1
00:00:00,000 --> 00:00:07,800
If nobody's going to buy our crazy government debt, then we have to monetize it ourselves.

2
00:00:08,220 --> 00:00:11,320
Literally, the only solution is to print money and to fill in that gap.

3
00:00:11,780 --> 00:00:15,500
The outlet valve is the currency, so the currency gets debased.

4
00:00:15,920 --> 00:00:20,640
I think we're intentionally pulling back from the U.S. and the dollar being the global reserve

5
00:00:20,640 --> 00:00:21,060
asset.

6
00:00:21,360 --> 00:00:26,300
I wouldn't get too excited about the price of Bitcoin until you start seeing signs that

7
00:00:26,300 --> 00:00:28,840
the U.S. economy is starting to take off again.

8
00:00:28,840 --> 00:00:31,800
or if we have some really good news come out of like, say, Congress,

9
00:00:31,800 --> 00:00:35,200
I think it could quickly go to 150 or 200K if that happens.

10
00:00:35,680 --> 00:00:38,600
Is this an age of abundance or is it like another Great Depression?

11
00:00:38,860 --> 00:00:43,380
Deflation is incompatible with the credit-based fiat monetary system.

12
00:00:43,760 --> 00:00:46,560
So if it takes hold and continues,

13
00:00:47,360 --> 00:00:51,300
I actually think that's the end of that government's fiat currency.

14
00:00:51,560 --> 00:00:54,820
At the other side of that, the world is priced in Bitcoin.

15
00:00:54,820 --> 00:01:03,840
Dr. Jeff Ross, I think the big question that everyone has for you right now is, is Dr. Bearback?

16
00:01:07,520 --> 00:01:09,180
So we're just getting right into it, huh?

17
00:01:09,780 --> 00:01:10,920
We're kicking off.

18
00:01:13,220 --> 00:01:17,220
So let me just start right. So I'm just going to come right out with it, right?

19
00:01:17,220 --> 00:01:24,040
The last clickbait title for the last time we got together was Bitcoin to $475,000, right?

20
00:01:24,040 --> 00:01:45,660
So let me acknowledge that I was wrong. Okay. So everybody who's listening, wrong. Why was I wrong? I think that everybody talks about Bitcoin moving according to what global liquidity is doing, but it also is very strongly correlated to what the global economy is doing and especially what the US economy is doing.

21
00:01:45,660 --> 00:02:13,460
What I really did not expect to happen in 2025 was that the U.S. economy would not get out of a recession. The manufacturing sector in the U.S. has been literally in a recession since 2022. It spiked briefly, the ISM manufacturing PMI briefly spiked above 50. So basically, it went from contraction to expansion briefly, I think in late 2024, early 2025, basically right after Trump was nominated.

22
00:02:14,280 --> 00:02:18,120
But then, of course, they came out with Doge and then followed that with tariff stuff.

23
00:02:18,480 --> 00:02:20,320
And that has just beaten down the economy.

24
00:02:20,320 --> 00:02:30,300
So besides that little blip where it went above 50, it's been in a contraction or another word for that is a recession since the end of 2022.

25
00:02:31,020 --> 00:02:32,620
I did not expect that at all.

26
00:02:32,920 --> 00:02:39,860
I thought that the manufacturing economy would be just booming by now and that we'd actually be peaking and rolling over at this point.

27
00:02:39,860 --> 00:02:52,880
So people ask, I see people still asking this, is the four-year cycle dead? And I'm like, of course it's dead. Of course it is. It's not even a question about it. It died because the economy is not in this four-year cycle anymore.

28
00:02:53,420 --> 00:02:55,940
So the question is, is what is going to happen going forward?

29
00:02:56,460 --> 00:02:58,320
And that's stuff we can probably talk about.

30
00:02:58,440 --> 00:03:02,120
But I think things look very good for a reversal of fortune.

31
00:03:02,280 --> 00:03:07,900
So just the way that 2025 surprised to the downside for the US economy, which is still

32
00:03:07,900 --> 00:03:12,580
in a contraction and for Bitcoin, which is bearish, very strongly bearish right now.

33
00:03:12,700 --> 00:03:14,260
Although I think it's close to a bottom.

34
00:03:14,360 --> 00:03:16,180
I think it's at or near a bottom at these levels.

35
00:03:17,200 --> 00:03:19,400
I think 2026 is looking good.

36
00:03:19,400 --> 00:03:24,820
And I think that's because the One Big Beautiful Bill Act will finally basically start taking effect.

37
00:03:25,160 --> 00:03:32,280
I think the accounting rules that are going to be in place starting in 2026 are going to start taking an effect.

38
00:03:32,400 --> 00:03:36,680
And I think people shouldn't underestimate how strong that impact will be.

39
00:03:36,940 --> 00:03:39,460
So I've basically, yes, I'm bearish currently.

40
00:03:39,960 --> 00:03:46,320
And I flipped to now being instead of bearish for 2026, I'm actually quite bullish and constructive on 2026.

41
00:03:46,320 --> 00:03:48,640
with one more caveat, and then I'll stop,

42
00:03:48,920 --> 00:03:51,100
is that I think I wouldn't get too excited

43
00:03:51,100 --> 00:03:52,480
about the price of Bitcoin

44
00:03:52,480 --> 00:03:54,420
until you start seeing signs

45
00:03:54,420 --> 00:03:57,260
that the US economy is starting to take off again.

46
00:03:57,380 --> 00:04:01,640
So I closely watch the ISM manufacturing PMI

47
00:04:01,640 --> 00:04:04,920
and it's still, the latest thing just came out recently

48
00:04:04,920 --> 00:04:07,820
and new orders are actually down again.

49
00:04:08,020 --> 00:04:09,580
So still very contractionary,

50
00:04:09,700 --> 00:04:11,160
still in a recession basically.

51
00:04:11,720 --> 00:04:15,220
Until you see new orders start to peak up above 50

52
00:04:15,220 --> 00:04:20,440
and then rise higher, and then finally the ISM manufacturing, PMI itself,

53
00:04:20,800 --> 00:04:24,520
start to rise above 50 to 55 and head towards 60,

54
00:04:24,980 --> 00:04:28,500
that will be the point that we'll start seeing Bitcoin making tremendous moves higher.

55
00:04:28,660 --> 00:04:31,340
But until then, I would definitely temper expectations.

56
00:04:32,440 --> 00:04:35,860
I mean, I definitely don't hold the price prediction against you, Jeff.

57
00:04:36,140 --> 00:04:39,320
It's one of those years where I don't think anyone called this.

58
00:04:39,540 --> 00:04:42,800
I don't know anyone who was saying 2025 was going to be a down year.

59
00:04:43,600 --> 00:04:45,540
I remember when we spoke back in June,

60
00:04:45,680 --> 00:04:47,600
I think you called that Bitcoin was going to go to 120

61
00:04:47,600 --> 00:04:49,000
by the end of summer, which it did.

62
00:04:49,380 --> 00:04:51,140
And then obviously, I think you were saying 475

63
00:04:51,140 --> 00:04:53,940
by Q1 next year, possibly,

64
00:04:54,540 --> 00:04:55,960
or first half of next year, at least.

65
00:04:56,500 --> 00:04:57,500
Again, things change.

66
00:04:57,560 --> 00:04:58,460
That's off the tables now.

67
00:04:58,540 --> 00:05:00,120
I think everyone would probably agree with that.

68
00:05:00,540 --> 00:05:02,700
But my question I want to get into is

69
00:05:02,700 --> 00:05:06,160
you talk of recession, because in macro circles,

70
00:05:06,160 --> 00:05:09,420
this has been a kind of debated thing

71
00:05:09,420 --> 00:05:10,400
for quite a while now.

72
00:05:10,520 --> 00:05:12,620
There's been people saying we're in a silent depression,

73
00:05:12,800 --> 00:05:17,520
or we're entering recession, but you think we've actually been in one for the last couple of years?

74
00:05:18,240 --> 00:05:21,780
Yeah, it just depends where you look. And I think even more now. So first of all,

75
00:05:21,800 --> 00:05:27,280
what I like to tell people too is we are not in a free market economy. This is not free market

76
00:05:27,280 --> 00:05:32,140
capitalism in the US or Europe or basically anywhere in the world. People kind of, you know,

77
00:05:32,180 --> 00:05:37,620
hack on China for being this communist country. We are as centrally controlled and commanded as

78
00:05:37,620 --> 00:05:43,220
China is here in the US. So what do I mean by that? I mean that the US government has for many,

79
00:05:43,360 --> 00:05:46,720
many years, not just with the current administration, but especially with the current

80
00:05:46,720 --> 00:05:51,380
administration, is picking winners and it's picking losers. Why does that matter? Because

81
00:05:51,380 --> 00:05:58,380
when you modify regulations and taxes and you funnel fiscal stimulus into certain sectors,

82
00:05:58,880 --> 00:06:04,720
you're picking winners. Those sectors are going to do well. Sectors that are not included are not

83
00:06:04,720 --> 00:06:10,460
going to do well. And so basically the manufacturing sector has been left for dead in the United States

84
00:06:10,460 --> 00:06:16,400
for about 30 years, 25 to 30 years or so. And so we've just seen an absolute gutting of the middle

85
00:06:16,400 --> 00:06:20,920
class and an absolute gutting of manufacturing capabilities in the U.S. and also throughout

86
00:06:20,920 --> 00:06:26,060
Europe, as you know, and I know you've discussed with lots of your guests. I think that's going to

87
00:06:26,060 --> 00:06:30,060
change, but it takes time for this to change. And we discussed this the last time we were together.

88
00:06:30,220 --> 00:06:34,300
It takes time. It doesn't just happen. You don't just suddenly start manufacturing somewhere,

89
00:06:34,300 --> 00:06:53,280
You have to build the equipment. You have to build the buildings. You have to get the electrical grid in place in order to do all this. This costs a lot of money and it takes a lot of time. I think we're finally going to start seeing the effects of this happen in 2026. It has implications across the investment spectrum.

90
00:06:53,280 --> 00:07:00,640
As a macro hedge fund manager, I'm focused on picking these things out and saying, okay, who will the winners be 6 to 12 months from now?

91
00:07:00,840 --> 00:07:07,760
Where is the regulation and the taxation and the fiscal stimulus being directed, and where is it not?

92
00:07:08,340 --> 00:07:14,600
And so I think if you look that way, you can actually see who will be the winners kind of 6 to 12 months into the future.

93
00:07:14,720 --> 00:07:22,160
We had a sneak peek of that in 2025 because markets look ahead, but I think those trends are going to really accelerate as we head into 2026.

94
00:07:22,940 --> 00:07:26,280
So Trump obviously made a big deal about bringing back manufacturing to the U.S.

95
00:07:26,400 --> 00:07:27,980
Like you say, that takes some time.

96
00:07:28,100 --> 00:07:40,140
But why would all the capital that's being funneled into different locations, like you say, them picking winners and picking losers, why has that money not been going into manufacturing while it's been in this kind of contraction, recession-type environment?

97
00:07:40,720 --> 00:07:43,760
So basically, it's because we've been waiting for 2026 to start.

98
00:07:43,760 --> 00:07:55,020
So some started with the fiscal new year, which was in October for the US, but we don't see the tax breaks basically to take effect until 2026.

99
00:07:55,180 --> 00:07:55,960
So what does that mean?

100
00:07:56,060 --> 00:07:59,160
So most people have heard about the depreciation rule.

101
00:07:59,220 --> 00:08:00,720
You can do 100% depreciation.

102
00:08:01,380 --> 00:08:03,840
I'm not an accountant, but here's what I do know about that.

103
00:08:03,840 --> 00:08:17,780
So if you are going to build a data center or a manufacturing center and buy a bunch of equipment, or if you're a Bitcoin miner and you're going to buy a crazy amount of ASICs and plug them in, you're going to wait until January of 2026 to do that.

104
00:08:17,900 --> 00:08:23,640
Why? Because then you can do 100% depreciation right away, right off the bat in 2026.

105
00:08:23,860 --> 00:08:28,860
And the businesses, they start having effects from their taxation as early as January 15th.

106
00:08:28,860 --> 00:08:31,040
So that's kind of the first little milestone date for them.

