There’s a lot of uncertainty in the crypto markets today…
Over the last couple months, we’ve received a big increase in crypto-related questions from Investor Hour listeners… Questions like:
Could quantum computing hack the Bitcoin system, rendering it useless?
Is government regulation coming soon?
And out of the literally thousands of cryptos out there… how do you choose the right one?
To help answer these questions, Dan invites crypto expert, Eric Wade, back onto the show
Eric is an early internet entrepreneur, angel investor, screenwriter, and editor of the Crypto Capital newsletter here at Stansberry Research.
Eric started mining Bitcoin and Ethereum long before 99% of folks had ever even heard the term “cryptocurrencies.” His Crypto Capital newsletter has had dozens of 100%+ winners and even a handful of 1,000%+ winners. He knows more about the space than just about anyone on the planet.
During their conversation Dan leaves no stone unturned, asking Eric everything you’ve ever wondered about the crypto space.
Eric also shares a new project he’s working on recently – a fascinating way to capture the full upside of the crypto market, but with less volatility and more consistent returns.
If you’ve watched the incredible gains in the crypto markets, but are still waiting on the sidelines, this is a conversation you won’t want to miss.
P.S. If you’re interested in learning more about Eric’s new project, he made a short video explaining everything you need to know. Make sure you visit www.cryptocash2021.com while it’s still online.
Editor Crypto Capital
He's an internet entrepreneur and investor who began picking stocks and trading futures contracts in college, using his expertise to become a Certified Financial Manager at the largest American retail brokerage. He eventually sold the internet domain of his nickname - Wallstreet.com - for over US$1 million.
1:33 Dan opens the show with a question you’ve likely never considered that every investor needs to ask themselves… “Are you a fox? Or are you a hedgehog?”
6:45 – “I want to know about these two ideas, because I want to know who I am. I’ve said many, many times, you must know yourself well to be a really successful investor. You have to know who you are...”
9:21 – Dan shares the quote of the week, this time from world-renowned physicist Richard Feynman… “You are under no obligation to remain the same person you were a year ago, a month ago, or even a day ago. You’re here to create yourself continuously…”
11:21 – On this week’s interview, Dan invites crypto expert Eric Wade back onto the show to talk about the exciting world of cryptocurrency. Eric is an internet entrepreneur, angel investor, screenwriter, and editor of the Crypto Capital newsletter at Stansberry Research.
13:13 – Dan asks Eric the one question about Bitcoin that comes up, time and time again… Should we be worried about quantum computing?
18:05 – “I think I heard one of our recent guests say something like… there were something like 9,000 cryptocurrencies in the world today. Is that right???
22:40 – “There’s something else it reminds me of, and that is the mining stock world because at any given moment, there’s like between 3 and 5 thousand of these tiny little mining companies, most of whom don’t even own any gold or copper or whatever… So, out of the 3 or 5 thousand, there’s maybe 100 you should ever pay attention to, and there’s maybe 20 that you’d really want to own…”
24:44 – Eric commits a cardinal sin… “Okay… I’m going to do the most dangerous thing in podcasting and investing history, and that is disagree with Dan Ferris…”
34:19 – Dan asks Eric how on Earth he sifts through the thousands of cryptos to find the ones that are truly worth paying attention to… “Are there simple principles that can help me cut out the 8,000 cryptos that I probably shouldn’t be looking at?”
38:20 – Eric explains the big problem that Ethereum solves… “It makes agreements not rely upon trust… Let’s say you lend your friend $10,000…”
42:55 – “If I can deal with this using blockchain, then I know the agreement is sound. Or it doesn’t get put on the blockchain. We know the terms, and we know the terms can’t be haggled or re-negotiated or changed. If I lend my college roommate 2 Ethereum on a contract that expires in 30 days, they come back to me in 30 days. Period. Or it doesn’t happen. And there’s A LOT of value in that…”
48:32 – Eric tells Dan about a new project he’s been working on… It’s a way to get in on the incredible upside of the crypto markets, but with less volatility than many crypto investments out there. To learn more, visit www.cryptocash2021.com
55:08 – Eric leaves the listeners with one final thought as the interview closes… “It’s critical in this environment, if you can’t see the crowd, you’re in the crowd.”
1:00:27 – On the mailbag this week, Dan fields a ton of great questions from listeners. One asks about the new Federal Reserve cryptocurrency (CBTC). Would this help or hurt Bitcoin? Another asks Dan how potential regulations could impact oil stocks. And another asks, is social security a scam? Listen to Dan’s responses to these questions and many more on this week’s episode.
Announcer: Broadcasting from the Investor Hour studios and all around the world, you’re listening to the Stansberry Investor Hour. Tune in each Thursday on iTunes, Google Play, and everywhere you find podcasts for the latest episodes of the Stansberry Investor Hour. Sign up for the free show archive at investorhour.com. Here’s your host, Dan Ferris.
Dan Ferris: Hello, and welcome to the Stansberry Investor Hour. I’m your host, Dan Ferris. I’m also the editor of Extreme Value, published by Stansberry Research. Today, we’ll talk with my good friend and colleague, Eric Wade. Eric is Stansberry’s crypto guru. He’s got an awesome résumé, and he is simply the smartest crypto guy I’ve ever met in real life, online, anywhere in the known universe.
This week in the mailbag, Craig J. writes in and says, “Is Social Security a scam?” Plus, we’ll have questions about crypto, oil and gas, and supply chain Armageddon – great mailbag this week. The mailbag is a conversation, so you might want to just talk to me. Call us up and leave us a message on our listener feedback line at 800-381-2357 and hear your voice on the show. In my opening rant this week, it will be very short, and I’m going to ask you to think about yourself, and I’m going to ask you a very simple question. Let’s do that and more right now on the Stansberry Investor Hour.
So, what’s this simple question that I want you to ask yourself this week? It is this – are you a fox, or are you a hedgehog? And you’ve probably heard – you may have heard about this. There was a piece written back in, I think it was 1954, by an intellectual type of guy named Isaiah Berlin. And Berlin started his piece – and the piece is all about, he’s, it’s some kind of literary critique of Leo Tolstoy, the Russian writer, but that’s neither here nor there.
He starts out – this is his first sentence, he says, “There is a line among the fragments of the Greek poet Archilochus” – Archilocus? I don't know my Greek. “There’s a line among the fragments of the Greek poet Archilocus which says, ‘The fox knows many things, but the hedgehog knows one big thing.’” You know, then he talks about, “Well, does this simply mean that the fox, for all his cunning,” Berlin asked, “is defeated by the hedgehog’s singular defense?” He just rolls up in a ball and you can’t do anything with it because he’s covered with sticky things. Is that what that means?
But over time, it’s kind of taken on a life of its own, right? You’re either a hedgehog or you’re a fox. Now, of course, like all these dichotomies, it’s an exercise. This is a thought experiment, right? It’s not literal. We’re all a little bit hedgehog, a little bit fox, or maybe 80/20, more one than the other or something. That’s the point of this – you’ve got to ask yourself this question and ultimately whether or not the question means anything to you. There’s a lot to think about here.
