WEBVTT - The Mark Moss Show - CPI? More Like CP Lie! 0:00:02.080 --> 0:00:04.120 All right, welcome to another episode of The Mark Moss 0:00:04.120 --> 0:00:06.880 Show where we talk about bitcoin cryptocurrencies. We talked about 0:00:06.880 --> 0:00:10.479 the decentralized revolution. Given you the play by play so 0:00:10.560 --> 0:00:14.240 you can understand what's going on from a political, financial, 0:00:14.360 --> 0:00:17.319 and a technological standpoint. You know, if you're only looking 0:00:17.320 --> 0:00:20.960 at one or the other, sometimes it gets a little murky, 0:00:21.239 --> 0:00:23.439 But when you look at them all together, things start 0:00:23.520 --> 0:00:27.200 to get a lot more clear. And it's pretty evident 0:00:27.440 --> 0:00:30.760 right now the financial system that we have today is failing. 0:00:31.440 --> 0:00:34.319 It cannot go on much longer. Now I say that, 0:00:34.800 --> 0:00:37.000 but I've been saying that for a long time. It 0:00:37.080 --> 0:00:39.559 can't go on much longer. How much is much longer, Well, 0:00:39.600 --> 0:00:42.960 we don't really know. Um. A smart person told me 0:00:43.000 --> 0:00:44.360 that I can tell you what's going to happen, or 0:00:44.400 --> 0:00:45.800 I can tell you when, but I can't tell you 0:00:45.880 --> 0:00:48.400 both together. And so that's kind of that's kind of 0:00:48.440 --> 0:00:51.159 where we're at. We can see what's inevitably happening, and 0:00:51.200 --> 0:00:53.040 we can see that we're getting closer and closer and 0:00:53.080 --> 0:00:56.360 closer to that. What that final event is we don't know, 0:00:56.440 --> 0:00:59.639 but most analysts would have you believe that we are 0:00:59.720 --> 0:01:01.880 getting very close to that, and we can see the 0:01:02.000 --> 0:01:06.720 signs all around us. So, for example, this week we 0:01:06.840 --> 0:01:09.800 got the latest numbers from the United States government of 0:01:09.840 --> 0:01:12.920 the inflation numbers or what they call inflation, which is 0:01:12.959 --> 0:01:17.080 the consumer price index UM. It's called c p I. 0:01:17.080 --> 0:01:19.959 I like to call it cp LIE. And the reason 0:01:19.959 --> 0:01:22.040 why I call it cp LIE is because the way 0:01:22.080 --> 0:01:24.959 they use this number, they use this number for manipulation. 0:01:25.000 --> 0:01:28.039 And so the CPI, the price index, is a basket 0:01:28.040 --> 0:01:30.200 of goods. If I went to the grocery store and 0:01:30.200 --> 0:01:34.560 I bought milk, cheese, steak, bread, and then every year 0:01:34.600 --> 0:01:36.640 I go back to the same store and I buy 0:01:36.640 --> 0:01:38.920 the same basket, and they would track the progress of 0:01:38.959 --> 0:01:41.880 that price. The problem is a couple of things. One, 0:01:42.200 --> 0:01:45.000 they continue to change the basket, so we're not buying 0:01:45.040 --> 0:01:47.039 the same basket of goods over and over. So their 0:01:47.080 --> 0:01:50.760 substituting things in the basket. Hey, you used to buy steak, um, 0:01:50.840 --> 0:01:54.360 Now let's put hamburger meat. Hey used to buy hamger meat, 0:01:54.400 --> 0:01:57.440 Now let's put spam or whatever. And so they change 0:01:57.440 --> 0:01:59.760 what's in my basket. And then they even just start 0:01:59.800 --> 0:02:03.080 room moving things. And then they go into straight out lies. 0:02:03.160 --> 0:02:06.520 So for example, they tell you that the shelter went 0:02:06.600 --> 0:02:08.760 up by five percent, but in reality, nation wide it 0:02:08.800 --> 0:02:11.919 went up by and of course that makes up about 0:02:13.160 --> 0:02:15.919 of the basket. So when they change the number that big, 0:02:16.080 --> 0:02:19.120 it changed the numbers. Okay, that being said, the second reason, 0:02:19.280 --> 0:02:22.040 the second problem we have a CPI is that CPI 0:02:22.800 --> 0:02:27.600 UM it tries to measure the prices, but we deal 0:02:27.639 --> 0:02:30.320 with prices, we interact with prices differently. So for example, 0:02:30.520 --> 0:02:32.720 if you're renting a home and I think Glendale, Arizona, 0:02:32.760 --> 0:02:35.240 the rent went up by about a hundred and eight percent. 