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You've had a dynamic where money has become freer than free.

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If you talk about a Fed just gone nuts, all the central banks going nuts.

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So it's all acting like safe haven.

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I believe that in a world where central bankers are tripping over themselves to devalue their

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currency, Bitcoin wins. In the world of fiat currencies, Bitcoin is the victor.

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I mean, that's part of the bull case for Bitcoin.

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If you're not paying attention, you probably should be.

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You probably should be.

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In a war in Iran, Yemen has stepped in.

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They're embargoing Saudi Arabia.

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We got AI taking over.

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Models leaking into other models, destroying them.

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Open AI and hugging face.

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Regulatory capture coming to America.

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But the most important thing out there right now is the fact that the power law

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The power trend is broken.

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Power curve.

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The power curve.

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Power curve is broken, sir.

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Are we going to be able to do this moving forward?

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What are we going to talk about?

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You know, I'm always up for a challenge, my friend.

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And when I hear the chirps and see the tweets of, you know,

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those very astute mathematical trend followers on Twitter saying the good old power law doesn't

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work anymore. I'm happy to rise to the occasion to show you as I've been showing you on this

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show for how many years now? I think we're at eight. Yeah, for the monetary base. I don't think

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we've done power law updates all those times, but I have actually first charted that back in 2018

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as well. So I'm happy to put some minds at ease that know the good old power curve of Bitcoin's

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network adoption is still growing fantastically well. And you should take comfort in that fact,

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not try to get all upset and worried about it. And that's what I'm here today to help you with.

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Just ease, ease minds and let Bitcoin let Bitcoin help you.

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That's it.

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Well, if I recall correctly, the last time we met here, we were probably around the same price level and it was generational buying times.

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who looked at Bitcoin pricing silver, pricing gold,

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and they were around the, I think, the lowest band.

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It could be 90th percentile below the mean or the trend, excuse me.

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It's even lower.

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It's even lower now.

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Yeah.

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You want to take a look at it?

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Yeah.

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I think we did February.

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so we are five months from our last recording generational buying opportunity five five months

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ago obviously we've gone down we've gone up we putzed around and so what are we looking at now

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so i'm gonna take off this for a second this is the old

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bitcoin power law or the power curve if you like what i like to call it because the word

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law seems to trigger people which we can uh we can also talk about but

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you know i do these these updates a lot i do streams like this if people want to uh

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see more i check check this stuff a lot but every day we get a new data point here

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and uh i don't know you and i'm already probably started to do it

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i feel like it was somewhere around 2020 maybe 2022 can't remember honestly uh when i started

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to get these charts running full time but um in any event if you go log linear like most charts

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like a stock or if you're looking at bond yields you're going to see straight lines

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but bitcoin log linear we have that nice kind of rainbow parabola and it should immediately

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should immediately make you think that something else is going on with bitcoin and if you go log

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log you can see that straight line actually starts to emerge but i this chart i like and i've been

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showing more because I'm actually, I'm showing how the bands of regression deviations have evolved

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over time and that they're not always perfect. Of course, you want to draw those straight lines

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in the past. You're basically actually extrapolating from present back to the past and into the future.

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So you see that I'm doing it into the future here, but back to the past.

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uh it's actually not you know we see those nice beautiful straight bands which i can show you as

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well i have plenty of charts like that that's not how it looked at the time this is how the power

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law looked at the time every day okay and uh what you should a couple things to take away from this

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chart basically is you see early years 2011 even after 2013 you see there more spaces between the bands Bands aren as close together and they can be a bit lumpy I actually taking the Q100 off because it a wild one

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It even all the way until 2016.

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But this is good.

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It's a good point, actually, because it shows you how wild it can be.

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It was still projecting that it was at least theoretically, statistically possible that Bitcoin could get to.

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66 million.

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And that's based on the data at the time.

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But as you see, there's a huge drop here

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as we get through the so-called

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crypto winter, which I guess is the name

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that they were calling it at the time.

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But basically the 2014, 15, 16,

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and as we got into more shit coins

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and ICOs, 2017.

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But in mid-2016,

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it sort of resets itself entirely.

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And then we get more of a straight

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straight lines if i zoom in to say from 2016 until today you see it looks pretty good right

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looks pretty good the lines are closer together less jaggedy but one thing that also you should

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see is that uh the pandemic start and also sbf's gift to all of us the 2022 uh crash on top of all

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of the, what do we call them?

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DeFi, Terra, Luna.

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It's really like Bitcoin collateral mismanagement.

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That's what I would.

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Yeah, but I think there was a certain DeFi narrative

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that was grounded in nothing as well,

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which Terra showed.

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I guess FTX had no Bitcoin anyway,

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although they did have Anthropik shares, right?

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Which was interesting.

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But in any event,

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we punched a new low there to take the lower bound down.

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And when we talked, I don't think we had punched a new low,

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or at least maybe we were starting to.

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I'm looking.

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No, we wouldn't have.

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So it was only actually from about June, May, June,

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where we had a big dip that if you start to see,

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how that expands the realm of probabilities basically we go even lower so it's okay it's

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happened plenty of times before you can see it that q100 looks wild but if you look at the bottom

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end you know the q0 q10 q20 it's happened plenty of times where we expand the realm of probabilities

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and i just want to remind people this is completely different than you know a trading view chart where

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where you draw a channel with an exponential chart,

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simply where things look like a straight line

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in Expo space, log linear.

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This is not, you know, Elliott Wave, ABC corrections,

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all that.

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These are just everyday expanding the set of probabilities

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of where Bitcoin can be relative to

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what's called a power regression or power law.

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And we can talk more about, again, what it means

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because it's all, I know we get all types of listeners

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to your show and other shows I do.

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So I'm happy to repeat some concepts.

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But in any event, you can clearly see that we are at the low, low range.

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For about the last couple of weeks, we've actually done a nice little Art Simpson, which we typically do.

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We have a big rise.

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I think it's totally possible, by the way, we could fall again.

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I'm making no predictions of where we can be.

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But statistically, long term, not financial advice, but statistically, we are in a very, very bullish phase.

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of Bitcoin's growth relative to the power curve. I mean, you can't really get much cheaper.

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Could we go down and paint another low in this zero-th percentile, as I call it, which is really,

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it's 0.0001 percentile. It's like the worst data point you could paint. It will catch that,

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basically. And so I still call it just the Q0. So it's basically as cheap as the

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realm of probabilities would paint. That's roughly where we are. We're basically just off it a little

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bit. And yeah, so I'd say it's a danger zone. You don't want to maybe go too crazy with buying here,

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but slowly, steadily, it could be. In fact, it certainly is. If you look past this prologue here,

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coming in at these levels for anybody is a very good decision.

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I can hear them now. I can hear them now, Matthew. It all sounds well and good. You're

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bullying us up, buying opportunity, cheap sats, looking at the regression, looking at the

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probabilities. But it seems to me that you're just changing the chart to make it fit your narrative.

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the next plan B

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all these lines are moving

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the curve and they're going down

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the power law is just you can make it what you want at any point in time You can manipulate it to make sure it within the bounds of this trend that you been describing for years

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It's pseudoscience.

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Excellent.

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Excellent steel man of, you know, all of these mathematicians on Twitter's points, Marty.

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I just did a show yesterday with the great Giovanni.

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Some might find him a little cantankerous on Twitter, but he's actually a nice guy.

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When you get to know him, I've met him a few times in person now.

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And he has this institute, which he has founded in Torino, Italy, actually.

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It's called the Bitcoin Science Institute.

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dude. And he's continuing to study this stuff, basically how the price could represent

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adoption of Bitcoin, looking at hash rate, looking at addresses, looking at those things over time,

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looking at those things as a relationship to each other, a price versus addresses over time.

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How would that look? And it's very interesting with Bitcoin, because no matter how you slice it,

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the power laws keep re-emerging. And basically, you know, again, crash course there. What does

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it mean? Power law, the way you can see it, it's a straight line on log log. You can clearly see

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that that is roughly happening here with Bitcoin. Yeah, there are some booms to the upside. Yeah,

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there are some crashes to the downside, but that's to be expected in the market.

