The Liquidity Event Podcast: Episode 42

 

Episode 42: Pegging the Dollar

In this extra-long episode of The Liquidity Event, our hosts find themselves down a Bitcoin rabbit hole. There’s the news that a stable coin that was supposed to be stable took a fantastic dive and created panic amongst investors. Not a good look. We’ve got not one, but two electric vehicle companies going public this week. These are small fish compared to Tesla and Rivian, but mighty nonetheless. Shane is mad that AJ blew up his spot about his X Box but she’s also riled up about some early 2000s children’s video game called Neopets. Anyways, this episode is chock-full of bad takes, drunken debauchery, and some financial commentary. This one is pegged.

Read the Full Transcript:

Speaker 1:

This podcast is for informational purposes only, and should not be considered tax, or investment advice. Welcome to The Liquidity Event, a show about all things personal finance, with a laser focus on equity compensation, hosted by AJ, and Shane of Brooklyn FI, each episode will take you through the week's news on FinTech, IPO, SPACS, founder wins and fails, crypto and whatever else these nerds think is interesting. Learn more, and subscribe today at brooklynfi.com.

AJ:

Hello, and welcome to the Liquidity Event. We are your hosts, AJ.

Shane:

And I'm Shane.

AJ:

This is episode 42, being recorded on Wednesday, May 11th, 2022, airing on Friday, May, what is this Friday? 13th. Got to do that math there.

Shane:

It's Friday, the 13th.

AJ:

Friday the 13th. It's a day for us witchy girls to celebrate.

Shane:

Are you going to celebrate the 13th? Is that where you're going with this?

AJ:

I don't know, I just always get excited. In the Jewish faith, 13 is a lucky number, not an unlucky number.

Shane:

Is that true?

AJ:

I think.

Shane:

Did you just make that up? Did you just make up Jew facts?

AJ:

Don't quote me. No, I'm pretty sure. I'm pretty sure. I'm pretty sure. I'm pretty sure.

Shane:

I just have to believe whatever you say about Jewish culture.

AJ:

It's true. It's true.

Shane:

I grew up, there was like four Jews in Mississippi growing up, and they were... I don't think I met any of them, though. There was not a big Jewish population down there.

AJ:

No, no, not indeed.

Shane:

Playing catch up.

AJ:

Speaking of Mississippi, where you don't want to live ever, you are currently traveling the Western States. I was like, "That's my segue."

Shane:

Unnecessary. Unnecessary, backhand to my homeland.

AJ:

What are you up to? What are you doing? What are you drinking? What are you up to?

Shane:

Unbelievable. I'm sorry we couldn't all grow up in 90210, bro. Jesus. I'm in Portland. Yeah, we have a retreat here next week. I drove up from LA, before my drive back to New York City in two weeks, a little cross country. I am enjoying it here. It's really beautiful. It's a beautiful city.

AJ:

First time?

Shane:

Very green, very wet. Yes. First time, Oregon. First time for a lot of these states up here, in the upper half of the country. If there was a peanut butter sandwich cut diagonally, instead of horizontally, I have not been to the top half of that peanut butter sandwich of the United States. So, I'm looking forward to seeing all this. I'm a little under the weather. I went sailing last night, I think it fucked me up. I think it pushed me over the edge, into a little bit of a cold.

AJ:

The sea got you sick?

Shane:

The sea was angry that day, my friend.

AJ:

Well, speaking of the sea-

Shane:

What?

AJ:

Not being angry, I just finished one of the best books I read in a really long time. Sea of Tranquility by Emily St. John Mendel, who is an amazing writer of pandemics, and science fiction. And this book, it's just, it's beautiful, it's beautifully written. It's cool. It's kind of about the pandemic. It's like, it feels very now. It's about time travel. Highly recommend, five stars from AJ.

Shane:

Is it sci-fi?

AJ:

Sci-fi, of course. Yeah. I don't read... I'll read S Ones, and sci-fi. I don't read anything else.

Shane:

Yeah.

AJ:

What are you reading?

Shane:

As one of my favorite friends once said, "Well, I don't understand why people read anything except sci-fi."

AJ:

Yeah. It's insane.

Shane:

Yeah, it's a lot of fun.

AJ:

Why would you waste your time with novels about contemporary life? No, thank you.

Shane:

Memoirs.

AJ:

Why would anyone ever read a memoir?

Shane:

I'm only reading item descriptions, in Elden Ring. I'm playing some video games while I'm sick. So, yeah, that's what I'm reading.

AJ:

Oh, fun.

Shane:

Yeah.

AJ:

That's fun.

Shane:

Yeah.

AJ:

That's lovely.

Shane:

That's not what you said the other day, when you were making fun of my Xbox.

AJ:

Oh. I was making fun of you.

Shane:

I was repairing my Xbox. I felt like a 12-year-old.

AJ:

"Sorry, AJ, I can't come to our executive meeting because I got to go to U Break I Fix to repair my Xbox." "Okay."

Shane:

I told you that in confidence. [inaudible 00:04:40].

AJ:

And then I blew up your spot.

