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Today’s episode is about the end of the everything boom and the wide Ripple effects of the federal reserve’s latest interest rate announcement.
For the last decade.
Plus, basically, every asset class you can name has gone to the Moon.
Stocks up, housing up crypto up.
That was the everything boom and it’s over, it was over when the stock market crashed into bear territory this week.
It was over when the housing market, you turned earlier this month and home-buying screeched to a halt.
And it is definitely definitely over.
Now that the FED today on Wednesday afternoon It’s raising interest rates by 75 basis points which is nerd speak for 0.75 percentage points.
This is the highest interest rate increase in 28 years.
Today’s guest is Kevin Rose, Kevin.
And I in this episode talk about fed policy, interest rates crypto, the everything boom.
But before we get to that interview, I want to do a few words on this historic rate announcement specifically what the Federal Reserve is doing and what the Federal Reserve is telling us it will do in the future.
Are we going to do this in a typical plain English e evidence versus interpretation breakdown.
So first, the evidence, no, editorializing that’s just what happened.
The FED raised.
Its Target, interest rate by 0.75 percentage points and sharply raised, its projection of rate increases over the next year, right?
Basically, interest rates are going up faster than we thought they would and they will continue to go up higher than we anticipated, say, six months ago, The Federal Reserve also comes out with new forecast for the economy when it raises interest rates, and it now projects lower GDP, growth and higher unemployment.
Now in the short term for you as a consumer, this means borrowing costs are going to get higher mortgage.
Interest rates are going to go up, auto loans are going to get more expensive.
So that’s all the, the what?
Now this is the interpretation.
This is me editorializing here, okay?
I think the feds freaked out.
I think the FED is freaked out by the inflation data by the stickiness of the inflation data, it is newly resolved to do whatever it can to bring down inflation.
And that means it is willing to risk a recession.
I think what the FED is telling us in a lot of subtle different ways is that we the FED, quote, we are willing to take this economy into a recession to sure the inflation bug you go to the numbers here.
The FED is projecting three straight years of unemployment rates Rising three, straight years of rising joblessness.
You go back to recent history that just doesn’t happen outside of a recession.
So in the FED says we are projecting the joblessness is Just going to go up and up and up in 2023 and for and flesh, that’s them saying, be prepared for a recession and this is all a part of the FED.
Just falling behind the eight ball here last year.
The FED projected that is preferred inflation.
Measure was going to end 2022 around 2.6 percent.
Now they say it’s going to be five point two percent five point two is two times higher than 2.6 there’s just no way around the fact that the FED has a massive with here, a massive mistake on its hands.
It is trying desperately to correct that mistake earn the trust of markets and tell people.
We are willing to risk a recession to bring down inflation whether that’s good or bad will say that for future episodes.
But that is what I think the FED is saying, right now, be prepared for a Slowdown, be prepared, maybe for a downturn Now onto the end of the everything boom I’m Derrick Thompson and this is plain English.
Kevin ruse my friend, welcome back to the podcast.
Derek what a pleasure, the theme of today’s episode, which I am taking directly from our email exchange.
Kevin is the end of the everything, boom.
So I want to start by asking, what does the everything boom mean to you?
And why do you think it’s ending?
Well, the everything boom is not my phrase, It’s either been appearing in stories for a while, but it’s basically, this period that we’ve been in this multi-year, sort of, you could call it 14-year bull market in which basically anywhere you put your money in the market.
You were going to make money.
We had stocks that have been just like, you know, growing and growing and growing.
We had real estate market was growing growing growing.
All of these, you know, companies were Awash in cash.
We just had this this this cycle where money was essentially free because of the decisions of the Federal Reserve which implemented what we tend to call a zero interest rate policy or a zip, one of my favorite blog posts of the past few years was by my friend Ron Jon Roy who Has a theory called zirp explains the world and it’s basically this sort of theory which I mostly, but don’t totally agree with that.
Everything weird in our economy, for the past 10 years has been related in some pretty direct way to the availability of very very low interest rate money money that you know, was not free in technical terms.
Usually there’s some nominal interest rate, but it’s definitely low.
