WEBVTT - The Great Crypto Unwind: A Replay of 2008 0:00:00.480 --> 0:00:02.880 Hello, and welcome to another episode of The Mark Moss Show, 0:00:03.240 --> 0:00:06.680 where we talk about the decentralized revolution that is changing 0:00:06.720 --> 0:00:08.960 the world as we know today. Of course we talk 0:00:09.039 --> 0:00:13.920 about it as bitcoin, cryptocurrencies. Technology is changing the world 0:00:14.280 --> 0:00:16.360 as we see it, and so I'd like to bring 0:00:16.400 --> 0:00:19.840 you some education to kind of help you see this. 0:00:19.920 --> 0:00:22.880 It's hard to see, UM, a new system when you're 0:00:22.960 --> 0:00:26.239 stuck in an existing system. UM. A lot of times 0:00:26.239 --> 0:00:28.720 we get what is it missed the forest for the 0:00:28.760 --> 0:00:31.520 trees sort of a thing where we're so inside of 0:00:31.520 --> 0:00:33.960 one system, where we're so zoomed in that it's hard 0:00:34.000 --> 0:00:36.000 to see the perspective of what's going on. And so 0:00:36.280 --> 0:00:38.000 i'd like to bring you some education to help you 0:00:38.040 --> 0:00:39.479 think about that. Of course, I like to bring you 0:00:39.520 --> 0:00:42.840 the latest breaking news and information so you can stay 0:00:42.880 --> 0:00:44.199 up to date each and every week, and then of 0:00:44.200 --> 0:00:46.919 course we talk about or I'd like to bring on 0:00:46.960 --> 0:00:50.159 some new guests so you can hear some different perspectives UM, 0:00:50.200 --> 0:00:53.720 so you can get a well rounded view of things 0:00:53.840 --> 0:00:59.040 in better context of what's happening today. And boy, each 0:00:59.040 --> 0:01:01.160 and every week I love joining because there is so 0:01:01.240 --> 0:01:03.920 much to talk about. UM. It's a good problem to 0:01:03.960 --> 0:01:06.840 have a consultant I used to work with said, these 0:01:06.840 --> 0:01:09.360 are high class problems. And so I've had problems in 0:01:09.360 --> 0:01:12.559 the past where there was not enough information to talk about. 0:01:12.560 --> 0:01:17.120 I remember doing content through and things were really boring 0:01:17.240 --> 0:01:20.160 back then. Um, now the problem is too much to 0:01:20.160 --> 0:01:23.880 talk about and trying to choose which stories to talk about. 0:01:23.920 --> 0:01:26.320 And so, like I said, it's a high class problem, 0:01:26.360 --> 0:01:28.280 and that's all good, But you know, I want to 0:01:28.360 --> 0:01:31.399 kind of put things into perspective of what's going on, 0:01:31.480 --> 0:01:33.720 and a lot of what we've been talking about over 0:01:33.760 --> 0:01:36.080 the last month or two is really a kind of 0:01:36.080 --> 0:01:38.800 a continuation of what's going on, and I'm kind of 0:01:38.840 --> 0:01:42.240 giving you the play by play of how things are unwinding. 0:01:42.280 --> 0:01:46.280 And so I've been talking about something called the crypto unwind, 0:01:46.360 --> 0:01:49.520 or that I was calling a great unwind, And what 0:01:49.600 --> 0:01:54.520 I'm talking about is an unwind of leverage or de leveraging, 0:01:54.560 --> 0:01:57.800 if you will. Now, Um, we see that there's leverage 0:01:57.880 --> 0:02:02.240 all over the system, and typically leverages built up through credit. Now, 0:02:02.400 --> 0:02:06.080 in our existing monetary system that we have in the 0:02:06.120 --> 0:02:09.360 world today, it's a debt based monetary system, and so 0:02:09.440 --> 0:02:14.160 that means that all money that's created is debt. So Um, 0:02:14.200 --> 0:02:17.040 we talked about the Federalserve just printing buttons, pushing a 0:02:17.080 --> 0:02:19.320 button and printing money. That's not really the way it works. 0:02:19.560 --> 0:02:22.720 Money is created through debt issue. And so when you 0:02:22.720 --> 0:02:25.720 go get a loan for a car, boat, house, boat, whatever, 0:02:26.160 --> 0:02:30.000 that money is created into existence and it creates massive 0:02:30.040 --> 0:02:33.399 amounts of leverage because it's all debt. So think about 0:02:33.440 --> 0:02:36.600 it for your own self, like your own personal household. Um, 0:02:36.639 --> 0:02:41.760 let's say that you were um using leverage to build assets. 