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uh also if you look at some stats here and i'll just highlight one for you see this is a 96.1

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percent r squared and if we looked at any other type of regression right so exponential regressions

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would be if this was a straight line on log linear which it's not obviously a curved parabola

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looking type you know decaying um chart here it would not fit an exponential trend certainly

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wouldn't fit a stock flow trend i wouldn't fit a linear or logarithmic trend either and i can show

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you actually uh i got a good one here for you we can we can go right through them so here's here's

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the same chart good old power law all right which by the way again we're significantly discounted

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just from the trend itself sometimes that helps to say it trends about 142 000 at the moment

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right so if you go back here i'm actually showing exactly the model i think it's 0.4

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uh 42 roughly is the zero bound we're a little bit higher than that

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uh we're surprised yeah 446 we're at 0.46 so under 50 percent of the trend itself which again

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uh it's been there before so if it's been there before there's no there's no reason it might not

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be there again okay now let's just let's just let's shoe let's shoehorn in some good old models

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here like you said like stock to flow others this is the wrong one i want to show this one

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all right so let's try exponential exponential trend is going to be a straight line on log

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linear i just asked you marty look at these two trends right there exponential is the dotted one

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powers the solid which one do you think more accurately describes what bitcoin is doing

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i mean just the eye test looking at the chart i would say the solid black line you know

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it looks good it looks really really good um we go a log log here you can see what an exponential

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starts to look like. Oops. Chart looking weird. But log linear, when it's a straight line,

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you can see it is, Bitcoin's price hasn't hit it since mid 2022. All right. So it's not even close.

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And again, another eye test, very simple thing. If Bitcoin was an exponential asset,

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like all other assets in the world, as far as I can tell, gold, stocks, bonds,

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then if it was on the all-time exponential trend that you can clearly draw with statistical

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analysis, simple math, basically, if you have a computer or AI these days,

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it should be, price should be around $600,000 at the moment. It's not. So I would say I would put

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to a lot of people, that's a good thing. That's a good thing that the power law is more conservative.

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It shows you the scalability of how it grows. And another thing just to say is,

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and you can see it here, if I go down to the statistics, let's go

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here. You see power trend says 39.4% TTM. And then if you see exponential, you see two metrics,

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108% CAGR and 108% TTM.

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And notice how power does not have the same.

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It says 136 CAGR 39 TTM or about 40 TTM The reason is exponential is just that It constant growth always right The world of 72 We talk about this a lot So just shut me off if I speaking

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too much, but if it helps, it helps some of the newbies in the crowd. A 10% return is not going

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to double every 10 years. It's going to double every 7.2 years. And that's constant. Every 7.2

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years, if you go at a 10% CAGR, you're going to double in another 7.2 years. That's exponential

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growth. Stocks through that, bonds, gold, silver. Bitcoin is not doing that right now,

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which is very interesting. It's actually slowing down slightly, but there is a constant

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proportionality, which is, and the numbers you have to sort of do the math, but it's

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basically for every 13% increase in the life of Bitcoin, the price doubles.

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That's what the power trend tells us. And that's a very stable metric at the moment.

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So basically, if you figure out the math, Bitcoin's about over 6,000 days old. 13% of that,

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you're getting close to 800 days, i.e. roughly over two years, the price doubles.

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Two years is also known as about 40% CAGR at the moment, which is an enormous return

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still. But the catch is it actually is declining a little bit. So that's how it works.

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uh we can do the old plan b trends let's look at his uh 2020 trend that was it's the one that's

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most laughable all right so plan b's trend would be uh it's showing 6.58 million bitcoin at the

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moment i think we can uh we can discount that one i think we can get back to it i think we

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we just say it's a nice nice little stair stepper there notice by the way how it's very

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close to the exponential trend. And I'll explain that in a second, but let's just run through them

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all. Let's go to plan B's 2019 trends, a little bit better, a little bit better, but still,

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you got to look at the numbers to see how rough it is. $800,000 Bitcoin is projected at the moment.

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You know, we got a way to go. I'm not saying we can't get up there. I'm not saying at all,

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we can't get up there soon. Notice, by the way, that we did catch it in right when the ETFs were

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approved in early 2024, but we haven't hit his 2019 projection since then. That is since 2024.

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We could also look at, say, another thing that helps if we want to see if a model works is how

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did it look at the time versus how does it look now? All right. So a good one I like to show is

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2016 because that's about when Bitcoin's power trend really started to manifest itself. Giovanni

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and I started to notice it about 2018, as have many others since then. Let's take off plan B.

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Let's take off, let's leave exponential. Let's look at plan B's, yeah, not plan B's because he

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was actually using even more crazy numbers, which I'll explain in a second. But let's just look at a

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pure stock-to-flow power trend in 2016. These would be the numbers. I'll put back 2019, actually.

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You see, it's very close to 2019.

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It's actually slightly better than it is 2019.

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$615,000 Bitcoin, okay?

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And then notice that that means

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that we have stopped producing data.

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We just left it at 2016 and projected forward, all right?

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So again, $600,000 versus $60,000 price

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were an order of magnitude,

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10 orders of magnitude actually off.

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if we go to

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this one

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this would allow the model to keep calculating out

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kind of an all time

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still a little bit better now

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260,000

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still off

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and well over the 140,000 power trend

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okay

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but the key would be more

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look at the gap

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between what 2016 projected, right?

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With all the data in 2016,

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up until the end of 2016 versus today, $400,000 off.

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Now let's look at the power curve, okay?

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And I'll take off exponential,

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but the power curve is projected 143,000 at the moment.

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Yes, we're well under it.

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That's fine.

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We've had plenty of periods

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where we've been under it and above it.

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All right, I've showed you before how it can evolve.

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Let's look at the power trend

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when it was calculated back in 2016 and then take no more new data and let's see how good it has

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been so that's 10 years now the line i'm about to draw for you has not seen any data since 10 years

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are you ready for it i'm ready look at that i didn't even notice it look at that

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So when the divas yell at you and say the power trend is broken or whatever,

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the calculation of looking at this power regression,

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say today with all time 7,000 or six, six and a half thousand,

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whatever it is,

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days of data points versus 10 years less of data points,

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the Delta onward,

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that all right is something around 15 16 17k it's incredible it's really incredible as as far as like

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statistics are concerned this is the same number it's literally the same number um

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you're not like stock to flow will give you orders of magnitude wrong exponential trends

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will give you orders of magnitude wrong. The power curve is consistently painting the same

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numbers. It means it's stable. And it has the highest R squared, which is about 96%.

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So again, anytime I see people tried to say like, it's not a valid model or whatever,

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it's not even anything. First, I guess I should just say this. I don't take it personally. If,

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people don't like the power law. I mean, maybe some people in the space kind of really want to

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educate on this hardcore or something, but it might be possible in the future, which we can

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talk about, that Bitcoin could move to an exponential model. You and I have talked about

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this a lot. I'm not sure where your latest, say, remembrances are of this. It's possible that if

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the financial system starts to co-op Bitcoin, monopolize Bitcoin, we get more and more fiat

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units of interest piled on top of limited Bitcoin, it's possible it could go exponential.

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But at the moment, it's not. And I would say that's actually a very, very good thing,

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because that's how networks usually grow. It's growing stable and scalable. So not only is it

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a scalable way to grow things in power, like the internet grows this way, networks, cities grow this

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way in power, which we can talk about too, if you want. But it's also stable. It's basically not

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changed. No matter if you look at now, with all of the data that we have in Bitcoin versus 10 years

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ago. So it's actually an incredible way. It's an incredible way to look at how Bitcoin grows.

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It's way more accurate than any other model, if you want to call it a model.

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And most of all, I just think people should take comfort in it because, trust me, if Bitcoin breaks

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the power law breaks the model,

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which it's not even close to doing at the moment.

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It's not going to break it to the downside.

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It's going to break it to the upside.

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It's going to go exponential.

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I mean, if it goes exponential,

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that means it's even going to grow faster,

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not slower, faster.

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So there's just many layers there,

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many levels.

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I'll stop there.

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But there's many,

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when people sort of say that it's broken

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or like you said,

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it's things are changing.

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It's actually not changing.

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It's quite stable.

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And it's also a scalable model.

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So people should actually take comfort in that.

298
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Thank you for answering. I've been hearing the naysayers and they've been having me

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doubting questioning. Should I even bring Matty back on to talk about that? I'm kidding.

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And he also supports you, Craig. My God.

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I think it's important to remind, I feel like despite the fact that we've gone over these core

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concepts quarter in and quarter out for many years now, it is important to really drill in

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the fundamentals because even i i i stray every once in a while i forget i get caught up in

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super cycle narratives i think yeah what i love most about our quarterly catch-ups is

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the grounding nature of the data that you bring to the table and on that note i mean you mentioned

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it and i think people do like analogies and they do like to get heady when it comes to describing

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bitcoin to other people trying trying to to paint the picture i mean cities following a power trend

308
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growth too. How does that happen? How has that happened historically? How could you measure that?

