Speaker 1: The real economy is broken because of the printing of
Speaker 1: money that it distorts the actual operation of money, the
Speaker 1: function of money, the price signals of money. Your money
Speaker 1: is losing its value. The printing of money is the problem.
Speaker 1: Bitcoin is money that can't be printed. It's the solution
Speaker 1: for that problem, and it's expressly built to solve them.
Speaker 1: It's fixed supply is the source of all fundamental value
Speaker 1: in bitcoin. It will only ever be twenty one million detcoin.
Speaker 1: It's volatle for the reason that has a fixed apply
Speaker 1: and that everyone's adopting bitcoin for the first time. It's
Speaker 1: naturally volatile, it's necessarily.
Speaker 2: Valt So the volatility is there, the price of bitcoin
Speaker 2: going up and down. I think that's a good thing.
Speaker 2: But in regards to like being in media a stable
Speaker 2: medium exchange today, maybe it's not. So how do we
Speaker 2: think about the volatility, as you said, in regards to
Speaker 2: payments today versus like an evolution of.
Speaker 1: That great question?
Speaker 2: So, so, Parker, you said that bitcoin is the most
Speaker 2: important innovation in the world. Why should someone listening to
Speaker 2: start this out maybe scaled on the fence. Why should
Speaker 2: they right now be dropping everything and paying attention to bitcoin?
Speaker 1: I think oftentimes people look at bitcoin as a solution
Speaker 1: in search of a problem, and that the reality of
Speaker 1: the situation is that people do not understand the problem
Speaker 1: that they have. They might know that they have problems,
Speaker 1: but they might not know the root cause of it
Speaker 1: or the source of it, and that, in my view,
Speaker 1: the most pressing problem that everyone is suffering is that
Speaker 1: their money is constantly being debased, and that bitcoin is
Speaker 1: the solution to that problem, and that they're seeking out
Speaker 1: somewhere on the range of imperfect solutions to bad solutions
Speaker 1: for the problem because they misunderstand it, and that bitcoin
Speaker 1: solves the most important problem for the greatest number of
Speaker 1: people on Earth, and it's still very early and not
Speaker 1: well understood, and that once they figure out bitcoin coin
Speaker 1: and they can also most efficiently go down that rabbit
Speaker 1: hole because it might be complicated, it might be unintuitive
Speaker 1: at first, but it's a finite surface area, and all
Speaker 1: the other derivative problems that they might perceive in their
Speaker 1: life stem from in most circumstances, maybe not all circumstances,
Speaker 1: but in most circumstances at least from a financial perspective,
Speaker 1: because their money is constantly losing value, and so all
Speaker 1: the time and energy they're putting in to accumulate money
Speaker 1: or to acquire money to pay for various things in
Speaker 1: their life is being destroyed. And biitwin fixes that.
Speaker 2: The biggest problem in the world. It fixes And so
Speaker 2: when you solve a big problem for a lot of people,
Speaker 2: there's a lot of value created. Let's just push on
Speaker 2: that for a second, because what you're saying is it
Speaker 2: solves the biggest problem for the most people, which is
Speaker 2: their money is losing values. They have to work harder
Speaker 2: and harder to maintain their life. But do you think
Speaker 2: most people, when we talk broadly the masses, understand that, Like,
Speaker 2: do they see that as a problem.
Speaker 1: They see it as a problem, but they don't understand
Speaker 1: extent of it. I'd say most people are engineered to
Speaker 1: know that their money loses value, so they try to
Speaker 1: address it on the margin. They invest in the equity
Speaker 1: markets to offset inflation, or they invest in real estate
Speaker 1: passively to offset the problem. And one of the things
Speaker 1: I like say is like, Hey, if there's a business
Speaker 1: that needs to be funded that is going to deliver
Speaker 1: a lot of value in the world, those businesses still
Speaker 1: need to be funded. If you dig up dirt and
Speaker 1: build a piece of real estate that delivers value like
Speaker 1: that is a necessary piece of equation because ultimately money
Speaker 1: is helping to facilitate exchange and to deliver real goods
Speaker 1: and services to the world, which is really what improves
Speaker 1: people's lives. But in the circumstance where people know that
Speaker 1: their money loses value but not knowing why or that
Speaker 1: it ends a lot worse than they think that it's
Speaker 1: not just their money losing too per a year, three
Speaker 1: percent or five percent that ultimately stops working. And there's
Speaker 1: there's plenty of historical evidence, and there's also a fundamental
Speaker 1: underpinning it that humans can't work and convert their time
Speaker 1: and energy into something that can be easily produced money
Speaker 1: being created at thin air. That it's that they know
Speaker 1: there's a problem, they just don't know the root of it,
Speaker 1: or the extent of it, or how negatively asymmetric. The
Speaker 1: end consequence of money being debased really is, I.
Speaker 2: Would just go step further. I think most people see
Speaker 2: prices going up and things keep getting more expensive, and
Speaker 2: so if I don't invest, how will I buy them
Speaker 2: in the future, Which is the same thing as you're saying,
Speaker 2: But it's the opposite side. Right, the money is being debased,
Speaker 2: it's losing value, which is why prices are going up.
Speaker 2: But they don't see the money being debased and going down.
Speaker 2: They just see the prices going up.
Speaker 1: Yeah, safety and amuse. The author of the Bitcoin Center
Speaker 1: has a great quote that I consistently see circul We're saying,
Speaker 1: the groceries aren't getting more expensive. Your your money's losing
Speaker 1: its value, right, and it's the other side of the
Speaker 1: same coin. But it's really important framing to shift your
Speaker 1: perspective in your understanding of the root problem.
Speaker 2: Right. And we saw in the last election that we
Speaker 2: just had where Trump won and inflation was probably one
Speaker 2: of the one of the hottest subjects going But people
Speaker 2: aren't really understanding that the root cause of this inflation
Speaker 2: or as they see CPI going up and so yeah,
Speaker 2: so not understanding the problem at hand. That's the number
Speaker 2: one obstacle to bitcoin. They think of it as a
Speaker 2: solution looking for a problem because they don't realize the
Speaker 2: problem is that the reason why your life keep getting
Speaker 2: more expensive is that your money's losing value.
Speaker 1: Or connecting it to bitcoin, that bitcoin's a solution to that.
Speaker 2: Right, Yeah, yeah, yeah, got it. So, you know, you
Speaker 2: used to write a lot. You've still been writing some stuff.
Speaker 2: I want to talk about some of the stuf you're written,
Speaker 2: But the big one is that gradually then suddenly, which
Speaker 2: is amazing, and you sort of took like a first
Speaker 2: principles approach to sort of explaining bitcoin. How would you
Speaker 2: put that into maybe like a three step framework for
Speaker 2: people to like think about and then maybe go dig
Speaker 2: into and research more from there.
Speaker 1: Yeah, So the three things are the problem the bitcoin's
Speaker 1: actually solving. That's that is not a solution in search
Speaker 1: of a problem. That it's an express solution to an
Speaker 1: express problem, and the problem is printing of money.
Speaker 2: So start there, start there.
Speaker 1: You have a problem. You know, one of the things
Speaker 1: that you just mentioned is in the last selection, it's
Speaker 1: in the United States, inflation was a big focus area.
Speaker 1: I never saw one politician who was talking about it
Speaker 1: on the stump. Connecting it to the printing of money.
Speaker 1: The printing of money is the source of that. You
Speaker 1: have a problem. The printing of money is the problem.
Speaker 1: Bitcoin is money that can't be printed. It's the solution
Speaker 1: for that problem, and it's expressly built to solve it.
Speaker 1: So connecting it to the problem is one frame. The
Speaker 1: second framework is understanding bitcoin from a bottom up perspective
Speaker 1: as to why it actually solves the problem and how.
Speaker 1: And the quick high level of that is that it's
Speaker 1: fixed supply is the source of all fundamental value in bitcoin.
Speaker 1: There will only ever be twenty one million bitcoin. What
Speaker 1: it represents is money that can't be printed, and that
Speaker 1: how Bitcoin is able to enforce its fixed supply is
Speaker 1: of significant consequence to the equation that it is not random,
Speaker 1: it's not by happenstance. It might be complicated or complex.