0:02:35.960 --> 0:02:39.160 If you're renting a home in like Philadelphia, rents went down, 0:02:39.880 --> 0:02:42.359 so for somebody there the CPI went down. Somewhere else 0:02:42.360 --> 0:02:46.880 the CPI went um. If you're buying a home in 0:02:47.280 --> 0:02:50.160 Lake and Lake Travis and outside of Austin, Texas, it 0:02:50.200 --> 0:02:53.519 went up a hundred and fifty percent. Some markets, I 0:02:53.560 --> 0:02:55.600 don't know which ones, I'm sure probably went up almost 0:02:55.639 --> 0:02:58.880 none at all. So inflation affects us differently. But inflation 0:02:59.000 --> 0:03:01.880 is what they're calling inflation, Really the price inflation, the 0:03:01.919 --> 0:03:04.480 price is going up of goods and services and assets. 0:03:04.919 --> 0:03:07.800 Really the inflation is the money supply going up. The 0:03:07.840 --> 0:03:10.360 money supply goes up, and what happens with the prices 0:03:10.440 --> 0:03:12.680 is the result of that money supply going up, and 0:03:12.720 --> 0:03:15.120 so the money supply goes up. The last two years 0:03:15.120 --> 0:03:20.040 went up, and real estate went up on average, used 0:03:20.080 --> 0:03:24.120 cars went up on average. A couple of things. Now 0:03:24.160 --> 0:03:26.720 back to the actual report, we saw that the CPI 0:03:26.880 --> 0:03:30.760 rises eight point three percent year on year, and it's 0:03:30.800 --> 0:03:35.400 the first growth slowdown since August. So we've been seeing 0:03:35.440 --> 0:03:38.160 cp I go faster faster, faster faster, and now it's 0:03:38.160 --> 0:03:41.840 slowing down. So we went from eight percent to eight 0:03:41.840 --> 0:03:45.960 point five to eight point three. So it came back 0:03:45.960 --> 0:03:47.839 down from eight to eight point five day point three, 0:03:48.480 --> 0:03:51.480 and everybody's celebrating. A couple of things about that that 0:03:51.560 --> 0:03:56.320 are pretty crazy. Um. First of all, they have cp 0:03:56.440 --> 0:03:59.920 I and then they have core cp I. Course, CPI 0:04:00.040 --> 0:04:03.360 it takes out things that you and I need to live, 0:04:03.560 --> 0:04:07.640 like food and energy. Actually the two most important things 0:04:07.640 --> 0:04:09.400 that we need to live our food and energy, and 0:04:09.440 --> 0:04:11.720 they take those out of the basket for some reason. 0:04:12.320 --> 0:04:16.000 That's pretty crazy. UM. But what I want, what I 0:04:16.040 --> 0:04:18.760 want to point to is that um, as this inflation 0:04:18.839 --> 0:04:21.680 has slowed down from eight to eight point five to 0:04:21.800 --> 0:04:24.880 eight point three, what that means is the price of 0:04:24.920 --> 0:04:27.760 everything has gone up. You know this. It's twice as 0:04:27.839 --> 0:04:29.560 much to fill up your gas tank, it's twice as 0:04:29.600 --> 0:04:31.000 much to get food for your house, it's twice as 0:04:31.080 --> 0:04:35.479 much to buy airline tickets, et cetera. When inflation goes 0:04:35.520 --> 0:04:37.640 from eight point five all the way down to eight 0:04:37.680 --> 0:04:41.039 point three, it doesn't mean prices are coming back down. 0:04:41.880 --> 0:04:45.279 What that means is that they're still going up, just 0:04:45.440 --> 0:04:48.160 at a slower rate. So they were going up by 0:04:48.160 --> 0:04:50.919 eight point five percent. Now they're still going up, but 0:04:51.000 --> 0:04:54.960 only at eight So, Um, it's not a reversal. It's 0:04:54.960 --> 0:04:57.479 not like things will get cheaper. It's not like things 0:04:57.480 --> 0:04:59.640 will get easier. It's not like you're purchasing power will 0:04:59.640 --> 0:05:02.919 get better. It's just that you're losing your purchasing power 0:05:02.960 --> 0:05:06.000 a little bit slower today than you were yesterday. That's 0:05:06.000 --> 0:05:11.360 what that means. It's crazy now because of this. Now, Um, 0:05:11.400 --> 0:05:15.360 the economists are like, well, uh, maybe maybe it's getting 0:05:15.400 --> 0:05:17.680 a little bit better. Um, maybe we don't need to 0:05:17.680 --> 0:05:20.039 be as harsh and as drastic on our cutbacks. So 0:05:20.160 --> 0:05:23.320 the to the Federal Reserve has been trying to slow 0:05:23.440 --> 0:05:27.400 down inflation by one raising interest rates. When they raise 0:05:27.440 --> 0:05:31.760 interest rates, less people borrow money. If you're not aware, 0:05:31.880 --> 0:05:34.239 we talk about money printing all the time. The FED, 0:05:34.520 --> 0:05:36.640 the government printed money. It's not really how it works. 