The End of the “Fiat Experiment” and the Rise of Bitcoin | Interview With Anthony Pompliano

The US Dollar will fail. Right. And whether we like that or not, that's just how history has played out. Money's a belief system. And right now the market believes that Bitcoin is more money than anything else.

Don't you think that in times of emergency, limiting individual freedoms is necessary for the greater good?

No.

Hi, everyone. My name is Giovanni. Today on our show, we have a very special guest. Bitcoin bull investor co founder at Morgan Creek Digital, Anthony Pompliano. How are you, Anthony?

I'm doing well. How are you?

I'm great. So before we start, Anthony, I want to mention that we asked our audience to suggest the questions for the interview today. And we picked the most interesting ones. So be prepared for that.

Awesome.

So in the past, you disclosed that 50% of your net worth is in Bitcoin.

Over 50% of my net worth is in bitcoin. And I don't plan to sell it. I forbid that.

That's insane. After the latest market turmoil, have you made some adjustments in your portfolio?

Yeah, I bought more.

How much more?

Enough.

Okay. So while a lot of people were actually escaping in this kind of liquidity crisis, you actually moved in the opposite direction.

Of course. I think that there's two things that are really important in life. One's having a strong balance sheet, and two is ensuring that you protect your wealth. And obviously, part of the reason why I am so bullish on bitcoin and such a big proponent of it, is I believe it protects your wealth. And so in a time where central banks are pumping trillions of dollars of liquidity into the financial system across the world, not just in the United States, but across the world, I think people need a way to protect their wealth. And Bitcoin's a great way to do that. And so I'm doing it myself.

Okay, cool. All right, so let's start with a question from our audience. So question from xrp, Moonshine, AKA Matthew. Why do you still believe in bitcoin when there are far better, faster, cheaper, more sustainable digital assets out there with actual utility like xrp?

Yeah, I always tell people my opinion doesn't matter. Right. Just look what the market has decided. And so far, the market's decided that bitcoin is the most valuable digital currency. And I understand there's plenty of other options. Some people believe other things are going to be more important or more valuable. But so far, the market's determined. Determined that bitcoin is the most valuable. And the key part about money is that money is a belief system. And right now the market believes that bitcoin is more money than anything else. And until that changes, I'm not going to fight a market with millions of people all moving in the same direction.

So let's talk about the upcoming bitcoin halving. You said that the argument of the bitcoin halving being priced in is dumb. Can you explain why? Do you think so?

Yeah, anytime you basically get a supply shock to an asset, there is going to be a change. And so if you look at what needs to happen for the actual having to be priced in, you would basically need 100% of people that are already in the asset to currently understand that the halving is going to happen. You need 100% of people to understand exactly what that event actually means. So what's going to happen during that event? And then you need 100 of people in the asset to agree on what the price post that event happening will be. And so 1, 100 people don't even know it's happening. Right. Maybe it's a high percentage. It could be 70, 80% of people know it's happening, but 100 don't. Then definitely 100 can't explain what it is. Even some of the biggest proponents, right? I've literally explained it to Kevin o' Leary on television before. Right? So, and he's had Bitcoin since 2013. So obviously everyone doesn't understand how it works. And then obviously everyone doesn't agree on the price afterwards. Right? And so those three things alone mean that you can't, it's just impossible for the price to actually be priced in or to have them be priced in. But with that said, another component of this is that on top of that you, you then get all of the new people who are going to come in between now and the having or right after the having, they don't even know about bitcoin at all.

Right?

So there's a bunch of people who are learning about bitcoin every single day and they don't know about the having either. So it's just not possible for the having to be priced in. And what you'll see is within the first 18 months post halving, you'll see an explosion in the US dollar price. And I think that debate will kind of be settled as it has been settled, you know, previous times with the halving as well.

So if you had to make a short term prediction for the price of bitcoin following the halving, would you be able to do that?