Speaker 1: There's a lot underneath the hood, but you first have
Speaker 1: to understand why it's relevant, why a form of money
Speaker 1: that can't be printed would be relevant to somebody. To
Speaker 1: then be able to go down and connect the dots
Speaker 1: as to how the economic incentives are able to be
Speaker 1: held together. S has to Bitcoin incredibly enforce its fixed
Speaker 1: supply without the need for trust. So that's the second thing,
Speaker 1: And then the third framework is all the common misconceptions
Speaker 1: about bitcoin, which are that it's too volatile to be money,
Speaker 1: or that it can be easily copied, or that it's
Speaker 1: just for criminals, which just for criminals is becoming less
Speaker 1: of a of a knock on bitcoin. As governments around
Speaker 1: the world and corporations around the world are adopting it
Speaker 1: as money, it's becoming more difficult for somebody to posit that.
Speaker 1: But basically understanding things that are difficult to see. If
Speaker 1: you could say, hey, it would make sense that if
Speaker 1: there were a form of money that can't be printed,
Speaker 1: that everyone would adopt it, adopt it. But how does
Speaker 1: that marry with the fact that bitcoin goes up ten
Speaker 1: percent in a day or down. That doesn't That's not
Speaker 1: how I have known or you know, I say I.
Speaker 1: But the person that's evaluating it might look and say, well,
Speaker 1: bitcoin can't be money for that reason. And in reality,
Speaker 1: if you realize that it's volatile for the reason and
Speaker 1: that has a fixed apply, and that everyone's adopting bitcoin
Speaker 1: for the first time, it's naturally volatile. It's necessarily volatile.
Speaker 1: So people have to work through those mental blocks in
Speaker 1: order to come back to the highest level ideas behind
Speaker 1: bitcoin to see how they're consistent with each other and
Speaker 1: not inconsistent. So the problem the fundamentals the bottom up,
Speaker 1: and then the common questions that are logical to ask
Speaker 1: but have coherent, consistent explanations.
Speaker 2: So let's dig into the volatility and why it can't
Speaker 2: be money. So obviously with you work on bitcoin payments,
Speaker 2: that's sort of your life right now with zapp, right,
Speaker 2: So I want to dig into that. I want to
Speaker 2: talk about stable coins and the Genius Act and maybe
Speaker 2: how that compliments or doesn't compliment bitcoin. But let's just
Speaker 2: talk about the payments piece overall, and we'll talk about
Speaker 2: those things. So the volatility is there the price of
Speaker 2: bitcoin going up and down. I think that's a good thing.
Speaker 2: But in regards to like being a media a stable
Speaker 2: medium exchange today, maybe it's not. So there's today and
Speaker 2: there's a future, so like will it ever be versus
Speaker 2: the best today? So how do we think through that?
Speaker 2: Because if I want to, if I'm in a country
Speaker 2: with a failing currency and I could maybe go to
Speaker 2: the dollar, I could go to bitcoin, but I don't
Speaker 2: have that much money. And if I go to buy
Speaker 2: groceries next week but I can't buy as much, that
Speaker 2: could be a problem. So how do we think about
Speaker 2: the volatility, as you said, in regards to payments today
Speaker 2: versus like an evolution of that.
Speaker 1: Great question? So one I think that to start, you
Speaker 1: have to understand why bit coin's volatile. You have to
Speaker 1: understand why it's volatile and why volatility is not a risk.
Speaker 1: And when I say that is that volatility can be
Speaker 1: a risk depending on what your time horizon is right,
Speaker 1: And so you have to be able to explains yourself
Speaker 1: first why bitcoin would store value over time despite being volatile,
Speaker 1: that it's volatility is actually to your benefit that you know.
Speaker 1: One way I would think about it is if only
Speaker 1: one percent of the world has any material exposure to bitcoin,
Speaker 1: and if you marry that with this idea that everyone
Speaker 1: in the world, if they understood that there were a
Speaker 1: form of money that can't be printed in that bitcoin
Speaker 1: is that, and that it's fixed supply of twenty one
Speaker 1: million is credible that ninety nine percent of the world
Speaker 1: is yet to adopt it, but they would adopt it
Speaker 1: for the very same reason that someone would who's already
Speaker 1: adopted it. Understood that it holds value because more of
Speaker 1: it can't be created, but it's also necessarily volatile. If
Speaker 1: one percent of the world has figured this out, well,
Speaker 1: if ten percent were to figure it out, then that
Speaker 1: means that nine out of every ten people in the
Speaker 1: world that are buying bitcoin for the first time are
Speaker 1: pricing bitcoin, are putting a value on it the first
Speaker 1: time in their life. Right, Well, if more can't be created,
Speaker 1: there has to be price discovery, right. That price discovery
Speaker 1: is naturally volatile. But the volatility for people who already
Speaker 1: hold it is a benefit because if ten times the
Speaker 1: number of people are demanding an asset, even if they're
Speaker 1: pricing it for the first time, are having to bid
Speaker 1: the price up to deliver value to people that already
Speaker 1: do hold it. Again, that is in your benefit. So
Speaker 1: first you have to anchor to that fundamental that is
Speaker 1: volatile for the very same reason of why someone would
Speaker 1: demand it in the first place, and that that is
Speaker 1: connected to its ability to store value.
Speaker 2: Let me hind on that. So, because it's a fixed
Speaker 2: supply and we have more people coming in and maybe
Speaker 2: something going down, I mean there's EBB and flow a
Speaker 2: little bit, so we get price moving up and down
Speaker 2: price volatility because of that. Now, if we look at
Speaker 2: the long lens of bitcoin, the price volatility moves to
Speaker 2: the upside, and so as an investor, we want the
Speaker 2: price to go up, right, We don't want to be
Speaker 2: in the stable poin that never moves, and so that
Speaker 2: volatility is our advantage. It's a necessary good. I think
Speaker 2: it's the point that you're making. Yes, right, So it's volatile,
Speaker 2: but volataile tipside, we like that, but depends on the
Speaker 2: duration correct.
Speaker 1: So then the way that I would think about that
Speaker 1: is and it is this difficult problem. If you have
Speaker 1: no savings and you are barely saving more than like
Speaker 1: when I say no savings, you have no Yeah, if
Speaker 1: your paycheck to paycheck and bitcoin is volatile, then you
Speaker 1: still have to figure out how to get savings. And
Speaker 1: the form of money that can't be printed is going
Speaker 1: to store your value best over time, but you have
Speaker 1: to get to that point in time. And so it
Speaker 1: becomes the identical equation of saying like, okay, I first
Speaker 1: have to produce more than I consume and then I
Speaker 1: have to start saving a small percentage. And bitcoins is
Speaker 1: that as it's volatile, it doesn't put me back in
Speaker 1: that negative position of being paycheck to paycheck. So another
Speaker 1: way to say it is someone that has a lot
Speaker 1: of savings can more easily adopt bitcoin than someone that
Speaker 1: has no savings at all. But everyone has to accumulate
Speaker 1: savings to get out of that rat race. To get
Speaker 1: out of living paycheck to paycheck. So it becomes a
Speaker 1: world to say, well, hey, maybe you need to have
Speaker 1: enough dollars or a stap quote stable coin that might
Speaker 1: be losing its value slowly but is maintaining its value
Speaker 1: day to day better saying I need to cover myself
Speaker 1: for a month or two months or three months to
Speaker 1: have that security buffer, but then saying well, anything that
Speaker 1: is more than three months, I need to be exposed
Speaker 1: to the asset that stores value over time. And so
Speaker 1: it's marrying the short term needs with the long term
Speaker 1: benefits and such that someone that has no savings realistically
Speaker 1: like they still need to be saving and bitcoin, but
Speaker 1: it might be able to have a smaller percentage because
Speaker 1: their personal working capital is non existent and they need
Speaker 1: to build that up. And so they still have the
Speaker 1: problem and there's no easy way out of it. But
Speaker 1: it becomes a function of each month saving more than
Speaker 1: you than you spend and putting a small amount away.
