5 April 2022

Preston Pysh interviews Lawrence Lepard about the dramatic change in financial markets. They cover the decline of the dollar’s global reserve status among many other current events.

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  • What market indicators are surprising Lawrence the most right now?
  • The energy market in a time of war.
  • If gold can’t rally in this environment, when can it?
  • Portfolio construction versus age.
  • What would Yield Curve Control look like?
  • What are some key knowledge points to watch out for?
  • What are his thoughts on the equity “melt-up” thesis?
  • The battle between deflation and inflation.


Disclaimer: The transcript that follows has been generated using artificial intelligence. We strive to be as accurate as possible, but minor errors and slightly off timestamps may be present due to platform differences.

Preston Pysh (00:00:03):

Hey, everyone. Welcome to this Wednesday’s release of the podcast, where we’re talking about Bitcoin. On today’s show, I have a veteran investor and fellow Bitcoiner with Lawrence Lepard. Lawrence has been in the private equity space for multiple decades and goes by the buyline, fix the money, fix the world. During our conversation, he provides an in-depth framework for why the current circumstances are a very different setup compared to anything we’ve seen during the past 10 years. We talk extensively about the inner plumbing and the flows of the various financial sectors. We talk about the impacts of global events that are making prices skyrocket. We talk about why Bitcoin will be so instrumental to a portfolio in this type of environment, among many other themes. So without further delay, here’s my chat with the thoughtful Lawrence Lepard.

Intro (00:00:48):

You’re listening to Bitcoin Fundamentals by The Investor’s Podcast Network. Now, for your host, Preston Pysh.

Preston Pysh (00:01:10):

Hey everyone. Welcome to the show. I’m really excited. This conversation is long overdue, Larry. I’m really excited to have this and have it recorded. So welcome to the show.

Lawrence Lepard (00:01:20):

Thank you very much. Nice to finally talk to one-on-one.

Preston Pysh (00:01:24):

Yeah. And I’m excited that hopefully we bump into each other in Miami here next week.

Lawrence Lepard (00:01:28):

For sure. It’s a plan.

Preston Pysh (00:01:31):

Here’s where I want to start off. And this was the question that I saw posted online for you specifically, and I just really like this to kind of kick off the discussion. The person asked which market indicators are you most surprised about, concerned about or paying attention to right now?

Lawrence Lepard (00:01:47):

A great question. Very smart. Well, a couple things. Just the general stock market. And this ties into what probably is going to be one of your later questions, which is why hasn’t gold taken off, given all the gold friendly stuff that’s going on, or even Bitcoin, why has Bitcoin kind of mired down below it’s all time high, given what happened in Russia.

Lawrence Lepard (00:02:07):

I think, Preston, what’s really going on here, it reminds me a lot of 82 and 83. And I was an investor back then, which tells you my age. And it takes a while for the world to wake up. You got big investment committees, you got decisions that take time. You and I can change on a dime. We see Putin do something. We’re like, oh, I know what that mean, boom, do it. But big asset allocators, they get reports and they have a timeframe and they have to have votes. Just things don’t happen instantly in investment land.

Lawrence Lepard (00:02:36):

And to that point, it’s shocking to me. Probably the biggest indicator that I’m most shocked about is given everything that’s going on, it’s shocking to me that the S&P is still within 5% of it’s all time high, right?

Read More

Preston Pysh (00:02:48):


Lawrence Lepard (00:02:49):

We had this dip and it just came rallying back. It just goes to show you how ingrained this by the dip is. And it’s because it’s muscle memory. It’s because it’s worked since 2008. There are people who are stock market investors who’ve never seen anything close to a bear market, and don’t realize that between the peak in 2006 and the bottom in 2008, stocks lost 50% of their value. The same story in 2000 to 2002, stocks lost 50% of their value. I don’t think the world at large, many investors today don’t understand that’s possible. And those were from lower levels on any way you want to measure it, in terms of the value compared to earnings, the value compared to the margins, the value compared to sales, you name it, we’re more overvalued now.

Lawrence Lepard (00:03:37):

So I’m watching the stock market very carefully because to me, that’s an indicator of the sentiment living in, “The old world.” I think our world is in the process of changing from a deflationary world that we enjoyed from 1980 to 2020, 2019, 2000, and we’re slowly rounding that bottom, and we’re now entering an inflationary environment, a serious inflationary environment where molecules and stuff are going to be a lot more important than paper.

Lawrence Lepard (00:04:09):

And so, I’m watching the stock market carefully. I’m also watching the bond market carefully. And so, the tenure, as we all know, has just taken off like a rocket ship and mortgage rates are going up a lot. We’ve seen them go from 3% to 5% on a 30 year. And obviously this is all because inflation’s going up. And so, these are all natural things you would expect given how much inflation’s gone up, but people are thinking, well, this is temporary. It’s going to turn around. Not transitory. Even the fed got rid of that word, but the one that amazed me is a guy on Twitter, a great guy, does a great piece of work named MacroAlf. And he laid out the bond swaps five years out. People think that from 2027 to 2032, the five year inflation swap is at 2.5%. That means the general people, sophisticated people who are investing in the marketplace today, think we’re going to eventually get all this stuff under control and go back to a low deflationary environment. And I think that is just absolutely and completely wrong.

Lawrence Lepard (00:05:13):

And so, it’s classic investing in the rear view mirror. Let me draw in this 1982 example, because I think it’s useful. I’m out college. I work in Wall Street a couple years and I go to business school. I’m out of business school and I’m investing money profession. That’s my job. And I remember the timeframe very, very well and everyone was saying, and we had just come out of a decade, the 70s where bonds just got annihilated, stocks got annihilated multiple times, kind of they were C-sawing up and down. And inflation was extremely high. Gold had gone from 35 to 800. And the consensus view in 81, 82 and 83 was inflation is going to be with us for the rest of our lives. It’s a serious problem that will never go away. Inflation will never go away. And therefore, bonds are the worst investment in the world, and stocks are the second worst investment in the world.

Lawrence Lepard (00:06:04):

Now, it had all just changed. The one smart guy out there who I listened to was a guy named Gary Shilling, who was an economist way back then. And he wrote a book and he foresaw what was coming and he bought the tenure strips. I don’t know if you know what that is, but it’s where they stripped the principle off of a 10 year and actually bought the 20 and the 30 year strips as well. And he put his entire net worth into that, like in 1981. And this was when the 10, 30 year was trading at 10% or 14% or something. And he made multiples of his money in the next five, enough that he could retire.

Lawrence Lepard (00:06:36):

So the point is that he caught a trend change from an inflationary environment to a deflationary environment and stocks took off. Of course, it took a while to get going. I remember 82 and 83 was pretty choppy for stocks. Bonds did well in that timeframe because inflation slowly started to come back down. But remember, you had an entire world thinking one way and it took them time to shift their thought pattern. You still have an entire world thinking that Lacey Hunter is right and he’s dead ass wrong. He’s completely and utterly wrong. And he is talking his book because he’s made all his money off the deflation trade.

Lawrence Lepard (00:07:18):

And so, what’s happened here is we underinvested in real productive capacity and it’s now showing up everywhere. We don’t have enough things and we got plenty of paper. You’re beginning to see this playing itself out. Things have been doing better. Paper has been doing worse, but there’s still a lot of doubt and it’s going to take time. My opinion is we’re very, very close to what I call the launchpad for silver and gold, which is, and then we’ll get to Bitcoin in a minute. But which is when gold gets through 2000 with authority and silver gets through 30 with authority, it’s going to be game on. People are going to start to realize, okay, this is real, we’ve got inflation, a new all time high end goal, that’ll be meaningful.

