In this episode of the podcast, we’ll be talking to Cedric Dahl about how to exit our crumbling financial sytem.

Resources mentioned in the episode:

Cedric’s YouTube Channel (free):

Internet Money Newsletter (free):

1000x Private Research Group (paid):


Please note: I’ve used an AI transcription service, which means there’s probably plenty of errors. At some point I’ll get a human to correct it.


So Cedric, you’ve recently made a return to YouTube, which has amazing as a fan of subscribing myself, you’ve also been sharing your insights in your kind of relatively recent internet money newsletter.

There’s a ton I want to get into, but the thing I’ve noticed from your content recently is that you’re touching a lot on this subject of exiting, right? Exited in the system, and so. What I want to kick off this discussion with is an exploration into what you mean by the term exiting and why now of all times, why are you so passionate about this in May, 2020 and please feel free to take as long as you need in order to flesh this out properly, like the way it deserves.


Yeah. Well, first of all, Louis, thanks so much for having me on here. It’s always great to connect and talk. You know, we’ve, we’ve had the fortune of having a friendship now for a couple of years, and so we’ve got to watch each other grow and change and morph. Is this. Really wacky world has been evolving around us.

You know, it used to be that we called it like the weird world of internet money, and now it’s just the weird world of everything. Yeah. So to your question, all right, exit. Why exit? Why exit now? Uh, I think that it’s pretty clear that people are buying guns to exit their dependence on the police. People are hoarding food to exit their reliance on supply chain.

You know, within crypto, we’re seeing people exiting altcoins. And Fiat currency to exit their dependence on stuff outside of Bitcoin. And I don’t mean to sound like a Bitcoin maximalist here, but I think that there is a very serious move towards being self sovereign towards being independent, whatever that means.

And so it seems like people are choosing whatever they believe to be their preferred path towards independence. So I think for me, what that means is I just want to be self service, everything, right? So like, uh. Right now, I’ve got self-service medicine set up. I’ve got those like little paddles that if my dad has a cardiac issue, I can resuscitate him.

I’ve taken a online CPR course, you know, I’m getting like oxygen condensers so that if one of my parents gets coven, I can take care of them. Because like realistically, what’s the chance of them getting the best attention? They’re senior citizens. They’re already in poor health. They’re going to get deprioritized.

And so just like I’m thinking about self-service medicine. I’m also thinking about self service safety. So I bought several guns cause you know, my parents live in Florida and I want to protect them when I’m there. Um, and you know, when I think about money, you know, I went down this rabbit hole on money trying to understand, okay, what is a safe Haven asset?

Hint, it’s probably not Bitcoin yet. Uh, it’s probably not anything in crypto yet. Uh, right now it’s probably the U S dollar, but you know, you never really know how long that’ll last. And we can get into that later. Um, you know, when I think about, you know, self service transportation, you know, you have this really weird phenomenon where in the short term you’re seeing bizarre deflationary spikes like gold when negative.

Right? And then, and then after gold goes negative, what happens next? Well, what happened is we had a severe supply. Oh, sorry. We had assumed a severe demand shock, meaning supply was consistent, but demand just felt completely away. And so you had this glut, this excess of supply, right? So what happens?

People start shutting down plants. They stopped producing oil. Folks go out of business. Consolidation happens, and the net result is that there is a lag, but eventually there is a significant decrease. In supply to meet that decrease in demand. And these things oscillate and they don’t always oscillate in favorable ways.

So it also collated favorably. Now the price of gasoline in some States in the U S is as low as 12 cents a gallon. Wow. Right. So that’d be, that’d be what, three and a half cents a liter. It’s so crazy, right? Like what is that? But, but then it oscillates the other way when, you know, you have the supply, which has now been constrained, and then you have a demand returned to normal or normal ish, or even go up.

Suddenly everything becomes much more expensive. And then, you know, you’ve got this issue also happening with the airlines. So initially. Consistent supply, but a huge demand shock. So flights get a lot cheaper. Sad to say that’s very likely going to reverse itself. And so if you like to travel, if you need to travel, if you want the option to leave where you are and go somewhere else quickly, that means that travel is very also likely moving in that self service direction.

You know, you look at the way that different countries, States, cities, even neighborhoods are pumping the gas and brakes. On opening and closing their economy. And what you realize is supply chains are completely fractured because of this. There’s no known way to get the chemical precursors you need for different.

Uh, pharmaceutical medicines for different, uh, coronavirus tests. You know, um, most people are estimating it’ll be a year before we can have worldwide continuous testing a year because supply chains are so shattered because of this pumping of the brakes of the economies. And so I think that right now is an incredibly important time to.

Become independent, but also to, to recognize and respect the men with guns. You know, uh, like any police officer, we raise like tremendous respect for police officers, tremendous respect for firefighters, tremendous respect for all the well-intentioned politicians that are trying to help us. But the system is pushed to the limits and when the system is pushed, the limits, it just can’t take care of the little gallon guy.

People like us. So we have to take care of ourselves. And that’s what I’m learning and I’m sharing my journey of learning.


Oh, that’s brilliantly put you. You touched on a lot there about what’s been happening relatively recently in the economy and what’s going on now. And I guess my next question from that is how do you expect things to play out, especially in terms of kind of economically.

Over the next two years. And what do you think the impact of what’s been going on with a particular V I? R U. S I won’t say it for algorithms don’t like it these days, but to what extent will that have an impact in the kind of, is it gonna be a short term phenomenon and the economy, or is it going to be much more longterm?


Yeah. So there, there’s sort of like three things you have to think about, right? The first is the shape of the immediate recovery. The second is, okay, what does this mean for the next. Three plus years, and then you have to ask how long before things actually returned to normal. But it all starts with these three shapes.

A V, a U or an L, right? You’ve probably heard these, you know, the, the folks listening have probably heard, these are the folks who are unfamiliar. Let’s describe them. So V is a quick drop followed by a quick recovery. A V a U is a quick drop, followed by some kind of flat period followed by a quick recovery.

And L is a drop followed by an indefinite. Recovery. And the thing that is really unfortunate is the smartest people in the room. People like biology, sort of awesome. The guy who’s been ringing the alarm bells since maybe like late January, early February, about the thing that we’re not going to say.

