The US economy at a crossroads, with Vinny Lingham

Transcript

GM good morning welcome to the milroad show The Daily crypto show where we deliver crypto news as effortlessly as hitting remind me later on software updates every single time I'm your host Jay Hamilton and today we are joined by Vinnie Lingham co-founder and chairman at room. also a co-founder and chairman of Civic Technologies a tokenized identity solution for verifiable web and a seed investor in salon filecoin render and some others Vinnie brings to the table a wealth of experience in both business building and investing and so today we're going to tap into Vinnie's mind to get his insights on where we're at in

this cycle the current macro environment and how he's allocating capital in these market conditions before we jump in we need to take a minute to check out our sponsor over at uphold meet uphold a trading platform that's changing the way you think about money imagine this earn earning up to 4.9% apy on your US Dollars no catches no lockup periods and no fees and yes it's FDIC insured up to $2.5 million they offer access to over 300 digital assets which you can trade store and exchange with confidence knowing uphold operates with a 100% reserve and a transparent model create

your account fund it with a few Taps and you're ready to go click the link in the description and join uphold today Vinnie welcome to the milk Road Show hey Jay uh good to be you thanks for having me yeah very excited to have you Vinnie uh let's just start for those of our audience who don't know you can you just give a brief background and tell us a little bit about your investing Journey sure um I always tell people I'm I'm an onrop year first I've been one for my whole pretty much my whole life uh but at the very least my adult life I've been starting companies I mean I guess since I was like 18 19 uh but you know in Earnest in the tech world serious companies since

2003 so it's about you know 21 years of being entrepreneur and running my own businesses um so that's the lens that I have is just as a Founder someone who builds companies right and uh and and starts them um I think I'm pretty good at that phase of it um I never like companies when it gets too big and I been acquired in previous companies by bigger companies and I don't really like working in those organizations they're just too big and slow and so I I was I just being sort of an early stage uh founder CEO um I will say that you know I took to investing at some point in my journey because I kind of saw other people doing the same thing I was like this is cool I can't be in two places at

the same time but my Capital can so if I can back a Founder um to do cool things and I I do it so for the past I'd say you know 15 years plus I've been probably close to yeah probably close to 18 years I've been investing in in companies um and so I've I've probably invested in two 300 companies at this point um and and and projects and whatever else uh and you know when you have that big of a surface area of attack you're going to have a couple of Miss shots few of those but you know equally when you hit you hit big so um I've been lucky in that regard so that's kind of my my that's like a little bit about me is this someone who's been a a

Founder across multiple Industries and investor across hundred companies and you're and you're also an active quitter uh Twitter contributor uh and a real contrarian on X it's great to you you're an enjoyable person to follow because you always come out with the hot takes you're not afraid to say what's on your mind which is such a good thing in this space let's just chat about a tweet since bringing up Twitter you wrote Maybe was two weeks ago you said I think I know how Michael bur felt back in 2006 now those who don't remember Michael bur Michael bur is the main character that The Big Short the movie was based on Christian Bale paid him in that movie uh he's an investor and hedge fund manager

who made the biggest bet and made it right and made it very rich uh why did you say that a few weeks ago I mean I I lost some money bidding on puts uh you know on just just Market puts S&P Etc and I was like you know what this is going to come down this this this run is not going to go on forever and eventually I'm going to be right but if I keep betting on the puts I'm going to lose more money than I can probably make when I'm right so at some point you go just say you know what I'm done uh B on the downside good luck fellas you know I'll see you on the other side and just kind of go you know sit back and and and see how things play out I I just see so much risk in the

market right now I think theet Market is La Fair you know there there's no like Buffett's selling everything and going to cash do you think we're smarter than Buffett by staying invest in the market so I you know and and and so I I disagree with the equity Market I think the equity Market is crazy I think it's everything's overvalued uh and I think there's two paths forward for the US economy right now um we can accept a a high level of inflation or we can accept a recession you cannot we're not going to have growth and low inflation again it's just not going to happen and we're not going to to fix the inflation problem without a cool down or slow down so um you know let's see how it plays out so with that you know in mind I I also been posting

