The credit-based system is going to malfunction. It's not going to work as it once did. Boom,
inevitably, bust. What would happen in a deflationary bust situation?
Pretty much that means everything goes to zero. Credit goes to zero. The supply of money actually
goes to zero. Everyone defaults simultaneously. There's no more money and liquidity to go around.
It's all wiped out. Do you still see this as being something that could cause the end of
the fiat system. Yes, but it won't look like hyperinflation or hyper deflation even. I think
what it's going to look like is countries backing their currency with Bitcoin. There's very low trust
in the world. Bitcoin fits perfectly within that new system. As soon as Bitcoin finds its legs,
I think it's going to happen pretty fast.
Ansel, good to see you, man. This is the first time we've met. I've had quite a few people reach
out saying I need to have you on the show. So welcome. Do you want to start with a bit of an
introduction about who you are? Yeah, thanks, Danny. It's a pleasure. I'm excited for this talk.
Yeah, so Ansel Lindner, I've been public in Bitcoin going back to 2016 with the scaling
conflict, started a podcast back then. And right when the user activated software dropped that night,
I made a podcast and said, this is how Segwit's going to get adopted. So I was on top of the
scaling conflict back then, more from an economics angle than anything else. And then I just been,
there's been a few hiatus breaks in my content over the years, but I've been producing content
for this whole time. I concentrate on economics, of course, the macro of Bitcoin. I also have a
background career in the military. And so this stuff around Iran and different things that have
been happening recently, you know, with Venezuela and then Iran kind of have some insight there as
well. Yeah, we should get into that because like, as you said, you sort of concentrate on the macro
side specifically. And this around war seems to have changed everything. And there's a few things
that have come out of it from a Bitcoin perspective that are particularly interesting, especially in
the recent, you know, the last few days, really. But from a macro side, has this changed the entire
picture, this war? No, I don't think so. I think it's a continuation of where we're going. So I
think we've been evolving away from this post-World War II era into something new, into a
de-globalized sort of paradigm. And this is just one more step along the road. And we're going to
continue down this. I mean, the next one is going to be even crazier and people are going to say,
is this the breaking point? Is this the break? No, it's just, we're stepping down the road
towards deglobalization. And I think it will continue. So I'm not surprised at all that
this is happening. I mean, it could be anything. I mean, it could be something blowing up in
Eastern Europe or in the Middle East. I mean, anything, but that we're going to have these
kind of breaks in the old system where we see allies not being allies, trade not being aligned
the way it was before and getting rerouted. We're just going to see all these types of signs of
deglobalization, and that's going to take us into the next paradigm. So your listeners might know
like the fourth turning, right? It has something to do with that. There's these generational cycles,
And we're about, what, 80 years since the end of World War II.
And so it's right on time for the next cycle.
So I think that's where we're at.
It definitely feels like fourth turning times at the moment.
And the most interesting thing that I've seen in Bitcoin in a little while, one that truly
surprised me, is when the Iran government, whoever's in charge there now, said that they're
going to take Bitcoin as payment for ships traveling through the Strait of Hormuz.
And this kind of plays into that multipolar world thing you're talking about, where it's
Like if you are in a situation with zero trust, what money do you use?
You can't use the US dollar in that situation.
You have to go to something neutral like Bitcoin.
It feels like a really pivotal moment.
But I know as Bitcoiners, we get sort of excited about things like this.
Do you think it is a real shift?
Yeah, I think it's an acknowledgement or maybe a wake up call for people because this was
inevitably going to happen because the dollar system that we've been on, a credit-based system,
you have global credit markets. And what happens to a global credit market in deglobalization?
Well, it starts breaking down, starts shrinking, starts contracting. And so you have this
financial system that was built for an era of high trust. It's not going to work as well in
an era of low trust, if at all. I mean, some countries are going to be cut off. There's going
to be these multipolar regional alliances that they might not be trusted by a whole third of
the rest of the world or something like that. And so you need a currency that is able or money
that is able to move between these big blocks when there's very low trust in the world.
If Bitcoin didn't exist, that would be gold. Most likely we'd go back to gold. But with Bitcoin
being able to be sent anywhere in the world in 10 minutes, very low storage costs, easy to assay and all this stuff,
then Bitcoin is just really suited for this very specific use case, which Iran has highlighted now.
And I think we will continue to see.
I mean, we've already seen the seeds with the strategic reserves in different countries,
different countries mining Bitcoin, even in that era or in that area with the UAE and Qatar and
stuff, they're very interested in investing in mining and in strategic reserves of Bitcoin.
So I think it's just one, again, it's one more step down this road towards deglobalization,
and Bitcoin fits perfectly within that new system, at least as high-powered money.
We might not be using it in daily transactions, but it will be used with international settlement,
settlement between central banks, things like that. That I would think would be the first
thing. And then eventually down the road, we will get peer-to-peer payments.