Cause we don’t want to, you know, have the algorithms, you know, knock us for talking about the V I R U S. But, uh, you know, the reality is that when the smartest people in the room who have exceptional track records. Oh, you know, Chamath, I can’t pronounce his last name. Shamar P um, you know, he’s calling an L.

You know, if you look at the actions of somebody like Warren buffet who has sold 100% of his airline stock, I mean, we gotta face the signals and the signals are all telling us, even if you’re not looking for signal yourself, the lagging indicators are all saying we are in a. Recession that is likely to have an indefinite recovery.

What that means is that we are heading for depression, but things get ultra super duper weird because you know, most of the data that we get comes from governments and I, I’m a big fan of governments and not trying to disparage governments, but you have to understand that governments are not designed for crises.

Governments are designed for elections. That is literally the way that governments come to exist and process is through election. And so these, these politicians in a specialized world, their specialty is getting elected. Their specialty is not helping you through a crisis. And so we’re in this very weird situation with the people who have the access to the levers that they can pull.

First of all, they only have access to a few levers, and their goal is to get reelected or to get elected for the first time. And so everything that you see. Right around you is not designed to make you better off. It is designed to get officials elected, which is a really bizarre situation to wrap your head around.

So let’s talk about the economy. Let’s talk about what these two things mean, and in a potential indefinite recovery and a system that is not at all designed for crisis. So I’m going to only touch on two things. One, why I believe we’re in an El and to the absolutely terrible. Structure that we’re in, which isn’t, it’s not at all a match for what we’re facing.

And I’ll, I’ll describe one specific thing that I believe is a leading indicator to systemic failure. Meaning that the system we’re in cannot, it cannot support us, and I’ll make a case for that. So why are we in an El part one the short version is we don’t have enough information to believe that we are heading towards herd immunity.

There are great arguments. To keep everything open. There are great arguments to shut everything down, but the truth is the reason that you can make great arguments for either of these and neither one is more right than the other, is we just don’t have enough info. Nobody knows. We’re all rolling the dice here.

So if you believe that we don’t have enough information, which basically everybody who’s got a couple of key points is saying, then what you need to, what you need to do is you try to understand, okay, if. We are in a worst case scenario. Are you better off having planned for that or having planned for best case scenario?

Well, obviously you’re better off having a plan and not needing it then, then not having a plan and needing it, and so you know, if it does turn out to be a quick recovery, if it does turn out, we have herd immunity. Having planned, having spent time and money on a worst case scenario, you’re not that much worse off.

But if you don’t plan. If you don’t spend some of your brain juice and some of your capital on making sure you know how to exit and a worst case scenario happens, you’re totally bones. Right? So let’s talk about timing. The L right? Why do I think we’re at an Al. Well, I don’t know if we’re in an L, but I’m planning for that L because of what we just talked about.

Now, if we are in a worst case scenario where we have a like no immediate herd immunity, where this thing does have an R value of one meeting, for every one person who is infected, at least one other person will get infected, meaning it’s not going away. And if the mortality holds at about the rate we’re seeing, which is somewhere around 3%.

That’s, that’s a bad situation. That’s a real, real problem. That’s like plague territory. So if we’re in that kind of situation. Then, you know, what we’re really waiting for is a vaccine. And you know, the reality is vaccines generally take decades, like they take many, many, many years. And so the absolute fastest that we could come out with something that might be moderately safe, not even totally safe, but moderately safe, is somewhere North of a year and a half.

So like, let this sink in for a second. If we are in that bad scenario. The best case scenario is a moderately safe vaccine that starts to get distributed in 18 months. So if that’s the case, what you have to understand is if for 18 months, different economies are pumping the brakes at different times on opening and closing their country, their manufacturing, their jobs, et cetera.

The economy’s done, it’s, it’s dead. And any movement you see is just central bank slapping on the paddles and running currency through the economy. So it’s flailing about like, it’s alive, but it’s dead. Um, so, so that’s, that’s the thinking about the L. I think we’re in an L because I have to plan for that.

I would prefer a V. But if you do believe that we’re at an L like this absolute soonest we could get out of it, timing wise would be 18 months. And so if that’s the case, 18 months of continued joblessness, I mean, I don’t know what the numbers are in the UK, but in the U S they are horrific. And it leads me to the second point, if it’s okay, that I’d like to make really quickly about why I am fairly certain that if we are in an L that will persist for more than 18 months, we’re almost guaranteed to see systematic failure.

Is that okay if I unpack that please? Okay. I know, I know. I tend to kind of go into these trans modes and you know, I have a bit of a rat up. Feel free to cut me off at any point. So here’s the reason why. If we’re in an L that lasts 18 months, here’s why this is so catastrophic. We live generally globally and democracies.

There are a few exceptions. There are a few dictatorships. There are a few other configurations, you know, socialist, communist, China, which has also quasi capitalists, whatever. We’re going to set those aside. For the most part, we live in democracies, right? What is a democracy? It is rule by majority.

Oppression of minority. It’s just a cut and dry definition. There’s no emotions in there. That is just what a democracy is. The majority gets its way. The minority does not. Okay, so what is the most valuable change that is happening that would make a democracy a terrible system? What’s happened is if you look at the labor force participation rate.

In the U S and most places, it was around 60 ish percent by 63% for the last decade. Right? If you start to factor in unemployment, what you realize is as of this week likely based on projections, because all the numbers that get reported are on a two week lag based on projections. This is the first week in America where we probably have.

Of all the working age, so of all the voting age people, 18 plus, we are likely having less than half of those people working right now. It’s like let this sink in in a democracy where it is ruled by majority oppression of minority, the minority of the voting class as of this month. Sorry, as of this week.

Is very likely less than 50% what that means is in any economy, which is essential for civilization as we know it, you cannot have a minority producing most of the value because it causes dah, dah, dah, magic word of the day. Exit. So this is, this is the big problem, right? It’s like it’s a fractal problem because when you squeeze the few remaining businesses that are producing asymmetric value, they exit, they immigrate, they go somewhere else.

