Harris vs. Trump on Judicial Reform, Regulation and Presidential Appointments

Plus…listener questions on tax software and the power of crypto and AI working together 

Ric Edelman:  It's Tuesday, October 22nd. We're going to talk today about judicial reform, presidential nominations, and regulation, all of that on today's show. But before we get to that, I got a question from Solon about tax software. Here's Solon's question.

Solon: “Is there any reason for an exchange user to pay for a tax software if they don't plan on selling for many years?”

Ric Edelman: Yes, Solon. It is not a question of whether you're going to sell anytime soon. It's a question of how often are you buying? You see the whole point of recording transactions. is that you have to keep records of all of your trade lots, meaning every single time you buy an asset, you have to record the date of the purchase and the price that you paid.

You also have to factor in total costs of the transaction, not just the price of the asset, but any commissions or related expenses associated with it that affects your cost basis. Now, if you are doing lots of purchases over a number of years, for example, if you're investing on a monthly basis through dollar cost averaging, for example, or regular investing strategy, every time you get a paycheck, you add money to your investments that creates a separate trade lot.

You have to track each and every one of those purchases over months, years. Decades. When you finally sell, you have to report to the IRS, not just how much money you received, but how much money you had invested and you only pay taxes on the profit. Well, if you don't have the data of your cost basis for each of those transactions, the IRS will assume that your cost basis was zero.

You'll be paying a lot more in taxes than you are otherwise needing to pay, and you want to avoid that. Well, keeping those records is difficult, the tax software does it for you. And that's why you want to use tax software, especially with crypto, because there's an awful lot of complicated transactions that occur. And crypto tax software does a really good job of automating that exercise for you. So yeah, get tax software.

Richard from Fort Rice. He's in North Dakota. He asked me this question about Bitcoin and AI. Listen in.

Richard: “Ric, both Bitcoin mining and AI require significant amounts of power. Please explain how crypto and AI work together.”

Ric Edelman: Yeah, we've talked often about how exciting the advent of artificial intelligence is, ChatGPT and large language models. And how the explosion of AI is really going to bring massive opportunities, benefits and values for all of us around the world. And we're all super excited about what's going to be coming.

But I've also said that the Bitcoin community is excited about AI, and we are now beginning to see the merger of Bitcoin mining and artificial intelligence. How so? Well, AI is also known as HPC, High-Performance Computing. In order for AI to work, AI is all computers, right? And the reason that AI is so exciting is that it can perform calculations radically faster than humans can.

This is high-performance computers. You know, your laptop, your desktop can't do this. We need specialized computers to do it. And we need lots of them because these computers often work in tandem. So, we need massive specialized computing power and it's expensive to put those computer systems together.

Well, guess what? Bitcoin miners have lots of this stuff. That's what Bitcoin mining is. They do a lot of this advanced computing. They do a lot of high-speed calculations, and they do them in tandem. That's what those Bitcoin mining farms are all about. And now bitcoin miners are discovering that they can make a lot of money, in fact, they can make even more money by giving their computing power to AI companies than they can by using their computers to mine Bitcoin, which is what they were originally designed to do. And so that's what a lot of bitcoin miners are in fact doing. A lot of bitcoin miners are now diversifying their businesses to be not just mining for bitcoin, but also to become AI data centers.

There are two things going on here at once. On the one hand, AI demand is creating a premium opportunity. AI needs a lot of power, a lot more power than there is for them to get. Bitcoin miners not only have that power, their bitcoin mining reward was just cut in half this year due to the Halving, which is an event that occurs every four years, which means right now bitcoin miners are making half as much money by mining as they were a year ago.

And at the same time, they can make a ton of money, at least for now, by selling their capacity to the AI folks. Oh, and by the way, it's not only that bitcoin miners have power, it's that they also have cheap power. They have green power because bitcoin miners are very focused on low-cost power because power is their primary expense.

They're also focused on green power because of the political implication of using all that energy. So, bitcoin miners use hydro, geothermal, wind and solar, to reduce the criticism that bitcoin uses a lot of mining. So, they have two big advantages. They've got a lot of power. They’ve got a lot of cheap power. They’ve got a lot of green power.

So, they have two big advantages to their power. They have a lot of it and it's cheap and green. So, this is a really big deal. And it's an advantage they have over other power companies like your local utility, because bitcoin has excess capacity. Your local utility doesn't, and bitcoin can shift its usage.