Oh, and that that expects the availability of that money, just kind of distorts the entire economy because distorts or at least affects the entire economy.
I mean, I only want to, you know, amend the term distort because you know, a lot of things that in the last 14 years, there were happening, we’re weird.
But a lot of things are also wonderful.
You know, there were some wonderful things that were happening.
In terms of, you know, you have slow labor market recovery that was happening.
You had people spending money on, not only durable items, but also Services.
It was easy to get money.
If you were starting a company and I’m very attracted to this idea, I love Universal theories of everything.
And every attracted to this idea that if you sort of like peeked behind the curtain of every single weird phenomenon, whether it was cheap Uber prices, or a slurry of crypto companies, or, you know, just an easy, it’s easy to get a car loan, you peek behind the curtain and, oh, there it is.
That’s why this is happening, is because interest rates are incredibly low, and not only were the interest rates low, but also the Federal Reserve, and a bunch of other central banks were injecting liquidity into the system.
Through quantitative easing, they would buy assets from Banks, they’d give the bank’s money.
Suddenly, the banks were like, wow, got all this cash.
What am I going to do?
I’m going to lend it now would also pull down interest rates, make it easier for people to buy houses so I agree.
This is It’s a fascinating phenomenon that basically all the weirdness and the wonderfulness of the last few years.
Has you can trace back to this zero interest rate policy.
You can trace it back to zirp.
Yeah and it makes sense in like a classical economics perspective.
If you can get, you know, better yield more.
If you can get more interest in investing, in riskier things, as you have been able to do for the past 10 years, like your savings at your bank was maybe going to pay you point one percent interest on a savings account with them which is basically a negative interest rate.
So investors went looking for riskier stuff, not just individuals like companies hedge funds, private Equity firms, Angel Investors, Venture capitalists, you know SoftBank like they all just went looking for more and more yield and that resulted in these kind of risky, propositions becoming very viable.
It resulted in, you know, dog-walking companies, raising billions of dollars from from Venture capitalists it resulted in cheap, Uber prices it resulted in crypto because we had all the sudden this asset class that seem to be doing better for people in.
In a return sense than just stashing their money away in a savings account somewhere.
This is a great summary of these derp explains the world thesis.
It’s basically that zirp makes the crazy rational.
It is crazy to think that a dog-walking company should be worth, you know, five billion dollars.
It is crazy to think that a real estate company.
Like we work should be worth a hundred billion dollars.
But as long as you are holding fast, the idea that interest rates are going to be 0, basically forever and money is going to be basically free forever.
You’re Looking for these yields, you’re looking to build the next Amazon of the future.
And so you have all these Venture capitalists that are throwing money at these companies willing to subsidize, you know, the next Amazon actually want to.
I want to take it a half, step back and read this article that economics writer Neil Irwin, your former colleague, wrote The New York Times because quote around the world nearly every asset class is expensive, by historical standards, this is basically your list.
Kevin stocks and bonds emerging markets, in advanced economies, urban office, towers and Iowa farm land.
You name it It is trading at prices that are high by historical, standards, end quote, when didn’t heal, right?
This 2020, 2017.
Know you wrote this in July, July, 7, 2014, eight years ago, he was diagnosed in the everything boom, in the middle of the Obama Administration.
So the Jenga tower that is toppling right now has been under construction for a long, long time.
And you gave me the perfect segue, which is that this you have this sneaky side effect of the everything boom, which is that when Stocks are trading at prices that are historically High.
It means relatively low returns for investors which means they want to put their money into riskier bets.
And when they put their money into companies like uber and Lyft and doordash, and Postmates and all these Uber 4X consumer tech companies that were floating around the world in the late, 2010s, you have the beginning of something that you and I have called the millennial consumer, subsidy, or the millennial lifestyle.
Kevin, how would you define this Millennial lifestyle, subsidy that emerged from the swamp of zirp.
Well, I’m glad we’re settling the debate over nomenclature today because you and I have both.
I think we, I think I might have stolen it from you originally, and then well.
So this is actually, this is a this is a tiny Arcane internet debate right now.