When you squeeze States that produce asymmetric value, they exit. You know, and this is not new. You know, we all saw this coming miles and miles away. We’ve been talking about this for decades. So like Kelly exit, for example, you know, you look at the United States. What are the States that asymmetrically produced the most value?

It’s New York and California, and it’s really California first, and like what is the value that New York produces? It’s mostly nonsensical financial products that don’t actually produce value. They just issue mountains of debt and give you mountains of leverage, which does terrible things. So New York, I would argue politely, no offense to my is in New York.

The value coming out of New York is mostly. Um, it, it is mostly the kind of value that I would call seasonal. Meaning it works in certain parts of market cycles, but it doesn’t work in other parts of market cycles. Like, uh, you know, debt is great when the economy is doing well. Debt is terrifying when the economy is doing poorly.

And so we, we have barely likely seen. The death nail, the coffin nail of the finance industry in a depression. This is not going to be great for New York. So what happens when new York’s number one producer of value like goes away? Where’s the next one? It’s California. But the thing about California is that the vast majority of the value coming out of California has to do with technology and technology produces real value, right?

It’s not this artificial value. Technology tends to produce value that does well, even in. Bad times now, it’s not all technology across the board, like Airbnb is certainly hurting right now. It turns out that in a pandemic, you know, there is some seasonality for that business. And my, my heart goes out to all the people who just got laid off of Airbnb cause it’s, you know, the, as of today, they let about 25% of the workforce go.

So the thing, this is all a long way of saying that you have to understand that. And in an economy that is a democracy, the moment that your voting population is comprised of less than 50% workers. All of the other people, all of their votes will be about getting more resources. And do you know where a hundred percent of those resources will come from?

The shrinking, oppressed minority? So a democracy is a horrific configuration for this new territory that we’ve probably entered this week in the U S and are almost guaranteed to enter. Everywhere else globally. Now a lot of people are going to be saying like, Oh, well, you know, if you open up the economy, everything will return to normal.

We’ll get that. V-shape maybe, but unlikely. And let me tell you why it’s unlikely because psychology in a crisis changes like how many people started to hoard food, how many people started to hoard guns. People’s psychology has changed. And they are scared. And that fear does not go away overnight. And so, you know, uh, if you are an elderly person who has savings, who has an education, you’re probably aware.

That it is a scary time to go out. Even if you’re getting social signals that you know your neighbors are going out or friends, you know, or going out or there are commercials on TV encouraging you to go out to stimulate the economy. You know, if you’ve got survival instincts and enough sense to have savings.

You’re probably like, huh, maybe I should wait this one out a little bit. Maybe I should just hang out for a couple of weeks, months or longer until I really know what’s going on. Because the truth is we are opening the economy, but nothing has changed. Like there’s no, in the United States, there’s no new tests.

Trace isolate programs. Testing hasn’t been figured out. We don’t have easy ways to distribute personal protective equipment. And not only that, but you’ve already had a wave of businesses shut down because they couldn’t afford to go six weeks without generating income. Not only that, but you’ve got a giant number of displaced workers.

You’ve got companies that are today laying off massive percentages of their workforce. Like we got to wake up to this idea that everything may not be okay. And so like at every level, right, you’ve got like these five levels of debt that the small number. Of workers are, are holding, right? So not only do they have to take care of themselves, but they have to take care of other unemployed workers.

That’s the first group that they are getting value suck that up to support. They also have to support the cities that they’re in that are now insolvent. And by the way, cities can go bankrupt in the U S you’ve got States that are not allowed to go bankrupt. So they’re just insolvent. They just have.

Inescapable debt. Um, and then you have these new federal programs. So there were already programs. Now we’re supporting a whole new class of programs, which costs money. And then you finally, you have the most messed up, one of all, which is this thing called, uh, swap liquidity lines where the central bank of the U S is printing money to buy currencies of its trading allies to keep the dollar low.

So that. You can continue to have exports and hope that you can get growth at some point. But all of this, all five of these groups are all being pre put the, all that pressure is getting put on the workers and the sabers and they can’t support that many people. And not only that, but there will be political action that continuously squeezes them harder and harder.

Until they exit you just, you just as a producer, there’s only so much that can be taken from you before you quit. Right? It’s like, it’s like any relationship when the relationship gets so bad, eventually you just quit. You just can’t do it anymore. Like you reach some breaking point and you know that. The thing that’s really weird about this is it’s not just individuals.

But like, you know, it’s the States who asymmetrically support the rest of the U S so California, California is extremely likely to succeed. And I’ll tell you why. The, the governor is already calling himself a nation state. He’s already calling California a nation state. He’s already making allegiances with the two States above him.

He’s basically taking the whole West coast, you know, they’re, they’re already having an asynchronous schedule with the rest of the U S about when to open one to close. You know? And also the thing about California is there are extremely intelligent, extremely wealthy, extremely coordinated groups. And these are technology founders that have had massive exits that have been seeing the state coming for decades.

It’s just that the VIR, U S the thing that we won’t talk about, it just accelerated it. And so, you know, as States get ready to succeed as neighborhoods lock themselves up and don’t allow new entrance, regardless of what federal laws say, you know, as individuals exit economies, as people buy guns to exit their dependence on, you know, the police as they hoard food to exit their dependence on, on supply chains.

You know, I think more and more people are starting to look for some kind of alternative. Safe Haven for their money. And in the short term, it looks like it’s going to be the U S dollar globally. But at the longterm, once you know, one of the major G 20 currencies fails because the U S just can’t buy enough of their currency as it’s failing and it fails, all the other G 20 currencies are going to be looking for something that they can get behind quietly, uh, without upsetting the U S in order to have some kind of cushion.

When not if, but when their currency fails. And so, you know, there are a couple of things that you should really understand here. Like the Euro dollar is an extremely important concept to understand here, the game theory of Bitcoin adoption. Uh, and maybe like why Bitcoin over everything else in crypto.

But if you understand these things, I think that you have a much better chance of navigating this. But it all comes down to this one idea, which is. Are you going to choose your own adventure? Are you going to take control and responsibility for the situation? And if you are, it’s my opinion that your chance of being okay just shoots up and if you’re waiting for a politician to take care of you, yo, you’re basically an NPC, a non-player character in the simulation that we’re all in, right?

