 Thank you for that introduction that was great. Yeah, I'm a career finance and investment guy and I discovered Bitcoin Technically in 2013, but I didn't really get involved until 2017 So I have one foot on the dark side and one foot in the light and I'll let the listeners decide which is which but Yeah, you know the book came about as I realized that I was gonna have to explain to my clients the investment thesis for Bitcoin and I knew I'd have to write it down and so I figured that as long as I'm gonna write it down Might as well publish it So this was born the book and I'm gonna try to distill what I wrote down in the book into 20 minutes Which of course is impossible that I'm gonna do my best. So here we go First we'll start with a bit of fun So I think to understand the investment thesis for Bitcoin You have to zoom out and think about the bigger picture and to my mind the story of Bitcoin reflects the story of these two men Now most people will recognize the one on the right That's John Maynard Keynes and his idea is basically shaped the last century of economic policy His notion was that governments could actively manage economies and in particular They could print money and run deficits to reduce the damage in economic downturns and then do the reverse in boom times Of course, the problem with that idea is that politicians and central bankers can't seem to help themselves They never take away the punchbowl in the boom times and so we end up in the situation We're in now and I'll talk about that later. Anyway, the man on the left is less well known today But I believe his time has come and I am persuaded by his ideas being better than those of a man on the right His name is Ludwig von Mises. He's probably the most important member of the Austrian school of economics And he believed that rather than attempting to manipulate the economy like Keynes said Governments should mostly just get out of the way and let the economic cycles play out as they will naturally Okay, so let's do a bit of historical backdrop and admittedly my focus is going to be a little bit more on the US than the entire world But let's talk about the last half century and specifically about the Federal Reserve So the Fed has two mandates basically one is full employment and the other is consumer price inflation at 2% how they came up with 2% I think is beyond me. Nevertheless, that's what it is So these two charts start in 1971 and that was the end of the Bretton Woods Gold-based monetary system. It's when we went to a pure fee-out system And what you can see is when we left the gold standard, there's this inflationary period You can see in the left-hand chart that inflation spiked up And of course Paul Volcker was appointed Fed chairman with a mandate to break that inflation And he did exactly that by jacking interest rates way up You can see that on the right-hand chart the left side of the right-hand chart and then a So inflation came down and then a strange thing happened Interest rates were lowered and still inflation stayed low and interest rates were lowered further and still inflation stayed low and we ended up with a four decade period in which consumer price inflation came down and stayed down and Yet interest rates were lowered and lowered and lowered and the Fed it seems has decided that as long as inflation stays below that magical 2% target then it ought to stimulate economic growth by easing monetary policy i.e. lowering interest rates and Implementing quantitative easing and hence we've seen lowering rates over the last four decades. Okay, unfortunately such Easy money policy has consequences and the big one is debt So surprise surprise when you keep reducing interest rates people borrow more That's the clear incentive and in fact, that's one of the stated goals of monetary policy So this chart I borrowed the base data and in the base chart itself actually from Ray Dalio's Book big debt crises template for understanding big debt crises And then I added some annotations to show some of the major events But I'll just talk briefly about how this is constructed So if you look at the y-axis on the right hand this shows debt as a percent of GDP And then the y-axis on the left hand shows the other three measures here Those are debt service which in turn comprises interest burden and amortization and just like with your mortgage You make your mortgage payment. That's a debt service that has two pieces of it It's the interest amount and it's the amortization of the debt pay-down amount Okay, when we look at the last century here, which is presented we see various Major events that happened you had the roaring 20s in the stock bubble You had smooth Holly tariffs and protectionism and the depression then you had FDR Come to power you had World War two and it's true the debt levels Fluctuated through that period, but they stayed within a sort of what I would say is a reasonable range less than a hundred fifty percent of GDP for most of the time except for Debt to GDP spiked close to two hundred percent, you know in the at the peak level And then you had the Bretton Woods Goldback system and what's fascinating is that 27-year period when we were on basically a gold standard debt to GDP was flat and then of course August 15th 1971 Nixon takes us off the gold standard and debt takes off like a rocket ship and debt moves from about a hundred forty five percent of GDP to 150% GDP and then we had