"Most People Have No Idea What Is Coming" — Michael Saylor’s Last WARNING & Bitcoin Crash Reaction
But i think that if you have a time frame of four to ten years, i think theres a different question, which is: why are the interest rates going up and uh and what is the macroeconomic environment? And i would say i would say you probably shouldnt even buy bitcoin if youre uh, if your time horizon is less than four years, because youre a trader and if youre a trader youre, probably not going to care about anything. I have to say youre. Just looking at on whether its correlated or uncorrelated and throwing lots of money around without thinking about it, i think, if youre, really a deep thinker or a macroeconomic investor, the bigger issue is, we have monetary inflation, the money supply or the currency supply is expanding. Crypto markets are getting smashed all across the border, with bitcoin hitting new lows falling into the mid 20. Thousands and ethereum plus many other old coins down 35 or more with investors everywhere, beginning to panic. One investor feeling, perhaps the most pain of all – is a notorious bitcoin bull, michael saylor, who is now down billions of dollars on his massive bitcoin position in his latest interview, sailor reacts to the market collapse and explains what his strategy is moving forward, make sure to Stick around to the end of the video, where i will unpack the main driving force behind this collapsing crypto markets as well as sailor, explaining the only scenario he would be forced to sell in also only a small percentage of my viewers are actually subscribed.
If you enjoy finance content, consider subscribing or liking the video its free and can always change your mind. I think the news today in turkey was 70 percent inflation in turkish lira. We probably got something in the range of 15 to 20 currency inflation in the us dollar in the euro. Weve got 40 percent inflation in like an argentine peso or more. So. What you have is an inflationary environment. We know the cpi, which is which is a which is a uh manipulated measure of inflation, its actually the lowest inflation that one could reasonably measure. I think uh its like seven and a half percent six and a half seven eight percent in the u.s and europe – and these are 40 year highs. So the cpi is eight percent, but that but the actual asset inflation rate is double to triple that. So the reason that interest rates are going up is because theres pressure on the central banks to get inflation under control and and their one tool to do. It is raise interest rates. But theyre not going to stop the inflation, because the inflation is caused by excessive money, printing budget deficits and the wars and political policies, domestic and foreign policies. And these policies continue. So, given the fact that we have uh an expansive currency environment and what you can see is the price of food and energy and scarce resources keeps going up. The question really is: if i have some money, what should i invest in and the answer is you dont want a whole currency because the currency is collapsing in value.
You know the us dollars lost 99.7 of its value. Over 90 years i mean and thats the winner. The losers are are losing 99.9 of their value over 100 years, so the currencies are all collapsing. So i i dont want to hold the currency. I dont want to hold bonds because bonds are currency derivatives. You know you know im going to basically youre going to give me a million dollars and im going to give you interest on the million dollars at 3 for 30 years and ill give you the million dollars back and in 30 years the dollars will buy 10 Percent of what they buy right now so thats even worse, you dont want to hold a value stock that generates valued on cash flows, because if the stock is valued on cash flows without growth, it looks just like a bond right. It might be slightly better than a bond, but if you, if the currency is losing 10 of its value a year and you cant raise your cash flows or raise your prices, you have to increase your cash flows 10 a year to offset a 10 percent currency Collapse right so when the currency is collapsing at 70 a year like turkey, the company you own has to raise its prices in turkish lira 70 or sorry. You have to you have to raise your your prices by an amount such that your cash flows would increase by 70, so that you hold parity in value.
So equities are currency derivatives, partial currency derivatives bonds are almost complete currency derivatives. Commercial real estate is a partial currency derivative. The currency is currency, derivative right, its a full currency derivative. So what do i own and the answer is i want to own scarce property, scarce desirable property? What is it that you own, that an affluent intelligent person will want to buy from you in a decade thats the question you have to ask yourself so, if youre owning things that will last a decade right, i mean, if you buy a car thats not going To last a decade, its not really an asset, its depreciating but maybe youre on a sports team or a picasso painting i dont know well, will people want to buy gold from you in a decade? Well, they want to own own uh. The building that you own in a decade right: well, they want to own the intellectual property rights. Well, it all depends. Uh bitcoin is scarce, desirable asset because it represents digital property. If i own a million dollars worth of buildings in moscow in a decade, whos going to want to buy them from me, presumably affluent intelligent russians, but will an affluent intelligent, uh british person or chinese business person or american want to own that asset. The same is true: you own a million dollars worth of buildings in nigeria, whos going to want to buy them in 10 years, whos going to whos going to want to buy what you own.
If you own a million dollars worth of argentine pesos for the next 10 years, theyre going gon na be worth ten thousand dollars right. So youre not going to want to own that, but owning a million dollars worth of buildings and bonus errors is only going to appeal to someone that wants to live and work or use that real estate in bonus errors and youre going to pay the tax and The maintenance cost in between now and then so interest rates are going up because theres macroeconomic headwinds blowing the real problem is inflation. If inflation running twenty percent and the interest rates uh go to two percent theyre not going to stop the problem of currency collapse, theyre just going to create a near term turbulence and if youre a trader you may get caught in that turbulence. But ultimately, if you are an investor and youre concerned about preserving your wealth to give to your children or your grandchildren, then whenever youre in an inflationary environment, your your strategy is simple. I have to convert my weak currency into a strong currency, ideally convert my weak property into strong property and that strong property i want to move out of the country. I want to move it out of the jurisdiction of a politician that may confiscate it or tax it away right and that thats, why you know converting a million pesos, a million dollars of pesos into a million dollars of dollars and bonus errors wont help you because Eventually, the politicians will freeze your bank accounts, convert it back into pesos and devalue it twenty to one that wont, help right, converting a million dollars of pesos and a million dollars of dollars and then uh buying a million dollars worth of big tech stocks in the Us may be a better idea if the big tech stocks are monopolies theyll be able to raise their prices hold their cash flows in whole value.