Shane:

Yes. I buckled like a child, post tax season, nostalgia, bought an Xbox. It's fun. Yeah. Video games are huge, big industry.

AJ:

Not to be an out of touch politician, but how much does an Xbox cost?

Shane:

About 500 bucks.

AJ:

Okay, cool. That's what I thought. I was going to guess $399, plus 8% inflation, we're about at 500 since my last pegging of that price to 2003.

Shane:

The word pegging is going to come up a lot today.

AJ:

Oh no.

Shane:

[inaudible 00:05:16].

AJ:

Oh no.

Shane:

Stay tuned, listener.

AJ:

This week, on the podcast. Anyways, we do have some IPOs this week. We have two very similar IPOs.

Shane:

Yeah. It's a very odd week for IPOs. We have two similar companies going public in a once barren IPO market. Who's trying to IPO during one of the biggest sell downs of the last 10 years? Huge withdrawals happening in the stock market, market is experiencing a... They're not going up, and to the right. There is a... Gen Z investors are experiencing the first time that stonks have ever gone down. So, that's fun this week. But yeah, within that barren IPO landscape, we have two electric vehicle companies going public at the same time. Not Rivian, not Tesla, obviously, has been public a long time. Almost taking [inaudible 00:06:15][00:06:15]

AJ:

We'll talk about Rivian later, by the way, I have some strong words for them.

Shane:

A lot of EV in the news, electric vehicles, as opposed to ICE vehicles. Do you know what ICE stands for when it comes to regular vehicles?

AJ:

No.

Shane:

You couldn't come up with something fast enough? Insane Clown Electric?

AJ:

Yeah, that's where I was going.

Shane:

That's what you were thinking?

AJ:

That's where I was going.

Shane:

We have the same Brian.

AJ:

Insane Clown Electric.

Shane:

Yeah.

AJ:

No, we just talk about, ICP at least once a week.

Shane:

Internal combustion engine, is what that stands for.

AJ:

Okay. Yeah, yeah. Makes sense.

Shane:

It's more traditional vehicles.

AJ:

Right. So we've got Envirotech, and Phoenix Motor, both filed to go public, aren't necessarily going public. We'll see what happens. But yeah, I just thought it was odd that in this barren market, we have two... We've seen a lot of biotech, so maybe this is not unusual, but we've seen like three or four tiny nano cap biotechs going public. But now we have two electric vehicle companies.

AJ:

Yeah. They're both hilariously unprofitable. Right? We can compare them side by side. What do we have here? What's our profit and loss? Yeah. We've got Phoenix Motor is operating at a $14 million loss, versus Envirotech, which is operating at a $7.7 million loss. So, what we have learned, well, what we'll talk about later with Rivian, is that it's very expensive to get an electric vehicle company off the ground. You have the tech, you have the ideas, you'd need a cash infusion to get production going, and open your first plant, and then actually get vehicles on the road.

AJ:

What's interesting about both these companies is that they're not consumer products, right? These are not your cool Teslas, or your slick Rivians for the tech forward outdoors man, or outdoors woman, or outdoors person. These are shuttle buses, and vans, and commuter vehicles, trucks. These are B2B, as you said earlier.

Shane:

Yeah. B2B electric vehicles. Yeah. Which traditionally has less pricing pressure, as opposed to the retail consumer, when your average Dick, or Harry, or Sally or whatever is purchasing something, there is a limited amount of budget, when businesses are more willing to drop dollars here. So, I think these might be the... Are these are the first B2B electric vehicle companies out there? I don't know if there's anyone else pushing. I haven't seen them on the streets at all, but everyone's coming at the market cap of Tesla, which now has the market cap exceeding, I think, all other vehicles. I saw a post the other day about how it's worth more.

AJ:

Oh yeah. It's encapsulated all the other ones. Have you ever driven a Tesla, by the way?

Shane:

No, I can barely get into them. Anytime I was in California, the Uber would pull up with the Tesla.

AJ:

So, quick story.

Shane:

Oh boy.

AJ:

Quick story. Teslas, I don't think all of them, but some of them have a mode called drag race. I'm not making this up, by the way. It sounds like I made it up, but I did not. A mode called drag race, so if you're in a very safe, unpopulated location, with lots of open road, with no other cars ahead of you, you can hit the drag race mode, and you go from zero to 60 in literally two sec, or however fast it is, and it is so fucking fun. It's like riding Space Mountain, and now I want a Tesla after years of shitting on them.

Shane:

[inaudible 00:09:47].

AJ:

Honestly, like a roller. It's like a rollercoaster.

Shane:

When did you do that?

AJ:

Like three weeks ago, in my new friend's Tesla, in California.

Shane:

You were such a hater on Tesla, but now that feels like Space Mountain?

AJ:

But it's like Space Mountain.

Shane:

Oh my God. As we all know, AJ just got back from Disney World as well. So, she's got Space Mountain on the brain. Such [inaudible 00:10:14].

AJ:

Which I did ride, and I almost killed myself on it, because people with heart conditions are not supposed to ride Space Mountain.

Shane:

You literally got on a rollercoaster?

