WBD688 Audio Transcription

Bitcoin, the Ultimate Reserve Asset with Jeff Ross

Release date: Friday 28th July

Note: the following is a transcription of my interview with Jeff Ross. I have reviewed the transcription but if you find any mistakes, please feel free to email me. You can listen to the original recording here.

Jeff Ross is the Founder & CEO of Vailshire Capital Management. In this interview, we discuss Jeff’s twin expertise in finance and medicine, the impact of AI, and the importance of personal responsibility. We also talk about the state of the global economy, liquidity in the Bitcoin market, the benefits of the state having Bitcoin as a reserve asset, and the changing narrative around Bitcoin.

“We’re sort of in a 4th turning period right now, it’s probably actually going to end in a major war which none of us want. so, what are some alternatives, and I think Bitcoin is literally the most viable solution.”

— Jeff Ross

Interview Transcription

Peter McCormack: Hello.  Yeah, so 75 HARD.  So, I want to lose weight because I keep getting fat shamed.  I keep getting fat shamed in the fucking comments!  And it's funny, you go from when I started, I've basically just got fatter as this podcast has gone on.  And I've probably been saying for two years to Danny, I need to lose weight and don't do shit about it.  So anyway, Jessica Hodlr, she put this thing up, she said, "I'm on day 75 of 75 HARD".  I was like, "What is that?  That sounds like something I want to do".  So, I started it.  It's no drinking, no cheap meals, keep to a diet, train twice a day, once has to be outside, both for 45 minutes, and you've got to read ten pages of book, and some other stuff.  So, I managed 15 days and I was really good.  And I'd shifted nine pounds and I felt good, but I couldn't get a second workout in one day and so I broke.  And then I was going to go back to it and I didn't, but it was almost like a circuit breaker like a reset, and so I carried on not drinking.

I didn't drink for 35 days and then I got here and I had a beer and a whiskey with Danny on the first night, but I haven't drunk since, and so I've not given up drinking I'm just not drinking for the sake of it.

Jeff Ross: Got you, yeah.

Peter McCormack: If I want to have a beer, I'll have a beer.  And if I don't want to have a beer, I won't have a beer.  Why do you not drink?

Jeff Ross: No, I -- 

Peter McCormack: I drink like a motherfucker! 

Jeff Ross: I'm not a heavy drinker.  I'll drink a few beers a week, that's about it.  If we would have done an afternoon session, I would have thrown down a beer with you guys, but water works.

Peter McCormack: Dude, Odell would have had one at this time!  You can have a beer if you want. 

Jeff Ross: I'm not as hardcore as Odell. 

Peter McCormack: I mean nobody knows what time we're recording. 

Jeff Ross: That's true. 

Peter McCormack: Nice to meet you Jeff. 

Jeff Ross: Nice to meet you too. 

Peter McCormack: We've been social media friends for a while, admired you a lot, and Danny said, "We're going to make a show", which is super-cool.  I think you're one of the nicest, most rational people on Twitter, we don't get to see too much crazy stuff.  But for people who don't know you, Dr Jeff, tell them all about you.

Jeff Ross: Sure, I'll try to keep it short. 

Peter McCormack: Hey man, it's a podcast, go as long as you want.

Jeff Ross: All right.  So, yeah, people like to hear my story of how did a doctor get into finance.  So, way back in college, which was in the 1990s for me, early 1990s, I had to decide if I wanted to follow a career in investments or become a doctor.  And it was tough for me, but I ended up deciding to become a doctor.  As you guys probably know, once you do that, your life is pretty much set for a while.  So, I did my pre-med stuff, I was a biology major in college, then went to medical school. 

In between there, by the way, I had two years off in between before I applied to medical school.  I went to Jerusalem, lived in Jerusalem for about nine months, worked as a nursing assistant there, which was awesome, toured around, learned Hebrew and Arabic a bit and some other languages because it was a hospice that I worked at where people would send their basically loved ones to die near the Old City.  That was awesome.  And then a friend of mine came over for the final few months, and then we travelled through Europe, going kind of from place to place because lots of the other volunteers at this hospital or hospice were from Europe, we were the only two Americans there.  So, that was fantastic, kind of bounced around Greece, Italy, and then went up through mostly Western Europe.  That was a great experience.

So, then came back, went to medical school, and then moved from Minnesota, where I grew up, to Wisconsin, did six years of residency, so that's training for radiology.  And then I did a fellowship in something called Interventional Radiology, which is image-guided, minimally invasive surgery.  So, most people don't totally know what that is, but it's like if you ever hear of people getting stents in their arteries, or getting a catheter put in, maybe a port for chemotherapy, I was the guy who did that.  I used to poke holes in people, and then if they had a cancer, like a tumour on their kidney, I would put a probe into it and then burn it or freeze it so they wouldn't have to get their whole kidney taken out.  So, minimally invasive surgeries, really cool stuff. 

I got into private practice in 2008 in Colorado Springs.  I became a partner a couple of years later in the group and then, because I can't sit still, got back into investing.  So, back in 2009, I started a blog teaching people how to invest on their own. 

Peter McCormack: Bought some Bitcoin. 

Jeff Ross: Yeah, I bought some Bitcoin, actually I bought it in 2008.  So, I even, front-ran Satoshi; just kidding!  No, I didn't know anything about Bitcoin at the time.  So, teaching people about it, I got picked up quickly by Seeking Alpha and The Motley Fool and used to write for them.  And then I had built up enough of an audience of people who said, "Hey, we like your style.  We like it that you're a doctor", that I kind of focused on healthcare stocks and those sorts of things back then.  They said, "Hey, could you manage my money?"  I'm like, "Oh, I'm just a doctor.  I just do this for fun.  This is kind of a little side gig". 

But it planted a seed in my brain and I thought, "Do I really want to do this surgery stuff, with being on-call every fourth night for the rest of my life?"  And then the other downside of interventional radiology is to see inside of patients, you have to usually put radiation into them, which means if I'm standing next to the patient, I'm getting radiated all the time.  So, in fact, the guy that I took the job from in Colorado Springs, he actually had to retire because he had a brain tumour that they think was probably related to the radiation.  So, you're standing next to this radiation column, basically.  He got a brain tumour on the left side of his head, had a major surgery, and so such is life.  But I just used to talk to my wife all the time, like is it worth it?  Is it worth doing this to help people, but to also have this risk that I'm going to get a tumour when I'm 50 and die of that.  So, those are the decisions I made. 

Out of that came Vailshire Capital Management.  So, I decided, "You know what, I'm just going to do this.  Life is short".  So, I started an RIA and a hedge fund called Vailshire Partners, founded that in 2013, started managing money professionally in 2014.  By 2015, I just got so busy with the two careers that I had to do something, so I gave up the interventional radiology side and just did diagnostic radiology.  That's where if you go in and get an MRI or a CT scan or X-ray, I'm the doctor that puts a report on that, interprets the results.  So, I was able to balance that or juggle that for a little bit, then it got to be too busy even doing that with my group, because I had to be hospital-based in the clinic, so I couldn't really run my financial business and be at the hospital at the same time. 

I ended up retiring completely from radiology then back in, I believe, 2017.  Then I got bored again and got my MBA in finance in there just to kind of have it, because a lot of people used to get on my case like, "Oh, doctors are terrible investors.  Everybody knows this.  Why would I want a doctor to manage my money?"  So, I'm like, "Okay".  So, I went back and got an MBA in finance and did that, so now I can say MBA, so people can't make fun of me.  It was interesting, mostly worthless though.  I would encourage people, people ask me often, "Should I go and get an MBA, is it worth it?"  I say, "No, it's just not.  You can learn so much more by just starting your own business, investing on your own, making your own mistakes".  I learn from mistakes, I've made practically every mistake you could possibly make, try to stay humble enough to learn from them. 

So, anyways, now we're up to 2019.  I went back and I missed radiology a bit, and I was done with my MBA, so I did something called teleradiology.  I work from home, so I was able to do Vailshire on one side of my office, and then I have six monitors set up on the other side of the office where I was reading radiology for a New York-based group.  And I did that for a couple years, and I'm almost getting to the end of this.  So, we're up to 2021.  2021, Vailshire was growing so quickly and it was still just me, so I needed some help.  I could either get help or be done with radiology, so I quit radiology again.  I'm going to sound like just this crazy, dirty man, I don't mean to be.  I'm usually actually pretty dedicated to what I do and I stay focused, but radiology is kind of this love-hate relationship that I have an off-and-on again relationship.  So, 2021, I retired again from teleradiology, just did Vailshire, and now fast-forward to today.

So, I haven't done radiology for about a year-and-a-half.  I'm starting it up again in August, so actually next month to do it, but kind of a part-time, full-time gig, and I'm going to hire another person for Vailshire to handle the front end, to do all the operations side of things, all the investor relations, and I'm going to be the guy in the background just doing the investments, writing my newsletters, doing interviews, things like that.  So, that's where we are today.

Peter McCormack: Wow, that's fascinating.  What a journey.  So, I would say it makes me think of that thing, "I try to get out but they pull me back in".

Jeff Ross: Hotel California?

Peter McCormack: Yeah, "I keep getting dragged back into radiology"!  So, on the radiology side of things, when you do teleradiology, what exactly is it you're doing; you're remotely reviewing scans?

Jeff Ross: Yeah, so it's like I'm one of the New York-based radiologists.  I just have my six computers on my desk, and I'm seeing the same work list that they're seeing.  So, you're somewhere in New York, you go get an MRI or a CT scan, it pops up on a list.  I can be in Colorado reading that study.

Peter McCormack: When's AI going to read that study?

Jeff Ross: Soon.  So, I think the first specialty of medicine to go down to AI will be radiology.  It just makes sense, it's just pattern recognition of images.  Way more complex than most people think it is, just because you can understand basic anatomy, but everybody's a little bit different.  And then to see how different disease processes affect the body, and then how does it affect it on CT; how does it affect it on the different sequences of MRI; and there's tons of different sequences.  What does it look like on ultrasound; what does it look like on x-ray?  There's a lot more complexity to it.  I tell people it's like self-driving versus full self-driving.  It's super-easy to have to programme a car to drive down Phoenix in the middle of the day with no rain or no people around.  But when you get roads without markings or road construction and then there's people darting out on the road and maybe a deer jumps out in front of you, how do you programme for that kind of stuff?  It's much more complicated.  So, radiology is like that too. 

But that said, I think my plan is to work as a radiologist until the field dies and is consumed by AI.  And then ironically, I'm also in Bitcoin, which I think is going to consume the field of finance and kind of take down Wall Street over time as well.  So, I plan to be out of a job completely within ten years or so for both of these fields.

Peter McCormack: It'll probably be about the right age to retire. 

Jeff Ross: Yeah, I think so yeah.  The AI side I think is really interesting.  I keep getting sucked into it.  I talk about a lot on the podcast, mainly because I use it nearly every day now.  I use it to write things, I've been using it for design concepts now, I've been using Midjourney.  It's a tool that saves a lot of time, makes us more efficient, so I'm all for AI right now.  But I have heard on the radiology side of things that there is an expectation that AI will be more accurate and faster, and it will get to the point where you won't -- it's almost like the AI will do the first diagnosis and then pass over to the, I don't know, you would probably tell me who that would go to. 

