The Macro Master Raoul Pal interview: The economic singularity is approaching, so don't get off easy for the next four years

Original source:When Shift Appens

Photo by Felix, News

The macro-investor, Raoul Pal, co-founder of Real Vision, re-enters the show Wen Shift Happens, to examine in depth why the AI competition was the largest capital event in human history, and why encrypted currency holders occupied a privileged position. Raoul Pal explains the economic singularity, why traders always lose to long-term holders, and why he insists on buying during his return。

PaNews organized the interview。

Moderator:You shared and commented on an interesting video a few weeks ago. The irony is that the United States stock market has been rising, that it can make money as long as it is “low buy-in” and that if it is not available, it is not for sale。What happened to the stock market

Raoul Pal:There are two main reasons. The first is clearly mobility, and we are witnessing its expansion. The other thing is that we are going through the most extraordinary period in the history of humankind, and nothing else matters. All capital flows into artificial intelligence, the largest competition ever. This is a competition between countries, between enterprises. So, of course, it sucks every cent of capital because you can't slow it down。

Moderator: Tell me about the competition。

Raoul Pal:In a world where no single super-Power is allowed to monopolize AGI, there must be two, and the United States and China alone can afford the competition. The game theory shows that no country will stop now, because stopping means that the other side will gain advantage. Even in a scenario such as the bankruptcy of OpenAI and the depletion of its funds, the United States Government would immediately auction its assets to Microsoft, Google and others, and would never allow a single company to dominate. This game is too big for anyone to stop. This is a game of transforming energy units into intelligent units。

Moderator: Too big to fall. So, should it always be "low buy"? Will it end

Raoul Pal:AS I WROTE IN GLOBAL MACRO INVESTORS, IT WILL NOT END UNLESS IT REACHES THE ECONOMIC SINGULARITY. ECONOMIC SINGULARITIES MEAN THAT THE SYSTEM CAN NO LONGER COPE WITH THE PACE OF TECHNOLOGICAL DEVELOPMENT. YOU KNOW THAT MAGIC FORMULA: POPULATION GROWTH, PRODUCTIVITY GROWTH, DEBT GROWTH. WHEN YOU COUNT AI AND ROBOTS AS HUMANS, WE NOW HAVE A POPULATION OF 9 BILLION, BUT WE CAN REACH 18 BILLION, 100 BILLION, OR EVEN 1 TRILLION. IF THERE WERE 10 BILLION OR 50 BILLION SMARTS, THE ECONOMIC SYSTEM WOULD NOT BE ABLE TO PLAY ITS ORIGINAL ROLE, AND IT WOULD RUN TOO FAST。

In the past, almost all technology diffusion followed the laws of Metcalf (PANews Note: the value of the network is proportional to the number of network users), showing a logarithmic increase. However, AI is the first case in human history of the observed “Red Law” (PANews Note: The value of a network’s size increases not only with the number of users, but also with an exponential increase in the total value of a network due to the role of group construction). This is an index level. It is estimated that, by 2028, AI ' s annual output will exceed the sum of all text output in human history from Gudenburg printing to the present。

Moderator: Anthropic also said in today's interview that they were expected to grow 10 times in the first quarter, but that the result was 80 times. This is incredible。

Raoul Pal:Yes, the economic singularity is what happens when you have an economic intelligence (agents) capable of forming capital instantaneously, and that's what Meme coins mean: instant capital formation and capital destruction. They can immediately establish digital operations, quickly occupy markets and then exit when opportunities disappear. Where is the role of large traditional enterprises in this economy? Who's the worker? The system is no longer functioning properly. Because carbon-based organisms (human neurons) are operating at 1 milliseconds, and now we use currents to create intelligence through sand (silica, the second most common element on Earth), six orders of magnitude (one million times) faster than human neurons. This is crazy。