Speaker 1: But now somebody that has a lot of savings that
Speaker 1: doesn't have, you know, a working capital need of six
Speaker 1: months or a year that then they start looking at
Speaker 1: the equations saying, hey, if I have this in cash
Speaker 1: and in a form of money that loses value, that's
Speaker 1: engineered to lose value. I need to be thinking longer
Speaker 1: than just a month or two months or three months.
Speaker 1: I need to be thinking about a year or ten years,
Speaker 1: and the more that you can save an asset that's
Speaker 1: volatile but stores value better than anything else for very
Speaker 1: logical reasons that everyone needs money, everyone needs set money,
Speaker 1: and people are adopting bitcoin for that reason. Then it
Speaker 1: becomes a kind of time horizon and managing short term
Speaker 1: volatility for the benefit of long term purchasing power.
Speaker 2: So to summarize that, then we have to understand that
Speaker 2: both dollars and bitcoin are both volatile price moves, but
Speaker 2: bitcoin is more volatile to the upside, whereas the dollar
Speaker 2: is just always constantly vaulted to the downside. So we
Speaker 2: want to look at those over different time horizons, where
Speaker 2: think of it as a checking in the savings and
Speaker 2: a little bit And depending on my time horizons and
Speaker 2: the amount of money that I make, then I want
Speaker 2: to be storing in the more volatile asset because it
Speaker 2: holds value better over longer periods of time, But I
Speaker 2: might be willing to put a little bit into the
Speaker 2: less volatile asset that holds value better in a short
Speaker 2: period of time.
Speaker 1: Right, Yeah, correctly, So you know, I always try to
Speaker 1: use it to a tangible examples like, hey, if I
Speaker 1: need to go buy beef at the grocery store tomorrow
Speaker 1: or over the next week, and there's a possibility that
Speaker 1: bitcoin drops by ten percent and I can't then go
Speaker 1: buy the amount of beef that I need, I haven't
Speaker 1: solved my problem. But if I know that the price
Speaker 1: of beef, you know, looking at ground beef, if it
Speaker 1: goes from six dollars a pound to ten dollars a
Speaker 1: pound to fifteen dollars a pound, that I need beef
Speaker 1: in six months too. And if I'm just saving in
Speaker 1: this form of money, that is the other side of
Speaker 1: that same coin, which we discussed before, like your your
Speaker 1: groceres aren't getting more expensive, your money is losing value.
Speaker 1: That you need beef next week, but you also need
Speaker 1: beef in six months. If you do the same thing
Speaker 1: for the next week that you're trying to solve for
Speaker 1: in six months or a year, you're gonna end up
Speaker 1: in a far worse place.
Speaker 2: Yeah, because the dollar might buy you more beef next week,
Speaker 2: but it's most likely guaranteed to buy you less beef
Speaker 2: in a year. Yeah, let's talk about than the dollar,
Speaker 2: but more specially stable coins. So sort of maybe somewhat
Speaker 2: historic here in the United States, we just passed this
Speaker 2: genius Act, the Stable Cooin Act. Scott Assent, the head
Speaker 2: of the Treasury, whose job is to sell US debt, right,
Speaker 2: that's his primary job, sell the treasuries. He's some dude
Speaker 2: pushing towards these stable coins. He said that he sees
Speaker 2: stable coins growing by three points set to three point
Speaker 2: seven trillion by twenty thirty. I saw you were talking
Speaker 2: about the difference of dollars in that, but I think
Speaker 2: I saw you make a tweet something about it being
Speaker 2: like regulatory capture. Yeah.
Speaker 1: So the if you play it out again, this is,
Speaker 1: you know, balancing short term of long term. That the
Speaker 1: short term benefit is that there's a a positive regulatory
Speaker 1: stance towards the digital currency world, which it is. And yeah,
Speaker 1: we can say that that's I won't say it's undeniable,
Speaker 1: but it's close to undeniable.
Speaker 2: It's like, hey, there's a regulatory stands too.
Speaker 1: That's that's positive, that that's welcoming to this in the
Speaker 1: US right now. Yeah, Yeah, And that's better than if
Speaker 1: Elizabeth Warren was going out trying to whack the mole.
Speaker 1: Everybody working on bitcoin or the broader what people refer
Speaker 1: to is the crypto space that you want that that
Speaker 1: it's better to have a regulatory apparatus that is friend,
Speaker 1: not foe. But long term, if you think about stable
Speaker 1: coins that are that are backed by dollars, it's not
Speaker 1: actually solving a problem, and that the very same interests
Speaker 1: that are helping to instantiate stable coins do not have
Speaker 1: an interest in in private versions of the dollar existing.
Speaker 1: Long term, they get immense control and power out of
Speaker 1: having a digital version of the dollar that's controlled by
Speaker 1: the Fed, and that the larger that a stable coin grows,
Speaker 1: the more control that the the Fed and the Treasury
Speaker 1: or the Office of the Presidency would want to have
Speaker 1: over it. Right, it becomes unavoidable, genuinely, and so that
Speaker 1: the law in my view, the large interest that we're
Speaker 1: pushing the stable coin apt or special interests that wanted
Speaker 1: their stable coin to be able to be the winner
Speaker 1: because they have seniorage and they will extract value out
Speaker 1: of that. And so in the short term it can
Speaker 1: feel like a positive because there's you know, women, I'm
Speaker 1: picking from a bitcoin lens that there are advocates that
Speaker 1: are that are friendly to an adjacent industry, not bitcoin specifically,
Speaker 1: and that there might be short term benefits that come
Speaker 1: from that, and it would be certainly better than an
Speaker 1: active foe trying to go stamp out bitcoin companies. But
Speaker 1: the larger that a stable coin grows, the more control
Speaker 1: the existing state apparatus is going to naturally have over it,
Speaker 1: and the interest of companies like coinbase and usd C
Speaker 1: or anyone that interacts and helps move that stable coin
Speaker 1: is going to be to you know, use our stable coin,
Speaker 1: not that stable coin, and that that's ultimately the root
Speaker 1: of you know, tether has worked perfectly well all over
Speaker 1: the world without this. Why does it need this? The
Speaker 1: only reason it needs this is to ensure that the
Speaker 1: state apparats doesn't come to shut it down. But then
Speaker 1: the other side of that coin is control. You know that,
Speaker 1: you know why, why if the free market has been working,
Speaker 1: why not allow the free market to continue to work.
Speaker 1: The logical explanation of it is is control surveillance, And
Speaker 1: it might not play out in the next week or
Speaker 1: the next month, but that's the direction that it's heading
Speaker 1: and in my view, we have serious problems they need
Speaker 1: serious people to solve them. The fact that bitcoin was
Speaker 1: de emphasized for stable coin legislation or market structure legislation,
Speaker 1: it just yeah to me, it points to regulatory capture
Speaker 1: versus innovation.
Speaker 2: Yeah. Part of the Genius Act, there was a couple
Speaker 2: of bills that went through. One was also called the
Speaker 2: Clarity Act, And that's how I felt about that bill specifically,
Speaker 2: because like in America, we're the land of the Free.
Speaker 2: We're supposed to be able to do whatever we want
Speaker 2: and then laws are meant to tell us what we
Speaker 2: can't do. But here they're passing a Clarity Act to
Speaker 2: give us clarity on what we can do, which I
Speaker 2: thought was kind of weird. So I see that going
Speaker 2: that way. But let's just kind of go back to
Speaker 2: what you're what you're staying here. So it seems like, well,
Speaker 2: number one, the government's not a monolith, right, So there's
Speaker 2: like multiple factions that have different interests that they want
Speaker 2: to see. I think both Trump and Thescent want to
Speaker 2: see the dollar maintain some power around the world. Sixty
Speaker 2: percent of FX transactions or something like that. Right now,
Speaker 2: we just drop down to a fifty nine percent. The
Speaker 2: cent wants to sell treasuries. Who's going to buy the treasuries?
Speaker 2: And so by getting people around the world who use
Speaker 2: dollar stable coins, it sort of keeps the dollars sort
Speaker 2: of demand. And then for the regulatory part that we
Speaker 2: make those stable cod in companies by US treasuries and
Speaker 2: then sort of de facto you get the people around
Speaker 2: the world to buy US treasuries. I mean, would you
Speaker 2: say that seems to be what's that play here?