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Yeah. So it's actually very elegant. It fits in very well to, I think a lot of the reading that

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you and I have done over the years, and I'm sure many people talk about free markets, talk about

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exponential debt, talk about fiscal deficits exploding that can't be restored. Those are

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actually noticed, by the way, in a big way. Of course, you can do fiscal, you have fiscal debt

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problems on a local level and plenty of states in America have gone bankrupt and municipalities as

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well. But on a national level, especially when you print money, whether you're in the United

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States or Britain or Germany or some banana republic, when it blows up in a big way, it's on

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a nation state level. And that's an exponential trend. So it maps very elegantly into reality.

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is just look at this chart again. Let's not even introduce debt and more numbers and all that

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stuff. But if you just look at these two trends here, our nation's debt grows on that straight

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dotted line. The money supply, the base money supply, the broad money supply, they have a

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little bit different rates, but they grow on that straight dotted line. The stock market actually

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grows on that straight dotted line as well. So it does keep up. That's why it's important to stay

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invested in something. Bitcoin is not. So that causes confusion. And we can talk about sort of

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the grand thesis as well Like how does this what happens when these things are going to match Because Bitcoin is growing much faster at 40 per year than say the stock market which is ongoing you know 12 to 14 per year with dividends maybe 14 15 reinvested

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I don't want to get ahead of myself, but it maps on quite elegantly just to say,

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and this is something I've been studying for a long time is exponential trends are volatile.

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They are just by nature, mathematically by nature, they're volatile. They can explode.

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They can cause financial ruin and you have to have a currency completely reset.

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That's the nature of exponential debt. Compound interest, it's an exponential function. It's

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all exponential at the end of the day on broad levels and that is volatile. You can have great

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growth. You can have some winners, a lot of losers. You can have all that other stuff

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politically, but it's a volatile function. So power curves, what are interesting about them,

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they tend to actually be visible in things that are less volatile. So like I said,

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nation's GDPs, debt, stock markets, all those things, they grow exponentially.

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But something like, and actually even nationwide populations grow exponentially as well.

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which is kind of interesting. But on a city level, on a more local level,

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you actually notice that they grow in power. And so what would that mean? It would basically mean

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that instead of having the population of a city just flip into the sun, like sci-fi skyscrapers

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and all the rest, it doesn't actually look like that. And in fact, every year, even though there

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might be a growing growth rate, like a positive growth rate, I should say, of people coming into

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New York or Philadelphia or wherever, the rate of growth now in, say, New York is way less,

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way less than it was 100 years ago or 200 years. So that's the way to think about a power law is

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basically it's a scalable growth. And what that does mean in practice is over time, it's a declining

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growth rate. And when I say declining, don't think that means anemic or bad. It just means

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It's scalable. It grows at a slower and slower rate, but it still grows. I can stop there.

345
00:28:21,568 --> 00:28:24,348
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I think it's important because people will look at this chart

378
00:30:07,368 --> 00:30:10,048
for those watching and looking at this chart.

379
00:30:11,268 --> 00:30:12,448
And hearing that explanation,

380
00:30:13,248 --> 00:30:15,288
I think Matty was just using this

381
00:30:15,288 --> 00:30:18,468
as an example to point at.

382
00:30:18,468 --> 00:30:20,368
As he mentioned,

383
00:30:20,708 --> 00:30:24,328
at the current point in Bitcoin's history,

384
00:30:24,968 --> 00:30:27,588
its power trend is growing faster

385
00:30:27,588 --> 00:30:30,488
than the exponential trend of the stock market

386
00:30:30,488 --> 00:30:32,708
or M2 money right now.

387
00:30:32,808 --> 00:30:36,288
So comparatively, based on the historical trend,

388
00:30:36,288 --> 00:30:50,268
And what we can gleam is that Bitcoin's outperformance compared to those assets should continue until they intersect, which is a very interesting point that Maddie and I have been discussing for a couple of years now.

389
00:30:51,368 --> 00:30:52,768
And we can talk about it again.

390
00:30:52,768 --> 00:30:56,348
Yeah, I feel like it has to be a recurring theme.

391
00:30:56,348 --> 00:30:57,468
Like, have you thought?

392
00:30:57,468 --> 00:30:59,608
But at some point in the future,

393
00:30:59,608 --> 00:31:01,968
Bitcoin's power trend is going to intersect

394
00:31:01,968 --> 00:31:05,348
with the exponential growth of M2 and in the stock market,

395
00:31:05,348 --> 00:31:07,608
and all these other assets that are growing exponentially.

396
00:31:07,608 --> 00:31:21,024
And that posits the interesting thought experiment of what happens then what co what does Bitcoin co the exponential trends and force all these other assets to grow at a more stable and scalable rate

397
00:31:21,024 --> 00:31:27,404
or do those exponential trends pull Bitcoin onto the exponential curve and send it on that

398
00:31:27,404 --> 00:31:33,704
trajectory moving forward. And this is really a conversation of how do you think society should

399
00:31:33,704 --> 00:31:41,604
grow? What is sustainable, I think, is the best question. Is this exponential boom bust economy

400
00:31:41,604 --> 00:31:48,664
driven by money supply expansion, equities expansion, is it the right way to do things?

401
00:31:48,764 --> 00:31:54,244
I mean, if we're looking now, I'm sitting here halfway across the world from where Maddie is

402
00:31:54,244 --> 00:31:59,864
right now. We're having a conversation. We've got very strong internet. There's no latency

403
00:31:59,864 --> 00:32:05,904
in the talk. It seems like this exponential growth trend has gotten us pretty far from a societal

404
00:32:05,904 --> 00:32:11,684
and technological perspective. But what is the case for convincing people that maybe

405
00:32:11,684 --> 00:32:20,264
power trend growth is more advantageous? Right. And if it will, if there even is the possibility

406
00:32:20,264 --> 00:32:27,144
to convince, or if we would be again, which I do fear, honestly, is you might be co-opted into a

407
00:32:27,144 --> 00:32:33,264
system where by the way bitcoin number go up could even be stronger exponential growth is stronger

408
00:32:33,264 --> 00:32:39,764
by definition it's it's more constant it's more forceful but then you can add a lot of volatility

409
00:32:39,764 --> 00:32:44,364
there um i had a similar discussion with danny recently and he mentioned an interview he did

410
00:32:44,364 --> 00:32:49,624
with thomas pacquiao who said basically kind of what i was trying to explain mathematically is like

411
00:32:49,624 --> 00:32:54,664
might be where we're all rich or something but the project has failed i actually remember that

412
00:32:54,664 --> 00:33:00,584
interview that thomas did with him but um that would be something that i would i say

413
00:33:00,584 --> 00:33:10,224
again it might be okay in that world but what i think that means is if bitcoin say goes exponential

414
00:33:10,224 --> 00:33:14,664
which by the way is a different topic than a lot of people on twitter saying if the power

415
00:33:14,664 --> 00:33:19,404
law is broken or something again if if if the bitcoin power law breaks it's gonna break to the

416
00:33:19,404 --> 00:33:25,744
upside, not to the downside. But if it goes exponential, then that just means that Bitcoin

417
00:33:25,744 --> 00:33:33,024
is going to start to mirror an already volatile financial system. And rather than show charts,

418
00:33:33,064 --> 00:33:37,664
I'll just try to talk through this a little bit more. I can show the charts. But even though the

419
00:33:37,664 --> 00:33:42,544
stock market grows at that constant exponential rate, it's actually what Jeffrey West calls

420
00:33:42,544 --> 00:33:48,124
super exponential. So if you look back far enough, and this should be intuitive to people as well,

421
00:33:48,124 --> 00:33:53,364
is when we had less technology, less growth, I can show you charts of the stock market in the

422
00:33:53,364 --> 00:33:59,604
1800s is only growing like 2%. Then after the Fed was formed, it's 5%. Then when I was growing up,

423
00:33:59,604 --> 00:34:06,224
even in the 90s, whatever, starting university, we'd talk about 9% being a good stock market

424
00:34:06,224 --> 00:34:11,724
return. That's about what the S&P 500 was doing. Now it's doing 12% plus 2% with dividends. You're

425
00:34:11,724 --> 00:34:18,444
almost to 15%. But to find those trends, you got to kind of separate out the noise. And I can show

426
00:34:18,444 --> 00:34:23,244
you that chart in a second. But the bottom line is, there's a directionality right there. So you

427
00:34:23,244 --> 00:34:28,384
have, firstly, it's exponential, which is constant. But actually, if you look at it in the big picture,

428
00:34:28,384 --> 00:34:33,404
it's super exponential, as Jeffrey West uses. It's not a mathematical term, but it's what we're

429
00:34:33,404 --> 00:34:38,824
noticing in certain markets. And you see this with the money supply as well, by the way.

