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It's very interesting.

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We've never seen it before.

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In fact, in TradFi that there's been an asset that grows the way that Bitcoin grows.

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It's possible that Bitcoin as a power curve could pull the entire TradFi exponential curve into power.

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And that is the mind bending thing.

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Draw me a loan instrument that works in power growth.

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We're making interesting records.

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We're breaking interesting records almost every month with Bitcoin, right?

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It's not bigger than the US dollar yet.

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And that will be a fun one.

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I think it's possible that we could get into a Satoshi world where Bitcoin is still the growth of the network itself is this power curve, sustainable proportionate growth.

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And everybody starts to accept it, even governments.

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Matthew, it is very good to see you, man.

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How are you doing?

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Danny, doing just great.

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Happy to be here.

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Been too long, actually.

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Enjoyed seeing you in person in Riga for the Honey Badger.

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That was awesome.

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That was my first time in the Baltics.

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It was a cool city.

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I really liked it.

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Is it not, huh?

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It's a great town.

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Yeah, it was a good conference, too.

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Like, real good Bitcoiners.

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Like, I love the conferences.

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Like, they all have a different bit of a flavor.

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But that was some real, like, hardcore Bitcoiners,

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people working on some really cool stuff.

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I enjoyed it.

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It was a good trip.

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And they keep it, I mean, they keep it seriously OG.

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like it's been that way every year since like 2017. And they keep wondering if they're going

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to do it again every year, but hopefully they do next year. I hope so. If they do it again,

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I'll definitely be going back. But you're doing good even though Bitcoin is

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just over 100K. We've been crashing. What's your take on it?

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Yeah. I've been doing streams now most every day. I'm pretty casual about it.

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uh morning baltic time 11 a.m baltic time 9 a.m london time so it's it's not exactly uh prime

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u.s time or australian time i guess it is more australian time prime time it's not too bad for

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me yeah um you know it's sort of been my goal always basically uh you know i think of trace

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mayor kind of had this view it's like when he was promoting the mayor multiple way back in the day

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everybody can catch a wick and you can talk about momentum and all these trades uh you know

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literally forever uh but bitcoin as a system there's a story you can talk about how it grows

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can talk about um you know how it's going to affect the trad fi system and that stuff only

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the story only gets better and better and better so that's you know in a nutshell what i try to do

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on my stream. And so a lot of that does ground itself in the power curve or the power law. I know

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a lot of people don't like the word power law, but I've been talking about that just as long as

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anybody. Giovanni, the Italian, I think most well-known to the power law, he first posted about

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it as a power curve in time, something like September 2018. And I think he did it on Reddit

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and I posted it on Twitter,

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like my own curve,

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my own analysis,

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independently.

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I mean, I didn't hear about Giovanni

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until like two years ago.

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I did it, I think, in December 2018.

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So this curve,

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and my analysis, by the way,

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was based on,

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for the hardcore listeners,

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there's an old series

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of pretty well-known posts now

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by a user,

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TroLolo on Bitcoin Talk.

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He started to do some regression

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analyses of the Bitcoin price, actually in logarithmic, which is a slightly different

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curve. We don't need to get into that. But it turned out over time, and you could really see

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this from about 2016 in Bitcoin, that it was growing weirdly, not like gold or stocks or

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bonds or anything in TradFi. It was growing at this power curve, which is actually more,

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it's something you observe more around network growth or growth of organisms.

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We can talk about it if you want. But basically, yeah, I talk about it almost every day on my

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stream is just trying to ground ourselves in the power trend, what it means, how we can take

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comfort in it and, you know, not try to get too bogged down in the crazy trades because,

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you know we can go we can go into that if you want but but the at the end of the day yeah the

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price could go down to 80k could go down to 70k but i'd rather just look at the levels see where

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we are relative to the trend relative to the past and then um you know spend time with my family

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otherwise so that's what i try to do i do want to get into it though because i've always been i think

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you know this i've always been pretty skeptical of it and i think part of that was probably a gut

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reaction to the kind of cult that came around with the power law stuff and we've seen models in

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bitcoin time and time again like the the classic example is the stock to flow stuff that plan b did

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and like when people have so much faith in one of these models to the point where even when it

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seems to break they refuse to accept that it's broken um i was worried it was basically going

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to be another one of those but i know you've talked about this a lot for a long time so i

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want to know why you put so much faith in this. So it would be good to get into like what a power

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law actually is before Bitcoin. Like what does it mean in terms of like organisms and networks?

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Right. So the bottom line is power curves or power relationships, they grow proportionately.

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So they grow, another word is they just grow sustainably. So there's a lot of evidence that

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the internet itself grew that way. And just to explain a power relationship, it's actually like

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the 80-20 rule. So if you looked at it, if you think about it in terms of nodes, all right,

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nodes and Bitcoin are nodes just like AWS and Facebook versus all the other client-server

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relationships on the internet, there is usually a relationship where you have a few large nodes

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with many connections and you have many small nodes with a few connections. So that's just the

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nature of how things grow that's the nature of how things scale so we yeah lightning network's

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a perfect example of that right right we can explain and lightning network does the same thing

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right there's a few large uh nodes with many many connections the opposite is the case with uh with

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small nodes so that relationship we just observe across time we can reserve observe it in this case

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the y and the x-axis is size versus amount.

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You can observe it many different ways.

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It's going to do some sort of a gradual curve,

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kind of like an 80-20 curve.

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But what's interesting with Bitcoin

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is we can actually observe the price do this across time.

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And explaining that, again,

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I'll try to just keep it very, very brief,

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keep it very, very simple

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without going too much into the numbers.

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But if you think about any,

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and I can show you charts here in a second,

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but let's just talk about it with words for now.

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if you think about any chart, like anything you've seen on Twitter, anything you've seen on

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TradingView, when people put charts in log scale, and usually when they say log scale,

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they mean log linear. That means the y-axis is log and the x-axis is just time, right?

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You draw a trend line, or as the TA people, you just draw all your sort of mad, mad hatter trends

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that connect wicks and candles and all this stuff. It's very easy to draw a straight line

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in log space. Okay. Because, because the nature of TradFi is that it grows exponentially. It grows,

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uh, geometrically, it grows in compounding fashion. All of those things are basically

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synonyms. So why? Well, my theory, my personal theory, I've never actually fully read this,

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but you know, I've read a lot about the history of money and banking and stuff, but I think it

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probably mostly has to do with the nature of of credit of compound interest so bank loans work

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the same your mortgages work the same every everything anytime you hear on cnbc or bloomberg

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or whatever on twitter you hear a percent gain or a percent return you're comparing it to a

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compound return that you expect to get every year to keep up with not only inflation that's the

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common one and that's true but also to keep up with the pace of innovation to keep up with the

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pace of population growth it's not all bad actually that we grow right there are good things about

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growing there's just a lot of nefarious things about inflation so wading through that is also

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difficult but probably more to the nefarious side more to the side that bitcoiners can understand

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or like you know i think empathize with it is true that banking um and i'm not even talking

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the nature of fractional reserve banking and all the conspiracies and all this. It's just the nature

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of credit is that if you have a fixed rate over time, you're going to get to something that will

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constantly double at a certain amount of years based on the rate. The common example is a rule

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of 72, right? So rule of 72, if I have a 10% return, rule of 72, how long will it take to

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double every 7.2 years with a 10% return. You might think it's every 10 years, but that's not

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how compounding works. That's not how exponential geometric growth works. It's actually faster than

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you think because that's the nature of exponential growth. So rule of 72, basically you take 72,

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take the percentage, whatever the growth rate is, slash away the percent sign and just say,

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so 72 divided by 10, what's that? 7.2 years. That's how long it will take to double.

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You do the inverse of that.

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Say you have a 7.2% compounding growth and it stays the same.

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It's going to take you 10 years to double.

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But the next 10 years, you will double again and double again and again and again.

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So all of those words that I just used to explain exponential growth, geometric growth,

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compound growth, compound interest, which is the nature of all bank loans,

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they constantly grow and it cannot be any other way.

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This is why. And again, people frame this often in a conspiratorial way, like if they don't grow the market, if they don't print, the market will crash.

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Or if we don't grow enough, the market will crash. It's actually I mean, it is true. It's true.

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But it's also there's more of a deep. It's just there's this very interesting, deep mathematical properties there that.

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A lot of it has to do with credit, and I think probably even most of it, but there are other things, too.

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You know, innovation, invention, obviously, AI is the next one here.

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But the Internet, for sure, we've actually increased our growth now relative to, you know, times 30 years ago, 40 years ago because of wonderful technological innovations.

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And so what happens is, and Jeffrey West talks about this in his book Scale.

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I've quoted a lot.

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Giovanni's talked about it a lot, too.

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I did the tour. When I saw you in Riga, my speaking tour over the summer was on this.

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It's basically, it's even more crazy than exponential growth because we actually grow

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a little bit faster and a little bit faster and a little bit faster over these epochs.

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And that even makes exponential growth even crazier. So in the short term, it's constant,

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but in the long term, it even gets a little bit faster. So that's what exponential growth

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does and is, and that's what TradFi is, that's what the stock market is, it's growing a little

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bit faster over, say, the midterm to the longterm, and we have to keep up with it. And it's hard.

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We get distracted and now we have our attentions going in a thousand different directions and all

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the other social implications of this. Maybe some people make it, some people don't. Maybe

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older generations just, this is really cruel to say, but they just throw their hands up in the air

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and they live in retirement peacefully and they don't care.

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But, you know, the pace of innovation, the pace of our communication, everything,

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it's way faster and it's way arguably, I think, you know,

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I know there's a lot of doom and gloomers in the Bitcoin space.

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I try to not be one, but it's argued, you'd rather live now than at any time in the past.

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today. That is anchorwatch.com. No, that's super interesting though. Let me ask you a question

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on that before we we get into the organism stuff because why is bitcoin not subject to the same

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things as tradfying that because things like money supply growth credit creation um growth

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population like why is why is bitcoin immune to that in its price performance yeah well immune

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is not a word i would use and also uh that it has to be is not a word i would use so for example the

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old stock to flow models which by the way we can talk about i can show you some hilarious uh

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prior predictions and what they are now. Those are based in exponential space. So the stock-to-flow

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model, he was using exponential coefficients for a power model. Anyway, I'm getting ahead of myself.

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It doesn't have to be in the future that Bitcoin is for sure following a power law.

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It's just right now. And as we've observed for the last 16 years or so of Bitcoin,

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it has followed a power curve. So it doesn't really matter why, it just is.

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Well, to get a little bit more to the why, the why is more sustainable. It's more proportional.

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Those are two words that you would use with power growth that you don't use with exponential growth.

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So exponential growth, all those things that I just talked about, we grow faster and faster,

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a lot of innovation. There's also a lot of inflation. There's booms, there's busts.

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It's volatile. It's maybe a little bit unsustainable, you could use the word,

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right? You think about all the debt that we have. Those things are all features of exponential

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growth. You can get to fast booms, but also fast busts like the Great Depression or the global

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financial crisis. That's just the TradFi world. There's no explaining your way out of that paper

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bag. That's the world. That's the universe that we're in. That's what it does. Bitcoin,

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it's provably observable with the statistics that it is not following an exponential curve.

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And I can show you a chart that exactly illustrates this, but it's just not following an exponential

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curve. Price is not exponential. So then you would say, why? Well, as I talked about with

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the nodes, with the 80-20 rule, with scaling, with networks, it's just a feature of scaling.

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it's a feature of networks that you do have um not everybody running the full you know the full

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node to use the old scaling or example um you know you don't you just have more top heavy nodes on the

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on the on the on one side and not as heavy nodes on the other side not as busy of traffic and that's

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how the network scales. And it's actually more sustainable that way. But of course, it's true.

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If you rely too much on those consolidated, concentrated nodes, you might lose some things,

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you might lose some security. You got to be careful about that. And that's why there's

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people way smarter than me having a lot of these arguments right now about how Bitcoin can truly

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scale, how it might, things that I don't actually completely see as relevant now, I don't think we

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need to get into, but how there might even be legal implications of what's on the blockchain

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right now, right? I don't quite see that at the moment, but I know a lot of people are

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talking about that, at least on Twitter. But anyway, all of this stuff is just,

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that's how networks grow, but it's growing not in a constant exponential fashion where you can pick

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a number and say, okay, Bitcoin is growing at 10% a year. If it's growing at 10% per year,

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the network's going to double in 7.2 years. And then 7.2 years from then, it's going to double

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again. That's not what it's doing. It's growing according to a power curve over time. And so what

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that means is that actually the growth rate shrinks. The growth rate shrinks. So back in the

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day, let's just use pricing as an example. It's pretty obvious if you bought Bitcoin for a dollar

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or whatever back in 2011 or 10, you were mining it maybe before there was even a price.

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your compound growth was huge. Even holding to today, your compound growth is hundreds of a

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percent. But as time goes on, and as the coin gets a little bit top heavy, it gets a little

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bit bigger, a little bit heavier. The growth is proportionately less. So, or actually it's

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proportionately the same. It just takes longer. That's a better way to say it. So, but if you

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look at it on a yearly basis, a yearly basis, that annual growth will fall. So for example,

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back in 2010, 2011, anybody could have had a thousand, thousands of a percent return.

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Now on a curve, on a curve, Bitcoin by the end of this year, we'll do 42% per year.

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And next year it's going to be 38 and some change. I actually don't know off the top of my head from

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that. I'll just tell you, Rick, it's on my website, by the way. So basemoney.world or

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porkopolis.io, you can find all this information. Let me find you the exact. It's scheduled to be

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39.2% by the end of 2026. So 42% by the end of the year, 39.2% by 2026, and 36.7% by 2027.

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And you can see this table where it shows you exactly the slope of the curve and how the curve

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declines in growth rate on my website, if you want to dig into those statistics. But that's a

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power relationship. It's actually, it's sustainable, it's proportional, but it grows

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slower and slower as it gets bigger. So when you see people, like, I'm not trying to call

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Saylor out here at all, but like Saylor will often in presentations present like the Kager

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of Bitcoin as 38% or whatever ongoing. Do you think he's missing part of the point there?