107
00:08:31,040 --> 00:08:57,620
What that means is, say, a Bitcoin miner who bought a lot of ASICs can depreciate 100%. That moves directly to their cash flows, and it lowers their taxes by that amount. So they pay less taxes. There are some Bitcoin miners that I think will be paying close to zero taxes for 2026 and probably 2027 and probably roll forward all the way into 2028 because of this depreciation rule.

108
00:08:57,620 --> 00:09:07,780
That, even though it's a little accounting gimmick, it means they have higher operational cash flows, which means they can actually use that extra cash flow to buy Bitcoin with.

109
00:09:08,620 --> 00:09:16,300
And so basically miners that have been waiting to say buy Bitcoin, they're going to wait for this rule to take effect in 2026.

110
00:09:16,300 --> 00:09:22,280
And then I think what that means is they're going to suddenly free up a ton of cash flow on their on their statements, on their balance sheets.

111
00:09:22,800 --> 00:09:27,620
And they're going to they're going to start buying Bitcoin in size and it's going to be very beneficial.

112
00:09:28,080 --> 00:09:31,940
That's just Bitcoin miners. The manufacturing sector itself is also going to be doing that.

113
00:09:32,000 --> 00:09:35,120
And we're going to see the effects. And that's what Scott Bessent has been hinting at.

114
00:09:35,120 --> 00:09:37,580
He's like, hey, I'm also the head of the IRS, as it turns out.

115
00:09:38,000 --> 00:09:46,660
And I'm telling you, you're going to see cash flow starting to move in huge amounts to the manufacturing sector, to the people basically that we're favoring.

116
00:09:46,940 --> 00:09:51,760
If you're in one of these sectors and you're building your business aggressively, you will be rewarded for that.

117
00:09:51,760 --> 00:09:57,000
And I think people are underestimating the effects that this is going to have as we head into 2026.

118
00:09:58,020 --> 00:10:01,920
So you think hash rate is going to go absolutely exponential in 2026 then?

119
00:10:01,920 --> 00:10:11,340
Because if it's essentially a full tax write-off to buy Bitcoin miners, then I'd expect that to be an insane year for Bitcoin mining.

120
00:10:11,620 --> 00:10:13,700
It's like the hardest business in the world just got harder.

121
00:10:14,660 --> 00:10:15,120
Right, right.

122
00:10:15,320 --> 00:10:19,660
And so with that, the difficulty adjustment will also get much harder.

123
00:10:19,980 --> 00:10:22,600
So that's the fun part about Bitcoin.

124
00:10:24,080 --> 00:10:26,400
If you're a miner, it's a dog-eat-dog business.

125
00:10:26,520 --> 00:10:28,180
It's really tough, as we both know.

126
00:10:28,460 --> 00:10:31,660
But I think that people need to take this seriously.

127
00:10:31,920 --> 00:10:37,100
this is really going to have a significant effect on basically the muscle of America,

128
00:10:37,240 --> 00:10:41,400
like bringing manufacturing back to America. I think we're finally going to see the effects.

129
00:10:41,400 --> 00:10:47,480
And I would not also underestimate the desire for the Trump administration and with Besant at the

130
00:10:47,480 --> 00:10:53,780
helm financially. I look at Trump as like the CEO now of America and Besant is the CFO and they kind

131
00:10:53,780 --> 00:10:59,400
of work in tandem. And I would not underestimate the desire of those two to goose the economy

132
00:10:59,400 --> 00:11:00,940
before midterm elections.

133
00:11:01,220 --> 00:11:03,840
And so I think we're going to have a smoking hot economy

134
00:11:03,840 --> 00:11:05,300
by kind of second quarter,

135
00:11:05,920 --> 00:11:09,220
somewhere in there, second, third quarter of 2026.

136
00:11:09,220 --> 00:11:12,180
And that bodes well for Bitcoin coming full circle.

137
00:11:13,400 --> 00:11:15,120
With fiat money constantly debasing,

138
00:11:15,420 --> 00:11:16,880
wealth preservation isn't optional.

139
00:11:17,400 --> 00:11:18,740
That's why I recommend Swan Bitcoin,

140
00:11:19,200 --> 00:11:20,820
a team of dedicated Bitcoiners

141
00:11:20,820 --> 00:11:22,260
who work with families and businesses

142
00:11:22,260 --> 00:11:24,820
to build and secure generational wealth with Bitcoin.

143
00:11:25,580 --> 00:11:26,900
Strong relationships with clients

144
00:11:26,900 --> 00:11:28,680
are at the center of everything Swan does.

145
00:11:28,680 --> 00:11:50,240
A dedicated Swan private wealth representative, which is a real person that you can text and call, will help you build a Bitcoin wealth strategy using Swan's comprehensive platform of Bitcoin services, including tax advantage retirement accounts, advanced Bitcoin cold storage using collaborative self-custody, inheritance planning with both trust and entity accounts, tax loss harvesting, asset-backed loans, and more.

146
00:11:51,040 --> 00:11:53,420
Swan have helped over 100,000 clients since 2020.

147
00:11:53,980 --> 00:11:56,980
And if you're serious about acquiring and securing Bitcoin, I recommend Swan.

148
00:11:56,980 --> 00:12:04,560
Meet the team at swan.com forward slash wbd which is swan.com forward slash wbd.

149
00:12:04,960 --> 00:12:08,260
What if you could lower your tax bill and stack bitcoin at the same time?

150
00:12:08,700 --> 00:12:11,360
Well by mining bitcoin with blockware you can.

151
00:12:11,920 --> 00:12:16,400
New tax guidelines from the big beautiful bill allow American miners to write off 100% of the

152
00:12:16,400 --> 00:12:20,960
cost of their mining hardware in a single tax year. That's right 100% write-off.

153
00:12:21,260 --> 00:12:26,260
So if you have $100,000 in capital gains or income you can purchase $100,000 of miners

154
00:12:26,260 --> 00:12:31,460
and offset it entirely. Blockware's mining as a service enables you to start mining Bitcoin right

155
00:12:31,460 --> 00:12:36,260
now without lifting a finger. Blockware handles everything from securing the miners to sourcing

156
00:12:36,260 --> 00:12:41,380
low-cost power to configuring the pool, they do it all. You get to stack Bitcoin at a discount

157
00:12:41,380 --> 00:12:46,500
every single day while also saving big come tax season. Get started today by going to

158
00:12:46,500 --> 00:12:52,260
mining.blockwaresolutions.com forward slash wbd. Of course none of this is tax advice,

159
00:12:52,260 --> 00:12:56,100
speak to your accountant or tax advisor to understand how these rules apply to you

160
00:12:56,260 --> 00:13:00,520
And then head over to mining.blockwaresolutions.com forward slash WBD

161
00:13:00,520 --> 00:13:04,940
and you'll get one week of free hosting and electricity with each hosted miner purchased.

162
00:13:05,440 --> 00:13:08,580
What Bitcoin Did is brought to you by the massive legends, Iron,

163
00:13:09,040 --> 00:13:12,840
the largest NASDAQ listed Bitcoin miner using 100% renewable energy.

164
00:13:13,620 --> 00:13:15,360
Iron are not just powering the Bitcoin network,

165
00:13:15,360 --> 00:13:20,140
they're also providing cutting edge computing resources for AI, all backed by renewable energy.

166
00:13:20,900 --> 00:13:23,640
We've been working with their founders Dan and Will for quite some time now

167
00:13:23,640 --> 00:13:25,360
and have been really impressed with their values,

168
00:13:25,540 --> 00:13:27,500
especially their commitment to local communities

169
00:13:27,500 --> 00:13:29,240
and sustainable computing power.

170
00:13:29,900 --> 00:13:31,200
So whether you're interested in mining Bitcoin

171
00:13:31,200 --> 00:13:33,020
or harnessing AI compute power,

172
00:13:33,220 --> 00:13:34,220
IREN is setting the standard.

173
00:13:34,760 --> 00:13:38,600
Visit iren.com to learn more, which is I-R-E-N.com.

174
00:13:39,340 --> 00:13:43,220
So this obviously isn't like anything to do with the Fed

175
00:13:43,220 --> 00:13:44,460
or the Treasury or money printing,

176
00:13:44,640 --> 00:13:47,880
but it's massive amounts of money

177
00:13:47,880 --> 00:13:50,300
from public and private companies going into the economy.

178
00:13:50,540 --> 00:13:52,860
Does that have any impact on inflation

179
00:13:52,860 --> 00:13:54,280
and things like that.

180
00:13:55,000 --> 00:13:56,780
So somebody has to pay for this, right?

181
00:13:56,880 --> 00:13:59,840
So we know that this fiscal stimulus, as Lynn Alden says,

182
00:13:59,880 --> 00:14:01,600
nothing stops the strain, and I agree with her.

183
00:14:01,620 --> 00:14:03,760
And I think that that's actually going to continue

184
00:14:03,760 --> 00:14:08,840
and probably accelerate where the U.S. runs massive fiscal deficits.

185
00:14:09,420 --> 00:14:13,320
When we say that's running massive fiscal deficits,

186
00:14:13,820 --> 00:14:17,460
that's sort of a fancy term for basically the Congress in the U.S.

187
00:14:17,460 --> 00:14:19,100
is spending more money than it has.

188
00:14:19,100 --> 00:14:21,720
So it's borrowing money to spend money.

189
00:14:21,720 --> 00:14:26,520
And the way it borrows money is by creating treasuries. And the way that the current

190
00:14:26,520 --> 00:14:31,780
Treasury Secretary Besant and Yellen before him like to do that is by issuing tons of T-bills.

191
00:14:32,220 --> 00:14:36,960
So when the government wants to spend money, the Treasury issues a crazy amount of T-bills.

192
00:14:37,400 --> 00:14:44,140
Right now, most of those T-bills are being held in money market funds across America. I think the

193
00:14:44,140 --> 00:14:51,560
last time I checked, there's about $7.6 trillion held in money market funds right now. As the T-bill

194
00:14:51,560 --> 00:14:56,800
yield comes down because the federal funds rate is coming down, that would be less and less

195
00:14:56,800 --> 00:15:01,500
desirable for boomers to park their cash in, right? So they've been super happy at 5% yields.

196
00:15:01,660 --> 00:15:07,620
They're a little less happy at 4.5% to 4% yields. Now that the Fed funds rate is even lower,

197
00:15:07,700 --> 00:15:15,620
now those yields are going to go down to kind of 3.75%, 3.5%. After a while, the American boomers

198
00:15:15,620 --> 00:15:19,740
are going to be like, you know what? That's not a good enough yield for me. I like 5%. I don't love

199
00:15:19,740 --> 00:15:27,420
3%. It's just not great. And so we should start seeing tremors in the bond system even more. So

200
00:15:27,420 --> 00:15:33,180
that's why I believe the Fed just recently started doing, what do they call it? The...

201
00:15:33,180 --> 00:15:34,980
Not QEQA.

202
00:15:35,700 --> 00:15:39,040
Yeah, it's not QEQA and I can't remember. It's the Reserve Management Operations. RMO,

203
00:15:39,200 --> 00:15:44,040
Reserve Management Operations. That's why they're doing that because basically what they're doing

204
00:15:44,040 --> 00:15:49,540
is they're saying, okay, we're going to start buying $40 billion worth of T-bills a month.

205
00:15:49,740 --> 00:15:52,280
And they say they're only going to do that through taxis,

206
00:15:52,280 --> 00:15:54,860
basically through April of 2026.

207
00:15:54,860 --> 00:16:05,228
I think that that will continue once you start QE It really hard to stop QE They don call it QE but it is QE So basically all they doing is they saying we got your back treasury

208
00:16:05,548 --> 00:16:07,268
You print as many T-bills as you want.

209
00:16:07,607 --> 00:16:09,067
We'll use our intermediaries.

210
00:16:09,148 --> 00:16:11,048
And this time it's going to be the money market funds

211
00:16:11,048 --> 00:16:13,628
to basically, we'll indirectly fund them.

212
00:16:13,628 --> 00:16:17,067
They'll buy the T-bills and we'll buy it all back

213
00:16:17,067 --> 00:16:18,808
by creating reserves.

214
00:16:19,247 --> 00:16:21,388
And so basically they're funding the treasury

215
00:16:21,388 --> 00:16:23,148
and that's the way QE always works.

