Patrick Byrne is the Chairman & CEO of Overstock.com. He joins the show to discuss why he made the decision to add Bitcoin as a payment form for Overstock.com. This interview is action-packed with Bitcoin content. Byrne explains how and when he first heard about Bitcoin and what his reaction was. He shares his thoughts on the currency nature of Bitcoin as well as the transaction part.
Byrne himself doesn’t own Bitcoin. He discusses why someone with all his connections wasn’t one of the first buyers. Byrne thinks the new cryptocurrency space will destroy central banking and give rise to a new kind of ecosystem. Overstock.com reported more than $130K in Bitcoin sales in 24 hours, and more than $1 million in sales since they started accepting Bitcoin in January. Byrne thinks more retailers will follow suit.
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JASON HARTMAN: It is my pleasure to welcome Patrick Byrne to the show! You’ve probably heard that name. He’s quite well known; he’s the chairman and CEO of Overstock.com. He is an American entrepreneur, E-commerce pioneer, and he’s just done some incredible things. Most recently, he was in the news for his being the first major e-tailer be a long shot to accept Bitcoin, and that’s a fantastic opportunity to talk to him about that, and some other things today. Patrick, welcome! How are you?
PATRICK BYRNE: Jason, it’s a real honor to be on your show.
JASON HARTMAN: Well, it’s an honor to have you. And just to give our listeners a sense of geography, where are you located?
PATRICK BYRNE: We are in Salt Lake City. The southern edge of Salt Lake City, Utah.
JASON HARTMAN: Fantastic. So, the decision for Overstock to accept Bitcoin—what was behind that?
PATRICK BYRNE: Well, there were both business reasons and philosophical. The business reasons are easy. It’s a—first of all, Bitcoin while only a tenth to two tenths of one percent of Internet revenue now is growing, I believe, at around 30% a month. So there’s that reason. And then in addition, we pay, say, 3% fees on credit cards, either between the credit card, or the cost of fraud, and the cost of people checking the fraud, etcetera, etcetera, comes to say, 2-3% for a typical retailer. Some 3-4%. You get to eliminate all that with Bitcoin. There’s no fees—interchange fees, there’s no fees to a credit card company, there’s no fraud risk for us, there’s no chargeback risk, the risk that the customer says, oh, I got my sofa, but I’m gonna tell Visa not to pay for it or something.
So, all that gets [unintelligible], so it’s great on the business side. And given that we’re sort of a 1%, hopefully on our way to 2, 3% net margin business, the idea being able to save 2-3% more, is you know, very—quite impactful on our bottom line. In addition, and some, I tell you, maybe the bigger reason, or at least as big, are the philosophical reasons, which are—I’m not a fan of fiat money. Or central banking, or fractional reserve banking, which all sort of go hand in hand. I’m one of those guys who—I thought we should at least be, we should have long ago gotten rid of fractional reserve banking and gone to 100% reserve banking, and maybe even a gold-based currency. And some years ago I looked into maybe even starting in Overstock some sort of gold-based currency where we held the reserves, then we saw the feds went after some other company that tried to do that, because they really don’t want people dealing gold. So, and thinking that way. Bitcoin—Bitcoin comes along, and Bitcoin really has a lot of the virtues of gold, in really—and so, because of that, I won’t go on too long. Because Bitcoin has so many of these virtues of gold, I got behind it, and so that’s why we [unintelligible]. So those are the two sets of reasons; the business reasons and the philosophical reasons.
JASON HARTMAN: Fantastic. So, first of all, I just want to ask you—you must have created some enemies here! I mean, think about it. MasterCard, Visa, and American Express could stand to lose huge amounts of revenue. Of course, the most powerful people in the world who run the central banking cartel—a lot of people are now learning, fortunately, about the pitfalls of fiat money, and the way people around the world are being impoverished by devaluation of their currencies, and trade agreements, and manipulations of fiat currencies and so forth. But just on the more simple and straightforward, MasterCard, Visa, American Express side, have any of these card issuing clearinghouses, have they said, hey, we’re gonna cancel Overstock.com’s account, or anything?