Lawrence Lepard (00:08:06):

But right now, they’ve been able to hold it down. That’s the other thing. The government obviously has their own set of interests. They know that these are the warning signals and alarms. They know that oil’s a problem. I’m sure they’re out there creating paper oil and paper silver and paper gold. But at the end of the day, and probably paper natural gas, if they can, but at the end of the day, paper natural gas isn’t going to warm Germany. And so-

Preston Pysh (00:08:35):

[crosstalk 00:08:35] Oh boy, what a problem they got there.

Lawrence Lepard (00:08:36):

Right. And they got a serious problem. And fertilizer, that’s gone up 5X is going to significantly increase food costs. I think a lot of people are think, well, this inflation is bad, but it’s because of COVID or it’s because of the poor, it’s because of supply chain, it’s all because of things and things will go back to getting better. And all I would ask people to consider is maybe they won’t get better. What if they actually get worse? And I think that’s a possibility. I think it’s a real possibility that the market is just starting to come to grips with. That’s kind of a long-winded answer to your question, but that’s kind of how I’m looking at the world right now.

Preston Pysh (00:09:17):

And I agree with everything that you’re saying. The one thing that I want to go back to, because there’s a lot there that we’re going to obviously talk through the rest of the episode, but the 5% off the highs on the S&P after what we’ve been seeing in the marketplace with the Russian invasion, the inflation prints that look like they’re going double digits, I would suspect here in the coming quarter or two, and equities priced that, what would you say the equity market is priced at, 2%, 3% as far as the yield right now?

Lawrence Lepard (00:09:48):


Preston Pysh (00:09:50):

It’s totally crazy. And you had alluded to this idea that everyone has been duped this by the dip mentality, because it has worked. Larry, what do you think that the average participant, they’ve probably never even lived through a bear market. When you think about the age of a lot of these analysts on Wall Street, and when they kind of came in, anybody under the age of, what would it be, 30, 35 years old has never even experienced a bear market.

Lawrence Lepard (00:10:20):

That’s exactly right. The last 12 years or more have been nothing but bull. The other thing that I think people aren’t factoring in is look at what the Fed is saying. Now, we all know they’re going to have to flip flop and they’re going to pivot, we’ll get to that in future part of this conversation. But any one of the things they’re talking about doing would create a problem. Well, first of all, the two 10 year spread turning over, that says we’re going to have a recession. But secondly, more importantly, they’re talking about nine rate hikes. Good God, man, look at what they did from 2015 to 2017. They had to very, very slowly creep it from zero to two, and that almost blew up the markets. And they’re talking about-

Preston Pysh (00:11:02):

[crosstalk 00:11:02] And you didn’t have any inflation to like…

Lawrence Lepard (00:11:05):


Preston Pysh (00:11:07):

There was nothing.

Lawrence Lepard (00:11:09):

Well, and they’re talking about tapering QT. They never really tapered before, all they did was let it run off. And as you’ll recall, when Powell said, it’s going to be boring and this tapering, it’s all on autopilot, the market quickly dove 20% and he had to do the first pivot. So, we know a pivot’s coming in the future and that’s what’ll lead us to hyperinflation in my opinion. But the point is, and we also know corporate margins are falling. So they’re going to lose, if demand is soft, they’re going to lose pricing power, but labor costs are going up. We know that. We saw what happened at [Deere 00:11:44]. They got 5% gains for five years on wages, which is obviously below inflation and we’re at peak margins right now. Average corporate margins, average profitability right now is 11%. It’s the highest it’s ever been.

Lawrence Lepard (00:11:57):

Here’s a perfect storm. You got the Fed tightening, you got the Fed withdrawing liquidity, you got all your corporate costs going up, you got soft demand up above and you got peak multiples. [inaudible 00:12:09] is right, the market could go down 75% and still not be fairly valued. It’s insane. This whole 60, 40 thing is just going to blow up in everybody’s faces. It’s going to be tragic.

Preston Pysh (00:12:20):

It is going to be tragic.

Lawrence Lepard (00:12:22):

First of all, the 40 is going to be worthless, and the 60 is going to get marked down by 50%, at least in my opinion. My hair’s on fire. I’m telling you. I’m [inaudible 00:12:33] sitting here.

Preston Pysh (00:12:34):

Well, and you say it’ll get marked down 50% at least, maybe I’m even more bearish than you in that, in order for them to continue this manipulation in place, I just don’t know how they’re going to be able to sustain any semblance of normal price signals. And if we look at the bond market currently price at what, two and a half percent ish to 3%, if inflation starts blowing out double digits, we’re more than 50% then maybe.

Lawrence Lepard (00:13:03):

Oh, easily. So then what do they do? The thing that gets really super interesting is trying to game theory out, moves and counter move. It’s been amazing to me the way the Fed has been bluffing, this tough guy Fed. I’ve got Bullard who used to be the biggest dove, trying to be the biggest hawk. And they’re saying, well, we’ll go to 50 basis points. We’re going to have nine increases, we could do with for all next month. It’s interesting though, they talk about all that stuff and you notice when it comes down into it, in my view, if Powell had any balls at all, he would’ve said, oh, it’s 50 basis points. It’s 100 basis points if he’d been serious about it. But here’s the thing that they don’t say that we all know, they really need this inflation. The reason they need it is because they can’t deal with this debt structure, unless they get inflationary growth to make the numbers such that the debt is a smaller percentage of GDP. That’s key to their whole thing.

Lawrence Lepard (00:13:59):

So, my sense is their playbook is they’re going to talk about how tough they’re going to be and how they’re going to get inflation out of control, but they’re really not going to do very much.

Preston Pysh (00:14:09):

Yeah, just let the market sell off.

Lawrence Lepard (00:14:12):

Yeah. They’re going to let it go.

Preston Pysh (00:14:15):

Wow. Okay. Let’s talk a little bit about just the Russia piece here. This is coming out next week, so we’re going to know the outcome of how tomorrow kind of happens, but Putin has made the comment that they’re going to pay with ruble. And if they don’t like it, then he’s going to shut off the power. Is this something? Is this a real threat? Is he going to actually have to flip his cards at the end of this hand and demonstrate that he actually is going to shut off the power to the EU?

Lawrence Lepard (00:14:46):

I suspect he is and I suspect he will. I don’t think he’s bluffing.

Preston Pysh (00:14:51):

I agree with you.

Lawrence Lepard (00:14:54):

Look, it’s hard. This is a very tricky situation to be in because, I don’t like the political leaders all around the world and Putin is one of them. And I’d no way support this guy. He’s an evil guy. Having said that, I understand what he’s doing and I understand why he’s doing it. And so I look at it from an analytical point of view, not a judgemental point of view. And I think that he is in a situation where he knows he’s got the bull whip and he’s got what the world needs. He’s got commodities. He was very strategic in the way he let us get way out over our skis with all this leverage, and now he’s saying fine, you want my stuff that you need, that’s great. You can pay me in something that’s real. Because in my opinion, what he is doing now is like what Dugal did in 71. And that’s why to me, this is an enormous monetary earthquake.

Lawrence Lepard (00:15:44):

I thought gold and silver were going to work and Bitcoin were going to work beautifully long before Putin did any of this stuff. To me, what just happened, I fell out of my chair. I was just like, this is a major, major accelerant to the trends that already exist. And then when the US reacted, well, when Trudeau reacted to the truckers and then the US reacted to Russia by freezing stuff, that’s like an advertisement for Bitcoin and gold, right?

Preston Pysh (00:16:09):


Lawrence Lepard (00:16:10):

The authorities can grab your money.

