Lyn Alden: BIP 110 Could Trigger August Bitcoin Chain Split | SLP757

[00:00:00]I mean that my my base assumption unless you know things change between now and and a few weeks from now is that it'll be a minority fork attempt it could potentially result in a chain split high risk of a chain split.

[00:00:10]>> Yeah. And it might even happen before that. Right. So literally it may not even be spam that gets into the block.

[00:00:15]It may be literally the miners choose not to signal in favor of you know pro 110 and that itself will cause a split around August 9th or so. Sometimes things can't be settled with talk.

[00:00:25]Sometimes they have to be settled with action and just market attempts. And this is yet another just market test for for Bitcoin to go through. And if people disagree on on what open source software they want to run, sometimes it it just has to go in different directions.

[00:00:40]Hi everyone, welcome back to Stefan Lea podcast. Rejoining me on the show today is Lynn Alden, renowned for uh her macro analysis as well as being a Bitcoiner and partner over at Ego Death. And uh I know uh well, first of all, first off, welcome back to the show, Lynn.

[00:00:55]>> Thanks for having me. Always happy to be on.

[00:00:58]So, I know you uh recently were engaging a bit on the the BIP 110 question for some people. Um that has been quite a a contentious kind of online discussion.

[00:01:08]Um you've been quite direct that Bitcoin that BIP 110 doesn't actually stop spam.

[00:01:12]Uh do you think do you think this fight is mostly noise or is there like some kind of real cultural risk here or what do you think?

[00:01:19]>> I think I put it somewhere in the middle. Uh you know, I've been monitoring this for a while. like I monitor all all uh you know kind of fork proposals or at least anyone that has some degree of traction. Um and uh I I kind of made a decision just months ago that um I wasn't really going to engage on it uh just because there's there's I mean there's countless forks out there that are you know pretty young or don't have a lot of consensus uh and there's a lot of things competing for attention um and so I kind of just didn't comment. I had opinions uh and occasionally we'd have like an LP at our fund reach out and ask or uh you know people would ask my thoughts on something and I would give it to them but I wouldn't really make an article about it. Um, but I was asked about it on a podcast and and gave, you know, it was kind of the tail end of a podcast. Gave my my reply, which is, you know, I I sympathize and I, you know, I I think that I'm certainly in the camp that Bitcoin is money. Uh, and um, you know, anything that that detracts from it is money or complicates, uh, introduces a tax surface. I mean, I'm not really in favor of of any of that. Um but when you have a set of things that already exists already is consensus uh and there's a pretty established uh complexity of how to mitigate spam in any system. I mean that's that goes back decades of research and you know because spam can disguise itself and is even hard to define at times. Um uh and just kind of reviewing everything that that exists about that software proposal. Uh it mostly just kind of rearranges where non-monetary data can go. Uh some people have very strong opinions on precisely where in the blockchain uh you know like more appropriate types of of places to put it. Uh even debates about whether or not this is even about spam. Um you know because some some proponents will say we have to cut down spam and other people will say well read the BIP. It's it's actually admitting how limited is at stopping spam. Uh so uh I I you know my view is that you know kind of the most powerful attribute of Bitcoin is that it's very hard to change. if it was easy to change. Uh so even if you're in favor of fork, like there are fork proposals out there that I'm, you know, kind of passively in favor of. Uh I don't really expect them to pass anytime soon. Uh but the kind of the kind of the key takeaway is that even if you're in favor of a given fork, uh the fact that it's really hard to get your fork through is also the defense around people that see things differently getting their fork through. Um, so I, you know, I certainly think that it's noble to try to find ways to to optimize to, you know, maybe add frictions to add non-monetary data into Bitcoin over time. If there's a way that can do that that builds consensus, I mean, I'm all ears. Um, but kind of the for me it's I think the main thing is the marketing around this particular fork, how it seems to differ from what the the fork actually offers. uh and kind of the um it's become this kind of cultural moment I I think more so than a technical solution.

[00:04:09]>> Yeah, fair enough. Um on the uh I guess upcoming uh mandatory signaling period which I think on the current estimate is around August 8th or maybe early morning August 9th. Do you have any expectation or do you think what do you think the network is going to do basically around that time?

[00:04:28]>> Well, so I've been monitoring that. I mean there's always like these confounding variables. Right now um it's still minority of of nodes which is not even a very accurate measure because number of nodes in in of themselves is not super useful data. It it's really kind of nodes that process a decent amount of volume on the network. Uh and it's also uh hash rate signaling uh minor signaling is is is currently very low. um some of the mining pool I mean one of the mining pools announced voting basically uh so you know and that that really goes up to the end which was uh kind of an interesting decision uh rather than any sort of like time buffer last I checked uh so we'll see how that kind of thing turns out I mean my my base assumption unless you know things change between now and and a few weeks from now uh is that it'll be a minority fork attempt uh so if it's not aborted or otherwise um changed uh then it it could potentially result in a chain split Um, basically as soon as miners try to put something in uh that uh meets current consensus but then doesn't meet the consensus of of this other chain um that you know there's high risk of a chain split. So uh I would you know probably >> and it might even happen before that right because of the mandatory signaling. So literally it may not even be spam that gets into the block. It may be literally the miners choose not to signal in favor of you know pro 110 and that itself will cause a split around August 9th or so. Yeah. And I've seen there's even like technical I've seen debates between developers around uh aspects of the of the fork that some some people call them bugs, other people it's it's you know it's a complex issue that hasn't maybe been as heavily reviewed as some other forks are. Um but yeah, my my expectation is some chain split again unless there's a change or a backing off of this. and and I you know there are people that are super worried about that but I I think Bitcoin market tests are decent um and sometimes things can't be settled with talk sometimes they have to be settled with action and just market attempts uh even as Bitcoiners as much as we are often against altcoins sometimes they represent market tests if people have a very strong opinion that blocks should be bigger uh I mean they got that test the market they they can use they can use bigger block block uh blockchains if they'd like to I mean they're out there now if people think privacy should on the base layer at the sacrifice of some degree of auditability or or other other issues. I mean they they have changed for that if they want if they want a more programmable base layer it's there for them and the market can assess that over time and this is yet another just market test for for Bitcoin to go through and if people disagree on on what open source software they want to run sometimes it it just has to go in different directions.

[00:07:09]you wrote uh the the BCAP um you know project and you did that with Steve Lee and I believe you had maybe one or two other collaborators. I'm curious >> given um you know given this you know controversy now in the community how well do you think BCAP has held up like would you change anything about it?