But just to give you an example, let’s make this a little more concrete for investors. Like, I think Warren Buffett became a hedgehog. I think he started out pretty foxy because he was doing all of these different kinds of special-situation-type plays in the market, he’d look for merger arbitrage and discounts to book value and all kinds of weird situations in the stock market, and he would hold them for a short time and then move onto the next thing.
But over time, he became a hedgehog. He just does one thing. And the Buffett hedgehogging is just about looking for companies, businesses he can understand with management he trusts at a price that makes sense. And does it have a competitive advantage, a sustainable competitive advantage? He’s been saying those four things for, like, decades and decades, he’s been saying those same four things, for a very long time. That was part of the influence of his friend Charlie Munger, who helps him run Berkshire Hathaway. This is a partnership that’s getting on 50 years now, and for most of that time, Buffett has been moving solidly in this hedgehog direction doing this one thing over and over. And with a bias toward holding forever, right?
Well, on the other hand, I would say Jim Rogers, the Investment Biker guy, I would call him a fox. Because, as he’s described it to me in conversations over the years and in conversations I’ve heard with other people and things I’ve read that Rogers has said, I think he’s a fox. He looks all around the world. He’s totally global, and he will buy anything. Currencies, stocks, bonds, futures – whatever. Physical commodities, commodity contracts, whatever you can buy in the financial world for some kind of a speculation or investment, I bet Rogers has done it at least once. So, that’s a fox.
And myself, I’m not ready to proclaim myself a fox or a hedgehog, but I will say this... For a few years now, I’ve said that you should be truly diversified and that the core of what I mean by true diversification is, in the financial system, out of the financial system, right? Financial assets like stocks and bonds and cash and assets that kind of hedge that, like gold and silver and maybe some land and, these days, some bitcoin, and for me personally, some Ethereum. And that’s your basic idea and run with it and do with it what you will.
So, that is kind of a foxy idea, but you could say that the total focus on making darn sure you’re truly diversified is a bit hedgehoggy. So, I don't really know where I come down, but I want to know about these two ideas because I want to know who I am. I’ve said many, many times, you must know yourself well to be a really successful investor. You have to know who you are. If you’re that Warren Buffett hedgehog and you just know one thing – like, we’ve had market wizards on the show, right? Mark Minervini, Peter Brandt, Chris Camillo – they're hedgehogs, man. They do one thing. They’ve found a system and they work it to death. And they’ve honed it over years, and they’ve been focused on nothing but that their whole careers, and it works great. They make a ton of money.
Maybe that’s not you, maybe you’re more like Jim Rogers. But ask yourself, are you a hedgehog or are you a fox? I think I’m going to leave it right there – "Are you a hedgehog or are you a fox?" And I’m going to move onto our quote of the week, which kind of feeds off of this idea of knowing yourself well, and it’s by a physicist, the late, great Richard Feynman. You may know of him as the guy who wrote a bunch of books, one of them is called Six Easy Pieces, because it’s six ideas in physics that he thinks are easy for people to grasp and he explained them in an easy-to-grasp way. And then there’s another book called Six Not-So-Easy Pieces, and it’s just more of these lectures that are transcribed into print that Feynman did over the years. And you can also get the complete Feynman lectures.
But you may also know that he’s the guy who, in a press conference, way back when we had the – gosh, the Challenger disaster, right, that space shuttle that blew up, the very first one? It wasn’t the first space shuttle, but it was the first big disaster space shuttle. And he took a piece of this O-ring that, I guess, rubber, plastic, whatever it’s made of, and he dipped it at a press conference into a jug of ice water. And you can hear in the recording of it, you can hear him say, and he’s from New York, he’s like, “Get me some ice water. Give me some ice water.” And he dips the thing into the ice water and shows that it loses its elasticity.
And the point was, it got really cold and that O-ring getting really cold caused a big explosion. It caused, I think, liquid oxygen to leak out in the direction of the incredibly large fire at the bottom of the rocket and just blew the thing up and killed everybody on board. It was horrible. And Feynman was the guy who sort of figured it out and explained it to the world.
But the quote is, “You are under no obligation to remain the same person you were a year ago, a month ago, or even a day ago. You are here to create yourself continuously." So, maybe you were a hedgehog, you’re becoming a fox. Maybe you were a fox, you’re becoming a hedgehog. Maybe you see elements of both of those in yourself as an investor. Maybe you’re becoming something completely different, some amorphous, other thing that has yet to be discovered, and you’re continuously creating it.
But I love that idea, "You’re under no obligation to remain the same person you were a year ago, a month ago, or even a day ago. You are here to create yourself continuously." You have to think. We live by thinking. And if you never change your mind and you never change your actions, you’re not thinking, you’re not growing. Great quote, great man, great intellect.
All right. Let’s go ahead and talk with my good friend, Eric Wade. Let’s do it right now.
On June 24, I invited Dr. David Eifrig on the show to discuss the greatest upset in the history of American retirement. If you missed the event, you still have another chance at Doc’s thesis, but in a different way. Dr. David Eifrig says what’s coming next is a phase he calls financial lockdown.
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Time for our interview. Today’s guest is Eric Wade. Eric Wade is the editor of Crypto Capital, an investment advisory where Eric uses his unique strategy to find the best opportunities in the cryptocurrency space. Eric is an Internet entrepreneur and investor who began picking stocks and trading futures in college using his expertise to become a certified financial manager at the largest American retail brokerage. He eventually sold the Internet domain of his nickname, wallstreet.com, for over $1 million. Eric’s cryptocurrency career began by mining bitcoin. Soon, he turned to mining Ethereum and then even taught himself how to build and program his own miners. Eric has also been an angel investor, a movie scriptwriter, and the founder of a family business that has earned international recognition. Wow!
Eric – welcome back, sir.
Eric Wade: Thank you. Glad to be back.
Dan Ferris: Yeah, it’s been a little while.
Eric Wade: It has been – too long.
Dan Ferris: Yeah, yeah, but in the meantime, I’m always getting these questions about, usually, bitcoin, but crypto in general that I inevitably, like, I shouldn’t even answer them anymore, I should just give them all to you.
Eric Wade: [Laughter]
Dan Ferris: And you’re always good enough to shoot me back an answer I can read. But people are concerned – we should just jump right in. Listeners are concerned. They have these same concerns they write again and again and again. They write in about once every couple of months about quantum computing. And you answered this question recently. I don't know if you have anything further to add to your answer, but does this come up, do people express this to you as often as they do to us?
Eric Wade: No, they don’t, but that also may be because we – the people that I write to and write for, we’ve kind of beaten it to death. And sure, it’s a threat in the same way that maybe a solar flare or something could be a threat that, wow, this really could happen, but we take every precaution we can, and the nice thing about quantum computing is, we can watch the threat materializing. There isn’t a lot of building of quantum technologies being done completely in secret.
