WEBVTT - Former United States Commerce Secretary Wilbur Ross Talks Tarrifs and Trade

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<v Speaker 1>Bloomberg Audio Studios, podcasts, radio news. Joining us now, I'm

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<v Speaker 1>pleased to say, is another member of President Trump's former cabinet.

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<v Speaker 1>Wilbur Ross's former Commerce secretary and the author of the

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<v Speaker 1>book Risk and Returns, Creating Success in Business and Life,

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<v Speaker 1>joins us now. Secretary, fantastic to have you with us.

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<v Speaker 1>I want to start with the tariff deadline, because you

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<v Speaker 1>were on the record that July ninth, the original tariff deadline,

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<v Speaker 1>was going to be very difficult to achieve. We did

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<v Speaker 1>see that pushback to August first, and I'm curious from

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<v Speaker 1>where you're sitting, do you think that August first is

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<v Speaker 1>achievable or might we see another delay here?

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<v Speaker 2>Well, I think almost every major country has already submitted

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<v Speaker 2>a counter proposal to the Trump administration trying to ward

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<v Speaker 2>off the tariffs that otherwise will go into effect.

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<v Speaker 3>So the real question is will.

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<v Speaker 2>Trump accept what they have on the table, will they

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<v Speaker 2>put a little more on the table? Where will it

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<v Speaker 2>come out? The worst comes to worst, he is fully

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<v Speaker 2>prepared to go through with the tariffs, then have that

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<v Speaker 2>for the end of the story.

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<v Speaker 4>You know, Secretary Ross, you also recently told Fortune magazine

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<v Speaker 4>that quote my one fear is that if our government

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<v Speaker 4>feels too chesty with their progress, they may overplay the

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<v Speaker 4>hand and get to levels that are hard, maybe even

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<v Speaker 4>impossible for other countries to give in. It's easy to

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<v Speaker 4>get carried away with early successes. Now you've pointed to

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<v Speaker 4>the success that the early administration has had in these discussions,

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<v Speaker 4>in these early phases. But what if they go too far?

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<v Speaker 4>Do they risk doing damage to relationships as well as

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<v Speaker 4>parts of the US economy.

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<v Speaker 2>Well, first of all, there's already been one hundred billion

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<v Speaker 2>dollars collected in terrace, and it has not really adversely

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<v Speaker 2>affected the economy. The estimates are that that total will

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<v Speaker 2>get to around three hundred billion by the end of

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<v Speaker 2>the year. Three hundred billion on a full year basis

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<v Speaker 2>is a little over one percent of our economy.

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<v Speaker 3>But what will really happen.

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<v Speaker 2>American consumers won't pay the whole three hundred The importers

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<v Speaker 2>will absorb some of it, The exporters will absorb some

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<v Speaker 2>of it. Probably some of the foreign governments will also.

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<v Speaker 3>Absorb part of it.

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<v Speaker 2>So it's only a fraction of that that I think

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<v Speaker 2>will come to pass. And so what are you talking

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<v Speaker 2>a fraction of one percent? Who you can't really even

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<v Speaker 2>estimate the economy to within a fraction of one percent.

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<v Speaker 1>Interesting, but we know that it's some people's entire jobs

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<v Speaker 1>to try to do exactly that. Let's talk about something

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<v Speaker 1>that's even harder to measure, and that is confidence, investor confidence.

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<v Speaker 1>I know that you know you made the point to

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<v Speaker 1>Bloomberg News that sort of this tit for tat the

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<v Speaker 1>will he won't he when it comes to these terrif

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<v Speaker 1>rates that could erode investor a confidence. And it was

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<v Speaker 1>interesting to read into the Delta earnings this morning because

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<v Speaker 1>we heard from CEO Ed Bastian that people are starting

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<v Speaker 1>to understand with clarity where things are headed. That allows

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<v Speaker 1>them to start making plans whether to travel or invest

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<v Speaker 1>in a business. And when you take a look at

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<v Speaker 1>the current landscape right now, heading towards potentially another deadline

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<v Speaker 1>that could be pushed back for tariffs, do you think

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<v Speaker 1>that investors have just gotten used to the uncertainty or

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<v Speaker 1>do you think we could be nearing a point where

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<v Speaker 1>some of that calm starts to crack.