I have no clue what the price is going to do short term, you know, it's a highly volatile asset. I just say I think that it's going to hit $100,000 by the end of December 2021.

That's a very well known prediction of yours. So let's move on to question from El Novato. What price of bitcoin are you going to retire?

I'll never retire, man. This is kind of business and investing is just a game to me. And it's different than a traditional sport where traditional sport you see a lot of people who, you know, they get to 30, 35, 40 years old and they've got to stop playing because they physically can't keep up anymore. Right. They just, their body wears down. I think the beauty of business and investing is that it's not a physical thing, it's a mental thing. So I don't think I'll ever actually retire.

You define the rescue plan of the Fed to inject a huge amount of cash in the economy as the end of the fiat experiment. So what do you mean by that?

Yeah, I don't know if I said that it was the end of the fiat experiment. I think what I basically said was people should be wondering or asking that question. Right. And my thought process behind why I brought that up was nobody was asking that question. And it's not necessarily that, hey, the fiat experiment is actually going to end. But it's a valid question at this point, given that we're seeing bigger boom and bust cycles and we're seeing an addiction to stimulus, which is really just debasement of a currency. And over time, we've seen every single currency that gets debased eventually fail. And so at some point the US dollar will fail. Right? And whether we like that or not, that's just how history has played out. And it can go on for another 25, 50, 100 years if it wants. But at some point, every currency has failed. And I don't see a reason why the US dollar is going to fight history in some way. And so kind of the current need for Federal Reserve or other central banks to inject liquidity into an economy to keep it running, I think is a way to ask the question is, is this the end of the fiat experiment?

So if any currency is going to fail sooner or later, don't you include bitcoin in this list? Don't you think that bitcoin will also fail at a certain point as other, other other currencies?

Well, it could fail, right? But the, the difference is that gold is not being debased. Away, same as bitcoin. It's a deflationary asset, right? So every inflationary asset that's been debased or devalued over time ends up disappearing or becoming not valuable and ultimately failing. But gold survived for 5,000 years, right? And I think bitcoin has a lot of the same properties of sound money. And so I tend to think that Bitcoin won't fall victim to that same kind of structure or mechanism because it has those sound money principles.

So now we have a question from Ron Neuner, the host, the crypto trader. Is Bitcoin a non correlated asset? He asks.

Yeah, Ron is trolling, but I love him so I'll entertain his trolling, basically. Look, it's a math equation, right? So this isn't like an opinion thing. This isn't. Let's pull up a chart and like try to eyeball. Do these two things look like they're moving in the same direction? It's a math equation and historically bitcoin has had less than a 0.15 correlation to traditional assets over the lifetime of it. And so yes. Are there times where it becomes more heavily correlated? Right. During a liquidity crisis, for example, what we saw in the month of March, everything trends towards one, meaning that they become more correlated. Gold went down, Treasuries went down, Bitcoin went down, stocks went down, everything went down. Because the liquidity crisis, the thing that strengthens is the dollar. But no one's arguing that gold is non correlated, right? Or saying that now all of a sudden gold is not a safe haven or that is correlated. Instead, what ends up happening is the liquidity crisis is a very short period of time. I don't know, 30 days this time, 2008, it was about six months. But over the lifetime, over years and years and years, Bitcoin has been a non correlated asset. It's a math equation. It's not my opinion, it's just math. And I think that it will continue to do that over long periods of time, but there will be short periods of time where it becomes correlated. But that's to be expected and natural and doesn't change the fact that over a long period of time it's non correlated.

You predicted that the dollar will soon lose its value due to inflationary monetary policy and people will likely turn to hedge assets like bitcoin and gold. So why would people choose Bitcoin instead of gold in this specific scenario?