Now, people will probably immediately want to disagree with that, but I’m not saying we know everything about it, but what we do know is mileposts, we know that it’s being done, it’s being progressed, and [Laughter] I always find it kind of funny that somehow, the argument with quantum computing is that the most technologically advanced currencies ever developed – bitcoin and everything that came after it – are going to be caught flat-footed when this new technology develops, right? Like, everybody in the world will have access to quantum except for the most technologically advanced, sound currencies there are. [Laughter] And that’s what you have to believe... to believe that we’re going to get caught flat-footed.
So, yes, the threat quantum computing presents is, it’s possible that we could have computers that are so powerful that they could crack the most powerful algorithms. Yes, that’s a threat, that’s possible. But we could also adapt to where we incorporate that technology as opposed to just sit there and let it attack us.
So, sure, there’s always this space race going on... can the good guys outpace the bad guys? And when it comes to computing power, who’s who? We don’t know. We think that bitcoin and other cryptocurrency guys are the good guys, but remember, bitcoin’s built on SHA-256, which is an NSA technology. So, is the NSA going to sit around and let its best technology it ever developed get cracked by quantum computing? I don't know. That’s what you have to believe to really see this as a threat – and boy, did we get off on the wrong foot on this one. [Laughter]
I’m not worried. We see it coming a mile away. Get off the train tracks and the train won’t hit you.
Dan Ferris: Right. It sounds very similar to the appropriate viewpoint of Y2K back in 1999, when everybody was worried about that. And the appropriate viewpoint was exactly what happened. We all saw it coming from a mile away. Programmers were hired, code was changed, there was no problem. And this sounds similar to me.
Eric Wade: It turned out to be a non-event, so good analogy, good analogy.
Dan Ferris: And you can’t, the lesson back there, I think it was Porter, actually, who told me, you can’t schedule a crisis, right? [Laughter] You can’t say, "In five years, the capability of this quantum computing is going to be so great that you'll be able to hack all the crypto and so, all the crypto will be worthless." You can’t schedule that sort of thing.
I like your answer, I do. I like it. There are always countervailing forces. For me, that’s the bottom line in this. You can’t, nothing is just one-sided, right?
Eric Wade: I think you’re right. And as a musician, you'll maybe understand what I’m about to say next is that the question about quantum computing is a great question. And sometimes I feel like how the Rolling Stones must feel when they're playing the same song again and the think, “Maybe I can improv a little in here,” or, “Maybe I can come up with another lick,” or something. Everybody wants to hear what they want to hear, but if you’re playing it 50 years down the road, you might think, “Let’s liven it up, let’s spice it up.”
So, whenever I think about quantum computing, I’m always trying to think of, is there another way I can answer this? Because it just keeps coming up. People keep feeling like – this thing is going to get us.
Dan Ferris: Right, you’re going to be singing “Satisfaction” 50 years from now. “I can’t get no" – yeah. [Laughter] That’s right.
All right, so, we had to get that out of the way, and I’m pretty satisfied that we’ve done so. Having covered that, I think I heard one of our recent guests say something like – I thought he said there were like 9,000 cryptocurrencies in the world today. Is that close to right?
Eric Wade: It’s close to right.
Dan Ferris: [Laughter]
Eric Wade: And many of them, it’s like, whenever you look at money and they tell you how much money is in real estate and how much money is in stocks and how much money is in M1, M2, and then they show you the derivatives, right? And then there’s $87 gazillion in derivatives, and crypto is heading in that direction because you can create "Moonbat Coin" and then the next day somebody can come up with "Moonbat Saturn Coin" or something, right?
There’s just so many possibilities that anybody – it’s like a sandbox. You could build anything you want in here, and people are. People are testing out every possible ramification of it. And some of them are great and could lead to be an innovation that, five years from now, we’re like, “Oh, my goodness, remember when they invented blah blah blah?” But the other 99% of them are experiments that should fail, and a lot of them do.
So, yeah, your reader, or your listener, is absolutely correct. There’s thousands upon thousands, and then there’s probably even more of them that we haven’t even heard of or haven’t even been indexed yet.
Dan Ferris: Yeah, actually, now that I think of it, I think it was a recent guest, Kevin Duffy, who said there were 9,000, and I thought, “Wow, it’s just amazing.” And it reminds me of, I mean, that’s just sort of the way things go. It’s the way, like, a classic example would be the automobile industry. I mean, there were, if I’m not mistaken, well over 100 different brands of automobiles shortly after decent automobiles were invented. Shortly after, it became possible to build one that you could actually kind of drive for a little while before it broke down, there were hundreds of them. And, of course, then we pared that down to just a small handful, here. In the United States, alone, I’m talking about.
Eric Wade: Yeah, and if you couple in that obviously, their startup costs were higher and gearing up for manufacturing lines and supply chains, etc., those were, there’s 100 of them and there were actual barriers to entry on that. Whereas with cryptocurrencies, and, OK, I don’t want to overstate it, but the barriers to entry are different. That, you know, if you could code over a weekend a new, fun coin and then it comes and goes, then you have the skill to do another one the next weekend and another one the next weekend. Whereas, starting a car company isn’t quite as easy as that.
Good analogy, I like that. Different time, but yeah, good analogy.
Dan Ferris: Yeah, a little lower on the barrier to entry. Just a little lower. [Laughter] You’re probably not going to create a new car company every weekend but, you know, that’s a valuable insight. See the valuable insight that you get here, folks?
Eric Wade: But hey, a lot of innovation was done back then, right? Let’s take your analogy all the way to home base is, a lot of innovation was done. How many cylinders? How do we get the fuel delivery in there and what kind of brakes are we using? And are we using wooden parts or are we going to bother to take time to paint these things and are we welding seams or are we bolting them.
So, all of that innovation happened because someone said, “I want to be car company No. 100, and boy, do I have a good idea. We’re going to blast this whole thing in, and people aren’t going to freeze to death when they're driving their vehicle around,” etc., right? Or, “Let’s pull the heat off the engine and throw it into the passenger compartment without letting the fuel mix get in there and killing them all.” [Laughter] So, innovation happens during that time, and that’s where cryptocurrencies are... someone can say, “I like what happened last week, but what if I tweak it? What if I improve on it? What if I fix that bug?” Yeah, that’s a great analogy.
Dan Ferris: So, it reminds me, there’s something else it reminds me of, and that is, like, the mining stock world. Because at any given moment, there’s just between 3,000 and 5,000 of these tiny little mining companies, most of whom don’t even own any gold or copper or whatever it is they claim that they are going after, they're just trying to discover some. And so, out of the 3,000 or 5,000, there’s maybe 100 you should ever pay attention to and there’s maybe 20 that you’d really want to own.
And so, it makes me wonder, I mean, crypto has to be the same way, right? It’s just got to be.
Eric Wade: Yeah, it does. And probably, taking that analogy even further is, there may be some in that bottom 1,000 of miners that every so often, something happens that they get something right and the stock goes up, whether they're doing things right or not, maybe. [Laughter]
Dan Ferris: Right.