tweets about the fact that I've gone into property gold silver not actually crypto because I think crypto is going to be a liquidity Spa that get strained uh when when things crash I think uh you there is an argument on the whole Bitcoin store value narrative that that can push us you know up whatever I think that that may happen but I don't don't think it happens at the same time I think when you have a crash almost everything goes down um I actually think gold May Buck the trend this time because a because the only way out of the problem is going to be currency debasement and currency debasement is actually better for gold than Bitcoin in the long term Bitcoin hasn't proven itself on a long enough time time frame just yet short term sure but it was also rising from you know

pennies to to where it is today so it's not easy it's not it's not I mean I don't think it's fair to compare Bitcoin to Gold because just the stage of where the asset is in terms of years and how long it's been around um but so I think if you want to have a safe trade right now I think the safest trade is actually gold Paul Tuda Jones came on yesterday saying exactly what I said on my tweet like two weeks ago about gold and silver and I think the timing is uh is now I think that the the governments are going to have to print their way out of this mess that they've creative for themselves um and it's obviously you have a bit of Bitcoin as well you have a bit of um you know other things assets but for me it's it's property gold and

silver I think those are the three things that can uh really um survive inflation an inflationary cycle because when they print their way out of this problem that they're in they're going to stoke inflation um and I think the the one thing that the equity markets are doing is they're trying to point towards oh you know um if inflation goes up equities all perform like well inflation goes up rates are going to go up if rates go up your borrowing costs go up your cost of capital goes up I'm not so sure that the enough companies out there that aren't lever to the hilt that will survive um infl that will survive the rates going the other way so so here's the here's the catch okay here's the like the Zug Wang if you play chess or

you know the Cat 22 If the Fed raises rates to fight inflation which they gonna have to do because it's gonna come back they're going to cause a massive recession okay um and if the Fate keeps cutting rates right now they're going to cause inflation and so they should have just done nothing at the last meeting and not cut 50 basis points I me look at the bond market right the bond market that 50 basic point cut it went the other way it went it went up to 4.25 today um and so this is a big issue so the FED keeps cutting and the bond markets sort of the bond Market's screaming at them the gold market screaming at them like you guys have made a policy error you've made a

mistake and I've been saying the whole year that we should be raising rates further and not and then they you know they kind of paused that people laughed at me uh and I just think that that was I think the policy mistake was cutting they shouldn't have cut they should have just lifted interesting and so Vinnie this is exactly why I wanted to get you on the show we is so natural in any any industry that you're in to live in an echo chamber and only speak to the same people and we really try to get a diversified View and I won't deny that most of the guests that we have in the show are very much like everything is lining up the banana zone is coming we're about to have a blow off the top

now this is mostly focused on crypto but you could extend that to all risk on assets would be the general view so it's fascinating to get somebody to come on the show to say hey no I don't agree I don't see it that way I see a different perspective um where where do you think we are in the cycle if we look at do you think that we the FED is said that they will continue to cut rates now whether they actually do that or not is it's not like it's written in stone I don't know they can I I don't know how they can unless they're they're just suicidal Maniacs like I don't know how they can cut rates I mean Japan's uh currencies the carry trade this carry trade 2.0 on wine coming it's like it's back over Plus in the end so I don't know how and

this is what I said like and I said this publicly as well like there's no way they can they should be cutting rates right now just given everything that's just going on the world like let the rest of the world cut rates if you have to but the US Dollar's got to remain strong um and yes the interest burden is is getting bigger and bigger for us and the deficit is getting bigger but that's not a fed issue that's a treasury issue the treasury and the government in Congress has to cut expenses or figure out how to reduce the C like we are you know we're going to be the problem is they don't kind of work together as long as there's no treasury market dysfunction the FED kind of like I don't know man I I'm not I'm not I don't think I'm smart enough to understand all the

potential ins and outs of this all I can tell you is from my my vantage point is we're like a bunch of limings running off a cliff and we just don't know it yet so you think uh do you think that we are going to go into a a bare market and or like the way you're position your portfolio makes me think that you think that that you think we're going to enter into and do you think that happens soon postelection pre-election like what do you think the timing is of that and like what are the catalysts that would lead to that I don't know uh and that's kind of why I'm like the Michael bur sort of point is like I no one knows but bar was right a