Jeff Ross: Yeah, so that's how I view it too.  So, first of all, it's almost good enough already, but I think the medical community will resist it, right, because they don't want to lose their jobs.  Being a radiologist is pretty lucrative also. 

Peter McCormack: So, they're already testing it? 

Jeff Ross: They're already testing it, oh sure, there's lots of AI-based radiology programmes out there.  But what will happen, I think we're going to have this awkward hybrid period for a while, maybe five, ten years, where they'll implement AI but they'll always have a radiologist on top of it.  They'll call it an assistant, a radiologist assistant, and then people are at some point going to realise it does at least as good of a job, if not better, way more efficient, way more cost productive.  So, I think what we can do is at some point, they're just going to be like, "What do we even need the radiologist for?"  So, I could see maybe having a hospital having one radiologist and then having AI do everything, but the radiologist oversees the conclusions.  And then at some point, they're going to be like, "Look, we don't even need the radiologist". 

Danny Knowles: There's probably something in it with how comfortable the patient would feel too.  It's like getting on a plane.  I know the planes fly themselves, but you wouldn't get on one without a pilot. 

Jeff Ross: You still want to know somebody's in the cockpit.  

Danny Knowles: Yeah. 

Jeff Ross: And so, yeah, exactly the same with medicine I think too. 

Peter McCormack: It's funny, my dad was an aircraft engineer and he said to me, "The biggest risk to a plane is still the pilot; pilot error is the biggest risk".  If you actually go and look at a number of the recent crashes over the last ten years, you'll see most of them come down to some form of pilot error.  And so eventually, we'll get to a stage where planes will entirely fly themselves, but I don't think I'm ever getting on a plane without a pilot, just in case.

Jeff Ross: Oh, you will, someday.

Peter McCormack: Oh, I don't know, man.

Jeff Ross: Ten years from now.

Peter McCormack: I hate flying as it is.  So, the AI now is already as good, but I guess the fear is AI's still learning, it could make mistakes?

Jeff Ross: Yeah, pretty much.  Again, it's useful to think about it for driving, right?  So, people just still don't quite trust it.  I have a Tesla, actually.  I have a bunch of old, terrible cars, and then this fancy Tesla.  It drives AI, excuse me, that's full self-driving.  It does it really well about 95% of the time now, but about 5% of the time, we almost do die and we almost hit people and we go over curbs a little bit.  And so it's still learning, and I like to kind of test it.  I know that each little mistake it makes, and probably my reaction, they're probably watching me freak out and grab the wheel and do something.  So, it still has some learning to do, but I think of radiology as the same.  It's still going to do it.  I think in general, it could already do lots of scan reading better than radiologists do, but it still makes some kind of glaring mistakes, and it's working on that.  So, as the database builds, it will get better and better.

Peter McCormack: But I'm assuming radiologists also themselves miss some things.  And there are times that maybe AI's finding something that the radiologist doesn't find.

Jeff Ross: Absolutely.

Peter McCormack: Yeah, that self-driving is kind of interesting.  So, if you're testing it, you've still got to be pretty alert.

Jeff Ross: Oh yeah.

Peter McCormack: So, on the highway, no, I barely pay attention because it does so well.  I go to Colorado Springs, to Denver on a regular basis and it's fantastic.  And if you're in stop and go traffic, it's great.  You barely need to pay attention because it just keeps the distance from the car in front of you and changes lanes if it needs to.  But when you're in a busy city, it's terrifying to use it.

Peter McCormack: Right, and so if you're on the highway and you don't need to do anything, what do you do?

Jeff Ross: I pay attention like we all should.  It's easier to get distracted by your phone and do other things, yeah.

Peter McCormack: I don't even know if there's any laws around this, that you're still meant to be fully… but I have seen the videos of people asleep or on their phones.

Jeff Ross: Yeah, you could.  I mean, I could basically nap.  Well, I say that, but Tesla still makes you about every 20 seconds, you have to shake the steering wheel to let them know you're there, so they don't let you fall asleep.

Peter McCormack: How did that one work then; I've seen the video of someone asleep? 

Jeff Ross: Yeah, there's something --

Danny Knowles: What happens if you don't make it though; does it pull over?

Jeff Ross: Then it freaks out.  So, the lights start flashing and then noises and then it actually just shuts down and it won't let you do the full self-driving if you break the rules too many times in a row.

Peter McCormack: See it's a weird thing, I actually enjoy driving, I like the process of driving.  Like when we're away making films, the crew are like, "Should we drive so you can rest?"  It's like, "No, I enjoy driving".  I can't imagine a world where the car drives for me.

Jeff Ross: I said the exact same thing before I got it, but then you get really used to it quickly.  It's just so convenient.

Peter McCormack: I don't want to buy an Elon car anyway, fuck that guy!  Yeah, what a fascinating career, and it's cool that you get to do both. 

Jeff Ross: Yeah. 

Peter McCormack: So, what is the edge do you think you've got in finance?  What is it, because you said people liked what you had to say, people are interested, wanting you to manage their money; what was your edge; where was your…?

Jeff Ross: I think it's not what most people think.  It's not being smarter in finance, it's not having better degrees, I think honestly, it's humility, it's patience.  Those things help you to do better.  Knowing yourself; are you more of a trader; are you more of a long-term investor; do you want to short; do you want to just be kind of a long-only type investor?  Greg Foss says this regularly too, but I've made every mistake you can make so far.  I'm sure I have a lot more to make, but I just kind of look at it like, you know what?  You've got to stay humble, you've got to keep learning.  I always do just, this sounds trite, but it's true, just always what's best for my clients.  I'll take a hit if I have to, if it's a benefit to my clients. 

Having that in mind, I will tell you though that I literally used to have patients dying on my table in front of me.  They would get in a car accident, they'd be internally haemorrhaging, and I was the guy that had to get in there with a catheter and find the artery and stop the bleeding so they didn't die.  It's more stressful to me to actually manage money.  Managing money in a bear market, when you're losing money for your clients, and I'm losing to the S&P 500, it's so stressful.  It keeps me up at night.  I wonder, what am I doing wrong; how can I make my system better?  I would just tell people, a lot of people think, "What a great job.  You just sit there and parasite, siphon off of people".  I used to think that same thing before I went into finance; you're just some parasite.  And honestly, I think most of the industry is that way.  But I think for fund managers who really love investing and who are in it for the love of investing, there is a big value add.  But it's not without stress, for sure. 

So, being a doctor doesn't give me much of an advantage, other than I'm analytical, and I'm kind of a systems-based, engineer-based investor.  I think some of the best investors are that way as well, and some of the best macro thinkers.  I think of Preston Pysh, Lyn Alden, these guys are former engineers.  They think in terms of systems and how can I improve this system.  And so that's what I do as well.  That's how my brain works logically, is I always want to have a better investing system for my clients and for my fund.

Peter McCormack: Well, we'll get into the wider system, but I thought it was quite interesting when you talked about doing an MBA and it's a complete waste of time.  My son just quit uni, he barely did finish his first year.  He was doing an art degree.  He came home at Easter and it's clear it wasn't working for him.  Me and my dad were there and we had the conversation with him and said, "Well, you've got three more years to go.  If you don't enjoy it, you don't do the work, well there's an option.  You can come and work for me, your dad, and see how you get on", and he took that.  I think it was a lucky get-out for him because he was behind on the work.  But he went to my dad after a couple of weeks and he said, "I've learned more in two weeks working with my dad than I've done in all of my schooling".

That whole university thing is, well, I used to say university, we had this lad when I used to have my advertising agency, one of his teachers got in touch and said that, "He wants to work in the advertising and marketing industry but he's not sure he wants to go to university, what do you think he should do?"  I said, "Well, you definitely don't go to university to learn advertising".  I said, "If he comes and works for me for three years, even if he worked for free, he'll be more employable than anyone who's done a degree.  But he can't work for free, so we'll pay him, so he'll get paid.  He won't get debt and he'll be more employable than anyone else". 

I hope he doesn't mind me mentioning, but Will's in a similar scenario.  I think the majority of degrees are an absolute waste of time.  If you're going to university to have fun and drink beers and party, fine, go for one year, but I think it's a complete waste of time.  I've employed people who've come in with a first, and the first six months they're working for you, you're just training them how to work.  It's the conditioning for how hard you have to work, how you deliver.  I think universities, I mean it's probably necessary for medicine and law and accounting, but certainly for the majority of industries --

Jeff Ross: Yeah, and if I could interrupt, necessary only because the regulators make it so.  Like, you can't be a doctor in the US unless you have the appropriate credentials.

Peter McCormack: I'm okay with that one, by the way!

Jeff Ross: Right, exactly.  But to your point, I think we're moving to a world back to the master-apprentice relationship, which is awesome in a lot of ways, and I think that's something that Bitcoin affords us, is we'll be able to move into that lower-time-preference training, where people just really develop the skills of their master and become just an excellent apprentice and become masters themselves.  I'm excited for that era, and I think you could do that easily in medicine actually, ironically, and it's not easy, the training is not easy, but I think that you would be at least as effective of a surgeon or as a physician if you could work just closely with another physician for years and years, and I don't know that you need to go through all those hoops. 

A lot of med school today is you're doing this extracurricular kind of things, right?  You're learning training and, well, I don't even know how far we want to go in this, but you're learning non-medical training that is deemed important by the state and by the regulators, but doesn't necessarily make you a better doctor. 

Peter McCormack: What do you mean by that, "non-medical training"? 

Jeff Ross: So, things like, well, first of all, things that are important.  I think what's extremely important in medicine and healthcare, as we all know, nutrition and exercise.  That's the foundation of health and sleep, those three things.

Peter McCormack: There's no money in that.

Jeff Ross: It's hard to make money in that, and that's legitimate.  I think that, first of all, the pendulums swing very strongly in both ways, and usually the extremes are wrong.  The truth is usually somewhere in the middle, whether we're talking about COVID, whether we're talking about how doctors, big pharma -- one of the big narratives out there is that medicine is just owned by big pharma.  That's sort of true, and there are truths to that, but that's not totally true.  Doctors are independent thinkers.  Most doctors go into medicine because they truly want to help people.  They are smart people who want to go out and help others, they're service-oriented, kind of like military people.  A lot of people go into the military, think they're going to do good for the world and use their military and physical skills for that. 

But the problem is, the system is broken, and that's the thing.  So, these systems, and I would say, because of government's hand on that and because of the broken money, it affects all of these systems.  So, good people go into the system and then they get trapped within it.  Even in medicine, even though I'm going back into it and I have this ongoing, off and on, on-again, off-again relationship, I just feel like a cog in this healthcare system.  I'm not the one making these decisions that makes it so clunky and inefficient and expensive for people.  Super-frustrating for me.  I used to do procedures on people and I would have patients come in and be like, "I can't afford this.  I was just diagnosed with cancer".  I'm here maybe I'm going to do a breast biopsy or a thyroid biopsy or a liver biopsy or something, that's the kind of stuff I used to do.  They'd be like, "I just can't afford this procedure". 