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<v Speaker 3>Well, I think a couple of things.

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<v Speaker 2>First of all, the most recent unemployment report was very favorable.

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<v Speaker 2>It's only two hundred and twenty seven thousand in that week,

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<v Speaker 2>so there's no sign that employers have started to be

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<v Speaker 2>more cautious about hiring people than they were. Second, I

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<v Speaker 2>think the key will be knowing what the endgame is,

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<v Speaker 2>and assuming it gets resolved on the first of August

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<v Speaker 2>or thereabouts, that will clear the air. Because businesses and

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<v Speaker 2>markets can adjust to good news, they can adjust to

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<v Speaker 2>bad news, but they have trouble adjusting too is uncertainty,

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<v Speaker 2>and so one way or another, I believe things will

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<v Speaker 2>be clarified around the first of August.

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<v Speaker 4>Why do you have confidence in that August first deadline,

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<v Speaker 4>especially when we see some areas in which the Trump

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<v Speaker 4>administration has been escalating the tariff wars here. You look

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<v Speaker 4>at Brazil for example, and the escalation there is quite severe.

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<v Speaker 4>So why would August be a thick and final Well.

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<v Speaker 3>First of all, the Brazil is a one off.

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<v Speaker 2>It's a very unusual talk about terror because it doesn't

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<v Speaker 2>have to do.

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<v Speaker 3>With imports and exports.

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<v Speaker 2>It has to do with President Trump's anger as the

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<v Speaker 2>way the Brazilian government is treating the Formula leader Balsonaro,

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<v Speaker 2>who's very friendly.

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<v Speaker 3>With the president. So that's a one off.

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<v Speaker 2>I don't think it tells you much about anything else

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<v Speaker 2>that he's doing.

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<v Speaker 1>Well, let's talk about that, Secretary, because you described that

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<v Speaker 1>as a one off, the situation with Brazil. But there

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<v Speaker 1>is some worry there that we're really pushing into other realms,

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<v Speaker 1>that we're not using these tariff measures just for trade anymore,

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<v Speaker 1>and that this could set a precedent.

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<v Speaker 2>Well, he president already sets the precedent. Remember back in

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<v Speaker 2>the early days of this administration, when he went after

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<v Speaker 2>Mexico because they weren't helping him with the border and

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<v Speaker 2>with controling fentanyl. So he has you and he's used

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<v Speaker 2>it with Europe in terms of the contribution of the

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<v Speaker 2>various EU member states to defense budgets, as.

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<v Speaker 3>They're supposed to do with NATO.

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<v Speaker 2>So the difference between the last administration of Trump in

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<v Speaker 2>this one is he is using tariffs much more broadly.

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<v Speaker 2>He's using the tariffs for achieving what you might call

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<v Speaker 2>diplomatic or other rules having not much to do with tariffs.

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<v Speaker 2>So the Bolsonaro thing, the Fentan all, there are a

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<v Speaker 2>number of things like that that he's been using tariffs for.

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<v Speaker 2>And I think the reason he's able to do that,

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<v Speaker 2>or feels he is is here we learned in the

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<v Speaker 2>first administration just how extensively the president can use tariffs

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<v Speaker 2>without going back to Congress. Historically, the Senate has played

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<v Speaker 2>a very major role in tariffs. This president has not

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<v Speaker 2>taken anything, by the way tariffs to the Congress, and

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<v Speaker 2>he's got some more things that will be coming down

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<v Speaker 2>the road. He has Secretary Lutnek doing two thirty two

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<v Speaker 2>investigations on pharmaceuticals, semiconductors, and probably other things. In two

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<v Speaker 2>thirty two is what we use is originally to put

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<v Speaker 2>on the steel and aluminum tariffs.

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<v Speaker 1>Well, Secretary, what do you make of that push as

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<v Speaker 1>you describe it using terms for really expansive purposes outside

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<v Speaker 1>of trade. We heard from Vice President former Vice President

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<v Speaker 1>Mike Pence this morning. It seems like he disagrees with

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<v Speaker 1>that push, and I just wonder what your opinion is.