But what happened was in 2019, you and I were tweeting back and forth about this phenomenon that you are about to explain the phenomenon of venture capitalists essentially subsidizing.
Sizing the life of Millennials.
And then, I think you said it’s, it’s as if they’re subsidizing Millennial Lifestyles, then I wrote an article for the Atlantic about it, and then you wrote an article for the New York, Times about it, and then I wrote an article for the Atlantic about it.
And so now we are coming together and sharing a conversation live about the subject that I believe we’ve only tweeted about.
So yet, explain what this is the millennial.
Let’s just call it lifestyle subsidy.
Yes, it’s a cheeky way of referring to.
The way that a certain type of startup has attempted to grow in the past 10 or 15 years and this is best exemplified by things like uber but there are a million examples.
I’m sure we can all name them.
They they sort of at their Peak ran the gamut from you know parking apps to you know mobile restaurants to just every part of the economy.
Had some very Well, funded vc-backed startup trying to expand through artificially low pricing.
So I’ll explain what that means.
So, basically, the Playbook of business over time is that you try to do something provide some good or service and charge more for it than it costs you to produce, right?
Like that is a pretty basic, you know, if you were going to start a sandwich shop and are your ingredients cost, five dollars, you’re probably going to sell the sandwich for ten dollars or eight dollars.
A number higher than five for sure.
And what happened is that a bunch of investors decided that the a more promising way to grow a business at scale was to effectively sell below.
Cost was to take your Uber ride, your lunch, your dog walking experience and through promo codes and discounts.
And introductory offers to essentially sell that $5 sandwich for like $4 or three dollars.
And the idea was that in all of these companies was that you, you do this for a while.
You use Venture funding to expand aggressively, you gain as much market share as possible, you elbow all your competitors out of the market.
And then once you have basically established a monopoly through these artificially low prices, then you get pricing power then you can jack up your rates.
Consumers don’t have any other choices.
You are the entire market for dog walking or Ubers or, you know, bologna sandwiches.
And then you have the best of both worlds.
You have no competitors.
You’re able to set your own prices and you win.
And this model has been not just like a fringe model in Silicon Valley.
This has been like kind of the main way that vc-backed startups in consumer Market.
Places have tried to expand in the past 10 years and It has been phenomenally unsuccessful for the investors and the companies, but it has been kind of nice to be like an urban Millennial, who like wants to get below, cost goods and services.
It basically sort of Finance, I think, as I put it in my piece, it allowed us to live like, Balenciaga lifestyles on a Banana Republic budget.
We were all getting chauffeured around and free lunches, and, and now that’s over.
Although I should say, there is one place where the millennial lifestyle subsidy still exists.
The only thing I want to edit there is that you mentioned that it’s not necessarily been a good deal for investors.
It certainly hasn’t been a good deal for investors, especially those that came on late in the life cycle of these companies.
But if you’re like Jason calacanis and you’re like an angel investor in Uber and Lyft, you know, you got in on these companies from there were like five million dollars like they’re not worth five million dollars.
Now they’re worth billions and billions and billions of dollars so that equity That you have is now worth quite a lot of money.
So right now, the Millennials subset lifestyle subsidies seems to be going away, you look at your Lyft and Uber prices.
They are way higher than they used to be.
You look at your door Dash prices, your post made prices much higher than they used to be.
And this is because as interest rates are rising, and these companies feel like they have to husband their cash.
They can’t burn money like they used to, which means they have to be profitable on a unit economic basis on a ride per ride basis and that That prices are going up across the board for these Millennial lifestyle subsidy companies.
You said, there’s an exception to this rule, Kevin, what is the exception to this rule?
Well, I’m a little hesitant to give it away because it’s like the one Joy left in my in my daily spending.
But in the in the Bay Area at least there are these like fast delivery apps.
We’ve seen these these like 15-minute like sort of get you know get your I don’t know your diet coke and Rose delivered in 15 minutes.
I don’t think this is going to last very long but they’re a bunch of startups that raise billions of dollars and are doing essentially, you know, Uber for groceries.
And and in the Bay Area, the one, the one everyone uses out here is called popcorn and it’s just phenomenally unprofitable.