PATRICK BYRNE: No, they have not. I have made new enemies, probably in those companies. I haven’t seen any signs of it yet. I’m on the alert for them. But my new enemies are gonna have to stand in line behind all of my old enemies. I’ve been talking about the mafia for years, I’ve been talking about mafia infiltration of Wall Street and its effect on the financial system, so there’s a whole—they’re gonna have to stand in line.
JASON HARTMAN: Wow, that’s—I love that philosophy. Can you—you know, it’s funny you talk about—I didn’t know that you had anything to say about the mafia infiltrating Wall Street, and I’ll tell you, I have, for at least 10 years now, called Wall Street the modern version of organized crime. So, that’s a very interesting—
PATRICK BYRNE: Well, it’s not just a version of organized crime—
JASON HARTMAN: It is organized crime.
PATRICK BYRNE: It is organized crime. And July 24th, 2011, Barack Obama signed an executive order declaring a national emergency on the grounds that organized crime, transnational organized crime, has infiltrated our financial system, and blah blah blah. Well, this is all the stuff I’ve been saying probably since 2004, 2005. In particular, where they’ve infiltrated I believe the settlement system. And now, you can just—your listeners can go Google Operation—I know people look at you weird when you talk about organized crime and the mafia like you watch too much Hollywood. I don’t know if they think that there isn’t such thing. There actually is something, organized crime, and it’s really out there. If you go to YouTube, I did a big talk about this in Washington in December.
If you go to YouTube and search for my name and organized crime, you’ll see an hour and a half talk come up in front of a crowd in DC. I’ve got this all in nice PowerPoint but, so yeah, organized crime has infiltrated Wall Street. Really, the 1990s. You can Google the expression Operation Uptick, and if you Google that, you will see that the FBI in 2001 swept in—or 2000—swept in and made the largest mafia bust in US history. They rounded up 120 mafia figures in one day, and they were characters all over Wall Street. So, the largest FBI arrest of organized crime in history occurred all across Wall Street in one day. So I think it’s just really bizarre when I talk about organized crime on Wall Street and people look at me like ah, are you some kind of conspiracy theorist?
JASON HARTMAN: Yeah.
PATRICK BYRNE: Read the newspaper.
JASON HARTMAN: Yeah, I gotta tell you, this whole conspiracy theorist way to be dismissive of people in the mainstream media has got to end. Because of course conspiracies exist. I mean, a conspiracy, Patrick, is nothing more than two people talking about doing something, and other people not being included in the conversation. I mean, the United States was the result of a conspiracy. I mean, so what’s so bad about that?
PATRICK BYRNE: Right? You gotta remember that a lot of those mainstream talking heads have basically room temperature IQs. They can’t see anything. They can’t—it’s just amazing to me that these guys, how economically illiterate they are, and really just illiterate. And not—un-intellectual. How anti-intellectual they are. You can’t even imagine—I know a lot of these people, and you can’t even have a serious conversation with many of them. Now, some of them are very, very sharp. So—I mean, I could rattle off, like Matt Taibbi at Rolling Stone, Gretchen Morgenson at New York Times, Charles Gasparino, Cade Metz at Wired, there’s—well anyway, there are some sharp figures within the national media, definitely. But for the most part, when you’re talking to these people, remember, you’re talking to a journalist. You’re talking to people often who are around the 20-30% mark in their respective—I mean, I read a study on this once. [Unintelligible] universities, if you take the [unintelligible] journalists by and large come out of the 20-30% level, in terms of ranking within their class. So, you just have to remember that when you talk to these mainstream journalists who have zero imagination, can’t even understand what you think of as basic economic arguments [unintelligible.]
