This Week In Doom: What’s It All About?

This Week In Doom: What’s It All About?

February 2, 2022

This is the first in a brand new series of podcasts featuring my co-host, Doomberg (the little green chicken who could) and a series of occasional guests who we believe will enhance and broaden your understanding of the increasingly complex world surrounding us.

Many of these guests will be content creators with smaller audiences than their work deserves to whom we’ll hopefully be able to offer a platform in order to help raise awareness of their work, as well as introducing our audience to great new talent.

In this first episode, we talk about recent pieces we’ve both written – fleshing out the ideas contained within them and discussing the feedback we’ve received. From crypto to energy markets and the use of both propaganda and censorship, there’s plenty into which we can sink our teeth (and beaks)…

This Week In Doom
This Week In Doom
This Week In Doom: What's It All About?
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This is the first in a brand new series of podcasts featuring my co-host, Doomberg (the little green chicken who could) and a series of occasional guests who we believe will enhance and broaden your understanding of the increasingly complex world surrounding us.

Many of these guests will be content creators with smaller audiences than their work deserves to whom we’ll hopefully be able to offer a platform in order to help raise awareness of their work, as well as introducing our audience to great new talent.

In this first episode, we talk about recent pieces we’ve both written – fleshing out the ideas contained within them and discussing the feedback we’ve received. From crypto to energy markets and the use of both propaganda and censorship, there’s plenty into which we can sink our teeth (and beaks)…

 

Grant Williams:

Before we get going, here’s the bit where I remind you that nothing we discuss should be considered as investment advice. This conversation is for informational and hopefully entertainment purposes only. So while we hope you find it both informative and entertaining, please do your own research or speak to a financial advisor before putting a dime of your money into these crazy markets. And now, on with the show. Welcome everybody to the first in a new series of podcasts featuring my special co-host, the most famous green chicken in the world right now, Doomberg. Hi mate, how are you?

Doomberg:

Grant Williams, it’s great to be here, I must say. If achieving the status of co-host of a Grant Williams podcast doesn’t solidify our nomination for the chicken hall of fame then I would suggest that that is simply an organization that has lost its way. This is it, we’ve climbed the mountain really, truly.

Grant Williams:

You’re way too kind. I’m just delighted. This is the one podcast where I’m intent on the two of us talking over each other as much as possible to dispel any of those, are they one and the same, rumors which have been flying around for quite some time now.

Doomberg:

Indeed, let me talk at the same time as you to get it started. It’s fantastic, really great concept. Love the name, I love the podcast. Clip art for the cover of the podcast that we’ve developed together, is going to be a ton of fun. And truly it is an honor to be a co-host of a podcast with you and we have a lot of fun things planned out for 2022.

Grant Williams:

Yeah. I mean, look, this is a great chance for you and I to get together and talk about the world. And we’ll invite some guests on and we will debate and discuss and talk about the things that are right, about the things we’re seeing. And in many cases, the feedback to those because that’s often one of the more interesting parts of anything that I write or produce, audio or visual, and I know lately it’s been the same for you.

Doomberg:

Yes, indeed. It’s been a crazy couple of days for the Doomberg team. We were chatting before we started this podcast about the latest piece that we published over at our Doomberg substack which is a piece about Bitcoin and cryptocurrencies. And as from personal experience, nothing brings out thoughtful, polite, debate like taking a tough position on Bitcoin.

Grant Williams:

Well, it’s interesting, isn’t it? I mean, it’s something I’ve steered largely clear of in public. I’ve tended to have my Bitcoin conversations in private because I’m really keen to understand it better. I know that I’m intellectually outgunned in the subject because I just don’t have the hours that you need to devote yourself to going down that rabbit hole to really understand it properly and so, I’m skeptical but curious. But a couple of times I’ve had those conversations in public and the first was with the debate I hosted between Nick Carter and Mike Green. Lovely guys both, great defenders of their position both. But what struck me after that was that I don’t think anybody listening was swayed and that has been the takeaway for me.

Grant Williams:

This is a battle lines drawn situation and you’re on one side or the other and there’s no no man’s land and I’m sure you’ve found the same given your recent piece. So, for anyone that hasn’t seen your recent piece and for anyone who hasn’t, they should go to doomberg.substack.com and sign up to follow you for a start. But if nothing else, as a gateway drug, read that piece. But talk a little bit about the concept behind it, the process of writing it and then what happened after you published it.

Doomberg:

So, I would correct one thing that you just said which I doubt most of the people commenting even bothered to listen to the podcast which is kind of what we’re finding as we-

Grant Williams:

Wow, actually that’s an interesting point.

Doomberg:

We have fun tangling with the trolls on Twitter today. And I should say it’s all in really good fun. We’re big boys and girls here at the chicken coop and we enjoy a good Twitter tussle as much as the next team. So the piece that we published yesterday and we’re recording this on Wednesday was a clever little title, Dollars Ex Machina. And the center of the piece is our own personal experience in crypto. And we’ve not really talked about this before but way back in the day in late 2016, we were approached by a brilliant entrepreneur. He’s sort of a Rainmaker. I would say his portfolio is a bit volatile because he kind of rides things up and down but one thing that he is, is always early and he spots things.

Doomberg:

He brought to us an investment opportunity and it was in a privately held company that was working on something called Bitcoin that was a form of something that he called a cryptocurrency and we had no idea what it was. But the sort of classic, bet the jockey not the horse really, we said, “Sure, we’ll participate in the minimum.” What’s the minimum investment was my first question to him and when he gave us the answer, I said just because it’s you put us down for that. And as I said in the piece, we immediately marked that investment at zero on our personal balance sheet as one should when you have your sort of more speculative part of your portfolio. And then a funny thing happened as we tried to learn a bit more about this thing that we invested in.

Doomberg:

And the thing that happened is Bitcoin went crazy. So in late 2017, you might recall, the first of the Bitcoin manias, Bitcoin was changing hands for almost $20,000. And at the time that we made that equity investment, Bitcoin was trading for $600. And as things go, private rounds go at higher and higher marks. Now we had invested in the seed round, literally in the earliest of the earliest rounds, and I should-

Grant Williams:

And very appropriate for chicken, one would imagine.