216
00:16:23,148 --> 00:16:44,688
And whether or not people want to call it QE, it is QE. QE is traditionally the long end of the yield curve, so long dated treasuries. Just because it's shorter end money market, you know, T-bill kind of terms, it still is QE. It's still the Fed buying the debt of the government, which is the Congress spending more money than it has, and it's being issued by the treasury.

217
00:16:44,688 --> 00:16:48,268
So yes, that's bullish for risk assets.

218
00:16:48,447 --> 00:16:52,827
Yes, that is inflationary, but it will be selectively inflationary, I think, as throughout

219
00:16:52,827 --> 00:16:54,268
2026 and 2027.

220
00:16:54,867 --> 00:17:00,408
Is it even more inflationary than normal QE on the 30-year bonds because it's more money-like?

221
00:17:00,987 --> 00:17:02,867
So not really.

222
00:17:03,067 --> 00:17:10,068
I think what matters more is how much is Congress spending, how much is the monetary supply

223
00:17:10,068 --> 00:17:14,307
expanding faster than underlying economic growth?

224
00:17:14,307 --> 00:17:21,428
So like in an ideal situation, the monetary supply would expand at about the same rate as the economy.

225
00:17:21,727 --> 00:17:25,408
If you have a fiat money system, that would be a responsible fiat management system.

226
00:17:25,888 --> 00:17:32,547
But what they're doing is they're expanding the monetary base faster than the underlying economy is growing, basically.

227
00:17:33,027 --> 00:17:37,148
And when you get that, you get inflation, but you don't always see it just in prices.

228
00:17:37,148 --> 00:17:39,388
And we saw that throughout the 2010s, right?

229
00:17:39,388 --> 00:17:46,547
We didn't have the CPI wasn't going wild back in the 2010s in the US, but but assets were ripping.

230
00:17:47,207 --> 00:17:50,307
And so what happens is it's where is that where is that money going?

231
00:17:50,467 --> 00:17:57,748
If you're if you're taking payments and now Trump is talking about the warrior check or whatever the war, you know, 1776 to two soldiers.

232
00:17:58,608 --> 00:18:02,767
That's that's great. You know, they're talking about other forms of basically entitlements.

233
00:18:02,767 --> 00:18:08,447
Whenever you just directly give money to people in their checking account, that is inflationary.

234
00:18:08,447 --> 00:18:23,408
But if you take this money, say, and put it into things like the manufacturing sector or directly into AI or semiconductors or military companies, you know, or rare earth materials, pick your winner that they're choosing for the next year or so.

235
00:18:24,127 --> 00:18:33,868
I would expect because they're directing the fire hose in those areas, those things will increase in price relative to the rest of the economy.

236
00:18:33,868 --> 00:18:39,027
So it's not necessarily inflationary in terms of price terms, in terms of like, you know,

237
00:18:39,127 --> 00:18:44,188
soup and food going up or real estate going up, but it will cause the price to go up and

238
00:18:44,188 --> 00:18:45,287
the winners that they're choosing.

239
00:18:46,467 --> 00:18:48,707
So they're choosing AI as one of the winners in this.

240
00:18:49,108 --> 00:18:53,328
And this might be a bit too tinfoil hat, but Scott Percent is a really smart man.

241
00:18:53,467 --> 00:18:57,287
He knows that the economy long term is in a really tricky spot.

242
00:18:57,787 --> 00:19:02,848
And one of the questions I've had for a while is, are they choosing AI as a winner because

243
00:19:02,848 --> 00:19:06,688
they want to get the productivity boom from AI to save the economy longer term.

244
00:19:07,868 --> 00:19:13,188
Definitely. That's one of them. Also for military reasons. I think what I appreciate about this

245
00:19:13,188 --> 00:19:18,287
administration is even though they don't talk about this publicly, I think they have, and I

246
00:19:18,287 --> 00:19:25,688
side with Luke Groman in this way, is I think they have sized themselves up to China and realized we

247
00:19:25,688 --> 00:19:30,508
can't win in a war against China. We probably can't even win in a war against Russia, even though

248
00:19:30,508 --> 00:19:35,148
We tend to think of them as they don't have quite the asset base that we have.

249
00:19:36,047 --> 00:19:44,307
I think looking at the geopolitical world order, and if we want to get into this, I actually really enjoy talking about this kind of stuff because I think the world order is changing.

250
00:19:44,707 --> 00:19:54,947
I think we have reached the end of American imperialism, and they're pulling back from world domination and controlling all of the world's choke points and military bases everywhere.

251
00:19:54,947 --> 00:20:01,388
I think they're being, even though they're not saying this publicly, they're withdrawing and we're going towards the Monroe Doctrine.

252
00:20:01,527 --> 00:20:03,348
Like we're focusing on the Western Hemisphere.

253
00:20:04,027 --> 00:20:09,508
And God bless Central and South America if the U.S. focuses on you from a military standpoint.

254
00:20:09,688 --> 00:20:10,668
And I think we are, right?

255
00:20:10,688 --> 00:20:13,348
We're seeing the military buildup outside of Venezuela right now.

256
00:20:13,807 --> 00:20:16,547
I would not want to be in Venezuela's shoes right now.

257
00:20:17,227 --> 00:20:19,928
But I think we're pulling back from the Middle East intentionally.

258
00:20:20,188 --> 00:20:21,568
We've already pulled out of NATO.

259
00:20:21,568 --> 00:20:25,368
We basically left Europe up to fend itself against Russia.

260
00:20:26,027 --> 00:20:26,768
Super interesting.

261
00:20:27,108 --> 00:20:33,108
I mean, you see quotes coming out of Europe right now talking about basically buckle up for the next world war.

262
00:20:33,627 --> 00:20:40,268
And, you know, we might have to start the draft again in some of these countries to fight Russia.

263
00:20:40,428 --> 00:20:41,088
I mean, that's crazy.

264
00:20:41,227 --> 00:20:44,947
They don't have even a they have a barely functional military right now.

265
00:20:44,947 --> 00:20:59,928
So we're going to see all of them, all of these countries ramping up military spending, trying to build up their industrial bases and build up the military industrial complex, which has been non-existent for about 30, 40, 50 years or so as they've relied on the U.S. and gone green.

266
00:21:00,328 --> 00:21:01,807
They're paying for that now.

267
00:21:02,307 --> 00:21:08,027
And then also interesting is watching Japan and China trade barbs.

268
00:21:08,027 --> 00:21:17,068
and the U.S. is just sort of loosely supporting Japan and Taiwan, but not aggressively supporting

269
00:21:17,068 --> 00:21:22,127
them. And I think that's also intentional and a sign of things to come. I think if we look five to

270
00:21:22,127 --> 00:21:27,987
10 years from now, there will have been war between China and Taiwan. And I think they're

271
00:21:27,987 --> 00:21:32,947
going to take back Taiwan. I think they're going to be going toe to toe with Japan. And I think

272
00:21:32,947 --> 00:21:38,227
China, after about 60 years or so, is going to break out of the fence that they've been in.

273
00:21:38,227 --> 00:21:56,148
So, you know, along the Pacific Rim, basically, there's been, you know, from Alaska, South Korea, Japan, and down into the Philippines, we've been hemming in Russia and China along the sea there, basically not allowing them to do what they want to do.

274
00:21:56,148 --> 00:22:03,527
So their economy, for their ships to run through there, they have to go through straits that are controlled by the U.S. and controlled by the West.

275
00:22:04,068 --> 00:22:07,008
I think that they're going to break free from that in the next five to 10 years.

276
00:22:07,047 --> 00:22:09,707
And that's going to really change the whole geopolitical world order.

277
00:22:09,707 --> 00:22:15,328
China is going to break free from the fence that they've been in and been contained by the West and predominantly by the U.S.

278
00:22:15,787 --> 00:22:18,588
And I think the U.S. and the Trump administration recognizes that.

279
00:22:18,727 --> 00:22:21,668
And so we're already pulling back in advance of that.

280
00:22:21,668 --> 00:22:41,508
And then focusing, we're basically making Venezuela, Colombia, that whole region, which happens to be very oil rich. That's sort of the new Middle East. I think that's going to be the new Middle East policy for the US. And we won't have much of a presence in the Middle East going forward probably 10, 20 years from now. So it's going to be a very different world order, I think.

281
00:22:41,508 --> 00:22:45,707
that's super interesting do you think that's part of the reason that trump's pushing the kind of

282
00:22:45,707 --> 00:22:49,568
america first agenda not that i think that's probably a good thing anyway but do you think

283
00:22:49,568 --> 00:22:54,908
it's almost like a positive spin on saying we don't have what it takes out here against china

284
00:22:54,908 --> 00:23:00,527
let's focus on ourselves i absolutely do i think a lot of people don't agree with that or see that

285
00:23:00,527 --> 00:23:04,868
but to me it's very obvious and i'm i'm actually thankful they're doing that and i think a lot of

286
00:23:04,868 --> 00:23:09,008
the world is thankful we're finally doing that i think america has been stepping on toes around

287
00:23:09,008 --> 00:23:14,727
the world too much for too long. And we've been funding it by exporting treasuries to the world

288
00:23:14,727 --> 00:23:19,168
and basically gutting our entire manufacturing base. And now we're paying the price for that.

289
00:23:19,287 --> 00:23:23,408
And so I'm thankful and I get why they're talking about that. They're issuing all of the,

290
00:23:23,648 --> 00:23:28,727
I don't, so, and I think I said this on your show before, I like most of the policies of

291
00:23:28,727 --> 00:23:32,467
the Trump administration. They're basically recognizing like, look, we've been basically

292
00:23:32,467 --> 00:23:36,368
shooting ourselves in the foot for the last 20 years or so. And we're basically giving all of

293
00:23:36,368 --> 00:23:42,127
our manufacturing capabilities over to China and Southeast Asia. And now like if they want to break

294
00:23:42,127 --> 00:23:46,307
free and go to war, we have no way to stop them anymore. And if we try to stop them, we're

295
00:23:46,307 --> 00:23:52,248
literally buying our weapons from them to fight them. Like there's no way we can win this battle

296
00:23:52,248 --> 00:23:57,648
anymore. And we have our huge tankers and destroyers, and I shouldn't be talking because

297
00:23:57,648 --> 00:24:03,648
I'm not a military guy at all, but we have our huge warships that seem super powerful that we

298
00:24:03,648 --> 00:24:07,908
would just totally crush. If we went back into World War II, I mean, the US would just dominate,

299
00:24:08,027 --> 00:24:12,207
right? But we're not in World War. We're about 80 years beyond that now. And so World War III

300
00:24:12,207 --> 00:24:18,727
is the age of hypersonic missiles and drones. And we are woefully underprepared. The whole West is

301
00:24:18,727 --> 00:24:24,008
just, we have nothing on China and Russia in those areas. And if you have just massive

302
00:24:24,008 --> 00:24:29,268
destroyer or aircraft carrier, what is it going to do against a hypersonic missile, right? China

303
00:24:29,268 --> 00:24:33,627
has an arsenal of missiles that travel five times the speed of sound. Like, how are we going to stop

304
00:24:33,648 --> 00:24:39,328
that. And so they're just sitting ducks. And so is Europe. So anyways, and I don't mean to get too

305
00:24:39,328 --> 00:24:44,148
pessimistic about this, but I just think it's what I appreciate about this administration is I think

306
00:24:44,148 --> 00:24:48,568
they have a realistic view of where we are, even though they don't necessarily share it publicly

307
00:24:48,568 --> 00:24:54,088
because we don't want to break the spirit of America or necessarily of the West. But we're

308
00:24:54,088 --> 00:24:59,908
way behind the eight ball right now. We're like two decades behind in our capabilities. And so

309
00:24:59,908 --> 00:25:05,487
the best thing we can do and i think these are what the closed door meetings with uh trump and

310
00:25:05,487 --> 00:25:11,508
putin and trump and xi from china i think it's basically like we won't mess with you if you don't

311
00:25:11,508 --> 00:25:17,908
mess with us we'll give you the east we'll focus on the west and like we won't outright say we're

312
00:25:17,908 --> 00:25:23,367
going to defend taiwan you can break free we'll we'll give them some of the weapons that you gave

313
00:25:23,367 --> 00:25:29,188
to us that we bought from you we'll sell it back to taiwan um but we won't directly confront you

314
00:25:29,188 --> 00:25:31,168
And if we do, it'll only be pretend, right?