JASON HARTMAN: Right, right. Most of them are reading a few prefab questions or talking points, and they just know very little about the subject. It is amazing to me to watch those talking heads on CNBC, because I’m so interested in finance, and it’s just—it’s just mind-boggling. There’s really, it’s just a shallow—television especially, is the idiot’s medium. Like, it’s just such sound bite—it’s so short, it’s just so shallow.
PATRICK BYRNE: There’s a couple good ones—
JASON HARTMAN: I agree, I know.
PATRICK BYRNE: I think Bloomberg is quite good. Bloomberg and Fox Business are both really trying to set a new standard. CNBC is, you know, CNBC is for people who move their lips when they read People Magazine. CNBC—I have sources within CNBC, and I’ve been on CNBC, but I have sources who tell me that there’s a fax machine within CNBC, and every morning, you get to see these journalist line up in front of the fax machine, and their respective hedge funds. And a hedge fund—each of those journalists is owned by some hedge fund; they’re just faxing in, basically, the talking points for the journalists to hit that day. So the hedge funds—the hedge funds are giving them their talking points, and trading in front of them. I like to quote Buffet, who says that if you ever sit down at a poker table, and in fifteen minutes you haven’t figured out who the pigeon is, you’re the pigeon. Well, if you’re getting your information from CNBC and trading on any of that, you’re the pigeon. You’re trading on information that some hedge funds have fed them, and traded in front of.
JASON HARTMAN: Yeah, yeah. Very interesting. Let’s go back to the Bitcoin thing for just a moment. Has your willingness to accept Bitcoin, which is a great move, by the way. I mean, I love the move philosophically. I have concerns about Bitcoin, and let me just lay those out on the table. I hope it succeeds. Or, I hope it opens the door for some ultimate cyber or crypto currency to succeed. However, I think the powers of governments and the central banks are gonna do everything they can to squash it. That’s just my opinion. Would love to hear yours on it. But, you know, I’d like to know—have you put pressure now on say, Amazon.com, to accept Bitcoin? Are there rumblings about it, with the other big e-tailers?
PATRICK BYRNE: Well, I am hearing things. I can’t say explicitly. But I do think that what we’ve done—yes. Especially if Bitcoin goes on to become 1, 2, 3% of the market, then, Amazon cannot cede that territory to us, so this will force Amazon’s hand, and you will see them adopt it. I can’t imagine—they can’t stand both the publicity we’re getting, and the fact that there’s now a fractional market. They can always shop at our site, not theirs. And the longer they wait, and the more Overstock and Bitcoin become associated with each other, then the worse that’s gonna be for them. So, yeah, I do think this is forcing the hand, and you’ll see other large retailers accept it.
JASON HARTMAN: That’s awesome.
PATRICK BYRNE: It’s a better mousetrap. It’s a better mousetrap. A better mousetrap—you build a better mousetrap, the world will beat a path to your door.
JASON HARTMAN: So, you made the remark earlier, Patrick, how you don’t like fiat currencies, and I didn’t ask you about that. But I don’t like them either. But, what’s behind that? Why don’t you like them?
PATRICK BYRNE: Well, I’m a pro-freedom guy. And some people object to me using the phrase pro-freedom to describe my beliefs, and I point out, there’s a whole group of people in the political class now call themselves progressives. They’ve hijacked the word progress, and they said that that’s our, you know, what we believe in is progress. Well, if they can co-opt the word progress, and they get to own it by calling themselves progressive, I’m gonna co-opt the word freedom, and say, what we believe in is pro-freedom. If you believe in freedom, you want limited government. Now, there’s some people, again, who feel differently, that believe—their basic worldview is, freedom comes from the government issuing freedom coupons, and if we only get a bigger government who can issue more freedom coupons, then we become more free. Well, that’s not a good strategy. You want a limited government.
