Greg Foss, Bond market veteran investor, and bitcoin/macro commentator rejoins me on the show to talk about the situation with global debt, bond markets and why Bitcoin is cheap protection. We chat:

  • US Fed
  • Japanese debt markets
  • The 60:40 stocks and bonds allocation and what changes
  • Sell Bonds, Buy Bitcoin
  • Scenarios for how this plays out
  • Looking Glass Education


Prior episode: 


Stephan Livera links:

Podcast Transcript:

Stephan Livera – 00:00:00:
Greg, welcome back to the show.
Greg Foss – 00:00:01:
It’s a pleasure to be here. Thanks so much for having me.
Stephan Livera – 00:00:04:
Yeah, Greg, always great to chat with you about bonds and global debt and all kinds of macroeconomic things. So
we’re speaking now at the end of July 2022, and it’s interesting to see the things that are happening around the world.
I’m curious, just to get your high level view from a macroeconomic perspective, what are the important factors in your
mind that you’re looking at?
Greg Foss – 00:00:28:
Well, I’m going to steal a Tweet from a good young trader. I think the synopsis is we are all trading derivatives of the
United States Federal Fund rate. And when you think about that, it makes a ton of sense because the USA Fed funds
rate basically sets the discount rate for the world. Okay? Everything trades off of the US discount rate, which sets the
US ten year rate, which sets discount rates for global bonds. It sets discount rates for global equities. It’ll set a certain
level. It will have some impacts on credit default swap spreads. So it was quite an astute commentary and so on that.
I think we have to evaluate what I view the Fed latest announcement. So two days ago, Wednesday, Jerome Powell
came out and raised rates to by 75 basis points for a range of two and a quarter to 2.5% fed funds are overnight. The
market reacted positively, and it’s interesting to see the diverging views. I actually thought that this was the first level
of his pivot. Now, it’s not a pure pivot, but I believe he has introduced some language called, you know, which is, for
example, the Fed is now at neutral. Okay, how can you be at neutral when inflation is 9% and Fed Funds is 2.5%? I
find that absolutely ridiculous. But they introduced this word. Then they also introduced again the terminology data
dependent, which means they’ve been focusing on backward looking data. Employment numbers are strong. Yeah,
that’s good. But look at all the layoffs that are coming. Look at all the high tech companies that have announced that
they’re going to be laying off employees, et cetera. So employment is always backward looking. The Fed says that
they’re now going to be data dependent. So before Stephan, they had a 4.5% overnight rate target. I don’t even think
they get the 3%. That’s my personal opinion. But even if they only do get the 3%, it’s a form of a pivot, in my opinion.
And that’s why you saw risk markets rally very hard. Now, it could be a combination of shortcovering and a
combination of the tech sector getting a bid. Because if you have a lower US. Ten year rate on long duration assets,
which tech stocks tend to be, the valuations can go higher as long as the discount rate doesn’t go from 3% to four
and a half percent. And then adding on the equity premium. Okay? It’s just a knee jerk reaction. I’m not calling risk
markets. You’ve got to go in. But what I am saying is risk markets interpreted it like I did. I think that this was more
dovish than the markets thought. Now you’ll get the other side of the coin. You’ll get people that are saying, my God,
he was so hawkish. I think he’s a horrible poker player. Okay? He was up on the podium, his cards were shaking. He
looked to me like he’s holding a pair of nines and he’s trying to pretend he has a full house, and he just did not look.
He says stuff like, we’re going to crush inflation. Yeah, that’s a good one. Like, you’re shaking like a leaf. You’re going
to crush inflation and also send a global risk market into the toilet so there’s no way that GDP can grow. All of these
things are problems. I view it, Stephan, as a degree of a pivot, and markets are forward looking, so I think this is
meaningful. What does it mean? It means QE infinity. Okay, very simply, they’re going to have to print forever. It’s
only mathematics. And that means you need to hold hard assets that will maintain their value against a forever
decreasing or debasing fiat unit of account.
Stephan Livera – 00:04:36:
Yeah, I think you’ve got a really interesting and well nuanced analysis, because you’re right, it depends who you’re
listening to. There are people out there with all kinds of different views, but this notion of a Fed pivot has been
something the market has been anticipating. And people if we rewind the clock three, six months ago, it was definitely
a different perception. It was seen like, oh, the Fed is going to really tighten. Because in their Keynesian minds,
they’re thinking, oh, they’re going to put the brakes, they’re going to pump the brakes, and the economy has to deal
with that. But eventually the narrative was, the Fed is going to have to pivot. And so now, as you rightly say, it seems
like they are at least slowing down, at least putting it in their mindset, right?

Greg Foss – 00:05:17:
I think so, because think of it, okay, so they’re at 2.5% . Now, they may have one or two more rate increases before
December. Again, I don’t think they do, but we’re talking rounding errors. So another 25 or 50 basis points is not a 75
or a 100 basis point shocker. I think at the September meeting, they pause, okay? Which means, really, by
December, you have two chances to raise rates. And then there are people who are saying in 2023, they’re going to
have to start cutting rates. Well, why raise rates to cut them right away? Maybe it’s just wait for this data to come in
for other markets to stabilize or at least show what’s really happening. Did you see the results out of Germany? I
mean, they are horrible. Horrible. So the euro is going to be under pressure against the American dollar if rates
continue to rise in the USA. Same thing with the Japanese yen. All of this stuff are pressures building in the system,
and something always breaks. So again, all I will tell you is I interpreted this as the first step in a longer term pivot.