Preston Pysh (00:16:12):

I think the FX reserve piece was, I was talking, I think to Luke Gromen the day that happened. And I know when we stopped recording, we were just like, I can’t believe this just happened. This is-

Lawrence Lepard (00:16:25):

[crosstalk 00:16:25] Me too. I had the same reaction. What happened to the rule of law? And of course we’re demonizing this guy, but it’s like, okay, but what we just did, is that correct as well, whatever. Let’s not get into the what’s right and what’s wrong, let’s just look at what’s happening. The fact of the matter is he is saying, I’m not going to take this paper in exchange for my real stuff. And we are trying to demonize him. I think the US strategy has been, well, let’s see if we can piss off all his oligarchs and maybe they’ll knock him off. But my sense is that he’s pretty well defended, and that’s not going to happen. And he’s going to be able to carry through on this thing. I’m guessing the way I read it, if he doesn’t get payment from Germany in the form of rubles, he’s not going to ship the gas. They’re going to turn the pipeline off.

Preston Pysh (00:17:16):

So what happens then? Because I’m with you. I think that’s the highest probable outcome here, is that they don’t pay, he shuts off the gas and then what?

Lawrence Lepard (00:17:26):

Well, they go into some form of rationing, gas prices go up even higher, fertilizer prices go up even higher. He can sit there. He doesn’t need to sell that gas, whereas the Western world needs, the Western world is highly leveraged with a lot of paper, a lot of derivatives, a lot of stuff, that it’s all linked together. And when you pull out the actual physical piece, the physical collateral, the paper stuff doesn’t work anymore.

Lawrence Lepard (00:17:57):

And so, we’ve already seen, you’ve seen [inaudible 00:18:00] and some of these big commodity houses have had serious problems, and we saw what happened with nickel. The nickel blow out. That basically just revealed the LME to be a complete forest. And something very similar, by the way, could happen with silver and gold. I think it might. I can’t predict it and I can’t guarantee it. But the point is that we’ve got this enormous paper structure built on these underlying things. And if you stop the flow of the underlying things, like he’s doing, everybody looks around at the paper and says, huh, what’s this paper worth if it’s not connected to something. My counterparty is going to fail. You had the same thing in 2008, but the paper was all built on the houses and it was the banks and it was at a lower level, and the Fed could step in and say, okay, no problem, we’re going to make all these guys money good with fake money. And so-

Preston Pysh (00:18:55):

[crosstalk 00:18:55] You didn’t have this strategic situation kind of playing out?

Lawrence Lepard (00:18:58):

Yeah. Russia wasn’t involved. Right. Look, it’s a big mess and it is going to, in my view, get worse because I don’t think this guy is going to back down. I think he understands the vulnerabilities. There’s a lot of data that says he understands how fractional reserve the gold market is. And it’s interesting. The choice, the ruble price he chose for gold was perfectly calculated to match today’s price. And so, he’s basically backing the ruble with gold. He’s not exchanging. You can’t take the ruble and get gold out of his vault. It’s not full exchangeable standard, but in a piece, by setting the price of the way he has, he’s taking people to a gold standard because he’s forcing other people who want his resources to pay in something that’s real. And that’s huge, and it’s going to be, the west is going to find that there’s not as much stuff out there as we thought, and we’ve underinvested, we’ve invested in the wrong things and we’ve underinvested in the right things. And so, the price of everything is about to get a lot higher.

Lawrence Lepard (00:20:07):

I’m shocked. I’m sure you’ve seen this. I saw, I think on Twitter yesterday, I saw some $7, $8 for gasoline in California.

Preston Pysh (00:20:14):


Lawrence Lepard (00:20:16):

So you look at the stock market, the stock market’s within 5% of its record high, you’ve got $7 gasoline.

Preston Pysh (00:20:22):

Doesn’t even make sense.

Lawrence Lepard (00:20:24):

My head is spinning. How is that possible? It makes no sense. And the reason is the stock market guys are doing a tina. They’re going, well, there is no alternative and there’s lots of liquidity and we can lever it up and it’s worked so far, but you know it, I know it, this is going to end badly for bond bowls and stock bowls. And it’s going to end better for commodity people.

Preston Pysh (00:20:47):

I think your comment about the nickel when they stopped the exchange, and then they rolled back trades that happened that entire day is truly a precursor for what’s to come, I think for maybe the rest of this year or the, even the year after.

Lawrence Lepard (00:21:03):

Absolutely. Twitter had it, the house doesn’t like to lose. They did this to the hunts. And this is something for all Bitcoiners, gold people, silver people, we’ve all got to be aware of this. They are going to change the rules. I saw this firsthand. I was massively short the financials in September of 2008. They outlawed selling the financials in September. I lost 5,000 basis points in three weeks. And my fund went from having an up, I had the Michael [inaudible 00:21:32] trade on, but I didn’t know what CDS was. And my fund was up 50% and I ended the year down six.

Preston Pysh (00:21:37):

Wow. Because they changed rules.

Lawrence Lepard (00:21:39):

Because they changed the rules. Hunt brothers, the hunt brothers had them beat. They had them cornered. There wasn’t enough silver. And they changed the rules. Whoever was long, those nickel contracts, they had it. But look, they did it with game stop. They do this over and over again. The difference with Russia is they can’t change the rules if you need the physical stuff. You either have the oil and gas or you don’t, and the paper is irrelevant.

Preston Pysh (00:22:14):

So, people from the Bitcoin space that are listening to this, they hear you say that they’re just going to change the rules on you. How do you think that they could do that with respect to Bitcoin?

Lawrence Lepard (00:22:25):

Well, fortunately it’s quite a ways down the road and they’re going to have a hard time. We’ve got some senators in favor, et cetera. They’re going to have a hard time coming after it that way. But having said that, as things get more and more desperate, you don’t even know where they’ll go. I think they’re going to do one, well, there are a couple things I predict. First of all, if you have foreign money overseas, if you’re an American and you have an overseas bank account with more than $10,000, you have to report it. A lot of people don’t know that, but you do. You send a form to Detroit every year. I do it because I have some accounts in Switzerland with gold in them. And they did that to try and crack down on tax excavators.

Lawrence Lepard (00:23:03):

My suspicion is that something very similar will be coming for Bitcoin. They’ll say, okay, you’ve got to report your Bitcoin addresses. And you got to tell us how many coins you have, because this is a tax evasion scheme. We don’t like it. You got to do it. And at that point, every Bitcoiner in this country is going to face some difficult decisions. Do you want to just have the 12 words? What do you want to report? What don’t you want to report? Whatever. We’re not going to go there, but the point is, that’s an issue. So I could see them coming for that. I could also them coming for windfall capital gains taxes on gold, silver and Bitcoin holders. But again, the advantage of these assets is that they are bearer assets. And maybe you can hang on long enough to the point where this regime fails.

Lawrence Lepard (00:23:49):

In France, in the French Revolution of 1789, the [inaudible 00:23:53] failed. And basically the government at the time was very anti gold. Everyone hoarded gold, because they knew the paper was failing. And so they said, you got to report your gold. You got to turn in your gold. Of course nobody did, or a lot of people didn’t. And they found people who had hidden gold or had not reported their gold [inaudible 00:24:12]. Governments can be brutal with respect to people that they think are behaving outside their interest. And you could certainly see a scenario where they say, we had this great fiat money scheme going, [inaudible 00:24:25] say that, we had this great economy growing, we had this great system going and you sound money people, you totally trashed it for us. You’re anti-American, you’ve ruined our system. We need to tax you. We need to know what you hold.

Preston Pysh (00:24:39):

You’re already seeing some Wall Streeters saying these things about our community. Mike Green is a perfect example where he was saying, y’all are unAmerican. And at that point I was like, okay, I disagree with you and I don’t really hear your opinion anymore.