Doomberg:

Yes, indeed. It’s a fun, interesting space to be in. And one of the philosophies you have in that market is the person pitching you is way more important than the idea they’re pitching. And so we went with that and we didn’t really know what crypto was and we had a lot of questions about it, as one does. But at the same time, the value of our little investment on paper began to skyrocket. And at its apex, it was probably worth 600 times what we put in it but we never allowed ourself to believe it.

Doomberg:

And we watched as the market crashed and the company fell onto hard times for a variety of reasons beyond their control, including various regulatory actions. And so that sort of steeled our… They say we’re shaped by our experiences and our experience in watching something go from nothing to life changing fortune back to nothing in the span of year, it makes an impact on you and so that was our introduction to crypto. We laid it bare pretty authentically in the piece and then the real heart of the piece and the thing that has sort of kicked the beehive so to speak is, if you view the lens of crypto through fiat as your framework, it’s kind of hard to counter the argument that at its core, the crypto universe is a bit of a Ponzi scheme.

Doomberg:

In the sense that, there’s nothing going on inside of crypto world, the crypto universe, that creates new fiat to come back out. And in a piece we described a sketch we made and sent to our friend all the way back in late 2016 which is we drew two circles and the left hand circle, we labeled real economy and on the right hand circle, we put the label crypto universe. And then we connected two pipes between the circles and one pipe into crypto universe and one pipe out of crypto universe and we labeled both pipes with fiat currencies. And we understood how money could flow into the crypto world, what wasn’t clear to us at that time was what was going on in that universe that would create more fiat for investors to take out of that pipe?

Doomberg:

And it seemed like it was at best a zero sum game and at worst a negative sum game and so that’s sort of a classic Ponzi/pyramid type scheme which is where in order to take more money out than you put in, you need to have ever higher inflows into the system. And then the bulk of the piece actually, we would label it, Follow The fiat. And there’s some big name players in the space who have hard fiat obligations which I know to many of our sort of gold oriented audience would seem like an oxymoron. But trust me when I say, in the context of cryptocurrencies, fiat currencies are hard. Michael Saylor, CEO of Microstrategy has $2.2 Billion in hard fiat obligations that he has leveraged his company to fund the purchase of Bitcoins and those bonds need to be paid back in fiat, not Bitcoin and not Tether.

Doomberg:

And so too, with the president of El Salvador who owes $800 million next January and is working to issue these Bitcoin bonds which when you again, follow the fiat, it’s new money coming in that he will siphon out of the crypto universe to pay back that bond and that’s just an interesting analysis. And the question we pose to our readers, which is one I’d love to know your opinion on Grant, is the mark to market value of the crypto universe is what $2 trillion today? Plus or minus-

Grant Williams:

Yeah, give or take.

Doomberg:

… half a trillion. How much hard fiat is in the crypto universe sitting in banks today? Because of the slight of hand of stable coins, which gives the appearance of marking Bitcoins in US dollars, people think they have $2 trillion worth of potentially American money sitting in their accounts. And we argue that there can’t be and I don’t know the answer so we speculated how many tens of billions of hard currency back that and then what is the total leverage ratio of the crypto universe? And it’s an interesting question. I don’t know the answer but I assume you agree that there’s not $2 trillion of deposits somewhere backing the stated value of Bitcoin.

Doomberg:

And I’ll close with the somewhat controversial comment that you shouldn’t quote Bitcoin in US dollars, it doesn’t really trade in US dollars at the margin, it trades in Tethers. And if you quoted Bitcoin as, it’s trading today at 37,000 Tethers, that might be a better way to look at it. And so that’s the piece we put out and you can imagine the torrent of hate and vitriol that we’ve been subject to both in the comments on the piece on Substack and then of course, on Twitter. So, that’s sort of the summary of the piece.

Grant Williams:

Well, it’s interesting, right? Because I read the piece, as I’ve read every piece you put out. And what struck me there as you went through that is, it’s actually a very simple question, nothing more. It’s not a statement. You’re not saying anything, you’re asking the questions and these are very basic questions. And I think they’re absolutely appropriate questions to ask for anybody who’s either invested or investing in these things. And look, when I’ve questioned the same things, the answers that I tend to get back are a blend of, you don’t understand it or that’s just FUD. No one’s actually come up with a sensible thought out answer to that. And, you brought up Michael Saylor then, you put Michael Saylor up in the piece.

Grant Williams:

And I go through what he’s done because there are Bitcoin evangelists everywhere. And look, a lot of them are very, very smart guys and a lot of them, I’ve known for some time and have a great deal of respect for because I’ve seen them think about, write about, talk about other aspects of the financial ecosystem so I understand their process and it’s a rigorous one. And that’s, I guess one of my big disconnects, people who I know who are all in and I’m missing something that they’re seeing that would allow me to do the same. So, let’s go back to Saylor and what he’s done to his company. Now, he’s taken a viable company, a viable business and he has levered it up to the gills to own an incredibly volatile asset.

Grant Williams:

And I did a podcast with a buddy of mine, Daniel Prince, back in the early days when Saylor was doing every single podcast talk show right after he first announced he was investing in Bitcoin. And I remember saying to Dan, “Look, this is all great but what if he’s wrong and it goes wrong? What’s he going to look like at that particular point in time?” And while the end hasn’t been written yet, if you look at what’s happened to the bonds, you look at where they’re trading, you look at how close he’s come over these last couple of drawdowns to being underwater on Bitcoin. You think about what, as a fiduciary, his board members would have to recommend the company do should Bitcoin fall not too much further from here.

Grant Williams:

And suddenly there’s the potential that this thing can unravel very quickly particularly if you are right about what would happen if someone tried to take a meaningful amount of Bitcoin out to convert back into fiat to pay off obligations. And there are questions, as you said, these are questions so the vitriol, the hate, I would prefer answers to that kind of stuff if I’m honest.

