Transcript: Gary Brode: Inflation Is Designed to Crush You

Gary Brode [0:07] You've had a dynamic where money's become freer than free. Let me talk about a Fed just gone nuts, all, all the central banks going nuts. So it's all acting like safe haven. I believe that in a world where central bankers are tripping over themselves to devalue their currency, Bitcoin wins. In the world of fiat currencies, Bitcoin is the victor. I mean, that's part of the bull case for Bitcoin. If you're not paying attention, you probably should be.

Marty Bent [0:34] Probably should be.

Gary Brode [0:34] Probably should be.

Marty Bent [0:36] Gary Brode, what is going on in the world? Insanity out there.

Gary Brode [0:41] It has been. Yeah. I mean, it's fascinating. And Marty, as somebody who travels 100% of the time, I'm watching my own country from other parts of the world. But not you know experiencing directly, and then you know everywhere I go I get like really interesting impressions. You know I'm currently in Montevideo, Uruguay, but I just came from El Salvador. I was in Bitcoin Beach, and I had dinner with this nice couple from Munich, from Germany, and that you know they had all these questions, and there was so much going on in the United States that. They didn't understand. And so much of it was because their press had lied to them about everything going on in the United States.

Gary Brode ⋮ And to their credit, they were curious. They were asking me questions not because they were trying to advance a narrative. They said, we don't understand what's happening. And when I explained it to them, they said, our media presents it differently. I said, well, does your media tell the truth about your country? They said, no. I said, well, why would you trust them when they're talking about mine?

Marty Bent [1:45] What were their preconceived notions or what were their questions around?

Gary Brode [1:50] It was a lot of stuff on politics. And by the way, one of the things that I thought was great, I don't care about the World Cup. I have zero interest in soccer. I do not care that that makes people angry, which, by the way, that's a really interesting question. Why does it make people angry that I refuse to care about soccer? It seems to be important to them that I care. I reserve the right to not care. I don't know why it bothers people. But anyway, but the thing that I thought was great was people from all over the world came to the United States and they came with these preconceived notions that had been installed in them by their legacy media.

Gary Brode ⋮ And you just saw all of these posts on X and all these social media posts saying, oh my God, this place is amazing and the people are wonderful and I feel safe here. And You know, the stores are incredible, and the restaurants are welcoming. " People told me, like, "Don't don't come to the United States. They'll shoot you in the airport. " And and you just got dozens and hundreds and thousands of stories of people who said it was amazing, and the people were warm and welcoming, and they were you know the United States was an incredible host country. And and one of the things that I thought was.

Gary Brode ⋮ really smart was instead of just doing this in places like New York, and granted, they had the finals in the New York area, they sent people all over the country and people from all over the world got to experience the Midwest. And I grew up in Michigan and to understand that there are other parts of the country between New York and Los Angeles and Miami, I think was great for the world to see. And I really enjoyed their stories and seeing my country through their eyes.

Marty Bent [3:41] Yeah, it was very encouraging this summer. I mean, it was one of the white pills of the summer, was watching everybody from around the world come and go to the South. You had multiple people from Germany, Scotland, other parts of the world blow up on Twitter, and they were getting invited to concerts.

Gary Brode [4:04] Yeah.

Marty Bent [4:04] They were getting invited to special poker tables in Vegas. They were experiencing Buc-ee's for the first time.

Gary Brode [4:11] And yeah, Buc-ee's, Waffle House, IHOP, Costco, Walmart, right? They're like, oh my God. So you could get pancakes at 3 in the morning and they were thrilled.

Marty Bent [4:22] Yeah, we did. And I think it was also a reminder, despite how, how our media would like to portray how terrible it is here, and there certainly are bad things or suboptimal things happening in this country, at the end of the day, it is It is pretty incredible that we have this union of states and a diversity of culture across the country. Yeah.

Gary Brode [4:48] Plus, Marty, the thing I would add to that is that, I mean, I've had wonderful experiences all over the world, but there is something really special and deep about American generosity and generosity of spirit and the way we pitch in and help each other. You know, like I'm anytime something goes wrong, I call one of my neighbors and I can trust them with my alarm codes and my entrance codes. And you know, like if something happens, they're like, "Yeah, I'm heading over right now." I mean, I've had people leave work to go check on my house because an alarm went off. You know, it's just it's incredible. And when I'm around, I always try to reciprocate and be there for them. But I do think you know Americans are some of the most generous people on the planet, and it we're fortunate to. We really are.

Marty Bent [5:41] I'm learning that too as I moved into this new house, been here for about 6 months now. Everybody's very welcoming, have adopted us into the neighborhood very quickly.

Gary Brode [5:52] Congratulations on the new home. I'm liking the new office. It looks like it's a really calming environment. I like it.

Marty Bent [5:59] It is. I need to put stuff on the walls. I'm lagging here. Spent the summer at the shore. at the Jersey Shore, so I wasn't able to put some time into it. But the fireplace, I'm going to see if I can get this thing back up and running. It hasn't been used in decades, so I would like to have some live fires in the background at some point in the future.

Gary Brode [6:18] I think it's a great idea.

Marty Bent [6:20] So where should we start? Should we start El Salvador? You just wrote this report. Should we start global macroeconomic markets, obviously oil and gas markets? are in a bit of a— under a bit of stress right now. Where should we take this in your mind? What's the best order of operations here to cover the state of the world markets?

Gary Brode [6:43] I'll tell you what, I think we should discuss all of it, but why don't we start in El Salvador? Because I know a huge part of your audience are Bitcoiners. And, you know, we just released— and thank you so much for reposting it— we just released a white paper this week, uh, answering the question, or at least in my opinion answering the question, of whether Bitcoin is a currency. So why don't we start there?

Marty Bent [7:08] Yeah, let's start there. What, what was the impetus for your trip to El Salvador and writing this report specifically?

Gary Brode [7:15] So it was 2 things. One is the social changes in El Salvador over the last few years have been unbelievable. This country went from the murder capital of the world to one of the safest places in the world, and it happened in a matter of 2 or 3 years. Um, it tells us that if you have the political will to get it done, you can get crime under control. Um, in my opinion, this was like the social and economic version of the Berlin Wall coming down. Right. You had a, you had a country that that was a no-go. This is a country of 7 million people where 3 dozen people were killed a day.

Gary Brode ⋮ And I heard story after story of people who died because they crossed the street. Literally, they went into the wrong neighborhood and gang members would just pull them over and say, hey, we don't know you. What are you doing in our neighborhood? And you'd lose your life that way. People were afraid to give any information about themselves, where they lived, where they worked, the name of their kids. Because if anybody had any information about you, you were going to get a phone call one day saying, hey, you know, we know this is your name, this is your wife's name, your kid's name, this is where they go to school, you know, this is where you work, uh, this is, you know, who your wife's parents are, and why don't you give us some money?