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I do. Yeah. And there's a fellow MIT grad from Saylor that everybody should follow. His handle

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is money or debt, money or debt. Steven Perinod is his name. I haven't interviewed him yet,

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but we've been on like some streams together. He's a great, he's a great mind at Bitcoin.

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And he's long said as an MIT grad, Saylor should get on the, you know, the power law train,

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the power curve train, because it's just not, it's not true. And people have actually,

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it is one of the ironic kind of funny things about sailor like he said for years all your

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models will be destroyed and then he made a model like a few years ago he came out with a bull case

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bear case normal case that was a model uh yet all of our models are going to be destroyed so again

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we make models all the time the people before the gfc made insane uh you know linear and exponential

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models according to rental rates that were just insane they wouldn't work they're unsustainable

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so we can do that but it's funny in his model he did this sort of like it was like a mckinsey

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person sort of got it it's like they do make uh it it almost mimics a power curve like it declines

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but it's like in this jagged stair step kind of weird way he's using exponential growth but

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decreasing it in a weird way to try to match a power curve and i've never heard him come out

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and and say for sure or say that it clearly seems like this is uh you know uh matching a power

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growth. But one more thing about this, which is highly interesting, and I don't know how much time

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we have to go in this episode, but this is going to have implications for the way that Bitcoin

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interacts with the TradFi system. And the jury is way still out on this fact. Okay. So, um,

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you want me to share a, share a chart? I've got too many questions for you. Can we hold off on

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that just for one second? Cause I want to know the answer to, or your answer to that, but just

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quickly before we never got onto the organism piece and I'm interested to know how this works

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in like the natural world. Yeah. So, um, you can look at, uh, just as a very, very simple example,

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you look at like a chart of mammals, like from, you know, a mouse to an elephant to a whale,

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the the calories that they need will scale proportionally Okay so it not that though a whale is whatever X times bigger than a mouse

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that a whale or an elephant, for example, is easier than a whale,

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that an elephant will also need X times amount of calories.

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It's actually proportionally less as the animal gets proportionally bigger.

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And again, just trying to short circuit a lot of the math,

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everything, the word that you need to understand there is sustainable. It's a sustainable,

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it's a sustainable growth rate. It's not, it's not all the way through, you know, sort of this

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exponential curve, which is just, there's a, I think Jeffrey West actually does this in his book

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as well. There's the example of Godzilla, like anyone who knows basic stats would understand

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and basic physics that some, someone like something like Godzilla is, is mathematically

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impossible. It would literally, if there was an organism that big, first of all, it would need

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like a mountain of food to keep it up. And its weight would just collapse it on itself.

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So it has to do with physics, has to do with gravity, has to do with nourishment. It just

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doesn't work that way. It's just nature. It just doesn't work that way on the planet that we live

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in. So again, the words, if there's two words that I can give to the listeners and to you about

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the power curve, about the power law. And I like to say power curve because for some reason,

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law triggers people, even though that's the technical term. The two words are proportionate

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and sustainable. That is the growth that is exhibited in a power relationship, whether it's

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organisms, networks, or Bitcoin. And that's a good thing, not a bad thing. It's a very good thing.

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So if you could calculate the calories that a mouse needs and the calories that an elephant

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needs and then you found out the mass of like a tiger could you with the power curve could you

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calculate the calories that a tiger needs based just on the math in the power curve yeah it would

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just be a straight line it would be a straight line through on log log so not log linear but you

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would have like calories and mass and you put them in log log space you line up the different sizes

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of the animals and you'd have a straight line cut right through it. So that would be, that would be

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a power relationship. So another tell, another tell, by the way, we didn't talk about this,

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that a relationship is a power curve is when you put it in log log, that is the y-axis and the x-axis

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in log log space, it's a straight line. Unlike all the first part of the show, which we talked

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about exponential geometric compound growth, which is the entire TradFi world. GDP, bonds, gold,

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S&P, all of that is a straight line. The trend line is a straight line on log linear. So that's

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the difference. That's the difference between the two. And so it's very fascinating. It's very

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interesting. We've never seen it before, in fact, in TradFi, that there's been an asset that grows

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the way that Bitcoin grows. Okay. Just lastly, before we get onto the actual chart, I want to

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know your take on what this means for how Bitcoin is going to interact with the traditional financial

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world. I'd rather show you some charts as I talk about that, but I absolutely say that the jury

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is still out there because TradFi is huge. The dollar itself is still huge, even though everybody's

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the bond vigilantes have been out for decades if you've been reading any gold newsletter and

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um yeah interest rates are going up maybe the dollar is going to get uh you know for some rough

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years but so is the russian ruble so it's just um it's it's not it's not clear how necessarily

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you know what i would prefer of course is the bitcoin vision and everything but basically the

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way i would sum it up and we'll get to some charts is i think one of two things is going to happen

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and explaining that is going to be easier with the chart. But it's either Bitcoin as a power

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law asset gets pulled into an exponential asset, which actually is fine for Bitcoiners because the

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price is even going to grow faster. All right. As I remember, I told you power growth slows over

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time, exponential stays constant. So it's actually, but again, that's not the world that I would

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imagine a lot of the purists would like, including myself. So if Bitcoin just turns into an exponential

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asset, then it's just like everything else. It's like gold. Another possibility, though,

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is if people start to understand the nature of Bitcoin, the nature of scarce satoshis,

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that these can't be printed, that fiat interest might not make as much sense on these scarce

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satoshis, which become more scarce and more scarce every year, then it's possible that Bitcoin

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as a power curve could pull the entire TradFi exponential curve into power. And that is the

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mind-bending thing that would be perhaps the philosophical thing with what hyper-Bitcoinization

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actually looks like. Are we on a Satoshi standard? The big X factor here, and I've said this a lot

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on my streams, big X factor to me, and it goes back to what I said at the beginning, is the nature

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of credit because you cannot, you cannot, it's mathematically impossible. You know, I posit this

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to any mathematician listening to this. Draw me a loan instrument that works in power growth.

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It does not work in power growth, but it's just not the nature of a credit instrument. Credit

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instruments work in exponential growth. They work in geometric growth, compounding growth,

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just like the rest of the TradFi system. So why is that? Is that because interest would have to

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drop constantly? Correct. So don't think of an annuity because that's kind of a little bit

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more complicated, but it's still, it's still the same idea. But, um, it's just think about something

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that just think about the same example I said before, the 10% growth rate from interest. Okay.

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In your native fiat unit, if you're going to get 10% every year, every year, every year,

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you're just going to double every 10 years. Bitcoin doesn't do that. The growth rate of

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Bitcoin, which is a power growth rate, declines over time. So I've thought about this a lot. I've

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thought about modeling it and showing it on my stream. I haven't even done it yet, but

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maybe something like simple interest over the short term could work a little bit.

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And by the way, this is going to have huge implications for TradFi and for stuff that

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Saylor's doing, for example, because all his instruments pay a fixed 10%. But Bitcoin is not

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fixed at a 38% growth. This is a challenge for him. Again, he's doing wonderful things. I just

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saw a tweet, maybe from Steven as well, that showed that the last purchases that they just

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made over the course of a day were more than miners would make with their latest. I don't

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think it was the Euro interest or the Euro instrument. Maybe it was actually, but which

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they just released. Anyway, it's amazing the amount of coins that he's accumulating, but he's

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also accumulating a lot of debt in fiat units that are fixed, fixed, fixed, fixed, constant.

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And the nature of Bitcoin is it does not grow in a fixed rate. It just does not. I've seen TA

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TradingView folks try to do these straight lines with Bitcoin on a log scale. I imagine every

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listener knows that that doesn't work. You just know that when you put that Bitcoin price over

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So the entire life of Bitcoin on log scale, log linear, you get that gentle curve.

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That's what a power curve looks like on log linear.

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If you do a log log, you'll get a straight line, but that's a different thing.

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Does that make sense?

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It does make sense.

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So this might be really naive to think that I could even sort of suggest an answer, but

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would the answer not be just a price interest in sats?

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uh if you price interest in sats you're uh you can absolutely do that and then we're in a satoshi

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world um but the nature of the satoshis themselves does not as as everybody knows they do not

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increase exponentially they don't in fact they decline exponentially which is weird they do

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So there's been a ceiling on how much credit can actually be issued.

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I mean, theoretically in SATs, unless you want to allow, and by the way, this can totally

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happen.

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You can allow certificates in Satoshis, and everybody knows that there's just not enough

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Satoshis to actually back and those things.

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So it's open.

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In my mind, it's open.

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But for sure, 100%, it would be basically foolish to have, well, before I say the foolish part, for sure, everybody knows that in the TradFi system, there's more and more currency units issued every year.

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Yeah, on the margin, you might actually have to destroy the money supply a little bit, and we can show you curves of that as well.

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But most of the time, the money supply increases at 7%, 10%, 12% per year. And that's a fixed number. So again, the money supply is doubling every seven. In my monetary base, exhibits show that the money supply doubles even a little bit less than six years globally worldwide. So in native unit terms.

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so that's that's how fiat works everybody knows that they increase and then everybody knows

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looking at bitcoin that's not how bitcoin works in fact bitcoin declines the rate of satoshi's

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declines exponentially at something like 16 a year so every four years it's uh 16 per year

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but then it halves so i mean the 16 a year represents the having a 16 declining declining

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satoshis um so that's that's just complete everybody knows that that's a completely different

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model than what fiat does so um yeah that's that's that's how it looks all right we should

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get into the chart um and as you're going through this one of the questions i want to know your

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answer to is if you had to put like a probability on it do you think bitcoin does pull tradfire into

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Bitcoin or do you think it works the other way around? Yeah. So first, uh, I do think that that's

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a good way to phrase it. And I haven't heard anybody else in the power crew, uh, phrase that

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like this. Uh, I've been wanting to talk to Steven and Giovanni and some of these guys, uh,

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seen as another very good, um, he's a Harvard, uh, guy that's, that's into the power curve.

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So if I had to put a probability on it, that's a good question, actually.

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Um, I'd say right now, right now, the probability is that Bitcoin gets pulled into the TradFi world.

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That's just the world that we live in.

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That's the nature of coercion.

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It's the nature of fiat money laws.

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Uh, but I also think the future is unpredictable.

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gosh and i can i can totally see i can totally see a world where you know

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the accumulating satoshis for even a government is so important that people understand that you

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know you can't just keep printing this money it's it's worthless the bonds become less let's not

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even say worthless, but let's just say less valuable over time relative to Bitcoin. And so

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I think it's possible that we could get into a Satoshi world where Bitcoin is still, the growth

402
00:35:08,490 --> 00:35:13,210
of the network itself is this power curve, sustainable proportionate growth, and everybody

403
00:35:13,210 --> 00:35:18,310
starts to accept it, even governments. I absolutely think that is possible. It's the here to there,

404
00:35:18,530 --> 00:35:25,330
right? That's the most difficult thing for me to grasp. And I would say anybody who's

405
00:35:25,330 --> 00:35:29,470
lying if they, if they would tell you otherwise. I mean, I I've heard Saylor speak in conferences.

406
00:35:29,470 --> 00:35:36,130
I mean, he's, he's even, uh, offhand say like, you know, yeah, I would like, I would like all

407
00:35:36,130 --> 00:35:41,690
the bureaucrats in Washington to see it my way. Uh, you know, many of them don't at the moment

408
00:35:41,690 --> 00:35:46,390
and they have, uh, he hasn't said it. I'm now putting words into his mouth, but they have the

409
00:35:46,390 --> 00:35:51,970
power basically to court. I mean, you know, who's to say that the United States might not say a

410
00:35:51,970 --> 00:35:56,550
couple of years from now, your Bitcoin stash is in the national security interest of the United

411
00:35:56,550 --> 00:35:59,690
States. We're just going to take that property. That's not a good thing. That's definitely not a

412
00:35:59,690 --> 00:36:06,210
good thing. Not for property rights, not for anything. And that's going to give more authority,

413
00:36:06,430 --> 00:36:11,110
not in a good way of that term. It's going to give more authority to the dollar if that happens.

414
00:36:11,450 --> 00:36:15,950
And it could happen. Again, that's a dark thing to say, but everybody knows that that's been

415
00:36:15,950 --> 00:36:21,890
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the website is mina.b.tc and use code wbd for 10 off and i would guess like from sales perspective

452
00:39:09,750 --> 00:39:14,550
perspective that's why he would want the u.s government and other institutions getting

453
00:39:14,550 --> 00:39:19,050
involved in Bitcoin because if everyone has Bitcoin, he's not the honeypot. Right. But

454
00:39:19,050 --> 00:39:25,330
everybody knows as well, if everybody's involved in Bitcoin and Bitcoin is, you know, you seriously

455
00:39:25,330 --> 00:39:32,050
understand that Satoshis are more and more scarce, less and less prevalent as far as the mining is

456
00:39:32,050 --> 00:39:36,990
concerned every year. That's going to have implications for the money printer. It's going

457
00:39:36,990 --> 00:39:41,330
to have implications for how we think about value in the future. And it's really, yeah,

458
00:39:41,330 --> 00:39:45,190
it's a really big deal. So that's how I actually frame it. And I haven't heard anybody else

459
00:39:45,190 --> 00:39:50,310
frame it this way. But in my view, it's either TradFi pulls Bitcoin exponential.

460
00:39:50,910 --> 00:39:54,670
You might see some big Bitcoin numbers there, but that's not that exciting. That's like digital gold

461
00:39:54,670 --> 00:40:00,050
in the worst way. Or Bitcoin pulls TradFi power and we're growing on a sustainable,

462
00:40:00,730 --> 00:40:05,590
open network that everybody agrees on. And even the people that own the guns

463
00:40:05,590 --> 00:40:09,590
in some way are going to understand

464
00:40:09,590 --> 00:40:12,490
that they can't buy more guns with printed money.

465
00:40:12,950 --> 00:40:13,490
That's how I'd say it.

466
00:40:14,890 --> 00:40:17,270
I've said this about 50 times on the show at this point,

467
00:40:17,390 --> 00:40:19,730
but something Thomas Pacquiao from PubKey said to me

468
00:40:19,730 --> 00:40:21,530
is like, we're all going to be rich and depressed

469
00:40:21,530 --> 00:40:22,430
because the project failed.

470
00:40:22,530 --> 00:40:26,270
And that seems like the traditional finance world

471
00:40:26,270 --> 00:40:28,330
pulling Bitcoin into it, that's the outcome.