I had some clients, I keep saying clients, I had some patients who would be just in tears, like, "I don't know what I'm supposed to do right now, I need to get this diagnosis, but I can't afford the many thousands of dollars".  So, the healthcare system is so inefficient, and then there's people like me who just truly want to help people.  But you're stuck in this system.  And then one other case in point, one of these patients, who was just sobbing about how expensive the procedures are, and she was very angry with me, because on the bill it says, "Dr Jeff Ross charged you $6,000 for this procedure".  And I'm like, "Just so you know, here's how this works".

Peter McCormack: "I don't get $6,000".

Jeff Ross: I don't get $6,000, I actually got about $60 from that procedure.  So, if you want to talk about whether or not that's fair for me spending an hour to do this biopsy and getting paid $60, we can talk about that.  I said, "But you should be angry at the hospital.  The hospital is charging you $5,000 for this room, they're taking the fees from this, and then the insurers in between, it's all this whole opaque system where the insurers are dealing with the hospitals and the clinics, and the doctors are left out of these negotiations.  We don't know how much this patient, patient X, is getting charged or patient Y.  And it's different for each patient based on their insurer, if they have it or not.  It's just this crazy, opaque, ridiculous system, and because of these inefficiencies, the people in the middle, the insurers and the administrators, they're just siphoning off the money, and the doctor-patient relationship gets left off to the side, and that's almost a secondary event.  That's what instigates the fees, but it almost doesn't even need to happen as far as the people in the middle are concerned.  And so very, very frustrating system. 

I think a lot of the military is like that, and as an American, we deal with this as well, right?  I love America, I love the ideals of America, the freedom that it's supposed to imply.  And I love supporting vets.  Colorado Springs is a huge town for veterans and for active officers, because we have the Air Force Academy and Army base there as well.  But, and the military people will tell you this, they go on these missions that they don't agree with and they're wondering, "What the heck am I doing, halfway around the globe doing some crazy mission, killing people that I don't know, for what?".  And so it leaves a lot of people asking like, "Who's in charge of these systems?  What am I doing?  I thought I was here doing good, but I feel guilty being a part of this system".  I have that as a doctor.  I know they have that in the military.  School teachers have that because they're told what they have to teach, what they can say, what they can't say.  It's frustrating for everybody.  It's this whole system-wide process of all of these major US-based organisations that are just broken and corrupt down to the core.

Peter McCormack: Well, this is where I think Mark Moss has a really valid point.  I've had Mark on the show a few times and he talks about this kind of peak centralisation.  And whilst I don't agree with Mark on everything, I think he's entirely right, we have reached this peak centralisation where we have these massive institutions.  It doesn't even matter if it's the UK or the US, I think the US is worse, and I think we have these global institutions, whether it's the World Health Organisation whether it's the UN, but we have reached this peak centralisation and the incentive structures of these entities are such that we aren't delivering, we are massively inefficient and it's really interesting when you brought up the military.  There's a really good documentary the BBC produced, called Once Upon a Time in Iraq, I think it is.  It's a four-part series and it's really, really worth watching.  If we dig out the link, I'll send it to you.  And there's a moment in there where a soldier's being interviewed and he's like, "I don't know what we're doing here, or why we're here.  What are we doing?  We're meant to be bringing freedom?  This isn't making any sense", and I think a lot of soldiers got disillusioned with that entire war.

Going back to the health service though, we've talked about it a lot on here and Bitcoin definitely changes you.  For me, I've definitely moved towards somebody who believes that we should have much smaller government.  I'm not completely anti-government, I just don't like where we've got to at the moment, but I've always struggled with those who don't like the idea of, say, the NHS in the UK.  And by the way, the NHS has huge issues right now that definitely need fixing, but I have always liked the fact that if I break my leg, I am not going to be bankrupt from that; or if I have cancer, I'm going to get treated.  And that's anybody.  And it's really hard to argue against that.  Nobody in the UK wants rid of the NHS.  If you had a vote, what do you reckon, Danny, what percentage would keep it? 

Danny Knowles: Keep it?  Yeah, 80%, 90%.

Peter McCormack: Yeah, maybe even high 90%s.

Danny Knowles: But I think at the same time, I've said this before on the show, I think most people would agree it needs some kind of reform.

Peter McCormack: Definitely needs a reform.  The problem is, it's a vortex for money.  Just more money goes in and it stays inefficient.  And my mum worked in the NHS, she was a nurse, and she often talked about, there was just this massive growth of red tape and bureaucracy that got in the way of nursing.  So, it does need reform and I've had exposure to the US health system.  Danny had to rush me to hospital one day with one of my SVTs and you know all about those. 

Jeff Ross: I probably did that kind of stuff.

Peter McCormack: Yeah.  I've had that all tested now.  I had an echo and a stress test.  By the way, could I just say, that was the weirdest thing.  So, they put a drug in me to increase my heart rate, and so I was laying there and just going, "Fuck, fuck"; that so freaked me out. 

Jeff Ross: Yeah, it's uncomfortable. 

Peter McCormack: Yeah, but I've been given the all clear, I've got no heart issues at all, which is great.  But I've had exposure to both and I think the top-end healthcare in the US is definitely better than the UK.  I know a friend of mine, they treated their son for cancer in the US because it's better treatment.  But anyone can get treated.  And private healthcare works really well in the UK, in that you're essentially subsidising the NHS.  So, my health insurance is £200 a month for the highest quality care you can get.  If I have cancer, I'm seeing a consultant within 24 hours and you start treatment immediately.  When I had my back surgery, when I had my MRI for my herniated disc, I was in surgery three days later and the whatever it cost, I think it was £9,000 for the operation, was just paid off by my insurance. 

So, we have a system which obviously collectively works better for people.  Individually, not so, because we have waiting lists, etc.  And I've really struggled to let that go, despite people going, "Oh, you fucking socialist", or whatever, I've really struggled.  So, I'm really intrigued to know how you would fix healthcare, how you think it should work.  Yeah, that's interesting, Danny's just pulled up, "Just 10% of Britons think ministers have right policies on NHS".  There's so many problems with the NHS.  One of the problems is, every election campaign, every single party will say, "We're going to give more money to the NHS".  I'd love you to find, Danny, the increase in fund -- the NHS budget over time.  So, I'm rambling lots of different things here, and I've been speaking to people in the healthcare sector, and been finding out why there's been massive increases in wait times in accident and emergency, and big issues for -- okay, so here we go.

So, in 2008-2009, the NHS budget, I'm assuming that's billions, was a £121.5 billion.  This year's going to be £180 billion.  So, that's a 50% increase in, what's that, 10, 12 years?  I know you can account for some inflation, but that's massive.  But in that time, waiting lists have gone up, and so one of the big issues now is when I was speaking to -- I spoke to both a nurse who worked in an A&E, and I spoke to a paramedic, and they said, "People think of the NHS now like they think of Uber or Deliveroo, 'I've got any issue, I'm going to phone up and I'm just going to try and get treated' rather than wait for the doctor" and they are dealing with a huge amount of anxiety and panic attacks.  And so, they have a lot of people come to the hospital,, like I've been with my SVTs, where there's nothing wrong with them.  And so, that's been a big issue.  Sorry, I've rambled on for ages there, how would you fix healthcare?! 

Jeff Ross: Well, I'll tell you how I wouldn't fix healthcare, because I'm 48 now so I've been around the block a few times. 

Peter McCormack: Looking good for 48, man. 

Jeff Ross: Yeah, look I feel old, thank you. 

Peter McCormack: I feel great! 

Jeff Ross: Yeah.

Peter McCormack: Check me out! 

Jeff Ross: That's right.  So, what I've been hearing since the 1980s is that the solution needs to come from inside.  Politicians are going to -- if you just elect the right person and get the right President in place and get the right set of Democrats versus Republicans, then we can fix healthcare.  It cannot be fixed from the inside, completely agree with that.  Jeff Booth talks about this kind of stuff a lot and I totally agree.  You can't fix a problem system from within the system.  You need to get outside of the system and create an all-new system.  So, I'll just do a quick summary of things that I think about healthcare that I think would be helpful. 

First of all, health insurance, to your point, has been basically bastardised.  It no longer means insurance in the pure sense of the word, right?  So, for instance, in America at least, we have fire insurance on our house.  My house actually burned down in 2012, we had this big fire in Colorado Springs called the Waldo Canyon fire.  It came out, took down 370 houses in our neighbourhood.

Peter McCormack: Holy shit!

Jeff Ross: Yeah, crazy.  So, I lost 99% of all my stuff.  That's a story for another day.  But we had fire insurance, right, for that one crazy thing that you need.  When you need fire insurance, it's here for you when the worst possible catastrophic event happens.  What is healthcare?  Healthcare in the US, and it sounds like the NHS is similar, you go in if you have a sniffling, some sniffles, you have an earache, you have an SVT, or you have cancer, or you get flown in from a helicopter because you got in a horrible crash in the mountains, or something.  So, I would say that number one, insurance should go back to being insurance, health insurance.  It should be for, and the concept that's closest to this in the US is high-deductible health plans.  So basically, if you have a catastrophic event, if you're in a terrible car accident, your whole family or something, and you're going to incur hundreds of thousands of dollars of bills, you definitely should have insurance for that kind of thing.  If you get diagnosed with cancer that's going to require tens of thousands of dollars of treatment, you should have insurance for that. 

For basic stuff you should not have insurance.  If you break your finger, if you have a cold or maybe you have COVID or not, you want to go get tested, insurance should not cover that kind of stuff.  So, that's the first problem.  You have to delineate what is a catastrophic event and what is just kind of routine healthcare.  Routine healthcare should be paid, I believe, completely different than how it is now.  Right now, the system is totally opaque.  The patients don't know how much things cost, the doctors don't know how much things cost.  I tell people this; imagine going into McDonald's and saying, "Hey, I want a Big Mac and fries and maybe a Coke".  And they're like, "Okay", and they just gave it to you.  And they're saying, "We'll bill you in a month for that".  And you'll be like, "Well, how much does it cost?"  And they're like, "We'll tell you in a month".

Peter McCormack: And you get a bill from the bun company, you get a bill from the burger company, a bill from the cheese company.

Jeff Ross: Exactly, and that's what happens.  I just had some major health stuff back in December.  I had this nose surgery because I couldn't breathe very well, and then it went bad and I got this face infection that was crazy, and I had to have all this stuff done.  Then I had some clots in my arm that then went to my lungs, I had something called pulmonary embolism.

Peter McCormack: Oh, that's dangerous.