Like you don’t want to be an NPC. You don’t want to be a lemming that gets like. Sent to your untimely doom. It’s much better to be the hero of this story and to like take control and responsibility for what’s going on. That’s my opinion.


Oh my goodness. That was extremely well Perth. While you were seeing all of that, I couldn’t help but think of the kind of striking resemblance is about what’s going on in America in terms of elsewhere in the world.

Like here in the UK for instance, you mentioned about you, you weren’t quite sure about what the employment, because we’re here, I can tell you that Jesse, the day there was an article on the Telegraph, see, and that we’ve officially reached that tipping point as well. So here in the UK now we officially have already.

Essentially more people dependent on the state than they are on the private sector in order to live, which is pretty striking. And even when you say in terms of how some States are, if you want to call it kind of more productive than others and depend on the help of others in America. You’re even seeing that now in places like the European union, which of course the UK isn’t a member of so much anymore.

But what you have the situation now with the likes of Greece and Italy and these kind of Southern members of that year that are struggling, they’re desperately asking for help at the kind of European level. And you’ve got the likes of Germany. Now we’re very much against it because for them they say, you know, we’ve got a more productive economy.

We work longer hours, and we’re German people. We, you know, why should we have to bail out other countries? And so. I think absolutely on all these kinds of levels and on the individual level, on the state level, on the country level, people are looking for exits. They don’t want to have to essentially. Bail out other people, especially when they’re not responsible for all this mess.

And so it’s very interesting. You painted a very bleak, dire picture, and I don’t think that’s because you’re a pessimist or anything. I think of you as an optimistic person that is just the situation that we’re in right now. And so. I guess my next question leading on from this is based on this dire economic picture, what are we the little guys to do?

Kind of practically, what should we be thinking about implementing? How do we ride this, this next chapter, this next wave?


Yeah, that’s a great question. So the, the. The number one concept to understand at the very beginning of all this is this one idea and how money works. It’s both the five minute fix that you know the people in the ivory towers and power in the central banks.

This is the one fix that they could do in five minutes that could keep people incentivized to not leave. It’s also the number one reason that people will likely leave because it’s unlikely to get changed. And the word is, it’s a weird word. It’s not a word that people use every day. It’s Seigniorage.

So a simple way to think of this as senior age, but it’s send your garage. So what does send garage? Well. In a central bank model where you have a fractional reserve currency where you are printing money, right? Uh, the, the question is, when you print money, where does the new money go? That is called . So in a central bank bottle, let’s say that I’m the bank and you are the little guy, right?

And there’s only $2 in the whole world. Do you have a dollar? I have a dollar. So to stimulate the economy, I decided I’m going to double all the money in existence. Right. So there used to only be $2 one for each of us, but now there’s $4 this is where it gets gross. The central banks keep all the new money.

So you went from having 50% one of $2 to having 25% of all the money, one of $4 so your slice of the pie just got cut in half and someone took that other slice of your pie. Right. So the value that you now have got cut in half. So that is just happened around the world, like all of our savings and all of the money we produced by having jobs.

Just got cut in half. Now you don’t feel it right away because you got these weird deflationary and inflationary movements happening. So it might look like things are getting cheaper in the short term, but in the longterm, we’re all super boned for a variety of reasons. But what ends up happening over a long enough timeframe is that your money buys less and less and less until you’ve got a Zimbabwe situation where you’ve got, you know, a hundred billion dollars buys a candy bar.

Right? That is not what any of us wants. And so the question is like, what do you do about this? Well, if you’re in the ivory tower and you’re someone in power, the easiest thing you could do is to evenly distribute, send Uriah value to, all right? We’re going to double all the money in existence. Hey, if you know, if you’re a saver and you’ve got a hundred bucks, you now have 200 bucks.

Right? So you’re not having value stolen from you, you’re just increasing the total number of dollars. Because people do have a very strong unit bias. This is like a part of human nature. People just want more units. They generally don’t think about the total value of those units. We’ve seen that play out in crypto.

I’m sure you’ve seen that play out first hand. Yeah, unit bias is real and it’s profound. Um, okay, so if you’re on the other side of this equation, what do you do? Well, the thing that’s weird is that not all countries are created equally. You have to understand this phenomenon called the Euro dollar. So what is the Euro dollar?

Why is it like the key to understanding how and when currencies will fail? Well, okay, here’s the deal. There is more debt denominated in us dollars than any other currency by a gigantic landslide. So what that means is the demand for dollars is GI frigging enormous. So let, let me put this another way.

Every year, the U S does about $25 trillion of business with a huge amount of that just being debt, right? Like I’m gonna sell you this plane and you’re going to finance the plane and pay for it over 30 years. Right? So that’s part of GDP as part of the transaction that happened is I, I sold you some multimillion dollar aircraft.

Uh, and you know, you gave me a check from the bank, but it’s all based on debt, right? So the, the debt in the U S the GDP, the gross domestic product every year is about 25 trillion with a T, right? The, the demand for dollars outside of the U S is about 66 zero trillion dollars. A year. This is like more than double the GDP of the U S and you have to understand that what this means is that even if these countries, these private enterprises, these institutions default it, you don’t have the same amount of money because when the debt default happens, that money just evaporates.

So you still have demand, right? But you have less dollars now in existence. And so this creates this really ugly feedback loop where what happens is. Unfortunately, you know, the, the dollar collapses last and every other currency collapses on the way, and then when it’s just the dollar in order for the dollar to do all the things that had to do, like have these swap equity lines, it’s been printing ungodly amounts of money that just to keep accelerating and the entire, or some giant portion of the population is dependent on this.

Enormous money printing, which historically about 97 cents out of every dollar that we’ve printed has gone to wall street and friends. 3% has gone to main street. So you have this giant asymmetric money printing machine that has an insatiable hunger, and that the net result is that every Fiat currency that we know today collapses.