AJ:

That was a very bad judgment call, on my part.

Shane:

You're supposed to check with me before you ride roller coasters. I need to know if I'm about to inherit half the company. Jesus.

AJ:

It was a bit of a bad judgment call on my end. Anyway.

Shane:

Dear listener, AJ literally has an iPhone size device on her heart, to keep her alive, if she should get too scared. Sincerely, like I'm not allowed to scare her anymore because she could die, and she's out here riding rollercoasters without telling me. I thought you were at a Bat Mitzvah with Cinderella.

AJ:

I was at a Bat Mitzvah, and Cinderella was there, but I also rode Space Mountain.

Shane:

Jesus Christ.

AJ:

Anyways. I'm sorry I didn't tell you about it.

Shane:

You can't get a Tesla. I didn't know it had Space Mountain mode. I thought I just had like autonomous, you can't crash this car, chill, like Prius mode.

AJ:

No, it's a beast. It's like a race car. It's pretty cool.

Shane:

I feel like a parent that just found out that you weren't going to a football practice, but like, fucking doing drugs under the bridge. What's going on?

AJ:

It was worth it. It was definitely worth it. Anyways.

Shane:

By the way, that's not a reference to any activities that have ever happened in my life. I made that reference up.

AJ:

Mom, if you're listening, I was definitely at football practice.

Shane:

Yeah. So, two cool car companies, B2B electric vehicles. I mean that doesn't really get anyone too hot. They both have big losses. I don't know why they're going public the same week, but it is interesting that we're going to get access to this. One of them is at... Doing $3 million. Yeah. They're only doing $3 million.

AJ:

They've got revenue.

Shane:

Yeah.

AJ:

What are they selling? Like merch or something?

Shane:

One's got $2 million. I mean, one of them has five employees. Envirotech has five employees, and Phoenix Motor has 55 employees.

AJ:

Yeah. I feel like there's more to the story here, like these are spinoffs, or there's something up here. Something is up here.

Shane:

Yeah. These tiny IPOs are always interesting. I mean Rivian IPO'd, when they IPO'd, what did they raise? $11 billion? I think it's going to come up in our articles later.

AJ:

$11 billion.

Shane:

Yeah.

AJ:

Let's just jump over to that, because it's related. So, yeah, so Rivian was the largest IPO of 2021, and the sixth largest in history. It raised $11.9 billion, almost $12 billion at their peak share price, back in November of... Just this past November, just when we were riding high, and we all thought the market was going up forever, it was trading at $172, and today it's trading around $20 a share. So, massive, massive upset there for... That's a sports term, right? Massive upset for Rivian.

Shane:

Yes.

AJ:

But what's more interesting here, are the other investors in Rivian, which were Amazon, and Ford, both had, I think one... I forget, respectively, about a 10% stake in Rivian, and for the first time, so Amazon reported losses this quarter, and then a lot of that was due to Rivian, which is really interesting, and same with Ford.

AJ:

So, they bet big on Rivian, Rivian appears to have crashed and burned, due to supply chain, they just couldn't get their shit together. They were probably overvalued, with hindsight, we can say that they were overvalued. We did not think that back in November, and it's not a good look. So yeah, they were way under delivered on the number of vehicles they said they were going to produce. They're blaming the supply chain. They have a plan, and a path forward, to create some value for shareholders, and get some vehicles on the road, but, we'll see what happens the rest of this year.

Shane:

Yeah. The punch bowl being pulled away means that cash has to come from somewhere. There's less future cash flows, thus lower valuations for these high flying growth companies, that require cheap capital to maintain these valuations, and continue to expand services. I mean, you're seeing it. I mean, if Brooklyn FI's investor clients were an ETF, it would not be doing very well. Investors are flocking to safety, dividend paying stocks, and blue chip, old traditional, Warren Buffet style investments.

AJ:

Yeah. I mean it's, yeah, it's not a good month, and not a good week. Not a good few days in the stock market. Our clients are, for the most part, they're scared, it's a scary time. We're seeing stocks that are 80% off of their all time highs, just six months ago, and we're looking at balance sheets where we haven't fully diversified yet, or we're partway through our diversification plan, meaning we're moving from holding 90% of our net worth in just one company, to being 90% diversified in a bunch of other companies.

AJ:

We were planning on getting X price, we built a plan based on that, and now, all of a sudden that value has been cut in half, or been cut by three quarters, and it's not good. It's very scary, very scary time. But we're going to get through it. Right? We're going to think about the long term. We're going to zoom out, have some perspective. That's all that we have, is perspective. In times like this, all we have is orange wine, and perspective.

Shane:

Is that what our newsletter was to our clients? "Hey, I know your portfolio's down. I know you've lost two commas of net worth, but at least there's orange wine."

AJ:

No, that was not the tone of our newsletter, joking on our podcast. No, I think we have to acknowledge that it's scary. Right? We, we can't discount... We talk all day, as financial planners, we've got to, discount, or ignore our emotions during these periods of volatility, but it's really hard. It's scary right now, so I think we have to acknowledge those emotions, but really think long term, think big picture, and stick to the plan, that hopefully we have in place, with our financial planner.