472
00:40:28,970 --> 00:40:30,770
I saw that episode with Thomas, actually, or one of those.

473
00:40:31,090 --> 00:40:32,710
I would agree with that sentiment.

474
00:40:32,810 --> 00:40:34,470
I would say that sentiment, what he just said,

475
00:40:34,470 --> 00:40:40,350
is my, that's another way of saying TradFi pulls Bitcoin exponential. You might like that number.

476
00:40:40,710 --> 00:40:47,730
You may like seeing Bitcoin increase at 20% a year, every year on a trend, but that's not what

477
00:40:47,730 --> 00:40:51,510
we don't get the promise of the full promise. Most of us are here for. Yeah. Yeah. Yeah.

478
00:40:51,910 --> 00:40:53,690
All right. Let's do the chart. I want to see it.

479
00:40:55,510 --> 00:41:00,210
All right. So here's my website again. Just this is the only chart I have up at the moment. I've

480
00:41:00,210 --> 00:41:04,370
read on my website many times, but this is the old power curve. This is log linear.

481
00:41:04,470 --> 00:41:08,970
all right this is just the price of bitcoin you can see it on my chart this is monthly frequency

482
00:41:08,970 --> 00:41:16,610
because it's a lot of data uh we'll do more detail in a second now here's log log okay so

483
00:41:16,610 --> 00:41:24,050
key thing to understand and i'll say this one more time is power curves are straight lines how you

484
00:41:24,050 --> 00:41:28,810
know it's a power curve this is a straight line on a log log curve so here if it was a straight

485
00:41:28,810 --> 00:41:32,690
line on log linear that would be an exponential but it's not it's curved it's clearly curved

486
00:41:32,690 --> 00:41:39,310
but it's a straight line on log log that's a power curve the next thing to understand is again

487
00:41:39,310 --> 00:41:45,370
you see dates here you see like 2010 and then you know further away 2012 but as we get closer

488
00:41:45,370 --> 00:41:49,970
and this one actually is not short as well but the dates become compressed basically like

489
00:41:49,970 --> 00:41:56,590
2023 march is very close to you know 2024 march whereas here it's like way farther away at the

490
00:41:56,590 --> 00:42:02,050
beginning of the the axis so again that's that's the effect of of the nature of putting it in log

491
00:42:02,050 --> 00:42:08,930
but it's important to understand that it's not the dates here that go into the formula

492
00:42:08,930 --> 00:42:15,330
the power curve formula it is days it is days since the genesis block and so another way of

493
00:42:15,330 --> 00:42:20,650
saying this and i don't think i actually said this part yet uh you can't really derive this

494
00:42:20,650 --> 00:42:25,630
from the formula you have to back into this but i like thinking about doubling time so power curves

495
00:42:25,630 --> 00:42:30,130
do not have a fixed doubling time like like exponential but we can still translate this

496
00:42:30,130 --> 00:42:36,090
into something like doubling, what does it mean? And the number is 13%. So that's that proportional

497
00:42:36,090 --> 00:42:43,610
growth. So you have it here on this chart. It's 13%, 12.7%, 12.8%. So what it means is for every

498
00:42:43,610 --> 00:42:53,610
increase of 12.8% to 13% in the life of Bitcoin, the price doubles or the adoption doubles. That's

499
00:42:53,610 --> 00:42:58,790
the definition of the power curve as I describe it, as I've found it. Other people, if they run

500
00:42:58,790 --> 00:43:04,390
numbers, they're going to get very, very similar numbers. So let's describe that now. When Bitcoin

501
00:43:04,390 --> 00:43:10,590
was 60 days old, 60 days old, roughly, roughly, and of course we didn't have a price at the time,

502
00:43:10,630 --> 00:43:15,510
but roughly what was happening is the adoption was doubling every seven days, every seven days.

503
00:43:15,510 --> 00:43:20,490
For every 60 days, then seven more days, the adoption of the price doubles. When it was 600

504
00:43:20,490 --> 00:43:27,910
days old, the price doubled every 70 days or so. And now we're a little over 6,000 days

505
00:43:27,910 --> 00:43:35,970
and Bitcoin is doubling every 700 days, aka every two years. So that is, again, another way to

506
00:43:35,970 --> 00:43:42,690
describe power growth. Totally different, totally different than exponential growth. Exponential

507
00:43:42,690 --> 00:43:47,290
growth, you get that fixed number. You tell me 10% growth, double every 7.2 years, double every

508
00:43:47,290 --> 00:43:51,110
7.2 years, double every 7.2 years. That's how TradFi works. That's how credit works. That's how

509
00:43:51,110 --> 00:43:56,410
banks work. It's not how Bitcoin works. So let's, did you have anything there?

510
00:43:56,410 --> 00:44:02,850
yeah i was just gonna say so based off this um what is the kind of fair price right now

511
00:44:02,850 --> 00:44:09,250
yeah so here's the here's a curve i show every day on my stream uh this is this is the price

512
00:44:09,250 --> 00:44:17,070
we got this out long into the future for fun and i have here the uh 10th to the 90th percentile

513
00:44:17,070 --> 00:44:21,730
and i do things you know maybe people have seen the quantile regression model that plan c or cena

514
00:44:21,730 --> 00:44:26,730
have done. There you'll get a nice smooth curve in the back because you're finding different

515
00:44:26,730 --> 00:44:32,270
percentiles to meet everything. I like to keep it simple. People like one number. So I like to look

516
00:44:32,270 --> 00:44:36,970
at multiples over or under the trend at the time. And to keep the multiples fixed, you get a little

517
00:44:36,970 --> 00:44:42,930
wavy action here, but you can still do it smooth in the future. So bottom line is, where are we

518
00:44:42,930 --> 00:44:49,130
right now? Let's just go right now. Right now, as you can see, we're under trend. All right. Not

519
00:44:49,130 --> 00:44:57,050
much, but we are under and a few things to say. So price, when I pulled it into the model this

520
00:44:57,050 --> 00:45:02,550
morning, actually, I should have the seventh here. No, I don't know why I didn't pull in.

521
00:45:02,610 --> 00:45:09,050
But anyway, yesterday's price 101. Basically the same price. Yeah, basically the same price.

522
00:45:11,670 --> 00:45:17,530
101. Okay, so the regression itself, the power curve is 119. My curve, some people are going to

523
00:45:17,530 --> 00:45:19,910
have a little bit different numbers. Other people are going to have different numbers.

524
00:45:21,150 --> 00:45:27,210
But notice that the curve itself, if we look at these percentiles, it's somewhere between the

525
00:45:27,210 --> 00:45:35,110
50th. Sorry, the price. The price is between the 50th and the 60th percentile. So you see 91,

526
00:45:35,110 --> 00:45:45,530
898, and 113, 777 is the 60th percentile. The curve itself is between the 60th and the 70th

527
00:45:45,530 --> 00:45:50,670
percentile. And it's about so that we can actually say that the power curve, interestingly, in

528
00:45:50,670 --> 00:45:56,590
Bitcoin's case, is about a two thirds sort of observation. So two thirds of the time, price is

529
00:45:56,590 --> 00:46:02,730
actually relative to the trend below it, one third of the time above it. And it's always exciting when

530
00:46:02,730 --> 00:46:07,730
it's above it, because first of all, that's a minority of the time. But it's also every day

531
00:46:07,730 --> 00:46:12,770
that it's above it, you know, unlike a rigid stock to flow model, which again, we can talk about that.

532
00:46:12,770 --> 00:46:26,220
this just adapts over time So it going to every time we above this curve we pull it up a little bit And every time we below that black line we pull it down a little bit That just the nature of how it goes That the model That trying to model what Bitcoin does

533
00:46:26,720 --> 00:46:31,600
So we are a little bit below it. That's not as fun, but we're not much below it. We're in about

534
00:46:31,600 --> 00:46:37,380
the 55th percentile. And by the way, 50th percentile means the median. So 50% of the time,

535
00:46:37,380 --> 00:46:43,220
that's the median. So that's where we are, Danny. That's where we are, about the 55th percentile.

536
00:46:43,540 --> 00:46:47,240
again, I just had Checkmate on the show yesterday.

537
00:46:48,020 --> 00:46:49,860
He's very good with the on-chain data,

538
00:46:49,940 --> 00:46:51,320
looking at, is this just a dip?

539
00:46:51,540 --> 00:46:55,800
Not, you know, he was even leaning into the idea

540
00:46:55,800 --> 00:46:56,800
without fully saying it,

541
00:46:56,820 --> 00:46:58,300
that this kind of looks like a dip.

542
00:46:59,120 --> 00:47:03,600
But, you know, I'm the same way as him.

543
00:47:03,600 --> 00:47:05,060
I make disclaimers all the time.

544
00:47:05,240 --> 00:47:08,520
Like, I do not day trade.

545
00:47:08,800 --> 00:47:11,380
I'm not here to, I'm just here to try to resolve

546
00:47:11,380 --> 00:47:17,040
the Maalox moments a little bit. Like bottom line, we're on trend. We're above the median.

547
00:47:17,040 --> 00:47:21,900
We're a little bit below the OLS, which is the power law, basically the ordinary least squares,

548
00:47:22,020 --> 00:47:27,260
the regression line, which is almost like saying the mean, slightly different, but basically it's

549
00:47:27,260 --> 00:47:32,660
like the mean. It's the best fitting trend that the price has done over the last 16 years. We're

550
00:47:32,660 --> 00:47:39,760
slightly below it. Now we look at these numbers. Let's see how far we could dip. So just before we

551
00:47:39,760 --> 00:47:44,500
do that can i just throw a couple of questions at you um can you just zoom right out so we can see

552
00:47:44,500 --> 00:47:54,940
the entire history of bitcoin on this yep so when i look at this obviously like 2013 2017 2011 there's

553
00:47:54,940 --> 00:48:00,560
these big peaks like way above that median line and then if you go to sort of the last few years

554
00:48:00,560 --> 00:48:07,240
we're staying much closer is this just like bitcoin maturing and and will it remain closer

555
00:48:07,240 --> 00:48:14,240
to that line as the sort of life cycle of Bitcoin increases. Yeah. So I, it seems to me that I'm

556
00:48:14,240 --> 00:48:19,560
about the last person standing that still says, I'm not saying that the cycles are not over,

557
00:48:19,980 --> 00:48:26,120
but I just, I find it curious or interesting that I've seen so many, you know, long-term

558
00:48:26,120 --> 00:48:30,520
Bitcoiners saying the cycles are over, the cycles are over, TradFi's here, Bitcoin IPO moment,

559
00:48:30,600 --> 00:48:33,260
which I actually liked that analogy a lot. I thought that was a great piece.

560
00:48:33,260 --> 00:48:41,020
It's a great analogy. I agree. I agree. I agree. And yet, and yet, we still have these statistics.

561
00:48:43,360 --> 00:48:49,260
I would say, you know, let's talk in six months. All right. Maybe it's a little bit longer,

562
00:48:49,380 --> 00:48:55,700
maybe a little shorter. But if in six months, this, you know, nice little green shaded area of the

563
00:48:55,700 --> 00:49:01,140
price growing in power terms is still between roughly, I don't know, the four and the eight

564
00:49:01,140 --> 00:49:05,620
here, that is the 40th percentile and the 80th percentile, then I would say cycles are over,

565
00:49:05,700 --> 00:49:11,040
or at least definitely the four-year cycle is over. But it's funny. I think I'm like,

566
00:49:11,540 --> 00:49:16,120
I'm not on Twitter so much, to be honest, so it might not be, but I've been saying every day on

567
00:49:16,120 --> 00:49:21,080
my stream, I'm not going to call it that it's over until it's over. And I know some people

568
00:49:21,080 --> 00:49:30,000
have done the math, like from trough to peak, we've now passed the average days of all the prior

569
00:49:30,000 --> 00:49:38,200
cycles together. I get all that. I get it. But like you said, every time there's been a pump,

570
00:49:38,260 --> 00:49:44,520
and it's true that this double pump in 2021 was kind of weird. But every time on this chart,

571
00:49:44,560 --> 00:49:49,460
we've been above the 90th percentile, which is fun. It's fun times. It's certainly Maalox

572
00:49:49,460 --> 00:49:57,180
moments for a lot of people, but we've had it. So I have not, I'm not saying I know for sure,

573
00:49:57,180 --> 00:49:58,820
This does not tell you timing.

574
00:49:59,080 --> 00:50:00,560
It just tells you relative risk.

575
00:50:01,040 --> 00:50:03,760
So I'm not saying that cycles are over.

576
00:50:03,900 --> 00:50:05,080
The four-year cycles are over.

577
00:50:05,260 --> 00:50:07,540
But I'm also not saying that they're not over.

578
00:50:08,680 --> 00:50:12,020
The hard thing with this, though, is what makes a cycle?

579
00:50:12,200 --> 00:50:15,920
What does it have to do to classify as a typical four-year cycle?

580
00:50:16,020 --> 00:50:20,700
Because, again, on this chart, it's barely been above the trend line this time.

581
00:50:21,100 --> 00:50:25,400
And so if we do go into a bear market, you would imagine that it's not going to be as volatile as the downside.

582
00:50:25,400 --> 00:50:29,960
side and does that mean the cycle's over or is that still the cycle continuing like this is where

583
00:50:29,960 --> 00:50:33,900
I think it gets tricky yeah no yes and yes I mean again I wouldn't I wouldn't be too complicated

584
00:50:33,900 --> 00:50:39,200
with it uh I think you're right yes and yes if we don't have a huge boom probably not a huge bust

585
00:50:39,200 --> 00:50:45,140
although again never say never no one knows um but here you can clearly see this was the start of

586
00:50:45,140 --> 00:50:52,360
the ETF run right so the ETFs were approved January February 2024 and you can clearly see

587
00:50:52,360 --> 00:50:57,800
and and uh james had you know verified this with a lot of the old coins they really came to life

588
00:50:57,800 --> 00:51:03,640
here and then for sure here all right when we got over 100k and the trump the trump pump and then

589
00:51:03,640 --> 00:51:08,460
you have you know liberation day dump and we're back up again but we're now there's a lot of

590
00:51:08,460 --> 00:51:15,540
softness so i totally understand and i would empathize with the idea that the cycles are over

591
00:51:15,540 --> 00:51:18,680
it's totally possible. I'm just saying

592
00:51:18,680 --> 00:51:21,500
every time

593
00:51:21,500 --> 00:51:25,840
we've been this 18, 20 months after the having

594
00:51:25,840 --> 00:51:28,700
eventually grandma gives a lot of money

595
00:51:28,700 --> 00:51:30,720
to her grandkids to buy Bitcoin.