430
00:34:38,824 --> 00:34:43,844
well, I should be cautious on that. You see that in some money supplies, not all,

431
00:34:44,724 --> 00:34:49,064
but certainly with the stock market, the big one is the stock market. You see that the returns get

432
00:34:49,064 --> 00:34:54,504
more and more. People need more and more to catch up with inflation, monetary price inflation.

433
00:34:56,484 --> 00:35:03,604
And that gets the rat race going a lot more. No matter what the Fed says or whatever,

434
00:35:03,604 --> 00:35:08,724
the central bank says, I try to measure the actual markets and the returns and try to make

435
00:35:08,724 --> 00:35:13,664
my decisions there and things are getting crazier, not less crazy as probably most people can sense.

436
00:35:15,524 --> 00:35:22,564
Map that on Bitcoin's growth rate. Well, let's even stop there before we say map that on Bitcoin's

437
00:35:22,564 --> 00:35:29,644
growth rate. Let's say that Bitcoin would just go exponential and start to map onto

438
00:35:29,644 --> 00:35:34,624
the stock market's growth rate. So even though it's faster now, let's just say

439
00:35:34,624 --> 00:35:36,584
it starts to go even faster in the future.

440
00:35:38,324 --> 00:35:42,064
I think what that shows is really not,

441
00:35:42,164 --> 00:35:44,604
I mean, you would for Bitcoiners, for sure,

442
00:35:44,984 --> 00:35:46,444
they could do well in either scenario.

443
00:35:47,484 --> 00:35:49,744
Bitcoin turns the world into a power curve

444
00:35:49,744 --> 00:35:53,464
or Bitcoin gets pulled into a TradFi exponential curve.

445
00:35:53,604 --> 00:35:54,884
This is basically my grand thesis.

446
00:35:56,784 --> 00:35:58,984
If we say that Bitcoin goes exponential,

447
00:35:59,524 --> 00:36:02,644
I think you're going to see more volatility.

448
00:36:02,644 --> 00:36:07,644
And yeah, Bitcoiners might be fine in certain ways, but society might not be.

449
00:36:07,644 --> 00:36:10,644
And we're on this path.

450
00:36:10,644 --> 00:36:12,644
We're on this collision course right now.

451
00:36:12,644 --> 00:36:34,780
And it basically the verdict is I think out or the jury still out on how that verdict will be decided And I tend to lean towards the fact that I would not want to see a Bitcoin world where it matches the stock market I would like to see a world as I sure you would many others would

452
00:36:34,840 --> 00:36:41,340
It's like the cypherpunk world, the distributed networked world, a lot more freedom.

453
00:36:42,220 --> 00:36:46,280
No one can tell us if we can't withdraw our coins from exchanges.

454
00:36:47,200 --> 00:36:51,200
The only way we can hold Bitcoin is not only through ETFs.

455
00:36:52,500 --> 00:37:00,240
I think if you start to see the opposite of those things that I just mentioned, Bitcoin could start to look like the stock market.

456
00:37:00,380 --> 00:37:04,540
It could start to just sort of mirror it or it looks like, I don't know, the GLD or something like that.

457
00:37:04,600 --> 00:37:09,320
We might go through long periods of just nothing and then some big booms and corrections.

458
00:37:10,060 --> 00:37:11,700
That would be an exponential world.

459
00:37:12,780 --> 00:37:16,680
And I think it's more volatile, not less.

460
00:37:16,680 --> 00:37:22,120
I think you have more and more debt, just like in the real estate world, you get more and more debt.

461
00:37:22,120 --> 00:37:27,220
that's behind the same asset that's really not that much more productive. Again, Bitcoin doesn't

462
00:37:27,220 --> 00:37:34,100
produce revenue anyway for holders. It does for miners, but not for holders. And you get more and

463
00:37:34,100 --> 00:37:42,300
more fiat interests piling up, like trillions and trillions of fiat currency interest units piling

464
00:37:42,300 --> 00:37:47,800
up on the same amount of Bitcoin. It's like a hot potato, right? It's like musical chairs.

465
00:37:47,800 --> 00:37:54,740
you get more and more volatility. So I actually think the whole thing, again, just to sort of be

466
00:37:54,740 --> 00:37:59,200
clear, and maybe I haven't fully described the Bitcoin turns the world power yet. We can talk

467
00:37:59,200 --> 00:38:04,280
about that. But I think it's quite elegant. I think the idea that exponential curves are volatile,

468
00:38:05,500 --> 00:38:11,460
the markets, money supply, debt, fiscal deficits, all that stuff is exponential and volatile.

469
00:38:12,660 --> 00:38:17,080
It's pretty interesting how Bitcoin, which is this totally unique and different financial asset

470
00:38:17,080 --> 00:38:22,020
than we've ever had for all the reasons you talk about on your show is not growing that way.

471
00:38:22,260 --> 00:38:26,500
It's clearly not growing that way. Like the R square doesn't show it. The eye test doesn't

472
00:38:26,500 --> 00:38:32,800
show it. The numbers don't show it. So I hope that it continues to grow that way. I will say,

473
00:38:33,160 --> 00:38:37,660
am I going to be like disappointed if it goes exponential? Maybe a little bit. I mean, but

474
00:38:37,660 --> 00:38:42,860
Bitcoin is going to do well either way, I think. But I do actually think there's something here

475
00:38:42,860 --> 00:38:46,460
and we're going to see it in the next, you know, you and I will be here for it for sure.

476
00:38:46,460 --> 00:38:50,680
in the next 10 to 15 years is where I think there's going to be some sort of a crossing

477
00:38:50,680 --> 00:38:55,460
where basically this 40% Bitcoin that 40% rate of return that Bitcoin does now

478
00:38:55,460 --> 00:39:01,080
is probably going to cross with this super exponential treadmill stair-step growth that

479
00:39:01,080 --> 00:39:05,540
the stock market is doing, where maybe in 10, 15 years, the stock market is also doing that.

480
00:39:05,600 --> 00:39:09,040
And then people are just going to have to ask themselves a question like,

481
00:39:09,720 --> 00:39:14,140
okay, do I just want to keep chasing all these fiat interest units?

482
00:39:16,460 --> 00:39:29,560
Or would I want to just go back to the castle, so to speak, have some Bitcoin to do my transactions completely different than the way the financial world has always done them before?

483
00:39:31,340 --> 00:39:34,320
That's going to be a big question, I think, for the TradFi system.

484
00:39:34,480 --> 00:39:38,680
And I certainly don't see the TradFi system giving up their power easily.

485
00:39:40,320 --> 00:39:41,500
Neither do I.

486
00:39:41,500 --> 00:39:45,460
And I wouldn't be shocked if that intersection point is pulled forward.

487
00:39:45,460 --> 00:39:51,360
I mean, if you just look at the stock market gains the last year, the AI boom, you could see things getting rather crazy.

488
00:39:52,060 --> 00:39:55,960
I think Google just put out their earnings report yesterday.

489
00:39:56,300 --> 00:39:58,280
I think they did like 24% growth.

490
00:39:58,820 --> 00:39:59,020
Yep.

491
00:39:59,260 --> 00:40:02,560
Last year is a $70 billion company, which is insane at those levels.

492
00:40:02,980 --> 00:40:03,140
Yep.

493
00:40:03,340 --> 00:40:10,940
I don't have it handy, but if you look at the top, those top tech stocks in the US, they are absolutely at, let's say, 25% CAGR.

494
00:40:11,500 --> 00:40:14,400
Even before AI, after AI, even higher.

495
00:40:14,400 --> 00:40:18,360
but 22% to 25% CAGR, that's what they're doing.

496
00:40:19,300 --> 00:40:21,820
So if you think, okay, they're already leaving the stock market behind.

497
00:40:22,860 --> 00:40:23,880
AI is a part of the story.

498
00:40:24,980 --> 00:40:27,020
This crazy fiat growth is part of the story.

499
00:40:28,900 --> 00:40:31,120
It's going to be pulled in, I think, even faster.

