George Gammon On Elon Musk Hiring Controversial Twitter CEO | PBD Podcast | Ep. 268
PBD Podcast Episode 268. In this episode, Patrick Bet-David is joined by George Gammon, Ran Neuner, Adam Sosnick and Tom Ellsworth.
FaceTime or Ask Patrick any questions on https://minnect.com/
0:00 - Start
8:05 - Fed Predicts The Unemployment Rate To Rise Above 4.5%!
35:43 - Will We Reach a 15% Unemployment Rate?
50:47- Will The U.S. Default On Its Debt?
1:06:57 - Will The U.S. dollar collapse?
1:14:40 - The Future of Gold
1:22:20 - Reaction To Elon Musk Hiring Controversial Twitter CEO Linda Yaccarino
1:54:08 - Reaction To Trump CNN Town Hall Appearance
2:03:45 - Bud Light Suffers Big Loss After Endorsing Dylan Mulvaney
2:21:58 - Ran Neuner On The Dangers of CBDC
Follow Ran Neuner on Instagram: https://bit.ly/3Mslzru
Follow Ran Neuner on Twitter: https://bit.ly/454oiPh
Subscribe to Ran Neuner's YouTube channel "Crypto Banter": https://bit.ly/451Mcur
Check out Ran Neuner's website CryptoBanter.com: https://bit.ly/451Mcur
Subscribe to George Gammon's YouTube Channel: https://bit.ly/3Obw1ox
Subscribe to the Rebel Capitalist YouTube Channel: https://bit.ly/42UQ8LH
Visit George Gammon's website Rebel Capitalist Pro!: https://bit.ly/3IdzwHn
Visit TheCollectiveAdvisors.com: https://bit.ly/41C9dkQ
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Patrick Bet-David is the founder and CEO of Valuetainment Media. He is the author of the #1 Wall Street Journal bestseller Your Next Five Moves (Simon & Schuster) and a father of 2 boys and 2 girls. He currently resides in Ft. Lauderdale, Florida.
Why would you plant on Goliath when we got pet taved?
Value payment, giving values contagious.
This world of entrepreneurs, we get no value to hated.
I didn't run, homie, look what I become.
I'm the one.
Okay, so if you've hit the gym today, by the time this podcast is done, your brain is going to have a workout because these two guys are some of the sharpest guys online when it comes down to talking economics.
Both of them have a big YouTube podcast show you'll find everywhere.
One of them is George Gammon.
I think, George, I've been on your show before a couple years ago.
He's a renowned American real estate investor, entrepreneur, YouTuber, and teacher schooling, macroeconomics.
He creates and stars in the Rebel Capitalist Show.
He doesn't believe in capitalism.
He believes in free market capitalism and the Fed.
It's his hat here.
And then the other gentleman that's here with us is Ran.
I was with Ran and Scaramucci.
And who was the other gentleman that was with us?
I actually remember the Scaramucci.
It was Mark Yusko.
It was Mark Yusko.
We had a really good time.
And like I said to you, great host.
He's a co-founder and CEO of OnChain Capital, a blockchain investment fund and advisory service.
In 2017, he launched CryptoTrader, the world's first televised cryptocurrency show featured on CNBC.
Today he is the host and executive producer.
The show has had huge success and is the most viewed show on the channel today.
His show is called Crypto Banther.
Yes, Crypto Banter and Rebel Capitalist.
Thanks for coming on being on the People Podcast.
Thanks for having us.
It's great to have you guys on.
You live where?
You're based out of... South Africa, Cape Town.
And you're out of... Medellin.
So neither one of you live in the States.
No.
I thought for sure you would live in California or Portland or New York or some blue states.
I actually left South Africa a couple of years ago, came to live in the States, spent two years in New York, spent a couple of months in Miami, and then went back to South Africa.
That's a story for another time.
And you're not leaving.
You're staying put.
I may come to Florida.
I have an affair with Florida.
I love an affair with Florida.
I love Florida.
So how about yourself, George?
You're staying put?
You're not moving?
Medain?
Yeah, you know, I went there originally in 2014 just for investment opportunities, and I saw the weather.
Perfect.
Food was amazing.
People were awesome.
Salsa dancing.
Adam knows what I'm talking about.
Yeah, I had an opportunity to go with George to a night out in Medellin, dinner in a movie.
Is that the time you guys went to that church and the pastor was giving great previously?
I heard you're praying.
It was a great time.
Incredible message.
Well, look, for guys who are, you know, the guys that listen to the podcast, we haven't done a podcast since last Tuesday.
It's been a crazy week.
Maybe we'll talk about some of the stories.
We had a great conversation on Thursday with someone.
Maybe we'll kind of get into it in a minute here.
But more importantly, today, I have so many stories I want to go through with you, with Tom, with Adam, with Rand, with all of you, economy-wise.
But if you don't mind for the audience that doesn't know you, of course, I give the intro here.
Well, maybe take a minute and give your background of what you've done in the past, where you are today.
Both of you will start with you first.
Yeah, so I retired in 2012 as an entrepreneur, a long-time entrepreneur.
And I didn't know anything about the Fed, the yield curve, nothing about macro at all.
But I knew that I wanted to invest my own money.
I didn't want to delegate that to a financial planner.
So I started studying.
And the first stuff that I came across, the first content I came across is Milton Friedman's Free to Choose series, going back to the 1970s and the 1980s.
And that just hit me like a bag of bricks.
I mean, it just really, really resonated.
So from there, I went to Thomas Sowell.
I started studying guys like Jim Rogers and Doug Casey and Rick Rule and Peter Schiff.
And I just became completely obsessed with it.
And it became my passion.
And then in 2019, I started the YouTube channel.
And that grew for whatever reason, that grew very quickly.
It still kind of amazes me that people actually want to see me talk in front of a camera, but for some reason they do.
And then we started another channel, the Rebel Capitalist channel, when the whole mandate thing came out.
I was really pushing back against that.
And that channel was really set up and designed to do that.
And now we turn that into a podcast that's doing really well.
And that's how I got to where I am today.
We just had our live conference this past weekend where we had Schiff and Mike Maloney and Lynn Alden and Snyder and Brent Johnson.
A lot of people.
Kiyosaki is there.
Kiyosaki was there.
Yeah, and it's just become this movement that I'm very proud of.
I love it.
I love the work you do.
When your stuff pops up and I'm listening to it, I get smarter by the time I'm done listening to what you have to say.
Your views are very, you're a good teacher in the way you explain things.
And it's obvious why you're growing.
How about your story?
Typical entrepreneur story, I think.
Dot-com raised money for an internet startup.
I was supposed to start an online wealth management community.
Blew myself up in the dot-com bubble.
Went insolvent for the first time.
Built myself up, built and sold the biggest marketing and advertising agency in Africa.
Very big acquisition in Africa, over $150 million.
And then went into cryptocurrency full-time.
And when I went into cryptocurrency, there was no information.
I was looking for information in 2016 and 2017 and there was zero information.
Somehow I convinced CNBC to let me run the world's first televised cryptocurrency investment show.
And we went live.
We ran the show for a couple of years.
And then I realized that media and the way that CNBC were doing it is not the future of media.
So I broke away and started my own 24-7, 365 crypto media platform.
You were talking 24-7.
That's a lot of work.
I talked 24-7.
No sale, babies.
Five-minute break here.
We'll be back.
Exactly.
Wife's pregnant.
Exactly.
You know how to do it, right?
No, of course.
I got four, too.
Between the two of you, eight kids.
Me and George, we're at zero.
You guys are on.
Yeah, we got to catch up.
We got to catch up.
Yeah, so today we run Crypto Banter, which is a crypto media channel.
An amazing community.
We're building towards 24-7, 365 credible crypto streaming content.
We do about five hours a day now.
And yeah, very strong community.
One of the most loyal communities in crypto.
Having the time of our lives.
I love it.
Listen, if you're able to create content, have fun, and you have a different point of view, you will find the audience eventually.
This game is a very honest game.
If you don't do it right, they will tell you.
If you do it right, they'll show up.
I agree.
And it's a ruthless game because if you don't do it right, you can get canceled in a minute.
But I think more importantly for me, the first time that I built a business and I needed to exit, I was working with a goal in mind and I had something to prove.
And this time, I'm actually just there because I'm having a lot of fun.
And it's like, I can't imagine having more fun.
I just can't imagine.
It's a very different mindset the second time around because you just do what you love and everything falls into place.
And the first time around, you've always got something to prove.
I got to tell you, it's very impressive that you have four kids and you're only 27 years old.
But I respect it for you.
You started early and it is what it is.
So how about we get into some story?
We've got a lot of them to cover here.
Since you guys are all a lot of economy, we got a lot of economy stories to get into.
Let's start off with jobless claims from Fox Business.
And then we'll do some Musk with the new CEO.
We'll talk about Tesla stock.
We'll talk about U.S. Treasury's inflation, Apple's new card, Jamie Diamond with the debt default that people are concerned about.
Bud Light parent company stock downgraded by HSBC.
We'll talk some blockchain.
We'll talk some Federal Reserve with the Fed now.
And some other stories in the back is what we'll get into with CNN Chris Lake, CNN Town Hall.
We haven't responded to the CNN Town Hall president, a bunch of other things.
Let's start off with jobless claim rise sharply to highest level since 2021.
Again, this is a Fox business story.
Let's see this year.
The number of Americans filing for unemployment benefits last week reached the highest level since 2021 with initial claims surging to by 22,000 to 264.
This figure is well above the pre-pandemic average of 218 claims and marks the sharpest level of jobless claims since October 2021.
Continuing claims, which represent Americans continuously receiving unemployment benefits, rose slightly to 1.81 million, indicating a potential cooling off in the historically tight labor market.
Economists anticipate further increases in unemployment as a result of rising interest rates, leading to potential reductions in consumer and business spending.
The Fed's projections suggest that officials expect the unemployment rate to rise above 4.6% by the end of next year, up from a current 3.5%.
This could result in over 1 million job losses by the end of this year.
Tom, what are your thoughts on this story?
Well, this is exactly what the Fed wanted to cause is whether they're the direct cause of it or it's now we're going through a cycle because we had overhired in 2021.
But this is what the Fed wants to see is rising unemployment.
And jobless claims is where it starts.
What's really interesting is right now the unemployment rate, according to government, is 3.4%.
And so that's 5.7, almost 5.25 million people unemployed officially.
But then we have this 1.9 million jobless claims in there.
So when you look at this and say that the last week, the week's claims is 264,000.
That's like 25% of the current jobless claims.
So it looks like this is inflating.
LinkedIn came out.
Yet another tech company just laid off a little under 1,000 people.
And the list of tech layoffs, we had a couple sheets in here.
It was just incredible.
Morgan Stanley 3,000, 3M 6,000, to name a couple companies that were outside tech.
The headlines have been tech layoffs, but it's all coming.
And people have been asking, what does this mean?
Does this mean the recession is here?
Remember, that's what they're asking.
Does this mean that he keeps interest rates flat in June when he gets along?
And we found an interesting chart here really quick.
Malik, do you have the blue bars?
Malik.
Just to give some context to what Tom's talking about when he said this is what the Fed wanted, I believe you're referencing the showdown almost between Jerome Powell and Senator Kennedy of Louisiana when they had a little thing going on.
His character talking about Federal You're saying you want joblessness to go up.
You want people to be upset and out of work.
Yeah, once you can kind of get past the almost like Wiley Coyote looking thing, what do you think about that?
Well, first and foremost, he's talking about something called the Phillips curve.
So back in the Phillips curve, they had this idea where there was an inverse relationship between the inflation rate and the unemployment rate.
So if the unemployment rate was low, then inflation would be high.
And if the unemployment, as the unemployment rate got higher, then inflation should come back down.
That was totally debunked in the 1970s, but for some reason, that's still part of their playbook.
Now, one thing I'd also point out about jobs, if you go back a couple weeks or last Friday, I think it was, the non-farm payroll came out this blowout number, right?
But then they also revised the prior two months down by like 150,000 jobs.
And I also saw a chart on Twitter that was very interesting.
This chart was how many consecutive months that the actual number exceeded expectations.
And it went back, let's say, 20 years, right?
And the most it got up to was about four or five months consecutively where the actual number exceeded expectations.
Now we're on 13.
13.
I mean, it literally goes off the charts.
But what they do is they've been revising down every single month prior.
You see?
So, when you think about it, it seems like what they're doing is they're coming out with a blowout number just to make the administration look good.
And then the next month they're just revising it because they know that no one will pay attention to that and they'll just sweep it under the rug.
So, if you look at the revisions as the actual number, then they jive a lot more with this story that you're reporting on than the actual headline non-farm payroll.
So, it's very suspicious to say the least.
I love that you use the word suspicious because I completely agree with you.
And I also saw the you sounds like you're reading it the same way I was.
About two months ago, they had gone in and revised the definition of seeking work.
And it was actually 5.1 million had, quote, given up, and so they pulled them out of the 166 million total workforce that they estimate, right?
Yeah, 62% participation rate, about 166 million people in the workforce.
And what they did, they pulled it out.
But if you put the two together and you doubled it, the unemployment rate, instead of being at that point four, would have still been closer to seven and three-quarters.
Yeah, yeah.
And the birth-death model.
Correct.
I don't know if you saw that, but I don't know if you guys want me to explain that.
But there's something, there's an adjustment for the headline non-farm payroll.
It's just birth-death.
So, what they try to do is not human beings, it's businesses.
So, what they try to do is guess how many businesses were started and how many businesses failed within that timeframe.
And then, since that's, I don't know why they can't report, but for some reason, those brand new businesses can't report, so they have to guess as to how many jobs were actually created based on how many LLCs came into existence.
And what's odd is they just assume that every single LLC that's created has X amount of employees.
And you know, as an entrepreneur, that's how they're guesstimating.
Yeah, that's one of the ways they do that.
And so, I saw a lot of people that I follow on Twitter that I'm friends with that are very, very smart.
Yeah, and they took out that adjustment for the birth-death model.
And then, if you do that, then it was basically zero and it was much, much lower, which will most likely next month get revised even lower than that headline number.
So, it's all this kind of financial engineering, so to speak, that's making the jobs numbers look as good as they can.
And keep in mind, that's the only thing that the Fed and the central planners and the Janet Yellen types have to say, hey, look at how great the economy is, because every single other metric that they have, that even the Fed said like a year ago, that this is how you tell if we're in a recession.
I'm referring to something called a near-term forward spread.
I can explain that if you'd like me to.
But they used to say, Well, this is what you have to look at.
This is what you have to look at until that inverted.
And then, like, no, don't look at that anymore.
Look at that.
Yeah, what are we seeing here?
Yeah, look at what's happening.
What do we say now?
So, this is all they've got left is the unemployment rate, and that's why they might be kind of using these types of financial decisions again.
Speaking of suspicious, we did this on the podcast two weeks ago: how Biden created 10 million new jobs, whatever the crazy number was, Rob, you probably have the link.
But it turned out it was just people who basically were fired during COVID and then just got their jobs back.
These aren't really created jobs.
So, it sounds like you can inflate a lot of these numbers.
What do we expect?
I mean, it follows the process.
You first increase interest rates.
We've had the fastest interest rate increases since anyone can remember.
Naturally, that's going to bring down inflation because spending is the first thing that stops.
And only after spending stops do people stop hiring people.
And so, the job numbers are coming down.
They are manipulated.
And they lag and they lag.
They lag.
But I think more importantly, I think this is probably the more important thing.
The Fed's mandate is based on a concept which was debunked.
So the Fed's mandate is based on inflation and unemployment.
That's what the Fed looks at.
And if you've been looking at what Jerome Powell has been doing and saying, no matter what happens around it, no matter what we think about the banking collapse or whatever else, we're focused on inflation and we're focused on unemployment.
And that's really where the focus area is.
And I think that the mandate of the Fed for this kind of scenario is probably wrong.
And I mean, I like this in the Fed, but I think the mandate needs to be redefined.
Yeah, and another thing that's interesting on the topic of unemployment is one of the presentations from this weekend, a good friend of mine, Jeff Snyder, who's probably the smartest guy I've ever met, he looks at those curves, like the near-term forward spread, which is basically the current three-month treasury yield minus the three-year treasury yield that the market expects in 18 months based on a variety of factors.
The price 10.
Well, the yield.
So you look at the current three-month yield compared to what the market is predicting the three-month yield will be in 18 months, and then you subtract that.
And right now, there's like a 200-basis point inversion.
So what the market is saying is that they're predicting in 18 months or within that timeframe, the two-year, or excuse me, the three-month treasury yield will be 200 basis points lower than it is today.
So then he said, you've got to sit back and ask yourself, what does that mean?
If the three-month treasury yield goes down by that much, what would the economic environment have to look like?
And where would the Fed have to have interest rates as a result of that economic environment?
And some of the conclusions that he came to is he thought that unemployment would be at double digits by the end of this year.
Double digits?
Double unemployment.
Double digits.
And he thought based on that and based on the yield curve, the normal yield curve and the near-term forward spread and the Euro dollar futures curve and whatnot, that the Fed would most likely be at 0% by the end of this year.
What you're saying is pretty shocking.
You're saying it's at 3.5% now by the end of the year.