Doomberg:

Yeah. So, as we said in the piece, let’s be very clear. Michael Saylor doesn’t own those Bitcoins and the frequency of the laser coming out of his eyes is not going to be relevant if certain things play out. I mean, he is a major shareholder, let’s be clear. He owns 20 some percent of the company but the company and the board have a fiduciary to people beyond Michael Saylor. And it would’ve been one thing if he had simply issued equity to raise the funds needed to bet the company bet that he did on Bitcoin. And by the way, that’s fine. He’s disclosed all the risks. There’s nothing inherent or illegal about what he’s done. You and I, it raises an eyebrow to us, it’s quite risky.

Doomberg:

And the point of the piece was, you’re not paying back those bonds with Tether and you’re not paying back those bonds with Bitcoin. Everybody in the world knows his weakness and Wall Street is nothing but a series of stories of people fully understanding somebody else’s weakness and totally exploiting it. And so he, like the last of the converts, which was issued at sort of the peak of the mania and his stock price has a conversion price, I think, of an odd $1,460 and the stock is trading it in the 300’s today. That is a deep out of the money sort of busted convert that’s fetching 64 cents on the dollar for a yield to maturity of 9% from here, that’s deeply distressed territory.

Doomberg:

That’s the bond market telling the board that this is a serious problem. And of course, by issuing the last $500 million straight bond senior secured debt, he primed the two converts he had already issued which means that they then slammed down in their claims and subordinate to that bond in the cap tables. So, if you go on Bloomberg and you pull up the Micro Strategy cap table, there’s a priority. That straight bond was, as we wrote in a piece many, many months ago called, A Drunken Saylor, that that bond was basically the end of his ability to mortgage his business and tap the bond market. But if he had never issued debt, he wouldn’t have created this hard fiat pipe obligation out of the Bitcoin universe but he did.

Doomberg:

And so the whole point of the piece is actually just to speculate a little bit about how much fiat is actually in crypto universe. I happen to think the leverage ratio of the entire space is probably 40:1 but nobody knows if you have an extremely high leverage ratio but that was the predecessor to the global financial crisis in oh 08/09 is if you have a 40:1 leverage ratio, it doesn’t take but a 2.5% or 3% draw down in your equity to wipe yourself out. It doesn’t take much fiat leaving at the same time for the whole thing to collapse. And so the things that people objected to most about the piece was the use of the word Ponzi to describe crypto universe.

Doomberg:

And then also the fact that we characterized Tether i.e, stable coins as a fiat sleight of hands. But I’d stand by both of those statements, I mean that by definition, there isn’t fiat being created in crypto universe. And the mining costs, however small the Bitcoin Maxis might claim they are, are real and need to be paid in fiat. You’re not paying the electricity bill to run your mining machines with crypto, you’re paying it with US dollars or Russian rubles or Chinese yuan or wherever you happen to be set up but it’s being paid in fiat and that comes out of the system. And so it’s a fascinating piece, by the way, it doesn’t bother us that people are mean to us on Twitter, it’s just interesting to see the response.

Doomberg:

And, in fact, Nic Carter, who’s a great guy and I very much enjoyed the podcast that he had with you and Mike Green, expressed some disappointment about our piece on Twitter. Some of the subsequent comments might seem to indicate that he actually didn’t read it but that’s fine. But I did say, we tweeted, happy to debate Nic Carter on the merits of our piece as written on any form of your choosing. And it sounds like, at least via some DM exchanges, he’s going to have us on his podcast next week which would be great, we’re happy to show up. And by the way, in a separate tweet, if we can be convinced that we wrote something plainly wrong, we will be the first to write a new piece and to put it through our email distribution list explaining the error and why we were wrong.

Doomberg:

We feel pretty confident we’ll be able to defend the things we wrote because here’s the other thing, it’s through a combination of people not reading it or people just projecting, they think they’re reading something that they’re not. And in one of the lines in our debate prep and don’t tell anybody, Grant, and I know this might come as a surprise to you but I was a champion debater in my youth. So in our debate prep for wherever we end up talking to Nick one of the lines we wrote down is we’re happy to defend what we wrote, we can’t defend what you read.

Grant Williams:

Right. That’s what’s interesting me about this whole crypto debate is that, as I say, in my dabbling with it and, like I said, in public, I keep those to a minimum just because it’s time and energy in the aftermath that I just could use elsewhere, frankly, more productively. But there’s been this extraordinary level of defensiveness on the part of the guys who are pro crypto. And I’m obviously biased because I am definitely in the skeptics camp but I find, in my experience at least, the skeptics are a little more willing to listen to potential holes in their thesis as I know you will be. Simply because, look, if someone can convince me that my thesis is wrong and this thing’s viable then what I’m left with is a tremendous opportunity. I’m left with something that potentially I can invest in and make a ton of money if it passes my risk management controls and if I get comfortable with it, I’m left with an opportunity.

Grant Williams:

The other way around is more problematic. If you are all in on this thing and you believe that the sunlit uplands lie not far ahead then if you get into a debate and you find someone making points that challenge your thesis, then you are left with a wholly different mindset to the one I’m left with. So that’s the best I can do trying to understand why the people that are so pro crypto are so defensive and so quick to fire into anybody who, as we said at the beginning, asks questions, that’s all. You’re asking questions about this thing. And I kind of get it but if that was me and that was my position and that was my mentality, that would raise a huge red flag in my own mind.

Doomberg:

And I would say, one of the things I like about Nic is he doesn’t seem to be one of those people. And I do hope that he follows through on his invitation and my sincere tweets about my belief in his sincerity stand and I’m happy to show up anywhere, anytime, any form because we wouldn’t have published what we wrote if we didn’t believe every word. So for example, here’s a sort of classic type of thing that we’re dealing with on Twitter, we categorize all of these as whataboutisms. So while by your definition, gold is a Ponzi and my response to that is the word gold doesn’t exist in the piece. What does that have to do with what we’ve written? I mean, having been trained debaters in our past, we know how to handle such things.

Doomberg:

But I mean, I stand ready to define the differences between gold and crypto but actually the word gold doesn’t exist in the piece. And then other people didn’t like the fact that we quoted a socialist magazine, Jacobin magazine, and hey, at Doomberg we quote The Nation and we quote the National Review in the last two pieces that we’ve written. We don’t worry about the author, we worry about the content. And while the background of the author might inform how we should consider the content, in reality the content should inform how we consume the content. And that’s kind of lost in today’s click bait, troll, Twitter, internet age but it’s fun. Again, I should say, it’s been great fun.

