Transcription
And I remember being long and defiant and very wrong. You know, I, I had the worst year of my career. And so, I have gotten things wrong. So, I've been humbled by life and humbled by markets, but I, I see the spectre of deflation as being a forward trend that I'm more worried about than short-term inflation. And so, I don't look at the near-term stuff as much as I used to, and I'm not as focused on it. I think, u, I would caution younger investors that listen to your show to try to think way longer term. I think these were mistakes that I made in the early part of my career that I wish haven't served me well. You know, too, too impetuous, too knee-jerky, selling at bottoms and buying at tops, and doing all the classic mistakes that you'd expect from human nature. You know, if you're taking exogenous risk, and I had to take exogenous risk as a kid to get to where I am, expect that your ass is going to get kicked.
And so, don't be a baby about it and don't play the victim. You know, when they fired me from the White House, I got torched by everybody. I got torched by the media, late night television.
Did I care? No. I went on those shows, faced the music, and never, never played the victim. So, you've got to have that mentality. If you're going to take risk, if you're not comfortable with that, then don't do it.
Welcome to the Master Investor podcast with me, Wilfried Frost, where we celebrate and learn from the success of the greatest investors, business leaders, and politicians in the world, giving you, our listeners, the edge. The Master Investor podcast is sponsored by Else, Interactive Brokers, the World Gold Council, and BMY Investments. Please do remember the views expressed in this podcast are for general information purposes only. Nothing in the podcast constitutes a financial promotion, investment advice, or a personal recommendation. More on that in the show notes.
My guest today is the founder and CEO of Skybridge Capital and the hosts of the Salt Conferences. He's also a restaurant, as well as prolific broadcaster and podcaster, and of course, also briefly the former White House communications director for President Trump. I'm of course talking about Anthony Scaramucci. Anthony, welcome to the Master Vessor podcast.
It's great to be here.
It's a real privilege to have you with us, and I listed some of the things you do there: podcasting. You've got The Rest Is Politics US. You've got Open Book. You've got All Things Markets. You've got a new book coming out, All the wrong moves: How three catastrophic decisions led to the rise of Trump. Publishing date September, uh, the 22nd in the US, September the 17th in the UK. I like that. Comes out here first.
Yeah. Yeah. I mean, listen, I've got great publishers on both sides of the Atlantic. And I, I try to encapsulate my 38-year observation as a Wall Streeter, but also a participant in the political system. Some of the things that we did that didn't go well. And by the way, it's not an indictment of anybody. It's just more a story of good and well-intended people making bad policy decisions that lead to this rise of populism and also this anger-based movement in our two populations where there's a very large group of people in the UK and in the United States that are upset, u, which is why you're seeing this turnover in your system and it's why you're seeing this rise of left-leaning and right-leaning populism in the United States.
Well, I hope you'll, u, come back on when the book is out on the Sky News program as well. That would be great. Be great. But my first question on this is, how on earth do you fit all of this in?
Well, you know, I, I am a big believer in, you know, I told Tony Pastor, who's one of the founders of Goldhanger, I'm a big believer in what's called servant leadership. I think I read that book about 20 years ago and decided I was going to implement that, and it's been successful for me. So, I have a group of people that are running our conference business, a group of people that run our funds business. I have a production team that runs the podcast for us, but also does a lot of the social media. So, the, the clips and things like that that you may see of us are generated by a young group of people. Uh, and then I have a whole dedicated team to what I would call the cryptocurrency and the blockchain space, all in the envelope of Skybridge. And so, I see myself, Will, as somebody that works for and with these other people. Meaning, if the guy running our Salt conference needs me to do something, I'm there for him. If he's reporting to me on what he's doing, I'm, I'm okay with his mistakes. I'm okay with his risk-taking. And I think that's more or less worked for us over the years. So, it's freed me up to do some of the things I like, which is podcasting and writing and hanging out with you. And so, so that's, that's sort of the, Well, that's sort of the thing. And by the way, you know, you, you, you talk about master investors. Warren Buff is a big believer in that. Just think about the businesses that he owns inside of Bergkshire Hathaway and how successful he's been at delegating to people at Geico or people at Seas Candy or the different things that he has in his holding company.
When do you think you graduated then from being a principal maybe in just one of those businesses to a leader aggregator of of so many? When did that transition happen?
So, I, I would say that that transition probably happened in 2014 or '15. Uh, this when we started our restaurant, you mentioned our restaurant, the Huntton Fish Club. We named it after, uh, John Gotti. I don't know if you remember the Mafia Dawn in New York, but he had a, he had a place called the Bergen County Hunt and Fish Club. And so, we figured, you know, we're Italians. We, we'll name it after him. actually had the, uh, we had John Travolta in the restaurant a few years back when he played John Gotti in the movie. So, uh, it was,
That's a good name drop.
It was fun for us. Yeah. Well, if you look up,
You've had Wilfford Frost in the restaurant twice, too.
I, I have had. And you like, you like the popovers. You were going at it with the popovers, Will.
They were both, uh, they were both lunches. I need to hit there for a late. What's the optimum meal there? Dinner.