596
00:51:31,560 --> 00:51:34,840
I know it's a narrative. I'm not looking

597
00:51:34,840 --> 00:51:37,020
at any trendline analysis. I'm just saying

598
00:51:37,020 --> 00:51:41,200
I am looking at trendline analysis. I'm not looking at

599
00:51:41,200 --> 00:51:44,520
TA analysis. I'm not looking at whatever they call

600
00:51:44,520 --> 00:51:49,600
the impulses and the ABC correction, all this Elliott Wave stuff, which I've heard some of

601
00:51:49,600 --> 00:51:53,440
these gold bugs for years on these newsletters, like this Robert Prechter guy, this deflationist,

602
00:51:53,660 --> 00:51:59,260
this Elliott Wave deflationist guy. It was never right. So I never put much stock into that stuff.

603
00:51:59,880 --> 00:52:06,180
But bottom line, sorry, I get all these tangents. I think it's possible. I think it's possible

604
00:52:06,180 --> 00:52:12,000
that we could have a nice boom here at the end of the year. Here's another thing, which is fun.

605
00:52:12,000 --> 00:52:19,960
uh fernando my old co-host uh and i about five years ago we interviewed um i was just thinking

606
00:52:19,960 --> 00:52:25,200
about this this morning now i'm now i'm uh blanking it's not jim rogers but who's the other guy

607
00:52:25,200 --> 00:52:31,760
guy that lives in asia mark faber it was mark faber uh we interviewed him you know the famous

608
00:52:31,760 --> 00:52:37,300
you know asian bull western bear and he was so angry i mean like as a lot of those guys like so

609
00:52:37,300 --> 00:52:42,400
you're like where is our gold run you know and he of course he says crypto he doesn't say bitcoin

610
00:52:42,400 --> 00:52:47,940
he's like all this money's going into crypto it's not going into gold that's a very uh famous sort

611
00:52:47,940 --> 00:52:52,840
of sentiment of gold bugs over the last 10 years i think they're having their time to shine now and

612
00:52:52,840 --> 00:52:58,180
i want to show you the same chart in gold ounces this is even more fun the the funny thing about

613
00:52:58,180 --> 00:53:02,620
that is i feel like bitcoiners are doing that now complaining all the money's going into gold and

614
00:53:02,620 --> 00:53:07,220
all the money's going into like ai stocks precisely and and they're they're right actually i think

615
00:53:07,220 --> 00:53:09,520
So there's real rotations here.

616
00:53:10,600 --> 00:53:15,680
You know, old Bitcoiners giving those coins away to Ibit and to new Wall Street investors.

617
00:53:16,580 --> 00:53:24,320
And old Bitcoiners probably moving into gold or to AI.

618
00:53:24,980 --> 00:53:30,340
Or just gold finally catching up from, you know, regular Trad 5.

619
00:53:30,460 --> 00:53:32,120
People thinking, okay, Bitcoin's done or whatever.

620
00:53:32,720 --> 00:53:34,920
The softness, maybe the four-year cycle's not happening.

621
00:53:34,920 --> 00:53:37,820
So all those narratives are actually, to some extent, true.

622
00:53:38,140 --> 00:53:39,220
But here's what's very interesting.

623
00:53:39,320 --> 00:53:43,920
If we look at the power curve in terms of gold ounces, Bitcoin price in gold ounces,

624
00:53:44,060 --> 00:53:44,660
it's very similar.

625
00:53:45,400 --> 00:53:51,980
So 95% R squared, that means 95% of the time the price moves around this line better than

626
00:53:51,980 --> 00:53:54,160
just a straight line average, which is obvious.

627
00:53:55,080 --> 00:53:56,720
That's the scientific definition of it.

628
00:53:56,720 --> 00:54:05,740
And we can see here that we are super cheap as far as Bitcoin priced in gold.

629
00:54:05,740 --> 00:54:18,480
So unlike here in the dollar chart, where we're just below trend and we have been hovering around trend basically for the last two years here, we haven't hit the trend line since 2022.

630
00:54:19,020 --> 00:54:19,180
All right.

631
00:54:19,240 --> 00:54:20,160
And it makes sense, right?

632
00:54:20,180 --> 00:54:22,140
At $4,000, $4,000 plus gold.

633
00:54:22,140 --> 00:54:31,860
and the actual price as of, let's call it the sixth, 25.39 ounces of gold per Bitcoin. The

634
00:54:31,860 --> 00:54:37,860
trend is 63. So almost a third, almost a third. I'm looking at this and I'm seeing

635
00:54:37,860 --> 00:54:46,540
from a gold bug's perspective, Bitcoin is on the trend, some of the cheapest that it's ever been.

636
00:54:46,540 --> 00:54:52,680
All right. We are at look at look at the percentiles now. 2026. Let me get back to the number.

637
00:54:53,740 --> 00:55:04,080
Twenty five point three nine ounces is under the 20th percentile, which is point four X the trend and above the 10th percentile, which is point three X the trend, which is 22 ounces.

638
00:55:04,620 --> 00:55:11,740
So in other words, extremely cheap. And yet and yet for as soft as you might think Bitcoin is relative to gold.

639
00:55:11,740 --> 00:55:21,020
Let's go back to 2022 to the puking, the SBF, you know, Terra Luna, all the disaster of, you know, the weak hands in 2022.

640
00:55:21,400 --> 00:55:23,120
How many ounces of gold do you see there?

641
00:55:23,700 --> 00:55:24,440
The actual prices?

642
00:55:24,760 --> 00:55:25,500
9.7?

643
00:55:26,100 --> 00:55:26,380
Yeah.

644
00:55:27,100 --> 00:55:37,560
So we are still, you know, nearly three times the value of gold from 2022.

645
00:55:37,560 --> 00:55:47,000
two, that to me shows enormous power curve growth for Bitcoin. The growth is still very strong,

646
00:55:47,100 --> 00:55:51,320
very fast, even though right now it's very weak relative to the trend. In other words,

647
00:55:52,400 --> 00:55:57,120
I really wonder how much longer the gold bugs, which are very similar, there's a lot of overlap,

648
00:55:57,260 --> 00:56:01,580
obviously, in these markets. I wonder how much longer they're going to hold their gold and see

649
00:56:01,580 --> 00:56:06,360
Bitcoin get to these cheap levels. So you think there's going to be a big rotation from gold to

650
00:56:06,360 --> 00:56:13,760
Bitcoin? I do. I personally do. Because again, it's just statistics. It is possible to say that

651
00:56:13,760 --> 00:56:19,440
gold really has been, I'm not using this as a real market manipulation term, but let's say

652
00:56:19,440 --> 00:56:25,420
suppressed over the last 15 years. It's just been out of favor. People are finally getting it.

653
00:56:25,420 --> 00:56:32,500
China's buying. A few things that don't jive with that in my view. First of all, government buying,

654
00:56:32,500 --> 00:56:38,700
which is the biggest buyers of gold, government gold holdings, is at the same very light 1.2%

655
00:56:38,700 --> 00:56:44,000
trend since 2008. If you do a trend line, I have this chart, I can pull it up. If you do a trend

656
00:56:44,000 --> 00:56:48,340
line on all the official gold ounces that governments have, it's not that much. I mean,

657
00:56:48,460 --> 00:56:57,700
it's increasing. It has been increasing since the GFC in 2008, 1% to 2% per year. That's the same.

658
00:56:57,700 --> 00:57:01,760
So where is this appetite coming? Where is this increase in the price coming?

659
00:57:03,400 --> 00:57:12,440
What also happens with the gold market and actually with any market, but not Bitcoin, which is great for Bitcoin, is we have the supply and demand functions.

660
00:57:12,440 --> 00:57:18,200
With Bitcoin, the supply is rigorous to the protocol because of the difficulty adjustment.

661
00:57:19,160 --> 00:57:26,860
The balance sheet budgets every 10, the balance sheet balance, the budget balances, that's

662
00:57:26,860 --> 00:57:27,300
what I should say.

663
00:57:27,340 --> 00:57:29,340
The budget balances every 10 minutes with Bitcoin.

664
00:57:29,880 --> 00:57:35,720
With gold, there's a lot of dislocation always, and it's always overshooting or undershooting.

665
00:57:35,860 --> 00:57:42,040
For example, a high gold price is going to bring in a lot of jokers to the gold industry.

666
00:57:42,040 --> 00:57:44,880
A lot of people that didn't care about it forever, but now care about it.

667
00:57:45,520 --> 00:57:52,420
Old mining projects that were completely unprofitable at $1,000 an ounce look pretty good at $4,000 an ounce.

668
00:57:52,560 --> 00:57:54,160
And that can work for a time.

669
00:57:54,780 --> 00:58:02,140
But there is still this mean reversion, which I don't see gold being immune from.

670
00:58:02,520 --> 00:58:03,740
Bitcoin is immune from that.

671
00:58:04,100 --> 00:58:07,280
We have a number of technology for Bitcoin, but gold is not immune to that.

672
00:58:09,520 --> 00:58:11,060
And by the way, here's the number.

673
00:58:11,060 --> 00:58:14,100
I have all the charts, but it's almost better to just talk about it.

674
00:58:14,560 --> 00:58:17,300
I think one of the really interesting things that's happened in gold this year is that

675
00:58:17,300 --> 00:58:23,160
Bitcoin, this, if you want to call it a cycle cycle, has not really attracted that much

676
00:58:23,160 --> 00:58:24,000
retail interest.

677
00:58:24,780 --> 00:58:26,780
But gold has had the retail FOMO.

678
00:58:26,860 --> 00:58:27,720
I'm sure you saw the pictures.

679
00:58:27,820 --> 00:58:29,060
I think it was actually in Australia.

680
00:58:29,240 --> 00:58:35,460
There was a huge queue out onto the street at a gold bullion place, people literally queuing

681
00:58:35,460 --> 00:58:36,740
up in the street to go and buy gold.

682
00:58:37,160 --> 00:58:39,880
Yeah, Bitcoin has seemingly flown under the radar.

683
00:58:40,420 --> 00:58:40,860
Nice.

684
00:58:41,060 --> 00:58:42,120
I did not see that.

685
00:58:42,480 --> 00:58:43,440
Makes perfect sense.

686
00:58:43,720 --> 00:58:44,340
And yeah.

687
00:58:46,000 --> 00:58:48,200
Let me just show you, you'll like this.

688
00:58:48,560 --> 00:58:50,320
So just while you're pulling that chart up,

689
00:58:50,400 --> 00:58:51,760
one of the things that this has made me think,

690
00:58:51,820 --> 00:58:53,140
getting back to the cycles thing,

691
00:58:53,480 --> 00:58:57,900
is I think your sort of power law take on this

692
00:58:57,900 --> 00:59:01,960
actually plays into a lot of the cycle people's play,

693
00:59:02,280 --> 00:59:04,060
which is that like a lot of people have said,

694
00:59:04,120 --> 00:59:06,740
maybe cycles aren't over, maybe they're elongating.

695
00:59:06,740 --> 00:59:09,540
And elongating is basically just saying power law.

696
00:59:10,340 --> 00:59:10,820
Yeah.

697
00:59:11,060 --> 00:59:29,860
Yeah, well, the power law, again, it doesn't, it actually doesn't predict the time. It just predicts, it just tells you the risk. So right now, theoretically, in dollar terms, we're at fair value. In gold, we're cheap. If you have gold, Bitcoin's looking pretty cheap. And again, I just want to harp on that point.

698
00:59:29,860 --> 00:59:36,880
it would be just statistically an anomaly if Bitcoin goes back to say 10 ounces of gold,

699
00:59:36,900 --> 00:59:43,100
like it was in 2022, right? I mean, that's just, that's, that's a, that's, that's completely

700
00:59:43,100 --> 00:59:49,280
different. And it's not, that's not what, uh, the markets project, let's say for the longterm.

701
00:59:49,500 --> 00:59:57,200
And so here's the example of projecting for the longterm. So here's gold over, uh, 55 years.

702
00:59:58,160 --> 01:00:03,240
Now, a lot of people, when they do trends of gold, just so you know, and I'm sure you've seen this,

703
01:00:03,520 --> 01:00:09,660
they pull like $35 an ounce in August 1971, and it was actually 42. That's a statutory rate at the

704
01:00:09,660 --> 01:00:15,020
time. That's what the US still values their gold at is 42 bucks an ounce. So they take this,

705
01:00:15,420 --> 01:00:19,980
and then they take the price today, and they get a number that's pretty gangbusters right now.

706
01:00:19,980 --> 01:00:24,220
It's still not over 10%. I don't actually know the latest. It might be closer to nine or something

707
01:00:24,220 --> 01:00:28,380
right now, if you do the compound growth, that exponential growth, but that's cheating a little

708
01:00:28,380 --> 01:00:32,180
bit because you're ignoring the peaks, the troughs. What you got to do with all this stuff,

709
01:00:32,580 --> 01:00:37,160
and this is one of the things that really harp on my channel, is it's not about picking peaks

710
01:00:37,160 --> 01:00:42,200
and troughs and everything. It's take the trend, take the trend. And okay, so here's a very

711
01:00:42,200 --> 01:00:47,560
beautiful, perfect, exponential trend line slicing through the gold market on log scale.

712
01:00:47,800 --> 01:00:50,820
This is what we talked about at the top of the show. This is all TradFi works like this.

713
01:00:50,820 --> 01:01:13,900
So what's the slope of that trend? 5.3% CAGR. It's actually not that much to write home about. Now, it might be better. It might in the future. But let's look where we are now relative to literally the max that we've ever seen. We're not there yet. And we could get there. I absolutely think we could get there. But we didn't get there in 2011. And it's possible that we could do something like this.

714
01:01:13,900 --> 01:01:23,320
Like this, this was so early in the data that, you know, getting so what I'm what I'm to be clear, what you're seeing here, this this line didn't exist at the time.