315
00:25:31,268 --> 00:25:36,648
So, and if Russia and NATO and all of Europe go to town, we'll sort of support Europe, but not really.

316
00:25:36,727 --> 00:25:39,987
We're just going to kind of say you're on your own and we'll supply some weapons that you made.

317
00:25:40,467 --> 00:25:42,788
And we'll give it back to them to fight you.

318
00:25:43,188 --> 00:25:46,288
But we're not going to get in your business if you don't get in our business.

319
00:25:46,408 --> 00:25:47,707
I think that's the new policy.

320
00:25:47,848 --> 00:25:50,748
You get the Eastern Hemisphere, we'll focus on the Western Hemisphere.

321
00:25:50,748 --> 00:25:58,707
Because we can still be a big bully to Venezuela and we can still take their oil, like we did in the Middle East for the last many decades.

322
00:25:59,188 --> 00:26:02,227
But we can't do that anymore against China and Russia.

323
00:26:02,447 --> 00:26:03,888
So it's just a different world now.

324
00:26:04,668 --> 00:26:05,648
Yeah, it's kind of scary.

325
00:26:05,848 --> 00:26:07,467
Like one of the things I think is interesting,

326
00:26:07,568 --> 00:26:08,828
I can't remember who I heard say this,

327
00:26:08,888 --> 00:26:09,528
but it was on a podcast.

328
00:26:09,748 --> 00:26:12,328
Someone described the Russia-Ukraine war

329
00:26:12,328 --> 00:26:14,848
as almost like R&D for the US and China

330
00:26:14,848 --> 00:26:17,528
to like watch what war looks like right now.

331
00:26:17,528 --> 00:26:19,627
And it's a really funny mix of like

332
00:26:19,627 --> 00:26:22,487
World War II style trench warfare and drones.

333
00:26:23,227 --> 00:26:25,707
And if the US is going to go to war with China,

334
00:26:26,607 --> 00:26:28,248
they're never going to compete them on drones.

335
00:26:28,248 --> 00:26:31,348
I don't know how many years behind, but decades.

336
00:26:33,408 --> 00:26:36,447
And the interesting thing that can come out of this now is like,

337
00:26:36,987 --> 00:26:42,467
with the BRICS countries, if they do get to market with an actual currency,

338
00:26:42,648 --> 00:26:45,168
whether that's like a basket of different fiat currencies,

339
00:26:45,388 --> 00:26:47,188
if there's commodities, whatever, if it's Bitcoin,

340
00:26:47,788 --> 00:26:50,547
that is going to be a real shot across the bow to the US

341
00:26:50,547 --> 00:26:53,987
because really the only thing left for them is their financial markets.

342
00:26:53,987 --> 00:27:03,987
I think that Besant and Trump, Besant mainly, has realized that it's no longer constructive for us to be the global reserve currency.

343
00:27:04,848 --> 00:27:10,788
And China realized this 10 years ago and so did Russia, especially after we sanctioned and stole their treasuries from them.

344
00:27:12,268 --> 00:27:17,008
And I used to think that the bricks were going to come up with their own currency.

345
00:27:17,148 --> 00:27:18,447
I actually don't think that anymore.

346
00:27:18,668 --> 00:27:21,528
I think they're just going to all have as much gold as possible.

347
00:27:21,528 --> 00:27:23,688
So they're using gold as their reserve asset.

348
00:27:23,688 --> 00:27:26,547
They're backing their currency and their economies with gold.

349
00:27:28,768 --> 00:27:31,248
It remains to be seen what the West will do.

350
00:27:31,467 --> 00:27:35,547
But I actually am hoping that they say, OK, you got your gold.

351
00:27:35,688 --> 00:27:36,788
We also have gold.

352
00:27:36,908 --> 00:27:41,588
But I also hope that they focus more on Bitcoin and that we see some progress on this in 2026.

353
00:27:42,508 --> 00:27:45,648
That's the better horse to bet on, I think, even though it's much smaller.

354
00:27:45,848 --> 00:27:49,188
And I think as Bitcoiners, we agree that it's a better form of sound money.

355
00:27:49,707 --> 00:27:53,168
So I'm hoping that we make the right decision and actually focus on Bitcoin.

356
00:27:53,168 --> 00:28:02,248
And I'm kind of optimistic that we will do that, that we'll actually start at a congressional level buying Bitcoin as like as a strategic asset here in the U.S.

357
00:28:02,307 --> 00:28:04,807
But remains to be seen. I'm not I'm not holding my breath for that.

358
00:28:05,268 --> 00:28:10,328
I think we're intentionally pulling back from the U.S. and the dollar being the global reserve asset.

359
00:28:10,588 --> 00:28:12,568
It's another unsaid thing that's happening.

360
00:28:12,727 --> 00:28:17,388
I think we're realizing that sanctions just don't really work against the BRICS nations anymore.

361
00:28:17,928 --> 00:28:19,408
We don't have that power.

362
00:28:19,508 --> 00:28:22,168
And all we're getting now because you have the whole Triffin dilemma thing.

363
00:28:22,168 --> 00:28:26,928
Now we're only seeing the negative consequences of being the world's reserve currency and reserve asset.

364
00:28:27,807 --> 00:28:30,028
So I think that's just going to continue to scale back.

365
00:28:30,168 --> 00:28:35,008
I think gold is going to continue to rise significantly against the dollar.

366
00:28:35,127 --> 00:28:40,307
And I think that just the global reserves in the U.S. dollar and treasuries is going to continue to drop.

367
00:28:40,768 --> 00:28:44,727
And the effects that that's going to have on the U.S. economy, I think, are profound.

368
00:28:44,727 --> 00:28:51,588
In fact, when we talked for our last episode, I showed that chart of the S&P 500 divided by gold.

369
00:28:52,168 --> 00:28:56,967
over the last 100 years. And that has only accelerated since we last talked. And I think

370
00:28:56,967 --> 00:29:03,107
that that is going to continue for the next 10 years or so. Basically, where the smart people

371
00:29:03,107 --> 00:29:07,727
are putting their money into hard assets and especially into gold. And I think Bitcoin will

372
00:29:07,727 --> 00:29:14,627
join that party here probably in 2026. And us in the US, even if our economy looks like it's doing

373
00:29:14,627 --> 00:29:19,408
well, and even if it looks like the stock market is doing okay, in real terms, it's going to be

374
00:29:19,408 --> 00:29:26,068
losing so much purchasing power that we actually will be losing. Even if your balance sheets are

375
00:29:26,068 --> 00:29:30,508
going up, if you look at your broker's statement and it's up 10% at the end of the year, you still

376
00:29:30,508 --> 00:29:34,528
might be losing purchasing power because of how fast the dollar is debasing. And I think that

377
00:29:34,528 --> 00:29:39,947
trend is going to continue and possibly accelerate for the next 10 years. So I want you to tell me

378
00:29:39,947 --> 00:29:44,268
if I'm being stupid with this theory. This is another harebrained scheme that I've got, and it

379
00:29:44,268 --> 00:29:49,268
could be complete nonsense. But one of the things that I've been thinking about is the writing is on

380
00:29:49,268 --> 00:29:54,107
the wall that fiat currency doesn't work long term, especially if you're running a trade deficit.

381
00:29:54,908 --> 00:30:01,288
But China have a ton of gold. They're running a trade surplus. Could they go to being a gold-backed

382
00:30:01,288 --> 00:30:08,648
currency again in a way, in a move to try and put pressure on the US? They certainly could. And I

383
00:30:08,648 --> 00:30:14,788
think in a way, they kind of already are, just by stockpiling gold as much as they have been and

384
00:30:14,788 --> 00:30:19,828
using it as a reserve asset. I don't think they'll want to peg their currency to gold.

385
00:30:20,588 --> 00:30:25,888
Governments don't like doing that. And the problem is, is when you get into fiscal trouble at some

386
00:30:25,888 --> 00:30:32,348
point, and most countries do at some point, you don't want to be constrained by gold if you can

387
00:30:32,348 --> 00:30:36,848
help it. And so I don't think they'll actually link their currency to gold, but I think they

388
00:30:36,848 --> 00:30:43,088
will continue to back their currency with huge stores of gold, if that makes sense. And I think

389
00:30:43,088 --> 00:30:46,508
the other BRICS nations will do that as well. I think they're all just going to pile up gold as

390
00:30:46,508 --> 00:30:50,207
much as they can, and they're not going to buy any U.S. treasuries. And they're also going to

391
00:30:50,207 --> 00:30:54,848
continue to wean off of buying U.S. stocks like the mega cap tech stocks. They're going to wean

392
00:30:54,848 --> 00:30:59,467
out of that and wean off of that and focus on their own economies. And as they do that, that's

393
00:30:59,467 --> 00:31:04,627
less liquidity, less capital coming into the U.S. from outside sources. And again, we're just going

394
00:31:04,627 --> 00:31:12,788
to be left on our own. And something is going to have to pay that price. And it's going to be the

395
00:31:13,088 --> 00:31:14,047
interesting times ahead.

396
00:31:14,828 --> 00:31:15,867
It's super interesting.

397
00:31:16,127 --> 00:31:17,428
Like, these are the things

398
00:31:17,428 --> 00:31:17,848
that make me think

399
00:31:17,848 --> 00:31:18,607
we're living in a simulation.

400
00:31:18,807 --> 00:31:19,607
Like, we live in the most

401
00:31:19,607 --> 00:31:20,428
interesting times.

402
00:31:20,987 --> 00:31:21,248
Yes.

403
00:31:21,528 --> 00:31:24,328
But if, so if they did this,

404
00:31:24,547 --> 00:31:26,867
if the US dollars stopped becoming,

405
00:31:27,207 --> 00:31:28,028
stopped being used

406
00:31:28,028 --> 00:31:28,987
as the world reserve asset,

407
00:31:29,828 --> 00:31:30,947
is that actually a good thing

408
00:31:30,947 --> 00:31:31,528
for the world,

409
00:31:31,668 --> 00:31:32,367
given enough time?

410
00:31:32,447 --> 00:31:33,748
Like, is this the painful period

411
00:31:33,748 --> 00:31:34,668
we need to go through

412
00:31:34,668 --> 00:31:36,268
in order to have a better future?

413
00:31:37,127 --> 00:31:38,467
Oh, I think so, for sure.

414
00:31:38,467 --> 00:31:39,987
And I mean, I think we're,

415
00:31:40,148 --> 00:31:41,388
I'm kind of a believer

416
00:31:41,388 --> 00:31:42,688
in the fourth turning theory.

417
00:31:42,688 --> 00:31:46,568
I think we're having multiple cycles converge right now.

418
00:31:46,568 --> 00:31:49,648
We have our business cycle convergence.

419
00:31:49,648 --> 00:31:53,928
And at the same time, we have kind of the fourth turning, which is every 80 to 100 years

420
00:31:53,928 --> 00:32:05,475
or so you have this major world war which kind of cleanses and globalizes the system and starts over And then I think we also at basically a 500 cycle that they talk about in The

421
00:32:05,475 --> 00:32:11,295
Sovereign Individual, basically, where we went from the Dark Ages to the Industrial Revolution,

422
00:32:11,295 --> 00:32:14,495
and people moved into cities and started working in factories and things like that.

423
00:32:14,755 --> 00:32:19,655
I think we're clearly moving into the digital age right now, and that has just astonishing

424
00:32:19,655 --> 00:32:21,135
repercussions as well.

425
00:32:21,135 --> 00:32:24,195
I don't think we'll even recognize the world 20 years from now.

426
00:32:24,275 --> 00:32:27,755
If we could fast forward 20 years, I don't think we'd even really get what's going on.

427
00:32:28,235 --> 00:32:29,315
That's how different it's going to be.

428
00:32:30,155 --> 00:32:31,935
So we have all of these things converging.

429
00:32:32,135 --> 00:32:38,275
But to your question, about every 80 to 100 years or so, the monetary system gets so out

430
00:32:38,275 --> 00:32:42,415
of sorts and there's so few winners who are winning so dramatically.

431
00:32:42,895 --> 00:32:47,775
And the rest of the masses, the poor plebs, the working class, whatever you want to call

432
00:32:47,775 --> 00:32:49,435
them, they're just getting crushed.