If you believe in freedom, you want limited constitutional government. As Jefferson said, we—it’s constitutional government is founded in jealousy, and not in confidence, because it’s jealousy that forces us to burn down governments with constitutions. Jealousy in the sense of doubts, suspicions, etcetera. So, if you believe in—if you’re pro-freedom, you want limited government. If you want a limited government, you can’t give government unlimited control over the money supply, which is what they get once you have fractional reserve banking and central banking. The great thing about gold—I mean, these guys, the anti-freedom people, believe that—which is spread across both parties. Basically the mainstream republicans and democrats, believe that people who like gold like it fetishistically. Like there’s something—and John Maynard Keynes actually made an argument that it was like a fetish that made people like gold. I think that that’s wrong.
The real reason is for over 5,000 years, mankind’s stock of gold has been climbing at a rate of 2 or 3% per year. And there’s nothing any government [unintelligible] can do to whisk more gold into existence with the stroke of a pen. So if you tie your financial system to gold, your monetary base, then that constraint, that handcuffs the [unintelligible] from trying to run the economy with their edicts, which is why of course they hate it. Now, I’ve always dreamed that some day we would return to a gold-based financial system. But it always seemed extremely unlikely. Then Bitcoin comes along, and Bitcoin has that same feature, in that it’s limited, and in this case, not by physical quantity of anything like gold is, but rather it’s limited by the laws of mathematics. And so there’s nothing any government [unintelligible] can do to change the laws of mathematics. So it has that key virtue of gold, and that’s—and so, I’m also, I hope I’ve discovered why it is I don’t like fiat currency, which lacks all these virtues.
JASON HARTMAN: Sure. Sure. Yeah. Absolutely. That’s—it’s an interesting point, and here’s what really happens, I think, as a result of governments loving and having fiat currencies. It allows our politicians to pander, and exploit class envy, because then they can form a dependent class that’s a permanent voting block. If they don’t have access to fiat money—if we have sound money, the politicians can’t do this. They can’t create money out of thin air to pay people to vote for them. The pandering goes away. And then the whole political process becomes much more honest, doesn’t it?
PATRICK BYRNE: Right. Central banking, fiat currency, all goes along with the government. Big government [unintelligible] now have a tissue thin veil of arguments that the economy needs them, and it booms and busts unless they step in and they try to manage things through central banking. I remember Buffet, 30 years ago, saying, believing you can manage the financial system, or the economy, by the money supply is thinking you can steer an 18-wheeler down a mountain road by sitting on the front bumper and sticking a straw in the sand, and bending this way and that. You can’t; it’s much too big.
What they can do, what it really does, is it opens the door for just what you said—it let’s them get a much bigger government than we would other otherwise have. that bigger government pays off their constituencies, and borrows the money from the future in one way or another, either through issuing bonds, or when they can’t stuff anymore bonds downs the world’s throat anymore, issuing more bonds but paying for that at the central bank, which is what we’re doing now, which is a little bit like, you know, taking a check book out of your right pocket, writing yourself a million dollar check, putting it in your left pocket, and going out and buying a new car, because you’ve just got a million dollar check in your left pocket. It’s a really reckless, abominably reckless strategy, and it is really all about—ultimately it’s all about political systems of fear, as you indicate in [unintelligible] paying off people off who [unintelligible] pay off in different ways, can be the defense, military industrial complex, it can be other things. But that’s what it’s all about, and why government wants that power.
JASON HARTMAN: Yeah, there’s another one, I coined this term, at least I think I did. I call it the government entitlement complex. So, you got all the people that are receiving something from the government, and they get something. You’ve got the pharmaceutical complex—I mean, there’s so many of them—you’ve got the agricultural complex, that have their lobbyists, that are just—they run the government! It’s a joke!
PATRICK BYRNE: Well, it is. I do want to—I haven’t gotten—I think that some of the people get entitlements, a lot of them deserve entitlements. Old people, and the people who served in the military, and you know, I do think that we need to take care of basically three groups. Old people, sick people, and poor people. However, a) you can design much better institutions than what we have now. And, but beyond those three groups, there’s a lot of entitlements—you know, there’s corporate—don’t forget, there are corporate entitlements. Agribusiness. Wall Street. I mean, there’s—it’s the entitlement, when people hear entitlements they think of Ronald Reagan’s—what did he call it, the Welfare Queen, or something? That’s not the—they’re not the problem. I mean, we could do better by how we provide education to—that’s what people think of when they hear entitlements—let’s not [unintelligible] but those people aren’t the real problem. The problem is the divested corporate interested which latch themselves onto the public, you know, the public sugar teat, and they’re just draining us.
