Early Investing

This Billionaire Makes a Compelling Case for Bitcoin

This Billionaire Makes a Compelling Case for Bitcoin
By Adam Sharp
Date July 2, 2021

Over the past few years, several notable traditional investors have come out in support of bitcoin, including Ray Dalio, Carl Icahn and Bill Miller.

But the most recent addition really caught my eye. Ricardo Salinas Pliego is a Mexican billionaire. The founder of Banco Azteca, Pliego is currently the third-richest man in Mexico.

But it’s not the fact that he’s a billionaire that makes me like him. It’s how he explains why he likes bitcoin. I strongly recommend watching this recent interview with Jose Rodriguez. Here are some highlights.

I’ve invested a lot of time studying bitcoin, and I think it’s an asset that should be part of every investor’s portfolio. 

It’s an asset that has international value that is traded with enormous liquidity at a global level. And that is enough reason for it to be part of every investor’s portfolio, period. The finite supply of bitcoin is the key part. 

Pliego then goes on to explain why fiat money is driving his interest in bitcoin. 

Fiat is a fraud. Look, I started my career in 1981. The Mexican Peso was at 20:1 [vs. the dollar]. Today we are at 20,000:1.

And that is in Mexico, but if we look at Venezuela or Argentina or Zimbabwe, the numbers lose all proportion. 

The fraud is inherent to the fiat system, and we can see it today in the USA. The monetary emissions went to the moon… The dollar as hard money is a joke. 

As the founder of one of Mexico’s largest banks, Pliego has seen the flaws of fiat money systems firsthand. I was shocked to learn that the exchange rate of the Mexican peso to the U.S. dollar has gone from 20:1 to 20,000:1 in just 30 years. I knew it was bad, but I didn’t realize it was that bad. And as Pliego said, it’s a lot worse in places like Argentina, Zimbabwe and Venezuela. The loss of purchasing power over time is devastating to savers. 

Moreover, the dollar has also lost a lot of purchasing power in that time. According to this purchasing power calculator based on U.S. CPI, to buy what cost $35 in 1981, you’d need $100 today. 

Since 1971, the entire world has operated on a fiat monetary system. Never before in history has there not been a single country with a gold- or silver-based system. It’s a giant experiment. And substantial, sustained inflation is inevitable as money printing and debt monetization ramp up to unprecedented levels. 

In my favorite part of the interview, Rodriguez asks Pliego to choose only one type of money to take 30 years into the future: gold, bitcoin or fiat money? Pliego’s reply is perfect.

No, no, no, no. No stinky fiat, for a reason. Not a single peso, nothing. No paper bills.

I would take bitcoin.

Seriously, watch the interview if you haven’t yet. It’s so much better to see his expressions and hear the inflection in his voice. Also check out his December 2020 interview with CoinTelegraph. In it, Pliego explains how he got into bitcoin in 2015 and more about his bull case. 

So Pliego is now officially my favorite bitcoin billionaire. I love his long-term thinking and the fact that personal experience with fiat devaluation is driving his investment decision. He has a powerful story here.

As the flaws in fiat monetary systems are further revealed in coming years, I think a lot of other ultra-wealthy investors are likely to jump on the bitcoin bandwagon. And powerful testimonials like Pliego’s are certainly going to help the cause. 

A few days after this interview blew up on Twitter, Pliego announced that his bank was working on being the first one in Mexico to use bitcoin. The Bank of Mexico quickly shot the idea down, but I suspect we haven’t seen the end of this one yet.

Have a great weekend, everyone.

Top Posts on Early Investing