And even if it’s not a pivot, it’s a slowing of the acceleration of the rate increases. Okay? It’s not always the first
derivative. It can be the second derivative as well, which means they just did 75 basis points and 75 basis points.
Even if they do 25 basis points, it’s a market decrease in the acceleration. So it’s a deceleration of your Fed Funds
policy. Look, markets are on the head of a pin right now. Lots of people are hedged and wedged. There’s short
covering. There’s no question but that sometimes we get, oh, my goodness, I can’t miss the chance to buy NASDAQ
stocks when they’re down, what are they down? 20 odd percent, or they were at least 20 odd percent off of all time
highs. So, you know, this is how lnmarkets work. This is how they flush themselves out. The most important thing to
remember for the listeners again, I believe that you need to store your assets in hard assets. So store your capital or
store your time and energy in hard assets that will maintain value in the face of a debasing currency that does not
include bonds. Bonds are a fiat contract. Yes, they may pop a little in price, but it’s still debasing so quickly, there’s no
way that the coupon on those bonds makes up for the debasement of the currency. This is a tough market for the 60
40 balanced portfolio. If you owe 60% equities 40% bonds, you need other assets. Introducing the traditional ones,
which gold, silver, but then the most beautiful one, the basis for our love of Bitcoin. It is exactly why Bitcoin was
designed. QE infinity mathematics. Always start with math. The base layer of language is how I like to say yeah.
Stephan Livera – 00:08:22:
And you have a great way of really zooming out and explaining where we are in the global situation. And so where
are we today? If we look at, say, global debt versus GDP, and what do those numbers just kind of at a high level,
what do they look like today?
Greg Foss – 00:08:39:
Well, these numbers are based these are somewhat dated, and they haven’t gotten better. So I’m throwing out
numbers that are absolutely putrid, and they actually have gotten worse, but they haven’t been updated. So I always
look at things on a macro basis, and I’m a debt guy, so I like to evaluate things on what’s called enterprise value. A lot
of people always look at market cap. They forget about the prior ranking debt. Well, that’s the wrong way to look at
stuff. If you have a prior claim in front of you, don’t look at market cap. You better look at debt. So total global debt is
four times total global GDP. Four times is the equivalent of a company that has an enterprise value that’s trading
extremely rich to its sales price. If you want to look at so GDP is global sales. Total debt is one portion of enterprise
value. But four times total debt to GDP means that unless GDP maintains a growth rate that can keep up with the
organic growth rate of the coupon because that’s what a debt contract is. It has a fiat contract, an organic growth rate.
Your debt spiral is going to grow in the absence of irresponsible politicians that keep adding more to the deficit. Okay,
so like, I like to play a game. What’s an average coupon that should be in the numerator? And this is total global debt.
So this includes US government debt. You know, all government debts around the world includes all banks,
structured products, high yield, corporate debt, all of it. I think it’s fair to say that if the US ten year rate is 3%, the
actual coupon on all of this debt, a blended coupon, is far higher than 3%. But let’s just use 3% just as a conservative
number. If your numerator is four times your denominator, your tax base, and it’s four times a coupon of 3%, is it likely
that your tax base or your global GDP is going to grow by 12% annually just to keep pace with the organic growth
of the debt? Not even including other oh, we just found this other thing, this spending on inflation package that the
US. And it’s fully paid for. What a load of hookah? Fully paid for. It’s fully paid for because you’re not going to pay for
any of your other debt that you owe. Like what a bunch of buffoons. But point is, your debt spiral is being fed by the
growth of it organically because of the coupon. We are reaching an accelerating debt spiral where escape velocity is
impossible, literally impossible. Except for one way that Luke Groman points out, which is basically financial
repression, which basically absolutely screws bonds. What they would allow it to happen is the denominator would
grow like the rate of inflation and the numerator would be capped in its growth because they would use yield curve
control like in Japan. So they would try to grow themselves back on side using an inflating economy and a cap yield
so that your debt spiral is slowing. In that scenario, all patterns lead to bitcoin. It’s another form of debasing of the

currency and you don’t want to be a bondholder there. Now I’ve covered my bond shorts, okay? I am not advocating
shorting bonds here, but I’m certainly not advocating being a long bond holder over a bond holder over the long term.
You want to trade bonds, you think you’re an absolute star. You might be picking up nickels in front of a steamroller.