Yeah, I think dinner, I think dinner is probably the best meal there. It's good. It's good fun. I had, you know, if you look up name dropping in the dictionary, of course, you see a picture of me, some of my family members. I just want to make sure people know that. So, um, it runs in my family a little bit, too. So, there we go. So, there's a lot there, um, in in your repertoire, and let's focus in on the market stuff for for the early part of the bulk of this conversation.
Tell me what you look at to get your feel for how the markets are. What's when you wake up, what's the first market-based, uh, indicy, currency, bond market thing you look at?
Well, I've evolved a lot. I, I, I would say to you that if you'd asked me that question 20 years ago, I was, you know, plugged into everything. All the stuff that you did on CNBC, and I was plugged into market sentiment and the ideas around the Federal Reserve. Of course, we lost Alan Greenspan this week. And if you remember, we used to look at his briefcase, and if he had a big briefcase, we thought he was raising rates. And if he had a small briefcase, we thought he was. And of course, he said that that was Andrea Mitchell, his wife, giving him lunch that day. If he had lunch in the briefcase, then it didn't really have anything to do with the rates. So, I was very fixated on short-term fluctuations, market sentiment, u, momentum, and then I would say over the years of being burnt and recognizing that I'm not smart enough to do that, uh, the smarter thing to do would be to relax a little bit, get, be less tense about the markets, and then look at and either accept or reject the long-term trend. And so, I'm sort of in the Buffett camp of accepting the long-term trend. I think where I differ from, u, the greatest investor ever, Warren Buffett, is that I'm probably more open to technology. Um, I'll, I'll, I'll tell this story because I think it, it was instructive and, uh, cost me a lot of money. This story, uh, I was at the Sun Valley Conference. Uh, Allan and Company host this spectacular event. This is many years ago. It was probably the year 2000. And, um, a young man at that time by the name of Jeff Bezos got to the microphone and he was making presentation, and I was sitting in the front, front row writing copious notes, and he was talking about Amazon. And at that time, it was priced as a overexpensive internet book seller, and Mr. Bezos was explaining to the crowd that it really wasn't a book seller. He was just using books to dot plot his warehouses. They're easy and inexpensive to mail around. he could get a sense for where the demand was for consumers, and he was eventually going to sell everything, sort of this A to Z thing like you see in the brand. And, oh, this is an ingenious thing. And I was writing down these notes, I've got to go out and buy Amazon. But the next speaker was Warren Buffett. He got up to the microphone. He said, you know, he's a very bright young man, Mr. Bezos, but, uh, you know, I wouldn't touch that with a 10-ft pole. And, and can you believe that this company, Amazon, this internet book seller, has a valuation in excess of this storied retailer, Sears, which was of course Sears Robbook. And look at all the assets that Sears has and all of its hard real estate. And of course, uh, I took my notes and ripped them up and I threw them in the garbage. And if you had just put a $10,000 investment in that company that many years ago, it was worth north of $14 million. It just give you a sense for missing things and the learning that's involved with missing things. So, I'm sort of in a two-tiered approach now. I've got this very long-term view, upwardly bias on markets, and then I have a belief that we have to participate in these new technologies. And so, you know, I wasn't an early investor in SpaceX, but I was able to participate in the, the private rounds of SpaceX over the years. I've gotten into anthropic and a few of these other things, which, uh, an earlier version of me I would have never participated in.
And, uh, I'm telling you, of course, about the winners, but I could give you a phone book, Wolf, of my losers as well. I don't want to suggest that I'm, you know, doing anything. I just think you're betting the averages. And so, I don't look at the near-term stuff as much as I used to, and I'm not as focused on it. I think, u, I would caution younger investors that listen to your show, u, to try to think way longer term. I think these were mistakes that I made in the early part of my career, um, that I wish haven't served me well. You know, too, too impetuous, uh, too knee-jerky, uh, selling at bottoms and, uh, buying at tops, and doing all the classic mistakes that you'd expect from human nature.
Well, and more on the, the Warren Buffett mindset. We had Becky Quick on two weeks ago, so I refer people back to that episode as well.
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It's interesting, mentioned Amazon there in 2000. If you put your $10,000 on in before it got to $14 million, um, you know, 25 years later, it went down to, you know, $1,500. It fell 80, 85%.
No question. You know, that would have been March of that year. You, you know, you saw an 85% drop. There was a, there's a news weekly in America called Barons. I think you're probably familiar with it because you worked in America. There was a picture of Jeff Bezos on the cover. It said Amazon.combomb, and it was him in one of those old-fashioned bombs with a sizzle on top, and it said the age of this internet retailer is over. And of course, that was the beginning.
So, so I guess you, you did mention that you don't want to be too knee-jerk, but do, do you feel we could be in, you also said you like to look at the trends. We could be in a trend shift. I mean, today it's, we're recording this on Tuesday, the 23rd of June. You know, markets are down sharply this morning. Do you think that we could be at a 2000 type moment or not?
