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Charlie Munger wasn't very happy with cryptocurrencies. You heard the comments he made on the subject. Actually, I'll read it to you to see what he has to say about them. Agreeing for the first time with what China is doing, Charlie Munger, a billionaire and partner of Warren Buffett , speaks about cryptocurrencies and says: "China made the right decision when it banned them." This is a Fortune story about all the recent buzz surrounding cryptocurrency investing.
Charlie Munger simply doesn't believe in that and also doesn't want any cryptocurrency trader marrying someone from his family. Believe me, the people getting into cryptocurrencies aren't thinking about the customer, they're thinking about themselves. Just look at them. I wouldn't want any of them to marry someone from my family.
He also said that he supports China's harsh crackdown on cryptocurrencies and disapproves of the heavy US involvement with them. The Chinese made the right decision, which was simply to ban them, and he specifically criticized Bitcoin . Sure, I hate Bitcoin's success. I don't appreciate a currency that is so useful for kidnappers, extortionists, and so on.
I don't like simply handing over my extra billions of dollars to someone who just invented a new financial product out of thin air. So, obviously you agree with Charlie, but if you want to delve a little deeper into what he's saying... An old man shouts at Sky. It's fair to say I agree with him, but I think his comments are important because, remember, in my book I have an entire section on how cryptocurrencies came about, okay?
So it's very important for people to realize that when Bitcoin was worth one dollar, I knew about it. So, what you need to understand is that the value of the currency and the platform are mutually exclusive. And what this means is that it's very important to understand the platform. Blockchain technology is how you will conduct all commercial transactions in the future.
It's like you're buying a property right now; you have a title broker, you have document stamps, you have a young lady who's handling something in the county. It's very old school. It was never intended to be a speculative currency. Exactly. So, when people talk about investing in cryptocurrencies, they're not actually investing, right?
They are speculating that the value of the currency will rise and that they will sell it to someone else who will want the currency. There are approximately 10,000 coins. That is , you access CoinGecko or whatever website it is. 10,000 coins. Okay, they're useless. Completely useless . Now, what percentage is useless?
A very, very high percentage. A high percentage, but what percentage? 90% or more? I would say that if you really want to own cryptocurrencies, you should get Ethereum first. You have a little Bitcoin and leave the rest aside. Like, none of that. Because... I didn't talk about Ethereum last week? I want to see why he's going to say that.
Actually, I'm curious right now . Because you get... Okay, a smart contract. For example, with your house, you have title insurance. What is title insurance? It says that if there's a problem with the title later, they'll ensure that you actually purchased the title and everything else. All of this is solved by the blockchain.
So you're talking about smart contracts, yes. Title insurance is worthless in 10 years. Currency is also a contract. It's like when Pat was buying his house and it took him 3 days to sign the agreement. Now it's just the currency. That's right. So, what should Gerard do with all his Dogecoin? Well, that's it.
And that. And that. Which currency will be successful? I mean, who knows, right? Because remember, Musk shows up and makes Dogecoin something. And now it's nothing anymore. It 's not something anymore. He finished. It wasn't a coup, but it was a... So, what did he say on SNL again? But look, this is like a stock promotion.
I mean, imagine if someone finds that strange, right? Like, you show up and think, what if my company is Metalla, with the MTA logo? If I were to say, you know, Metalla is ... If I started talking about all this stuff, like how she's going to the moon, right? The SEC will shut me down. I cannot be part of a council.
I can never say anything. Unless you're in Congress, then everything's fine. Well, yes, it's very complicated. That's a very good point here. That 's a very good point he's raising. You can't claim that your stocks or an investment will go to the moon, but you can with cryptocurrencies. Yes. And many people do that.
So, think about it. Imagine if The Rock showed up tomorrow and said, "Shiba, you know, to the moon." And he has a million Shibas, and that goes up one decimal place. He is a decabillionaire. This goes back to Joseph Kennedy's model , back when he caused the stock market to crash, and FDR brought it in because he knew all the ways to manipulate the stock market, and then they added controls to it.
So the challenge with the crypto community is that they come back and say, "Well, the government can't mess with this." They're already trying to mess with it. And then I get some guys from private equity who say, "Let me tell you what people are doing in private equity right now because of the tax code with cryptocurrencies.
You can buy, take a loss, buy again. You can take double tax deductions repeatedly." They wo n't let this last much longer . But why? Isn't that the beauty of the market? Like, school costs money, man. If you get caught in a pump and dump, you'll get caught once. That's okay, it happens. If you get caught twice, it 's your fault.
I 'm not disagreeing, but what I'm trying to say is that you really believe in Elizabeth Warren, AOC, Bernie Sanders, and Nancy Pelosi. Are they going to let this happen? Do you think they'll let this happen constantly in the crypto community? Don't you think these guys will want to over-regulate the crypto community?
