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this is matthew crowder from trader university and today i want to talk about why warren buffett and charlie munger hate bitcoin so much especially in the context i've been getting a lot of questions about charlie munger's recent comments about bitcoin being disgusting and contrary to the interests of civilization the full quote they were asking him what he thinks about bitcoin success he says of course i hate the bitcoin success that's a funny way to say the bitcoin success i and then he goes on to say i should say modestly that i think the whole damn development is disgusting and contrary to the interest of civilization and i'll leave the criticism to others warren buffett was a little bit more diplomatic saying he didn't want to offend bitcoiners uh but let's go in take a little bit closer look at what monger means and i think it's especially interesting that he says that bitcoin is disgusting and contrary to the interest of civilization so i just want to look a little bit into charlie munger's career and what he might consider to be civilization so he's obviously warren buffett's right-hand man he's his right-hand man his business partner and they've been uh they're both from nebraska both from omaha and they've been investing together for many many years charlie munger started off as a lawyer and then went on to become a uh a very successful investor and we're going to go through and look at some of his biggest invest investments and really where he made his money now unfortunately the bulk of his money has been made by investing in financial companies especially big banks and also in junk food companies and this is very ironic that he would he would be uh criticizing bitcoin and saying it's contrary to the interest of civilization when a huge percentage of his money has come from investing in coca-cola which is uh probably okay in moderation but coke has been coconuts products have been an absolute disaster especially for poor people and if especially for people in developing uh developing parts of the world africa uh india mexico here's an article from the new york times about how uh there's no water in various mexican towns but you can get a lot of coca cola uh here's an india an article from the times of india also talking about diabetes in india this is these are well-known facts about uh about coke he has a famous uh charlie munger has a famous speech in which he actually talked about from he did sort of a thought experiment around the origins of coca-cola and said how can we create a highly addictive drink that has salt and how can we use it uh get more and more people to drink it instead of water it's a very brilliant essay but when you step back and look at it and think about in the context of what what sugary products like coke have done to the health of the world this article takes on a new a new sinister light i should say if you're enjoying this video and finding it useful please hit that subscribe and like button maybe share it with a few friends especially people who follow buffett and monger now in terms of monger's own business practices the companies he invests in have a long history of uh of of having problems discrimination etc here's a lawsuit against court furniture which was owned by wesco financial one of munger's big investments and he was the uh he was the c ceo for many years in which black employees were paid a lot less than white employees and treated very treated very badly another one of munger's really big investments along with buffett uh they've invested in craft heinz as well as the predecessor which was kraft foods kraft foods is really makes a lot of the food that unfortunately i grew up eating in the 70s and really calling it food is quite a quite an exaggeration i used to drink this drink called tang which was who knows who knows what was in it was mostly artificial color and sugar so it's important to keep this in mind when buffett is talking about the interests of civilization that really this is where his own money came from investing in kraft foods which bought tang oreo cookies and then of course we move on to the big banks and for someone who's made a ton of money investing in u.s banks to try to take the moral high ground is very it's i would say it's fairly fairly hypocritical here's an article about how wells fargo helped to launder money uh for drug traffickers from the sinaloa cartel and the list of i don't have to go through all of the uh all of the problems with the big banks especially the us big banks over the years here is a interesting chart though that shows how many companies uh how many u.s banks and other financial companies that warren buffett and berkshire hathaway and charlie munger were invested in that really benefited from the uh from the bailouts after the grave financial crisis of 2008 to 2009 and the name is just uh the list of these companies is a list of really bad companies wells fargo goldman sachs bank of america these are not love names by any means and they've been surrounded by scandals for the past 20 years and unfortunately have received a lot of government bailouts and this was there's a real conflict of interest when you have people like monger and buffett talking about how important the bailouts were when they they owned huge stakes in the companies that were bailed out even after the great financial crisis wells fargo got fined ended up getting fined three billion dollars for opening up all these fake accounts without people's uh people's permission so this is another wells fargo is obviously another huge buffett and monger uh investment i'll link to this article uh more about buffett monger and the end the uh bank bailout so you can look at it in detail buffett and manga were also huge investors in moody's which was one of the great uh one of the companies that was really behind the housing bubble and they were really responsible along with along with s p and fitch and the bond rating agencies for inflating the ratings on bonds and directly contributing to the housing crisis so again this is something to keep in mind this is uh this is how the man has made his money and this is how what