Listen, it's very possible. Uh, you know, people have asked me about the AI bubble. Is there a bubble? what happens. Uh, I'm old enough to remember the March of 2000, uh, internet one, sort of Web One collapse, uh, that the Dow got hit, but, you know, the NASDAQ really got crushed, was, you know, down probably 70% peaked the trough. And it could that happen? I'm not, I'm not saying it, it couldn't happen. There's different things going on today, uh, relative. I think the, the Fed and the central banking community is more sensitized to that. I'm not saying they're putting a put in place, but they sort of are in some ways. They weren't doing that as much, you know, in the Greenspan era as they're doing now. Um, I would say that, uh, we're going to be wrong about some things short term, but I think the, the inflation that we're seeing right now is supply shock related. It's been inducted by a few things: President Trump's tariffs. It's been inducted by the war going on and the uncertainty about the straight of Hormuz and the insurance cost of getting tankers now through the straight, which has really hurt the, uh, supply, and it's also affecting prices around the world, you know, because that, well, of course, the most important commodity has an impact on all the other prices. But I see this stuff as short-term, you know, wars do resolve themselves. I mean, Afghanistan was a miserable one, so was Iraq. But, u, you know, my guess is this will eventually resolve itself with some type of favorable outcome. And so, I'm not overly worried about that. Maybe I should be. Um, I did get the pandemic wrong though, Wolf, I will tell you this. I walked out of a meeting in the World Economic Forum in January of 2020. We had met with some World Health Organization officials. I won't name my other head, other hedge fund friends that were in the meeting because they did miserably, and it wouldn't be fair to mention them. I'll just mention myself, but we all walked out of the meeting. The WHO was telling us that this was going to be more like SARS or MIRS, if you remember Mirrors.
And I remember being long and defiant and very wrong. You know, I, I had the worst year of my career in a 12-day period in the month of March of 2020. And so, I have gotten things wrong. So, I've been humbled by life and humbled by markets. But I, I see this, uh, I see the spectre of deflation as being a forward trend that I'm more worried about than short-term inflation. That's not to say that the Fed won't raise rates, which is causing some market uncertainty and a depression in prices right now. But I think the bigger thing that we're going to be talking about in four or five years is, oh, wow, you know, the AI, the automation, the robotics, the advancement in amunotherapy is going to, uh, crush the curve of costs and it's going to cause some deflation, some job disruption.
So, I think the, that's, I'm more worried about that than the inflation.
That's obviously the Elon view of, uh, the kind of productivity gains to come. Let's just dwell on SpaceX IPO because, because as you said, you're an investor. Obviously, there's a lockup period. If there wasn't, would you have been a seller in the short term?
No, I'm not, I'm not, I'm not selling that. It's probably because I'm a little bit more mature now. And, um, you know, I've, I've, I, I did something that I would recommend to every investor. I read a very simple book, uh, when I was 17 years old called The Richest Man in Babylon. Have you heard of the book?
I haven't.
Okay. It was written by George Clayson, C.L.A.S.O.N., uh, 100 years ago now, 1926. And it's a parable about what the richest man in Babylon did to create his wealth, and basically, put simply, you invest every month of your life, and you can fix that number, you can increase it as your income goes up, but you invest every month of your life. I, I've got a couple of young podcast producers at Goldhanger that I have in this discipline, and one of them, uh, uhh, texted me last week, uh, two years later, he says, "Well, you know, I have over £100,000 in my investment account now. Thank you very much." And so, what I've been doing since the age of 17 is I've been buying stocks every month. And it could be the S&P 500, it could be a Bergkshire Hathaway, it could be on Amazon. Uh, got to Amazon later after making that mistake. But my, my point is, if you just take that discipline and you buy every month irrespective of where markets are, and you sit back and wait five or 10 years, I think you'll be rewarded. And I think what younger people have to do, no matter what their income is, is pay themselves first. They have a rent charge every month. They have a cable, perhaps, charge or a data charge, uh, electrical utility charge. All that's fine, but pay yourself first. come up with a number, uh, that you can live without and put that in the markets. And if you do that, and you do that over a, a steady period of time, you'll be in, you know, in incredibly good shape. So, I've done that. And so, when I have a win like SpaceX, my attitude is, I'm not going to bet against Elon Musk. Whatever his political views are, I may agree with some and disagree with others. This is the, uh, it's almost as if Thomas Edison got together with Henry Ford and John Rockefeller and made Elon Musk in a laboratory. And so, he's got vision, execution skills. He's an engineer. Uh, and he's just not somebody I want to bet against. And, and you know, Mike Novagrats and I talk about this. You know, Mike was short Tesla,
but he had two Tesla cars in his driveway. Okay, but you're short something that you're using. You actually love the product. So, what you'd probably be better off not shorting it. So, SpaceX, I, I get it. I understand how expensive it is. I understand the, the revenues versus the market capitalization, but I believe this guy could catch up. And, and I know you know a lot of the Goldman people read the Goldman Research report on the potential for revenue streams coming into SpaceX over the next five or 10 years. And of course, I'm, I'm a decent acquaintance of Ron Baron. I think you know Ron, legendary investor, who's got a very big piece of this, you know, he sees this as a four or five trillion dollar company. Moreover, uh, Musk could merge Tesla, he could take Neuralink and put these entities together. Uh, I, I was lucky to be an X AI investor or a, you know, former Twitter investor. Uh, the merger of those two things gave me more SpaceX shares, and I think betting against him would be a mistake. So, could be wrong about that, but over the context of my overall portfolio and this sort of grinding out game that I've been playing for 45 years has put me in pretty good position.
Well, the grinding out game long term, I'm such a believer in, obviously, having spent my time in the US and CNBC, and it's a, a sentiment that's, we need to shift here. So, I'm all for you, uh, making that argument again so convincingly.
