Speaker 1: All right, welcome to another episode of The Mark Moss
Speaker 1: Show where we talk about bitcoin cryptocurrencies. We talked about
Speaker 1: the decentralized revolution. Given you the play by play so
Speaker 1: you can understand what's going on from a political, financial,
Speaker 1: and a technological standpoint. You know, if you're only looking
Speaker 1: at one or the other, sometimes it gets a little murky,
Speaker 1: But when you look at them all together, things start
Speaker 1: to get a lot more clear. And it's pretty evident
Speaker 1: right now the financial system that we have today is failing.
Speaker 1: It cannot go on much longer. Now I say that,
Speaker 1: but I've been saying that for a long time. It
Speaker 1: can't go on much longer. How much is much longer, Well,
Speaker 1: we don't really know. Um. A smart person told me
Speaker 1: that I can tell you what's going to happen, or
Speaker 1: I can tell you when, but I can't tell you
Speaker 1: both together. And so that's kind of that's kind of
Speaker 1: where we're at. We can see what's inevitably happening, and
Speaker 1: we can see that we're getting closer and closer and
Speaker 1: closer to that. What that final event is we don't know,
Speaker 1: but most analysts would have you believe that we are
Speaker 1: getting very close to that, and we can see the
Speaker 1: signs all around us. So, for example, this week we
Speaker 1: got the latest numbers from the United States government of
Speaker 1: the inflation numbers or what they call inflation, which is
Speaker 1: the consumer price index UM. It's called c p I.
Speaker 1: I like to call it cp LIE. And the reason
Speaker 1: why I call it cp LIE is because the way
Speaker 1: they use this number, they use this number for manipulation.
Speaker 1: And so the CPI, the price index, is a basket
Speaker 1: of goods. If I went to the grocery store and
Speaker 1: I bought milk, cheese, steak, bread, and then every year
Speaker 1: I go back to the same store and I buy
Speaker 1: the same basket, and they would track the progress of
Speaker 1: that price. The problem is a couple of things. One,
Speaker 1: they continue to change the basket, so we're not buying
Speaker 1: the same basket of goods over and over. So their
Speaker 1: substituting things in the basket. Hey, you used to buy steak, um,
Speaker 1: Now let's put hamburger meat. Hey used to buy hamger meat,
Speaker 1: Now let's put spam or whatever. And so they change
Speaker 1: what's in my basket. And then they even just start
Speaker 1: room moving things. And then they go into straight out lies.
Speaker 1: So for example, they tell you that the shelter went
Speaker 1: up by five percent, but in reality, nation wide it
Speaker 1: went up by and of course that makes up about
Speaker 1: of the basket. So when they change the number that big,
Speaker 1: it changed the numbers. Okay, that being said, the second reason,
Speaker 1: the second problem we have a CPI is that CPI
Speaker 1: UM it tries to measure the prices, but we deal
Speaker 1: with prices, we interact with prices differently. So for example,
Speaker 1: if you're renting a home and I think Glendale, Arizona,
Speaker 1: the rent went up by about a hundred and eight percent.
Speaker 1: If you're renting a home in like Philadelphia, rents went down,
Speaker 1: so for somebody there the CPI went down. Somewhere else
Speaker 1: the CPI went um. If you're buying a home in
Speaker 1: Lake and Lake Travis and outside of Austin, Texas, it
Speaker 1: went up a hundred and fifty percent. Some markets, I
Speaker 1: don't know which ones, I'm sure probably went up almost
Speaker 1: none at all. So inflation affects us differently. But inflation
Speaker 1: is what they're calling inflation, Really the price inflation, the
Speaker 1: price is going up of goods and services and assets.
Speaker 1: Really the inflation is the money supply going up. The
Speaker 1: money supply goes up, and what happens with the prices
Speaker 1: is the result of that money supply going up, and
Speaker 1: so the money supply goes up. The last two years
Speaker 1: went up, and real estate went up on average, used
Speaker 1: cars went up on average. A couple of things. Now
Speaker 1: back to the actual report, we saw that the CPI
Speaker 1: rises eight point three percent year on year, and it's
Speaker 1: the first growth slowdown since August. So we've been seeing
Speaker 1: cp I go faster faster, faster faster, and now it's
Speaker 1: slowing down. So we went from eight percent to eight
Speaker 1: point five to eight point three. So it came back
Speaker 1: down from eight to eight point five day point three,
Speaker 1: and everybody's celebrating. A couple of things about that that
Speaker 1: are pretty crazy. Um. First of all, they have cp
Speaker 1: I and then they have core cp I. Course, CPI
Speaker 1: it takes out things that you and I need to live,
Speaker 1: like food and energy. Actually the two most important things
Speaker 1: that we need to live our food and energy, and
Speaker 1: they take those out of the basket for some reason.
Speaker 1: That's pretty crazy. UM. But what I want, what I
Speaker 1: want to point to is that um, as this inflation
Speaker 1: has slowed down from eight to eight point five to
Speaker 1: eight point three, what that means is the price of
Speaker 1: everything has gone up. You know this. It's twice as
Speaker 1: much to fill up your gas tank, it's twice as
Speaker 1: much to get food for your house, it's twice as
Speaker 1: much to buy airline tickets, et cetera. When inflation goes
Speaker 1: from eight point five all the way down to eight
Speaker 1: point three, it doesn't mean prices are coming back down.