Eric Wade: Right? That sometimes, the economics of the stocks may separate away from the reality of what’s on the ground or what’s in the vault, or how many pieces of equipment they have or even whether if they're digging in the right spot, to oversimplify this. And yeah, you probably get questions about that. I thought you said only 20 of these guys were good, well, what about this little three-man operation off in the middle of nowhere? Didn’t their stock just go up from a penny to seven pennies? And someone who tracks mining stocks, they're probably looking at it like, “Yeah, it did, and none of us saw that coming,” but –
Dan Ferris: Well, and it’s worse. Eric, it’s worse than that because some of the, until they get found out, the mining frauds can be huge, huge winners. [Laughter] So, it’s like the Dogecoins, right? I mean, they eventually are discovered that there’s nothing there and it’s a joke, but huge money is involved at some point.
Eric Wade: OK, I’m going to do the most dangerous thing in podcasting and investing history, and that is disagree with Dan Ferris. I love disagreeing so much that actually, on my presentations, I have a segment that I call Agree/Disagree. Because yeah, generally, I agree with most everything you say, but I’m going to disagree here in that I don't think a lot of people discover that some of these cryptos are worthless. I think it’s that they're intentionally overlooking the possibility that it’s worthless, and buying anyway. Or maybe they're not wanting to know about the worth.
Because I don't think, and I’m not defending Dogecoin, so nobody who’s within the sound of my voice take this to think that I buy or sell or any way maintain any kind of position on Dogecoin. I don’t. But if it comes into your field of vision as worthless and never claims to have worth other than what people are willing to pay for it. That’s kind of a pure argument of supply and demand. They're not claiming to solve any big problems or anything like that, other than peer-to-peer electronic currency. And in that case, it works perfectly, it works great. Now, if the peers are willing to crank the price up to something that looks completely irrational, then so be it.
The worth, though, I just, I can’t let that one stand as worthless, because it does exactly what it’s supposed to do and if people want to speculate on it like a bunch of risk takers, so be it. And there’s many, many other investments, oceanfront properties, that people do the same thing with. And just because it’s tangible, we don’t ever call it worthless.
OK, there’s my disagree with Dan Ferris. Now, beat me up, and all of your listeners who love you, because I’m one of them, will beat me up as well and say, “No, no, no, Dogecoin is worthless.” And I contend it’s not. I say it’s not. I don't like to let that stand.
Dan Ferris: Yeah, I can’t push back on that. I can’t say it’s worthless. What you are saying, essentially, is, “Let the market decide,” and I’m all about that. I’m not going to say it’s worthless. I’m going to say it’s sort of emblematic, it’s like a flag of the time that they, it came out as a joke, right? I mean, initially, there was this kind of, it came out, the person who created it, they were snickering at the world when they created it, but here it is. [Laughter]
Eric Wade: Yeah, yeah. And when I was in high school, my friends and I were – we were the nerds, we were the dorks. I was on the debate team, for goodness’ sake. And we had a concept that we called, amongst our nerdy, dorky selves, the existentialist joke. And that is something that’s not inherently funny, but it becomes funny once you’ve said it 30 or 40 or 50 times. And some of these economic anomalies, I think, fall into that case. The existentialist argument for Dogecoin is that it still exists. Maybe it started out as a "thumb the nose at the world" and here we go, it still exists, and you can mine it profitably with a pretty cheap piece of equipment. So, what do you do with that? [Laughter] It’s still a joke, but it’s a pretty profitable joke right now. I don't know, maybe it’s, maybe there’s more to it. [Laughter]
Dan Ferris: Well, we’re actually getting into a fairly profound area here because throughout man’s history, from the very beginning, man has always been, I made this same argument about gold, by the way, being initially very likely a bauble, just a shiny object that man was probably fascinated by, having found it on the ground somewhere. And you can imagine that first clump of gold, people would say, “Oh, what is it, what is it?” You know? “Oh, this is mine, I found it,” It probably got pretty heated.
Eric Wade: Yeah.
Dan Ferris: That was probably the first gold theft or something, as well as other things. And it was just a shiny object, it was just this pleasurable thing. And it didn’t start out with some grand utilitarian theory about what makes good money and what doesn’t. And in the same way, mankind, like other animals, needs to play in order to learn how to survive and learn how to thrive. And so, we’re at play in this crypto world, and the Dogecoin folks are just having a good, old time and they came up with something for which, for whatever reason, we can talk about Elon Musk and all the whole thing, but there’s this demand for it. It’s proving to be just a little bit more than a joke all of a sudden.
And I think that’s the way it goes with innovation sometimes. We’re just playing around with stuff, and we say, “Oh, wait a minute, I just cured cancer or found a new currency” or whatever it is that you did.
Eric Wade: Yeah, and maybe there’s also this element of 1950s car design when the first guy invented, “I’m going to make that rear tail stick up a tiny little, the rear quarter panel, I’m going to put kind of a sharp edge on it.” And then the next guy put a little sharper edge, and then five years later, we’ve got these tail fins that are a foot high off the back of the trunk. And then, at some point, someone said, “All right, that’s a little – that’s a little silly. That’s kind of a joke.” But then 100, what are we now, 70-some-odd years later, you look at some of those cars and you say, “I can see how we took that to excess, but I also like the stylish look of it now because of what it represents from back then.” So, where does it fall? Is it in excess, or is it a style cue that I can link myself to? There we are with cars again. Maybe a little bit of both.
And every time I hear about Doge, for example, or those other 9,000 cryptos that are out there that you think someone’s experimenting on it, and maybe these are the punk rockers, maybe these are the car designers, maybe these are the Jackson Pollock, the first, and by the way, we’ve really taken splashing paint too far, I think. Can we put a stop to splashing paint? But Jackson Pollock, imagine the first person who was thinking about trying to buy a Jackson Pollock was probably like, “I love you, man, and I want to support you, but you dripped paint.”
Dan Ferris: [Laughter] That’s right.
Eric Wade: “And I don’t want you to starve to death, so I’ll give you some money for your paint dripping thing here.” So, there you go, Jackson Pollock experimented, and now Jackson Pollocks are worth a fortune, but someone had to be the first one to say, “You dripped paint, and fine, I’ll give you a grand, or $500 or a steak dinner, right? I’ll keep Jackson Pollock. I don't know the Jackson Pollock story. All I know is, people are still splashing and dripping and isn’t that like the ultimate expression of artistic “I can do it” is take some paint and throw it at a wall, or smear my hands in it"? And we’re still doing that.
And then, so yeah, if anybody ever comes at me with, “Cryptocurrencies try anything," OK, fine, look at some art, why don’t you? We have invisible art. We have bananas taped to walls.
Dan Ferris: [Laughter] That’s right.
Eric Wade: Yeah, so, we do and try everything in cryptocurrencies. We’ll do and try anything.
Dan Ferris: Right. We are evolving. It’s a process of evolution. And sometimes in evolution, you wind up with these weird, exaggerated traits as well.
Eric Wade: Yeah.
Dan Ferris: I mean, they don’t always, the saber-toothed tiger is no longer around, but there was such a thing for a while.