Shane:

Yes. Yes. One of the benefits of planning is, when things change, having a third party objective person to help you navigate the rough tides, the rough, choppy water that life inevitably throws at us in our thirties, forties, fifties, et cetera. But that's enough high horsing for Brooklyn FI. We were talking about Warren Buffet here. He's back in the news with his dissing of Bitcoin.

Shane:

I guess the Berkshire Hathaway annual shareholder meeting, a famous investor conference for folks that just give a damn about investing in general, and investing commentary, want to know what the Oracle of Omaha has to say about things. And at the meeting, this, was it last week? He expanded on his disapproval of Bitcoin, and he spoke about it for about six minutes, and he has this analogy, or he talks about how, TLDR, he doesn't even think that it produces anything. He still thinks that it's a scam. He would invest in farmland, he would invest in apartments, because farms produce food, apartments produce housing, Bitcoin produces...

AJ:

Pollution.

Shane:

Pollution. Yeah. So there's just negative externalities. I see where he is coming from here. He was also pretty hesitant to invest in internet companies. That was definitely wrong. I mean, there was a bubble, of course, there was a dot com bubble, but if he invested in Amazon back in the mid-nineties, then he would have higher returns than he does have. Not that I need to question Berkshire's returns over the last 50, 60 years, but I do... I mean, how do you feel about this? I agree, I am an optimist around cryptocurrency, but I don't understand use cases yet, and I'm still waiting for good use cases.

AJ:

Exactly. Yeah.

Shane:

And I'm not digging for them either. I'm like, "You got to prove it to me."

AJ:

Right. As a Bitcoin skeptic, not a hater, I don't hate it, I believe in the technology, I'm excited to see what blockchain technology provides as a good to society in the next two to 10 years. We still haven't figured out, like the smart people are, in the basements, and in their parents' garages, figuring out how blockchain technology, and crypto, and all of these alternative currencies are going to change the world.

AJ:

Right now, as an outsider, it feels like a bunch of dudes tweeting at each other about these coins that they've made up that are crashing, and these poor teenagers, or folks just out of college are like throwing their life savings into, and it feels like it's... Yeah. It feels like it doesn't have value right now. But I do think there is long term value in crypto. But Buffet's like... I mean, I just looked this up. Buffet started in investing in 1941. He was 11 years old. The world's changed a little bit since 1941, so his... If I were his age, and of his position, and I had my track record, I wouldn't be interested in like changing my whole business model, and my whole investing philosophy to make way for this alternative asset. It doesn't surprise me that this is his take, and it's okay for him to be skeptical, because that's his investor base. It's investor base or Bogleheads, they believe in investing for the long term, and looking at company balance sheets. There's no balance sheet of Bitcoin to look at. This is like, well, outside of his like-

Shane:

Well, technically it is just a giant balance sheet.

AJ:

Sure, there's the blockchain. It's just literally just a ledger.

Shane:

So, careful.

AJ:

Fair. Fair, fair, fair.

Shane:

Don't add AJ, if you heard that, please.

AJ:

Fair enough. But yeah, this take does not surprise me, but I think it's necessary. We need critics, and I think that's a lot of the criticism of Bitcoin, is that Bitcoin believers do not do well with criticism. It's all in, or you're an idiot, if you don't believe in it.

Shane:

Yeah. It continues to resemble a casino in my opinion. A big poker table, where there are winners, and losers, and the winners are those that can bluff the best, and or sell, can buy the pot, or can sell at the right time. But, it doesn't feel like anyone is truly predicting value, and investing in early, and seeing a vision where there's going to be value, because I have yet to see anything valuable pop out of the cryptocurrency space. What can I do now that I used to not be able to do, thanks to cryptocurrency? I don't know. Please, someone please tell me.

AJ:

Well, if you're driving in downtown Los Angeles, what you used to see as the Staples Center, is now the horribly named Crypto.com Arena. That's the difference. That's the only difference that I've noticed.

Shane:

Maybe it's already happening, and I just don't know that something has been enabled by NFTs, or crypto, and-

AJ:

Well, that's what I mean. We are like the retail crypto investors, like so far outside of the think tanks, and the brain trust, that I'm just waiting for them to show me what it can do, and that's where I'm at.

Shane:

You know what's bonkers to me? Is this started in 2017. That was the first run up, when Bitcoin went through the roof, and there was a huge spike in like November, December of the price of Ripple, Ethereum, and Bitcoin, and then the crash. So, it's been five years since, I don't know, Bitcoin became a thing to the general population, when our clients in their sixties started showing up with Bitcoin in their portfolios, and we're like, "Oh, shit, boomers have Bitcoin now."

AJ:

"Oh shit, got to pay attention."

Shane:

Well, yeah. It's like your mom's on Facebook now. Like everyone remembers the first time that your parents enjoyed a social media platform, you're like, "Okay. Time to take down all the drunken posts of me having a good time with my friends." That happened in 2017, and I [inaudible 00:21:57].

AJ:

Private, private, private.