JASON HARTMAN: Yeah, they most certainly are. Well—
PATRICK BYRNE: The problem is Wall Street.
JASON HARTMAN: Yeah, absolutely, absolutely, very interesting. You know, remember you would talk a lot about, you know, over the years—how long—now, you’re the founded of Overstock, is that correct?
PATRICK BYRNE: Yes.
JASON HARTMAN: And Overstock is 1999? Was that the launch?
PATRICK BYRNE: October ’99.
JASON HARTMAN: Okay. And, by the way, you know, congratulations on your incredible success. I want to ask you about that in a moment, because—
PATRICK BYRNE: It’s better to be lucky than smart.
JASON HARTMAN: Better to be lucky than good any day of the week, but we can’t count on that darn luck, so we’ll take smartness as second. Smart or ambitious as a second backup position. And I want to ask you about that in a moment. But you used to talk a lot, and maybe you still do, I’m not sure, about how people kept shorting Overstock stock, and that was really wreaking havoc with your stock valuations. What was going on there? I mean, tell us about that.
PATRICK BYRNE: Well, okay. I’d love to. But let me point out two things. That was kind of the public spin that the mainstream press put on it. I actually was talking about the financial system in general, and even not shorting, but a specific type of activity called naked short selling, which sounds like short selling, but it’s really a much different thing. It’s a way to manipulate a stock. Stock manipulation. And I—now, I sort of became aware of this because I saw it going on in our own company, and some certain things were happening, and I got interested in the subject, and then I started investigating, and what I found was, by 2005, I’d figured out that there was a [unintelligible] syndicated hedge fund, on Wall Street, centered on a fellow named Stephen Collin, and some very close associates of his, who were all in this game together. And were manipulating stocks, and had journalists who they had essentially bought off who were publishing [unintelligible] publishing and keeping them apprised of when she was going to publish, and things like this, and this real racket had emerged, and they had some officials at the SEC who because of the revolving door were doing their bidding for them and such. So that’s really what I was—and ultimately, the organized crime was involved.
Now, how it actually was being done, it involved an insider trading network, it involved techniques of an insider trading, which went along with the whole stock manipulation. Now, as soon as I came out and started talking about this, the mainstream financial [unintelligible] who are largely [unintelligible], they’re largely shills for these kinds of characters, started spinning it as oh, this guy’s just mad his stock went down, that’s all he’s saying. Well, that became this smokescreen through which it got very difficult to push my message. However, then once 2008 happened—oh, and I’ve been playing on all the systemic instability that’s created. Well, 2008 came along, and the SEC went from laughing at me to they went and implemented exactly the things we had said should be implemented. And then the largest investigation of Wall Street began, and the largest insider trading investigation began, and they’ve now put 80, 90 people in jail, and another couple hundred indictments, and guess what?
It’s exactly the group the same 15 hedge funds I was talking about in 2004 or 5 centered on Stevie Cohen, who just paid a billion eight fine for insider trading. So, it really is not about me, it’s not about Overstock, it’s really about short selling. It’s about a type of stock manipulation called naked short selling. And also, in just in the last year, finally, there have been a whole bunch of DOJ actions and SEC actions coming out against exactly the people we said were doing it for just the things we, you know, so, anyway, that’s really what it’s about. Really our market is rigged. Less rigged than it used to be, but there was a way, all through the last decade, for people to manipulate the market in a way. You thought you just lost some money in your 401(k). You actually were robbed. Somebody figured out a way to manipulate some of your stocks, and that’s part of the reason your stocks went down. And I think it’s still out there, it’s just moved into a different corner of the market.