I mean, bitcoin can shut down their mining. Who cares if they're not mining, you know, but your local power company can't shut down the power to your house. Right? So, bitcoin is flexible in its power usage, whereas your power company isn't as flexible. So, bitcoin miners have a huge advantage in helping the AI community get the power they need.

But this crypto advantage isn't going to last forever. Energy companies are racing to increase their capacity. Amazon, Google, Microsoft, Meta, Hewlett Packard, IBM, Oracle, they're all working on increasing their power capacity, but it can take five years to build a high-performance computing data center. And they cost, I mean, these things are expensive…they cost $20 million per megawatt to build.

Right now, there are 14 publicly traded Bitcoin miners that are already producing five gigawatts of power. It would cost the computer industry a hundred million dollars to be able to build that. These bitcoin miners already have it.

And they have under construction another 5 gigawatts of power. So, they've got a big head start. The Department of Energy says that data centers use 50 times more energy than a commercial office building. And we are gonna need 21 gigawatts of power this year. One gigawatt, that's enough energy to power about 750,000 homes.

So, we're talking lots of power need. We're going to need 35 gigawatts by the end of the decade. That's going to be 10 percent of all the electricity used in the US just for AI. By comparison, crypto mining uses one and a half percent of electricity. So, AI's power consumption is going to dwarf crypto, like by a factor of 10.

Let me just drill it down for you to an exact, simple equation. Right now, you've got a question, and you want to ask Google, Hey, what are the lyrics to an Elvis Presley song? You know how fast Google produces that answer for you. It comes instantaneously. Pretty cool, right?

If you ask ChatGPT a question, ChatGPT consumes 10 times more electricity then a Google search does. That gives you an idea of the power demand of ChatGPT and AI broadly. Add it all up, miners can earn $4,000 per megawatt per hour, and they've got five megawatt capacity right now. That's $175 million in annual revenue that bitcoin miners can earn by helping out AI.

VanEck says that that profit's going to hit $14 billion by 2040. So yeah, Bitcoin and AI tastes great together.

Okay. Let's move on to our political conversation. As you know, from tuning into this series, I am befuddled. I am struggling to determine who I'm going to vote for. I will reach a decision. Simply because I regard it as my civic duty.

I believe we all have a responsibility to vote in the presidential campaign and to make a serious vote. Don't write in Donald Duck, okay? We need to contribute and participate in this most fundamental of all civic duties. So, I’ve got to figure it out and I've got, what, less than two weeks till the election, isn't it?

So, here we are 34 topics I've identified. I'm covering them all across 19 podcasts.

Today, judicial reform, presidential nominations, and regulation. I have developed a spreadsheet, a little XLS, cheat sheet to help me quantify how I'm feeling about all of these 34 topics. Not just how I'm feeling about it, how important is the subject to me on a scale of 1 to 10? How strongly do I agree with my candidate of choice on each topic on a scale of 1 to 10?

In an effort to quantify my thinking about it, this is a trick I learned from Benjamin Franklin. And you can download my XLS. You can use it yourself. You can modify to suit your own desires and needs. And, I invite you to do that. I would love to hear your views of  your usage of my Excel spreadsheet, little cheat sheet, to help you reach a decision the same way I am trying to reach a decision.

Not that you'll reach the same decision as me, but that you will, if you are undecided, and 10% or 15% of us are in this country. We're the ones who are going to choose the next president because the decideds are at a standstill. They're locked up, right? We know it's roughly 50/50, Trump, Harris, Harris, Trump, and they're locked stuck.

They're not going to choose the president. We are. And that's why I'm going through this exercise with you on a daily basis.

Let's tackle today's three topics, judicial reform, presidential nominations, and regulation. First, regulation. Here's what a couple of my listeners have written to me with their comments.

First, here's Robert. Here's what he said from Huntington Beach, California.

Robert: “Trump and Elon Musk will be forming a new branch of government that will eliminate hundreds of billions, if not trillions, of dollars of waste in government spending.”

Ric Edelman: and off in Texas, here's what Doug had to chime in.

Doug: “Hello Ric, Trump wants to cut government bureaucracy, and he did so in his first term. He'll do it again.”

Ric Edelman: So, thank you gentlemen for your comments. You know, I remember when President Biden promised really early in his presidency that he would fix the nation's infrastructure, our roads, bridges, tunnels, he would also improve and expand internet access.