Speaker 1: What that means is that they're still going up, just
Speaker 1: at a slower rate. So they were going up by
Speaker 1: eight point five percent. Now they're still going up, but
Speaker 1: only at eight So, Um, it's not a reversal. It's
Speaker 1: not like things will get cheaper. It's not like things
Speaker 1: will get easier. It's not like you're purchasing power will
Speaker 1: get better. It's just that you're losing your purchasing power
Speaker 1: a little bit slower today than you were yesterday. That's
Speaker 1: what that means. It's crazy now because of this. Now, Um,
Speaker 1: the economists are like, well, uh, maybe maybe it's getting
Speaker 1: a little bit better. Um, maybe we don't need to
Speaker 1: be as harsh and as drastic on our cutbacks. So
Speaker 1: the to the Federal Reserve has been trying to slow
Speaker 1: down inflation by one raising interest rates. When they raise
Speaker 1: interest rates, less people borrow money. If you're not aware,
Speaker 1: we talk about money printing all the time. The FED,
Speaker 1: the government printed money. It's not really how it works.
Speaker 1: Over of transactions are digital. Nobody is using really paper money.
Speaker 1: It's not really printing anything. And the Federal reserved by
Speaker 1: itself doesn't even create money. All they do is give
Speaker 1: reserves to the banks, and then the banks with those
Speaker 1: reserves can create money into existence by issuing debt. So
Speaker 1: when you go to borrow money for a house, a
Speaker 1: car on r V, a boat, etcetera, that money is
Speaker 1: being created into existence by debt. So when the interest
Speaker 1: rates go up, you borrow less, which means less money
Speaker 1: is being created into existence. Um. So the FED has
Speaker 1: been pretty aggressive on raising rates, some of the most
Speaker 1: aggressive we've seen them be in several years. And they
Speaker 1: raised half a basis point, um another half a basis point,
Speaker 1: and many still believe they're going to continue raising rates. Um.
Speaker 1: But the markets are completely melting down and they may
Speaker 1: have to be reversing course here pretty quickly. Of course,
Speaker 1: might talk about the markets melting down. Everything is melting down.
Speaker 1: We've seen, um, the Nasdaq is down, the Dow Jones
Speaker 1: is down, the SMP five is down, UM the big
Speaker 1: Darlen's are you know, Tesla's down, um coin bases down, UM,
Speaker 1: you name it. Everything has come down. The crypto markets
Speaker 1: are not immune to this either. There's a complete blood bath.
Speaker 1: A lot of it's due to this uh failing UM
Speaker 1: stable coin protocol U s T, which I've been talking
Speaker 1: about quite a bit. I'm sure you caught that, and
Speaker 1: that's bringing the entire market cap down. Considering how bad
Speaker 1: things are. Dare I say that maybe Bitcoin is holding on? Okay,
Speaker 1: I know it's hard to say that at a time
Speaker 1: like this, when we have this complete melt down happening,
Speaker 1: but maybe it's not doing UM so bad. So we
Speaker 1: can see like Tera Lunas down in seven days, eight
Speaker 1: coins down, sixty UM thor it's a big one avalanche,
Speaker 1: UM decentral and you know so so Lana, the big
Speaker 1: Darly and um so a lot of these are really
Speaker 1: really really down uh forty fifty even sixty percent just
Speaker 1: in the last seven days, which is pretty insane. But
Speaker 1: we can see, you know, Bitcoin seems to be somewhat
Speaker 1: holding on in light of that, UM, you know, considering
Speaker 1: it's not a stable coin. It's down about so while
Speaker 1: the entire or some of the biggest cryptocurrencies are down
Speaker 1: by fifty sixty and even sevent bitcoins holding on at
Speaker 1: about drop, which, um, you know, doesn't make it the best,
Speaker 1: but it's still dropping down. We can see ethereums down,
Speaker 1: overt x, rps down, over cardanos down forty five percent,
Speaker 1: Salona is down fifty five percent, Elon must's favorite, dodge
Speaker 1: coins down, and so Bitcoin holding on not doing too
Speaker 1: bad all in all. And even while all this carnage
Speaker 1: is happening, there's still some bright spots on the horizon.
Speaker 1: We can see another nation is announcing that they're going
Speaker 1: to start buying it. Not another nation, but we saw
Speaker 1: news that Latin America's largest digital bank is going to
Speaker 1: allocate one percent to bitcoin and offer crypto investment services.
Speaker 1: And so here we have the largest digital bank in
Speaker 1: Latin America that's going to start putting their reserves into bitcoin.
Speaker 1: And we've seen through the stable coins melting down that
Speaker 1: bitcoin is a big beneficiary. A lot of people are
Speaker 1: buying bitcoin, and I think now it's still a pretty
Speaker 1: good time to get into bitcoin. Um, you buy when
Speaker 1: there's blood in the street, and that's basically where we're
Speaker 1: at right now. You're listening to the markma Show. We're
Speaker 1: talking about bitcoin and so much more. I got a
Speaker 1: lot more. Don't go away, all right, Welcome back. You're
Speaker 1: listening to the Mark mo Show. We're talking about bitcoin
Speaker 1: and cryptocurrencies and the decentralized revolution. Before the break, we
Speaker 1: were talking about the latest government numbers on inflation cp I,
Speaker 1: what the Central Bank and the federal probably continue to do.