year before he was right and and his investors a lot of his investors pulled out the year that he was going to be right they they were just pulling out they were like this is crazy you know we're Rock we're done you're mad eventually he hit it um and I think that that's the case it could take three months it could take six months could take three days who knows um but at some point something breaks and the only response to something breaking will be the FED saying we're slashing rates we're printing out we're going to go QE this thing we're going to save the day more liquidity to the system and what happens gold gold is going to Skyrocket maybe Bitcoin maybe but but most likely gold because Bitcoin is not held widely globally and it's not held widely by central banks gold is go Gold's Gold's

the reserve asset for the world at this point and you objectively you can argue that Bitcoin can get there one day it's just not big enough I mean Bitcoin is 1.4 trillion dollar gold is 156 trillion do you you know if Bitcoin for Bitcoin to work its way up 10x from year there's going have to be a lot of selling a lot of profit taking a lot of coins coming into circulation back and forth and and that liquidity takes time to build in a global financial crisis um money is going to ramp into gold because it's it's big enough for Global markets to hide from you know shelter in place from the US Dollars um you know it's it has to weaken but again they can you this is the weird situation like what do they do

they you know I I don't know how I think they I think they've made a mistake so they it's done I don't think they can go raise rates now I think it's too so what do you think what do you think they do in in November I mean we're few away a cut because the one thing I can say about the fed and you can quote me on this fed the FED will always make the wrong decision at the right time [Laughter] it's true though did you hear that Jerome Whenever there whenever there's a critical decision to be made the FED will always make the wrong decision at the right time and the wrong decision was cutting and I think the Market's telling them that the Bears are telling them that the everyone's telling them that the bond Market's shouting at them the

gold market everyone's going Silva's going through the roof like everyone's saying you guys up and and the reason just to be clear the indicators that tell you that the Market's yelling at them break down those indicators for us well well well how do you have a situation where they cut 50 basis points and and the the ten year goes from 3.6 something to 4.25 yeah I don't understand how that happens that makes that's exactly the point the market saying okay well we just don't believe that the we don't believe that inflation has gone away and we believe inflation is GNA come back so you want us to bet it on the 10-year bond the us we're going to start factoring inflation in year two and three and four from here and maybe come down and and you know what we wind up at 4.25% yield because you are going to

have to go fight that inflation again and we're going to have to pay the price so when you when you're doing these Bond trades that's kind of how they look at it they look at pretty much you know the next 10 years and see where's it going to wind up and it's a good buy right now and the guys are short in the short in the bond market also if you look at the the the US dollar to bond pair it's gone one way I mean literally it's you you know shorting tlts and buying gold uh rightor the gold TLT uh pair it's gone one way like over the past couple of years it's just a oneway street Gold's getting stronger and stronger and US FR is getting weak and weaker let's talk about uh the a few major macro things that are happening right now and I'm curious which ones of

them you think are a catalyst you think are concerning or which ones you're like I don't pay much attention to that so we've got um liquidity surging across pretty much all econ eies China really leading the way right now we've got geopolitical tension is seems to be looming rather large uh we've got the FED which we've talked about at at an nauseum so we don't need to talk about more of that and then we've got the US election those are sort of the three major catalysts that we talk a lot about on the show of those of those three the US election geopolitical tension and liquidity surging across markets which ones are you watching which do you think might have the biggest impact or cause a list for the

markets I mean geopolitical is the one that that it's kind of you know the US election is kind of already Bak in in real time the markets trade on poly market and whatever else based upon people people are positioning I mean Paul T Jones went on this week and said that he's positioned for a trump win so people position based upon what the markets what the prediction markets are saying um I think global global tensions are really high right now um I don't think we can look at the the global market and say that geopolitics isn't a concern it's it's a big concern so um yeah there's just so many variables right you've got Ukraine you've got