Shane:

Right. Yeah. Move to Snapchat, move to Instagram, move to TikTok.

AJ:

Yeah. I mean, it's just, it's too volatile. Investing should not make your stomach drop out. Speaking of which, I mean... What? You disagree?

Shane:

Yeah. I mean, high risk investing comes with high returns, but Bitcoin is not stocks. Like there's no value popping out of it. So first of all, I don't want to compare it like that, where risk equals reward. Like we've got the data for the past a hundred years on high volatility generally is required for high return, over the long term, in the stock market. But, I don't like to compare Bitcoin to stocks, because again, there's no dividends from crypto. There's no shares in company profits. There's no profits from coins, it's just literally betting on a currency.

AJ:

The only profits are-

Shane:

You betting that someone else will buy it from you, in the future.

AJ:

Well, or the Coinbase, who are just charging fees, because this technology is so new, it's like, how do you get something off of the ledger, or the balance sheet? How do you get that out, and into a currency that you could use to buy things, and to create value, or to amass value? So, those are the people that are winning in the crypto space, are those that can make money off of the-

Shane:

The picks and shovels, so to speak, the people that maintain, yeah. The people that sell the jeans to the gold miners.

AJ:

Yeah, exactly.

Shane:

Levi Strauss.

AJ:

Speaking of volatility, today we saw a stable coin, which is a hilarious name for something that all of a sudden is unstable.

Shane:

Goo branding.

AJ:

Yeah. Stablecoin UST, which is supposed to be pegged to the US dollar, so it's supposed to be around a dollar, in USD terms, fell. It had a dramatic fall in its share price, or price from a dollar, to around 30 cents today. It came back up by the end of the day. But it's like, what? I mean, you're going around saying like, "This is a stable coin. This is the bank account of the crypto world." And this coin crashed. If the US dollar crashed, we would have panic in the streets. We can't have our entire economy built on something that's going to crash 70% in one day.

AJ:

It's like, we don't see that kind of economic disaster. We haven't seen that since like the Second World War. It's crazy. Anyway, anyway, I don't want to over blow this crash too much, because this particular stable coin, I learned this today, I did not know this, is an algorithmic stable coin, meaning that... I'm not going to try to explain this, but-

Shane:

Acquiring information. Acquiring?

AJ:

Yeah. It's just, it's all about-

Shane:

Digesting.

AJ:

Equations being run all the time, to try to mimic this value, whereas the other stable coins are just literally pegged to the dollar, and this particular one that crashed, and lost all this value, as of today only had about $8 billion in market cap, whereas the bigger coins had $81 billion, and 40 billion. So, it's a small portion of the market, but the internet was making a big deal out of it, because people love to see people fail, and today, UST, the stable coin, had a massive fail.

Shane:

You have this Twitter rant here that you wanted to talk about, but the word peg is used too often for me to feel too comfortable reading this. I stopped after like the fifth reference to peg.

AJ:

Oh, is that what it was? Okay. Yeah. I mean, honestly, listener, I learned... This is a new world for me today. This world of algorithmic stablecoins. I did not know that was the thing, honestly. I also learned that, was it Magic Internet Money is the name of an actual stablecoin, that has a couple billion in holders of that particular currency, or crypto, or whatever.

AJ:

So yeah, the guy who started this whole Terra community, which is behind the stablecoin that crashed today, goes on this like 50 tweet rant, and it literally just seems like gibberish to me. I was trying to follow this, and I'm like, "I don't know what you're talking about." I guess he's talking about the algorithms, and how we have to slow them down, or turn them back on, and his last tweet is, "Terra's return to form will be a sight to behold. We're here to stay, and we're going to keep making noise." That sounds like someone who's about to like, disappear, and go live in the Cayman Islands forever.

Shane:

Okay. Yeah. I mean, the guy that surely owns at least 1% of a market cap company, like, I can't even call it a coin, that's worth $8 billion, so he is worth at least $80 million in related to this coin. Right? I'm assuming he owns at least 1% of something he invented. Every 1% is... So, did I do the math right? 800. Yeah. $8 billion. So, yeah, so no shit, he's trying to buoy the price of this coin that just lost 50% of its value over the course of a few weeks, due to it's wacky algorithmic-

AJ:

A day.

Shane:

Oh, was it one day?

AJ:

It was one day. Yeah. And that's the issue.

Shane:

Not a casino. It's definitely not a casino, and you definitely don't understand AJ, what cryptocurrency is, so you don't deserve to participate in this community-

AJ:

Exactly, exactly.

Shane:

Of people going to the moon. So thank you, moving on to the next topic, please. You don't get it. Small brain women. Okay, [inaudible 00:27:27].

AJ:

Oh boy. That is when Shane got canceled.

Shane:

Mic drop.

AJ:

For the record, that was a joke.

Shane:

No.

AJ:

Yeah. I mean, look, I'm skeptical of crypto, but I actually do believe in it. I just, yeah, I don't understand it, and it's not a part of my current portfolio strategy, because, yeah, I don't understand it. I mean, I understand it's effect on the world. I'm just excited for it, to see where it goes. You're cutting me off?