715
01:01:23,580 --> 01:01:26,680
So what you're seeing is sort of the evolution of how the trend would grow.

716
01:01:27,360 --> 01:01:31,800
But it was always this red line is 2.54x the trend at the time.

717
01:01:32,800 --> 01:01:39,720
So it's possible that right now we could just blow through this and to keep us at our 2.54x the trend, which is 100.

718
01:01:40,080 --> 01:01:42,200
You know, that's basically the max observation.

719
01:01:42,500 --> 01:01:43,560
We could do that here.

720
01:01:43,560 --> 01:01:48,420
we could pull even higher i could totally see a world where it goes i think that what was the

721
01:01:48,420 --> 01:01:54,400
price there about five thousand dollars uh yeah five five thousand is that number so five thousand

722
01:01:54,400 --> 01:01:59,680
the number gets to five thousand dollars yep but let me show you now and i have a chart like this

723
01:01:59,680 --> 01:02:05,020
for ai as well or basically the top tech stops tech stocks in the u.s let's just look at this

724
01:02:05,020 --> 01:02:09,560
period which is from actually not even this period just from this period from 2022

725
01:02:09,560 --> 01:02:15,640
too. It's the best R-squared, the fastest trend line I can show you for gold, the most favorable,

726
01:02:15,760 --> 01:02:21,940
the Peter Schiff curve, basically. And it's right here. You started here, actually, in December.

727
01:02:23,440 --> 01:02:28,540
No, October. Where did I start it? October 2023 at that dip and then grow.

728
01:02:30,780 --> 01:02:35,020
It's a curve that Peter Schiff has been waiting his whole life for. It would be amazing,

729
01:02:35,020 --> 01:02:41,080
all the rest. Let's see how long it would take to get through the all-time trend, top-level

730
01:02:41,080 --> 01:02:50,360
observation ever. It would be $5,351 an ounce. That would be the number. So totally possible

731
01:02:50,360 --> 01:02:55,880
we can get there, right? I'm absolutely saying it's possible. What is highly improbable,

732
01:02:56,040 --> 01:02:59,080
and we can show this with the market cap of gold, it would be like the size of the US

733
01:02:59,080 --> 01:03:06,820
debt by 2038 or something. What's highly improbable is that we go, again, compound growth,

734
01:03:07,460 --> 01:03:14,900
41. I didn't even say, what's the slope of that curve? 41.3% CAGR. That's what Bitcoin does right

735
01:03:14,900 --> 01:03:20,200
now. Yeah, that's what Bitcoin does right now. And Bitcoin's slowing. So for that just to keep up,

736
01:03:20,800 --> 01:03:25,860
you're at $100,000 gold by 2035. Peter Schiff would love this.

737
01:03:25,860 --> 01:03:27,320
Bitcoin's tiny compared to gold.

738
01:03:27,480 --> 01:03:28,340
That makes no sense.

739
01:03:28,600 --> 01:03:28,760
Precise.

740
01:03:28,900 --> 01:03:29,740
It makes no sense.

741
01:03:30,460 --> 01:03:31,960
It just doesn't make any sense.

742
01:03:32,120 --> 01:03:35,320
And you have to think about the supply and demand dynamics that I said.

743
01:03:36,960 --> 01:03:39,560
They say in the commodity industry, right?

744
01:03:39,580 --> 01:03:41,300
It's like the cure for high prices is high prices.

745
01:03:41,400 --> 01:03:42,960
The cure for low prices is low prices.

746
01:03:43,340 --> 01:03:45,360
But it's depending on your perspective.

747
01:03:45,540 --> 01:03:48,780
So if you're a consumer, the cure for high prices is high prices.

748
01:03:48,780 --> 01:03:51,940
Because if you just want to buy gold or you want to buy jewelry or whatever,

749
01:03:51,940 --> 01:04:00,800
you know if prices stay so elevated relative to the cost of mining you're just going to get more

750
01:04:00,800 --> 01:04:07,060
entrance into the market more competition price will come down conversely if prices are so low

751
01:04:07,060 --> 01:04:16,360
relative to uh to uh mining then you're going to get more producers uh coming in and uh you know

752
01:04:16,360 --> 01:04:21,020
figuring out or sorry you're getting more consumers more consumers coming in and buying until the

753
01:04:21,020 --> 01:04:28,060
price rises. So that's that dichotomy, right? So the cure for high prices is high prices in the

754
01:04:28,060 --> 01:04:34,140
case of gold. So it's a long-winded way of saying I don't see this lasting, let's say, more than,

755
01:04:34,280 --> 01:04:39,960
I don't know, two years, three years. It totally could blow through the old record, which would be

756
01:04:39,960 --> 01:04:44,660
$5,300 an ounce, maybe it goes to $10,000, maybe it goes to $15,000. On this trend, it would only

757
01:04:44,660 --> 01:04:52,640
take till 2029 at some point uh the numbers are so wacky compared to all the other base

758
01:04:52,640 --> 01:05:00,580
level things like um like government balance sheets right it just it it wouldn't it wouldn't

759
01:05:00,580 --> 01:05:05,240
it wouldn't hold in my even if it makes it to 2029 it's not going to make it to 2039 on that curve

760
01:05:05,240 --> 01:05:09,620
right precisely so it's going to go back to this it's going to revert to the mean at some point so

761
01:05:09,620 --> 01:05:12,860
Have you ever done a log log power lower on gold?

762
01:05:15,060 --> 01:05:16,500
No, it wouldn't fit.

763
01:05:16,620 --> 01:05:17,280
Actually, no, I have.

764
01:05:17,400 --> 01:05:18,980
Let's see if I can pull it up for you.

765
01:05:20,040 --> 01:05:21,920
Just to show you how it does not fit.

766
01:05:23,000 --> 01:05:26,280
So here's a power curve on gold.

767
01:05:26,460 --> 01:05:29,680
Now, I can't log log is sort of bad on my software here.

768
01:05:29,740 --> 01:05:30,800
I can do it at my break.

769
01:05:31,840 --> 01:05:33,280
Yeah, so here's log log.

770
01:05:34,700 --> 01:05:35,180
All right.

771
01:05:36,000 --> 01:05:37,440
Don't watch these dates here.

772
01:05:37,440 --> 01:05:37,800
It's annoying.

773
01:05:37,900 --> 01:05:38,860
The tooltip will be correct.

774
01:05:39,620 --> 01:05:43,420
But basically, you're spread out way here back in the 70s.

775
01:05:43,580 --> 01:05:45,200
There's a lot of distance between points.

776
01:05:45,340 --> 01:05:47,020
And then as we go here, you compress and compress.

777
01:05:47,440 --> 01:05:49,760
See that it's a straight line, right?

778
01:05:50,020 --> 01:05:51,160
It's a long, long straight line.

779
01:05:51,580 --> 01:05:55,060
It's a little bit weird because of the little bit not straight here.

780
01:05:55,180 --> 01:05:56,240
But basically, it's a straight line.

781
01:05:56,320 --> 01:05:57,600
This is a power curve, right?

782
01:05:58,300 --> 01:06:04,620
So, but taking that off, you get that gentle curve, which is faster at the beginning.

783
01:06:05,200 --> 01:06:09,420
You can see it doesn't fit well for gold.

784
01:06:09,620 --> 01:06:10,100
Yeah.

785
01:06:10,620 --> 01:06:14,040
Actually, R squared is better than I would think relative to the exponential.

786
01:06:14,980 --> 01:06:16,340
But it's nothing like the Bitcoin mom.

787
01:06:17,200 --> 01:06:17,500
Right.

788
01:06:18,000 --> 01:06:18,940
It's nothing like it.

789
01:06:19,060 --> 01:06:21,280
And also, it's not doing that.

790
01:06:22,780 --> 01:06:25,260
Nothing in the gold environment makes sense there.

791
01:06:25,360 --> 01:06:26,120
Like gold increases.

792
01:06:26,660 --> 01:06:29,040
Gold ounces come out of the ground at 1.8% per year.

793
01:06:29,160 --> 01:06:31,400
That's pretty been a fixed number for about 200 years.

794
01:06:32,060 --> 01:06:33,360
That's exponential growth.

795
01:06:33,700 --> 01:06:34,300
It's compound growth.

796
01:06:34,380 --> 01:06:35,320
It's just like the rate of interest.

797
01:06:36,100 --> 01:06:38,080
So, yeah.

798
01:06:38,080 --> 01:06:39,500
I could keep going on all these topics.

799
01:06:39,620 --> 01:06:40,580
What should we cover next?

800
01:06:40,960 --> 01:06:45,540
The thing that I would be interested in is your read on the AI stuff that's happening

801
01:06:45,540 --> 01:06:46,040
right now.

802
01:06:46,160 --> 01:06:48,820
Because there's a lot of people calling for like a huge bubble in that.

803
01:06:48,940 --> 01:06:50,500
Like, I want to know what your data says.

804
01:06:50,940 --> 01:06:51,080
Yeah.

805
01:06:51,160 --> 01:06:56,380
So I would say the exact same thing that this analysis I made for gold is going to happen

806
01:06:56,380 --> 01:06:56,900
with AI.

807
01:06:58,700 --> 01:07:06,040
Again, I don't know the true, let's say, stabilized cost for building a data center

808
01:07:06,040 --> 01:07:07,540
that would make sense.

809
01:07:08,080 --> 01:07:13,460
Um, you know, that's not crazy, but what I can tell you right now is if you look at the,

810
01:07:13,460 --> 01:07:19,200
here's the top eight market caps of us stocks, including, you know, Broadcom and NVIDIA,

811
01:07:19,300 --> 01:07:22,400
which are two chip makers, which obviously are going gangbusters right now.

812
01:07:22,820 --> 01:07:26,460
Here's the, here's the top eight market caps in the world.

813
01:07:27,680 --> 01:07:29,280
Uh, tech, us tech.

814
01:07:29,680 --> 01:07:34,000
I think TSMC might, might be a bigger than a couple of these companies, but I'm just

815
01:07:34,000 --> 01:07:34,980
sticking with us tech.

816
01:07:34,980 --> 01:07:46,060
so we're at 23.2 trillion that right now is the is the top that's about eight yeah 23.2 trillion

817
01:07:46,060 --> 01:07:54,420
dollars let's look at this on liberation day earlier this year is 15 trillion before liberation

818
01:07:54,420 --> 01:07:58,060
day when trump got elected and everybody thought he was going to save the world 18 trillion

819
01:07:58,060 --> 01:08:08,340
so higher it went from 18 down to to uh maybe even 13 13.8 and then you know just back

820
01:08:08,340 --> 01:08:16,960
two years into the biden administration uh it was 6.8 trillion total total so let's put some

821
01:08:16,960 --> 01:08:22,840
trend lines on this and i'll show you okay so the same same deal let me know if you have a question

822
01:08:22,840 --> 01:08:27,160
on this one pulling up the chart that's all good i just i just uh i need to see these trend lines on

823
01:08:27,160 --> 01:08:35,020
Yeah. So you can see, obviously, booms and busts and Maylocks moments for everybody. It's just

824
01:08:35,020 --> 01:08:43,800
exponential growth, crazy days. Here is the from 2008 trend line. It's a very good trend.

825
01:08:44,880 --> 01:08:51,080
98.7% R squared. I'm putting this on log scale already just to show you straight lines. This

826
01:08:51,080 --> 01:08:58,460
is this chart. It's just total, total, total eight stocks, Amazon, Google, Meta, NVIDIA,

827
01:08:58,720 --> 01:09:07,160
Apple, Microsoft, Broadcom. Here's the CAGR. It's a pretty great CAGR, 24.3%. If you bought,

828
01:09:07,320 --> 01:09:10,920
and even before this, you bought Apple in 2000, Google obviously in 2004, you're happy.

829
01:09:12,760 --> 01:09:19,000
All right. But still, huge deviations can happen from the mean. You have the pandemic silliness

830
01:09:19,000 --> 01:09:35,190
here meme stock trading and then liberation day takes you well below the minute It can be crazy but it clearly an exponential relationship not like Bitcoin not like bitcoin all right now let do that same thing we just did with gold let go to the hundredth percentile first of all notice it much tighter than gold right

831
01:09:35,190 --> 01:09:42,850
the old gold one was like you know gold gold went through a long bear so anyway this is a you know

832
01:09:42,850 --> 01:09:47,750
it's pretty this is why they say the trend is your friend like i'm not i'm not saying if you

833
01:09:47,750 --> 01:09:51,310
want to and bitcoiners do this by the way if you if you want to throw some money into some

834
01:09:51,310 --> 01:10:00,990
tech stocks and take some 2011 sat gains in dollar terms, whatever. Never financial advice on my

835
01:10:00,990 --> 01:10:08,830
channel, but it's much tighter and we're actually not there yet. So this is the max max. Now notice

836
01:10:08,830 --> 01:10:16,410
how tight this is. It's only 1.37x. The trend will be the record. We're not there yet, but let's draw

837
01:10:16,410 --> 01:10:22,250
like we did the Peter Schiff trend. Let's catch the best trend over, I think I did here. Actually,

838
01:10:22,270 --> 01:10:26,170
I can't remember. Let's pull it up. Yeah, good. I took it here, not just Liberation Day. So

839
01:10:26,170 --> 01:10:31,530
same deal, basically. The last two years, ChatGPT came out, started 2023, same deal.

840
01:10:32,470 --> 01:10:37,850
Massive growth. And indeed, about the same as gold and Bitcoin at the moment, 41% CAGR.