No, no, the Fed funds is right now.
I thought you were talking about unemployment rate.
Well, yeah, I am.
I'm sorry.
I've talked about unemployment as well.
So unemployment goes from 3.5% to double digits by the end of this year.
And the recession that's producing that causes the Fed to take rates, Fed funds, down from, let's say, 5% all the way back down to 0%.
And then think about what type of economy, think about the banking crisis.
Think about the black swan event that we would have to have in order for the Fed to drop rates that quickly.
And another thing that I would add, there's a big psychological component here, right?
Because you guys, if you study history, you guys know that history remembers Paul Volcker very well.
It does not remember Arthur Burns well, right?
And he was the Fed chair that preceded Paul Volcker.
Everyone thinks that he didn't have the balls, basically, to take interest rates high enough to break the back of inflation.
And sure enough, Paul Volcker comes in and he had the wavos to get in there and do what needed to be done, even though it was very unpopular.
So if you're Jerome Powell, who do you want to be remembered as?
Obviously, Paul Volcker.
So from a psychological standpoint, that puts him in a place where if he's going to err on one side or the other, he's going to err on the side of taking rates too high.
But you see, the market knows that.
And even when you include that psychological component, they still are betting that he's going to take rates almost down to zero or around that area by the end of this year.
No, the market, the market.
Because if you look at how the market is placing their bets, the bond market, as an example, that's what they're saying is going to come to fruition.
And the bond market is the smart money.
I mean, if you look at just the basic yield curve with the two-year Treasury and the 10-year Treasury, you can take that all the way back to 1950s.
And that has almost 100% accuracy.
When that inverts, 99% of the time, you get a recession.
Now, what's interesting is right now it's still inverted.
So the two-year Treasury yield is higher than the 10-year Treasury.
But the stuff doesn't hit the fan when the curve is inverted.
It hits the fan when the curve is no longer inverted.
And what usually happens is you have a bad invert, or when the yield curve steepens, you have a bad steepener and a good steepener.
The bad steepener is when the two-year goes back down below the 10-year.
And almost always, that's a result of the Fed dropping rates as a result of some sort of crisis situation.
So those people that think that if the Fed drops rates, the stock market's going to rip higher, that unfortunately, they're on the wrong side of history.
And they might get a rude awakening, to say the least.
The bond market is right more often than the Fed narrative is right.
And if you're looking at what the.
And the yield curve is almost always right.
Always right.
And if you look at what the Fed narrative is now, the Fed narrative is now we're going to continue raising until the data says otherwise.
But I think Paul Tudor-Jones was on CNBC today and he said, I wish they would say something like what they really wanted to say.
So I'm not a big believer in the Black Swan event, which you which you spoke about, but I do think that there is something else that threatens the job market and could cause mass unemployment.
And I don't think it's going to happen in the next three to six months, but I do think it's going to happen in the next 12 to 18 months.
And that's AI.
So I think no one is forecasting for the dramatic change that AI is going to have on people's jobs.
Because right now it's just chatbots and we're seeing the beginning of it.
But remember that AI technologically does that.
And I think that that's going to cause a lot of people to lose their jobs.
And I don't think we've recreated the jobs, the new jobs, as quickly as we're going to lose the old jobs.
And I think that's a big thing that we've got to look out for.
As I say, I don't think it's three to six months from here, but I do think that 12 to 18 months from here, we've got a massive jobs problem.
And we're going to have a lot of unemployed people.
Yeah, but you layer that on top of the $21 trillion time bomb, which is commercial real estate.
I mean, let's not forget about that.
We see Silicon Valley Bank going bust or signature, all these regionals.
Well, who do you think finances all these commercial real estate deals?
And keep in mind, you know this, when you do a commercial real estate deal to buy a 40-story building or something like that, you're not getting a 30-year fixed rate mortgage.
You're taking that out with maybe two-year debt, maybe five-year debt.
And within the next, I think it's within the next two years, you guys might know.
I think there's like $2 to $2.5 trillion worth of commercial real estate that needs to be rolled over debt, right?
So if you think about where you got that debt to begin with, was these regionals, and they're all going bust.
So when you go back to that regional bank, you think that they're going to be chomping at the bit to give you a loan?
Absolutely not.
When that just blew a hole in their balance sheet.
So if you can even get a loan, there's going to be a massive risk premium on there.
In other words, the interest rate is going to be extremely high as your cash flow has gone down because your occupancy rates have gone down.
The cap rates have gone down because the treasuries have gone up in yield.
And that's going to, you know, cap rates are going to follow treasuries because that's a competing asset class.
So basically, you have your expenses going way, way up.
If you can even get debt to roll over and your income is going way, way down, your equity is going down because cap rates are going up.
And this creates a whole big problem.
I mean, personally, I don't think that we're over the banking crisis.
I think we're probably in inning two or three.
Inning two or three.
Yeah, and you look at Europe and the commercial real estate is just as bad over there.
Yeah.
So I mean, they started with credit suisse, but I wouldn't be.
there's nowhere to go.
Three years ago, you'll commercial real estate.
I agree that we're ending, ending, ending two or three.
Yeah, and it's going to be pretty bad because you look back at two years ago and what paper did I have at LIBOR plus X?
Now look where LIBOR is.
It's impossible to refi.
I can't refi it.
And my asset value just is Pick a City is taking anywhere from what, 17 to 33% down in the U.S. market and cities.
We saw that building in San Francisco had a it's got a 330 million dollar asset value and a bunch of paper that's underneath that building.
And they were expecting it to go sub 100 in a 60 million.
Yeah, they're just going to give the keys back to the bank.
I was reading a statistic the other day that if you combined all the occupancy in New York City, you'd have 34 Empire State buildings.
And think about that.
What a statistic.
But it does mean that we're getting to the end of the tightening cycle.
And it does mean that we're going to get into an easing cycle much quicker than Fed's letter.
But let's not forget the interest rate fallacy that Milton Friedman points out, that when interest rates are low, that means, usually that means money's tight.
And for a lot of small businesses, that means the interest rate's infinity.
Yeah, I mean, I hear you.
But we're getting to the end of the cycle.
We're seeing jobless claims start going up.
We're seeing real estate starting to come down.
And that's usually the end of the cycle in the beginning of the new cycle.
So I think that the tightening cycle, certainly, in my opinion, is that I think it's close to done.
I agree with Paul Tudor-Jones.
I know you guys had it up there, but I agree with Paul Tudor-Jones, and I think it's close to done.
Yeah, yeah, I would agree.
Tom, were you going to say something?
Yeah, the period at the end of the sentence is I wanted to step back from the numbers and manipulated numbers.
I really wanted to know what the consumer thought.
So I dug in and I found this, if we can go to it now, the blue bars.
And what it did is it broke up the generations right now.
And then it said, okay, what do these generations feel about job security?
Well, if you run a national poll, 53% of people in America are not worried at all about job security.
Then you peel back the onion.
82% of boomers close to retirement or fighting the last inning of their own financial war.
82% that they're not worried about job security.
Until you get to Gen Z millennials, only 25% of Gen Z and 37% of millennials and 48% of Gen X are feeling good about job security.
So you forget about the manipulated unemployment figures that we're talking about and go look at what the common man, this is a broad-based survey.
And this tells you, it tells me that what the average worker is feeling is that the younger generations, you know, the ones that extorted the 20% raises during COVID are suddenly feeling a little different about job security.
But this is all directly connected to the business.
You know what?
This reminds me of a video I did the other day on these buy now pay later loans.
I don't know if you guys saw this firm, fintech companies and others like them.
No, just how many people right now, how many Americans are using buy now, pay later?
They said 44% of Americans said that they will likely have to use a buy now pay later loan within the next six months.
And then that survey broke down.
You know, what do you think you'll need that buy now pay later loan for?
And so 44% of Americans said that.
And of the 44%, 21% said that they needed to buy groceries.
Well, I mean, here's a story that you're talking about, right?
Americans are spending big credit cards.
Here's what that means for the possibility of a recession, CNBC story.
Consumer spending accounts for more than half of the economy, making it a significant factor in maintaining economic stability.
Kurt Long, chief economist at National Association of Federally Insured Credit Unions, stated if consumer spending is strong, that alone is generally speaking enough to keep the economy from slipping into a recession.
In the first quarter of 2023, GDP showed a modest growth of 1.1% compared to the previous quarter.
The improvement from the mid-2022 GDP figures, which initially raised recession concern, can be attributed to consumer spending.
Consumers are spending despite rising prices leading to a decline in personal savings.
Many Americans, particularly those with lower incomes, are increasingly relying on credit cards for their day-to-day expenses.
Bank of America Institute economists reported that roughly 29% of household earnings earning less than $50,000 a year are using credit cards for spending, 29%.
Additionally, the average tax refund has decreased, negatively impacting spending for households that rely on refunds.
So when you're in a situation like this and you're seeing data and then you're looking at the stock market, market's doing okay, nothing crazy is going on.
And you're like, well, you know, I guess we're kind of recovering.
Everything's going back to normal.
You're like, well, you know, real estate's not really dropping that much.
Yeah, maybe a little bit of movement.
Yeah, it's gone down maybe 5, 10, 15 points in certain markets.
But no one's still selling their house because they know if I sell the house, I still have to go buy a house a similar price and I'm not going to go out there and try risking fine.
So maybe it's not as bad as it is.
And then there's the other side that's saying, listen, it's not as bad as it is.
They're expecting a recession, Q4, Q1 of next year.
It's coming, 10% unemployment, et cetera, kind of like what you were talking about.
And there's a third party that says, yeah, it's going to be soft landing, man.
It's not going to be as bad as people think it is.
Things you have to worry about is AI.
You got to worry about the debt, the default, the election, the real, there's so many different things going on, more important in the economy.
The economy stuff about fear porn.
It's not real.
They're just trying to scare you for eyeballs.
What do you say to those people?
Two words, yield curve.
that's it so what i mean by that is i know i know what you mean by that Talk to a person that doesn't consume financial content all day.
The regular person sitting at home, they're 35 years old, makes 82 grand a year, household income 130, 135.
They're like, George, what are you talking about?
Explain to me what I should be worried about and shouldn't be worried about.
Yeah, so let's go back to 2020.
Let's go back to March.
Yep.
And we all know what happened in March.
You know, we thought the world was going to around that time, the Fed funds was right around 1%.
Now, they were supposed to meet on a Wednesday and at an emergency meeting on the Sunday prior.
And they met that night, and they came out and announced that they were going to drop rates right down to zero.
So from 1% down, they're going to drop it by 100 basis points.
And they were going to commit to basically QE infinity.
And they were going to commit to doing up to a trillion dollars a day in the repo market.
So just providing that type of liquidity, kind of the oil, the lubricant of the financial system.
Well, the very next day, the stock market went down by about 1,500 points.
And it continued to go down until we got the CARES Act, where you had this fiscal stimulus, and then the market started to go back up.
But my point is that the Fed dropped rates by 100 basis points.
Boom, right?
Why?
Because we thought the world was coming to an end.
So what these curves are telling us right now, and they're almost always right, is that the Fed is going to do that again by the end of 2023.
But this time, they're not going to drop from 1% to 0%.
This time, they're going to drop from 5%, maybe not all at one time, but they're going to drop from 5% down to 0% or close to that, right?
So think about that.
If they had to drop by 100% because of COVID, because the world is coming to an end, what does the world look like if they're dropping by 400 basis points or 500 basis points?
Tell us, what does it look like?
What does it look like?
It looks like worse than what we saw in 2020.
It looks like worse than the GFC.
Unpack that.
Okay, so it looks like unemployment just going up past double digits.
I wouldn't be surprised.
I don't know about 2023, but going into 2024, I would not be surprised if unemployment got north of 15 percent.
15 percent.
Absolutely.
Absolutely.
And I think that you're looking at it over the long period of time, because the residential real estate doesn't crash.
It slowly goes down over time.
I mean, it peaked out in 2006, and we didn't see a bottom until 2012 when you adjust for inflation.
And you can see that real price decline as nominal prices are flat if we have a certain degree of inflation.
But I think that over the long, you know, the next five or six years, you're going to see real estate really come down.
Commercial real estate, I think, might crash.
But then you're looking at the SP going down by 30, 40, 50 percent.
And we have to real ⁇ another thing to keep in mind here is tax receipts, Patrick, because you know that the government is spending like a drunken sailor will say, right?
So they have this huge deficit.
And if we go into a recession, what are they going to do?
They're going to have to increase deficit spending.
Because this is monetary heroin.
And what I mean by that is if you do $5 trillion of deficit spending to cover COVID, you have to keep doing more and more and more and more to get the exact same result.
So let's say this time they have to do $10 trillion in deficit spending, right?
Okay.
Well, let's also keep in mind that tax receipts are not a derivative of tax rates.
That is total nonsense.
Because you go back to the 1940s, regardless of whether the rate has been 90% or 25%, they still get about 18% of GDP as far as tax revenue, right?
But now, especially since the economy has been so financialized since the 1980s and 1990s, now tax receipts are really tied to the stock market.
And what we have seen, and we can talk about this.
I was talking about this with Lynn last night, is this blow-up in the one-month Treasury, where the other day it went up in one day by 100 basis points.
I mean, you never see that type of volatility, ever.
And this most likely was a result of the government coming out that day and saying, hey, guess what?
Not only do we have this debt ceiling crisis, but all that tax money that you thought we were going to get, we're not getting that because asset prices haven't gone down this year.
They've gone down this year.
And so if we have this recession, if the market goes down by that much, tax receipts are going to go down by that much as well at a time when the government is having to spend more than they did during COVID to try to patch this hole, right?
And then who is buying these treasuries?
At the short end, you might have a buyer, but the long end, do we go into a recession where interest rates are actually going up at the long end?
I mean, these are all questions that we need to think about.
So by the way, the last time, did somebody say something?
No, I was going to say, I didn't share such a gloomy view, to be honest.
Let me just say that.
Let me say this.
It's just the yield curves view.
I'm coming to you next.
So last time we hit 15% was 1940, 14.6%.
We got up there.
We got close to that COVID.
Yeah, but you can't really count COVID because COVID to me is ⁇ I understand what you're saying, but COVID to me was a completely different black swan that we went through.
Non-black swan, 1940.
But you're talking about unemployment?
Unemployment.
14.6%, yes.
What did I say?
Did I say something?
No, no, you're not.
This is clear, 14.6%.
The entire hospitality industry was told to stay home.
So this is the part.
I'm really curious to know, George, Rand, your thoughts, and then Tom, you as well.
Here's the difference, where I become a little bit skeptical of my own trends that I look at and I say, this should move this.
That should move this.
This should get destroyed.
This should come up.
The last three years, it's been a little out of whack.
That the stuff that moves another thing doesn't move it anymore.
So why is that?
What is the difference between 1940 and today?
Here's the difference that I see, and I want you to push back and find a leak in my argument.
1940, we were on the gold standard.
You couldn't really manipulate that much.
You were still protected by the gold standard.
As much as you wanted to manipulate, you know, and kind of play the game, you couldn't fully, you could do it.
Don't get me wrong.
Joseph Kennedy mastered it in the 20s and he caused the whole 1929, all that stuff, fine.
But you still had a certain level of the Fed still had a certain level of accountability to what they could do and what they couldn't do.
Post, you know, 1972, 73, gold standard, we're off of it, Nixon, whether you agree with it or not, you know, to where we are today.
Today, these guys have more levers to control and manipulate and play with than ever before.
They're like, yeah, you know what?
We're going to kind of go like this.
Yeah, we're kind of going to go like this.
Like the whole thing with the default.
Like, you know, could we really default?
Back in the days, every time we wanted to spend something, and this is like a little over 100 years ago, you had to avoid it, you know, report it line by line.
Then all of a sudden it becomes what?
No, let's just increase the debt limit and let us do whatever we want to do with the money because we need it.
And then you know what?
Now we make it political.
Now it becomes divisive.
I think they have so many different things to manipulate to put temporary band-aids on a catastrophic event that they could delay that each time you're like, yeah, they delayed it for five more years.
Yeah, they delayed it for five more years.
Yeah, they delayed it for 10 more years.
Do you agree or do you disagree with the fact that they have more manipulation today than before?
Oh, absolutely.
And I want to be clear.
I'm not saying that there's a high probability that they default if we go to this debt ceiling.
I think that's going to be resolved for sure.
Isn't it always resolved?
Yeah, it's almost like that.
I'm less concerned about the default.
We'll get into that story.
I'm more concerned about 15% unemployment Q1 of 2024.
Yeah, but so what you're saying is what Jerome Powell was saying is that, hey, I've got the tools for this.
Yeah.
Right.
Well, okay, did he have the tools for Silicon Valley Bank?
He came out and created that new facility.
I forgot what it's called, the bank fund lending facility or something like that.
But then what do we have?
Then we had First Republic.
You see what happens?
Every single time they come out and say that I've got a tool for, you know, we've got the tools.
Don't worry, Adam.
We've got the tools.
But the full story.
Then you have another bank blow up.
oh, well, actually, we've got to create more tools.
But it was more to protect the insurer, though.
It was to protect the...
Depositor.
Depositor, not the...