0:05:37.279 --> 0:05:40.920 Over of transactions are digital. Nobody is using really paper money. 0:05:40.920 --> 0:05:43.479 It's not really printing anything. And the Federal reserved by 0:05:43.520 --> 0:05:46.200 itself doesn't even create money. All they do is give 0:05:46.279 --> 0:05:49.000 reserves to the banks, and then the banks with those 0:05:49.040 --> 0:05:53.359 reserves can create money into existence by issuing debt. So 0:05:53.400 --> 0:05:55.000 when you go to borrow money for a house, a 0:05:55.080 --> 0:05:57.960 car on r V, a boat, etcetera, that money is 0:05:58.000 --> 0:06:02.360 being created into existence by debt. So when the interest 0:06:02.440 --> 0:06:05.840 rates go up, you borrow less, which means less money 0:06:05.920 --> 0:06:08.400 is being created into existence. Um. So the FED has 0:06:08.400 --> 0:06:10.200 been pretty aggressive on raising rates, some of the most 0:06:10.240 --> 0:06:12.800 aggressive we've seen them be in several years. And they 0:06:12.880 --> 0:06:16.599 raised half a basis point, um another half a basis point, 0:06:17.000 --> 0:06:20.880 and many still believe they're going to continue raising rates. Um. 0:06:20.920 --> 0:06:24.360 But the markets are completely melting down and they may 0:06:24.400 --> 0:06:27.520 have to be reversing course here pretty quickly. Of course, 0:06:27.560 --> 0:06:30.800 might talk about the markets melting down. Everything is melting down. 0:06:30.880 --> 0:06:36.120 We've seen, um, the Nasdaq is down, the Dow Jones 0:06:36.200 --> 0:06:40.280 is down, the SMP five is down, UM the big 0:06:40.360 --> 0:06:45.520 Darlen's are you know, Tesla's down, um coin bases down, UM, 0:06:45.560 --> 0:06:48.960 you name it. Everything has come down. The crypto markets 0:06:48.960 --> 0:06:51.720 are not immune to this either. There's a complete blood bath. 0:06:52.120 --> 0:06:54.800 A lot of it's due to this uh failing UM 0:06:54.800 --> 0:06:58.200 stable coin protocol U s T, which I've been talking 0:06:58.240 --> 0:07:01.600 about quite a bit. I'm sure you caught that, and 0:07:01.640 --> 0:07:05.960 that's bringing the entire market cap down. Considering how bad 0:07:06.000 --> 0:07:12.640 things are. Dare I say that maybe Bitcoin is holding on? Okay, 0:07:13.480 --> 0:07:14.960 I know it's hard to say that at a time 0:07:15.000 --> 0:07:17.800 like this, when we have this complete melt down happening, 0:07:18.160 --> 0:07:22.120 but maybe it's not doing UM so bad. So we 0:07:22.160 --> 0:07:26.200 can see like Tera Lunas down in seven days, eight 0:07:26.280 --> 0:07:30.560 coins down, sixty UM thor it's a big one avalanche, 0:07:31.920 --> 0:07:35.760 UM decentral and you know so so Lana, the big 0:07:35.840 --> 0:07:39.400 Darly and um so a lot of these are really 0:07:39.440 --> 0:07:43.720 really really down uh forty fifty even sixty percent just 0:07:43.800 --> 0:07:47.720 in the last seven days, which is pretty insane. But 0:07:47.800 --> 0:07:50.680 we can see, you know, Bitcoin seems to be somewhat 0:07:50.720 --> 0:07:54.840 holding on in light of that, UM, you know, considering 0:07:54.880 --> 0:07:59.800 it's not a stable coin. It's down about so while 0:07:59.880 --> 0:08:03.640 the entire or some of the biggest cryptocurrencies are down 0:08:03.720 --> 0:08:07.960 by fifty sixty and even sevent bitcoins holding on at 0:08:07.960 --> 0:08:13.920 about drop, which, um, you know, doesn't make it the best, 0:08:14.520 --> 0:08:17.360 but it's still dropping down. We can see ethereums down, 0:08:17.360 --> 0:08:23.840 overt x, rps down, over cardanos down forty five percent, 0:08:24.000 --> 0:08:27.880 Salona is down fifty five percent, Elon must's favorite, dodge 0:08:27.880 --> 0:08:33.560 coins down, and so Bitcoin holding on not doing too 0:08:33.600 --> 0:08:36.800 bad all in all. And even while all this carnage 0:08:36.880 --> 0:08:39.760 is happening, there's still some bright spots on the horizon. 