but now we have a situation as the chart shows 84 percent of the value intangibles or the knowledge based on knowledge so take a look at tesla for example they must has knowledge about how to go on joe rogan and promote his means he has knowledge about creating memes he has knowledge about branding he has knowledge about interesting engineering ideas but the actual book value of the company itself is nowhere near the hundreds of billions of dollars we see in the stock market that's true across the board for every single company really in the s. and p. $500.00 they make their cash flow on the ability to game the system and to exert arbitrage spliffs on the data that's being rolled on the various cash tasks of different banks and like you have on lost so eloquently demonstrated on the joe rogan show so this is interesting use the word knowledge because you think about knowledge any think that it has some basis in

some kind of foundation of wisdom but this is knowledge about how to use artificial intelligence and knowledge about how to use propaganda knowledge about how to use subliminal advertising that it's evil it's evil or they might as well just replace intangible with the word evil well i don't know about that but certainly it is an interesting time and we do see it you and i grew up in the 1970 so we saw what it was like to have a more tangible economy and that could be part of why so many people are having a meltdown while we are having problems domestically in the united states in terms of the economic disadvantage you know and the inequality growing so you know it's not like an intangible thing as you mentioned tesla is worth $400000000000.00 based on one guy you know i got his team of engineers it's not all that other stuff is this one guy so you know you don't have to manufacture something to be worth tens of billions are one. of billions of dollars right well

how to get the valuation you get by multiplication of stock price times current number of shares outstanding and if you have knowledge on how to buy back your own stock and pump up those stock prices and executive stock options then you have a hierarchy where you actually didn't create anything for the economy you didn't engage in any capital expense expenditures a cap ex to expand your company in any way then what will happen is what will happen the i.b.m. you know they went to the whole stock buyback routine then eventually it played out and the company is a shambles or general electric general electric is almost absolutely out of business by trying to push me a miss instead of products we'll find out one day if there's any if the fact that there's no there there matters that all it's also coincides 975 we had only been off the gold standard for a few years so the global economy and global trade used to have more there there because if you sent us your oil or you sent us your manufactured good you got gold

back in return now you can't fluffy paper and that could disappear you could be cut off your whole nation could get cut off from the swift grid so your paper might not mean anything your gold had you you know exchange goods and services for gold those would always mean something and it would always be fungible but let's move on to another thing that's going on in the markets about this you know we've had intangible now we have the issue of inertia and the investors are pretty angry well investors vent frustration over fed's balance sheet inertia well apparently the fed balance sheet growth stalls max and you see that in the little top bit of the chart it's stalled and what do we always say here on kaiser report you can't taper a ponzi and that's tapering a ponzi you have to keep on feeding the ponzi scheme you have to keep on feeding fresh new debt credit and cash so if you're not doing that then it all comes apart well the core intent of ball. asset of the american economy is the u.s.

dollar that has no intrinsic value it has no value at all really and the country itself is mired in debt right so it's got negative value they're actually going to go to negative interest rates so the as you point out the only mean value of money particular burr in the ponzi scheme that comes with a massive multi-trillion dollar printing schemes. to be illusion of a working economy and if that money spigot is turned off it's like turning the off switch on the whole the ground that is the american economy they were active economy if you put all those names together right that's it was a holy ground and that is the u.s. domestic economy it's a $25.00 trillion dollar hologram composed with entities like a tesla or a general electric but our teams within the whole of gram if you turn it all off by cutting off the money supply then everything disappears overnight well the chief me maker of all is of course how fed chairman who has created the best me most of all

the educated the world instantly at the same time so everybody got knowledge at the same time of what this money printer go but it does in order to keep up well to keep this wealth and income gap that a lot of people around the world are really starting to take issue with that money printing that these investors demand hedge funds and private equity and friends of the fed demand is also causing the threat of inflation everybody's wondering whether we're going to have inflation or deflation whether the fed printing is going to cause more nervous going to cause inflation some people like read out the own gun locker saying that the inflation could get up to 10 percent well here is adam back with a tweet about our guests michael saylor of micro strategies he says we just have the awful realisation that we are sitting on top of a $500000000.00 ice cube. that is melting said michael saylor on micro strategies