Speaker 1: I think that's the that's the line of thinking. That's
Speaker 1: a first derivative, that sounds good, sounds right, sounds plausible,
Speaker 1: and so people run with it. They say, hey, these
Speaker 1: stable coins are great for the US dollar safety and
Speaker 1: muse again. He gave a great presentation at the Bitcoin
Speaker 1: Conference where he basically explained that it's substitute demand. It's
Speaker 1: not creating demand for the treasury. Somebody has to own
Speaker 1: all treasuries at all times. If you think about what's
Speaker 1: actually happening in the financial system. If somebody is choosing
Speaker 1: to convert a deposit at a at a US bank
Speaker 1: to a dollar stable coin, somewhere in the background, a
Speaker 1: reserve at the Fed is changing from one account to
Speaker 1: the other, and that somebody was holding a treasury and
Speaker 1: now somebody else is holding the treasure.
Speaker 2: Is it and is it the government holding it they
Speaker 2: had to print the money on buying their own or
Speaker 2: is it someone in Argentina or Venezuela.
Speaker 1: Right, But if somebody, you know, imagine the scenario where
Speaker 1: there's a a central bank in Africa and the person
Speaker 1: African says, I want to hold a US dollar stable coin. Well,
Speaker 1: the dollar doesn't just disappear. So the central bank in
Speaker 1: Africa might have bought a treasury. Now the you know,
Speaker 1: the private company that issued the stable coin is buying
Speaker 1: the treasury. You know, it didn't it changed the treasury,
Speaker 1: It changed hand. It didn't create demand for the US treasury.
Speaker 1: And so I think that realistically, what it more so
Speaker 1: is is it's a new rail to move dollars. I
Speaker 1: think about it more as a method of payment. It doesn't.
Speaker 1: It doesn't. It genuinely does not create demand. Like as
Speaker 1: an example, Blackrock is the largest holder. I think if
Speaker 1: it's not the large holder, it's one of the top
Speaker 1: two or three holders of US treasuries. If their assets
Speaker 1: shift to some other party and say it's a party
Speaker 1: that wants to hold stable coins. It's like somebody is
Speaker 1: banking blackrock, somebody's back banking the stable coin. That's the foundation.
Speaker 1: It's like the stable coin is not creating demand, shifting demand.
Speaker 2: It's shifting demand. But I want to we'll get into
Speaker 2: sort of the failing system that we have in a
Speaker 2: little bit, But just to talk about this for a second.
Speaker 2: If there's a massive demand external demand for US treasury,
Speaker 2: is easier for the US to sell the treasuries into
Speaker 2: the market and manage the debt. Whereas if the government
Speaker 2: has to, as we've seen many times other countries around
Speaker 2: the world, have to print money to buy their own debt,
Speaker 2: it goes into a deep, a pretty fast doom loop. Right,
Speaker 2: So if we have to print money to buy our
Speaker 2: own debt, that's a problem. Versus if there's a massive
Speaker 2: demand externally for our debt, then it's not as bad.
Speaker 2: And so I would say to the point that you're making, Yes,
Speaker 2: the Treasury has to whatever debt they need to send out,
Speaker 2: they need to send out, so there's the demand. But
Speaker 2: as far as shifting the demand, if they have to
Speaker 2: print and buy it themselves, it's much worse. Than if
Speaker 2: some and I think you said, Zimbabwe, Africa buy is
Speaker 2: it right?
Speaker 1: What I'm saying is we all have to accept that
Speaker 1: the only way that thirty six trillion or thirty seven
Speaker 1: trillion of debt is getting repaid is because the FED
Speaker 1: is going to create more of it. Sure, everything else
Speaker 1: is moving chairs around on the on the deck. Because
Speaker 1: two things are categorically true. The Treasury sets the number
Speaker 1: of treasuries that exist, and Congress based on the amount
Speaker 1: that they spend. First, the amount that they take in
Speaker 1: is in relation to that.
Speaker 2: But the Treasure is the budget.
Speaker 1: The budget the budget. So if you know the report
Speaker 1: that came out the other day is that just in
Speaker 1: the next two quarters, the Treasury is going to have
Speaker 1: to issue net incremental treasuries of one point six trillion.
Speaker 1: The debt of the United States is growing by one
Speaker 1: point six trillion over the next two quarters. That's the Treasury.
Speaker 1: In Congress, the FED is the single entity that sets
Speaker 1: the number of dollars that exist in the system. If
Speaker 1: the FED is not increasing the number of dollars that
Speaker 1: exist in the system, and the Treasury is having to
Speaker 1: increase the supply of treasuries by one point six trillion.
Speaker 1: It's having to take out money from somewhere else in
Speaker 1: the system to replace that demand. Right, so as as
Speaker 1: more treasuries exist, if the amount of dollars didn't increase,
Speaker 1: it's sucking money either out of the private sector or
Speaker 1: out of some other public sector need for money. And
Speaker 1: the only way it gets solved, the only way the
Speaker 1: leaky ship gets solved, is the FED creating more dollars.
Speaker 1: You know, That's why Trump's going to the Fed and
Speaker 1: saying you got to increase the interest rate by three percent. Well,
Speaker 1: the only way to lower interest rates in terms of
Speaker 1: the like the real the real interest rate is printing money. Right,
Speaker 1: so more dollars have to exist to release the pressure
Speaker 1: of the market rate to borrow.
Speaker 2: But does the Fed have to create the dollars because
Speaker 2: the euro dollar market is dollars increasing, well, not the
Speaker 2: Fed doing anything.
Speaker 1: Well, the same dilemma exists on the euroside, like the
Speaker 1: European Centi Bank ultimately has to create more euros to
Speaker 1: satisfy euro denominated debt. Well, euro dollars is the intersection
Speaker 1: of that.
Speaker 2: But the.
Speaker 1: Dollars need to be supplied, I don't say need to
Speaker 1: be but the way that the current market is structured,
Speaker 1: is that ultimately more dollars need to support more dollar
Speaker 1: nominated debt. You can again, like, if the FED isn't
Speaker 1: creating any more money, the Treasury is issuing one point
Speaker 1: six trillion, there are one point six trillion more deposits
Speaker 1: credit claims on dollars that exists out there without the FED.
Speaker 1: My point is that the market figures out that the
Speaker 1: actual funding currency is becoming more scarce to the amount
Speaker 1: of claims on it. That causes interest rates to rise.
Speaker 1: The only way to actually solve that is the FED
Speaker 1: singularly sets the number of dollars that exists in the system,
Speaker 1: the dollars that can move from bank to bank.
Speaker 2: And your a dollar market can't create those.
Speaker 1: They can create more claims on the base money, but
Speaker 1: they can't create more of the base money.
Speaker 2: What about if billions of dollars of Argentine pesos convert
Speaker 2: into US dollars.
Speaker 1: Again, there's a relationship between the actual number of pesos
Speaker 1: that exist in the world that are created by their
Speaker 1: central bank, and there are the number of dolls dollars
Speaker 1: that exist created by our central bank, and then there
Speaker 1: are claims on those dollars. So it's like, yes, if
Speaker 1: somebody wanted to convert pesos to dollars, creates demand for dollars,
Speaker 1: creates lack of demand for paces, which dictates that the
Speaker 1: peso issuer needs to issue more pasos or their system collapse.
Speaker 2: So it's Robin, Peter pay Paul is shuffling cars on
Speaker 2: the deck.
Speaker 1: But what it's doing, but the foundation of it that
Speaker 1: dictates all of it is the central issuer, right, And
Speaker 1: if you are creating more debt on top of the
Speaker 1: existing money supply, Ultimately people figure out that there are
Speaker 1: enough chairs on the deck and they saw all going
Speaker 1: to sit down at the same time to get there
Speaker 1: the dollars that they need at the paces that they need.
Speaker 1: That causes a credit collapse, that causes interest rates to rise,
Speaker 1: that induces the acceleration of money printed. There's no way
Speaker 1: around it.