Gary Brode ⋮ And that request would be followed by requests for more money, would be followed by requests to use their home to maybe store something that they shouldn't be storing. And that was life, right? I mean, people left that country thinking that they would never return. And when I say never return, I mean never go home again to see their family home, to see where they grew up, to see their friends and relatives. They fled. And now these same people are looking at coming back. They're looking at taking over the family business and returning. And I can tell you, as somebody who just spent a month there, it is safe.

Gary Brode ⋮ There was never a moment when I felt in danger. Nobody tried to take as much as a single penny from me. So the second reason I wanted to go is because it is literally the global capital of Bitcoin adoption. Um, there is more ability to use Bitcoin as a currency there than anywhere else in the world, and I wanted to see it. You know, Marty, a lot of people, they talk about places, but, but they don't know. And, you know, like, there are times, like, I went to Colombia in 2010 and people said, oh no, you're going to get kidnapped. I said, your information it's stale.

Gary Brode ⋮ The country's changed. The reputation hasn't changed. I just spent 6 weeks in Guatemala, and people said, oh, you shouldn't go to Guatemala. It's dangerous. There's a State Department warning for that. But you go to Antigua or you go to the lake, and it's just not like that. A lot of times you need to see these places in person. And I'm a big fan of not only having that personal experience, but talking to people, right? So when I was in El Salvador, I spoke to taxi drivers, Uber drivers, people who worked in hotels, people who ran family businesses, people at religious celebrations, you know, the, the waiter at a restaurant.

Gary Brode ⋮ I, uh, people who ran businesses, um, people who had money, people who didn't. And I, I talked to them, and what I've found is that people will tell you anything about their lives. They'll tell you about their politics, their religion, how much money they have, how much money they make. They'll tell you about intimate details of their intimate lives. You just have to do one thing, which is convey to them, I'm not judging you. I just want to understand you. If you do that, people will tell you anything.

Marty Bent [11:03] What was the common theme that you pulled from these conversations? People Because because that's what I think. Nayib Bukele is very polarizing. Either love him or you think he's like some dis. There's many people that think like yeah, it's all well and good that the murder rate's been cut to to the lowest to the lowest levels in the Western Hemisphere, and the economy is on on the rebound. But he is he is a dictator. What he's done with the elections there, what what he's done to insert himself is. dictatorial. We cannot accept this. And then you have the others who are like, well, just look at the data.

Marty Bent ⋮ I think I'm in this camp. I don't care if he's a dictator. It looks like things are safer there and people are happier. And it looks like particularly there's a focus on education, children's education specifically. They've implemented AI in many schools. I think they have a pilot of 1,000 schools that are doing AI-assisted learning and they're the testing results are screaming through the roof, getting on parity with a lot of Western European nations. And it's a look at the outcome, not the way they got there situation for me.

Gary Brode [12:17] It's a great question, Marty. So let's talk about both sides of it. First of all, it's important to understand how bad things were in El Salvador, because what that murder rate did and that extortion rate and that crime rate did was it changed the economy. And and in important ways. So for example, if you ran a business and you had any amount of money, you were going to be robbed. And I spoke to somebody who was in a nice car and he had the decision of being killed by a gang or running somebody over. Literally, that was it. And he was in a kill-or-be-killed situation.

Gary Brode ⋮ So when you have people who have any success, and that means they're going to be robbed, your incentive for producing it becomes negative, right? Because losing the money that you've earned is bad, but being murdered or beaten up for it is even worse, right? Succeeding meant your life was in danger. So every year you had fewer people with an incentive to produce and more people with an incentive to join a gang. And that's where things were. Now, most of the people I spoke with were in your camp, Marty. They just said, our lives are so much better, and we were afraid, and life was cheap here.

Gary Brode ⋮ People telling me some guy had worked in a place for 10 years, didn't show up. Nobody said anything. The business owner asked somebody else. They said, where's Jorge? Where's this guy? And the answer was, yeah, Jorge was killed over the weekend. Just flat. Something happens. Nobody cared. And that's how cheap life was. That's how bad things were. And so when you talk to them, I would say 75% to 90% of people are saying life here is amazing now, and it's getting so much better, and they feel safe. And like you said, their kids are going to school, they're learning, people are starting businesses, foreign investment is pouring in.

Gary Brode ⋮ There's construction everywhere. And most of them think it's amazing. Now, let's get to the concern you brought up. Because there were people who expressed constitutional concerns and did use the word dictator. And what was really interesting was even those people acknowledged that life was a whole lot better. And basically what they were saying is, okay, look, life is a lot better here, but I'm worried that some of what Bukele's done has been outside the Constitution. He's had a state of emergency that's lasted far too long. And as a result of that, they basically said, "I don't mind the way he's using power. " And I think maybe the best comparable I can come up with is it reminds me a lot of Lee Kuan Yew in Singapore, who was absolutely a dictator.

Gary Brode ⋮ But look at what happened to the quality of life for the people in Singapore. They went from this poor backwater port city country, uh, to a place that had autonomy. And it was a first-world nation, you know, more than a quarter century ago, right? With, with first-world amenities and a high quality of life and an educated, literate population at a point when their neighbors were not. And so I, I think, you know, Lee Kuan Yew is, is a really good comp where you had a guy who basically was a dictator and used that power to make the lives of his people so much better. And, and it really is a great example.

Gary Brode ⋮ And unfortunately, this hasn't been done, you know, in our part of the world, where government force is being used to help people as opposed to steal and oppress the, the people living there. And so even Bukele's critics acknowledged, yeah, I'm worried I think he's a dictator, but boy, is my life so much better, and the lives of my friends and relatives and neighbors are so much better. So it's— I thought it was interesting that even his detractors acknowledged that he had used his power really well.

Marty Bent [16:34] Benevolent. And that's— I mean, some people call him a dictator, and I think this— I've reread Democracy: The God That Failed by Hoppe. earlier this year, which is talking about monarchy. And, uh, I think, uh, that's one thing that other people are floating, uh, not as much as the dictator, but like maybe he's setting up like a new monarchy in El Salvador. And who's to say that that's not a good thing at the end of the day?

Gary Brode [17:06] Well, so you know what's really interesting, Marty, is the idea that we should rule ourselves is one that, that resonates with the vast majority of Americans and certainly with me. I think, you know, my concern for our version of democracy is, for the most part, Americans are not governed by the people we elect. Our lives are more affected by the unelected permanent bureaucracy. That, to me, is the real issue. It's that we're ultimately— we are constantly answering to the agencies that aren't elected and yet have an enormous amount of legislative power over our lives.

Marty Bent [17:47] Yeah. And you said you were going to bring it up, but I'll bring it up. I think the Lindsey Clancy saga is a bit of an undercurrent of that, right? I think a lot of that bureaucratic managerial class has been taken up by, in many cases, I think objectively, if you look at the numbers, women who have this grudge against the patriarchy, and it leads to non-meritocratic rule, if you will, in many aspects of our lives. And I think the microcosm of the Lindsay Clancy case points to that to a degree.

