t think it’s unrealized.
[00:03:08] JF: It’s the only way they can actually get up that.
[00:03:10] JG: That’s right. That’s right. It would be a nightmare from an audit perspective, as John knows, to try to do this from across all income bracket categories, etc. She said, “I do support eliminating stepped up basis. The reason is that, a very large share of the income, words have meaning throughout this whole discussion tonight, okay. Income of the wealthy individuals is simply never taxed. Individuals hold onto these assets during their lifetime. That income is never taxed. Again, it’s not income. It’s appreciation.
We know that for some of the wealthiest individuals in the country, they pay very low taxes overall, because most of their income takes the form of unrealized capital gains. Unrealized capital gains are not taxable, people. Just to be clear. Capital gains are taxable, currently. The Biden administration proposed that at death, those gains be taxed. Currently tax law, when you die, and you have property per se, it is passed onto your heirs, and there’s a thing called stepped-up basis, which means their new cost basis is what the value of the property is at the time that they receive it. We’ll get back to that in a minute.
She says, “And with careful consideration, not in any way to harm the prospects of family-owned farms and small businesses, because they would have massive tax of all events on these events on death,” they’d have to sell their farms, or get a loan to pay the tax. It wouldn’t make sense. “There were substantial exemptions to protect them.” She’s trying to protect them from that. “Even if there is not actually taxation imposed that death, getting rid of stepped-up basis would mean that an heir would inherit the original basis of the asset.”
Even if they didn’t get rid of it, they’re saying, they’re going to go back to saying that your cost basis is now their cost basis, which I don’t think is completely unfair, to be totally honest. I’m not totally against all the things, but because you’re not – if that’s not a taxable event, unless they sell it. She’s just saying, why should you get a stepped-up basis on a cost basis? That makes sense, actually, in my opinion, but you could debate that.
When that person eventually sells that asset, the taxes would be paid and she didn’t say this, but it would be on the original cost basis that your parents bought it for as an example, okay. All of this is important, because they’re mincing words and they’re conflating things. She’s saying things along the lines that the large share of the income from the wealthy individuals is never taxed. That is not true. The current tax code is that you are taxed. There are ordinary income taxes, and there are long-term capital gains taxes. There are no longer short-term capital gains taxes, because there are now taxes, or ordinary income levels. They already fixed that one, so that means they’re taxing rich people – It is.
[00:05:45] T: I don’t think that that’s actually projected as 25%. Check it out. It’s correct.
[00:05:48] P: Tina? Let Jay finish.
[00:05:51] JG: Again, long-term capital gains, long-term capital gains have a special treatment, and they are to be taxed at a lower rate, because you’re imposing risk on the investor. This is why they have this. They define that guys by profit earned on the sale of that asset, which has increased in value over the holding period. Then asset, could be a tangible property, like a car, business, a stock, as well as intangible properties, right? Bitcoin, can touch it.
Then, ordinary income is just what most of you probably have. It’s if you have employment, you have a job, or it could be interest, or dividends, and then income from sole proprietorships, rents, royalties, if you’re lucky to have something like that. What they’re trying to say now is that if you have rents on a property, or royalties for some an asset, like you have a publishing deal for a book, or music rights or something of that nature, they’re going to want to look at that asset that is deriving the rents, the royalties, the dividends, the interest, and they want to tax that based on the appreciative value of it going up year-to-year, which could be forced liquidation for some individuals, depending on who they are. It sounds like, she’s also targeting, P, the top 400 richest people in the world today. That is the current narrative and rhetoric. I just wanted to get out some of the factual information here.
[00:07:00] JF: Yeah. P, can I just tag in a little bit, if you wrapped up on that point? One, short-grain taxes are our taxes, ordinary income. Long-term capital gains are based on your income. From zero to a certain percent, from zero to 50,000, I think it’s just for $0 or 0%, so there is no short-term. They just need long-term capital gains.
Then from 50,000, roughly 450,000, it’s at 15%. Then everything above that is 20%. The Biden proposal is to move it all toward ordinary income tax. Unless that’s changed in the last three months, I don’t believe it has – there’s any tax accounts there that want to correct me. I don’t think that I’m wrong.
The second thing I wanted to hit on Jay is what you talked about, is there’s not a real practical way to actually go after unrealized gains, because they also have to go on off of unrealized losses and they haven’t talked about that either, right? Literally, the methodology that’s cited in this letter is going off the Forbes list.
[00:07:51] JG: It’s ridiculous. I know.
[00:07:52] JF: It’s a joke, right? I tried to go through their technical, how they use the data to ultimately form their calculation and their methodology. It’s just basically a joke. The thing that I think that Jay, you hit on, I wanted to bring home, I think the way that they actually get this done, and just to further introduce myself, I worked in public accounting, I’m a reformed public accountant. I have not practiced in 12 years, so I don’t want to come and speak from a public accountant’s perspective. P asked me to talk about some of the things that are going on with institutional adoption. Since we’re talking about this piece of it, what I think is important is what can be, I think, the practical way of actually getting at a wealth tax, which is ultimately what this comes down to is eliminating stepped-up basis.
I’m not here to argue the merits for or against, whether or not that policy should take place or shouldn’t, but that’s actually how they’re going to get at additional wealth that’s trapped in these ways. I think, it’s a really great way to do it, right? If you want to further the Ponzi scheme and you know that you’re going to print – you’re at the printer of last resort, and where’s all that money, where’s all that wealth being created? It’s being created in assets.
If you’re going to continue to build them out to backstop it, you’re extracting more value to go into your Ponzi scheme through ultimately, measures like eliminating stepped-up basis. It’s a way to actually get more tax revenue from investments. I think, that’s where you were headed a minute ago, Jay, with how they actually practically implement these unrealized gains.
[00:09:10] JG: Yeah. I think they’re going to do it on death. It’s going to be a death tax. I think, the attempt is to eliminate the stepped-up basis to try to collect more revenue.
[00:09:18] JF: Exactly.
[00:09:19] JG: That’s what I think. That’s just step one, right? Clearly –
[00:09:21] JF: I think, that’s how they tend to meet up with the estate tax is really –
[00:09:23] JG: Look, all they have and definitely wanted to do, John, if that’s all they wanted to do, there’d be no narrative rhetoric, around about unrealized gains being capital gains, right?
[00:09:34] LW: That’s the thing, right, Jay? If you think about it, this is just the destruction of wealth. Because really, what they’re doing is they’re trying to rebalance everything. hey know they’ve printed way too much money. They know they can’t stop printing money. They know our economy is in the crapper, and the only way you’re going to really be able to save that is through some form of UBI.
The only way you can retrieve any of this money you keep throwing out there is to figure out a way to tax some stuff that probably even shouldn’t even really be taxed, just to get the money back. I think, that’s why they’re doing this, they’re really literally throwing darts at a dartboard, trying to figure out ways to pull money back out of the assets that they’ve inflated. It’s almost like, you blow the balloon up, and then now we need to come in and put a small hole in it so that we can pull some of the air out of the balloon, because we know next week, we’re going to put more around the balloon. They just don’t want the balloon to pop. They feel this is the only way they can balance this entire thing. Yeah. I think it’s crazy. No, not at all.
[00:10:30] JG: A 100% of the 400 richest people’s income. They took all their assets. You can’t pay this off. We just keep pumping afterwards.
[00:10:38] P: I think, it’s important acknowledge that this is a key tenant of modern monetary theory, right?
[00:10:41] JG: This is what I think this is. This has been going on for centuries guys. They come after the billionaires first. They take from them and the people say, “That’s not me. I don’t have to worry about that, so I don’t speak out.” They came for the unions, unionists and the socialists and speak out, even though I’m not a socialist. Then they came for the incurables and I didn’t speak out. Then they came for the gypsies and the Jews and the homosexuals, and I didn’t speak out, because they’re not me. Then they came for me, because there was no one left to speak out for me. Guys, wake up. They’re going to come for you.
They may not come for the poorest people in this country, but the richer people in this country, the middle class of this country, the upper middle-class of this country, they’re looking and saying, “Screw that. They’re the 400 richest people. Oh, I’m not them.” Okay. Then they slide it down, to the top 1,000, the top 10,000. Let me tell you something. Eventually, it’s you. they don’t ever change these rules. Like AMT, Obama Affordable Healthcare, the 3.8% tax. They never got rid of that.
[00:11:33] P: Yeah. A 100%.
[00:11:35] JG: They don’t ever get rid of any of these things.
[00:11:37] T: Just talk about putting caps on what you can earn in a Roth IRA. I don’t know other details on this, but there’s a guy from [inaudible 00:11:43] financial guy, Adam Bergman was at the Bitcoin Conference, who gave a presentation who has been talking with us. He’s a tax attorney, and he’s got a business, which caters to IRAs and the self-directed. Now they’re coming to you right now.
[00:12:01] JF: I have a great step for this fact.
[00:12:03] T: I guarantee you that in the course of the next 20 to 30 years, you will hit those caps if you have a Roth IRA.
[00:12:09] JG: Yeah, because [inaudible 00:12:09] about a 5-million-dollar cap. If you’re 25-years-old, you’re likely to have 5 million in your IRA in the future. Just do the math on a kegger with the amount of money that’s being printed and what your growth will be.
[00:12:20] P: What is it? 80% of all the U S dollars that have ever existed have been printed in the last 14 years.
[00:12:26] LW: Yeah. Here’s the thing, that 5 million is going to be worth –
[00:12:28] P: The 13 [inaudible 00:12:29].
[00:12:31] LW: That 5 million by the time you get there, it’s only going to be worth about a half a million. You keep printing money like this, it’s going to make even that wealth. This is what I feel like is going crazy in this country. Right now, this wealth destruction, the ability to compound interest, all of these different things that especially, which is weird to me, because it always comes from the democratic party, which always talks about the inequality and the wealth gap.
If you think about it, when you take away the ability for people to invest in assets and actually compound that interest without being taxed on it, you are a literally expanding the wealth gap, because the people who already have, they already have. The only way I’m going to be able to make it back is to actually invest in things, so that I can actually build compound interest, so that I can at least catch up in the gap in some form or faster.
But they wind up destroying that wealth possibility by bringing in things, like unrealized capital gains tax. Then, they take that out and put it to the bottom by doing something like UBI. If you think about that, all it is the government making us more and more dependent. See, the thing is that the democratic party, they always are a party of trying to create the goodness. Just look across the entire scope of what they’ve done, I’m talking about when they finally changed over, when they were the racist party, it was a little bit different. Then they changed over and they still might’ve been the racist party, because they wanted dependence and they wound up making the dependence, those people who didn’t have a whole lot, which happened to look like me back in the day.
Now, we’re in a position now where the dependents, they’re trying to make the entire middle-class dependent upon the government, because they understand that if they have a dependent body, what happens is that dependency makes people vote for them in the future. This is what I feel like is exactly happening right now in this country. They are establishing ways to make us more and more dependent upon government, and I think that if we have to fight back against it, and by any means necessary, and I truthfully believe, Bitcoin is the best way to fight against all of this bull crap.
[00:14:23] P: Yeah. I totally agree. I think this is all about systems of control. You remove people’s upside and then you force them to take the dog food you’re feeding them, and that allows you to have control over them. Jimmy, I want to give you a chance to comment, weigh in and then yellow, I want to hear your thoughts, because you’ve had your hand raised for a while.
[00:14:39] JS: I did write a tweet earlier today about how were cats, four times now, already on our income, and this is going to be tax number five, like unrealized capital gains. I think, there’s something really crazy going on here. I thought Lamar made some really good points about how it’s really a way to – They know that they printed too much money, that it’s in the hands of rich people. They’re trying to calm down some of the poor people by taking some of that back that and they’re doing that through taxation. Unrealized capital gains is, I’m not even sure how you force that, right?
Because Mark Zuckerberg is worth billions of dollars, but the way he gets money is he keeps his stock in Facebook and he gets loans against that stock. That’s how he operates. That’s the way in which he could continue to get upside on his business and so on. That’s how a lot of people in the US are. They don’t actually have that many liquid assets. They just borrow against the assets that they have. This in turn causes this Cantillon on effect of additional money printing, because all of those loans that they get against their stock or their assets, it’s all newly printed money. That in turn, causes even more money to be printed and go into the economy, that causes higher prices and stuff.
You do a wealth tax like this, they now have to liquidate this stuff. I suppose, they could take out a loan against that and hope that the tax goes away eventually, but they’re most likely going to have to sell. Now you have less leverage that these people have. You’re destroying this money creation avenue. You contract the money supply as a result of this. It’s not going to be pretty. You do this from some of the wealthier people in the – You really contract the money supply significantly. That means that the fed has to print even more and give out even more loans on even less of a basis. You get even more fragile. I just think this thing has disaster written all over it.
[00:16:42] JG: I got a question for you. Do you see a scenario, or possibility where, because a guy like John Malone from Liberty Media, he did this. He was the master at this. He never paid any taxes. He just borrowed against his holdings and he kept growing through acquisitions and his network kept going up and just kept borrowing against it and never had to sell anything.
He serviced the debt with the loans as well. Really genius, actually. Why not, in a low-interest rate world that we have, which isn’t going anyway, going away anytime soon, and let’s say, he has a 100 million dollars that he wants to borrow, and he’s currently borrowing it at 3%, just say, why couldn’t they just impose a very small tax on the amount borrowed, because otherwise, for him to get the 100 dollars, he would have had to sell assets. Then, he could just use the loan that he’s borrowing to service the debt.
Essentially, it’s increasing his interest rate, essentially. The interest rate from the bank, but then you have an imposed tax from the government, the tax from the bank, it could just be like, almost a library plus, right? He may have a 3% interest rate from the bank, and then the government says, if you’re borrowing money against your assets, we’re going to tax you 5% on the amount you borrow. They’re not going to not borrow to do that. They’re certainly not going to sell their assets.
[00:17:46] LW: They will move, Jay. I believe, billionaires are going to move.
[00:17:50] JG: I think that’s true.
[00:17:52] LW: They’re going to be straight –
[00:17:54] T: Hold on. I just retweeted something that I learned about many years ago about lead trust in Harvard alumni. Go read what I tweeted. I sent it to John, to P, to Jay. Go take a look at that. Some of the things you have to understand about super rich people. One, they set up – Hold on. They set up foundations. Foundations enable you to take substantial amounts of money and keep it untaxed for centuries, certainly for decades. The power of having substantial wealth is the power of using it and having access to it. That money pretty much [inaudible 00:18:27].
There are many things in the tax code, which enable the super wealthy to very much mitigate the effects of these things. These things will fall down on upper income, not fantastically wealthy people. They will fall on people who might be considered rich, or not super rich, because the super-rich can do things that other people can’t do.
When Bloomberg has the giving pledge, whatever the hell he calls it, it gives substantial amount of money into a foundation. That foundation can be controlled by family members for decades, which is the real power of having money, because you have massive social influence, political influence. This is the power of real money. People will have tens of billions of dollars, can’t spend it, but they sure as hell like that political influence, and it’s serious.
I’ll look at lead trusts. The game is set up so that those who have well into the nine figures and above can do things that other people can’t do. If you have 20 to 30 million dollars, which sounds like a lot of money, you get screwed, because you can’t defend yourself from these things. When you have 500 million, a billion, 2 billion dollars, there are lots of things you can do.
It’s not going to be quite what you’re saying. It’s going to fall on the heads of people who are successful, who want to leave money to their family, and maybe to others, but it’s going to slam those people. It is not going to hit the super-rich. Really, if you want to change the tax code to change the consumption tax, eliminate all capital gains, all income taxes, because the consumption tax will capture the spending of the super-rich and there are plenty of things that can be done to mitigate the effects on substantially, lower-income people.