That feels like the real Bitcoin story in this whole conflict. Alongside the fact that it's
performed relatively well since the conflict began. While everything else was crashing,
Bitcoin has been sideways to slightly up during that period. And there's a lot of people that are
asking like is bitcoin becoming a risk-off asset which i think is way too early to say that but
it it has almost been a hedge during this conflict um how do you see like its place in the markets
right now well i reacted to i don't know if you know michael green yeah um yep i reacted to one
of his posts a while back about bitcoin not being a geopolitical hedge and this was specifically
around October 7th. So just going back a few years and that Bitcoin immediately on October 7th,
Bitcoin crashed. And I said, well, okay, this isn't really, you're kind of changing the definition of
what a geopolitical hedge is. A geopolitical hedge is not necessarily a short position,
right? So you have a hedge that you take out that is specifically designed to move contrary to
something else. But if you have a geopolitical hedge, you're actually trying to get uncorrelated
returns. So it doesn't matter necessarily if something crashes and then Bitcoin skyrockets
immediately or vice versa. It matters that over the long term, your returns are uncorrelated.
And so there was actually somebody that did a study a couple of years back. I don't know,
I cited it in that blog post, but and they detailed out statistically that gold and Bitcoin
are really close to being the same from an uncorrelated geopolitical hedge type of scenario.
And so, yeah, I pushed back on that. And I said Bitcoin was a geopolitical hedge at that time.
And I think this time, too, it shows that, you know, Bitcoin is not crashing and it's not skyrocketing,
anything like that. It's very stable. It's kind of uncorrelated to the craziness that we see out
there in the world. So I think very much so that it is stepping out on its own right here as being
a very good geopolitical hedge.
At least it has to be in the conversation
when you talk about gold,
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your first miner. That's blockwaresolutions.com forward slash WBD. The thing that I struggle with
when you kind of call Bitcoin a hedge
is the fact that it trades 24 seven.
Does that mean it's very hard for it to be a hedge?
Because we've seen Trump time a load of his announcements
when markets are closed in the US.
And so there's really one asset
that can move a lot of the time
and that tends to be Bitcoin.
And so like it is the thing that moves first.
And if it's a negative statement
or something that the market deems a negative statement,
then Bitcoin does sell off.
Does that make it a tricky asset
to be a proper hedge?
Yes, if you're looking for,
you know, you want to maximize
or you're day trading
and you want to make sure
that you're scalping
as much of the gains as you can.
But if you're in it for the long term,
I don't think so.
I think that that stuff
levels out over the long term.
I mean, just zoom out
to like 52 weeks
or something like that
and you won't see any of those
real reactions to the market like that.
Fair.
I do think that's also one of the most interesting elements of Bitcoin in that it is like a 24-7 prediction market, essentially.
And it does move first.
And quite often it will move actually before announcements happen.
It's like the way you keep your finger on the pulse across markets.
But with this war, we've obviously seen oil prices go through the roof.
And there's a load of talk of inflation coming back in a stronger way.
And I know that's something that you've quite often talked about.
And you think that instead of inflation being the concern, it's deflation.
Has this war changed that perspective?
Not at all.
It's just made it stronger, I think.
So there's some people out there that talk about deflation as like prices falling.
I don't talk about deflation like that.
I think it's the money contracting.
So the supply of money getting smaller.
And what is money today?
Money is credit.
And so, like we just mentioned at the beginning, there was global credit markets and how are they going to react to deglobalization?
They're going to shrink.
I think about it like a carrying capacity.
So the globe has a certain carrying capacity for debt and credit.
But if you start deglobalizing, that carrying capacity goes down.
So you had to shrink credit markets.
And that is actual deflation that's happening.
And the problem with actual deflation is that it spirals out of control. You get hyper deflation instead of hyperinflation. Everybody's been worried, myself included 10 years ago, was worried about hyperinflation. Right. But we didn't get that after trillions, tens of trillions of dollars of QE and fiscal spending and all that. And we still do not have hyperinflation. That's because the overriding pressure is deflationary.
So in a bubble just think about boom and bust cycles right Boom inevitably busts right So you juice the credit you juice the inflation you get a boom and what happens It busts You can avoid the bust Even if you try to print your way out of
the bust, you can extend and pretend for maybe a decade or something like that, but eventually
it's a bust. Eventually it's a deflationary bust. And so I think that's what we're seeing here,
specifically with the oil markets, I think that we have a surplus of oil right now on the market.
It might not seem that way because shipping is affected. But in 2026, so far, up until the
beginning of this conflict and all of the forecasts from most of the major forecasting firms in the oil
market, they were thinking three to four million barrels per day surplus. So that means that they
would go into inventories, et cetera, et cetera. So the world right now is in a fundamental surplus
or glut for oil. That's why when you look at the chart, you see a spike during the Ukraine-Russia
kickoff. It spiked up to like 120, 130, and then it drifted down for two or three years.