Doomberg:

The piece has done amazing well. As we sit here some 30 hours after we publish it, it’s got 75,000 views on Substack and 550 likes and 180 comments. And you could bet that we’ve read every single comment as part of our upcoming debate prep because we want to be able to intelligently rebut through the framework of the piece. But I would argue, we’ve already won the debate because we’ve determined the framework of it which is our piece. It’s actually not a piece about the merits of Bitcoin or the merits of the US dollar and we even say in the peace to try to get ahead of this Bitcoin Maxi whataboutisms as we call it. There’s plenty of Ponzi’s in the world in the wide open and they just happen to be blessed by the State. And blessed by the State doesn’t mean we approve it, the whole point of our analysis of the crypto space is expect the empire to strike back.

Doomberg:

We are aghast at the sort of blatant criminality that we see going on in the space but there’s criminality in the fiat world too. I mean, “Hey, this just in, Deutsche Bank launders money for bad people.” We get it. We’re not saying that Bitcoin is inferior to the State, we’re saying that the State has capabilities to strike back and you best be prepared to be ready for it. Let’s be honest, I mean there’s a bit of a cult aspect to all of this. Cults don’t take any criticism, all criticism must be destroyed which we kind of knew going in and we’re just having some fun with it.

Grant Williams:

Yeah. I mean, I remember watching that YouTube video by Michael Bitstein, I think it was, about a year ago where he gave a presentation talking about exactly that. Anybody criticizes, you have to attack and destroy them and you have to maintain the focus on number go up and-

Doomberg:

There is no bad news for Bitcoin.

Grant Williams:

Right. So, I mean, clearly there is a bit of that and it’s under pressure right now. And there will be some people who will look at your piece and think you’re piling on because it’s under pressure and it’s had a big downward thrust and I get it. For me, I’m genuinely curious about this because it’s something that for many different reasons is important. There’s no doubting it’s importance right now but I just don’t understand it well enough to be comfortable. And so that’s why I’m keen to hear all kinds of opinions from you as well as Nic Carter.

Doomberg:

Yeah. And look, I genuinely like Nic Carter and look, as we said, I generally would like to know what the Bitcoin Maxis think is the answer to this question, how much hard fiat exists in regulated banks in the crypto universe? Period. What’s that number? That number would be pretty informative to all sides. What do you think the number is?

Grant Williams:

I wouldn’t have the first clue but I’m telling you now it’s absolutely not $2 trillion.

Doomberg:

Well look, if it’s a trillion and a half, okay, it’s no big deal. But you had a guest on your podcast, his name escapes me, he was an expert in banking and it’s on my list of things to read. But it was a podcast after you had Bennett Tomlin

Grant Williams:

Yeah, David Dorr.

Doomberg:

David Dorr, exactly. Yeah, David Dorr’s podcast. It was fantastic and he’s like, “If you think Tether has $80 billion in the bank, you’re crazy.” Well, I mean, I would be the first to admit that David Dorr knows a lot more about the banking system than we do but I respect his opinion. He can’t conceive that this is real and that’s the other point of the piece that people have objected to, of course. Which is, we consistently say Bitcoin should not be quoted in US dollars, it’s not traded in dollars. One of the differences between gold and Bitcoin is gold is traded in fiat and I know that I could walk down to the local pawn shop and sell the gold coins I have in my safe for US dollars.

Doomberg:

Cryptocurrencies are traded in Tether and nobody knows where Tethers come from. And there’s a case to be made that the purpose of tether is to make price go up, to increase the excitement, to bring new money in, which is the classic thing you need in a Ponzi pyramid. And so is Bitcoin really worth $37,000 is an important question. And when people sort of say, “Yeah. But by your definition, gold is also a Ponzi.” Not really, there’s a lot of differences but gold at least is transactioned into fiat and you could say fiat is a Ponzi and I would say, I agree.

Grant Williams:

Yeah. No, and I think that’s an important one because just that ability to simply transact. Gold is another faith-based instrument, let’s face it, right?

Doomberg:

Absolutely.

Grant Williams:

It’s an element, there’s nothing behind it, it’s just a lump but it is a faith-based investment but that faith is based on centuries of track record and you’ve seen-

Doomberg:

And a big difference is you don’t need other people to transact with Bitcoin because of proof of work, you need the miners to append the blockchain and that comes with a penalty. And so with gold, I could walk over to your house and say, “I’m short of gasoline, here’s a gold coin. Can I take that tank of gasoline?” And there’s no work required for that transaction to occur or to be validated. Look, I mean, there’s all kinds of debates which by the way, we didn’t get into in the piece. So my commitment, if I do debate, is I’m going to stick to the framework of the piece. But the whataboutism that we see the most is gold is also a Ponzi by your definition. Gold doesn’t need any proof of work to transact.

Grant Williams:

Yeah. I mean, look, people might argue, I’m trying to be devil’s advocate here, and say, “Well, it needs to be assayed or I need to know that’s it’s not Tungsten, sprayed gold but for the most part, I agree with you. But listen, let’s do us and the listeners a favor and let’s move on from the Bitcoin debate because we end up going around the circles.

Doomberg:

Yeah, sure.

Grant Williams:

I will be tuning in. I hope you and Nic do debate because, as I said, I like Nic, he’s a very thoughtful guy and-

Doomberg:

Me too.

Grant Williams:

… He makes some great points. And I thought he did a fantastic job when he and Mike Green went head to head over a year ago. Now, it wasn’t a knockout win for either side which I think is great, it’s great that it wasn’t either of those. Another focus that you’ve been all over in recent months, way ahead of a lot of the mainstream media, has been the problems in the energy markets. This is something that you’ve taken apart from all different angles. So what I want to know is why energy and what’s your background in energy that took you down that road so far ahead of most other people?