So, here’s where I’m headed, though, Eric. I’m headed in a direction with all of this. Given these analogues, the car market in the 1920s or 1910s, 1920s, whatever it was. Given that and the market for tiny little mining companies that don’t actually own anything but hope to hit something and the similarity that we’re seeing among cryptocurrencies, the people I know, the one person especially who I know, actually, there are a handful of them in Vancouver and Toronto who can really navigate that market really well. And they're frickin’ brilliant and they’ve been doing it for decades.
And I imagine, to navigate 9,000 cryptos, maybe one maybe somebody ought to listen to the guy who started mining bitcoin early on and who has your résumé that we read at the top of the interview.
Eric Wade: [Laughter]
Dan Ferris: This seems really hard to me, is what I’m getting at. It seems really hard. But are the principles? Like, do we have any, are there any simple principles that can help me cut out the 8,000 cryptos that I probably shouldn’t be looking at or something?
Eric Wade: There are, and the first step everybody should take is, try to make it look and feel and act like a stock, that, I mean, we don’t have boards, and on most of them, we don’t have earnings announcements, we don’t have even general accounting, let alone revenue or profits or any of those. And a lot of that could be because cryptocurrencies don’t want to look like that.
So, that’s your first step to take is, think of it as structured as a computer person’s creative mind can go. And they have to behave specific ways to it into computers working with them, so they're digital, etc., but we’re even trying to bridge that gap now. I don’t want to go too far off on the side on that.
But so, they have to have that much structure of being, can I computerize this? Can I digitize this? Can it be something that I can pass around over the Internet? Or maybe not over the Internet, satellite, or ham radio in some cases? And that’s pretty much the only restriction. So, it doesn’t need to have all of these aspects like a stock or even like a bond where you say a maturity date and what assets back it up, etc. Things like that can have some aspects like real estate, limited supply, etc., or maybe not. Cryptocurrencies, some of them have limited supply, some of them don’t.
So, a lot of people tend to think of it a little bit like gold-type properties, because it’s hard to pin down, “Well, is gold an element, or is it a currency, or do we use it for jewelry?” So, that one seems to have a little bit of staying power in that gold is a little harder to define exactly what it is, and cryptocurrencies are similar to that.
But then when I’m looking at – those are the broad strokes. When I’m looking at what it is that makes something interesting to me to invest in, I start looking for users. I start looking for a use case. Like, what does this do? Who needs this? And that’s the first test that I try to match is…Is there a use and users that are going to want this?
So, that’s why – that’s how you turn the corner from something that’s the first half of our conversation today exciting and interesting and anything can happen. And then you turn the corner towards well, what if, can I use this technology for solving a problem and being a good investment?
So, yeah, when you’re trying to turn the corner into making it solve a problem and be a good investment, that’s where I come in. Is I say, “OK, I’ve got this amazing technology that maybe I can solve inflation for people, for example.” That’s what we’re going to be, that we just released last night is, we’ve come up with ways to turn this “anything can happen” technology into solving inflation, or into solving, for people who have real needs in their investment portfolio.
Dan Ferris: OK. Let’s forget about the idea we’ve solved, I think bitcoin, we’ve made the case, it’s been made over and over again, it kind of solves inflation, as you alluded to.
Let’s talk about other problems that get solved. Like, what does Ethereum solve? What has been solved there?
Eric Wade: OK, the fastest, easiest way to answer that for me is, it makes agreements not rely upon trust. And for people who may be listening to this right now, thinking, “What do I need that for?” I used to have an analogy I loved, which was, let’s say someone that you know really well or brother, cousin, best friend, college friend, etc. comes to you and says, “Hey, I’m in a bad way. I need a little bit of help, but I can cover the, lend me 10 grand and I can cover it in a month once my property sells” or something like that. And we’ve all been in that position. And if you haven’t, then bless you, you’ve lived a wonderful life.
The next thing that usually happens is, either you get paid back on time and everything’s fine, or you don’t. And with Ethereum, if I was to enter into a contract with someone using Ethereum, what they say is going to happen, happens. And the only way to not perform is to overtake the power of the entire network.
So, when I, if I have a smart contract that I say, and that’s what’s good about Ethereum’s is, it allows you to write a smart contract, and that would be like that deal I make with my friend right? If I lend you 10,000, then you pay me back 10,000 in 30 days, kind of thing. And I get it, we’re mixing the real world and the computer world in here with this, but I hope everybody has this notion in their head of the best-laid plans. I can lend out money or I can borrow money. At some point, somebody has to perform on that. They have to deliver. And if it’s somebody that I operate with a level of trust, brother, friend, college roommate, etc., I can grant really hammered on that one, right?
There’s a reason that, when I go to a bank, they say, “I’m going to lend you the $10,000, but here’s the terms and here’s the paperwork and here’s the contract.” Well, with Ethereum, everything that happens has to have that level of contract. There is no best friend who can just kind of come buy, pick up 10 grand and not sign his life away. The contracts, the “if thens," the "borrowings," the "everything that happens is in writing or it didn’t happen," period. And in order to change that, you have to have all the parties agree or overcome the power of the entire network.
So, someone can’t come in and say, “Let’s go back to that friend who borrowed money from you.” And when they say, a month later you’re saying, “Hey, you told me you’d have that money back in a month” and we’ve all been there, right? And if you haven’t, bless you. “Hey, you told me you’d have that money back in a month” and they say whatever they say, right? “Oh, man, I didn’t know you meant one month literally,” etc.
Dan Ferris: [Laughter]
Eric Wade: OK, those arguments stop when it comes to dealing with the blockchain. If someone says it’s going to be on, and I know I’m biting off a big one here, but the reason why those arguments stop when you’re coming to the blockchain is because if you ask me for money for a month, the blockchain doesn’t write down a month, it says 30 days specifically, right? And if you agree to the terms, you’re agreeing to specific terms, or it doesn’t get into the Ethereum network.
And that’s where, when I say we’ve found ways to beat inflation and we found ways to invest solidly for people who were just planning to live out their retirement comfortably, etc., that’s what I’m talking about. I’m not talking about lending a little bit of money to a friend, I’m talking about, we’re in a position now where Joe Investor can say, “I personally have never been that good at lending out money to people, but I know there’s folks out there who are willing to pay 6, 7, 8, 9, 10% to borrow a little bit of money. If I can deal with this using blockchain, then I know the agreement is sound, or it doesn’t get put onto the blockchain, right? We know the terms and we know the terms can’t be haggled or renegotiated or changed, etc.”
So, if I lend my college roommate two Ethereums on a contract that expires in 30 days, they come back to me in 30 days, period, or it doesn’t happen. And there’s a lot of value in that. So, we go, you’ve got those people who are saying, “It’s all intangible, and what’s the value in that?” Well, here’s some of it, and imagine if you were a large trader or a Goldman Sachs or JPMorgan or somebody, right? And you start thinking, “Wait a minute, I’m already doing this kind of business.” And if I wanted to lend some money to El Salvador or something like that, I can enter into a smart contract or I can – I’ll know the terms going into it, and I’m scooping up some business that I’m already doing, but now I’m using blockchain technology to carry it out.