500
00:40:31,900 --> 00:40:37,240
Yeah, and then you think it looks like AI is being deemed an existential industry,

501
00:40:37,440 --> 00:40:40,440
at least here in the United States and other parts of the world for that matter.

502
00:40:40,440 --> 00:40:43,620
And it's going to be backstopped by the full force of the federal government.

503
00:40:43,620 --> 00:40:47,980
and the Fed, essentially,

504
00:40:48,200 --> 00:40:50,980
even though the Fed probably won't explicitly admit

505
00:40:50,980 --> 00:40:53,540
that the Treasury is there to backstop them.

506
00:40:53,600 --> 00:40:55,480
We've seen this with the quasi-nationalization

507
00:40:55,480 --> 00:40:58,020
of some of these publicly traded companies,

508
00:40:58,400 --> 00:40:59,780
the government getting stakes in them.

509
00:41:00,020 --> 00:41:03,820
And as we all know, the Fed exists to monetize the debt

510
00:41:03,820 --> 00:41:06,040
that the Treasury prints.

511
00:41:06,040 --> 00:41:09,340
And so it's hard to believe that the Fed would have backstopped this

512
00:41:09,340 --> 00:41:13,320
if pressure was put on from the federal government

513
00:41:13,320 --> 00:41:23,660
which it seems like the intent of this administration has been when it comes to the Fed is to tie more closely to the Treasury.

514
00:41:23,660 --> 00:41:32,820
But bringing this back to the power trend and the effect it has on Bitcoin, it stays on the power trend and the effect it will have on markets.

515
00:41:32,820 --> 00:41:39,960
Not only we've expressed it this way in the past, it may be interesting to wander down this thought experiment.

516
00:41:39,997 --> 00:41:44,857
But this concept has been popular in Bitcoin for quite a while, but maybe when they intersect,

517
00:41:44,857 --> 00:41:52,097
the market just comes to a sort of come to Jesus moment or just a question.

518
00:41:52,257 --> 00:41:58,077
It's like, okay, what do we want the risk-free rate of return to look like?

519
00:41:58,577 --> 00:42:01,677
And how do we want to calculate opportunity costs moving forward?

520
00:42:01,777 --> 00:42:07,757
Do we want to do it on this exponential curve that is very much affected by Fed policy and

521
00:42:07,757 --> 00:42:12,677
M2, monetary expansion, M0 monetary expansion, M1 monetary expansion?

522
00:42:12,957 --> 00:42:19,177
Or would we like to coalesce around this sort of neutral distributed protocol with rules

523
00:42:19,177 --> 00:42:24,637
that are very cut and dry and begin to weigh opportunity cost of return versus the returns

524
00:42:24,637 --> 00:42:25,577
of this asset here?

525
00:42:27,257 --> 00:42:27,697
Yeah.

526
00:42:30,057 --> 00:42:30,857
Does that make sense?

527
00:42:31,197 --> 00:42:31,737
It does.

528
00:42:31,897 --> 00:42:32,397
It does.

529
00:42:32,997 --> 00:42:33,937
Makes perfect sense.

530
00:42:33,937 --> 00:42:37,997
I have charts actually to show all of it, but I'll still try to go back to the charts.

531
00:42:40,897 --> 00:42:47,057
The power curve won't, by definition, a power curve, a power regression, a power law is

532
00:42:47,057 --> 00:42:48,417
different than an exponential curve.

533
00:42:50,457 --> 00:42:55,997
More, you know, exponential curves in the markets are exponential because of compounding

534
00:42:55,997 --> 00:42:56,277
interest.

535
00:42:56,577 --> 00:42:58,037
That is what makes them exponential.

536
00:42:58,037 --> 00:43:03,297
So more and more, as I've been saying, more and more fiat units of interest.

537
00:43:03,937 --> 00:43:07,317
begets higher and higher principal balance,

538
00:43:07,437 --> 00:43:09,317
debt balance, all the things system-wide.

539
00:43:09,857 --> 00:43:11,437
That's just, that's how it looks.

540
00:43:12,077 --> 00:43:14,077
Every once in a while, you get an explosion of that.

541
00:43:15,457 --> 00:43:18,517
You know, we had that actually in World War I,

542
00:43:19,137 --> 00:43:21,777
and we had it in World War II.

543
00:43:22,017 --> 00:43:23,537
We had nations that basically

544
00:43:23,537 --> 00:43:26,397
couldn't pay their debts anymore.

545
00:43:26,757 --> 00:43:27,797
Some of them started wars.

546
00:43:27,917 --> 00:43:30,057
Some of them were defending in wars like Britain.

547
00:43:31,197 --> 00:43:33,477
But they, you know, Britain...

548
00:43:33,937 --> 00:43:37,717
Britain was basically bankrupt in both wars, both World War I and World War II.

549
00:43:39,957 --> 00:43:44,857
So it certainly feels, again, this is where I always try to be careful,

550
00:43:45,537 --> 00:43:48,517
saying when is the point, it comes a moment, so on and so forth.

551
00:43:48,617 --> 00:43:50,577
I've told you that on the show for many years, right?

552
00:43:50,637 --> 00:43:56,557
Because I think gold bugs in the 1980s probably thought this was it, right?

553
00:43:56,597 --> 00:44:00,097
Gold was going to $850 an ounce, and then it went into a 20-year bear.

554
00:44:00,097 --> 00:44:14,397
So I'm not sure exactly when this point will come. Maybe AI gives us like another three decades with its productivity somehow. I don't know. I honestly do not have a crystal ball there.

555
00:44:14,397 --> 00:44:28,737
But I would say if so, the other idea basically of this, my grand theory is that if Bitcoin kind of does, it's a little bit, I'll come back to your point about having a risk free rate of return.

556
00:44:29,217 --> 00:44:35,877
But a power law can't actually have a risk free rate of return because a power law over time has this declining growth rate.

557
00:44:36,697 --> 00:44:38,097
So it just won't work.

558
00:44:38,477 --> 00:44:40,257
You know, exponential interest won't work.

559
00:44:40,257 --> 00:44:52,257
So again, then you would go back to maybe other theories that other Bitcoiners have espoused or other people, you know, people have talked about like equity only, equity only type world, where basically everyone's kind of a VC.

560
00:44:54,077 --> 00:44:57,257
People are just investing, you invest in someone's future.

561
00:44:57,837 --> 00:45:06,537
It might be on sort of a socialist like family level, or it might be on an actual like here, I expect you to give me this return.

562
00:45:06,537 --> 00:45:10,637
And if you don't, maybe, you know, I'm just throwing it out there.

563
00:45:10,657 --> 00:45:12,777
But like, you know, I'll have collateral on your car or something.

564
00:45:12,877 --> 00:45:13,197
I don't know.

565
00:45:13,437 --> 00:45:14,797
It could be all sorts of things.

566
00:45:15,377 --> 00:45:20,317
But the required rate of return or the constant rate of return doesn't work.

567
00:45:20,537 --> 00:45:22,857
It just does not work in power, law, mathematics.

568
00:45:24,077 --> 00:45:35,297
And I haven't seen this, by the way, explained by anyone, by anybody even, say, smarter than me in the power of law world, like Giovanni or other people that have, you know, physics PhDs.

569
00:45:36,537 --> 00:45:44,097
it will not work. So that's why I keep saying the only way I can see it working is if literally

570
00:45:44,097 --> 00:45:49,117
Bitcoin, like a black hole, pulls the whole TradFi market into its really interesting,

571
00:45:49,977 --> 00:45:59,057
more stable growth rate, but not something that can rely on exponential fiat units of interest

572
00:46:01,057 --> 00:46:06,497
versus Bitcoin itself being pulled back into this monopolized TradFi world where you have

573
00:46:06,497 --> 00:46:15,357
ever expanding amounts of debt contracts with ever expanding amounts of fiat interest behind

574
00:46:15,357 --> 00:46:20,037
that. And I think that would still happen under your model of Bitcoin is the risk-free rate.

575
00:46:20,937 --> 00:46:25,297
I think that would happen. I mean, even if Bitcoin's a risk-free rate, it's still a rate

576
00:46:25,297 --> 00:46:30,317
and it's still going to be a compound interest rate. So it's kind of a wild thought to think

577
00:46:30,317 --> 00:46:34,777
that we wouldn't have like proper old school interest rates at all, but that would be if

578
00:46:34,777 --> 00:46:39,377
the power law we're going to hold. And I'm not saying that it has to. It could absolutely turn

579
00:46:39,377 --> 00:46:46,477
back into a traditional good old TradFi exponential curve. But if it holds, then compound interest

580
00:46:46,477 --> 00:46:49,620
actually won work So that the theory

581
00:47:17,500 --> 00:47:22,460
hypothecation, you stay in control. And guess what? You can lock in a fixed rate for up to 10

582
00:47:22,460 --> 00:47:27,900
years. That's 10 times longer than most lenders out there or go interest only for up to five years.