0:08:40.840 --> 0:08:43.600 We can see another nation is announcing that they're going 0:08:43.679 --> 0:08:45.360 to start buying it. Not another nation, but we saw 0:08:45.400 --> 0:08:47.880 news that Latin America's largest digital bank is going to 0:08:47.960 --> 0:08:51.960 allocate one percent to bitcoin and offer crypto investment services. 0:08:52.240 --> 0:08:54.200 And so here we have the largest digital bank in 0:08:54.240 --> 0:08:57.680 Latin America that's going to start putting their reserves into bitcoin. 0:08:58.160 --> 0:09:00.200 And we've seen through the stable coins melting down that 0:09:00.280 --> 0:09:02.559 bitcoin is a big beneficiary. A lot of people are 0:09:02.640 --> 0:09:05.120 buying bitcoin, and I think now it's still a pretty 0:09:05.120 --> 0:09:07.520 good time to get into bitcoin. Um, you buy when 0:09:07.520 --> 0:09:10.280 there's blood in the street, and that's basically where we're 0:09:10.320 --> 0:09:13.240 at right now. You're listening to the markma Show. We're 0:09:13.240 --> 0:09:15.640 talking about bitcoin and so much more. I got a 0:09:15.679 --> 0:09:18.160 lot more. Don't go away, all right, Welcome back. You're 0:09:18.160 --> 0:09:20.360 listening to the Mark mo Show. We're talking about bitcoin 0:09:20.440 --> 0:09:23.760 and cryptocurrencies and the decentralized revolution. Before the break, we 0:09:23.760 --> 0:09:27.600 were talking about the latest government numbers on inflation cp I, 0:09:28.280 --> 0:09:30.840 what the Central Bank and the federal probably continue to do. 0:09:31.160 --> 0:09:33.000 We're talking about some of the blood bath happening in 0:09:33.040 --> 0:09:35.920 the DeFi protocols because of the terror Luna. I went 0:09:36.080 --> 0:09:38.000 super deep into that in the early segments, so I'm 0:09:38.000 --> 0:09:40.280 not gonna go back deep into that again, Unlesten, if 0:09:40.280 --> 0:09:42.840 you want to go back and check out that archive, um, 0:09:42.840 --> 0:09:44.600 but it's a blood bath in that. And I talked 0:09:44.600 --> 0:09:49.120 about how bitcoin is actually holding up pretty good considering 0:09:49.440 --> 0:09:51.679 what's going on the rest of the market. Most of 0:09:51.720 --> 0:09:54.719 the market is down fifty sixty even sent Bitcoin is 0:09:54.760 --> 0:09:58.079 kind of holding in there about we can see here's 0:09:58.120 --> 0:10:01.040 as terror contagion leads to an eighty percent decline in 0:10:01.040 --> 0:10:04.800 the DeFi protocols associated um with this, and so it's 0:10:04.800 --> 0:10:08.319 just starting to drag everything down. Like I said, I'm 0:10:08.320 --> 0:10:10.080 not gonna go super deep into this. Already a deep 0:10:10.080 --> 0:10:12.760 dive on this. You can go listen to the podcast 0:10:12.920 --> 0:10:14.880 version of this something I Heart Network to search Mark 0:10:14.960 --> 0:10:16.800 Moss podcast or Mark Moss I Heart and you can 0:10:16.880 --> 0:10:19.720 check that out where I really dug in deep to that. UM. 0:10:19.760 --> 0:10:21.959 But what we can see is that there's a lot 0:10:21.960 --> 0:10:25.319 of contagion happening, and I'm afraid that what could happen, 0:10:25.559 --> 0:10:28.120 what's happened with us T could then lead to us 0:10:28.440 --> 0:10:31.200 d T, which is tether, and it could even spread 0:10:31.200 --> 0:10:33.480 to some of the c FI coins like Celsius, because 0:10:33.520 --> 0:10:36.680 I see Selfius Celsius trying to backstop um these and 0:10:36.679 --> 0:10:38.400 it makes me think they have some sort of invested 0:10:38.440 --> 0:10:41.640 interest that so be very very careful of this contagion 0:10:41.679 --> 0:10:47.360 that's that's happening right now. UM. And of course a 0:10:47.400 --> 0:10:49.640 lot of people losing a lot of money, which then 0:10:49.760 --> 0:10:54.040 leads the uh, you know, the government's the regulators to 0:10:54.120 --> 0:10:56.920 do what they do, which is regulate, and we have 0:10:57.000 --> 0:11:00.920 the SEC Security Exchange Commission, and their role is to 0:11:01.120 --> 0:11:04.600 protect customers. Their role is to protect people from this 0:11:04.760 --> 0:11:07.040 very thing. Now I'm not a fan of the SEC. 0:11:07.679 --> 0:11:10.440 I don't think I need protection or you need protection. 