And I think this is the lesson for the next year for standard folks out there is, I know there’s money to be made out there, but when we get these traditional borrowing and lendings or getting between two people who are doing a trade, I can use blockchain to be a third party between you and your buyer or seller or something, and maybe take 50 basis points on that transaction, as your third party.
Now, I’m starting to talk about stuff that Dan Ferris is thinking, “Wait a minute, like a market maker, or like I could be an escrow agent, perhaps?” Right, all of these old school businesses that the service provider made a little bit of money off of 1,000 times a month, now we have blockchain technology to carry that out. And I’m finding ways to scoop some of that up and investors who have money that they're willing to put aside for a little bit can make money using blockchain technology to get in between these. The lendings, the market makings, stuff like that. We can get in between these and make 50 basis points on our money all day, every day.
And if you do that, hey, some of the things I’m recommending, we’re making 5 basis points, but we’re doing it 1,000 times a day, every day of the year. It adds up. You can make a living off of that. And in the environment we’re in, where Treasury is 1.5%, I got that wrong. What is it today, 1.4... 1.6... 1.5%. Junk bonds, two, three, 4%. Who planned their retirement around junk paper making 3 or 4%? This is ridiculous.
So, that’s why we’re looking at blockchain is because we know there’s opportunities out there, and that’s really what we just launched was, this is inflation 5%, junk bonds 3, 4, 5%? That’s not right. [Laughter] You used to be able to make a spread between inflation and junk bonds.
Dan Ferris: OK, so, when you say, “this is what we just launched,” what are you talking about, exactly?
Eric Wade: We launched something called Crypto Cashflow, and it is literally looking for, you take those 9,000 cryptos that you mentioned earlier, and you start looking for opportunities to take blockchain technology and solve real-world problems and we keep the profits on it, because we’re the investors in it. And if it’s something that’s a cash flow-type of investment where I can make a little bit of money every day over and over and over again, then that starts to sound like what people who make routine, good, long-term investments are looking for.
I want to be careful how I phrase this. Not everybody who’s investing in the next wave of cryptocurrencies just wants to buy something for a penny that goes to a dollar. That’s not going to go away. There’s also a whole crowd of people who’ve been hesitant to invest, and we’re addressing that because there’s a crowd of people who want to make a little bit of money every day and book it and lock it down, right? I want that in my wallet, in my bank account, etc. But the investments that are paying a little bit every day aren’t keeping up with inflation now. They're 0% to 0.5%, 1%, etc.
So, we’re using blockchain to solve that. And the neat thing about this is, and this is what I’m really proud of is, I’ve got this Crypto Capital that I’ve been with Stansberry for a few years with this, finding these 200%, 600%, 1,000% winners. And they can be risky. They can be, I’ve got a 95% lower on my portfolio, too, so it can be risky. But with Crypto Cashflow, if you’re booking these little wins every single day, we’re able to seek out some of, with a little piece of our portfolio, some of those 1,000% winners, but with less volatility than what Crypto Capital, my other newsletter with Stansberry does. Crypto Capital is going to keep looking for those buy it for a penny and it goes to a dollar kind of cryptos, because those aren’t going away. The crypto industry loves those, and that’s where your innovation happens.
But in the meantime, we can separate out, for people that want good, solid returns, routine, bankable, use this brilliant technology to solve problems like market maker and escrow company and inflation hedge, etc. Borrow and lender. Some of the least exciting businesses out there are about to get taken over by blockchain, and we want to be there when that happens. So, the benefit of that is, we can beat inflation, we can make a good, solid return every single day, and some of our money can be in those moonshot cryptos because some of them are going to take off.
So, we’re kind of trying to find the best of all worlds there... outperform on a routine basis and present people with moonshots, with lower volatility. [Laughter] So, that’s what we just launched.
Dan Ferris: Well, that sounds really cool. People can find out about this and see your presentation, right, at cryptocash2021.com.
Eric Wade: Yeah, yeah. And we talk through it a little bit more in depth on that. And I know you have a very investment savvy audience, and they’ll probably get a lot out of that if they watch that cryptocash2021.com. We’ll get a little bit more in depth into the problems we’re solving and who this is right or and how this is something that’s sustainable. And I know I’m really throwing out a big challenge here of reduced volatility, because that matters. To a lot of investors, that really matters, reduced volatility. But yet, if I’m going to be in the crypto space, I don’t necessarily want to give up those 200%, 500%. We’ve got one recommendation in there that could go 25X, 2,500%. And I think that’s worth people taking a look at.
Dan Ferris: Yeah, I’ll take a look at a potential 25Xer. [Laughter] I like those. Because the great thing about this – and for me, bitcoin and Ethereum are these kinds of bets, that’s why I own a little bit of each of those – is that I can basically take a stake that’s so small I barely notice it and wait 10 years, I think, in the case of those two. And I think the odds are pretty good that I’m going to have a major multibagger on my hands, and if not, it was such a small stake that it didn’t matter. And yet, if it is a major multibagger, it can move your total portfolio. The potential there to do these low-risk, potentially enormously high-return trades, it was kind of cool. There’s that mining stock aspect again.
Eric Wade: Yeah, yeah, absolutely. And I think that, like I said, your audience, probably in their lifetimes, have had an investment that went really, really, really well. And that’s something that they can look back and say, what were the characteristics of that? Maybe I put 100 shares or something like that in it. Took a small stake because it sounded good, but I didn’t want to lose everything if I was wrong.
We recommend that with cryptos, as well. Obviously, we say, if you’re new to this, start with 1% of your investable assets. Start with 1%. And we’ll go even further and we’ll say, we’re recommending, if you watch the presentation, I’m going to absolutely recommend something during the presentation. So, it’s worth your time to watch it anyway, something that already is outperforming any savings device you may have out there.
So, there is one in there, but there’s also 10 more that we recommend to people if they sign up for this. And we tell them, if this is new to you, start with one. Pick one and work your way through it and get to know it really well. It’d be the same advice you’d probably give me if I sat down with you, we had a couple of adult drinks, and I said, “All right, I’m tired of hearing about all these mining stocks and not participating. Tell me all of the ones I want to buy,” you’d probably say something like, “Whoa, whoa, whoa, whoa, whoa. All? [Laughter] Let’s get you one or two and you see how they work.” Right? You might talk to me like that.
So, I do the same with cryptos is, I’ll tell you good ones, but I’ll also tell you, let’s behave like this is something important to us and get to know it and start with 1%, and if it doubles, then you’ve got 2% in your money, and if it goes 5X, you’ve got 5% of your money in it. And that’s a really real possibility for people, and that’s something we preach the gospel of position size and don’t be emotional. And if you find yourself getting emotional to the up or the down, right, the good side or the bad side, euphoria is an emotion as well, then you have to listen to yourself on these and you have to back off on that. And we hold dear common sense with investing, on all of these. None of these are we saying, “Take everything you own and throw it into this,” because it’s a flip of the coin.