Jeff Ross: Yeah, I almost died, it was pretty wild.  So, I had a really rough like three-month stretch here a couple months ago.  But so, thankfully I got past it.  Thank you, thanks deserved.  But I got to see the system from the inside as well.  So now, I'm the patient, I'm sitting in this junkie ER in our town, waited for five hours to be seen, and I'm having severe chest pain, I literally can't breathe.  I'm telling them, I said, "I'm a doctor", like I was telling the people, "I'm a doctor, I don't speak in hyperbole generally.  I'm telling you this is the worst pain I've ever felt, I can't breathe, I feel like I'm going to die, I think I might die, this is how bad this is".  And they're like, "Okay", and they sent me off in the waiting room, they started an IV, put a tag on my wrist, and then I just sat there. 

Again, you don't know how much it's going to cost, don't know who's going to see me.  An ER doctor, on one of the times I went to the ER, came to see me and said, "Hi, I'm not actually doing anything, but I'm in charge of the ER tonight, so I just wanted to say hi, everything good?"  And I said, "Yeah".  Literally, that was our encounter.  I got a $1,000 bill from her a month later.  $1,000.  And I'm like, you literally, literally did nothing other than say hi to me. 

Peter McCormack: But that's a scam. 

Jeff Ross: Yeah, it's all a scam.  So, again, opaque pricing filled with middlemen who benefit from the opaque pricing.  How would I fix it?  The first step I would do is make it so just you have legitimate pricing.  The best doctors get paid the most to do the most complex procedures, right, like you would expect for anything.  If you want to buy a fancy car, whatever, from a fancy dealership, with the highest performance, you would expect to pay more.  You pay less for less-quality doctors, doing easier procedures, those kinds of things.  And just be like, "Here's how much it costs.  If you don't like that, go shop around, that's great", bring some competition back into it, like an actual free market.  It's the farthest away from a free market that you could possibly get.  And again, I think the people in the middle love it. 

I always say, anything the government touches, it turns inefficient and opaque, and it's tough to read.  It happened in education, healthcare, military.  We could kind of go down the list for all of the things that happened.  So, that's what needs to happen, we need to bring it back to a free market system.  That's step number one.  That would reduce costs, I think, dramatically by 50% to 70%, just right off the bat.  I can stop there.

Peter McCormack: No, keep going.  I mean, this is fascinating.  Who's milking the system?  Who is taking a significant portion of money with this least contribution? 

Jeff Ross: Sure, so again, and I'm not saying these are bad people, because I'm sure there's people listening to this right now.  You've probably seen these charts, the growth of healthcare administrators relative to providers.  So, if you look at a chart from like 1970 to today, so over the last 50 years, the healthcare providers is this tiny little baseline at the bottom that you can barely see and administrators have gone parabolic.  Can you find that chart, Danny? 

Danny Knowles: Yeah.

Peter McCormack: I remember Marty Bent posted it a long time ago. 

Jeff Ross: Yeah, it gets posted a lot.  So, that's number one, right, that's clearly highly inefficient. 

Peter McCormack: I think he's got it. 

Jeff Ross: Okay cool. 

Peter McCormack: So, for anyone listening, Danny's just pulling up this.

Jeff Ross: Yeah, that's great.

Peter McCormack: Wow, so physicians has grown, percent growth, from what, 1977 should we say? 

Danny Knowles: What happened in 1971?!

Peter McCormack: Yeah, holy shit, yeah.  So, the chart runs from 1971 and I guess that's -- and you say that's annualised growth, it's like --

Jeff Ross: 3,200% growth in administrators.  So you say, "Why is US healthcare expensive?"

Peter McCormack: Well, so physicians has grown, what, I'll say 100%, 150%, and administrators 3,500%.  

Jeff Ross: Since 1970.

Peter McCormack: Yet the work is done by the physicians.  So, who are these administrators?  What are they doing? 

Jeff Ross: They're the people that sit in their rooms and tell doctors what they should do and make us mad, because we just want to do what we think is best.  So, there's them, and obviously I'm oversimplifying, and I actually don't even mean to offend people.  Because again, administrators go into this thinking that they're going to do good for people by being a healthcare administrator, but it's all part of the problem.  The problem is the broken system, not the individuals.

Peter McCormack: It went parabolic between 1991 and say 1996.  It's gone from in 1991, 500%; in 1996 to, what's that, about 2,300%?

Jeff Ross: Yeah.

Peter McCormack: What the fuck happened in the 1990s?

Jeff Ross: Was it something to do with Clinton, Hillary, Hillarycare?  I don't know.  Something definitely happened, and I would say it's not good.  And you can look at the effects now.  So, to me, that's the number one reason why is US healthcare so inefficient and expensive?  Well there's your answer, at least part of your answer right there.

Peter McCormack: Is any part of that to do with fear of litigation, that they have put procedures in place? 

Jeff Ross: Yeah, so that's another huge thing, right?  So, the regulators come down and they say, "I think it's a good idea that you do A, B, C, and D".  And then it turns from a good idea to, "Well, let's put this down in writing", to, "Let's make this law.  You have to do this as a doctor, otherwise you're not going to work here any more". 

Peter McCormack: Well, that's the comparison I had from the UK to the US.  So, when I have an SVT in the UK, I go to hospital, wait in A&E, they see me, they do an ECG, they do a blood test and then I go home.  In the US, I had an ECG, I had four vials of blood taken for multiple tests, and I was given two drugs at the end to take, I can't remember what they were, and then I had to sign a bunch of forms.  And I was like, "Why am I getting the drugs here and not in the UK; and why am I signing all these forms?" and the obvious reason is the fear of litigation, should something have happened to me afterwards.  And that was just a super-interesting comparison between the two countries. 

Jeff Ross: That's American healthcare also, so the fear of litigation is real.  And so, malpractice insurance is a massive industry for physicians.  Everybody knows that humans make mistakes, they even know that doctors make mistakes, but God forbid you make a mistake on my exam, or I'm coming after you.  So, that CYA medicine, Cover Your Butt medicine, is massively prevalent.  So, case in point, if you come in, say you're a 10-year-old kid, you got in a wrestling match with your brother and you fell and you hit your head, so, most countries, they'd look at you and they'd say, "How are you doing?  Any issues with your vision?" kind of thing, do a little test or something, "Any headache?"  "Maybe a little bit kind of hurts?"  You're probably fine, right?  That's kind of how most of the world works. 

In the US, you would come into the hospital, you would get a head CT, which costs probably $1,000 minimum to have that done.  And even though the doctor says, "He's fine, he has a little residual headache, he has no other symptoms of concussion, no symptoms of head bleed or anything other dangerous, we should probably just let them go", in the US, you would absolutely get a head CT because of CYA, right?  Because of the 1 in 1,000 times that there actually is a bleed in the head and if you miss it, you're toast, you're just dead meat.  So, you have to cover your butt.

Peter McCormack: I think this is the problem with centralised institutions, you can take it to everything, these bureaucracies, is that trying to have a zero failure rate across everything.  And you can transfer that, you can take it with your example of healthcare, but you can also take it into sports, like kids not being allowed to fail when they're early on, or you can take it just anywhere, there's no allowance for failure rate. 

So, a really brilliant tweet, it was a promoted tweet as well, which I thought was quite interesting, but it was a guy clearly wanted to grow his profile.  And it said, "What if we taught children that failing is learning?" 

Jeff Ross: Love it. 

Peter McCormack: Yeah.  It's that that desire for a zero failure rate and also that conditioning we've got.  We've kind of almost conditioned society that everything is someone else's fault, and if something happens that's bad to us, we need someone to blame, or someone to pay for it.  We've gone beyond this thing that's like, "Look, there's failure rates, there's accidents rates", we've gone beyond that.  I think that was one of the biggest issues in COVID, is that we were trying to get to a situation where there's zero failure rate.  You know, I got sucked into it, "We're going to fight this, we're going to try and get to a situation where nobody catches this virus that spreads".

Jeff Ross: "This massively contagious --"

Peter McCormack: Yeah, "And if we lock everybody down, that nobody will get it.  And when we open up, it'll be gone", and I just find this everywhere.  Okay, so just to bring this back almost to Bitcoin, we'll get your origin story, but has Bitcoin helped give you a lens to look at things like this then?

Jeff Ross: Absolutely.  I would say the number one reason is because Bitcoin forces an honest unit of accounting on whatever it touches.  So, you can't mess around with it, right?  Like you can with the dollar, right, the dollar is, "Wink, wink, nod, nod, hey, hook me up, print some money, and I'll be the first recipient", the Cantillon effect.  Bitcoin does not work like that.  So, that honest unit of account is kind of number one.  Number two, as we all know, it gives you that lower time preference.  So, how can I build today something that will grow and become something beautiful and awesome and helpful tomorrow?  Bitcoin affords you that time versus fiat, which doesn't.  Fiat, you feel like, "I've got to do something now.  If I'm a politician, I've got to say the right thing to get elected so I can do my thing now.  I don't care if I'm screwing the next generation or even four years from now, I don't care if I'm screwing them, I need to do what I got to do today to get elected.  I got to spend the money today, because it's depleting, it's melting, and purchasing power right before our eyes". 

Bitcoin, to me, it just changes everything.  And in medicine, because of what I was talking about earlier, where it's this opaque system, right, of payment, it's not a free market, even remotely.  Nobody, including doctors have no idea how much this procedure is going to cost.  If I read a CAT scan for somebody, is it going to cost them $500, $5,000, $10,000?  I just don't know, we're out of the loop on that system.  And so, I think Bitcoin would bring back more of a free market to medicine, and that would be a wonderful thing. 

Then obviously, the obvious thing about Bitcoin, and we don't have to go down this tangent right now, but obviously, it's designed to increase purchasing power over time versus the fiat government fiat system is designed to deplete purchasing power over time.  And so, if you're just in medicine, medicine healthcare costs in the US are world famous for how much they've just totally been let out of the bag, right?  They're insane, nobody can afford healthcare.  You pay £200 a month for NHS, we pay $2,000 a month for crappy healthcare. 

Peter McCormack: With a big deductible. 

Jeff Ross: With a huge deductible, right, yeah, a $20,000 deductible or something. 

Peter McCormack: Do you know about the deductible? 

Danny Knowles: Yeah.

Jeff Ross: Yeah, "We've got you covered", right?  Insurance companies are always there for you until you need them, that's kind of my standard mantra that I tell people, tell my patients that.  You think you have insurance, you think you're being covered, but you're not.  You're covered after you pay your deductible.  You've got to factor in what you pay each month.  You could buy a house for what you spend on health insurance if you save that money for four or five years or so. 

I'm digressing here, but Bitcoin, and what it represents, and taking that personal responsibility is another huge thing, right?  That's another funny thing about America is we're two different people groups.  We're ultra-super-healthy individuals, and we're just the most horribly, unhealthy, obese population on the planet as well, depends what kind of population you're looking at.  So, that taking responsibility for yourself, right?  Doing things like just eating well, you're talking about your exercise plan, just walking, getting off your dumb butt for a couple hours a day, right, and walking around the neighbourhood and getting some sun and getting enough sleep.  That literally, if you could just do that in the US with our just massively overweight population, you could reduce healthcare expenditures by a definitely noticeable amount. 