MODERATOR: NOW THAT AI IS GROWING EXPONENTIALLY, MANY PEOPLE IN THE ENCRYPTION CIRCLE WANT TO SWITCH TO AI, THEY FEEL THAT THE ENCRYPTION INDUSTRY IS NOT INTERESTING, EVEN AFRAID OF BEING FRAMED. WHAT DO YOU THINK ABOUT INVESTMENT CHOICES BETWEEN AI AND ENCRYPTED MONEY

Raoul Pal:Despite the extreme fire in the AI industry, I still believe that, in a longer cycle, encrypted currency remains one of the best investments with risk returns. But it is also very difficult to compete with chip companies such as Ingweida, because they are at the core of transforming energy into intelligence. However, the encrypted currency has an "infinite TAM" market. Last October or so, we witnessed the birth of the al-Agents. When these agents begin to expand on a large scale, they will have their own wallets and operate along the chain. We used to estimate that the encryption market could reach $10 trillion based on human users, and now there are unlimited AI agents, which has completely changed the rules of the game. Moreover, the Fed operates as it did in the Greenspan era, relying on productivity miracles to reduce the share of debt in GDP, the devaluation of statutory currencies, and the financial system as a whole is shifting to block-chain infrastructure, so you just need to rob institutions. The worst is over, as global liquidity is accelerating。

Moderator: So for you, bitcoin fell back from its recent peak of 60,000, not Bear City

Raoul Pal: It's just a sad return in the cattle town。I've been in the encryption circle since 2013, and it's normal for a 50% return to bitcoin, and then other Shancocoins will fall even worse, like the last cycle of Solana, which fell 80% before the boom. The difference is that in 2021, the echo was very fast, and then it went up fast, and this was a shock that took months, so people felt very painful. In another way, however, the longer the inventory is, the longer the bull market will be, the larger it will be。

MODERATOR: THE PROBLEM IS THAT THE FALL IN 2021 WAS FAST AND FAST, BUT THE MARKET WAS BUMPY AND TIME-CONSUMING. AND SOME OF THE GOOD-PERFORMING COMPANIES (E.G., THE STABILISATION CURRENCY, THE RWA) HAVE NO TOKENS, THE DIASPORA IS UNABLE TO INVEST, AND IT IS FELT THAT THE PROMISE OF EARLY PROSPERITY HAS BEEN BROKEN。

Raoul Pal:I don't think it's true, but the match between the product and the market is the way it works. Just because your money hasn't gone up doesn't mean your promise is broken and the market owes you nothing. People get used to the easy days of having their eyes closed for money in previous years, but mobility in 2024 is still being suppressed, and we have not yet entered the real Banana Zone. Although ordinary people may not be able to buy the shares of the Stabilized Currency Company, it's not at all a problem. You just have to hold the bottom Layer 1 token. This is our “basic national equity” for all of us. If a large part of the future economy is dominated by AI and agents, and they use encrypted networks, we can share their success only if we have Layer 1 token. We do not have such an opportunity in the Internet age, and there is no excuse to miss it。

Moderator: What have you sunk in the recent fall

Raoul Pal: I bought some Sui and some Zcash。Last year Zcash went crazy and I didn't chase, and I started buying during the callback. In the area of value storage, privacy is valuable. It's a very simple "left curve" transaction (intuitive): it's a bitcoin with privacy. The right-hand curve transaction (the considered trade) takes into account its antiquated properties. While this may lead to the closure of the Government, in the future it will provide a very important preventive attribute。

Moderator: Can you explain in detail why the smart contract Layer1 captures much of the value of encrypted money over time

Raoul Pal:Layer1 is the infrastructure level at the investment level. Just as the market for operating systems ended up with three or four leading players, Layer1 ended up with three or five core chains. And how do you understand the value of Layer1? And if you pull out the ETA plug today, the economic value of your destruction is enormous: all Layer 2, DeFi, NFT, RWA will be zero。THE CURRENT ETH VALUATION MAY EVEN HAVE BEEN UNDERESTIMATED。Bitcoin has a single function, and its goal is to gain a share of global savings; but the expansion of smart contract infrastructure is unlimited。