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Let's talk about one of the, the new technologies or asset classes that, that you have obviously really thrown yourself at in recent years at Skybridge. Put simply, what is the case for crypto?
Well, that's a broad topic, right? So, so I, I, you know, I would say the blockchain, there's a strong case for that. Even Jamie would make that argument. I know you're going to be interviewing him, but I think he probably doesn't like Bitcoin and these other things. He's called them decentralized Ponzi schemes, etc.
He's softened his language, and Buffett has called it a pet rock or something like that, or rat poison.
But, but for me, uh, I got this wrong. This is a story of me missing things. Hal Finny is somebody that I met, uh, maybe 2011. Uh, he gave a presentation at the Ames Research Center, uh, which is outside of, uh, Silicon Valley. It's sort of a Google has a, a research thing there. Peter Deiamandis was running something called Singularity University. Hal Finny came and gave a speech on Bitcoin, and if you remember, he was the first recipient of a Bitcoin from the Satoshi wallet, and some people think how was actually Satoshi. But, but I listened to it, didn't believe it. I think it put out on Twitter, "don't understand Bitcoin, I don't care, caveat mour." So, I missed it. was probably trading at $60 at the time. Uh, in 2014, the Winklevosses came to me at the Skyward Salt event, which was in Las Vegas. They, they explained the prowess of Bitcoin. I think it was trading at a, $1,000, maybe $600, something like that. I passed on it as a traditional institutional investor. And then, uh, uh, my brief, ill-fated tenure in the White House, uh, I can tell you, Will, it was a Wednesday. It happened on a Wednesday because I was only in the White House one Wednesday. So, I know that it was actually a Wednesday. Uh, two Fed officials came into the West Wing with Steen Minutuchin to talk about this digitization of the US dollar, and they had done a white paper. And I looked at the two of them and I said, "So, over the blockchain?" And they said, "Yes." And I said, "Like Bitcoin?" And they said, "Yes." This is nine years ago, and I remember thinking to myself, "Okay, I have to be neurallastic. I have to understand this technology that I have refused. I've gotten two pitches at, I've swung and missed at both of them. These guys are believers in the blockchain. They work at the Fed. I got to understand the blockchain. Not saying I'm going to invest, but I got to understand the blockchain." And so, I mean, I think I got fired maybe three or four days later. I went back to Skybridge and I bought the URL skybridgecoin.com and I started doing homework on Bitcoin specifically. And I don't want to bore your people, but I'm going to say the following things about Bitcoin. Number one, you have to do some homework on Bitcoin. If you're an investor, you can't just flip off Bitcoin. You have to do the homework. And I submit to people that do the homework. Nine out of 10 of them will probably own a little bit of Bitcoin. Paul Tudtor Jones didn't like it, now owns it. Ray Dallio, Stan Ducken Miller, I could list a, ser, Howard Marx. list a series of investors that after steeping themselves and understanding the technical nature of Bitcoin and what it actually is, they end up owning it. And so, for your viewers and listeners, I would say this is a hard asset. It's effectively a spreadsheet. It's an open, fully transparent spreadsheet where there's hundreds of thousands of nodes that are going to verify the transactions on this hardened spreadsheet. And when you look at the definition of money, and, uh, my friend Neil Ferguson wrote a best-selling book. It became a BBC documentary called The Ascent of Money.
We had a great episode with him on, on the podcast.
Yeah. And so, if you read Neil's book, he defines all the characteristics over thousands of years that we relate to money. You know, the immutability, the special uniqueness, the scarcity, etc. Uh, and this has all of that. and it has one extra layer, and that is it has the absence of a third party. And so, we don't like each other typically as human beings, and we don't trust each other. So, we've always gotten our money from a third party that would be our government, and we've always transacted with third party verification. So, if I'm going to buy your house, uh, you wait for my funds to get transferred into your third party corresponding bank before me, you hand me the deed. But over the blockchain, because of the nodal system and the confirmation process, we can have a peer-to-peer permissionless transfer. And so, that is a great expedition. It's a huge cost savings. Uh, we mentioned my restaurant, so let's go there for a second. We could go to my restaurant. If we have stable coins, which are US dollars represented on the blockchain, we can pay the bill at the restaurant by taking the, the stable coins out of my wallet and moving them to the restaurant's wallet. Uh, we eliminate that third party known as the credit card company. We'd save three and a half percent of the fees. On a restaurant like mine that has 15% margins, a three and a half percent fee is like a 30% up uptake, 28% uptake in the gross margin. So, you have trillions of dollars of expenses related to third-party verification of our transactions. Uh, you know, and I guess if you go to chat GBT or Claude, the estimate is about $4 trillion US. This would be think lawyer fees and transacting on deeds, credit card fees, wire fees, all the different things that we do. The blockchain can help us avoid those. Uh, very reminiscent to me of telecom where when I was here in this city at the London School of Economics in 1985, it cost me $3.50 per minute to talk to my parents. Of course, I was able to call them once a week, let them know I wasn't drunk somewhere at, uh, you know, the Odon or the Hippadrome or places like that. And, and now you can make that call costless anywhere in the world just by hooking up into an internet cafe. And so, this technology has the ability to transform finance. Uh, we will have perpetuals. The CME is not happy about them, but we will have those. We just saw OKX do a deal with the New York Stock Exchange. We just saw Kraken do a deal with the NASDAQ. And so, put simply, this is a technology that's going to enable us to bypass costs and make things secure and very efficient. Now, Bitcoin is different. It's a property. And if you, you'd have to really do the homework on it to understand it. Uh, but it's a volatile property, and like all tech, you mentioned Amazon. Amazon went down if you held it, $10,000 went to $14 million. But boy, you had to have a stomach for it because it went down eight times 50%, one time down 85%. And Bitcoin has been tracking other tech where it is not yet fully adopted. There's heavy skepticism on it. And so, every four years you'll see a 50 to 70% dip in Bitcoin, and, and we're seeing that right now. We're halfway through the cycle. There's having cycles of Bitcoin where the, the network is spitting out 450 coins a day right now. In about two years, Wolfe, it'll, it'll go down to 225, and then four years later down to half of that. So, So when that happens, you have these technical disruptions and selling pressure. But, uh, you either, you either see it and believe it, or you're a Bitcoin skeptic like many people are praying for it to go to zero. But I think this is an asset that's here to stay.