But again, to your point earlier, how do doctors make money on that?  Well, they can't really, right?  It's just giving good advice.  If people would just listen and actually have self-discipline, take personal responsibility, it's what we talked about, you guys brought up at the discussion last night with Preston and Odell, taking personal responsibility, right?  Being like, "I can take ownership of my Bitcoin in cold storage", and so many people put their hands up and they act like they're victims and, "I need somebody to do this for me, poor me", you know.  It's like, well sure, there will be groups and organisations that will do that for you, but you're losing your freedom then.  You're going to have to get permission, like with COVID, "We're going to tell you, you can move or you can get out of your house or you can travel, but we're going to protect you".  It's all under the guise of protection, "but we're going to take away your freedom then, if that's what you want us to do".

Peter McCormack: Well, I love the personal responsibility side of Bitcoin.  Like I say, I've been putting weight on ever since I started this podcast, honestly.  The length of this podcast, I have probably put on close to 40 pounds.

Jeff Ross: Nice. 

Peter McCormack: Yeah, like three, three-and-a-half stone.

Jeff Ross: All muscle?

Peter McCormack: I wish!  And the entire reason it happened is me, it's my choices.  I can make these excuses, "Well, I'm traveling with work", well, yeah, but I can still cook.  Well, I have Danny cooking for me these days, but I can still choose to eat healthy, I can still choose to drink less, I can still choose to go for a walk and I just didn't, I took no personal responsibility.  It's entirely my fault.  I love that Bitcoin brings back this personal responsibility.  One of the guys, I didn't answer it, but I don't remember last night, one of these guys brought up the question, he talked about the wealth disparity that will happen with Bitcoin; we're going to have some people who are going to be fabulously wealthy and others who don't have a lot of Bitcoin.  And I thought, well the good thing about that is it's going to bring back the personal responsibility for your money, because there's going to be less to go around from the government. 

Back to the Breedlove interview, where Breedlove talked about one of the problems with democracy is you're voting other people's money to yourself.  You're going to have less ability to vote other people's money to yourself, so you're going to have to get out there and work.  Again, personal responsibility, I love that side of things.  As somebody who has, in certain areas of my life, had complete ill-discipline, I'm a big fan of that.  I did write something down here actually.  You said, "Politicians have to say the right thing to get voted".  What's been super-interesting right now is, again I brought it up last night, is that all these presidential candidates, they're all pro-Bitcoin.  They're saying the right thing to get voted in.  Now I believe that RFK is a bitcoiner; I don't believe that Vivek and DeSantis really are bitcoiners.  But the game theory is now working out that they have to be because they want that voting bloc.  It's kind of weird.  The game theory of Bitcoin, everything always works in the right direction. 

Danny Knowles: Everything's good for Bitcoin.

Jeff Ross: If you wait long enough.

Peter McCormack: Yeah.

Jeff Ross: Everything does.  All roads do lead to Bitcoin.  But it's frustrating to wait.  For those of us who've figured it out early on, it seems like it's taking forever.  Let's go, let's go, let's change the world, let's get the whole monetary system figured out.  We can do it, right?  We have all the pieces in place, but the world isn't ready for it.

Peter McCormack: Well, yeah, you couldn't have it overnight.  It was like, I think it was Scott Horton I interviewed and talked about, he's a libertarian, and I think he even wrote an article on this, if there was the big red button to get rid of government, he wouldn't press it because it would be catastrophic, it would be bloody, it would be a revolution that leads to a lot of death.  There needs to be a transition.  And it's the same with Bitcoin.  It's almost like, I don't know how much of this was Satoshi's genius and how much was luck, but the halving creates this amazing cycle that gives us step changes every four years.  Every four years, we step change the amount of people who come on board, the amount of companies there are.  You know, it's allowing us to transition from one kind of paradigm to the next, hopefully as a peaceful revolution.

Jeff Ross: Right, because the slower it takes and the more people you can get on board, the more likely it's going to be peaceful.  I totally agree, too, I think it would rapidly disintegrate into chaos.  I'll tweet out things like, "Hey, if I was President, the first thing I would do is just cancel all government programmes today and put us on a Bitcoin standard".  It would be just pure chaos, obviously.  But we would climb out of it.  Humans climb out of chaos, like we climbed out of World War II, so you can rebuild.  But we would obviously prefer to do this without loss of life and keep geopolitical tensions down as much as possible.  So, I think there is wisdom in it taking long and I agree that four-year cycle, about three-year-and-eleven-month cycle that Satoshi started, I think there is some wisdom in that.  I don't know if he foresaw that or if it was just luck or just fortunate, but I think it's good for America, it's good for the world as well.  Hopefully it will help us transition peacefully.  I think that's what we all want. 

Peter McCormack: In your role as an investment manager, is Bitcoin part of it; are you advising on Bitcoin?  And what cautions do you have with that, because you're advising a completely different asset from equities.

Jeff Ross: Yeah.  So, I'll give you my little Bitcoin origin story.  It all ties in here.  So, as a fund manager, I'm always looking for the assets with the best risk-adjusted returns or the highest Sharpe ratio, and obviously Bitcoin came onto my radar.  For me, it was about 2015 that I started looking.  I think I first started buying back when it was hundreds of dollars.  I still remember, by the way, thinking about, "I can't believe that someday the price of 1 Bitcoin might be as much as an ounce of gold".  And then I actually distinctly remember the morning, I remember where I was sitting, I'm like, "Bitcoin is more than an ounce of gold right now".  I was telling my wife, she's like, "Okay".  And like, "Why do I care?"  I'm like, "This is amazing".  We just didn't think it was ever going to get there. 

Peter McCormack: My first Bitcoin was £80.

Jeff Ross: Dang, way to go!  Sub-£100.

Peter McCormack: What was yours?  I think it was about $450, something like that.

Peter McCormack: Yeah.

Jeff Ross: Oh, wow.  Nice.

Peter McCormack: But I don't have any of the Bitcoin from 2013.  I bought it for the Silk Road.  But Tim Draper has 3.5 of my Bitcoin. 

Jeff Ross: Because why? 

Peter McCormack: Because he bought the Silk Road Bitcoin. 

Jeff Ross: Funny. 

Peter McCormack: I said it to him, I was like, "Can I have my fucking Bitcoin back?"  He wouldn't give it to me! 

Jeff Ross: "You took it from me when I was being stupid, that's not fair"!

Peter McCormack: Sorry, you carry on. 

Jeff Ross: Okay, so 2015, found Bitcoin, then I got -- I affectionately call myself a former degen crypto trader, right?  I was one of those guys. 

Peter McCormack: Love it!

Jeff Ross: Got attracted to the shiny object, and I just didn't know back then.  This was before Bitcoin Twitter, this was before I knew anybody in the space.  I was just kind of by myself trying to figure this stuff out.  I got attracted to the crypto shiny object.  So, by the end of 2017, the big bull run, I had sold all -- so this is back when also, when you wanted to buy other cryptos, you had to basically, the only trading pairs for the most part were Bitcoin.  So, you had to sell your Bitcoin.  I had to buy Bitcoin and then take my Bitcoin and buy crypto with that. 

By the end of 2017, I had no Bitcoin and I had tons of these cryptos and I thought I was a genius, like we all did, like everyone does during a bull market.  By the way, this has nothing to do with Vailshire, this is just me personally doing this kind of stuff.  I always feel like I need to disclose that.  And then 2018 happened.  2018, everything crashed.  So, all of these cryptos, all these ICOs and all that nonsense, they dropped 90% to 99%.  I had no Bitcoin and I got hit with just this gigantic tax bill in 2018 for my 2017 successes.  But all that money was basically gone now, right?  All those, a lot of those gains.  So, I learned a big lesson there. 

First of all, I realised, "Okay, that was really stupid".  Second of all, then the Blocksize Wars were going on at that time too, and I was one of those people, I was again on the outside, I didn't really know what was going on.  I'm like, "Well, I don't know, that sounds kind of reasonable, maybe we do need bigger block sizes".  So all those arguments, we don't have to rehash all that.  By 2018, at the end of 2018 and early 2019, I realised there's something to Bitcoin, it just keeps sticking around.  And it turns out that the smaller block size was probably right for the decentralisation aspect.  So, that made sense to me.  So, now I was starting to get it.  And then I think Saifedean's book came out right around 2019, and then around that same time, Plan₿'s stock-to-flow model came out.  And then if you remember, we had that spike where everybody was all excited, everybody knew that the stock-to-flow model was the solution, knew.  And so the price spiked and then we kind of came down again. 

Peter McCormack: I'm telling you, that's going to come back. 

Jeff Ross: You think so? 

Peter McCormack: Yeah, if what I think is going to happen over the next few months happens, it's going to be back in range, and I think he will be putting out a narrative of why it underperformed for a year-and-a-half. 

Danny Knowles: No one's going to take that seriously. 

Peter McCormack: I think some will.  I think some people who are new will take it seriously.  I mean, he has 1.2 million followers or something, 1.3 million followers.  I took it seriously.  Actually, do you know what the interesting thing is about it?  There's very, very highly credible bitcoiners who took it seriously.  I remember being sat with some in Austin, four of them, explaining to me why he's right on this.  I think even Saifedean was keen on it as well.  A lot of people, very credible people were keen on it.  I think it was Cory was the first who came out and said, "This is fucking bullshit". 

Jeff Ross: Right.  And so I was one of those guys too.  I was pro stock-to-flow.  After reading Saifedean's book, because he talked about stock-to-flow, and then I'm like, "Wow, this actually makes sense".  But what it doesn't talk about is the demand side of things too.  So, that's what Cory brings up.  He's all like a demand-based guy.  And so, yeah, there's so many different directions we can go on there, but…

Peter McCormack: Your origin story. 

Jeff Ross: Origin, oh yeah, we're still on that.  Okay, so by 2018 and 2019, I had basically gone down the rabbit hole.  And so now, my next job was as an advisor, I need to start teaching my clients about that.  At first, we had zero exposure to Bitcoin.  And then, I think it was 2019 that I started putting some clients who were amenable to it into it.  I would talk about it in my monthly letters and things like that.  Then what was great is I had test cases, I had things to compare to.  So, I had my Vailshire portfolios with Bitcoin a little bit, like 1% to 2% exposure, and the Vailshire portfolios without.  Because the people who didn't have it, they say all the things you say, right, they're scared, it's used by terrorists, it's terrible, the government doesn't approve of it, it's way too volatile, and I was like, "You know what though?" and Alpha Zeta's done some great work on this stuff too, about how it actually decreases portfolio volatility overall, even though it is volatile, it's just how portfolio mechanics work. 