0:11:10.520 --> 0:11:12.960 We should all be in a free market that allows 0:11:13.040 --> 0:11:16.200 me to freely choose what I want to decide, what 0:11:16.360 --> 0:11:19.960 risks I want to take, etcetera. UM, And really I'm 0:11:19.960 --> 0:11:21.600 a little bit mad at the SEC because they don't 0:11:21.600 --> 0:11:23.280 do anything to protect you. UM. A lot of times 0:11:23.320 --> 0:11:26.839 what they're doing is actually hurting you. So for example, UM, 0:11:26.880 --> 0:11:28.920 the rich get really rich because they get access to 0:11:29.040 --> 0:11:32.199 really good deals before their public. So for example, UM, 0:11:32.280 --> 0:11:38.080 some famous VC investors UM put like dollars or fifty 0:11:38.120 --> 0:11:41.480 thousand dollars or a hundred thousand dollars into early upstarts 0:11:41.480 --> 0:11:46.400 like Uber and turns into twenty million dollars, fifty million dollars, 0:11:46.400 --> 0:11:49.480 a hundred million dollars, little bits of money. But you, 0:11:50.000 --> 0:11:52.800 well maybe you, maybe not you. But the average person 0:11:53.360 --> 0:11:55.320 isn't able to get in these types of deals because 0:11:55.320 --> 0:11:58.720 you're not an accredited investor. So the SEC is trying 0:11:58.760 --> 0:12:01.280 to protect you, so they're keeping you out of these 0:12:01.320 --> 0:12:04.040 types of deals. Meanwhile, the rich keep getting richer because 0:12:04.080 --> 0:12:05.880 they get access to these deals. And what happens is 0:12:06.400 --> 0:12:09.760 they get into all these early round deals and they 0:12:09.800 --> 0:12:13.120 make a bunch of money and then finally they go public, 0:12:13.320 --> 0:12:16.679 which means the average person that's non accredited, kid credited 0:12:16.760 --> 0:12:20.040 can buy them. And so what happens. All those venture capitalists, 0:12:20.040 --> 0:12:23.000 all those are credit investors by early and as soon 0:12:23.040 --> 0:12:25.839 as they get onto the market, the regular people, non 0:12:25.840 --> 0:12:27.920 acredit investors have been waiting and waiting, waiting to get in. 0:12:28.360 --> 0:12:30.679 They can finally get in, and what happens, Well, those 0:12:30.720 --> 0:12:33.920 early investors dump on them. Sure, I already made ten 0:12:34.120 --> 0:12:37.360 x fifty x on my investment. Here you go buy it. 0:12:37.760 --> 0:12:41.720 And usually right after that happens, the price plummets down, 0:12:42.160 --> 0:12:45.440 and so the SEC they say, I was trying to 0:12:45.480 --> 0:12:48.480 protect the average person. The reality is more people end 0:12:48.559 --> 0:12:52.520 up getting a hurt by this. However, I can't fault 0:12:52.559 --> 0:12:55.560 them from trying. I suppose here they are again, back 0:12:55.600 --> 0:12:59.040 at it again, meeting at an I S d A 0:12:59.240 --> 0:13:03.040 meeting and they're um, they're addressing the audience. It's an 0:13:03.080 --> 0:13:06.800 annual meeting and of the International Swaps and Derivatives Association 0:13:07.880 --> 0:13:11.320 in Madrid, Spain. And Gary Ginsler, he's the head of 0:13:11.320 --> 0:13:13.840 the SEC, and the head of the U S Commodity 0:13:13.880 --> 0:13:18.079 Futures Trading Committee UH Chairman Roston Benham were both features 0:13:18.120 --> 0:13:22.120 keynote speakers at the event. UM, basically saying what they 0:13:22.160 --> 0:13:24.439 plan to do. Ben him spoke at length about a 0:13:24.559 --> 0:13:27.840 quote request for an amended Order of Registration as a 0:13:27.880 --> 0:13:32.120 derivatives