So, So let's touch on that point about you saying people are skeptical. Obviously, you outlined in 2017 when you became a believer that was nine years ago now. I mean, how many people are still skeptical, do you think, or is that shift?
Yeah, I would say, listen, I think, I would say there's fiveish percent of the investor population that I would qualify as Bitcoiners. If you just look at the number of wallets, when I first looked at Bitcoin in 2017, there were probably 50 or so million wallets, there's probably nine or 10 times that now. Uh, and if you look at a, our population, you know, it's only four or five percent of the overall global population. Uh, but remember, you know, in stable countries like the UK or the US, even though we have pockets of inflation and we are using inflation as a way to monetize our debt, which we can also discuss the problems of that. Um, most of the world has defuncted sovereign currency. Most of the world, uh, is either in a dollarization situation in some of the Latin American countries or Africa, or they're shifting to things like Bitcoin. you know, you know, uh, China doesn't like it. They've banned it. And yet 10% of the transactions and 10% of the Bitcoin mining is still happening in China. So, so it's here. Uh, I've done the homework. I'm a believer in it. I think I have its size right in the portfolio where if we're right, and again, I'm not saying it's going to go to a million dollars a coin like Michael Sailor is saying from strategy, but I do believe that it could trade to half of the market capitalization of gold, which is sort of a 10x from here over the next decade. Let me just say one last thing. I have a son who's 34, went to Stanford business school, and I was with him on Father's Day this past Saturday. Uh, he's an astute investor. He, he bought this Pokemon card for $16.5 million. He's creating this sort of physical asset treasure, treasure company called Treasure Trove. And he said something to me about Bitcoin which people should listen to. He's 34. Uh, Bitcoin is in the top 15 market capitalized assets. You know, last year it was in the top eight. It's dropped because of this, uh, you know, fall in Bitcoin. I just want you to think about the durability and the sturdiness of that. And I want you to think about a 34 year old being 44 in 10 years or 54 in 20 years. That generation of men and women are going to own Bitcoin. It's the generation that I'm in, the 60 generation that likes gold and they have a disdain for Bitcoin. Uh, but the future is going to be digital, and the future is going to have a form of digital stored value or digital scarcity. Uh, and I'm a believer in that long term.
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Um, touch for me on your outlook for inflation. I mean, you mentioned deflation over the next decade. Yeah. In, in the next year or two, do you think inflation is, is sticky? And what's your views on the, the transition that's gone on at the Fed?
Look, you have to be very careful with inflation. You know, Jerome Pal called the COVID related inflation transitory. Uh, it, it was more secular than transitory. I think that they mised a few things. You know, one of the, you know, this is the, the butterfly effect in life. If you really studied what the Fed was looking at, they were making an assumption that the Chinese were going to turn on the supply chain in China coincident with the West. Uh, but what they underestimated or they misunderestimated, I like using that word because it's not a real word, but George Bush used to use it. So, I like using it's going to fire out the word misunderestimate.
Love it.
Just really should be in the Oxford dictionary now because it's just so crazy. But, but what they misunderestimated in China were the hospital beds. And so, what happened in China very simply, they didn't have enough hospital beds. And they looked at the situation with CO and said, "We can't have this international nightmare where we're exposing our health care crisis. We have elderly people in China. And if we can't get them into the hospitals during COVID, uh, we can't open the economy." So, they locked the economy way longer than the Fed thought. And this led to way bigger price fluctuations, supply fluctuations, and more inflation. And so, I, I bring this up because the data that we look at, I think, is anacronistic. I think we have to look at data in a more transparent and more widespread way. So, one of the metrics that I look at is something called truflation.com. So, it's trulation.com. And what they've done a very good job of is they've, they're aggregating inflation data at the storefronts from the vendors. Uh, they're not using the traditional metrics of CPI or the things that the Fed is using. And so, the bad story to tell there if you go to trulation.com is that the US dollar has lost 28% of its value since January of 2020. And so, we just pumped the dollars out into the system. Some of it was done for, uh, stimulus. Some of it was done to cover up some of the debt issues that the country has. And, you know, it'll eventually catch up with us. But what we've done is we've wildly overspent as a generation of political class and we've wildly undertaxed while we're wildly overspending. And so, Milton Freriedman had a great line for this, and I'll, I'll paraphrase it. He said, you know, the deficit spending is unfunded tax liability. And so, whether you like it or not, Piper has to be paid.