So, what I had to show my clients is, "Look, here --" and I think about in the 1980s, in the US at least, we used to have these commercials.  They would say, "This is your brain", and they'd show an egg, and then they'd crack it, and they'd pop it into the frying pan.  They'd say, "This is your brain on drugs".  And so I used to tell people, like, "This is your portfolio, and this is your portfolio on Bitcoin, and look at the difference.  And we have less volatility but better performance, even with just a little bit of Bitcoin exposure".  So, I went from 0% of Vailshire clients having Bitcoin, to a small minority of them, to now we have it where everybody has at least some Bitcoin.  And so, I base our portfolios on 60-40, except it's 60% stocks, 40% sound money.  So, the ones who are more aggressive have the highest Bitcoin exposure; the ones who are the most conservative, they have a lot of gold and cash exposure plus just a little bit of Bitcoin.

Peter McCormack: Have any of them, have you had to kind of hold their hand through the last year or so? 

Jeff Ross: Lots, yeah.  This has been a tough year.  So, being in finance is very different than being a physician.  Being a physician, you have this nice, strong, steady income through thick and thin.  In finance, you go up, you ride the cycles, so it's painful.  So, that is a downside of managing money for people, is my income went way down over the last year as well.  Had to do a lot of handholding, lost lots of clients.  The clients, just like anything, they come in at the wrong times and they leave at the wrong times, as far as I'm concerned.  Right, and Bill Miller III gave some great advice on this that really helped me personally as a fund manager.  I can't control when my clients come in and when they go.  They all want to come in at the top, they think you're a magical superstar because we crush the market in the good years.  And then on the tough years, though, they all leave when you're -- so you're already down and out, then they give you a kick.  I say, "They punch you in the face and kick you in the shorts".  That's kind of what it feels like managing money for people during the down times, and lots of people leave. 

I'm always like, "This is when you should be coming in, right, you should come at the bottom of cycles and get ready to ride up the next cycle higher".  But people do what they do and I just have to let that go because I can't control the flow of clients.

Peter McCormack: It must be a tough but fascinating time to be managing people's money with everything that's going on.

Jeff Ross: Oh yeah, well it always is to be honest, but there are some times where it's exceedingly clear from my perspective, from a macro, I'm kind of a macro guy, it's easy sometimes.  Like, 2022 for me was easy.  I got really unpopular on Bitcoin Twitter in 2022 because I was Dr Bear, they called me.  I'm like, "It's going to be a bad year, you guys".  We were sitting at $50,000, I'm like, "I think it's going to go lower".  We went down to $40,000, I'm like, "I think it could drop in half from here, you guys.  That's the stuff I'm looking at".  People screamed at me, you know. 

Peter McCormack: Of course they did.

Jeff Ross: They just hated me, hated me.  And I'm just like, "I'm just telling you what I would want to hear if I was in your shoes". 

Peter McCormack: What did you see? 

Jeff Ross: Well, just the macro backdrop was terrible.  So, I'm a business cycle guy, so I knew that we had crescendoed basically at the end of 2021.  I'm a big liquidity guy, so liquidity had basically peaked and was rolling over now, and now it was contracting.  The business cycle had peaked and rolled over and was now contracting, and stocks see that, they sense what's going on, they sense the trouble underneath the hood.  And actually, Bitcoin above all senses both of those things.  It senses the health of an economy, but it mostly senses liquidity.  It's the great absorber of liquidity.  So, when you see liquidity start to roll over, Bitcoin just kind of naturally follows what liquidity is doing throughout the world.  And so I just saw that coming.  I'm like, "This is going to continue based on cyclical things we can look at.  I can't see the future, but you can compare it to what we had and what's coming up next.  And we have many quarters of probably bad performance". 

So, Bitcoin Miami 2022, I think I was there on stage and I said -- Bitcoin was at $40,000, around there, and I'm like, "It's going lower, you guys.  Don't trade, Bitcoin is savings, you don't trade your savings or your chequing account.  So, that's what I would say.  This is a great time to be dollar cost averaging, but just prepare yourself emotionally and mentally.  We're probably going to go lower.  I wouldn't be surprised if we got cut in half down to $20,000" and then it happened.  Not that I know the future, but you can just kind of see where things are going.

Peter McCormack: How much clarity do you have right now?

Jeff Ross: Not as much, so that's getting back to your question.  So, why don't I have clarity?  Because the data is mixed and weird right now. 

Peter McCormack: Yeah. 

Jeff Ross: So around the world, there is a clear manufacturing recession going on.  So, let me back up.  Everything changed with COVID, and that's another major thing.  I think of the economy and how stocks and bonds and things flow, they're always cyclical.  They're like a sine wave.  And I play guitar a little bit; it's kind of like a guitar string.  What happened with COVID, somebody came and plucked it super-hard.  They pulled the string down, and everything just crashed and came to a halt, supply chains came to a halt, all the finance, small businesses got just decimated because of what the government forced small businesses to do.  We don't have to get into that. 

But then it creates this shockwave, almost like throwing a rock into a pond or something, it creates these big waves.  So, there was this massive pull down, and then we had this massive rebound, right?  And that was helped by the fiscal stimulus.  So, the government's like, "Okay, you all get free money, we're going to just plop tons of money into your account".  And back then I was like, "What's this going to do?  It's going to cause inflation, real inflation, price inflation, to just go to the moon".  You can't just give people a ton of free money without expecting prices to go up, right?  So, we have now a limited supply of goods and services, and people are just flushed with cash in their bank accounts.  So, it just by necessity is going to mean that CPI is going to rise and get out of control, which is what happened.  So then, we had this spike higher, productivity, GDP, everything went higher to the end of 2021, and then you have that recovery. 

Now what's happening, like that guitar string, it gets pulled way down, rebounds way up, and now it's kind of going smaller and smaller in between until it kind of stabilises into a more normal sine wave again.  So, we're still feeling the effects of that right now.  To your question, manufacturing in the US and around the world is clearly already in a recession.  It's massive contractionary levels right now.  And you see the data just shows that super-clearly.  But in the US, manufacturing is only a small part of GDP.  We're a services economy for the most part.

Peter McCormack: So, is that a massive risk to China?

Jeff Ross: Sure, yeah.  They are actually showing recessionary conditions right now.  Their producer price inflation, so what the cost of goods for the producers, the manufacturers, way down.  We're actually seeing deflation in China and other parts of Asia right now.  So, we're seeing that we're heading into, and you could argue we're already in, a global synchronised manufacturing recession.  The only thing that's holding it up is here in the US, because we have such a strong services component, we are not completely in a services recession right now and that is the strongest part.  That's why the US economy keeps holding up and we have this dichotomy right now.  The hard part for me as a fund manager is, how do you manage through that.  Depending on who you read, and if you pay attention, the bears who are super-doom-and-gloomers, they talk about banks, credit contractions, and they talk about manufacturing recession.  Those are the stats that they'll point out.  And then you have the super-optimistic people, they'll talk about unemployment being low and services is still hanging on there.  So, that's doing well, that's bullish.  Manufacturing is bearish. 

What are markets going to do?  I look at, I say, I take those two things.  But then for me, what's more important, what supersedes all of that, is what is liquidity doing?  So, net liquidity bottomed in the fourth quarter of 2022, both in the US and in the world, kind of worldwide liquidity, and has been increasing ever since.  There was a big scare going into the debt ceiling debacle, the debate, which was resolved with, "There is no ceiling".

Peter McCormack: Again.

Jeff Ross: Like, "The emperor is wearing no clothes", right?  And so, we have unlimited spending ability.  The concern with that, and lots of smart people were talking about this leading up to this, what about the refilling of the Treasury General Account, because isn't that going to take liquidity out of the system?  But what I was telling people is, "Yes, but what's more important now at this point is to watch what is the overnight reverse repo market doing?"  Because there was over $2 trillion at the time, $2.2 trillion just sitting there, waiting to be a reserve liquidity option in case the Treasury General Account needs to get refilled.  So, what we've seen since that was passed. 

Peter McCormack: Well, let's back up a second.  Explain to people what the reserve --

Jeff Ross: Sure.  So, net liquidity is made up of basically three main components.  And so, when people think of quantitative tightening and easing, what they're talking about is, what is the Fed's balance sheet doing?  So, the Fed has been, and they're still doing tightening officially, meaning they're letting Treasuries and mortgage-backed securities roll off of their balance sheet, so kind of their chequing account.  That's getting smaller.  As that decreases, that is a contractionary net liquidity-type event.  But that's only one part. 

Part two is, what is the Treasury General Account doing?  Treasury General Account, so the Treasury pays out, so Americans, when you pay taxes, that goes into the Treasury General Account, like into their chequing account, and then when the Treasury pays out, they do fiscal things like, "We're going to create projects, or we're going to invest in something", or we're going to give -- oh, perfect, yeah.  So, that's the Fed's balance sheet right now.

Peter McCormack: So, Danny's just brought up a chart.

Jeff Ross: So, what you'll notice is it basically peaked in, what, mid-2022?  And then, that's the quantitative tightening, so they're letting assets roll off. 

Peter McCormack: When you say roll off, what does that mean?

Jeff Ross: So, they just let them expire.  So, what they do is they buy Treasuries and mortgage-backed securities and they have end dates.  And when the date ends, they take the money and let it…

Peter McCormack: Okay.

Jeff Ross: They don't buy more.

Danny Knowles: And then, this was the bank failure? 

Jeff Ross: That was the bank failure.  So, that was the Bank Term Funding Program that the regional banks have been accessing, so that's why you saw that spike.  So, I call those liquidity patches.  It's when they see trouble and they see the system is getting shaky, right, and it felt like the world was going to collapse at that point, or at least the banking system was going to collapse, they do these liquidity patches, and that helps stave off a disaster.  So, that interrupted it, but now they're clearly doing some QT again, although you'll notice it's not quite as steep as it was before.  It's close.

But if you go to June-ish, see how it, just a little bit before, go left, yeah, right in there, see how it flattens out right there?

Danny Knowles: Yeah. 

Jeff Ross: So, that's more people using the bank term funding programme as well, and the FHLB as well, which I can't remember what that stands for.

Danny Knowles: So, that's most likely regional banks feeling a bit of stress.

Jeff Ross: Yes.  So, regional banks are feeling stressed and the Fed is saying, "We'll take that garbage that you have, those long-dated Treasuries that we kind of forced you to buy a few years ago, forced you to buy".  Whether people have strong opinions either way, I just think that's kind of the options they had, is they had to buy something in a zero interest rate world.

Peter McCormack: But this is healthy?

Jeff Ross: Well, no.

Peter McCormack: A healthy trajectory? 

Jeff Ross: No, so I think this is stupid that they're doing this.

Peter McCormack: Okay.

Jeff Ross: So, Powell wants to decrease that, he's being shrewd right now, right?  This is what they say they're doing.  This is the quantitative tightening.  We're going to go off on a couple of tangents here.  So, this is the quantitative tightening.  He says, "This is what we need to do in order to basically cause the economy to contract, destroy demand, bring down inflation".  So, that's number one of net liquidity.  Second is the Treasury General Account.  When the Treasury General Account fills up, the way to think about it is, it's sucking money out of the private sector and putting it onto the government's chequing account.  So, what happened after we got to that debt ceiling debacle, we were almost about to default, and then the Treasury had to refill.  I don't know if you have that chart.

Danny Knowles: Yeah.