They never said they're going to protect the bank.
No equity holders got wiped out.
No, no, no.
The Fed set up a facility so that those banks could unload those assets off their balance sheet at 100 cents on the dollar.
Well, they could borrow against it.
They couldn't unload them.
They could borrow against them at 100% of the dollars.
But they would have to repay the loan.
It's not worth loading.
Well, if they had a deposit flight, they could get those assets.
They could get 100 cents on the dollar.
They could borrow 100 cents on the dollar for the face value of those assets, which they thought was their problem.
But then you had First Republic.
It didn't solve that problem.
So what I'm saying is the Fed thinks they can solve these problems, but they're way behind the curve.
And if they weren't behind the curve, they wouldn't have to do 45 rounds of quantitative easing, as an example.
That's an example of their tool that you just have to do over and over and over again.
Well, if it's so powerful, why do they have to do it 45 times?
And if they've got all the tools for this, why do we still have these blow-ups when they have to create another tool?
You see, the problem here is the global monetary system is broken.
And if it wasn't broken, you wouldn't have a Silicon Valley Bank.
Why couldn't they go to the discount window?
Why couldn't they go to the repo market?
Why couldn't they use all of these free market solutions?
Well, not the discount window, but the repo market.
Why couldn't they use these free market solutions where the other banks would give them the liquidity they need?
Because there's too much counterparty risk in the system because all the banksters know that the system's broken.
And the only person that's willing to come in and clean up the mess is J.P. Morgan if they unload the risk of the asset side of the balance sheet they're incorporating onto the taxpayer.
And they say, oh, by the way, in order for us to do this deal, we're going to have to borrow $50 billion from the taxpayer.
And I don't know if you read that story, but they took an immediate gain of $2.6 million and they're projected to make $500 million a year on that deal.
JPMorgan is.
And he didn't even have any out-of-pocket cost to do the deal.
And he said, FDIC, you've got to ensure 80% of the losses that I incur if I absorb this balance sheet.
I mean, it's just like it's a freebie.
But you see my point.
It's FDIC-assisted.
It's FDIC-assisted rescue packages, which means the taxpayer is funding, assisting JPMorgan and the bigger banks in rescuing the smaller banks.
That's what it is.
Rescuing.
Not rescuing Christmas gift.
Yeah, taking over.
But that goes back to my question, though.
That goes back to my question that they will use every lever today because there is no accountability to manipulate any data point they want.
That's what I'm saying.
Yeah, so you go back to COVID and everyone said, what you're saying is that there's a Fed put.
There's a Fed put, George, so we shouldn't worry about it because they can kick the can further down the road.
That's the argument.
That's what seems to be happening.
You're right.
I'm saying that in COVID, you could see that the Fed put expired because the Fed tried to come in with their put and the market kept crashing.
It just said, you know what?
The Fed put's done.
How long did it crash, though?
What was it probably a week or a week?
But it kept crashing until the government came out.
That's the point.
Okay, so then we go from a Fed put to a government put.
So the question now becomes, can the government act the same way that the Fed did?
And if we are in an environment where inflation is 0% or they're worried about deflation, the answer would most likely be yes, assuming that the Democrats and the Republicans could get along.
Who knows, right?
But if we're in an environment where inflation is extremely high, is the public going to have the stomach for the Biden or any administration to come out and say, yes, we're going to do another $5 trillion when they realize that that $5 trillion created this inflation that they're having to suffer through now.
You think the public's going to say no to it?
You think the public's going to say no to it?
They're going to say yes.
They're going to open up their arms and say, drop the demand.
Look, this is why the system that we have in America, in a way, it's broken, because there's no such thing as earning the right to vote.
Anybody, if you allow the majority to vote, this was a republic.
Gradually it's becoming more of a democracy where the individual is not protected from the majority.
It's a complete different concept of what America was truly founded for.
That's my concern.
My concern is there is way too many levers to bullshit the real economy and put a big-ass band-aid.
So everybody thinks, oh, things are great, guys.
Let's go ahead and get re-elected.
Like even before midterms, what happened pre-midterms?
Let's use all the stuff that we've been having for oil and all that in our reserve.
Guys, dump it, dump it, use all of it, use all of it.
Yeah, this is all of the reserves.
Use all of it.
$6, $5.50, $5, $4.50.
Did you notice how in the last midterms, it's supposed to be a red wave?
Boom, it's not.
What happened there?
Well, we fixed the economy.
A month later, back to the same shit again.
So the point I'm trying to make to you isn't I disagree with you.
I think we should be at 15%.
I think the mess that we have should be at 15%.
We're cleaning out the system.
But we have created zero, George, zero accountability where we allow these guys to get away with murder because whoever controls the knob controls what they can do to delay the current issue.
That's my concern.
We're aligned on the same page.
I'm worried who's controlling the knob.
That's right.
Remember before the elections there was the recession and then the definition of recession was two quarters, six negative feeds of the money.
But then they had two quarters and then they said, no, no, no, but that's not a recession.
That's not the definition of recession.
Okay, give us what the definition of a recession is.
Well, that's not the definition of a recession.
That was the manipulation.
The other big manipulation is not having to mark T-bills to market.
In other words, when the interest rate goes up, not having to reduce the value of your holding on your balance sheet if you're holding government treasury bills.
Or mortgage-backed networks.
Or mortgage-backed securities.
What that means is that that is manipulation.
That is as if I buy a property today and I buy the property today for a million dollars and then the interest rate goes up and the property is only worth $600,000.
If I say that I'm going to hold the property until the end of the mortgage, then you don't have to write it down.
And that's manipulation because you don't know as a bank when your depositors are going to want their money back.
And when that happens, you're going to have to sell these mortgage-backed securities or these T-bills to honor that.
And so the biggest manipulation and the biggest scam was not having to mark these things down.
Basically a counting trip where they were able to put an account called Hold to Maturity is what he's referring to.
It is a very good point.
All they had to do was say, we're going to hold these T-bills till maturity, and you could write them at the value of maturity, even though the value had decreased by 40%.
So a million-dollar T-bill, if you held a million-dollar T-bill for 10 years, it was on your balance sheet at $1 million.
Even though if you want to sell it in the open market today, you would get $600,000 or $700,000 for it.
Because you said you were going to hold it to maturity.
But if your depositors came and knocked on the door and said, we want our deposits back, what?
You only got $600,000.
You got to sell it.
That is the manipulation.
Yeah, and that's why the Fed Fed set up a facility $100 on that.
Can I ask you guys a question?
And this is kind of to Pat's point.
Let me just be clear about the question.
You're basically saying the system's broken.
We got to, would you say, end the Fed over here?
Pat's basically saying somebody needs to be the bad guy.
We're almost on a steroid or a heroin trip right now, right now.
We're inflating the economy.
My question is, we know that the administration, whether it's the current Democratic administration under Biden or whether Trump, they don't want to be the bad guy because why they'll not get re-elected after the election cycle.
So who needs to be the bad guy to get us out of this mess?
If the system is broken, is it the Fed?
Is it the Fed?
Secretary, who is it going to be?
I think it goes back to Pat's point.
Usually the way these things end is just slowly and gradually, the politicians try to kind of dodge responsibility.
And the people that end up holding the bag are the poor and middle class.
And that's what's very because if you go through what Pat is saying, okay, they come out with more fiscal that kicks the can down the road, but that doesn't mean that it fixes the economy.
Ever.
If the economy continues to get worse, as an example, if you go back to purchasing power, right?
We have had nominal wages go up.
But if you look at the actual real wages since 2019, they've gone down when you adjust for inflation.
Yeah, they're Destroyed.
That's right.
So we're eliminating middle America.
Even though you get these stimming checks, let's say they do UBI next.
Yeah, right?
To try to fix the problem.
Well, yes, I agree with you that the poor and middle class are going to say, yeah, let's take that.
Let's take that.
Let's take that.
I think unfortunately, it's going to make them worse off over the long run because they're always the ones that's going to have to pay the bank.
But if you're making 40, 50 grand a year and someone wants to send you money, you're never going to say no.
We had the same conversation with Andrew Yang.
But you know what's crazy?
Let me tell you.
So let's talk as capitalists here, okay, who have somewhat won the business game.
We're doing okay for ourselves, right?
Okay, there's a community that'll say, well, that's easy for you to say because you made your money and now you got all the money.
And you want them to go because you want to see the market crash and all this other stuff because that's how you're going to make the money.
First of all, a true free market capitalist is going to do good in a good market, a bad market, a terrorist.
It doesn't matter.
They're going to excel.
So if you print more money and you send $5 trillion through the economy, I'm going to make money.
Why?
Because low and middle income families don't know how to spend money.
It still comes to us.
If you don't give the money and you hold these politicians accountable, we're going to go through a season where all the fake capitalists are going to be filtered out and they're going to go out and work for a true capitalist.
And then we're going to have some real people that are doing it the right way, operate companies.
And then people are going to say, I want to work there.
I want to work there.
Quite frankly, all these banks that are going out of business, you buy long-term 64%, 63% of your assets are sitting in that and rates are being called and a JP Morgan sitting on 14%, whatever their numbers was, 14%, 15%.
Some of you guys are playing the risky game.
And guess what?
You shouldn't be in business.
There's guys that should be out of business.
So for those that fall into this trap of all the rich people want the recession to it, nobody wants the recession to it.
Nobody wants the money to be printed.
We simply want accountability.
Accountability gets rid of fake players in the game.
There's way too many fake players in this game and nobody knows who's who.
It's going to be a good thing.
You're not going to get accountability because I'm going to explain to you how it works.
I live in South Africa.
In South Africa, we used to have a reasonable economy.
Today we have 10 hours a day of no electricity.
Okay.
You have to understand we have 10 hours a day every single day where the government switches off our electricity on a schedule.
So you get 10 hours a day of no electricity.
For everyone across the country?
Across the country, 10 hours a day.
You don't have any.
With your rich, poor, middle income.
They just shut down.
They say Fort Lauderdale, bang.
They shut down Fort Lauderdale.
Lauderdale's gone from two to six.
Now you.
California, are you listening?
Now you think that you think, okay, you think that's cool.
Like, okay, so the studio doesn't have lights, so you don't have lights at room.
The traffic lights don't work, which means that the traffic becomes, you can't go to a meeting because there's no traffic lights.
The stores can't operate.
So now you're asking for accountability.
Let me tell you how this happens.
There's no accountability.
It just gets worse and worse and worse and worse and worse for the middle and lower class until something breaks.
When something breaks, how does the government respond?
More money.
Just makes it rain.
What happens to the more money?
Flips to the top.
We have a period like COVID where everyone has more money.
Yeah.
The people that don't know how to save, the ones that aren't capitalists, the ones that aren't successful, spend all their money.
And the cream rises higher to the top.
And the people that are successful rise to the top.
So all that happens is there's no accountability.
And what happens is the rich get richer and the poor get poorer.
I've seen the extreme.
You guys are living in the U.S., you're not in the extreme.
I'm in South Africa.
I see it.
The rich are 0.1%.
The poor are 99%.
And the gap is huge.
And I'm seeing the states do exactly the same thing.
We're on track.
The rich are getting richer.
The poor are getting poorer.
We're on track.
The only thing is you still have 24 hours of electricity.
For now.
For now.
Some states.
Let's carry on.
Yeah.
Sometimes.
In California, you can't use water from time to time.
Sometimes we've seen examples of that.
Yeah, you need to be outside of something.
You guys live it, but sometimes you need to be outside of the business.
Let's go to the next story.
We've been on this story for a while.
I want to go to the next story, what Jamie Dimon said, and we'll comment on it as well.
So, Jamie Dimon warns U.S. debt default is potentially catastrophic.
Asks J.P. Morgan has a war room.
He warned the U.S. debt default would be potentially catastrophic for the economy, emphasizing the urgency for Congress to raise the debt ceiling and avoid defaulting on financial obligations.
Diamond expects panic in the markets if lawmakers fail to address the issue leading to volatility and potential problems in both the stock and treasury markets.
He stressed the need for politicians to negotiate a deal and come to an agreement.
He is preparing for the risk of a default by holding regular warroom meetings, which will increase in frequency as the deadline approaches the standoff between Republicans and Democrats over the debt ceiling.
Debt Limit continues with Republicans seeking spending cuts and Democrats insisting on a clean debt ceiling bill.
Tom, thoughts on this?
Well, you know, we've been watching this for several years now, and it really seems like the potentially catastrophic debt ceiling is like the latest Avengers movie.
We're going to have a whole lot of stress and a whole lot of things coming on, and then someone's going to save us.
One day it's Spider-Man, the next day it's Ant-Man.
Maybe this time it's time for Aquaman.
But at the last minute, a deal gets cut, and Jamie Dimon is trying.
He has seen the stalemate now going on between Kevin McCarthy and Joe Biden.
And you notice that there were three different meetings that they had over the course of five days, and then it was all leaked out before McCarthy was in his limo.
The White House was leaking out.
Oh, McCarthy started yelling.
They used the word yelling.
You mean yelling?
No, I mean hollering.
No, Janet wasn't there.
You know, it was just, they were hollering at each other.
And the White House leaked that out to make him look bad before he even had a chance to get to the microphone.
And I know you both follow this and what I'm talking about.
And I think what's about to happen is who's going to save it this time?
And what Jamie Dimon is trying to do is push forward to get them to come together and to agree for the...
Who has leverage?
Who has more leverage right now?
The question becomes, who has more leverage?
Who truly is going to wait till last second?
Who's got bigger balls?
And who is more worried about this hurting their reelection?
You know, any of that stuff.
Those are real questions we've got to answer.
I think right now McCarthy has cards.
He knows it because it's a bigger election for the Dems because they could lose the White House that they have.
So right now, I think McCarthy has the ability to go that 5% further and get them to blink on his terms.
But make no mistake, the debt ceiling's going up.
It's just going to be what other concessions are underneath that deal.
That's what I think.
What we're watching there is a marketing campaign for a game of chicken.
That's what it is.
You've had the two marketing campaigners that have come out in the last couple of weeks.
Janet Yellen has come out and panicked everybody about what's going to happen if the debt ceiling doesn't get raised.
She's been on every single TV station.
And the next porn in the marketing campaign is Jamie Dimon.
But ultimately, I think everyone knows, American or non-American knows it, they're not going to default on their debt.
The U.S. isn't going to default on their debt.
It's a negotiating tactic.
It's a negotiating play between the Dems and the Republicans.
And I think I'm in the same camp as you where I think McCarthy's got 5% more, and that's it.
That's where it ends.
The U.S. ain't going to default.
Yeah, I don't follow the politics too much.
But from a macro standpoint, I don't usually say this, but I actually agree with Jamie Dimon.
I think he's understating it.
If they default on those T-bills, you got Mad Max.
Let me put it to you this way.
I had my two-hour quarterly meeting with my Goldman Sachs guy before this meeting.
They flew in.
We had the lunch at the house, and we talked about it.
And their position was to move money out of certain bonds because they're not fully sure for now on what's going to happen between May, June, maybe July, we revisit.
I'm like, Goldman's taking that position.
Yeah.
Why is Goldman taking that position?
You never know.
In the history of the last hundred years, only six countries have defaulted.
And we've never defaulted.
Like Russia, Argentina, Germany, what is it?
Lebanon, Greece, Venezuela.
It's really those six have defaulted.
Okay.
You guys are thinking we may be one?
No, we're not saying we are.
We just think we have to be ready.
Okay.
So then you hear, you know, the numbers come out on how much we have in our Treasury general account, right?
Our GDP right now is $23.5 trillion, but we only have $200 billion in that account.
That's like somebody making $239 a year, $239,000 a year, and you got $200 in savings.
That's America today.
Okay.
That's current America's financial situation.
$200 billion sounds like a lot of money.
We don't have a lot of money.
But for me, this is what it's going to come down to.
I don't remember when the whole midterms was going back and forth and they thought it was going to be a red wave and McCarthy thought he wasn't going to need anybody from the MAGA camp.
It's like, I don't give a shit what those guys say.
We can do whatever we want to do to them.
And they're like, oh, that's how you talk to us behind closed doors?
No problem.
It's not a red wave.
So guess who you need to negotiate with?
You need to negotiate with the guy you hate the most.
What's his name?
Matt Gates.
I'm right here.
Let's negotiate.
You got to call Trump.
Last minute here, call him.
He's got on the phone, all this stuff.
Because Trump is a ball-busting negotiator that's willing to use the threats.
Like the whole thing in the CNN town hall that he says, so, you know, when you were president, you said this.
And then, yeah, that's when I was president.
But what's the difference between now?
Because I'm not the president today, right?
Because he knows how to use leverage.
Does McCarthy have that kind of backbone to really negotiate and get everything he wants?
I don't know if he has that kind of backbone, quite frankly.
Based on what you hear from a lot of different people, he's more part of the, you know, swamp camp than some of these other guys are because, you know, they're all negotiating with each other.
What ends up happening here, you know, at the end of the day, of course they're going to end up figuring out a way not to default.
You heard Trump said, let him default.
Let him go through it.
That's the DNA of a negotiator that's willing to go all the way to say, no problem, let's go ahead and do this.
Because in reality, let's just say they do default.
Okay.