JASON HARTMAN: Wow, amazing. It’s such a complex game, but you know, I can completely agree with you that the game has got to be rigged. It has got to be rigged. I mean, just, the people winning on Wall Street are the insiders, including Warren Buffet, who is so hypocritical sometimes I can’t even stand it.
PATRICK BYRNE: I gotta catch you there. Warren Buffet’s a great friend of mine, and a great friend, and a great teacher, and I love Mr. Buffet. And I—
JASON HARTMAN: Well listen, I love his value investing philosophy, I will tell you that. I just—it’s just, sometimes he comes out with these statements that—oh yeah, I’m gonna buy $5 million, or billion, maybe, of Bank of America stock. I can’t remember—and I don’t know, I just think there’s some advertising going on there, that’s all. And that sort of bugs me. But we don’t need to go into that whole Buffet subject. I appreciate—I like a lot of things about Buffet too, so, we’ll leave that as it is. But you know, do you think, with the fiat currencies, that we’re going to see a lot more inflation? Or is the future inflationary, deflationary, stable? Your thoughts?
PATRICK BYRNE: Well, what we are—what we’re doing [unintelligible] something that some people do on Wall Street, which is—sounds technical. But the expression would be, selling long dated [unintelligible] and booking it as income. Another way of saying it in a simple way is, you’re making bets, and there’s certain kinds of bets you can make that 9 days out of 10 are gonna pay off. And let’s say you make a million bucks. And one day out of 10 you’ll lose, and you lose $50 million. If you are those first 9 days, well, Buffet calls those businesses picking up dimes in front of a steamroller. On most days you make a dime. Once in a while you get hit with a steamroller. You have a real bad day—well, that’s what our central bank is doing. That’s what this administration. And this is not at all to blame Barack Obama.
This goes long back. This goes back decades, this way of thinking. They are taking a very reckless policy for the last five years. I mean, I think that they did have to do some emergency measures to get us through late 2008, early 2009, but then they’ve adopted a really reckless policy, and they, through that policy, they’re able to reflate the economy somewhat. So, we have this thing that they’ve been telling us is a recovery. It’s not a recovery at all. All they’ve done is reflate a bubble, and call it a recovery. It’s gonna work until the day it doesn’t, and then the day it doesn’t work, it’ll have a—I think it’ll be a disaster. Now it’s kind of funny. Economic activity will—so, I think that fundamentally these are inflationary—but it does not mean that inflation’s gonna break out today or tomorrow. What it means is, some day, I think, unless the government gets its fiscal house in order, there will be a treasury auction that fails.
The world will not show up to buy treasury instruments, and at that point, interest rates go up. The price of government bonds—well, all bonds crash. Interest rates go the other way, and they go way up. And the problem with that is, the only price that the government can afford to pay now, for tax bonds, is zero. I mean, there’s [unintelligible] 2% or something, and it can’t pay—if interest rates go to, say, 10%, a gain of 8% on $17 million of outstanding debt is a trillion three, that would be nearly the entirety of the government’s revenues—$2 trillion dollars. So we would be almost at the point of the entire government federal revenue would be just covering interest payments, leaving nothing for army, and no more military, and Social Security and everything else. So I think when that day comes there will be massive inflation. Until then, what’s going on, I don’t believe our—I think we’re in a deflationary environment, but it doesn’t show up, because a) I think the feds are lying—well, they changed the way they’ve calculated inflation aggressively. If we calculated inf—am I giving you too long an answer?
JASON HARTMAN: No, no, I love it. Go ahead.