Shane:

No, no, no. I'm just... We've talked about it a lot, crypto.

AJ:

Yeah.

Shane:

Let's talk about something cool. Let's talk about the Biden, or the Democratic-

AJ:

Oh my god.

Shane:

Internet plan.

AJ:

I'm so excited to talk about this.

Shane:

Yeah.

AJ:

Okay. So, that trillion dollar infrastructure package last year, included this little line of law, where the government will subsidize your high speed internet. So, previously, a lot of folks in rural communities, or cities, they didn't actually have high speed internet, or it was expensive. Now the government will subsidize their monthly internet bills. So, I have nothing snarky, or bad to say about this. This is awesome. There's going to be bureaucracy. It's like, they'll cover most of it, but then, when you have to prove your certain income, you get a rebate. It's not going to just be like, "Hey," What is it? It's 48 million households will be able to access this. That's significant impact. It's not like you show up, and you're like, "I'm here."

Shane:

Supposedly.

AJ:

Supposedly.

Shane:

So, yeah, I don't see the details on like what level... Oh, you need to be at the 200% of the poverty line or lower. So you have to be pretty, pretty poor to have access to this. And it costs, if you're at that poverty line, or below that level of income, you pay 30-

AJ:

Zero.

Shane:

Oh, I thought you paid $30.

AJ:

Well, so you paid $30, but then there's another subsidy that you can get back through a rebate. So, it's going to be like a little bit of like hoops.

Shane:

Oh, totally. Yeah.

AJ:

To jump through to actually get it.

Shane:

If you make less than 200% of the poverty line, you're definitely great at paperwork, and bureaucracy. Like, that's definitely...

AJ:

Right. So, I'm so excited about this. But the con, if I see any, is just the infrastructure, and actually getting this to work.

Shane:

Yeah. No, I think it's awesome. I think it's a classic example of the government trying to help, or the democratic government, of liberals trying to level the playing field a bit, by offering subsidies to low income folks, allow them to bootstrap up out of the digital gap, the digital divide. I think that the internet is almost a form of literature, or it's a language that you need to learn, and not having access to speak that language is going to handicap people for the rest of their lives. It's like literacy.

Shane:

So, I think that we're boosting digital literacy here, which is awesome. Some of the threats I see are classic paperwork, just like you were saying, like, yeah, you get a subsidy. They're going to be working with AT&T, Verizon, et cetera, is going to be involved. So, imagine three years from now, your bill is $30 a month, until the other party comes in, and cancels these subsidies, or you start to make more money than you used to, and your bill goes from $30 to $100, you don't notice, you're still paying $30, six months go by, now you owe fucking AT&T, or Verizon, or Comcast, like $600, you weren't paying attention, because you're not great at paperwork, because you're a low income earner, and suddenly your credit gets-

AJ:

Or you move.

Shane:

Even further destroyed, or you move. Yeah. Classic. So yeah, those are some of the threats. Going to be tough to administer this effectively. It's like student loans, like waiting for this to be bungled. But, you've got to do something. We've got to get high speed internet to the rural low income earners somehow.

AJ:

Yeah.

Shane:

So, they're taking a shot at it.

AJ:

I mean, the wide-eyed, sophomore college student at the liberal arts school in me is saying, "This is amazing." Harvard puts all of its 101 courses online for free, so imagine you don't have access to great teachers in your town, just because of geography, and your limitations, and maybe your parents didn't graduate high school, so they can't teach you, and open your eyes to the world, and all of a sudden you're taking like, Computer Science 101, at Harvard. That's fucking cool. I'm really excited about this.

Shane:

Yeah. I hope we get a Bill Gates out of this initiative. I hope we get 10 Bill Gates out of this initiative.

AJ:

I hope we get like early Bill Gates.

Shane:

Oh, you know what I mean. Shut up.

AJ:

Yeah. I know.

Shane:

I mean, early Bill Gates was even nastier than modern Bill Gates.

AJ:

Right, right. Right. Yeah.

Shane:

Yeah. I mean-

AJ:

"No one can be, I am the only."

Shane:

Which one's worse? Like mild sexual assault modern Bill Gates, or, "I'm trying to destroy every other competitor." Yeah, the [inaudible 00:32:04].

AJ:

"That maybe has an idea similar to mine."

Shane:

Yeah. Which one is worse? Monopolistic Bill Gates, or hand on the lower back Bill Gates? I don't know. But, we're almost done with malaria. He almost killed malaria.

AJ:

Oh, he did? Oh, the Bill and Melinda Gates Foundation?

Shane:

Yeah. They solve big problems. Yeah. Yeah. Trying to get rid of malaria, trying to cut down on... Oh, hard to say, hard to say, he contains multitudes, that fella. For sure. Speaking of multitudes, you have this thing about Neopets?

AJ:

So you never played Neopets?

Shane:

What a transition.

AJ:

Okay. So Neopets, for those that are not in the know, was this, I don't even know how to describe it. Like a sort of Pokemon, like-

Shane:

Tomagotchi, are they not Tomagotchis?