The dollar collapses. Last. A Bitcoin is by far in the best place to give us an alternative, but it’s not great, to be honest. It’s not a great currency. It’s a, you know, it has its uses. I admire it. I have been a long time fan of Bitcoin. I’ve studied it extremely in depth, but I gotta tell you like. If the U S dollar fails, is Bitcoin a perfect or ideal replacement?

Not even close and ideal replacement for the U S dollar world economy would be a algorithmic stable coin that has what’s called an Oracle, which understands how much demand. It has, and it is able to print and contract the supply algorithmically, and it evenly distributes that sensorized value. We talked about.

The problem is that can’t exist yet because we have a dependency on this math problem called the Oracle problem, which is that it is impossible to measure objective reality in the meat space today. So what do we do in the meantime? My best guests, just my opinion, not financial advice. Bitcoin, but not at first.

At first it’s the U S dollar. And so the question is timing. Well, you know, just like Bitcoin has blocked time, not discrete time. So discrete time would be like minutes, seconds, block time would be block one, block two. I think that you can look at global events in terms of event time. So like. Instead of being like on January 5th, 2021 this will collapse, which is impossible to know.

What you could instead say is okay, just like there are dominoes, you know, we’re one tips. The next steps, the next are the dominoes. And by my best guesstimation, cause it’s impossible to know, I believe that an early indicator of a flight out of dollars will actually come from a signal of a flight into dollars.

And so one of those very obvious signals to me will be when a G 20 currency fails. And so when that happens, it’s basically like all bets are off. That’s a strong signal to all the other currencies that the us can’t maintain these swap liquidity Alliance to keep other currencies of flow. And they will desperately be looking for something where they can, you know, soften the fall of their currency.

And the, the reason that it’s probably not going to be gold is because of this thing that I just kind of stumbled into. It’s this idea of what’s called a trust discount. So the problem with gold is you have to trust the person holding it. You have to trust that they have it, and then you have to trust that they haven’t, like, you know, had some chicanery with it.

So, you know, uh, the U S in Germany had a big issue a few years ago. Germany had a bunch of golden Fort Knox. They were like, Hey, we want to check out our goal in the U S is like, ah. They’re like, we want to see our gold. They’re like, ah, like we want to cut our golden half and make sure it’s not filled with tungsten.

And they’re like, ah. And so this discount that you have to give people who have a physical object of the meat space, at some point that discount is so big that you don’t care about the volatility of something where you don’t require an Oracle, something where you know for sure that somebody either has it or they don’t have it.

Right? And Bitcoin is the King of that. It is the King of money that doesn’t need a referee if, okay. So working along those lines, then bring it back to where we were discussing earlier. If the economy, what’s fall into some kind of severe recession, how would that affect Bitcoin in terms of both adoption and price and the kind of short to medium term.

It’s not good to be honest. You know, it’s, a lot of people think, you know, Oh, the habiting moon, man, I really, you know, Oh, a recession moon. No, not really. You know, I have tried my best to be a voice of reason, and it’s not just that, like, I’m right, listen to me, it’s like, here’s what I think. Politely disagree with me.

Um, and you know, it’s, it’s not, it’s not nice when you’re right about bad things. It’s not, it’s, it’s not a, there’s no sweetness. It’s straight bitter. Right. And so when I, when I think about some of the bitter pills I’ve had to swallow, like unfortunately being right about the ICO mania, that almost every single one of those things would fail.

It would just fail to deliver anything. Unfortunately, that was true. And a lot of people lost a lot of money because of that. And that, that sucks. Right? Uh, the next one that I put out, a video I think about eight months ago, which was like, Hey, if a global recession is coming, it’s not going to be great for crypto, and it’s going to be extra, not great for anything that doesn’t have real adoption.

And unfortunately, we’ve seen that play out as well, and it’s not good. I’m not like happy about that, you know? But what I’m trying to establish here is that I’m sharing my best map of reality, and I want you to disagree with me so. What does it mean for crypto? Well, I don’t think that the havening as an event will have any positive impact on the price in the long term.

Sure. You know, a, a supply shock for something that has consistent demand over a long period of time is generally good for price, right? That’s all other things being equal. But we live in an emergent, chaotic system where you truly cannot know. You cannot predict the price. So, uh, in my mind, the real question is, okay, well, like.

Who can give us some kind of model about how to figure out longterm value increases. Well, the people who have done it the best consistently are venture capitalists investing in technology. And the, the major difference between like investing in Google before its IPO and Bitcoin is that you can’t sell Google shares until the IPO.

But with something like Bitcoin, you can sell it whenever you want. And so you can have these bizarre, massive oscillations. Because you have this liquidity where you can move in and out. So, you know, I think that you can apply in many of the lessons of venture capital to crypto, but you have to understand that there’s this one gigantic difference, which is liquidity, which has the ability to get in and out, which creates massive oscillations and value in the short term.

So long term, I think it’s just about adoption. And so you have to be looking for adoption and the place that needs. This stuff, and the only place that needs this stuff is the dark net today, you know? Or it’s people who are doing something their government doesn’t want to do. You know, Bitcoin is different things to different people in the West.

Bitcoin is mostly an exotic, speculative bet, right? In a sub Sahara Africa. Bitcoin is a really cheap way to do remittance versus everything else. Um, you know, in Iran, Bitcoin is a way to avoid sanctions, right? And so what you have to understand is what do you believe about the future? Right? So do you believe.

That. Uh, okay. If you believe today, most of the value of crypto is being propped up by people in the West who are betting on things they don’t understand, right? If you believe that that’s the majority of value in crypto, well, if a recession happens, they’re out because they would rather eat than make some bet that they don’t understand.

Right? And I think that this is really what you saw with Bitcoin dominance in 2018 falling to 30% there was just a lot of dumb money just betting wildly and trying to diversify as much as they could. And what have you seen since then? You’ve seen the return to sanity where Bitcoin dominance has more than doubled.

Just let this sink in for a second. And you’ve got coins that were, you know, like some meaningful percentage of crypto market cap shrinking by more than half. You know, you’ve got like. Oh gosh, Ethereum has more than half that. I love a theory. I think of the theorems is an amazing experiment, but you have to understand that as time has gone on, as we saw this ICO mania fade, as we’ve seen, you know, more and more smart money getting in when this would be like a lagging indicator.