Speaker 1: We're talking about some of the blood bath happening in
Speaker 1: the DeFi protocols because of the terror Luna. I went
Speaker 1: super deep into that in the early segments, so I'm
Speaker 1: not gonna go back deep into that again, Unlesten, if
Speaker 1: you want to go back and check out that archive, um,
Speaker 1: but it's a blood bath in that. And I talked
Speaker 1: about how bitcoin is actually holding up pretty good considering
Speaker 1: what's going on the rest of the market. Most of
Speaker 1: the market is down fifty sixty even sent Bitcoin is
Speaker 1: kind of holding in there about we can see here's
Speaker 1: as terror contagion leads to an eighty percent decline in
Speaker 1: the DeFi protocols associated um with this, and so it's
Speaker 1: just starting to drag everything down. Like I said, I'm
Speaker 1: not gonna go super deep into this. Already a deep
Speaker 1: dive on this. You can go listen to the podcast
Speaker 1: version of this something I Heart Network to search Mark
Speaker 1: Moss podcast or Mark Moss I Heart and you can
Speaker 1: check that out where I really dug in deep to that. UM.
Speaker 1: But what we can see is that there's a lot
Speaker 1: of contagion happening, and I'm afraid that what could happen,
Speaker 1: what's happened with us T could then lead to us
Speaker 1: d T, which is tether, and it could even spread
Speaker 1: to some of the c FI coins like Celsius, because
Speaker 1: I see Selfius Celsius trying to backstop um these and
Speaker 1: it makes me think they have some sort of invested
Speaker 1: interest that so be very very careful of this contagion
Speaker 1: that's that's happening right now. UM. And of course a
Speaker 1: lot of people losing a lot of money, which then
Speaker 1: leads the uh, you know, the government's the regulators to
Speaker 1: do what they do, which is regulate, and we have
Speaker 1: the SEC Security Exchange Commission, and their role is to
Speaker 1: protect customers. Their role is to protect people from this
Speaker 1: very thing. Now I'm not a fan of the SEC.
Speaker 1: I don't think I need protection or you need protection.
Speaker 1: We should all be in a free market that allows
Speaker 1: me to freely choose what I want to decide, what
Speaker 1: risks I want to take, etcetera. UM, And really I'm
Speaker 1: a little bit mad at the SEC because they don't
Speaker 1: do anything to protect you. UM. A lot of times
Speaker 1: what they're doing is actually hurting you. So for example, UM,
Speaker 1: the rich get really rich because they get access to
Speaker 1: really good deals before their public. So for example, UM,
Speaker 1: some famous VC investors UM put like dollars or fifty
Speaker 1: thousand dollars or a hundred thousand dollars into early upstarts
Speaker 1: like Uber and turns into twenty million dollars, fifty million dollars,
Speaker 1: a hundred million dollars, little bits of money. But you,
Speaker 1: well maybe you, maybe not you. But the average person
Speaker 1: isn't able to get in these types of deals because
Speaker 1: you're not an accredited investor. So the SEC is trying
Speaker 1: to protect you, so they're keeping you out of these
Speaker 1: types of deals. Meanwhile, the rich keep getting richer because
Speaker 1: they get access to these deals. And what happens is
Speaker 1: they get into all these early round deals and they
Speaker 1: make a bunch of money and then finally they go public,
Speaker 1: which means the average person that's non accredited, kid credited
Speaker 1: can buy them. And so what happens. All those venture capitalists,
Speaker 1: all those are credit investors by early and as soon
Speaker 1: as they get onto the market, the regular people, non
Speaker 1: acredit investors have been waiting and waiting, waiting to get in.
Speaker 1: They can finally get in, and what happens, Well, those
Speaker 1: early investors dump on them. Sure, I already made ten
Speaker 1: x fifty x on my investment. Here you go buy it.
Speaker 1: And usually right after that happens, the price plummets down,
Speaker 1: and so the SEC they say, I was trying to
Speaker 1: protect the average person. The reality is more people end
Speaker 1: up getting a hurt by this. However, I can't fault
Speaker 1: them from trying. I suppose here they are again, back
Speaker 1: at it again, meeting at an I S d A
Speaker 1: meeting and they're um, they're addressing the audience. It's an
Speaker 1: annual meeting and of the International Swaps and Derivatives Association
Speaker 1: in Madrid, Spain. And Gary Ginsler, he's the head of
Speaker 1: the SEC, and the head of the U S Commodity
Speaker 1: Futures Trading Committee UH Chairman Roston Benham were both features
Speaker 1: keynote speakers at the event. UM, basically saying what they
Speaker 1: plan to do. Ben him spoke at length about a
Speaker 1: quote request for an amended Order of Registration as a
Speaker 1: derivatives clearing organization by an entity seeking to offer non
Speaker 1: intermediated clearing of margin products to retail participants. It's a lot,
Speaker 1: it's a big mouthful. What does that mean? That means
Speaker 1: they want to create more red tape and UM, you know,
Speaker 1: more gates that people have to get through before they
Speaker 1: can give these UH securities and UM derivatives for you
Speaker 1: to invest into, which is good. UM. I think most
Speaker 1: people probably shouldn't be investing in these at all. UM,
Speaker 1: but never like like I said, they're gonna try to
Speaker 1: continue to regulate it. They're gonna try to you continue
Speaker 1: to protect us. And notably UM, Sam Bankman Freed was
Speaker 1: there UM talking Sam Bankman Freed. You might recognize that name.