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<v Speaker 2>Well, yes, I think Vice President in Pence has tended

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<v Speaker 2>to disagree with a number of the tariff decisions the

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<v Speaker 2>President Trump has made, so that doesn't surprise me too

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<v Speaker 2>much at all. But he is the president. He is

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<v Speaker 2>making the decisions that he decides to make, and while

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<v Speaker 2>some of them probably eventually will be challenged.

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<v Speaker 3>In the court.

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<v Speaker 2>For the most part, the courts have been pretty good

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<v Speaker 2>and coming in on is side, and as I said,

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<v Speaker 2>that's what gives him the confidence to be a bit

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<v Speaker 2>more expensive secretary.

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<v Speaker 4>You're also on the side, very interestingly about to join

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<v Speaker 4>the board of a company focus on crypto. This company,

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<v Speaker 4>Reserve One, is merging with us back going public. And

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<v Speaker 4>we spoke to the CEO of Reserve One a little

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<v Speaker 4>bit earlier this week and she actually mentioned your involvement,

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<v Speaker 4>had mentioned that perhaps in the past you might not

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<v Speaker 4>have been keen on crypto, but now are obviously taking

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<v Speaker 4>a much bigger stance by joining this company which is

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<v Speaker 4>focused on bitcoin. Treasury, why did you change your mind?

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<v Speaker 4>Are you a believer now in crypto more broadly or

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<v Speaker 4>is there something about bitcoin that you are now latching

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<v Speaker 4>onto as the administration warms up to crypto?

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<v Speaker 3>Right?

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<v Speaker 2>Well, what has changed? My objection to crypto in the

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<v Speaker 2>beginning had been that it was a little bit like

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<v Speaker 2>the wild ones. You didn't really have government regulation, you

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<v Speaker 2>didn't have government supervision, you didn't have professional investors really

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<v Speaker 2>active in it. But look at now here you have

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<v Speaker 2>President Trump getting all sorts of regulatory things through and

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<v Speaker 2>in fact getting into the family, getting into the crypto

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<v Speaker 2>business themselves. You've got Black Rock, Fidelity funds and others

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<v Speaker 2>coming in. You have Strategy and others using corporate treasury

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<v Speaker 2>and arbitraging capital markets into bitcoin. So what's happening is

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<v Speaker 2>you're getting away from the retail wild west and into

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<v Speaker 2>a more professional environment. And I think that's what we're

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<v Speaker 2>trying to accomplish with Reserve is bring a batch of

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<v Speaker 2>professional skills, both broadly investing and specifically knowledge of bitcoin

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<v Speaker 2>and the other competitors. So the world is changing. It's

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<v Speaker 2>becoming widely accepted as an appropriate institutional class, and therefore

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<v Speaker 2>the environment has changed.

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<v Speaker 3>And I think that's the important thing.

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<v Speaker 2>For example, the trading of late has been mostly what

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<v Speaker 2>they call whales on the cell side. Those are retail

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<v Speaker 2>individuals who had accumulated a thousand or more coins in

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<v Speaker 2>the old days and therefore have now made a big

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<v Speaker 2>fortune out of it. Those are tending to sell and

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<v Speaker 2>whose boy are the ETFs and people like Strategy and

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<v Speaker 2>all sorts of institutional investors.

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<v Speaker 3>Larry Fink is widely.

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<v Speaker 2>Quoted as saying he recommends that five percent of portfolios

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<v Speaker 2>should be in bitcoin. Centenderer Big Spanish bank they're recommending

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<v Speaker 2>to their clients.

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<v Speaker 3>So what's happening is you're.

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<v Speaker 2>Getting away from the wild and weally unregulated, mostly retail

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<v Speaker 2>market into one that's very much more professionalized, and I

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<v Speaker 2>think that's a healthier thing.

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<v Speaker 1>Right Unfortunately, Secretary, we're up against the clock, really looking

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<v Speaker 1>forward to seeing your progress with Reserve one, and you're

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<v Speaker 1>right in that this has become a much more mature

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<v Speaker 1>cryptocurrency market. Really appreciate your time this morning. That is

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<v Speaker 1>Wilba Ross. He is the former US Secretary of Commerce,