Peter Schiff: Bitcoin will Bankrupt Microstrategy

This week, Peter took to his podcast to analyze the big movers in the crypto world. He discusses MicroStrategy’s big bet on Bitcoin before diving deep into the Trump administration-to-be’s plans on immigration, agriculture and food regulation. He wraps up the show by breaking down the United Kingdom’s ill-advised Employment Rights Bill. 

Peter spends a good chunk of the show discussing Bitcoin’s recent all-time highs. He attributes a lot of the coin’s surge to political optimism:

If you’re not a liberal by the time you’re 22, you don’t have a heart. If you’re not a conservative by the time you’re 28, you don’t have a head. Well, a lot of 22-year-olds are buying Bitcoin, and Trump got their vote. He got their vote by pandering to their most important issue, which was getting rich off their Bitcoin. I always thought the promises made would not be kept. It’s kind of par for the course in American politics—you promise everything to get elected and then screw over the people you promised.

Bitcoin advocate and Microstrategy CEO Michael Saylor recently compared Bitcoin to crude oil. Peter argues this is not a valid comparison:

He’s talking again about Bitcoin and how it’s digital energy. I mean, he’s not even really saying it’s digital gold anymore—he’s saying it’s digital energy. I always get a kick out of that, as if it’s some kind of battery you can plug into things and power them with your Bitcoin. … He also said, ‘Imagine what would happen if we eliminated all of the crude oil in the world.’ … I mean, imagine a world without Bitcoin. Nothing would change.

With Microstrategy buying billions in Bitcoin as the asset reaches an all-time high, it’s unlikely the company will survive any crypto price decreases:

The only way it ends is with MicroStrategy going bankrupt. I don’t see how this can end any other way other than the bankruptcy of this company, because their whole business model depends on pushing up the price of Bitcoin and borrowing money to do it. The minute they run out of the ability to borrow money, the whole thing collapses—because they are the big buyers. And without them, this whole thing collapses.

Turning to American politics, Peter tempers the fervor of healthy food advocates like Robert F. Kennedy, Jr. Healthy food is not always best on the margin:

The reason food is processed and grown the way it is, with all these additives and preservatives, is entirely about lowering the cost. If you eliminate all that and switch to organic, healthy food, it’s going to cost a lot more to grow, make, and deliver it. You can do that right now. … If we impose rules and regulations mandating healthier food and banning many processes or ingredients, we’ll be forcing Americans to pay significantly more for groceries.

Finally, Peter criticizes the poorly named “Employment Rights Bill” circulating in Great Britain. Proposed as a way to protect employees, the bill will only make hiring more expensive:

The problem is when the government does this, when the government punishes employers for hiring people, they hire fewer people. They do whatever they can to avoid hiring people. And that’s especially dangerous now when you have automation that’s gaining more popularity. You have artificial intelligence. …The last thing government should be doing is making it more difficult, more expensive and less desirable for the people who create the jobs to actually do it.

The bill continues an alarming trend that paints entrepreneurs and businesses as villains. In reality, they– not politicians– are the ones that make society richer:

The entrepreneur doesn’t get a salary—he may not get anything. He only gets what’s left over. Everybody else gets paid: the workers get paid, the landlord gets paid, the borrowed money and interest get paid. … If there’s a loss, he reaches into his pocket, takes out a loan against his house, or dips into his savings. The workers don’t have to do that. They don’t have to kick in any money. …The unsung heroes are the entrepreneurs—the business owners.

For more of Peter’s recent analysis of Bitcoin, watch his interview on The Corner Office.