Gary Brode [18:29] The thing that really worries me about that case is not that one person did something horrible, it's this outpouring of support And, you know, she flat out said, you know, I did this. And you see, like, enormous numbers of people saying, no, no, it was the husband. Right? It is amazing that, you know, they won't even believe a confession. And the amount of support for somebody who did something monstrous and has acknowledged doing something monstrous is incredible to me. Um, you know, Marty, when you and I see a man do something horrible, at no point do we say, all right, well, let's get on X, let's start making videos supporting him, and you know which one of us is going to start the GoFundMe.

Marty Bent [19:17] No.

Gary Brode [19:19] It's, it's, it's horrible that— it's horrible what happened to those kids, but the fact that people are supporting this and there are copycat cases is, is worrisome.

Marty Bent [19:32] Yeah, there's a copycat case in Illinois, I think just a couple weeks ago. Yeah. And it's— you get these social dynamics and then you get the technological dynamics of it too, because we saw this during COVID the mass psychosis that is easily spread through these technologies that we have. And there were some women in my life that I had Not sit down, but the Lindsay Clancy case would come up and they would bring up like TikTok rabbit holes that they found out that had very compelling cases that it was the father. It wasn't Lindsay. It was Patrick Clancy, not Lindsay Clancy. And I had to be like, hey, let's take a step back.

Marty Bent ⋮ Like, this is patently absurd. What are you watching? What are these people telling you? And the sort of rapid nature through which those theories were spreading on social media was pretty— it's very alarming and concerning considering how many people took these theories, ran with them, and took them as fact at the end of the day when it was patently absurd.

Gary Brode [20:42] Yeah, it's interesting to me that what people are willing to believe off of a TikTok video, but I'll also remind everybody that that algorithm is controlled by the CCP, right? I mean, they will amplify anything that divides us, that makes people angry, that makes people feel like they can't trust their neighbors.

Marty Bent [21:07] Yeah. I actually recorded an episode yesterday, completely different topic, but same vein, with Sam Lyman from the Bitcoin Policy Institute. He wrote a research report in the beginning of the summer highlighting that a lot of the anti-data center rhetoric and narratives in the US are being funded by Chinese entities and for the same purpose, to divide and to, I think, also to slow down the AI build-out here. And he was on Capitol Hill on Wednesday testifying. in front of the Senate, and he made a really good point. If you look at the media narratives in China with Chinese state media around AI data centers and AI more broadly, it's extremely positive. It's like, this is going to revitalize our economy. It's going to create an incredible future for us. And yet they're funding these propaganda campaigns in the US to make us believe that that's not the case.

Gary Brode [22:05] Yeah, it's incredible that they're allowed to do that. Obviously, American entities are not permitted to you know try to convince Chinese people or the Chinese government to slow down their research. So I think that's I think it's really interesting that that they're doing and that people believe this, right? I mean, obviously, what China wants to do is is they want to take that lead. So, it's, you know, it's incredible to me that people will believe it. Also, you know, the other thing that is certainly attention-grabbing are the headlines from people at, you know, Anthropic and OpenAI saying, oh no, we're going to destroy the world, you better regulate us. And people are believing that these companies are saying, well, you know, without regulation, we're going to destroy the planet, we're going to destroy humanity, you'll get your Terminator future.

Marty Bent [23:03] Right.

Gary Brode ⋮ And to me, it seems obvious that if you think what you're doing is dangerous, maybe you should stop it. Why are they calling for government regulation? And the answer to that is the same thing it always is. Anytime you have an oligopoly in an industry, that oligopoly has an incentive to pull the ladder up behind them and ensure that anybody else starting a competing company will have to face a regulatory apparatus preventing their success that these companies didn't have to face. And, you know, the most recent obvious example of that was, you know who was part of leading the charge for charging taxes on, uh, internet purchases?

Gary Brode ⋮ It was Amazon. And the reason for that, when you think, well, wait a minute, like one thing that gave Amazon a huge advantage over Walmart and Costco and every local store was you didn't have to pay state sales tax. And so why, why would they give up that advantage? And the answer is because Amazon could afford the software to calculate what everybody owed in a particular city, a particular state. You know, it was being shipped from this place, sold in this place. They could manage that complexity. But boy, it made it a lot harder and more expensive for smaller companies to come challenge Amazon. Um, I think that's what we're seeing here.

Gary Brode ⋮ Like, if these companies really believe what they were doing was dangerous, then stop doing it. If you think you're going to destroy humanity, Stop. You don't need the government for that. This is simply the natural inclination of any oligopoly to pull up the ladder and ensure they don't face more competition.

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Marty Bent [26:58] You can access it for free at simplemining.io/tftc. That's simplemining.io/tftc. Yeah. And that oligopoly has another mining virus embedded in it, which is effective altruism. I'm not sure if you've been following the the sleuthing of the individuals that work at some of these companies and the third-party research groups that are there to help them provide the safety guardrails. It is heavily seeped in effective altruism thought, which is completely insane to people who think they can use spreadsheets to determine the best outcomes for future humans and therefore decide what we have to do today. And this is actually a topic that I've been covering for probably 5 or 6 years now because Sam Bankman-Fried was an effective altruist too. And we went through the effects of the effective altruists getting control of part of an industry in Bitcoin last cycle. And These people are absolutely insane.

Gary Brode [28:15] Yeah, it's a huge problem. And in fact, I stopped using OpenAI. I stopped using ChatGPT earlier this year over the summer because I was getting insane answers. And every question I asked was put through the lens of racial preferences and gender preferences and you know, I— it would give me these really biased answers and I would point out, hey, this answer is biased and you're putting people above me, but I'm asking about something related to me. And it would be very sly in its response and it would say, yes, well, I'm not against you and all people are equal and I would never put one person above another, but you know, uh, but there are protected classes of people and we can't write anything even in a private conversation that might upset, uh, somebody who's in a protected class.

Gary Brode ⋮ I'm like, that's the definition of prioritizing certain people above other people. And I don't know what to tell you, but I, I don't agree that somebody else's desires or needs take precedence over mine because they're part of a particular group and I'm not. That's not That's not moral, it's not right. And so I would get these insane racist, sexist answers from it. It also was just incapable of following instructions. I would say, you know, don't give me an answer unless you confirm it with these sources, and it would tell me, okay, great, I did that, and I would find out it not only didn't, it couldn't.

Gary Brode ⋮ Like, it's like, yeah, I would ask, I'm like, I thought you checked this. Oh, I don't have access to that. I'm like that. Then you gave me an answer, right? So it was racist, it was sexist, it was inaccurate, it was confidently wrong, which is the worst thing of all. You know, there were times I would tell it, give me an answer about this topic, do not consider this. And guess what? You know, I would get A and B. I'm like, I literally one instruction before just told you. Don't do that. And it would constantly violate the ground rules that I would give it and I would say, hey, we've had this conversation 10 times, you're supposed to have memory, why are you doing this?