you've got Israel you've got um Taiwan you've got so many things that can happen I I don't think any happens before the election's over um I think people you know most foreign leaders looking to start a war right now they're going to want to know whether it's Trump or Harris um and and and quite frankly like without being political I think that um it's very clear that the current Administration and and and Harris as a sort of extension of that would probably lead to more of these sort of um you know you know geopolitical rivales being up uh yeah I'm a registered independent I don't have a I don't have a you know bone in this race um other than to say that I think that

they would be more fearful of starting these wars with Trump than they would be with with Harris just because of way the Administration has responded in in regards to Ukraine um Israel whatever else so that's a that's just a personal sort of viewpoint on it um and you know if that's what America wants we want to go get involved in a whole bunch of Wars then you know then fine vote for Harris um that's that's kind of what it's looking like like right now I mean on the crypto side obviously um you know Harris is not good for crypto the Democrats have been terrible for crypto we know that so if you're supporting crypto and way crypto is supposed to be going um I think the Harris Administration would slow down crypto

dramatically um and even if they replace gen it'll just be someone else right uh it's it's the Elizabeth Warren agenda that's coming down hard on crypto and so I think the Market's just kind of wait and see I think the crypto Market's going to Rally hard if Trump wins and I think it's probably G to tank if uh if Harris wins and so it's a 5050 though I you know the predic markets are saying 6040 Maybe on py Market I think it's probably 5050 it's a it's a coin toss right now no nobody knows it can go either way so for you right now you're allocating based on a a Viewpoint that there's too much uncertainty and when there's this much uncertainty you're saying hey I'm pulling out I'm not going to go risk on I'm going risk off and I'm

investing in only the safest most consistent gold silver real estate you mentioned is that correct because it's infl proof right so one thing we know over time is that gold and uh you know gold and property in particular Silver's bit more of a beta play on gold but gold and property have always maintained value over over any sort of inflationary cycle um over a long enough period in the short term I think that um the debt levels are unsustainable right now we know that at the current interest rates they're going to try and drop the interest rates to make the debt sort of balance the books a bit more so the debt level is growing every single day uh we're adding you know hundreds of billions of dollars a month in debt

we've got no ceiling right now and I think at some point the rest of the world says it we've had enough we can't buy your bonds anymore um and so that it's just becomes it's we're paying interest on interest right now we're paying compound interest we are like a guy who earns you know $50,000 a year and you know hundred and something thousand in credit card debt that's where we are right now right and and so there's no digging our way out of this without balancing in the budget and uh and quite frankly all the feds you know as much as they're trying to wind down the balance sheet right now and get it smaller they're doing it for a reason because they know they're going to have to expanded at some point and so they'd rather they try to get winded out as much as possible while there's

liquidity out there because when the liquidity disappears they're going to be the ones picking up the the tab on it so that that's so so for me gold is just like this I don't see gold dropping from I mean let's look at the worst case scenario in the great financial crisis 2007 2008 when it actually hit I think gold dropped 20% but everything the other things were down 90% right so Gold's going to drop the least um but that wasn't that wasn't at a point where I think the FED had a reputation for doing what they've done in the in financial crisis before and that wasn't at a point I we saw it happen during CO as well I think the response to the US uh having a collapse a crash some sort of response that it has something it has

to respond to will be to print more money and lower interest rates and I think gold just benefits dramatically more than anyone else so I I wouldn't be surprised I'll make a prediction I think in in 12 months time gold sitting at four to 5,000 an ounce from 20 British right now I think we we could even see a double but that remember that's not just you what people Miss understand about gold is it's a it's a global asset that people are buying everywhere all countries in the world and so when when all these other countries are getting devalue people are buying their gold they hold their gold they you know whatever else and there's just lots of ways to buy gold uh there's you know there's there's not that many ways to buy um you know crypto in some markets right some markets are very cash they're

cash markets and getting cryptos a b harder um transaction fees are issue just buying some gold and holding people you know Rings India is famous for holding gold so I I can just see more people saying look the Dollar's crashing or whatever we have to buy gold so I've become a bit of a gold bug I don't think it's a long-term trade I think it's yeah I was going to ask that what do you think the time frame on that trade is I'd say it's a year eur2 trade for me um yeah and I think silver could pop to 50 bucks to 100 easily um so you know gold and silver at this point I'm just trying to protect wealth and and and assets and capital right so if you you know leaving it in cash is just a bad idea at this point I mean it's good