Monopolies will be fine right. What is a monopoly, its scarce desirable property, if i offered you a monopoly with unfettered ability to change the price of something like oxygen, sell oxygen to new york city? You know youre, probably going to do okay right. The problem with with even monopolies, though, is over time. Monopolies get regulated right like like. In theory, the richest person ought to be the person that sells water in new york city, but theyre, not the richest person, because the new yorkers get together and they decide that they dont want the water company to raise the price of water to a hundred dollars. A gallon even though youd pay it if youre thirsty. So what what can i buy thats going to hold its value over time? That represents scarce desirable property, not just scarce, because theres, a lot of things that are scarce, that arent desirable right, scarce, desirable property, and i think one of the obvious things is digital property right. If i created a city in cyberspace with 21 million blocks – and nobody could make any more and it was going to last for a thousand years – and it was the dominant city and everyone wanted to live there, would you want to own one of those blocks? I think the answer is yeah and that city is called bitcoin lets say you have a billion dollars on your treasury as a company or a country. If you store that money in u.
s sovereign debt and youre holding a billion dollars of t bills and if the u.s currency is inflating at 18 a year, that means every four years you lose half your money. Okay, so another way to say it is its costing. You 180 million dollars a year or its costing your citizens, 180 million dollars a year to use that as your reserve asset and it will cost them 500 million in four years and it will cost them 750 million in the 10 year or in the eight years. So its very expensive to use a depreciating currency as a reserve asset right, its so expensive that in essence it impoverishes you. For example, my company had 500 million dollars of cash and we were generating 100 million dollars in cash flow a year. Well, when the inflation rate gets to 15 percent, then youre losing 75 million dollars in and wealth on your treasury in the same year that youre generating 100 million in cash flow. If you have to pay tax on that cash flow, you have 75 million after tax and you have a 75 million dollar loss. So that means that a profitable company working as hard as they can doing a hundred thousand things right every year makes no progress. When the inflation rate doubles to thirty percent or twenty five percent youre actually getting poorer working as hard as you can so another way to say this is the road to serfdom, is working exponentially harder for a currency growing exponentially weaker.
You want to take the extreme. Imagine yourself working as hard as you can in argentina, while the currency is losing 40 percent of its value a year. What you can see is its utterly hopeless and impossible. No matter how hard you work, you have to work 40 percent harder per year to stay. The same right impossible right, so the reason that a country or a company would want to switch to a bitcoin standard from the us dollar standard for your treasury asset is because, instead of losing 20 billion dollars a year, they would be accreting or making 20 billion Dollars a year because they picked the right asset to store their economic wealth in you. Take a country like china, if chinas holding a trillion dollars worth of u.s debt and the u.s inflates the money supply by 20, the chinese people pay 200 billion dollars. For that privilege, in fact, theyre probably holding 3x, that much debt, so the us is in essence exporting inflation that cost the chinese 600 billion dollars a year every year. Okay, its its a pretty profound idea. Now you could call it security, like maybe the uss greatest export. Is security. People pay us hundreds of billions of dollars a year for the privilege of using our currency as a reserve asset and using our banking system. But you know if youre a country and youre and your citizens are working as hard as they can, like. Maybe im.
Basically shipping oil. If i ship a hundred billion dollars of oil – and i export it every year, but i lose a hundred billion dollars by holding the us debt im in essence selling my oil for nothing impoverishing myself. And so why would you switch well? Because if i told you everything you do, the rest of your life is going to be worth nothing or you could switch your savings technology and everything you did in the rest of your life would be worth a lot and your children could live a comfortable life Which of the two strategies? Would you choose so theyre sailor explaining why, in a situation like this panicking is the worst thing you can do with adopting a long term multi year, investment time horizon being the best strategy bitcoin, along with the crypto market, has always recovered to new highs? Do you think this time is any different now to show what was one of the main driving factors behind the collapse in price of bitcoin? Is some data out from bitcoin analyst will clement a huge downward pressure on the bitcoin price? Was the collapse of the terror algorithmic stablecoin, which had over 80 000 bitcoin used in backing? What we witnessed over the last three days was essentially a modern day. Crypto bank run with terror having to sell out of their entire bitcoin stack to attempt to maintain the stablecoin peg. This, however, led to a downward death spiral with terra, eventually selling out of their entire billion bitcoin position in an attempt to regain the peg, which they were unable to do.
The only good news out of this is that lisa added bitcoin to sell so a huge downward pressure on the btc price has now ended. In other news, michael saylor outlined on twitter that his company microstrategy needs to maintain 401 million dollars for collateral on their loans. For sailor to be forced to sell out of his position, bitcoin would have to fall below 3 562 and the company would have to be unable to post collateral in any other form. The likelihood of this is extremely unlikely. However, i do admire the complete transparency of sailor and his companys balance sheet.