Speaker 1: He is the UM. I think he's under thirty. I
Speaker 1: want to say he's like one of the richest men
Speaker 1: under thirty. He's the founder of ft X Exchange so
Speaker 1: ft X Exchange I believe they sponsored is at the
Speaker 1: Miami heat Stadium possibly UM huge crypto exchange. He's a billionaire.
Speaker 1: He's there speaking about regulations, and here he isn't another
Speaker 1: article talking about the scams that he sales. M hm.
Speaker 1: So he's there with the SEC and the CFTC talking
Speaker 1: about regulations and protecting people. But just a few weeks
Speaker 1: ago he was talking about how the scams he perpetuates.
Speaker 1: So let me let me break this down. There's this
Speaker 1: Bloomberg article. You can find it just search. Sam Bankman
Speaker 1: Freed described yield farming. If you just look at that,
Speaker 1: so he says, uh so uh, he says, uh. Anyway,
Speaker 1: this article is like, what do you find some of
Speaker 1: the most creative money making seems to take place in
Speaker 1: yield farming. You might be asking yourself right now, what
Speaker 1: the heck is yield farming? Well, a lot of people
Speaker 1: are so. In this article, um ft X chief executive
Speaker 1: officer and crypto billionaire Stan Bankman Freed with Bloomberg opinion
Speaker 1: columnist Matt Levine sat down and Matt asked Sam exactly
Speaker 1: what filled yield farming actually is. And here's what he said.
Speaker 1: You're gonna love this. Matt Levin says, can you give
Speaker 1: me an intuitive understanding of farming? I mean, like, to me,
Speaker 1: farming is like you sell some structured puts or whatever.
Speaker 1: So Sam Frank Sam Bankman Freed what's called SPF for short.
Speaker 1: Remember he's the billionaire that runs f t X who
Speaker 1: was with the SEC talking about regulating. He says, um,
Speaker 1: let me give you sort of like a really toy
Speaker 1: model of it, which I actually think has a surprising
Speaker 1: amount of legitimacy for what farming could mean. You know,
Speaker 1: where do you start? He says, you start with a
Speaker 1: company that builds a box and then practice this box.
Speaker 1: They probably dress it up to look like a life
Speaker 1: changing you know, kind of like world altering protocol that's
Speaker 1: kind of replace all the big banks in thirty eight
Speaker 1: days or whatever. Um, maybe for now, actually ignore what
Speaker 1: it does or pretend it does literally nothing. It's just
Speaker 1: a box that does that make sense? So right now,
Speaker 1: he says, it's sort of like a box that they
Speaker 1: promise is going to change the whole world in thirty
Speaker 1: eight days, but it literally does nothing. It's just a box,
Speaker 1: that's his words. So you start with nothing and they
Speaker 1: pretend it's going to be something, but in his own words,
Speaker 1: it actually does nothing. He says, so what this protocol is,
Speaker 1: It's called Protocol xits the box and you're a token.
Speaker 1: You can take ethereum or whatever and you put it
Speaker 1: in the box and you take it out of the box.
Speaker 1: All right, So you can put tokens in and you
Speaker 1: can take boat tokens out. So you put in the
Speaker 1: box and you get like, you know, an IOU for
Speaker 1: having put it in the box, and then later you
Speaker 1: can redeem that i o U back to get the
Speaker 1: token back. That makes sense here with me. So far,
Speaker 1: you have this worth lipp worthless box. You can put
Speaker 1: it token in, they'll give an IOU for it, and
Speaker 1: later you can redeem that for the token. He says,
Speaker 1: so far, this is Sam Bakeman freesteal, what we've described
Speaker 1: as the world's dumbest e t F. It doesn't do anything,
Speaker 1: but it lets you puts things in if you choose.
Speaker 1: And then this protocol issues a token, we'll call it
Speaker 1: whatever ex token, and x X token promises that anything
Speaker 1: cool that happens because of this box is going to
Speaker 1: ultimately be usable by you know, governance votes of holders
Speaker 1: of the X token. So basically it's a bunch of
Speaker 1: smoke and mirrors. They created box that literally does nothing
Speaker 1: that you can put tokens into with a with an
Speaker 1: I O U, and they promise you that whatever this
Speaker 1: box ends up doing, you'll be able to have a
Speaker 1: claim on whatever that box ends up doing because you
Speaker 1: have that IOU. However, he already told you that the
Speaker 1: box does nothing. Sounds sort of like a fraud or
Speaker 1: a scam, doesn't it. I want to explain what he
Speaker 1: says here and more in some of the questions that
Speaker 1: were asked back of him, so you can understand, what's more,
Speaker 1: what they're talking about here are You're listening to the
Speaker 1: Mark Moa Show talking about bitcoin and cryptocurrencies and a
Speaker 1: whole lot more. I'm gonna come back with this story
Speaker 1: and more in a second. Don't go away, all right,
Speaker 1: welcome back. You are listening to the markmas Show. We're
Speaker 1: talking about bitcoin, We're talking about cryptocurrency. We're talking about
Speaker 1: the decentralized revolution. I was talking about right before the break,
Speaker 1: I was talking about this Defy protocol thing. I was
Speaker 1: talking about how it's blown up, it's blowing up the markets,
Speaker 1: how the SEC, the CFTC, they're having this meeting to
Speaker 1: figure out how they're going to regulate things and how
Speaker 1: they're going to protect us from investing into a bunch
Speaker 1: of scams and frauds, and at the event was Sam
Speaker 1: Bankman Freed. He's the billionaire founder of f t x,
Speaker 1: one of the largest cryptocurrency trading platforms, and he was
Speaker 1: in an article just a few weeks ago on Bloomberg
Speaker 1: and he was interviewed by Matt Levine asking him what
Speaker 1: the heck is this defy yield farming about anyway? The
Speaker 1: yield farming, Uh, defy that's like blowing up the entire
Speaker 1: financial markets right now. Yeah, So we asked him about it,
Speaker 1: and Sam Bankman Freed said, it's basically like a box.