Lawrence Lepard (00:24:52):

I have no time for that guy.

Preston Pysh (00:24:55):

I don’t buy into this idea of either you believe in free and open markets, and that the best, if I want to go out there and I want to buy something that you think is worthless, if you actually believe in free and open markets, you should promote the person to do that because then they’re going to have less buying power and less influence into the direction of where everything goes. To imply something like that, to me, is such a fundamental flaw of what this country stands for, which is free and open markets and just capitalism and freedom.

Lawrence Lepard (00:25:29):

I completely agree. At some fundamental level, you have to decide who is more sovereign, the individual or the state. And status believe that they have a right to tell you how to live your life. And I don’t believe that. And I don’t believe that’s what the constitution says. I don’t believe that’s what the majority of Americans believe. And so, I am very anti-status. But there are people who are status, who they use all kinds of different mechanisms to try and control people. And this has been going on for years. All these wars are driven by status and all these wars are financed by fiat money.

Lawrence Lepard (00:26:10):

If we had sound money, we wouldn’t have these wars. You know that, I know that, Bitcoiners know that, gold people know that, and the status know it too. And that’s why we’re their enemy, because their system rewards them and punishes us. And what it really does is it doesn’t just punish us, but it punishes the average working people who are unable to save their labor and therefore basically get in a situation where they can’t even retire because they never know if their money is going to last.

Preston Pysh (00:26:38):

One of the glimmering hopes that I see in government is at the state level relative to the federal level. Let’s just pull the thread and let’s say at the federal level that it becomes politically popular to do some of these things that you’re talking about that have been demonstrated throughout history. It appears like states like Wyoming, Texas, and a few others have already started passing some type of protective measures for self custody. And I guess I’m hopeful that competitive dynamic that exists here in the United States between the rights of state powers versus at the federal level will really kind of in the gear and protect the interests of people that are local into some of these jurisdictions that have demonstrated a strong resolve for protecting self custody. What are your thoughts on some of that?

Lawrence Lepard (00:27:31):

Well, I think that’s right. There could be a succession of several states. Obviously Florida and Texas are two most likely candidates. I’m in favor of that. The federal government, what do they do really? They conduct wars and they redistribute income. Those are the two biggest line items in their budget. If Texas or Florida were to say, sorry, we’ll opt out, we’ll send you our share of the military budget for national defense and we’ll opt out all that other stuff, it would be quite a challenge. I don’t think we’re going to fight another civil war, but to me, it’s interesting that there are big pieces of this country and hopeful that there are big pieces of this country that understand just how broken the political system and how broken the federal system is.

Lawrence Lepard (00:28:20):

My personal view is that the way this is going to go down is before that happens with the states falling off, one of the questions you put up a thread to what questions you want to ask last, I think we’re going to have hyperinflation, Preston. I really do. I don’t like saying that. I know others believe it, but don’t say it. Well, I’ll say it. I think it’s going to happen. And I think when the currency fails, because mathematically it’s it kind of baked in and historically it’s the pattern that happens when we see what’s going on now happens. I don’t know the timeframe. It could be two years. It could be eight years, but it’s somewhere in that window.

Lawrence Lepard (00:28:54):

And when the currency outright fails, when it will not spend, when everyone has given up on it, well, that’ll lead to all the politicians being throwing out, everyone being very angry, a lot of suffering and pain, all around for all of us, it’d be horrible. And yet, I believe there’s a remnant of smart people in this country and others that will say, the reason this occurred to us is that the government was broken and we got to reform it, we got to fix it. Mayor Suarez will become president Suarez, and we’ll go to a Bitcoin standard or a gold standard and we’ll have term limits and we’ll try all the criminals who put us into this mess. And there’ll be a better system coming out the other side. To me, that’s the task of Marty Ben’s generation in this fourth turning. Marty and Jack Mallers are going to be the leaders of the hero generation. They’re going to lead us to the other side when this collapse occurs. And to me, it’s pretty inevitable that it’s going to occur. I think fiat’s going to be worthless and not that far away.

Preston Pysh (00:30:01):

Yeah. I’m with you. I think that what we see playing out, and people ask me this, they’re like, well, how do you have so much conviction in that idea? And I’m saying, it’s not necessarily that Bitcoin is going to pull it there. I think it’s more that the existing system and the macro backdrop, especially in fixed income is so incredibly broke that it’s going to push and force this. It’s going to thrust it upon us.

Lawrence Lepard (00:30:30):

Absolutely. It’s just math guys. It’s just so simple. You can’t increase the debt load faster percentage wise and you increase the productivity without having, eventually it to implode. It just by definition it has to, because we have to continually print more and more money. And so to me, the next big thing that’s going to happen is we’re going to have the next Powell pivot. And I don’t know when that happens. I can’t predict. Nobody does. But given what they’re doing and given how fast things are moving, my suspicion is that it’s probably not going to be that far out. The Fed now has three mandates. They always had the mandate of full employment and controlling inflation, but the third mandate really is continuous markets. And so, as we were talking about earlier in this conversation, what happens when the bond market starts to break and everybody, look, the tenure in and of itself is absolutely ridiculous.

Preston Pysh (00:31:23):

We’re getting there.

Lawrence Lepard (00:31:25):

Yeah, it’s already broken, but I’m going to talk about really breaking. You got 8% inflation and you’re getting a two point something percent yield, right?

Preston Pysh (00:31:32):


Lawrence Lepard (00:31:33):

Well, that doesn’t make any sense. So pretty soon, the entire bond market is going to say, sold to you, Fed. And so, as people sell out of the tenure, which they’ve been doing substantially, and it goes much, much higher, it just starts shutting off everything. Then the government says, well, okay, and they can’t sell their bonds. And so they have to continue to buy them themselves. What’s standing between us and hyperinflation right now is just lack of awareness by enough people in Gresham’s law. And I’ve said this many times. Read Reinhart–Rogoff, read all this hyperinflation books. What you come to understand is that hyperinflation is money velocity based on people dumping the money, and people dump the money when they come to the conclusion, as Gresham’s law, they come to the conclusion, there’s absolutely no way the government could stop printing.

Lawrence Lepard (00:32:22):

And some of us already know that. I believe that, you believe that, other Bitcoin generally believe that. Most of America doesn’t still believe it. They’re probably worried about it. They’re starting to be worried about it, but they don’t believe it. But once they come to believe it, they’re going to want out of every single dollar they’ve got, they’re going to sell every single bond they’ve got, they’re going to sell a lot of the stocks they’ve got, and they’re going to move into real things. And they’re going to see the price of real things going up really fast. And that’s how hyperinflation happens. It’s an abandonment of the currency because the stewards of the currency have so abused it, and there’s no way they can bring back the confidence.

Lawrence Lepard (00:32:56):

Volker did it. We had a version of this obviously in the 70s, gold went from 35 to 800 and it did it when inflation was high and the teams and so forth. But we weren’t in debt and Volker was able to step in with a 20% interest rate and bring back confidence. If we had a 20% interest rate today, the entire country would go bankrupt. There’s no way, right?

Preston Pysh (00:33:15):


Lawrence Lepard (00:33:15):

Yeah, immediately. It looked like the great depression. And actually one of the great questions on your thread for me was, well, are we going to have hyperinflation or deflation. And the answer is both. But it’s just not clear in what order, because the inflation’s going to be so messy that activity’s going to collapse and that’s going to lead to deflation. I think sadly, what’s going to probably happen is we’re going to have deflation in assets, everything you own, and we’re going to have inflation in everything you need to stay alive.