583
00:47:28,340 --> 00:47:33,960
Rates start at 7.99% APR for a product that lets you keep your stack and still access liquidity.

584
00:47:34,500 --> 00:47:39,600
It's hard to beat. I mean, the duration in the rates is the best I've seen in the market to date.

585
00:47:39,720 --> 00:47:45,440
You also get 2% unlimited cash back every time you use the card, spend fiat, keep your Bitcoin,

586
00:47:45,440 --> 00:47:49,600
the whole game. If you've been stacking for years and you need liquidity without triggering

587
00:47:49,600 --> 00:47:57,320
the taxable event, this is worth a serious look. Go to aven.com slash Bitcoin. That's A-V-E-N.com

588
00:47:57,320 --> 00:48:01,1000
slash Bitcoin. Check it out. Freaks, look at me. I'm glowing. I've got like an angel's halo

589
00:48:01,1000 --> 00:48:06,880
going around me. You know why that is? I feel good. I feel taken care of. I feel blessed,

590
00:48:07,020 --> 00:48:10,460
healthy, happy. And that is because I'm a CrowdHealth member. My family and I have been

591
00:48:10,460 --> 00:48:14,920
CrowdHealth members for five years now, literally this month. Five years ago, we joined CrowdHealth.

592
00:48:14,920 --> 00:48:19,160
We've had two babies. We've had multiple health events and we're never going back to health

593
00:48:19,160 --> 00:48:24,260
insurance. CrowdHealth is crowdfunded healthcare. So you sign up for CrowdHealth, you pay a monthly

594
00:48:24,260 --> 00:48:30,360
fee, you help out with other people's bills. And it's significantly cheaper than health insurance.

595
00:48:30,500 --> 00:48:35,580
We were on COBRA as a family of three when I left my last job before I went full-time with CFTC,

596
00:48:36,200 --> 00:48:42,140
went on the CrowdHealth. Now as a family of five, we pay, I believe, $700 a month.

597
00:48:42,140 --> 00:48:43,320
It's significantly cheaper.

598
00:48:43,660 --> 00:48:45,380
They're going to negotiate prices lower for you.

599
00:48:45,780 --> 00:48:50,360
They've consistently negotiated healthcare prices as much as 50, 60, 80%.

600
00:48:50,360 --> 00:48:52,940
In many cases, they help out with babies.

601
00:48:52,940 --> 00:48:56,600
If you have a pregnancy, you pay the first $3,000 and the crowd covers the rest.

602
00:48:57,260 --> 00:49:01,920
If you have a regular health event, you pay $500 and the crowd pays the rest.

603
00:49:02,060 --> 00:49:03,300
Go to joincrowdhealth.com.

604
00:49:03,580 --> 00:49:04,100
Sign up today.

605
00:49:04,320 --> 00:49:05,240
Use the code TFTC.

606
00:49:05,560 --> 00:49:06,960
Opt out of health insurance.

607
00:49:07,100 --> 00:49:08,580
I'm an insured baby and I love it.

608
00:49:08,800 --> 00:49:10,920
Use the code TFTC at joincrowdhealth.com.

609
00:49:10,920 --> 00:49:16,740
You'll get $99 a month for the first three months that you're on the crowd health platform in the community.

610
00:49:16,980 --> 00:49:17,320
Big winners.

611
00:49:17,700 --> 00:49:18,520
You found sovereign money.

612
00:49:18,800 --> 00:49:21,620
Now find sovereign health and sovereign health care.

613
00:49:22,100 --> 00:49:28,860
At the point that they intersect and then the power trend stays lower than exponential when it's past the point of intersection.

614
00:49:30,220 --> 00:49:32,540
Start experiment as a capital allocator.

615
00:49:33,460 --> 00:49:35,060
I mean, you can look at the return of the exponential.

616
00:49:35,060 --> 00:49:47,560
But if you're thinking about it from like a risk perspective, like what do I need to do to outperform the hurdle rate of Bitcoin's CAGR at this point?

617
00:49:49,500 --> 00:49:51,260
Would that be seen as more risk averse?

618
00:49:51,360 --> 00:49:53,300
It's like, OK, I need a lower rate.

619
00:49:53,500 --> 00:49:58,040
I need to raise capital, deploy it into this productive endeavor.

620
00:49:58,300 --> 00:49:58,1000
We'll just use farming.

621
00:49:59,100 --> 00:49:59,900
I'm going to start a farm.

622
00:49:59,900 --> 00:50:04,220
I think I can raise capital now, get seats in the ground, get a yield.

623
00:50:05,060 --> 00:50:11,620
um harvest that yield sell to the market and have a return uh on that initial capital outlay that is

624
00:50:12,180 --> 00:50:16,260
that is higher than what bitcoin's category is that year and compare that to the exponential

625
00:50:16,820 --> 00:50:23,140
curve could i could i get a rate of return that's higher than the exponential rate of return which

626
00:50:23,140 --> 00:50:26,900
is a bit higher than in the power trend right now like i'm just trying to think through the thought

627
00:50:26,900 --> 00:50:34,180
of experiment like what conditions would pull which trend um towards the other

628
00:50:34,180 --> 00:50:40,980
Yep. And it also changes the picture when you think of what your North Star becomes.

629
00:50:40,980 --> 00:51:01,600
Right. So if your North Star is still like dollars, you know, this transactional currency of dollars and they still have the strongest military and they can force you to, you know, use their dollars and pay taxes and dollars, even if they have like a large portion of the treasury having some Bitcoin, which, again, may happen sooner than we think.

630
00:51:01,600 --> 00:51:04,760
if it's still in dollars,

631
00:51:05,160 --> 00:51:06,980
you're going to move towards

632
00:51:06,980 --> 00:51:08,1000
something that represents

633
00:51:08,1000 --> 00:51:11,620
the rest of the TradFi world.

634
00:51:12,060 --> 00:51:13,740
Your thought experiment, I would say,

635
00:51:13,800 --> 00:51:15,900
is harder because it could also be

636
00:51:15,900 --> 00:51:17,700
that we're in a sats world, right?

637
00:51:17,800 --> 00:51:18,620
And if we're in a sats world,

638
00:51:18,680 --> 00:51:19,520
then it could be like,

639
00:51:19,600 --> 00:51:21,060
well, we know that Bitcoin

640
00:51:21,060 --> 00:51:21,680
is always going to...

641
00:51:24,620 --> 00:51:25,1000
It's like everyone's going to continue

642
00:51:25,1000 --> 00:51:27,300
to chase Bitcoin, okay?

643
00:51:27,360 --> 00:51:29,120
And I'm not saying that this is the goofy

644
00:51:29,120 --> 00:51:29,900
like central bank,

645
00:51:29,980 --> 00:51:31,400
like deflationary situation.

646
00:51:31,600 --> 00:51:38,960
This is the central bank propaganda, by the way, is that, you know, productive good deflation is a bad thing.

647
00:51:39,620 --> 00:51:47,160
Of course, it's not. Right. Because we know, you know, because they say, oh, if you have deflation in assets, then you're never going to buy them and the economy slows.

648
00:51:47,260 --> 00:51:50,740
But that's obviously patently false. I'm sure you talked about this many times in the show, right?

649
00:51:50,760 --> 00:51:57,440
I mean, we know that technology in particular, like your laptop is going to be faster and better next year, even with Moore's law.

650
00:51:57,440 --> 00:51:59,860
Like it's still faster and better next year.

651
00:51:59,860 --> 00:52:10,202
Like the rate of return is declining That true but we getting there So yeah the question is if we are in a Bitcoin world

652
00:52:10,302 --> 00:52:10,922
we have sats,

653
00:52:11,102 --> 00:52:13,042
we know that sats are like the gold standard,

654
00:52:13,142 --> 00:52:13,682
so to speak.

655
00:52:15,702 --> 00:52:17,202
What is going to be a project

656
00:52:17,202 --> 00:52:20,522
that's going to make you want to risk those sats?

657
00:52:22,382 --> 00:52:23,662
And the thing is,

658
00:52:24,182 --> 00:52:25,922
I think people always think about

659
00:52:25,922 --> 00:52:28,162
getting that defined CAGR and everything,

660
00:52:28,162 --> 00:52:29,162
but it's...