the global financial crisis and a slight reduction in debt levels But then they started to creep up and then of course we had the pandemic which is why I've got this sort of Jerry rigged Red arrow on the upper right hand part of the chart I don't actually know the magnitude and I don't think anybody knows the magnitude yet of how the of how much the debt is Going to increase as a result of this pandemic, but suffice to say it's rising quickly The additional thing I'll say is this is total debt as and that includes everything Includes household debt it includes corporate debt it includes government debt However, it excludes the unfunded liabilities and those liabilities Medicare Social Security You know what in Europe you would call pensions that is roughly a thousand percent of GDP So the picture overall when you include the entitlements is worse than this But this shows the trend where the trend is clearly that when you're off a gold standard That's a hard money standard and you're on a fiat standard debt just rises dramatically and that takes us to where we are today Okay, so there's too much debt. What are the options for managing too much debt? Well, I see six and they're all bad. That's our a la carte menu of bad options on the left The first is austerity, which is actually living within our means, right? This is spending less especially at the government level than you take in in taxes, which really means cutting budgets Politically very difficult almost no country has been able to sustain it for any significant amount of time It's basically impossible. At least that's what modern history shows us option two is mass defaults This is what we saw in the Great Depression nine years ago And for that reason we probably won't see it again because that period was so painful that governments will do anything possible To avoid that kind of outcome Option three is what was known in biblical times as a jubilee also known as debt cancellation mass debt cancellation and debt cancellation is an interesting idea The problem is that if you do it at any scale People start to question things like contract law and property rights because basically if government or some other entity can just declare a debt Null and void then you start to wonder what other Bases of the economy and commerce, you know, will be under attack. So that's unlikely Now we get to the bottom of the menu, which I think is the more likely set of Policies or outcomes. We have redistribution, right? That's taxing the rich and giving to the poor generally speaking I think we'll see more of that TBD we have financial repression, which is a concept that was coined by a couple of Stanford economists in the 1970s and The basic idea is lower interest rates to penalize savers and make them spend that's ongoing As well as capital controls that hasn't happened to a large degree at least in the in the developed world but it could happen to a larger degree we'll see and then option 6 is I think the most likely and that's consumer price inflation that is causing inflation Via various policies such that the real burden of debts is reduced and that's the direction I think we're most likely to go in okay So speaking of inflation we'll we'll get to another bit of fun Our second economist showdown is Friedman versus hanky So Friedman said inflation is always and everywhere a monetary phenomenon That's true as far as it goes But what hanky figured out was that inflation is ultimately a fiscal phenomenon and what he meant was yes Friedman was right if you print too much money, you know, that's the proximate cause of inflation But really when you look empirically at cases of significant inflation through modern history, they tend to be in those scenarios in which Governments start to run huge deficits that are so large that they must be monetized via money printing So in other words, it's ultimately the fiscal It's the fiscal burden or the fiscal impetus that really drives inflation Into into higher levels. Okay, so it's worth asking. Well, you know, when are we gonna see inflation and what are the major factors driving it? Okay, here I present four major ones that I think are really important right now Those are technology globalization and trade government stimulus and demographics And I have three time periods on the chart here and I'll just take a moment to set this up These are somewhat arbitrary, but I think they're Indicative of what's going on. So the first column is 2001 to 2016 the next column is 2016 to 2019 And then the next column is 2020 to 2030, you know, which is basically the next decade looking forward Okay, technology so the the story of human progress or a big part of the story of human progress, of course is Technology advancements allowing us to make things better faster cheaper This reduces the cost of goods and services over time and this is always deflationary in the long run And that's why I have a green arrow pointing downward for all these time periods, which is technology is inexorably reducing Reducing basically the costs of goods and services on average some would argue that that's even accelerating now I think you know like Jeff Booth, for example, I think that may be true. Although it's open for debate I think that's an area for you know further research and reflection, but I I have a constant process here on the graph Okay, now globalization and trade is where it gets interesting China joined the