And so, we have figured out that we're going to pay it through the most pernitious and the most regressive form of taxation, which is inflation. And so, we've monetized the debt. And so, this has created wild, uh, affordability issues in all of our respective countries in the West because if you don't own assets, just think about my dad for a second. He got hourly wages. So, the wages came in, he had no assets to speak of. We did own the house. It was a small house. He paid $16,000 for it in 1962. So, you had this, uh, asset poor, workingass group of people. Well, they can't catch up. You know, Calvin Klein, u, bought a house, uh, in the Hamptons in 1987 for $4 million. He sold it in 2021 for $85 million. It's being offered out right now 5 years later at $165 million. So, if you have the asset and you're doing this type of inflation, you know, the asset will hedge you against the inflation. But the poor and the working families, they get crushed by this inflation. So, so that's happened and we have to accept that. But what's happening alongside of that now is this major transformation in production, productivity, robotic technology, AI, which I think is going to transform the way we think about jobs, white collar jobs. We're going to move to a 4-day work week for sure. It'll happen in our lifetimes, which will be a whole other set of jobs. But, but I think that's coming and that will create an offset to all the inflation that we've experienced. So, weirdly, like most times in our society, failed political economic policy will be overwhelmed by great technology and great human ingenuity and innovation, and we'll end up working our way out of the problems. You know, we, we had Thomas Mouthys tell us in the 1840s we were going to starve. The population would not be able to create enough food for its exponential growth. He left out fertilizer and vertical farming and irrigation and all these things. We had prior to OEMIC, Wolf, if we had more people dying from obesity related illnesses. In the 80s, we were told we're going to run out of oil. Well, what about, you know, horizontal fracking and GPS and better drilling and more efficient places or places like the UK that don't use air conditioning, places like you guys, you know, that are saving of the environment. You know, my, my, my point is we always have this apocalyptic vision of something bad that's going to happen. it doesn't happen because the ingenuity of innovation. So, I think that's the story with the money. I think the money, I think, Will, we'll hit a huge pocket of deflation, but I think by and large we've, we've lost some trust in fiat currencies, and, and things like gold and Bitcoin will continue to do well.
Um, let's transition then to a little bit of political chat. Um, you, you talk now a lot about the difference between Wall Street and Washington. Did you underestimate that before you went to Washington in 2017?
Oh my god. I mean, so badly. I mean, listen, I'm, if I'm, if I'm to be guilty of so many different things, one of them would be a naive about how Washington works. You know, Bob Rubin wrote, one of my old bosses, wrote a great article leading up to this recent inauguration of President Trump. There was a January Wall Street Journal article where he said, "Oh my god, you know, we were so ridiculously naive. Us Wall Streeters were walking the 1993 inauguration of President Clinton, and we were going to come down to Washington and we're going to change Washington. But, uh, Washington changes you. You don't change Washington." And it was such great insight there. I didn't have that insight. You know, I, I thought that, uh, I was going to go to Washington and help to be a problem solver. But the difference between Washington and Wall Street is very clear to me now. On Wall Street, we have a green team. And but what I mean by that is American money is green. Your money is all different colors of the rainbow. But I'm talking about American money is green. We have a green team. So, if Wolf and I, if we hate each other, but there's a billion dollars to split up. Could Wil and I pretend to like each other for six months to split the billion dollars? I'm pretty sure Wolf and I can do that. But that's not Washington. Washington, there's a red team and a blue team and a yellow team, and they fight over positioning of the seat on Air Force One or the location of the staff members office relative to the president's office or the House Majority Leader's office, and they, you know, they, you know, somebody said to me in Washington, they'll pick each other's eyeballs out because the stakes are so small. you know, pre President Trump said something to me which I want to share, uh, because whatever my disagreements are with him, he has great political instincts and, and he's also a great comedian. You know, I was at lunch with him and we were in the study off the Oval Office, and, uh, we were eating. He was like pouring gallons of Diet Coke, and he looked over at me. He said, "You know, this is a very tough place." And I said, I said, I said, "Yes, I'm, I'm becoming aware of it," because, "Let me tell you something, 'cause I was on in New York. I was a seon of real estate. I thought these real estate billionaires were a bunch of killers." He said, "The assistants down here in Washington could destroy these real estate billionaires." He goes, "I've never seen anything like it." You know, quote, "They could pick your eyeball out with an ice pick and drop it in their martini glass. You're bleeding at the table and they're still talking to you like nothing happened, you know." And I was like, "Wow, Trump is so right about this." is I mean, that's the viciousness of Washington, but it's also misalignment of incentives between Wall Streeters and Washington that the Wall Streeters get very wrong, and of course, I got it colossally wrong.
You, you also have referenced another conversation you had with him. He asked you if you were fiscally conservative and socially liberal.
Yeah.
So, explain that to me.