661
00:52:30,002 --> 00:52:32,722
I don't know.

662
00:52:33,002 --> 00:52:35,602
Theoretically, in a power world, it's not constant.

663
00:52:36,162 --> 00:52:37,602
It's not a constant rate of return.

664
00:52:37,682 --> 00:52:39,802
If you get a constant rate of return, then you're back to exponential.

665
00:52:40,022 --> 00:52:41,042
You're back to square one anyway.

666
00:52:42,002 --> 00:52:45,062
So it's a weird thought experiment.

667
00:52:45,062 --> 00:52:48,802
The only way I could simply say it is,

668
00:52:49,202 --> 00:52:49,942
okay, I have Bitcoin.

669
00:52:51,062 --> 00:52:51,783
I'll hold it.

670
00:52:51,842 --> 00:52:52,482
I'll save in it.

671
00:52:52,662 --> 00:52:57,422
And if I want to take some risk to get access

672
00:52:57,422 --> 00:53:00,922
of what that purchasing power is expected to gain me in Bitcoin next year,

673
00:53:01,082 --> 00:53:03,082
I'll take the risk.

674
00:53:03,902 --> 00:53:06,882
And of course, people can put numbers on those investments and everything,

675
00:53:06,882 --> 00:53:10,662
but the rate is not constant.

676
00:53:11,322 --> 00:53:12,682
The rate actually will decline.

677
00:53:13,022 --> 00:53:19,362
It will slowly and slowly come down, basically.

678
00:53:19,622 --> 00:53:21,162
So that's just how a power curve works.

679
00:53:21,602 --> 00:53:21,882
Different.

680
00:53:23,262 --> 00:53:25,662
So it's hard to even think about mathematically.

681
00:53:25,662 --> 00:53:34,522
This is why it's a wild thought because we like never in recorded history has anything even worked like this at all.

682
00:53:37,822 --> 00:53:50,522
I do think you could come back to a situation where and Bitcoin helps with this, too, by the way, is where the collateral, which, by the way, is what the ancient Greeks is called.

683
00:53:50,522 --> 00:53:56,662
like in probably if you have European, many European, different European speakers listening

684
00:53:56,662 --> 00:54:01,922
right now, like the word for collateral in many languages is hypotech or hypoteca. It's like the

685
00:54:01,922 --> 00:54:08,042
hypothetical. And it's possible, first of all, collateral is way more hypothetical than it's

686
00:54:08,042 --> 00:54:13,562
ever been today in this financial world. Like it's, it's actually, so the word rehypothecation,

687
00:54:13,982 --> 00:54:18,322
it means rehypothes, it doesn't mean like fractional reserve banking or anything. It just

688
00:54:18,322 --> 00:54:24,002
means rehypothecating a single piece of collateral that everybody clearly understands, like a house.

689
00:54:24,482 --> 00:54:28,162
Right. So it's like instead of having one loan on a house, you have four or five. That's like the

690
00:54:28,162 --> 00:54:33,962
very simple example of rehypothecation in the worldwide financial system. And that's bad.

691
00:54:34,122 --> 00:54:38,182
That's bad. Like it would be great if everybody knew asset values and they knew the collateral

692
00:54:38,182 --> 00:54:41,982
and everything. And so Bitcoin can actually do that. You have to look at what people in

693
00:54:41,982 --> 00:54:48,502
Dubify are doing or other projects. If you have the collateral, you take a loan out against it,

694
00:54:48,562 --> 00:54:54,442
even in a fiat world. So it's a still exponential world at the moment, but the idea is clear.

695
00:54:55,442 --> 00:55:00,062
And you can't pay back that loan, then the collateral goes back to the lender.

696
00:55:00,682 --> 00:55:07,522
That might be something that is clear in everybody's mind and could be something.

697
00:55:07,522 --> 00:55:12,982
It's like, you know, it sucks, but it's like if you're a borrower and you lose your collateral.

698
00:55:13,482 --> 00:55:17,842
But if you're a lender and you really want to worry about your risk, right?

699
00:55:17,902 --> 00:55:24,002
Like collateral might be something that's like way more important in the future and actually like very clearly understood.

700
00:55:24,102 --> 00:55:25,482
There's another thing I'm thinking about.

701
00:55:25,582 --> 00:55:27,322
And that's an ancient concept, right?

702
00:55:27,322 --> 00:55:30,462
So it's the hypothetical, the thing that is pledged.

703
00:55:32,002 --> 00:55:34,262
It's literally the word the Greeks use as hypothec.

704
00:55:34,262 --> 00:55:38,682
So it's the hypothetical thing that is pledged when someone draws a loan.

705
00:55:39,302 --> 00:55:49,662
And I think that a Bitcoin world will allow for extreme clarity on what is collateralized and what is not collateralized.

706
00:55:50,022 --> 00:55:51,002
Extreme transparency, right?

707
00:55:51,102 --> 00:55:54,822
Yeah, primarily because of the blockchain and primarily just even because of the Bitcoin itself.

708
00:55:55,722 --> 00:55:59,402
But that would be like Debify, for example, at level one right now.

709
00:55:59,402 --> 00:56:11,222
You can pledge Bitcoin in multi-sig where everybody sees it, borrow, lender, platform, a bank, you can have a lawyer, whatever, doing a multi-sig.

710
00:56:11,562 --> 00:56:15,202
You know that the collateral is right there and it's not going to be re-hypothecated further.

711
00:56:15,862 --> 00:56:19,082
It literally kills re-hypothecation.

712
00:56:19,262 --> 00:56:21,242
It's a great concept, what they're doing, for example.

713
00:56:21,322 --> 00:56:25,682
And other people are doing it, but Debify, in my opinion, is the one that's...

714
00:56:25,682 --> 00:56:26,942
And I have a relationship with those guys.

715
00:56:26,942 --> 00:56:30,822
I don't personally, but just I've, you know, work with those guys.

716
00:56:30,902 --> 00:56:32,242
They put the honey badger on.

717
00:56:32,423 --> 00:56:34,082
So be clear about that.

718
00:56:34,163 --> 00:56:35,982
But not anymore, unfortunately.

719
00:56:36,142 --> 00:56:36,882
Not going to do that this year.

720
00:56:37,043 --> 00:56:37,562
But anyway.

721
00:56:37,842 --> 00:56:38,482
It's hiatus this year.

722
00:56:38,642 --> 00:56:39,302
Hiatus this year.

723
00:56:39,322 --> 00:56:39,862
Yeah, hopefully.

724
00:56:40,182 --> 00:56:40,423
Hopefully.

725
00:56:40,862 --> 00:56:45,382
The point is, it's a great product that utilizes Bitcoin's multi-sig.

726
00:56:45,482 --> 00:56:46,742
Doesn't do anything too fancy.

727
00:56:46,923 --> 00:56:49,202
And it actually kills rehypothecation.

728
00:56:49,642 --> 00:56:53,062
Because everybody knows, bar a lender, you know where the collateral is.

729
00:56:53,062 --> 00:56:56,663
and you know that's not pledged again to some other loan,

730
00:56:56,663 --> 00:56:58,062
or if it's going to be pledged again,

731
00:56:58,062 --> 00:57:02,922
you could clearly see, okay, that this is already pledged once, right?

732
00:57:02,922 --> 00:57:07,402
You can actually see that in the platform and the code and everything.

733
00:57:07,562 --> 00:57:09,242
So it's really interesting, really interesting.

734
00:57:09,562 --> 00:57:11,602
Now, that is still an exponential world.

735
00:57:11,682 --> 00:57:24,485
You using fiat interest fiat currencies to borrow against that Everything is still exponential world But I could see in the future where we get to some sort of a power arrangement or an equity

736
00:57:24,485 --> 00:57:28,245
like arrangement, where the collateral is really what people start to think about.

737
00:57:28,325 --> 00:57:33,345
They're like, okay, me as a borrower, do I want to pledge my car to take a loan to try

738
00:57:33,345 --> 00:57:34,285
to do this project?

739
00:57:34,865 --> 00:57:40,425
If I have the real risk of losing my car, maybe I do if I believe in it, or maybe I don't.

740
00:57:40,425 --> 00:57:49,705
And so that is something as well that I'm thinking about a lot is because Bitcoin can make all of that like perfectly transparent, which would be another way to think about it.