[00:07:28]>> No, but the I I kind of the whole point of that um document is to change ironically. Uh so it's not necessarily anything I would change about our first draft our V1. Uh we so for context we we went on your show back when we published it but basically back in 2024 the three of us co-authored this paper uh and it's a combined economic and technical paper.

[00:07:48]So as people can imagine I came more with the e economic side of it and I I was fortunate to have uh the other two that that really kind of shor up the the the software details in that whole thing and and really focused on that area. Uh but it basically reviewed the history of how consensus changes are made in Bitcoin.

[00:08:05]uh and it's not all you know the process has changed over time as the network you know goes from basically Satoshi's project to this you know this global uh very large and and kind of a semiified asset uh network um uh and so we kind of reviewed that and at the time you know we we took a neutral peanut on any given fork at the time uh there was the kind of taproot wizards um approach uh it was it was kind of a concerted attempt to make Bitcoin a little bit the script a little bit more expressive uh you could say. Uh and there were some people talking about the potential for an alternative client to to try to make that fork a reality. Uh and so we kind of went over some analysis of of what the potential risks are if you get a chain split or you get a soft fork that activates but then could later become a hard fork. Um and we we I think that kind of the key takeaway that's relevant for this this kind of current era is that we mapped out the different uh powers in Bitcoin. you know what what what powers decide whether a fork is successful and becomes consensus or not?

[00:09:08]Uh is it is it just one group has all the power? Is it kind of a multiple groups competing with each other? And then more nuanced than that, are there certain phases within the timeline of introducing a fork where some groups have more power say earlier on and then their power diminishes and other ones have less power early on but then their power grows throughout the process. And I I think a lot of that holds up really well and I I I you know people are um confused about what's happening. I think it can be informative. Uh but then what we did is we published from the day one we published the paper on GitHub and invited the community to um you know improve it over time. It's a living document rather than just a snapshot of of what me, Steve, and Ren uh think about it. Uh, and so it we we just put out the V1 and and said this is our best effort so far and and people can help.

[00:09:59]>> Yeah. And to be honest, I think it holds up pretty well. Like ultimately, Bitcoin is this kind of anarchctic thing and you kind of have to get enough people on board with your change to get it over the line. And, you know, I think your project did a good job to sort of codify some of the, you know, these elements of it, at least what we understand right now. you know, um, of course people would disagree and people have their own different views. Like what we're seeing now with the BIP 110 people is they sort of think there's kind of a game. They think of it as this the game theory is sort of in their favor because they will talk about, let's say, the wipeout risk, but they will, you know, they may not necessarily give a balanced presentation on things like, well, what if you're a minor who points hash rate to the chain that does not become the dominant majority chain? You would have wasted your hash rate. And remember, there's a rule that says, and for good reason, mining rewards have a 100 block delay before you can claim them. And so, you know, if you're if you're going to point to 110 chain and it doesn't become a real thing, you as a minor, you're you're out money, right? You've pointed hash rate. And so, uh, also, there's not any large exchanges who are willing to sell 110 coin. There's not really any large futures or predictions markets. I mean there's one on like predicts where it's maybe 3 BTC worth of liquidity. So it's just if you look at the signals that are out there it's very different to you know 2017.

[00:11:20]>> Yeah. And I think the best part about this from the from the perspective of the BCAP paper is I mean this will be the best best uh data point we've had on how to update the paper. So if if if you know if we do want to get new contributors or maybe some of the original authors come back and add a add a section uh this will be a new test a new data point and regardless of how it the details of how it works out as the details occur and are documented I think it'd be a great uh contribution to the paper from from some some of us. Yeah.

[00:11:52]So, let's talk to let's just kind of switch to Bitcoin just broadly.

[00:11:55]Obviously, price and macro and what's happening there. As we speak, it's uh the price is about $66,000. It is the 21st of July. Uh where do you feel we are at or where are you sensing we are in the cycle right now for Bitcoin?

[00:12:11]>> So, my estimate is that we're in the bottom decile of of the market cycle.

[00:12:16]So, I I never try to bottom tick anything. Uh that's more of a trading call. Um I I sometimes I work with a base case like you know we hit that low in February and then kind of held that for a while. So I was kind of operating with the base case that might be the low and then of course we spilled to a slightly lower low uh kind of from the low 60s down into the instead the the high 50s. Um and so I'm kind of once again treating that as a base case for potentially a bottom. But that's that's you know it's not super high conviction.

[00:12:42]It's more like I think that most sentiment indicators, momentum indicators, valuation indicators, just basically a bunch of different ways to to you know kind of analyze is there fast money and enthusiasm uh and other things in the space or is it the complete opposite of that? I I think we're in the complete opposite of that.

[00:12:59]Um and I've also kind of detracted other market aspects. I mean, I think the AI trade, as massive of it as it is, has sucked a lot of the oxygen out of the room for many other assets, uh, including, uh, you know, potentially, I would say, likely Bitcoin. Um, and, you know, I we've done analysis before that showed, uh, 83% of the time, uh, Bitcoin goes in the direction of various measures of global liquidity. And there's a couple different ways to define what that means. Uh, and this is this has been one of those 17% of the times where it's not really, uh, gone in the direction of global liquidity. uh because global liquidity has been kind of flat to up whereas obviously Bitcoin's been in a in a bare market. Um I I I do think that kind of the whole kind of post um kind of 2020 and 2021 stimulus uh ever since we we got past that era in kind of the macro cycles have been different now um rather than the kind of the cycles we saw throughout the 2010s decade. Uh, a lot of that I think has to do with fiscal dominance.

[00:13:57]Uh, which is like a macro topic I keep, uh, kind of pounding the table on. Um, uh, and so we're in this kind of longer grindier type of macro environment. Uh, that also it's another way to describe it is kind of the two-speed economy or the K-shaped economy. Uh, which is you have the combination of and the US kind of influences the rest of the world. I mean I'm in Egypt and you both of us in the Middle East right now having this conversation but obviously the US uh dominates a lot of global macro which is to say u when you have loose fiscal meaning pretty large fiscal deficits uh that are pretty structural in in the biggest economy in the world uh and then you have semi-tight monetary policy trying to fight back against uh above target inflation levels uh and putting for example home prices uh like the actual ability to purchase them when you include both the house price and the associated leverage and interest on top of that that that most um say middle- class Americans would engage in. Uh you you you have pretty restrictive policy up against that loose fiscal policy. So in in automobile terms, it's kind of like, you know, holding the E bra while uh putting your foot on the gas at the same time is basically what the US economy is doing. And that affects a lot of assets. A lot of things are kind of grinding flat to up. Um some of the anti-software, anti-AI trades have been kind of liquidity sucked out of them. uh and at least until recently a lot of the money has kind of poured into that AI space uh and you know I think that as that kind of subsides not to say it's some ultimate top but as like the sheer speed of that move cools down I think it allows other assets uh to get their kind of day in the sun uh potentially and hopefully including Bitcoin.