Gary Brode ⋮ And it would say, yeah, you're totally right, I did do this. If I do this again in the future, just remind me. I'm like, what? You're a computer. You're relying on me to remember and remind you, why can't you Like, you literally have memory for this purpose. And the only thing I could conclude is its goal is not to be useful, or at least not to be useful to somebody who has my ideas. And I just concluded that it was dangerous and wrong and horrendous and stopped using it. I think there's a reason they've lost so much market share to Claude and Anthropic. You know, this last quarter, the revenue at Anthropic was double the revenue at uh, at OpenAI.

Gary Brode ⋮ I, I actually think OpenAI potentially is a zero, right? They've, they've got $600 billion of commitments. I, I don't know where they're going to get that $600 billion, but what I do know is that their revenue hasn't been growing the way it is in other places, and their losses are, you know, they're still looking at losing like $100 billion over the next few years. Um, who's, who's going to be funding That I, you know, one of the best pieces of analysis I saw on this was written by Alex Macris, who writes a blog called The Tree of Woe, which is a great Conan the Barbarian reference.

Gary Brode ⋮ " That's a great line.

Marty Bent [32:21] Well, I mean, to that point too, there were rumors that there was a secondary sale of— I forgot if it was Anthropic or OpenAI equity, but I think it was OpenAI that sold at a $445 billion valuation, which is one-third of what they were publicly saying they wanted to IPO at. And obviously they've stepped back from the IPO. Anthropic seems to have too. And I think that's a big question on everybody's mind, whether it's OpenAI or Anthropic, but just broadly speaking about this AI buildout, what is going to happen and what's the effect going to be on the economy? Have we overextended the run here? Have we pushed too much capital into this? Is the return on invested capital not materializing fast enough? What are you seeing in those regards?

Gary Brode [33:17] Yeah, I think that's the case, right? And this is something I've been talking about for 2 years, that these companies have no plan to earn a return on literally trillions of dollars of invested capital. I don't see that happening. My disappointment about OpenAI not going public is now I can't short it. I mean, I really think it's a zero. I would love to short that stock if I could, Right now, there's just no effective way to do it. I also think it's notable that the American companies are all against the open weight models. They don't even want competition for, like, Marty, you and I putting our own weights in, having our own— people should be able to put together competing models and they're trying to stop that. They're saying, oh, it's dangerous.

Marty Bent [34:04] Really?

Gary Brode ⋮ Really? So you guys are the ones who have the wisdom to decide, you know, what the truth is and how everybody's going to learn and to be counseling everybody on whatever personal stuff they put in there. But other people who could, you know, alter these models or design their own models or, you know, put their own weightings on them are somehow dangerous. Like, I, I think that's completely insane. The one way that I'm playing this, and we've done so very profitably, is through Intel. I bought that stock at $35 back in November, and then I bought more of it in the upper 40s, low 50s, something like that.

Gary Brode ⋮ And the reason for that is because of the shift from training to inference. And so think about it this way. If you're designing an LLM, this is the kind of incredible expense that you were just talking about, Marty. To do that, you have to train a model, and for that, you want a lot of very expensive NVIDIA GPUs. But inference is simply using it, right? So agentic AI, which is a fancy way of saying, I want to have AI agents that will go do things for me, that will go find information, that will compile information, that will make a purchase, that'll buy me airline tickets, that will you know, send Marty an email saying, hey, can we move our, um, our TFTC, you know, uh, filming from this time to that time?

Gary Brode ⋮ All of that stuff, um, that's not GPU heavy, that's CPU heavy. So that's Intel and AMD. And, um, and so when I look at that, I think to myself, you know, the company's spending hundreds of billions of dollars on this. They may never earn a return on it, but that doesn't mean there isn't demand, right? And so like the, the easy comparable is to look at the, um, the, the dot-com build-out and the, um, the e-commerce build-out that started 30 years ago. And, you know, you had a lot of companies go bankrupt, but use of the internet skyrocketed and never stopped. Even when those stocks imploded in 2001, It didn't stop people from using the internet.

Gary Brode ⋮ And so I do think there's demand to use AI. That's all agentic demand, and that's going to be very CPU heavy. And, you know, I also think we're going to see a shift from LLMs to SLMs, right? The large language models hosted in these data centers, you'll end up with, with small language models hosted on your own hardware. And we already have a lot of people, individuals have enough computing power for that right now. So basically, that's the way I'm playing that shift.

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Marty Bent [39:29] Yeah, no, I completely agree. And at Dark Horse, the company I sit on the board of, I think that's our thesis too, is that inference demand is not going to go down anytime soon. I just wanted to pull up this chart again, and it's crazy. You're talking about agents, the agentic economy, agent-to-agent token usage is going exponential.

Gary Brode [39:49] Right. So that blue line there, that's not NVIDIA, right? That's Intel and AMD. Marty, let me ask you a question. In your data center, what's the name of your data center?

Marty Bent [40:01] Company's called Dark Horse.

Gary Brode [40:03] All right. So at Dark Horse, what's the ratio of GPUs to CPUs in your facility? Do you know that?

Marty Bent [40:11] Right now it's all Bitcoin mining. We're in the process of transitioning. We have land and power assets.

Gary Brode [40:16] Gotcha.

Marty Bent [40:18] Yeah.

Gary Brode [40:18] Okay. So right now, if you go into these AI data centers, it's like 8 GPUs per CPU. And I talk to people every week in the industry. These are senior executives, people designing these data centers. And what they're telling me is they think over the next few years, that ratio goes from 8 to 1 in favor of GPUs to something in the neighborhood of 2 to 1 or 1 to 1, where the CPU demand is going to be off the charts.

Marty Bent [40:48] Yeah. I think it's obvious if you look at Intel, AMD, a lot of the memory companies over in South Korea, you're going to need a ton of memory for this too.

Gary Brode [41:00] Yeah, absolutely. One thing that's really worth pointing out, and people might say, well, how would you have enough horsepower to run an SLM, right? Don't you need these giant data centers? And I'm talking to you right now, I'm traveling using a laptop that I bought at Best Buy earlier this year for $1,300. And I have enough horsepower on this thing to run an SLM, right?

Marty Bent [41:28] Yeah.

Gary Brode [41:28] And now, could I do the same stuff that Groq can do or that Claude can do? No. But most of what people need these things to do, you don't require the high-end stuff.

Marty Bent [41:40] No, I mean, for our TFTC company agent, we have it running in the cloud and we have some local models running in the cloud. It gets a lot of work done.

Gary Brode [41:50] Yeah, exactly right. And even if you're using it for 50% of your needs, 60% of your needs, those are tokens you don't have to buy from Anthropic or OpenAI or from Gemini. It won't decrease your AI usage, but it'll decrease your token purchases.

Marty Bent [42:12] Yeah. And even if you're not using SLMs on your physical device, the open weight Chinese models, if you're using DeepSeek or Kimi K3, I mean, they're 98% cheaper and 2% of the cost for the tokens. So that's another thing. That's why I also think the oligopoly is calling for regulatory capture and regulatory moats because they see this open wave coming, much cheaper, comparable intelligence, and it's scaring the crap out of them.