PATRICK BYRNE: If we calculated inflation like we did in 1980, our inflation rate now would be about 6%. But what happens is, so they calculate the nominal GDP growth every year, and let’s say that they say it’s 4%, and then they say, well, inflation is 2%, and so that means we grew 2%. Well, [unintelligible] changed the numbers so you can follow [unintelligible] nominally growing 4%, but they calculate inflation to be 1½%, and they say okay, their real growth was 2½%. 2½ plus 1½ equals 4. Well, what if they’re lying? They’re changing the way they calculate inflation every few years it’s changed. And so for example, they’ve now put the substitution rule in, so that if you—if people—if the price of steak goes up, and steak’s in their basket of goods that they use to measure inflation, they just say well, we’re just gonna assume people switch from steak to hamburger, and so, it doesn’t—it’s a way of hiding the amount of inflation. If inflation really is 6%, and the nominal rate of growth is 4%, that means that real growth is minus two. And I think it may really be that way. I think we may be in a long, slow decline. And there’s a lot of—I don’t believe in this recovery at all.
JASON HARTMAN: I agree with you there. I think the recovery is totally fake, and I love the way you put it. All they’ve done is re-inflate a bubble, and call it a recovery. And of course we’ve talked extensively on the show about the ways they manipulate the inflation numbers; weighting, substitution, hedonics, it’s just ridiculous. And I wrote an article, you can’t—I can’t eat my iPad, even though I love the technology, it’s totally awesome. You know what really, Patrick, hedonics does to people? Is it says that we as people aren’t entitled to progress. In other words, if they didn’t use a hedonic index, which I think has some rationale, but it’s, in a way it doesn’t, because it says that, you know, things aren’t allowed to get better! I mean, in our life. If they used hedonics, and put it against the discovery of fire or the invention of the wheel, from ancient history, right, there would be no inflation at all! Because look at the ways those things have improved our lives.
PATRICK BYRNE: I’m gonna quote Buffet again, even though you don’t like him.
JASON HARTMAN: No! I like him—I don’t not like him! I just don’t like some things about him.
PATRICK BYRNE: He says, beware the man who shoots an arrow into a blank sheet of paper, and then goes up and draws a bull’s-eye around it.
JASON HARTMAN: Aha!
PATRICK BYRNE: That’s what they’re doing. They just keep changing the way they measure and report, because the government just keeps changing that. There’s a wonderful site you probably know, which unravels this. It’s called Shadow Government Statistic, by John Williams.
JASON HARTMAN: John Williams, yeah. He’s great.
PATRICK BYRNE: Yeah. And I didn’t know—well, what’s interesting is, the government does disclose all these changes they make, how they do the calculations, in the footnotes, but only real fanatics—
JASON HARTMAN: Read it.
PATRICK BYRNE: Are gonna read it. And this guy John Williams does, and the site Shadow Government Statistics basically reconstructs—it takes government reported numbers, and then it goes back and reconstructs them as if they had not made these changes, and so you can see where we really are, and it’s in a much more perilous position than is, than what we’re being told.
JASON HARTMAN: Than you think. No question about it. Well, Patrick, thank you so much for your time. This is—I’d love to talk to you for hours and hours, but you know, I just wanted to give you the opportunity to talk about—you’re the board chairman of the Friedman Foundation for Educational Choice, and I’m very passionate about school choice as well. Did you want to talk about any of your work there?
PATRICK BYRNE: I would love that. It’s my great charity—not charity. Outside of Overstock, what I do is, I’m on the Friedman Foundation board. Friedman Foundation is the intellectual center of gravity of the school choice movement. There’s two things to fix in this country. I mean, you could name all these things going wrong, but the two things that move a society forward are its ability to create human capital, and its ability to marry human capital to financial capital. Well, marrying human capital to financial capital, that’s Wall Street. And creating human capital, that’s education. The two things that really have to be fixed are education and Wall Street. The only way to fix education—we currently have a system that’s organized top down, and doesn’t make any sense, and you could solve the entire state budgetary crisis around the country if people would just switch to vouchers. You give people a voucher. Currently we’re spending $16,000 per student in America, in government schools. If you said, anyone who wants to withdraw can take a voucher for say, $8,000, and the state pays the other $8,000, and about 25, 30% of people took that, you would solve the entire state fiscal crisis, and you’d get a better educational system.