$425000000.00 bitcoin by this is not a speculation nor is it a heads this was a deliberate corporate strategy to adopt a big queen standard i think this is for some a moment in this it marks the transition and the inflection point where we go from this story about deflation to a story about inflation because corporations up until this moment have been using that cheap money to buy back their own stock and boost executive stock options and basically gaming the system and encouraging the central bank to print trillions and trillions of dollars what michael saylor at micro strategies and his team have realized is that ultimately this is incredibly destructive to the dollar and the dollars purchasing power will crash as it has done in other countries like venezuela in some bob way and therefore it's prudent to prepare for this collapse

of the u.s. dollar by owning the hardest possible asset that you can and that means bitcoin and he very eloquently describes why big corn is much harder magnitudes harder than gold and we'll get into that in the 2nd half but i think the importantly what this signals is a really a watershed moment to going all the way back to the 1980 period when we saw the beginning of this bull market in the bond market which has now been going on for 40 years and interest rates have been going down for 40 years and we've had this this inflation deflation story and that cycle i believe now this is the top of the bond market finally with this micro strategies by bitcoin so he's protecting the company by converting the dollar treasury to bitcoin is $500000000.00 ice cube that is melting so here's a tweet from ice cube who perhaps one time was worth $500000000.00 the rapper the

rap star and he tweeted a link to the photo of the deficit mess by stephanie calton and empty modern monetary theory right. where the vast majority of people are looking at the situation and seeing this rise in wealth and income gap especially the wealth gap and why is the wealth gap happening because the can tell you a fact we have a class of cantillon heiress who get fed all this free money from the fed the fed buys their corporate bonds above par so they're paying above market rate and what we're seeing is people are starting to think well if the feds printing them free money why don't we get free money like give us free money and then we could compete with them so he ice cube tweeted america loves to cry broke but in america money does grow on trees right so this is going to be a very confusing time for a lot of people because they don't understand that the can tell you the arabs did

so in a way that was subversive and undermine democracy and so m.m.t. or modern monetary ferry is not the solution to a club talk or say. it's just trying to grab some of that kleptocratic money for your own but the kleptocrats are not going to give you any sadly ice-t. that's the truth. it's ice cube ice q. ok fine i know but this is the way every single banana republic starts the oligarchs take a huge amount of money they becomes corrupt and they plunder the state then the people rise up and they throw them out and install a dictator who will then give them free money and then it all falls apart that's that's kind of the the path it takes so the people are now starting to rise up and say hey give us a free money because we've sat here for 40 years waiting for our free money even giving free money to these bankers and your friends on wall street for the last 40

years where's our cut we're finally ready for it and if they go down that path it doesn't solve the problem wages as i've been saying now for 20 years if you're sincerely interested in the left wing. policy to combat the kleptocrats you need to time money supply with wages if money supply goes up by 15 percent so to wages that's the connection you need to make and that would restore balance to the economy and it would get rid of the controlling there to a large degree but since labor has no organization and has no representation that's not going to happen either well we don't have labor we don't produce anything we don't make our cars here we don't make our stereos here we don't make our anything here everything is made in china so you know you need to create wealth in order to distribute wealth so if we don't have any wealth creation all we have is free money and you know only a small group of people can live off the labor of you know

a 1000000000 chinese like you can't have a huge middle class in the united states off of that my call sailor and micro strategies they're not philanthropist they're not doing this because they are you know egalitarianism minded guys they're doing it opportunistically because they see that the tide has turned and every single company in america is going to come to the same conclusion. and we're going to talk more with michael saylor in the 2nd half don't go away. the to.

my social class. if you're born into a poor family i. already family if you're born into a family that only has a single parent that really constrains your life chances. generational poverty. by every day you meet your needs and the needs of your family.

welcome back to the kaiser report by max keiser time now to turn to michael saylor c e o of micro strategy who bought $38250.00 bitcoin for $425000000.00 cost averaging every 3 seconds in over 88000 trades michael welcome thank you match great to be here micro strategy is the 1st s. and p. 500 company to actually adopt a bit coin standard or something close to it what was this let's revisit your road to damascus here years ago you had tweeted that bitcoin would go to 0 now what so what changed your mind i didn't really i tweeted 2013 i didn't i forgot about it