Dan Ferris: Sure. That’s wise. So, it’s time for the final question, Eric, which, if you listen to the program, well, you’ve been on the program before, so you know what I’m about to ask. And I’m going to ask you to try to keep it brief, because I know you and I know you like to spell things out in great detail.
Eric Wade: [Laughter]
Dan Ferris: So, the final question of every interview here on the Investor Hour is, if you could leave our listener with just one thought or one idea today, what would it be?
Eric Wade: I’m going to modify something that they’ve heard before.
Dan Ferris: OK.
Eric Wade: It’s critical in this environment. If you can’t see the crowd, you’re in the crowd.
Dan Ferris: That is, that sounds like if you don’t know who the patsy is, you’re the patsy. I love that.
Eric Wade: There you go.
Dan Ferris: If you can’t see the crowd, you’re in the crowd.
Eric Wade: If you can’t see the crowd, you’re in the crowd, yeah. And there’s a lot of crowd nowadays. Everything, right? Internet links us all together, the Reddits, the chat rooms, the Twitters, everything. It’s easy. It’s easy to get caught up in that crowd. But if you can’t see it, if you can’t spot it, where the crowd is or what the crowd’s doing, you’re in it. Take a step back. And hey, crowd trades can be very profitable, [Laughter] don’t get me wrong.
Dan Ferris: Right, right. Yeah.
Eric Wade: I’m not an anti-crowd guy. Crowd trades can be great. But there’s a big difference between crowd and crowded.
Dan Ferris: That’s right. Very good. That, OK, so, I pressured you to be brief and you were brilliant!
Eric Wade: I had that one ready too, I was going to be brief the whole time.
Dan Ferris: You were ready for that, OK, all right. [Laughter] Well, thanks a lot, man. It was really great to have you here, and it’s really great just to hear you wax about crypto, because you know more about it than anybody I’ve ever met in my life.
Eric Wade: Thank you.
Dan Ferris: Whether it’s been in real life or online or anywhere.
Eric Wade: Thank you. I appreciate every time I’m on here, I think we have a great conversation.
Dan Ferris: Yeah, we do. So, yeah, it will be not soon enough, the next one we have, and I know you'll be back on in several months. We’ll be happy to talk again.
Eric Wade: Yeah, I’m looking forward to it.
Dan Ferris: OK, Eric. Thanks a lot, man.
Eric Wade: Thanks for having me.
Dan Ferris: So, I started saying that we get a lot of questions about crypto, and I should always just shoot them to Eric, and you just found out why that is. [Laughter] Like, you can ask him about anything. He’s a great guest for me. He makes my job really easy because all I have to do is say, “What about quantum computing?” and sit back and let him talk and he'll explain all of it, usually in really simple language.
That is the amazing thing, to me, about Eric is that if people use all the technology to explain the technology, if they use all the technical terms to explain the technology, eh, maybe they don’t really understand it as well as someone like Eric who doesn’t need any of the technical terminology to explain to you something like, I asked him about Ethereum, what problem does that solve, and you heard the way he explained it. It wasn’t technical at all, really. And to me, that’s like, I’m always super keen to have him on the program and to shoot him all your questions about cryptos. We should probably have Eric on the show once a month, you know, just, “Hey, it’s Eric’s Crypto Corner, answering all your questions about crypto” or something.
But I hope you enjoyed that as much as I did. And if you’re into cryptos at all, you should definitely go to cryptocash2021, cryptocash2-0-2-1.com, and check out whatever Eric has to say about the new project that he’s doing. If you’re into cryptos, I’m telling you, he’s the smartest crypto guy I have ever met in person, online, heard of anywhere. And to find that out and find out what he has to say, go to cryptocash2021.com.
All right. Lots of fun. Let’s have some more fun now and do the mailbag. Let’s do it right now.
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Great mailbag this week, man. In the mailbag each week, you and I have an honest conversation about investing or whatever is on your mind. Just send your questions, comments, and politely worded criticisms to [email protected] I read as many e-mails as time allows and I respond to as many as possible. You can also call us on the new listener feedback line, 800-381-2357. Tell us what’s on your mind and hear your voice on the show.
Lots of good stuff this week. I’m going to start off with Mike K., and Mike K. says, “Hi, Dan, enjoyed the show with Kevin Duffy, I listen to Investor Hour every week and continue to learn from the content, so thank you. With the theme that regulation favors the incumbent,” as Kevin Duffy and I discussed, “I’m interested,” Mike K. says, “in your thoughts on when the product competes with the federal government. It seems likely that soon bitcoin will be regulated and the Federal Reserve CBDC will come to fruition," the Federal Reserve’s electronic coin or crypto coin or whatever.
And then he continues, “This would seem to make them competitors. Do you feel that bitcoin being the incumbent will thrive in this environment? I realize the Federal Reserve is not part of our federal government, but they do seem to be tightly intertwined. Thank you, Mike K.”
Yeah, they're close enough. Just call it the Federal Government, even though it’s really not, right? So, yes, the bitcoin, I would view bitcoin as the incumbent. And I think, no matter how you regulate it, it’s designed to sort of get around some of that. On either end of a bitcoin transaction these days, you’re just converting cash to bitcoin. But as long as you’re in bitcoin, it could be tough for a regulator to get ahold of your assets and find out how much you have and where it’s stored and what it is.
If you can really spend bitcoin, if it winds up that you can really do bitcoin the way it’s intended, like, without ever going back to any other currency, just staying in bitcoin, transacting in bitcoin, living in bitcoin, I think it could be a little problematic for regulators.
But your question is good. Everybody’s worried about the government regulating bitcoin, and besides the fact that it’s kind of designed to get around that, the SEC already says it’s a security. So, when you sell it, you have to report your gains and losses and so forth. So, we’re kind of already there in a big, important way. But it’s good to keep asking the questions. I appreciate it.
The next one is from Robert H. Robert, you had three parts to your e-mail and you said your third item may be a bridge too far and not specific to the podcast. It was actually a wonderful little paragraph, but it’s so long, I’m just going to stick to your first two.
You said, “Dan, I’m a faithful listener for years now. You fit the Lake Woebegone model, as all of your podcasts are above average.” Well, thank you, I appreciate it. He continues, “In a recent podcast, you discussed investment in both oil stocks and oil services stocks, finding a positive outlook for price appreciation because of adverse regulations and various ESG headwinds leading oils stocks to go higher. You mentioned tobacco stocks as a similar example. It seems to me that this thesis works for the oil stocks, but may do the opposite for oil services stocks, as they would bear the brunt of regulation in lower levels of oil, exploration, and transport. I guess they might make up that revenue source in keeping older wells and systems running. What am I missing?”
I’m going to answer that before I go to your next paragraph. So, Robert, the point is that when you regulate something or you tax something, you get less of it. And we still have a demand for this product, a huge demand. A demand that will continue to grow. Fossil fuel demand will continue to grow, as the population grows and as the world generally becomes wealthier and people want to travel more, especially. Travel is the big demand source for this. And you can say oil, oil services. If you regulate it, it’s just, it gives the incumbents an advantage, and we’re still going to need it, you see? You still need the services to get the stuff out of the ground.