Speaker 1: The box does nothing, it's worth nothing, but you can
Speaker 1: put a token in it, and then you get an
Speaker 1: IOU for that token, and then, um, you know, they
Speaker 1: make you think that this box is going to do
Speaker 1: something cool and if it does, then your token then
Speaker 1: your claim on that token allows you to participate. Um.
Speaker 1: He went on to say, of course, so far we
Speaker 1: haven't exactly given a compelling reason for why there ever
Speaker 1: would be any proceeds from this box, but I don't know,
Speaker 1: you know, maybe there will be. So sort of where
Speaker 1: you start and then you say, all right, well you've
Speaker 1: got this box and you've got a token, and the
Speaker 1: box declares or votes on governance. UM. And what we're
Speaker 1: gonna do is gonna take half of all the tokens,
Speaker 1: maybe two thirds, and we're gonna offer those tokens. We're
Speaker 1: gonna give him away for free whoever uses the box.
Speaker 1: So anyone who goes and takes some money and puts
Speaker 1: it in this box, remember the box that he said
Speaker 1: is worthless and does nothing. Whoever takes money and puts
Speaker 1: it in this box each day, they're gonna get back,
Speaker 1: you know, one percent of this new box token UM
Speaker 1: for everyone who put money in the box. Now for now,
Speaker 1: what EX token does? It gets given away to box people.
Speaker 1: So this box that does absolutely nothing creates its own token.
Speaker 1: And if I put real money in there, they're going
Speaker 1: to give me back this box token. But what's the box?
Speaker 1: The box does nothing and box token does nothing. UM.
Speaker 1: For now, he says, in his own words, what X
Speaker 1: token does? It gets given away to the box people.
Speaker 1: And now what happens, Well, the token has some market cap, right,
Speaker 1: it's probably not zero, let's say it's you know, it's
Speaker 1: a twenty million market So this box token that does
Speaker 1: nothing and gets given away to people who put their
Speaker 1: money in the box gets given away and it's worth
Speaker 1: twenty million. And so the interviewee Matt Levine says, wait, wait, wait, wait, wait,
Speaker 1: from like first principles, it should be zero. And Sam's
Speaker 1: answer is, uh, sure, okay, yeah, it's completely reasonable, should
Speaker 1: be zero. So so Matt says, wait, but like, when
Speaker 1: you describe it in this totalical, cynical way, it sounds
Speaker 1: like it should be zero, but go ahead and go on.
Speaker 1: So Sam says, okay, describe it this way. You might think,
Speaker 1: for instance, that in like five minutes with an Internet connection,
Speaker 1: you could create a box and such a token and
Speaker 1: that it should reflect like, you know, it should be
Speaker 1: worth like a highty bucks or something market cap for
Speaker 1: that um because of the amount of time and effort
Speaker 1: that it went um. And he says that in the
Speaker 1: world that we're in, though, in this world today that
Speaker 1: he operates in, if you do this, everyone's gonna be like, oh,
Speaker 1: box token, maybe it's cool if you buy in box token.
Speaker 1: You know, that's gonna appear on Twitter and it's gonna
Speaker 1: have a twenty million market cap. Of course, one thing
Speaker 1: that you could do is you could like maybe make
Speaker 1: the float very low and whatever and you know, there
Speaker 1: wouldn't there. There haven't been twenty million dollars that have
Speaker 1: been flowed in yet, so that's sort of like it.
Speaker 1: So what they do, what does you mean by that? So, um,
Speaker 1: let's say that I have a million tokens in this box,
Speaker 1: so I create this worthless box, and I create a
Speaker 1: million box tokens, and people put token their real money
Speaker 1: in the box, and I gave him this worthless box
Speaker 1: token back. I know, it sounds insane, this is what's happening.
Speaker 1: What they do is then they say, well, we have
Speaker 1: these million tokens, but that's how many are total total supply.
Speaker 1: We're only going to put a hundred thousand into the market.
Speaker 1: That's the float. That's what he's talking about. Why would
Speaker 1: they do that, Well, supply and demand. If they make
Speaker 1: the tokens seem more scarce, then people want it more.
Speaker 1: And so you take the entire market cap of the token,
Speaker 1: and then you reduced the amount of tokens by what's
Speaker 1: available in the market to float, and you artificially increase it.
Speaker 1: So so the interviewer goes on to say, it shouldn't
Speaker 1: have any market cap in theory, but in practice they
Speaker 1: always do Okay, so it should be worth nothing that saying,
Speaker 1: and so Sam baby Free says, that's right. So and
Speaker 1: obviously already we sort of hiding some of the magic impact, right,
Speaker 1: So like some of the magic is like how do
Speaker 1: you get that market cap to start with? But you know,
Speaker 1: whatever we're gonna move on from for that second. You know,
Speaker 1: we have ex tokens being given out to all the
Speaker 1: sophisticated firms. So all these Wall Street firms and here's
Speaker 1: where the real scam comes in. So all these Wall
Speaker 1: Street firms are in on this. So you take this
Speaker 1: worthless box and these worthless box toke box tokens, but
Speaker 1: you give them out to these sophisticated firms. Like, if
Speaker 1: the total amount of money in the box is a
Speaker 1: hundred million dollars, then it's going to yield sixteen million
Speaker 1: this year in box tokens that are being given out
Speaker 1: for it. That's a sixtent return. That's pretty good. We'll
Speaker 1: put a little bit more in, right, and maybe that
Speaker 1: happens until there's two hundred million dollars in the box.