Well, there were two big seinal things that he said to me in March of 2016. So, I joined the campaign after Jeb came out of the race, and now I'm traveling with him, and I got to see a side of America that, uh, to me was heartbreaking. We talk about that if you want, but these specific conversations, one was, I was reading in May of 2016 a research report prepared by my team at Skybridge, and Trump looked over at me. He said, "What are you reading?" I told him what I was reading. He goes, "You're an idiot." Oh, I know I'm an idiot, but, but why am I an idiot? He said, "You're an idiot because that report says that it's economically a bad decision to Brexit, that for the UK to leave the EU." This 10 year anniversary today. Yeah, exactly. And, and he's, he's, this is May of 2016. And he says, "So, your report is saying that the, the UK citizens are going to vote to remain in the EU." And I looked up at him. I said, "You know, sir, that is exactly what this report says." Well, that makes you an idiot because this is an emotional thing and this is something related to British or UK nationalism, and they're going to vote to leave. And that was about a month before the election. So, that's, uh, excuse me, that's 10 years and one month ago, right? Because today's the anniversary, and Trump got that right. I got it wrong. I, I was on television telling people there's no way that they're going to leave. Second thing he said to me, and we were coming back into the plane. We were in Youngstown, Ohio, and, uh, I was looking around and I turned to the president. I said, "You know, you're actually talking to my dad." And this is something that as an investor or just as a citizen of a world I want to caution everybody about. And again, it doesn't reflect well on me. I lost my way, Wolf. I grew up in a blueco collar family. I went to Tus Harvard Law School. I entered the salons of the wealthy via Goldman Sachs. I ended up at the World Economic Forum, CNBC, hedge fund community, Salt conferences. I started to get the confirmed biases of the people that I was hanging out with. And what Trump taught me on that campaign is that the people I grew up with feel left behind. Uh, many of them didn't go to Tus and Harvard. they are putting in sheetrock or they're working a crane or they're digging clams out on Long Island, and their inflation, all these different things that have happened to them, their purchasing power has gone way down. And I remember coming back onto the plane and looking over at Trump and saying, you know, "You're actually talking to my dad." You know, my dad was born in 1935, but these are people like my dad born in '65 and '75. And then he said to me, "Yeah." He said, "And you're really out of touch because you're fiscally conservative. You're a Wall Streeter, so you're fiscally conservative and socially liberal." Now, Wolf, how many people do you know on Wall Street that are fiscally conservative and socially liberal? Will?
Well, in the UK more than in the US, in the equivalent, but, but I, I, I get your point.
Okay. So, Trump said to me, "My base, my base is social conservatives and fiscally liberal. They want the programs." And you know, if you remember the Tea Party movement or even Trump's MAGA movement, they would hold placards up and they would say, "Get your government hands off my Medicare." But Medicare is a government program. And many of these people didn't really understand that. But they wanted the program. And Trump has never touched, nor will he ever as president. and he won't touch social security or Medicare because he intuitively understands this and he understands
This is a big part of the needs of his of his base of voters.
It's it's such an interesting when when I was researching for this and I heard you say I just it resonated because I think it's what's going on here at the moment as well. I think reform are pursuing the same balance in that sense. Yeah.
Uh and our countries match each other. It's like a match sailing race. you know, you're watching we watch your sale and you guys watch our sale and we we sort of sail towards each other in the race.
The difference and I don't know the answer to this here is that it's coming at you know a decade later and I'm not sure we can afford it and and do we have the comeuppance before the innovation saves us all which which I hope you're right about. Do we have the comeuppance that that means you're promising to you know keep the spending going deliver for for those people and that that you don't then get the rewards of it and I don't know the answer to that. Obviously I hope the sunlit uplands arrive in time that we can all have a 4-day working week and all the benefits but but that's where the balance might not hold. We'll see.
You listen again this is an observation as a nonitizen but someone that travels here a lot uh the country is very hard on itself. Um, and this country has a tendency to be very self-critical, but I would look to some of the things about this country that I admire. One is the system and the process. You know, you're not getting the exigencies of the extremes. I predict Farage will not be the prime minister here. I just don't think your system is going to allow for it. Uh, the second thing that happens here is you have unbelievable innovation here. You got great universities and you develop a lot of patents, but up against that, you're not the there's not a campaign or policies associated with venture capital spending or the appropriate tax treatment on venture capital. And so this is a a constraint. It's sort of a socialist constraint on the economy. And so I'm just wondering if you can get that right. You know, I'll give you an example. Who has gotten it right are the Irish. The Irish have figured out that they can marry right-leaning tax policy with left-leaning social programs, you know, so they've floored the uh taxes. They've gotten them down extremely low. You you know, when I go to Dublin, you just see one colossal multinational after the next up along the uh waterfront uh in that beautiful city. Uh and they're running probably the only EU nation at this moment that running a a budget surplus. and they're doing it because they figured out foundationally that they have the right tax policy that's bringing the capital into the country. So to me, you know, I'm a big believer that we have to look to other nations. We have to look to what are the best practices. So as an example, the best practices on gun control came out of Australia. the US won't adopt them, but if we did adopt them, we would reduce our school killings and our mass shootings by a quantum, you know, and so, but we have a sort of if it's not invented here thing, then we don't we don't use it. But I think we just have to look around and look at some of the best ideas out there. And I'm just wondering if the UK uh it's got the patents, it's got the brainiacs in the country, uh get the capital to match the brains, and it'll unleash a lot of economic growth. I totally agree with all the ingredients here. I think we're a cold spring if we can get get some of the hard political things right. Um I think we can play catchup. It's not about the US leaving us behind over the last 20 years. I think it actually makes the catchup the early years of the catchup perhaps a little easier. We shall see.