Jeff Ross: Basically, so starting in June, the Treasury went from near zero billions of dollars to now they're up around $400 billion, and that's what they said, they're going to go to either $425 billion or $450 billion to refill the Treasury General Account.  That is contractionary, that's net negative for liquidity, which is a net negative for risk assets. 

Third part is the overnight reverse repo market.  That's basically --

Peter McCormack: Danny, can you explain the overnight repo market? 

Danny Knowles: It's been explained to me so many times. 

Peter McCormack: How many times have we had it done?  I mean, Lyn's probably done it ten times!

Danny Knowles: Before we get to that, here's the Treasury General Account.

Jeff Ross: Yeah, the TGA.  So, what's that sitting at right now?  That's above $500 billion?

Danny Knowles: Yeah, just above $500 billion.

Jeff Ross: Yeah, OK.  That's nice.  I only have a chart that updates weekly, so that's cool.  So, that was what everyone was concerned about, where it went from that bottom near zero, $23 billion, up to where it is now.  That was going to suck liquidity out of the system, and people were concerned that that was going to cause risk assets to fall.  But what I was saying at that time is, "Watch the overnight reverse repo market", I don't know if you can pull up that chart. 

Peter McCormack: Explain what that is again, for the millionth time to us. 

Jeff Ross: So, you have money market funds, they give you an interest rate of whatever, 4.5% it's sitting at right now.  What they do is they park their collateral in the overnight reverse repo market, which is zero risk.  And the Federal Reserve says -- and if you can focus it up on from like 2022 to current?  Yeah, okay, so that's really helpful.  So, they can park it there and get a return, and right now that rate, the award rate, is 5.05% for basically zero risk, "You can just park your stuff here, we will give you 5.05%, you can take a little cut of that and then give the rest to your money market fund owners".  That's one option they have to have interest.

Danny Knowles: And how long would they leave it there for? 

Jeff Ross: Overnight. 

Danny Knowles: Literally it's overnight? 

Jeff Ross: Yeah, but you can keep it there as long as you want, but it pays daily, basically.  Or, they can buy Treasuries.  So, the concern was as the Treasury then to refill its Treasury General Account and to pay for all the fiscal deficits of the US, they have to create tons of short-dated T-bills, right?  And so now, these people are saying, "Okay, I can leave my money, our money parked here for 5.05% with no risk, or I can buy the no-risk T-bills", which are currently, if you see a one-month or three-month T-bills, I think they're between like 5.11% for the one-month and maybe 5.25% or 5.3% for the three-month Treasury bills. 

Peter McCormack: Why do they need this money overnight? 

Jeff Ross: Why do they leave it? 

Peter McCormack: No, why is it parked overnight?  Why is there an overnight reverse repo?  What's it for?

Jeff Ross: Because they just have tons of excess cash and it's a way for them to earn interest. 

Peter McCormack: Yeah, but why does the Fed want it overnight? 

Jeff Ross: So, the Fed controls the overnight reverse repo market. 

Peter McCormack: What is a reverse repo? 

Jeff Ross: So, you're parking your collateral with the Fed, and in return, the Fed is giving you -- they want this because this is a backup money bag. 

Peter McCormack: Okay. 

Jeff Ross: It's a backup bag of liquidity.  And so, what they can do then is, they kept that rate at 5.05%, while the short T-bills, the shorter-term trade rates are going higher.  And so, the people in the money market say, "You know what, I can get a better rate if I buy these T-bills.  I'm going to pull money out of the overnight reverse repo market, and I'm actually going to buy these T-bills that the Treasury is selling right now". 

Peter McCormack: Okay. 

Jeff Ross: Does that make sense? 

Peter McCormack: Yeah. 

Jeff Ross: So, it's just shifting it from here.  And so, the Fed uses this as just these bags of it shifting the liquidity around.  And, because that has gone up so much -- yeah, so you got the one-month rate sitting at 5.35%.  So, look at from May, yeah, in that May 2023 time period, and how it's basically just fallen off a cliff.  It's gone from $2.25 trillion, or whatever it was yeah, so $2.27 trillion.  Now, today, it's sitting at $1.7 trillion.  So what that means is --

Peter McCormack: What is that; you said $1.7; is that $1,700 billion?

Jeff Ross: Yeah.

Peter McCormack: So, it's trillions?

Jeff Ross: Yeah, trillions.  So, $2.27 trillion it was at, towards the end of May.  It's fallen all the way down to $1.8 trillion.

Peter McCormack: So, what's this telling us?

Jeff Ross: That means that all of the concern we had about the TGA getting refilled and sucking liquidity out of the system, actually most of that came out of the overnight reverse repo market, so that offset the liquidity contraction.  So, net-net, it's basically net negative.  Does that make sense?

Danny Knowles: I think so.

Jeff Ross: So, liquidity basically just is kind of going sideways, even though people were concerned that it was going to drop off a cliff and risk assets were going to get hammered.

Danny Knowles: Does that play into this Treasury General Account, how this increased by $500 billion?

Jeff Ross: Yes.

Danny Knowles: So, that's where the $500 billion has gone?

Jeff Ross: Yes, for the most part.

Danny Knowles: So, it's just moved from the Fed to the Treasury?

Jeff Ross: It's just shifted pockets, basically.  And so, the private markets weren't really affected by that, so that's why we're still seeing a good performance in stocks and Bitcoin, things like that.  They didn't fall off a cliff, which a lot of people were concerned about.  All that did is it just kept that stuff just all shifting.  So, if at some point this -- so that's what I was -- this is the best-case scenario.  If I was long risk assets and long Bitcoin, I want to see that going down.  And they still have $1.8 trillion sitting there just as reserve liquidity, waiting to come out into the system. 

So, the way the Fed manipulates that is they can say, "You know what, we want even more to come out.  We're going to lower the reward rate in the overnight reverse repo market from 5.05%.  Let's put it down to 4.5%.  Then people will even more soak up, they'll buy more, they'll pull money out of that".

Danny Knowles: So, they'll put money into the bond.

Jeff Ross: Yeah.  And then, the more flushed that the bank reserves are in the US, the more they can take their excess liquidity and move it further out on the risk curve and cause risk assets to rise in price.  Does that all make sense?

Danny Knowles: I see, yeah, I think so. 

Peter McCormack: It's bullish on Bitcoin.

Danny Knowles: I definitely couldn't explain it, but it makes a lot more sense.

Jeff Ross: What's that?

Peter McCormack: Bullish for Bitcoin. 

Jeff Ross: Well, I would say it's not bearish for Bitcoin. 

Peter McCormack: Okay. 

Jeff Ross: What will be bullish for Bitcoin is when the Fed finally pivots and says -- so, the first thing we looked at with the Fed's balance sheet, how it's still going down, we want to see that going back up again. 

Peter McCormack: Yeah, so CPI print this morning was 3%.  Interesting thing that Preston said last night, where he said, "Inflation in the UK is quoted about 9%, it's actually about 11.5%.  But in the US, it was quoted at 4$, but it's actually 2%".

Jeff Ross: He was looking at the trueflation metric.  You know that?

Peter McCormack: Yeah.

Jeff Ross: I haven't looked into it enough.

Peter McCormack: But down to 3% means trajectory-wise, we're heading towards that kind of 2% they want.  Is there a chance they overshoot and we head to deflation?

Jeff Ross: Oh sure.  We could get a deflationary bust, yeah.  If they continue to stay hawkish as the economy is rolling over, and we're having this at least manufacturing recession, everything is on the edge right now.  So, if I were Powell, what I would say is, I would give myself a pat on the back, "We've done a great job".  I would take all the credit for it, even though it's more of the markets and not what they're doing.  And then I would say, "We've gone far enough.  Before we break anything, let's ease off a little bit", and I would actually lower rates at this point a little bit.  Now he's going to come out, he's not going to do that.  They're going to stay hawkish and they're going to say, "We don't want a repeat of the 1970s, so we can't get easy too quickly.  I don't want to be known as Arthur Burns, I want to be known as Paul Volcker.  And so, I'm going to slay inflation".  But I think he's going to overdo it.  And so the longer they keep these tightened conditions, two hawkish conditions, the more they risk more bank failures, slowing the economy too much.  The economy doesn't like that.  Risk assets, if they sense that, then the floor will drop out and we could have a late-2008, early-2009 moment where everything crashes and we actually see actual deflation; that's not good.  And that would cause them to quickly pivot, they'll quickly lower rates, go back to QE, there'll be chaos everywhere, blood in the streets.

Peter McCormack: How bad is deflation, because there are people in the world of Bitcoin who say deflation is fine? 

Jeff Ross: Depends what we're talking about.  And Jeff Snider talks about this, a lot of smart people talk about this.  I have massive respect for Jeff Snider, but I think he's wrong in this.  He's wrong because he's correct in terms of government fiat.  When you have depreciating currency, fiat currency, you have to have inflation to make it go.  Deflation is the death knell of an inflationary currency and an expansionary credit-based Keynesian system.  Bitcoin is different, it's just built differently.  It's an equity-based system, it's designed to be deflationary, or at the very least, disinflationary.  And so they're two different things. 

So what I've noticed is, all of the people who seem like they're right there, as Foss would say, they're on the one-yard line, they ran the ball all the way, and they just can't quite get in the end zone, it's because they're stuck on this aspect.  They're so used to the government fiat system that they can't imagine an entirely different system that's built on deflation.  So, I don't know if that makes sense.

Peter McCormack: Yeah.  Do you think there's a risk we head into a recession with inflation?

Jeff Ross: So, what I think the most likely outcome for this decade is basically a period of stagflation, so stagnant economy, possibly dipping into a recession and then popping out of it again, and high, sticky high, and volatile inflation.  So, very different from last decade, right, where we just had kind of a strong economy, very, very low, abnormally low inflation and near zero interest rates.  I think this decade is going to be, even though the causes are different, I think it will look and feel a lot like the 1970s based on history, obviously we weren't old enough for that.  We were probably both born in the 1970s, so I can't really remember it.  But looking back, I think that period of uncertainty, inflation spiking off and on, and the Fed heroically coming in to save us with their policies, even though I think they probably caused more harm than good, and then just a frustratingly weak economy, I think is what we're going to be stuck with. 

We're just overextended.  When you're over-indebted, you're basically pushing this mountain ahead of you, and you're stealing future productivity, future growth, and we're getting it all today.  You can only do that for so long before the game runs out, right?  So, you get that Japanification concern at some point that we just can't grow out of this any more, because we just have too much debt.  I think there's going to be more and more talk about a debt jubilee this decade, which is insanity that we would come to that point.

Peter McCormack: Is there an alternative option?

Jeff Ross: Well, Bitcoin! 

Peter McCormack: To what extent? 

Jeff Ross: And I actually mean that.  So, say just today, Powell resigned and they pulled me in as Fed Chair, or maybe Yellen resigned and I took over as Treasury, or I would want much smarter people than me; but say I got forced in that position, the first thing I would do is I would start buying Bitcoin as a reserve asset and start strengthening our economy.  And when you do that, like I talked about earlier, it forces an honest unit of account, right?  It forces austerity where you don't want it, even if it's unpopular; it forces you to quit stealing from the future and taking the benefits today and giving our problems to our kids and our grandkids, which is just treachery, I think.  I just think it's insane what we do in the US and basically the entire Western world. 