[00:15:36]>> And I guess let's touch a bit on the fiscal dominance thing. I know this has been a big um hobby horse issue for you.

[00:15:43]Obviously the nothing stops this train meme which you are obviously famous for.

[00:15:47]Um and I guess as I if I had to kind of quickly summarize my understanding of that, it's that basically given the welfare state, given the entitlements, given the demographics especially of America and many other countries too to be honest, it's like it's just going to be very difficult to not keep spending a lot of money. And the point is maybe in the 2010s era we were in a more of a do monetary dominance era let's say where interest rates of the Fed and the actions of the Fed were very you know important and now I think as you say post 2019 or so that's when we went into fiscal dominance which is more like it's more about what the federal government is doing in terms of budget and spending. Is that would you say that's kind of a fair summary of that?

[00:16:34]>> Yeah I I think it is. Uh you know there's a couple other nuances that the US is more financialized than any other major economy. Uh uh meaning that um our economy kind of like is it's a situation where the tail wags the dog. So our economy kind of is influenced by the stock market whereas historically it's more often the other way around. Uh but the the main forces are the ones you said which is uh for a variety of demographic reasons in addition to political polarization we have this really locked in fiscal deficit in the US. you know the the ability to materially reduce it uh is extremely curtailed uh like near zero in any sort of investable time horizon uh and uh you what you know it's it's not like a temporary thing like let's just stimulate to get out of this you know malaise it's structural uh and it's also accumulated debt and and uh you know kind of accumulated over 100% debt to GDP which means that uh the the the Fed has limited tools here when they when people think of inflation they inevitably think of the 70s And then they think of Vulker and they say, "Well, what's the solution to high inflation?" Well, it's raising interest rates. Uh, and the reason it worked back then, actually was it was a combination of things that worked back then. It was also geopolitical solutions to get oil flowing again and and release supply.

[00:17:47]But the reason that kind of hawkish monetary policy worked is because the back then the baby booer generation was entering their home buying gears. Uh, that was kind of peak demographics in a way and that means a lot of credit formation, a lot of demand for credit.

[00:18:00]So in the US and and by extension a lot of part elsewhere in the world there was kind of the highest modern rate of fractional reserve bank lending uh basically new money creation through through fractional reserve bank loans.

[00:18:12]Uh and so you have more rapid than average money supply growth and then you had a real constraint which was the whole Middle East oil oil the geopolitical conflicts and all that. So increased money supply growth uh real scarcity inflation. So Paul Vulker comes along, he jacked interest rates up. Uh it it put a lot of dollar indebted emerging markets into a basically depression. I mean it killed Latin America's oil demand. Uh and then it also slowed down lending growth uh in the US and other countries were doing something similar. So the combination of slowing down the money supply and eventually geopolitical solutions that got oil back into the market uh helped relieve the inflation burden. The issue is that federal debt to GDP was like 35% uh in the US at that time which means when it when he jacked up interest rates to double digits. Uh it it it you know it it slowed down bank lending to the private sector. Uh but and it did to some extent blow out the deficit especially when we had the whole Reagan 80s. Uh that was a very deficit driven decade. Um but it slowed down the bank lending that was like a bigger factor than the deficit increase. The problem is when we fast forward 40 years uh and uh most of the you know more money creation really comes from like fiscal deficits and and you know banks even just buying treasuries and things like that on fractional reserve than it comes from banks making loans to consumers and businesses. And when you have over 100% of debt to GDP, uh when the Fed says, "Oh, there's high inflation. We got to raise interest rates to some extent." Uh that does still slow down, you know, bank lending to some extent. But then it actually the by sheer numbers, it blows out the fiscal deficit by literally a bigger dollar value than it slows down that private sector bank lending.

[00:19:50]Basically, there are consequences for having over 100% sovereign debt to GDP.

[00:19:54]Uh it doesn't mean everything breaks tomorrow. Uh but it just means that the the monetary tool that central bankers have relied on for for the better part of a century here uh kind of modern financial history is is not really the one-way sword or the one-way tool that it used to be and now it kind of ricochets as much or more than the initial direction it pushes in. So you get this messy situation of structurally high fiscal deficits, tradeoffs anytime the central bank tries to raise rates uh and uh growing populism as well because you have you know if you're long assets that benefit from the deficits um or just own assets in general and you're just you've locked in a 30-year mortgage or you're other you locked in 30-year bonds and you basically structurally short the currency, you're you're generally doing pretty well. Uh whereas if you're not if you know if you're younger, you don't have a lot of assets, you're looking to buy your first home, you're you you know most of your income is from wages, not from assets, you're not really um it's not cheap for you to short the fiat currency. Uh you're I mean you're on the wrong side of a lot of this. Uh and uh so it results in class issues. It results in and and you know it's I mean this is already complex enough podcast and this is simplified.

[00:21:09]It's very hard for even financial professionals to wrap their head around these details. Um let alone if you just you work in any other field and it's hard to point to what the issue is. Uh so people point in a lot of different directions. Uh and so you get a very polarized and angry political environment.

[00:21:28]And the other I guess point you were touching on there is that if the Fed would otherwise have wanted to raise rates now they're boxed out. they kind of can't do that because as you said if they if they let rates go too high then the government's deficit blows out a lot and it interest cost obviously blows out a lot because you're paying a higher interest rate and so I guess you I guess you're saying they're kind of boxed into keeping interest rates low and basically doing what it takes to keep interest rates low because that's that's all the system can handle.

[00:22:02]>> Yeah, pretty much. And I would say there's no like like so there kind if I say that there there are people that will push back and say well what's the exact interest rate level that breaks it then? And my view is not necessarily that anything that there's no interest rate level that breaks it. It's that it just stops being effective. Uh so it it basically if you raise interest rates you know higher and higher. Let's say they said okay well inflation's high.

[00:22:22]Let's jack up interest rates to 6% 7% 8%. I mean they could. It doesn't blow up the day they do it. But then well then o over weeks and months um the federal deficit will increase because their interest expense will get refinanced at that higher rate over time. So they'll be pouring more money out to people that own money markets, the people that own bonds. Uh a lot of this is spend spendable money. Uh they'll be paying the banks more because banks own a lot of those uh uh government liabilities. Uh and you know they can pour into what they're doing.