As far as I’m concerned. But go ahead, knock yourself out. It’s just a horrible investment long term. So the 60 40
portfolio is dead this year. The 60 40 portfolio has been down double digits both equities and bonds in the first time in
history. Both have recorded double digit declines for the first six months of the year. It’s never happened. So there’s
been no buffering or no offsetting of the risk. So pension funds all around the world have been destroyed this last
semiannual period, and they need assets that are non correlated with this over time. The hard asset story is alive and
well in my opinion. Bitcoin certainly was not a star at this time, but bitcoin is still a little bit in its early days. People
don’t truly understand its risk mitigating properties. I think that will happen, and I’m really proud to say, I’m not sure if
you saw that, but zero hedge published an article last night that I’ve been banging the drum on for a while. Bitcoin is
basically the equivalent of credit default swap insurance, they said on the US. Fed. I’m like, don’t stop with the fed. It’s
credit default swap insurance on all central banks around the planet. So I think that will happen over time where
bitcoin will be a non-correlated asset that will actually shine when other assets are getting debased or you risk off,
however you want to call it. So it’s an interesting time, let me tell you. I think there’s a lot of opportunities in the market
right now, but you don’t want to get too far over your skis. You never know where there’s another leverage unwind
coming, whether it’s in the TradFi space or in the crypto ecosystem. Got to be careful. That being said, smart money
is making adjustments as the information changes.
Stephan Livera – 00:14:45:
Excellent. And to your credit, you have been banging the drum about the CDS component or aspect of bitcoin. It
being protection. And maybe one way to frame it is a very cheap protection. I think that’s something I’ve seen you one
way you framed this, and you make a really interesting point because as you said, back to those numbers with the
3% and 4x global debt to GDP. And the thing is, even there, you’re actually bending over backwards to be
conservative and helpful to that case, because the reality is it might not even be 3% interest. It might be 4 or 5%. In
which case then the global growth rate shouldn’t be 12%, should be 16% or 20%. And we know historically, even
countries that are growing very quickly, they might be doing 7 or 8%. And like, an average country is lucky to get 2 or
3% GDP growth per year. So we are well below the level that would be required to so called grow out of this debt
problem. And so it just brings all of these problems around. What is the way this resolves? Obviously, I’m with you. I
think the inflationary pathway is the most likely now, of course not endorsing, we’re just saying this is the most likely
pathway. It’s the least bad from the politicians and the government and the systems point of view, that’s arguably the
least bad way out of this. But I want to touch on this point you mentioned as well, because you mentioned earlier that
60 40 is having one of the worst years of its entire in history, 60 40. So 60% stocks and 40% bonds. It’s a typical thing
that people get put into as an allocation. Now, I’m curious, Greg, your point of view here, do you see that there will be
some investors who are angry at their financial managers who put them into a 60 40? Are they going to be angry and
calling them out and saying, hey, get me out of this. Or do you see it like potentially some of these investors are in
bonds because they have to be because of various reasons, mandate, government regulation, etc.
Greg Foss – 00:16:44:
There will always be unhappy unit holders having managed money. It’s a horrible job, okay? Why? Well, if somebody
puts money with you and you do really well, they were really smart to put money with you. It had nothing to do with
you. It’s how smart they were to put money with you, right? And then if they put money with you and you crack the
bed, even if markets you’ve outperformed your benchmark, you’re down. But hey, I’m presenting you with a return of –
15%, but the benchmark was -22% so look at me I’m such a star. They look at you like, how are you a star? You lost
me 15%. You’re the idiot, not me, for putting money with you. You’re the idiot. So it’s a bit of an asymmetric reward
position to sit in that chair. Some of clients are good, some of them understand what it really means in the longer term
though, and you mentioned this, okay, advocating for something different than the 60 40 portfolio doesn’t mean 100%
equities and 0% bonds, and it doesn’t mean you do it right away. What it does mean is, in my opinion, as I said
before, I would like all asset managers in the world to attain at least a 5% waiting in Bitcoin. All I’m saying is, where
should that 5% allocation come from? Absolutely it comes from bonds before it comes from equities. Absolutely it
comes from bonds before it comes from commodities so let’s say commodities was a portion point is to not confuse
the math. 60 40 should become 60 35 5 over time. Sell some bonds, buy some bitcoin. Bonds are an asset that’s a
fiat contract that are programmed to debase, whereas Bitcoin is an asset that is programmed to increase in value
relative to the unit of account, the bond unit of account, or the Fiat unit of account. People always overthink this. And I
did say this on stage at bitcoin Miami, and I think it went over a lot of people’s heads. But the funny thing is, if I ever
do succeed in getting a big pension plan to put 5% of their assets in bitcoin, it’s like they forget what the other 95% of
their assets are, then they’re only focused on this bitcoin thing. Oh my god, it’s gone down. It’s gone down. Dude, if
you own shopify stock, it’s gone down way more than bitcoin has. Oh, well, yeah, well, we own shopify because it’s in

the index, so everybody has to own shopify. Well, stop your belly aching then. Focus on the fact that over time, I
believe bitcoin will be embraced, in the words of an asset manager, a non correlated asset that will provide
diversification benefits, which is to say you can reduce the risk of your overall portfolio and maintain the same level of
expected return. Or the flip side is, you can keep the same level of risk in your portfolio and enhance your expected
level of return because of an asset like bitcoin. It’s so exciting where this is going, not just price wise, but just what
you see out in the lnmarkets to find, right? You’re seeing the apps that are being built on top of the bitcoin blockchain.