Speaker 2: There's no way around it. It's inevitable how that looks,
Speaker 2: and the timeframe of those things vary based off of
Speaker 2: how good they can shuffle cards around the deck. So
Speaker 2: the milkshake theory from Brent Johnson is that all it
Speaker 2: puts a lot of pressure on Urgerden payso they collapse
Speaker 2: and then the dollar kind of just keeps sucking more
Speaker 2: and more, and things keep collapsing faster and faster and faster.
Speaker 1: Right, so one system could collapse faster than another system.
Speaker 1: But again, if the Treasury is issuing one point six
Speaker 1: you know, like using the microcosm of the example that
Speaker 1: it's a real example based on their own estimates, they're
Speaker 1: issuing one point six trillion more in dollar denominated debt,
Speaker 1: that is more, and if the Fed is not increasing
Speaker 1: the money supply, that is more claims on the same
Speaker 1: amount of dollars. That forces the dollar interest rate higher, right,
Speaker 1: you know, so it's like, yes, you know, the dollar
Speaker 1: milkshake theory can can be accurate, and that the PASO
Speaker 1: could collapse faster than the dollar, but the same dynamic existence.
Speaker 2: Just a function of the system.
Speaker 1: It's collapsing slower, it's not not collapsing.
Speaker 2: Sure, Sure, it's a function of the system.
Speaker 1: And then ultimately Bitcoin becomes the release valve because as
Speaker 1: the market figures out, okay, well, the Treasury had to
Speaker 1: issue one point six trillion more dollars, that's more claims
Speaker 1: on dollars competing with the same amount of dollars. The
Speaker 1: only way to satisfy that demand is to force interest
Speaker 1: rates higher. Oh well, now the FED steps in and
Speaker 1: prints more dollars. Shit, there is no rate of interest
Speaker 1: I can get on a dollar nominated claim that performs
Speaker 1: better than just holding the form of money that is
Speaker 1: agnostic to this whole charade. And so to come back
Speaker 1: to this idea that stable coins create demand for dollars, No,
Speaker 1: they just shift from one party, and one party might
Speaker 1: be more inclined to buy US treasuries over some other
Speaker 1: instrument in the US financial system, depending on you know,
Speaker 1: it's moving out of one bank holding reserves to an other.
Speaker 1: But it's all like you miss the forest for the
Speaker 1: trees if you don't realize that all of that is
Speaker 1: just debt chairs shifting. And what really matters is the
Speaker 1: total amount of system debt. That isn't just the US Treasury,
Speaker 1: it's every private issuer of credit, every state, local municipality
Speaker 1: issuing debt. The relationship of the total debt stack to
Speaker 1: the actual number of dollars that are in the system
Speaker 1: that can support it. Because what happens is for intermittent
Speaker 1: periods of time is that debt expands significantly without the
Speaker 1: actual number of dollars increasing to support it. The market
Speaker 1: figures it out, there becomes a credit collapse, they print
Speaker 1: more money twentsand and eight nine twenty twenty, guaranteed to
Speaker 1: happen again. And the only true exit valve from that
Speaker 1: is to get in the money that is not subject,
Speaker 1: that is entirely divorced from the function of credit.
Speaker 2: Get off the deck where they're shuffling chairs and onto
Speaker 2: something else. So let's talk about the relief valve. So
Speaker 2: Howard Lutnik, Secretary of Commerce, before he came into the
Speaker 2: Trump administration, through his fund, Cantor Fitzgerald, was jumped into bitcoin,
Speaker 2: big zoime right, two point or two billion dollar credit line,
Speaker 2: major stakes in micro strategy, major stakes in tether. Now,
Speaker 2: with the Trump administration building a bitcoin reserve, maybe this
Speaker 2: sovereign wealth fund his son now is deploying billions of
Speaker 2: dollars into bitcoin companies. Trump himself just bought two billion
Speaker 2: not himself but through his company which he owns control
Speaker 2: and interest of bought two billion dollars worth of bitcoin
Speaker 2: a week or two ago. Trump seems to have a
Speaker 2: way of maybe front running the markets and even telegraphing
Speaker 2: what's coming. He said, you might want to buy stocks
Speaker 2: right right before the tariff deal was announced. I think
Speaker 2: there could be a case where the government wants bitcoin
Speaker 2: and gold maybe to run really hot. So we saw
Speaker 2: elon musk leave dose. We can't cut. It's never gonna work.
Speaker 2: We have to grow away out of it. It's cop
Speaker 2: a cent goes on the TV saying we have to
Speaker 2: grow away out of it. So we need to let
Speaker 2: inflation run hot. Hopefully GDP goes up faster than the debt.
Speaker 2: Maybe stable coins can fuel some of that by maybe
Speaker 2: getting some money into directly to the market, maybe get
Speaker 2: more inflation going. We have to grow away out of it.
Speaker 2: But the problem is if we have a lot of
Speaker 2: inflation prices going up too fast, people get unhappy. But
Speaker 2: bitcoin is this liquidity sponge that seems to be not
Speaker 2: seems to be. Is much more sensitive to liquidity than
Speaker 2: other assets, and so potentially if gold and bitcoin could
Speaker 2: absorb a big piece of that liquidity and go up
Speaker 2: maybe faster and higher than most people think, it could
Speaker 2: keep the other assets and prices down a little bit.
Speaker 2: What do you think about that.
Speaker 1: I think that it's again one of those things that
Speaker 1: can sound right in terms of a first derivative that
Speaker 1: fails to see the forest for the trees and is
Speaker 1: not functionally possible, and that this idea that you have
Speaker 1: to grow your way out of the debt. It's like,
Speaker 1: first you have to accept that the US credit system
Speaker 1: has grown faster than even if GDP is a terrible
Speaker 1: metric to measure economic activity, the debt system has grown
Speaker 1: grown faster than GDP for the last thirty years. And
Speaker 1: you're basically saying, Okay, well that has to reverse. But
Speaker 1: what if there's a relationship that dictates, given the level
Speaker 1: of debt that it's not possible. So my point is
Speaker 1: that there's an amount of debt that exists the world,
Speaker 1: and there's amount of dollars that exists in the world,
Speaker 1: and to inchor people into what that general relationship is
Speaker 1: is no, it's like one hundred and two trillion dollars
Speaker 1: of dollar denominated.
Speaker 2: Debt to three hundred and fifty trillion, oh to.
Speaker 1: About six to seven trillion dollars. Oh, and there is
Speaker 1: a mathematical equation. Now, not all of that one hundred
Speaker 1: and two trillion dollars of debt that's owed is due
Speaker 1: in a month or doing two months, or a year
Speaker 1: or five years. Some's not due for thirty years. But
Speaker 1: there's a mathematical relationship between one hundred and two trillion
Speaker 1: dollars of debt to six to seven trillion dollars that
Speaker 1: actually exists in the system, and that the one hundred
Speaker 1: and two trillion dollars debt cannot be satisfied by the
Speaker 1: six to seven trillion dollars. So the idea of like,
Speaker 1: you know, if you would relate this to the idea
Speaker 1: of GDP, like to grow our way out. How do
Speaker 1: you grow your way out if you didn't increase the
Speaker 1: number of dollars? How do you grow out of the one?
Speaker 2: Well, you don't grow your way out. But could we
Speaker 2: go from one hundred and ten to GDP to eighty percent?
Speaker 2: That to GDP change?
Speaker 1: So ratio, Well, we'll set aside debt to GDP for
Speaker 1: a second.
Speaker 2: The real.
Speaker 1: Of consequence ratio is the amount of debt that exists
Speaker 1: to the amount of dollars. How do we how do
Speaker 1: we de leverage that system? There's two ways. There's allow
Speaker 1: the debt to reduce, or there's create more dollars. There's
Speaker 1: no other mathematical way right now. The way that debt
Speaker 1: is reduced is that as debts become due, they get
Speaker 1: repaid and more credits not issued. The problem is that
Speaker 1: because of the extent of the leverage that as soon
Speaker 1: as that credits is so that credit system that was
Speaker 1: one hundred and two trillion went to one hundred trillion
Speaker 1: to ninety eight forces interest rates higher. Okay, and basically
Speaker 1: the market because because the money that because those are
Speaker 1: those are those are dollars that are in somebody say
Speaker 1: account that are no longer there. People are tight. So
Speaker 1: like the economy starts to shrink, or first it starts
Speaker 1: to grow slower. Like basically growth is tied to credit expansion.