This was a game about power, and this is a game, when you can grant special favors and dispensation to people who were not hit by this tax code, that’s the real power that Congress has. The ability to grant special tax benefits to different groups and classes of people. I think, class is not an economic class. I’m talking about –
[00:20:32] JG: Tina, let me ask you a question. Let me ask you a question. I’m aware of this. You’re right. For the richest individuals in the country, the billionaires, this is a strategy. It’s really funny. The giving pledge with Warren Buffet and all these guys. It was really funny when I saw – it was Garrett Camp, the founder of Uber, decided and put 50% of his wealth in there. Just do some math on that.
Anyway, if you look, and by the way, they’re doing really good things. I’m not criticizing the effort, but there is a tax benefit to this. The billionaires are mostly all aware of it. I imagine, they’d have to be. They’re not, I don’t know what rock they’re living under. The politicians are mostly aware of it as well. The lobbyists are making them aware of it. They’re all aware, so why is there a rhetoric around this? What is the goal? Why do you think they’re doing it? Because to me –
[00:21:15] T: I didn’t think it’s [inaudible 00:21:17].
[00:21:17] P: Go for it, Jay.
[00:21:18] JG: Because it seems to me, I think it’s just, number one, they’re pandering to their constituency base, their voters. Number two, it’s a slippery slope that leads to the others like us.
[00:21:29] T: It’s the politics of envy. Here’s something you need to know. Everyone needs to know this. There’s no point in discussing rates, if you don’t discuss definition of income. Taxes are all about definition of income. When you start defining unrealized capital gains as income, that’s definition of income. When people talk about 80% and 90% rates from the 50s and 60s, the definition of income was very different. The 1986 tax reformat eliminated credit card interest as a deduction. There were all kinds of tax shelters people could engage in. People do not understand that definition of income is critical. You can’t have a discussion without it.
[00:22:05] P: I totally agree.
[00:22:06] JG: That’s where we started the topic to call.
[00:22:07] P: Yeah, I totally agree, Tina. That’s, what’s really going on here, to Jay’s point. Essentially, the government or, Yellen, the White House, they are basically putting a target on “wealthy individuals’” backs, because that is a politically acceptable way to shoehorn this, pass all the constituents.
[00:22:27] JG: They’re pandering to the bottom 50% of income earners in the country. This is a true fact. The bottom 50%, they only pay 2.9% of the tax revenue collected for the government for federal taxes.
[00:22:39] JF: There was a girl who wore a dress that says, “Tax the rich.” This is a really phenomenal way to raise money and pander to your base. If you guys remember, if you look at how Mitt Romney lost the 2016, excuse me, the 2012 election, he basically was pulling neck and neck. This is the point that, I think, Jay was raising. Then he goes, 47% of Americans don’t pay any income taxes. There was a secret video. Go watch the polling from that day through. This is an extremely effective way. It polls really well within certain demographics, a really large demographic and an increasing demographic, like, one where you can say, what’s wrong with society? This is another one of those pointing to the symptoms and not actually to the cause.
[00:23:17] P: I do want to give yellow a chance to speak, because he’s been extremely patient. Go ahead, yellow. What’s up?
[00:23:23] Y: Thank you for having me, first of all, I actually have a question for a Jimmy Song. I’m a huge fan. What’s his thoughts on banana bread?
[00:23:30] P: God dammit. Banana bread is an important asset to diversify one’s holdings into, as you and I have talked about for a couple of days back, bananas are actually, a really interesting token, which has a physical aspect associated with it. We talked about the seeds, the fact that the Cavendish bananas are all clones and that there’s a terrible fungus that’s attacking all Cavendish bananas.
[00:23:51] Y: I know it’s off topic, and I’m hijacking a little bit. I’m sorry about that. I just want to know this and I’ll be going that banana bread is a great store of carbohydrates [inaudible 00:24:01] through time and space. If you want to know more, you should read the banana standard and thank you for your time.
[00:24:07] P: I am going to bring us back around to this specific conversation. Let’s continue.
[00:24:10] JF: We left off in a Banana Republic, or how we’re leading to a Banana Republic. If that would get us to segue back to the wealth tax. I think, Tina, let a really sharp point that I think it was worthy of noting. This doesn’t hit people that have a nine, 10-figure net worth. This is folks that are going to be in that seven, eight figure net worth, which probably is going to comprise a lot of people in this room, in the next 10 or 15 years at worst, even if you’re really bearish like me, all joking aside.
[00:24:39] LW: It’s going to hit the people, too, bro.
[00:24:40] JF: I get it. I get it. I get it. Let me finish this thought, and then I’ll let you get any pertinent thoughts in. I think, it’s important to understand there are a lot of ways to manipulate this thing. By the time that this thing gets enacted, like most people have things figure it out before the actual tax laws get enacted.
When the Dodd-Frank tax after the bank said, after the 2008 financial crisis and the banks were the enemies, which they are, but any who, in terms of the political rhetoric at the time, literally of the 10 most important provisions of Dodd-Frank, eight of them, they already found work arounds for eight or nine of them, I believe, before the actual law actually was implemented. This is a function of making a lot of accountants richer. Let’s take a counter and a thought here and just like, I don’t actually see an unrealized tax bill being passed. I think, it’s political suicide and 70% to 80% of the country’s congressional districts.
I think, it’s a really effective way to raise money and to insulate your power for about 20% to 30% of the congressional political districts. The reality is, very few things can get passed in this country. Things like that, I think, are going to be really difficult to do. Not just from a political standpoint, but actually, from a pragmatic standpoint. That’s why I brought up the methodology they use. They’re literally relying on Forbes to actually find the 400 richest people that they’re citing in this particular report, or the 400 richest family.
The reality is, I think, Tina laid out that last point around where the burden will actually fall and it won’t fall on that next bracket. It won’t fall on the uber wealthy. This is one of those things, to bring it back to the conversation, I think, circles this all, this is what this is why Bitcoin matters. This is why you need hard money. This is why you need censorship-resistant money. This is why you need to start to build community, which I think is taking place in a much more sophisticated way in Washington than the entire time I’ve been. With Amanda’s efforts, with probably, Bitcoin Magazine, helping putting a lot of the content out that they are.
I know a lot of people personally that have been on the phone with senators, like Ted Cruz and Toomey and Lummis, etc. This is one of those things where we got to step up our game as well and be part of the narrative that’s up for it.
[00:26:44] LW: Here’s what’s crazy. The part I was saying is this going to hit the people with six-figure net worth, too, John. The people who might be custodians and been saving for the last 30 years in their 401k and barely getting up to a million. You know what I mean?
[00:26:57] JF: You’re not wrong, Lamar. I would actually say further, you’re going to wind up having for selling. You’re going to have a bunch of people selling assets, instead of accumulating assets.
[00:27:05] LW: Right. Then what happens when you started having for selling? What happens to the actual price of those assets, when you start having all of this –
[00:27:12] JF: All our volatility. You see it in [inaudible 00:27:13]. We’ve seen this with the point price every year in March or April, whatever, where the Bitcoin prize dips, because people have to sell to pay their trading bills, etc., etc. This is one of the things that happens with a lot of the estate taxes, even in current day, right?
Most people that are inheriting large dollar estates, aren’t actually receiving a bunch of cash in bank accounts, or money market accounts. They’re inheriting real estate. They’re inheriting, perhaps, shares in a company. They’re inheriting the family business, etc. This is where Jay was hitting in on, and Jay and I were talking about the stepped-up basis conversation. That will be the easiest way to attack it.
If you really wanted to increase revenue, especially from that targeted group of individuals, the way you do that is you basically increase their tax basis, or you remove the ability for the heirs to inherit the tax basis and you say, “Yo, this isn’t a taxable event. They don’t have to pay taxes necessarily then.” When they do, when you do die, or when you do give it to them, or when they sell it, then they’re going to have to pay it based on a different basis.
[00:28:14] JG: John, they’ll probably do one of the two things. They’re probably going to do that. They may also say that we won’t tax you on this liquidation event of your parents passing away, but if you pass away and still have it, that will be a liquidation event for your kids. You can’t just keep it. They’re probably going to prevent to push that down intimately and definitely.
[00:28:30] T: Hold on. You’re saying, there’s an unlimited elimination of the estate tax? Is that what you’re saying? Because I don’t think –
[00:28:37] JG: That’s not what I’m saying.
[00:28:37] T: [Inaudible 00:28:38] about eliminating the estate taxes. Hold on. The reason you get – Hold on. The reason you get a step up in basis is because you get hit within estate tax. As a quid pro quo, you get the step up in basis. If you own XYZ stock at basically zero, and now it’s at ,2000, you get the step up in basis, because for any estate over some amount, you pay a very large estate tax. You can’t forget that. You can’t eliminate –
[00:29:02] P: Tina, I just want to make sure that the audience understands what you mean when you say step-up in basis. Can you define that for us?
[00:29:07] T: Okay. The basis is the price you paid. You bought Microsoft stock. You bought it back in 1989 and you paid the equivalent of 20 cents for it. Today, it’s selling at 300 and some odd dollars. That’s a step-up in basis. You own 30 million dollars’ worth, in the state of whatever, which is in excess of the exemption. The exemption today is 11.7 million per person.
Together, a couple can leave twice that amount, 11.7 million dollars times two to their children, with as an exclusion, and without paying a state taxes on it. They’re going to drop that 11.7 to 5 million something, so you won’t get as much of an exclusion, and you’ll get hit on a estate tax over that amount and you’ll pay the difference in the gains.
The reason Warren Buffet likes the estate tax so much is that when all kinds of people have to sell their businesses, because they can’t meet the estate tax, because they may not be liquid, he gets to buy it on the cheap.
[00:30:05] JF: That’s the point that I was getting. Forcing the selling in those areas for people that [inaudible 00:30:09]. It basically distorts markets. Hey, Tina, just because I think, and you’re not wrong in everything you’re saying, but just to repeat it, because for people who don’t know what stepped-up basis is, probably got lost in the next two bullet points you are. Let me just literally recite this. [Inaudible 00:30:24].
[00:30:25] T: You do it, John.
[00:30:26] JF: Yeah, it’s fine. The tax code in the United States holds that when the person beneficiary receives an asset from the giver, the benefactor, after the benefactor dies, that asset receives stepped-up basis, in which market value at the time of the benefactor dies, a stepped-up basis can be higher than before death costs. Simply put, you when you’re inheriting an asset, you basically can get the market price of the asset as your basis when you receive it, because the person who likely has given it to you, this is assuming that it’s higher than what you received it at. If you’re getting a piece of real estate that is now worth a million, but it was bought for a 100,000, stepped-up basis now allows for you to own that real estate at a million. When you sell it for 2 million, you would now owe a million dollars in taxes, versus 1.9 million. Is that more clear, P?
[00:31:12] P: Yeah, absolutely.
[00:31:12] JF: Should I try that one more time?
[00:31:13] P: No. Thanks, man. I also want to give just a chance for Shannon, you requested to speak. You’ve been up here for a while.
[00:31:19] JF: Hey, really quickly, P. Can we let Tina finish that? I think he’s about to finish the last thought that I think it was really important. Tina, if I didn’t interrupt you. And then Shannon, if you want to jump in on that. I think, you were really winding a really important thought that I was trying to –
[00:31:31] T: I don’t remember what thought. If you do, you can fill in for me, because I completely forgotten what I was saying.
[00:31:37] JF: No worries, Tina. What I think what you’re doing is basically, tying the additive component of where you can extract more of more tax revenue, right? Just by using the illustration I do, so if you basically eliminate stepped basis, you’re able to actually hit that group harder, and more likely than not a bunch of people that don’t have the ability to pay that tax with liquid cash. What they wind up doing is they force sell assets, especially things that might not necessarily have huge market.
Imagine if you’re buying – you get a piece of real estate, because your parents have had the family home for 30 years. Cantillon effect of inflation, etc., and has now driven that price. This is a middle-class home, probably in Chicago. It’s now worth a couple million dollars, perhaps. Now, obviously, fast forwarding 10 or 15 years, the way that they’d be able to get more tax revenue is to obviously tax you on the basis that was the original acquisition of that asset. An example I used before, a 100,000 versus a million, obviously taxing 1.9 million makes that a lot more tax revenue, but also it distorts markets, right?
One of the reasons we have wash sale rules, P, and this is where I was trying to bring this thought home on market distortion, or perhaps, even more volatility, is that people are going to be selling for no other reason than to pay a tax bill, that they wouldn’t have had, if someone didn’t die, or someone didn’t hand them something.
It doesn’t allow for intergenerational wealth. It doesn’t allow for you to transfer your energy through time and space in the way that Bitcoin is perfected. I think that’s why it’s like, this type of thought is super, super anti-Bitcoin, and I think something that should be concerning, even though I actually don’t think that it’s super practical.
I think, the stepped-up basis attack is definitely practical. I think, the ability to start taxing people on appreciation is going to be much more difficult, not only politically to pass, but also from an accounting standpoint to enforce.
[00:33:37] JG: They’re going to try to tax you on the money you borrow against assets.
[00:33:42] LW: I think, also from a political standpoint, like you were saying earlier, if you even look at the whole idea of tax the rich, the problem is what I was saying earlier, I think, there is asymmetric information about what’s really going to happen. The people who are on the bottom rungs of society that actually need to save and start investing in assets to start building up their own net worth and wealth, they don’t understand that those same laws are going to be affecting them, because it’s not affecting them immediately.
The problem is as those laws begin to affect them, they are going to be further behind in the wealth gap, which is not good for anyone who is trying to actually grow generational wealth to pass down for generations, so that the next generations can stop being in the situations that they’re in.
I think, that’s the part from a political standpoint that it almost is manipulative, to be all the way – What politics aren’t manipulate? Let me rewind that. It’s just politics as usual to try to manipulate a base to make them believe that it’s us versus them. When the truth of the matter is, the us versus them is probably really supposed to be the government versus the people, the state versus the people.
I think, that’s what really, we need to start looking at and understanding that some of these policies and the things that they’re encouraging is not going to only affect these “billionaires” that they are targeting, but it’s also going to affect everyday people. I think, that winds up putting us into a far darker hole when it comes to marginalized communities in this country, man. That’s the part that makes me very passionate. That’s the part that just makes me very upset that they try to do things like this, because you never can get out of the hole if every time you get out of the hole, they change the rules about what the hole is, you know what I’m saying? And what income is.
[00:35:31] JF: I’ll tell you, it’s also probably worth just to bring this home a little, P, and I won’t be very long. This is just a Cyborg Yellen, pretty much. This is political suicide, I believe, for 70% of [inaudible 00:35:42]. Take a different position than me. That’s mine. It’s okay for us to disagree. Let me just say this. Right now, this isn’t a serious proposal that’s getting any traction. These are the types of things that have been talked about for years.
It’s not like, I’m just putting this out there from a perspective of anybody that’s sitting there and listening, worried about calling their accountant tomorrow and being like, “Yo, what am I taxed?” Take a deep breath. There’s no new tax done.
[00:36:05] P: Great. Jay, before you jump in, I just want to comment and say, that’s a very – Lamar and John, you just framed a really eloquent way of thinking about this, which is that it’s ultimately an attack on what Bitcoin is designed to fix. Specifically, it’s an attack on low-time preference. It basically forces you to have a higher time preference. I think, that’s a really important frame for us to acknowledge, because that is the type of attack, the type of insidious attack that we are most likely to see on Bitcoin going forward.
Bans like the one that China has implemented, it’s comical at this point, right? We all laugh that price barely is affected from just yeah, trying a good fucking luck. These types of things where the narrative is being shifted and more importantly, the incentives are being shifted. That is really fucking dangerous. I think, it’s so important that we are – whether or not these are imminent threats as some of us think they are, or just proposals, John, as it sounds like, you think they are. I think we have to be hyper-aware of these things, regardless, because these are the types of threats that have a largest likelihood of undermining everything that we’re trying to achieve with Bitcoin.
[00:37:13] LW: P, can I say this really quick, Jay. Just really quick.
[00:37:14] JG: No, man. Because I’m trying to talk. I try to be respectful here.
[00:37:17] P: [Inaudible 00:37:17] Go ahead, Jay.