Speaker 1: So you know, sophisticated traders or people on crypto Twitter
Speaker 1: or other sort of similar parties go and put two
Speaker 1: hundred million in the box collectively, they start getting these
Speaker 1: ex tokens for it. So what he's saying, you create
Speaker 1: a completely worthless box and a completely worthless token or
Speaker 1: box token. People then put real money or other tokens, bitcoin,
Speaker 1: etherorum into this box and they get this worthless box
Speaker 1: token back. They manipulate the markets to seem like there's
Speaker 1: value and I'm getting fifteen percent back on my tokens
Speaker 1: or my money in this box token, and then I
Speaker 1: can take this box token and I can go exchange
Speaker 1: it back for a U. S dollar stable coin or
Speaker 1: a bitcoin or a theoryum or whatever. Are you falling
Speaker 1: along here? Does it sound ridiculous, It's because it is.
Speaker 1: That's exactly what's happened with us Tara Luna. So they've
Speaker 1: created this box Tera Luna, and if I give them
Speaker 1: a dollar, they go and create Tara Luna coin, which
Speaker 1: is a worthless coin for a worthless box. They use
Speaker 1: their market makers and their Wall Street sophisticated traders to
Speaker 1: look like it has value, pump it up on Twitter
Speaker 1: and pay back artificially fift Now. Remember if you on
Speaker 1: Terra Luna, they offer you tw so a lot of
Speaker 1: pop are gonna take that. How do they pay you back?
Speaker 1: They pay you back with a worthless box token. Look,
Speaker 1: this is what Sam Bankman Freed is saying. All right,
Speaker 1: this isn't my words, this is his. Now, who's Sam
Speaker 1: Bankman Freed. He is the founder of the ft Exchange,
Speaker 1: was the largest cryptocurrency exchange. He's the same person at
Speaker 1: the meeting with the SEC and the CFTC that's trying
Speaker 1: to protect you from this exact scam. He's not trying
Speaker 1: to hide it. He's not trying to say like, um,
Speaker 1: um no, this really has value. He's not saying that.
Speaker 1: He's saying it's a scam. Um he said. The interviewer says, uh,
Speaker 1: I think of myself like a fairly cynical person. And
Speaker 1: that was so much more cynical than how I would
Speaker 1: have described it. You're just like, well, uh, I'm in
Speaker 1: the ponzi business and it's pretty good. That's the interview
Speaker 1: asked him. Uh. And and they said, at no point
Speaker 1: did any of this require any sort of like economic case.
Speaker 1: It's just like other people putting money in the box,
Speaker 1: and so I'm going to you too, and then and
Speaker 1: then it's more valuable. So they're gonna put more money in,
Speaker 1: and at no point in the cycle did seem to
Speaker 1: like describe any sort of like economic purpose. Uh yeah,
Speaker 1: so you're getting the point that's exactly what this DeFi is. Um.
Speaker 1: I know a lot of you may not like to
Speaker 1: hear this, and I apologize because it's maybe the first
Speaker 1: time you're hearing something like this. But you've created a
Speaker 1: worthless box, and you've created a broken economic incentive system
Speaker 1: to get more people to put their real valuable tokens
Speaker 1: or money in a worthless box. And then they're creating
Speaker 1: a worthless box token to pay you back a percentage
Speaker 1: of your real money in Personambankment Freed in his own words,
Speaker 1: I read it for your word by word. It's a scam.
Speaker 1: Anything backed or packed as a scam. I'm gonna come
Speaker 1: back and I'm explain this a little bit more, and
Speaker 1: I wanna explain ways we can look at other tokens
Speaker 1: that and more. You're listening to the Markma Show. We're
Speaker 1: talking about bitcoin, We're talking about cryptocurrencies. We're talking about
Speaker 1: the decentralized revolution. We're talking about this defy decentralized finance
Speaker 1: that is blowing up right now and taking the entire
Speaker 1: cryptocurrency space with it, and the larger financial markets with it. Now,
Speaker 1: Christine the Guard and Yelling have warned us this could
Speaker 1: create financial instability and their right, and we're seeing it firsthand.
Speaker 1: But it's not what it appears. So I'm gonna explain
Speaker 1: that anymore when I come back. All right, welcome back.
Speaker 1: You were listening to the Markmas Show. We're talking about bitcoin,
Speaker 1: We're talking about cryptocurrencies, We're talking about the decentralized revolution,
Speaker 1: and before the break, well, we've been talking about defy,
Speaker 1: decentralized finance. We're talking about stable coins. We're talking about
Speaker 1: the world blowing up, the crypto, the defied world, the
Speaker 1: cryptocurrency world, and even traditional financial markets melting down because
Speaker 1: of what's happening with this Terra Luna token. I was
Speaker 1: talking about how the regulators getting together to regulate do
Speaker 1: what they do, the SEC, the CFTC, and how Sam
Speaker 1: bankman Fried was there as well, and then I read
Speaker 1: an interview with him from a few weeks ago on
Speaker 1: blue Berg where he basically said all of DeFi is
Speaker 1: a big Ponzi scheme. He admitted that if you missed
Speaker 1: out on that, you can go back and listen to it.