and then 2020 came along and in 2020 we watched a v. shaped recovery on wall street we watched an l. shaped non-recovery on main street i looked at my cash and i realized my i had $500000000.00 it was going to melt away my understanding inflation flipped then and i realized that the real inflation rate is the asset inflation rate asset inflation rate was looking like 25 percent this year and looking to be 10 percent or more in the next 3 or 4 years and i just imagine losing $50.00 to $100000000.00 a year in asset inflation and i don't ascribe journey to try to find something to do. and eventually don't lead me for you know to precious metals or bitcoin and analyze it all. i looked at bitcoin and i jumped through hoops wondering what big coin well we're not a crypto currency replacement and i think the thing that really was

a big big decision point for me as i realize a bit klein is more than 90 percent of the market for true for work tripped ocurred see which meant it was completely dominant and then i realized that all the hard forks that had taken place in 2017 had merely made the point value proposition better and they had made sure that it had gotten out of its adolescence and started it if i was making that decision in 2014 or 2013 before the hard forks and before did point cash decline s.b. and all that complexity and if i was making the decision before i saw all the institutional great cost to the ins or exchanges come online it would have been very difficult and i don't doubt i could have done as a public company officer but i think in 2020 i finally had as a security that i thought i could invest the treasury and because of those things the moment this news broke and i looked at it and a lot of things are answer my mind and one of the things that popped into my way of

thinking is that there's a company with a big cast position and every single company that i've been writing about the last few years of big cash positions they end up buying back their own stop and a lot of times they finance these purchases because interest rates are near 0 or as arrow and you can borrow money at near 0 percent buy back your own stock of course this diminishes the shares outstanding it gives a big boost to the stock it gives a big boost to the executive stock options and i and i see what micro strategy is doing and i thought wait a minute. is this a turning point in terms of inflation because that stock buyback. only works if you can get away with that without any inflation i know i.b.m. went through a big stock buyback program at eventually it worked against them so i guess the question is on a corporate strategy level eat it not for the stock buyback and he went with

a bit coy walk me through that decision 1st of all i think if you're sitting on cash he either have to buy equity with it or you have to buy some other asset with it if if the inflation rate felt like 3 percent then your cost couples 3 percent but this year the inflation rate seems like it's going to be north of 10 percent for the next 5 years so your cost a calculus north of 10 percent if your company's not growing its cash flows faster than 10 percent then if you buy your company's stock then you're actually going to be deluding yourself and so a low growth company and a high inflationary environment buying a stock but that's a losing proposition and on the other hand if you could find well da huge company that had you know 20 or 30 percent cash flow growth that was not overvalued you could buy that maybe that's good but you can't find those today we actually looked at this and we said we have to do this mogul we have to do in

a respectful way to our shareholders so we actually announced we were exploring it 1st and gave her body a chance to digest that then we announce we bought $250000000.00 of bitcoin and simultaneously we made a 200 $50000000.00 tender offer to our shareholders at a premium so anybody and our shareholder base that disagreed with the big point strategy and wanted to tender for cash had the option to do so we let that tender offer run we only had about $60000000.00 worth of shares tendered we took we took that share count out and reduced our are our shares outstanding but then we took the. sure a $175000000.00 and we reinvested that in bitcoin so that over the course of 6 weeks we substantially converted the entire $500000000.00 into either bank or aine or to equity you know my investors would say why don't you just give us back all

that money and buy back $500000000.00 worth of stock and the answer is if i didn't capitalize the company so that we have no new treasury assets left if we run into a problem then we could be insolvent you know like i have a bad year i don't make 50000000 i make 10000000 i run out of cash i can't make good on my obligations to my customers my employees my vendors my counterpart and so you can't dick out the lies and institution that you wish to last for the next 30 years and that's the problem with buybacks exclusively they put the company at risk we've seen in this town downturn companies are short of cash and they're highly leveraged and a lot of them are facing huge problems so now but again on a macro economic scale here at that you are kind of making a bet in terms of the reemergence of inflation in a big way you used 10 percent inflation number the fed says are trying to shoot for 2 percent there's a disconnect there with their methodology has been pointed out by many folks they

don't include in their basket of inflation things that actually go up in price it's a misnomer it doesn't really catch inflation of course being an executive at a company like yourself you can't drink the kool-aid and go along with the program you've got at the liver results for real so is tell us about this inflation rate it's really 10 percent i mean if you look at the right and number the best my 1st question and then the 2nd kind of add on there is. are you the tip of the spear i mean these companies like apple and all these other big tech companies with hundreds of billions if not trillions of casts on their balance sheet that you characterize as a melting ice cube in the face of this rail inflation is this the beginning of a wave of rate of corporate of due diligence and prudence that you're obligated purtier shareholders to move into pickling michael i think it is the