Doomberg:

So our background, it stems from at our firm we have several decades of relevant experience in heavy industry, in the commodity sector at various companies that your audience would recognize. And in fact, one of the things that we think makes Doomberg unique is there are very few people at the levels of industry that we come from who are free to write about things in the way that we do because they’re still an industry and they still have options to vest and they have stock to sell. And one of the things when you’re working in industry is you just don’t go on social media because there’s risk of cancel culture and of saying something wrong or annoying your customers, et cetera, is ever present and we don’t have that.

Doomberg:

We run our own firm, we have clients, our clients know us. They value us based on our ability to think about creative problems in unique ways and to distill complexity for them so that they can feed our input into their own investment processes. So, we have decades of industry experience on the ground. I was talking with you offline at one point, I sort of have a molecular map of how the economy actually works in my head because of that experience that we had. And that experience plus the freedom for us to write about it gives us a different vantage point. A lot of people in the energy debate are either at think tanks or are environmentalists who work at universities or who work in government and we bring the industrial, the practical, the real, to bear.

Doomberg:

And we sort of view that aspect of the Doomberg product as teaching non-finance concepts to finance people in a way that they can easily understand, that’s the key. And so we’ve come at the energy debate from all circles and ultimately, if you do have a decent understanding of physics and chemistry and thermodynamics, you can very quickly understand how critical energy is to life and how the consequences of the decisions that our relatively uneducated leaders are making are going to be laid bare in short order. And we’ve had a great run of being able to predict sort of next week’s news today. We had an early run on the natural gas situation in Europe. We had a early prediction, a very somewhat strident piece for us called Starvation Diet that highlighted and alerted the world that a crisis in fertilizer was coming and I think the price of fertilizer has probably tripled since we wrote that piece.

Doomberg:

And then we’ve written a piece about the European credit markets, carbon credit markets. It’s been fun, it’s in our wheelhouse, people seem to like it. And when you could write from a position of expertise and describe things in a way that is accessible to a wider market, people seem to like that and they respond to it. And the danger of course is you sound sort of pro status quo, anti renewable, global warming denier, all of the sort of propaganda tools that people use to try to shut down debate. We’re none of those things, we’re human first, realists who have an understanding of science.

Grant Williams:

Well, listen, I would say you’re chicken first, human second and then scientist third but that’s just me splitting hairs. But listen, it’s funny, when you talk about that and taking everything else aside to be someone with some expertise in this field and the ability and this is the crucial part to be able to think clearly and write about it unfettered, what’s interesting to me is you’re called Doomberg and the piece you’ve put out are doomy, right?

Doomberg:

Mm-hmm (affirmative).

Grant Williams:

But that’s not because you set out to try and be doomy. What I find interesting is that someone who understands these things, has a rudimentary grasp of physics and can communicate well, the outcomes tend to be problematic. Which really there’s a lot of information in it because we you’re being told one thing by people who can’t speak or write freely about this stuff. And yet, given the benefits that you have of your position, that seems to be a long way from the truth. And so what does it take for people to kind of be able to realize that, okay, the chicken has got no skin in the game. The chicken knows what he knows and is willing to explain that in a really accessible way and the conclusions from that thinking are problematic. But I don’t want to listen to him because he’s just spreading FUD and doom and fear. What does it take for people, do you think, to get past that and work out what is a very simple equation, knowledge plus freedom equals a few problematic situations?

Doomberg:

Yeah. And I would say to the long time readers of Doomberg, they would actually know that we’re not doomy and that we’re not pessimist. That we’re actually fun, happy people. We’re polite people and ultimately we’re optimistic about the end state. We’re pointing out that there’s better path functions but we are wholeheartedly long, the human spirit and ingenuity. And we will try out, like Churchill said, right? I mean, democracy is the worst until you’ve considered all the others.

Grant Williams:

[crosstalk 00:33:20], yeah.

Doomberg:

Yeah. So we’re going to do a lot of bad path functions and it’s going to hurt a lot of people. It’s going to starve a lot of people but ultimately the human endeavor, which is a constant unrelenting struggle against entropy is a history of winning. And we will circumvent the political ineptitude that we’re currently confronted with because ultimately given the choice between starving and rioting, people will riot and what follows the riot, it will be a better system, will be better decisions. You’re already seeing Joe Biden backtrack, I’d say, pushback on some of the more extravagant and nonsensical positions of the radical environmental left. Energy is life and when you tinker with energy policy, you tinker with life and when you tinker with life, you risk the guillotine.

Doomberg:

And that’s just the nature of history. Nothing about history has changed, nothing about human nature has changed fundamentally. People want a safe home, healthy family, food to eat, water to drink, clean environment and if they don’t get it, they’ll riot.

Grant Williams:

Yeah. Look, I couldn’t agree more. But what is it, do you think, about that very simple proposition which, as you say, has been provable for millennia that that is very basic and something that everybody wants? What do you think it is currently about that that just makes people completely blind to what is a very simple base equation to everything that gets laid on top of it?

Doomberg:

So, who are the people and what are they blind to? We’re not talking about the billion people on the planet for whom the daily struggle to meet the base of Maslow’s pyramid of needs, they don’t really care where their energy comes from. They care about living, they care about getting to the next day. The people that care are the people that can care, the people that have the luxury to care. The top of the pyramid, the apex of the world, the 1% lottery winners. And to actually a pretty influential, although very small minority, of those people they’ve become violently anti-human. And I was a guest on Alex Epstein’s podcast who is a very vocal and effective debater on the topic of fossil fuels and he believes that fossil fuels are the key to human progress.

Doomberg:

He does show, in reading his book and preparing to go on his podcast, there’s some shockingly anti-human parts of the environmental movement. Now they’re not the majority but they’re pretty influential. And in their eyes, humans shouldn’t exist. That any damage to nature is unjustifiable, period. And so in their eyes, humanity is the cancer on the planet. Whereas from our perspective, we start with a chicken first, human first, mindset and say, “How can we equitably partition the highest standard of living possible at the lowest environmental impact possible?” That’s the ratio we’re trying to drive through to this radical extreme part of the environmental movement. There’s only one part of that equation which is to drive down the impact of humans on the planet.

Doomberg:

And in their eyes, they’d rather not have humans. And our point to them is, you first. Go ahead, leave the planet but second, go ahead and say that honestly and put that to a vote. Because I can assure you, it would be roundly defeated at the ballot box which is why it’s a very quick trip from environmental extremism to totalitarianism terrorism. They just don’t believe that the general population is capable of protecting the planet and so they’re going to do it for them.