to have cash when everything else is crashing but I just don't know how long it's going to be I don't know whether it's three months six months 12 months and in those 12 months inflation is going to eat away seven eight% of the cash inflation I don't think is 3% 4% I think it's closer to s or eight at least in California so um you know yeah you you have to protect your buying power and I think Gold's been best Hedge for that so if if you're if you're not in your position of having had the success that you had and having have the financial means that you have to be in a position where you are focused on protecting your assets and maintaining your assets Warren Buffett as you said earlier in the show also in a similar

position if you're more of a a younger or a newer investor that is looking to capitalize right now what would be your advice to that type of person so I I hate giving Financial advice to other people because it's always it's so subjective based upon um your your personal set of circumstances like I'm going on about gold and silver because I'm in a position right now where I have to take my you know some of my assets and say okay look how do I hedge against you know systemic risk to to me to you know the to the market right now excuse me so for younger investors when you're starting off in the market of investing I think the best investment you can ever

make is your own house right and so buying the biggest most expensive house that you can possibly afford is what I've always told people to do and and I've done it for myself and you know and and I've stressed myself to the Limit where I was actually stressed about making the mortgage payments before because I was like geez I went too big and you know got too much to pay off and whatever else and you know with enough time and go so the reason I think uh so I want to make that so right now mortgage rates are ridiculously high it's over 7% in the US doesn't make sense to buy homes right now so if you haven't bought a home probably best to just wait um because you would want to be paying that level of interest if you do have a home and you probably locked

it in hopefully at 3% or 4% or even 2% don't move and that's no one's moving right now the stats are very clear um but that is the cheapest money you'll ever get at this point in the economy so all you want to do is um don't pay off that debt faster than you have to if it's an interest only that's great if it's uh you know Capital plus interest just pay the minimum payments every month don't make them mistake of trying to pay off debt that is actually devaluing faster than what the rate of interest is um so that's the first thing now if you've got um if you've got enough cash to invest um buy a house if you don't have one right if you can buy a house cash I should I think people should do that and because you live in

it you get utility out of it you start saving on rental um and that's another good way to invest so once you've so and this is like very basic Financial advice but I always tell people get get your life in order first and put most of your wealth or at least some portion of your wealth into something which is you have utility it saves you money in some way and it grows in value and it's inflation proof and that's what homes are for the most part um obviously you you know Market timing but over the long term you know it's proven to be a best investment then the next thing is so once you have your house the next bit of advice is get a 12-month emergency fund okay if you don't have 12 months of cash in the bank and we should all know this from covid

that's your first priority not investing in crypto not buying gold not doing all this other stuff just go and put 12 months cash in the bank ideally 18 months and so you now you know okay I've got my house potentially uh and I've got 18 months worth of cash in the bank so guess what now your quartis all levels are low because you don't have a lot of stress and you can think clearly and you can make good decisions put that money in a in a sort of savings account that you don't touch any excess cash you get first of all make sure your cash for positive every month that you're actually you know running above your your your uh expense line every month and then any excess cash to figure out what the best way basic thing to put it into right now I don't like stocks I

think they're way overvalued right now and no matter what Bull Run happens in front of us I just think that they're overvalued and I wouldn't be paying for it um if you just if you don't know what to do I would just buy Burkshire Hathaway I mean b if you're if you're in like novice investor buying Burkshire haway is I think better than S&P 500 um personally because I think I think the S&P 500's got a herb mentality to it which you you can and will get caught off guard at some point and I think Buffett and his team do a phenomenal job of managing Capital um and then if you want riskier stuff uh if you've got the aptitude to start a business because that's that's the best way to make money and become wealthy and if that's your thing if you don't if you're if you have