I mean, these user adoption numbers are absolutely astounding. And it’s a combination of a technology and a store
of value that over time will disintermediate the visas of the world, that will disintermediate a lot of the traditional
finance management, traditional finance payment rails. This is something that you cannot afford to have a zero
exposure to bitcoin. The risk of having a zero exposure far outweighs the risk of having a 5% exposure that can have
asymmetric returns that are non correlated to other risk assets.
Stephan Livera – 00:21:02:
Yeah, absolutely. And so I think part of this is that journey of people changing their defaults in their mind away from
the default 60 40 or whatever their typical allocation is. And look, the other reality is there’s a lot of individuals out
there, just everyday people. They’ve got their government superannuation fund or pension and the money is just
going into these things without them knowing. So they already are exposed to bonds, they just don’t even know it. So
I think that’s an important thing that I think people have unfortunately been pushed into a system where maybe they
don’t really have that much control over their own retirement accounts and what’s going into them and how to do that
stuff. I want to also ask as well about in terms of where this goes. As we said, we’ve got this very high debt to GDP
ratio just globally and in terms of the ways things could potentially shake out in the future. Now obviously, I’m with
you. I think the likely scenario and arguably the less bad scenario is inflation. But what about some other scenarios if
they try to find another way to make somebody else take a loss? So as an example, what about just explicitly
defaulting? Or I’m sure you might have heard of cases where in China, in some of the banks there and some of the
mortgages, there are people who are literally just not paying the mortgage. And so in those cases, who’s going to
wear the loss in those kinds of scenarios.
Greg Foss – 00:22:22:
So let’s define some different type of scenarios that could be very painful. One is called a bail in that was actually
used in Cyprus in 2013. Correct. Okay. What happens is depositors money in banks over a certain level become,
hey, it’s not your money anymore. And what does that do? Well, that basically allows the government to take those
funds and take them away from you and bail out the bank a little bit because those funds are like debt relief. Okay? In
any of these scenarios, debt relief is what is a default? Well, it’s debt relief because basically then you have to
restructure the debt and the chances are you cut your debt in half or more. The reality is, though, that would be
absolutely, in my opinion, so cataclysmic and so disruptive to the functioning of the fiat system, everything would
stop. Okay. It would make the great financial crisis look like a walk in the park, like talking about the potential default
of even a G Seven country, let alone the most important country of the world, the USA. I can’t even fathom the
grinding to a halt of the financial system measured by things like OIS over LIBOR, the LIBOR OIS spread, which in
the great financial Crisis blew out to, you call it 4%. It’s a measure of the stresses in the banking system. Well, 4%
would probably go to 10%, which means any bank loan would be priced at 10% plus whatever they’re charging you
for your credit risk. At the end of the day, do things work at a 10% interest rate when right now we can’t even make
the government or the global debt markets work at a 3%? Stephan, again, it’s only the math. Like, there is no way to
escape this unless they do financial repression, which is a longterm, slower bleed punishment of bonds or a fixed
income contract. That’s what essentially Japan is doing right now. Everyone says, well, look at the Japanese
experience. It hasn’t been that bad. Yeah, don’t forget Japan was a net exporter. It’s not the USA, which is a net
importer. That little difference between being a net exporter and the net importer changes your whole GDP equation
and makes the map again not work. So all paths lead to Bitcoin, in my opinion. It’s either financial calamity, which I
think a lot of Bitcoiners actually want. I don’t want financial calamity. I can promise you my children don’t want
financial calamity because the pain and the social unrest would be far outweigh the potential benefits. Oh, yeah, well,
bitcoin is now the global reserve asset. Look, we can get to global reserve asset status without having to go through
some sort of Armageddon scenario. And that’s what I believe is going to happen. That’s what I believe. The
government’s not that they’re going to embrace Bitcoin globally. Some governments will those first movers will be
advantaged. But the reality is, in order to survive social a civil war, potentially, you have to just keep the people
happy. They’re not happy with inflation. But the alternative is again, will you be happy when there’s war in the streets?
I don’t think so. Let’s hope that we can solve this with a slow bleed in the traditional finance system, and people learn
that Bitcoin is their escape, is their lifeboat. Very simply, use fiat money as your checking account. Use bitcoin as
your store of value. Savings account. Countries should do the same. Fiat money is good for avoiding barter. It allows
a price to be set so you don’t have to trade goods for other goods. You can have an intermediary currency, but fiat

money is not good for saving. And that’s where bitcoin comes in. So Jeff Booth and I love to say you want to develop
this parallel system over time that is able to absorb the reality of the fiat death spiral. You don’t want that death spiral
to happen tomorrow. It could, but you don’t actually want it to. You build this parallel system that will allow for an
orderly transfer would be the best outcome in my mind.