841
01:10:38,550 --> 01:10:43,170
So how long can that go? How long can that go? Well, here it's a little bit longer,

842
01:10:43,170 --> 01:10:48,590
actually to reach the max. I'm not saying that this red line needs to be hit, by the way. Again,

843
01:10:48,590 --> 01:10:55,430
this is just statistics. If we think AI is a crazy boom, if we think it's all it's cracked up to be,

844
01:10:55,450 --> 01:10:59,430
and a lot of people don't think that, right? They think it's overrated and chat GPT seems to get

845
01:10:59,430 --> 01:11:05,990
worse and worse every day, taking longer and giving more insane answers. But if you think

846
01:11:05,990 --> 01:11:13,690
that it is going to be a sea change, a narrative change. Okay. Well, where would be the level that

847
01:11:13,690 --> 01:11:21,590
that would outstretch the prior trend? The level in terms of market cap of these companies is right

848
01:11:21,590 --> 01:11:27,670
here. It's about, I told you right now, they're about 23 trillion. So sticking on that same trend

849
01:11:27,670 --> 01:11:34,050
line of the last two years when Chad GBT came out, that would take us to 35 trillion. So we need to

850
01:11:34,050 --> 01:11:39,210
go up $12 trillion in market gap, which by the way, you know, again, you could have huge booms,

851
01:11:39,310 --> 01:11:43,170
huge busts, but that's, that's the number. And then of course the question remains, how,

852
01:11:43,170 --> 01:11:46,850
how much longer could that go? Would that be a new trend? Would we settle in? I,

853
01:11:46,930 --> 01:11:51,110
I don't know all the answers to those questions, but, um, you know,

854
01:11:51,850 --> 01:11:58,650
this could run, this could run. I'm absolutely not saying that it, it, uh, it will not.

855
01:11:58,650 --> 01:12:07,850
But then you just got to start asking the question, is a 41.1% CAGR in the top tech companies in the

856
01:12:07,850 --> 01:12:12,610
world, is that sustainable? Does the cost make sense? Does the data centers make sense? Does

857
01:12:12,610 --> 01:12:16,310
the electricity consumption make sense? Some people think that it is. It seems that Wall

858
01:12:16,310 --> 01:12:22,310
Street is way more bullish on TradFi than it is on Bitcoin, even at this moment. So I'm just going

859
01:12:22,310 --> 01:12:30,790
have to see. But again, I try to harp on the same ideas on my stream, like just draw a trend line,

860
01:12:30,970 --> 01:12:38,150
draw a trend line to understand where we've been, which is here on the max level, and where we could

861
01:12:38,150 --> 01:12:46,670
go, which is here. And, you know, and then we'll see. And I would say, you know, caution, like

862
01:12:46,670 --> 01:12:50,570
Caution would be advised if we get to a $35 trillion industry in 2027 and

863
01:12:50,570 --> 01:12:54,510
chat TPT still seems as bad as it is today.

864
01:12:55,210 --> 01:12:55,470
So,

865
01:12:55,590 --> 01:12:56,750
you know,

866
01:12:56,790 --> 01:12:56,930
again,

867
01:12:57,130 --> 01:12:58,090
I got nothing against them.

868
01:12:58,330 --> 01:12:59,810
It's just whatever.

869
01:13:00,350 --> 01:13:03,010
So the thing that I'm interested in there is like the,

870
01:13:03,630 --> 01:13:07,270
I think it was around 35 trillion where it crosses the line.

871
01:13:07,970 --> 01:13:10,710
I wonder if in before this reverts,

872
01:13:10,750 --> 01:13:14,450
if it gets to the size of being bigger than the U S debt,

873
01:13:15,150 --> 01:13:16,270
that would be interesting.

874
01:13:16,670 --> 01:13:17,890
Yeah, it would.

875
01:13:19,650 --> 01:13:24,070
The, I mean, I don't know how the parallels,

876
01:13:24,170 --> 01:13:25,810
it would be fun to run some analyses

877
01:13:25,810 --> 01:13:27,530
on like what they pay in taxes

878
01:13:27,530 --> 01:13:29,990
and tax receipts and stuff.

879
01:13:30,070 --> 01:13:31,070
That would be interesting,

880
01:13:31,270 --> 01:13:33,330
but I don't have that data yet.

881
01:13:33,750 --> 01:13:34,910
What I can tell you with the gold,

882
01:13:35,030 --> 01:13:35,850
back to the gold one,

883
01:13:36,790 --> 01:13:38,430
is it gets very silly.

884
01:13:39,490 --> 01:13:40,210
Let's actually just show you.

885
01:13:40,210 --> 01:13:42,850
Yeah, that one's way more crazy than the tech stocks.

886
01:13:43,310 --> 01:13:45,550
Right, but I can even show you in market cap.

887
01:13:46,670 --> 01:13:51,470
The lesson from this, I think, is sell gold, sell tech stocks, buy Bitcoin.

888
01:13:52,110 --> 01:13:53,290
That's my financial advice.

889
01:13:53,310 --> 01:13:55,470
Never financial advice from me, but yeah, you can.

890
01:13:56,730 --> 01:13:58,170
Here, here's the official holdings.

891
01:13:58,390 --> 01:14:00,030
This is another reason why I'm not so...

892
01:14:02,890 --> 01:14:04,210
Again, I got no problem with gold.

893
01:14:05,110 --> 01:14:06,370
It's fine to hold some gold.

894
01:14:07,310 --> 01:14:09,830
I know a lot of people in Bitcoin hedge with some gold.

895
01:14:11,590 --> 01:14:15,170
But if you look at something like this, this is the official holdings.

896
01:14:15,170 --> 01:14:17,010
in dollar terms.

897
01:14:18,310 --> 01:14:18,950
Same deal.

898
01:14:19,130 --> 01:14:19,510
Same chart.

899
01:14:19,550 --> 01:14:20,470
I got a long and a short trend.

900
01:14:21,730 --> 01:14:21,930
All right.

901
01:14:22,690 --> 01:14:24,530
So this is worldwide central bank

902
01:14:24,530 --> 01:14:26,050
and treasury holdings of gold

903
01:14:26,050 --> 01:14:29,030
from the 70s.

904
01:14:30,250 --> 01:14:31,030
Very similar.

905
01:14:31,210 --> 01:14:32,390
It's going to move with the price, right?

906
01:14:32,730 --> 01:14:33,610
But right now,

907
01:14:34,470 --> 01:14:35,370
we're at records.

908
01:14:36,370 --> 01:14:37,710
This is actually only of July.

909
01:14:37,710 --> 01:14:39,410
It's going to be a little bit higher than this.

910
01:14:39,490 --> 01:14:40,010
It's $4 trillion.

911
01:14:40,350 --> 01:14:42,050
Wait, tell me what I'm looking at here.

912
01:14:42,070 --> 01:14:42,750
Sorry, I missed that.

913
01:14:42,830 --> 01:14:42,930
Yeah.

914
01:14:43,310 --> 01:14:44,710
You're looking at...

915
01:14:44,710 --> 01:14:48,470
So central banks hold about 1.1 billion ounces of gold.

916
01:14:48,970 --> 01:14:50,750
I like to think in ounces, not in tons.

917
01:14:51,010 --> 01:14:52,830
I know like World Gold Council talks in tons,

918
01:14:52,970 --> 01:14:57,770
but there's 6 billion ounces of gold available worldwide,

919
01:14:57,910 --> 01:14:59,930
jewelry, bullion, coins, bars.

920
01:15:01,510 --> 01:15:04,830
7 billion has been mined throughout humanity.

921
01:15:04,830 --> 01:15:07,930
So that extra billion is usually,

922
01:15:08,290 --> 01:15:10,890
I chalk it up to industrial or losses.

923
01:15:11,010 --> 01:15:12,590
No one knows exactly, but it's something like that.

924
01:15:12,590 --> 01:15:15,090
So 6 billion is available.

925
01:15:15,970 --> 01:15:20,030
1.1, now it's getting close to 1.2 billion ounces

926
01:15:20,030 --> 01:15:21,070
is owned by central banks.

927
01:15:21,990 --> 01:15:24,810
See, that's a number that I could imagine going up a lot.

928
01:15:25,290 --> 01:15:26,830
It's not, though.

929
01:15:26,990 --> 01:15:27,710
This is the thing.

930
01:15:28,090 --> 01:15:29,250
This is the funny thing.

931
01:15:29,410 --> 01:15:32,710
So here's the lifetime trend.

932
01:15:33,270 --> 01:15:34,910
All right, the lifetime trend.

933
01:15:38,030 --> 01:15:40,930
And actually, I didn't, I should have done it from 2008.

934
01:15:40,930 --> 01:15:44,370
this is actually, you're going to think it is going up a lot and it is, but it's relative to

935
01:15:44,370 --> 01:15:50,970
the price. I need to show you announces, which I can show you in a second. So anyway, this is,

936
01:15:51,050 --> 01:15:57,110
let's look at the lifetime trend of all central bank gold holdings out to say 2050. All right.

937
01:15:58,030 --> 01:16:05,650
Can you read that? So it's 6,900 billion, 7,000 billion. That's a, that's 7 trillion,

938
01:16:05,930 --> 01:16:10,070
right? A thousand billions, a trillion. So $7 trillion. It's not even, you know, that's,

939
01:16:10,070 --> 01:16:12,210
That's the whole world, central banks, not just the US.

940
01:16:12,810 --> 01:16:16,630
And it's well smaller than the US debt today, which is going to grow.

941
01:16:17,130 --> 01:16:19,930
So that actually makes theoretical sense.

942
01:16:19,930 --> 01:16:22,910
Again, if we think in exponential, things grow constantly.

943
01:16:23,410 --> 01:16:23,910
It makes sense.

944
01:16:24,350 --> 01:16:27,370
Now let's look at this gold price growth explosion.

945
01:16:28,550 --> 01:16:32,030
It starts to look insane even by, let's say, 2035.

946
01:16:32,030 --> 01:16:41,370
You're at $75 billion of just holding gold of an explosive gold price.

947
01:16:41,950 --> 01:16:42,630
Yeah, that's crazy.

948
01:16:43,150 --> 01:16:44,490
It doesn't seem to make sense.

949
01:16:44,610 --> 01:16:47,630
And you're going to start to get to numbers that are already bigger than the United States debt.

950
01:16:48,210 --> 01:16:53,170
So again, I would love for everybody to just go on a gold standard and we buy gold, but we all know that's not going to happen.

951
01:16:53,310 --> 01:16:58,030
And it was already completely centralized after the first year of World War II.

952
01:16:59,230 --> 01:17:00,730
Most of the gold went into the United States.

953
01:17:00,730 --> 01:17:09,090
So with that chart, though, like the kind of obvious questions putting our conspiracy theorist hat on is like you're relying on central bank data here.

954
01:17:09,510 --> 01:17:14,810
Who knows if the U.S. has the gold that they have and who knows if China has way more gold than they have?

955
01:17:14,910 --> 01:17:18,010
Like. How reliable do you think this can be?

956
01:17:21,010 --> 01:17:30,430
I think it's it's a fairly it's a fairly good picture, but I totally understand, you know, GATA has all this.

957
01:17:30,430 --> 01:17:36,090
They've been talking about it for years that the U.S. most of the gold that you see on the U.S.'s books, which, by the way, isn't even marked to market.

958
01:17:36,210 --> 01:17:40,190
They put it at 42 bucks an ounce so they can have more room for the treasuries that they hold with their printed money.

959
01:17:40,830 --> 01:17:45,010
But they say that, you know, they have it all.

960
01:17:45,290 --> 01:17:46,110
Maybe they don't.

961
01:17:46,290 --> 01:17:48,510
Fort Knox hasn't been audited since the Eisenhower administration.

962
01:17:49,090 --> 01:17:50,790
All that stuff, I think, is is true.

963
01:17:50,910 --> 01:17:55,610
But the more important thing is just that gold is notably failed.

964
01:17:55,610 --> 01:18:06,090
I mean, again, I say this as someone who has no problem with gold, but it has just failed in the, you know, what's the Bitcoin word I should use?

965
01:18:07,830 --> 01:18:10,910
Or the Taleb term, anti-fragile.

966
01:18:11,110 --> 01:18:11,650
You know, it's just not.

967
01:18:12,250 --> 01:18:13,210
It's been centralized.

968
01:18:13,550 --> 01:18:19,570
So here's another reason why I don't necessarily think gold's going to the moon.

969
01:18:19,930 --> 01:18:23,270
The biggest buyers of gold have been buying.

970
01:18:23,270 --> 01:18:29,710
all right and by the way the euro area holds the most all right which is hasn't changed in uh

971
01:18:29,710 --> 01:18:34,190
really it's gone down a little bit from when the euro started but this was a this is a big thing

972
01:18:34,190 --> 01:18:38,110
that germany did when they decided that they agreed to come on the euro so we got it back

973
01:18:38,110 --> 01:18:44,910
by gold so it is officially backed um it was at least 10 to start even more maybe here 15

974
01:18:44,910 --> 01:18:52,170
i think it's still maybe something like 10 um the dollar which again they might not have so

975
01:18:52,170 --> 01:18:55,890
the euro and the dollar. So at least the Western nations do have it, IMF, which the US controls.

976
01:18:56,590 --> 01:19:00,430
And then people always talk about, okay, Russia, China, India, they're going to be the big buyers,

977
01:19:00,430 --> 01:19:07,650
or they're going to be the big drivers of gold demand. First of all, they're not that small.

978
01:19:08,110 --> 01:19:13,050
They're not that big. They are small. So I'll take away the Europe, United States, IMF,

979
01:19:13,770 --> 01:19:19,890
and Switzerland. All right. So we do have the rest of the world. It's growing here. But it's not like,

980
01:19:19,890 --> 01:19:27,750
in my view, this is, you know, justifying such a insane price as of recently. And if you did a

981
01:19:27,750 --> 01:19:33,990
trend here, I don't have it on this chart, but if you went from say here, which, uh, this is

982
01:19:33,990 --> 01:19:40,090
confusing because I haven't dollars in ounces, but basically this amount, which is something like

983
01:19:40,090 --> 01:19:46,850
220 million ounces for these emerging market players in the rest of the world, 220 million

984
01:19:46,850 --> 01:19:54,450
ounces from 2008, the GFC. It has gone up. It has indeed gone up, but you're at 400,

985
01:19:55,570 --> 01:20:03,310
maybe not even 400 million ounces. I should have the total here. So 220, 230 to 400. If you do a

986
01:20:03,310 --> 01:20:09,010
compound on that, an exponential growth trend, it's less than 2% a year in actual ounce buying.