clearing organization by an entity seeking to offer non 0:13:32.120 --> 0:13:36.120 intermediated clearing of margin products to retail participants. It's a lot, 0:13:36.480 --> 0:13:39.400 it's a big mouthful. What does that mean? That means 0:13:39.440 --> 0:13:42.480 they want to create more red tape and UM, you know, 0:13:42.600 --> 0:13:44.640 more gates that people have to get through before they 0:13:44.640 --> 0:13:49.840 can give these UH securities and UM derivatives for you 0:13:49.880 --> 0:13:53.280 to invest into, which is good. UM. I think most 0:13:53.280 --> 0:13:56.400 people probably shouldn't be investing in these at all. UM, 0:13:56.440 --> 0:13:58.360 but never like like I said, they're gonna try to 0:13:58.400 --> 0:14:00.640 continue to regulate it. They're gonna try to you continue 0:14:00.679 --> 0:14:05.920 to protect us. And notably UM, Sam Bankman Freed was 0:14:05.960 --> 0:14:09.720 there UM talking Sam Bankman Freed. You might recognize that name. 0:14:09.760 --> 0:14:13.839 He is the UM. I think he's under thirty. I 0:14:13.880 --> 0:14:15.839 want to say he's like one of the richest men 0:14:15.960 --> 0:14:20.560 under thirty. He's the founder of ft X Exchange so 0:14:20.960 --> 0:14:25.080 ft X Exchange I believe they sponsored is at the 0:14:25.120 --> 0:14:29.600 Miami heat Stadium possibly UM huge crypto exchange. He's a billionaire. 0:14:30.600 --> 0:14:34.200 He's there speaking about regulations, and here he isn't another 0:14:34.320 --> 0:14:39.440 article talking about the scams that he sales. M hm. 0:14:39.960 --> 0:14:42.440 So he's there with the SEC and the CFTC talking 0:14:42.440 --> 0:14:45.440 about regulations and protecting people. But just a few weeks 0:14:45.480 --> 0:14:48.040 ago he was talking about how the scams he perpetuates. 0:14:48.120 --> 0:14:49.520 So let me let me break this down. There's this 0:14:49.520 --> 0:14:53.520 Bloomberg article. You can find it just search. Sam Bankman 0:14:53.560 --> 0:14:56.200 Freed described yield farming. If you just look at that, 0:14:57.560 --> 0:15:02.920 so he says, uh so uh, he says, uh. Anyway, 0:15:02.920 --> 0:15:04.440 this article is like, what do you find some of 0:15:04.440 --> 0:15:06.520 the most creative money making seems to take place in 0:15:06.720 --> 0:15:09.840 yield farming. You might be asking yourself right now, what 0:15:09.880 --> 0:15:11.960 the heck is yield farming? Well, a lot of people 0:15:12.000 --> 0:15:16.200 are so. In this article, um ft X chief executive 0:15:16.240 --> 0:15:19.560 officer and crypto billionaire Stan Bankman Freed with Bloomberg opinion 0:15:19.600 --> 0:15:23.600 columnist Matt Levine sat down and Matt asked Sam exactly 0:15:23.600 --> 0:15:26.840 what filled yield farming actually is. And here's what he said. 0:15:28.120 --> 0:15:30.280 You're gonna love this. Matt Levin says, can you give 0:15:30.280 --> 0:15:33.280 me an intuitive understanding of farming? I mean, like, to me, 0:15:33.400 --> 0:15:35.480 farming is like you sell some structured puts or whatever. 0:15:35.840 --> 0:15:39.400 So Sam Frank Sam Bankman Freed what's called SPF for short. 0:15:39.800 --> 0:15:42.440 Remember he's the billionaire that runs f t X who 0:15:42.520 --> 0:15:46.160 was with the SEC talking about regulating. He says, um, 0:15:46.240 --> 0:15:48.200 let me give you sort of like a really toy 0:15:48.280 --> 0:15:50.720 model of it, which I actually think has a surprising 0:15:50.720 --> 0:15:53.440 amount of legitimacy for what farming could mean. You know, 0:15:53.440 --> 0:15:55.600 where do you start? He says, you start with a 0:15:55.600 --> 0:15:58.320 company that builds a box and then practice this box. 0:15:58.640 --> 0:16:00.320 They probably dress it up to look like a life 0:16:00.400 --> 0:16:02.920 changing you know, kind of like world altering protocol that's 0:16:02.960 --> 0:16:04.680 kind of replace all the big banks in thirty eight 0:16:04.720 --> 0:16:08.240 days or whatever. Um, maybe for now, actually ignore what 0:16:08.280 --> 0:16:11.080 it does or pretend it does literally