It would be uncomfortable, but it's necessary.  And if you did that, over time, what we'd do is we would start generating growth again, and we would grow out of this debt, because we would stop taking new debt on.  And Bitcoin, as the government bought it, it would start increasing the price, it would start bringing wealth back to the people who own it as well.  And so, you're going to start growing the GDP in different ways that are very different from now, and you're going to start creating this inner system inside this big blob of debt and low growth and frustration and hopelessness, you're going to create this little ball of light that's going to be this equity-based, income-generating type nidus that is going to grow and grow and eventually grow and expand and explode that debt bubble that we're in right now. 

So, it's hard to understand, but I think something needs to happen that's dramatic.  You can either have -- because with a debt jubilee, there are lots of things to think about.  First of all, it's going to cause chaos.  It's only going to stoke and increase geopolitical attentions.  It could end up in a war.  I know you're probably familiar with the fourth turning kind of stuff.  We're in a fourth turning period right now.  It's probably actually going to end with a major war, which none of us want.  So, what are some alternatives?  And I think Bitcoin is just literally the most viable solution.  I'm just hoping that government embraces it, and that's why it's encouraging to come back to your point that politicians, political candidates, even if they're not overly serious and they're not the frontrunners, they're still talking about Bitcoin, and they're still pandering to this audience.  That did not happen four years ago.  So, we are moving in the right direction.  The fact that Larry Fink, who's the king of ESG, is officially on Bitcoin's side now, it literally changed the narrative in one day.  That's what I think is the most important thing about Larry Fink. 

Peter McCormack: It's what Harry said last night. 

Jeff Ross: Yeah, and I agree completely with that.  The narrative shifted the second he said that.  And literally that day, a couple hours later, not to dox my father-in-law, but he's been very anti-Bitcoin and kind of thinks it's funny that I've been into it and says, "Well, it's used by criminals and it's bad for the environment and it wastes energy".  And I'm like, "No, no, no".  But that's the narrative he has heard, because people like Larry Fink and the big brokerage houses have been talking about that.  That day he called and he was interested in Bitcoin for the first time.  And I think that's not unusual and I think it's not a surprise.  So, the fact that the narrative is changing is super-encouraging to me, whether or not a spot Bitcoin ETF gets approved.  And you guys have probably noticed too, but it's almost like all the headline, the headline machine just kind of got turned off and they're not talking about it any more.  

Peter McCormack: You know what it's like?  You know when it's storms, you look across the horizon at the storms and then the clouds part and the sun comes through; it kind of is like that moment.  It is a bit misleading.  Somebody put out that Larry Fink has come out as pro-Bitcoin and look at all these positive news articles from Forbes.  That's actually a little bit disingenuous because Forbes has been positive for a long time.  And I think, what's that guy, Level39? 

Danny Knowles: Yeah.

Peter McCormack: Yeah, he put out a thread, a very good thread, listed those journalists and how they've declared they hold Bitcoin and how they've been writing positive Bitcoin for a while.  So, that was a bit disingenuous, I don't know if it's on purpose or not.  But at the same time, I think we are going to just naturally see that shift.  I'm waiting for the first positive New York Times -- yeah, here we go.  So, @Level39, big shoutout to you, "The idea that BlackRock's Bitcoin ETF is responsible for recent positive Bitcoin coverage in Forbes ignores that many contributors have been working tirelessly for months on reframing Bitcoin in the press.  Let's meet those contributors hard at work". 

So, he goes down and you've got @PlebiusEconomus and @criptobastardo, who I interviewed in Venezuela actually.  And so he's just listed them all, so it's really cool. 

Jeff Ross: That's great.

Peter McCormack: Yeah.

Jeff Ross: And I guess my rebuttal to that is, nobody cared though that they were doing this until Larry Fink did what he did.  Yeah, but give me a New York Times, "Bitcoin is good for the environment" article and then it's like, right, let's go, we're in. 

Jeff Ross: Yeah, we're in, I agree.

Peter McCormack: And I think it's going to come.  I mean, I think the narrative shift has been coming, and I think it's kind of getting to the point whereby it's kind of been embarrassing some of the people coming out against Bitcoin, and how they've been coming out against it.  And we've seen lots of different things.  I think Alex Gladstein has been great on the narrative side.  I think Jason Maier him coming out with his book has been super-useful, and then the tireless work that other people have done for years, from the Pierre Rochards to the Bitsteins.  There's so many people over the years who try to frame it always in the right way.  Getting that leaking out into the mainstream press is super-important.  Natalie Brunell does really great interviews covering as well, big shoutout to Natalie, and so we are seeing that shift. 

I think it's almost moronic now, when you see these articles come out as very anti-Bitcoin.  It's like what's your agenda here?  The next step is the politicians.  These presidential candidates have realised, and we do have a number of people like Cynthia Lummis, Ted Cruz, who are pro-Bitcoin and understand it.  It's going to be interesting what happens to the likes of Elizabeth Warren, because she has her anti-crypto army, which by the way we're kind of on the same page for part of that.  But if she actually comes out with a shift and says, "You know what, I got this wrong", that's when it will be interesting, a game-changer. 

Danny Knowles: I do think there's a massive difference between someone like Cynthia Lummis, who's clearly a bitcoiner, and the people that have come out just begging bitcoiners for money.  I think we're very naïve and anyone who says "pro-bitcoin" we're throwing money at them as a community, as an industry.  But Cynthia Lummis is very different.  I think you need to keep her in a completely separate bracket.

Peter McCormack: Yeah, but I do trust RFK on this issue, and I'd love to know your views on him and his anti-vaccine.  I don't want to say anti-vaccine, I think that's always a pejorative term, but he is sceptical of vaccines.  I'd love to know yours; maybe we'll do that offline, but I'm nervous around that.  But you never agree with a politician on everything.  But I believe him when he is pro-Bitcoin, I believe he gets it.  I don't trust Ted Cruz, but I think Ted Cruz understands money.  And DeSantis, to some extent, very anti-CBDC and I'm not a DeSantis fan, but I don't believe Vivek, and that's not to say I'm anti-Vivek.  I'd happily sit down with him again and have a conversation but I don't believe he is a bit coiner; I think he's a fiat bitcoiner maybe, like a BlackRock bitcoiner!

Jeff Ross: A BlackRock bitcoiner!  That could catch on.

Peter McCormack: Yeah, man.  We need a translation done, don't we?

Danny Knowles: What do you mean?

Peter McCormack: The Luke Gromen tweet. 

Danny Knowles: Oh! 

Peter McCormack: We got this tweet from Luke Gromen, and for the best of me, I used every bit of energy I had to try and translate this tweet! 

Danny Knowles: He posted this today.

Peter McCormack: Yeah, "The Fed getting inflation down before debt/GDP was inflated back to sustainable levels is like watching a dog catch the car: "OK, you caught it; now what are you gonna do with it?!"  Okay, I'm cool here, it's this bit, "Here's how fast positive real rates induces fiscal dominance with debt/GDP & deficits this high"; I don't understand it!  What's he saying here?  I hope you can do this.

Jeff Ross: I know, you're putting me on the spot here.  If we put the three of our heads together, maybe we can translate what Luke is trying to say.  He's so smart. 

Danny Knowles: I assume he's saying that they've not inflated the debt away.  They didn't leave inflation high enough for long enough to inflate the debt away.

Jeff Ross: Yeah, and I think that this kind of gets back to, and I don't want to put words in his mouth, but what I was talking about with the 1970s, the kind of stagflationary episode, is just because we got it down here now at these levels does not mean that we're through the woods yet.  It's going to come back and it's going to rear its ugly head, and I think that's why Powell is going to talk about, he's still going to speak hawkishly, even though we should be cheering, lots of people in the markets are cheering that the CPI is down to 3%, we're not through the woods yet.  I think inflation itself is kind of entrenched this decade, it's here to stay.  The only way to get out of that is by growing our GDP, but we have this stagnant economy.  And again, I think that's what he's talking about, the debt-to-GDP ratio. 

You have two factors there.  You can get your debt down, or your GDP up.  We're obviously not going to get our debt down, so you have to grow your GDP.  And I don't see lots of hope for that this decade.  I think we're just going to have a stagnant economy, and it's going to be almost impossible to grow out of that and to get that debt-to-GDP number down.  So, it's encouraging in the short term, but we're not through the inflation story yet.  And I think we're going to be talking about this, unfortunately, for years and years.

Peter McCormack: Coinbase is trending.  I always think it's funny to see the things that are trending together.  Coinbase, the FBI, and Tate!  Why is Coinbase trending? 

Jeff Ross: I don't know, probably because it's down again because Bitcoin's pumping? 

Peter McCormack: So, "Bank of America just closed my personal bank account I've used for 15 years for no reason".  Welcome to my world, Muneeb, "Real reason?  I do Coinbase transactions through this account for Bitcoin.  This is a war on Bitcoin % crypto.  Please RT".  I mean, why would Bank of America be doing that at a time --

Jeff Ross: Oh, that's why.

Danny Knowles: Yeah, that'd be why.

Jeff Ross: Cathie Wood sold Coinbase shares, I saw that earlier.  They yo-yo in and out of Coinbase quite a bit. 

Jeff Ross: Yeah, her timing isn't awesome. 

Peter McCormack: No.

Jeff Ross: I actually like a lot of what she has to say, but man, she --

Danny Knowles: Oh, I have seen this the last few days as well.

Peter McCormack: Yeah, "In March 2020, Coinbase held over 1 million Bitcoin.  This has now dropped to 439,000.  The exchanges are being drained.  Bitcoin is on the cusp of true price discovery".  That's a few exchanges.  Can we see all exchanges?  Is that a Glassnode thing?

Danny Knowles: Yeah, I don't know if I have access to that chart.  Let me try.

Peter McCormack: Willy would know.  But I've heard it's everywhere.

Danny Knowles: I'm sure it is after last year.  If it's not, you'd be done.

Peter McCormack: It's that Root chart, isn't it?

Jeff Ross: Rational Root?  Yeah.

Peter McCormack: Well, we should definitely do this again, loved this.  And we'd love to have you over in the UK and sit down and chat again at some point, take you to a football match. 

Jeff Ross: I would love it, see some real football.  That'd be great. 

Peter McCormack: Yeah, this was awesome, loved it.  Tell people how to follow your newsletter. 

Jeff Ross: Sure, so I'm most active on Twitter.  My handle is at @VailshireCap, you can find me there.  And then like I said, I manage money and run a hedge fund.  You can send me an email directly at info@vailshire.com or just check out vailshire.com, the website and I'd be happy to get back to you. 

Peter McCormack: Did you find it? 

Danny Knowles: No.

Peter McCormack: Can't have it, fuckers!  All right, see you later, man.