JASON HARTMAN: Isn’t it amazing how simple some of these solutions are, yet we just can’t implement them because of all these entrenched interests in government, and all these unions, public employee unions especially, that are just—they’re just pillaging! I mean, it’s unbelievable!
PATRICK BYRNE: Right. But with—yeah, I’m not a big—in fact, I’m the NEA’s public enemy #1, and I’m quite proud of that.
JASON HARTMAN: Good. You know, Steve Forbes, a long time ago, and I had Steve on the show, he called it the National Extortion Association. And I love that.
PATRICK BYRNE: Well, if you go on their website and you see their public enemies list, I’m up there, #1. Wal-Mart is #2. Quite proud that I’m viewed by the NEA as a greater threat than Wal-Mart.
JASON HARTMAN: Congratulations.
PATRICK BYRNE: Thank you. But the issue really isn’t the union. The issue is the guild, and the guild—yeah, the union is part of the guild, but when I talk about the educational guild, you gotta remember that there’s layers and layers and layers of the educational system that you never see. There’s behind that local high school down the street with the teacher you love, there’s—you know, there’s the district headquarters, there’s the county, there’s the state, and there’s the federal, staffed with all of these people who you have no idea what kind of—more than half the money is going to them now. So whenever you go out and talk about education, and vouchers and stuff, they trot out as a smokescreen, as blue smoke and mirrors, they trot out your local high school teacher from down the street and say oh, he—
JASON HARTMAN: I know, there’s nothing to do with it. Yeah.
PATRICK BYRNE: It’s really this whole guild behind the scenes just protecting itself.
JASON HARTMAN: Yeah, yeah. Very true. So, the website for the Friedman Foundation is www.edchoice.org. Ed like education. Ed. www.edchoice.org, and that’s a dot org, not a dot com. Of course, everybody knows Overstock.com. Great company. I’ve been a customer for many years, and I can’t believe what a bargain some things are on there.
PATRICK BYRNE: The more you spend the more you save.
JASON HARTMAN: Yeah, that’s great. That’s a great policy for the person, but not for the government, okay?
PATRICK BYRNE: Right.
JASON HARTMAN: Yeah. Well, Patrick, anything else you’d like to say in closing? There are so many areas—I’d love to talk to you for another half hour just about your entrepreneurial success, and how you started Overstock.com, but we don’t have time for that. We’ve been 35 so far—
PATRICK BYRNE: So call back! Call back anytime, and we will. Call back anytime and we will have another conversation. My only—I once asked Milton Friedman my—what’s the biggest priority for me, near his death. And his answer was, keep the books from being burned. In other words, keep—I’m actually optimistic. Not as—he was always—he was just a very optimistic guy. And we made these [unintelligible] we have good times now to be optimistic. People are getting it. But in other words, these ideas, if we do go into some kind of intellectual dark ages again, and the forces of state and centralized power and—wash over us, keep these ideas alive. You know, they’re better ideas, and eventually the central planning system will exhaust itself.
JASON HARTMAN: Yeah, yeah. Fantastic. Well, I hope to help keep those ideas alive, and thank you for your contribution in doing that. And thanks for joining us today! That’s Patrick Byrne, chairman and CEO of Overstock.com, and also the board chairman for the Friedman Foundation, and go check out of course both of those websites. Thanks for joining us.
PATRICK BYRNE: Jason, it’s been an honor, and yes, please go Google or Bing Friedman Foundation, and go in, and if every one of your listeners would just make a $10 donation, it would be an even greater—you can call back for two hours next time.
JASON HARTMAN: I’m gonna go and make a $100 donation right now, when we get off the line. Thanks for joining us, Patrick.
PATRICK BYRNE: Thank you, Jason.
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Transcribed by David
The Jason Hartman Team
Episode: CW 372: Doing Business with Bitcoin & Central Banks vs Crypto-Currencies with Patrick Byrne CEO & Chairman of Overstock.com
Guest: Patrick Byrne
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