Bitcoin topping $90,000 for the first time ever as the record rally continues, kicked off by President-elect Trump's victory one week ago today. We're going to bring in crypto bull Mike Novogratz, who's called the most important thing to happen to digital assets in years. Joining us now, of course, is Mike Novogratz. You know, Mike, when you think about just what has happened here in crypto prices over the last couple of weeks, that's one thing, but I also want to get your view into the larger view of things. We are getting many appointments coming in rapid fire overnight. When you think about who the president-elect wants to put around him, and you see for example Elon Musk and Vivek Ramaswamy playing a role here, at the end of the day, how does this all make you think differently about the policies you're going to see moving forward, how credible some of these policies can be moving forward, how you invest through them?
Listen, I think one thing is clear with Elon and Vivek, they want to cut some of the spending out of the government. And so when I think of, you know, we have a $6.75 trillion budget. When you look at Medicare, Social Security, and interest payments, that's 57%. If you throw defense on top of it, you're like at 75%. And so you only have 25% to work with unless you're going to attack those sacred spaces, right? Medicare, Social Security, I've always been third rails. The easiest thing is to pressure the Fed to cut rates, right? Every 25 basis points of rate cuts saves $25 billion from your budget. Now think about how many $100,000 employees you need to cut out of the government to save $25 billion. Like, quickly do a calculator and do the math, right? And so the biggest fix for the government would be to get short rates down so our funding costs... and I think the story they're going to tell is we're going to need monetary policy because we're going to be really good on fiscal, we're going to cut, cut, cut. Now if that's the case, it's great for the stock market, it's great for America. The proof will be in the pudding, can they cut? Trump wants to cut taxes to spur growth, but can he cut spending? And he never has in his career.
Well, to that end too, would you be a buyer of long bonds at this juncture, or would you actually go short with that kind of doubt?
I think you've got to sell the long end. Every rally, you want to sell. Listen, because if things are working, the Fed's going to cut rates, right? Again, this idea of how do you cut interest rate costs down, and the yield curve steepens. And so I just don't think there's a whole lot of value in a world... and listen, Bitcoin is telling you that, gold, silver tells you that. Like, the world is still worried. The only way you get out of $36 trillion of debt is to inflate it away. And you want to gracefully inflate it away. You can't have hyperinflation or you have chaos, right? You want to run 4% inflation. That's hard to do, but that's the goal, right?
So Mike, it sounds like you're a bond bear but you're a Bitcoin bull. And I want to get back to crypto here and I want to talk about the possibility of a Bitcoin strategic reserve. You think about this rally that we're seeing in Bitcoin, which is one of the purest supply and demand markets, and one of the reasons I keep hearing is that there's a lot of optimism that we could see the United States government buy up to a million worth of Bitcoin. Now that you do have all these crypto advocates in Congress, are you confident that we could see something like that?
I still think it's a low probability, right? You know how Congress works. The House gets excited, the executive gets excited, and the Senate says calm down, right? That's the role of the Senate. And while the Republicans control the Senate, they don't have 60 seats, they don't have close to 60. And so listen, I think it would be very smart for the United States to take the Bitcoin they have and maybe add some to it and say we want to show the world that we're going to be a technology-first country, a crypto, digital asset-first country. I don't necessarily think the dollar needs anything to back it up. We have the strongest military in the world, we have the dominant economy in the world, and the reserve currency we've earned. And to need to back up the reserve currency is counterintuitive. And so again, listen, if we get the Bitcoin reserve, and as a guy that owns a lot of Bitcoin, I will not cry. And if you see me crying, they'll be crocodile tears. I think Bitcoin heads to $500,000. Again, it's a whole different paradigm because it forces every other country... and countries are already buying it. I've got a dear friend, the guy that actually turned me on to Bitcoin in 2013, who's in the Middle East right now, and he said he's never seen anything like it. He's convincing more people to buy Bitcoin in the three days he's been there than any time in his whole career. And they're huge pools of capital. And so we're seeing something globally. When Trump advocated in Nashville that he was going to be a crypto president, a Bitcoin president, and now he's the president, let me tell you, other leaders heard that. And so I think we're strapping in for what could be an amazing rally.
I want to get back to your point on hyperinflation, Mike, or at least more than 4%. I look at a longer-term chart of Bitcoin, say five years, and in that run-up post or during COVID, I always see an inflation indicator here. I know that there was a lot of helicopter money that helped out as well, as people being home with nothing to do. But to me, it was an indication that at least this community saw massive inflation coming, and that was borne out. Do you not see the most recent run-up as the same sort of signal?
Yeah, listen, so when the government's printing as much money as they... I mean, the Bitcoin narrative, the only narrative really for Bitcoin is it's a hard asset in a world where you're going to debase fiat currencies. Like, that's the story. Forget any other story. Like, you know, when Bitcoin, they say we're going to be layer twos and we're going to do NFTs on it, I always think that just confuses the story. Eyes glaze over. The story is digital gold. It is a hard asset that's believed to be a hard asset by the people that participate in its community. And it's really hard in a world of populism, not just in the United States, all over the world, for governments to not want to spend more. And every single government is spending more than they take in.