Like I don’t have any access to their internal corporate financials but like, you know the other day they were running this like crazy promotion it was like fifty percent off your first.
And so everyone I knew was just like texting each other, like go get like, half-price groceries from popcorn and and so you know, I did I like filled up my fridge with like you know, groceries that were essentially half price and like to be clear like they’re not getting a special deal on those groceries.
They are just purely like Lou.
It’s like the Venture capitalists are just like stapling bills to every order, like, handing them to you.
And so that’s that’s the one place in the economy.
Think that it’s still experiencing a little bit of subsidy like that.
But yeah, the Glory Days of artificially cheap Ubers and and other other, you know, sort of uber 4X startups appears to be over.
I’m glad to know that there’s like, a little kernel of nostalgia that’s holding out in San Francisco, at least that you are still getting.
It really, really was the old with VC.
The group plastic like are like, filling up with referral codes and people are like, they’re just running a new promos do it.
We’ve all gotten the other thing that I think the millennial lifestyle subsidy created was like extreme hyper Awareness on the part of consumers.
Like, when you are getting a deal that is objectively too good to be true.
I think I’m most recognized this a couple summers ago when like everyone.
I know started getting really into movie pass.
This was the summer before movie Past collapsed and it was like they were offering this like insane deal which like was all The movies, you can watch in a theater for like $10 a month and like if you saw one movie, it was worth it.
And if you saw more than one movie movie has, was essentially like giving you free tickets to the movies while paying for themselves.
So it was like a deal that everyone at the time was like this makes no sense.
I’m definitely going to take advantage of this and like go see every movie I’ve ever wanted to see.
So that was, that was a moment in time.
That, I don’t think we’ll get back for for quite a while.
Movie Past, just seemed like absolute magic.
I mean, it really did feel like for Brief period of time.
A company in a capitalist system had just like forgotten how to do a capitalism.
And was just like, we’re just gonna basically be a charity for people who love sitting in movie theaters.
We’re just going to give you money in exchange for doing that.
What you were always going to do anyway which is just see the movies you want to see.
Like it really was like an amazing beautiful psyop and when it ended it was, it was tragic.
But at the same time it made me feel like a little bit sane like, while movie Past was taking In off, I was like, I’m sorry, of course, I would love everyone who loves movie is to be able to be paid to watch movies, but this does is this just doesn’t make any sense.
And when the company finally went under, I was like, this sucks on the one hand, but on the other hand, my sense that reality has like an underlying sense to it has been restored and to a certain extent that’s kind of what coming out of the millennial lifestyle subsidy has been like, it’s like all these little inklings that you felt for the last few years.
Like that price can’t be right, this price can’t be. 8, there’s no way this company can actually exist in the long term.
Will it turns out that if you raise interest rates by literally 25 basis points the company poof disappears because it cannot survive the subtlest rate increase.
So, this takes us.
It’s like, yeah, it’s like discovering the gravity still exists or something.
If there’s something reassuring about it.
And I know we’re trying to move on, but I want to make one more point about the millennial lifestyle subsidy, which is that we’re sort of being tongue-in-cheek about how it’s been just like this amazing thing for consumers.
And And, you know, for us yuppies who want cheap Ubers, there is a cost to all of this.
It’s not totally free.
A lot of these startups, relied on a, the availability of cheap labor.
That was, you know, drivers were getting squeezed delivery.
Folks were getting squeezed.
The gains of the millenia lifestyle.
Subsidy did not necessarily flow to the people who actually provided the services, and it also was Ad for small and local businesses who didn’t have access to billions of dollars in cheap capital and had to actually sell sandwiches from more than they cost to make.
It’s really, really hard to compete in a market where SoftBank are the Saudi Sovereign wealth fund or someone else is just showing up and showering cash on some startup that is doing what you do except they don’t have to make money doing it.
So there has been a cost.
Just to the Millennials lifestyle subsidy era.
I don’t think it’s a totally benevolent scheme, but but I do think that it has given people a false sense of what kind of Lifestyle they can afford.
