#729: The Generational Liquidity Trap with Jeff Park

**SPEAKER_1** (0:07)
You've had a dynamic where money's become freer than free. When you talk about a Fed just gone nuts, all the central banks going nuts. So it's all acting like safe haven.

**SPEAKER_2** (0:18)
I believe that in a world where central bankers are tripping over themselves to devalue their currency, Bitcoin wins. In the world of fiat currencies, Bitcoin is the victor.

**SPEAKER_1** (0:29)
I mean, that's part of the bold case for Bitcoin.

**SPEAKER_2** (0:31)
If you're not paying attention, you probably should be.

**Marty Bent** (0:34)
You probably should be, you probably should be. Jeff Park, welcome to the show, sir.

**Jeff Park** (0:39)
Happy to be on the show. Thanks for having me. Big fan.

**Marty Bent** (0:43)
Thank you. I'm a big fan of yours as well. And like I was telling you before we hit record, I've been reading rereading and restarting the article that you posted on X, the generational prisoner's dilemma three certain truce and the exit liquidity trap. And I'm not going to lie, it's a bit unnerving.
Bit unnerving, but we'll unpack it. But before that, for anybody listening who is unaware, Jeff is the CIO at Procap Financial, who's previously the head of Alpha Strategies, Portfolio Management at Bitwise Asset Management and just a sound macro analyst in the Bitcoin space. I think starting before we get into the meat of the conversation, I think you've had a pretty incredible journey from Morgan Stanley, to Harvard Management, to Bitwise and now Procap. I think just starting there, talking about your experience, what's the through line in your thinking about capital allocations, or all these different environments, and how you ended up at Procap specifically.

**Jeff Park** (1:47)
Yeah, absolutely. So as you mentioned, I started my career at Morgan Stanley. I was an exotic equity derivatives trader.
And I think I naturally fell into it because one, I'm a big, big fan of numbers. And on the other side, the equity options business, I think, has always been kind of more probabilistically set for those who are practitioners than maybe anything else, especially related to like delta one trading. So it appealed to me greatly, but it also shapes a lot of like the world views that I have in terms of how I think about, not just finance and monetary policies and money, but also just all things in life. And it really set kind of the foundation for what would let me think about Bitcoin and crypto outside of the box that at the time most people were probably not willing to give or underwrite the different tail risks associated with that kind of cataclysmic event. But one thing I knew was that it's also very niche, like exotic equity derogatory trading is really small. There's probably like a handful of traders in New York already that we all know each other. And it's kind of one where you learn a lot, but you also get to see that the world is a lot bigger than just that. And so when I went to the Harvard Endowment, part of it was because I wanted to see what the rest of the investing practice looks like outside of just being a trader in the exotic space. And that really opened my eyes to the entire endowment model. You get to see the public to private spectrum of investable opportunity set. At the time, Harvard was running an internally managed operation as well, kind of like a mini hedge fund within trading its own balance sheet. And so that's the team that I joined, and I started trading corporate credit there as well as asset-backed credit. And so it kind of allowed me to see the big picture of capital structure. And I think after that, you just get to see the world moves on credit. And of course, equity is interesting and it's topical, and people love chatting about stock tips. But really, the whole foundation of our financial world is built on credit. And I think once you see that, you can never unsee it. And it's partially why I think Bitcoin, once I discovered it, was so appealing because it was probably once in a generation to imagine how to re-underwrite the monetary framework outside of the lens of fractional reserve banking system by notion of credit. And if you're a practitioner of finance, I think for me at least, looking outward to see how the world is changing is equally interesting and important as past looking. So that's why I spent 10 years in the hedge fund industry and ultimately joined Bitwise as my full-time professional foray into being a professional crypto investor.

**Marty Bent** (4:33)
Yeah. And I think one thing that you popularized is radical portfolio theory, that framework. Seems like it's gaining traction. And I think understanding, getting an understanding of how you came to recognize that maybe the traditional 60-40 portfolio construction isn't applicable to our modern times to your points looking backwards. Maybe the wrong thing to do at a time when we're, we're at an inflection point with incredible change.