AJ:

Sort of like Tomagotchis, but it was this whole universe, and when I first heard about Bitcoin, whatever, a long time ago, I was like, "Oh, that's like Neocons in the Neopets land," because you have to have people doing something to... Basically wasting time, or in Bitcoin's case, generating energy from running algorithms, or running programs.

AJ:

In Neopets world, you had to play these games. You would play a game called Meerca Chase, which was basically Snake, and you would generate these coins, and you could actually get real stuff. So, Neopets is Bitcoin. Anyway, there's an article that, I didn't even know it was still a thing. I mean, I literally played this in like eighth grade. This is like internet early, early, early days. I was a child when I played this, and now, I guess they're still around, which is news to me.

Shane:

All right. Land the plane. What's going on here.

AJ:

Fuck off. Stop cutting me off.

Shane:

All right.

AJ:

I'm having a chat. I didn't [inaudible 00:33:50] about your fucking Xbox for like the first 20 minutes of the show.

Shane:

Okay. Okay.

AJ:

Anyways, now they're getting into NFTs, and the fans of Neopets, who are still around, apparently are upset. That's all.

Shane:

That's the end of the story? What the fuck? [inaudible 00:34:10]. So, okay. So, hey, now Neopets are issuing NFTs, and fans are upset about it?

AJ:

Neopets. Yes. They're selling the IP of Neopets, so people can make their own NFTs, and they're very upset.

Shane:

How many people care? Including you.

AJ:

Well, at the height of their popularity, there were over 25 million users, over 80% of them being minors. I think the height of the popularity was probably in 2003, but here we are.

Shane:

Got it.

AJ:

So, 20 years ago.

Shane:

Got it. All right. Well, you're welcome, listener. You're welcome. Thanks for sticking around for the deep cuts.

AJ:

I'll see you on the Meerca Chase battle [inaudible 00:34:57].

Shane:

Jesus Christ. All right. It does remind me, for some reason, of the photo of the couple divorcing, in like the mid '90s, that have all the Beanie Babies out on the-

AJ:

Yeah. Oh my God.

Shane:

On the floor, and they're like-

AJ:

In the courtroom. That's the best. That is the-

Shane:

Incredible image.

AJ:

That should be in the Smithsonian. Right?

Shane:

It probably is. Yeah. Like, "You get Tabasco, but I get the Princess Di."

AJ:

Di, oh yeah? And I get the dolphin, Flash, with the wrong tag backwards. Whatever.

Shane:

Speaking of obscure media, you have, what is this?

AJ:

By the way, I did not find any of these articles. All these articles magically filtered into my internet universe today.

Shane:

Okay.

AJ:

Via my inbox, and-

Shane:

Yeah, the algos. I gotcha.

AJ:

Pro tip. Do you subscribe to the USPS notifications for mail that you get? That's how I found out about this next thing.

Shane:

Yes, actually. Yeah.

AJ:

Those are great. You get an email every day of all the mail that's coming to you, so you're can be like, "Oh, I'm getting a huge pile of junk mail." Or like, "Oh, that's my new Jet Blue rewards credit card that I've been waiting for."

Shane:

There's nothing I need more in my life than more emails, especially redundant ones about stuff I'm going to get physically. I def need more emails, confirming physical mail I'm going to-

AJ:

Fair.

Shane:

Immediately throw away.

AJ:

Fair enough, fair enough, fair enough.

Shane:

But yeah, go on, go on.

AJ:

But what about you? You're like a nomad, so don't you want to... Whatever, it doesn't matter. Anyway, did you know, this is also a story going nowhere listeners, so we're also way over time, so if you want to tune out now, be my guest, but I'm here to tell you about the USPS official podcast.

Shane:

Fuck it. This one's going to be 90 minutes long [inaudible 00:36:42].

AJ:

Which I did not know was a thing. That's all.

Shane:

Yeah. What do you think they talk about? Routes?

AJ:

No, I looked it up.

Shane:

Dogs?

AJ:

They talk about security, mail fraud, the 10 year plan, the reason why they're doing gas mail trucks, and not electric vehicles, which was like a whole outcry last week. I haven't listened, but it exists.

Shane:

Well, I mean, the US Postal Service, I mean, we have a podcast, and our company does a few million in revenue. The US Postal Service surely does billions of... Like, if it was an independent company, it would do billions of dollars in revenue. Right? It might. I don't have the government budget here, and I know that it loses money, but it's a service that we all pay for. It's supposed to lose money, but-

AJ:

Okay, so what's the revenue of the US Postal Service? Guess.

Shane:

What do I think it is?

AJ:

It is billions. Yes.

Shane:

I'm going to go with $100 billion.

AJ:

$77 billion.

Shane:

That was pretty close.

AJ:

Pretty close. Pretty close. Give or take $25 billion.

Shane:

Well, what's $23 billion amongst your fellow citizen? Yeah. So yeah. So, of course they have a podcast where they talk about... 77. I mean, my aunt was a postal worker, Aunt Peg, believe it or not. Throwback joke to the pegging earlier reference, in the show.

AJ:

Oh, that's so interesting, because I emailed... One of my favorite English professors is named Peg, and I emailed her today. So, today's Peg day.