Then we see this spike, and it's going to drift back down. It'll probably be faster this time
if the conflict is faster.
I don't think this conflict will last
into the three or four years
like the Ukraine-Russia conflict has.
So overall, we're in a oversupply situation
and the U.S. continues to increase its pumping.
Venezuela now promises to increase its pumping.
Brazil is forecast to increase
by a million barrels per day this year.
I mean, it's just everywhere you look,
the oil market is oversupplied except for this Hormuz situation. So once the Hormuz situation
gets cleared up, which I expect it to get cleared up relatively shortly, we're going to be back in
that same situation. Oil prices are going to keep going down. Interesting. But what are you seeing
in the broader market outside of just oil that makes you think deflation is coming? I mean,
you can look at the bond market and you can see that, you know, people have been predicting bond
yields to explode and get out of hand. That's what we would see in a high inflationary situation.
Even at a high risk of inflation, we would see 10% on the U.S. 10 year, but we're not seeing
anything like that. The kind of pressure is downward. Same with the oil price, same with a
lot of commodities. I mean, commodities have had a little bit of a run here in the last six months
or so. But overall, if you look back to the great financial crisis compared to today,
very few commodities are above 15 years ago. They're all lower.
You know, I speak to a lot of macro people and the general consensus is that inflation is the
worry at the moment. And I'm just curious, like why you see it differently? What it is that you
see that makes you go kind of go against that consensus view?
because for inflation to be sustainable you need to have economic growth so in a system in a credit
based system we're not in a real technically we're not in a fiat system we're in a credit based system
when you print money if we were in a fiat system and you printed money you would have just assets
being put on a balance sheet but in a system we have today you have asset and a liability
so you don't have more money chasing the same amount of goods you have more money chasing more
goods because that bond is actually tradable and stuff so you don't really have inflation the way
that people that talk about fiat that we have inflation like that so to have sustainable high
levels of of inflation and credit creation you have to have productivity gains you have to have
growth in the economy. If you don't, then the pressure turns from boom into bust and you start
getting contractionary forces. And that, you know, if the credit market isn't growing, it's shrinking.
And so that's the bust phase. And overall, 75 years building up to now, I think now we're in
this bust phase and we can't run away from it forever. We can kick the can down the road,
but the overriding pressure is still going to be towards a bust like obviously with the people that
think that inflation is going to get out of hand potentially move to the hyperinflation again
timelines vary depending on who you talk to but eventually most people will see this as being like
there will be a time when the fiat system comes to an end on the deflation side is it the same thing
just it plays out in a different way like do you still see this as being something that could cause
the end of the fiat system? Yes, but it won't look like what most people think about. It won't look
like runaway hyperinflation or hyper deflation even. I think what it's going to look like is
countries backing their currency with Bitcoin. So a lot of people, they just kind of completely
discount the possibility that the US government decides to back the dollar with gold or Bitcoin
again. I don't see why that would be the case. They've changed it so many times throughout its
history. This has been a floating currency experiment for 75 years, and we're getting to
the end of that, especially if, say, other countries are like, we don't want to accept
your dollar unless you have some other collateral with that, which would be Bitcoin or something
like that. So I think it naturally, the end state of this is towards backing of the dollar
with Bitcoin or gold, but Bitcoin would be the better answer in my opinion.
And what do you think would force a country to do that? Because like they will love having the
superpower of being able to print money with nothing backing it. Like why do you think they
would go back to a hard money backed currency? Credit collapse.
Hmm. Because no one accepts their money anymore. Because to do business, you don't trust other people. You don't trust other countries. You don't trust other regions. And so you have to have some sort of asset that's flowing with the money to give it value. And so that's that's why they would do it. Because the old the credit based system is going to malfunction. It's not going to work as it once did.
You know, it used to be where you could just, these developing countries could join the system, join the WTO, get access to foreign capital, foreign credit, build up their export industries, export to the world.
Well, what if nobody's importing?
What if they have to run a bunch of bilateral trade agreements instead of accessing the global market for things?
You have to go to this country and this country and this country to negotiate your stuff.
It's just a world where if you want your currency to work, you're going to have to do what the market wants.
And if the market is demanding Bitcoin or a gold-backed currency of some sort, you're going to have to do that.
You don't really have a choice.
I know as Bitcoiners, we like to jump on these things quite often too early.
But do you think the stuff that's happening in the straightforward moves with Iran taking Bitcoin as payment is like a very early sign of that happening?
Yes. Yep. I think it's just a sign of what we're going to. I mean, like I said earlier, we're seeing some other similar steps. Just the U.S. talking about a strategic reserve of Bitcoin is a sign that it's going this direction. Now we have the Iran thing.
One thing that I predicted last week in my newsletter is that we're going to see China easing the ban. So they're going to ease their stance on Bitcoin as well because they see that they probably, this is total speculation on my part, but I think that they might view Bitcoin as another attack vector on the dollar.