433
00:32:49,435 --> 00:32:53,435
And the income inequality is just outrageous right now.

434
00:32:53,615 --> 00:32:58,915
So like the poor working class, not just in America, around the world, because of government

435
00:32:58,915 --> 00:33:02,495
fiat currencies are getting just absolutely decimated.

436
00:33:02,615 --> 00:33:03,795
They have no purchasing power.

437
00:33:04,055 --> 00:33:08,315
They're just they're working two or three jobs just to try to pay their rent, just to

438
00:33:08,315 --> 00:33:10,795
try to buy groceries, just to try to have gas for their car.

439
00:33:10,915 --> 00:33:12,635
And they're still not making it.

440
00:33:12,715 --> 00:33:14,395
And they're getting super depressed.

441
00:33:15,195 --> 00:33:18,775
The deaths of despair are rising dramatically.

442
00:33:19,435 --> 00:33:21,515
in the US and around the world,

443
00:33:21,515 --> 00:33:23,715
violence is starting to increase dramatically.

444
00:33:23,715 --> 00:33:27,975
I think there's more conflicts happening around the world

445
00:33:27,975 --> 00:33:30,315
than the last time we had this many conflicts

446
00:33:30,315 --> 00:33:32,915
happening around the world was World War II.

447
00:33:32,915 --> 00:33:36,195
So the world is reaching a boiling point again,

448
00:33:36,195 --> 00:33:39,435
and then you have this big systematic reset.

449
00:33:39,435 --> 00:33:41,195
So what I appreciate, again, coming back

450
00:33:41,195 --> 00:33:43,535
to what the current administration is doing in the US,

451
00:33:43,535 --> 00:33:45,515
is I think they see that and realize

452
00:33:45,515 --> 00:33:47,795
that this is getting to be a serious problem.

453
00:33:47,795 --> 00:33:57,355
And they're doing things like these Trump accounts and they're encouraging people to like, okay, boomers who have all of the world's wealth right now in the US, it's the wealthiest generation in the history of humanity.

454
00:33:57,635 --> 00:34:05,415
They're like, dude, you got to give that money back to the Gen Z and these kids that are just dying to make it.

455
00:34:05,575 --> 00:34:06,595
They can't find work.

456
00:34:06,695 --> 00:34:07,715
They can't afford an apartment.

457
00:34:07,895 --> 00:34:08,995
They're living in their parents' basement.

458
00:34:09,115 --> 00:34:10,035
They can't afford food.

459
00:34:10,595 --> 00:34:14,075
You have to start giving that money back or they are going to come and take it from you.

460
00:34:14,175 --> 00:34:15,495
And it's not going to be pretty, right?

461
00:34:15,495 --> 00:34:22,515
I mean, I think we're at that point now where you start seeing like civil wars where the poor working class just can't take it anymore.

462
00:34:22,835 --> 00:34:30,275
And so they basically overrun the ruling class and the ruling elites need to make some decisions and they need to do it quickly.

463
00:34:30,835 --> 00:34:35,875
Or when the system reset happens, they're going to be the ones who pay the steepest price for it.

464
00:34:36,555 --> 00:34:39,035
Do you wish you could access cash without selling your Bitcoin?

465
00:34:39,555 --> 00:34:40,575
Well, Ledder makes that possible.

466
00:34:40,575 --> 00:34:48,875
They're the global leader in Bitcoin-backed lending and since 2018 they've issued over $9 billion in loans with a perfect record of protecting client assets.

467
00:34:49,655 --> 00:34:56,915
With Ledin you get full-costal loans with no credit checks or monthly repayments, just easy access to dollars without selling a single sat.

468
00:34:57,755 --> 00:35:06,195
As of July 1st, Ledin is Bitcoin only, meaning they exclusively offer Bitcoin-backed loans with all collateral held by Ledin directly or their funding partners.

469
00:35:06,815 --> 00:35:09,035
Your Bitcoin is never lent out to generate interest.

470
00:35:09,035 --> 00:35:14,195
I recently took out a loan with Ledin. The whole process was super easy. The application took me

471
00:35:14,195 --> 00:35:18,755
less than 15 minutes and in a few hours I had the dollars in my account. It was really smooth.

472
00:35:19,395 --> 00:35:24,775
So if you need cash but you don't want to sell Bitcoin, head over to ledin.io forward slash WBD

473
00:35:24,775 --> 00:35:31,955
and you'll get 0.25% off your first loan. That's ledin.io forward slash WBD. If you already self

474
00:35:31,955 --> 00:35:37,135
custody of Bitcoin, you know the deal with hardware wallets. Complex setups, clumsy interfaces and a

475
00:35:37,135 --> 00:35:42,655
seed phrase that can be lost, stolen or forgotten. Well, BitKey fixes that. BitKey is a multi-sig

476
00:35:42,655 --> 00:35:47,295
hardware wallet built by the team behind Square and Cash App. It packs a cryptographic recovery

477
00:35:47,295 --> 00:35:52,455
system and built-in inheritance feature into an intuitive, easy-to-use wallet with no seed phrase

478
00:35:52,455 --> 00:35:58,655
to sweat over. It's simple, secure self-custody without the stress. And Time named BitKey one of

479
00:35:58,655 --> 00:36:05,055
the best inventions of 2024. Get 20% off at bitkey.world when you use the code WBD.

480
00:36:05,055 --> 00:36:12,295
that's b-i-t-k-e-y dot world and use the code w-b-d. This episode is brought to you by Anchor

481
00:36:12,295 --> 00:36:16,815
Watch. The thing that keeps me up at night is the idea of a critical error with my Bitcoin cold

482
00:36:16,815 --> 00:36:21,515
storage and this is where Anchor Watch comes in. With Anchor Watch your Bitcoin is insured with

483
00:36:21,515 --> 00:36:26,895
your own A-plus rated Lloyds of London insurance policy and all Bitcoin is held in their time-locked

484
00:36:26,895 --> 00:36:31,255
multi-sig vaults. So you have the peace of mind knowing your Bitcoin is insured while not giving

485
00:36:31,255 --> 00:36:35,595
up custody. So whether you're worried about inheritance planning, wrench attacks, natural

486
00:36:35,595 --> 00:36:40,835
disasters or just your own silly mistakes, you're protected by Anchor Watch. Rates for fully insured

487
00:36:40,835 --> 00:36:46,415
custody start as low as 0.55% and are available for individual and commercial customers located in

488
00:36:46,415 --> 00:36:51,215
the US. Speak to Anchor Watch for a quote and for more details about your security options and

489
00:36:51,215 --> 00:36:58,415
coverage. Visit anchorwatch.com today. That is anchorwatch.com. Can we go back a little bit to

490
00:36:58,415 --> 00:36:59,355
something you were talking about earlier,

491
00:36:59,555 --> 00:37:01,315
when you were saying that you think

492
00:37:01,315 --> 00:37:03,295
there's going to be some kind of conflict

493
00:37:03,295 --> 00:37:04,855
between China and Japan.

494
00:37:05,575 --> 00:37:07,755
And I want to talk more specifically about Japan

495
00:37:07,755 --> 00:37:09,795
and what's happening with their bond yields at the moment.

496
00:37:10,595 --> 00:37:11,795
Because I don't fully understand it.

497
00:37:11,795 --> 00:37:12,975
I've seen yields are going up.

498
00:37:13,435 --> 00:37:15,035
There's a bit of a crisis happening there.

499
00:37:15,115 --> 00:37:16,255
But what's actually happening?

500
00:37:17,135 --> 00:37:18,695
Well, so what we're finally seeing in Japan

501
00:37:18,695 --> 00:37:20,675
after a very, very long time

502
00:37:20,675 --> 00:37:23,315
is inflation is coming back to Japan.

503
00:37:23,955 --> 00:37:25,775
So, and that's, you know,

504
00:37:25,815 --> 00:37:27,215
they've been begging for inflation

505
00:37:27,215 --> 00:37:31,755
and doing this easing over, you know, for decades and decades trying to revive it.

506
00:37:31,915 --> 00:37:34,395
And now that it's back, they're like, oh, shoot, what do we do now?

507
00:37:34,455 --> 00:37:36,155
Like they kind of let the genie out of the bottle.

508
00:37:36,915 --> 00:37:38,795
And so that's what we're seeing.

509
00:37:38,795 --> 00:37:45,555
And then we have and then the investing repercussions of this are the unwind of the famous, you know, yen carry trade.

510
00:37:46,035 --> 00:37:51,635
And as leverage unwinds, that has effects throughout basically the Western world and the way that this leverage was used.

511
00:37:51,635 --> 00:38:00,655
So basically what's happening is future growth and inflation expectations are finally increasing in Japan for the first time since basically the 1990s.

512
00:38:01,455 --> 00:38:02,855
And these are the effects of that.

513
00:38:02,915 --> 00:38:04,835
You see the yields rising in the long term.

514
00:38:05,895 --> 00:38:07,595
Money has a price again.

515
00:38:07,715 --> 00:38:11,735
If you want to borrow money, it actually has a cost to that capital.

516
00:38:12,035 --> 00:38:15,835
And so you have to start making decisions of where do you want to invest your money?

517
00:38:15,915 --> 00:38:17,015
Do you want to keep it in bonds?

518
00:38:17,015 --> 00:38:21,895
If you have projects that can make money, they have to make more than the underlying cost of capital.

519
00:38:22,175 --> 00:38:24,355
And so that's what Japan is dealing with for the first time.

520
00:38:24,995 --> 00:38:32,075
And this whole yen carry trade concept has been going on for so long that the unwinding of that is fairly dramatic.

521
00:38:32,215 --> 00:38:38,475
When you have these jolts, each time the interest rates pops up a little bit higher, you see jolts in the financial system.

522
00:38:38,575 --> 00:38:44,475
And that's because these hedge funds all around the world have to unwind these trades that are no longer profitable or they're less profitable.

523
00:38:45,095 --> 00:38:54,635
So the end carry trade, am I right in saying that's basically them borrowing money in Japan at really low rates and then investing it elsewhere and just catching the spread, basically?

524
00:38:55,495 --> 00:39:01,475
Yeah, basically, that's the easiest way to think about it. So as the yields rise, it gets less lucrative to do that.

525
00:39:02,275 --> 00:39:07,075
And it was a huge trade, like trillions of dollars, maybe billions.

526
00:39:07,075 --> 00:39:09,855
Yeah, I got to be careful about how much I'm talking about it.

527
00:39:09,875 --> 00:39:12,435
But yes, the way I understand it is like in the trillions.

528
00:39:12,435 --> 00:39:15,515
I think the low, like below 10 trillion, but trillions.

529
00:39:16,235 --> 00:39:17,635
Yeah, my real question there would be like,

530
00:39:17,755 --> 00:39:21,175
what are the potential consequences from that carry trade unwinding?

531
00:39:21,415 --> 00:39:24,375
Will we see repercussions in like Western markets?

532
00:39:25,075 --> 00:39:26,235
I think absolutely.

533
00:39:26,415 --> 00:39:28,075
And especially in the US market.

534
00:39:28,175 --> 00:39:30,775
So basically what people were doing from around the world

535
00:39:30,775 --> 00:39:35,235
is borrowing cheap money and buying US mega cap tech stocks.

536
00:39:35,955 --> 00:39:39,515
So the magnificent seven stocks, basically, because they were can't lose.

537
00:39:39,715 --> 00:39:47,915
So everybody from central banks, from Switzerland to Japan to wherever you were in the world, whatever hedge fund you were running, you're looking for cheap liquidity.

538
00:39:47,915 --> 00:39:49,815
You're looking for cheap capital to borrow.

539
00:39:50,295 --> 00:39:54,055
And then you just put it in basically the NASDAQ and you make a lot of money.

540
00:39:54,175 --> 00:39:54,995
And it was very easy.

541
00:39:55,095 --> 00:39:57,855
And that's been the trade for the last 15 years or so.

542
00:39:57,975 --> 00:40:00,475
But that is, I think, again, coming to an end.

543
00:40:00,475 --> 00:40:04,375
And we're at the point now where it doesn't really make financial sense anymore.