Who loses?
Well, President Biden, can you imagine?
Because of Congress, because of Congress, because of Congress is the reason why we default.
And if it wasn't for Congress, President Biden, 100 years from now, when history books write, who defaulted?
No one's going to say Congress because ain't no one going to remember McCarthy unless he becomes the president.
They're going to say there was a president.
They call him the worst president of all time, second to Jimmy Carter, and he beat Jimmy Carter.
His name is Joe Biden.
Son, 100 years ago, this guy was the president that defaulted.
The concern of putting the fear on Congress, Congress should not be afraid right now.
Congress should sit there and say, it's kind of like the movie Air.
I don't know if you've seen a movie air with Michael Jordan and Ben Affleck is playing the role and Sonny is played by Matt Damon.
And Matt Damon sits down in the boardroom and is having this conversation with Michael and says, Michael, let's face it, no one's going to remember us.
Everyone's going to remember you.
They're going to remember your story.
They're going to tell movies.
They're going to do this to you.
But no one's going to remember us.
We're not going to remember it.
Congress is not going to remember it.
President's going to remember.
Congress has to know.
They have the leverage.
If they're able to negotiate accordingly with that, then they can get a lot of things done, especially with accountability.
If not, it's going to be another, hey, we need a few more trillion dollars.
Oh, okay, here we go.
Can we go to the same bar together?
Yes.
Help me out with my reelection bid to make it a little bit easier next time in case Trump wins.
That's the stuff that's going to happen.
I hope I'm wrong.
I hope they stay strong because I think the leverage today is with Congress.
It's just, well, we'll see if McCarthy is a good negotiator.
Maybe McCarthy needs to, in the next 24 to 48 hours, take a break from everybody and read a book called Art of the Deal.
That this guy who was a good business guy back in the days, things changed.
You said who wrote Art of the Deal?
Who's this one?
This guy, what's his name?
Donald Trump.
Said there were six countries that have defaulted on their debt, right?
I think that was Argentina, five.
Argentina, Argentina's done it to Pija.
So, this is a little naive of a question because we've never done it in the United States.
Walk me through what happens if we do default on our loan.
Like, I think Tom had a great analogy where it's almost like a Marvel movie.
They come in at the last minute, but let's say there's no one to save you.
Superman doesn't swoop in and save Lois Lane.
What happens in America?
It's different when it's the U.S.
So, when Argentina defaulted or when Greece defaulted, okay, it's a small country, third world country, defaulting on its debt.
But you think about all the countries holding U.S. sovereign debt on their balance sheets and it becomes a cataclysmic worldwide event.
And that's why it's you know what?
If the U.S. missed one payment, the discussion that he had with Goldman is irrelevant because it means that everything goes to zero.
So, it's not going to happen.
You know, you know what it is?
It's like if the aliens invade Earth, I have a feeling that Russia and Ukraine will fight the aliens together.
You know, it's that kind of like you're talking about saying that's so big and so macro that if it happens, everybody will fight together to make sure the Democrats and Republicans will become best friends in making sure that it doesn't happen.
When aliens show up, I'm just saying you use the Mad Max analogy, yeah, because I think it's even worse.
So, he's saying that all of these global governments have these T-bills as an example on their balance sheet.
So, first and foremost, you have to differentiate.
Are you talking about defaulting on payments, like they just have to close down some parks and stuff?
Or are you talking about default that these T-bills are maturing and they literally can't pay back their T-bills?
Because those are two completely separate questions.
So, let's just go down that path that for whatever reason, the U.S. says, okay, we're not paying back our T-bills.
Those T-bills that you have that are maturing, you can go ahead and pound sand.
So, not only are they on the balance sheet of these central banks, but more importantly, they're the underpinning of the global monetary system.
So, let's go back to 2008.
The problem that you had, the main problem, is that the global monetary system was using two main forms of collateral: mortgage-backed securities and T-bills.
Now, all of a sudden, they woke up one morning and they saw, oh, you know what?
These mortgage-backed securities, they're not good as collateral.
They're not 100 cents on the dollar.
And then you have the whole monetary system implode, which gives us the GFC.
Now we've got one form of collateral.
That would be those T-bills.
So if you take out that Jenga piece, that's the last one.
Now, and who knows if it's one day, will that Jenga piece come out?
I don't know.
But you don't want to play that game.
And going back to his point, which was very good, I think in that type of situation, everyone's going to be on the same side because they're going to be getting so many calls.
They're going to be getting calls from Jamie Dimon.
If you're McCarthy, would you take it to that level?
Well, I don't know how much he understands the global monetary system, but he's going to be getting calls from every single world leader saying, you better do this because you don't understand the fire that you're playing with right now.
If I was McCarthy, I'd definitely play that card because, as you said, he's got less to lose because the reputation, the reputation is in Biden.
You said it.
You said it.
You know, presidents are presidents because they want to do good and they want to be remembered as being presidents that do good.
And no president wants to go down as the worst president in history.
Right.
And I don't think that I think the Democrats have just got, I think Biden's got much more to lose.
And I think to your point, McCarthy's got 5% more.
And that could be the risk that the bond market is pricing in.
If I have six bullets in a battle and you got five, I've got more shots than you.
Yeah, but if I can bluff you to scare the crap out of you.
There's no bluff.
The card's all on the table.
Oh, no, no.
So, so, so here's what's in the game they're in.
In the world of politics, dude, the way they use ways to put the fear of death in you is very different than capitalism.
In capitalism, someone's going to say, I'm going to recruit away your best talent and I'm going to take your best customers and I'm going to open up an office right across the street from you.
We've got to compete, right?
In politics, you want to do that?
Do you want us to release that story about you 17 years ago?
Do you want mainstream media come and talk about Gina?
Who's Gina?
You don't remember Gina in college, second year?
I'm going to tell you about Gina, Kevin.
Oh, you forgot about Gina?
No problem.
Hey, keep doing that, buddy.
Tomorrow everyone's going to know about this girl named Gina.
By the way, there's no such thing as a girl with Kevin McCarthy and Gina.
I'm just making, I don't want people to put it in.
Or is there?
Or is there?
That's kind of how Kevin, you're listening up.
So I don't know.
We'll see what happened there.
The reality is, if it does, you're talking about our currency is going to be devalued.
You're talking about global catastrophic events with economy.
It's going to be catastrophic at the highest level.
You can move to the next global reserve currency real quick.
I think maybe an interesting question would be, okay, let's just assume that they do fix the problem of the debt ceiling.
If they extend it, then what happens?
Because to Pat's earlier point, the TGA right now only has, I think it's even less than 200 billion.
But Janet has come out and said that she would like to see $500 or $600 billion in there.
So let's assume that they get this thing resolved.
And Janet Young goes straight out to the market and says, here's $500 billion worth of treasuries.
Increased liquidity.
So then what does that do?
What does that do to interest rates if there's not enough buyers out there for those treasuries?
Does she scale that in?
Does she issue all of the debt at the front end of the curve where there is a lot more demand?
And then you bring down the average maturity of that $32 trillion in debt from two years down to like one year, then they're much more, then the short-term interest rates impacts their budget, the treasury, the federal government, much more than it did before.
You can literally see them painting themselves into a corner in real time.
Let me ask you another question.
If in the unlikely event that there is a default, what assets would you be wanting to hold on the day of the default?
Bullets.
No, I agree.
I agree.
I agree because I've seen this.
I agree.
Bullets is a great one.
I see this.
Zimbabwe is just, it's one of our neighbors.
I've watched the currency go from something to zero in a matter of weeks.
You want to earn bullets.
You want to own property because a house and a property always has value.
You want to hold gold.
Yep.
Yep.
And then to me, you would probably want to hold digital gold.
I'm not pushing the crypto narrative, but if there is a default, then there's not going to be a default.
The chances zero comma zero one.
You've got to start thinking, what are the assets that you actually want to be holding?
But you're saying there's still a chance, though.
That's what you're saying.
There's always a chance.
And I'm a philosopher saying.
There's always a chance.
And I'll play devil's advocate here, and I'd say that you want to hold dollars as well.
Dollars?
Yeah.
Absolutely.
Yeah.
People will be dumping their T-bills.
Okay, fine.
So you're looking at the asset side of the balance sheet, look at the liability side.
So all those dollars, let's say there's $100 trillion in the world right now, which is probably a fault number.
Okay, so you got asset, but how did that $100 trillion come into existence?
Through debt.
So you still got to pay back that $100 trillion.
But even if you want to dump those, someone else is picking them up.
You've still got the exact same amount of future demand for those dollars.
You see, it's just like you, Adam.
Let's say you've got a million dollar mortgage right now that's denominated in dollars.
And you say, you know what, Pat, I really don't like what's going on with the dollar.
I want you to go ahead and pay me in Bitcoin or pay me in gold or Russian rubles or the new BRICS currency.
That's fine.
But at the end of the month, you still got to come up with dollars to pay your mortgage.
You see?
And what happens is if the world economy collapses, so do banks.
There's no liquidity and there's no dollars in order to pay back all of those loans that are due at the end of the month.
And you have a rush to dollars, and you see it spike from 101 on the DXY up to 120, 130, 140.
It's almost like a short squeeze on the dollar, and that could be just as disruptive as the default on the debt.
And then Tom brought up a good point.
We kind of skipped over it a little bit, but if the US dollar is no longer the world's reserve currency, what's next?
Like, we're seeing what happened with BRIC or BRICS to not to preclude South Africa from that.
What would happen with that?
Don't open that kind of words because we've been talking about this de-dollarization theory on our channel for months now.
And it is true that the world is becoming de-dollarized.
Yes, kind of.
There's more trade happening in non-dollar denominated currencies.
So you're getting oil deals done in rennmbi or Chinese renmbi or stuff like that.
Chinese one.
Or whatever, Russian ruble or whatever you want to call it.
But ultimately, that Chinese one is still pegged to the US dollar.
Now, is de-dollarization happening?
It's a process that'll take many, years.
But what is the alternative?
So, okay, cool.
We decided, we all decided we don't want to be part of the US dollar.
Where are you going to go?
You're going to go to China?
You think China is a better option than the United States?
Look, maybe the US isn't perfect, but let me tell you, China is not much of a better option.
I don't think you want to be in the South African currency.
It hasn't got a great track record.
You certainly don't want to be in the Turkish lira.
So you want to be in the Russian currency?
So the problem is that the dollar right now is the best of a bad bunch.
And in order for de-dollarization to happen, what you need is you need for there to be a better option.
Because otherwise, as capitalists, people will hold on to their money and say, even though this is bad, that option over there is a little bit worse.
It's still government counterparty risk.
Yeah.
Now, look, we've taken the orange pull.
So for us, we see Bitcoin and we look at Bitcoin and say, look, you need to have a certain percentage of a portfolio in a neutral money.
That's not linked to any country.
That's linked to an algorithm and a mathematical formula.
But other than that, and again, I put the question to you guys and say, if there is de-dollarization and you guys are forced to de-dollarize, where are you going to put your money?
Yeah.
And the answer is you're going to rather be in U.S. dollars.
Yeah, when you go back, and I agree, by the way, and I think that we are definitely in the process of de-dollarization.
That's without question.
And the dollar is absolutely losing its reserve currency status.
But that doesn't happen overnight.
It doesn't happen over years.
That happens over decades.
And if you go back to the last world reserve currency, the British pound, that started losing its dominance in the 1920s.
When they came in in 1944 in Bretton Woods, that just kind of the icing on the cake, right?
And so what you see is you never have a global reserve currency that is implemented by decree, that you have a king or a Putin or whatever coming and say, from now on, we are using this BRICS new currency.
What happens, it's always bottoms up.
So those entities within that economic system say, hey, we want to do more business with the United States, going back to the 1920s, right?
Because the U.S. is growing and growing and growing.
We have more business.
We have more customers there.
So we want to hold more dollars on our balance sheet.
And as the U.S. economy grows as a percentage of global GDP, so does the use of the dollar.
And that's how it happens.
So the BRICS or Chinese won or whatever, yes, over the long run, it will overtake the dollar, but it'll only do so as that economy overtakes the United States economy as far as a percentage of global GDP.
So I saw a chart of GDP of the G7 versus GDP of BRICS.
And if you look at the GDP of the G7, it's a chart that goes like this.
And if you look at the GDP of BRICS, it's a chart that's going like this.
Yeah.
Well, the trend is there, but still, as a percentage, it still heavily favors the GDP.
So I don't know if you've got that chart.
It was a tweet by Gabor Gerbach, I think is his name.
And he shows the chart that does that and that.
And the trend you can see when you look at it in isolation, it's nothing.
But if you look at it over a long period, it's actually quite a scary chart because BRICS is going up and the G7 is going down.
And the two crossed a long time ago, kind of like that.
I also saw some stats that showed the GDP of China relative to the GDP of the U.S. forecast for 10 years from now.
And let me tell you, it's scary because the rate of acceleration in China versus the decline in – versus the U.S. is – it's a very – there we go.
So that's the line that I was talking about.
The red line is the BRICS countries.
The blue line is the G7.
And that's GDP.
And that's going from 1995 to 2025.
Now, the lines have crossed.
Okay.
You were talking about people wanting to hold the currency of the economy that was growing in GDP.
I'm just trying to make glasses.
There's your number.
There's your chart.
There's your chart.
You've got the BRICS countries growing in GDP.
You've got the G7 going down.
The biggest economy in the G7 is the U.S.
Yeah, so the only other equation is that dollar denominated debt, which is future demand for dollars, and how rapidly, you know, or looking at another chart of global debt denominated in dollars outside the United States, as you start to see that decline from, let's say, 70% down to 65%, you're seeing the dollar lose reserve status in real time.
But what the mistake people make here is when they look at this equation and probabilities, is they only focus on dollars being on the asset side of the balance sheet, and they forget that dollar liability is on that other side, and that creates future demand for those dollars.
And if the banking system contracts, if we have a global slowdown and economic depression, those dollars are going to be harder to come by.
Now, people say that, oh my gosh, the Fed's going to print money and the Fed's, and we're going to do all this money printing.
That's fine, but how do those dollars get outside the United States?
You see, the way they get outside the United States is through the trade deficit.
Well, that's fine.
That's $1.2 trillion per year.
But you're looking at a global economy that needs $100 trillion or that has $100 trillion in it.
So that's just a drop in the bucket.
So go ahead.
Just try and look for, I'm just trying to think there's another chart we could actually show you.
What percentage of countries are holding US dollars as part of their global reserve or something like that?
And what you'll see is that over time, it has declined.
Yeah, but that's central banks.
Central banks.
Yeah, I agree, but I think you really got to look at the private sector there.
And then to do that, that's why I like looking at that debt because it includes the debt on the balance sheet of the private sector.
So I think what we can agree on is that de-dollarization should happen.
Yeah.
It is happening.
And it is happening.
The problem is that there's no viable alternative currency right now that could displace the dollar.
So if you, as I say, in order for de-dollarization to happen, you've got to have a viable alternative.
You're basing it on trade.
Right now, there is no BRICS currency.
And if there was one united BRICS currency, maybe we'd see a different story.
Yeah, and you've got to have something that interrupts the network.
I mean, I know you're a crypto guy, so you know how important networks are.
And there's never been a more powerful network than the dollar.
Never.
Never, ever, ever.
When you include the Euro dollar system and the global banks that are on dollars, so how do you penetrate that?
You know, that's what I'm saying.
I just pulled up the growth level of BRICS versus GDP may be ahead.
But size-wise, it's not yet.
Population-wise, BRICS is obviously BRICS is what I'm saying.
I just didn't know that's right.
That's why I wanted to find it.
BRICS is size of population.
It's not even close.
No, no, no.
But in regards to GDP, the G7 still has BRICS speed.
But growth is exponential.
Growth is exponential.
Growth is exponential.
And by the way, the one that is going to drive it even, and they're not going to slow, I don't think it's going to slow down anytime soon.
I think India is going to continue to do what they're doing.
But this conversation leads to gold in my mind.
Yeah.
Here's an article from Forbes.
Why gold is a good investment right now may be set for a new record price.
Gold prices are approaching it.
They're all-time high.
With a 10% increase this year, driven by investors seeking a safe haven asset.
Amid economic uncertainty, UBS predicts gold could surpass its record price, setting a target of $2,200 per ounce by next March, citing factors such as weakening U.S. dollar, banking sector stress, debt ceiling concerns, easing interest rate expectations, and the likelihood of a recession.
Gold's price surge is primarily influenced by macro variables rather than supply and demand fundamentals.
UBS analyst Cleve Ruckert notes that gold's price is driven by factors like U.S. real estate and the strength of the U.S. dollar.
The surge in gold price is unique as it is unrelated to its case.
So use case, what do you think is going to be happening with gold?
Well, I think it's a question of timing, right?
So if you say, is it five years or is it the next five months?
I'll go ahead and start by saying that I think everyone should own gold.
And I don't really see it as an investment.
I just see it as insurance.
So regardless of the price, I always put it 10% of my portfolio because I don't care if the price goes up or down.
It's just purchasing power.
It's that insurance policy.
Now, if you say the next five months, I would say my base case is that gold actually goes down, believe it or not, because I think that's overbought.