You see that more and more of them are massively asymmetrically betting on Bitcoin. Versus any other coin and the way that you can look at this as to look at the Bitcoin investments, or sorry, the grayscales crypto investment trust, and you see that just they publish all their data. Most of the money that from institutions, from, you know, family offices, from prop shops, hedge funds, it’s mostly going into Bitcoin.

So then you have to ask, okay, so if, if that speculator world contributed most of the value, right? Like will that continue to go up or down? Well, it looks like most of the people who have very little money are really just trying to hoard food and are trying to be safe and are trying to be okay. And they just don’t have the appetite for an investment that they don’t understand.

Right. So you’re probably going to see a significant amount of money just. Come off the table. That’s what we anticipated. There’s a video that you can watch. They made about the same months ago. That’s kind of what we saw. Right? But at the same time, you’ve got adoption spiking in places like Africa. I mean, uh, in Africa, Bitcoin exchanges, peer to peer is at an all time high.

It’s enormous in places like Nigeria. You know, you look at places like Iran, yo, people on Twitter, random people that I’ve never met because they know that I study, you know, um, censorship resistance. They’re sending me pictures of Bitcoin mining rigs in mosques. Yo, Iran is issuing licenses to people to come and use their subsidized electricity to run Bitcoin mining farms, like they have army officials who are publicly endorsing and encouraging crypto infrastructure.

They’re publicly announcing crypto infrastructure, and so there is like 100% for sure. Adoption in places outside of speculation. You know, we, you and I have talked a lot about network effects and other conversations, but you have to understand they’re like these three major categories of network effects.

There are speculators, people who are betting on the future price of the thing and don’t actually need it. That’s most of the West when it comes to crypto. You’ve got people who. Like work on the thing. These are developers, right? And then you’ve got people who actually need the thing. So what I would ask is, okay, where does the majority of value come from?

When you study technology investing, it’s people who actually need the thing. It has to solve a hair on fire problem. So let’s go right around to our magical word of the day. Exit. Like is there an increased pressure on people to potentially exit. A scary financial system, obviously. Yes, we all see it. The writing’s on the wall.

You can’t have a stock market at all time. Highs with joblessness also at all time highs. This does not compute like wall street and main street are completely disconnected. This cannot exist for a prolonged period of time. So if you have any savings, if you produce any value, you want an escape hatch.

And the question is, you know, if you were in. Germany during the Holocaust as a Jew, what percentage of your wealth would you want to take with you? None or sob? Well, I can tell you that my grandparents told me this story and they tried to take anything with them. Their pockets were emptied. A gold necklace was ripped off of my great grandma’s neck.

They were penniless. They could not bring a single set with them when they left Egypt to go to Uruguay, like not a single penny, right? Their house was taken, their bank accounts were drained, their business was confiscated. And so I’m not saying that that’s going to happen, but at the end of the day, if you are looking for an escape hatch, right?

We know for sure. Bitcoin is by far the best escape hatch. Currency there is, there’s just none better because of liquidity, because of the infrastructure to give you tools to do it that because of how much it’s been battle tested at this point. And so as you look at the potential increase in actual demand by actual users, not speculators, not developers, but users personally.

Seems to make a lot of sense to me that there’s a very strong case for Bitcoin and asymmetrically Bitcoin over every other crypto. Don’t get me wrong, I think there’s some great experiments out there, but if I’m looking to move wealth out of a scary place into a less scary place, Bitcoin is by far the most obvious bet, in my opinion, not financial advice.


Right, and so kind of extracting from what you’ve said then, if we would have fallen into some nasty recession, you think Bitcoin could take a hit, and I’m assuming that would mean that if Bitcoin takes a hit. Any other outgoings that don’t have legit adoption would be crushed. Is that, is that kind of a fair assumption?


Yeah, and we already saw that, right? If we already, we already saw the beginning of that. Um, you know, I don’t think that Bitcoin is going to go to zero, but you know, I don’t think it’s also, I don’t think it’s going to go to the moon overnight. I think what is a lot more likely is that the really bizarre increases in value will come from government adoption that cause, think about it, like governments have all the money in the world.

They basically use their guns. To reallocate treasure and the treasure they’re reallocating is really about energy. It’s about fossil fuel on the ground. It’s about resources in the ground, precious metals, the rights to do different things with land. You know, it’s about controlling the meat space. And so.

You know, these folks still sit on enormous amounts of treasure, even if you don’t like the pieces of paper they use to coordinate activity around that treasure. So, I mean, there’s still going to need a way to coordinate. And you know, if the, well, not even if, when the trust discount and other money and other assets that require holding those assets, when the trust discount is too big, the volatility of something like Bitcoin doesn’t matter anymore.

And that’s, that’s when I think the really big moves happen. So I, I actually think that governments. We’ll drive the biggest increases in value of crypto. I don’t think governments are going away. I think Fiat currency is very likely going away. It’s impossible at the time, but I think you should be watching the G 20 currencies looking for one of those to fail because when it does, you’ll see a flood into the dollar.

And when everybody’s looking left, I like to look right and look at what’s next. And so the dollar can only maintain that insane printing for a finite amount of time before. The, the very few remaining value producers and savers are like, yo, this is too hard. I’m out.


It’s really interesting. You’ve presented such a strong case for Bitcoin cause I know that you said before, you’re not a Bitcoin maximalist.

Do you want to try and approach this from a kind of objective standpoint? Um, devoid of any ideology, cause I know you’re not a fan of that. You’d like to think for yourself. People will have noticed that there’s been very little mention of any other coins, not even a theory them, even though you’ve spoken very positively about that in the past.

And so I’d like to just touch on that for a moment. And so even in the context of ease 2.0 potentially launching soon, the beacon chain sometime this year, right. And you’ve got the defy, is that not enough, I guess to satisfy what you’re looking for with the kind of wider economy in mind right now?



So first of all, a huge shout out to everybody who’s ever worked on a theory. What an amazing experiment. You know, humanity is better off for X, Ethereum having existed. Thank you to all the speculators who put money into it, which attracted more developers to it. I think we’re all better off for a theory them having existed.