So if Iran can use it, it's an attack vector on the dollar to circumvent SWIFT and to circumvent these other payment processors and things.
And so they might look at Bitcoin as being a way to attack the dollar at the same time.
But in reality, what they're doing is, you know, the U.S. has 300,000 Bitcoins.
It has a push towards a strategic reserve.
It's kind of in a first mover type of position for governments, at least.
and so I don't think it's going to hurt the United States.
But that was my prediction is China is the next one maybe
that we'll hear loosening their ban.
That would make sense.
I mean, they've done that before.
I could see them doing it again.
But the interesting thing there is,
you say they may see it as an attack on the dollar.
We've obviously had a lot of people in the US,
the sailors, the politicians, the policymakers in the world,
saying that Bitcoin can actually help strengthen the dollar,
which I've always found very hard to really believe.
Which way do you see that going?
Do you think it can help strengthen the dollar
or is this just a straight up attack?
I think it will be viewed as an attack by China
but I don't think it really is an attack.
Being that the US has the biggest government stockpile
I think any adoption of Bitcoin
is actually just going to help the United States.
One thing I've said for a long time
is that Bitcoin aligns incentives
And I just I don't see how Bitcoin can be against the dollar.
You know, they it's like saying gold is against the dollar.
They're totally competing in opposite realms.
The dollar can simply just say, OK, now it's 10 Satoshis per dollar.
And that's the exchange rate.
That's what we're backing the dollar as.
And that's it.
So in that scenario, how would the dollar be going against Bitcoin or Bitcoin be an attack on the dollar?
I guess maybe I'm wrong in this, but I think my perspective on that would be it only helps the dollar if the U.S. adopt Bitcoin to a degree.
Like I can see it really helping the dollar if they start doing bit bonds and they really integrate it into the system.
But if they try and ignore it for too long, then I do think it's probably an attack on the dollar because it's just like a separate system that their fiat dollars can flow into.
I don't think, to be honest with you, I don't think the people that are buying a bunch of treasuries are worried about if it's backed by Bitcoin or has some Bitcoin tied to it in the structure.
I really don't think they care about that.
It actually might be more of a risk to many of them if that was the case.
So, you know, demand begets supply. A lot of times people think, oh, I can build this shit coin and people are going to buy it and it's going to be so great and it solves all these problems. But really, the demand needs to be there first. So the demand for these bit bonds needs to pull that supply onto the market. It's not like they're going to offer bit bonds and all of a sudden there's a market there. You know, you have to do the right order of operation.
So if we do get this deflationary bust that you talk about, how do you think Bitcoin performs
during that? Because in a hyperinflation event or a high inflation event, the sort of pathway for
Bitcoin looks clear. Who knows what will actually happen, but you can see, you can project what you
think may happen based on like COVID stimulus and things like that. What would happen in a
deflationary bust situation? Well, a hyper deflationary scenario, like a financial crisis
where you have, remember, during the great financial crisis
and then during the September repo rumble in 2019.
2019, yeah.
And I think also in COVID, for a very brief period,
the markets went bidless.
They had zero liquidity in the financial system,
and pretty much that means everything goes to zero.
Credit goes to zero.
The supply of money actually goes to zero,
which is very interesting to think about um so what does that actually mean the supply of money
goes to zero well because money is credit and if everyone defaults simultaneously there's no more
money and liquidity to go around it's all wiped out so anyway so they if if that happens i think
that's very bad for bitcoin because people are going to bid for food and water and you know
They're going to run out there and try to save themselves.
But in the long term, in the buildup of those financial crises, I think it's going to be
positive for Bitcoin.
So Bitcoin is not going to do well in those instant crashes, but it will do well in a
deflationary environment.
For the same reason why gold will do well in like a buildup to a recession.
People start getting worried.
They start, you know, squirreling away their money and safer assets.
The same aspect is going to happen with Bitcoin.
And so, yeah, that's so the buildup is good, but the actual financial crisis is bad for Bitcoin.
So deflation or inflation, Bitcoin wins.
Yes, it actually is an inflation hedge and a deflation hedge.
And gold bugs should tell you the same thing.
And Bitcoiners should tell you the same thing.
So in a system that's built on counterparty risk, if you have an asset that has no counterparty risk, then that asset's going to be bid in a period of deflation or default, I would say.
That's going to be bid.
So that is the deflationary side.
And then the inflationary side, obviously, that's pretty self-explanatory.
There's a fixed number of Bitcoin and the supply of money goes up.
So the price of each Bitcoin is going to go up.
So, yeah, it's an inflation and a deflation hedge.
Let's go.
And one of the interesting things that happened over the last 12 months or so is that commodities have caught a bid.
Gold's been flying.
Silver had an amazing run.
And Bitcoin had an all right 20, 25.
And then so far, a bad 26.