Moderator: Which few of Layer1 will win

Raoul Pal:ETH has the most intense economic value and the intellectual resources of developers (security, Lindy effect, etc.) and, like Microsoft, buys it without making a big mistake. Solana has proved successful, more efficient, faster and cheaper. Sui, though earlyBut when the market fell 80%, ETH, Solana and Sui were the only three tokens that kept economic density。Sui ' s programmability within individual blocks, speed of processing of thousands of transactions, and speed of final determination are at a completely different scale. The assessment block chain cannot use the traditional “discount cash flow (DCF)” model because the network is designed to provide the cheapest and fastest service, and it is nonsense to value it with what fees it generates。The cheapest, fastest and most programmable chain will eventually win the big plate。

Moderator: Some say DeFi has been “dead” after a lot of hacker attacks in the last few months. How can a traditional financial institution put money on a DeFi that can be easily hacked

Raoul Pal:But..This will only force people to develop better products。Like we put poison software on a computer, hacker attacks are everywhere. Within each bank there are teams dealing with hacker attacks and percentages of stolen funds, although they do not advertise. I predicted in 2014 that the infrastructure of the entire financial system would be shifted to the block chain. Why? Because it's the most efficient way to produce energyThe financial system will always move to the most profitable and efficient orbit. And DeFi is actually better suited to machines than to humans。Machines do not even need front-end websites that can rebalance and deal instantaneously in assets that cross multiple chains in milliseconds and use a variety of stable currencies for extremely low friction. They're going to be DeFi's biggest user group, and we don't even know about these transactions。

Moderator: Do you think NFT will gain enormous value from the wealth effects described above? I bought Crypto Punks and XCOPY, and they don't want to see them anymore。

Raoul Pal:This is because NFT activity is a function of the encryption economy boom. You have to wait until the encryption market as a whole reaches trillions of dollars. When ETH goes up from now to 5,000, or goes up, you see a massive recovery in NFT activity. Imagine that we are going through the greatest turning point in the history of humankind: we will no longer be the top intelligence on Earth, and art is the vehicle for documenting our time's culture. When people make a lot of money in this huge machine economy, they naturally buy trophies (PANews note): those who, because they are extremely scarce, have an excellent area or have significant historical and cultural values, are able to highlight the social status of buyers, bring a high degree of psychological satisfaction, and are usually the top assets of the “goldest money in the market”), like technocrats, real estate tycoons, and hedge funders when they get rich。

MODERATOR: SO HOW ARE YOU GOING TO CONFIGURE THE NFT PORTFOLIO? ISN'T IT WORTH BUYING ONLY THE FINEST GRAIL

Raoul Pal: I'm actually preparing to launch a NFT fund。Many high-value people, family offices, even those who make money in the encryption ring but never buy digital art don't know how to buy it. Our foundation is divided into two parts: part of the investment in the Grail assets (e.g. Alien Punks, XCOPY, Beeple, valued at hundreds of thousands to tens of millions of United States dollars), which already have a proven social consensus. Another part is invested in medium-level but highly visible works of artists. For example, "Die with the most likes," he records the decline of the American middle class in a humorous and even crude way; or the German artist Kim Asendorf, who is at the forefront of AI art. If these artists' works are re-pricing from 20 ETH to 200 ETH (5-10 times) and the future ETH itself can increase 10 times, you will get an amazing double return of 100 times。

Don't worry about the normal NFT, because the whole industry is small and everything is re-pricing. Even if you buy the same series of regular Punks, it's a good deal. In addition, our fund will be involved in NFT mortgage lending, generating more than 15% returns, and investing in the mobility of the whole art ecology。

MODERATOR: IS BITCOIN THE PROXY TOOL FOR INVESTING IN AI

Raoul Pal:It can be said that, because AI will boost economic growth, the devaluation of the French currency resulting from the huge debt will improve the function of the digital value of the currency. But Layer1's smart contracting platform is better and more direct。