I’m so glad you said that just to connect a few Dots here because I think the story you’re pointing to is so interesting and so important, when we came out of the Great Recession, the housing market was in shambles.
It was disgusting and aggregate demand consumer spending was very So the FED comes in and says we’re going to keep interest rates, really low.
We’re going to have aggressive quantitative easing because we want to stimulate the housing market.
We want to get consumer spending back on track and this was really good for Wall Street prices.
It was really good for raising asset prices but low interest rates reflected something broken on Main Street.
It reflected weak labor markets.
Sort, a lot of people were driving an Uber or delivering Thai food because they didn’t have competing job offers that would clearly pay more per week.
So it’s a story here in the biggest picture about how the Great Recession, created the necessary economic conditions for companies like uber to thrive.
And that means that the millennial consumer subsidy that we’re like, you know, kind of joking about here is in a kind of dark way and expression of week aggregate demand.
Like, watch The Dominoes here, weak, labor markets, meant, lots of low wage workers, contributed to low interest rates and that meant plentiful cheap.
But all of this has changed, all of.
It has changed job openings.
A hit record.
Highs quits of hit record, highs nominal wages are rising, fast is for low-income workers.
The labor market has recovered really nicely from a pandemic, flash fees recession, and this is coincided with inflation.
So now interest rates are going up.
And now, all this is showing up in the high, Uber prices that you’re looking at on your phone.
Like again, in the biggest picture, I won’t belabor this point anymore, but basically, you can tell an entire history of 21st century.
Mix through the price of an Uber ride.
Now another category it’s got walloped here by Rising interest rates is crypto Bitcoins down 70% large crypto companies like coinbase or laying off 1/5 1/3 of their Workforce.
Kevin let’s start with the big picture here in crypto land and then we’ll descend through the clouds to see the Carnage up.
Close, how would you summarize the disaster Zone in crypto right now?
Well I think it’s related to the end of the everything boom.
This is the end of a historic bulmer.
It period like in every asset class including crypto and in an environment where, you know, stocks are going down, you know, real estates going down, people are losing their jobs.
People tend to try to get rid of their riskiest assets first and for a lot of people who invest in crypto, like crypto is the riskiest thing that they own.
And so that’s going to be the thing that they get rid of first and crypto has also historically.
Had a very sort of basically a four-year boom-and-bust cycle like every four years crypto, crashes, it happened in 2014.
It happened in 2018 and now it’s happening in 2022, like clockwork.
And so, what’s happening in the crypto Market is, essentially what’s happening in the stock market, you know, crypto is not the only thing that’s down 70% from its all-time highs.
Netflix is to, for example and so you Investors who are pulling back from crypto.
You also have these sort of spectacular blow-ups and failures that have happened in the crypto Market in the past, few months, that I think are making people skittish when it comes to holding any crypto assets at all.
One interesting distinction between, let’s say Bitcoin and Netflix, because you’re absolutely right, they both fall in by basically the exact same percentage amount is that no one ever talks about.
Netflix, is being an inflation Hedge.
Quite the opposite.
It was very clear that Netflix was a bet on growth.
This was a low profit company that was growing subscribers quickly and the faith that Netflix is valuation, should be as high as it was in 2019 and 2020.
Was in part a bet on the future of cheap money, that would allow Netflix to continue to spend 20 billion dollars every single year.
While turning a small profit, you look at Bitcoin, it’s the opposite.
A lot of people were pointing at Bitcoin is digital gold digital gold.
At least here representing the possibility of it being an Hedge will now inflation.
At least headline inflation is 8.6% core.
Inflation is really high and Bitcoin is getting its teeth knocked out.
So it’s an interesting that when you look at how people actually treated Bitcoin, they talked about it like it was digital gold, they talked about it like a potential inflation hedge but they treated it like essentially a tech stock on steroids when you talk to people in crypto right now who are working on crypto projects, big or small.
What are they saying are they?
Is there a sense of gallows humor?
They like we’re completely screwed.
This is the end of the party.
Are they optimistic?
They’ll be a kind of a trampoline effect here where it’s kind of like, the.com crash where a lot of companies like Amazon lose, almost all of their valuation, but then they bounce back the next 10 years and become Giants.