Lawrence Lepard (00:33:49):

Another question was, is housing a good store of value? Yes, it is if you don’t lose it, because it’s got practical utility. The thing that’s wrong with it is the government can tax it. But at least it’s the place you can live. If you know your income is solid and you’re not too levered on it, in some places it makes sense. There was a time when you get a 30 year mortgage for 3%. You’re putting on a [inaudible 00:34:12] trade by levering yourself up to buy something you needed, which is why I think that housing was up 20% last year. Isn’t that amazing? Housing prices are up more in this cycle than they were in the 2008 housing bubble? To me, that’s just people realizing that this is an asset that’s real. And so, it’s Gresham’s law for housing.

Preston Pysh (00:34:34):

Larry, I got a question for you. You had mentioned that getting the timing of the Powell pivot is something that you can’t forecast. When I’m looking at the bond yield curve, and I’m looking at the last 40 years of this down trend on the yields that we’ve seen, they seem to hit like this mechanical stop that is very predictable. When you look at all the different durations and they all kind of hit a different yield, depending on which direction you’re looking at. And when I’m looking at this, just as an example, like the 30 year right now is suggesting that once we get to around 2.87, we start to hit that 40 year trend line on the 30 year, and today it’s at two point, we’ll call it 2.5%.

Preston Pysh (00:35:21):

So we’re like dangerously close to this limit that we’ve seen for 40 years, at least on the 30 year. You go to the 10 year, I think we’re already there. And so, you had mentioned that you think we’re getting dangerously close to whatever that limit is for the Powell pivot. Do you think that this is a good way to kind of, if a person was trying to estimate on when that’s going to happen or how much is left before things dangerously start to fall apart in the fixed income market, is this a tool that you think you could rely on? Is there anything else?

Lawrence Lepard (00:35:53):

No, it is a great tool. That’s probably your primary tool. The things I’m watching, I’m watching that. I’m watching the stock market, because as the stock market starts to sell off, there’s negative wealth effect and so on and so forth. I’m watching the price of Bitcoin and I’m watching the price of gold and silver. To me, those really are your dashboard for what’s going on here. And everybody else is watching them too. And this is the common knowledge game that we’re playing. So, if the bond market really starts to fall apart, recall that what created, we had a preview of it, frankly. It’s a good preview.

Lawrence Lepard (00:36:32):

So in March of 2020, COVID hit and stock market, big exogenous shock, stock market womb just took in a huge dive. But the thing that, the really interesting clue there is what normally happens, stock market takes a dive, bond market should have been well bid. People should have said, okay, great stocks are cratering. Oh yeah. I’m running into bonds. Bonds should have rallied like crazy. Well, they did initially. And then they started to sell off. And eventually, as Gromen points out, eventually there was no bid in the bond market. Well, that’s scared of the Fed. You can see it. It’s in their minutes. And so, that’s when Powell came in and did his druggie and said, okay, whatever it takes. And that’s how we printed $4 trillion worth of money in a couple of years, which is basically all the QEs from 2008 to 2013. We did it all in two years.

Lawrence Lepard (00:37:22):

So it’s the Hemingway bankrupt, how’d you do it, well, two ways gradually then suddenly. Watch the acceleration, watch the second derivative. If we see serious acceleration in the sell off in the bond market and rates going up, we see serious acceleration in stocks, we see serious acceleration in gold, silver, or Bitcoin, you’ll know what’s happening. To me, those are the clues. And we’ve seen all of those. Just recently we got a pretty serious, the Russia thing hit, we got a pretty serious acceleration in gold, but then they kind of got it under control. Nickel blew up, but they put that back in the can and they got everything under control. Gold come back down below 2000, came back and tested low 1900s.

Lawrence Lepard (00:38:06):

So, it’s like waves. You get a wave and then you’ll stop. You’ll get a retrace, but not all the way back. Gold’s not back in the 1800s, the 1700s. Bitcoin same thing. Bitcoin was in the high 69 area, and it slowed down. It run awfully hard. Everyone who was in it at 5,000 or 10,000 was feeling pretty good at 69. I recall it, they were all telling me I was an absolute idiot throwing gold. Look, I get it, and then it backs off to 30. There was a lot more silence, kind of like, oh, okay.

Lawrence Lepard (00:38:42):

So, to me, these are the indicators, because they are the most liquid, most watched signposts. And you can bet that when Bitcoin did that, alarm bells were going off the Washington DC and at the Fed. They had an exchange stabilization fund, just as when gold takes out 2000 the next time, which I think it will within a month or two here. It’s going to squirt on up to 2,500 or 3000. It’s going to be game on and these stocks are going to go berserk. And everybody is going to go, huh? What’s going on here? And it’s going to be because of the obvious inflation and more and more people coming to realize. I think I’ve said this many, many times, but it’s just substitution. You’ve got 350 trillion of financial assets. You’ve got 7 trillion of sound money assets, all that 350 trillion has to do with some piece of that has to say, Hey, I’m not holding my purchasing power, give me some of that sound money stuff.

Lawrence Lepard (00:39:38):

And so, even if it’s only 10%, that’s 35 trillion fiat assets chasing 7 trillion of gold, silver, Bitcoin, and gold stocks. What’s going to happen? The seven’s going to get bigger. That’s just going to happen, and that’s a fact. And so, people have asked for my targets on this stuff. I think this year we’ll see gold at 3000. I think this year we’ll probably see Bitcoin at 150. I think this year we’ll probably see silver at 50 in the next wave up. And if the pivot comes, and that’s even before the pivot. I think-

Preston Pysh (00:40:11):

[crosstalk 00:40:11] When you say pivot, are you saying yield curve control is basically what’s going to have to happen for them to get things under control or what do you think that that pivot looks like?

Lawrence Lepard (00:40:21):

Yes. Yield curve control would be one form of the pivot because they have to grow their balance sheet to do that. They claim they’re going to shrink their balance sheet. Yeah, yield curve control. Any reversal of this tough guy Fed talk that we’ve heard. But my sense, here’s my sense, Preston. This is important. A lot of people are like, well, they’re going to roll over right away. I don’t think so. I think they know, I think they’re aware of how much fire they’re dealing with here. And I actually think they’re going to let the… Joe Wang on Twitter does a good job of, I think they’re going to let the stock market go down 20% or 30%. And I think the reason they’re going to do it is they kind of need to do it to create demand destruction to have a chance of getting oil and all this energy inflation back in the can. So my sense is… Go ahead.

Preston Pysh (00:41:06):

The previous sell offs, I’m sorry to interrupt you. The previous sell offs that we’ve seen that have been pretty sizable in the last, if you even want to call them this, in the last decade have been around that point that you just said, that percentage drop. I know the March, we were down 30% in March on the NASDAQ at least. So when I chart that out from the high that we’ve seen in the NASDAQ, it’s pretty much right where you’re saying, another 25% from here before they’re going to step in and do anything, and it seems like that’s their trigger that things, if they let it go any more than that, it’s going to really get disgusting and maybe difficult to even calm the markets.

Lawrence Lepard (00:41:47):

I think that’s exactly right. I think they know that’s the point at which people really start to freak out and they got no chance of bringing it back. And they’ll probably have some excuse for it. It’s interesting to be the way-

Preston Pysh (00:42:02):

[crosstalk 00:42:02] Oh, yeah. Russia.

Lawrence Lepard (00:42:02):

Yeah. It’s Russia. It’s not our fault. We had to do. This is the only natural thing to do. They’ve already started doing this. The gasoline prices are high in California, Pelosi says we should start sending checks to people as rebates. Other countries have talked about that too. So, where’s that money going to come from? Well, we’re going to print it. And people will be screaming bloody murder in terms of gas prices and food prices. There’s an election coming up. One thing I’m sure of, my guess is before the election comes up, Biden’s going to forgive all the student debt. He’ll just waive that.