Have you been surprised with Bitcoin's price action?
Absolutely, man.
Absolutely.
I thought 2025 was going to be much.
I thought by this time last year that we would be you know going in the top of the blow off phase of of the bull market But that never occurred It been very tamped down I mean it been how many years and we still at 70 When did we hit 69 the
first time? Back in 2020? 21, I think. Yeah, 21. So five, six years later, we're still in the exact
same spot. So I have definitely been surprised by it. How do I explain that? I think it is
options markets. I also think that there was a four-year cycle that a lot of OG Bitcoiners
that had tens of thousands of coins, perhaps. Oh, that's the end of the four-year cycle.
We didn't get our blow off top. So I'm going to sell now. And they sold at 100K.
I said before we got to 100K, I was like, there's probably going to be significant resistance of people selling at that round number.
You know, like they bought in for $10 and then they held, I'm just going to hold to 100K.
And they held, then they sold.
It didn't happen right away, but that whole kind of zone around 100,000 provided a lot of resistance to the Bitcoin price.
And so I think, you know, we just have to eat through that, eat through that supply and come out on the other end.
It's just really hard to think, man, strategy is buying tens of thousands of bitcoins every week and the price is not moving.
What's going on? So I don't know. It'd be interesting to hear your take on that.
No, I'm the same. I was surprised. And I sort of fell into the camp of thinking maybe this time will be different.
and so far at least it's not been.
I still think there's the potential
that it could be proven different.
Like if we have a decent 2026,
sort of end of 26,
then I still think that-
Like the four-year cycle, you mean?
Yeah, I think it probably still breaks
that four-year cycle idea.
And I don't really understand
why the four-year cycle would still exist.
You know, the subsidy coming online
is kind of irrelevant now.
Like you say,
strategy is buying way more
than the mining subsidy.
So I don't know exactly
why the four-year cycle would stay. I don't see any real reason for it. So I would love to see
that narrative get thrown out of Bitcoin, but I was definitely surprised. I thought we were going
to go higher last year and I didn't think we'd go as low this year. But Bitcoin market humbles you,
I guess. Do you think we're going to have a positive sort of second half of 2026?
As soon as Bitcoin finds its legs, I think it's going to happen pretty fast. I don't think it's
going to be like a slow buildup, you know, at the end of the year, we're at 100. And then six months
later, we're at 125. I think it's going to go from 75 to 125 in a couple of weeks when it does happen
eventually. Now, when is that going to be? I don't know. It could be some major country like Iran or
some major situation that everyone has to sit back and say, okay, they're accepting Bitcoin.
This is real. Maybe maybe the China thing. So we just talked about maybe China easing their ban on Bitcoin. Maybe that's a trigger to see a repricing in Bitcoin by 100 percent up. So I don't know. But that's that's kind of what I expect to happen is fast and furious when it does come because the market wants to screw everybody possible out of every last dime that it can.
And so it's not going to let fence sitters get the chance to jump into a trade.
It's going to happen really fast.
And everybody that's in gets to go.
Everyone that's not in, they get a buy at the top and we repeat.
So that's what I'm thinking.
Yeah, I think one of the other dynamics that was different this time is like since I've
been in Bitcoin, we had the 2017 run, we had the 2021 run.
And then and both those times, Bitcoin was like the exciting, fresh new thing that everyone
was interested in, there was FOMO. Whereas this time that was AI, like it was the AI trade that
stole so much of the hype. And even within Bitcoin, I think it was the treasury company
hype rather than buying spot Bitcoin. I think that has definitely played into it. I don't know
if that comes back. Maybe it does. I think price action fixes that. Like if Bitcoin starts absolutely
ripping, it will get the attention. But you mentioned the options markets there and it's
like, I don't pretend to fully understand options markets, but why would that have a negative
impact on spot Bitcoin price. If you're in a different regime, you can have options that
either accentuate the volatility or depress the volatility, depending on what regime you're in.
And we've just been in this regime where the options are set up to sell the rips and buy the
dips. So that keeps you in a range until something changes that. And that's why you see the very fast
dips because it was being held, managed, and then all of a sudden something changed, maybe a big
player blew up or something, and it went to a new level, and it has stayed in that new level
in that regime in the options market. Now, it can happen in the other direction, and that's kind of
what I'm talking about, is as soon as the regime changes to enhancing volatility, so you buy the
rips and you sell the dips in the options the way you trade your options, then that means that
it's a reinforcing loop higher. And also there's talk about, you know, a gamma squeeze or a Vanna
gamma squeeze. I'm not an expert in the options market, but these things are reinforcing. So as
price goes up, you know, these people have to reevaluate their risk. The market makers have
to reevaluate their risk and they have to go out and buy Bitcoin. So if they're taking the
other side of a trade and they're shorting Bitcoin and someone else is longing Bitcoin.