544
00:40:04,375 --> 00:40:08,215
As the interest rates start to rise, you start to think, well, let's see, is this actually

545
00:40:08,215 --> 00:40:09,235
safe to do anymore?

546
00:40:09,835 --> 00:40:10,435
And you don't.

547
00:40:10,555 --> 00:40:15,395
And a lot of people, so what people do then is they withdraw their capital, their purchasing

548
00:40:15,395 --> 00:40:20,475
power out of the US, leaving the US to sort of fend for itself to do this whole buildup

549
00:40:20,475 --> 00:40:25,355
of manufacturing and the military industrial complex and the AI complex and the energy

550
00:40:25,355 --> 00:40:34,675
complex, which is all woefully behind at least energy and manufacturing. And Europe is sitting

551
00:40:34,675 --> 00:40:39,515
here like, oh, shoot. So the US just bailed on us with NATO. And now we're going to go to war

552
00:40:39,515 --> 00:40:43,515
with Russia. And we don't have a military really to speak of. And we don't have manufacturing

553
00:40:43,515 --> 00:40:50,055
capabilities much to think of. And we don't have real energy sources to think of. We got to pull

554
00:40:50,055 --> 00:40:56,175
our capital out of the U.S. just to help build up our own bases. So that further drops U.S. assets

555
00:40:56,175 --> 00:41:00,895
and it doesn't support the U.S. treasury market anymore like it did in the past. And then Japan,

556
00:41:01,375 --> 00:41:05,675
with their conflict with China coming, is doing the exact same thing. They're like, sure, we'll

557
00:41:05,675 --> 00:41:10,795
invest in the U.S., but if you're not going to back us militarily, then we need to get our own

558
00:41:10,795 --> 00:41:14,455
military going again. So now they're going to have to do that and they're going to have to put

559
00:41:14,455 --> 00:41:19,815
their capital in there. So I just think this whole, you know, the last 15 years or so of basically

560
00:41:19,815 --> 00:41:25,035
everybody levering up, just putting all your money into the US financial stock market system,

561
00:41:25,435 --> 00:41:31,155
and just you can't lose. That age is over now. That ended, I think, basically in 2022. And if

562
00:41:31,155 --> 00:41:35,655
you look at the charts, again, that's the chart I showed you last time, and that just looks more

563
00:41:35,655 --> 00:41:41,915
like the trend is even more pronounced now, is you go in these periods of 10 to 15 years or so

564
00:41:41,915 --> 00:41:47,295
where for 10 to 15 years, you can't lose investing in America, you just buy bonds,

565
00:41:47,295 --> 00:41:49,435
and you buy stocks and you'll just crush it.

566
00:41:49,835 --> 00:41:52,055
And then it gets just too overdone.

567
00:41:52,275 --> 00:41:53,715
And people are like, wait, why are we doing this?

568
00:41:53,735 --> 00:41:55,175
And I don't really trust America anymore.

569
00:41:55,255 --> 00:41:58,095
And like, they're going to have to debase the heck out of their dollar

570
00:41:58,095 --> 00:42:01,255
in order to pay for all of these crazy things they're talking about.

571
00:42:01,615 --> 00:42:03,815
And so people start pulling their capital away from it.

572
00:42:03,895 --> 00:42:07,435
And then it starts to decline relative to gold.

573
00:42:07,535 --> 00:42:10,435
And so gold starts to go up and hard assets start to go up.

574
00:42:10,815 --> 00:42:15,235
And I think like Bitcoin and basically any hard asset with a limited supply

575
00:42:15,235 --> 00:42:17,955
should do well, relatively speaking,

576
00:42:18,055 --> 00:42:21,215
to financialized assets relative to the last 10 years.

577
00:42:22,355 --> 00:42:23,315
It's funny, as you're talking,

578
00:42:23,475 --> 00:42:25,415
a load of pennies are dropping all at once

579
00:42:25,415 --> 00:42:27,395
because I don't know if you saw in the last couple of days,

580
00:42:27,835 --> 00:42:30,575
it might have even been today, I'm losing track,

581
00:42:30,715 --> 00:42:33,495
but the EU came out and said they were going to do

582
00:42:33,495 --> 00:42:36,915
a $90 billion print to help Ukraine in the war effort.

583
00:42:38,095 --> 00:42:38,675
I didn't see that.

584
00:42:38,695 --> 00:42:40,295
And that kind of fits in with what you were saying

585
00:42:40,295 --> 00:42:43,095
in terms of America being, you know,

586
00:42:43,395 --> 00:42:44,515
giving it a bit of a further reach,

587
00:42:44,515 --> 00:42:48,435
trying to stay away from that, the EU have realized they have to step in and do something.

588
00:42:48,615 --> 00:42:54,855
So printing $90 billion is a decent start. Right. And all of these Western nations like Japan,

589
00:42:54,855 --> 00:43:02,055
I consider them as part of our coalition, right? So Japan, US, Europe, they don't have any choice

590
00:43:02,055 --> 00:43:06,735
because they don't have a foundation to build on. They gave all of that to China over the last 30

591
00:43:06,735 --> 00:43:11,215
years. We just literally, the only solution is to print money and to fill in that gap.

592
00:43:11,215 --> 00:43:31,395
And so we'll see how long that lasts. And if nobody buys your debt, so when they say print money, that basically means the central banks are monetizing the debt of their government, right? So the government saying, we got to spend a crazy amount of money that we don't have to pay for this war that we're getting in and is only going to increase and get more expensive and get worse.

593
00:43:31,395 --> 00:43:54,995
And if nobody's going to buy our crazy government debt, then we have to monetize it ourselves. And what that means, if your central bank is buying your government's debt, the outlet valve is the currency. So the currency gets debased. So they're stealing the purchasing power of everybody who uses their currency in order for the government to spend money that it doesn't have.

594
00:43:55,335 --> 00:43:56,515
That's how the whole system works.

595
00:43:56,555 --> 00:43:58,875
And that's happening in every Western nation right now.

596
00:43:58,955 --> 00:44:00,195
And that's going to, I believe,

597
00:44:00,355 --> 00:44:02,255
accelerate dramatically in the coming years.

598
00:44:02,635 --> 00:44:04,235
It's one of those tricky things where

599
00:44:04,235 --> 00:44:06,995
it sounds terrible, but it's good for Bitcoin.

600
00:44:07,215 --> 00:44:08,475
And it's like, it's not necessarily

601
00:44:08,475 --> 00:44:10,115
the way you want Bitcoin to win,

602
00:44:10,315 --> 00:44:12,255
but it might be the way that Bitcoin does win.

603
00:44:14,355 --> 00:44:15,655
Just one more question on Japan

604
00:44:15,655 --> 00:44:17,175
before we get onto Bitcoin a little bit more.

605
00:44:17,915 --> 00:44:20,715
They were always seen as this like crazy outlier

606
00:44:20,715 --> 00:44:24,075
that could survive having 250% debt GDP

607
00:44:24,075 --> 00:44:24,935
or whatever they're at.

608
00:44:24,995 --> 00:44:26,515
while not having inflation.

609
00:44:27,435 --> 00:44:29,555
I guess this is like a two-part question.

610
00:44:29,995 --> 00:44:33,075
What's changed that's no longer the case?

611
00:44:33,635 --> 00:44:35,555
And will they be able to survive

612
00:44:35,555 --> 00:44:37,395
now they have got inflation coming back?

613
00:44:38,175 --> 00:44:40,815
So inflation is absolutely coming back

614
00:44:40,815 --> 00:44:45,355
in Japan and America and Europe.

615
00:44:45,935 --> 00:44:46,495
Absolutely.

616
00:44:46,755 --> 00:44:47,455
And it has to.

617
00:44:47,555 --> 00:44:48,555
And it has to accelerate.

618
00:44:48,555 --> 00:44:51,155
And what all of these countries are banking on

619
00:44:51,155 --> 00:44:53,955
is AI and robotics to save them.

620
00:44:53,955 --> 00:44:59,355
because AI and robotics, as people understand now, is extremely deflationary once it takes hold.

621
00:44:59,995 --> 00:45:05,035
And in fact, we're seeing a great example of AI and robotics taking hold in China right now.

622
00:45:05,595 --> 00:45:10,255
They're manufacturing, they have automated manufacturing that makes the rest of the world

623
00:45:10,255 --> 00:45:15,395
just look embarrassingly sad and terrible. And they're having massive deflation right now,

624
00:45:15,455 --> 00:45:19,775
and they can't even stop it, basically. So I think we're going to see a lot of printing in China

625
00:45:19,775 --> 00:45:23,875
of their currency just to sort of try to keep up with the deflation that's happening. And I

626
00:45:23,875 --> 00:45:29,275
don't think they'll be able to. And I think that what the Western world is banking on, Japan to

627
00:45:29,275 --> 00:45:35,095
your point, but also the US and Europe is like, you know, a decade behind, they're hoping to build

628
00:45:35,095 --> 00:45:41,735
up their robotic and manufacturing capabilities enough to actually spur a deflation and have it

629
00:45:41,735 --> 00:45:47,315
spur across the whole AI and robotics sector enough that they can get out of this crazy bind

630
00:45:47,315 --> 00:45:52,535
we're in. And so I think that's definitely the plan in the US here, is that they're basically

631
00:45:52,535 --> 00:45:58,835
going to just dump money into AI and robotics and energy and manufacturing. And they're going to try

632
00:45:58,835 --> 00:46:04,095
to goose the GDP just off the charts high. And I think they're actually probably going to succeed

633
00:46:04,095 --> 00:46:09,155
eventually. I don't know if it happens in 2026, but it's going to take hold at some point and

634
00:46:09,155 --> 00:46:14,255
it's going to succeed. And when it does, it's going to start out to be very inflationary because

635
00:46:14,255 --> 00:46:17,975
they're going to have to borrow money to do that. And people aren't buying our treasuries anymore.

636
00:46:17,975 --> 00:46:21,095
So we're going to have to monetize our own debt and that causes inflation.

637
00:46:21,715 --> 00:46:34,555
But as it takes hold and finally starts to turn and we start to have the capabilities that, say, China has currently, we're going to see, I think, a wave of deflation hit America and hit the Western world and actually hit the entire globe.

638
00:46:35,635 --> 00:46:38,615
Probably in the next sort of three to five year time frame.

639
00:46:38,955 --> 00:46:43,655
And then I think everybody is going to be dealing with how do you deal with deflation on a global scale?

640
00:46:43,655 --> 00:46:48,215
well, is this an age of abundance or is it like another Great Depression?

641
00:46:48,535 --> 00:46:50,815
And we're going to see how the different governments handle that.

642
00:46:50,895 --> 00:46:51,915
So that's what Japan is doing.

643
00:46:52,095 --> 00:46:53,635
Japan has terrible demographics.

644
00:46:54,155 --> 00:46:58,155
They're banking on AI and robotics to help fill in that gap.

645
00:46:58,755 --> 00:47:03,935
And as they kind of deal with this 250% debt-to-GDP ratio,

646
00:47:04,775 --> 00:47:07,595
they're going to first have to try to inflate their way out of it,

647
00:47:07,595 --> 00:47:10,675
but they have to grow their economy to try to grow their way out of that.

648
00:47:10,675 --> 00:47:12,635
and the only way they can do that

649
00:47:12,635 --> 00:47:15,055
is by basically going all in on AI and robotics.

650
00:47:15,435 --> 00:47:17,275
So I think that's what we're going to see in the coming years.

651
00:47:17,995 --> 00:47:18,955
It's super interesting.

652
00:47:19,115 --> 00:47:21,555
So I want to talk about Bitcoin more short term,

653
00:47:21,655 --> 00:47:23,535
but you just said something that I can't ignore.

654
00:47:23,535 --> 00:47:28,135
So if in three to five years we do hit this runaway deflation event

655
00:47:28,135 --> 00:47:30,095
where you basically can't stop it,

656
00:47:30,715 --> 00:47:32,595
what do you think that means for Bitcoin at that point?

657
00:47:33,835 --> 00:47:35,535
You know, I think a lot about that, Danny.

658
00:47:36,055 --> 00:47:38,715
First of all, deflation is incompatible

659
00:47:38,715 --> 00:47:46,475
with the credit-based fiat monetary system. So if it takes hold and continues, I actually think

660
00:47:46,475 --> 00:47:52,275
that's the end of that government's fiat currency. So I would keep a close eye on China.