WTO of course 2001 That was massively deflationary hence the downward green arrow, right all these Chinese workers came into the global workforce Their labor was cheap. So producing goods and services and especially goods became less expensive until more or less the election of Donald Trump in 2016 and that started a reversal of this globalization trend and This free trade trend. So that was already an inflationary factor But now with the pandemic, of course, it's gone into overdrive Which is why I've got two red arrows upward here, which is we figured out that there are all these goods these Essential goods that we can't even make in a time of need especially related to health care And it appears that there is now more or less consensus among Politicians on both sides of the aisle that we need to continue to reverse that so that means on shoring production and On shoring production means the cost of production all else equals likely to go up Okay, category three is government stimulus. Now we get into the issues. We're talking about with Friedman and hanky from the prior slide I Arguably, you know in the first period here 2001 to 2016, you know We had periods of government stimulus in the sense that we were mostly running deficits on the fiscal side And then you had periods of quantitative easing Reduction of interest rates, you know, whether it was after the dot-com bubble burst or it was after the global financial crisis And then we've continued to have that in the most recent period. That's the that's the middle column here But that's now an overdrive I mean the scale as we all know having read the newspapers the scale of what governments are doing both on the fiscal side and What central banks are doing in terms of quantitative easing and money printing is Unprecedented hence. We've got two upward arrows. The last category is demographics and I think this one is not as well known as it should be There's two major factors going on here. One is the largest generation now generational cohort in us Well in US history today, most people think of it as the baby boomers. It's not anymore It's the millennials who were basically the kids of the boomers. They had started basically joining the workforce and that Basically trend ended in the last few years in other words this big fat group of people added their labor to the pool that was deflationary because Increase in the supply of labor means more people competing for wages which keeps wages down keeps cost component down and that trend Ended in the last few years, which is why I've got one upward arrow in the 26 of 2019 period now Also, we've got the boomers themselves who are retiring So they are withdrawing their labor from the workforce that again is a reduction in supply of labor Which all else equal should increase the cost of labor increase wages so hence we've got two upward arrows and When I take all these factors together, I look at this chart I look at the right-hand side and I think it's debatable You know, I could probably draw two downward arrows for technology Maybe but suffice to say these other factors are all pointing upward in terms of their likely inflationary effect now When will this hit not immediately? We've got a huge demand shock obviously with the pandemic But once that passes we may be facing significant inflationary force. Okay, so what so inflation may be coming What do you do about it? Well, the thing to own in an inflationary environment is hard money assets Here we have hard money's past. That's the Roman solid is coin on the left The present for the most part is gold bullion and other monetary metals primarily. I think that the future may belong to Bitcoin So we're talking about hard money assets. We have to ask ourselves. Well, what makes something good money? Most people will say that a successful money has five or six characteristics. I wish it were that simple I see that there are at least 14 I wrote about these in some detail in the book and I won't go into detail here But suffice to say that all these factors are important but no form of money scores well Along all these factors in other words every form of money scores more strongly or poorly in different areas and None of them are are the same in that regard however, I think we can do a useful exercise which is Scoring some popular monies or monies that may be of interest in the future so here we score the dollar gold and Bitcoin and A few things to conclude here from the chart one which is not surprising Which is the dollar outscores gold as a matter of fact the dollar is used as money much more commonly Than gold today What's also interesting is that Bitcoin today already slightly outscores gold. That's the third column here versus the second column And now we have to Think about the future right this is status quo these left side three columns But what's interesting is Bitcoin is improving Okay gold is basically the same the same it hasn't changed in the you know hundreds of thousands of years And the dollar is actually getting worse the dollar is getting worse in terms of its monetary characteristics because they're printing more of it So it's becoming less scarce Bitcoin on the other hand is becoming more scarce We just had the halving event in which the issuance rates The issuance rate came down so the issuance rate for gold and Bitcoin is now approximately equal slightly less than 2% annually But a few years from now Bitcoin's