[00:22:53]Uh and uh so it it doesn't really just solve the issue. uh and you know fractions of bank lending is not at an elevated level compared to history. If anything is slightly below average um so you get the you know you keep kind of holding the real estate market somewhat underwater uh which which does put a somewhat of a lid on it but then it just all those other things are blowing out.

[00:23:15]So it's like you're again that you're you're holding a speed break while still having your foot on the gas or trying to get water out of a out of a boat that has holes in it. you can use multiple analogies uh that it just isn't super effective. Um and you know there's like Argentina went through something similar which was I mean you know they can jack up interest rates to 100%. Uh but they're not they're not addressing the core issue. Um you know it's it's kind of the whole point of higher interest rates when used properly is to try to slow down money supply growth. Uh but if you're in a state of fiscal dominance it doesn't necessarily achieve that effect is kind of the the punch line at the end.

[00:23:50]>> I see. And then when it comes to interest rates, people, you know, the big talking point is how big of a line item it is on the Federal Reserve, sorry, on the Federal Government's um budget. Uh can you talk to us a little bit about that that side of it in terms of like when they do when they're rolling things over? Like how long does it take before it really starts to spiral further away from them?

[00:24:13]>> Yeah, good question. I mean I mean interest expense is well over a trillion dollars annually right now. I don't have the exact number in front of me, but it's over a trillion now. Uh, one of the the headlines I see on Twitter or X a lot, uh, which is one of the ones I fade actually is you'll see a figure like, you know, $9 trillion has to be refinanced in the next 12 months or something like that. Yeah, you know, whenever the the figure pretty much only grows over time and as though that's like a catastrophe. Uh but I fay those headlines because 90 some percent of that is just rebought by the entity that already owns that that insurance companies, banks, pools of capital, money markets uh that that people have their their savings in that it just a T bill or a T-note matures and it just it just gets bought into the same equivalent T-note or T- bond. It's really the the net issuance that matters. Um and uh how quickly interest rates transfer to larger interest expense depends of course on the average duration uh of the federal government's debt. Um and historically speaking the T bill portion uh so you know the portion that is like very short duration that's been historically under 20% of government debt. Uh and the other 80% is is somewhat longer uh duration meaning that that wouldn't be affected by you know for for a year or two or in some cases up to 30 years. Uh so 20% of it gets you know kind of refinanced in the in the in the months that follow and the other parts uh over time. Uh but currently uh you know generally speaking when governments enter fiscal dominance they tend on average to shorten their duration. So we actually have a higher than average amount of T bill issuance uh which uh began under Secretary Yelen.

[00:25:52]Uh the current Treasury Secretary criticized her for that and then kept doing it when uh he took over because this is it's structural at this point.

[00:26:00]Uh the other way of course that it can affect uh interest expense is that um if they raise short-term interest rates, it could at times affect long-term interest rates. Uh that you know unless they do yield curve control, they don't have a firm control over what happens to the longer end of the curve. And in fact, for example, some of the some of the Federal Reserve cuts that they did in recent years hasn't really translated to lower mortgages because it hasn't really affected the long end of the curve because there still is this kind of inflation uh component in the market and this kind of high amount. But basically the other factor in addition to what the Fed's doing is what the long end of the curve is doing. Because at any given time, for example, there's a 10-year Treasury maturing and the government is issuing another 10-year Treasury to replace it at whatever prevailing market rates are, which is partially influenced by the Fed, but then partially influenced by by the market. So, in general, higher interest rates over time take, you know, months to work through and ultimately take years to work through to higher interest expense.

[00:27:00]While we're on the topic of the Fed and all this stuff, obviously everyone knows President Trump, he loves low interest rates. He wants them as low as he can get them. U but obviously what he's actually going to get, we don't know. Um and obviously the other big talking pointer is that uh I think uh the Federal Reserve chair Kevin Walsh has mentioned that he would like to lower the Federal Reserve balance sheet, but is that realistic? Or maybe that's like a longer term medium longer term thing.

[00:27:25]So I guess my question to you Lynn is where do you see the Federal Reserve uh balance sheet going in the you know medium term.

[00:27:33]>> Uh flattish for a while is is my is my best estimate. Um so so pre-war uh pre pre the current Fed uh my view was the gradual print uh you know kind of the people calling for a big big print or uh you know other other factors. My view uh was that uh we're kind of entering a a pretty long period of a gradual print, which is to say the Fed's not going out there and just rapidly increasing the monetary base uh but they are around the margins creating new base money uh to to buy a small amount of treasuries over time uh and you know just gradually keep the base money growing and by extension uh making the broad money not have to contract due to like you know bank capital restrictions and things like that. uh and that's been the case really since uh late last year uh and otherwise would probably continue for the foreseeable future. Any sort of investment time horizon uh going forward unless there's some massive crisis that just you know kind of rapidly blows things out. There are around the margins things that that the Fed can do to reduce that. Uh and it mostly revolves around giving banks more ability to to basically buy things on fractional reserve. uh especially ever since the global financial crisis there's a number of kind of constraints that banks have uh the kind of certain tests they have to meet uh certain you know certain things they they have a certain amount of capital risk weighted capital um and certain things count as you know kind of different risk weightings in that and the Fed has the ability to kind of make it easier for them to hold treasuries uh on their fractional reserve and so basically if you if you see um if if so worsh has been hawkish on the balance sheet since like 2011 or So since really since the balance sheet blew out. Um and I would say so far that he's his his remarks and that have been somewhat dovish which is that he he's made very clear to the market this is not it's not his unilateral decision and involves a lot of people agreeing it'll be well telegraphed to the market. They will check with banks and other market participants. It's kind of way of saying hey I'm not like a ideological hawk. I just want to find ways to tweak this. Um and one of the things they could do is is you know red slightly tweak and they've already done this a little bit but they can slightly tweak um bank regulations let them hold more treasuries and you kind of get that gradual print on the bank side instead of the central bank side um which is it's kind of a net wash like uh you know it's not really a massive change either way. Uh so the short answer uh is flattish. I mean, it could be slightly down for a while if he gets kind of his most hawkish dreams and most um uh kind of liberalization of bank balance sheets. Uh or we just continue flat to up if the status quo stays in effect, which is also a reasonable possibility.