And he delivered. President Biden got Congress to approve a $1 trillion infrastructure bill. That was in 2021. Good for him. I want to ask you a question. Have you seen any improvements in our roads, bridges, or tunnels in the last three years? Have you seen an improved or expanded internet access? Not me.

And it's not because Joe Biden failed. He delivered the bill. He got Congress to provide the money. The problem is that we haven't seen those improvements in our infrastructure because of the bureaucrats. The time it takes today from filing a permit to build a house and actually starting to build it, that time has doubled

in the past 25 years. Did you know that they built the Empire State Building in just one year? Jean and I did a home renovation. It took us three years to get the project finished, mostly because of regulations, getting permits, getting inspections. We've got another home in Arizona. It has taken us a whole year to get a permit to build a fence.

The federal government says regulations are costing the economy $300 billion a year. The National Association of Manufacturers says nonsense. The National Association of Manufacturers says federal regulations cost $465 billion a year, not $300 billion, like the government says.

They say we spend $50,000 per employee per year just on regulation compliance. In other words, without all the need for all that, your pay could be skyrocketing higher than it is today. Without all these regulations, not only would your pay be a lot higher, prices would be alot lower.

And it's not just the National Association of Manufacturers that says this. The National Association of Home Builders says that the cost of regulation adds $93,000 to the price of every house in America. Now think about that. The average house in America is $420,000. We're talking nearly 25% of the cost of your house just to pay for the regulations that let builders build it. The Cato Institute says companies spend 3% percent of salaries just on compliance.

You know, Biden and Harris keep bragging about all the job growth in America. Last year, we added 3 million new jobs and Kamala Harris is running around the country bragging about that fact. And, hey, got to give her credit. Good for her. 3 million new jobs, more people working, less unemployment, more people working, more money into the economy. Everybody's lifestyles get better, et cetera. Great. We had 3 million new jobs last year. Guess what Kamala Harris doesn't brag about of those 3 million new jobs last year…709,000 of them were government jobs. Every month on average for the past 12 months, 45,000 people were hired by the government. 540,000 jobs on average for the past 12 months. 709,000 of them overall in 2023.

Those jobs, every single one of them, have their salaries paid for by taxpayers. You and me. Every person the government hires is a person you are paying for. Sure, let's hire more school teachers and police officers and so on. But is there any effort by anyone in government to control the spending? To try to operate more efficiently? Does anyone in government pay attention to reducing their expenses instead of just constantly asking Congress for more?

There's no question that Kamala Harris will expand government. She will add to the number of government jobs. Donald Trump, on the other hand, he's a businessman, whatever else you can say about him, what other label you can apply to him, many of which are valid, so is this one, business exec. He pays a lot of attention to costs.

I'm a business exec, so I've got to go with Trump on regulation.

Next presidential nominations. Here's what a couple of my listeners had to say. First, we'll hear from Paul. Here's what he wrote in

Paul: “I share your concern about Trump's association with crackpots like Laura Loomer. She is a clear nutcase, but have you looked at some of the allies of Kamala Harris lately? Rashida Tlaib, Ilhan Omar, Ayanna Pressley, AOC, among others? They give lessons in anti Semitism.”

Ric Edelman: And also heard from Gary. Here's what Gary said.

Gary: “Can you picture Loomer as a high-ranking cabinet member? Not to mention Giuliani or Bannon. Harris has said she'll appoint a Republican to the cabinet. No way Trump will do that.

Ric Edelman: Yeah, I thoroughly positively, agree with both of you, Paul and Gary. I am terribly concerned, about the fact that Donald Trump has made it clear he will surround himself with think alikes. He wants “yes” men. He wants loyalists ahead of experts. He's not interested in getting to the heart of the matter or doing necessarily what is best for everybody. He's going to focus on what's best for him.  So. on presidential nominations, I, would prefer Kamala Harris. There's no question in my mind on that because of the things Trump has said he will do.

Finally, judicial appointments rounding out our troika of topics today. A couple of more comments from you.

Here's John. He's in Raleigh, North Carolina.

John: “I will vote for Trump because the judges that he appointed were first-rate. They have multiple times showed that they respect the Constitution.”

Ric Edelman: And here's another John. He's from Cornell University.

John 2: “Thanks again. I'm really enjoying the analysis and perspectives from both sides. Very informative. I appreciate the balanced analysis. In your podcast on the economy, you said you count on the media and his political opponents and the courts to keep him in check. That's the way our system of government is supposed to work.