issuance rate will fall again and it'll improve and then meanwhile We've got thousands at least of very smart and hard-working Entrepreneurs as well as software developers that are making Bitcoin easier to use So Bitcoin score is rising over time the dollars is reducing over time and gold is basically constant So why buy Bitcoin? Well today buying Bitcoin is an investment in an asset that is developing into the world's hardest money It's not there yet, but it is well on its way it's over a decade old and It keeps cranking out new blocks of transactions while The scarcity factor increases as the issuance rate decreases. Okay So what's the total addressable market for Bitcoin then if the addressable market is hard money? Well, it's at least at least tens of trillions of dollars in today's dollars And then as a bonus Bitcoin historically has been largely uncorrelated with other risk assets Which results in very large diversification benefits in the context of a larger portfolio. So I'm going to Run through these very quickly, but suffice to say there's five categories the most obvious is digital gold Bitcoin is going to take share from gold. I see two trillion dollars of value there over the next decade It's probably going to take share from fiat currencies I think that's another two trillion dollars of value as it takes perhaps 20 percent of a ten trillion dollar market there Offshore assets or another category where Bitcoin will likely take share Demonitizing other assets a lot of people hold real estate collectibles aren't even to some degree stocks purely as a monetary store of value There's at least a trillion dollars of potential there and then the last category is basically new Applications that are either being built or that we haven't even thought of yet You know Microsoft is building a new identity system on top of Bitcoin Abra has built a very clever way of owning and transacting Numerous kinds of assets that are collateralized Bitcoin Micro payments have been more or less impossible in the US Mostly because the credit card companies have kept fees so high This could be solved by people building second layers on top of Bitcoin like than that lightning network So suffice to say when you put it all together in the book the the investment case I present is eight trillion dollars of value within a decade. That was as of September So more like within nine years now, which is four hundred thousand dollar per Bitcoin You know, which is more than 40 times the current price pretty attractive upside Okay, now we talk about the correlation I use five assets to Which are I would say major asset classes that people think about S&P 500 is US stocks MSCI EFA. That's foreign developed market stocks We have emerging market stocks in the Barclays aggregate That's bonds and we have gold and Bitcoin and when you look at the right-hand side of this table What you see is that? Bitcoin has less than 20% correlation on monthly data to all these asset classes very low correlation So the result of this is that when you look historically and you construct a portfolio either without Bitcoin or with Bitcoin Something magical happens. I look at column one here and I see okay put One-fifth of my assets in each of the five asset classes. I mentioned with no Bitcoin Okay, annualized return four and a half percent roughly a standard deviation 2.6 percent Then I add 1% Bitcoin The annualized return goes up by one and a half percent annualized roughly and the standard deviation goes up ever so slightly 2% Bitcoin same story return goes up very significantly slightly higher standard deviation The real magic though is when I add a little bit of cash to the portfolio as ballast I use the three-month treasury as sort of a proxy for cash in that scenario as compared to the no Bitcoin Portfolio if I've got 10% cash and 2% Bitcoin and the rest of those other asset classes in equal amounts My return is roughly 7.3 percent annualized versus 4.6 percent annualized Which is a huge difference and my standard deviation is actually slightly lower So it's pretty amazing what Bitcoin has done for a portfolio historically a diversified portfolio So now no investment thesis would be complete without discussing the risks Honestly, there are numerous risks and we don't really have time to discuss all of them So my lazy solution here is to just copy the second half of the table of contents of my book Which discusses the risks and there are four categories There's technical risks political risks economic risks sociological and psychological risks and Suffice to say that although there are a number of them my estimation of these risks in aggregate does not dampen my My enthusiasm for Bitcoin as an investment and I still see it as by far the most asymmetric and positive potential Investment that I have seen in my career So here's the book. It's called why buy Bitcoin If you want to follow me at all I'm on Twitter and from Andrew the books on Amazon as well as Apple My personal website has podcast appearances my firm which does wealth management is West Cap Group and I'm happy to announce also that I recently took on the mantle of head of institutional for swan Bitcoin, which has a dollar-cost averaging Bitcoin saving Product which allows recurring buys of Bitcoin over time So thank you very much for listening to my presentation and I will turn it back To the to the bosses here to either take questions or or move along