661
00:47:53,075 --> 00:48:06,482
And as they continue to accelerate their robotics and manufacturing and AI I think that deflation is going to get so bad that I don know It might be the end of their currency And I think that why they stockpiling gold

662
00:48:07,722 --> 00:48:13,002
And I think Bitcoin will do well, too. But they obviously don't like Bitcoin because they can't control it.

663
00:48:13,043 --> 00:48:15,063
They can't fence it in as much.

664
00:48:17,582 --> 00:48:22,543
I think we're going to see fiat currencies really struggle in the next 10 years or so.

665
00:48:22,543 --> 00:48:25,262
So what does that mean for Bitcoin?

666
00:48:26,403 --> 00:48:33,602
I think we're going to see at some point, you know, probably if we get that massive, you know, deflationary event.

667
00:48:37,002 --> 00:48:45,002
It's hard to know because historically speaking, when we have deflation, at least here in the U.S., that's actually been negative for the price of Bitcoin in dollar terms.

668
00:48:46,363 --> 00:48:46,923
I don't know.

669
00:48:47,082 --> 00:48:49,063
You know, honestly, I don't know how to think about that.

670
00:48:49,063 --> 00:48:52,222
because I think the only thing that survives

671
00:48:52,222 --> 00:48:54,923
are actually sound money,

672
00:48:55,123 --> 00:48:56,203
are gold and Bitcoin.

673
00:48:58,482 --> 00:49:00,443
But you don't get those huge price stakes.

674
00:49:00,523 --> 00:49:01,482
I think what you just get

675
00:49:01,482 --> 00:49:03,923
is you have Weimar Germany type movements

676
00:49:03,923 --> 00:49:04,782
in fiat currency.

677
00:49:04,963 --> 00:49:06,663
So you'll see that in the price of Bitcoin

678
00:49:06,663 --> 00:49:08,163
and the price of gold as well.

679
00:49:08,602 --> 00:49:11,423
And then the fiat currency will just die at that point.

680
00:49:11,523 --> 00:49:12,943
And then the only thing left standing

681
00:49:12,943 --> 00:49:14,323
will be these sound monies.

682
00:49:15,123 --> 00:49:16,823
It's really hard to predict though

683
00:49:16,823 --> 00:49:18,403
what that means going forward.

684
00:49:18,403 --> 00:49:41,443
I think just at the other side of that, the world is priced in Bitcoin. And that kind of fits with my theory. What I've been talking about for a while now is the multi-decade approach. So the 2010s was the collectible phase for Bitcoin. The 2020s, which we're in now, is the store of value phase. Then comes the medium of exchange in the 2030s. And by the 2040s, I think Bitcoin is the world's unit of account.

685
00:49:41,443 --> 00:49:45,602
and I think everything is and you don't even think about bitcoin in dollar terms or fiat

686
00:49:45,602 --> 00:49:49,663
currency terms anymore it's just the world is priced in bitcoin at that point so like you know

687
00:49:49,663 --> 00:49:56,302
sailors projections of whatever 10 21 million by 2045 or whatever things are I don't think

688
00:49:56,302 --> 00:50:00,943
they'll even be the dollars around necessarily to think like that anymore I think the world will

689
00:50:00,943 --> 00:50:05,543
just be priced in bitcoin and so the way I look at it is how much will like a New York strip state

690
00:50:05,543 --> 00:50:06,943
cost in sats at that point.

691
00:50:07,723 --> 00:50:08,462
21 sats.

692
00:50:09,883 --> 00:50:12,002
It's honestly the wildest time.

693
00:50:12,943 --> 00:50:14,903
So maybe a little bit more short term.

694
00:50:15,602 --> 00:50:17,742
You think 2026 is going to be a good year for Bitcoin.

695
00:50:18,302 --> 00:50:20,782
Do you think it's going to be a good year across all risk assets?

696
00:50:22,262 --> 00:50:28,683
So I think it will be good in the asset classes that are picked as winners by the government.

697
00:50:29,423 --> 00:50:32,982
And so I think the way to explain what's been going on is in the rest of the world,

698
00:50:32,982 --> 00:50:36,002
so the non-Western world, the BRICS, let's just say that.

699
00:50:36,123 --> 00:50:40,183
So in the BRICS countries, they don't want anything to do with U.S. assets.

700
00:50:40,623 --> 00:50:43,262
They don't want U.S. financialized nonsense anymore.

701
00:50:44,102 --> 00:50:45,443
That's why gold has been winning.

702
00:50:45,602 --> 00:50:49,982
So gold and silver has been winning and commodities in general.

703
00:50:51,123 --> 00:50:52,282
And I think that will continue.

704
00:50:52,482 --> 00:50:55,282
It'll have ups and downs, but I think we'll see a continued

705
00:50:55,282 --> 00:51:00,423
or even an accelerating chart in those assets.

706
00:51:00,423 --> 00:51:06,343
in the u.s we've picked our winners and we've talked about them already right so the u.s the

707
00:51:06,343 --> 00:51:14,563
military industrial complex all things related uh um uh rare earth materials um industrial metals

708
00:51:14,563 --> 00:51:19,502
uh as well so your steel your titanium your aluminums the government is doing these private

709
00:51:19,502 --> 00:51:24,403
public partnership things going which it gives me the heebie-jeebies by the way i don't like these

710
00:51:24,403 --> 00:51:29,423
centrally controlled it's it's a sort of a form of communism um and that's what we're doing we're

711
00:51:29,423 --> 00:51:34,582
picking winners and losers, semiconductors, what else, whatever in manufacturing. So basically,

712
00:51:34,762 --> 00:51:39,063
these are electricity. So electrical, like there's going to be a race to produce more electrons,

713
00:51:39,163 --> 00:51:44,302
basically. So companies that are doing well in that, those are going to do well, I think,

714
00:51:44,623 --> 00:51:49,663
at the expense of the dollar and at the expense of basically everything else in the US economy.

715
00:51:49,663 --> 00:51:56,703
So I have kind of low expectations for most risk assets. I think, though, that the things that the

716
00:51:56,703 --> 00:52:01,643
government has selected as winners should continue to do well. I don't think any of them will do as

717
00:52:01,643 --> 00:52:07,723
well as, say, Bitcoin and gold, because the world is going to increasingly look at, like, why would

718
00:52:07,723 --> 00:52:12,123
anyone want your dollars? Like, this is kind of crazy. And why would we even want your stocks if

719
00:52:12,123 --> 00:52:16,863
they're kind of priced in dollars? What we'd want are hard assets and sound money. So I think we're

720
00:52:16,863 --> 00:52:21,502
just going to continue to see that trend accelerate in 2026 and probably 2027 as well.

721
00:52:22,102 --> 00:52:25,943
Yeah. In terms of, like, the four-year cycle is obviously coming up a lot now because Bitcoin's

722
00:52:25,943 --> 00:52:30,203
been crashing. And I think there's probably an element of that that is just a self-fulfilling

723
00:52:30,203 --> 00:52:35,102
prophecy in that if people think it exists, they'll start selling and then can they create it

724
00:52:35,102 --> 00:52:39,043
at least for a short period of time. I don't believe we're going to have a proper four-year

725
00:52:39,043 --> 00:52:44,482
cycle long-term bear market. I just don't see it. One of the things Checkmate always says,

726
00:52:44,563 --> 00:52:48,782
which I think is probably the best take on this, is that the bull market also is the bear that

727
00:52:48,782 --> 00:52:54,582
follows. And we never had an exponential run-up in Bitcoin. I don't see us having an 80% drawdown.

728
00:52:54,582 --> 00:52:56,383
It just doesn't seem likely to me.

729
00:52:56,782 --> 00:52:59,943
And like you said earlier, I wouldn't be surprised if we're close to a bottom already.

730
00:53:01,383 --> 00:53:07,883
It's just what I'm not sure of is what does a Bitcoin bull market look like now?

731
00:53:07,982 --> 00:53:11,043
Are we just going to just grind higher for a long period of time?

732
00:53:12,163 --> 00:53:12,782
I think it depends.

733
00:53:12,923 --> 00:53:17,962
So again, I think the solution that everybody is looking for is actually sort of right in front of our faces.

734
00:53:18,282 --> 00:53:23,383
If you see the US economy and specifically the manufacturing sector.

735
00:53:23,383 --> 00:53:38,663
And why do I think this is so strongly correlated? Well, first of all, let me finish. If you see the U.S. manufacturing PMI start to accelerate, I expect Bitcoin to start to accelerate as well. To me, that's the strongest correlation.

736
00:53:38,663 --> 00:54:04,482
And to your point, what you just said, this is the first cycle since 2010 where you can go back and look at Bitcoin prices. This is the first time where my system that I've developed hasn't shown a peak in Bitcoin. You usually have a point where all the lights are screaming. It's like, it's peaking, it's peaking, it's peaking. That didn't happen this cycle for the first time ever since basically 2009, 2010.

737
00:54:04,482 --> 00:54:11,343
So but now we're already back at levels that look like we're in deep value territory for Bitcoin.

738
00:54:11,523 --> 00:54:19,082
Like this is the time to be to really be loading up, which tells me and the whole reason for this is because the economy has just been lagging.

739
00:54:19,203 --> 00:54:25,602
It never had a cyclical economic peak for the first time ever in the US since World War Two.

740
00:54:25,802 --> 00:54:32,502
It's never happened where we didn't have a recovery, where we just have just languished in this sort of recessionary contractionary state for three years.

741
00:54:32,502 --> 00:54:42,883
That's very, very weird. So, yes. So I think that that this weird recession that most of us were expecting in 2026 just got pulled into 2025 in these last couple of years.

742
00:54:42,962 --> 00:54:47,943
It never did recover. It's been very weird and strange. And that's been reflected in the price of Bitcoin.

743
00:54:47,943 --> 00:55:02,203
And I would expect that we'll slowly start to see the effects now of all of like we talked about the very beginning, the tax breaks, the deregulation, all of the fiscal stimulus getting pushed into the manufacturing sector of the US into specific winners.

744
00:55:02,502 --> 00:55:05,102
that's going to start to take hold in 2026.

745
00:55:05,102 --> 00:55:08,343
And as that does, you'll start to see life come back to Bitcoin again.

746
00:55:09,063 --> 00:55:12,262
And if they get the economy just absolutely ripping,

747
00:55:12,423 --> 00:55:15,403
which I think they want to do before the midterm elections,

748
00:55:15,602 --> 00:55:18,683
I would expect that to be reflected also in the price of Bitcoin.

749
00:55:18,843 --> 00:55:21,123
And I think finally at that point, we could start talking about,

750
00:55:21,183 --> 00:55:23,203
you know, when moon, when's it going to the moon again,

751
00:55:23,242 --> 00:55:26,582
those kinds of things that could actually possibly happen at that point

752
00:55:26,582 --> 00:55:28,923
because people would get, you know, excited about it again.

753
00:55:29,002 --> 00:55:31,063
They'd start applying leverage again, which they shouldn't do.

754
00:55:31,123 --> 00:55:32,262
You should never use leverage with Bitcoin.

755
00:55:32,502 --> 00:55:36,023
and we'll start to see some pretty serious price action.

756
00:55:36,143 --> 00:55:38,703
But until that happens, I would temper your expectations

757
00:55:38,703 --> 00:55:41,703
and just see this as a longer-term buying opportunity.

758
00:55:42,203 --> 00:55:44,242
Yeah, I don't want to ask you for a price prediction.

759
00:55:44,383 --> 00:55:46,462
I don't want you to get hate from the people in the comments

760
00:55:46,462 --> 00:55:47,482
if they don't come true.

761
00:55:47,623 --> 00:55:48,782
These are just fun anyway.

762
00:55:49,602 --> 00:55:51,102
But do you think there's a decent chance

763
00:55:51,102 --> 00:55:53,683
that we get all-time highs again next year,

764
00:55:53,723 --> 00:55:54,762
or do you think this takes longer?

765
00:55:56,343 --> 00:55:59,623
Well, I expect the economy to take off finally

766
00:55:59,623 --> 00:56:02,443
as we head into the second quarter, third quarter,

767
00:56:02,502 --> 00:56:08,403
of 2026. And if that happens, then yeah, I think we'll absolutely be back at new all-time highs.