[00:37:19] JG: Apparently, it’s different in Spaces. You got to wait for everybody to finish. John, I agree with what you’re saying, but I don’t in a way. It’s dangerous to have this thinking of, there’s nothing to worry about. Joe’s in here as a listener. He’s not on stage. He generally does a lot of this.
[00:37:30] JF: No, that’s not my take. Just for the record, that’s not my take. That’s why I’m here to join the conversation. I didn’t want people panicking and calling their accountants and figure out, like thinking that this is a tax bill that we’re talking about, like the infrastructure bill a couple weeks ago or something. I just wanted to put some component of it. That’s all. Or some context to it. I do think it’s important, and I do think it’s a threat.
[00:37:50] LW: That’s my whole thing though, John.
[00:37:52] JF: Hey, Lamar. After you’re done, though, let Tina jump in, because he’s been waiting for a while.
[00:37:56] LW: Yeah. Quickly, go ahead, Jay. Man.
[00:37:58] JG: I didn’t asked you a damn thing. I just wanted to say, that I think it’s important to understand that I started the call off when we started this room, saying that words have meaning. they started this rhetoric in 2008 under Obama’s hope, whatever the fuck campaign he had, when he kept saying they’re not paying their fair share. the fair share line, I’ve never heard before. They’ve been pounding that drum and slowly introducing more and more overreaching tax strategies.
The first one was the Obama Affordable Healthcare Tax. Obviously, it made sense if you believed in doing the affordable care for the day, to try to have to pay for it what they say. They could just put in more money. They had the 3.8% tax. Then when Trump comes in and has his told tax plan and tax cuts, doesn’t cut that tax, right? They’re never going to take these things away, so they slowly creep these things in. They start with the rhetoric. They start doing it this way. They lean it. They do the same thing at the fed, right? Where they’ll say things like, “We’re thinking about tapering,” and then they want to see how the market reacts. If the market doesn’t overreact, they might actually try it. They try a few more signaling aside, a verbal expression. Then, eventually, they try it and they see how the market reacts there, then they push further and they push further. They’re doing the same thing here with this stuff. This is what their strategy is. They push it out there.
[00:39:11] JF: They tax the rich –
[00:39:11] P: Wait a minute. Hold on. John. John, John, John. John, wait. I do want to give David a chance to speak and also, Shannon.
[00:39:17] JG: Okay. Nothing’s changed, John. It’s always been the same, right?
[00:39:19] JF: No. The first time that said [inaudible 00:39:21].
[00:39:22] JG: John, it is a strategic words. Listen to the words. Listen to the rhetoric.
[00:39:26] JF: I get it. I’m saying, you just said the first time you heard it was in 2008 with Obama. I’m telling you that this goes back to the election of 1890 with –
[00:39:35] P: John, hold on, hold on, hold on. John. John. I take a point. It doesn’t actually matter when they are pushing this narrative. Jay’s point rather still stands, which is that –
[00:39:42] JG: It’s accelerating.
[00:39:43] P: It is accelerating. Absolutely. Jay, you and I were talking about how I feel foolish being continually surprised by how rapidly we are accelerating along this timeline. This is how it goes to your point. You’re absolutely correct. It’s narrative and it’s how does the public respond? Then, it’s basically, okay, they didn’t respond too harshly, or maybe only a little bit harshly. Great. We can lock us in and it will never be removed. You see this in every single aspect of our lives, including like, fucking bridge tolls. I live in the SF Bay Area, the Golden Gate Bridge, there was not supposed to be a bridge toll on that, and they have increased it every fucking year and every fucking year. It’s announced as being a temporary measure that is never going away. I think, that it’s so important as you said, that we are understanding these ideas as attacks.
[00:40:24] JG: The thing that gets me the most riled up, like I was the other day –
[00:40:27] P: Jay. Wait, hold on. Go ahead and finish this thought, and then I do want to let Shannon.
[00:40:31] JG: The thing that really gets me going is that it’s a class warfare. It started with Obama creating this class warfare of the rich and the poor. Yes, John, they’ve been doing this for many years, but not as strategically calculated as they’ve been doing over the last 15 years, 13 years, I should say. Very strategic. Now, it’s just dumping over into people, like Elizabeth Warren now, that are acting on the total polar opposite side of Donald Trump and the way the politics are, and they have AOCs, and you have multiple ones on that side of the aisle that are getting more and more radical.
It’s dangerous and a rhetoric that needs to stop. You need to have people step up in Congress and stop this shit, because it’s class warfare. It’s pitting the majority against the minority. I don’t care what the reasoning is and what those classes of people are. Whether it’s race, religion, creed, wealth. I don’t give a shit what it is. When you’re pitting people against each other and it’s a farce, because they’re the ones creating the problem with the money printing, they know they are, it’s completely and utterly disingenuous at best, what they’re doing right now. Because they’re blaming the rich. They’re not saying it per se, but they’re saying, they are paying their fair share. It’s an implication.
It’s very smart what Obama did and his team. They’ve latched onto it and they haven’t let it go, because it assumes to the average person listening, the rich people are getting richer and they’re using words like income. They’ve been doing this in the media, by the way, for at least a decade, when they would say, the stock market’s roaring and Mark Zuckerberg’s income last year was way up, and because the stock is up. It’s like, that’s not his income. They’ve been saying that. I’ve been correcting that on CNBC for years and they say it on CNBC, guys.
[00:41:56] P: To your point, and then I want to – I do want to let Dave and Shannon speak. I also want to welcome Dustin and Joe to the stage. This is a classic playbook. You take a minority that people are already biased against for various reasons. Then, you focus that ire and you focus that anger, and then you blame them for the things that you have, actually, the problems that you and by you, the government, or any specific entity that’s trying to amass power has actually created.
This is a classic scapegoat strategy. This is, I hate to fucking bring this up, because if you immediately are an idiot if you bring this up, but this is exactly what happened in Germany, and this is exactly what we’re seeing here. I’m not saying that – I’m not comparing Nazi Germany to America, but these are very tried and true tactics. Isolate groups, create narratives that divide them and then ferment anger between various groups. Then once you eliminate one group, you shift to a different group and you move them out as well, because the rules never go back.
[00:42:56] LW: We got a ton from Adolf Hitler, My Struggle. You can read the book and he can teach you things that do this.
[00:43:02] P: Yeah. Lamar, to your point, this happens with race and [inaudible 00:43:04] laws and everything.
[00:43:06] LW: No. I’m talking about race. I’m talking about, think about it, vaccinated, not vaccinated.
[00:43:11] P: Yeah. Perfect. Perfect example.
[00:43:13] LW: Think about it. It’s like, there’s a division constantly being had, because what people don’t understand is as long as they can keep you divided, they can keep control over you, period. I don’t care if it’s race. I don’t care if it’s class. I don’t care if it’s vaccine. Once you start to realize is these narratives, and that’s why, when John was saying it, I thought he was saying the same thing Jay heard. The truth is that these seeds that are being planted, man, these seeds are being planted over and over again, just looking for fertile enough soil to make people believe that even things, like potentially socialism is better than capitalism.
You got all of these seeds that get planted. Then, what happens is now you have people who think socialism is better than capitalism, who think capitalism is better than socialism. Whether you have what P said, a divide, the seeds get planted first, then the divide comes later. It happens over and over again, and we’re seeing it with this rhetoric of we need to go after this income.
When Jay said earlier about Mark Zuckerberg, the really wealthy in the world are not having income, because they’re borrowing against their assets, so there is no income. The only people actually making income are us. It’s not the billionaires. It’s us. We’re the ones making income. We’re the ones going to get tax for that income and the same way that large corporations don’t hardly ever have to pay tax, the same way large billionaires don’t ever have to pay tax. It’s always comes down to us.
[00:44:41] JF: Shannon, you better jump in right now, man. I’m going to try to block for you for three seconds. Do it.
[00:44:45] P: Shannon, go for it.
[00:44:46] S: I think, the moral of this story is that you need to have an off-grid Bitcoin mining farm that people don’t know about, instead of investing in other assets. More importantly, what are you supposed to do about it? That’s the big problem, right? The government tends to do whatever they want and they have a bigger voice. Tina’s loud, but their voice is bigger.
[00:45:03] JG: To me, it’s memes.
[00:45:05] T: I’ll chime in on an opinion on that, if you’d like. What I think, what’s really critical is Bitcoin needs to get big. Bitcoin needs to be in the tens of trillions and hundreds of trillions of dollars, because basically, the bigger Bitcoin gets, Bitcoin effectively almost becomes its own nation state. It becomes a weapon and they know it.
We need to get other people to own and hold Bitcoin, because that does become an immensely powerful tool. People usually like to protect things that they own. It’s not perfect, but it really does become very helpful when people have their own wealth to protect. You really want to encourage people. This is my opinion, and probably others disagree with that, but it’s an amazingly powerful tool. Bitcoin we’ll get to some size. Bitcoiners will be able to have significant influence on politics, because they’ll be extremely wealthy, and to be able to hire lobbyists and do the things necessary to influence the way things work in this country and other countries. That’s my personal opinion.
[00:46:11] JG: I think, you need memes. I’m not joking when I say that. The pay your fair share is basically a meme. You need taglines. You need something that resonates, that’s digestible and easily repeatable, so that people can understand. What that is, it needs to be telling the truth. It needs to educate people with the truth and taglines. It’s the only way to counter what they’re doing and their taglines.
[00:46:31] P: I could not agree with you more. Yellow and I are literally chatting in the background about how funny it was that he came up and made the joke about bananas. I think, that is so important, because one, humor is one of the most effective ways to communicate. Especially when it is strategically interspersed in super heavy, or dense topics. More than that, Yellow is part of, what is it’s like? The meme factory (This is not a real thing). I think, those types of initiatives are, they’re funny, but they’re also super, super important.
[00:47:04] JG: P, remember when Zuckerberg went to Congress and the Congress people asked him the stupidest questions and he’s divestment, we sell advertising, when they were like, “Where do you get your revenue from?” That’s an hour of talking about how they derive their revenue. Those kinds of things, we have to find that type of shit and make that viral, to show that the people that are actually out here proposing these ridiculous things, it is ridiculous, because look at all the other ridiculous shit they’re saying, and then you explain that. It’s got to be 30 seconds to a minute on those types of clips.
[00:47:34] P: Yeah, totally. Okay. Shannon, it sounds like you got your – you were distracted/forgot what you were going to say. David, what’d you got for us?
[00:47:41] D: Two things. One, is Ron Wyden has already taken the stance that it’s the billionaire income tax. That is the messaging now. It’s a billionaire income tax. The stat that I think everyone needs to remember with this is in 1913, when the 16th amendment went into effect, less than 1% of people paid a 1% net income tax. That was where income taxes started. It’s not going to stay with the billionaires.
[00:48:05] JG: Slippery slope.
[00:48:07] P: Yeah, totally. Again, this has nothing to do with facts or reality. This is a narrative game. This is about convincing constituents that a thing is true, that is not necessarily true. In this case, definitely not true. That is the terrain that we are fighting on, and I think it’s really important to acknowledge that. Joe, I want to acknowledge you and thanks for joining us. What are your thoughts? Then I want to go to Dustin.
[00:48:30] J: Thanks, P. Thanks for all the great discussion in the room. A lot of great points. I was really enjoying listening. I will say this. I believe that this is a threat to be taken seriously. I believe this creep towards additional taxation is not to be minimized, or just pushed off as something that’ll never occur. I think, it’s something that we really need to look at very closely.
That being said, I do think part of the messaging and the narrative that we’ve overlooked here is that people are seeing the real way to stay flat. They’re seeing a lot of situations where the middle-class, particularly the poor are trapped in these cycles, where they can leverage the Cantillon effect that a lot of other classes can. They are desperate for politicians to be relatable, to put on a dress and say, tax the rich and make them understand, or feel. It just shows some virtual signaling for why they understand their plight.
I think, that’s a big part of this. Because if you actually look, and Jay made this point earlier, the amount of revenue under most of these proposals, it’s not going to solve the spending. It’s not going to be budget neutral. This will be taken on a tremendous amount of debt that is essentially monetized by the fed. You have to look at really, what is the point of this? Why are you emphasizing these tax changes and going after the wealthy elites here, if it’s not going to solve the spending problem? In fact, in many respects, it’s going to actually be negative and it’s going to result in lower tax revenue for the reasons Tina said, because you’re going to just find more and more loopholes and way to safeguard that income.
I think, part of it is just to understand where we’re at in this overall fiat cycle, and why the politicians from a political standpoint, having their vested interests, the desire to go after and identify the boogeyman and blame that person and bring that person to task and say, “Now we’ve raised taxes on the rich.” It’s a common historical thing. You needed a bogeyman to point out that say, this is why you middle-class Americans and lower-class people are struggling. It’s an easy way to deflect from the overarching problem of the fiat standard and the nons-top money printing, which is in the words of Stanley Druckenmiller, has been the single greatest force for the concentration of wealth and equality in the last 50 years, has been the federal reserve and its monetary policy. I think it’s important to not lose sight of that context.
[00:50:37] P: Yeah. That’s a great point. Dustin, did you have any thoughts?
[00:50:40] D: I agree with Joe, which is, he says so much awesome stuff. It’s hard not to. Yeah. Honestly, I think Janet Yellen has been saying this over and over again, somehow it ends up getting the headlines. My own personal theory is that it’s hard to imagine Congress passing a law that would hurt themselves so dramatically. They’re all millionaires. They all have probably tons of unrealized capital gains. I imagine, if they do pass them like that, they have so many loopholes for themselves that hopefully, we have access to, too. I don’t know. I suspect, there is a demand like Joe is saying, for sounding like they’re doing something.
I wouldn’t be surprised if there’s a unrealized capital gains tax law that’s passed at some point. Then, actually doesn’t do anything, but it sounds really good. That’s on theme with what’s happening with these bills. They’re like, revenue neutral bills. Everyone knows they’re not, but it’s just this weird political theater that they’re playing right now.
[00:51:28] P: I don’t think it’s necessarily weird political feeder. I don’t think it is. I think, it’s they’re trying to push these narratives and see what sticks, see what doesn’t, and –
[00:51:37] JF: Yeah. Strategic. If it’s theater, it’s strategic. It’s calculated and strategic, I agree.
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[EPISODE CONTINUED]
[00:53:43] JG: I want to say something else. I viewed taxes a little bit differently when I was earning. When I was running my company and making a lot of money, I looked at it as well, I got to pay tax. I made a lot of money. That’s good. Then, when you’re done and you have money that you’ll die with and you’re wealthy and you’re not working and earning anymore, it’s a real drag when they have all these tax implications, and adding more taxes and they’re proposing the ideas of any more taxes, because you’re not out there earning anymore.
Earners, Dustin was speaking to the Congress people here, right? They are in the world where they’re going to go do speaking gigs and book deals and they’re making money off of their income from Congress, their job, they have their healthcare paid for. They’re not feeling the crunch where they have a net worth that’s flat, then now have to take all of that capital that they’ve made and been taxed on and push it into risk assets. They’re not quite there yet. I’m not saying they don’t have their assets in risk assets. I’m saying, that they’re continually earning and there is a difference there when you are an earner, how you view taxes.
[00:54:38] JF: Jay, because they’re part of the revolving door, and then they go work for the lobbying firm that was lobbing them, or the large corporation in their district that they were doing all those favors for. Yeah, for sure. Shannon, actually ask the question, so what do we do about it? Amanda’s on stage. I know there’s been a lot of conversations that we had early on with what feels like the reunion crew here from Bitcoin Club. I remember when I met you, Amanda, for instance, Gary Gensler just got appointed. We just got some declaration from the OCC about banks being able to hold digital assets, BNY, Bank of New York Mellon was not part of the conversation. [Inaudible 00:55:17] wasn’t part of the conversation, Tesla. There were all these things.
Now, we’re starting to see, I think, one of the developments that I’ve seen and you’ve been central to that is we’re actually starting to be a little bit more organized, and with a lot of effort from you and a lot of others putting in the ability to educate people who really have a massive education gap.