Well, they do that based on a formula. How much Bitcoin do I have to have to hedge this short
position that I'm taking to make a market? And as the price of Bitcoin goes up, well, they got to
buy more Bitcoin to hedge that position that they have on. And so that is a reinforcing volatility
loop and to the upside, right? And so eventually that will happen in Bitcoin. When that happens is
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So this idea that volatility is going to be suppressed going forward in Bitcoin just because of how the sort of market dynamics have changed.
Is that something you don't buy into then? You think we still can have, you know, the crazy run-ups, the blow-off tops. And then obviously bear market always follows a blow-off top, but you think we can still have that volatility in Bitcoin?
Well, yes, I do. But I think it's going to be fewer and far between. So if you look at gold, right, gold has been, it's, it's not that much older than Bitcoin in the sense of having like an ETF. I think the gold ETF was in 2006.
listeners can correct me if I'm wrong on that it's 2006 and you know we couldn't even own
gold until my lifetime like people could actually own gold again in the United States
so it's not that much older and it is it is also heavily manipulated in the same way
but it has just done a parabolic move you know it did a parabolic move during the great financial
crisis and then another parabolic move here now. So they can't, it can happen. It's just going to
be fewer and far between. Um, but I think Bitcoin is going to have these like moonshots. One,
one week it's going to go 50% up and then it's going to find a new level. And then maybe the
next week it goes 25% down and goes at that level. But, um, it's going to have, it's going to break
the options, uh, regime that it's in. It's going to reprice and then it's going to be held there
for a while so this is the idea of sort of extended cycles you think the it might not be
the four-year cycle but it's always going to play out in boom bust cycles yes that's how assets work
pretty much uh that's how gold has worked um even though it's it was pegged to the dollar say
and so 35 an ounce was that's how much gold was but its purchasing power did fluctuate and so
So, yeah, I think there will be booms and busts until it's pegged.
And then maybe that will even suppress it even more.
Because once you back a currency with a commodity, that commodity is held in everybody's account, right?
And it's a very, very deep market.
It takes a lot to move and bring volatility to a market where everybody owns some.
And so it will suppress it more.
But it will happen in that respect as well.
so a bit earlier in the conversation you called bitcoin currency and then kind of corrected
yourself and called it money and i'm curious what you were differentiating between there
yeah i think well first off i think a cryptocurrency was a really bad branding mistake
and i don't think satoshi used it um i can't remember now but if maybe he used it later on
after somebody else used it but he didn't come up with it he didn't brand it maybe later
like 2010 or something like that, that he used the term cryptocurrency. But a currency is a
measure of money. That's what I think of it as. So you have a money, gold or Bitcoin,
and then you have currency that is a denomination of that money. So one ounce, you have $35 per
ounce of gold. So dollars is the currency, gold is the money. And same would be for Bitcoin. If
you pegged it at 10 satoshis you would have 10 satoshis per dollar the dollar is the currency
and the bitcoin is the money so that's how i would define it so you don't think bitcoin can be both
money and currency yes it can be a gold coin is both you know gold coin with a face value
is both money and a currency it can be but it probably won't be the utxo set kind of limits
how many people can use Bitcoin.
Even if we had huge blocks,
unlimited block space,
you still would have UTXOs
and you really wouldn't want to have a UTXO set
that had 100 billion entries
because it would take almost as long as a block
to just find one UTXO out of the list of the UTXO set.
It was always going to be a derivative.
I mean, even Hal Finney talked about Bitcoin banks, right?
And so it's always been known that most likely, if it really does become some sort of global money, then it will be a derivative that's traded.
you don't think this will be solved with like layer two solutions layer three solutions whereas
you might you know you might be using spark or arc or lightning or whatever like because even
with an open time there's still a utxo there i know you can trade it physically so you don't
need to do any there's no like on-chain footprint of swapping that utxo but you don't think this can
just be solved technically at different layers well i really like side chains and i really haven't
thought about this for a long time. I used to talk about sidechains being what's going to scale
Bitcoin because you could, you know, each country could have its own sidechain and then you could
have atomic swaps between sidechains and this would all be cryptographically proven and managed.
And so sidechains are a really good solution. That way you don't have to mess with the on-chain
UTXO set and all of this You just have your sidechain and you can have your own rules as well So one government might allow confidential transactions and another government might not
allow confidential transactions. And so each government can have their own side chain that
is cryptographically pegged to the actual Bitcoin and they can have as many transactions as they want.
but overall I think that the biggest
this I saw you had
Jun Seth on
one thing that he would always say
at least in the past was
you know there's benefits to
fraud protection there's benefits
to being able
to reverse a transaction and
if you have it on chain
especially you can't do that but even
if you had it on a side chain that would be much harder
to have those type of
protections and so I think
there is demand for a layer like on-chain for major, major transactions, maybe even demand for
a sidechain type layer. But then there's also a demand for just a regular old payment rail
that's centralized that somebody can reverse and manage and you trust the bank and that's that.