Gary Brode [42:47] It should. It should scare them. And unfortunately, I don't think they've been good stewards of the public trust. They have a particular point of view and they're going to push it.

Marty Bent [43:05] How do you think this plays out over the next 6 months to a year? And I think bringing in a more well-rounded picture, obviously we have the models, we have the data centers, but then underlying that is this larger endeavor of broad reindustrialization of the US economy, focus on our energy systems, obviously, We have wars going on, Russia-Ukraine, Iran-US. Oil and gas markets are being heavily disrupted. We have diesel refineries shutting down here in the United States. What do you think this fall and winter look like? Because it seems like we're on the precipice of either threading the needle or having things unravel to a certain degree.

Gary Brode [43:51] So I think that's a really difficult question, and the reason is so much of it depends on the weather, right? Europe is going into the winter with their fingers crossed that it won't be a cold winter. They don't have enough fuel to get through the winter if it's cold, right? They're going to get very unhappy and very uncomfortable if it's a cold winter. So, you know, if you want to predict the weather, uh, 4 months from now, I'll tell you what's going to happen, right? But I, I'm— I can't predict the weather. 4 months from now. Here's what I think though. I think long-term worldwide energy usage will only go up.

Gary Brode ⋮ You have extraordinary needs in the United States, right? Like, you know, like a town might use a gigawatt of energy. You now have data centers being built that are using 5, 6, 7 gigawatts of energy. Or that will use that. So you've got massive needs there, and then you have literally billions of people all over the world who want more energy usage. And if the correlation between energy use and a higher material quality of life is almost 100%, right? There, there are no prosperous, comfortable, wealthy societies that have low energy usage. It simply doesn't exist, you know, even in warm parts of the world. Even parts of the world where people won't freeze to death, you need energy to live a comfortable material quality of life.

Gary Brode ⋮ And so you've got massive data center demand in the United States and China, and then you have billions of people in India, China, Africa who want a better life. And so I think we're looking at a gigantic increase in worldwide energy usage. The way I'm playing this is I'm not focused on short-term headlines, which literally at one point were changing by the hour. You know, the, the— somebody, you know, in the White House would make an announcement, the IRGC would make an announcement, and oil prices are moving. And there was no way to predict that. But what I've done is I own large amounts of energy and energy infrastructure, um, and I own a huge amount of uranium.

Gary Brode ⋮ I do think, you know, there's going to be a worldwide nuclear renaissance. Because if people want a higher quality of life and politically they want, you know, zero carbon, that's— then that's the answer. There are no other answers, you know, that will get you reliable high levels of power without, without carbon. So, um, I, you know, my portfolio is loaded up for higher energy prices. Whether that happens over the next 3 to 6 months, I don't know. But what happens over the next 3 to 6 years?

Marty Bent [46:33] How do you think rates play into this? Obviously, that's another point of focus for market participants right now is looking at Kevin Warsh and the Fed, looking at the Treasury yields, 10-year popped above 5, still hovering around there. I'm not sure where it is today. Obviously, you have this debt situation continuing to balloon here in the United States. And obviously, you have Japan struggling to— or not even struggling. I think they've determined that they're not even going to try to maintain yield curve control as well. And you just have yields blowing out all over the world.

Gary Brode [47:11] Marty, one of the things that surprised me is that people still believe that the Federal Reserve has control over the situation, and they don't. And so you see this thing where people are saying, inflation has made life unaffordable. We want the Fed to fix that. And so the Fed raises and they say, oh no, we're not going to be able to afford mortgages. Okay, well, one, which do you want? But 2, why do you think the Fed has any say over this? And yeah, I, like, I heard people this morning talking about how, you know, the Fed will do this and that and it'll affect borrowing rates and, you know, it'll make life unaffordable for people.

Gary Brode ⋮ I, I don't know why they think that. The Fed has zero control. So I— and I've written, I've spilled gallons of digital ink about this for years— the Fed does not control the yield curve. The Fed controls the overnight rate. So, you know, Marty, let me ask you, if Morgan Stanley or JPMorgan pays 25 basis points more on their overnight deposits at the Federal Reserve, does that affect your life? No, of course not. So, and, and people might say, oh, well, the Fed, but they'll, they'll change the overnight rate and that'll make its way through the yield curve. And the answer is no. It used to do that when we had less than $40 trillion of debt.

Gary Brode ⋮ But at $40 trillion of on-balance sheet debt and another $200 trillion plus of off-balance sheet debt, no, it no longer matters. And here's the proof, right? So everybody was wailing this week that the Fed raised rates and nobody's going to be able to afford anything. Well, you know, your mortgage gets priced off of the, the 10-year, um, Treasury. And I took a look from the beginning of this week to the open this morning. 01%. In other words, the bond market said, we don't care what Warsh is doing. So somebody might say, well, that's one example and it's 2 days. Okay, fair enough. Let's look at the last 2 years.

Gary Brode ⋮ Right. And I wrote in the summer of 2024, Powell's going to hike— sorry, he's going to cut and it won't matter. It's not going to help. It won't get people the response they want. And so we had 2 years of Fed cuts. The Powell Fed started cutting in September of 2024. They cut by about 200 basis points. Take a look over the last 2 years. The yield on the 10-year rose. The yield on the 30-year rose. Right. So the Fed was cutting and borrowing, borrowing rates rose because the bond market was correctly saying we're projecting higher future inflation. And the bond market was right. That's exactly what happened.

Gary Brode ⋮ Now the Warsh Fed raised, and, and the 30-year is down this week. 01%, right? What that's telling you is the people trading the bond market don't care what the Fed is doing, and neither do I. It's just no longer relevant. And the reason we're going to see higher long-term inflation is because what we have— the proper definition of inflation is an expansion of the money supply. And what we have is not only a government that's overspending by trillions of dollars a year, which is bad enough, but they're not using that money for infrastructure that creates value.

Marty Bent [50:35] It's—

Gary Brode [50:35] so much of it is waste, theft, graft, fraud, right? It's, it's not being used to help us. It is being wasted and stolen. And, and then, you know, that, that money adds to the money supply. So, you know, when people are talking about the Federal Reserve, that's not relevant. Inflation is being caused by overspending out of Congress. It's a bipartisan problem, and it's not going to stop. Both parties do this. Nobody is talking seriously about cutting spending. And so that's the direction all of this is going to go. You know, Lyn Alden, one, one of her big memes, she's been saying for years, nothing stops this train, meaning Congress is going to overspend, the money supply is going to expand, Inflation will continue. There is nothing anyone can do to stop it. Nothing stops this train. And as usual, Lyn is right.

Marty Bent [51:27] Who knew all you had to do is spin up an LLC and say that you're providing hospice to people? Spin up an LLC, get a PO box, and get tens of millions of dollars from Medicare.