he thinks a great a great civilization is we've talked before about the revolving door uh between the government regulatory agencies and wall street here's a great uh venn diagram that shows the overlap between people who've worked at goldman sachs and then go on to make policy in the federal government and vice versa really the revolving door and this is this is what has made buffett and monger rich meanwhile these are not guys you want to talk to about technological developments they've been very bearish on in the internet and the whole internet revolution since the early 90s buffett finally woke up in 2015 or 2016 and he did a smart thing he invested in amazon and apple after badmouthing tech companies for 15 or 20 years but these are not people who are on the cutting edge they were brilliant investors in their day when the us had these very large uh anti-competitive monopolistic companies that control the population didn't just control the population in terms of what they ate and where they banked but also controlled all the jobs this was a very closed economy in the 50s 60s 70s 80s when these giant companies had so much control from the newspaper companies which of course buffett and munger benefited from to uh all the other uh the junk food companies and the banks etc and one of the things the internet revolution has done it is of course created its own monopolistic problems but it has also completely broke blown open the field to competition it's put the newspapers uh against the wall it's put a lot of these old companies out of uh business and now fintech and bitcoin and the bitcoin revolution are really hurting the traditional uh traditional banking system and so we can see people like this who benefited from the existing fiat financial system would not like bitcoin but if you listen to them when it comes to tech uh you're definitely getting bad advice and this is one reason that buffett and munger and berkshire half of hathaway have been underperforming underperforming the nasdaq and even the snp uh for many years uh many years now the famous quote about bitcoin being rat poison or rat poison squared i like this meme because it really does show you uh the uh who gets hurt by bitcoin which is the traditional uh fiat uh financial companies so to summarize buff munger's made most of his money through investments in real estate big banks junk food companies he's the typical cantillionaire i like this coinage it's a coinage of millionaire billionaire plus the cantillian effect or canteeong effect where basically those who stand closest to the money printer people on wall street people who make investments uh and especially people who are tied into wall street and the whole banking system which is uh which leeches off the central bank and many of the same people uh go and work for these various organizations but these people have been standing people like munger and buffett have been standing right next to the money printer for their entire lives and yet they have the nerve here to try to take the high the moral high ground they've both benefited tremendously from terrible central bank policies that the federal reserve has implemented that have really increased wealth inequality have pumped up valuations of both real estate and stock and it's it's amazing to me because buffett and munger are obviously very smart people but for them to have this giant blind spot uh they should be if i were them i would just be very quiet and uh not go out of my way to criticize uh to criticize bitcoin i'll link to this article on the cantillian effect if you want to read more about that i think here's a this is a great case of uh cognitive dissonance or being trapped in the wrong mental models which monger of course has spent a lot a lot of time talking about talking about cognitive errors famous monger quote we have a habit of distorting the facts until they become bearable for our own views and monger even being aware of this falls in to the into the trap and uh i i would say that i've had a lot of respect for munger and buffett over the years but the the more time passes the less i really like these figures they seem like dinosaurs to me that want to keep us in an old form of civilization i've written a book about buffett and i've since really revised revised my views they were certainly great investors if you look in the rear view mirror but you can see looking forward that uh value investing i've made multiple videos videos about this value investing doesn't work it's very reliant on these this sort of monopolistic uh uh economy that the us used to have where you have all these uh oligopolies by contrast bitcoin is the hardest money the world has ever seen and great civilizations are built on hard money we've seen in this video what monger considers considers through his life's work to be the apex of civilization investing in junk food companies and the big banks but what i would suggest is the great civilizations are not built on fiat money which is really how buffett and monger made their fortunes great civilizations are built on hard money the gold standard in the past and the bitcoin standard in the future if we look at uh if we look at europe under the gold standard the great example always is the belle polk at the end of the 19th century and early 20th century leading basically that 40-year period before 30 or 40-year period before world war one broke out when we had this real flowering of civilization it's called the golden age and it was the age of the gold standard as well when you had all these innovations in art and music and technology you had peace you had economic prosperity etc and i would suggest that this is really what a great civilization looks like not the horrible disposable junk food civilization that monger and buffett have done so much to contribute to and benefit from if you found this video helpful be sure to hit that subscribe and like button hit the notification bell if you want to be notified when i publish my next video and let me know your questions and comments in the comment section below thanks a lot for watching and i'll see you in the next video
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