So yeah, I don't mind the idea of sidechains either. Obviously, Liquid really hasn't got
any traction. People are trying to build out these BitVM things. We'll see if they work.
But it sounds like you're talking about Bitcoin even, you know, decades into the future as having
as fiat still being around. Do you think that is what's going to happen? Or when you talk about
fiat, is this like a tether type stable coin? Like, what are you thinking the future looks like?
Well, I think the dollar, I think currencies will be backed by Bitcoin. Or we might go into
a Bretton Woods situation, you know, where the dollar is backed by Bitcoin and then all these
other countries are backed by the dollar. But it really goes back to Bitcoin. You know, Bitcoin or
the dollar at the end was 40 percent backed. So we had reserves to cover 40 percent of the supply
of dollars. It could be reinstated something. Maybe it's 10 percent for Bitcoin. I don't know.
There's all sorts of different plans and how that or there's all sorts of different ways that you
could plan it to institute it. But that's what I see. If it's not backing of the dollar by Bitcoin,
it's going to be what we have today. I really don't see Bitcoin just being floated out there
as its own thing. You know, like gold has that opportunity right now, but it's not.
Yeah, it's gone up to $5,000, but it hasn't really, it's not used in transactions with
with central banks or with anybody. I think maybe Iran and some sanctioned people might use it once
or twice, but it hasn't really been a currency used or a money used. And it's had a long time
to do that. So I don't think that Bitcoin, if it doesn't get backed or if it doesn't back a
currency, I don't think there is an opportunity for Bitcoin to really be used globally. I hope
that makes sense it will always have a place in a portfolio and as a store of value but it won't be
used for that medium of exchange rule so so in that like normal progression of money from store
value to medium exchange to unit account you think bitcoin will never get to the sort of full stat
no i think it will but i think it gets there by backing bitcoin or by backing the dollar
and backing other currencies. Not on its own. Right. Interesting. I mean, that still seems
like a massively positive outcome. I guess at that point, you probably don't have things like
the Federal Reserve because there's not just six people in a room or 12 people in a room,
whatever it is, deciding the price of money. Yeah. Well, I think that the Federal Reserve
will probably lose its independence. I mean, it'll go away naturally. I don't think, I don't,
I don't foresee like losing the actual role of the Federal Reserve for a long period of time, but there will be losing of independence of the Federal Reserve.
So one thing we've seen recently, you know, Besant and Powell and Trump, they all are kind of, there's all sorts of different stuff going on.
So Trump is trying to fire Lisa Cook, if you remember that.
She's trying to fire one of the governors.
She actually wasn't one of the bad ones.
Like, she was relatively dovish.
She was one of the dovish board members, which is what Trump wants on the FOMC.
But he wanted to make a statement.
He wanted to say that you guys work for me, and I can fire you at any time.
Well, he tried to do that.
Powell said, no, I'm not going to listen to you. And so now it's going to the Supreme Court and
it's still at the Supreme Court and we'll see what they say. I think there's good, there's good
arguments on both sides, but I tend to believe that if the government wants to subsume that back
under itself, it eventually will. If it will be this president, the next president, somebody will
bring that back in into the fold and put the Federal Reserve as a subordinate of the Treasury
department. So I think that's going to happen maybe 10 years down the road, but that's going
to happen for the Fed. I mean, I can totally buy the Fed losing its independence. I think it's
arguable how much independence it has already, but I think we're about a month away from Walsh
coming in as governor, as chairman, sorry. And I think that's already a huge step in the direction
of it losing its independence. Do you think he will be a positive appointee? Oh, man.
i think he is
i think he's a yes man he'll do what he's told he'll do what he's told even though i think
personally he probably disagrees with um letting you accommodate a monetary policy at this this
time i think he personally will disagree with that but he will do what he's told and he'll try
to run it hot. Now, whether he can or not, I mean, that's another question. Because I don't
believe in like an omniscient Fed. I don't know if they can really do just anything they want.
They can pretend to print money, or they can print money, whatever. But that doesn't mean
the economy is going to take off and there's going to be inflation. Just look at QE. I mean,
QE, people that were watching the markets in 2009, we thought there was going to be
instant hyperinflation.
Or at least over the next two years,
there's going to be like really high 100% inflation rates.
Never happened.
It never happened.
Didn't matter how much QE they did.
Actually, when they were doing QE,
yields dropped.
You know, like this is not what we would expect to happen
if inflation is picking up.
And so what the Federal Reserve actually has power to manifest
is up to debate, I think. So I think there is going to be somewhat of a boom in the U.S.
relative to the rest of the world. But I don't think that's going to be a result of the Federal
Reserve. I think that's just going to be the U.S. is booming. Okay, I want to get into both of those
things. So first of all, with the Fed, clearly Trump wants him to cut rates. I think that's
most likely going to happen, whether it's this year or next, it's going to happen at some point
relatively soon. They've also been doing a small amount of QE over the last couple of months.