And if you look at history, going back to COVID or the GFC, when you have a crisis situation, gold actually goes down because it's the only thing on the balance sheet that these big funds can sell.
It's the only thing that has a bid because it's doing its job, right?
So if you go back to Lehman Brothers, you see that gold just crashes.
And then once rates get down to zero and the market says, okay, we've kicked the cam down the road, as Pat was saying, because we did all this, we'll call it quote unquote money printing, then gold rips higher, absolutely rips higher.
And it did the exact same thing during COVID.
So if you say the next five months, I'd say there's a my base case is that gold actually trades lower.
But if you say over the next three years or the next five years, I think it goes way, higher.
But I don't know in real terms, definitely in nominal terms.
But again, that's with the caveat of I think anyone should always own gold pretty much at any price because it's not an investment, it's insurance.
I think I agree with you 100%.
I don't really care about the next five months because that's not an investment horizon for me.
But I think in the long term, gold certainly does continue to go up because of exactly what we said.
We're de-dollarizing because we've got nothing to do because we're de-dollarizing, we've got nothing else to de-dollarize in.
Right now, there's only one other neutral network which is not owned by any of the players, right?
And that neutral network is gold, right?
Like if you think about currencies, currencies are all linked to a specific country.
Gold is not necessarily linked to a specific country.
It's the second network.
Now, the law of network effect says that it's called Barabasi's law.
And I can maybe break down network effects, but the law of network effects states that A, in the absence of regulatory interference, users will flock to the busiest nodes.
So what's the busiest node?
The busiest node is the US dollar today.
So let's just think about what network effects actually are.
If a network is defined as anything where each individual user increases the value of the network exponentially.
Okay, so let's just quickly define that.
If we talk about WhatsApp, which is a telecommunications network, if there are two people on the network, myself and Adam, the maximum number of calls I can make on the network is I can call you and you can call me.
Two people can make calls.
There's two calls on the network.
If we add Patrick to the network, I can call you, you can call me.
I can call Patrick, he can call me.
And Patrick can call you and you can call Patrick.
So now there's six.
There's six.
So we've increased the value of the network exponentially.
By one person.
Exponentially.
So the first thing is that networks continue to grow at an accelerating rate exponentially, which is the most powerful effect in the world.
That's why networks are so powerful.
That's why Google is so powerful and Amazon is so powerful and Uber is so powerful, is because they are all networks.
That's the only thing that they all have in common that is amazing.
Now, the second rule of networks is in the absence of any regulatory interference, users will flock to the busiest nodes.
I always say if you're landing in a new country and you've got to decide whether you're going to go onto WhatsApp or some other chat messenger, you're going to go to WhatsApp because everybody's using WhatsApp.
That's the busiest network node.
So it's the same thing with money because money is the ultimate network.
The US dollar is the network with the most users and therefore people will flock that network.
The second biggest network is gold.
And so you have to hold gold because of the network effect that it has in the monetary system.
And that's why I agree with you.
I don't have 10% because I think each individual based on their risk tolerance may be slightly different.
But you have to hold gold as part of your portfolio.
Now, to me, I see an extension of gold, which is digital gold.
And to me, that's Bitcoin.
And so I take some of that allocation and I put some of that allocation into Bitcoin.
Yeah, I was in Turkey a couple months ago.
And I wanted to spend, we all know that they've gone through this hyperinflation.
So I spent a few days there.
I had a tour guide.
This gal is probably 30 years old.
And I was obviously asking everybody.
Poor guy.
I like it.
My wife should only find out I have a tour guide here in Miami.
All right.
Just don't tell her it's an end.
So this weekend, I was in South Beach hanging out with a couple tour guides down there.
Anyway, go ahead, George.
But I was very inquisitive with pretty much everyone I met.
You know, I said, how are you guys dealing with this inflation?
And they're actually dealing with it very well.
But this was their strategy.
What they do is they get paid in lira.
At the end of the week, they pay all their bills and anything they have left over, they immediately turn it into dollars or gold.
Yeah.
Exactly what he was saying.
And then I went through the airport, that brand new airport they have that's gorgeous.
And on my way out, I just happened to get a coffee, you know, and they opened the cash register.
I just happened to look in that cash register in Turkey, and all they had in there were US dollars.
Well, let me tell you what happens when you can't get US dollars because the flow happens.
First of all, they use US dollars, but then the problem is that everybody buys up all the US dollars and there's not enough US dollars.
And then you know what they do?
That's the short squeeze I'm talking about.
Well, no, they start using airtime data and minutes.
So in South Africa, for example, because we're in Zimbabwe where you can't get dollars, what you trade in is you trade in minutes of airtime.
So call minutes or gigs of data.
They do that in Ecuador as well.
But I want to be very clear for the viewers, and I think you might echo these thoughts.
I'm saying that the dollar, if we have a big crisis situation, you know, there's that flight to safety and the liquidity issues we talked about, the dollar goes up, but I'm talking about going up against other fiat currencies.
I am not talking about the dollar going up against goods and services in the United States.
And this is a hard concept for people to understand.
They have to look at the dollar as two separate currencies.
So inside the United States, we can have 10% inflation, while the dollar is going up by 10% outside of the United States relative to other fiat currencies, such as the Euro, the Turkish lira, et cetera.
And people really need to understand that concept.
That makes sense.
That's good to make that distinction.
Okay, so next story.
Let's talk about Musk here.
Musk hires an ex-NBC Universal ad chief, Linda Yukarno, to be Twitter CEO and people lose their minds.
So this is a CNBC story.
Linda Yucarino, the former global advertising chief of NBC Universal, has been hired as a new CO2.
Twitter.
Musk confirmed the hire in a tweet stating that Icaria would focus on business operations while he focused on product design and new technology.
Her appointment comes after Musk's announced his intention to step down as CEO of Twitter.
She brings extensive experience and relationship in the advertising industry, which could help Twitter regain advertisers who have withdrawn due to offensive content issues.
Musk acquired Twitter last year and implemented changes that led to a loss of ad revenue.
Ikari knows role will be crucial in rebuilding relationship with advertisers and improving the platform's reputation.
Her departure from NBC Universal is immediate, and Mark Marshall will serve as the interim chairman of the company's advertising and partnership group.
Is this a good or a benefit?
They didn't even, did they put the fact that she's huge in the World Economic Forum?
Yeah.
Yeah.
I don't know if that's put in this article.
But I think that's the right.
They intentionally.
So either one of you guys take the lead on this one.
What are your thoughts on it?
I've spent a lot of time speaking about it.
I can spend two hours on this topic.
I'll tell you why.
When I was at Harvard, the first thing they taught us around Elon Musk's recruiting strategy was when he took over Tesla.
When he took over Tesla, he didn't start Tesla.
He took over Tesla from he was an investor and he took over Tesla.
And they asked, what is the first hire Elon Musk makes when he moves into Tesla?
Now, the question is: when you move into a new company that's failing and you're going to rescue it, what's the first hire that you make?
So, question, guys, what is the first hire that Elon Musk makes when he joins Tesla?
It's just him.
Who's the first person he hires?
Accountant, lawyer, a recruiter, an HR.
I'm going to say HR.
HR.
HR.
Okay, cool.
He's got the HR manager.
What's the next person that they hire?
Ops.
Someone to make cars, engineering, head of engineering.
Where does he get this head of engineering from?
Now, this is the mind shift that I couldn't understand here.
Where does Elon Musk imagine that you're going to set up a car?
You're going to go and take on all the car manufacturers in the world.
You need someone to help you build cars.
Where do you hire that someone from?
Someone from the big three?
Which one?
Which are what?
4GM.
4GM?
Chrysler?
Toyota or Nissan?
Nissan's actually Nissan Russia.
No.
No, no, no.
Elon Musk hired the head of engineering from Google or something, from software.
Why?
Because you never hire from the industry that you're in.
You hire from the industry that you think is going to disrupt the industry that you're in.
Now, this for me, he hired someone from the old God.
I mean, he's out to disrupt media and he's hiring a CEO from the old guard.
That's not an Elon Musk hiring strategy.
So then I analyzed this thing even further and I said, hold on a second, what is he doing here?
And I think I understand what he's doing here.
The power of Twitter is actually the product and the algorithm.
Like if you think about what Twitter is, Twitter is the product and the algorithm and it's not actually the CEO.
And I actually think that Twitter would operate better if it didn't have a CEO.
I think if Twitter just operated by itself without a CEO, Twitter would be a much better platform.
We'd get much better content with a lack of oversight and policies, right?
And so I think what he's done here is he's gone and hired somebody that is the exact complement to him.
So you think about like Elon Musk, the first thing he did when he walked in, he pissed off all the advertisers.
He pissed off every single one of the advertisers.
Did some damage there, broke it down.
He did a lot of damage with the staff.
Like he walked in there, he walked in there with the kitchen sink.
You know, as a CEO, no matter who you are, you don't want to walk into a company with this kitchen sink.
He did big damage with the kitchen sink.
I mean, you know, people may walk around smiling and some people may have tolerated it, but the message was everyone is fireable.
So damage with the advertisers, damage with the internal staff.
So now he needs to hire someone that is going to fix the mess that he made.
So he hires, he hires Linda.
She's great.
She was head of partnerships and advertising at NBC.
She managed a $100 billion book or whatever, however big the book was.
She's famous for combining all the sales teams of all the channels, which means that he's going to make it profitable because she's got a track record doing it.
But again, what is the power of Twitter?
The power of Twitter is tech and product.
The CEO in a private company called Twitter.
It's a private company.
Elon Musk owns it.
The CEO is not, she's not the CEO.
The CEO is the biggest shareholder.
I mean, you can be the CEO, but you got a big shareholder.
Yeah, but I think the elephant in the room is you might as well have hired Klaus Schwab.
Not really, because she's actually, she's World Economic Forum, but on a specific agenda, which is the Great Reset Agenda?
No, it's the new work environment.
You're Jubilee.
The new work environment.
She was also on one of the councils for Trump.
I think she was on sports and fitness or something.
So she's quite balanced in her views.
She's an advertising person.
He needs an advertising person.
She's a brilliant people's person.
She managed a team of 2,000 people.
He's not a brilliant people's person.
He's hiring the compliment.
But again, the thing that baffles me the most is that Elon Musk is known to hire disruptors and not known to hire disrupted people.
I don't know.
My view is that the global elite, especially the World Economic Forum, they're a Malthusian cult.
Let's just call a spade a spade.
So you're saying that, oh, she's great, but she's just from this Malthusian cult.
I'm saying in this case, don't judge a book by the cover.
I think let's give her a chance because everyone's reading two lines in her CV and already judging her by that.
So how do you hire somebody then?
How do you hire somebody?
You don't judge them by their resume?
I mean, Pat, I think this is a great question for you.
I do, but hold on.
Twitter's not, you hire them by the resume, but you also have a face-to-face discussion and you judge their intellectual, their intelligence and their emotional intelligence.
Twitter and all of us are judging by five newspaper headlines and bios and stuff like that.
I'm not super excited about it.
I was super surprised by this hire, but I'm kind of made a resolution that I'm not going to judge a book by its cover.
And again, I say to you, I don't think that the CEO of Twitter is such an important position.
I think the more important position is the product manager and the tech guy, which he's keeping, and the owner of the company, which is 100% shareholder, who's also the only person who can fire the CEO.
I think there's two options here.
Number one, she's like a secret libertarian that was just using the World Economic Forum for a network, right?
Or she, or Elon Musk is just sick and tired of Twitter.
He's like, I got to get back over to Tesla.
And even though she's part of the World Economic Forum, and even though I'm coming out and saying that I'm a leader in free speech, I know that she's got all the connections and she's going to keep us from going bankrupt.
So I'm going to hold my nose and hire her anyway.
So I think there's a great question.
For debt holders, since you have so much experience as an entrepreneur, would you hire someone?
If they came in and you said, hey, this World Economic Forum, I don't know about that.
And they said, well, look at I'm a secret libertarian.
I was on Trump's board for the physical education.
Look at the people that I follow on Twitter.
They're all Ron Paul and whatnot.
Would you give her a pass or would you be suspicious enough to say, I just don't trust this gal.
What do you think?
So, first of all, Elon Musk always reminds me how broke I am, you know, when I'm comparing networks.
I talked about this this week in Dallas, and it's great because there's always a guy that you can compete with in the marketplace.
But I don't know the whole story.
I'm going to give it to you from the outside perspective, from my POB.
So why did he buy Twitter?
Actually, answer the question on why he bought Twitter.
Twitter wasn't a best investment for you to buy.
Could have bought hundreds of companies better than Twitter in regards to investment.
You know, like, you know, if you were to sit there and say he could have bought a complimentary company to Tesla to bring him in and do X, Y, Z, he could have bought so many different companies.
So why did he buy Twitter?
He bought Twitter because he was concerned of freedom of speech with all the stuff that was going on.
It was a cause-driven thing that he was doing.
Okay?
No problem.
Then after he bought Twitter, we didn't yet know because he originally bought 9.2%, whatever the whole Morgan Stanley announcement.
You know, Elon is now 9.2.
He doesn't want to be on the board.
He just kind of wants to be on the outside and, oh, it's going to be all right next thing.
You know, no, he wants to buy the whole thing, but he's not going to be firing the CEO.
No, it's not really going to be happening.
You know, Professor Galloway comes up.
Watch, he's not going to close.
All he's trying to do is manipulate the stock and he's trying to hurt them.
No, he ends up closing.
And he wants, I don't think it's going to really, he's not going to daily operate.
No, he was responding back to everybody.
Customer service, you can get a hold of him.
Oh my God, Elon just retweeted me.
Oh my God, Elon just responded to me.
Oh my God, Elon just liked my tweet.
Everybody's like, damn, this guy's, how the hell is he doing this?
Does he sleep at night?
He's at the home office.
So the whole thing was cause-driven.
And then the messaging was for us to get away from relying on advertisers.
Then you go hire somebody whose strength is in advertising.
You're confusing the audience on why you bought the company in the first place.
So to me, the biggest confusion is, why'd you buy Twitter?
If you bought it because you wanted to be that person, then this may not be the best person to hire.
So ask the question, why?
Well, she recognized Larry Fink from BlackRock.
What a great job he's doing.
And we need to pay attention to ESG.
And I don't really know if there's anything really fake news.
Fake news is really from the people that are the non-journalists, the true journalists from the mainstream media.
They don't have any kind of fake news.
Seriously, that's against his philosophy of what he's doing.
So the messaging while we sat there, we just heard an editor-in-chief and he's saying, so, you know, what is success for me here?
I said, success for you here is for us to not need sponsors and advertisers.
Right now, we have three major gold companies that are bidding to be the main gold sponsor for the brand.
And we're doing a hardcore investigation on who these guys are.
And they're putting some real numbers behind it.
We're not talking like a multiple six.
We're talking about a real sponsor.
But guess what?
Here's how we don't do it.
Okay.
This is who we are.
This is how we're going to sell it.
You can't get to tell us what not to talk about, all this other stuff.
These are bylaws on what we do, right?
Why?
I don't want to rely on a person telling me what to do.
I'm in a negotiation right now of a Tom, you know, the story of a sports team, okay, that I'm working on potentially.
Anyways, so we've gone back and forth, okay?
This has been going on for how long now?
12 months, 11 months?
I think it's the one-year anniversary of the kickoff of those negotiations.
Every background check you can think about has been done on me.
And a catchment.
Just to be a professional minority owner of a well-known sports team that we're talking about, right?
One of the four major sports that we're talking about.
You know where it's at right now?
Here's where it's at right now.
Why this could happen and it doesn't happen.
It's, listen, we see where you're at with your positions.
We don't like our owners to say stuff like this.
And we don't know.
And then I have to go have a meeting with them right now.
Literally, I'm having a meeting with them next week.
Okay.
Because they watch your content.
And guess what my meeting is going to be about?
What I'm going to say.
I'm telling you, I needed an email that if I become an owner, you're not going to tell me what to say and what not to say.
Because I left Iran, so I don't have to fear freedom of speech.
And I can tell you, and I made money, so I don't have to be controlled what I have to say and what I don't have to say.
When I was running an insurance company, I was getting on stage talking about certain things.
People were saying, you can't be saying stuff like that.
Go to another company.
You can't be talking about that kind of stuff.
I totally get it.
So for me, my concern here is you went selling this philosophy of not relying on advertisers and then you hired this person?
You know how weird that is?
It's kind of like this.
It's like saying, you know, hey, we're going to go and be a, the way we're going to win a Super Bowl championship is by the Pittsburgh Steelers model.
Let's have a strong defense.
Baltimore Ravens, strong defense.
NFL draft becomes.
First six rounds.
Each person you pick is all an offensive player, wide receiver, running back, quarterback, running back, fullback.
Wait a minute.
You missed after that linebacker.
That guy's a linebacker, defensive.
What are we doing here?
So it's like, I think that's the biggest disconnect.
Do you think he just got in over his head?
Like initially, that was his game plan, but then when he actually looked at the revenue company, he's like, if I keep doing this, I'm going bust.
And that could jeopardize Tesla.
So, okay, that was all fine and dandy, but now the rubbers met the road and I got to hire someone that's going to keep us afloat.