0:02:41.840 --> 0:02:44.280 Let's say we're back to two tho a matter of fact, 0:02:44.360 --> 0:02:46.239 is a good parallel to what we're gonna talk about today. 0:02:46.400 --> 0:02:48.799 So back in two thousand eight, people were able to 0:02:48.840 --> 0:02:52.360 buy multiple houses, multiple houses at the same time, and 0:02:52.400 --> 0:02:54.480 so people would go to these like new housing developments 0:02:54.480 --> 0:02:58.640 in California or Arizona or Nevada, Florida, those kind of 0:02:58.680 --> 0:03:01.720 hot spots of the country, and these home prices were 0:03:01.760 --> 0:03:04.400 exploding so fast, they were going up so fast that 0:03:04.480 --> 0:03:06.639 people could just go to a brand new housing development, 0:03:06.639 --> 0:03:08.720 put their name down to a a deposit down on a house, 0:03:09.040 --> 0:03:11.800 sometimes a thousand dollars, five thousand dollars down on a house, 0:03:12.400 --> 0:03:15.480 and then once those houses were built, they could just 0:03:15.520 --> 0:03:20.359 sell them and make dollars per house times five or 0:03:20.400 --> 0:03:22.680 ten however many they bought. So they're putting a thousand 0:03:22.800 --> 0:03:26.040 or five thousand dollars down and then they're making dollars 0:03:26.040 --> 0:03:28.280 down the house. They're using leverage. It was that credit 0:03:28.320 --> 0:03:30.560 that there was being extended to them, and that works great. 0:03:30.720 --> 0:03:34.600 You can grow really really fast with that leverage. Another 0:03:34.600 --> 0:03:36.520 way you can use leverages. Let's say that your business 0:03:36.600 --> 0:03:39.280 is expanding. Let's say that you were in the construction business, 0:03:39.280 --> 0:03:42.040 and so obviously construction business was booming, and so we 0:03:42.080 --> 0:03:44.560 need contractors to go out there and frame the walls 0:03:44.560 --> 0:03:46.400 and hang the dry wall, put the roofs on, build 0:03:46.440 --> 0:03:50.000 the fences, thro the landscaping, et cetera. And so I 0:03:50.120 --> 0:03:52.240 might have or other people might have gone about five 0:03:52.360 --> 0:03:54.080 or ten homes at a time. A lot of people 0:03:54.080 --> 0:03:55.560 were doing this, and so there's a lot of demand 0:03:55.600 --> 0:03:58.560 for houses. And so now these these contractors that deliver 0:03:58.640 --> 0:04:01.600 these services also used leverage, and so they would go 0:04:01.640 --> 0:04:04.840 out and take loans to then buy more trucks and 0:04:04.880 --> 0:04:08.280 buy more equipment and hire more crews. And that leverage, 0:04:08.360 --> 0:04:11.440 that that credit that was extent them allowed them to 0:04:11.880 --> 0:04:14.320 build much faster to scale their business to take advantage 0:04:14.320 --> 0:04:19.440 of all that incoming business. And so leverage works really well. Debt, debt, leverage, 0:04:19.600 --> 0:04:22.560 that credit, whatever you want to call it, um that credit, 0:04:22.880 --> 0:04:25.039 that debt, that leverage allows us to grow really fast. 0:04:25.320 --> 0:04:27.520 And if you were in playing this real estate game, 0:04:27.839 --> 0:04:30.599 you were UM leveraging that credit and you were getting 0:04:30.640 --> 0:04:34.200 five homes and they everyone really fast, or you're building 0:04:34.200 --> 0:04:36.760 your business really really fast, that was great. The problem 0:04:36.839 --> 0:04:39.760 is when um, we get to the end of that 0:04:39.800 --> 0:04:44.120 credit cycle. So throughout this long term credit cycle, we're 0:04:44.240 --> 0:04:47.119 using more debt, using more debt, credit, credit, credit leverage, 0:04:47.160 --> 0:04:50.080 leverage everywhere, growing, growing, growing, not just you, not just 0:04:50.120 --> 0:04:54.279 the roof of the framer, the the window guy, the landscape, etcetera, 0:04:54.360 --> 0:04:58.240 but the homeowners buying the homes, um, but the whole system, 0:04:58.279 --> 0:05:01.000 the entire monetary system is basically doing that. So we 0:05:01.040 --> 0:05:04.080 have these long term