Grant Williams:

And yet this idea has obviously taken hold and become a cause. Whereas some more radical ideas quickly get kind of laughed at and put away and pointed out for what they are. With regards to the Green Energy Agenda, it’s difficult to find anybody who will say, “No, I want to inflict the maximum amount of damage on the environment.”

Doomberg:

Sure.

Grant Williams:

That’s just not the mindset of people. Everyone’s perfectly willing to do something that creates a better planet for all of us. However, they’re not willing to make the kind of decisions in the short term that cause problems. And with this, I’m just thinking about all the knee jerk reactions after Fukushima and what that’s done to the nuclear industry which let’s face it, is as green an energy as you could possibly wish for. And yet people in charge of policy are still, in the case of Germany, making decisions which are absolutely not in the interest of the purest distillation of green energy. They are making decisions based on populist rhetoric, on populous stances, taken by aggressively energized demonstrators to make decisions which are absolutely not in the best interest of their constituents. Well, why is that?

Doomberg:

Well, again, it’s platitudes is the foundation of the political decision making and it’s truly a symptom of too much success. One of the biggest challenges in life, whether as an individual or an aggregate is managing your success. And when you’ve created so much plenty, you have time to feel guilty about it. And honestly, I think that’s what’s occurred. We’ve lost religion in society and I should say, I mean, I’m not particularly religious myself but in a way. We’ve seen in the wealthy economies an aggregation towards cults. And I would argue that in many ways, the same traits that we see in Bitcoin are present in the alarmist camp. There is absolutely zero tolerance or consideration for the possibility that we might be able to just set aside some money and react to things as they occur, as opposed to spending so much money in an effort to prevent something that may or may not occur, that is just considered unacceptable speech.

Doomberg:

And you wrote a fantastic piece which I’d love to pivot to and pick your brain a bit in your latest edition of Things That Make You Go Hmmm… Which is available to your silver and gold subscribers about propaganda and the power of it. And when we see these sort of intolerance of authentically held positions politely expressed. The areas where we see a lot of that intolerance are obviously with COVID 19 and then now with global warming. And I would predict that it might not be many years from now where expressing the types of view that we’ve done on Twitter and on Substack would be considered cancelable offenses and it’s scary. So yeah, I think it’s all sort of part of this complex mix that we’ve been talking about for the entire podcast.

Grant Williams:

It is scary. I happen to believe that these things tend to be pendulum-like in nature and eventually they kind of start to swing back the other way. But sadly, I think we haven’t kind of reached the point where the pendulums at its furthest arc yet, I think we’ve still got a way to go. And it’s that last part of the pendulum path where things can start to get sticky but, excuse me, the piece you referenced, I too have been fascinated by the kind of ratcheting up of propaganda and understanding where it came from and the guy particularly, Louis Bernays, who was the father of spin, he was known as. Sorry, Edward Bernays, I’m going middle name first. He wrote a piece called Propaganda back in the 1920s and he used it for public relations.

Grant Williams:

It was pure hearted at the time. It was a case of how can we get people to buy the products we want to advertise. And what’s interesting over the intervening years has been to watch how propaganda and censorship have gone hand in hand. And you’ve, you’ve got this period where propaganda is used to try and convince people of things and once it fails or once the impact begins to lessen, then you have the imposition of censorship. And that’s kind of where we are now, these propaganda subjects, like you mentioned there, green energy is a great one. Wokism for want of a less all-encompassing term is another one. Once they start to run up against opposition which they are particularly in the case of COVID, for example, then you start to reach the point where censorship gets the upper hand.

Grant Williams:

And that’s the part that worries me greatly about where we are now because the subject we’re talking about here, green energy, climate change, whatever you want to call it. I did two podcasts recently, one with Felix Zulauf who is a legendary investor and a phenomenally smart guy who’s got so many big calls right over the years. And during that hour long discussion, Felix made a passing reference and I timed it, it was 30 seconds of the hour, where he said, “I think the blind spot for people here is climate cooling. I look at sun spot activity, I think the earth may be entering a cooling phase and not a warming phase. And because of that, these are the implications I find for agricultural commodities.” That was it. That was essentially the length of the discussion.

Grant Williams:

Now he wasn’t on a soapbox, he wasn’t trying to convert anybody to global cooling. He wasn’t making any disparaging comments about people that thought that global warming was the problem. He was just offering an opinion based in his own research and then saying what he felt that might mean in terms of investment possibilities. And the amount of correspondence I got over those 30 seconds, even to me, was truly, truly extraordinary. People say how fantastic Felix is but because of those 30 seconds, they wonder whether they can take anything else he says seriously. People accusing me of giving a platform to far right propaganda, it’s remarkable. And the following week, I had another podcast with a friend of mine, Simon Hunt, who again touched on this and said, “I heard your podcast with Felix. I heard what he said about global cooling and my own research suggests that I think he may be right.”

Grant Williams:

And he quoted some things that he’d found on a website, a NOAA website, in a presentation which has subsequently been taken down but he’d taken some notes on it. And again, he read this quote out which talked about sunspot activity and talked about how on a cyclical basis, the sun spot activity suggests that the earth could get cooler. Now, neither of them were saying, “We are right, everybody’s wrong.” They were saying, “Look, I’ve done some reading and this is where I come down on the subject.” And for me, in the midst of that conversation, in the context of that conversation, there was absolutely no point in me then pivoting either of those discussions to climate change and saying, “Well, give me your evidence. How can you say this? Who do you cite? Why are you standing against the science that is deemed to be correct?”

Grant Williams:

No, this was a discussion about investment and these are opinions that they hold. I’m not a climate scientist, they’re not climate scientists so what’s the point of having that discussion? But the pushback I got was very much, you cannot allow someone to have an opinion like that without first calling them out on it. Secondly, pulling them back on it and thirdly, either ending the conversation or never speaking to them again. And that censorship, which has come down from authorities is now being embraced by the general public. And let me tell you, my audience is absolutely phenomenal. They’re such a remarkable group of people. They’re smart, they’re engaged, they’re open-minded, they entertain all kinds of ideas and I engage with them on an incredibly regular basis.