Preston Pysh (00:42:39):

That’s an interesting call. I think you might be onto something there, because they’re going to have to do something pretty miraculous in order to turn the tide here based on the numbers that I’m seeing.

Lawrence Lepard (00:42:50):

Yeah, he’s got 40% approval rating. It’s going to get lower. Look, you would not want to be a politician in this country, anywhere really in the world in the next year. There are going to be a lot of really righteously pissed off people. I get it. And they’re going to take it out. I hope on all the incumbents because frankly they all stink. And then hopefully, over time, probably not this cycle, but a few cycles out, we actually start getting some sound money candidates who are like, look, you hate the inflation we’re living with, we do too. Here’s how you solve it. You do a monetary restructuring. And that would be a lot easier, not easier, but it would be a fairer way of solving this problem rather than letting it go to its end conclusion of runaway inflation.

Preston Pysh (00:43:38):

So here’s my issue. I think you already know my issue with gold. I don’t have an issue with gold on an individual level. If an individual investor wants to own it, hold it to preserve buying power, I have absolutely no issue with that. Where I get frustrated with gold is on a sovereign level, in that you’re going to have governments that through branding and marketing, suggest that they’ve got a PEG when in reality… You can go back and look at, even in this country from the 1940s, until we came off the gold standard, did we really have a PEG or did we have a PEG in branding and marketing, because we were adjusting the money multiplier. I’ve got charts that kind of show how we were adjusting that money multiplier based on what they had in the vaults.

Preston Pysh (00:44:28):

And so, although it briefed well, in practicality, like any other gold standard, it failed because they were manipulating the ledger and they were manipulating the amount of currency that was riding on top of the amount of gold that was in the vaults. So, where I get a little bit frustrated with, and you would see this, I think Russia is a perfect example. They’re threatening or they’re, I don’t know, you call it a threat. They’re saying that they’re going to start backing their currency with gold, or that they’re going to accept gold for their oil sales and that it’s becoming sound money. But in order to actually truly run a PEG, you have to be willing to sell the gold in the vault at a certain price in order to PEG the currency.

Lawrence Lepard (00:45:12):


Preston Pysh (00:45:12):

I think, and this is me, when I’m looking at the competitive landscape that we’ve got happening around the globe, to engineer growth through the basement, you’re in this ultimate rat race of like 100 meter sprint, where the only way you can possibly win is by cheating better than the person standing next to you.

Preston Pysh (00:45:36):

So thinking that any one of these nation, states are somehow going to just, oh yeah, we are going to actually run this race by the rules, fully knowing that nobody else here running the race is going to obey the rules. I just don’t see it happening. I don’t see it happening based on the demand by the populace for manipulation of currency and the basement, the free college, you name it. The populace wants this, as of right now, that’s about the change like you’ve so eloquently highlighted, there’s going to be a call for the exact flipping of that. But I think right now to think that anybody could go along with this for sound money policies at a time where the cheating is the only way you can possibly stay in the race, I just don’t know how it’s possibly going to work.

Lawrence Lepard (00:46:28):

Yeah. Well, I agree with you there. I don’t disagree with any of that and there’s no doubt that the great flaw of the gold model, it’s not verifiable and it’s hard to move and you can cheat on it and everything else. It’s failed. The gold standard has failed at-

Preston Pysh (00:46:45):

[crosstalk 00:46:45] At sovereign level. Yeah.

Lawrence Lepard (00:46:46):

At a sovereign level. Until Bitcoin was invented, it was the best of all alternatives. It was the least worst alternative. And now Bitcoin’s a better alternative because of the way it’s structured. But it’s still relevant though. Some people have asked the question of, how do I see it unfolding and will gold have any monetary value in 10 years? And look, it takes time for people to change perceptions and you got 5,000 years of Lindy Effect on gold and you got, I don’t know, was is it 12, 13 years or more. I’m Bitcoiner.

Lawrence Lepard (00:47:20):

And so, gold’s not going away. I’m completely with [inaudible 00:47:20] that Bitcoin’s a superior form of gold or of sound money, but I differ with him in the sense that I don’t think gold is Bitcoin’s enemy. I think there’s a transition period that’s going to occur between the two and they’re both sound money with slightly different characteristics. And so, I foresee, Bitcoin is clearly the faster horse in the race and the better of the two and probably where we’ll end up in 20 years in terms of base money, which we need, we need a neutral reserve currency. I don’t think most people in the world even have a clue of what driven dilemma is, but at top monetary circles, they understand what it is. And so we will go to a neutral reserve currency, I think out of this fourth turning because what’ll happen is these will be so awfully broken and people would have suffered so much that somebody smart will get in there and say, this is the solution.

Lawrence Lepard (00:48:15):

I pray that solution is ultimately Bitcoin. I think it probably will be. But I also think that there’s a chance that between here and there, you’ve got three nuclear powers in the world, three big nuclear powers and more, but Russia, China and ourselves, and two of them are betting pretty heavily on gold. And we could leapfrog them if we bet on Bitcoin, I think we should. And hopefully that’s what Jason Lowry’s able to convince the Pentagon on, but it’s a tricky issue. And I wrestle with it every day.

Lawrence Lepard (00:48:42):

My personal account, my PA, I’m much more heavily Bitcoin than gold, but I also manage a gold fund and gold stock fund. And a lot of my investors are boomers that want nothing to do with Bitcoin. I’ve got 20% of my fund to Bitcoin and they’ve seen the performance and they like that, but they don’t want to give up on the gold. And I understand why. This is a new technology that they view as not being widely accepted and having risk. I think that’s falling away.

Lawrence Lepard (00:49:10):

I’ve said in the past, I went to the gold show and I gave a speech on why all gold people need to own Bitcoin, and the speech is available, puts out on the web. This was a gold show with a lot of older people who’ve owned gold for a long time, been very frustrated. And somebody asked the question, said, “How many of you guys own Bitcoin?” Half the hands went up. I thought that was impressive. Your gold holders, your best Bitcoin convert. They understand the monetary issue, they just need to understand what digital immutability is. But Bitcoin’s not [inaudible 00:49:43]. It’s completely different. And it’s not XRP, it’s the real deal.

Lawrence Lepard (00:49:46):

And so, once they come to understand that, most of them eventually embrace it and start over, and like me, become more and more into it as time goes by. But how this whole thing unfolds, none of us know. There’s a lot of politics involved. I think that what I can say with confidence, what I believe anyway, is that for individuals and families, if you want to carry your savings and wealth through for your kids, grandkids, and your family, your next generations, your best places to be are in this order, Bitcoin, silver, gold, or maybe gold, silver. Silver’s more volatile. And somebody asked some question on the thread, if you had $100,000, how would you allocate it? I’d probably put the average person, I’d probably put them a third into each of those three things. I know that people will say, well, you should go 100% Bitcoin. Well, whatever. Look, they’re all going to maintain value over time,

Preston Pysh (00:50:43):

I think a really important thing that’s missed, especially with the few characters that you have on Twitter is age when you’re doing portfolio construction. And you’re also considering, well, what lifestyle is this person trying to preserve at that particular point in their life, or if you’re dealing with a young person, right, how much is this person trying to grow and how much risk tolerance are they willing to take based on how much more time they have to catch up if they’re wrong. And these are nuances that are vital to portfolio construction that no one ever addresses.