[00:30:17]Uh and that the net result is that I think the the repo issues uh we've seen uh late last year will be under will be well controlled. Um the Treasury market will be liquid. Um the Fed will step in around the margins if needed to keep that liquid. Uh the deficits will continue. Money supply will keep growing, broad money supply. Um uh and so it's yeah, I I multiple ways to get there, but I think they all lead toward gradual print.

[00:30:44]>> So can you expand a little bit on that for us? This idea that the Federal Reserve balance sheet may stay flatish, but money supply, as in, you know, broad money, M2, M3, etc., those metrics are still going to grow. Can you explain a bit of that? Sure.

[00:30:59]So, basically there's there's two layers of money in the FIT system at you know there's multiple ways to break it down but there's really two layers. The base layer uh is kind of defined by that country's central bank. Uh and they said this is this is base money. Uh and then what most people have is commercial bank deposits. Um you know they they can have direct liabilities from the central bank if they have physical banknotes but for the most part they have fraction reserve bank deposits. And what a commercial bank will do is, you know, they'll hold let's say 10% of their deposits in base cash, you know, more or less. Uh, and then the rest is backed up by other assets. Um, so it's fractional reserve banking. you have a a uh duration mismatch uh where uh people have uh you know they can pull their money out on demand in theory uh and then the bank is back backing that by generally longer duration assets uh and that that creates a fraction of their bank lending environment and so you get a broad money supply that is multiple times larger uh than the base money supply so you have basically these IUS for base money equivalents um and there are various regulatory levers or even just decisions by the private market to to determine how much those banks are are either allowed or comfortable in leveraging uh you know to make sure they're not caught out on their duration mismatch um or that there's tools available to them. Uh and so prior to the global financial crisis, the ratio was actually much higher. Uh because banks the the base layer was very thin fra the fractional reserve ratio was extremely high. Uh when that all blew up uh basically you you know when you only have like 3% of you know IUs backed by actual base cash and it's kind of like the it's kind of like a game of musical chairs where there's there's a hundred kids and there's three chairs and the music stops and it's just it's pure chaos. So you have to throw a lot of chairs in there and you know fix fix the problem that way. Um uh you know now they have a a you know a slightly better ratio but it's still the broad money is multiple times the base money and so even as the base layer gets at some times is not growing. I mean for there was a couple years there where the Fed was reducing its balance sheet it wasn't growing. It was actually shrinking. uh and you still had at least for most of that period you had broad money supply still gradually growing because you still have that fraction reserve uh layer built on top of it and that's the part that is generally more impactful at the end of the day for what happens with consumer prices uh because that's the money that's actually in people's bank accounts uh in corporate bank accounts uh that is generally what we think of as as spendable >> right and then that ties into you were touching earlier on like liquidity and how that has been historically reasonably highly correlated to Bitcoin price moves and of course the stock market in general. So I guess as I'm trying to understand your view then the Federal Reserve is likely to be staying flat in terms of balance sheet but we will still get monetary expansion and then that's where possible and some of that can come from changes in the rules you know whether how much capital you know banks and financial institutions are required to hold uh in in in uh in reserve. Uh and so then your view then is that you know that that the liquidity cycles can still play out on top of a flat balance sheet at the Federal Reserve let's say.

[00:34:22]>> Exactly. And I think that so the current status quo is slightly increasing uh Fed balance sheet uh like a slow rate of increase and then there's a variance like I said of what happens you know if worse successful you could have that either stop increasing and flatten out for a bit or even slightly go down. Um and yet you have that broad money supply. I would say at this point is probably very unlikely to go down. Uh you know it briefly contracted in 2022 when the Fed was kind of all out going hawkish against the the 2020 2021 uh rapid increase in the money supply and then the associated price increases that followed. Um so you know you get a temporary contraction here and there. Uh I think we're past that phase and yeah I think the broad aggregates uh continue to grind higher uh regardless of the exact rate of change of the the Fed's balance sheet for a while.

[00:35:12]So if you just had to sort of finger in the air, have a guess where you think uh the not base money expansion but you know uh broader money expansion rates are going to be like historically has it been sort of seven or 8% depending on where you look uh different countries but let's say for a US investor what where would you sort of handicap that and the reason I'm asking is let's say you think you're going to go buy the S&P or you're going to NASDAQ, you also want to understand like if I'm going to earn 12% in the S&P or whatever, but I'm getting inflated away at 7%. So my real return is more like five. So just as an example, like I guess what I'm asking is where do you how do you handicap that like in terms of how much you would anticipate um the inflation to be versus like typical S&P growth?

[00:36:05]>> So historically it's around 7% over a multi-deade long term. um kind of in modern financial history in the US.

[00:36:12]Obviously, it'll vary by country.

[00:36:14]Japan's historically been the lowest in in in modern history, which actually surprises a lot of people. They think of Japan as the big printer, but in terms of broad money supply, uh they've actually been on the slower end of the curve, even as their base money has exploded. Um uh most developed countries are kind of in that 5 to 8% range. Uh developing countries are generally in the double digit range more often than not. Um I I I expect that the US is probably going to continue somewhere around its average which is mid to high single digits uh you know for for quite a while. Probably the main difference is the composition of where that money supply growth is coming from because again since we're in fiscal dominance it's less that fractional reserve bank lending and it's more that fiscal deficit component. Uh which and a lot of that is is is generally going to go more toward consumption than production. um which can around the margins be more inflationary than if a similar amount of money supply growth was happening because for example you were building a lot of new factories to make a lot of new supply of things uh at least you know the price increase of the things you're making uh supply of uh so different composition I think for what is otherwise back to kind of average money supply growth um uh now when you look out further and further that could increase um another aspect of this kind of a change in structure is that that number is a little bit less cyclical than it used to be. Um because deficits, you know, f fiscal deficits don't really go down in a recession, for example, in the way that that bank lending tends to.