987
01:20:09,550 --> 01:20:16,230
Again, we just talked about how gold is growing at 40% on a trend over two years, the actual price

988
01:20:16,230 --> 01:20:21,210
how does that correlate with central bank buying which is two percent a year or less

989
01:20:21,210 --> 01:20:27,570
it doesn't square so i'm not interesting yeah i'm not a big believer that this is

990
01:20:27,570 --> 01:20:32,170
gonna change the world yeah because like the narrative that i mean i don't follow gold closely

991
01:20:32,170 --> 01:20:37,570
but the narrative i see on like twitter and stuff is that this is like china central bank buying a

992
01:20:37,570 --> 01:20:41,550
load of gold that's driving the price up like if it's not the central banks what do you think is

993
01:20:41,550 --> 01:20:49,690
causing the price probably the uh rotation that you know uh mark faber was depressed about five

994
01:20:49,690 --> 01:20:53,370
years ago and all the gold bugs were depressed about five to ten years ago that we got no action

995
01:20:53,370 --> 01:21:00,470
sideways movement from gold since 2011 uh you know it was let's just go back to the long-term

996
01:21:00,470 --> 01:21:08,990
trend it was it wasn't like even off the trend but it's just you know it's just it's it's just

997
01:21:08,990 --> 01:21:14,030
markets, right? They spring. You can have a lot of movements. And if you can catch that momentum

998
01:21:14,030 --> 01:21:19,490
and you can draw lines on the wicks, all power to you. I just prefer to look at things relative

999
01:21:19,490 --> 01:21:25,710
to the overall rate of change. Gold is pretty hot right now. It could stay hot for another

1000
01:21:25,710 --> 01:21:31,630
two to three years. But at some point, the numbers are so insane. Like central banks,

1001
01:21:32,010 --> 01:21:38,970
basically, if this is what it is, then governments can just keep printing money and just hold

1002
01:21:38,970 --> 01:21:44,090
the gold that they have. And, you know, Bob is your uncle, as the Brits like to say.

1003
01:21:44,550 --> 01:21:53,310
As we know, as we know, you know, that's just not how markets work. And the numbers are just,

1004
01:21:54,530 --> 01:22:03,610
you know, I guess you could theorize that in 10 to 20 years, either we're going to go back to a

1005
01:22:03,610 --> 01:22:08,910
gold standard or we're going to go back to we're going to go on a bitcoin standard okay uh or we'll

1006
01:22:08,910 --> 01:22:13,030
have a little bit of both maybe central banks will start to hold more gold and more bitcoin

1007
01:22:13,030 --> 01:22:23,110
that's fine but still relative to the mining cost relative to the uh to the sales price

1008
01:22:23,110 --> 01:22:30,510
there's it's just like it's like ai valuations it's just so silly after some time that it

1009
01:22:30,510 --> 01:22:35,030
eventually has to revert. Yeah, but it can go. Look, I'm not saying we can go look here. I mean,

1010
01:22:35,030 --> 01:22:40,230
it can go by 2030, $20,000 an ounce. That's possible. But with the nature of compounding

1011
01:22:40,230 --> 01:22:44,590
at 40% per year, like something will break somewhere in the system here. Like that's,

1012
01:22:44,590 --> 01:22:49,490
that's reverting to a gold standard or something, you know. I guess the bullish thing for Bitcoin

1013
01:22:49,490 --> 01:22:54,270
here is that if this isn't like a huge geopolitical shift, if it's not central bank stacking tons of

1014
01:22:54,270 --> 01:22:59,650
gold and it is just a trade, like at some point you would expect a rotation back to things like

1015
01:22:59,650 --> 01:23:07,350
Bitcoin. And more importantly, I don't see anything in the buying now that reflects

1016
01:23:07,350 --> 01:23:14,370
the price action that justifies the price action. It's the same old central bank buyers

1017
01:23:14,370 --> 01:23:21,550
that have been buying since 2008. You know, Russia is like a client state of China now.

1018
01:23:22,490 --> 01:23:27,530
I mean, Russia, Russia's issuing bonds in Chinese yuan. Did you see this?

1019
01:23:27,530 --> 01:23:33,670
no i didn't that's insane there's now russian government bonds denominated in chinese yuan

1020
01:23:33,670 --> 01:23:38,830
and they're going to force you know russian banks and clients to hold them like that's it's such a

1021
01:23:38,830 --> 01:23:47,230
disaster that's wild state yeah so you know and you know good luck convincing at least the same

1022
01:23:47,230 --> 01:23:54,490
people to buy those so it's it's not it's nothing it's it's it's continuation of the past yes china

1023
01:23:54,490 --> 01:23:57,810
is getting stronger. They also got demographic problems. You know, we can talk about the

1024
01:23:57,810 --> 01:24:02,850
geopolitics all day long, but it's probably more important things to talk about. So maybe quickly,

1025
01:24:02,850 --> 01:24:08,790
before we do close out, we should talk about Bitcoin becoming the world's biggest base money.

1026
01:24:09,230 --> 01:24:12,990
I know, I know it's been close. I'm sure the price action in the last few weeks has dropped

1027
01:24:12,990 --> 01:24:17,650
that down a little bit, but maybe it's worth just very quickly explaining what base money is as sort

1028
01:24:17,650 --> 01:24:23,130
of like cash in this economy. And then maybe just put into context, like the scale of Bitcoin,

1029
01:24:23,130 --> 01:24:27,750
because I think it's really easy to not understand how close Bitcoin is to the US dollar in this.

1030
01:24:28,290 --> 01:24:31,910
Yeah, let's do that. So I made a tweet of this.

1031
01:24:32,710 --> 01:24:37,010
Yes, I did see this tweet, but I've not really gone into it in detail. So walk us through it,

1032
01:24:37,050 --> 01:24:43,010
explain what's going on here. So I'm showing a snapshot of only America's money supply,

1033
01:24:43,010 --> 01:24:53,550
which is based abroad, which is base money to M3 back in 2015 to 2025, June. In 2015,

1034
01:24:53,730 --> 01:24:59,090
there was $22 trillion of total US money supply, total dollars in all different

1035
01:24:59,090 --> 01:25:03,090
savings accounts, checking accounts, time deposits, repurchase agreements.

1036
01:25:03,910 --> 01:25:09,850
And in 2025, June, we have 40. All right. So nearly a double. And if you remember our

1037
01:25:09,850 --> 01:25:20,710
compounding a double in 10 years is a 7.2% CAGR. So that's roughly what the total money supply is

1038
01:25:20,710 --> 01:25:29,050
doing. I'm also layering in Bitcoin. So Bitcoin you see here, incredible, $4 billion in 2015,

1039
01:25:29,050 --> 01:25:35,850
June. That was the crypto winter as they called it, but I know Bitcoiners don't like that word.

1040
01:25:35,850 --> 01:25:47,990
um 2025 june all right we have uh we have 2.13 trillion dollar valuation okay and we've gotten

1041
01:25:47,990 --> 01:25:55,350
close to 2.3 so what i try to talk about a lot as well so the power curve i look at if i could do

1042
01:25:55,350 --> 01:26:00,810
a broad statement about two main pieces of my research is is the power relationship that bitcoin

1043
01:26:00,810 --> 01:26:06,570
has, you know, to itself, to the hash rate growth, address growth, price adoption.

1044
01:26:07,110 --> 01:26:11,710
There's this power relationship that can ground us and help us understand what Bitcoin does.

1045
01:26:12,130 --> 01:26:14,170
There's also, of course, the TradFi world, the money supply.

1046
01:26:14,310 --> 01:26:15,050
Bitcoin is money.

1047
01:26:15,290 --> 01:26:16,230
So how does that fit in?

1048
01:26:16,650 --> 01:26:23,610
I still believe that at the moment, the power growth, the power relationship of Bitcoin,

1049
01:26:23,970 --> 01:26:29,430
you know, to itself, to its price over time is 95% of the story.

1050
01:26:29,430 --> 01:26:30,870
95%.

1051
01:26:30,870 --> 01:26:33,790
5% is the Fed, interest rates,

1052
01:26:34,570 --> 01:26:36,150
the economy, deficits, taxes.

1053
01:26:36,950 --> 01:26:37,030
Yeah.

1054
01:26:37,110 --> 01:26:37,990
It's just too small.

1055
01:26:38,110 --> 01:26:39,790
It's just too small to affect it at the moment.

1056
01:26:39,830 --> 01:26:41,550
And you can still see that here.

1057
01:26:41,790 --> 01:26:42,010
Okay.

1058
01:26:42,090 --> 01:26:45,190
So again, even at 2.1 trillion,

1059
01:26:45,310 --> 01:26:46,610
and by the way, this is only America.

1060
01:26:46,970 --> 01:26:47,430
This is, you know,

1061
01:26:47,430 --> 01:26:50,790
the European Union has a similar breakdown,

1062
01:26:50,990 --> 01:26:52,130
a little bit smaller, the Euro,

1063
01:26:52,690 --> 01:26:54,510
the Yen, the Yuan, you know,

1064
01:26:54,630 --> 01:26:56,150
Russia's shitty currency.

1065
01:26:56,490 --> 01:26:58,470
They all have, uh,

1066
01:26:59,430 --> 01:27:07,370
broad money supplies, which is deposits, which are representations of value that people give to

1067
01:27:07,370 --> 01:27:10,930
the banks. And then the banks hold assets, which are loans. That's how the banking system works.

1068
01:27:10,970 --> 01:27:16,190
And all of that is a compounding function with a rate of growth, an interest rate of growth

1069
01:27:16,190 --> 01:27:20,890
year on year. So it's going to grow. It's always going to grow. Bitcoin's going to grow and fiat's

1070
01:27:20,890 --> 01:27:28,930
going to grow. The most economically comparable money supply to Bitcoin is what's called base

1071
01:27:28,930 --> 01:27:35,250
money. Okay. So it's here. And that's just like cash in the economy, right? Yeah. So I, I try to

1072
01:27:35,250 --> 01:27:40,950
literally show you exactly. So what it is, is it's bank reserves, right? Which is what banks

1073
01:27:40,950 --> 01:27:46,270
hold. This is like the bank account with the Fed. That's what that, sorry. This is the bank's bank

1074
01:27:46,270 --> 01:27:50,190
account with the Fed. It's called the master account. It is digital. It's the, it's the,

1075
01:27:50,250 --> 01:27:53,790
it's the main account. Okay. So it's bank reserves. Also the vault cash, you know,

1076
01:27:53,790 --> 01:27:58,450
banks, even though it's kind of weird, uh, they do hold a little cash still. It's not much.

1077
01:27:58,930 --> 01:27:59,430
Not enough.

1078
01:28:00,050 --> 01:28:00,690
Yeah, not enough.

1079
01:28:00,910 --> 01:28:01,230
Not enough.

1080
01:28:01,830 --> 01:28:05,790
And then in cash and circulation, which is cash outside the banks, you know, in grocery

1081
01:28:05,790 --> 01:28:11,330
stores, in retail shops, in your wallet, in a safe, under your mattress, whatever.

1082
01:28:11,850 --> 01:28:16,450
These three things, bank reserves, vault cash and cash in circulation, total base money.

1083
01:28:16,850 --> 01:28:17,110
Okay.

1084
01:28:17,510 --> 01:28:24,330
And in the US right now, if you look at it here in 2025, we got 3.357 bank reserves,

1085
01:28:24,550 --> 01:28:27,430
85 billion vault cash, 2.3 trillion.

1086
01:28:27,530 --> 01:28:28,810
Did I say 3.35 billion?

1087
01:28:28,930 --> 01:28:34,850
3.3 trillion bank reserves vault cash 85 billion 2.3 trillion cash are you getting somewhere a

1088
01:28:34,850 --> 01:28:44,850
little over 5.5 5.6 trillion dollars in base money okay 10 years ago it was 3.7 all right so it grows

1089
01:28:45,810 --> 01:28:52,770
uh then you have m1 okay so you have m1 is actually the only money supply that overlaps

1090
01:28:53,410 --> 01:28:57,250
with a so you notice if you can see these shaded things here yeah this one's kind of purple

1091
01:28:58,250 --> 01:28:59,490
That's because there's an overlap.

1092
01:28:59,670 --> 01:29:01,950
So cash in circulation is also called M0.

1093
01:29:02,650 --> 01:29:05,390
That plus your demand deposits is M1.

1094
01:29:05,770 --> 01:29:06,790
So that's M1 money.

1095
01:29:07,270 --> 01:29:09,030
A lot of people like to say, oh, Bitcoin's M1 money.

1096
01:29:09,110 --> 01:29:10,550
It's not at all M1 money.

1097
01:29:12,150 --> 01:29:13,990
Yes, the cash in circulation is bare.

1098
01:29:14,150 --> 01:29:15,610
That's very much relatable to Bitcoin.

1099
01:29:15,750 --> 01:29:17,790
But demand deposits have nothing to do with Bitcoin.

1100
01:29:17,790 --> 01:29:23,430
So demand deposits are a representation of wealth that someone deposits with the bank.

1101
01:29:23,530 --> 01:29:25,610
The bank turns around, loans it, tries to make interest.

1102
01:29:25,810 --> 01:29:26,590
They may or they may not.

1103
01:29:27,250 --> 01:29:31,910
Um, but that's, you know, that, that's not anything what Bitcoin is.

1104
01:29:31,970 --> 01:29:34,410
Bitcoin is a UTXO on Bitcoin is bear.

1105
01:29:34,570 --> 01:29:35,050
It's final.

1106
01:29:35,310 --> 01:29:39,170
It's just like, uh, the cash part, but it's not at all like demand deposits.

1107
01:29:39,470 --> 01:29:45,530
So anyway, M1 is M0, which is also part of the monetary base.

1108
01:29:46,190 --> 01:29:49,010
Um, plus demand deposits.

1109
01:29:49,010 --> 01:29:49,670
That is M1.

1110
01:29:49,750 --> 01:29:51,470
M1 is demand deposits plus M0.

1111
01:29:51,470 --> 01:29:52,650
All right.

1112
01:29:52,690 --> 01:29:56,670
You can see here back in 2015, it was about 3.7 trillion.

1113
01:29:57,250 --> 01:30:03,130
Today, after the massive stimulus of the pandemic, people still have a lot of cash.

1114
01:30:03,870 --> 01:30:06,150
It's over 10, it's about $10 trillion.

1115
01:30:06,850 --> 01:30:07,530
$10 trillion.

1116
01:30:08,070 --> 01:30:08,250
Yeah.

1117
01:30:08,710 --> 01:30:09,530
So that's M1.