Grant Williams:

But these topics demonstrated that there is a weak point there. These are subjects that some of them are unwilling or unable to entertain an open mind about. And I got to say, Doomie, that worried me tremendously.

Doomberg:

Well, it was a great way that you ended that piece. And everybody listening who isn’t yet, at least, a silver subscriber should go and sign up and read it. Here’s how I would frame what you just said and this actually goes back to what few people truly understand, which is what is the definition of science? The general public probably thinks science is some combination of technology, intelligence and authority but actually science is none of those things, Science is a method. Science is literally a rigorous and unrelenting attempt to negate hypotheses in the search for the best ability to define the universe as we can do it today. And hypothesis is nothing more than conjecture that has been formulated into a hypothesis and a hypothesis doesn’t become a theory, i.e, our current best ability to define the truth until it has withstood any and all heartfelt criticisms of the hypothesis.

Doomberg:

And by definition, settled science is an oxymoron, by definition, every theory that is nothing more than a hypothesis that has survived unrelenting criticisms is just one effective criticism away from being debunked. Now, there’s a certain amount of smoking causes cancer, yada, yada, yada, I get it but there’s no such thing as settled science. And so part of the issue with people like me is when I hear those types of phrases as a trained scientist myself who spent 20 years, 30 years, of my life practicing science, the method. When I hear non-scientists trying to shut down debate between people who have opposing views in this space, it immediately sets off a red flag for me and it causes concern.

Doomberg:

The second thing I would say is the climate is a non-linear system, it’s very difficult notoriously. It’s known in the scientific community that it is very difficult to model non-linear systems. So, it’s just one of those things that you just sort of have to observe. And I’m disappointed by the feedback you got but I’m not surprised by it because the hallmark of anti-science behavior is shutting down the ability to critique. But criticism is the tool of the scientist, it is the thing that allows a hypothesis to evolve to a theory which is nothing more than our best description of the truth as we can understand it today.

Grant Williams:

Yeah, beautifully put. Well, listen, we’ve talked about censorship, we’ve talked about Ponzi schemes, we’ve talked about propaganda. Let’s talk a little bit about what our plans for this podcast are because we are not planning on it just being you and me talking backwards and forwards every time we turn the microphones on. There are other factors that we want to try and bring to people. So talk a little bit about our little brainchild and what we want to do for this.

Doomberg:

Yes. And again, really phenomenal opportunity to co-host a podcast with you. Our intent is to actually have a series of guests and what we thought we would do which we hope the audience will think is interesting is to find new content creators that may not be on the radar of your audience today that we think are really doing great stuff whether we agree with it or hopefully, even better, whether we don’t and to get them on the show, to highlight them, to give them a platform, to help them grow their content creation business in a way that both informs our audience and helps the guest. And it’s going to be a lot of fun. We have some ideas of who we’re going to bring on in the next coming weeks and months.

Doomberg:

And I really think it’s going to be a great way to take the best of the internet. The thing about the internet that’s great is anybody can participate. It’s also the thing about the internet that makes it bad is that there’s a lot of noise. And what we want to do is to bring you the signals amongst the noise that you might not be aware of as listeners that we have vetted for you, that we think are great or interesting or controversial or think in ways that are different to the way we think but that might be helpful for our audience as they go about trying to navigate this complex world.

Grant Williams:

Yeah, I think it’s such a key point. One of the absolute bonuses of having any kind of platform is the ability to use that platform for others and to bring people to an audience that, again, maybe they wouldn’t have heard of this person without them appear on this podcast but to allow people to judge for themselves. You and I might bring guests on that we think are interesting and the audience think, “Who the hell was that guy?” But it won’t be because we’ve just pulled names out of a hat. It will be because we’ve talked to them, we’ve listened to them, we’ve read them and we think that they’ve got something worth saying. And just to broaden the debate, to give people a chance to listen to diverse opinions and some they’ll agree with some they won’t.

Grant Williams:

But if you can curate this in a way that people can be confident that if they listen to this unknown person for 35, 45 minutes, it won’t be time wasted. It’ll be informative, it’ll be entertaining and thought provoking and that’s one of the best things that we can do with a platform like this is to broaden out and give access to the audience, to strangers and to people looking to build a name for themselves in the business, a potential audience. I think it’s just a wonderful exchange that I think you and I are both going to be delighted to be in the middle of.

Doomberg:

Absolutely. The internet need not be a cesspool

Grant Williams:

No.

Doomberg:

Yeah. We could go and find the good stuff and polish it up and share it with the audience in a way that is mutually beneficial to us, to the guest and to the people listening because there’s one hallmark about the Grant Williams podcast. And believe me, I’ve listened to every one of them that you’ve produced and as you know, I’m a member of the gold tier which we should probably talk about before we sign off because it’s really some fantastic stuff that you’re putting out, speaking of great content creation. But the internet need not be accessible and we as content creators are on the internet probably a lot more than our listeners or your subscribers or the people that subscribe to doomberg.substack.com, the fastest-growing substack on earth. But we can do that as a service to go ahead and to find the well polished stones from the river of noise and to bring to the listeners the very best signals that we could find.

Grant Williams:

Yeah. No, I couldn’t agree more. That’s what this is going to be about and I can’t wait to get stuck into it and get some guests on here and have a range of debates about who knows what? I mean, literally you and I have no idea what we’ll end up talking about with this stuff. It won’t just be energy and it won’t just be Bitcoin and it won’t just be gold, it’ll be anything and everything that we find interesting and thought provoking and the hope that it engages people.

Doomberg:

Yes. And look, I’m not going to let you get off this podcast without telling us about your journeys. I know that you’ve just spent some time in the UK and that you’ve found yourself in Australia now. You’ve been producing some amazing content for your gold tier. Tell everybody what the gold tier is, a lot of the listeners of the podcast might not be subscribers. I can tell you that, especially like the last piece I think you put out was with Don Yaeger was just phenomenal. Talk to us a little bit about the gold tier, your journey, how fun it is to have two, three hour long interviews with these brilliant people and you’re your own editor and you can produce the exact piece you want to produce.