I’ve talked about this before. I have friends that are in various levels of state and the federal legislator, and a gas that at their understanding of this. Having said that, the infrastructure is developing, and I think, the other half of this is seeing more institutions come online that can ultimately sway the narrative in Washington in a more significant way. It was more interest that to protect, and more marketing dollars and lobbying dollars to support really tactical efforts by what feels just to decentralized group of cyber Hornets’ going after, Cynthia and crew to get them educated. I don’t know if you want to chime in, because I do think the question Shannon raised is probably the more pertinent one. What do we do next?
[00:56:19] AC: Yeah. Shannon’s been part of this too. Last week, we taught a staffer via Zoom, so anyone can do this, just about Bitcoin and have addressed some of the FUD. We’ve done this with senators directly as well. Becca, Jimmy, myself, and a few others, Joe, have been working on C4. We’re bringing that out into the world, just to focus on education in DC and then some grassroots efforts where it makes sense.
I think, a lot of it is just being naive and ignorant, but I at least, so, I think it’s on us to take the steps to focus on teaching folks on the hill and back home. I think, where you live is just in your local politicians are just as important as people in DC. That’s been exciting. I don’t know. I would love to hear if any other Bitcoin groups had submitted a Toomey proposal. Senator Toomey had asked for a response on guidance around cryptocurrency legislation.
We were able to submit that proposal, Monday night. Now, we’re just hitting the ground running, CJ and Alex Gladstein are going to be talking to a group of, I think, senators and staffers, probably the end of this, or yeah, in October. Then, some of us are going to go out to DC and November and just set up a bunch of meetings and start building those relationships.
It takes time. I think, it’s really important to offer education before asking for specific attention to things that they know that were going to be around for years and not just come and go. I think, that’s really important throughout this whole process. Thanks, John.
[00:57:57] LW: Amanda, quick question. Do you think that it’s more important to educate the incumbents, or those on the hill, than it is to educate the actual constituency? Because I’ve always taken the approach that educating the constituency will make the people on the hill get educated really fast, because that’s what happens, right? If your constituency, as a issue that they’re going to want to vote on, or that is really important to them, then that incumbent better figure it out really quick, or that next election, they’re not going to make it.
I think, we put a lot of effort into trying to educate the folks on the hill. I truthfully believe, it’s that old country thing where, when people say you can’t teach an old dog new tricks. I think, that to me has shown forth more than anything. I know Senator Warner, not Warren, but Senator Warner, I met him a long time ago, man. These people have had a chance to learn about Bitcoin. They’ve had a chance to learn about what’s going on in the cryptocurrency space. They’ve had no interest in it. Why they had no interest? Because their constituency has no interest in it.
I’m just wondering, do you think that the efforts of doing that are in someone in vain, if you don’t have a lot of money behind it? Because that’s how I always feel. Or do you feel like, that there are some efforts that are actually chipping away at their ideologies and the things that they believed for a long time?
[00:59:24] AC: Yeah, that’s a good question. I guess, we experimented with that on the infrastructure bill with so many people who called their senators, right? We were blowing up the hill. Sorry, this is bad. I don’t want to flag this. We were taking up the phone lines to an annoying point.
[00:59:38] T: 40,000 calls, right?
[00:59:41] AC: Yeah. Those were just the ones we know about. I think, there were probably more. That’s a great little, “Hey, we’re here.” If we can’t back that up with consistency and education, that’s a one-time trick. I think, now, you have to follow that up with, “Hey, we’re the annoying ones that called you. We’d like to talk to your staff and teach you about this.” That’s the most important part. I don’t know how many people actually followed up and called and taught. If we don’t have that follow-up, it doesn’t matter if we’re –
[01:00:10] JG: They never called.
[01:00:12] LW: That’s what I’m saying.
[01:00:13] P: Yeah. Jay, you have 45-minute long messages.
[01:00:17] LW: I guarantee, they call back their biggest donor. Guarantee you. I guarantee you. Did you see what I’m saying? I guarantee you.
[01:00:25] JG: Lamar, to your point. I think about marijuana as an example of some grassroots movement. I think, it wasn’t the politicians that came to us and said, “Hey guys. You know what? You need marijuana. I think we should legalize marijuana. What do you think?” No, it was the people. It was such a demand that they had to respond to the constituencies.
I think you’re right on that. I don’t know how you do that. That’s a grassroot movement. I think, what they’re doing, going to the senators and lobbying them, I think, you still have to do that. I do think, there needs to be a concerted effort towards getting people to be pushing on, like you did before. That was fantastic. When I’m reading that there’s 40,000 calls, I did not hear that on Clubhouse, guys. I saw that on CNBC or some shit, the website. A CNBC article. That’s amazing. That was purely out of the Clubhouse crew that did that. Congratulations. Fantastic.
[01:01:06] LW: Yeah, congratulations on getting it. Here’s my question. Here’s the thing, man. We’ve seen political efforts happen like this, grassroots people yelling, screaming. We’re getting a lot of people calling in, the whole nine. The question is, what are the outcomes? Yes, we were annoying. Yes, we were on the phones. What happened in that bill? What was the outcome of the vote? At the end of the day, no matter how many calls that you all made. That’s the part, right?
I think, that’s the part that we sometimes miss is that yes, it feels good to do all of these things and go about it in a standard political way and the whole nine. The truth is, just like what Jay said, we’ve talked about that before. With marijuana, it’s like, the people saying, “Look, man. We want this to be legal.” Until the people really spoke up loud enough and were like, “Look, we’ll vote you out, if you don’t make this legal,” or they wind up getting to the point where it was on the actual ballot.
[01:02:00] J: It was extraordinarily positive. I understand [inaudible 01:02:03] senators, you had a United States Senator on the floor of the Senate fighting for a Bitcoin. At least one, Ted Cruz. You had other senators trying to fix language and listening to reason. Because of an arcane parliamentary rule, they couldn’t get it through, because some other idiot wanted to get his priority passed. That’s essentially what happened, right? To make the note –
[01:02:22] JG: First time ever.
[01:02:24] J: All that activism is so silly. Lamar. I’m sorry. I just completely disagree.
[01:02:28] P: All right. I muted everyone. Okay, hold on. Lamar, please finish. Then I do want to hear Amanda’s thoughts. Go ahead, Lamar.
[01:02:35] LW: Yeah. Suddenly, he was quiet after I asked the man the question. I let her respond. She was like, I think it’s a – Joe disagrees. At the same time, Joe, that language that was put into those bills, regardless of what you’re saying, some of that language was not great for Bitcoin. It wasn’t great, period. It literally wasn’t great. Ted Cruz had the best option, period. He was like, “We don’t know enough about this. We shouldn’t be out here putting this in the bill.”
[01:02:58] JG: That’s not the point, though.
[01:03:00] LW: No, that is the point, because here’s the thing. No. Jay, listen, just listen. Let me land mine.
[01:03:04] JG: I’m listening.
[01:03:05] LW: The point is this, is because if you get the wrong institutions, the wrong people writing the bills and making these decisions within the bill, then even if we get something in there that says something about Bitcoin, if it is not the right thing, then all of a sudden, we’re fighting an uphill battle all over again. That’s what I’m saying. You’re literally running in circles, if people are not putting the right things in, and these people don’t have enough information.
[01:03:32] JG: We all agree. We all agree. A 100%. You should also celebrate that what Joe said is absolutely also true. There’s a guy, senator, standing there fighting for Bitcoin. Never had that before. Never had that before. It could go 100% favorably? No. It’s a stepping stone. It’s inevitable. It’s all inevitable.
[01:03:50] P: Hold on. Hold on. Lamar. Wait. Hold on. He’s fighting for Bitcoin, because many of the people on this stage put a ton of effort into getting him onboard with that. Hold on. I totally –
[01:04:05] LW: He’s not in freaking New York, bro. He’s in Texas. If he was in New York, he wouldn’t be doing that. That’s what I’m saying.
[01:04:10] P: Hold on. Jay, Jay, Jay, I got this. I got this. Lamar, totally agree with you. I think that it is also very important to acknowledge that this is a stochastic process, right? It is not something that is going to go from one to 100 instantaneously. We’re always in a situation where we’re doing three steps forward, two steps back, five steps forward, two steps back, 10 steps forward, seven steps back. That’s what it takes.
It takes the efforts of everyone, the plebs, and it takes grassroots efforts from the bottom up, constituents calling their representatives. It also takes companies weighing in. It takes lobbyists. It takes organizations like the one that Amanda and Joe and Becca and Jimmy and others are part of. It’s a multi-pronged attack. It takes all aspects. Again, it’s always going to be the stochastic step forward, but we are moving forward, even if sometimes we lose ground in the short-term. Amanda, I do want to hear what you were going to say. Go ahead.
[01:05:15] AC: Yeah. I think a lot of contexts was missed on how to get a politician from zero to grand-standing on the floor about Bitcoin, right? That took a month of prep. That took unrelentless follow-up. If we’re going to do this on pleb-powered and do grassroots orange pilling like that, then we all have to step up and you can’t just take, “Oh, they didn’t call me back.” You have to email, you have to call, you have to try 10 different ways to get a hold of them sometimes.
It’s like, how relentless are you going to be? I’m not picking on you, Jay. I’m just saying, I hear this all the time and I’m just like, “Yeah, you have to be relentless. You have to be relentless.”
[01:05:58] P: Jay, look, I did have you tattoo the message that was relevant on my back. I think, that’s the level of commitment that we’re talking about here. We took pictures. We sent it to the representatives in California.
[01:06:06] JG: On the small of your back.
[01:06:07] P: Oh, yeah, yeah.
[01:06:08] JF: It was a tramp stamp, is what you’re trying to get at. It’s all good.
[01:06:10] P: Look, that’s your word. That doesn’t align with my culture. But yes, we call it a tramp stamp, with an H in there, so it’s a different word.
[01:06:17] LW: This it he crew.
[01:06:18] T: I think, to validate Lamar’s thoughts.
[01:06:19] P: Lamar, go ahead.
[01:06:21] LW: No, I love Amanda. Because this is, that’s my girl. That’s my peoples. Anyway, Amanda, but here’s my question. I have a question to you. Would you say that in the political realm, matter of fact, I was talking to – what’s my man’s name? Regulatory Jason. He was telling me, if I put $500, if you might do too, bro. I’m saying, if you put $500 on, like basically donate $500, you’re far more likely to get a meeting with your Congress person. He was telling me that. He was explaining it to me one sec. Amanda, do you think that if Bitcoiners put their money together, that we would have a far better influential stick, we have a far better carrot, so to speak, to get people like Ted Cruz to get on the floor, if we had – Yeah, I know that.
[01:07:07] AC: You’d have to follow through. There are many approaches that are going on right now are basically, three entities. One’s a C4, one’s a C6, one’s a C3. There are three Bitcoin specific groups that are collaborating to get this done. Probably two super packs will come out of it, because you have a limit on how much you can donate to a campaign. Yes, Lamar. I think, that’s where the super pack thing comes in. We also want to be really wise with where you spend those resources, right? Some are just a lost cause. We’ve been running, and this is where it would be amazing to have help from Plebs. Feel free to DM me, or Becca, or Jimmy.
We’d love help from you, because we’re going to start focusing on data and targeting. There’s a lot that you can do if you understand who to target. The problem is, if someone’s one, let’s say I’ll just go with Dems, because they’re easier to pick on, because they aren’t as up to speed on Bitcoin. Let’s say, they won their area by a landslide. That’s probably not someone we want to target. What we want to target are people where they are in a tight race, or historically have been in a tight race, and where they don’t always vote with party line. They use their own brain a little bit.
We’ve actually made a tier system for probably, 70 Democrats on the house side and then, and rank them. We have five tiers. We should probably be targeting the first three tiers pretty heavily. Then, some people aren’t going to be running for election again. We need to figure out how do we get to those candidates before they’re actually running and teaching them?
I think, that’s huge. It’s really easy if there’s a seat opening to get to those candidates before they’re officially on the docket. I think that, yeah, sometimes money does speak, but also, so do companies that are employing people, like Bitcoin miners are employing a lot of people across this country. You have financial services companies that have just raised series A’s, for example, Unchained Capital.
Those are the companies that I think could have influence in these conversations. Also, if you’re just living in your district and there’s a negative policy coming down the pipeline, you probably want them to – staffers to understand where you’re coming from and teach them before you say, “Hey, I don’t want you to go after my IRA, or I don’t want you to do these taxes, or this is a backdoor on privacy.”
It’s really about building these long-term relationships and it’s a lot of work. I think, people can do it. I think we can do it. It’s just going for it. That’s what we’re trying to help with too, is some of that. That’s why folks like Shannon and some others from Colorado, we’ve done experiments. I grew up there. There’s so much that can be done on the local level, and then on the federal level.
[01:10:02] P: Becca, you were going to jump in for a second. Going once. Going twice.
[01:10:08] B: Right. Sorry, I’d stepped away from the phone. No, I think Amanda covered it great. I think, there will be a lot of opportunity for people to get involved according to their interests and their skills.
[01:10:20] JF: BTS to come on and talk about it a little bit. I don’t want to re-introduce the topic yet. I think, it’s important that we talk about the letter from Janet and how we organize. I would say that one of the things that also has to happen for us to get our way, and I know that sounds a really simple semantic delivery of our way, but yeah, getting this thing to 10 trillion, or a 100 trillion is going to change the way that Bitcoin is viewed, is going to change the sharpness of its tool.
I think, it enhances the game theory that we all know is built into the protocol. Tina hit on this a little bit ago. I think, it’s going to take further institutional adoption to get the lobbying power in Washington, much like other massive and influential lobbies. Map those strategies out from there. Then, I think, the letter that Michael sent in particular is really important for a lot of institutions. I’ll leave that there for now in terms of other steps that I think need to take place for us to have more of a voice in Washington.
[01:11:14] T: Probably, the biggest reason the NRA is effective is not just because they spend money, but because they have a hardcore base of voters who vote on that issue. Bitcoiners need to become a hardcore base of voters. We will become a huge base of voters.
[01:11:31] JF: Tina, that’s true. That’s absolutely true. 95% of their money comes from four gun manufacturers.
[01:11:37] T: They have a lot of interests. You have the miners.
[01:11:40] JF: Yeah. That’s my point. That’s exactly the point.
[01:11:43] T: The bigger problem is that there are a lot of Bitcoiners who think politics doesn’t scale, doesn’t matter. I’ll tell you all the answers I’ve heard in the last three years from people. It’s like herding cats. They think shit doesn’t matter. Bitcoin may be anti-fragile, but when an IRS agent is crawling up your ass and out your nose, you trust me, you’re fragile. I promise you, you are freaking fragile.
[01:12:08] LW: I’m going to bring this back around, though. Because this is what Bitcoin Tina just said. The reason why the NRA has an incredible amount of political power is because they have an incredible base of voters. You got to ask yourself, who are those base of voters? That base of voters are people who hold guns. That’s a lot of people holding guns. That’s why I’m saying, it’s going to come back around to this.
What we have to do is get more people holding Bitcoin, because the more people that hold Bitcoin and understand what Bitcoin is doing for them, the larger the base of voters becomes. Regardless of what politician is there, if their constituency is holding Bitcoin, they’re going to have some questions to answer when it comes to the town halls and the little pop-ups and everything that these politicians do within their states.
I think, that’s what it is. We got to do both, but I truthfully believe, we still have to still run the race of letting people know about Bitcoin, why it’s better, how it gives people freedom and the whole nine. I think, that’s going to be the foundation for which Amanda and Becca kill it, you know what I’m saying?
[01:13:16] D: Yeah. The other thing I would say is that, [inaudible 01:13:17] sometimes compared to the NRA, but they a single point message. They have a message. It’s never changing. Bitcoin, what we can do through Amanda, myself, give me others are doing is get that message home to the politician. Then, when the ownership of the Bitcoin is spread much more diversely, they’ll all have that same message. The message and the ownership will be widespread and the political impact will be much greater.