Yeah, well right now you can't even get gold, right? I mean there's a Shortage of gold in terms of access, so it's just not accessible. They're literally having trouble delivering the gold to people getting paper claims on the gold. But then when you get into all of the differences between, you know, why read a newspaper online versus read a physical newspaper, There's a million advantages to reading the newspaper online, both for the creator of the paper, right? In terms of they can edit things, they can change the headlines, they can distribute it to more people quicker, it saves them money, etc. But there's also advantages to the reader, right? I don't have to actually go pick up the paper from my front door. I can read it on the train on my phone. You know, all these advantages that you have, same thing between gold and bitcoin. If you look at bitcoin as like a digital gold, right? Which I think it's more than that. But let's just say that you just think it's digital gold, it's more portable, it's more divisible, it's more provably scarce, it's easier to access right now, it's much easier and more efficient to send around the world. It just has multiple advantages over kind of the entire aspects of gold. And so I think that over time people will learn about that and eventually move to bitcoin. I'm not like a gold hater either, right. Like, I think that both bitcoin and gold will do well. It's just that bitcoin will appreciate more in value given the volatility that it has, rather than gold.

But that's interesting because you were saying that, yeah, bitcoin has a series of advantages compared to gold because of course it's more portable, it's digital, and so on and so forth. But what do you think? Wouldn't it be better to have, for example, gold coin, which has high transaction speed and it's pegged to the value of gold, instead of having bitcoin, then.

If people want to do that, they can buy that. I'm not doing that, but other people can do that, right? I mean, look, all you're doing is you're basically getting exposure to gold, right? So it's just not something that I think is going to do as well as bitcoin. But gold's going to do just fine, right? We're in a deflationary environment right now where every asset price sold off dollar got super strong. They're going to have to move us back into an inflationary environment in order to spur economic activity. So they flood the market with dollars when they do that, your dollars become less valuable. And this happens all around the world. So every currency is going to get less valuable or debased and every asset price will rise. Stocks, bonds, gold, bitcoin, etc. I just tend to think that Bitcoin is going to do the best out of all of those.

When I ask you about this comparison between this hypothetical gold backed digital currency and Bitcoin, you seem that you choose Bitcoin because you have faith in Bitcoin, but you didn't explain exactly what's the advantage of Bitcoin compared to this gold backed digital currency.

How much gold's in the world? You can't tell me. Nobody can. There's not one person in the world who can answer that question. I'm not putting my wealth there. I can tell you exactly how many Bitcoin exists, right? I can tell you 1800 Bitcoin today got created. But you, no one can tell me how much gold got dug up out of the ground today. So it's just, I can prove it, right? And the transparency and the provability from the scarcity standpoint is much more valuable to me than than gold, which although it has been around for 5,000 years, it does not stand up in terms of the transparency, the information, the accessibility, the divisibility, the portability, all of those things.

All right, let's move on to a question from the audience. So Alt Anonymous asks, when are you going to Joe Rogan's show?

I'm sure we'll do it at some point, but I'm currently sitting in my apartment in New York City and until we're allowed out of here, I don't know if I'm doing anything other than playing around on the Internet.

Yeah, I see the quarantine routine. So talking about what is going on right now in the US You've always been a staunch defender of individual freedoms. Commenting on the surveillance measures adopted in the US to contain the spread of COVID 19, you said that American freedom is dead and the surveillance state is here. So don't you think that in times of emergency, limiting individual freedoms is necessary for the greater good?