[00:37:40]Uh and if anything is more often likely to increase in a recession. So you get this kind of more structural background increase. Uh which is then partially offset by the kind of older demographics generally means less private sector borrowing demand. uh as well as the Fed's kind of current attempt to to you know push back on inflation and keep kind of the housing market kind of restrictive is also somewhat pushing down on that money supply growth compared to if they just um you know did yield curve control and said okay go out and buy a home and party while also the fiscal deficit you that that would be a that would probably result in net higher uh money supply growth >> and contrasting let's say monetary dominance and fiscal dominance I'm curious how you see it. So let's say you know the typical canion effect really applies especially in a monetary dominance era right like in the monetary dominance era to benefit you you try to go near the printer right like the closer you are to the printer the better you are as an individual let's say or a business in a fiscal dominance era is it more like you need to try to be supplying the government because the government is the one spending a lot of the new money or how would you see that >> I I think that's a lot of it yes I think so so basically in a monetary dominance environment like you said the closer closer you are to the the the money printer, the better, which in practice generally means um the the lower and longer you can borrow money uh like lower interest rates for longer and with less restrictive terms um you know your advantage compared to entities that that can't borrow as much. And that that's true even in a hard money environment, but that in that kind of softer money environment that borrowing difference >> that advantage, right? Yeah. It's especially it goes from like a a tertiary concern to like almost the primary concern uh in a fiscally dominant environment. Um that's I mean that's still a relevant factor. I mean Birkshar Hathaway with their insurance float and and super low, you know, bond yields still, you know, much a in a better borrowing position than me or you and and we're better in a better borrowing position than than someone who is is less financially well off. That's that's still all all true, but you don't have that kind of 40-year period of declining interest rates anymore. Um and so that's a little bit uh you know diminished compared to it was at its peak. But then like you said it's replaced by you know is a company or or an individual aligned with where federal spending and deficits are flowing uh or you know by extension if do you own companies that are even if you're not do you you know do you own the assets that are on the right side of that uh or even indirectly on the right side of that. So for example, if money pours out to say um uh you know social security for example, what do those people spend their money on? You know what if you have an aging demographic that is uh you know supported in that way, what do they what do they spend money on? So for example, uh travel companies have held up pretty well. um uh uh whereas if if you're in a business that depends on real estate turnover, you know, you're on the you're not really on the right side of fiscal deficits. You're on the wrong side of the semi-tight monetary policy, right? So, it really comes down to being on the right side of where the where that that's flowing.

[00:40:50]>> Yeah, fascinating. I guess there are some interesting insights there for investors there. And then, uh let's talk a little on the AI side of things.

[00:40:56]Obviously, that's a super hot topic.

[00:40:58]It's obviously the big thing of the day.

[00:41:01]Um there are different sectors in AI and I know in your recent newsletter you were commenting a little bit on how you're playing this in terms of you know there's like the semiconductor side of this there's like what's happening with software there's obviously the models and the the companies are making those the frontier labs so-called um so can you give us a bit of your overview on you know how you're how you're playing the AI trade let's say >> yeah good question I mean so uh for a while there the the hyperscalers and the semiconductor ctors were doing great together and and in the private market the AI models were also doing great. So kind of those three big buckets of AI were doing great. Uh but really in in recent months it shifted toward semiconductors uh up until weeks ago were still doing amazing. That's where the that's where the kind of the true bottlenecks are. Uh that's where there's a lot of differentiation that is you know pretty pretty wide economic modes and hard to reproduce. Uh so they've been kind of printing money. The hyperscalers are in pretty fierce competition with each other. Uh so in the 2010s, these internet companies benefited from network effects. They benefited from mostly software stuff, mobile stuff, um pretty low capex spending relative to their revenue. And so they they just basically printed free cash flow, which they could plow into boosting their balance sheet, they could buy back shares, they could around the margins pay some dividends. uh and now they're deploying a lot of that free cash flow and even their their their prior stockpile of cash toward hardware spending uh data centers and all these chips. Uh and there's so far not in you know there's a lot of there's there's like lower switching costs. You know it's it's it's hard to get off Twitter and go start a Twitter competitor. It's hard to get off you know Facebook and go start a Facebook competitor. It's hard to get off Instagram. it's hard to make a competing search engine for example or you know these network effects things that kind of really entrench themselves YouTube as well um but it it's easier to switch to a different model uh or it's easier if you have a a solution to change where you're you know what environment you're hosting uh that solution in uh and so I I'm I'm not really bullish on the AI models themselves um I think there's increasing competition from open source I think there's a there's you kind of low switching cost toward whatever the best model is. Um uh and the hyperscalers, you know, they have some degree of economic mode. Uh but compared when competing with each other, they have to spend a lot of money. Um so I I mean I like semiconductors whenever they sell off a ton. I mean they they get overenthusiastic and then they sell off.

[00:43:33]And uh I I tend to be kind of a cautious bull which is that um I think that I mean I think the AI trade is real. I think that we are going to have much higher structural demand for compute for the foreseeable future but sometimes the prices get ahead of themselves and when they do sell off and and you know they become cheap again I I tend to go long.

[00:43:52]If anything my mistake has uh been getting out too early. I tend to my my kind of at heart I'm a value investor so when things have doubled or tripled I I tend to want to uh put profit off that.

[00:44:02]Yeah.

[00:44:03]>> Yeah. Whereas I've been a little I think a little too quick on the trigger finger there. So I' I've owned a lot of the the popular semiconductor names and then get out when they do their really kind of final parabolic move, but I tend to get, you know, I think the structurally speaking, I'm bullish on pullbacks. Um the other way I'm kind of looking at it is the opposite side of the trade, which is that as all as the semiconductors and AI has has kind of taken off. Um there are areas of the market that are viewed I think rightly as disrupted. So software companies uh who you know people can vibe code competitors now uh or u you know if you're if you're if you're a worker uh and you maybe used to have to hire 20 designers uh and now you can hire five designers who have eight AI tools and each one does the work of four designers. How do the design software companies try to recoup uh that potential hit? Uh and interestingly so far we're seeing that their their their revenue and their earnings of of most software companies or at least the big ones um like the leading ones in their field have actually so far not really been impacted. They're still growing compared to last year, the year before, the year before that. Sometimes around the margins you have a slightly slower growth rate which I think is is common for a mature company. But the market is kind of priced in the idea that maybe two three years out they're going to run into some pretty severe impairments.

[00:45:18]their growth going to dry up, maybe even go negative um as their pricing power will reduce as their maybe their the volume of demand will reduce. Uh and so these have kind of shifted from growth stocks to value stocks and the market is trying to figure out are these value traps meaning that they look cheap but it's only going to get worse. uh or is it overhyped and maybe you know uh it's easy to kind of vibe code a prototype but it's harder to maintain uh you know a tier software uh and I mean even the even the software companies themselves can save expenses with AI so you know maybe their their top line does get thinned out but maybe also their expense line gets thinned out and these these just transition to value stocks in the market uh so I think for value investors digging around in things that have just completely sold off while they're fundamental rentals haven't yet.