That’s why it’s very important to have a crisp message about Bitcoin to the politicians. Not to say that we shouldn’t sometimes it’ll go with the other with other groups, because we’ll need that, they’ll need that force on one or two issues that impact everybody, but ours is an independent voice that is large and honed in Washington.
[01:14:11] S: Donna, and everybody, let me ask a question back to the group. How do we do that effectively? How do we get this uniform block of Bitcoin voters, when we know, Bitcoin is supposed to be available to everyone? It’s people all over the spectrum. How do we both, to Lamar’s point, really focus on getting Bitcoin into the hands of the most people possible? Because that’s the end game and that’s what wins in the end. How do we encourage that adoption broadly and quickly, while still creating cohesion and this voting block, which ultimately ends up encouraging tribalism?
[01:14:47] D: I think, it has to be, small groups in small communities, little lessons on how you get it, how you buy it, how you hold it, why it’s powerful in everywhere, your little community groups, on mothers talking on the playground. It’s a grassroots effort.
[01:15:04] JF: I got an idea. What if we just ran Clubhouse and Twitter Spaces rooms 24 hours a day, just talking about Bitcoin? Would that be an effective –
[01:15:13] P: Don’t be ridiculous. No one would be willing to commit that much time for free to education. That’s just an insane proposition.
[01:15:20] NVK: Yeah, who would do that? I guess, crazy. To be honest, I think that it’s actually helped a lot though, because I look at PlebNet.
[01:15:27] T: A 100%.
[01:15:30] NVK: Look at PlebNet, look at the Black Bitcoin Billionaires. You have 120 –
[01:15:33] JF: Don’t let me not agree with you. Stop trying to not let me agree with you.
[01:15:36] P: John, please –
[01:15:37] JS: Okay. Can I say something?
[01:15:38] P: Yes, Jimmy. Go for it. I think the biggest and most obvious way in which you get a lot of people involved is number go up. That is how you get more people. Because every time number goes up, there’s way more people that come in. This latest round, I think we’re estimating something like, 40 million people in the US. I’m not sure. I’ve heard estimates between 10 and 40 million, yeah, that own Bitcoin. That’s a lot of freaking people.
Imagine that. The nice thing is, time is on our side. I think, a lot of these politicians come to us, not the other way around. They’re going to be like, “Okay, we know you guys have money. What can we do for you?” I’m expecting that in this next bull market, where a lot of people come seeking us out and not the other way around, which is I think, going to be a lot better, because we are going to get a lot more adoption. It’s nice, because we’re on the winning side and we’re going to be.
[01:16:37] JF: Jimmy, I’d argue you’re right, even if you haven’t realized that already, but that’s what Ted Cruz did. Think about the politics of this, just the politics, okay. Forget all of the implications of the tax bill, etc. What Ted Cruz did, he’s likely to run for the presidency in 2024. What he may have just did is tried to get a first mover advantage in a community that he thinks is likely to be a lot wealthier, and a lot more powerful, and a lot more – Some of the conversations you’ve had, so I shouldn’t say that I fully know, but some of the people that were in a conversation with you and [inaudible 01:17:13]. All joking aside, but tell me some more thoughts. I think, that was the –
[01:17:16] P: John, wait. Let Jimmy finish.
[01:17:18] JF: The concept. No, I think he was, and I let him jump back in here. Jimmy, go. By all means.
[01:17:22] JS: Basically, I made all the arguments that I could to get Ted on our side. I think, he heard them, and I think he’s very convinced. Let’s just put it that way. If you want to know exactly the arguments I gave him, I don’t know, DM or something. I’ll be on Clubhouse later. I just don’t want to say it.
[01:17:39] JF: It’s all good, but I think that it worked is what I mean to say. I think, and it’s been incredibly effective, because the thing is, he has nothing to lose by going up there. No one’s going to remember in four years. Anybody that wasn’t going to vote for him already, isn’t going to remember, “Oh, remember when Ted Cruz went up during the infrastructure bill and spoke up to propose an amendment in a committee?” That cost him nothing.
[01:18:02] P: I disagree, man.
[01:18:03] JF: I think, it’s signal to – Oh, I shouldn’t say, take it back. I don’t want to say, it cost them nothing, but I think the calculation is that he signaled to a lot of people that are going to have a lot of power and money, and he did it before any other major candidate likely for the 2024 election did.
I don’t want to pretend it was a zero-risk piece. Generally, I think, he knows that it helped them more than it hurt him. I gather the conversation, Jimmy, Amanda, CJ and others had with them probably helped to eliminate that.
[01:18:31] AC: Which some of it, John, I regret a little bit. I think, it just happened with timing that he was voting that day. I am genuinely concerned that this becomes a single, a one-party issue, or Republicans take hold of this. I think, it’s really important that this is a bipartisan issue. Then we’re just swaying back and forth on a pendulum, depending on who’s in power. If we can take the Lummis approach and take the bipartisan approach, I think we’ll far we’ll fare much better jumping on this.
[01:19:03] JF: Oh, a 100% agree.
[01:19:05] AC: Also, why is he running for president? He wasn’t even born in the US. It’s just a show for this guy. I appreciate what he did. I know a lot of people are working hard. at the same time, it’s really in such a divided country right now to keep this bipartisan and let the game theory on. Lefts wants this more than right. The right wants this more than left, versus just honing in on this being a Republican-only issue. That’s what I’m concerned about.
[01:19:33] B: I don’t belong to a political party, by the way.
[01:19:37] LW: Did you see the hippies? Bitcoin is for the outright for them to get around some stuff. Come on, bro.
[01:19:44] AC: Yeah. That’s why I think when we talk about trying to be like the NRA, let’s be more like AARP. They are even more terrifying on the hill. They’re bipartisan and they support. People pay a membership fee, 40 million members. We have 46 million Bitcoiners in the US, so I try to point us in the direction of trying to draw more similarities between AARP, because we’re already getting painted in that corner.
[01:20:10] JF: Yeah. Amanda, I agree with that completely. I would even argue to say that to maybe summarize that, and this is something I’ve argued and get beat up for all the time. Bitcoin is no doubt, political, but in my mind, it is not a partisan – Both parties hit the print button and have been hitting the print button. Both parties have had power in different forms for the last 50 years since we got off it.
In fact, to the point of just the Republican point that you brought up, just because Ted Cruz is Republican. We had a Republican president when we got off the gold standard, right? There’s all types of this stuff that I totally agree. It’s no doubt, political. The game theory is certainly political. You’re right. This would be so much more effective. It’s probably going to be really difficult in 2021, 2022 American politics to cultivate a non-partisan piece. I think, the AARP example is a great one, and certainly applaud your perspective and try to focus that in. It’s awesome.
[01:21:03] LW: Plus, I think people with AARP cards get discounts on Captain D’s the seafood place.
[01:21:11] JS: Here’s the problem with this partisan thing, because the Republicans are the ones that are actually more open to it and the Democrats are the ones that are demonizing it. You have warrants saying stupid shit. You have people like AOC that are clearly leaning in that direction of vilifying anybody that disagree.
[01:21:33] BA: I hear that, Jimmy. But why would we just lean back and encourage that polarization down that road? I agree with everything you just said. I think right now, the narrative is going in a very hardcore direction that aligns with party lines. To me, it’s really upsetting, because to me, Bitcoin is changing the distribution of wealth. I think, that’s something that taking away the power from the elite and giving it to the working person, that’s how the left view themselves, whether it’s how they view them or not, it’s how they view themselves.
I think, it’s just an afront to Bitcoin, that they don’t understand that Bitcoin is about justice and about equality and about fairness. These are messages that are complimentary to them. I think, when you build up the right, the Bitcoin hero, and you strengthen that narrative that the right is from the Bitcoin, they’re not our friend. They’re politicians.
[01:22:32] Jimmy, two quick examples. Ro Khanna, who I didn’t know who he was, literally gave a really – I didn’t even know who he was until you made this post. Ro Khanna made a really eloquent argument for defending energy use for Bitcoin, saying that it’s not a bad use for energy. That he is basically fighting the FUD.
Then the other thing I would point to, by the way, I totally agree with the trend line that you’re talking about, and If you were to stack them up. Remember, it was Richard Shelby from Alabama, a Republican Senator that basically shot down the amendment that we were looking to have. I just don’t think it’s that clear.
[01:23:02] JS: Can I finish my thought? Because the thing is, right now, the Democrats are in power. That’s my point. They’re not going to listen when they have power. They’re going to listen when they’re desperate. That’s where the Republicans are there. They know that they have an opportunity and that they’re going to need people like us. The thing is, it’s okay to seem a little partisan at certain points, because the pendulum does swing.
Republicans are at some point, I think, will be in power and then the Democrats will come falling. That’s when you say, okay, here’s all the reasons why you should support this and why you should condemn this. It’s that, which, I think, a lot of the really effective lobbying groups do, which is, just okay we’re always going to back the winner.
[01:23:44] JG: Contribute to both sides.
[01:23:45] JS: Yeah. Yeah. This is the fine art that we have to figure out how to play, which I’m not so sure that – It’s not obvious what that path is, because I don’t know, I suck at politics.
[01:23:56] JF: Jimmy. I think you’re not wrong. I don’t think you’re wrong about that at all. I think you’re right. They backed [inaudible 01:24:00]. If you look at most large banking companies are donating to both the district. They’re maxing out on both. Energy companies are doing it in different ways. All types of lobbying organizations will back both horses, and then they just donate to the person that they think that’s going to win at the end and double down on them.
For the most part, you’re right. I would just say, and I think, the strategy of finding the person, or the party that needs you more is certainly not something I would disagree with or endorse. I don’t know. I’m not a lobbyist in the room either. I think, it’s important to be partisan. I actually predict one day, we’ll all be a 100% partisan, because Bitcoin will be the party. It’ll be the single issue. Now, how we traverse from here to there, I think is more akin to how you just laid it out.
I do think, the more macro point that I think Amanda and Becca are saying, I think is still important, to be able to make this a non-partisan issue. The AARP is such a great example, or that’s why Medicare and social security cuts are the third rail of politics. It’s the fastest way to lose your seat, no matter how long you’ve been there. I just think the more macro point of being able to attract both sides and neutralize them and not make it an abortion issue, or a gun rights issue, or just any of the other things that we wind up being divided about, which is going to be hard. I don’t even know how to do it, but I do think that goal is noble.
[01:25:17] JS: Can I offer some analysis here?
[01:25:20] P: Wait a minute. Just because he hasn’t –
[01:25:22] NVK: Those people vote. Most younger people who are –
[01:25:26] P: Tina.
[01:25:27] AC: He’s right. Old people vote.
[01:25:28] P: I love you, Tina. That’s a great point. I do want to hear Jimmy’s thoughts, though.
[01:25:31] JS: What I was going to say is that, the way you get that loyalty from both parties is that you punish them when they go against you, right? That’s essentially what AARP, even the gun lobby and everybody else that does effective lobbying, that’s what they do is they punish the people that go against you.
Right now, you have people Warren and Sherman that are going against us, and they both happen to be Democrats. If you punish them, guess what? The next Democrats are going to be a lot nicer. They’re going to start being more conciliatory towards you.
The way to, I think, get the Democrats on our side is to punish the bad ones. Not necessarily woo everybody. Although, hey, I would love to see Erica Riordan beat Brad Sherman. I think, that would be amazing. Punishing those people that are against you, and purging them from the party through whatever you’re able to do, that’s ultimately, I think, how you’re going to get them to come around. Once you show your strength, they’re like, “Okay, maybe we should be aligned with them.”
I think, this is what AARP plays masterfully. Anytime anyone in either party talks about social security, or Medicare, or something like that, they punish them if they speak out against it and it’s perceived as bad.
[01:26:50] DR: Can I just add one thing on that? Is, I thought that the conversations that we’ve had, let’s say, with a couple of, we’ll just make it more widespread with a couple of the legislative people, where, they met you Jimmy, and they met CJ. Those people became real people. They were not Bitcoin, which they didn’t even know what Bitcoin was. These were their constituents that had businesses, that had opinions, that had kids that are all of a sudden, there was a face to Bitcoin, which was a human face to Bitcoin. I think, that’s very important. When AARP that there are certain a person. There’s an older person.
All of the legislative persons know what that person is. They have a grandmother. They have a grandfather. The gun people also have an image. We are just building ours. We need to introduce ourselves to these legislators, whether they be Democrats, Republicans, it doesn’t really matter. To see that we’re their constituents that have businesses, that are professors, that are doing all these kinds of interesting things with families and schools, and we have Bitcoin. That’s our most important issue, not withstanding the health of our families. That is also tied up into Bitcoin, because it gives it the potential for economics. I think, that once they have an identity, they understand that there are people behind this, they feel more comfortable to be an advocate for it, because it’s not understandable to mirror. These are their constituents talking to them. I do think that’s important.
[01:28:29] JS: I know what we can do. Just hit me with what Donna just said. Let’s invite politicians to a Bitcoin meetup.
[01:28:34] AC: Yes. Yes. Can I tell you something I did once?
[01:28:36] T: Bitcoiners are all over the country. Invite politicians to Bitcoin and meetups.
[01:28:40] P: Go ahead, Amanda.
[01:28:40] AC: Tina is a 100% right. When they meet us in person, all those fears, those uncertainties, all that FUD in the media just is noise, and they can focus on the signal of the person right in front of them, teaching them. I think, that is huge. What I think is the most powerful persona that they can come away with is Bitcoiners are innovators that are going to allow America to compete at the global level. Because right now, we’re losing that foothold.
[01:29:11] P: Interesting. You’re saying that basically, it’s easy for politicians to get lost in the rhetoric. If you put a person in front of them, a potential constituent that they can see their face, understand their excitement, it transcends the specific issue and they can see that the person is genuine and be convinced.
[01:29:28] AC: Yeah. It’s going towards building those relationships, right? I think, that’s the most important thing. So many times, people just come to politicians when they have a problem, or when they want something. If you can take a different approach and be a resource and then show them a different view, I think that’s extremely powerful. Tina’s right.
[01:29:46] JS: Can I Jump on that point exactly?
[01:29:48] T: They look for places. They look for places to connect with constituents.
[01:29:53] P: Definitely.
[01:29:55] T: These meetups take place organically. They’re going to be in Congress people’s districts. It can be incredibly effective.
[01:30:02] A: I wanted to talk exactly about that. I also live in Wyoming. In addition to Cynthia Lummis, we have possibly, one of the worst people in the house, and that is Liz Cheney for Bitcoin. Not specifically, but privately, she’s extremely against it. That aside, the people of Wyoming definitely do not like her and there is going to be a pretty big battle about it.
I have been working very closely with at least prior to Harriet Hagerman becoming tapped by Donald Trump, the previous front runner, Anthony Bouchard, who, when I moved here, he was about as anti-Bitcoin as you could get. In fact, the local conservatives were trying to undo, or were thinking about trying to undo all of the Bitcoin laws that were passed here in Wyoming.
I met them at a political event and I said, “Actually, guys, I’m a Bitcoiner. Let me talk to you.” They had me and Caitlin Long there for two and a half hours. 50 people came in the room, including Anthony Bouchard, thinking that Bitcoin was the devil. By the end, 30 of them were asking how to buy it. Now, Anthony Bouchard is about as close to almost being a Bitcoiner as I think he could be, without actually being there yet. He’s definitely off. He’s off the mark of disliking it. Yes, talking to these people, one-on-one, talking to their constituents, educating people, it’s a big piece of leverage that people don’t expect.
[01:31:19] AC: Yeah. Find a couple people and just start trying to contact them, and where are you get a little traction. Just keep moving with that traction. If anyone wants to talk about this or reach out, I have to run to a dinner meeting, but feel free to message me. Message me here, because, I think, this is what folks are doing at the grassroots level. It adds up Find the candidates that are coming in to replace others and start teaching them before they’re a big deal.