Lawrence Lepard (00:51:26):

Absolutely. And I’ll add to that volatility, which you alluded to with the risk point of view. Look, people in the Bitcoin space can handle a 30% draw down, a 50% draw down, even an 80% draw down because we know what it is, we believe in long term, we know it’s going to win. They’re going to be worth millions of dollars per coin, full stop. So we’re good. But if I take my 80 year old mother and put her into Bitcoin and she’s looking at the statements every month, and I put all her net worth into Bitcoin and her net worth gets drawn down by 50%, she is going to freak out. I think she is going to completely and totally freak out. And she just can’t handle that. So, as you point out, everybody has a different risk tolerance or different points in their life. And gold has never had an 80% draw down. It just hasn’t. And yet they all represent sound money in today’s world.

Preston Pysh (00:52:18):

Here’s a question I loved. I don’t think you’re prepared for this one.

Lawrence Lepard (00:52:21):


Preston Pysh (00:52:24):

When will clown world peak?

Lawrence Lepard (00:52:28):

Yeah. I love that question. I think clown world will peak when it gets very serious and real. You know what I mean?

Preston Pysh (00:52:38):


Lawrence Lepard (00:52:38):

And I’m sad to have to say that, but I think, let’s look at a prior example, let’s say the roaring 20s, when everyone was drinking like crazy and partying and the good times were roaring and the stock market was going up. I remember my grandfather had a business and he levered it up and he almost lost it because of that leverage. That was kind of happy times, clown world. And it’s maybe similar to what we’ve lived through here with this bull market. And then the depression hit, and he was struggling to survive and so was everybody else, they were just trying to feed themselves.

Lawrence Lepard (00:53:13):

There were people in the Midwest who lived by, I’ve read stories, when they literally lived by the fact that they had a gun, they were able to shoot squirrels and [inaudible 00:53:22] and that’s how they got their food. And then a war broke out. It was an existential war. It was for all the marbles. Had a bunch of evil powers that wanted to take over the world and we had to go overseas and slam. The people who did that, those were serious people. That was the greatest generation. Those were very serious people who address us a very serious issue. And there weren’t any clowns left. And after that, we had a pretty stable world in the 50s and 60s. It didn’t feel stable to them because they were worried about the cold war and a lot of other things, but there was a lot of good going on before they decided to assassinate a president and start a war.

Lawrence Lepard (00:54:00):

But I guess my point is, I think that when times get tough, and sadly think they’re about to get really tough, that clown world’s going to go away. NFTs aren’t going to have any value. We’re going to go back to some fundamental values, who do you know? Who can you trust? What do you value? Family and friends, what really counts and what do you do produce, not what do you lie about or say you’ve got, or how much paper can you shuffle, but what can you actually do? Are you a doctor? Can you heal people? Whatever it might be. Are you an oil field worker? Can you help get oil out of the ground? Are you a farmer? Can you produce food? People who do real stuff have been terribly left behind and undercompensated in this 40 year enhanced bubble.

Preston Pysh (00:54:51):

Amen to that, sir. Amen to that.

Lawrence Lepard (00:54:54):

Right. It’s tragic. It’s just tragic. Look at the way that Midwest was hollowed out. Then you have the sackers come in and mess them all up with all those drugs and kill all those people. What’s happening to this country is absolutely tragic, and yet there are enough people around, there’s enough of a remnant around who remembers what it used to be like, because we grew up in the good times and we knew we had grandparents who fought in those wars and uncles and aunts. And we believed in the fundamental goodness of this country. And it is a great country with great people. And even though it’s gone very much astray, tough times, and Marty and Jack’s generation, they’re going to step up. They’re going to step up and go, you guys F this up, and we know how to fix it. And here’s what we do, we go back to sound money. We reward the right things. We get the money out of politics. We put in term limits. We go back to what the founding principle and we investigate the CIA, maybe we shut it down. We go back to the principles this country was founded on, and therefore our grandkids will live much better lives.

Lawrence Lepard (00:56:10):

There’s a lot of good out there. There’s been so much in the way of technical advances that are fabulous. And there’s a lot of good out there. If we can just stop from blowing ourselves up, that’s my greatest fear is just that, even in this little thing, this little Ukrainian thing reminds me very much of World War I and how they stumbled into that.

Lawrence Lepard (00:56:32):

So, sitting there and having like school boy bully fights with each other, the way Putin talks to Biden, the way Biden talks to Putin, it’s ridiculous. These guys have nuclear weapons in their hands. Who knows, if somebody makes a misstep, to me, it’s a very dangerous thing that’s going on and they need to calm the war side of this down. If they want to fight it at an economic level, great. Let’s fight it out over money and sound money and resources. That’s a fight.

Lawrence Lepard (00:57:04):

If we get back to a neutral monetary standard, Luke, I’m sure in your conversation with him pointed this out, if we get back to a neutral monetary standard, US industry will grow. Intel’s putting a plant into Ohio. We will come back. The mistakes we made will get solved with a sound monetary standard, but it won’t get solved until we get there. And sadly, our leaders today aren’t smart enough to take us there without having this blow up. And it’s going to blow up. That’s one thing I really strongly believe in my bones. It is going to blow up and soon, certainly within 10 years and probably within five. And that’s sad. I’m not happy to say that, but what I’m good at, what I’ve been paid to do is analyze stuff. And I’ve looked at historically the patterns and that strikes me that’s the pattern. It’s going to blow up.

Preston Pysh (00:57:53):

Larry, the last time we had this shock to the stock market, you and I both agree, we think that this is coming pretty soon. The NASDAQ was down about 30% through that March, 2020 sell off.

Lawrence Lepard (00:58:06):


Preston Pysh (00:58:06):

That same period of time, gold was down. It wasn’t down a lot. Bitcoin was down 60% through this sell off with equities. Now, it had a substantial recovery very quick.

Lawrence Lepard (00:58:19):

It got fast.

Preston Pysh (00:58:19):

Very quick recovery. Do we see something similar to that on this go around?

Lawrence Lepard (00:58:26):

You could. With each cycle, people get smarter. It’s different every time. Bitcoin has had several 80% draw downs, but I think there’s more and more people who are realizing that it’s a safe harbor. And I actually feel the same with gold. In 2008, gold sold off hard. Look, in a liquidity crunch, correlations go to one and everything goes down. Everyone’s just scrambling for cash to stay alive. You don’t sell what you want to sell, you sell what you have to sell.

Lawrence Lepard (00:59:03):

I had a bunch of silver ounces that I had put it a depository and levered them up in March of 2020, and I got a call basically said, you got to come up with X thousand dollars. It was a big number. It was a big six figure number in three days or else we’re going to forsell your silver at $12 an ounce. And it kind of was a lesson for me about leverage. That’s why I’ve often said on Bitcoin holders, other holders, be careful not to be leveraged. You got to know what you own, you got to know why you own it and you got to be prepared. And it’s the same with houses. People go, well, okay, I’m going to do this [inaudible 00:59:41]. I’m going to buy this house because they’re going up and I know it’s going to work and blah, blah, blah, I’m going to get a mortgage. Well, okay, you do all that. We have a depression, you lose your job, your house and value is inflated, you can’t make the mortgage payments, you’re going to lose the house.

Lawrence Lepard (00:59:56):

So, the answer your question, I don’t think we will have that deep, a draw in silver, gold or Bitcoin this time around, because I think a large percentage of the people have become aware of the issue. And the issue is the monetary debasement and these are your safe havens. In fact, I’ve seen more and more things where if the stock market, and we’ve seen days with the stock market will be weak, the bond market will be weak and the gold share market will be strong, which is very interesting to me. You’re starting to see these correlations break. And year to date, my fund is up. Year to date the stock market’s down. It’s not a huge gap between the two, but that’s unusual. That hasn’t happened for a while.