[00:46:07]Uh, and many of them have strong balance sheets. So, I I I think there's a reasonable trade here for cautiously bullish on AI, but not expecting everything legacy to just go to zero next year. Um, that there is kind of a balanced trade there. And by extension, I mean, for a while, Bitcoin's been correlated with some of these software stocks. Um uh and some of them are kind of showing signs of a potential bottom uh as the the kind of the memory and and other semiconductor that that rally we had in kind of the first half this year has kind of faded to some extent. Uh some of these other names are finding at least local bottoms. Um and Bitcoin's also been showing some strength here from a from a pretty oversold position on the use of AI. I'm curious uh if you're looking at this and some of this could be even on the personal side in terms of what we use or in terms of like analyzing what's it going to what's the impact going to be on the economy. I'll give you an interesting stat that I've seen and you might have seen it which is only about 2 or 3% of American households are paying for AI. So many of them might have used it for like a search thing. But isn't that interesting? Like are we maybe in an echo chamber where let's say you and I and listeners of this show are probably very likely to be paying for AI and doing like vibe coding and agentic engineering and this that and the other but the masses are not. So I'm curious how do you see that? Is it just a a similar a typical thing of like techn technical change preceding the social change?

[00:47:30]>> I I do think so. I think I mean kind of like how the a lot of the people that were in the dotcom bubble a lot of the kind of the people saying what the world's going to look like were right. I mean a lot of the the the expectations came true they just came true at a slightly slower time frame than many of them maybe thought and therefore the prices they were willing to pay for certain things were premature and some of the investments that were maybe seen as valuable actually had to be discounted over a longer period of time and therefore kind of broke their model.

[00:47:57]But then over a given amount of time, the world caught up to what those kind of early adopters thought it would become. I think probably AI is similar.

[00:48:03]Uh which is that, you know, people that are really in the space can kind of see where the puck is going. Uh but you know, house, you know, the way you do things doesn't change overnight. Uh you know, people there's like that stat like people listen to the same music they liked in their teens and 20s. It kind of gets locked in for the rest of their life. H there's a million other things people do that are just like that. Uh the same is true for businesses. uh it takes a lot of time for for processes to change even as the options and the tools that that are available do change more rapidly. Uh and so right now I mean if obviously someone works in software if they're a very competitive in in kind of the white collar field of any sort um they really you know AI is obviously pretty important to them. Uh especially if it's any sort of just again you know if if they're competitive in any way and they're you know they're trying to be at the kind of leading edge there. Um, but I do think it'll take time to work itself through businesses and through households in a more economically active way. Um, uh, and that there and there's still a ceiling for what AI can do. I mean, these, you know, the these are, uh, very advanced models, but they still have certain limitations. I mean, as as kind of high as those limitations might be.

[00:49:14]And, uh, what do you think about the whole, you know, the memes of, you know, the permanent underclass? Are we all are we are are people going to be doomed to the permanent underclass if they don't uh you know make it very soon?

[00:49:28]>> I think the short answer is no. I I think while this can bifurcate society to some degree, it's it's less about class and it's more about ability, which is to say in some ways it's never been easier to to to change your your status because it would get increasingly cheap to to deploy bots and and do things like that that really extend your reach. Uh a lot of the gatekeeping that that p previously existed is down now. Um and and I think the the biggest hurdle is that it's just so crowded. I mean, these do these tools are widely available.

[00:50:00]Obviously, if you if you're the owner of a semiconductor foundry, you're I mean, you're you're you're if there's a new countdown effect, it's can you print semiconductors uh and and do you have the power to run them and all that and and all that, but um in terms of just I I think it's the powerful thing here is that in the 2010s when we saw kind of the rise of social media, the biggest beneficiaries were the social media companies themselves. Uh, and if anything, I mean, obviously people were empowered. I mean, I I certainly enjoyed having access to social media. It's been it's it's done a lot for my business.

[00:50:33]Um, but it also came with a lot of negative effects for society. Uh, people glued to their phones and all that and and um, you know, I don't have to reiterate all all the issues there. Uh, the thing about AI is that it because there's lower switching costs, um, I think a lot of the benefits of the long term actually acrue to those using it.

[00:50:53]Uh, you know, the customers using it.

[00:50:55]Um, you know, the AI models I think are going to lose money for the foreseeable future. It's hard to maintain a moat there. Um, uh, and I I any sort of small business can just substantially reduce it its kind of backend expenses, uh, and focus hopefully more on the things they actually want to focus on. Um, and so I I I think that there's there's obviously any sort anytime there's rapid change, there's a lot to adapt to. Um, and maybe we see a shift uh slightly away from white collar work toward more real world work and building things. uh because robots are just inherently harder than software bots because you have all the software components plus the real world materials, the real world functionality, the real world edge cases. Everything in material is harder. Um so I think there's a lot of room to um you know either whether you work in information work or physical work. Um it's more about are you using the tools or or not and are you capable of using the tools.

[00:51:47]>> And lastly, let's talk about orange juice. So this is a new um venture that you have been talking about recently. So give um listeners an overview there.

[00:51:56]What are you what are you trying to achieve there?

[00:51:59]>> Yeah, good question. We are um we started a company called Orange Juice uh which will seek to buy small and medium uh cash flowing businesses. Uh and then unlike private equity which you know goes out buys businesses uh generally speaking makes rapid cuts uh usually levers them up and then flips them gets out uh often with a statistically high rate of failure going forward because you have a hollowed out company. uh instead we intend to hold indefinitely uh the companies that we buy um and we'll have this foundation hopefully of a of a b you know diversified set of cash flows and then uh because we believe Bitcoin is sound money and is likely to appreciate over time uh we intend to to have a Bitcoin treasury uh attached to that um kind of you know more private equity type of company uh and so you um one of the big criticisms of kind of Bitcoin treasury companies is that at least a lot of the pure plays and I think there's a role for Uh but the kind of the criticism of of their detractors is that they're very reliant on the appreciation of Bitcoin price. They often don't have cash flows that can meet their interest expense. Um uh whereas the way we intend to structure this is that any interest expense we have is covered multiple times over by operational cash flows of companies that have nothing to do with Bitcoin. Uh and that um we accumulate more Bitcoin into our treasury. And if anything, over the past, I mean, since since the first company came out and put Bitcoin on its balance sheet, I've been hoping to see um companies that just have profits that has nothing to do with Bitcoin, uh decide to stick it into, you know, at least some of their assets into Bitcoin for as as you know, kind of a long-term appreciation appreciating asset. Haven't seen a ton of that. Uh and um we think there's an opportunity to go out and do that. Uh and then even for for business sellers, uh we talked about demographics earlier. There are there are a trillions of estimated value of small to medium private businesses.