[01:31:46] P: Love it. Okay. I do want to acknowledge, we’re at about two hours now and I really appreciate everyone who’s jumped up on stage and who has joined this conversation. This has been recorded and will be released on the Bitcoin Spaces Live Podcast, which you can search for, and whatever you want. You can also find it on YouTube under the Bitcoin Magazine Channel. Just want to give, if anybody needs to jump out, you absolutely can, but let’s keep going for those who want to stick around. I can go for another half an hour or so, and then we’ll call it. How y’all feeling? You want to keep going?
[01:32:17] JS: Yeah, sure. I don’t know. There’s something about politics, where we’re at the stage, where the margins of politicians are interested, but we’re soon going to get to the mainstream ones. I think, we just have to be patient, because I really do think they’re going to come to us, and we need to be prepared when they do. They’re like, how it is in every bull market is that you have people from all over the place coming in, contacting you every day.
Your third-grade best friend calling you and saying, “Hey, should I buy this thing?” That sort of thing. Same thing. I think, it’s going to happen at the politician level. They’re going to be like, “Okay, I need to really find out more about this thing. What am I going to do?” We’re at the edges right now. The politicians that we’re getting to talk to, they’re not top tier ones, right? We’re not getting to talk to the president, or the speaker of the house yet. It’s people like Ted Cruz who lost the primaries on the edges of the Republican party, or Erica Rhodes who’s running against a 20-year incumbent. That’s what happens.
We’re at the edges right now. We reward some of these people at the edges that are helping us, and we punish some of the people that are more near to the center of power that are against us. Soon we’re going to be at the center. I think that’s inevitable, and that’s my thought on it.
[01:33:28] JF: Yeah. Jimmy, I don’t disagree. I think, the playbook you lay out is less AARP. Almost a certain extent, it’s more AIP. AIP is one of the most effective lobbying institutions. They’ll get both candidates to come up to, it’s the Alliance for Israeli Pack, I think, is what it stands for. Or American Israeli Pack. I don’t know. It’s a very powerful lobby for Jewish-American causes and maybe for Jewish causes overseas, too. I’m not really sure. It’s the one place where you’ll get both parties and both presidential candidates to go to the conference and basically say, “I support Israel.”
I do envision a day where it’s just it’s going to be like that. You can’t go against certain mainstream issues, whether it’s the AARP example with Medicare and social security becoming just such a death wish for a politician, or someone coming out and saying, “We don’t stand with Israel.” That’s a death wish for a politician. I think, the structure, or the infrastructure that’s taken place over the last 12 months for me, it’s been pretty significant.
Yeah. I’m familiar that AIP is pro-Israel. Just, I’m getting a bunch of DMs, so I don’t know if I misspoke. Yeah. The idea is that they’re really effective. If you come out against those particular issues that they are, they don’t go and necessarily to support the politicians that support them,
because most everybody does at this point. They have enough power. When you step out of line, they basically fund your primary opponent, fund the other candidate, take out really large dollar media campaign ads in your district, etc. I think, that strategy laid out is probably one that is going to behoove us not to pursue.
It’s probably going to be where game theory actually leads us. Yeah, I don’t disagree with that at all. I also just think that there is some tangential consideration of our interests that are tied to squares, and micro-strategies, taking those types of powerhouses that are able to write the letter that for instance, I’ve put up in the tweet of above to get accounting changes that are really practically needed, not just why changing laws, or a federal legislator. There’s some of the things that need to go to the SEC, some of the things that need to go to FASBI. Getting really marginal changes that really help the adoption of Bitcoin is also part of – I think, part of the formula.
[01:35:28] P: Donna, you’ve been quiet for a while. Do you have any thoughts?
[01:35:31] DR: I thought it was very talkative before. Tina agreed with me. That makes me twice as talkative.
[01:35:36] P: Fair enough. I apologize. I crave your indulgence. I am so sorry that I have –
[01:35:44] DR: But not my people. We had different people. No, I think it’s great that Bitcoin crowd has – the Bitcoin crowd has – that was Jay. That’s the same people, I think. The Bitcoin crowd has come around to have a conversation and to have a strategy and to be willing to participate and understand how important it is to get the regulators, at least, calmed down and educated and stuff like that.
Even though Bitcoin will be Bitcoin, we’d like to be there a little bit with greater grace and flexibility to make it put in our path, it’s some really big boulders. I think, any discussion we have, this is fantastic, and I applaud everyone for doing it and engaging and to coming with an open mind.
[01:36:25] JS: Yeah. The one thing I would point out is I know a lot of people here do not like Ted Cruz, or just are very turned off by him. I get it. There’s some certain things in which you might not like him, or maybe the way he’s portrayed in the media, or whatever. Regardless, you have to like, that what he’s doing up for Bitcoin is a good thing. He’s our defendant right now. Now, is he going to be president? Probably not. If he does, would that be a terrible thing for Bitcoin? I don’t know.
There are lot worse scenarios than that. I support the fact that [inaudible 01:36:57]. That’s all I’m saying. It’s, don’t just automatically say, “Oh, he’s too partisan and let’s dismiss him. Or, we need to get somebody on the other side, because I don’t like this guy and he’s toxic, or whatever.” Give the guy a chance. Let him prove his loyalty to us. You know what I mean?
[01:37:10] P: Corey. Terrence. Welcome to the stage.
[01:37:13] T: I support Bitcoin freedom over government servitude.
[01:37:16] P: That’s good. You’ve passed the test. If you’d answered incorrectly, we would have gulag you. Banned forever.
[01:37:22] JF: Thank you for the controversial statement, Terrence. We appreciate that.
[01:37:26] T: I believe in unpopular opinions to engagement farm.
[01:37:28] JF: I think, there’s something to keep in mind though about adoption of this by politicians. The reality is, they’re not going to be Bitcoin maximalist in my mind, because the politics don’t allow for that. A lot of jobs that they’ll try to “bring to their district,” or their state, or whatever their jurisdiction is. It’s going to be a bunch of VC money pumped into blockchain bullshit that will represent jobs that they can claim, and that’s good politics. They’re going to say, Bitcoin is great, and they’re going to say, oh, there’s all these other things, too. Just be ready for that, too. They’re going to be shitcoiners.
[01:37:59] JS: That’s the thing I’m much more concerned about than no coiners, that are trying to ban everything. It’s the altcoins. There’s such an easy path, too. We make it an innovation argument, then it’s, oh, then we should allow all these altcoins to price, too. We have to make sure we can thread this needle and make sure that they’re not no coiners, but they’re also not altcoiners, you now what I mean?
[01:38:19] DR: I think, Cynthia Lummis Senator Lummis has done a very good job at that. I would say, that she has supported the state and she has been an advocate for Bitcoin in Congress, and they have good Bitcoin mining laws there, and their hope to – Yeah, they do hope to bring business around Bitcoin to the state and also, the custody thereof.
[01:38:41] JF: in fairness to Cynthia, her son-in-law works at Unchained. She gets it probably better than most. Politicians are politicians, man. We’re going to see the acceptance of what I just laid out, or at least I predict that. There’s going to be too much money. I’d argue, even coin center. There’s not a Bitcoin lobbying organization. Probably get most of their money from shitcoin VC.
[01:39:03] PB: They just raised 3 million using an NFT.
[01:39:06] P: Wait. Sorry. Who did?
[01:39:07] JS: Coin Center. Coin Center raised 3 million dollars or something.
[01:39:12] BA: Yeah. Which is insane and problematic.
[01:39:17] P: Kind of.
[01:39:17] NVK: What was the valuation?
[01:39:19] LW: I’m dropping a Ted Cruz NFT tomorrow.
[01:39:22] BA: Yeah. That’s literally why it’s problematic. When I saw that. Yeah.
[01:39:28] P: What is the reference to Ted Cruz? Is that part of it?
[01:39:31] BA: No, no, no. Nothing with Ted Cruz. It was coin center, right Jimmy?
[01:39:35] JS: Yeah. It was Coin Center. [Inaudible 01:39:37].
[01:39:38] BA: They minted, as I understand it, they partnered with some artists to – minted some eth-based NFT, and then agreed to donate the proceeds or something like that. At the end of the day, they ended up with a crowdfunded 5 million. When I read it, first, my mind was blown, because it just as a marketer or whatever, that’s such an interesting thing. Then, the way that can change the world of almost, political donations and fundraising and open it up to abuse, or promise of different things. Yeah. I don’t know. I think it could actually be the first of many such things for political organizations to raise money.
[01:40:18] JF: Hey, P. This has been a fun space.
[01:40:21] LW: Would that be against the law if Ted Cruz –
[01:40:23] P: Wait. Hold on. Hold on.
[01:40:23] JF: No, what was against the law is you’re not letting me say bye to P.
[01:40:27] LW: Then I was like, I was thinking, and I didn’t even hear you talking. I ain’t going to lie to you, John. I’m sorry about that, bro. I was telling, can you really raise money for [inaudible 01:40:35] with the NFT?
[01:40:37] JF: P, this has been a great space, man. Lamar, I love seeing all these spaces. I know I haven’t hung out with a bunch of you guys on Clubhouse and stuff. It’s been a fun little reunion here. We can talk a little bit about Michael Saylor, and some of these more institutional adaptions another night, or at least some of these challenges. I don’t envision them going away in the near future. I posted the letter from Michael Saylor in the nest above about FASBI accounting changes, and the indefinite, or the intangible accounting issues, to the extent that people have questions, happy to follow up. I’m getting a bunch of DMs about tax and accounting advice, and I’m not a tax lawyer, or an accountant anymore.
[01:41:11] JG: Not for them. Just for me.
[01:41:12] JF: You’re out of the net worth of profile that even when I once worked in public accounting. Anyhow, your tolerable error is probably 80 million on your audit. All joking to another end, I’m not here to – I’m not an accountant. That’s not my business. Please stop DM-ing me about accounting questions. P, man. Fun time and I appreciate it, man.
[01:41:30] P: Yeah. Thank you so much for joining. Apologies. Originally, this was supposed to be half the stuff you can talk to me about it.
[01:41:34] JF: No, I’m glad we did it. We can do it another day.
[01:41:36] P: Yeah. We’ll definitely do it another day. John has a bunch to say about the challenges and strategies that need to be employed around acquiring Bitcoin as large institutions. Yeah, let’s definitely have that conversation another time, John. Thank you.
[01:41:50] JF: All right. For sure, man. Good times. Good to see you.
[01:41:52] T: Man, I think NVK in the streets?
[01:41:54] P: Oh, yeah. He’s been up here, man. NVK, what you got?
[01:41:57] NVK: Oh, I got nothing. I just joined in. I wasn’t sure what was going on, so I was just remaining quiet.
[01:42:03] P: How many boars have you haunted from horseback with knives today?
[01:42:06] NVK: None. There are no boars in the current location, but there were squirrels that had to be dealt with.
[01:42:16] JS: See, if I see NVK, I really need CJ in the same room, so I could see them doing the accents against each other. Yeah.
[01:42:22] P: NVK, versus Bizarro NVK?
[01:42:24] NVK: Yeah, let’s get CJ here. By the way, I now make a fee. There’s a licensee fee involved every time CJ makes an impression of me, I get a cut. I support that. You have a NFT of I got you. I got a question for you, guys.
[01:42:41] LW: No, no. Questions are scarce. NFTs are not scarce.
[01:42:46] T: It’s a great deal of skill for an impression, not for an NFT. Is that what you’re saying?
[01:42:51] LW: Do all of this in crocs, though? That’s my only question, NVK.
[01:42:53] NVK: Depending on the weather, yes.
[01:42:56] T: Got you. You hunt squirrels and boars and license out your voice impression in crocs. Now, this is not a commercial for crocs, by the way.
[01:43:05] NVK: No, listen. I only have –
[01:43:06] T: We have negatives cancel each other out.
[01:43:08] NVK: I used to be a flip-flops guys, because I grew up in Brazil. Now –
[01:43:12] P: You check too much.
[01:43:14] NVK: I either do barefoot, crocs, or bloodstones. That’s it. That’s all I have.
[01:43:18] P: Did you say blood stones? Like conflict stones?
[01:43:22] NVK: Bloodstones. However you call those boots.
[01:43:24] P: Yeah. Conflict diamond. That’s fucked up, man. I know you’ve got a business to run and you’re producing some of the best hardware wallets in the market. Yeah, diamonds that are mined by orphans.
[01:43:34] NVK: P, we used a child labor, just because the parts are very small to solder on the devices, so then we need little hands.
[01:43:40] P: That’s what I’m talking about. Look, I’ve been petitioning to the Bitcoin mining council for months that we should be employing orphans, because their hands are smaller and they can shovel the coal into the steam engines, to power the miners way, way faster. I am told that I’m an insane person and also, that I should not waste anyone’s time. I’m going to do it on my own and set this advantage use free. Moving on, CK, I see you’re up on the stage. What you got, man? Silence.
[01:44:10] JS: I don’t think he’s paying attention. I think he’s –
[01:44:14] NVK: He’s counting his Bitcoin conference money.
[01:44:16] T: I think, it’s called –
[01:44:19] P: I did. I said – I was talking about mining Bitcoins with orphans, because they can shovel the coal into the steam layers.
[01:44:26] CK: I stepped away for a second and washed my hands and that’s when you caught me. Yeah. Honestly, it’s a great strategy. I heard they have a lot of orphans in Tennessee. We can check that out and see if we can put together an op.
[01:44:35] P: Yeah. Just to be clear, for every block that is mined, each orphan gets 10 Bitcoin. We’re actually losing –
[01:44:41] JS: This really is a reunion.
[01:44:44] NVK: Totally an orphan chain here.
[01:44:46] P: Now, look. We’re here to empower the disadvantaged. If we have to lose a massive amount of Bitcoin on each block reward, we’re here for it. That’s the commitment that we have to this space.
[01:44:56] NVK: Maybe cycling the orphans after?
[01:44:58] P: That’s a separate conversation. We can talk afterwards, NVK.
[01:45:02] LW: Hey, NVK. Did you hear what happened about the safety deposit boxes? I heard they stole everything, except for these two calculators.
[01:45:11] NVK: That’s awesome. I hope they left the cold card. Seriously, that’s why never leave your seeds on safe deposit box, unless they are split or [inaudible 01:45:21], or something.
[01:45:23] P: All right. I do want to bring us back around though. All joking aside. We’re not mining with orphans. That’d be fucked up. We’re all good Bitcoiners. NVK, I am curious, we’ve been talking about the – this conversation initially got kicked off around the claims that Janet Yellen made yesterday, and around the article that the white house published two days back, about the idea of, they just tried to slip in the claim that unrealized capital gains, or income.
[01:45:52] NVK: Yeah. This is fascinating, because I think, it has a little bit of a stench from either the math, or the world economic forum. Because I’d say, six months to a year ago, the liberal government used some arm organization here in Canada to run what’s called a balloon trial. They just released a study pretending that it was just a study, but really, just tasking the politics around doing unrealized cap gains on homes in Canada. People lost their shit.
I think, this is extremely unlikely to happen, because it’s absurdly hard to deal with this, it becomes selective enforcement, which governments love, but you totally be a legal shit show. Then, there is an upside to it. You also have unrealized losses, which you can do adjusting in your accounting.
[01:46:47] P: Wait. Are you talking about Canada or the US?
[01:46:49] NVK: No, in the US or Canada. We have very similar tax codes. It could get funny. If they do this, we’re all going to change our year-ends to whatever is the time of the year that Bitcoin dips, most commonly. Might even try to trigger Bitcoin to go to shit that month of the year, so we can know pull some losses. They might actually owe us taxes back.
[01:47:14] P: P: Wait. I don’t think it’s going to work that way, though.
[01:47:15] NVK: No, it does. If they’re going to do unrealized gains, it means you also get unrealized losses. That you can’t have your cake and eat it, too, when it comes to this shit. You could get pretty funny. It’s not going to happen. This is all stupid.
[01:47:28] CK: Yeah, it’s performative.