Speaker 1: Check out Mark moss Um podcast or Mark mosson hired
Speaker 1: podcast app. Now, Um, going on from that, what I
Speaker 1: was saying is that, Um, that's basically the way this is.
Speaker 1: They create a worthless box, a worthless token, and people
Speaker 1: buy it. Anytime you hear something being backed, what does
Speaker 1: that mean? So what is bitcoin backed by? What is
Speaker 1: the dollar backed by? What is gold backed by? And
Speaker 1: what does backed even mean? So let's think about this
Speaker 1: for a minute. So for five thousand years, gold was money.
Speaker 1: Gold fits most of the attributes of money portable, divisible, durable, recognizable, salable, um, fungible,
Speaker 1: et cetera. But it's not very portable, so it lacks
Speaker 1: that it's it's not very good there. And so we
Speaker 1: put gold in the banks because it's too big and
Speaker 1: heavy and clunky to move over for far space. We
Speaker 1: put in the banks and they gave us layer to
Speaker 1: a paper gold certificate. Paper certificates are easier to transport.
Speaker 1: It speeds up the velocity of money. But it's not money.
Speaker 1: It's a claim on the money. So what it is
Speaker 1: is an I owe you. If I were to give
Speaker 1: you that paper claim, that means you can go to
Speaker 1: the bank and claim that gold. So that gold back
Speaker 1: certificate was backed by the gold in the bank. That
Speaker 1: makes sense, it was backed by the Golden bank, But
Speaker 1: what was gold backed by golds backed by nothing? Gold
Speaker 1: just is gold is money. Gold has value because everybody
Speaker 1: says it does. But I need to be backed by anything.
Speaker 1: So then the dollar was backed by gold, and then
Speaker 1: eventually the dollar became backed by nothing. It kind of
Speaker 1: went to the petro dollars, so goal so dollars were
Speaker 1: kind of backed by oil. At least oil helped keep
Speaker 1: the price of the dollar propped up. They say today
Speaker 1: that the dollars backed by the full faith and credit
Speaker 1: of the government, whatever that means. Um, So, really the
Speaker 1: dollars not backed by any think just this kind of
Speaker 1: collective illusion or trust that somebody else will accept it
Speaker 1: later for goods and services. And so the reason why
Speaker 1: I bring that up is because the very fact that
Speaker 1: something has to be backed by something else tells you
Speaker 1: there's a problem, tells you what you have is not
Speaker 1: the real thing, but rather a claim to it. Anytime
Speaker 1: you don't have the real thing, but rather a claim
Speaker 1: to it, It introduces risk, It introduces counterparty risks. So
Speaker 1: if I have the gold. I have the gold. If
Speaker 1: I give you the goldie of the gold. If I
Speaker 1: put the gold in the bank and I give you
Speaker 1: a paper gold certificate, there's a chance that you may
Speaker 1: not actually get the gold. Remember the days of getting checks.
Speaker 1: You probably do if you're old enough, you'd get a
Speaker 1: check and sometimes you'd wonder, like, well this check actually
Speaker 1: be good if I cash it? And typically it would
Speaker 1: always be good. Um, but you know, people would bounce checks.
Speaker 1: I remember bouncing plenty of checks in my day learning
Speaker 1: how to manage a checkbook. And so sometimes that check
Speaker 1: would not be worth it. Sometimes claim that IOU would
Speaker 1: not be worth it, and so wouldn't you rather have
Speaker 1: the gold? And so whenever you hear this about these
Speaker 1: um de fi protocols, um, there it's a box. It's
Speaker 1: a worthless box at sam Bank, Benfried says. And then
Speaker 1: you put these tokens in it, you put this money
Speaker 1: in it, and they give you back an iou. They're
Speaker 1: backing that IOU with the assets in that box. But
Speaker 1: what if those assets in the box aren't any good
Speaker 1: or you don't get them back, then that that that
Speaker 1: IOU that you have, that claim is worthless. And then
Speaker 1: it starts just cascading from there, and that's exactly what
Speaker 1: we're starting to see happen throughout the entire DeFi decentralized
Speaker 1: finance market. And I think there's a lot of a
Speaker 1: contagion there and it's it's starting to pull down other
Speaker 1: assets like bitcoin. So, for example, Tera Luna um didn't
Speaker 1: hold those dollars. Instead, they created this box token. They're
Speaker 1: Tera Luna token. They also took some of those tokens
Speaker 1: they bought over a billion dollars of bitcoin with it,
Speaker 1: thought oh, we'll also back our token with bitcoin. The
Speaker 1: problem is, as more and more people started coming to
Speaker 1: redeem that, they were forced to liquidate their box token,
Speaker 1: and their box token went from a twenty five billion
Speaker 1: dollar valuation hold wait for it, wait for it, from
Speaker 1: a billion dollar valuation to a one billion dollar valuation.
Speaker 1: We lost four billion dollars off the valuation, just like
Speaker 1: that um and because it was backed by something else
Speaker 1: and then what it was backed by this bitcoin, they
Speaker 1: were forced to liquidate the bitcoin and it pushed all
Speaker 1: this downwards selling pressure on the market. And the problem
Speaker 1: is that we have so much leverage in the system.