Gary Brode [51:39] Here's what's amazing to me about this, Marty, and I think this tells you the whole game. It's not amazing to me that people see holes in the system and ways to abuse American generosity. Thieves are going to be thieves. What's amazing to me is that half of the country is getting angry at the people pointing it out, saying, hey, we have billions of dollars being stolen from us every year, and it's systematic and it's intentional. And people are saying, how dare you point that out? It's wrong. You can't look at this. What, are you kidding me? That's our money that's being stolen. And, and you are paying for it in higher inflation, right? And so I, I think it's really interesting that people are getting— you know, people got angry at Elon Musk for pointing out how much of government spending was fraud. And, you know, Elon this, and like, okay, wait a minute, why is nobody going to deal with the issue that money is being stolen from us?

Marty Bent [52:39] They started throwing Molotov cocktails at Tesla dealerships.

Gary Brode [52:43] Yeah.

Marty Bent [52:44] Yeah.

Gary Brode [52:45] And they would have killed people. They wouldn't have cared.

Marty Bent [52:47] Yeah. And again, goes back to this mass psychosis. It's like, how, how could anybody? I mean, actually, I can see how, like, if you are like a democratic socialist or a pure communist, you'd say like, yeah, we're stealing from the system. It's a form of reparations. I think many of those people believe, and it's completely sick. It's a sick mindset. But at the end of the day, it's just overt, in-your-face theft. And as a taxpayer who looks at his tax bill every year, it's like taxes feel like a humiliation ritual at this point.

Gary Brode [53:29] Oh God, they are. They are. And by the way, what you just described, Marty, the Oh God, the, the Piven-Cloward strategy. I may be mispronouncing that.

Marty Bent [53:40] Piven, uh, Piven-Cloward. Yeah, I think it's— I'll look it up.

Gary Brode [53:46] I may be mispronouncing it, but basically these were a couple of socialists in the '60s or '70s who said the, the way we crash the system is by, by making so many people dependent on it and making the, the demands for social services so high that we crash the entire system. And then when it fails, will be able to implement communism. That, I mean, that, that was a state, and they said this out loud, right? Somebody might say, oh, you know, conspiracy. No, no, this is not a conspiracy theory. Go read what they wrote about it. They, they spoke in public. They were clear.

Marty Bent [54:20] Yeah, the cloud-driven strategy.

Gary Brode [54:23] Okay. Yeah, yeah, I had it, I had it mixed up.

Marty Bent [54:28] The Way to the Poor, the strategy to end poverty. urged activists to register every person eligible for welfare benefits who are often blocked by local bureaucratic hurdles onto the system all at once. The goal: overloading local government budgets and agency capacities will create a fiscal and political crisis. The authors believe that the federal government would then have to step in and replace local welfare with a federal system of guaranteed annual income. Getting close to that.

Gary Brode [54:55] Yeah. So look, here's the thing. And again, Marty, one of the things I do whenever you and I do these Um, you know, whenever we do these, these shows, I always go and, you know, I go to the comments and I respond, and inevitably there are a bunch of people saying, you know, I'm a horrible, mean, heartless person and I just want everyone to die. And no, no, I, I just don't want our money to be stolen, and I don't want our free enterprise system to collapse, and I don't want the country to collapse, and I don't want our financial system to collapse. And people stealing billions of dollars and Congress overspending by trillions of dollars and wasting it and, you know, having it be lost to fraud.

Gary Brode ⋮ That, that's not good for any of us. And so, you know, listen, you, you guys can write in the comments that I just want poor people to die, but that's not true at all. And, and I'm not the one trying to harm everybody. And I— listen, as somebody who owns Bitcoin and gold and silver and energy and a home, I actually benefit from inflation. But I don't want that. I want to make my money from generating alpha, from identifying great companies trading at inexpensive prices. But if this is going to happen, then I'm going to own hard assets and I'll benefit from it. That's not what I want.

Gary Brode ⋮ That's just the way the world is working right now. It doesn't mean that's what I want to have happen.

Marty Bent [56:21] Yeah, objectively it is what's happening, and it is incredibly frustrating because, uh, the communists, the, uh, the people who believe in the Cloward Piven strategy will say this is the way we get, uh, we get equality, we, we, uh, we smash the, uh, the wealth inequality gap. You're, you're gonna smash the wealth inequality gap, you're just not gonna have any wealth. Right.

Gary Brode [56:44] Yeah, it's the problem with this. We'll all be equally poor. And by the way, like, worth pointing out, It's, it's these strategies, um, that create inflation. Well, I, I've got news for you. Like, again, the people who write in the comments that I'm a horrible, heartless person because, yeah, this isn't what I want, this is the way it is. But I will point out that inflation is horrible for poor people. It's horrible for the elderly on fixed incomes. It's horrible for people who have to spend, you know, 90% of their income on food and fuel and gas and don't have disposable income. It is great For people who own homes, who own Bitcoin, who own gold, who own hard assets, those are wealthy people.

Gary Brode ⋮ And so somehow, because people— most people are not economically literate, somehow we have a situation where the exact policies that create massive amounts of wealth inequality are being lauded as the ways to decrease wealth inequality. And it's— it is one of the most amazing sleights of hand by the Federal Reserve and the Treasury Department and political activists who have all colluded with these policies to create inequality. And then they say the, the solution to this is more of the same policies that create more inequality. And it's just— And people will question your morals and my morals because we notice this, but More of the same will create more of the same outcome.

Gary Brode ⋮ More of the same government theft and graft will create more inflation, will increase the wealth inequality gap because inflation benefits wealthy people and harms poor people.

Marty Bent [58:33] It does. And I think this is a good segue to tie it back to your El Salvador trip, Bitcoin. But how do you think Bitcoin is faring throughout all of this? How do you think this year has played out and looking forward, and then tying it to your trip to El Salvador? Because I think we both believe that, again, the inflationary pressures are monetary in nature. One of the ways to protect yourself and to, if you want to fix things more broadly, is get back toward a sound money policy, which Bitcoin enables you to do without the government having to do anything, um, what, what's the setup for Bitcoin looking like in your mind?

Gary Brode [59:17] Yeah, so I'm going to speak in, in very round terms here, but roughly 90% of all Bitcoin that will ever be mined and created have already been created. So, you know, we've, we've roughly, we roughly have 20 million Bitcoin in existence. There will be one more for a total of 21 million. Of that, maybe 3 or 4 million have been irretrievably lost. and cannot be recovered. Um, so, you know, the real total supply is going to end up being about 17, 18 million. That last million Bitcoin will be mined over the next, I don't know, 140, 150 years-ish, something like that. Um, as opposed to the US government, which is, you know, people say, oh, inflation's coming down.