credit cycles and all this credit 0:05:04.120 --> 0:05:06.160 debt leverage builds up in the system and we grow 0:05:06.720 --> 0:05:11.680 massive growth. Gross domestic product is exploding, The economy is 0:05:11.720 --> 0:05:14.560 doing good, there's more money. People are going and spending 0:05:14.600 --> 0:05:17.680 more on clothes and at restaurants, and then those restaurants 0:05:17.720 --> 0:05:20.479 and are expanding, etcetera. So you can see how this 0:05:20.960 --> 0:05:25.440 winds up. The problem is when it unwinds down, and 0:05:25.480 --> 0:05:28.640 so just as fast as it grows on the upside, 0:05:29.240 --> 0:05:33.760 it actually unwinds and d leverages way faster. You can 0:05:33.800 --> 0:05:37.080 think about this easy. Um. You know, it takes a 0:05:37.080 --> 0:05:40.039 while to take on debt um to continue to build 0:05:40.080 --> 0:05:44.120 your portfolio using debt, but you can just default on 0:05:44.200 --> 0:05:46.839 that debt instantly and all that can just disappear. And 0:05:46.839 --> 0:05:49.680 that's exactly what happens when things turn. And so back 0:05:49.680 --> 0:05:51.560 to two thousand and eight, all those people that had 0:05:52.000 --> 0:05:54.680 used debt credit leverage to build up those portfolio of 0:05:54.720 --> 0:05:57.479 all those homes, all those contractors who had scaled their 0:05:57.520 --> 0:06:00.680 businesses and bought all new equipment and new trucks, et cetera. 0:06:01.040 --> 0:06:04.039 And then as soon as the market started to crash, 0:06:04.200 --> 0:06:06.560 it just started to unwind really really fast, and of 0:06:06.600 --> 0:06:10.120 course it led to the Great UH Financial Crash two 0:06:10.160 --> 0:06:13.560 thousand and eight. The entire banking system had built up 0:06:13.600 --> 0:06:16.560 so much leverage because then people were buying homes, and 0:06:16.560 --> 0:06:20.279 then those homes, those loans were being sold off, and 0:06:20.279 --> 0:06:23.239 then companies were buying giant package of these home loans 0:06:23.400 --> 0:06:26.240 and they were bundling them together, packing together, selling them 0:06:26.240 --> 0:06:29.120 off in trenches. Then Wall Street was taking these packages, 0:06:29.160 --> 0:06:31.560 they were repackaging, bundling them, and they would take some 0:06:32.400 --> 0:06:34.800 high risk one, some low risk ones. They put them 0:06:34.800 --> 0:06:37.560 all together to try to get this blended risk model, 0:06:37.760 --> 0:06:39.720 and they'd packed them together and they'd sell them off, 0:06:39.720 --> 0:06:43.200 these mortgage backed securities they were called. And so leverage 0:06:43.200 --> 0:06:46.280 built up from the individual homeowner through the contractors put 0:06:46.279 --> 0:06:47.920 it built up all the way through the financial system, 0:06:47.920 --> 0:06:51.000 all the way through Wall Street and into the global 0:06:51.040 --> 0:06:53.560 financial system where all the banks of the world were 0:06:53.560 --> 0:06:56.919 now trading these mortgage backed securities, and it became a 0:06:56.920 --> 0:06:59.160 big mess. So when the financial system crashed, there was 0:06:59.240 --> 0:07:02.200 exposure or to all of this, and this great unwind 0:07:02.360 --> 0:07:07.479 just dragged everything down. Now, I've told you that a 0:07:07.600 --> 0:07:09.880 story just so you can get an understanding of something 0:07:09.920 --> 0:07:12.880 that you understand, something that you know, so you can 0:07:12.960 --> 0:07:17.760 understand how this crypto market crash is also part of 0:07:17.760 --> 0:07:21.680 the great unwind, and how it's interesting that we saw 0:07:21.800 --> 0:07:26.320 Bitcoin was created out of the great financial crash. As 0:07:26.320 --> 0:07:30.560 a matter of fact, it was who was developed by 0:07:30.600 --> 0:07:35.280 Sotoshi Nakamoto famously put a line of text in the 0:07:35.440 --> 0:07:38.000 very first block that was mined on the Bitcoin network 0:07:38.400 --> 0:07:41.560 saying that the chancellors on the brink of another another bailout, 0:07:41.840 --> 0:07:44.800 so basically showing that this