This is despite his recent speeches, where he's detailed plans to undermine each of these checks, such as arresting critical members of the media, using the military against protests, and stacking courts with loyalists. Could he succeed in doing those things? Would the systems hold?

Ric Edelman: So, thanks to everybody who wrote in today. For me, the topic of judicial appointments is really very easy. It's a very easy answer. Kamala Harris. And I say that simply because I look at the Supreme Court. To me, there is no bigger, longer lasting issue than Supreme Court nominees.

And of course the federal bench as well. Take a look at our nine justices. Clarence Thomas, 76 years old…Sam Alito,74…Sonia Sotomayor, she's 70. Three of them in their seventies. Clarence Thomas will be 80 years old by the time the next president leaves office.  There is a distinct possibility our next president will appoint one or more Supreme Court justices.  John Roberts, he's 69. That's close enough to 70, right? You could argue that four of them are going to be in their seventies, pushing 80. We've got, Kagan, she's 64. The others are pretty young. Kavanaugh's 59, Gorsch, 57, Barrett, 52 Jackson, 54. So, I'm not so sure any of them are going to leave barring, heaven forbid health issue, among any of them, but it is possible that because we have some older justices that they may decide to retire, during the next four years. I do not want to see more right-wing extremist Republicans nominated to the Supreme Court.

Do you realize that of our nine justices on the Supreme Court, seven of them are Catholics? Now I'm not being anti-Catholic here. I'm simply saying Catholics as a percentage of the US population does not constitute seven out of nine people. We do not have proper representation of viewpoint on our court.

We do not have sufficient diversity. There's been a focus on race and a focus on gender that is not representative of diversity when it comes to legal scholarly viewpoint. We are seeing too much political conservativism. And if Donald Trump is elected, that will get worse, not better. Simply for the sake of diversity, I want to see Kamala Harris elected for this particular issue, because if there are opportunities to make nominations to the Supreme Court, Kamala will help round out the court from its current six-three conservative leaning. It won't go seven-two…eight-one…nine-zero. It'll go to a far more balanced approach. So, I give judicial reform and presidential nominations to Harris and I give regulation to] Trump. Sorry, it's how I see it.

Tomorrow. We're going to have a fun conversation. Racism, bigotry, LGBTQ rights, religious freedom, gender, sexual orientation, and transgender. All that tomorrow on the program. I want you to join me for that.

I also want you to join me tomorrow, 2:00pm EDT for a really important webinar: How to Factor Longevity Into Your Financial Planning. You run a really high risk of outliving your money. We all remember the days when we were young, when we ran out of money before the end of the month. Imagine running out of money before the end of your life.

We're going to talk about how you can address longevity risk. A couple of really new investment opportunities dealing with the innovations of medicine and how to compensate for the new longevity risk that you face. Nate Conrad, the head of Life X at Stone Ridge Asset Management is going to be joining me.

It's a free event. If you're a financial advisor, you want to check in on this for your clients and you'll get one CE credit for doing so. You can register right now, the link is in the show notes. See you tomorrow for both of these topics.

If you like what you're hearing, be sure to follow and subscribe to the show, wherever you get your podcasts, Apple, Spotify, YouTube, and remember leave a review on Apple podcasts. I read them all. Never miss an episode of The Truth About Your Future. Follow and subscribe on your favorite podcast app.   

I'll see you tomorrow. 

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Links from today’s show:  

Click here for Ric's worksheet to help you evaluate the candidates

The 34 Issues of Election 2024 – The Daily Podcasts https://uth959jfpszs9vqn-59513929894.shopifypreview.com/blogs/this-weeks-stories/tagged/election-2024

Kamala Harris Official Campaign Website Policy Page: https://www.kamalaharris.com/issues/

Donald Trump Official Campaign Website Policy Page: https://www.donaldjtrump.com/platform

10/23 Webinar - How to Factor Longevity into Your Financial Planning: https://www.thetayf.com/pages/october-2024-webinar-how-to-factor-longevity-into-your-financial-planning

11/13 Webinar - An Innovative Way to Generate Income in a World of Declining Rates: https://www.thetayf.com/pages/november-13-2024-an-innovative-way-to-generate-income

10/9 Webinar Replay- Crypto for RIAs: Yield, Staking, Lending and Custody. What’s beyond the ETFs? https://dacfp.com/events/crypto-for-rias-yield-staking-lending-and-custody-whats-beyond-the-etfs/

Certified in Blockchain and Digital Assets including Crypto Taxation Course/Webinar: https://dacfp.com/certification/

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