Speaker 1: I'm afraid it could get worse. So, for example, UM,
Speaker 1: this contagion spread into all types of hedge funds, Wall
Speaker 1: Street chaders. UM. Potentially you know, I've talked quite a
Speaker 1: bit a lot about Michael Sailor micro Strategy UM. They've
Speaker 1: used leverage, They've used debt debt is leverage UM to
Speaker 1: buy an enorm this amount of bitcoin. And some people
Speaker 1: are speculating that these large Wall Street firms, these Wall
Speaker 1: Street traders could potentially be trying to break that leverage.
Speaker 1: And so what happens is, I think he has about
Speaker 1: four billion dollars worth of bitcoin. You look at some
Speaker 1: of these giant hedge funds. They got four billion dollars
Speaker 1: in their back pocket. They could easily to take that
Speaker 1: four billion dollars bet against him, start sprinkling a little
Speaker 1: bit of bad news, and bring that price down low
Speaker 1: enough to a point that it forces an liquidation event,
Speaker 1: which means he'd be forced to sell to cover the
Speaker 1: debt or post up more collateral. UM. I'm not saying
Speaker 1: that's going to happen. I certainly hope it does not happen.
Speaker 1: But this is the problem that we get into from
Speaker 1: two reasons. We get into this problem from one reason
Speaker 1: is that this leverage in the system massive amounts of debt.
Speaker 1: So debt unfortunately had a very adverse effect on me
Speaker 1: in two thousand and eight. I've told my story many
Speaker 1: times about that when the entire real estate market collapsed,
Speaker 1: I had too much leverage and I couldn't manage my
Speaker 1: portfolio properly. Um. I like to think of leverage as
Speaker 1: like fire. Fire can cook my food and keep my
Speaker 1: house warm, but it could also burn my house down.
Speaker 1: It works that way, and so leverage would allow me
Speaker 1: to scale my business really quickly. I go get a
Speaker 1: bunch of new accounts, I go buy ten new service trucks,
Speaker 1: I hire a bunch of new people. I scale my
Speaker 1: business really quickly. But now if something were to happen
Speaker 1: I lose some of those accounts, business drops now all
Speaker 1: of a sudden. That leverage works in reverse, because now
Speaker 1: I have ten new trucks I have to pay for.
Speaker 1: I have all those employees have to pay for, And
Speaker 1: so leverage allows me to scale up really fast. But
Speaker 1: then if I don't handle it properly and I don't
Speaker 1: know everything that could happen, it would also cause an
Speaker 1: unwind that I may not be able to handle, and
Speaker 1: that's what we're starting to see. We can see coin
Speaker 1: Base Global, the public trade company. Their founder, Brian Armstrong,
Speaker 1: had a personal fortune of thirteen point seven billion as
Speaker 1: recently as a few months ago, and now that's just
Speaker 1: two point two billion. Now, don't feel too bad for him.
Speaker 1: He's he's just only worth two point two billion, but
Speaker 1: down from thirteen point eight to two point two that quickly.
Speaker 1: Now that still sounds like a lot. But you don't
Speaker 1: know how much leverage he may have on those assets.
Speaker 1: So he had thirteen billion, let's say that he levered
Speaker 1: him by seven billion, which seemed like maybe a pretty
Speaker 1: reasonable number. But now he's down to two point two.
Speaker 1: If he can't cover the leverage on the seven billion
Speaker 1: or the five billion, let's let's let's use it a
Speaker 1: smaller number. I mean, let's say that he levered it
Speaker 1: by you know, three billion, um a three out of
Speaker 1: four almost fourteen billion. That's a small number. That seems
Speaker 1: pretty reasonable. I think he should be able to handle that.
Speaker 1: But then it shrinks down to only two point two
Speaker 1: How can he handle that? Now? I'm not saying that
Speaker 1: that Brian Armstrong from coin Base has leverage. I'm not
Speaker 1: saying that at all, because I don't know him, nor
Speaker 1: do I know if that's true. But you can see
Speaker 1: how quickly UM, you can get yourself into trouble as
Speaker 1: that leverage and wines Mike now Novograts, the CEO of
Speaker 1: Galaxy Digital m had a fortune of eight and a
Speaker 1: half billion in early November. Let's say that he levered
Speaker 1: it by three billion dollars to go into Terra Luna,
Speaker 1: which he got the tattoo of UM and now it's
Speaker 1: worth two billions as as today. So again that's how
Speaker 1: quickly you can get yourself into trouble, particularly in these markets,
Speaker 1: like these these crypto markets. But like I said, there's
Speaker 1: all this contagion that then it starts to pull down
Speaker 1: other markets as well. I learned the hard way, and
Speaker 1: hopefully you're learning from these lessons that I'm sharing with you.
Speaker 1: It makes sense, But let me know. Hit me up
Speaker 1: on social media. You can find me at number one
Speaker 1: Mark Moss on Instagram and on Twitter. I'd love to
Speaker 1: hear from you that you're listening to the show. UM,
Speaker 1: send me a question. I try to answer every single
Speaker 1: message I get on social media, So let me know
Speaker 1: on there if you're just tuning in and you're listening
Speaker 1: to the Market Mo Show. We're talking about bitcoin, we're
Speaker 1: talking about cryptocurrencies, we're talking about the decentralized revolution. We're
Speaker 1: talking about the intersection of politics, finance, and technology. Don't
Speaker 1: go away, I'll be right back.