a day job and you just don't have a business that's fine but even then I think people having a side business selling some stuff online you can make you know extra tens or 50s or hundreds of thousands of dollars a month a year to supplement your income so having that second source of income is more important than being a investor in crypto markets now you can put some in the crypto markets depending on your wealth dabble a bit buy some uh coins but like don't buy these stupid meme coins it's just a freaking it's you might as well go to the casino and go bet it all on you on the ret table um me mem coins you unless you're scamming people it's not worth it uh I hope not no I know I know because that that's that's how the guys make money they scam

people and so I I don't play the mem coin thing at all I think it's a big joke I think it's a it's just it's stupid because and you you know you probably know as well as everyone like how these guys operate they they you they f up these like fake communities everyone excited and people start buying and they take the cash and they run they rug it um you know if you're GNA investing in crypto go buy um I mean obviously as a seni best in salana I think salana is probably the best blockchain out there in terms of super capacity and use adoption so far uh for those metrics and uh so buy some salana but if you know if you like Bitcoin ethereum buy some Bitcoin buy some ethereum bu but that you know crypto should not be a big percentage of your

wealth it should be a small percentage that becomes a big percentage one day I always tell people put money put put hard money when you have savings into soft Investments that can become big Investments that can when they become big you take them off and put them into hard money again so so as an example like let's say you put $10,000 into a salana type investment and now you know that's maybe not too meaningful but it's a it's a big bet for you one day becomes 100 Grand hey take the 100 grand out and go buy gold or something you know it it doesn't have to sit in crypto forever uh and and I think too many people make the mistake and I've made this mistake many times where I I make the right bet I see a 10x a 50x I leave it there because I

think it's safe and it goes back down right so put put you know so put the soft money into hard assets is what I what I and soft money is something that's going to move more than you know 10% in a day is is is is pretty risky and that's equities as well um I mean gold is not dumping 10% a day I mean you look at the charts it's just not going to happen so gold if I ever want to get out it's it's going to be you know there's not a lot of slippage I have to wait you know even you go through a bare Market the fundamentals aren't there for it gold safe um but yeah I mean Bitcoin Bitcoin D Tamp sent in a day very often so it's not hard yet it might get hard one day it's not hard yet so just keep that in

mind but I would say house first personal savings fund second and then dabble third in things which you know either second source of income or um you know build a you know buy some Burkshire haway or some other you know sort of index subject funds um don't don't try and pick stocks it's not you know stop picking is unless it's your full-time job you're probably going to screw it up most people uh Vinnie this has been a a a very enlightening show because you could not have been more of a contrarian of the typical show that we do and I know you're not doing that on purpose you're just being yourself I have to apologize so yeah no that's okay I I I I didn't expect that

you had but it's it's fascinating to get somebody on who uh when we are so focused on um highly risk risky Assets in bit in crypto and and talking about how to invest in those and how to take advantage of the cycle and you're making a great point which all of our listeners and all of our viewers should know which is that you know what no matter who you listen to We could bring on people from both sides there's always somebody that will say one way or the other nobody actually knows what's happening in the markets and there's so many factors that play that you need to do what is best for yourself and I that's the best advice you had is it isn't a one- siiz fits-all approach you got to decide what's best for you and what you want in your life and your goals and your family

and based on that make the best decisions for you Vinnie thank you so much for joining us today and sharing your thoughts uh and for being uh a levelheaded adult in the room at a time when there's too many people maybe screaming uh for a bull run or a banana Zone and let's be real it could go in either direction and you've got to listen to all the different viewpoints to make the decision that's best for you appreciate your time today Vinnie thank you Jay I appreciate thanks for listening in everybody have a wicked awesome day as as always if you liked today's episode please hit subscribe and make sure you follow us so you don't miss out on the next one there's also a link in the description to our free five minute daily newsletter where we simplify crypto for you while making you

laugh and if you're willing to step up your crypto investing game we're going to also leave a link for milk Road Pro you get access to our portfolio where you can see exactly what we are buying this is your number one resource to help you invest successfully in crypto one final note this show is for educational purposes only and nothing we say is financial advice investing in crypto or any asset is risky and you should never invest more than you can afford to lose thanks so much for listening in my friends have a wicked awesome day