nothing. It's just 0:16:11.160 --> 0:16:15.240 a box that does that make sense? So right now, 0:16:15.480 --> 0:16:17.880 he says, it's sort of like a box that they 0:16:17.960 --> 0:16:19.920 promise is going to change the whole world in thirty 0:16:19.920 --> 0:16:24.480 eight days, but it literally does nothing. It's just a box, 0:16:25.080 --> 0:16:28.080 that's his words. So you start with nothing and they 0:16:28.120 --> 0:16:30.320 pretend it's going to be something, but in his own words, 0:16:30.360 --> 0:16:33.040 it actually does nothing. He says, so what this protocol is, 0:16:33.080 --> 0:16:35.320 It's called Protocol xits the box and you're a token. 0:16:35.960 --> 0:16:38.080 You can take ethereum or whatever and you put it 0:16:38.080 --> 0:16:39.680 in the box and you take it out of the box. 0:16:39.800 --> 0:16:41.400 All right, So you can put tokens in and you 0:16:41.400 --> 0:16:43.280 can take boat tokens out. So you put in the 0:16:43.320 --> 0:16:45.520 box and you get like, you know, an IOU for 0:16:45.600 --> 0:16:48.320 having put it in the box, and then later you 0:16:48.360 --> 0:16:51.120 can redeem that i o U back to get the 0:16:51.160 --> 0:16:53.200 token back. That makes sense here with me. So far, 0:16:53.320 --> 0:16:55.760 you have this worth lipp worthless box. You can put 0:16:55.760 --> 0:16:57.360 it token in, they'll give an IOU for it, and 0:16:57.440 --> 0:17:00.640 later you can redeem that for the token. He says, 0:17:00.680 --> 0:17:03.600 so far, this is Sam Bakeman freesteal, what we've described 0:17:03.640 --> 0:17:06.679 as the world's dumbest e t F. It doesn't do anything, 0:17:07.119 --> 0:17:09.080 but it lets you puts things in if you choose. 0:17:09.400 --> 0:17:11.960 And then this protocol issues a token, we'll call it 0:17:12.000 --> 0:17:15.320 whatever ex token, and x X token promises that anything 0:17:15.320 --> 0:17:17.439 cool that happens because of this box is going to 0:17:17.600 --> 0:17:21.320 ultimately be usable by you know, governance votes of holders 0:17:21.359 --> 0:17:24.399 of the X token. So basically it's a bunch of 0:17:24.400 --> 0:17:27.719 smoke and mirrors. They created box that literally does nothing 0:17:27.920 --> 0:17:30.520 that you can put tokens into with a with an 0:17:30.640 --> 0:17:33.280 I O U, and they promise you that whatever this 0:17:33.400 --> 0:17:35.560 box ends up doing, you'll be able to have a 0:17:35.640 --> 0:17:37.840 claim on whatever that box ends up doing because you 0:17:37.840 --> 0:17:40.040 have that IOU. However, he already told you that the 0:17:40.080 --> 0:17:44.320 box does nothing. Sounds sort of like a fraud or 0:17:44.320 --> 0:17:46.919 a scam, doesn't it. I want to explain what he 0:17:46.960 --> 0:17:48.439 says here and more in some of the questions that 0:17:48.440 --> 0:17:50.560 were asked back of him, so you can understand, what's more, 0:17:51.160 --> 0:17:53.159 what they're talking about here are You're listening to the 0:17:53.200 --> 0:17:55.800 Mark Moa Show talking about bitcoin and cryptocurrencies and a 0:17:55.840 --> 0:17:58.359 whole lot more. I'm gonna come back with this story 0:17:58.359 --> 0:18:00.320 and more in a second. Don't go away, all right, 0:18:00.359 --> 0:18:02.440 welcome back. You are listening to the markmas Show. We're 0:18:02.440 --> 0:18:05.720 talking about bitcoin, We're talking about cryptocurrency. We're talking about 0:18:05.720 --> 0:18:09.280 the decentralized revolution. I was talking about right before the break, 0:18:09.320 --> 0:18:11.960 I was talking about this Defy protocol thing. I was 0:18:11.960 --> 0:18:14.280 talking about how it's blown up, it's blowing up the markets, 0:18:14.640 --> 0:18:17.920 how the SEC, the CFTC, they're having this meeting to 0:18:18.000 --> 0:18:19.840 figure out how they're going to regulate things and how 0:18:19.840 --> 0:18:23.160 they're going to protect us from investing into a bunch 0:18:23.200 --> 0:18:26.320 of scams and frauds, and at the event was Sam 0:18:26.359 --> 0:18:29.639 Bankman Freed. He's the billionaire founder