Before you answer this, let's just consider two things.
Go for it.
He's got debt holders.
People have debt.
He didn't put the money in himself.
He has debt holders.
The debt holders are maybe looking at this and going, look, Elon, you can't be treating the advertisers like this.
Ultimately, you got to repay our debt.
What's your monetization model?
Then 2024 is a very interesting year, right?
What happens in 2024?
Election.
And Olympics.
Okay.
Two of the biggest advertising events in the world.
Two of the biggest advertising events in the world.
But let me get this straight.
So do you realize what?
Do you realize what they said the other day with, did you see the Richard Dreyfus interview when they said what it takes to win an Oscar nowadays?
Did you hear about what it takes to be nominated for Academy Award City, what you have to do as a company?
Did you guys read this article or not?
And you heard what Richard Dreyfus said?
Okay, can you pull this article?
I just want to read this to people for them to realize.
Go to news and the article will pop up.
It's New York Post or Washington Times.
Pick either one of them.
Anyways, I have it right here.
I'm guessing this has a high DEI she's going to be.
In order for you to be considered for Academy Awards now, okay, you have to have a certain number of actors in the movie that are part of the LGBTQ community.
You need to meet a, I'll read the article to you.
So Hollywood New Diversity, Hollywood New Diversity.
Let me just close this up.
Hollywood New Diversity rules are making one actor sick.
Legendary actor Richard Drevis condemned the inclusivity changes that will be implemented for next year's Oscars, saying the new standards make me vomit.
This is an art form.
It's also a form of commerce and it makes money, but it's an art.
He says this in an interview with PBS, firing line with Margaret Hoover.
And no one should be telling me as an artist that I have to give it to the latest, most current idea of morality is.
Richard Dreyfus goes off and says, what we are risking, what are we risking here?
Are we really risking hurting people's feelings?
You can't legislate that.
And you have to let life be life.
And I'm sorry, I don't think there is a minority or a majority in the country that has to be catered like that.
And it goes into breaking down what they're looking like on screen representation needs to be a certain percentage.
And, you know, it's classified at least one lead character from an underprecedented racial or ethnic group having at least 30% of secondary roles, be from two underpinned groups or mainstream.
Do you see how much bullshit of a story this is where they're going with this, right?
So the categories, each pertaining to different aspects of movie production, would require new diversity measures to be met on screen representation, creative leadership, project team, industry access, opportunities, audience advancement.
Okay, so now go to Olympics.
What do you think is going to happen with Olympics now?
What do you think is going to happen with Olympics?
The teams are going to have to have that.
No, but that's why I think he's hired someone that's the opposite of him.
Someone who's hit of partnerships.
She's hit of partnerships.
But she's going to come in and she's going to say the Olympics said they're going to give us $50 million if we're able to recognize transgender as such and such.
Or if we can shadow ban Patrick Vett David.
Yeah.
No, I don't think we're saying the same thing.
I'm saying in the Olympics, Nike are going to want to advertise.
Editors are going to want to advertise all the sports brands.
Those are ESG companies.
Yeah, but they're all going to want to advocate.
Those are all ESG companies, buddy.
This is a war.
This is not a regular thing we're talking about here.
To take a stand, I'm not a Rumble guy.
We do our stuff on YouTube, but I love what Rumble's doing.
I think Rumble is necessary.
I'm not a Spotify guy.
We put our stuff on Spotify, but we're not like going out there saying, I'll buy Spotify stocks.
Spotify is necessary when they protected Rogan.
What he did with Twitter, he scared the crap out of everybody in Silicon Valley.
He took a company, Twitter, and then from there there was talks.
Maybe he buys CNN.
People started shivering.
They could no longer play games.
Tucker goes to Twitter.
Now you want to go out there and start giving somebody like this that's going to go to advertisers and say, hey, we could get $100 million from these guys, but here's what we need to do.
We need to make sure we do this.
But no.
But do you think this is the same?
But I think that's yin and yang.
I think he's the one that's going to protect that.
We're not budging.
She's the one that is good at partnerships.
She goes to Nike and says, look, we can't really do that, but you know what we can do?
Everything at the end of the day ends with two words.
We'll see.
Okay.
Ying and yang.
No, everything's going to be we'll see.
Okay, we'll see.
But to me, you didn't have to go get somebody from World Economic Forum.
You could have gotten somebody from a lot of different places.
But do you think she could have been part of that?
I could be part of the World Economic Forum and do it for completely different reasons, right?
And I'm still keep my principles and my libertarian views.
I could be doing it just to get inside.
You know, you keep your friends closer and your friends closer and your enemies closer.
Do you think that she could be kind of a libertarian at heart or a free speech enthusiast?
Well, no.
Have the same worldview, but was just in that for her job.
George, maybe.
You don't have to.
I'm playing devil's advocate.
Please keep playing devil's advocate.
I want you to keep playing.
Let me say my thoughts on this on responding here.
Okay.
Yes, you could have hired your president.
That's somebody's from there.
Your COO?
No problem.
CTO?
Fine.
CMO?
Cool.
CEO?
No.
Because CEO has to buy into your philosophy and the vision.
I don't think you can do it with your CEO.
Again, guys, like I said, Musk always reminds me how broke I am because the guy's made a lot of money.
I'm a big fan of what he's done.
We talk about him in a very respectful way in a place like this.
But I don't think you can get a CEO that doesn't fully, that goes out there and says fake news doesn't exist and thinks Larry Fink and BlackRock is doing a great job with ESG and thinking ESG and DEI, all this stuff are great things that are being done.
No, you're going to cause concern in certain people that got there and started being active on Twitter because they finally realized I'm not going to get.
And after Twitter files one, two, three, four, five, how many times did we realize who's being this and who's being that?
So now guess who's going to be doing the hiring?
Who's going to be hiring the people in the company?
Elon?
No, she is.
Who's she going to hire?
Who's she going to bring in?
Okay.
So who now if I'm the CEO, I run a company, I run multiple companies now.
So do I get approval on who to hire?
No, I'm hiring the person.
I don't go to the chairman of the board.
This is what we're going to bring as CMO.
Yeah, and you fast forward two years and Twitter is Twitter of two.
That's the point.
It's Paxcock.
Hold on.
You're not considering two things.
First of all, it's a private company with a majority, if not 100% of the shares held by one individual.
In a private company, you have a CEO, but the real boss is the owner.
Not a public company.
Where there's there's a boy, it's Elon, Elon.
Whatever Elon says eventually goes.
She knows that.
The second thing is he is extreme on the one side.
When you extreme on the one side, you piss a lot of people off, internally and externally.
What's the best strategy to mitigate that?
Bring in the yang, bring in the yang and let if it's only about money, if it's only about money, ran.
Yeah, if it's only about money And you were doing this to make money and figure out a way to increase your $44 billion, you should have looked elsewhere.
You could have made money in different places.
Going this direction and compromising the real threat that we have with ESG, DI, DEI, all of these things that's going on in media.
People are sitting there looking at candidates that are criminals, yet the real criminals are the ones that are being sold as angels.
It's kind of a weird time we're living in.
So this guy who did this, now, again, I've hired people and from the outside, people have bitched about who I hired.
And they say, I can't believe you hired that person.
How could you pick her?
And how could you pick him?
And why'd you make her the CEO?
You think she can be the president?
You don't know what you're doing.
Totally get it.
I get that.
But my concern, if it was money, you should have bought a different company.
If it was a cause, you really wanted to be that cause guy, then stick to the cause and hire somebody that's a CEO that's more a registered independent coming from a different space.
Who's the real CEO of a private company in a technology sector?
Just quickly, is it the owner plus the CTO plus the project manager?
Or is it the appointed CEO?
That's the question again.
Who is the real CEO of a private company that relies on this technology?
Is it the owner plus who is also the CTO and the product manager?
Or is it the appointed CEO?
Who's the real CEO?
I know what you're saying, but also on the flip side, George Soros just sold all his shares with Tesla.
Public announcement.
I don't know if you guys saw this or not.
He's leaving, you know, Tesla.
And Tesla is not in the best shape right now with all the criticism they're getting.
And Tesla was at one point a trillion-dollar company.
So you're talking about a company that is calling left and right for Elon to go there and do this.
This is not a guy that's just doing Twitter by himself and is going out there hanging out.
This guy's got a lot of stuff on his plate.
So I do think when you bring somebody like this who is coming in, you know what her personality is like?
Here's what their personality is like.
I guarantee you in an interview, she asked the question of Elon.
I'm fully convinced she asked this question.
Elon, you're going to let me run the company?
Or am I going to be one of your employees, one of your friends, that you do everything through them?
Or are you going to let me run this company?
So I'm not leaving NBC Universal if you're not going to let me run the company.
Zero to 100.
What's the chance that she asked that question in the interview?
100.
Okay, perfect.
So guess what she's going to say?
So what can we put in place for me to know you're going to let me run the company?
There has to be an agreement, okay?
So if he starts trying to impose, she doesn't like it, we're going to hear about it within three to six months.
If it doesn't work out, and who's the world going to side with?
Well, with him.
And that's the game here.
I'm not disagreeing with you, but there are a lot of different people that I'm sure he interviewed a lot of different people that he could have gone through.
There are a few things that are philosophically against what he believes in.
And she doesn't think it's a big deal.
Isn't it?
Philosophically.
Isn't one of the philosophies in a company like this that if you really want to make it neutral, then you've got to have someone very strong pulling left and someone very strong pulling right?
No, I don't think so.
I think there's one thing you don't have to be neutral in.
I have no design.
Like there's one thing we do when we hire people here.
You know what it is?
I'm not neutral about this.
You're going to read a book every month and write a paper on it.
Seriously, I'm not neutral about it.
I had a person in the company that says, Well, Patrick, this is you remember this.
This is too much.
You know, people are stressed out.
I said, Nope, that person needs to leave.
They don't read the book of the month.
Agree.
So, what you know what we did?
We created in our bylaws day one when we're hiring, pre-hiring, agree to read a book every month and write a paper on it.
You're serious?
I haven't read a book for 20.
I totally get it.
If you're not going to do this, isn't the company for you?
Okay, two, here's what we believe in in value tame.
What's that?
I don't care if you're any ethnicity, any sex, but I care that you know that capitalism is the way to go.
We don't sit here and say, Well, we should have a couple communists here as well, and let's have a communist CEO run it and let's see how valuable does.
It's okay, let's have a neutral because I'm so much of a capitalist, let's be a communist.
No, you cannot compromise freedom of speech, but you're talking about a capitalistic company with capitalistic ideals.
This is a different business.
This is supposed to be a neutral platform, which is not about being monetized.
Yeah, but neutral by definition is freedom of speech.
So, if you've got someone that's way on the left and way on the right, I totally agree with you, but they still have to agree on free speech.
Look, again, I'm skeptical of it.
I've agreed not to judge a book by its cover.
I'm just making the countercase here.
Yeah, having studied a lot of Elon's hiring decisions in the past, this one was one that truly surprised me.
And this is how I've rationalized it over the last couple of days since it came out.
What did you see?
I wouldn't have hired her tweet about when he hired her.
Did you actually see his tweet?
No, what did he say?
He basically said that she's going to be running business operations, and I'm randomly.
And he's going to be running product design and technology, and together they're going to turn it into X, the everything app.
We talk about this all the time, where they're just more than a free speech platform.
They want to be the go-to everything app.
Like, what do they have in China?
What's the go-to app that they have there?
Everything, the tweet chat.
Exactly.
That's essentially what he wants to do.
Let's play a little game here.
Um, how long is she going to last?
Let's maybe all just write down on a piece of paper how long is she going to last, and then let's meet again and see how it works.
Yeah, I mean, basically, your argument is ends justify means, but then that goes back to what Pat was saying: it's what's your priority here?
Because initially, your priority was freedom of speech, and now all of a sudden, your priority is profit and growing the world's biggest app.
So, where are we here, Elon?
You know, what's your true objective?
What happened?
Elon passed that.
There was one Sunday where Elon tweeted something and he said, If you post any links on your Twitter, which take people out of Twitter, that account is going to be banned.
It was to that one platform, Substack.
But it was only Substack.
The way it was worded is: the way it was worded is: if you post any links to go outside of Twitter, what happens?
Who is going to push back on Elon when he does shit like that?
Because for one weekend, I shat myself because I use my Twitter to promote my YouTube.
And I post links to my YouTube show as you guys post to your podcast.
And I sat there and I thought, if this goes on, my account's getting banned here because every second tweet is listen to my podcast, meet me here at Patrick B. David's show.
Someone needs to push back because otherwise, it's the Elon show.
And you're saying that should be her.
I'm saying if you were going to hire someone to push back, you want to hire someone that is pulling the other way and not someone that it's not a business.
It's a platform that is designed to remain neutral.
I understand fully what you're saying, and I don't disagree that you need somebody that's going to do certain things.
For example, okay, marrying a wife, what's more likely for the marriage to be catastrophic?
Ready?
Both are Christians, one is a communist, the other one is a capitalist, or both are capitalist, one's a Christian, one's an atheist.
What's more likely for the marriage to work out?
What's more, let me ask the question one more time, okay?
They did a study on this.
I'm gonna ask the question.
I want you to actually think about this, okay?
You got a husband and wife, both Christians.
They met out of church.
One is a full-blown capitalist.
She believes in personal responsibility.
You can do something about it.
The other is a communist, thinks rich people are greedy.
They have character flaws.
They're selfish.
They marry each other.
Or husband and wife marry.
They both believe in capitalism.
One's a Christian, one's an atheist.
Which one is more likely to work out?
So you're asking the level of idea of importance of ideas.
What is more important, religion or philosophies of how to live life?
I would say, I think it depends on kids.
Assuming there was no kids in the equation, I would say the atheist and the Christian have a better chance.
What do you say, Tom?
I think the atheist and the Christian have a better chance.
If there's no kids, because I think that would get real complicated.
I think it's different.
I think that you're defined in hierarchies.
And I think, I mean, I haven't thought about it, but I think you're defined as being male and then being of a certain religion and then being of a certain philosophy, I think.
But I haven't thought about it long enough.
My parents got married.
They were both Christians.
They both believe in Jesus.
They both believed in God.
Okay.
My mother was a communist.
My dad was a capitalist.
I cannot tell you how catastrophic that was in the household and how confusing it was.
I can't even describe it to you.
What a hot mess it was.
One believed rich people are greedy and they're terrible human beings.
The other one believed poor people are lazy and they don't do anything to take full responsibility for themselves.
They divorced twice in 20 years.
Okay?
My parents, twice in 20 years.
In this case, the premise of what you brought everybody in was freedom of speech, was anti-ESG, was anti-DEI.
I don't care about all the other stuff.
That was the core values and principles.
I don't care about all the other things that you do, but the values and principles has to be the same.
I don't care what religion she is.
I don't care what religion he is.
I don't care what ethnicity.
Philosophically, they're not on the same page.
One believes fake news is only by others that are content creators, and he believes fake news can happen from mainstream media because he exposed everybody with the Twitter files.
One believes that, you know, Larry Fink and all these guys, BlackRock and ESG, they're doing a good job for society because we need to really contribute.
And so the other guy's like, not for it.
And now all of a sudden, you're going to take it to another level.
One's most likely an authoritarian, a collectivist, and the other is an individualist.
So, you know, how does that one pan out as well?
So listen, again, the great thing about this show is we debate topics and then we find out 36, 12 months later who's right, who's wrong.
And we're so comfortable with that.
Nobody here is shooting for 100% free throw rich.
As long as we're shooting 80% plus, we're okay with that.
If this is the 20% that I miss, I'm very comfortable because I think Elon's an absolute scout of a guy.
So I think that they get divorced.
I think these two get divorced.
And that's kind of what validates.
I think these two get divorced.
Yeah, this is not a marriage.
What's your over-under?
I don't know because it's there's two.
From what standpoint?
As a tourist guide or he's going to fire the entire Justin Chudeaux.
I think she lasts six to 18 months.
So I don't think she makes the over 18 months.
And I think that Elon will tolerate her for the first six.
But I might be wrong.
All right, let's go to the next story here.
CNN.
I want to kind of talk about what's going on here with CNN.
CNN boss Crick Lick facing fury of criticism within the company over Trump's town hall.
We haven't yet responded to this story because we've been gone for about a week.
So we have to kind of touch this story here, what happened.
He's facing criticism after the company brought in former President Donald Trump a platform to spread lies, keep in mind, spread lies and his conspiracy theories during a town hall.
The decision was widely spread, criticized, with one staffer stating, I can't believe anyone thought this was a good idea.
CNN's own media owner, Oliver Darcy, reported on the backlash following the town hall, describing CNN and Chris Licht as facing a fury of criticism.
The network, which has been trying to move away from its left-leaning coverage, was accused of putting moderator Caitlin Collins in a no-win situation.
Despite the criticism, Chris Licht defended the town hall and Collins performance, stating that they obtained Trump's answers and made significant news.
He dismissed suggestions that Collins did not push back hard enough on Trump's claims and emphasized that the job is to get answers and hold the powerful accountable.
Licht also praised Collins, stating that she exemplified what it means to be a world-class journalist and asked tough, fair, revealing questions.