was because of the bailouts 0:07:44.800 --> 0:07:47.120 that was happening with the banking system, and so we 0:07:47.120 --> 0:07:49.360 wanted to create something in a response to that so 0:07:49.400 --> 0:07:52.200 that we could get rid of those problems. We would 0:07:52.240 --> 0:07:56.880 be subject to those problems happening again. You know, a 0:07:56.880 --> 0:08:00.160 lot of times it's hard to see where decisions are. 0:08:00.200 --> 0:08:04.160 Things will take us um and so mistakes are made. Right, 0:08:04.440 --> 0:08:06.200 A lot of times people think that we should, you know, 0:08:06.280 --> 0:08:09.960 move fast and and take chances and break things. But 0:08:09.960 --> 0:08:11.960 but you're trying to learn from those mistakes, so you 0:08:12.000 --> 0:08:15.480 don't make those same mistakes again. My dad told me 0:08:15.800 --> 0:08:17.640 over and over and over as I was growing up. 0:08:17.680 --> 0:08:20.480 You pounded into my head always that once it's an accident, 0:08:20.520 --> 0:08:23.280 and twice as stupid. So that means that, hey, look, 0:08:23.280 --> 0:08:25.360 we all make accidents, right, Let's just keep trying, try 0:08:25.360 --> 0:08:26.960 and try, and we will make accidents, but just don't 0:08:27.040 --> 0:08:32.679 make the same mistakes again. But unfortunately we make same 0:08:32.679 --> 0:08:35.760 mistakes again. Is unfortunately U two things I think. One 0:08:35.800 --> 0:08:39.000 they say that history doesn't repeat it rhymes well, it 0:08:39.040 --> 0:08:41.080 does repeat, and and it does rhyme. So we see 0:08:41.120 --> 0:08:42.960 that happen again, and so they say, those who don't 0:08:42.960 --> 0:08:45.520 know history are bound to repeat it um. But then 0:08:45.559 --> 0:08:48.520 also we have human emotions like greed that get the 0:08:48.520 --> 0:08:50.199 best of us, and this time will be different, and 0:08:50.240 --> 0:08:52.120 we're gonna go ahead and bed at all. And so 0:08:52.160 --> 0:08:54.400 I like to say that that this leverage is like fire. 0:08:54.760 --> 0:08:56.559 It can be used to warm up your house or 0:08:56.600 --> 0:08:58.600 cook your food. Those are good things, or it could 0:08:58.600 --> 0:09:00.920 burn your house down. So I want to explain to 0:09:00.920 --> 0:09:04.520 you how the great unwinding the crypto market is very 0:09:04.559 --> 0:09:07.079 similar to the two thous financial crash. What we can 0:09:07.200 --> 0:09:10.320 learn from this, more importantly, what we can see, how 0:09:10.360 --> 0:09:11.760 we come out of this, how we can navigate it. 0:09:11.760 --> 0:09:13.160 I got a whole lot to cover when I come 0:09:13.160 --> 0:09:15.280 back in a minute. You're listening to the Mark Moss 0:09:15.320 --> 0:09:19.760 Show talking about the decentralized Revolution, talking about bitcoin, cryptocurrencies 0:09:19.880 --> 0:09:23.040 and the greater financial system, trying to help you understand 0:09:23.040 --> 0:09:26.040 what's going on and hopefully prevent you from making the 0:09:26.080 --> 0:09:28.160 same mistakes again twice. So I got a lot to 0:09:28.160 --> 0:09:30.000 cover when I come back. We'll be back in a minute, 0:09:30.720 --> 0:09:32.760 all right, Welcome back, you are listening to the Mark 0:09:32.880 --> 0:09:36.000 Moss Show, and uh, you know, each and every week 0:09:36.000 --> 0:09:37.719 I'm trying to give you the play by play, give 0:09:37.720 --> 0:09:39.160 you the context of what's going on in the world 0:09:39.160 --> 0:09:43.720 today and what I called the decentralized Revolution. Last week 0:09:43.960 --> 0:09:48.160 I went through, uh an entire show explaining to you 0:09:48.240 --> 0:09:51.440 what the decentralized revolution is, because I talked about it 0:09:51.480 --> 0:09:53.160 every week and maybe a lot of you are like, 0:09:53.160 --> 0:09:55.080 what the heck is he talking about? So if you 0:09:55.160 --> 0:09:57.440 didn't catch that episode, I would encourage you to go 0:09:57.559 --> 0:10:00.040 back and check it out. UM. You can find it 0:10:00.120 --> 0:10:03.000 on the I Heart Radio network or the I Heart 0:10:03.080 --> 0:10:05.920 app or any podcast app that you use, iTunes, whatever, 0:10:06.200 --> 0:10:09.840 Just search Mark Moss Podcast, Mark Moss Show and look 0:10:09.880 --> 0:10:14.840 back to the previous week. Um, early July. Sorry, um, 0:10:14.880 --> 0:10:17.520 and I had to show breaking down the decentralized revolution 0:10:17.520 --> 0:10:19.760 if you want to know what that means. Um, all right. 