[01:47:30] NVK: Yeah. This is all silly. What they could do though, and this, I don’t put past this people, is they might come up with unrealized gains just for crypto, because they’re going to go and they’re going to say, “Can I say crypto, because that’s how they’re going to frame it?” It’s not just Bitcoin. They’re going to say that we have this evil thing that, it’s gambling and it’s also, polluting the planet and blah, blah, blah, blah, blah. Because it’s not going to affect 99% of the population, they are going to be “Yeah. Fuck, yeah. Let’s go get their money.” Then, could get tricky.
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[EPISODE CONTINUED]
[01:52:09] P: We’ve been talking about it for a while. Jay, I’d love to just, if you’re still around, I’d love to hear your thoughts on NVK’s comment. Jay’s already thrown this one in the trash. Yeah, I’m not so optimistic, NVK. I think, this has been – we were talking about earlier that this is a narrative that has been – it has been pushed for many years in the US, at least. They keep hammering it, because they’re trying to figure out ways to classic MMA, or MMT modern, going MMA. When they gut-punched the economy via modern monetary theory, which prescribes a massive liquidity injections, and then over taxation in order to curb it.
[01:52:44] BA: Couldn’t both be true. Couldn’t the implications of passing something like this be absolutely terrible on so many fronts, but also, realistically, probably not get passed.
[01:53:00] NVK: Unless, they power through it.
[01:53:02] BA: This would be incredibly hard to pass.
[01:53:04] P: Wait, NVK. I just want to clarify. When you say, both things could be true, I’m unclear, when you say – you mean, they could try and fail? Or they could be trying to pass this, because of MMT style rhetoric and they could also fail at it?
[01:53:16] BA: You were saying that you – I assume the redirect was to me. You were saying that you are not so optimistic, meaning you’re worried, or you’re a pessimistic about this. I would say, you are right to be very concerned about unrealized gains being taxed. To NVK’s point, is that actually a realistic outcome in the short-term?
[01:53:38] P: Got it. NVK.
[01:53:39] NVK: Yeah. This stuff, this is a monumental change, right? This is not oh, we’re going to increase tax, or we’re going to start taxing carbon. It’s a truly monumental. It’s hard to convey how big this is. It changes everything, the same way that source deductions changed everything. It’s a whole new world of taxes and affects everything, from chickens to bananas, to houses, to your baseball card collection, everything. It’s huge. It’s practically unenforceable. That’s why it’s only selective enforcement. Now, they are not going to do this, because it doesn’t matter if you’re left or right.
The people who have any kind of power in the world, they all own stocks. Champagne, socialists all own stocks. AOCs of the type, definitely own stocks. Pension funds own stocks. They’re not going to want to have this. They’re going to get a backlash from everybody. It doesn’t matter which part of the political spectrum you are. You’re still sucking on the stock’s titty. They’re not going to do this.
[01:54:55] DR: I think, you’re just assuming that it’s going to be one gigantic movement.
[01:54:59] NVK: Yeah. My point, Donna.
[01:55:00] DR: There’s a red mark to market on regulated futures contracts on non-equity options, such as bonds, commodities and currency and exchange traded index options, so they could add crypto.
[01:55:14] NVK: Yeah. There was a thing before. If they’re going to do this, they’re going to just go for crypto only. They can’t just go after everybody, because you would be a massive flop.
[01:55:27] LW: Yeah. My only thing is, NVK, that’s you taking the approach that they don’t want it to be a massive flop. That’s you saying that they don’t want to put us into a position of dependency. That’s the whole thing. If they did some crazy like stuff this, which I truthfully believe is more of like I said, the seeds that have been planting a more – a ploy to move toward a certain direction, what would happen is that they would basically kill a whole lot of the wealth of this in this country. There’ll be wealth destruction. People will be forced to sell. We’ll wind up getting into a situation where the stock market’s on decline, and what happens?
You wind up getting everyone into a position, where they have to be more and more dependent upon the government, especially those people who at the bottom rungs of society. Because now, they don’t even have hardly any vehicles, because you should see what’s happening in a single-family residences, you see the freaking hedge funds are buying those up. Then, where in the world does the average person that is trying to come up in the world, actually build wealth to create generational wealth for their families? Well, they don’t. What? You’re not going to invest in stocks, because it’s what they would do with that.
They’re not going to invest in houses. Guess what? You’re going to be more reliant upon the government, which is what people who want big government won’t, bro. That’s the thing we have to watch out for. I think, it’s just these types of seeds that wind up being planted. You start to see, I forget, somebody said it. I can’t even remember who said the quote, it’s going to be at America, where there are a lot of people who own nothing. They have money, they own nothing, though. You know what I’m saying? I think that’s what [inaudible 01:56:57].
[01:56:59] NVK: You’re preaching to the choir here. Let me put it this way, okay. If I was alive and around when they brought in source deductions, I’d say, there is absolutely no fucking way they’re going to be able to put in source deductions and people are going to be okay with that. They use the war as an excuse, because they had to fund the war. They did get source deductions in and stuck around forever. It was going to be temporary.
It’s huge to make people to pre-pay. The evil source deduction is that people don’t know what they don’t already have. It’s a much easier trickery on people. Now, the problem with unrealized gains on normal people stuff, especially houses, is that it’s going to force sale on everything. You would absolutely, and America, Canada, or any country that does this in any scale, because people are up to their nose with debt. They’re not going to find a way to pay those gains at the end of the year. I doubt that very much.
I don’t think there is an appetite in any country in the world to be able to pass this stuff through, aside from places that are fairly wealthy. Say, Holland has wealth tax, if I remember right. I think, it’s 1.5% over your net worth. That stuff won’t work in north America. Although, can’t put anything past these people.
[01:58:24] A: NVK, when you said source deductions, what you’re talking about, it’s the Canadian version of –
[01:58:28] NVK: Income tax. Yeah. That’s right. Payroll tax. Source deduction is the technical name of that. It means that you take, for the people that don’t understand, what I’m saying is essentially, before you give people their paycheck, you withhold the tax. You take the tax before you pay them. This was a policy instituted, I think, it was in the 30s to pay for second world war. It was meant to be temporary, because nobody would ever go for the idea, “What do you mean, you’re going to take the money from my paycheck?” That’s insane.
[01:59:00] P: We were talking about this earlier, that these are all meant to be temporary measures, but they never are. They are always permanent. It’s evident from bridge tolls, to taxation, and basically, everything that’s passed that takes money from you and gives it to the government.
[01:59:12] NVK: I’d been bitching about source deduction forever, and I don’t even pay source deductions.
[01:59:16] P: I think, source deduction is basically the same thing as income tax in America.
[01:59:21] JS: Withholding.
[01:59:24] P: Got it. Interesting.
[01:59:24] NVK: From a Canada point of view, it’s quite brilliant, really. You take the tax before people have it in their pockets. They’re not going to feel as bad about giving it away.
[01:59:35] T: You never knew you had. Then when you overpay, you get a refund, so you’re happy.
[01:59:40] LW: This sounds so funny. Because I’m listing to NVK said, and I’m like, “Man, that’s how it’s been since I’ve been working.” You know what I’m saying? We’ve already bow down to that, you know what I mean?
[01:59:50] P: Oh, a 100%.
[01:59:52] LW: Fucking crazy.
[01:59:54] P: On my paycheck, I look through every time and I’m like, “All right, so that’s the amount that’s going to social security. Never going to see that ever again. That’s the amount that’s going to Medicare. Never going to see that shit ever again.” Every line item, I’m just like, “Yup. That’s just the government taking its cut and shoving it up their ass.”
[02:00:11] NVK: It’s absolutely crazy that people didn’t revolt after. Then again, when people fly out the idea of, “Hey, maybe we get unrealized gains,” and they’ll carve out this and these people are not idiots. They are in many senses, but not on this. What they would probably do, if I was putting myself in that evil mind, I will also carve out, say cars, or anything really that would affect say, 70% of the population of the country. Now, you have a great majority of the country that’s unaffected by these facts. Then, you have this 30% who’s going to whine and cry. They’re doing well in the eyes of the rest of the population.
Then, two, three years later, I encroach in into another segment of the population. Now, you have the people who already paid for two years saying, “Yeah. Fuck, yeah. If you’re going to charge me, you’re going to charge those, too.” Then you get to the other side of the population who is more on middle to poor side to go, “Yeah. Fuck, yeah. Charge those people in the middle, too.” Then, you have those in. Then, you get there through a couple more years and then you go after the rest, a few five, six years later. You can roll this thing out without much bullshit within 10 years.
[02:01:29] LW: We live in very weird times. Did you all see the attack on the Roth IRA as well? Where if you have so much in your Roth IRA, you have to cash it out?
[02:01:38] CK: I was listening to that and I felt vindicated, because I truly believe that the Roth, especially, and IRAs in general, 401ks, all of that stuff, for anyone who’s under 35 is, and maybe even anyone under 40 is just an utter and complete scam. Gosh, I don’t even know. Maybe even someone who’s under 50-years-old is an utter and complete scam. That’s why we got to hold our keys, guys. The whole end conclusion of this entire conversation is that, this is what Bitcoin was built for. Hopefully, we can use jurisdictional arbitrage to find a safe haven.
[02:02:11] P: I’m not currently clear on –
[02:02:12] T: Hold on. You can’t use jurisdictional arbitrage, because US citizens are taxed globally.
[02:02:18] P: I know. It’s so fucked.
[02:02:18] T: There is no jurisdiction, unless you plan on go living off planet somewhere.
[02:02:22] P: No. You can go to other jurisdictions. You can leave the US. Maybe in Holland. You can renounce your citizenship. Then, all you have to do is pay one – Yeah, exactly. You have to pay one-half of your earnings, as if you had just sold everything in order to leave the US. It’s like a Roach motel. You can enter, but you can never leave, at least financially.
[02:02:40] CK: Just like the 401k rules can change, all the other rules can change, too.
[02:02:44] P: That is true. Are you saying that as an optimistic angle?
[02:02:47] LW: You’re very optimistic. I like that.
[02:02:49] CK: Yes, absolutely. I know where the leverage is.
[02:02:52] NVK: The difference this time is if this guy’s go for retard, realistically speaking, people will leave with their BTC without ever being declared. They will renounce their citizenships and they will go live somewhere with their wealth and be happy, and just simply never go back.
There is a point of no return with this stuff. Most people want to do things kosher. You go, you pay your exit tax, or whatever. There is a point in which, people will be forced to go above and beyond what’s kosher.
[02:03:27] P: Yeah. Here’s the thing, right? We were talking about this earlier before you came in, but the shifting of the goalposts, and the narrative orchestration, the propagandizing of these types of concepts is so insidious and over time, extremely effective. The fact that people don’t understand that like in California, it’s fucking insane that you get taxed on income, sales and property. Everybody’s just, “Yeah. California has good schools.” It’s like, “No, it doesn’t. That was in the fucking 80s. We’re done here. It’s a fucking wasteland.” People are like, “It’s just where I grew up with,” and people just accept it.
When Yellen gets up and she makes the claim with a totally straight face, and Biden promotes this article in the White House with a totally straight face, that unrealized cap gains, our income, I got to tell you, 90% of people are just, “I don’t really even know what unrealized cap gains are. Yeah, fuck the rich.” It slowly becomes the norm. I think, that’s really the dangerous thing here. I actually don’t think that people will just revolt, because they’re not actually going to do a China bans Bitcoin style thing.
They’re going to make these incremental changes that slip under the radar for 80% or 70% of the population. Then suddenly, we live in an absolute hell hole and it’s “too late.” Then, people are resigned to it. They’re cynical and they’re like, “What are we going to do? Leave the United States and I have to give up one of my testicles and also give up 80% of my net worth?” You’re going to be like, “But it was 50% three years ago.” They’ll be like, “Yeah, but this is the world we live in now.”
[02:04:55] CK: The crazy thing is that, let’s just call it the people in the center of the IQ distribution curve, the midways, they embrace nihilism, right? The PhDs are like, “Oh, it’s nihilism. I’m nihilistic. This is just the world we live in.” It’s just insane that they don’t see a reason to fight back. That’s why I’m optimistic about Bitcoin, because it is that reason.
[02:05:17] LW: Such a dire painting right now, man. That is, we should all be leaving right now, because if people just go along to get along, if average people can no longer build wealth in this country to be able to pass down for generations, if at the same time, the average wage earner, their jobs are being substituted, they’re being actually get substituted for robots and automation, where do you see the future heading in this country, if you guys are all believing the painting you just painted? Right now, this painting is like the Mona Lisa with a black stripe over her face, you know what I’m saying?
[02:05:56] NVK: Lamar. Let’s put it this way. It’s still fairly early for Bitcoin. In another five years, say, maybe we’re talking about real mainstream, people start saving. If they are saving at 21 million supply, they will still find fairly decent wealth in a fairly short period. There is hope. It’s not fully dead. It goes down fast. I mean, Canadian healthcare system is absolute shit. People here fully indoctrinated to believe that this is what’s good, and that’s their identity. People identify themselves as people of public healthcare, no joke.
They’re told the stories about how bad it is in the US, which is not true for most people. Most people in the US don’t have to wait six months to get very basic shit. Anyways, it’s all a matter of stories.
[02:06:51] LW: That’s what I’m saying. What is the narrative? Because y’all know, I’ve talked all the time about this on there. I really believe that what we’re seeing is this shift into a government that makes us all more dependent. If that is the case, I’ve heard so many people say, “Lamar, I’m not leaving this country. You won’t ever get me to leave.” I’m like, “If Rome is burning, what do you do? Do you stick around and watch it burn? Do you play the violin?”
[02:07:20] CK: Lamar, what’s on your mind? Which jurisdictions are you thinking about? I’m just curious. What would be your plan if you’re going to get out of the US?
[02:07:27] LW: Man. You do think I’m going to docs my area? I’ve already done all my research.
[02:07:35] P: Look, I’m sorry, man, but I’m going to docs you. We’ve talked about your Willy-Wonka style elevator that shoots up into the sky, and I don’t think that’s practical for most people. For you, definitely.
[02:07:44] LW: It’s not. It’s not. You’re right. You’re right. Yeah. It is full of chocolate in the base. You swim in chocolate just to get up. Yeah, I got you.
[02:07:52] P: I know. Also, I think the –
[02:07:54] LW: [inaudible 02:07:54]. I’m just asking. I don’t know. I listen to us, right? I listen to us as Americans, see NVK excluded. He’s dealing with a public healthcare in Canada. I was thinking about us as Americans in this country. The whole thing is that in times like this in the past, there have been revolts. There have been people that have stood up. There have been people that marched on Selma, you know what I’m saying? Do we have those same people today, is the question? Real talk. Do we have people who are going to fight a system that is clearly not in the best interest of any of us? Period. Think about it. You say you tax the rich, but you continue to create money, which is at the chagrin of every person that earns wages. You’re killing them.
[02:08:48] NVK: Who’s going to rise against if most of the people are on the tits?
[02:08:51] LW: That’s the point of the dependency, right? Because if I make you ultimately dependent upon me, then there will come a point that you will not be able to fight me, because without me, you don’t exist. That is what I’m saying. That type of dependency is where control is, and that’s why we all need to be focusing on as much sovereignty as we possibly can have.
We need to get sovereign food, sovereign everything, because as we continue to move towards a state of dependency, you wind up getting yourself into a position where you can no longer even interact without being dependent upon. It’s the matrix. You’ll be plugged in at that point. You feel me?
[02:09:29] P: Yeah, a 100%. I think, what CK was getting at is you were framing it as a question like, “Man, y’all are some dark motherfuckers.” But I think we’re all on the same page that like –
[02:09:38] LW: Yeah. I think so. I’m just saying, I just wanted to enter that question to get that conversation going. What do you do? What’s the solution? We all hear the problem. We know the storm’s on the horizon. There’s a storm out on the ocean and it’s coming this way. The question is, what do we do, man? I know we all buy Bitcoin. That’s the first step of having sovereign money.
[02:09:58] P: You took the words out of my mouth. Yeah. I was going to say, I hear you, Lamar. I do want to give a Preston and – Yup. Yup. Also, Luke a chance to speak. Preston, famed Marmotcoin creator. Marmot herder, small dog attack vehicle creator. What are your thoughts?