That rule the world.
What’s the vibe right now in crypto land?
Yeah, there’s a lot of gallows humor.
There are a lot of memes about, you know, going to work at McDonald’s.
Now that my Crypt Startup has tanked, there’s a lot of really like depressing, like, the cryptocurrency subreddits that I would have been browsing over the past week, it’s Bleak out there.
People are losing their shirts and there’s just no two ways about it.
And the way that people who, you know, crypto has like, I would say, like, a culture of sort of toxic positivity and and this is, you know, functions in some ways like a, like a religion.
And so you have People who are saying this is good for crypto that all the prices are falling because it’s clearing out the Casual tourists and the speculators and the people who are going to be left are the builders and like, you know, high prices, attract a certain kind of person to invest and work in the crypto industry.
And those kind of people aren’t in it for the right reasons, the joke is that like everyone who’s going to be left is like in it for the tech.
And so now they say will have this period.
We’re like prices have Crashed.
And there will still be startups building things and infrastructure and they’ll say, you know, all these, you know, big crypto companies like a lot of them started during the last crypto winter and so they are sort of trying to I guess put a happy face on.
What is a pretty cataclysmic event for them?
I mean if you catch them in their less guarded less sort of positive spinny moments, they’ll say like yeah this is this is horrible, we’re all laying off people.
We all feel like the you know we’re waiting for the bottom.
I want to ask about a specific crypto project maybe see some of the disaster at a close-up level of all the specific examples that you can think of Bitcoin.
The stable coins that have collapsed.
Some of the individual companies like coinbase or Celsius that have had a really, really hard time in the last few months, what to use.
Like the most interesting Icarus story.
In this whole space that you think the story of this company, really goes a long way to explaining what’s happening in crypto and what the spillover effects might be.
Well, I’ve been really fascinated this week by, what’s happening to Celsius.
Sophia Celsius is yes, Celsius is sort of like a crypto quasi Bank.
Like, it’s not a bank, it’s not regulated like a bank but they are they take deposits.
Assets and lend and give people yield on their assets.
It’s basically like a little crypto quasi bank and Celsius is not little.
Actually it’s at its peak, it had something like, you know, almost two million users like twenty five billion dollars in assets.
Like it’s a big big firm in the crypto space, and it was one of the kind of moral legit seeming ones.
Like, it was raising money from all these like the this Canadian pension fund like gay.
Bunch of money in a recent fundraising round.
And the way that Celsius worked was basically that they would, they would you would deposit your crypto with them and they would give you some interest rate back on that crypto, which was much much higher than anything that you would get from your regular old bank.
So they were paying, you know, anywhere between like five and eighteen percent on on crypto do Deposits depending on the asset and what this is just money, that’s held in the bank.
Like I just, I have some crypto coins.
I deposit them in Celsius.
It’s basically in like, in like a checking account, and they’re giving me five percent interest on that checking account.
So, they’re turning around and going out and, and looking for, basically, they are taking those deposits and like a bank, they’re going out and turning around and lending them and, you know, using them in other ways.
And their model was basically, we pay You say 5% on your Bitcoin deposits and then anything we can earn with your Bitcoin above and beyond that 5% we get to keep and so they were going out and and basically trying to put people’s deposits in things that would make more money than they were paying out an interest.
And one of the ways that they did, this was sort of interesting and this was something that they did called staking.
And staking in crypto is basically when you promised to A cup, a certain amount of crypto for a period of time in exchange for interest or certain other rewards and they did this with with millions and millions of dollars and it and it turned out to be kind of one of the things that is now putting them in a lot of trouble, you know, listen to you.
Now, I’m realizing that crypto is also a deep story about the legacy of the Great Recession, like maybe of listeners come away from this.
Sewed with one lesson it is that when it comes to the financial crisis of 2008, the past isn’t over and it’s not even past the part of the appeal of crypto.
I think has always been that the 2008 financial crisis has exposed the banking system as broken and often quite corrupt like Banks were supposed to be responsible but instead they were incredibly Reckless and they help to blow up the world and what crypto promises or at least what these specific decentralized Finance promises to a lot of people.