0:10:19.880 --> 0:10:24.600 So I was talking about how Bitcoin, which is the 0:10:24.640 --> 0:10:29.680 technology leading this decentralized revolution, was designed after the two 0:10:30.080 --> 0:10:33.600 Great Financial Crash to prevent a lot of the problems 0:10:33.920 --> 0:10:37.040 that we saw from that crash, but unfortunately we sort 0:10:37.080 --> 0:10:41.080 of ended back in the same place. And what I'm 0:10:41.080 --> 0:10:45.199 calling the great unwind, and I'm talking about an unwind 0:10:45.240 --> 0:10:47.680 of all this leverage, all this credit, all this depth 0:10:47.679 --> 0:10:50.199 that's been built up in the system, and so I 0:10:50.240 --> 0:10:51.640 want to kind of break that down so you can 0:10:51.679 --> 0:10:55.360 see what happened, um, but also how we can navigate 0:10:55.360 --> 0:10:58.000 this correctly and how we can maybe learn from these 0:10:58.080 --> 0:11:00.840 mistakes so we don't get caught up. Been this again. Now, 0:11:01.800 --> 0:11:05.200 some people were caught really, really bad. And I've heard, 0:11:05.280 --> 0:11:10.040 unfortunately countless stories of people who have lost everything. And 0:11:10.080 --> 0:11:12.840 some people, um, were caught up a little bit, just 0:11:12.920 --> 0:11:18.160 they maybe their paper gains went down on paper. Now, 0:11:18.200 --> 0:11:21.600 if your paper gains went down a little bit, whatever, 0:11:22.120 --> 0:11:24.800 those paper gains were just paper and they'll come back eventually. 0:11:25.040 --> 0:11:29.280 But some people lost real money as a matter of fact. Um. 0:11:29.320 --> 0:11:33.040 I was in Austin m at Consensus as the largest 0:11:33.040 --> 0:11:35.800 like cryptocurrency conference. It was about a month ago, and 0:11:35.920 --> 0:11:39.120 I was at it an after event and I saw 0:11:39.160 --> 0:11:40.679 I was Some guy came up to me and said, hey, Mark, 0:11:40.679 --> 0:11:42.200 I'm a big fan of your show. I've been watching 0:11:42.200 --> 0:11:44.160 your stuff, and that was cool. Wes talked for a 0:11:44.200 --> 0:11:46.400 little bit and he said, you know, I've been I've 0:11:46.400 --> 0:11:48.880 been in marketing my whole career and I and I 0:11:48.920 --> 0:11:53.160 built up this company. We specifically UM did marketing for 0:11:53.480 --> 0:11:57.960 medicare and you know, government sponsored healthcare stuff. And it 0:11:58.040 --> 0:12:00.319 was a great business, did really well for me, and 0:12:00.800 --> 0:12:02.800 I made a lot of money and I just sold 0:12:02.840 --> 0:12:05.079 the company. We had a big exit, and I'm ready 0:12:05.080 --> 0:12:06.760 to move on to the next stage of my life. 0:12:06.760 --> 0:12:09.559 He's over fifty years old. I'm not exactly sure old 0:12:09.559 --> 0:12:11.840 he was, but over fifty. And he said, I'm ready 0:12:11.880 --> 0:12:13.480 to move on to this next stage of my life. 0:12:13.960 --> 0:12:16.559 And I came to this event. I booked this event 0:12:16.800 --> 0:12:19.000 UM and I bought the whale pass. I bought the 0:12:19.000 --> 0:12:20.880 most expensive pass I get so I can come network 0:12:20.880 --> 0:12:23.320 and try to find my next opportunity. He said. But 0:12:25.160 --> 0:12:27.960 I had taken all that money from the cell of 0:12:28.000 --> 0:12:30.559 my business, and I had put it into this terror 0:12:30.640 --> 0:12:34.320 Luna stable coin because it's supposed to be stable and 0:12:34.360 --> 0:12:40.480 it offers me this awesome yield, and unfortunately I lost 0:12:40.520 --> 0:12:46.200 it all all his money. He had built this business 0:12:46.920 --> 0:12:49.680 for most of his press professional career, had a nice exit, 0:12:50.120 --> 0:12:52.160 was looking forward to taking that money and moving on 0:12:52.240 --> 0:12:54.120 the next stage of his life. He put it all 0:12:54.200 --> 0:12:57.679 in and he got caught in the great unwind and 0:12:57.760 --> 0:13:02.080 lost it all. Now he's not alone. There's probably millions 0:13:02.080 --> 0:13:04.800 of people that got caught up in the same situation. 