Preston Pysh (01:00:42):

That’s worth bragging about, Larry. That’s worth bragging about.

Lawrence Lepard (01:00:46):

It’s not bragging. It’s just an observation.

Preston Pysh (01:00:48):

No, you’re right.

Lawrence Lepard (01:00:50):

I think that gap’s going to get bigger. I think that gap’s going to bigger. But certainly on a short term basis, could any of these things get hit? Absolutely. Absolutely. Get on a Twitter and Google [Mamacan 01:01:04]. Have you seen the [Mamacan 01:01:06] chart on the German Deutsche Mark in [inaudible 01:01:08]?

Preston Pysh (01:01:07):

Oh, yeah. The volatility.

Lawrence Lepard (01:01:11):

Look at the volatility. There’s-

Preston Pysh (01:01:14):

[crosstalk 01:01:14] I think that’s a really important chart to come here in the next five years for people to fully understand.

Lawrence Lepard (01:01:20):

Exactly. Exactly. To me, that’s the, as you’re trying to guide people through this, it’s extremely important that you help them understand what they own, why they own it. Look at the Bitcoiners who pumped it at 17,000 to people who didn’t understand what they were buying, and then it went down and then they blew it out at 3,500 and guys like me bought it at 3,500. And I was buying, by the way, I bought it at 17,000 too. But you see, the point is, this is like we’re flying an airplane and conditions are getting really bad and we’re maybe on the borderline of crashing. The dials are going to start going nuts. When the dials are going nuts, you got to have your hand on the stick and you got to understand exactly what you’re aiming for.

Lawrence Lepard (01:02:07):

And so, you don’t want to get blown out of your sound money assets. You don’t want to get blown out of your house. You don’t want to get blown out of your Bitcoin. You don’t want to get blown out of your silver or your gold, and leverage can do that to you.

Preston Pysh (01:02:20):

Larry, this is my last question for you. So people hearing this, this can get depressing. This can get people down, but give people kind of a message of hope or a message of, if you’re on the right side of this, there’re large opportunities is here for folks. So, what-

Lawrence Lepard (01:02:41):

[crosstalk 01:02:41] Absolutely. I got smashed from 2011 to 2015. I got absolutely smashed because I was long golden gold socks. I watched my net worth really severely decline. And that was horrible. It was one of the worst things ever been through. And yeah, it was that smash that caused me to realize I was physically out of shape and I wanted to be around to fight the battle and win at the end of the game. And so I went crazy on getting into shape. I got in a CrossFit and everything else.

Lawrence Lepard (01:03:12):

And so, the point, I guess I’m trying to make is that this is going to be tough, but you can view that as bad or you can view that as an opportunity. You can view it as a cha, and we’re all playing for posterity. We’ve only got so much time here. And at some point it’ll be near the end game and the kids will be saying, man, grandpa did it right. You know what I mean? Things really sucked. I’m sure it wasn’t fun being 18 years old in 1939 in the United States, and the Japanese had attacked Pearl Harbor, 4142, the Japanese attacked Pearl Harbor and the Nazis are rolling through Germany and you’re fighting age. You realize this is going to suck. But the flip of that is, you got a chance to prove yourself in a very tough environment. And if you come out the other side, you’re going to be the greatest generation.

Lawrence Lepard (01:04:07):

And I do think, there really is brightness on the other side of this. When we fix this, it’s going to be a much better world. It really is. It’s not a bad world. What we’ve got is we’ve got bad leaders and broken system. And so every generation has the challenge that they’ve got to endure. And this group of us living today, and the boomers, look, the boomers are going to suffer later in their life that’s because we’ve had a pretty cushy life for the last 30 or 40 years. And now we’re about to get tested. That’s going to really suck for some boomers if they’re not on the right side of this.

Lawrence Lepard (01:04:45):

For young people, arguably it’s an enormous opportunity. They get on the right side of this. I don’t think this is going to last 30 or 40 years and this is going to get taken. This is going to be over. If you look at fourth turnings, they’re typically 20 to 30 years long. And I think this one started in 08.

Preston Pysh (01:05:03):

Yeah, I agree with you there.

Lawrence Lepard (01:05:06):

Worst case, it’s 2038-ish, so young people will have a lot of good life post this issue. And I don’t think it’s going to go that long. I think it’s probably going to be over by 2030. That’s my opinion. I have been wrong on timing though. Things sometimes do take longer than I think. So perhaps it’s a bit longer, but it’s an opportunity if you view it as an opportunity. And irrespective of how you view it, we don’t get to choose the conditions we live in, all we get to choose is how we respond to them. And so, I’ve always been very much of the stock philosophy that, whatever the times throw at us, let them throw them at us, what matters is, are we doing it right? Are we doing what’s honorable? Are we doing what’s correct? Are we doing what’s ethical? Are we working hard? Are we being the best version of ourselves? I don’t know. Personally, I don’t want a cushy life. Do you know what I mean? I really don’t.

Preston Pysh (01:06:09):

I love that.

Lawrence Lepard (01:06:11):

I don’t want a cushy. I’m in the CrossFit, it’s like you just push yourself as hard as you possibly can. I want to be the best version of me I can be. I don’t want a cushy life. I want to be challenged. I think Bitcoiners feel that way too. They want to change the world.

Preston Pysh (01:06:26):

I totally agree with that.

Lawrence Lepard (01:06:27):

Yeah. Fix the money, fix the world. And if anyone’s listening to this or looking at this, the people who are inclined to listen this, you have a set of knowledge that most people don’t have. And so, imagine understanding, fully understanding what’s going on and being in a position to help yourself, help other people, help your friends, educate people, change the world for the better. In my view, even though there could be some very rough stuff that happens, and there’ll always be rough stuff happening in the world, there’s a way for all of us to feel good about it and to make progress with it.

Lawrence Lepard (01:07:06):

Let me just say this, I go to gold shows and the people are depressed because they’ve been fighting this battle for so long and they’re so depressed. I go to Bitcoin things, everyone’s fired up. That’s what I love about Bitcoin. It’s such a sharp spear. It is definitely. The other side they’re totally screwed. We are going to win. We are going to win big time. And that’s going to be fun too. But along the way, is it going to be rough? Yeah, it’s going to be rough. There’s no doubt.

Preston Pysh (01:07:34):

I love that. Harness your environment. Don’t be a victim of it. I love the message. Larry, thank you so much for making time. We have to do this more often. I need to bring you on the show more often here because you just have wealth of knowledge.

Lawrence Lepard (01:07:46):

Well, whatever. I’m happy to do it. I enjoy talking to you. It’s really a lot of fun. It’s off the cuff, I know.

Preston Pysh (01:07:52):

We got to get a high five in next week down in Miami.

Lawrence Lepard (01:07:56):

Yeah, I’ll see you in Miami. It’s only week away, so I’ll see you next week.

Preston Pysh (01:07:58):

Awesome. Awesome. Thank you so much for your time, Larry.

Lawrence Lepard (01:08:01):

Thank you.

Preston Pysh (01:08:03):

If you guys enjoyed this conversation, be sure to follow the show on whatever podcast application you use, just search for, We Study Billionaires. The Bitcoin specific shows come out every Wednesday and I’d love to have you as a regular listener.

Preston Pysh (01:08:16):

If you enjoyed the show or you learned something new or you found it valuable, if you can leave a review, we would really appreciate that, and it’s something that helps others find the interview in the search algorithm. So anything you can do to help out with a review, we would just greatly appreciate. And with that, thanks for listening, and I’ll catch you again next week.

Outro (01:08:35):

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