Stephan Livera – 00:27:25:
Right. And of course, I’m with you there. I think that would be less bad than the other scenarios. Unfortunately, that’s
where we are right now. But I think here’s the other point. Bitcoin today is very small. It’s only about 450,000,000,000
as a total market as we speak today. Of course, we all want it to be bigger, but that can oppose challenges for large
companies or governments who want to take a large position without, let’s say, moving the market. And it may be
challenging for some of these large investment entities, pension funds and the like, to take a meaningful position in
Bitcoin. Because, as you said, 5%. But if they all went 5% into bitcoin today, the price of bitcoin would absolutely
Greg Foss – 00:28:10:
At that point, it would essentially go to $2 million. Okay, that’s where Bitcoin would go, because let’s run through that
math. I don’t think I’ve done it on your show, but I have done it in the past. That, incidentally, is my price target. It’s not
my limit. It’s my price target in US dollars for Bitcoin, and it’s based on today’s dollars. And how do I get there? I start
with what our total global financial assets. And that number is $900 trillion around the globe. It includes all the debt
that I talked about. $400 trillion worth of debt. It includes $300 trillion US worth of real estate. Okay. It includes $100
trillion worth of equities and $100 trillion worth of commodities and other hard assets. Gold is 10 trillion of that. So you
have 400 plus 300 plus 100 plus 100. That’s $900 trillion. What’s 5% of the 45? 45 trillion? 45 trillion, which is 45
trillion divided by 21 million. There’s your $2 million price target, okay, in today’s dollars. Now, don’t get mad with me,
all you bitcoin maxis. Why am I so bearish? Okay? It’s a target. It’s not a limit. And it has to go through my price target
before it goes through your price target, which is some guys are like, ten times my price target. It’s all possible. But
here’s the crazy thing. Right now, based on its potential, bitcoin is such a rounding error that you have to have
exposure to it. So if bitcoin price target, my price target is 2 million. And I’m looking at your block clock right behind
you, and I’m assuming it’s right. Let’s just to make the math easy, though. Say it’s $20,000. 20,000 is 1100 of 2
million. Okay? The market is basically telling me that there’s a 1% chance I’m right. 20,000 divided by 2,000,000, 1%.
And I’m not 100% certain I’m right, Stephan, but I’m way higher than 1%. Like, you fired an ice holes. You’ve got to do
the math. This is the best asymmetric return I have ever seen in my life. And you don’t care if you get in and you
move the price from 20 to 40, at least you’re in, because then at 40, it still has 50 times 50 multiples upside, which
means it’s a 2% chance. Now, you moved it from a 1% to a 2% chance. The market is telling you you’re right. I think
I’m like 70% chance that it’s going there. So if I’m a big fund and I’ve done the math, I’m like, yeah, I’m going to move
the market. But guess what? It’s a rounding error. I got to get in. It’s the price of admission. You know, bitcoin is
actually a better risk adjusted opportunity today at 20,000 than it was when I first got involved in it in 2016 at under
$1,000 US per bitcoin. And everyone will say, how is that possible? And I’ll just say three things adoption, the
response to Covid, the government response to COVID, which was unprecedented $9 trillion of global money
printing, and unprecedented in the great financial crisis. I mean, there was maybe 2 million, $2 trillion. Now we’re at
$9 trillion. And then the most important part of it, it’s five years down the road. It’s worked for five more years. It’s
security. The network security is higher than it’s ever been or close to as high as it’s ever been. All of these indicate
that the likelihood of me attaining my price target is actually higher. So even though it went from 1000 to 20,000 20x
higher, it’s better today more likely to obtain my final price target than it was five years ago. I lose my voice
sometimes I run into a wall. I smash my head against the wall. I cannot for the life of me understand why people don’t
see how simple this is. But they look at the donut, and they focus on the hole. They don’t focus on the donut. They
focus on the hole. They’re like, well, it wasn’t 70, and it went down to 30, and, oh my goodness, well, you grow up,
people learn how to manage risk. Okay, this is the opportunity. Now, even at $70,000, I thought it was cheap. Based
on a credit default swap analysis, by a credit default swap analysis, I think bitcoin should be trading at $400,000
today just on the CDs analysis. But it’s not, and it’s not my price target either. But the point is, using another
mathematical way of looking at it, 400,000, it’s 120th of its price. So all I will say is this is a tough sale to a lot of
people. What we need to do is get the education out there. You’re doing a great job. I love what you’re doing. I mean,
sometimes I’m not the world’s best educator because I get upset, and I use my old trading floor language, and I
apologize people to people, I swear, because I care. Like, I really cannot for the life of me understand how people
who are paid to do smart risk analysis still have their head in the sand when it comes to this asset class.
Stephan Livera – 00:33:56:

And I’m curious as well, then you’re pointing out that there are some of these people who should have better risk
management, better analysis capabilities. Is it also then that there are certain individuals that if you got to them, if you
got orange pill, those individuals that would really move the needle because they in command or have some way to
influence the allocation of larger pools of capital, as opposed to, let’s say, a lot of retail individuals? Of course not anti
the retail individuals, but in this sense, I guess the point you’re making here is that certain individuals can really move
the needle.