[00:53:53]Owners looking for liquidity that for a variety of reasons might not want to see their company chopped up. Uh you know, might even want to continue working on it as they manage to unlock liquidity from it. Uh and uh you know, we think that there's an opportunity in permanent capital vehicles to to you know, kind of meet them where they are.

[00:54:09]>> Interesting. So in a way you're sort of trying to trying to I guess lead by example and show people that you you know you can more and more companies can adopt Bitcoin as their let's say their savings asset. Now, as I understand, you mentioned leverage, but I presume what you mean there is like you may lever, you may take fiat loans to buy other small businesses, small to medium businesses and just stack Bitcoin with your profits is kind of the idea as opposed to the take out fiat loans to buy more Bitcoin strategy or style.

[00:54:40]>> Exactly. Yes. Yeah. I mean, we'll have we'll have obviously um physical assets, you know, that are associated with the companies themselves. Uh we'll have, you know, financial assets, cash and Bitcoin. Uh, and then, you know, we intend to have leverage. Um, but it's it's it's a, you know, it's it's backed up by the operational cash flows of those businesses rather than just tied to the to the Bitcoin treasury. Uh, and so when most companies spin out of private equity, they enter the market in a very leveraged state where they have their, you know, they have their physical assets for what allows them to do what their business does. They don't have a lot of financial assets. You know, their their their balance sheets been stripped. They often have leverage.

[00:55:16]They have a lot of debt. Uh and so they're often in a situation where if the slightest thing goes wrong, they fail. That's why post PE businesses have higher average failure rates than than average. Uh and instead we'll have a bunch of companies hopefully uh that you know earn earn operating cash flows and at the parent company level we also have a Bitcoin treasury. So we have more financial assets than uh liabilities uh to to to back up the companies and to accumulate you know. So we're we're in we're structurally short fiat currency and in a conservative way and structurally long Bitcoin over time and backed you know with any sort of interest expense uh backed up by operating cash flows.

[00:55:56]>> Yeah. And then in terms of who's going to be primarily involved I know Nico from um EO Nico Luga it sounds like he's going to be really involved. Are you going to be like actively involved or are you sort of more at a passive level for this one or what's your um what's your specific role going to be here with Orange Juice?

[00:56:13]>> Yeah, so I'm a partner uh and a co-founder. Uh so the way we've structured it, so so the four partners that work at Eagle Death Capital, including myself, are part of this. We also brought in uh Adrian uh uh Steckle and Ruben. Uh so there's six uh kind of founding partners of the of Orange Juice. um are the the most kind of full-time operating partner is Ruben.

[00:56:35]You know, he's running the day-to-day operations of this. He's a former Navy Seal officer uh who uh you know after that you know he got a he got a degree in Oxford. He's been working in finance for a number of years uh mo most recently was a CIO of a of a very large multif family office uh doing some deals that are much like what we're seeking to do. Uh and so you know he he'll be running the day-to-day operations. The rest of us as uh you know founding partners um will not be taking any uh salaries um but we are part of the investment committee uh and in our various capacities you know we're running socials we're running all the legal backends we're we're uh you know running the kind of the operations of the business and then most importantly when it comes to making acquisitions uh all of us will be on the investment committee for that uh as well as governing highle decisions uh you know with the board and the advisor groups and this investment committee uh for how the companies run, how much uh you know, how much leverage we have, um what companies we're buying, you know, h how do we respond to market conditions uh and so um uh it's you know, it's it's a it's a structure that we think is it's somewhat new way of doing things, but we think uh this is an attractive way to kind of bring this opportunity to the market.

[00:57:49]>> Yeah. And just to be clear, this is a private company, but you are accepting outside investors like accredited investors.

[00:57:56]Yes, it's a private uh company. Uh it's not a fund. That's what makes it different than private equity. So private equity, you know, you have a 10-year fund life. Uh realistically speaking, within a 3 to sevenyear period, they're looking to buy a company, kind of gut it, leverage it, flip it for a higher multiple, give the money back to to investors. Um this is a permanent capital vehicle. So aka a company um you like a a mini tiny little version of say Berkshire Hathaway is kind of the intention. Uh so just a company that can go out and buy other companies. It's privately uh owned at the current time available for accredited investors. We have a publicly stated intention to eventually go public. Um obviously you have to you know meet certain requirements and get to a certain size where that that becomes relevant. Uh but that is our longer term uh aspiration.

[00:58:42]>> Gotcha. And then I guess the other one would just be when you're going out to acquire some of these smaller medium term medium-sized businesses, you re you will really need people who have experience in that sector, right?

[00:58:53]Because if you sort of end up buying things in some other sector, you really risk, you know, not knowing what you're doing or getting ripped off or not knowing the kind of where the traps are in that industry. So what's the plan around that? Is it just to kind of have advisers for that or to kind of hire an operator from that industry or what's the plan there?

[00:59:08]>> Great question. I mean, so one of the best case scenarios is that the existing operators keep running their business.

[00:59:14]Um, because not everyone who's seeking to sell a business wants you to stop doing what they're doing. Um, so a lot of people uh have a lot of capital tied up in an illquid business. Um, you know, they maybe they want to pass on money to their kids, maybe they want to diversify, maybe they want to derisk, maybe they want to buy more Bitcoin because we're initially targeting business owners that just happen to see the value in Bitcoin. And so one of the options we have and that we you know we think u business owners will like is that you know while we can buy a business in cash we can also buy a business in a combination of cash and or juice equity uh and so the founder can partially continue with the upside of their business and this diversified set uh and we can structure things to to keep a a founder there >> uh for a number of years uh where and this is you know that they can keep working at it and keep you know kind of contributing to what they've built uh just in a d-risk and more liquid way.

[01:00:07]And then yeah, over time we you know we would we would line up a deep uh bench to make sure that even when the founders leave um you know either from within that in that subsidiary or outside um operators, we can hire people. And if you have this kind of larger parent structure, it's it's easier to go out and get talent. Uh you know, it's hard for a single small business to to maybe hire someone at times. Uh whereas if you have this kind of larger structure and you know kind of a you know large social media reach and and kind of just a bigger aspirations you can bring people on uh and kind of put out you know put out calls for resumes and say here's something we we we need run uh over time.

[01:00:49]>> Fantastic. Well, a lot of interesting insights. Thank you for joining me today, Lynn. Listeners, go and check out Lynn's uh research over at lynolden.com.

[01:00:56]I recommend subscribing. It's great research, both the free stuff and the premium stuff. Uh, and of course, follow Lynn online, linen contact onx. Lynn, thanks for joining me today. Thanks for having me. Happy to be here.