Speaker 1: If the credit expansion starts to slow or then decline,
Speaker 1: the absolute amount of leverage is so high it starts
Speaker 1: to feed on itself. One you know, credit contraction begets
Speaker 1: credit contraction ultimately induces a credit collapse that induces the
Speaker 1: printing of more money. And so it's like you can't
Speaker 1: get yourself out of the mathematical equation.
Speaker 2: Like you could.
Speaker 1: You could take a piece of debt that's sitting on
Speaker 1: a on a productive asset, say like an oil and
Speaker 1: gas well, and say, well, you know, cancel the debt
Speaker 1: and now it has a new equity holder. It's just
Speaker 1: that we live in a world that's so leveraged that
Speaker 1: would create you know, and it ultimately will. There's you know,
Speaker 1: it's a catch twenty two. There's no way out of it.
Speaker 1: The way out of it is printing of money or
Speaker 1: the more accelerated decline of the dollar via hyper inflation
Speaker 1: and a credit collapse. So you know, everything else of
Speaker 1: like GDP growth, it's like one hundred and two trillion
Speaker 1: dollars of debt six to seven trillion dollars. The Fed
Speaker 1: sets the number of dollars that exists, and then the
Speaker 1: market creates credit on top of that. But every time
Speaker 1: since you know, realistically two thousand and eight nine, the
Speaker 1: market figured out that something was inherently broken, not everyone
Speaker 1: knows the source of it, and guaranteed they print more money,
Speaker 1: you know, and there's no there's no chasing it. So
Speaker 1: you know, one thing I last one I want to
Speaker 1: say is like when people talk about GDP and outgrowing debt,
Speaker 1: if you lose sight of the real economy and what
Speaker 1: money is supposed to deliver to the economy more goods
Speaker 1: and services that and just think in terms of GDP
Speaker 1: and GDP growth and relationship of you know, how much money,
Speaker 1: more money needs to exist to satisfy it. It's like,
Speaker 1: what is actually broken is the real economy, and the
Speaker 1: real economy is broken because of the printing of money
Speaker 1: that it distorts the actual operation of money, the function
Speaker 1: of money, the price signals of money, and we're not
Speaker 1: going to get to a more stable world until the
Speaker 1: fly is taken out of the ointment. The ability to
Speaker 1: print money is no longer exists because governments adopt bitcoin
Speaker 1: and then they can't print money, and they have to
Speaker 1: be honest in terms of how they finance their operations
Speaker 1: because what happens as a natural consequence is that one
Speaker 1: point six trillion ultimately gets financed by the creation of
Speaker 1: more money.
Speaker 2: Right, the inevitability of the system is we are on
Speaker 2: a debt based monetary system, and because of that, the
Speaker 2: debt has to always grow, and because of that, we
Speaker 2: never pay the debt off, and so the inevitability of
Speaker 2: the system is eventually it ends.
Speaker 1: And the real economy gets destroyed because of that.
Speaker 2: And the real economy gets destroyed because of that. Now
Speaker 2: we have a solution with bitcoin that that can allow people, businesses, individuals, businesses, nonprofits,
Speaker 2: churches and corporations, and even governments start offloading onto another
Speaker 2: ship to maybe try to save itself from the inevitable collapse.
Speaker 2: I guess I was just thinking more in terms of
Speaker 2: shorter term moves. Yeah, the next four years of the
Speaker 2: Trump administration, we saw in the eighties, Israel was facing,
Speaker 2: you know, triple digit debt to GDP ratios. Let high
Speaker 2: double digit inflation happen for three or four years. Inflated
Speaker 2: the GDP, which changed the ratio down to seventy five percent.
Speaker 1: But the only way to do what they I mean,
Speaker 1: I I'm not an expert in that, about what I
Speaker 1: would presume is they printed more money into dealers.
Speaker 2: Sure. Yeah, and that's that's my point. So we're going
Speaker 2: to print a lot more money. Trump wants, as you
Speaker 2: said earlier, right, he wants Powell or the Fed to
Speaker 2: drop rates three points, you know, down to one and
Speaker 2: a half. That's going to print a lot more money. Potentially,
Speaker 2: we can get there's what three point three trillion dollars
Speaker 2: of sterilized reserves sitting in the banks that they could
Speaker 2: issue stable coins against and put that onto the street.
Speaker 2: That's more money. And so that's a lot of inflation.
Speaker 1: But but yeah, it is.
Speaker 2: It's a lot of inflation.
Speaker 1: It's a lot of inflation. And and again I'm not
Speaker 1: an expert in the history of of why More Germany,
Speaker 1: but i I know some of the history. And there
Speaker 1: is this natural phenomenon that that when they say the
Speaker 1: price of bitcoin goes up, you think that you're getting richer.
Speaker 1: When the when the value of your stock market goes up,
Speaker 1: you think that you're getting richer. But it misses what
Speaker 1: wealth is. It misses that the your the day to
Speaker 1: day delivery of goods and services that you consume, and
Speaker 1: the and the increasing base of capital capital and not
Speaker 1: in terms of dollars, but capital in terms of productive
Speaker 1: capacity delivering real goods and services to the market. Right,
Speaker 1: That that's wealth. That that's the thing that improves the
Speaker 1: day to day living of more people. And that when
Speaker 1: you know, someone like Trump might buy bitcoin and think
Speaker 1: that bitcoin's helping the dollar, he might just not be
Speaker 1: seeing the forest for the trees. And that it might
Speaker 1: feel good to all of us when the dollar value
Speaker 1: of our bitcoin goes up. But if more businesses are
Speaker 1: being destroyed than are being created, we're kind of we're
Speaker 1: the boiling frog, right you know. And so it's very
Speaker 1: easy for people to not realize. And I'm talking specifically
Speaker 1: about people that are putting forward legislation or regulations or
Speaker 1: even Trump, you know, buying bitcoin and not seeing the endgame,
Speaker 1: thinking like, oh, it's a good thing if you know,
Speaker 1: the stock market moves up. But like, think about the
Speaker 1: craziness of the stock market. I think, really, you know,
Speaker 1: reach all time highs or the sm P at least,
Speaker 1: and like, you know, it's at an all time high
Speaker 1: and Trump is sitting there telling the Fed chair that
Speaker 1: he's going to fire him to reduce interest rates by
Speaker 1: three percent? Yeah, Like, what good is your stock going
Speaker 1: up if the actual you know, fabric of the productive
Speaker 1: capacity of an economy and being destroyed along with it.
Speaker 2: Yeah, that is certainly correct. Most people, unfortunately, don't see it.
Speaker 2: As we started at the beginning is most people don't
Speaker 2: understand the problem. And so part of the CP lie
Speaker 2: is to get us confused on prices going up as
Speaker 2: inflation and that we don't understand why electronics went down
Speaker 2: and this went up, and we don't understand it's the
Speaker 2: money supply. I think the average American would much rather
Speaker 2: see their home value their retirement accounts go up, even
Speaker 2: if gas went up. A little bit then to see
Speaker 2: all of their life savings get cut in half and
Speaker 2: gas stayed the same. I went down a little bit, right.
Speaker 1: The problem is that they have to consume their house
Speaker 1: every day and they have to consume gas that they
Speaker 1: have to have both.
Speaker 2: Yeah, and you you've mentioned several times like thinking through
Speaker 2: first order derivatives. So if you think through second, third, fourth,
Speaker 2: fifth order, where does this go? And then what then
Speaker 2: then what you see the impending doom that it creates.
Speaker 2: But most people just unfortunately can't see that. Let me
Speaker 2: ask one more question then we'll wrap this up. So
Speaker 2: we've talked about the impending doom, the inevitability of the system.