Greg Foss – 00:34:30:
The most important institution on that front, in my opinion today is Fidelity, which has, you know, it’s a top five global
asset manager. It’s done incredibly good research. It has Jurrien Timmer, who he has price targets of over a million
dollars on bitcoin using things like cell phone adoption comparison and internet adoption comparison. The Abigail
Johnson, the CEO of Fidelity, has been testing bitcoin mining for ten years, and they’ve come out with this research,
and they, as you know, in the USA are accepting bitcoin in 401K accounts, et cetera, et cetera. They’re getting
pushed back from some of the US Senators who are brain dead financial risk managers. That’s okay. The more
important part is the black rocks of the world which compete against Fidelity, and they’re both going to have the same
clients. And if a client comes to BlackRock and says, I’m going to move my money from you to Fidelity unless you
provide a bitcoin silo, BlackRock will really quickly provide a Bitcoin silo. Okay? So I see that happening. I see Fidelity
doing great research. I like that institution. I always have. I viewed them as a trailblazer. They did great things in
Canada. Here’s what I do know. The other guy that I think is becoming a Bitcoiner, and I’m not going to put these
words in his mouth, but I saw him on CNBC the other day, Mohammed Alarian. Now that guy is smart, okay? I’m not
mocking all these managers as not being sharp. Alarian and is smart. I know he knows the benefits of a diversified
portfolio with asymmetric return possibilities asymmetric investments define careers. If your 1% allocation to Bitcoin
goes up a hundredfold, that 1%. And you had 99% in other assets, let’s assume those other $99 on $100, they keep
its value, and your one dollars goes up to $100 because it went up 100 times. Your entire portfolio now is 50% in
Bitcoin. Right. Assuming you didn’t sell any and the $99 is still 99, but the Bitcoin went from one dollar to one hundred
dollars. That is the possibility here. And this is why you cannot afford to have zero. Because if you have $100 in
nonbitcoin and your competitors have $1 in Bitcoin and 99 in the same stuff that you have, you’ve just lost out to the
best asymmetric return ever. And your unit holders are going to be bitching to you like we just talked about. How
could you have missed this opportunity? Well, having lived it and the craziest thing is, people are very money is so
precious to them that they make irrational decisions all the time. Okay? The irrationality of it is due to emotions. When
you let emotions impact your investing, you tend to make horrible investment decisions. Some people hate bitcoin.
They can’t get over it. Peter Schiff is that type of individual. I’m afraid that shifty Pete has got to learn to change his
portfolio allocation when the information changes. So the point is, please, guys, remove emotions from your trades.
Remove emotions. And that’s why sometimes computers are better traders than humans. Computers trade based on
price with no emotion. When something hits a price, it buys because it’s programmed to buy or sell. The emotion of
the person, the emotion of the person who is making this decision or programming the computer is different. But you
cannot allow yourself to fall into these problems.
Stephan Livera – 00:38:41:
Yeah, of course. And I think that’s also perhaps part of the reasoning why there’s the message around auto DCA,
right? Like that companies like Swan and others have this idea that you can automate your savings. I think part of
that, though, is for some people, depending on where they’re at in their life, it’s about whether they are able to save in
Bitcoin. Because part of that is you do have to be able to take some volatility, and I think you have to. That for some
people is depending on where you’re at. If you’re able to save and you’re able to stomach that volatility, others will
sort of run the
Greg Foss – 00:39:16:
Bill Miller. Okay. Greatest greatest phrase. Volatility is the price of return. Okay. If I show you an asset that has very
low volatility, chances are its return profile will bump around just above zero. Okay, here’s the craziest thing. You
know what ball measures, right? It measures. Okay. So I’m trying to draw a graph on your screen. Top right, top left
to bottom right. A straight line down. No volatility. Straight line down. Is that thing non risky. No. You’ve lost money
from there to there. But there’s been no volatility. It’s gone straight down. People who measure risk by using volatility.
Forget that you can be in a straight line down with no volatility and still lose your shirt. And the same thing applies to a
straight line up with sawtooth. Okay. Even though you’ve got to look at the regression to the mean. This is what’s
happening. Don’t focus on this thing. And all of these guys who use things like what’s the term? At risk.

Stephan Livera – 00:40:32:
Value at risk.
Greg Foss – 00:40:33:
Value at risk. Thank you. Your bar, your value at risk is all based on volatility. Sometimes it’s astronomy, because
they’ll say, hey, you can have all of this. And guess what? Over time, it goes straight down with no ball. Straight line
down. All of these systems were built at times when computers they’re going to make my life so much easier.
Sometimes they don’t. Sometimes computers mess things up just because you’re able to measure so many different
variables at one time.