With that being said, I think we got to very politely disagree with the narrative. So let’s, let’s tear it apart, right? Let’s just like be as objective as possible. When you’re betting on a technology, you want that technology to eat a market that is inelastic, meaning there’s no seasonality, meaning no matter how good or how bad the economy is, the demand is only consistent or growing.

That is the ideal investment you want to invest into inelastic markets. So has Bitcoin found an inelastic market that it’s the King of? Yes. The darknet uh, Bitcoin is without exception 100%. The King of the darknet and it is unit like you just, uh, in a one way trajectory gaining dominance there. It’s, it’s just the way it is.

It’s just objectively facts. We can look at it, we can quantify it. We can all agree on it. Uh, what about Ethereum has a theory of eaten an inelastic market. No. I’ve been studying a theory in depth since before it was released. I think I first heard about a theory in 2013 I was part of the early pre-sale.

I’ve been a huge fan of metallics and the whole community over there. It’s nothing short of amazing. But you know, Ethereum had like two big elastic markets that it found, but they were elastic. It found . I mean, the very first tutorial for how to develop the theory and was how to make your own coin and Whoa.

And that one turned out to be a wacky ride, right? Like most successful tutorial ever. Uh, you know, in software. And so, uh, you know, it’s, it’s been a really weird situation because you had this ICO mania that really got exploited. By, you know, groups that were basically like, look, any human can come to us.

Slap your name on the front of this, project your picture so that the authorities know who to pursue for liability, and we’ll take care of the rest for a, you know, 20 to 50% fee. You don’t have to do anything other than take on this liability that you don’t understand and we’ll do the rest. So that happens.

Right. And a lot of people got separated from their money, which is really unfortunate. You had a lot of crypto cults, a lot of narratives, a lot of human nature got preyed upon by people who understood it, unfortunately. So I CEO’s came and went, right. Ric is still happening. Yeah. But not really in a meaningful way.

Uh, have any of these ICS delivered? Extremely few. Well you can, you can count them on your hands, right? It’s just like so few IKOS have turned into projects that are still alive, still shipping code or like getting developers to pay attention. It’s a very small number. So, okay, there’s ICS of water. I defy.

So when you look at defy, what you see is that defy is exclusively with no real exceptions, just leverage long positions on Ethereum price. And so implicit meaning it’s a silent bet. That goes along with every Ethereum defy contract is that you believe that Ethereum will outperform the other side of whatever that contract is, which unfortunately has not been the case.

And what gets even worse is a lot of people don’t realize that they’re going to get liquidated. Meaning they, you know, they follow some utuber who says, you know, get as much theory as you can put it in a contract. You know, get some dye, do another contract. Just go in circles. It’s going to be great.

You’re going to be rich. And then the price moves against them. They didn’t know that they were going to lose all of their Ethereum, and they’re like, I just lost my life savings because I didn’t understand what I was betting on. And so the problem with these leveraged long positions on defies, they’re expensive.

You can get cheaper leverage. In CFI centralized finance. And so there are some like legit innovations inside of defy, like there are these flash loans, which are amazing, but defy is like not an inelastic market. It’s just an expensive leveraged law position. I do not mean to belittle the amazing work and all of the incredible learnings that are happening because of defy, but it’s a speculator as a long view speculator.

I’m not a day trader as somebody who invests for a piece of technology. Solving a hair on fire problem in an inelastic market. It’s not there for theory. Does that mean I’m like dumping any Ethereum I may have purchased? No, I’m just not buying more. I look. Is a theory worth paying attention to hundred percent it’s got this insane developer community that’s so good.

It’s got, you know, like some real advantages. But the thing you have to understand about a theory is that Ethereum was not designed to solve any specific problem. And because of that, what they did is they made an amazing general purpose tool. But because crypto is so hard, what ended up happening is.

Ethereum could. It couldn’t solve any specific problem that had inelastic demand well enough. They could replace a centralized version of it. Now, will that change with the theorem 2.0 no one’s made a case that I believe yet? Look, I’m, I’m still a fan of Ethereum. When Ethereum staking is a real thing, I’ll be staking, you know, I’d love to maintain my very tiny proportion of the Ethereum pie that I own.

I think that Ethereum is definitely a project with paying attention to because the value, if they ever do figure it out is going to be super duper high. Even if it’s for like. One niche type of contract. Um, but you know, the, it’s like the, the weird thing about Ethereum is that people like, Oh, it’s just like Bitcoin.

You know, it could be used for all the same things as Bitcoin. We’ll look at the dark net. Bitcoin, like for most of the exchanges that we measure that were using Ethereum last year, they’ve either like gone away or they’ve stopped accepting Ethereum for the most part, which is really bizarre. You know, we’ve counted several months.

Where some of the major exchanges, no vendors except Ethereum on the dark net. Let that sink in for a second. Right? Like the one place that needs needs underlying bold, italics needs crypto. It’s not using Ethereum, right? Like who’s using a theory? Well, right now. It’s, you know, some IKOS, which unfortunately the demand has been elastic and it’s way down.

You know, you’ve got defy projects, which unfortunately are very tied to the price of Ethereum. And so, you know, I, I love it theory them technically, but as a speculator, I’m just waiting for it to find some market where, you know, the demand for that is inelastic and it’s, it’s better served by a theory than by a spreadsheet.

Yeah, that’s very well said. I’m just trying to imagine the people at home who might be quite saddened by what you’ve said about Ethereum so far. And so I guess almost kind of played devil’s advocate, and I would love to hear your kind of response to this. I guess you could say. Well, the thing about Ethereum, because it’s such a generalized platform and because there are so many developers on it.

You can almost see us like a probabilistic bet that at some point there will be some decentralized application that will have that kind of, um, hair on fire problem being solved. And it’s almost just like a kind of near inevitability that you will get that. And so that’s almost a kind of speculation on that scenario.

Would you say that’s kind of reasonable or would you disagree with that? Somewhat. I th I think your thinking is good. I think the general approach is correct, but I think it might also be helpful to go one layer deeper. Uh, I am barely technical, I’m technical enough to get myself into trouble. And then I am technical enough to recruit friends to help me get out of it.

