Notes by TPan

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Balaji Srinivasan - Author, The Network State, ex-CTO Coinbase and ex-partner a16z

🤑 Balaji’s Bet

• Will be providing an update about his bet soon
• Believe 10% chance of large issue in financial system in months, 70% chance in years
• Sees crypto as more of an insurance policy
• Budgeted $1M to raise awareness, believes there is a significant chance of existential financial risk
  • Not 1000x from where he thinks
  • People are quietly exiting fiat system (moving money offshore, etc.), Balaji is just more vocal about the issues
  • 2008 financial crisis, was surprising for mainstream, but it was slowly creeping up. Eg: Goldman saw the issue since 2006 and made adjustments. “Sell, then tell”.
  • System was set up to fake every indicator. Subprime mortgage assets were rated as AAA and were sold

💭 Balaji’s Mindset

• Question 1: Recognize the issue. Is this economy on fire, is there a problem?
• Question 2: What do you do about it, what is the solution?
  • Different tribes will address it in different ways. Eg: buy gold, buy Bitcoin, buy Ethereum
  • Observing many Indian founders are moving money back to Indian banks and diversifying where their capital is held
• Some people view Balaji’s stance as FUD (fear, uncertainty, doubt) of the fiat system
  • Balaji’s response: Why does Jerome Powell hate the US economy so much? He’s the pilot of the US economy and it’s going to crash
  • Calling out a directional signal with his bet. Signal of collapse in faith of the US financial system.
  • Some guy on Twitter didn’t cause it, the Fed did
  • Treasuries are the new toxic waste in 2021-2022 like subprime mortgages were in 2008
  • “Trust the Fed, end up dead”
  • How you know tech isn’t causing this banking problem
    • Yellen admitted it wasn’t
    • Multiple banks are having issues, common denominator is a Central Bank problem
    • Auto loan crisis, commercial real estate crisis, student loan crisis
• Doesn’t consider himself a Doomer, maybe a Doomer Optimist
  • “If you survive to the other side, you’ll thrive”
  • “I’m burning a million to tell you they’re printing trillions”
• When you think of dollar as a social network, there are plenty of alternatives to it
  • Other fiat currencies
  • Cryptocurrencies
  • Other payment networks (international payment apps, etc.)
  • Financial, internal, external pressures