of f t x, 0:18:29.680 --> 0:18:33.679 one of the largest cryptocurrency trading platforms, and he was 0:18:33.720 --> 0:18:36.280 in an article just a few weeks ago on Bloomberg 0:18:36.560 --> 0:18:39.520 and he was interviewed by Matt Levine asking him what 0:18:39.600 --> 0:18:43.359 the heck is this defy yield farming about anyway? The 0:18:43.400 --> 0:18:47.600 yield farming, Uh, defy that's like blowing up the entire 0:18:48.000 --> 0:18:50.399 financial markets right now. Yeah, So we asked him about it, 0:18:50.520 --> 0:18:52.639 and Sam Bankman Freed said, it's basically like a box. 0:18:52.960 --> 0:18:55.600 The box does nothing, it's worth nothing, but you can 0:18:55.600 --> 0:18:56.840 put a token in it, and then you get an 0:18:56.880 --> 0:19:00.480 IOU for that token, and then, um, you know, they 0:19:00.480 --> 0:19:01.919 make you think that this box is going to do 0:19:01.920 --> 0:19:03.560 something cool and if it does, then your token then 0:19:03.560 --> 0:19:06.760 your claim on that token allows you to participate. Um. 0:19:06.800 --> 0:19:08.359 He went on to say, of course, so far we 0:19:08.400 --> 0:19:11.440 haven't exactly given a compelling reason for why there ever 0:19:11.480 --> 0:19:14.480 would be any proceeds from this box, but I don't know, 0:19:14.800 --> 0:19:17.200 you know, maybe there will be. So sort of where 0:19:17.320 --> 0:19:20.720 you start and then you say, all right, well you've 0:19:20.760 --> 0:19:23.080 got this box and you've got a token, and the 0:19:23.119 --> 0:19:28.560 box declares or votes on governance. UM. And what we're 0:19:28.560 --> 0:19:30.879 gonna do is gonna take half of all the tokens, 0:19:32.160 --> 0:19:34.719 maybe two thirds, and we're gonna offer those tokens. We're 0:19:34.720 --> 0:19:37.560 gonna give him away for free whoever uses the box. 0:19:37.960 --> 0:19:41.000 So anyone who goes and takes some money and puts 0:19:41.000 --> 0:19:43.000 it in this box, remember the box that he said 0:19:43.040 --> 0:19:45.320 is worthless and does nothing. Whoever takes money and puts 0:19:45.359 --> 0:19:49.119 it in this box each day, they're gonna get back, 0:19:49.160 --> 0:19:53.440 you know, one percent of this new box token UM 0:19:53.560 --> 0:19:56.200 for everyone who put money in the box. Now for now, 0:19:56.480 --> 0:19:59.320 what EX token does? It gets given away to box people. 0:20:01.160 --> 0:20:03.960 So this box that does absolutely nothing creates its own token. 0:20:04.720 --> 0:20:07.399 And if I put real money in there, they're going 0:20:07.440 --> 0:20:11.160 to give me back this box token. But what's the box? 0:20:11.240 --> 0:20:16.560 The box does nothing and box token does nothing. UM. 0:20:16.680 --> 0:20:18.760 For now, he says, in his own words, what X 0:20:18.800 --> 0:20:21.240 token does? It gets given away to the box people. 0:20:21.960 --> 0:20:25.719 And now what happens, Well, the token has some market cap, right, 0:20:25.720 --> 0:20:28.080 it's probably not zero, let's say it's you know, it's 0:20:28.080 --> 0:20:31.800 a twenty million market So this box token that does 0:20:31.840 --> 0:20:34.600 nothing and gets given away to people who put their 0:20:34.880 --> 0:20:38.440 money in the box gets given away and it's worth 0:20:38.440 --> 0:20:41.840 twenty million. And so the interviewee Matt Levine says, wait, wait, wait, wait, wait, 0:20:42.000 --> 0:20:45.719 from like first principles, it should be zero. And Sam's 0:20:45.760 --> 0:20:49.320 answer is, uh, sure, okay, yeah, it's completely reasonable, should 0:20:49.320 --> 0:20:54.440 be zero. So so Matt says, wait, but like, when 0:20:54.480 --> 0:20:56.680 you describe it in this totalical, cynical way, it sounds 0:20:56.720 --> 0:20:59.239 like it should be zero, but go ahead and go on. 0:20:59.280 --> 0:21:01.720 So Sam says, okay, describe it this way. You might think, 0:21:01.720 --> 0:21:04.040 for instance, that in like five minutes with an Internet connection, 0:21:04.240 --> 0:21:07.159 you could create a box and such a token and 0:21:07.160 --> 0:21:08.720