0:13:04.840 --> 0:13:06.520 It's devastating. So I want to make sure that you 0:13:06.559 --> 0:13:09.560 don't get caught up in that same situation. And like 0:13:09.600 --> 0:13:10.839 I said, even if you're on the perp field. So 0:13:10.880 --> 0:13:13.600 let's take a look at this. So, as I said before, right, 0:13:13.960 --> 0:13:17.679 bitcoin was created about thirteen years ago, UM, coming out 0:13:17.679 --> 0:13:22.400 of the two Great financial crash, UM trying to prevent it. 0:13:22.480 --> 0:13:24.959 And so one of the big problems, as I already explained, 0:13:25.000 --> 0:13:28.120 is that the banks had built up all this leverage 0:13:28.120 --> 0:13:30.760 and then the banks basically caused this crash. Now, a 0:13:30.800 --> 0:13:32.080 lot of times people want to tell you that it 0:13:32.120 --> 0:13:34.080 was the homeowners were way too greedy, they bought too 0:13:34.120 --> 0:13:36.520 many houses and they were the reason why the markets crashed. 0:13:37.200 --> 0:13:41.040 That's not true. Yes, homeowners did get too greedy, sure, 0:13:41.760 --> 0:13:44.680 but they were being given loans by Wall Street because 0:13:44.720 --> 0:13:47.360 Wall Street was too greedy, and Wall Street packaged these 0:13:47.360 --> 0:13:50.760 things up into these zombie sausages and sold them and 0:13:50.840 --> 0:13:54.240 had got way too over leverage. That's what caused the crash. 0:13:54.520 --> 0:13:58.240 And of course, um all markets are cyclical and go 0:13:58.360 --> 0:14:00.960 up and down. So first of all, let me just 0:14:01.000 --> 0:14:04.959 say that the Federal Reserve, who backstops the banks, um 0:14:05.080 --> 0:14:08.240 is supposedly they're telling you. They're telling you and I 0:14:08.720 --> 0:14:11.440 that they print all this money per this what's known 0:14:11.480 --> 0:14:16.040 as Kinsean economics, in order to prevent booms and bus 0:14:16.120 --> 0:14:19.760 because nobody wants to go through a bust. Nobody wants 0:14:19.800 --> 0:14:22.680 to lose money, right, and so if they could just 0:14:23.080 --> 0:14:27.160 pump in more credit, more debt when those bus cycles come, 0:14:27.560 --> 0:14:30.560 they could smooth that out. That's the story they tell us. Now, 0:14:30.880 --> 0:14:33.040 if you believe that I might have a bridge that 0:14:33.080 --> 0:14:35.520 I want to sell you as well, anybody with a 0:14:35.560 --> 0:14:38.480 few minutes online could look at charts and see that's 0:14:38.520 --> 0:14:41.600 just absolutely false. As a matter of fact, we have 0:14:41.680 --> 0:14:44.840 boom and bust cycles going back hundreds of years, and 0:14:45.120 --> 0:14:48.440 right when the Federal Reserve was created nineteen, the boom 0:14:48.440 --> 0:14:51.320 and bus cycles have gotten bigger and bigger and bigger 0:14:51.520 --> 0:14:55.200 and bigger every single time, and so they're not smoothing 0:14:55.240 --> 0:14:58.440 anything out. Now. Boom and bust cycles are normal because 0:14:58.480 --> 0:15:03.840 we're humans and things change, styles change, what we want 0:15:03.880 --> 0:15:08.160 and need change. Uh, greed happens, and people go you 0:15:08.200 --> 0:15:09.680 know too far one way and then they have to 0:15:09.680 --> 0:15:11.920 swing back the way. There's all types of reasons. Why 0:15:12.360 --> 0:15:15.640 you know, I was a manufacturer selling, um, what were 0:15:15.680 --> 0:15:18.120 those last things? So those fidget spinners, for example, right, 0:15:18.120 --> 0:15:20.440 that was a huge boom. Everybody wanted them. You're you're 0:15:20.480 --> 0:15:22.240 ordering tons and tons and tons. You can't keep up 0:15:22.240 --> 0:15:24.040 with the demand. And then all of a sudden that 0:15:24.240 --> 0:15:27.800 nobody wants them anymore. And anybody who jumped into that business, 0:15:27.800 --> 0:15:29.640 it was manufacturing those things, and in order a bunch 0:15:29.640 --> 0:15:33.160 of inventories, they had a bust. It just happens, right, 0:15:33.400 --> 0:15:35.560 people got over too overleveraged in that probably, and so 0:15:35.600 --> 0:15:39.320 that happens, and so um. Unfortunately, that's just a natural process. 