Speaker 2: It was never going to work, right, it's a function
Speaker 2: of the way the system works. But maybe we're starting
Speaker 2: to see the world waking up to this reality you
Speaker 2: mentioned earlier, you posted a chart of the guilt market
Speaker 2: in the UK is like plunging, and if we look
Speaker 2: at like the long bond around the world, they're all
Speaker 2: like basically making new all time highs. And you mentioned
Speaker 2: it's like a regime change. Yeah, a regime change where
Speaker 2: maybe the entire world there starting to wake up and
Speaker 2: realize that the only way to pay those is printing
Speaker 2: lots of money and we have to go find something
Speaker 2: else or what was the regime change?
Speaker 1: Yeah, So one way I think about this is that
Speaker 1: the academic economists which make up the Federal Reserve or
Speaker 1: central banks all over the world think about pulling levers
Speaker 1: or pulling you know, basically taking actions expecting certain reactions.
Speaker 1: So traditionally the world of academic economists that make up
Speaker 1: central banks think, well, if I increase interest rates, I'll
Speaker 1: decrease inflation. The person in the real economy realizes that
Speaker 1: if you arbitrarily increase interest rates, you're not going to
Speaker 1: make goods more abundant. You might destroy someone's ability to
Speaker 1: buy a good, but the real way to make goods
Speaker 1: cheaper is greater abundance. I say that to them, bring
Speaker 1: up the point of well, the consequence of raising interest
Speaker 1: rates and let's talk about a real example of the
Speaker 1: Federal Reserve of increasing interest rates aggressively in twenty twenty two,
Speaker 1: and here we're sitting in twenty twenty five, that the
Speaker 1: other side of increasing interest rates is the value of
Speaker 1: the underlying bonds declining in value, and that the past
Speaker 1: regime was low interest rates manipulated lower for a long
Speaker 1: period of time, and it trained this entire class of
Speaker 1: investor to say, well, the Fed's gonna print money to
Speaker 1: get these bonds to zero. So even if it doesn't
Speaker 1: make sense to lend government or money to the government
Speaker 1: for a long period of time, say ten years, twenty years,
Speaker 1: or thirty years at this arbitrary low rate, I'm going
Speaker 1: to do it anyways, because they're going to have to
Speaker 1: buy these assets to force the interest rates lower. Well
Speaker 1: by keeping interest rates higher for longer periods of time.
Speaker 1: There was massive amount of holders of those bonds that
Speaker 1: got burned, that lost money doing the quote safe thing,
Speaker 1: and it's a fool me once. Shape on you, fool
Speaker 1: me twice, Shame on me. The market has learned that
Speaker 1: they cannot bet on the fact that the Fed's going
Speaker 1: to even if the FED is going to have to
Speaker 1: print money, the time duration matters, and they've lost They've
Speaker 1: gotten burned. So it's you're not going to fool me again,
Speaker 1: and that when the FED starts to lower interest rates
Speaker 1: by printing money, or the the Bank of England or
Speaker 1: the European Central Bank, the holders of those assets like,
Speaker 1: why would I do this again? You know you've already
Speaker 1: tried to quote reduce inflation by starving the market. I
Speaker 1: got burned by that. So even if you try to
Speaker 1: force interest rates lower, I'm not buying your paper. You're
Speaker 1: going to have to buy your paper. And so that's
Speaker 1: the regime change. That the market has gotten burned, and
Speaker 1: they're not going to be quick to become the boil
Speaker 1: and frog again to become the bag holder. So that
Speaker 1: it seems like, and not in terms of a truly
Speaker 1: dislocated way, but that central banks have lost control that
Speaker 1: the market is the true set ceenter of interest rate.
Speaker 1: The what the consequence is that central banks are going
Speaker 1: to have to be more aggressive in buying their own debt.
Speaker 1: The only way that they can do that is by
Speaker 1: printing more money. Then operation by which central banks buy
Speaker 1: the debt of the government is creating more supply of
Speaker 1: the base money, increasing that six seven trillion to eight trillion,
Speaker 1: nine trillion, ten trillion.
Speaker 2: That's then Alden's nothing stops this train.
Speaker 1: Yeah, And the truth thing that that dictates that nothing
Speaker 1: stops to train is the relationship between the debt and
Speaker 1: the system to the actual number of base dollars or
Speaker 1: euros or yen. And at the level just below that
Speaker 1: is that if you have a form of money that
Speaker 1: is built foundationally with the idea that it can be
Speaker 1: created by a central issuer at no cost, that the
Speaker 1: market's going to figure that out and opt in to
Speaker 1: a different form of money that has a different set
Speaker 1: of rules, being bitcoin.
Speaker 2: All Right, So we've talked about the inevitability system and
Speaker 2: where this is all going, and one part I didn't
Speaker 2: really want to I didn't get a chance to hit
Speaker 2: on is you talked about the volatility of bitcoin and
Speaker 2: starting to think about how we're allocating to it. So
Speaker 2: we see the inevitability. You've built that up nicely for
Speaker 2: us and using maybe some dollars and bitcoin. But I
Speaker 2: know you have a company's app, right and you're pioneering
Speaker 2: bitcoin payments, and so I'm just curious what you see
Speaker 2: from that regard. You know, I see this as like
Speaker 2: this evolutionary path. I know you're sort of bringing that forward.
Speaker 2: What have you seen since you've been working on payments?
Speaker 2: How has the adoption of that been going?
Speaker 1: Well? I think one thing because we talked about this previously,
Speaker 1: but then connecting it with this idea of why central
Speaker 1: banks are going to have to create more money and
Speaker 1: this trade off of short term volatility versus long term
Speaker 1: destruction of value. Those are those two things coexist with
Speaker 1: each other and everyone within the system has to solve it.
Speaker 1: So a lot of people naturally look at bitcoin's volatility
Speaker 1: and say, well, how could anybody ever accept it as payment?
Speaker 1: And it's a very logical dilemma. I'm looking at the
Speaker 1: surface level, but in reality, it's the same dilemma of
Speaker 1: buying bitcoin for dollars as accepting it for payment. That
Speaker 1: if you think about, you know, one of the strategies
Speaker 1: that people employing bitcoin is dollar cost averaging, buying a
Speaker 1: small amount every day or every week, and they're taking
Speaker 1: a different price. You know, they're buying one hundred dollars
Speaker 1: and the price of bitcoins x one day and lower
Speaker 1: the next day, and higher the next day, and getting
Speaker 1: a little bit more bitcoin one day and less bitcoin.
Speaker 1: That if somebody has figured out why, yes bitcoin is volatile,
Speaker 1: but why it stores value over time, that it's money
Speaker 1: that can't be printed. That and they have a business
Speaker 1: that they realize the end game and they say, well,
Speaker 1: if I start selling my goods and services for bitcoin, yes,
Speaker 1: the price is different. I'm you know, day to day,
Speaker 1: and I'm gonna still be pricing goods in or services
Speaker 1: in some dollar denomination, or if you're in Europe, you're denomination.
Speaker 1: But it's the same as dollar cost averaging. Because when
Speaker 1: they turn on the ability to be paid in bitcoin,
Speaker 1: one hundred percent of their sales do not magically turn
Speaker 1: up in bitcoin. It might be one percent to two
Speaker 1: percent to five percent to ten percent. And say that
Speaker 1: a business was doing ninety percent of their sales and
Speaker 1: fiat and ten percent and bitcoin, well, they were going
Speaker 1: to have to convert that ten percent of fiat into
Speaker 1: bitcoin because they wanted to save in bitcoin anyway. And
Speaker 1: so it it just is a different means to actually
Speaker 1: acquire the bitcoin, but in a way that de risks
Speaker 1: the business at the same time that is able to say, well,
Speaker 1: I can still be paid in dollars and I have
Speaker 1: my dollar rails, but now I have this new rail
Speaker 1: that creates redundancy and allows me to market my services,
Speaker 1: to appeal to people that have bitcoin, and to actually
Speaker 1: make the transaction more efficient if people want to pay
Speaker 1: me in that way. And so we're still early to
Speaker 1: bitcoin payments. So like the way I think about it
Speaker 1: is we're early to bitcoin, which means that we're earlier
Speaker 1: to bitcoin payments because somebody does necessarily need to understand
Speaker 1: something fundamental about bitcoin, like I do not think, as
Speaker 1: an example, that somebody that does not know why bitcoin
Speaker 1: stores value even while being volatile, should endeavor to accept
Speaker 1: bitcoin payments. It's a it's a reverse order of operation.