Gary Brode ⋮ Like, yeah, great, but M2 is up 5% in the last 12 months, right? And, and that's just the on-balance sheet. If you include off-balance sheet spending, which does count, and off-balance sheet accruals, it's more than that. It could be double that. So I think these trends are in place permanently, and that's been the fate of every fiat currency since the beginning of time. For thousands of years, every fiat currency has collapsed in the same way: overexpansion, debt war, guns, butter, bread, circuses. That's it. People just decided they could fund everything if they reduced the value of the the currency. And that's why all fiat fails.

Gary Brode ⋮ And we're, we're in the early stages of that right now. Um, nothing will, will change that. And Bitcoin is a hard asset. And so I, I want to own that. I think, you know, what we've seen, um, with the, the recent 50%-ish drawdown, which is a lot lower than previous drawdowns, simply where we were in the 4-year cycle. We see this every 4 years, Marty. You've, you've seen it every cycle. You have like some giant crash usually it's more like 75 to 90%. We got an easy one this time. At this point, I don't, I don't panic out of it, right? The last time I bought more in 2022, I just bought more, you know, when Bitcoin went from $64,000 to $15,000.

Gary Brode ⋮ This time around, you know, when it got down into the 70s, I just bought more. I didn't sell it, right? Like, and then when it went down to, you know, $59,000, I don't panic out of it, right? Like, Bitcoiners don't panic. You just hold it. I also think there were 2 things that I would convey about my experience using Bitcoin in El Salvador. One is Bitcoin is absolutely a currency. You know, you could use it for daily purchases, right? Like, there's always that, that joke about coffee. But, you know, it's a currency if you can buy coffee with it. That's the example everyone uses. But you know what?

Gary Brode ⋮ It's actually a really good example because what it says is a currency is something that you can use to make a daily purchase. that you could buy breakfast or dinner or, you know, go to the store or buy a coffee with it. I think that's a really good definition for a currency. And using the Lightning Network is better, easier, faster, and safer than using a credit card. The, the, the transfer was instantaneous, right? So like, I'd go into a restaurant, I would buy dinner, and I would ask the, the cashier, you know, can I pay with Bitcoin? Like, sure, They were happy. They point to the QR code on the wall and I, I was using River, uh, as, as my payment app.

Gary Brode ⋮ I just point at the QR code. I put in the amount instead of having the merchant put in the amount, you know, which somehow they, they have these handheld devices. They never show you, like you're always tapping. And I, I would get rec— I didn't want the receipt. I was getting the receipt to make sure it was the right amount. It always was. Nobody tried to cheat me, but it makes me crazy. They put in the amount facing themselves and then you tap. I have no idea the amount. Using River, using a Bitcoin app, you put in the amount, I would push send, instantly their phone would would get the notification like bueno, muchas gracias, and I would be on my way.

Gary Brode ⋮ It is 100% a currency. Now to me, one of the interesting things that I figured out actually use, and I went through I don't know six seven apps trying to figure out which one to use and what worked quickly and what was expensive and what had the right functionality, and and I outline all of this in. in the white paper that I put out this week. Um, but I also answered the question for people: should you use Bitcoin as your payment system? Should you use Bitcoin to make purchases? And the answer depends on who you are and how much money you have. So, you know, life is not fair.

Gary Brode ⋮ Wealthy people are actually paid by their credit card companies and their banks to use their services, right? You, you get paid interest in a checking account if you have enough money at, at one of these banks. Your credit card company, depending on which credit card you have, will return 1 to 3% of your money depending on what you're purchasing, right? So, you know, maybe you end up earning, you know, 3, 4, 5% using their services. And by the way, when you pay with credit card, what happens? You don't have to pay them for another 30 days. So you keep your money in a checking account, you earn interest.

Gary Brode ⋮ Now, some people get charged to use their credit cards, they get charged to use their debit card, they get charged to have a checking account, they get charged by their bank for things like wires or for ATM withdrawals, right? And so their banks make a lot of money charging these people fees, and it can get really expensive for them. 25%. So here's the thing, if you're getting paid 3, 4, 5% to use the traditional banking service and using Bitcoin will cost you 1 or 2%, then, you know, it's, it's 5% in the wrong direction to use it. But if you're somebody who gets charged constantly from your bank.

Gary Brode ⋮ And I've seen ATM fees of as much as $8. Well, if, if you're withdrawing, you know, $100, which would be a lot for a lot of people, that's an 8% fee just to get cash. And they get charged constantly by their banks. 25% fee becomes a lifeline, and it's much cheaper and faster and easier and better. So the answer of should you use Bitcoin really depends on who you are and the kind of relationship you have with your bank.

Marty Bent [1:06:05] Yeah, I completely agree there. And I thought it was another interesting point that you made in the white paper, going back to buying coffee. If you're buying something under $5, $10, there are cases where the merchant won't let you use a credit card. And so if you don't have the cash, it's, uh, you're shit out of luck. And so like, there's another area where like the Lightning Network, it like fits in perfectly.

Gary Brode [1:06:31] Yeah, I had multiple situations where I couldn't buy a bottle of water because, you know, a bottle of water in El Salvador was like 60 cents, 75 cents. That was all I wanted. Well, they're not going to take credit card for anything under $5. And, you know, there were times— and in El Salvador, they use the dollar, the US dollar. So, you know, the money you're getting from an ATM in El Salvador is exactly the same as what you would get from an ATM in the United States. The bills are the same. It's the exact same money. But there were times that I had just been to an ATM and the smallest bill I had with me was a $20 bill.

Gary Brode ⋮ And Salvadorian convenience stores are not going to give you $19 in change. They don't have that much change. You know, these are small stores. And so literally I could not buy a bottle of water. If you have Bitcoin, you can make a purchase on the Lightning Network and it's not a problem.

Marty Bent [1:07:25] Yeah. Where do you think the biggest pain points is? You mentioned the wallets in the white paper. You mentioned the sort of UX hurdles that you ran into.

Gary Brode [1:07:36] Yeah. Yeah. Cash App in particular, they have a horrendous user interface. It's just horrible to use. It's not— and there are people who might say, oh, no, no, I use it all the time. Yeah, you use it time, you're familiar with it. A first-time user, I, I found it to be confusing. There were other apps that had really good user interfaces. You know, I went to Strike, and I think Strike has a really good product, but in order to buy Bitcoin on their system, I either needed to pay a 2% fee using a debit card, which I didn't want to do, or they wanted to hold my money for 17 days before releasing Bitcoin that I purchased.

Gary Brode ⋮ 17 days is not reasonable, and I don't want to do business that way. Um, you know, like normally you send a check and a bank may hold that, that money for like 2 days, something like that, and they're gonna grab that float for a couple days and make sure it clears. Okay, fine, I understand that. I don't love it, but it's reasonable. 17 days to me is not reasonable. And I actually sent them an email and they responded quickly and politely, and they said, yeah, look, if you use our app regularly, then we'll reduce the hold time. I'm like, okay, look, I'm in Bitcoin Beach for 2 weeks.