0:15:39.360 --> 0:15:43.120 Just like the world. We have seasons, right, spring, summer, 0:15:43.120 --> 0:15:45.600 winter fall, and so the spring everything grows, and the 0:15:45.640 --> 0:15:47.480 winter everything dies and it keeps going, or like a 0:15:47.480 --> 0:15:51.080 forest fire. Anyway, back to two tho eight, so the 0:15:51.120 --> 0:15:54.080 banks created this problem. We had Bitcoin I was created 0:15:54.360 --> 0:15:57.120 and Stosi Nakamoto put a quote in two thousand nine 0:15:57.320 --> 0:16:00.240 and they said, quote, banks must be trusted to hold 0:16:00.280 --> 0:16:05.040 our money and transferred electronically for us, but they lend 0:16:05.120 --> 0:16:08.320 it out in waves of credit bubbles. With barely a 0:16:08.400 --> 0:16:12.560 fraction in reserve, and they don't even have any reserves today. 0:16:12.640 --> 0:16:16.200 So basically they're just they're sending out this money, creating 0:16:16.400 --> 0:16:19.040 credit bubbles. That's what he talked about. So we give 0:16:19.040 --> 0:16:21.400 our money to the banks, they loan the money out, 0:16:21.560 --> 0:16:25.880 and they create these credit bubbles that inevitably crash and 0:16:25.920 --> 0:16:28.960 cause of all. Um, there's a great movie that talks 0:16:29.000 --> 0:16:31.200 about this, two thousand and eight, The Big Short. If 0:16:31.200 --> 0:16:32.600 you haven't watched it or read the book, or the 0:16:32.640 --> 0:16:35.800 book is amazing, or you could watch the movie. Um, 0:16:35.800 --> 0:16:38.280 it's got some great actors in it. And Uh, there's 0:16:38.320 --> 0:16:43.480 a quote that says they mistook leverage for genius. So 0:16:43.520 --> 0:16:45.640 this kind of goes back to warm buffets quote that 0:16:45.960 --> 0:16:48.800 a rising tide raises all boats, and so when the 0:16:48.800 --> 0:16:51.520 markets are going up, everybody looks like a genius. You 0:16:51.520 --> 0:16:53.400 can just close your eyes by anything and you can 0:16:53.440 --> 0:16:55.920 make money, and then you use leverage and then you 0:16:56.000 --> 0:16:58.480 look really smart because you made more money than everybody else. 0:16:58.720 --> 0:17:02.359 So he says the quote, they mistook leverage for genius, 0:17:02.920 --> 0:17:05.400 and so that's exactly what happened. Now, over the last 0:17:05.440 --> 0:17:07.440 couple of months, we've been seeing the effects of this 0:17:07.560 --> 0:17:11.720 in the cryptocurrency market, and we've been seeing basically all 0:17:11.800 --> 0:17:17.479 these cryptocurrency industry giants have been melting down, and uh, 0:17:18.080 --> 0:17:21.800 they've been basically toppling each other like a set of dominoes, 0:17:22.040 --> 0:17:24.440 the smaller ones leading to the medium sized ones leading 0:17:24.440 --> 0:17:27.359 to the bigger ones. And now we're pretty much wiped 0:17:27.400 --> 0:17:29.600 out of that. We're still dealing with that, but most 0:17:29.640 --> 0:17:31.800 of the leverage has been wiped out. But it was 0:17:31.840 --> 0:17:34.639 basically like a bunch of nukes in the balance sheet 0:17:35.160 --> 0:17:38.240 um of these crypto lenders that were supposed to be 0:17:38.280 --> 0:17:41.359 holding money, but they were really just turning themselves into 0:17:41.680 --> 0:17:45.360 over leverage, risky hedge funds. So I want to talk 0:17:45.359 --> 0:17:48.040 about how this unwinds, where we're at with this, and 0:17:48.080 --> 0:17:50.320 how we move forward with this. In a minute, but 0:17:50.440 --> 0:17:52.919 you're listening to the markma Show. We're talking about the 0:17:53.000 --> 0:17:57.280 decentralized revolution, We're talking about bitcoin, cryptocurrencies, the financial system overall. 