Of course. I think they're trying now. They're getting used to it. So, everyone accepted the fact that they can have a wallet, they can have digital money, all their money can be on the network. All those people who talk about cryptocurrencies being offline are completely wrong. Like that kid in Orlando who was hacking people's Twitter accounts, remember, and getting Bitcoin?
They caught him. They showed up at his house. How did they do that? They found him very quickly. Very fast. And he had sent the Bitcoin all over the world to be divided and laundered. This is on the internet. Anyone who thinks they're offline just needs to do some research. Why? Why are they on platforms like Coinbase or Gemini?
Or what? Blockchain is infinitely traceable and controllable. And where all of this ends is at the blockchain point. Correct. Where all this ends is FedCoin. And in the book, this is a term I coined about 6 years ago. FedCoin is what we'll use to pay for everything, and it will be easy to get people to accept it.
And what I think, and this is somewhat controversial, but I think all these stablecoins will eventually collapse, and then FedCoin will be what they bring forth, like the phoenix they will rise from that. Like Tether, the USD currency, do you think they'll collapse and then everything will be replaced by FedCoin?
It could be a pre-planned breakdown, where basically they say, "Okay, everyone's in this now, right? But as you can see, there have been some speculative problems, like in the private market. So, the Fed will control this ." But wait. Do you think some shadowy international government or pseudo-government would orchestrate some kind of apocalyptic event to increase its control?
But imagine if we were the elite. Okay , so we say now, okay, we would let people be free, but that's absurd, because what happens when you get to that level is that you try to consolidate power all the time. You are worried about threats. And then take a look at FedCoin. I can control everything you do .
Taxation: you can no longer avoid being taxed because all your money is in the bloc. So they're going to nationalize cryptocurrencies, is that what you're saying in other words? They will choose a cryptocurrency winner that is infinitely, you know, the blockchain is a distributed ledger. That's the technology.
But when you have FedCoin, it's a controlled ledger. So MIT creates a server that controls the entire FedCoin ecosystem on a quantum computer, and every FedCoin is documented, and you were very naughty. So, enough with the leisure activities. Yes, the social aspect, social engineering. Social status.
So, let me ask you something. So, let's say we go in that direction. Who wins? Who loses? Well, I think the people who are close to power win. Okay, we're transitioning to a command economy. So, that's what China has, and I think the US is envious of China because China's control is so great. Economy of command?
Yes, a command economy. So, in a command economy, where do you want to be? In a market economy? Is that the idea? That happened a long time ago. So , in a market economy, there is price discovery. And what happens is that price discovery creates the value of everything, and the market produces different solutions, you know, to solve different problems.
We left that behind a long time ago. Currently, the command economy is controlled by decree. It is controlled by a committee. And if you look at how things are going in the US, the narrative gets out, the news narrative gets out, the policy is defined, and then people like us say that we debate these things, but it's pointless.
Is this like a rebranding of communism? A command economy? That's how it is. You described communism as an attempt to be communism with the idea of free market principles. Because if you look at America, everyone thinks, "Oh, this is a free market." Is it really a free market? I mean, "Oh, we can vote here.
It's really great because we get to choose our elected leaders." Do we really choose our elected leaders? All the time, all the things that people say, if you really question them, let me ask you this. They are falling apart. I'm sensing a threat here similar to Peter Schiff. So you're saying that we've gone from being a market economy with free enterprise, where you could go out and do whatever you wanted when it was based on a gold standard, to now being a command economy because it's based on fiat currency.
Are you going to 1972? Is this roughly where you 're going or what? And Peter is a friend. I mean, he 's the largest shareholder in our company, you know? He's a really nice person to be around because he has a different perspective on this than I do. I mean, I don't think the gold standard really matters that much.
I mean, the government has, you know, nuclear-powered aircraft carrier battle groups, and they say that's the dollar, and that's fine, it's the dollar. I call this the lead standard. We are at the lead standard. Yes, exactly. That's what we're going to use Fedcoin for. They will do the same thing. You either use Fedcoin or you starve.
I mean, that 's the deal, you know, you're going to do it . So, what happens to the real US dollar if this Fedcoin comes into existence? I don't think that matters. I mean , I think what we're seeing is that interest rates started falling at the turn of the century, they're negative now, and they're going to continue falling.
Everyone thinks: "Oh , they're going to go up. The government is going to have trouble financing it." No, that's not going to happen. It's not going to happen. The agreement is that you can control this. This is a controlled demolition. So, if you enjoyed this short podcast segment we made, here's another short segment to watch.
Or if you want to listen to the entire podcast, click here. Take care, everyone. Goodbye.
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