Stephan Livera – 00:41:02:
Yeah. And I think for some individuals who like to trade a lot, like day traders, they often end up losing money,
because there are some statistics that have been done in studies showing that some of the regular traders were the
ones who lost a lot of money, as in people who are just trying to play these either in equities or in futures and other
Greg Foss – 00:41:21:
I’ve done this for 35 years. I’ve done this for 35 years. All I bring to the table is 35 years of mistakes. Okay. And I
learn from every single mistake I make. And the key is not to keep making the same mistake. And the very most
important key is remove emotion and cut your losses. Ride your winners and cut your losers. Whereas most people
do the absolute opposite. They like to crystallize their gains. They like to be able to go to a cocktail party and say, I
bought Bitcoin at 100 and I sold it at 500. They forget to tell you that now it’s trading at $15,000. Okay. But they
wanted to crystallize that gain. So they sold it at 500. And now it’s many times much higher. And then they never tell
you about that penny stock that they bought at $10. That’s now trading at $2. But they’re praying that it comes back to
$10. Right. Because they kept their losers and they sold their winners. So, again, Stephan, I bet you in my life, I might
have a 60% batting average on winning to losing trades, okay? And that’s way above average, I promise you. And
that being said, the only thing I do well is on the 40% of my losing trades, they’re gone. I’m not emotionally attached
to them. They’re off the table. They’re out of my conscience, okay? I might have had the long term plan, right, but my
exit or entry was horrible. You know, the worst expression in managing money is we were early. Yeah, you’re right.
We’re wrong for the time frame that you said you were early, right? So be careful about all that stuff. I’m not
advocating firstly, there’s a couple of things I need people to understand. They say, Foss, you trade bitcoin? I say,
I’ve spent my life as a trader, okay? I have a core holding in bitcoin. I will never be short bitcoin. But are there times
that I trade it? Come on, guys. I’d be lying to you. Of course I traded. I’ve done this for 35 years, okay? Then they’d
say, all right, what’s your ideal? Or what’s? Your core holding. Well, I’ll share with you that my core holding is above
25% and less than 50%. They’ll be like, Why aren’t you 100%? And I go, Because you don’t have to be 100%
allocated to this most beautiful asymmetric return in order to reap the benefits, okay? And when you’re not allocated,
what it means is you can take some profits. You can wait for the price to potentially come back down. If it doesn’t,
you’re still above your core holding number, and I’ll talk to you in 20 years. I think that there’s a lot of people out there
that should actually just DCA and hodl until they get to their portfolio weight. But then there’s other people. And I
talked to a friend who is a little boisterous out there, BitcoinTINA has admitted that he has now realized that perhaps
his weighting was a little too high in bitcoin and he didn’t sell enough when it was above 50K, because now he can’t
buy anymore when it’s below 20k. And now he wants to actually reevaluate his passport. TINA, please don’t. I’m not
whatever they doxing you or whatever you’ve admitted that on a podcast with me. And I’m good with it, because,
look, I do the same thing. My entire life has always been manage risk as the information comes in. And if the
information changes and your position is wrong, guess what? Change your position. That’s why I find the best
traders. You know who the best traders are on Wall Street? They’re women. Women are actually better traders than
men. I’ve noticed on Wall Street, they can remove the emotion better than men can.
Stephan Livera – 00:45:21:
I see. I wonder if it’s like a survivor bias thing. Is it just the ones who survive are the ones who manage their

Greg Foss – 00:45:32:
I’m too proud to admit this loss. I’m going to show the market who is right. I’m going to bully the market to see that
very few people are bigger than the market. Okay? And when you become bigger than the market, you probably
become something like the JPMorgan whale that almost brought down the whole bank on a credit default swap
position that was mismanaged out of Europe. So far from home. Greater the play, pen farther from home. JPMorgan
had this London based whale that almost brought down the bank on some crazyass structured product credit default
swap thing where the guy was too proud that he wouldn’t absorb his losses. He tried to force the market into his
position and almost brought down the bank again, credit where credit is due. One of the best traders at JPMorgan
that I ever transacted with was a young lady, one of the founders of the credit default swap market. To be honest, she
was absolutely unemotional about her trades. And while it appeared so anyway, and I thought she was absolutely
fantastic, and many other female traders that I’ve traded with, I found the same thing. And sometimes I have to check
my own emotion, right, Stephan, if I ever think I’m bigger than a market. Okay, time for you to check out, Foss. Like,
you have lost your mind. Okay? The only market that you’re bigger with that is the sell that you should be in a padded
little room thinking that you’re the master of your own domain. Please. People manage risk properly. Understand that
there’s nobody who has 100% batting average. Nobody. And think of baseball where you know a 300 batting average
is, like, outrageously good. Maybe it takes time to learn that the best way you learn it is by losing money,
unfortunately. But that’s generally the only way you learn. So I’m not trying to get people trading 101 tips here. Get
your allocation. In my opinion, it should be a minimum of 5%. Then we’ll talk. Hopefully that 5% will happen with
people that deserve to get it before the price goes parabolic. I want countries like El Salvador to get as much as they
need before the price goes parabolic. Because you know what? I love the USA, but they already have all the money.
It’s not like they need more money. It’s countries like El Salvador that need to have to experience the upside.
Stephan Livera – 00:48:07:
Yeah, fantastic. So let’s also chat about your website. You’ve got So do you want to tell
us a little bit about that? And I was checking out some of your articles there as well. So tell us a little bit about this.
Greg Foss – 00:48:19:
What a great question. Thanks for bringing it up. Very proud to be a partner in that effort. Run by two young kids, one
of whom lives in Western Australia, I think, but his name is Daz Bea. His last name is spelled B-E-A.