0:17:57.359 --> 0:18:00.440 Given you context of what's going on today, Uh, we're 0:18:00.440 --> 0:18:02.800 gonna finish talking about what I'm calling the great unwind 0:18:02.800 --> 0:18:04.760 and how you can stay out of trouble as this 0:18:04.840 --> 0:18:08.800 continues and don't make the same mistake twice. I'll be 0:18:08.840 --> 0:18:11.000 back with that and more in a minute, So don't 0:18:11.000 --> 0:18:13.480 go away. I'm gonna be right back, all right, Welcome back, 0:18:13.680 --> 0:18:15.720 and you are listening to the Markma Show. We're talking 0:18:15.720 --> 0:18:19.639 about the decentralized revolution, talking about bitcoin, cryptocurrencies, the greater 0:18:19.680 --> 0:18:22.760 financial system overall, and I'm explaining to you, if you're 0:18:22.760 --> 0:18:26.159 just tuning in, how what we're seeing happen in the 0:18:26.240 --> 0:18:29.760 great in the crypto economy, the great unwind, as I've 0:18:29.760 --> 0:18:31.359 been calling with the last couple weeks, is very similar 0:18:31.359 --> 0:18:33.760 to what happened in two thousand and eight. And bitcoin 0:18:33.800 --> 0:18:36.199 and cryptocurrencies were designed to fix the problems in the 0:18:36.200 --> 0:18:39.360 financial system, but found themselves doing the exact same thing. 0:18:39.960 --> 0:18:43.280 And so we've seen, like I said, these crypto lenders 0:18:43.320 --> 0:18:44.960 that were supposed to be like banks. They're supposed to 0:18:45.000 --> 0:18:48.880 receive your deposits and then um be very careful with them. 0:18:48.880 --> 0:18:52.760 Instead they turned into very risky, over leveraged like hedge funds, 0:18:53.320 --> 0:18:56.040 and one blew up and then it had exposure to 0:18:56.040 --> 0:18:58.359 the next, the next next, and we saw hundreds of 0:18:58.400 --> 0:19:04.040 billions of dollars worth of notional value just collapse, just gone. 0:19:04.920 --> 0:19:08.440 Hundreds of billions of dollars of value gone like that, 0:19:08.560 --> 0:19:10.560 and that's real money. I mean it was on paper, 0:19:10.640 --> 0:19:12.639 but a lot of people were expecting to have that 0:19:12.720 --> 0:19:16.560 money and now they don't have it. Um. Now we've 0:19:16.600 --> 0:19:18.840 I've been reporting over the last couple of weeks. I 0:19:18.880 --> 0:19:21.000 think it's pretty much done as a matter of fact. 0:19:21.560 --> 0:19:24.240 And the founder of f t X, A CEO Sam Bankman, 0:19:24.280 --> 0:19:28.200 freed he's coming in backstop the last couple of exchanges 0:19:28.240 --> 0:19:30.400 that look like they're at risk of blowing up, and 0:19:30.480 --> 0:19:33.960 he has said that he thinks it's over. UM. I 0:19:34.000 --> 0:19:37.440 obviously at mcgreen with him now, as I said, this 0:19:37.520 --> 0:19:39.560 is really happening because of the leverage and the debt 0:19:39.600 --> 0:19:42.040 that was built up, and it builds up really fast 0:19:42.080 --> 0:19:44.919 when markets are going up. As I've explained, when they 0:19:44.960 --> 0:19:48.280 wind up, it's the undwind that's the problem. Just like 0:19:48.320 --> 0:19:53.200 in two now, Bitcoin was, like I said, supposed to 0:19:53.240 --> 0:19:56.560 help us with this because now for the first time 0:19:56.600 --> 0:19:59.680 we could custody our own money without having to give 0:19:59.680 --> 0:20:02.600 it to bank. See the problem. So it's toshiy Knakamoto said, 0:20:02.600 --> 0:20:04.600 if I go back to the original quote, banks must 0:20:04.640 --> 0:20:07.080 be trusted to hold our money and transferred, but they 0:20:07.240 --> 0:20:10.119 lend it out in waves of credit bubbles and so um, 0:20:10.240 --> 0:20:12.879 rather than give them our money and trusting them, we 0:20:12.920 --> 0:20:14.520 could just hold our money on our own and we 0:20:14.560 --> 0:20:16.560 don't have to give it to them, and we don't 0:20:16.640 --> 0:20:19.880 have to um have them put at risk because what's 0:20:19.880 --> 0:20:22.840 known as counterparty risk getting somebody else involved. We don't 0:20:22.840 --> 0:20:26.359 have to have that at risk. The problem is it 0:20:26.480 --> 0:20:29.080 didn't fix it. We still ended up in the great 0:20:29.200 --> 0:20:33.160