beginning of a wave i think you'll see various groups 1st find out where the individuals and family offices 1st then you'll see private investors and private corporations 2nd and then you'll see institutions and hedge funds and then and you'll see public companies come and then after that eventually smaller ones mid-size ones then the big ones then you know then the sovereign funds excite her but with regard to inflation yeah the idea that she p.r. is inflation is a misnomer right as it is so it's a fallacy what you if you think about inflation it's not a scalar it's a vector which means that there's a different inflation rate on different things there's a bucket and i'm out a market basket of deflationary assets like youtube and oberon and stuff you can get from apple and pandora and spotify and amazon and that stuff is going down i think it's manufactured by robots or a ais it's getting cheaper. then there's another bucket of things that are going up

0 to 2 percent and they're lightly manufactured commodities and generics then there's another bucket of things going up 78 percent there are luxury branded items like a harvard education or a gucci bag or something that's that's thought to be unique and then the the highest inflation rate is on assets that are inflated between 8 percent and 25 percent you know and this is the stuff that i don't pay attention to most people don't if you bought a $1000000.00 bond in the year 2010 a page of $50000.00 a year an annuity stream you can retire on it and this year you have to pay $10000000.00 for the same bond so it went up by a 1000 percent over 10 years and that means that it's been running inflation rate of 22 percent for the last 5 decade the same you know the s. and p. and x. is about 8 percent for a decade truly scarce assets like beachfront property where you want to live or

someplace that you really anything you want that's where i scarce is going up north of 8 percent a year in a good year and this year you know if you wanted to share of apple stock at the beginning of the year well it cost 3040 percent more now because it cost a lot more for all those and nobody's so i think you look at inflation is a vector and the assets that will allow you to never work the rest your life are inflating your to 10 percent and the things you can buy like a domino's pizza and a you tube streaming free video is deflating if you wish to create a market basket of deflationary assets you can park the inflation rate to be below 0 for ever but of course you know it's kind of like a jet i mind trick it's like i'd like to work make a $1000000.00 and retire and never work again i need to buy a bond for that these are not the droids you're looking for you don't want that on that's not for you somebody else wants to bond so based on empirical evidence we can say. with a high degree of confidence that jay powell at the federal reserve bank is

understating inflation by 8 and a half percent lace and that's the reality today and if people understood that they would understand a lot more about why these markets are doing what they're doing now you're not the only guy who sees this inflation risk paul tudor jones went long bit calling famously a few months ago re dahlia was piled into gold warren buffett dumped his long held bank shares and went long some gold miners and also japanese stocks kind of get out the dollar stand talking miller is warning about 10 percent in place and of course he was a partner over there with soros and renowned money manager so you have people in your camp and again i get back to the sea change in markets and we've had and you mention the bond market there as being priced in a way that doesn't reflect the real economic environment out there but it has been

an almost 40 year bull market going back to 1980 so is this an inflection point or you know can we say based on wally's smart people and what you're doing that maybe the bond market itself is about to turn what are your thoughts on that i think it is because i remember i came of age during paul volcker's administration and i remember 18 percent inflation huge and and huge interest rates and then we just saw our interest risk really interest rates mortgage down successively for the cost 3035 years they can once they go below 0 what we have is a warm current sheet and not not like a war to make the u.s. currency weaker than the euro the war in currency is anybody holding currency is getting attacked and so now that we're starting to realize that currency is being made toxic by the political you know financial policies of the center. banks you

kind of have to run away from that currency this something that's not toxic and i think decline is that nontoxic currency all right we're going to take care of this over to a park to thank for being on this portion of the kaiser report michael saylor thank you for and that's going to do it for this edition of the kaiser report with me max kaiser and stacy herbert want to thank our guest michael saylor of micro strategy until next time. cash calendar is drawing alfonzo along. their situation page served. his 1st words were that allow a c. or a challenging post you've got 2 years to live. i

have no doubt that what happened was criminal. defense concentrate market is a $1000000000.00 industry these companies how this huge financial motivations to solve these problems there are numerous showing that doctors were keen to test facts right concentrates for insights of its own that patients want gives them doctors the wrong ones to play golf term why they would keep me from secure those years. and people still die and i'm always question were still alive aren't being allowed to live where in so many have. my social class laws passed people also in poverty 1st place if you're born into

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