1118
01:30:09,870 --> 01:30:14,110
Then M2, you got the biggest stack savings deposits.

1119
01:30:14,510 --> 01:30:18,270
That is $7 trillion in 2015, 8.8 today.

1120
01:30:19,070 --> 01:30:19,310
All right.

1121
01:30:19,530 --> 01:30:22,130
Then you got retail time deposits.

1122
01:30:22,350 --> 01:30:23,070
People know that, right?

1123
01:30:23,070 --> 01:30:27,470
That's when you actually explicitly put your money in the bank for a specified term.

1124
01:30:27,550 --> 01:30:30,810
That was $500 billion back in the day, 10 years ago only.

1125
01:30:30,930 --> 01:30:31,590
Now it's a trillion.

1126
01:30:31,790 --> 01:30:32,170
So there you go.

1127
01:30:32,230 --> 01:30:35,530
It's a 7.2% CAGR per year in growth.

1128
01:30:35,990 --> 01:30:37,310
You got retail money market funds.

1129
01:30:37,370 --> 01:30:40,130
That's basically like a stable coin, but it's basically brokerage account money.

1130
01:30:40,890 --> 01:30:42,990
$600 billion 10 years ago.

1131
01:30:43,490 --> 01:30:45,150
Today, $2.1 trillion.

1132
01:30:46,470 --> 01:30:46,690
All right.

1133
01:30:46,990 --> 01:30:48,530
And then M3 money.

1134
01:30:48,750 --> 01:30:52,930
Now, no one on Twitter posts about M3 because the Fed doesn't use it anymore.

1135
01:30:52,930 --> 01:30:57,290
So people in their broadest representations, they like to do charts of M2 all the time.

1136
01:30:57,410 --> 01:30:59,010
That's not the total money supply.

1137
01:30:59,330 --> 01:31:00,570
It has to be M3.

1138
01:31:00,890 --> 01:31:01,990
They stopped telling you what that was.

1139
01:31:02,190 --> 01:31:05,310
The Fed stopped telling you what that was in February 2006.

1140
01:31:06,090 --> 01:31:06,510
I wonder why.

1141
01:31:06,730 --> 01:31:08,150
Conveniently, two years before the crisis.

1142
01:31:09,330 --> 01:31:13,490
There's two things that are important in M3 that they stopped.

1143
01:31:13,650 --> 01:31:14,990
So first is repurchase agreements.

1144
01:31:15,530 --> 01:31:18,990
Repurchase agreements are basically like treasuries that trade like cash.

1145
01:31:19,130 --> 01:31:20,330
It's people levering up treasuries.

1146
01:31:20,330 --> 01:31:49,010
It's like you put liquidity in your, I don't know, your Kraken or your Coinbase account and you trade with leverage. That's what people do. They're posting a treasury bond, hedge funds posting a treasury bond with a money market fund and trying to short or do something else more aggressively. And the money market fund in return for allowing that, giving them that liquidity to do that in the market, they earn excess of what they would earn if they just bought the treasury bond itself directly from the government.

1147
01:31:49,010 --> 01:31:55,490
so that's that's so basically the bottom line is m3 money's less regulated highly liquid highly

1148
01:31:55,490 --> 01:32:00,170
fast money and it's all institutional money so you got institutional time deposits institutional

1149
01:32:00,170 --> 01:32:05,110
money market funds are like stable coins repurchase agreements or repos so here you can see this is

1150
01:32:05,110 --> 01:32:13,110
the total amount and notice uh institutional money market funds and repos big dollar numbers now okay

1151
01:32:13,110 --> 01:32:19,710
They've all roughly grown with the exception of savings deposits and the exceptions of

1152
01:32:19,710 --> 01:32:24,990
demand deposits, which grew faster because of the stimulus from the 2020 period.

1153
01:32:24,990 --> 01:32:29,450
They all roughly grow at, they double every 10 years, right?

1154
01:32:29,450 --> 01:32:37,050
They grow at 7% to 8% a year, but that's what's happening sort of inside the

1155
01:32:37,107 --> 01:32:41,907
the system and it's also my again i i want to keep going back to the idea that

1156
01:32:44,067 --> 01:32:50,227
um 95 of what you see in bitcoin is the network growth itself it's adoption is the power curve

1157
01:32:51,987 --> 01:32:56,467
only five percent is actually this stuff so you know i'm not i'm not saying just forget about it

1158
01:32:56,467 --> 01:33:04,307
or whatever but you know this is rarely this is rarely and not very significantly on the feds

1159
01:33:04,307 --> 01:33:08,627
radar at the moment right there's there's so many other things that they're trying to attend to in

1160
01:33:08,627 --> 01:33:12,627
the economy i'm not i'm not defending them i'm not saying they do it do it right but bitcoin is just

1161
01:33:12,627 --> 01:33:18,707
still so small yeah that we got a while we got a while and i expect money supply to double again

1162
01:33:19,347 --> 01:33:26,787
within 10 years and uh you know double again after that so if not maybe even a little bit faster so

1163
01:33:28,467 --> 01:33:33,347
that's the lesson i would just try to say is like look there's a lot of different money supplies out

1164
01:33:33,347 --> 01:33:38,307
there everything i just drew here for the americas or for the united states you can draw for other

1165
01:33:38,307 --> 01:33:42,387
countries uh and there's even one more thing that actually is not here which is another reason why

1166
01:33:42,387 --> 01:33:47,667
the fed stopped publishing m3 and that is euro dollars so euro dollars or offshore dollars

1167
01:33:47,667 --> 01:33:53,827
basically dollar-based accounts in you know japan that's not that was never really counted very well

1168
01:33:54,547 --> 01:33:58,787
i i are they even able to count that that's that's the question i i think you could if

1169
01:33:58,787 --> 01:34:01,787
If someone, I bet the IMF has some idea.

1170
01:34:01,827 --> 01:34:04,487
I haven't seen good estimates.

1171
01:34:04,527 --> 01:34:08,027
But if you were to like just try and even guess what that number would be,

1172
01:34:08,067 --> 01:34:11,007
I mean, I imagine this would that would blow all the rest of these off the chart.

1173
01:34:11,027 --> 01:34:11,967
Like it would be.

1174
01:34:11,967 --> 01:34:13,727
It's definitely on the higher end.

1175
01:34:13,727 --> 01:34:26,579
Yeah I seen wild estimates of Euro dollars from being like a couple trillion to ten trillion to 30 trillion to 100 trillion Yeah There a lot of mixture there That some people mixing you know

1176
01:34:27,299 --> 01:34:32,759
just holding a treasury versus holding an actual dollar denominated account. So it's, yeah,

1177
01:34:32,839 --> 01:34:37,039
it's hard to tell. And I don't have it either. So that's the one asterisk to this money supply

1178
01:34:37,039 --> 01:34:40,779
that I actually don't have euro dollars. But in any event, I don't want to be too long here.

1179
01:34:40,839 --> 01:34:45,159
The point is the money supply is complicated. I'm not defending it. Bitcoin is still very,

1180
01:34:45,159 --> 01:34:51,099
very small. And at the end of the day, Bitcoin is most like what you call the base money section

1181
01:34:51,099 --> 01:34:58,559
here, which is bank reserves, vault cash, and cash in circulation. And so it's growing. It's

1182
01:34:58,559 --> 01:35:04,599
very close to the United States. Physical cash, look at this. You see, this was June, right? So

1183
01:35:04,599 --> 01:35:10,999
cash in circulation in June was 2.3. It's a little bit more now. Bitcoin was close to passing that

1184
01:35:10,999 --> 01:35:16,119
this month, whatever the market cap is now, it's not going to be 2.3 trillion by, or it didn't

1185
01:35:16,119 --> 01:35:20,779
close at 2.3 trillion by October. I thought it was possible. Maybe November, if we have the

1186
01:35:20,779 --> 01:35:26,819
cycle continue, as I say may have, maybe we will pass it. But this is actually the last

1187
01:35:26,819 --> 01:35:33,539
fiat money supply part of base money that's just cash that's bigger than Bitcoin.

1188
01:35:34,159 --> 01:35:39,179
That seems like a huge signal if Bitcoin gets to the scale where it's bigger than all,

1189
01:35:39,179 --> 01:35:44,619
you know, US cash in circulation at least. And it's not even a million miles from the entire base

1190
01:35:44,619 --> 01:35:49,599
money. Yeah. Yeah. It's true. I mean, it's, it's growing fast. It's growing at 40% a year,

1191
01:35:49,659 --> 01:35:54,479
although declining on a power curve. So yeah, it's, it's, it's important. It's growing. I mean,

1192
01:35:54,479 --> 01:35:59,679
we all know the benefits of Bitcoin, but I'm just trying to temper people's expectations because,

1193
01:35:59,679 --> 01:36:12,372
um you know as much as we might think hyperinflation is coming tomorrow or hyperbitcoinization is coming tomorrow none of those things hyperinflation in particular is not a good thing

1194
01:36:12,452 --> 01:36:18,072
It's not something I particularly cheer for. And, you know, some of this, you know, I was on a panel

1195
01:36:18,072 --> 01:36:23,012
with Peter Todd and Adam Back in Helsinki, and Peter's been on about this a lot. He talks about

1196
01:36:23,012 --> 01:36:27,312
like what the, you know, the cypherpunks had to do with code and the national security laws in the

1197
01:36:27,312 --> 01:36:32,312
90s. Like at some point, and I don't want to say that the United States Supreme Court is the

1198
01:36:32,312 --> 01:36:37,372
ultimate arbiter of this stuff, but at some point politically, we're going to have to win

1199
01:36:37,372 --> 01:36:42,372
on some levels here, right? It goes back to, is Bitcoin going to be pulled to the TradFi curve,

1200
01:36:42,452 --> 01:36:47,132
or is Bitcoin going to pull TradFi to the power curve? There will be some political victories that

1201
01:36:47,132 --> 01:36:52,792
we will need to have. Like, you know, an obvious, I know you got to jump to any, but like an obvious

1202
01:36:52,792 --> 01:36:57,292
problem to this would be if everyone in the world just accepts that we can't withdraw our Bitcoin

1203
01:36:57,292 --> 01:36:59,192
from mainstream exchanges.

1204
01:36:59,712 --> 01:37:01,072
That's not a future I want to see.

1205
01:37:01,652 --> 01:37:01,972
Exactly.

1206
01:37:02,372 --> 01:37:04,492
So these are still open questions.

1207
01:37:04,752 --> 01:37:06,452
I know a lot of people with the Trump admin

1208
01:37:06,452 --> 01:37:09,232
thought that that threat was over.

1209
01:37:10,672 --> 01:37:12,992
I don't see that over yet.

1210
01:37:13,112 --> 01:37:14,872
And I see that money supply is still growing.

1211
01:37:14,872 --> 01:37:17,272
I see the military industrial complex growing.

1212
01:37:17,752 --> 01:37:19,792
I see a lot of things that are difficult

1213
01:37:19,792 --> 01:37:24,132
for sort of the Bitcoin future that we all want.

1214
01:37:24,132 --> 01:37:29,452
So, yeah, maybe it's not the most optimistic note to end the show on, but I would say,

1215
01:37:30,012 --> 01:37:34,932
look, we're making interesting records.

1216
01:37:35,072 --> 01:37:37,652
We're breaking interesting records almost every month with Bitcoin, right?

1217
01:37:37,992 --> 01:37:42,292
And like I said, this 2.3 cash in circulation here is the last...

1218
01:37:42,292 --> 01:37:54,724
That the last fiat stock that Bitcoin hasn passed in value It bigger than euros yen yuan you know shitty Russian ribbles for sure But it not bigger than the US dollar yet And that

1219
01:37:54,724 --> 01:37:59,984
will be a fun one. It could happen in November, could happen in December. But that's not even the

1220
01:37:59,984 --> 01:38:03,084
size of the monetary base. You still got to count the bank reserves on top of that. It's going to

1221
01:38:03,084 --> 01:38:07,884
take time. All that, by the way, is about $27 trillion. I'll release my update coming soon this

1222
01:38:07,884 --> 01:38:14,964
quarter. So $27 trillion is the total base money of the world. $27 equivalent. Bitcoin, as you know,

1223
01:38:14,984 --> 01:38:23,544
is 10% of that. So we got some time. Yeah, but it's going to happen. It's not a if, it's a when.

1224
01:38:24,124 --> 01:38:27,284
I think we're in the right industry. Yeah, I think we're in the right industry.

1225
01:38:28,244 --> 01:38:33,264
Bit of a sobering thought to end on, but Matthew, I appreciate you, man. I could talk to you all day.

1226
01:38:33,264 --> 01:38:38,844
um i think maybe honestly i've got like three or four other like half hour topics to talk about so

1227
01:38:38,844 --> 01:38:43,684
maybe we give it a few months and we go again but i appreciate you man this is great yeah likewise

1228
01:38:43,684 --> 01:38:47,564
danny uh all the best to you congrats on everything you're doing and uh you know hope to see you

1229
01:38:47,564 --> 01:38:52,244
hope to see you sooner rather than later i'm sure we will before we close out actually you should

1230
01:38:52,244 --> 01:38:57,444
tell everyone where they can watch your streams get all your updates everything you do yeah you

1231
01:38:57,444 --> 01:38:58,184
You can just find me.

1232
01:38:58,544 --> 01:39:01,744
The handle is OneBaseMoney on Noster, Twitter, whatever.

1233
01:39:02,504 --> 01:39:05,604
YouTube OneBaseMoney is my handle.

1234
01:39:05,804 --> 01:39:06,064
You can...

1235
01:39:06,064 --> 01:39:07,944
BaseMoney.world is my website.

1236
01:39:08,164 --> 01:39:09,564
It's the easiest way to remember, probably.

1237
01:39:10,464 --> 01:39:11,024
Let's go.

1238
01:39:11,144 --> 01:39:11,384
All right.

1239
01:39:11,464 --> 01:39:11,984
Thank you, Matthew.

1240
01:39:12,064 --> 01:39:12,564
This was great.

1241
01:39:13,344 --> 01:39:13,964
Thank you, Danny.

1242
01:39:14,324 --> 01:39:14,824
Take care, man.

1243
01:39:27,444 --> 01:39:57,424
Thank you.