Tom, did Chris Lick do a good job?
Did he make the right decision having Trump on?
And what are your thoughts with all these people losing their minds?
Well, I don't like everything that's in Chris Lick's personal belief structure and platform, but he was brought into CNN to somehow bring it back to a more balanced credibility with the viewer.
That was his mandate.
We have to remember what was the mandate.
Chris, we're off the edge here.
We got to come back at least a little bit.
You may be on a one to 10, we're a nine, but you got to get us back to like a seven.
And you got to have something that gets us in a position where we can win some viewers back.
And he got rid of Don Lemon, and there's a bunch of things that happened.
So I think what happened here is that he's trying to do that.
And he was honestly, and by the way, you know, once upon a time, there was an advertising comment that was made about CNN.
And they say, man, our revenue every quarter has sucked since they canceled that cool desert storm show.
And this goes back.
No, this goes back to the war.
This comes back to Wolf Blitzer and the war.
And remember that?
CNN made bank on Operation Desert Storm.
Let's face it, because they had something to do.
Right now, they don't have anything to do.
What do they have to do?
Maybe Trump, maybe DeSantis, and hide for the president.
So what has happened here is Chris Lick has done what he was told, but it is so endemic what's inside there that the natives have just come to his office calling for his head.
And that's what happened.
How could you?
Because they see themselves, the media sees themselves as a liberal defender.
They see themselves as the defender of that.
They are basically like political activists.
Yeah, they're defense lawyers for the president when his son's in trouble.
Think about that.
They're running to the microphone, putting the spin on the defense strategy for the president rather than covering what is happening to the president.
So Chris Lick did what he was supposed to do, and it blew up because there's a lot of people still there that are, as you say, political activists that haven't moved yet.
Moving a network under a mandate is really, really hard.
It's those damn people.
And I think CNN is just a year ahead of Fox.
I think Fox is going to be in the same position.
I think this is the smartest thing that CNN's done in a long, time.
Let me explain to you why I think it's the smartest thing CNN has done in a long time.
Because when you're dealing in media and you're dealing with viewers, the problem is that when you do damage to the viewers, the damage to the viewers is cumulative.
So if you start off with a media channel and you got 100 people watching you and you upset five of those 100 people and they leave, you've got 95 people watching you.
And then you do damage again, you lose another five views.
You've now got 90 people watching you.
And so your market gets smaller and smaller because inevitably in media, you're going to upset people.
That's how it works.
I think the only way to bring the 10 people that you've lost back and more is to do crazy shit that you ordinarily wouldn't do.
And I think that that's what they did here.
This is something that CNN wouldn't ordinarily do.
I think this is something that brought a whole lot of views to CNN.
And I'm going to be honest, I haven't watched CNN in years, since Desert Storm, the Desert Storm series.
I haven't watched CNN in years.
But now I just remembered who CNN were.
And I just remembered there was a channel called CNN.
And I think it was, I think they were the big winners here.
I think they were the big winners in the night.
And I think that we need more of the traditional media companies that are falling to do extreme things like this, which they ordinarily wouldn't do to try and bring back the cumulative views that they've lost.
Yeah, I think if your objective is ratings, it's a win.
But if your main priority is being objective, I think it was a loss.
But it's challenging.
This is not Twitter.
This is not Twitter.
Twitter is maybe objective.
These guys are after money and sponsorship.
Money and sponsorship comes after viewers.
And CNN is dying.
If you're dying, you do extreme things.
Yeah, I get it.
Well, all of mainstream media is dying.
All of legacy media is dying against.
Yeah, that's my point.
If you're looking at, I think 95% of all cable shows, as far as most watch shows, are on Fox.
So if you're CNN, if you're Chris Licht and you're looking at Fox dominate, and then all of a sudden they let go or whatever happens with Tucker Carlson and you're like, all right, our number one competitor is now drowning.
Half their audience is basically, what, what's the average age of a Fox viewer?
65.
And it might even be older than that.
You're desperate.
You need to do something.
And what's the most desperate move you can do is bring on Donald Trump you haven't had on your air in five years almost.
Or just hired Dylan Muldaney.
Yeah, that might be next.
But this is it.
But now all of a sudden, Rand Noor all of a sudden is basically watching CNN again when you haven't watched there in years.
And how many more Americans or international audience are doing the same thing?
I haven't seen this tweet.
I haven't seen this tweet, but I agree with it.
The first line, CNN.
I think there were two real winners that night, CNN and Trump.
That was the big, and those are the two big winners for me on the night of that debate.
Both of them shocked me.
Both of them shocked me.
CNN shocked me because of what they did and how they owned what they did at the time.
Like at the time, they owned it.
And the other one that shocked me was Trump.
You know, you know who is, you know, why they're so scared.
So think about why you're scared.
You're never scared when somebody performs shitty.
You're like, oh, that was great.
The guy was an idiot.
He looked like a fool.
He was like, the only reason you're angry is because he crushed it, right?
Only reason, the audience.
I can't believe the audience was clapping for him.
How dare they clap?
How dare they clap for the guy?
You know, that's exactly.
They got 3.3 million viewers.
Okay.
Most watched cable news network of the night.
780,000 people in the critical 25 to 45 advertising demo.
Employees are complaining and bitching.
You're in a media space.
You're supposed to get eyeballs.
That's what your job is.
That's like Dana White not making a Conor McGregor fight because Connor will promote proper 12 and all he'll do is increase the valuation of his drink.
Who gives a shit?
Let him do it anyways.
This is another reason why DEI and ESG scores cause CEOs of Fortune 500 companies to make dumb decisions to please a crowd.
I think Lick did a great job.
Now, if they fired a guy, Lick, we're hiring a new CEO right now.
But if they fired a guy, if they fired a guy and he's sitting there saying, are you freaking kidding me?
That's the job he's trying to do and you want to do something like this to him?
This is an opportunity for CNN to sit there right after Fox got a black eye.
Fox got crushed by what they did to Tucker.
CNN is now winning.
And Dominion.
This is a phenomenal opportunity for CNN.
They should be celebrating.
But Anderson Cooper said, I understand some of you may never want to watch this network ever again.
And I understand why.
But shouldn't we see the other side?
Shouldn't we give people the opportunity to expose themselves like he just did?
Shouldn't we do this?
Just leave that.
But that is why.
Food for thought.
Do you think it could be a Bud Light moment?
This is why CNN isn't going to be a good idea.
I think it's a great capitalist moment.
But you see what I'm saying?
Of course, of course, if the viewer just says, okay, we're protesting, we're never watching you again.
You're right.
It could be.
It very, very well could be a Bud Light moment where.
You know what the problem is?
You just said, you've just mentioned the whole problem.
There's momentum inside an organization.
And someone went against the momentum of the organization.
The problem is the question is whether the jolt was enough to disrupt the momentum of the organization and inside it.
Because if not, it's like a meteor coming from the earth.
And the direction is down because everyone's pushing down.
And what he did was he tried to push them back up.
And the problem is that Anderson Cooper apologizing and and and and, it's just everybody pushing the media down back to hit the ground.
You know what's the biggest difference between this and uh, but light, butt Light.
Try to cater to a point zero.
One percent of population transgender, drinking butt light.
I don't know if i've ever seen, you know, like that just doesn't make any sense.
I'm trans and I drink butt light.
Yeah, doesn't make any sense.
CNN try to, you know, market to 50 of America, which is not a bad strategy to see if they can get those viewers.
This job of what Chris Lick did salute, good job for you.
What but Light did?
That was a catastrophic.
Let me just reaffirm exactly what you're saying.
So if you're, if you take mainstream media as an example, if you look at every single show, late night show on ABC NBC, CBS you go Colber, you go Fallon, you go Kimmel they're getting.
These are professional all-time comedians.
They're getting freaking.
Crushed by who?
Greg Gutfeld, who has to read off a script to tell a joke, why?
Because he has 50 of America just tuning into late night FOX, whereas they're just cannibalizing each other.
So essentially, CNN just took a, a page out of the book of FOX and just say, all right, let's just cater to the largest market share, whereas they let these guys just eat each other.
And Greg Gutfeld.
It's not funny.
Is Colbert Kimmel, any of these guys falling?
But he's beating them.
So I mean, just look at the numbers.
What happens to his ratings once Tucker's gone to see if, like you know, the tide raises all boches?
Let's transition into butt light guys.
We we've had enough Elon Musk.
Honestly, let's give all right guys.
Bring in some beer here, let's have a conversation.
BUTT Light parent company stock downgraded by HSBC amid branding crisis, huge sales drop.
This is THE FOX Business Story.
HSBC downgraded Anheuser-busch AND BEV stock to hold UH, citing a crisis following butt lights marketing campaign with uh transgender activist Dyla Mulvaney.
HSBC Carlos Laboy expressed concerns about the brand's response the, and the significant drop in sales, stating that the way this butt light crisis came about raises many questions.
Sales of butt light in the?
U.s.
Plummeted, reaching one percent Of the company's global volume in sales, stating.
In the first three weeks of April, retail sales, store sales of BUD Light also experienced a sharp decline of 21.4% compared to the previous Year.
In contrast, Coors Light and Miller Light saw sales increase by almost 21%.
Exactly.
Same percentage.
LeBois questioned the decision-making and risk assessment of ABI's leadership.
That's Anheuser-Busch, asking why did its U.S. leadership underestimate the risk of pushback given the recent experience of other firms.
Is AB hiring the best people to grow the brands, grow the brands, and gauge risk?
That's the question.
So do you think America, how we are, we forgive, we move on, they're going to do a but wise error.
They're going to do a commercial.
The frogs are going to make a comeback and we're going to be like, you know what, man, that's just, I'm reminiscing.
Yeah, I want to have a Bud Light.
Forget this guy.
They fired her.
Do you think we're forgiven or do you think this is going to be something that's going to be around for a while?
Spuds McKenzie.
I got to throw that one in there.
Going way, way back.
That's a great question.
I've tried to think about this.
And I think over the next year, it's going to be a big deal.
I think over the long run, as far as the overall parent company, I don't know if it'll make that big of a difference because they have so many other brands.
So many that aren't even realize.
People think that if they're, you know, go from Bud Light over to XYZ, it might not be Coors, but something else that they're doing damage, but they don't realize they're just going from one of their products to another of their products.
I don't know that it'll have long-term consequences, but I could be wrong.
I hope I'm wrong.
Yeah, I think if you look at it as an individual brand, or if you look at it in a company, if you look at it as an individual brand, what matters now is what the competitors do with the opportunity.
Because now there's weakness.
Now there's something for the taking.
And it all depends on how the competitors respond.
And I don't think the response is in a week or a month.
I think, as you said, the response is what happens in the next year.
But I think Patrick's right.
I think Americans are very forgiving.
So they're forgiving until you break.
And I don't think Pat's broken.
And people tend to forget.
I think Pat's absolutely right.
They're one good commercial away and about six to 12 months away of people being like, ah, you know what?
Those Bud Light guys, we're drinking again.
But at the same time, like there was two commercials that Dylan Mulvaney did that pissed people off.
Number one was the March Madness commercial, where basically he, she, it, the, them, whatever he is, couldn't define what March Madness was.
He's like, I think it's something about it.
It was just so obnoxious.
And the second one that pissed people off was the one in the bathtub.
And to Rand's credit, about his capitalizing, Coors Light did a commercial of a dude just kind of sitting back in his bathtub.
Oh, like a performance.
Yeah, exactly.
How many dudes are just taking baths?
And they called it the best seat in the house.
And he's watching a game, kind of like a macho man watching a basketball game, you know, in his bath, versus juxtapose that with her doing her little dance in the bathtub.
But Bud Light has been some of the, made some of the greatest commercials of all time between the was-ups.
Yes.
Rock can't handle it.
He can't handle this.
Actually, I'm glad I don't have my glasses.
They completely missed the mark on this.
Who approved this?
Well, we know who approved it.
It was that one lady basically saying, listen, for forever, Bud Light was this sort of fratty bro type of brand.
And we tried to move away from that.
But it's like, that's your market.
Dudes who drink beer.
Yeah.
Not she females that drink.
Drinking.
Beer in a bathtub.
I could argue the other side too, because, you know, If I'm going out, let's say, like as an example, when you came down to Medellin, I think I was drinking old-fashions, and I had love old-fashions, drank them for the last five years or whatever.
But now I was turned on, I don't even know how, to Don Julio, Don Julio 70.
And man, that is good.
And now I drink that when I go out, and the old fashions are just part of history.
So maybe, maybe people that go from Bud Light to Coors Light will never ever go back and they have to rely on the younger people that are coming into drinking age going to Bud Light.
And that will definitely take some time.
But it'll be very interesting to see how this plays out.
Adam's more of a rosé guy who likes desserts.
Hey, if you're buying, I'm drinking.
That's the kind of guy.
These are just bad American beers, but for branding, America is forgiving.
But I think that this one's going to cling for a little bit because the longer this trans thing and what's going on in the election is there, I think that doesn't help them on their effort to bounce back.
But there's so much heritage and so much brand equity, as it's called, with Budweiser as a whole.
I think there's an opportunity for them to come back.
But I do not think that this dialogue and all this controversy on trans is going to help it go away anytime soon.
Because you have to remember, you need the controversy to go away.
And the longer the controversy is gone, the longer, you know, remember, once upon a time, every female football fan in America was upset with Brett Farr because he was sending images and stuff.
And everybody was disappointed in him.
He wasn't our hero anymore.
But the longer it was since that, and his wife had breast cancer and he got a divorce on her, there was a real schism that was there.
But guess what?
People get on with that.
The longer the controversy is away from you, and the more you just show of who you are after.
You're saying you wouldn't exchange a text with Brett Farr today.
Like you're over it.
No, I will.
There's some crazy images that I've got Charles Barkley, who was talking to Ernie about it, and he said, I just got one thing to say, Brett.
If you're going to do that, the one rule is, it's got to be ginormous.
And Charles Barkley said that.
And it's like shaking his head, you know.
So I think the longer, I think the trans controversy has got to kind of normalize a little bit.
And then that will be away from the brand and the brand can make a comeback.
And with the budget, how's the bonehead move?
How would you feel right now going to a pub or going to a party and holding a bud light?
Yes, this is what I was going to say.
Well, let me tell you something.
I mean, right now, today, you're at a party, you're at a pub, you're at a nightclub, and somebody hands you a free Bud Lat.
Now, is it in a can or is it in a drag?
Because it's on drag.
You're never going to know.
It's in a can.
It's in a can.
How do you feel?
How do you feel?
People are getting in fist fights when they're drinking cans of Bud Light in a pub.
This is a serious thing.
This is a very good question.
I can give you a real world example.
Tom, when you were drinking Bud Light in a can at the bar the other day, tell us what happened.
Hang on.
I'll give you a real world example yesterday.
Take my daughter, we go to go down and see Miami Marlins, you know, and we got standard stadium food.
And I noticed that right there, it was just like the pictures you see on social media that I was thinking, maybe they're making that up.
They took the picture of the, you know, the Bud Light counter.
Nobody standing there.
Maybe they took that when it just opened and nobody was there.
It was legit.
Nobody was standing there.
They were over there getting yingling and other beers that were there.
But that little Bud Light stand, that poor person was just sitting there in the little blue shirt and they weren't buying.
Rand hit his nail on the head.
No dude wants to be at a stadium in a Bud Light line while he's trying to get some.
How many guys were Adidas?
Who was Adidas?
I like Adam.
You were Adidas?
Yes.
Okay, you know, Addie, Adidas, Addie, Adolph.
The founder's name was Adolph.
Yeah.
And you know what Adidas is linked to?
What?
You're not a Nazis.
Adidas is linked to?
I didn't know if you're going to tell Nazism.
I didn't know that.
That's what it's linked to.
I thought it was two brothers.
One of them was.
Well, but it's linked to that when you go to the dark history of Adidas, right?
And then if the same goes with Volkswagen.
As a young man, he was part of the younger.
Yeah, but the point is, I mean, if you were Adidas today and if you were Volkswagen today, Demi's eventually going to drink Bud Light.
Okay.
History tells us.
That's why I'm asking.
How long?
But how long is you know, could be, you know, he said one year.
I don't know.
I don't know, one to five years.
And by the way, the way you do it is the following.
Here's what you have to do it.
Here's what you have to do.
You have to fire the CEO immediately because you have to show everything rises and falls on leadership.
This happened under his watch.
Agree.
You fire the CEO, you fired a CMO, you fire the marketing department, you find a replacement immediately.
Then you make a statement saying we have to go to a different direction.
And here's what we're doing.
We brought XYZ from this place.
His background's got to be military.
His background, because you know the current CEO used to be a CIA agent.
You got to bring a different kind of a guy that comes in and maybe you're going to say, hey, I got this guy.
He's worth, boom, here's a new vision.
This is where we're going to be going.
And then the rest of the history people move on.
So this happens.
But for now, they're going to take a hit.
You know, when you look at the stock market curve and you look at how it went up, up, up, and then you see COVID.
Yeah.
And then you see it goes up again?
This is COVID.
This is Bud Light's black swan.
But if you zoom out in 100 years, you eventually just go.
So what you're saying is, if in a week you get an email, okay, them asking you questions saying, hey, we would like to sponsor your podcast.