No. Right. I mean, if you think about it from the sense of the American part of what makes the United States of America so great. Right? And the absolute powerhouse of the world is the fact that we have the United States Constitution. And the United States Constitution is there to protect the people from the government. That's exactly why the Constitution is there. It is our rights. And it's not a document that says this applies, except for in times of crisis. It's actually the opposite. It really should apply and we should really pay attention to it in times of crisis, because that's when people will try to take civil liberties and personal freedoms. And what we're seeing are absolute violations of the Constitution. And what I tend to think will happen is that there will be liberties and freedoms that are given up over time, but that doesn't make it right. And I think that given the platform I have, it's important for me and others to stand up and say, this is not right. This is a violation of the Constitution. This is an encroachment on those personal freedoms and civil liberties. Right. And look, if people don't say things, then we might as well just give up all of the freedom, just tear up the Constitution. Right? But I think that it's important to continue to call out the. When we see it. And there. There's no scenario, not one single scenario, whether it's a terrorist attack, a virus, or anything else that warrants the encroachment on civil liberties. Because once you start to encroach, all of a sudden, next thing you know, you're talking about communism, right? You're talking about dictatorships. You're talking about what every other country that has fallen into those positions, they all started out with small little encroachments on their freedom and. And then next thing you know, they're not free. Right. It's kind of the point of freedom.

Anthony, we are heading towards a global economic recession. According to you. Can you give a piece of advice to investors? Where should they put their money into?

Yeah, I mean, look, I don't really give it financial advice. Right. I think the question is you've got to take into account who the person is, where they are in their life, what responsibilities they have, what their risk appetite is. Kind of all of those things make it impossible to give an answer. That's just kind of a silver bullet for everybody. With that said, I think that there's a couple of key pieces that people should think about. One is have cash so you can weather the storm. Right. I think part of what people don't realize is this is not something where the economy's gonna be shut off until May 1st, and next thing you know, they're gonna be all right, everyone come out of your homes. Turn all the businesses back on. Let's go back to the old days of January and February 2020. It's not going to happen. Right. We are in for a really, really bad economic environment and so people need to have the liquid cash available to weather that storm. You got to be able to pay your rent for 12 months. You got to be able to, you know, get food. You've got to be able to do all of those things. And so kind of having the liquidity is really important. Then once you know that you're going to survive, then you can start to position your portfolio to thrive coming out of this. And like I said, we're in a deflationary environment now, so dollars are king. Every other asset has sold off. It's probably not done selling off. In many asset classes over time, we'll go back to an inflationary environment, those asset prices will all rise. I mean, frankly, you can put a bandana around your eyes and pick any asset, and they're probably going to go up in price at some point. But timing the market is really stupid, I think. And so what I choose to do is I basically choose to have cash. I've got a little bit of real estate, and then I basically put money into bitcoin to protect my wealth. And those three things are how I position myself, along with some illiquid investments, in order to kind of best position myself to, one, have the optionality of surviving, you know, two, three years of a market downturn, but also positioning myself well coming out of this. And I think that a lot more people are starting to realize having sound money, having, you know, kind of the people's money, if you will, the thing that no one can manipulate, the thing that you can transparently prove you own, you know, how much is out there and you're in control of. I think a lot of people are starting to realize, hey, that might actually be more valuable than I originally thought. And we'll see what happens.

You mentioned real estate. So you think that owning real estate in this kind of recession is a good thing?

Yeah, look, frankly, bitcoin's digital real estate to some degree, right? There's 21 million of them, and I own some of them. You probably own some of them, right? Everyone listening probably owns some of it. But there's only 21 million lands, no different. And so I think that, you know, investing is really not that hard. I mean, everyone tries to have, like, the intellectual Olympics or, or make it into some big thing that it really isn't. But for me, like, this is pretty simple game. Take dollars, right? Have a bunch of dollars come in, make sure you've got enough dollars to survive any sort of market chaos. We're in that right now. And then make sure that you're able to get those dollars converted into assets where you can protect your wealth. And whether that's bitcoin, that's gold, that's real estate, whatever, this game's not that hard. It's just that people want to make it harder than it is. They get distracted by all the noise. They all think that they're, you know, fucking geniuses like Warren Buffett and stuff, and they want to go pick stocks or do whatever. But it's about discipline, right? And kind of the consistency and discipline to do the boring stuff. And that's pretty much it, man.

Thank you, Anthony, for being with us today. That was very cool.

Thanks for having me. I appreciate it, guys.

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