Moderator: You said that we were all too concerned about the cycle, and the bigger picture was so obvious: you should never sell unless it was urgent。

Raoul Pal:Exactly. Why would you sell it in this age of possession of Agens, declining value of the French currency and chaining everything up? If we know the long-term direction of market value, why sell it? This is the pension scheme for all. In about four years, you have four years to hold these assets as much as you can, and they can take you through the greatest uncertainty of the future。

Moderator: Can you prove by data that you “buy and hold” those who try to trade in bands

Raoul Pal:Absolutely. I made models. If it goes down the logarithmic trend path to one to two standard-deficient super-selling areas, you buy, and then do nothing, and it's amazing. If you want to sell it at the top and pick it up at the bottom, 99% of you can't do it, it's too hard. People tend to catch up on their way up。I've been in this business for 35 years, and I don't know who can keep making big money through short-term deals. Those traders who make big money actually earn asset management fees。

It turns out that those who make the most money in encrypted money are those who “do nothing”。WHY ARE THE MOST PROFITABLE ACCOUNTS OF MAJOR ISSUERS OFTEN THOSE OF THE DEAD? NOT ONLY DID THE FAMILY ATTEMPT TO GET HIGH AND LOW, BUT IT CONSUMED A GREAT DEAL OF EMOTIONAL AND PSYCHOLOGICAL ENERGY, AND DAILY ANGER OR ECSTASY IN THE FACE OF PRICE INCREASES AND DROPS WAS ABSOLUTELY THE LEAST EFFECTIVE USE OF INDIVIDUAL ENERGY. IF YOU HAVE SPARE PRODUCTIVITY ENERGY, GO STUDY AI AND HOLD YOUR BITCOIN. IF THE PRICE EXCEEDS TWO STANDARD DEVIATIONS, YOU CAN SELL A LITTLE TO ENJOY LIFE; OTHERWISE, SHUT UP, BUY LOW, AND THEN BE PATIENT。

Moderator: How can people maintain faith when the portfolio falls 60-80% and lasts for months

Raoul Pal:I don't care. I live on my salary. If there's free money and there's a serious oversold market, I'll keep buying. Because my core logic remains unchanged: tomorrow will be more digital than today。

MODERATOR: NOW AI STOCK IS RAGING, MANY CHARTS ARE UP THE ROAD. WOULD THAT ATTRACT PEOPLE TO LEAVE THE BORING ENCRYPTED CURRENCY TO BUY AI

Raoul Pal:Your job is to be a mercenary of your own capital, where you make money. But I think encrypted money has a higher compound return。By comparison with NASDAQ, Bitcoin is now in a position of severe overselling in its long-term trend。This means that you should now configure more encrypted money than NASDAQ。

Moderator: Finally, give us some optimism about the years 2026 to 2027, so that we can regenerate our morale。

Raoul Pal:The good news is very good. First, banks are entering the market, and the stabilization currency will be subject to explosive growth in the next two years. The Clear Act at the regulatory level would be signed, which would allow almost all people to begin building on block chains. At the macro level, the United States Government had hundreds of trillions of dollars in interest to roll and pay, and they must continue to print money and increase global liquidity. The business cycle remains strong, and more people ' s income will be recovered into speculative assets. Most importantly, current encrypted assets are at the cheapest low of the long-term logarithmic upward trend relative to assets such as NASDAQ. We have also experienced the longest and lowest reading of the “extreme panic” period in history (the collapse of the Fear and Greed Index 10), and it is highly likely that the Middle East war will be resolved permanently. It's a perfect storm to look up the combination. I think this is happeningThe probability of a positive outcome is 70%The remaining 30 per cent of the downside risk lies mainly in the failure of the Middle East war to resolve, leading to inflation and liquidity contractions, which I have yet to see。