[02:10:16] PB: Yeah. I’ve thought about this at length. Let me just say that I’ve been in bed for the last three days, because I screwed up my back. I haven’t gotten any client work done, which is really annoying. What I have managed to do is have a really good crack at learning Morse code, which NVK has been keeping track of my journey as I become a bigger and bigger ham radio.
How do you prepare? I think, one thing that people really haven’t considered about what we’re going through now is that it’s like this really weird, slow collapse, where we’re starting to see things get jankified, right? There’s some general jankification of society. The jankification is starting to manifest itself in really funny ways, like the fact that you can’t buy a car, or the fact that certain supermarket shelves are empty, or the fact that restaurants can’t hire people, despite the fact that there are lots of people looking for work.
Something broke in a weird way. We’re really only going to fully understand what broken – housing prices are ridiculous. They’re going up 20%, 30% a year. Something broke very badly. Nobody’s quite sure what. There’s some underlying sickness in society. I’m not sure what it is. People are angry. COVID-19 is part of it, but our response to – COVID-19 didn’t cause the price of cars to go up, or response to COVID-19. [Inaudible 02:11:39].
[02:11:42] LM: We’re missing the forest for the trees. That’s the conclusion of a long-term debt cycle. What we’re seeing now is in my opinion, just the thin edge of the wedge of what’s to come, and maybe zoom out to the last time we had debt levels this big in the 1930s and 40s. You’ve seen all the similar things play out here in the 2020s. Okay. You’re seeing gold confiscation with the FDR in 1933. In 1940s, they had food stamps, there was food rationing, all of this. It’s what they have to do with a debt bubble this large. It’s all part of a much bigger movement and a much bigger plan.
I’m not sure if everyone’s familiar with [inaudible 02:12:16] thesis of essentially, a central bank, digital currency system being exported to the Western world. That’s what it’s all about. You were watching the world economic forum come out and say, capitalism has failed. We need to re-imagine capitalism. We need to adopt a, what did they call it? Stakeholder capitalism. This is all just part of a plan, in my opinion.
[02:12:37] T: Yeah. A very old plan.
[02:12:38] PB: I remember 2008 very vividly, because at the time, I was a law student, but I was joining a securitization group at a law firm in London. I joined them in 2009, having gotten the job in 2007. In England, it’s a weird system, where you apprentice and you’re hired years in advance when you’re still a student, whatever. I was paying super close attention when that happened. I remember, the issue was that there was risk built up in the system, but the big problem with the global financial crisis is because there was risk in the system that people didn’t know how to account for. They didn’t know who was solvent and they didn’t know who wasn’t.
As a consequence, there was a huge contraction of liquidity, because no one was going to lend to anybody else, because which entity was a house of cards and which one wasn’t. That caused a contraction of credit, which caused the contraction of the economy, yada, yada. It took years to work through all of that.
Now, we’re in this weird go-go economy where everything’s just money is just sloshing around. No problem. People are spending it hand over fist. There seems to be no end in sight. Everything’s doing really well. The stock market’s doing really well. I’m just going to have tangles of 2006 with rap videos of guys running around, throwing euros in the air, and all the rest of it. Yes, we’re in the middle of a pandemic, so maybe the consumption isn’t that conspicuous, but not-withstanding, the markets are clearly insane. Something is really wrong. I can’t quite put my finger on it.
What I do know is that I think there’s going to be a de-risking, or a de-leveraging at some point in Western societies. Whether that’s today, tomorrow, two years, five years, I don’t know. When that debt falls due, when it comes time for that debt to be paid, and some people say it never will. It will, one way or another. The US national debt is a prime example. That’s going to get defaulted on one way or another. They’re either going to inflate it away, or the country will collapse, or they will default, or whatever else. There’s no prospect to that, or the debt of any other major country is ever, major Western country is ever being paid back.
Then, there will be major consequences from that de-risking that they do, because it’ll basically be like, it’s a rubber band. You pull, and you pull, and you pull, and you pull, and you pull. Eventually, you let go and it snaps back. They’ve been reallocating risk constantly, social risk. There are two guys who really deal with this well. One of them is Jurgen Habermas, who’s a – he’s a Marxist German fellow. He talks about something called the legitimation crisis, which is where you have societies that just rack up risk, political, social, and otherwise in the form of debt, so much that eventually, it becomes overwhelming and it starts to affect the government’s ability to carry out programmatic demands that it sets for itself.
We’re seeing that, for example, would be in, I live in Connecticut, by way of example, Connecticut has a 100 billion dollars of unfunded pension liabilities. We’re a small state. That’s $70,000 for every man, woman and child in the state of Connecticut. Connecticut will never pay those back. They’re either going to default on its pension obligations, get bailed out by the federal government, or something else. There’s no way that they’re going to be able to rustle up $70,000 from every single person in the state of Connecticut to pay those dues.
That’s an example of something where we’re in the early phases of state failure. We know that something’s going to happen, but we’re just not sure what that thing is. It’s a time bomb waiting to go off. Joseph Tainter, he’s a collapsed theorist, and he talks about how societies eventually become too unwieldy and complex. Then, what happens is they disintegrate into more efficient forms, where you don’t necessarily need large bureaucracies to maintain them. I think that where we are now is that the government has constantly expanded for the last 120 years, and particularly after World War II and The Great Depression.
There’s just never been any retrace. It’s always been growth of the state. As a consequence, we have this thing that’s just not fit for purpose. There’s institutional inertia. Nothing has changed. The world is changing under its feet with the consequence that we’ve got this big, lumbering beast. We could pay off the debt if we automated away most of the bureaucracy and kept our tax receipts the same. No, there’s no political will to do it, so we’re just going to collapse. That’s my view.
[02:16:53] P: We keep coming back to this idea that I don’t think anyone on the stage, or I think there are probably aspects of what you said that some people disagree with. I don’t disagree with it, though. What do we do in that situation? We all own Bitcoin. We’re all hardcore Bitcoiners. We all have a knife that says Bitcoin etched on the side that we wave around wildly at parties and try to convince people to buy Bitcoin. Given the scenario that you just laid out, what do we do as –
[02:17:14] NVK: Get out too.
[02:17:15] P: Oh, go ahead, NVK. NVK.
[02:17:17] NVK: Oh, wait. Sorry. It was a tangent on supply chains. Maybe this helps people understand maybe what to do. I’m developing this theory that the problem really goes back a bit. There was even maybe slightly before 2008, there was no way we could come up with the proverbial deflationary prices for technology, without making technology just in time. Because inventory costs a ton.
For you to have all that opportunity costs sitting in a warehouse is unrealistic. Supply chains became just in time. That’s how you decrease cost. Slowly and surely, for many years I fought like, “Hey, it’s just maybe hard to get good timing on parts, because we’re not the size of Toyota.” That was how I thought about some of this stuff, because we share some chips that some those car makers use. I couldn’t fully comprehend that, why can’t I pay and get the stuff? It makes no sense to me. As we grew and could like, just, fuck it. We’re just going to stock bigger quantities of chips that we know we’re going to use for years.
It became clear. It’s just, there is no production capacity. Absolutely no production capacity. Products are overly complicated. Even a stupid little toy has hundreds of either parts, or steps to get made. It’s a domino of issues there. Then, all the stupid COVID lockdown shit did was just give us a glimpse, really, of what’s to come, which is we have incredibly fragile supply chains on a good day, and we have absolutely no production capacity to fill the demand needs.
I think, we are in for some very interesting supply shocks in the next coming years, if credit is cheap. Because still baffling to me, I was bitching about this maybe, six months or so ago. How is it possible that the world is literally ending in mid-pandemic for the average person in say, January this year, everybody’s going to die, but you cannot buy an overboard motor boat? That is probably the last thing people are going to buy if their world is ending.
It’s fascinating, because overboard motors are mostly made in Japan for any size that’s not a tiller size motor. You have a fairly constrained supply chain complexity, because it’s just in a single geography. Essentially, you have cheap credit. Everybody is bored and buying every fucking thing they can. Then, you have the checks going to people and they’re buying all this stuff. You have no production capacity. You’ll have essentially, the world’s just 50 ways the world economically could end. What I’d say is really, think about the stuff you’re going to need in the next two years and maybe stock it, because it could get tricky.
[02:20:47] CK: There’s going to be a compounding effect to that. I think what’s crazy is, I totally agree with you, NVK, that we’re going to see a lot of supply chain crises, but I also think that a lot of people are going to blame it on inflation. We’re going to just have a really fucking strong inflation narrative when it’s really just the complexities of globalization breaking down, really breaking everything else.
[02:21:09] PB: One thing I’ve seen – I got a taste of. I think that we are underestimating the effect that a rebalancing of consumption has had away from services and towards durable goods and consumer goods. I have never saved so much money as I did during the pandemic. It was amazing. Now, I’m doing stuff as NVK knows. I’m turning around and buying ham radios, because it’s just 1,500 bucks, because why not? It’s interesting.
A lot of my clients are in the chia ecosystem. I know this is a Bitcoin room, so I apologize for bringing up a shitcoin. One thing that we saw in the spreadsheet, it works by mining using hard drives, similar to filecoin, but not quite.
[02:21:46] P: Well, it’s more than that. It destroys hard drives.
[02:21:48] PB: It destroys SSDs, and it doesn’t destroy – You store the things on spinners and then you plot using SSDs. They’ve managed to get the rights way, way down on the SSDs. Basically, the original plotting thing that – just for everyone’s general edification, the original plotting program that they had wrote something like absolutely stupid, 1.8 terabytes of rights for a one 100 gigabyte plot, which will take a normal consumer SSD and wreck it in two weeks, which is insane. It took eight hours.
Some enterprising guy who was an early GPU miner and figured out how to cut that way down. Program’s called Madmax, if you’re interested in looking it up. Anyway, I digress. What happened was there was a bit of a frenzy in April, which has since died down, where the demand for hard drives globally, in the retail channel, which is about 10% or 15% of global hard drive demand, went up by 2% or 3%. As a result of that, hard drives everywhere completely sold out. Because the hard drive manufacturers planned this quarter a year ago, and they said, “This is what how many we need to produce now, and this is what our production capacity needs to be, and blah, blah, blah, blah, blah.”
Then all of a sudden, there was this unexpected surge in demand. Then hard drives just disappeared for three months. You couldn’t get a 20 terabyte, or 18 terabyte hard drive anywhere. Now that’s changed, as everything has calmed down and gone normal. That gives you some idea of how a very modest change, 1% to 2%. I think, that global drive market annually is something like a 100 exabytes, or a 150 exabytes. That was a 10 exabyte, resulted in a absolutely catastrophic disruption of supply chains, where people who are running servers couldn’t get hard drives for their websites. It was ridiculous.
[02:23:32] P: It was particularly funny. It was particularly funny, because the whole premise of chia was like, “We’re going to save the environment.” Purchasing hard drives is not the cheapest thing, nor is it the most environmentally friendly.
[02:23:46] PB: Yeah. There’s that. The e-waste argument didn’t go away. I think, they’re still holding onto the power consumption argument.
[02:23:54] A: Was that 10% of annual production, or is it 10% of total hard drives that are active?
[02:23:59] PB: 10% of the annual hard drive market worldwide. I think it wasn’t 10. I think, it was 1% to 2%.
[02:24:05] P: More importantly, let’s get back to Bitcoin.
[02:24:08] PB: Back to Bitcoin. Anyway, but just to give you some context. With that supply chain, there were a couple of things playing their chip shortages, various other things. Even a very modest rebalancing of demand wound up throwing the entire – then, that’s just a crypto related story, so I figure everyone can relate. That very minor change resulted in a massive change to the market itself. I think, with what we’re looking at, we’re also considering if crypto people looking forward on a five to 10-year, or maybe less, a shorter time horizon, you’ve got social things that could be an issue. You’ve got wars that could be an issue. Cyber-attacks are another issue. All of those can take out chunks of the supply chain and increase the general levels of gentrification in the society.
There’s a huge amount of disruption, which is capable of being done. COVID has just basically showed that the Americans, it should our adversaries, it should everyone else, all right, if you lean on this and you lean on this, you take this computer out, you take that computer out. How do you then affect a society, and what pressures can you put on that society as a result? It’s going to be a really interesting decade.
[02:25:12] LM: Don’t forget climate change, too. Who was the Democrat in the news the other week, saying that, “Oh, look out. Climate change is going to raise the sea levels and it’s going to impact ports.” Guess what? That’s going to cause inflation in the coming years. They’re all just narratives to disguise what’s really going on. It’s all monetary reset. This is all the whole unrealized capital gains. It’s just the thin edge of the wedge. If you go and read Klaus Schwab’s book, he’s the head of the World Economic Forum, he’s directly telling you, we need to re-imagine capitalism. We need to implement this social credit score communism model across the world. That’s how we’re going to do it.
Everybody’s going to consume the energy based upon their carbon credits and their social credit score. You’re even watching MasterCard come out recently. What did they come out with last week? Everybody’s got to have a carbon limit on their credit cards.
[02:25:57] P: I know. It’s fucking ridiculous. It’s so upsetting.
[02:26:01] NVK: COVID vaccines, right? I don’t care how people feel for or against, that’s not the point. That’s the first North American West experience with you’re good and you’re bad.
[02:26:12] P: I just want to let you know, NVK, you have successfully completed my bingo card. So far in this conversation, we haven’t mentioned vaccines yet, but –
[02:26:18] LM: That gets back to Lamar’s earlier point as well. What do we do? Where do we go? Do we have a large enough population who’s able to revolt? Obviously, you look at the population of the hardcore Bitcoiners like us, who understand all this stuff. It’s probably only what? 0.1% globally. When you look at the people who believe in medical and bodily autonomy, you’re looking at 20% to 30% of the population. They’re all Bitcoiners. They just don’t know it yet. I think, we’re going to be fine.
To Lamar’s original question, where do you go? This is this is a global debt problem. Every single country around the world has an absolute debt crisis. I just think, I think Shinobi was going to touch on it earlier. You get local. You get out of the cities. Klaus Schwab, and his cronies at the World Economic Forum and the IMF, they’re going to try and implement these central bank digital currency system on the other side of the failing one that we’re operating in at the moment. I think, it’s going to fail in the long run. You just need to wait it out in this transitionary timeline.
[02:27:12] P: Absolutely. I do just want to jump in. Shinobi has shown more restraint than I’ve ever seen him show. Shinobi, please give us your thoughts.
[02:27:21] S: Get the fuck out of the cities. Rodolfo said, stockpile anything that you’re going to need that’s part of a complex supply chain you can’t produce yourself. Start producing your own food, whether that’s grow a garden, whether that’s chickens, whether that’s cattle, if you have the land, too. Do it. If you can’t do that, find your neighbors who can and buy shit from them. We need to get the fuck out of the city and localize as hardcore as we can. Then hopefully, never actually have to pull the guns out. It might actually get to that point.
[02:27:57] NVK: What’s your opinion on hunting and eating nocoiners?
[02:28:02] S: No comment.
[02:28:02] NVK: Too salty.
[02:28:05] P: NVK: Ooh.
[02:28:07] LW: Good. Human meat tastes like squirrel, man. Not the good time squirrel. Like the good squirrels.
[02:28:11] P: I actually think that the higher economic value is in harvesting the tiers of the nocoiners and the altcoiners that flow freely down their face. That actually is an incredibly effective cooling agent for ASIC miners. I actually think that we won’t eat them, not because we have moral issues around it, but because the tiers are just so much more effective as I –
[02:28:34] LW: Those are electrolytes, man. That’s going to be like Gatorade. We just don’t call it Haterade, for all the people that hated on Bitcoin over the years.
[02:28:41] PB: Yeah. A little bit, in fact, it’s actually the only renewable resource that’s truly renewable.
[02:28:45] P: There you go. All right, my friends, we’ve been going for three hours straight. This has been an amazing conversation.
[END]