So, I hear what you’re saying. Yes, it affects their business model. It may add expense to their above the bottom line, but the effect overall, I believe, will be the same. It will really cut down, it’ll really reduce the incentive for new competitors to come in and that’ll give an advantage to the incumbents, and it’ll also feed into this idea that we’re cutting investment, we’re creating this huge environmentalist headwind that’s going to cut into incentives to invest in new oil and gas resources and also, as you point out, the services, the picks and shovels that are required to get the stuff out of the ground in the first place, right, and transport it and stuff. I think the effect is the same up and down the industry. And you might not be missing anything. I could be wrong, but I think that’s how it works out.
And here we go with another question about crypto security. “There was also a mailbag question,” Robert says, “about AI, artificial intelligence, breaking today’s cryptography/security. Eric Wade’s answer, and by extension yours, was spot on,” Robert H. says. “I could not help but recall a very long ago history professor who started out the semester with a guiding statement, ‘Fundamentally, nearly all aspects of the history of mankind’s advance has been the constant and never-ending battle between the lock makers and the lock breakers.’” Truer words. I’d love to read the rest, but it’s kind of long, and I appreciate you pointing out the differences between the stress of someone in battle who can get people killed and the stress of someone who’s in the market who may lose a little money. And as you point out in the end of your e-mail, “Perspective changes everything.” And that’s Robert H., an Alliance member. He says his Alliance membership was an unbelievably good investment. Thank you, Robert. Good stuff.
Next comes Craig J. Craig, I’m going to go straight to your question. You had some other stuff in there, you said some nice things about the show. Your question is, “Is Social Security a scam?” And I think it is a bit of a Ponzi scheme. There’s no Social Security trust fund. The idea of the government saving up money for your retirement…No, they're not, they're absolutely not. They're running up an enormous liability which, in order to pay it, we assume at some point the money printing is really going to have to get going, even more so than in the past year and a half.
So, I mean, Social Security, people who consider themselves very rational, like, if you go to a Berkshire Hathaway meeting and Warren Buffett says, “Social Security is one of the greatest things ever did in this country, it’s a resounding success, it’s never created a problem yet.” I mean, I would say it creates a huge incentive not to take care of, anything the government takes care of creates a huge incentive not to take care of yourself. Part of the muscle of your soul is atrophied if you’re having to rely on the government for things that everyone ought to be able to do for themselves.
Very few people, I would say ought to be interfered with in this manner. It really screws up society, if there is such a thing as society. [Laughter] But it screws up people’s incentives, individual people’s incentives. And it screws up, like I said, it causes a part of you to atrophy, and that works against you. That’s an unintended consequence, a highly negative consequence that works against you. The government has my back, therefore, I don’t need to have it myself. And as you point out, governments allocate, they don’t invest. They're just, they're not investing anything, they're taking from Peter, they're robbing Peter to pay Paul in different time frames and that’s all Social Security is.
So, to me, I kind of, your implication is that you agree that it is a scam and I think, you said maybe your question should be, “Has there been a larger scam in history than Social Security?” And you said, rightly, “I will certainly not be counting on Social Security in my life. Anyway, thanks for your great work, Craig J.”
Craig, I hear you, and I think I have to agree. We need to take care of ourselves. And this idea that the government is something other than a mechanism by which we prosecute infringements against individuals, persons, and property is wrong. I think that’s primarily what government ought to be. But people get their hands on the levers of power, they think they're better than you, smarter than you, they should be allowed to run everything from the top down, and whether they should be allowed to or not, they're going to do it, right? They're going to violently seize power and they're going to violently push their agenda on you, as has been done all over this land of ours, and all over the world.
That’s what governments are constantly doing. People get their hands on the levers of power and they shove their way of life down your throat, in a very top-down fashion that does…People who live in large geographic areas, there’s all kinds of different situations, and to have these top-down solutions from government, it screws everything up badly, much worse than any pro-government person will ever admit. They never admit the disasters they cause, ever, never, ever, right? Today’s woke government-worshipping, condescending, highly politicized person never admits how badly government has screwed up lives and taken lives and destroyed lives. They never do it, but it has.
All right, enough of that. Our last question this week is from Mike F. And Mike, I won’t read your whole question, but you’ve got some good stuff in here. Mike F. says, “I work for a relatively famous global footwear company and have insight into our current supply chain Armageddon that very few people are talking about in the mainstream media. Costs to ship containers from Asia have spiked from $500 less than 10 years ago to values that no one could have predicted. In one case, we had a quote for $17,000 for a single container out of Vietnam. That doesn’t include the goods inside the container. This is all a function of a shortage of domestic manpower, ships, containers, and factory workers in Asia due to COVID. It has created quite the bottleneck for many companies, from Walmart, Target, Home Depot and thousands of others.” Then he says later in his question, “We have so much junk from Asia already here. There seems to be more than enough of it to go around, except maybe cars. In your opinion, how will the U.S. respond to a shortage of junk from Asia?”
And I’ll just leave it there. Mike also asks about inflation – I think that’s just a separate issue and I’ll just leave it alone. But how will the U.S. respond to a shortage of junk from Asia? My experience tells me that if, politically, this is even recognized, if politically, anyone even cares – which I don't think they necessarily do – the extent to which the U.S., by which I assume the U.S. government, maybe, to the extent that the government gets involved, they’ll screw it up. If you mean how will U.S. businesses respond to a shortage of junk from Asia, look, a shortage of anything in demand, a business will respond by trying to bring customers more of it or trying to charge more, or doing whatever they have to do to exploit the opportunity, which will tend over time, of course, to level out the market, right? It’ll tend to clear the market of this shortage situation.
And that’s, markets handle this stuff brilliantly, right? They do. If there’s something in high demand, that can mean there’s a shortage, or if there’s something in just normal demand and then all of a sudden, there’s a whole lot less of it, which is the situation you’re talking about, businesses tend to be pretty good at saying, “Let’s put some more money into everything that the market demands more of.”
So, to me, the only problem here is just letting the market clear this and the government interferes. Even if it’s as simple as requiring lots of personal protection equipment and mask mandates and not letting people get back to work and not letting them leave their homes and, as you point out, you pointed to shortages of domestic manpower and factory workers in Asia. Well, if they’ll just let everybody go back to work, the market will clear all this.
So, that’s my take, Mike. You had a lot of other questions, and I don’t want to complicate the issue any by discussing inflation, which I think is a separate topic, but I’m glad you e-mailed, that was interesting stuff.
Well, that’s another mailbag, and that’s another episode of the Stansberry Investor Hour. I hope you enjoyed it as much as I did. We provide a transcript for every episode, just go to www.investorhour.com, click on the episode you want, scroll all the way down and click on the word transcript and enjoy.
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Until next week, I’m Dan Ferris. Thanks for listening.
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