Shane:

It's Peg day.

AJ:

It's also leg day.

Shane:

Leg day.

AJ:

Today is leg day. Today is definitely leg day. Have you been outside? Oh, you're in Portland. Portland leg day, not so good.

Shane:

Portland peg day.

AJ:

Anyways. All right, we're just shooting the shit now?

Shane:

Shall we keep going? I mean, we're already over.

AJ:

Oh yeah. Let's keep going.

Shane:

For our listeners that don't know-

AJ:

Let's bring it home.

Shane:

We get charged extra by our podcast producer if we go over 30 minutes. So, fuck it. We're already over, let's talk about Joe Biden's tax returns came out. He filed them on April 12th, I want to say, April 13th, just before the deadline.

AJ:

Self filed? Self prepared?

Shane:

No. No. What if they were? What if it was like Turbo Tax? That'd be so ill. If Joe's like on the computer, like, "Oh, shit, I've got to do my taxes."

AJ:

"Jill, Jill?"

Shane:

"Jill, get in here."

AJ:

"Jill, I need the 1099 from Chase."

Shane:

"For the 50th time, Jill, I need your W-2." Don't you and your husband have like a big... That's like your biggest contentious thing, is your taxes?

AJ:

Nabile and I have the best, great relationship, and then every tax time, it's like a nightmare. Always a nightmare. Mostly because of you. But other than-

Shane:

Shut the [inaudible 00:39:28].

AJ:

Speaking of which, as my accountant, I would like you list president as my occupation on my 1040. I'm on extension, so it's not too late to fix it.

Shane:

Yeah. Well, only if I get to be listed as second gentleman on my tax return, which is the coolest official title. Yeah. That's Kamala Harris' husband. He's the first official gentleman of the White House, and he is listed as the Second Gentleman, which is so cool. Who do you think Kamala's first gentleman is? It's a little [inaudible 00:40:03] throwback joke. She keeps two.

AJ:

What? I lost you there.

Shane:

Well, I mean, you think she's got two gen... All right. It's just a funny title. Capital S, Second Gentleman. Yeah.

AJ:

Got it.

Shane:

Anyway. Yeah. He's listed as President as his occupation, they have income of about 600,000. About 370K of their income is his W-2 as the President, she makes 70K at the Northern Virginia Community College. She's a doctor, as the Republicans made a big hufflepuff about when she referenced herself as doctor, and they're like, "You're not a medical doctor. What if you're..." Like, okay, [inaudible 00:40:42].

AJ:

I have a doctorate.

Shane:

"Sorry, let me be clear." Most of their income comes through two S corporations, which I find very interesting, when politicians have S corporations. It's traditionally a risky thing to have on your taxes, ever since, I forget what presidential candidate got into a lot of trouble. He was a doctor in like the year 2004, 2004, was running, and he had an S corporation to avoid social security, and Medicare taxes. So, tax avoidance are not heavily favored amongst politicians, at least prior to 2016.

AJ:

Disagree.

Shane:

Things used to matter, you can get in trouble for adding S corporations. Doesn't matter anymore, apparently. They're both drawing from social security. They have about $50,000 of social security, because they are old AF. They haven't paid their house off yet, which I find very interesting. They wrote off mortgage interest. So, your own President, y'all, doesn't own his house outright.

AJ:

Outright, yeah.

Shane:

Paid mortgage interest. And they contributed about $17,000 to charity. It's very interesting how a tax return tells a narrative about your life, about what you're up to every year, and I read them like books, little essays about your little name, your little social security number, your little [inaudible 00:41:58].

AJ:

You wanted to be an English major so badly.

Shane:

Couldn't afford it. I just wanted to get out of Mississippi. So, here we are, good at taxes. Shall we continue? Do you have anything to say about their tax returns?

AJ:

No, I'm out. I'm done. I'm out.

Shane:

Yeah, same. Okay. This has been... Oh my God. I can't even do the outro. You do it.

AJ:

This has been-

Shane:

Take us out.

AJ:

This has been the Liquidity Event. Oh, Shane's dying. Shane has COVID. Oh yeah.

Shane:

I hope not.

AJ:

Yeah. This has been Liquidity Event. No, we're not rushed at all. I'm going to take my time.

Shane:

Okay.

AJ:

You can email us at liquidityevent@brooklynfi.com. I check that email directly. We have a Slack channel, so your message will appear right before both of our eyes. Thank you for those who have reached out to us. You can leave us a voicemail, as well. We'll play it on the air. Show notes for this episode can be found at brooklynfi.com/episode42. Thanks for sticking with us for 15 extra minutes. Have a great week. We'll see you soon.

Shane:

Bye.

Speaker 1:

Thanks for listening to the Liquidity Event, hosted by AJ, and Shane, of Brooklyn FI. Head on over to brooklynfi.com, where you can subscribe to the podcast, or YouTube channel, or if you want to learn about their full service financial planning, tax, and investment firm, specializing in tech professionals, and creatives on the path to financial independence. We'll see you next time on the Liquidity Event.