Is that will solve the banking problems that were laid bare by the financial crisis.
But this is a point that Matt Levine and Joe wiesenthal a Bloomberg, make all the time, the way the crypto solves these problems often makes the problems much much much, much much worse.
They think about what Celsius is promising here Celsius is basically like hey you know how traditional branch banks are broken pieces of shit that take your money off her unrealistic promises but then make a bunch of Reckless trade.
To lose your money.
Well what we’re gonna do is take your money off.
Run realistic promises make a bunch of Reckless trades and then lose your money.
And oh, by the way, the money won’t be insured by the FDIC her a Innovation, you lost your deposit.
And I’m laughing here, but the people are losing incredible, amounts of money and it’s awful, it’s really bad.
And I’m not going to accuse Celsius of fraud because I’m not a lawyer and I don’t want to get sued for defamation, but I will report that other people are using the f word very liberally.
Right now about crypto there are lawsuits being brought against companies and celebrity endorsers.
The Kim Kardashian Floyd Mayweather and the claimants are basically saying crypto scammed us.
We trusted them, they lost our money.
How serious do you think these crypto lawsuits are right now?
I think we certainly will see a Spate of lawsuits.
Like that’s pretty clear to me whether they’ll succeed.
I’m not so sure.
I think the key issue is like, what representations were these crypto Making like were they saying, we can guarantee you eight percent yield or were they saying?
You know, here’s a, here’s an idea for an investment that we have.
You should do it.
But like, by the way, you could lose all your money, I think the, the sort of relevant issue in Securities, Law will be.
Did they where they promising things?
That they, that they knew to be false that they didn’t deliver on.
And I think that’s the question that I think there are certainly Only going to be cases where that happened and I think that it’s also sort of relevant.
Like, I don’t think any, I don’t think Matt Damon is likely to go to jail for appearing in a Super Bowl.
And then, but I do think that, you know, a lot of celebrities promoted sort of projects that they didn’t fully understand that they were just cashing the check for.
And I think a lot of them You know, we’re sort of Pawns in this larger sort of effort to make crypto consumer-friendly and make it appear risk, lists and non-threatening.
And what was, you know, what was really happening under the hood.
As we now know that a lot of these like, you know, these programs, these companies that were promising, you know, safe returns were actually investing in all kinds of risky stuff under the hood and so I think yeah the people who have been involved in you know, pumping And promoting the space.
Like I think they they should be doing some serious self-reflection last question for you about the crypto apocalypse.
Why should normies care?
If you’re someone, who never got into the crypto hype, you always thought this space was kind of stupid.
You’re feeling really, really satisfied about the predictions that you made about crypto right now that it’s just read, read, read across this entire asset class.
Why should those people care about the story starting right now?
The early, the people who are early in crypto, the people who are sort of the big winners in crypto, a lot of them have cashed out or they’ve, they’ve moved money out of the crypto market and they’re just rich people now.
Like they’re not going to be less.
I mean, they’ll be less rich, but they won’t, you know.
So there will still be crypto billionaires and those crypto billionaires will still have lots of money and we’ll have lots of ideas about how the world should work.
And they are going to plow that money into elections.
They are going to apply that money and to think tanks and nonprofits.
I think that you should understand that, they’re the people who are deep into crypto are going to stay deep into it and they are they are committed to making this happen and they have some of them quite a lot of money and quite a lot of influence you’ve made this point before in the podcast.
I think it’s a great point to end with.
I am uncertain about the future of crypto as a class of Innovations.
I am much more certain about crypto as a means by which lots of extremely rich.
People have been made extremely rich and it is important.
I think to continue to follow any space whose ideology and philosophy.
You have to stay on top of it.
In order to understand the future of where rich people are going to spend their money.
They are going to have a huge impact, I think, on the future Politics on the future.
Business on future of names of sports stadiums on the future of Regulation.
And I think understanding what they want from the world is really really important.
Kevin ruse, thank you very much.
My friend as always and we will have you back in the pot very soon.
Always a pleasure, thank you very much for listening.
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