So I am going to give a gross oversimplification of a technical part of Ethereum that I’m probably going to butcher and I invite the people in the comments to correct me, cause I’m sure there’ll be parts of this that are incorrect. So when you think about the theory at the very lowest level, the data structure where the information is kept, the question is.

Is that data structure going to allow a theorem to solve one specific problem better than a Mitch. Smart contract. So, you know, if we look at other protocols that are out there, like handshake for example, you know, you had a bunch of people who were working first on Bitcoin, then on a theory, them leave Ethereum and go to this new thing and this new thing.

It doesn’t have a smart contract language. Not really. It has this. Or sorry, it doesn’t have like robust smart contracts. It has extremely simple smart contracts called covenants, and because these things are extremely purpose-built because the data structure is like very specifically designed to solve one very niche type of contract, which is naming contracts, it’s, it’s able to solve those.

Orders of magnitude better than you could solve with Ethereum because the data structure is purpose built for one specific problem. And as much as I love a theorem that might be its coffin nail is that because it’s designed to solve any problem, it can’t really solve a specific problem. And then not only can it maybe not solve a specific problem better than a centralized solution, but.

You know, you may just find that this idea of a general purpose data structure just never allows it to solve that one specific problem good enough. Versus either a centralized solution or a niche data structure like what happened with covenants. Um, and so, I don’t know, you know, the jury is still out on a theme.

I think your thinking is right, but I also worry that a theory is. There’s so much brain juice being poured into making it wide that unfortunately it might get out competed by a narrow competitor. Like we’ll, we’ll watch how, uh, ENS does the Ethereum naming service does versus something like handshake.

The jury is still out. It’s still early, but you know, the, the early games, not in the theory of his favor there. That’s very well put. I guess you could almost summarize it as. Yeah. We’ll have to leave the market determine whether it prefers specificity and kind of single niche operations versus interoperability and whether the market favors this idea of Lego money, which I know people have spoke about.

And so I guess we’ll just have to leave that because it’s up to the market decide ultimately. Right? Yeah. But I mean, on the flip side, the reason to pay attention to a theory is that if it works, the prize is so enormous that it’s worth paying attention to even even if the chance of it finding product market fit.

And an inelastic market, even if it’s small. I mean, the, the good that it can do is so gigantic that it’s worth paying attention to.


Ah, that’s brilliant. I feel like we’ve done a fantastic job of covering both the wider economy and crypto before we ultimately kind of wrap things up. Now for this podcast, one of the things I admire about you is that you are a very inquisitive, curious person.

You love learning new things, and every time we meet. You’ve always developed some new skill or you’ve been learning about something outside of crypto. I was wondering, since we met last in 2019 what have you been learning? What else have you been kind of exploring?


Well, you know, since the world started melting, um, I’ve been really curious about the basics, so how can you make sure that you have food.

And water. So one of the things I’ve been getting into is gardening. So I have, you know, I did a little research. I found out that, uh, the fastest, easiest, cheapest way to grow food is a vertical aeroponic garden. So, you know, you have a tower with a bunch of plants in it and you put it outside, you know, you have like a little hose at the top that kind of sprinkles it with a little bit of water and you end up getting plants that grow like 20% faster.

They grow like twice as large and they require like 90% less water. And so I’ve been, uh, I’ve been gardening, which has been an interesting experience. Um, I really want to, like, my goal is, okay, if, you know, we have supply chain issues, how do I feed my family? I’m not going to grow all of my own calories, but I think if I can buy some boring source of calories.

Olive oil. Olive oil is extremely calorie dense. If I could just have like vehicles for that olive oil, like things to put the olive oil on top of, right. Whether that’s leafy greens or you know, like peppers or whatever, then I can at least like have some variety, you know? Maybe I’m only producing like 20% of the calories I’m eating, but you know, mixed with some boring source of calories that I can still get access to, I’ll be okay.

So it’s really just been about exit. I mean, that’s my whole thing right now is like what are the essentials? How do you in a day learn enough to get started? Whether you’ve got a big bank roll or no bank roll. And that’s honestly, that’s been my new hobby is just learning how to exit. That’s great. I think a lot of people out there, including myself, that guilty of associating.

Gardening with something that you do on your attire sort of thing. Right. But I think now more than ever, it’s actually quite important and it’s a useful skill to possess. So I might have to give that a go myself. And so just the, you know, end things here.


One thing I want to do at the end of this podcast is ask my guests.

So you, in this case, to share one most kind of powerful piece of advice for crypto investing or investing generally. And then also one piece of advice you would offer about life. So if you could please do that, that would be awesome.


Oh man. Um, well, I think it’s in all things in life, it’s important to be skeptical and to not believe the hype.

And that’s especially true in crypto. So if I was going to give one piece of crypto advice, I would say go talk to the people who actually need the stuff, not the speculators, not people betting on it. Talk. Talk to the people who actually cannot exist without it. Understand how they use it. Understand how long they hold on to it.

Understand. How and when they get rid of it. Um, just talk to those people and you know, the way that you can find those people go on to Reddit. Go look. Imagine you’re that person who has that problem. Where would you go to solve that problem? And then just try to set up Skype calls and like actually talk to them.

Um, like figure out how many of these people exist and try to talk to as many of them as possible. So that’s my, that’s my crypto advice, which is be skeptical. And now here’s my life advice, which is like an extension of be skeptical, which is. Don’t be afraid to throw some spaghetti against the wall. So a lot of this stuff seems impossible at first, right?

Like, Oh, I have to find stuff and I have to talk to people. Yeah. It’s going to seem overwhelming at first. Whatever it is, whether it’s. Learning about crypto adoption or you know, approaching some person that you find attractive or making a friend or whatever, like there’s tons of scary stuff in life, but you just gotta try it and you got to understand that you’re probably going to fail more than you’re going to succeed.

But try to replace that word fail with learn. So in life, you either win. Or you learn, and I think we had to diddly all understand that it takes a lot of learning before you win. So just approach every new experiment with the mentality that you’re ready to learn.