Stephan Livera – 00:48:37:
I’ve seen him on Twitter, yeah
Greg Foss – 00:48:38:
Great kid, okay? A little bit older than that. I’m not sure how old you are, but definitely younger than me. So I call him
a kid. All right, there’s Daz and then there’s Sebastian Bunney, an expat New Zealand kid who I ski with in Whistler in
the winters. Just a great guy, huge brain, 29 years old, trying to change the world, putting together this free education
for people. So Daz and Seb are co CEOs, if you will, that are putting together this free education for people to
understand the fallacy of the fiat system. Stuff you won’t learn in school, because if you did learn it in school, you
would never deposit your money in a commercial bank. Honestly, you wouldn’t, because you’d realize the risk that
you have by depositing your money in the commercial bank. Point is free education. Young, motivated kids that are
changing the world. And here’s some examples. It’s been translated into the 18 different languages. They’re using it
as part of the curriculum in El Salvador already, okay? We’ve had talks with Madeira, we’ve had talks with Brazil
translating into Portuguese. So all of these things are so positive. It’s only been out since we announced it at the
Bitcoin Miami conference this year, and already there’s been something like I might have their number slightly wrong.
Over 3000 people have completed the course, the online course, which gives it’s an accreditation that says that,
congratulations, you went through this learning process where you actually see some of the risks in the fiat ponzi that
I like to describe it as. But they can’t have a full on Foss indoctrination. They’ll think I’m some sort of madman. Okay?
They need the kids doing it basically, how would you say it’s? More like a drip indoctrination by drip test rather than
the boss who comes at you and throws it all at you. Right? Yeah. So I’m proud to be part of that, but I’m purposely
stepping away. I want the kids to run it the way they think is most advantageous for the world. And yeah, thanks for
bringing it up. We have received really nice accolades on the content. And most importantly, I think we’re helping to

change and educate the lives, the people that need to know this. The population of El Salvador, for example. Like I
said, look, Americans generally are the most privileged population in the world. They’re not the ones that are going to
benefit the most by learning about this opportunity. It’s the lesser privileged countries. And so, yeah, these kids are
doing amazing. We’ve had people reaching out who want to help more. All I can say is it’s a great community to be
part of. We’ll come back to that. You remember when Larry LaPard had that party and you and I were at this is what
Bitcoin is all about. I never met a community that is such a giving community and willing to give their time and their
effort. When you work on Wall Street where I did. I mean, there’s not a lot of givers on Wall Street. It’s a zero sum
game. In fact, if the world is 85% taker and 15% giver, I think Wall Street is 99 taker and 1% giver. And the Bitcoin
community is actually the flip side. It’s like 85% giver and 15% taker. It’s a beautiful community to be part of. And
that’s why, look, I never would have met guys like you, Jeff Booth, Larry Lepard, all of these influencers, they aren’t
doing it because they’re doing it because they feel it’s a greater good. Are they going to make financial gain if our
outcome plays out? Yeah, but that’s not exactly why we’re doing it. Even at the Bitcoin Miami conference, how often
did you hear price being mentioned, which was very little relative to opportunities that are being generated with this
technology, right?
Stephan Livera – 00:52:59:
Greg Foss – 00:53:00:
And this is what the traditional media guys, they always paint us as being a bunch of wackos who are having fun
staying poor and all this shit. The majority of us are more like, hey, we’re trying to change the world. We want to build
a world that our children would be proud and happy to live in. For the kids. Right. We’re doing this for the kids. So
summer upping along saying that is my efforts to be involved in something that will make
the world a better place for the kids. Full stop.
Stephan Livera – 00:53:34:
Absolutely. And so there’s so much different education out there and sometimes different angles can appeal to
different people. Right, so obviously there’s podcast stuff. You’re a regular on podcast out there, Foss. Obviously,
there’s my show. There’s Sailor Academy. There’s Looking Glass Education. There’s the material we’re doing at
Swan. There’s just all this stuff out there and whoever gets to it, well, whatever material you find, or if you find some
article on Bitcoin magazine and then that sends you down the rabbit hole, these are all different pathways that people
can take. So, yeah, I think that’s probably some of the key takeaways. Sell your bonds, buy some bitcoin. Trying to
learn about bitcoin and yeah, so, listeners, go and check out and follow Greg over
@FossGregfoss on Twitter. And yeah, Greg, thank you again for joining me.
Greg Foss – 00:54:22:
Can I just thank you. And Swan as well. A huge fan of what Corey has done for the space, a fan of other people that
are part of the Swan bitcoin family, friends, Natalie Brunelle and Delight that are doing new shows under the Swan
Bitcoin banner. This is so valuable. So thanks for having me forever friends that I’ve made in this community. I know
we’re going to win. We have to win for the kids. And it makes it easier when you have a group of people that are cut
from the same ethical desires as we are. So really appreciate you having me. Daz Bea and Ozzy is going to some
bitcoin bash somewhere up in Queensland or something this weekend. So shout out to him and all the guys that are
up there from Canada. Thanks for the support and we’ll talk to you soon. Alright?
Stephan Livera – 00:55:21:
Thank you.

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