Grant Williams:

Yeah. Look, it’s a huge gift to be in that position, I have to say and I’m thankful for it every time I get to do one of these. I mean, the whole idea of the gold tier was that. It’s to take the time to have real meaningful conversations with people that could last an hour, could last multiple hours. I’ve just finished recording one which I just cannot wait to release. Which without any word of a lie, I think when it’s finished will be over five hours long but it goes by in a heartbeat. I still don’t quite know how I’m going to release that yet and whether it’s in one piece or whether in parts, I’m not sure. But it’s five hours of just remarkable insight and wisdom from someone who’s lived a life, who has experienced success, who’s experienced failure, is happy to talk about what it was that led to both and the lessons they’ve learned.

Grant Williams:

And yeah, the whole idea of these conversations is just that. They’re not talking about markets per se, they’re not talking about what I think is going to happen tomorrow. They are attempts to distill the very, very best out of people who’ve had remarkable careers and understand what it was that made them successful because I think those kinds of lessons can be taken by people listening can be filed away and can be used at points in their own careers where they reach the same kind of crossroads that my guest reached. And perhaps at the back of their mind there’s, “You know what? I know how this guy or I know how this lady handled that.” And yes, it seem like a tough decision now but I’ve got a kind of sense of where that path leads.

Grant Williams:

And so, I want to create content that stands the test of time. I want to create content that you could watch in five years time, 10 years time, and it will contain more lessons as opposed to less rather than creating stuff that’s obsolete because it predicts where the S&P’s going to be next week which there’s a place for that, for sure but it’s just not the kind of conversation I’m interested in. So, I launched the gold tier last year. You mentioned Don Yaeger and for someone with a finance background like mine and investment to spend almost three hours talking to a former editor of Sports Illustrated might seem a very curious choice to many and people might think, “Well, what the hell? Why would I watch that if I’m interested in finance and investment?” But these conversations are applicable in so many different ways.

Grant Williams:

And that particular conversation with Don, which was spent largely talking about sport and, and champions and successful athletes and the mindset it takes to be a champion on a court or on a pitch. If you listen carefully, you realize just how applicable they are to finance, to entrepreneurship. There are so many lessons out there and sometimes going and speaking to people who you might not instantly think have a relevance to what it is you do can be eye opening. And that particular conversation with Don Yaeger was exactly that. I mean, I had a massive mailbag about that just from people who were surprised by him and blown away by him and inspired by him.

Grant Williams:

And really that’s what it’s all about, if you can find people that have a story to tell that is inspiring and educational and thought provoking then I think it stands the test of time. So that’s really what I’m trying to create. And the fact that I get to travel the world and meet all these wonderful people and spend a day with them in their homes, with their families, really getting to know them is just a phenomenal gift for me and I’m grateful to every one of them. I’m here in Australia to see my daughter, God bless her. Hi Bronte, if you’re listening because I haven’t seen her for two and a half years because of COVID. But once she and I have spent some time together then I’m going to travel around Australia and film some conversations down here.

Grant Williams:

Because Australia, despite what all the press has been over the last couple of years about it turning into some kind of new Stasi State is filled with some of the most remarkable people, gifted entrepreneurs, fascinating thinkers that you’ll ever meet anywhere and I’m going to go and talk to a bunch of them down here and get a sense, not just of what’s happening in Australia but how they’ve built successful businesses and successful careers. And so, I can’t wait to get on the road next month and go and have those conversations.

Doomberg:

I mean, all five episodes that I’ve seen and I’ve watched them all start to finish as soon as you’ve released them. I mean, John Husmann was your first. He was fantastic. Obviously Paul Isaac there probably isn’t a smarter person on Wall Street than Paul Isaac and to spend as much time as you did with him. And then Pippa Malcolm really blew me away. She’s such a great personality and brilliant insights especially taught me a lot about crypto and NFTs in a way that I sort of hadn’t really considered before. And she has such a great geopolitical mind and experience and the stories that she tells about 911 were great. My personal favorite obviously was Don Yeager which is episode five, which is just a complete must watch.

Doomberg:

But actually John Perkins was really brilliant too. Episode four, the author of Confessions of an Economic Hit Man. I thought his thoughts on China and Belt and Road initiative and the similarities to the types of tactics that not only did he use as an economic hit man but China has learned from and improved since his time in that space. They’ve really been fantastic. I congratulate you on it. I encourage everybody listening to sign up for gold and it’s really been great and super thrilled to be associated with the Grant Williams brand and this podcast. It’s going to be a lot of fun.

Grant Williams:

Well, Doomie, you’ve plugged that better than I ever could so I thank you for that.

Doomberg:

Somebody has to.

Grant Williams:

I’m hopeless at that kind of thing. But listen, this has been a great first edition of this thing. Hopefully we set our stall out and people understand what it is we’re trying to do. Everybody listening to this, please send us suggestions. If there are people out there that you think deserve a platform and we should talk to and bring to a wider audience, that’s really what we hope to do with this so please let us know. Any feedback is welcome on the topics at hand even if it is crypto. We’re both big boys, we can both take the slings and arrows and outrageous fortune squarely in the chest so, don’t worry about that.

Grant Williams:

But just please be a part of this conversation. There only interesting things happening right now and none of their futures are set in stone. And the hope of this podcast is to try and get a better understanding of them to try and handicap the risks and to get the perspectives of people that really have a better hand on it than we do to try and educate ourselves and you. So please, please make sure you’re a part of the conversation.

Doomberg:

Absolutely. It’s been fantastic Grant, looking forward to the next one.

Grant Williams:

Absolutely. In the meantime, if you don’t follow us already then you should absolutely sign up to the Green Chicken at doomberg.substack.com. You can find him on Twitter @DoombergT. You can find me @ttmygh and we will see you all next time. Thanks, Doomie.

Doomberg:

Thank you.

Grant Williams:

Nothing we discussed should be considered as investment advice. This conversation is for informational and hopefully entertainment purposes only. So while we hope you find it both informative and entertaining, please do your own research or speak to a financial advisor before putting a dime of your money into these crazy markets.

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