Do you think that continues? Do you think it even potentially ramps up?
Well, I predicted the QE that they're doing. And I said like a couple months before they started it,
I said, you know, they're probably going to do something like a minimal QE and call it something
like reserve management. And sure enough, like a meeting or two later, they came out with the
the reserve management facility, I think is what they call it. So yeah, I think that's going to
continue. As the amount of credit, as the absolute number in the banking system goes up,
then if they say, oh, we need 20% reserves in the banking system to maintain stability,
but the system keeps growing, they have to increase the amount of reserves.
and so i think that's what they're doing that's that is what they're doing with qe at least that's
the rationale what they're doing right now and i think they'll have that'll have to continue at
least under this textbook of what they're using now does that mean they have to do that to
maintain a good economy no they don't have to do that but they probably probably will
is what you're saying there essentially even if they cut rates and they continue qe that's not
on its own going to boost the u.s economy you think it's really because of the unshoring
efforts that are happening right now. Yes. I think that they could have some confidence,
you know, influences, but mechanically, it's not going to, that is not what mechanically
makes the economy grow. And why are you so confident that the onshoring,
one, is going to work and two, isn't going to be massively disrupted by sort of AI and
automation and things like that? Well, one, I don't, I mean, those are several different
questions there. Automation, I'm not worried about because automation is a good thing. You know, for
when new technology is adopted by a market, it actually makes the market more complex
and it makes it more productive and all those things. So I'm not worried about automation.
I think it's good. If automation is adopted, it's actually a positive. It's like definitionally,
it has to be positive to get adopted. Let's say AI is all it's hyped up to be.
You could have a massive increase in the sort of K-shaped economy where there's still the people
that become like almost a permanent underclass from this, but then you have the economy could
be ripping at the same time. Yeah. Well, I think there's going to be a K-shaped global economy for
sure um developing markets are going to go back to third world markets most likely
and you're going to have a big divergence and are those developing countries are they going to be
able to afford using ai maybe not maybe right now we have this uh kind of i think unwarranted
assumption that running AI is cheap. Oh, it's cheap. I just asked this prompt and I get all
this, or I asked it to build me some software with these specifications and it's really,
really cheap. But that's the subsidized price. That's the subsidized capex price.
I don't think it's going to be globally like post-scarcity. It's not going to bring us anything
like that. That's just a silly assumption that people make is that we're going post-scarcity.
Universal, what did Musk say? Universally high income instead of basic income? No, that's just
fantasy land that that's not going to happen in the foreseeable future. I mean, maybe hundreds of
years down the road, but we can't see that. So in the near term, it has to pay for itself.
And right now it's being subsidized by all this CapEx. We'll see what happens when that
subsidy runs out. So when do we get to the point where the working population isn't enough to
sustain the retirement of everyone who has already gone into retirement? Like when do those payments
stop? It's going to be different for different countries. The countries that are the worst off
right now, South Korea, China, Taiwan, Japan, these are hitting it right now. Like I did a calculation
about Japan and they're not quite at 1% yet, but they're getting really close to losing 1%
of their population every year. That's not sustainable for any sort of retirement or any
sort of government assistance or pension plans. So if they haven't hit it yet, they can probably,
you know, financially engineer it for a little while longer, but pretty soon, yeah, you have to
have people there to actually work to not just pay, not just pay into the system, but to actually
do the jobs of the economy to keep the economy running. And, but once those retirement accounts
can't be paid, like the obvious thing is they're probably just going to print the money, right?
It depends. Yeah. I mean, probably if they're, if they're on the same system that they're on right
now, it, yeah, sure. They could, they could print the money. Um, but that wouldn't help them at all.
that would just, it would be instantly into inflation.
And people would be fleeing out of that system
to buy hard assets of anything.
Just like in any hyperinflation
or high inflation environment,
people instantly dump their cash
and try to buy any sort of durable good that they can.
If there is major capital controls in China
and these other economies,
then that's going to be more difficult.
but no, that's not going to solve the situation. It's, there's still going to be the same amount
of pain. It's just, um, whether it's pain with high inflation or pain with low inflation.
And so this has been great. Is there anything that we've not talked about that you wish we had?
Nope. Uh, deglobalization is my big thing, demographics, and then of course deflation.
So I think we covered it all. I love it, man. Um, tell everyone where they can go to find out
more of your work, hear your podcast, all that kind of stuff?
Bitcoinandmarkets.com is my original podcast and content. I just recently started Rogue Macro,
so you can check out roguemacro.substack.com for my writing. That's more 90% macro and
only 10% Bitcoin. So you guys can check out Rogue Macro and Bitcoin and Markets.
Awesome. Thank you, man. We'll have to do this again. I really enjoyed this. Thank you, Ansel.
Thanks, Danny.
Thank you.