Speaker 1: It's the wrong it's decidedly the wrong order. But if
Speaker 1: everyone is on this curve of understanding bitcoin understanding the
Speaker 1: problem that it solves that the people that were earlier
Speaker 1: to understand bitcoin are increasingly asking to be paid in bitcoin.
Speaker 1: So we're seeing growing trends. Is you know, there's a
Speaker 1: recognition that it's early to the ballgame, but somebody has
Speaker 1: to be early, and that the amount of adoption that
Speaker 1: we're seeing feels like, you know, we're you know, an
Speaker 1: inflection point. Doesn't mean the majority of the world in
Speaker 1: a year or two not just accepting bitcoin, but but
Speaker 1: doing more than fifty percent of their sales, but that
Speaker 1: there's a critical mass that's more that it's going to
Speaker 1: materially accelerate Companies like Square turning on the bitcoin payments,
Speaker 1: in my mind, is a watershed moment for everybody working
Speaker 1: on bitcoin payments, but also for everyone out there that's
Speaker 1: providing a payment service that doesn't have bitcoin incorporated, because
Speaker 1: it becomes a differentiation. Yeah, for any platform.
Speaker 2: And we've seen the I mean the best case was
Speaker 2: at the Bitcoin conference like two months ago Steak and
Speaker 2: Shake and Now so they were going to start accepting bitcoin.
Speaker 2: And I think it was the president maybe of Stake
Speaker 2: and Shake got up and gave a talk and he
Speaker 2: gave some numbers out I forget what it was, but
Speaker 2: they increase like per store visits like fifty percent or
Speaker 2: some crazy number. You may know that, but I mean
Speaker 2: you could see that first move or advantage where all
Speaker 2: of a sudden people wanted to go spend the bitcoin.
Speaker 2: And of course, as the wealth of bitcoin continues to grow,
Speaker 2: people are going to want to spend it.
Speaker 1: So yeah, and you know someone might say, well, why
Speaker 1: would somebody spend bitcoin? You know if it's values going
Speaker 1: up so much, And it's not really a spending bitcoin,
Speaker 1: it's a spending for savings because if you were going
Speaker 1: to spend your dollars, you could have decided not to
Speaker 1: consume and to buy the bitcoin.
Speaker 2: And so.
Speaker 1: Yeah, and so you know, for a lot of people
Speaker 1: that have owned bitcoin for a long time the vast
Speaker 1: majority of their savings are in bitcoin. Now that that
Speaker 1: is again a small percentage of the population, but for
Speaker 1: those people, spending bitcoin is actually easier than converting back
Speaker 1: into dollars and spending dollars. And if there's more people
Speaker 1: adopting bitcoin, there's more people holding bitcoin, and there's more
Speaker 1: merchants that want to accept it. And it's just this
Speaker 1: organic process of growth, and there will be accelerations of
Speaker 1: it and decelerations and accelerations again, but it ultimately needs
Speaker 1: to exist for bitcoin to work long term, and that
Speaker 1: when I look out into the future, I think this
Speaker 1: shift to bitcoin happens a lot faster than people think,
Speaker 1: and we're seeing the amount of blumes of people being
Speaker 1: interested in it, and the trend will only accelerate, and
Speaker 1: the bitcoin payments might be a small segment of the economy,
Speaker 1: but it becomes a massive differentiator for platforms that have
Speaker 1: it versus those that don't. And what's becoming clear with
Speaker 1: an example of Stake and Shake is that bitcoin is
Speaker 1: large enough that you can either service one hundred percent
Speaker 1: of the of the economy, the fiat economy and the
Speaker 1: bitcoin ecomy, or you can you can service a subset
Speaker 1: of it, and it still might be the majority of it,
Speaker 1: but you risk being at a disadvantage to one of
Speaker 1: your competitors that does accept it, and that will be
Speaker 1: a force that also drives acceleration. That bitcoin sales might
Speaker 1: be one percent or two percent or five percent, but
Speaker 1: if you don't have it, a large share of the economy,
Speaker 1: even if it's still small on a percentage basis, is
Speaker 1: going to shift somewhere else.
Speaker 2: Yeah. Yeah, I love that. I love what you just
Speaker 2: said there because the reframed my brain. It's not a
Speaker 2: spending bitcoin. It's a spending question or thought right where
Speaker 2: it's like I'm gonna spend dollars, but those dollars good
Speaker 2: about bitcoin. Yeah, so it's really a spending problem and
Speaker 2: I hadn't really thought about that. That's a good reframe.
Speaker 1: Yeah, And there's a there's a thing that Jack Mallers
Speaker 1: talked about on the podcast that I think is is
Speaker 1: really right that like, when you hold very few dollars,
Speaker 1: you think about it as an opportunity cost some bitcoin,
Speaker 1: and when you hold a lot of dollars, it's like
Speaker 1: I'll go I'll go spend on, I'll go spend my
Speaker 1: dollars on anything because because they're loser value, and so
Speaker 1: it does as a as a consumption model, it shifts
Speaker 1: your framing of do I really need this? Am I
Speaker 1: willing to spend my bitcoin on this? And there's a
Speaker 1: lot of cases in my life just because you know,
Speaker 1: I move the vast majority of all my savings are
Speaker 1: in bitcoin, where it's a no brainer, I need this.
Speaker 1: I need to get the transmission of my car fixed,
Speaker 1: I need to spend this vacation money for my for
Speaker 1: my family. And then there's other things where I'm like,
Speaker 1: do I really need that?
Speaker 2: Yeah?
Speaker 1: Do I need to go spend five hundred dollars on
Speaker 1: that dinner?
Speaker 2: Yeah?
Speaker 1: Or can I cook steaks at home and enjoy and
Speaker 1: and enjoy the dinner more? Yeah, not just because I'm
Speaker 1: saving because yeah, I'm at home with my family rather
Speaker 1: than you know, so it does. It makes you essentially
Speaker 1: a better consumer the more bitcoin that you have in
Speaker 1: less fiat.
Speaker 2: Because better capital alligator. Yeah yeah, yeah cool. Let's wrap
Speaker 2: it up with that, Parker, as anything else that people
Speaker 2: should be fans in to do. I think you wrote
Speaker 2: a new piece recently, right, bick one can't be copied, No.
Speaker 1: Someone just recirculated that that was that was an older one.
Speaker 1: But my blog, I you know, I do write less.
Speaker 1: It's kind of like feeling that I only want to
Speaker 1: write when I have something that needs to be said.
Speaker 1: But I do post kind of from time to time
Speaker 1: on my blog. So gradually, then suddenly dot x y
Speaker 1: Z my book which is on Safety's web how website
Speaker 1: the safe house spelled s A I F so the
Speaker 1: safeouse dot com. They can get my book gradually than suddenly.
Speaker 1: And again I say, if you know, if you don't,
Speaker 1: you know, people shouldn't just jump to bitcoin payments. So
Speaker 1: they're still exploring why is it? Why are people saying
Speaker 1: this thing bitcoin's money? Why is it sore value? Read
Speaker 1: a book? You know, there's there's a number of other
Speaker 1: great books linn Alden's books on the safe House, Safety's books,
Speaker 1: But you can get my book there graduate and suddenly,
Speaker 1: so there would be where I point people. And if
Speaker 1: you're further down that path you understand why bitcoin store
Speaker 1: is value. You are a business owner, you should I
Speaker 1: would urge people who grock it to realize that accepting
Speaker 1: bitcoin is just a more efficient way to acquire it,
Speaker 1: and it eliminates risks for your business at the same
Speaker 1: time that if you're one of those people, check out
Speaker 1: our website zappright dot com. If you reach out to us,
Speaker 1: I'll likely be the person that's helping serve you day
Speaker 1: to day.
Speaker 2: So learn about it you know, inquire about it perfect.
Speaker 2: Thanks scraping Up