Would you take it?
$100,000 per month.
Not a chance.
How about $100,000 per month?
Not for sale.
A million an episode.
Not for sale.
We will let you be the CMO to Linda, the new CEO of Twitter.
Would you take it?
Not for sale.
So you're not going to take anything from Bud Light right now.
No.
But you will a year from now.
And you were Adidas.
Why don't you do it?
And we're Adidas.
I would need to see what they did.
Lifetime supply of Adidas shoes with Bud Light.
And a brand spanking Volkswagen parked outside zero to six in 10 seconds.
I'm just thinking about.
I'm thinking of a practical.
I'm thinking of a practical question.
And also, you know, can you imagine a guy?
Can you imagine any guy walking up to any bartender in any club?
Can you imagine how he would order the Bud Light now?
It's like just whispering it out there.
Well, I won't whisper this.
I'll make a public announcement to the CMO of Bud Light.
If you want to pay me double what you paid Dylan Mulvaney, I'll jump in a bathtub bucket right now.
You know what?
It's going to pay me.
Let's go.
And also, Value Tame is looking for Value Tame is also looking for a headline sponsor.
And they are in talks with three you said.
No, there is first space for a fourth.
Gold light.
It's not a high-end.
You know, there might be, if this was Hennessy, maybe there's people that would defend Hennessy because that's a high-end beverage.
But Bud Light is not a high-end beverage.
To make Bud Light, you feed a gallon of water to a horse and put a bucket under the horse, right?
That's how you make Bud Light.
It's a simple filtering process.
It's an everyman's beer, is what you're saying.
It's an everyman's beer.
Everyone said, well, you got a great joke.
So guys, let's wrap it up.
We got a couple of guys here that know a thing or two about crypto.
I want to wrap up with the story on blockchain and get both your thoughts on it.
So it's two stories.
One, Federal Reserve's FedNow will connect with metal blockchain, okay?
With metal blockchain.
And the other story is going to be about what Gold and Microsoft are doing with blockchain.
So first one, FedNow.
The Federal Reserve's upcoming instant payment service, FedNow, will be integrated with Metal Blockchain, allowing metal users to convert funds to stablecoin and vice versa using the FedNow system send and receive function.
FedNow is set to launch in July and will enable round-the-clock near-instant payments between banks.
Metal blockchain developed by Metalicious, Metal Licus, offers compliance-friendly options for decentralized finance, DeFi developers, and emphasizes bank secrecy act compliance, et cetera, et cetera.
Anyways, and I'll give you the other story as well.
The other story is Goldman, Microsoft, SIBO, and others team up to launch blockchain's network.
This is a Bloomberg story.
A group of firms, including Goldman Sachs, Microsoft, Deloitte, SIBO, Global Markets is teaming up to launch the Canton Network, a blockchain system aimed at linking institutional applications and promoting wider adoption of distributed ledger technology in financial markets.
The network offers improved privacy and controls along with scalability and standards suitable for financial institutions.
What are your thoughts on these two stories?
How do you think the market's going to respond to this?
I think both of these stories are nothing burgers, and I'll tell you why.
I'll go through it.
So, Metal, with all respect to them, known the company or the protocol since they launched.
Back in the day, they launched, and apparently Richard Branson is one of the investors, and they've been looking for an identity since.
And I think that this announcement would impress me a lot more if the Fed came out and the Fed said, hey, we are now, we have picked this blockchain provider.
So, that's my response to the first story.
I think it's a nothing burger.
I think regarding the second story, by definition, blockchains are open public ledgers.
Otherwise, they're just glorified databases.
And they need to be permissionless and not controlled by anyone.
And that is why Bitcoin has been so successful.
And that's why Ethereum is the second most successful, because it's permissionless.
It's not owned by anyone.
It's not controlled by anyone.
It's not swayable by anyone.
When you're talking about these companies, these are exactly the companies that blockchain is trying to move away from them being controlled.
And so, you know, you can make as many announcements as you want, but ultimately, let's look at who's going to be using your blockchain and what they're going to be using your blockchain for.
Right now, the most used blockchain between, I mean, you've got two blockchains which are really both being used, which are Bitcoin and Ethereum.
And the one thing that makes them both that used is the fact that none of these corporations are able to control it, structure it, fund it, finance it.
They can use it as equal players as if we use it.
And that's the beauty of these things.
So I think it's like this is both of these stories for me aren't really big stories.
I think we'll hear about it here.
And I don't think we'll ever hear about these stories again, to be honest.
Yeah, I mean, I don't follow the crypto stuff, the Bitcoin stuff, as much, but I just look at this from the standpoint of a central bank digital currency, which I think is what most people are really worried about right now when they read about FedNow.
And FedNow is basically centralizing the settlement process in the clearinghouse that right now is done by a quasi-free market process.
So whenever you have centralization or something like that, I don't like it.
But I also want to highlight something that he was saying in using the word ledger, because people need to realize that money or let's say currency outside of green pieces of paper really doesn't exist.
All it is is a ledger system that says, hey, the bank owes you this much.
And so it's like time.
You really can't, all you can do is keep track of it, right?
So my point here is when people hear FedNow, they get really freaked out about central bank digital currency.
But they shouldn't, I want to make sure that people who value privacy, freedom, liberty, and free market capitalism focus more so on the ledger and less on the currency as far as the central bank digital currency.
If, and I think that we're going into this tough time like we talked about earlier, and I think one of the solutions that they're going to provide so the depositors don't take a haircut is to move your deposits to the Federal Reserve's ledger, right?
And when you move all of these deposits to the Fed's ledger, now you have that ledger centralized, including the back-end plumbing, which is FedNow.
And that, by definition, gives you a central bank digital currency, regardless of what they call it.
So, right now, when I see Florida banning central bank digital currencies, or I see Ted Cruz in Texas doing the same thing, I think that's great that it's bringing attention.
But I'm very concerned that the global elite are using this as a diversionary tactic because they're starting this central bank digital currency fire over here, while at the same time, they're creating an environment where you could centralize that ledger.
And people are so focused on that central bank digital currency, they wake up in six months and they're like, How on earth do I have a social score?
Because they don't realize that the fundamentals of a CBDC is moving all those deposits onto one ledger, more centralization.
And that's the first thing that I think about when I see this article.
After COVID, the scariest thing in the world for me is a central bank digital currency.
Because I don't think people understand the implications of what a central bank digital currency does.
And I think for those people who are hearing about this for the first time or not that au fair with what it actually means, right now, if you've got dollars in your hand, you can spend those dollars how you wish because there's always going to be a buyer or a taker to take those dollars out of your hand.
But when there's a central bank digital currency, the government can literally, because it's all digital, they can control where you spend and what you spend, and they can cut you off at one point if they own the central hub of the ledger.
If it's on one ledger, if it's on one ledger, if it's on one ledger, and that is what they're gearing up for, they're gearing up for a central bank digital currency.
Now, just I mean, let's just quickly compare central bank digital currency with what happened with COVID.
So, during COVID, we had to stay at home and there were curfews, and you had to be at home past a certain time, and you couldn't go in the morning.
Now, one way to enforce that is to just say, hey, guys, you can't leave.
And if you do leave, you better be part of the essential workers.
Oh, I was going to say, Gavin Newsom's private partnership.
Another way to do it is to just cut off your spending and basically say to you, listen, you cannot spend money between 10 a.m. and 10 p.m.
Cannot spend money.
Wherever you go, you will not be able to touch money out of your bank account.
That is a very, very, very scary scenario.
Let me give you just a practical example.
Say you have a baby and your baby needs diapers and you have a little emergency.
You go to the store, you want to get yourself a set of diapers.
You walk into the store, you grab the diapers, you try and pay for the diapers.
It says, sorry, the government said that you can't spend money between X and Y. Let's take it one step further.
Government doesn't want you to eat red meat anymore.
It just doesn't want you to eat too much red meat.
You want to go and pay for your steak.
They say, sorry, you've had eight stakes this month.
That is the power that we give governments if we get a central bank digital currency.
I would also add issuing credit based on narrative instead of merit.
So as an example, if you take everything onto the one balance sheet, the Fed can't go bust.
So they can issue loans.
They don't need to be paid back.
They could care less.
So you don't need to give them a credit score.
So what happens is Adam goes down to the local bank.
You've got to talk to Jerome Powell to get your next mortgage.
And they say, hey, you know what?
We heard what you said the other day.
Pat, yeah, that ain't going to happen.
Your social score is a negative 10 or whatever.
But Dylan Mulvaney goes to Wells Fargo and they're throwing money at him and he's got a 500 credit score.
Why?
Because he is part of that group that is part of that political narrative.
You see, that woke narrative.
And that's why having all those deposits on the same ledger is so crucial for them to implement these Orwellian policies that all of us should be extremely concerned with.
But the focus needs to be not so much on the CBDC, but all of those deposits going onto one ledger.
That's what people have to push back against.
And the good news here is that is currently illegal.
If you go to the Fed's website, they say that it is illegal for them to hold accounts of individuals.
So we all need to be cognizant of that.
So if they try to change that law or if they try to circumvent that law, that we can hold them accountable.
And that's what this has all about.
Who would lead the charge in the United States for that to actually be implemented?
Well, Jerome Powell is the one that's been speaking about it.
So Jerome Powell is the one that has mentioned that they were looking into a central bank digital currency.
By the way, if you think that this is very far away, it's not.
Like in China, it's happening.
In China, they have been dealing with central bank digital currencies for many, many years.
And there is a festival, I think it might even be Chinese New Year, where the idea is that you give a red envelope and inside the red envelope is a gift and the gift is a certain whatever it is.
And they actually did a campaign in China where they had a red envelope campaign, but with a CBDC.
So people actually adopt a CBDC to see how much money they've got.
And that's an adoption tool.
Once people get used to using the central bank digital currency, you've given the government the ultimate power.
Have they already implemented a social credit score in China?
Is that actually social credit scores in China?
But remember, the central bank digital currency is not yet mass adopted.
There is a list.
I don't have the website, but there's some website that actually shows a list of all countries and how close or how far they are from being able to implement a digital currency, a central bank digital currency.
What's at the top of the list?
I think it's China, and I think there's like African countries there, like I think Nigeria.
And I can check the tweet in a second.
But for me, the scariest thing is if we get a central bank digital currency, you have got to make sure that as much of your money on the day that that central bank digital currency is a reality, you've got to get as much of your money into a neutral system as possible.
Unfortunately, I think you're going to have a problem there as well that people really need to be cognizant of.
First of all, you never let a good crisis go to waste.
So if we have a banking crisis, the FDIC comes in, they've got 200 billion.
Okay, great.
There's 18 trillion in deposits.
So an easy solution is Jerome Powell riding in on the white horse and saying, hey, move your deposits from Bank of America over to the Fed, and you'll never risk taking a haircut.
Done deal.
That's what the average Joe is going to say.
Going to the point that he was making, which is very, very good, is people need to realize you can't program money because it doesn't exist, just like you can't program time.
So in order for them to get the data they need to know whether Pat ordered a tofu burger at the restaurant or he ordered a steak because that's going to go against his climate score, his carbon footprint score for the month, they have to have that detailed data.
So I've been talking to Robert Barnes, the famous lawyer about this quite a bit.
And he thinks that they're going to have the IRS come in.
And to get your EIN number, you're going to have to use their point of sale software.
And so whether you pay with Bitcoin or whatever, they still could attach that purchase to the algorithm that would still crank out that score.
You know, I took some of my employees from Columbia to Disney World because that was on their bucket list, right, this weekend when I was in Orlando.
And I don't even know if you know this.
I was shocked.
I went in there, I bought the ticket.
And you know, in the old days, you just buy the ticket, you give it to the guy, you'd kind of rip it, and then you'd go through the little spindle or whatever, right?
Now what they do is you buy the ticket, it's got a QR code on it.
You go up to the spindle, you have to stop right there, they take a picture of you, then you take your QR code, you scan it, then you give them your fingerprint.
You see, now whether they're doing this intentionally or not, the bottom line is they're conditioning people to give their fingerprint wherever they go, right?
And so the central planners, I think, are going to take advantage of this and say, hey, listen, this point-of-sale software that you're using, in order for me to take your order at Chipotle, just go ahead and give me your fingerprint.
And you can pay with Bitcoin, silver, gold, dollars, I don't care.
But then once it goes through your fingerprint, it goes to the IRS.
It goes on.
I don't mind that.
I don't think that.
I don't think that the world should be about tax evasion.
And to be honest, like you said.
No, no, no, tax evasion.
No, what they're doing is they're doing that in order to get the detailed information as far as what you're buying.
Because right now, if you go to Chipotle, your Wells Fargo statement shows that you spent 20 bucks, but it doesn't show exactly what you bought.
I don't even mind, to be honest, if they collect that information about me.
You don't care if the central planners and the authoritarians have that information on each and every single American.
I don't care as long as I control my spend.
But if you take that and you take away my ability to control my spend, that's where the pit.
Like for me, I don't mind record whether I eat too many nachos or tacos or who the hell cares.
As long as you don't control my spend, as long as I have the right to do whatever I want with my money.
But if you take that and you combine it with ownership of my money and telling me where I can spend, and next time I walk into Chipotle and I want to buy something, it says, sorry, we have deemed for some reason that you can't buy this.
That's the part that worries me.
Yeah, but that's how they collect the data to determine whether or not you can buy that in the first place.
And you sound like somebody that would want as a spokesperson because, you know, for us, when we're not concerned about things like that, everything starts off with being sold as it's not a big deal.
What's the big deal?
What's the big deal?
You know, it's not a big deal.
We're not trying to do anything.
And then all of a sudden, it's like, well, I'm already doing it anyway.
So next and next and next.
Some people would even say, George, just started with your phone.
You pick up your phone and seize your eyes, iPhone, and boom.
Absolutely.
And then you're in it.
And so, look, at the end of the day, CBDC is something that a lot of people are concerned with.
And it doesn't matter whether they're crypto or not crypto, they're concerned about it.
And I think if there's ever been a time for us to stay more paranoid as a collective, today's the time to stay more paranoid than ever before.
Enjoy your life, but stay paranoid because there are some people that have different motives than we do.
I don't think the average person understands the implications of a CBDC.
I think to them, it's just, I think that when the CBDC comes, they're going to disguise it as a gift.
But they won't call it a CBDC because it's got too much negative press.
I'm just going to call it moving it onto the Fed's balance sheet.
And that guy that's so paranoid about the CBDC is going to say, great, move my account to the Fed's balance sheet.
I don't care, but as long as you don't do a CBDC, and he's going to wake up six months later, and he's going to have a social credit score.
You want your stimulus check, no problem.
Let's take the balance in your bank account.
We'll top it up with $2,500, but you have to now move onto this new spending system and close your account at JP Morgan.
Thank you very much.
Yeah, and to be clear, it could be JP Morgan's balance sheet.
It just has to be one.
It doesn't necessarily have to be the Fed.
You don't want to hear something interesting just to prove that point about the ledger.
I went back and did a video the other day on the Bank of Russia.
It was called Gaws Bank, and it was there from 1922 to 1991.
And if you read everything it did, it's just like reading a top 10 of what the central planners could do with a central bank digital currency.
And I sit there and I ask my audience, and I did this in the presentation, how could they do that?
How could they manage credit?
How could they know every single transaction that you're doing?
How could they basically give you this credit score?
They didn't even have computers, right?
Why?
The reason they could implement that is because everything was on one ledger.
And that bank, because it was the only bank in the whole country, the central bank was every single commercial bank and it couldn't go bust.
Therefore, it could issue that credit based on narrative.
Basically, everything that you should be concerned with about a central bank digital currency.
And they didn't have a CBDC, but they had one ledger.
That's the real devil in this story.
We're at the end of the podcast.
This was a great podcast.
I think you guys got a friend here funding Jim.
Good to see you.
He's a very good friend of mine.
$500, what do you call it?
Super chat.
Good friend for many years.
On the show, looking forward to the highest of stakes movie release.
True DeFi Crypto Will Rise funding Jim Gary Woods.
Did you want to put a shout out for the highest of stakes movie release?
Oh, Gary's a good friend.
He's down in Medellin.
He's part of my mastermind group.
He's a great guy.
Are you both the next Pablo Escobar from America going to Medellin to start a new movement?
A freedom movement.
I like it.
We're going to try to spread that.
Keep it, man.
Keep doing it.
You guys are doing a great job.
Again, Ran and George, thanks for coming on.
We're going to put the link below to your podcast.
If you have to choose one of the two, which one would you rather do?
Gammon or the Rebel Capitalist?
Rebel Capitalist.
Okay, so let's put Rebel Capitalist at the top as well as Crypto Banter.
You guys can find him.
It'll be in the chat, in the description, and in the comment section.
This has been a blast.
I believe we're doing a podcast again tomorrow.
Yes, we are.
What time is tomorrow's podcast?
9 a.m.
9 a.m.
Tomorrow we have Mike Tyson and Michael Francis in the house at 9 a.m.
They just dropped that right in there.
Mike and Mike.
It's no big deal tomorrow.
We're going to do our best not to get knocked out by Mike Tyson tomorrow.