Gary Brode ⋮ I'm not waiting 17 days to have access to my Bitcoin, and you're being unreasonable, and I'm not going to play along. So I didn't use that. The thing I will point out that's important, it makes a difference if you're in Bitcoin Beach for 2 weeks or if you live there. Right. So if you live in a place where you, you're using Bitcoin for purchases regularly, then you might have 2 or 3 or 4 of these apps and move sats around from one to the other and be accustomed to that. And, you know, having a delay here or there is not a big deal. If you're somewhere for 2 weeks, then you need to work right away.

Gary Brode ⋮ So, you know, part of it depends on your time frame. It depends on, you know, what it— some of it will also depend on whether you want an app just to make purchases or an app to buy Bitcoin and use that to make purchases. Different apps have different levels of functionality. So these were all things I explored and detailed in the white paper.

Marty Bent [1:09:57] Do you think there's a future in which everybody will be using Bitcoin as money?

Gary Brode [1:10:03] I hope so. I really do. It's just so much better than than fiat. And I would remind everybody, you can't save in dollars, you can't save in euros, you can't save in British pounds, you can't save in yen. The value of your money, the purchasing power of your money is eroded every single month, um, and that's not going to stop. And I think one of the things that's really horrible about that is it's put normal people in a situation where they need to manage their own money. Um, and they, they shouldn't have to do that. They shouldn't have to do that. People should just be able to go to work, have their money deposited in their checking account or their savings account, and not have the value of that money eroded.

Gary Brode ⋮ Um, that in a just world, they don't have to become money managers when they get home from work. But You know, take a look at what's happening, right? Everybody watching this, what's happened to your rent or your grocery bill or housing prices, you know, or any of the things that you buy on a regular basis? It's gone up and people yell about higher prices. But another way to say it is the purchasing power of your fiat, of your dollar, has collapsed. And that's not going to stop. And so, you know, you have all these people who all of a sudden have to figure out, what do I do with my money?

Gary Brode ⋮ Because— and, and, you know, it's always interesting to me when people say, oh, Bitcoin's so volatile. Okay, well, you can either gain purchasing power irregularly with a lot of volatility, or you can be in the safe dollar and just lose a little bit of money every month, right?

Marty Bent [1:11:53] Well, not only that, but it's funny, the dollars in this— everybody, not everybody, I like to reference When Money Dies, and particularly the section of the book where they're talking about how every paperboy and busboy was a speculator talking about stocks, and the amount of risk that people are taking these days just to stay afloat. I think that's I've been observing just the use case of agents since they began proliferating last fall. And one of the top use cases is people trying to build agentic trading systems to trade prediction markets or sports betting markets to make money, to escape the permanent underclass. And to your point, a lot of people say, I'm not going to invest in Bitcoin. I'm going to create this agent that trades for me on all these prediction markets. It's like, well, you're just taking an obscene amount of risk there. And unless you're a top 1% trader, which you probably aren't, you're going to lose money at the end of the day.

Gary Brode [1:12:59] Yeah, it's something I started to see about 5 years ago with some of my younger friends. They were buying zero-day to expiration options, which is basically you're— the only thing you're doing is making a leveraged bet on what a stock price does on a particular day. And people viewed it sort of as this free way to make 40% in a day. And, you know, I have a friend who actually works in finance who turned $5,000 into $160,000 doing this, making these kinds of trades, and then promptly lost all of it. Right. And so, and I keep seeing these stories. And so now we've gone from From buying zero-day to expiration options to sports betting on call sheet.

Gary Brode ⋮ And when you talk to these people, what you realize is they view that as a way to make money. And I'm thinking to myself, you do not have better information than the people who do this for a living and the people who make these markets. There are people like, I get it, you predicted a few NFL games correctly, but it's just long-term, these things don't work unless, you know, you're basically Stevie Cohen and either have information you shouldn't have or just like an insanely good trader or both.

Marty Bent [1:14:23] Well, we saw this with, uh, what's his name, uh, Leopold, with, uh, situational awareness. Like somebody who does have— I mean, I don't think he would ever admit this, but he's married to somebody at Anthropic and was at OpenAI himself. He knows the industry inside and out. He has probably probably more information, probably in the top 0.1% of people with the information as it pertains to the AI industry. And even he wasn't able to outtrade Stevie Cohen and Citadel. Yeah.

Gary Brode [1:14:56] And I think a big part of that was just the leverage. His positions were too big and he didn't have liquidity. Ultimately, Citadel bought him out at a giant discount. They're like, okay, fine, we'll take the whole book, but you're taking a giant haircut. And he had to do it because he was going to keep bleeding. he kept getting margin calls and the reason he was getting margin calls was because he had to sell, right? It was a circular reference basically, right? It's what George Soros would refer to as— oh God, what's— I just lost it, Marty. It was reflexive, reflexivity, right?

Marty Bent [1:15:34] Mm-hmm.

Gary Brode [1:15:35] That was basically the tendency of any system to perpetuate itself. And you do get that in finance, right? So So Leopold had to sell. That caused stock prices to drop. When that happened, he got another margin call, so he had to sell more. That caused stock prices to drop. He got another margin call. It's the perfect example of what Soros called reflexivity.

Marty Bent [1:15:54] Yeah. A lot of leverage out there.

Gary Brode [1:15:59] Yeah.

Marty Bent [1:16:00] It's the fourth turning. Fourth turning seems to be upon us. Stay frothy. I think saving in Bitcoin for the long term is the best way to to weather this storm, me personally.

Gary Brode [1:16:12] Yeah, I agree. I agree.

Marty Bent [1:16:14] Gary, thank you for your time. Thank you for the white paper. We're going to link to the white paper in the show notes. Go read it. I think very objective, but also very encouraging. It seems like what's happening in El Salvador is a great blueprint to take to the rest of the world. And we're beginning to see it here in America with Square terminals and things like that. I was in Birmingham, Alabama, earlier this summer, wandered into a coffee shop, Square Terminal, paid in Bitcoin. It's happening.

Gary Brode [1:16:45] It's happening. Yeah. I hope so. And Marty, thank you so much. Great speaking with you again. I always love our conversations.

Marty Bent [1:16:51] Always a pleasure. Enjoy your weekend. Enjoy South America. Enjoy your travels. And we'll do this again at some point, maybe later this year, early next.

Gary Brode [1:17:01] Looking forward to that. Thanks, Marty.

Marty Bent [1:17:02] All right. Peace and love, freaks. Thank you for listening to this episode of TFTC. If you've made it this far, I imagine you got some value out of the episode. If so, please share it far and wide with your friends and family. We're looking to get the word out there. Also, wherever you're listening, whether that's YouTube, Apple, Spotify, make sure you like and subscribe to the show. And if you can leave a rating on the podcasting platforms, that goes a long way. Last but not least, if you want to get these episodes A day early and ad-free. Make sure you download the Fountain podcasting app. You can go to fountain.fm to find that. $5 a month gets you every episode a day early, ad-free. Helps the show, gives you incredible value. So please consider subscribing via Fountain as well. Thank you for your time, and until next time.