768
00:56:08,863 --> 00:56:14,023
I think based on where Bitcoin should be relative to other assets that it's normally correlated with,

769
00:56:14,123 --> 00:56:17,802
it normally lags the price of gold by about six months. And it normally

770
00:56:17,802 --> 00:56:25,423
trades synchronously with the NASDAQ stocks. And it's lag. So both of those are like,

771
00:56:25,423 --> 00:56:30,343
they've diverged like this. So Bitcoin's down here and the tech stocks are up here because of AI,

772
00:56:30,343 --> 00:56:32,223
because those were the picked winners.

773
00:56:33,043 --> 00:56:35,563
And then that's also where gold was

774
00:56:35,563 --> 00:56:36,502
and Bitcoin's been laying.

775
00:56:36,663 --> 00:56:37,883
So if it does recover

776
00:56:37,883 --> 00:56:40,143
and we start to see the manufacturing sector come back,

777
00:56:40,262 --> 00:56:42,703
or if we have some really good news come out of like,

778
00:56:42,782 --> 00:56:43,903
say Congress, say they're like,

779
00:56:43,982 --> 00:56:45,442
hey, you know what, we're going to do this deal

780
00:56:45,442 --> 00:56:47,043
where we do this strategic Bitcoin reserve

781
00:56:47,043 --> 00:56:48,703
when we buy a million Bitcoin.

782
00:56:49,363 --> 00:56:51,123
That would be what would get this leg

783
00:56:51,123 --> 00:56:52,942
to the alligator jaws to close

784
00:56:52,942 --> 00:56:54,123
and to kind of catch up again.

785
00:56:54,502 --> 00:56:57,482
And I think it could quickly go to 150 or 200K

786
00:56:57,482 --> 00:56:58,163
if that happens.

787
00:56:59,082 --> 00:57:01,082
But that kind of remains to be seen.

788
00:57:01,163 --> 00:57:03,302
So I don't like making those predictions if it will happen.

789
00:57:03,403 --> 00:57:07,223
But if that does happen, then yes, I think the price of Bitcoin will do really well.

790
00:57:07,802 --> 00:57:13,623
That's the last point I kind of wanted to bring up, by the way, about what we were talking about earlier is liquidity is tight right now.

791
00:57:13,903 --> 00:57:14,823
Everybody knows this.

792
00:57:14,823 --> 00:57:21,002
And that's why the Fed is finally starting to do the QE, not QE again through the reserve management operations.

793
00:57:23,482 --> 00:57:27,703
When liquidity is tight, it can only go to a few different places.

794
00:57:27,703 --> 00:57:33,423
And so the world is competing and the US in particular is competing for that liquidity.

795
00:57:33,762 --> 00:57:41,183
And the government has decided that AI gets to have it and the rare earth sector gets to have it and industrial metals and the military get to have it.

796
00:57:41,423 --> 00:57:43,843
And everybody else kind of struggles.

797
00:57:44,523 --> 00:57:56,903
So I think until there's either more abundant liquidity, which I think is coming in 2026, or until the government picks Bitcoin as a winner, it's going to be liquidity starved until that point.

798
00:57:56,903 --> 00:58:09,883
So if either of those two things happen where the government picks it as a winner or overall liquidity picks up rapidly, until that happens, we're going to see the price of Bitcoin language and the manufacturing sector language.

799
00:58:10,123 --> 00:58:14,163
And then once it happens, though, it will be reflected in the price of Bitcoin.

800
00:58:15,302 --> 00:58:17,743
What would cause a liquidity boost?

801
00:58:17,743 --> 00:58:24,942
basically uh so so we're already seeing that it's planned so with the one big beautiful bill where

802
00:58:24,942 --> 00:58:29,762
the spending really starts in earnest and the tax breaks start to happen in earnest in 2026

803
00:58:29,762 --> 00:58:34,462
we're going to see that we're going to see the government spending increase so the fiscal deficit

804
00:58:34,462 --> 00:58:39,942
will stay very very high you know two more than two trillion or so of spending money that they

805
00:58:39,942 --> 00:58:44,903
don't have borrowing that money which has to be funded by somebody and that comes back to what we

806
00:58:44,903 --> 00:58:50,323
talked about earlier, as the front end rates come down lower and lower, the money market funds that

807
00:58:50,323 --> 00:58:53,602
have currently been buying that are just going to be like, you know what, it's just not really worth

808
00:58:53,602 --> 00:58:59,823
it. And so that's going to cause issues with the markets, which the Fed will see. And the Fed is

809
00:58:59,823 --> 00:59:02,782
going to be like, you know what, I think I know we said we're only going to do this through April.

810
00:59:02,782 --> 00:59:07,582
And I know we only said 40 billion a month of buying T-bills. Let's up it to 80 billion a month

811
00:59:07,582 --> 00:59:11,143
and let's actually extend it for another three months. I think we'll see something like that.

812
00:59:11,143 --> 00:59:16,262
and that's where liquidity is starting to pick up steam and gain steam so as we head into about the

813
00:59:16,262 --> 00:59:20,082
second quarter of 2026 i think we'll be seeing those announcements and it will be

814
00:59:20,962 --> 00:59:25,723
pretty impressive and that will start adding enough liquidity that will start seeing it spread out

815
00:59:25,723 --> 00:59:31,403
across different asset classes and into bitcoin specifically well the good news is it doesn't

816
00:59:31,403 --> 00:59:39,543
sound like dr bear is back um i want to just close out with one thing which is you were talking last

817
00:59:39,543 --> 00:59:45,823
time we're on the show in June about the three burners. And was it liquidity, the economy,

818
00:59:45,962 --> 00:59:51,863
and leverage? Was that the three? Yep. Okay. So I want to start with which one went out

819
00:59:51,863 --> 00:59:59,143
from going from 126K to back down to 80? Sure. So liquidity has been basically fine,

820
00:59:59,462 --> 01:00:04,223
except for recently over the last few months, we've seen a rise in the strength of the dollar.

821
01:00:04,223 --> 01:00:09,442
So the Dixie has been rising relative to other global currencies. I think that's peaked in

822
01:00:09,442 --> 01:00:13,982
is already going to start rolling over. Why does that matter? Because when the dollar strengthens,

823
01:00:14,082 --> 01:00:19,203
that means basically that the global liquidity is inversely correlated to that. So global liquidity

824
01:00:19,203 --> 01:00:24,623
has taken a hit. But now that's reversing again. So the dollar is rolling over and going to come

825
01:00:24,623 --> 01:00:30,863
back down. So I think liquidity will start to go up again. And as the dollar declines in strength

826
01:00:30,863 --> 01:00:36,962
against other global currencies, that frees up those other global currencies to also do

827
01:00:36,962 --> 01:00:41,383
quantitative easing. So they can debase their currency as long as the dollar is already debasing.

828
01:00:41,543 --> 01:00:47,582
And then they are racing to debase, basically, racing to go to zero faster. And that's sort of

829
01:00:47,582 --> 01:00:54,482
good in general for global liquidity. So global liquidity has been fine. It dipped. Now I think

830
01:00:54,482 --> 01:00:58,863
it's going to resume its course. And I think it's going to accelerate into 2026. The second is,

831
01:00:58,863 --> 01:01:03,883
we've already talked about this ad nauseum, the US economy has been terrible, especially the proof

832
01:01:03,883 --> 01:01:08,923
of work manufacturing economy has stayed in a recession basically for three years.

833
01:01:09,663 --> 01:01:13,602
That's directly correlated to the price of Bitcoin, which most people don't get, but is

834
01:01:13,602 --> 01:01:17,023
a hugely strong correlation with the price of Bitcoin.

835
01:01:17,243 --> 01:01:21,923
So if that finally takes off, and I think that's if you can tell people, because I know

836
01:01:21,923 --> 01:01:25,243
lots of people who are like, I thought it was going to 475 or whatever.

837
01:01:25,363 --> 01:01:25,762
Like, why?

838
01:01:25,903 --> 01:01:27,243
You know, why has the price been so terrible?

839
01:01:27,363 --> 01:01:29,143
I'm like, because the economy has been terrible.

840
01:01:29,582 --> 01:01:30,602
I did not expect that.

841
01:01:30,602 --> 01:01:32,703
I thought the economy was going to rev up into 2025.

842
01:01:33,002 --> 01:01:33,423
It did not.

843
01:01:33,423 --> 01:01:39,043
I do expect it to finally break out of its muddled mess that it's been in for three years in 2026

844
01:01:39,043 --> 01:01:43,143
and start to rise. And as it does, I think that will be reflected. And then leverage.

845
01:01:43,363 --> 01:01:48,082
If you remember what happened, I think it was October 8th, 9th, 10th, somewhere where Trump

846
01:01:48,082 --> 01:01:52,863
basically threatened 100% tariffs on China. And he did that, I think, on a Friday afternoon,

847
01:01:52,962 --> 01:01:58,623
of course. And the only thing that has liquidity on a Friday afternoon is Bitcoin. And so they just

848
01:01:58,623 --> 01:02:03,082
had a massive leverage long liquidation cascade. Basically, everyone got margin called because

849
01:02:03,082 --> 01:02:08,502
they needed liquidity right now. And it caused a wipeout of something over $100 billion worth of

850
01:02:08,502 --> 01:02:16,063
Bitcoin got wiped out, something like that. Liquidity got flushed, excuse me, leverage got

851
01:02:16,063 --> 01:02:22,323
flushed. And then also with the yen carry trade unwinding, that's more cheap money. So more leverage

852
01:02:22,323 --> 01:02:27,163
that got flushed as well, and it's continuing to get flushed. Those two factors basically have

853
01:02:27,163 --> 01:02:29,543
brought overall leverage levels down.

854
01:02:30,782 --> 01:02:33,482
And so there's kind of a direct correlation

855
01:02:33,482 --> 01:02:34,683
when the economy is struggling,

856
01:02:34,923 --> 01:02:37,323
leverage tends to not do very well as well.

857
01:02:37,843 --> 01:02:41,502
And as both of those start to recover into 2026,

858
01:02:41,502 --> 01:02:44,623
we should see that being reflected in the price of Bitcoin.

859
01:02:45,203 --> 01:02:45,743
Let's go.

860
01:02:46,082 --> 01:02:49,762
I think American HODL's green, green, green, red meme might be over,

861
01:02:49,942 --> 01:02:51,623
but I'm excited.

862
01:02:51,623 --> 01:02:51,942
I hope so.

863
01:02:51,982 --> 01:02:52,883
I don't think we're at the bottom.

864
01:02:52,883 --> 01:03:00,323
them. I would love it if this was just a kind of a weekly red year, right? Like if I'd love it if

865
01:03:00,323 --> 01:03:06,343
Bitcoin closed below 93k in 2025. And so we could give it a red candle. And then we just had kind

866
01:03:06,343 --> 01:03:11,383
of a slow resurgence as we head into 2026. That's kind of the base case I'm working off of.

867
01:03:12,063 --> 01:03:15,523
Yeah, I think I agree with you. It'd be nice to get rid of the four year cycle narrative and then

868
01:03:15,523 --> 01:03:20,982
we can just get on with things. But Jeff is always great speaking to you. One of my favorite shows I

869
01:03:20,982 --> 01:03:23,002
do. We'll have to try and do one in person at some

870
01:03:23,002 --> 01:03:25,163
point in the next year, but thank you.

871
01:03:25,523 --> 01:03:26,923
I would love it. Yeah, thanks for

872
01:03:26,923 --> 01:03:28,262
having me, Danny. I love being on your show.

873
01:03:29,383 --> 01:03:30,623
And we'll have to, yeah,

874
01:03:30,962 --> 01:03:32,863
at one of the conferences maybe. I don't know if you're going to

875
01:03:32,863 --> 01:03:34,582
conferences anymore, but we'll find some time.

876
01:03:35,942 --> 01:03:36,923
Yeah, we'll figure

877
01:03:36,923 --> 01:03:38,823
something out. All right. Have a great

878
01:03:38,823 --> 01:03:39,863
Christmas, Jeff. Thank you, mate.

879
01:03:41,043 --> 01:03:41,942
Thanks, Danny. Merry Christmas.

880
01:03:50,982 --> 01:04:20,962
Thank you.