Um, we've done investment, we've done politics. Let's close out. We've only got a few minutes left with some advice for our listeners and start if we can, Anthony, with with career advice. You've we've touched on a lot of them. You've taken a couple of big gamles in your career, >> whether we you know, we didn't go as far back as leaving Goldman Sachs to start your own business. >> What what's your advice to any of our listeners who might be weighing up that moment in their their own career if they should take that gamble or not?
Well, you have to know yourself. You know, I had a roommate in college and law school actually who was a prototype Goldman Sachs partner and he was literally like if you were buying Barbie dolls or Ken dolls and you saw him, you you pick him up, you'd look at the the QR code on him. It was Goldman Sachs partner. He looked apart. He acted the part. He was like perfect right out of Central Cast thing. And so he should be a Goldman Sachs partner. He was a Goldman Sachs partner. He got extremely wealthy being a Goldman Sachs partner. He's now a retired Goldman Sachs partner. But if you had me in a box next to him, man, I was not suited for that. You know, I didn't have the personality for that. My my friend Lloyd Blankfine, I interviewed him and I think you've had him on your show and I I've got to go back and watch that one. >> But Lloyd and I are friends. We did the Bill Maher show together and I when I read his book, uh, our upbringings are very similar. But you know what? He wanted to be an insider. He wanted to be part of that corporate structure. I never really wanted that, you know. So, I wrote in my diary, uh, as soon as my school debt is paid off, I'm going to leave and start my own business. And I saw something intuitively. I just don't have the personality to shave the points off of my opinions or the hard edges off of my elbows. I just wanted to be myself. And I and I feel like you grow oldish if you are comfortable in your own skin and self-aware. I think I would have been a poor first of all, I don't think I would have made the partnership at Goldman Sachs. I didn't have the personality for it, but I think it would have been a really poor partner if I had done that. So, first thing I would say to your viewers and listeners is self-awareness. Know who you are and know if you have the ability to take on the pain and the uncertainty of entrepreneurship because entrepreneurs jump off the cliff and they're trying to build the plane as they're descending to Earth. Like, you have to be able to do that. And I I got launched into my own asset management company in the mid '9s. It was right after Greenspan, now the late Alan Greenspan's irrational exuberant speech. And we were getting our asses kicked and I was like, "Oh man, this is not going to end well." And the market lifted and we were doing quite well. And one of my colleagues from Goldman came to see me and he said, "Oh, this is great. You're running your own business. You're the master of your own destiny. I'm going to leave Goldman and run my own business." And I looked at him. I said, "Okay." He said, "Can I can I show you something?" He said, "What do you want to show me?" I said, "I want I want to show you my summer house in the Hamptons." Oh, your summer house? Yeah. I said, "Come down the hall." I walked down the hall and I opened up the closet, Wolf, and there was a stack of servers and switches. Okay. It was $850,000 out of my own pocket, which was our trading network, Cisco systems, all this different stuff. And I said, "You see that? That's my summer house in the Hamptons. Are you willing to put your summer house in the Hamptons in a closet here in Midtown Manhattan? Because if you are, then you should leave and have your own business. But if you're not, you should shut the you know what up and you should stay at Goldman and enjoy your career there. Okay? And so the big message is who are you? >> What are you capable of? And what do you like doing? And uh you know failure has never been an option for me which is why I always have to dig out of my calamities in life. But that's the other thing you know expect failure. You know if you're taking exogenous risk and I had to take exogenous risk as a kid to get to where I am. Expect that your ass is going to get kicked >> and so don't be a baby about it and don't play the victim. You know when they fired me from the White House I got torched by everybody. I got torched by the media late night television. I I was Tony Soprano on the PTOAC. I was a Jersey Shore cast member. Uh, you know, Coar was like running cartoons of me as like Tony Goomba. Did I care? No. I went on those shows, faced the music, and never never played the victim. So, you got to have that mentality. >> If you're going to take risk, if you're not comfortable with that, then don't do it.
I think it's uh a great place to leave the conversation. Anthony, we're out of time. Thank you so much for sharing with us all of that wisdom. It's been an absolute pleasure having you here on the Master Investor podcast.
It's great to be with you by the way. Thank you. It's been honor. >> Great. Great to be with you. Uh that was of course Anthony Scaramucci. Next week on the Master Investor podcast, we will be joined by the Robin Hood CEO Vlad Tennis. So make sure to hit follow or subscribe on your podcast app if you haven't done so already. But for now, our thanks again to Anthony Scaramucci. The Master Investor podcast is sponsored by Else, Interactive Brokers, the World Goal Council, and BMY Investments. Please do remember the views expressed in this podcast are for general information purposes only. Nothing in the podcast constitutes a financial promotion, investment advice, or a personal recommendation. More on that in the show notes. This podcast is produced by Paradine Productions and Master Investor Limited in association with Birdline Media. If you've enjoyed the show, please do subscribe on YouTube or click follow on your podcast platform and you'll be automatically notified each time a new episode drops.