741
00:57:49,705 --> 00:58:06,165
But again, are you using interest rates there? Are you using like, I don't know, haircut somehow technology or terminology where I don't know, maybe you force the borrower to sell the collateral like.

742
00:58:06,165 --> 00:58:13,425
I mean, the collateral itself could be Bitcoin, actually, simply. And so you just force the

743
00:58:13,425 --> 00:58:18,725
borrower to sell the Bitcoin if they can't repay, which is how it works now. But I'm just thinking,

744
00:58:18,825 --> 00:58:23,785
again, if you think out long and longer term in an exponential world, it still won't work

745
00:58:23,785 --> 00:58:27,525
with the compounding rates. So you'd have to think about someone who was comfortable

746
00:58:27,525 --> 00:58:35,005
really taking a risk, both on the borrower and the lender side. But that's far in the future.

747
00:58:35,005 --> 00:58:39,085
What I'm talking about right now is 10, 15 years at least, if it works out this way.

748
00:58:40,105 --> 00:58:43,685
The much clearer, easier thing to understand is, say, what Debitify is doing right now.

749
00:58:43,745 --> 00:58:44,645
You just have a fiat loan.

750
00:58:44,725 --> 00:58:45,465
You have an interest rate.

751
00:58:45,545 --> 00:58:46,245
It's compounding.

752
00:58:46,305 --> 00:58:46,785
It's exponential.

753
00:58:46,945 --> 00:58:51,065
If you can't pay it back, you either post more Bitcoin or they liquidate the Bitcoin.

754
00:58:52,125 --> 00:58:52,285
Yeah.

755
00:58:53,165 --> 00:58:57,725
I think a better way, or maybe not a better way, but another way to reframe this is,

756
00:58:57,725 --> 00:59:10,425
Do we think the landscape of financial arrangements, financial contracts between individuals has explored the whole design space?

757
00:59:11,085 --> 00:59:24,405
And will we innovate in the world of finance in the pursuit of economic expansion and productivity gains in a Bitcoin world?

758
00:59:24,405 --> 00:59:28,705
You know, I'm trying to get like, we can't, we can't right now.

759
00:59:29,025 --> 00:59:30,305
We've been talking about this for years.

760
00:59:30,465 --> 00:59:34,665
So we always come back to the same part, same answer, which is the same conclusion, which

761
00:59:34,665 --> 00:59:37,045
is we don't know what's going to happen.

762
00:59:37,205 --> 00:59:48,905
And so I think a reframe is like, do you think the extent of the, the extent of financial

763
00:59:48,905 --> 00:59:54,325
engineering, for lack of a better term, has, we've explored the whole design space.

764
00:59:54,405 --> 00:59:59,205
and we won't innovate again and i think that's that's what we've been getting at right for two

765
00:59:59,205 --> 01:00:06,725
years as we we don't know what it will be and if we are going to pull trad fi onto the power trend

766
01:00:06,725 --> 01:00:12,485
i think it would preclude that we need to figure out a new sort of financial arrangement for

767
01:00:13,365 --> 01:00:18,965
for an investment in the economy um and i'm optimistic right i'm sure you are as well we're

768
01:00:18,965 --> 01:00:29,465
human beings are uh you know if nothing but creative i mean when when it worst comes to

769
01:00:29,465 --> 01:00:37,065
worst you can creativity technology is definitely room for optimism even amidst the crazy uh volatile

770
01:00:37,065 --> 01:00:42,505
exponential world so i'm super optimistic about all of it uh and yeah we'll probably be probably

771
01:00:42,505 --> 01:00:47,125
surprised well this is a good segue into i'm actually writing was writing the newsletter i

772
01:00:47,125 --> 01:00:53,085
didn't get out before we started hit record but i'm really uh excited to get this one out in

773
01:00:53,085 --> 01:00:57,145
particular because i've um i've been tweeting about it this week and i think it's particularly

774
01:00:57,145 --> 01:01:03,005
here in the u.s it's it's a big problem which is the fact that gen z many younger millennials

775
01:01:03,005 --> 01:01:11,725
they are turning towards the democratic socialist of america mermundani and others of that ilk

776
01:01:11,725 --> 01:01:16,765
because they believe that the united states the united states as a capitalist system has failed

777
01:01:16,765 --> 01:01:23,365
them terribly. And I'm going to posit and put forth in the newsletter, and I've already done

778
01:01:23,365 --> 01:01:28,385
that in a couple of tweets, but I'm expanding on it today, that we live in a capitalist society.

779
01:01:28,525 --> 01:01:33,845
And it brings back to, I think, why we're into Bitcoin is because we live in a quasi-socialist

780
01:01:33,845 --> 01:01:40,385
experiment here in the United States and globally, for that matter, because the fiat currency can't

781
01:01:40,385 --> 01:01:46,185
have a truly capitalist system if the most important tool used to coordinate economic

782
01:01:46,185 --> 01:01:53,205
activity essentially controlled. And I think it's a big social problem that needs a lot of narrative

783
01:01:53,205 --> 01:01:58,425
work here in the United States as many people thinking that the K-shaped economy, the income

784
01:01:58,425 --> 01:02:04,725
inequality that exists here in the United States is a product of a capitalist system. And obviously

785
01:02:04,725 --> 01:02:10,745
to a degree, there are private free markets in the United States, but they're sitting above a

786
01:02:10,745 --> 01:02:16,745
that is completely centralized and I would argue very socialist,

787
01:02:16,745 --> 01:02:20,745
particularly when you consider bailouts and the ability to issue debt

788
01:02:20,745 --> 01:02:22,745
that will be monetized by the central bank,

789
01:02:22,745 --> 01:02:26,745
and you can use the proceeds of that debt to throw at things

790
01:02:26,745 --> 01:02:28,745
that otherwise would not exist.

791
01:02:28,745 --> 01:02:29,965
Yeah.

792
01:02:30,008 --> 01:02:35,328
completely agree with you completely agree with you and that's that's uh you know it could be a

793
01:02:35,328 --> 01:02:41,548
in fact a perfect time i mean i say often you have to have gratitude in life and i'm very grateful for

794
01:02:41,548 --> 01:02:50,108
bitcoin uh and all of that i think layers on very well to what you've been saying you've just been

795
01:02:50,108 --> 01:02:56,968
saying and i think you know again i think it's just as surely you've talked about plenty of times

796
01:02:56,968 --> 01:03:01,228
on your own show. It's just, it's an elegant solution for so many problems in the world.

797
01:03:01,228 --> 01:03:07,168
It's hard to see, you know, why it won't keep pushing the boundaries of things that we wouldn't

798
01:03:07,168 --> 01:03:13,128
expect. And one more thing, by the way, to try to stay away from the numbers and the compound

799
01:03:13,128 --> 01:03:16,508
interest, because I know that can cause people's eyes to roll in the back of their head. But I

800
01:03:16,508 --> 01:03:23,108
would still say, if we get into a system like you're saying with Bitcoin, where just forget

801
01:03:23,108 --> 01:03:30,128
the numbers. But if it's a, if it's sort of this Bitcoin treasury or the United States treasury or

802
01:03:30,128 --> 01:03:35,388
governments hold some Bitcoin and that's it, and exchanges are really, you know, the KYC is just

803
01:03:35,388 --> 01:03:42,828
even more overbearing than the law itself, whatever it might be. At some point withdrawals,

804
01:03:43,428 --> 01:03:47,828
shut down, you know, the system becomes completely centralized and controlled.

805
01:03:47,828 --> 01:03:53,888
everybody already intuitively knows that's not a good thing but i would i think that that actually

806
01:03:53,888 --> 01:03:59,728
pretty cleanly layers onto a you know volatile exponential system whereas if you have the other

807
01:03:59,728 --> 01:04:05,448
we have you know whatever it is more community-based distributed people can actually

808
01:04:05,448 --> 01:04:10,448
withdraw or people don't even have to worry about withdrawals because you're anyway trading on you

809
01:04:10,448 --> 01:04:14,848
know layered networks above the main chain if you want to withdraw back to the main chain that's fine

810
01:04:14,848 --> 01:04:18,888
all those things, you have multi-sig on a main chain level.

811
01:04:19,768 --> 01:04:25,808
I think that actually pretty cleanly aligns with a new technological era that grows in

812
01:04:25,808 --> 01:04:29,168
a scalable, sustainable power law fashion.

813
01:04:29,548 --> 01:04:33,688
So that's another way I would try to just tie up the things that we've been saying.

814
01:04:34,708 --> 01:04:34,848
Yeah.

815
01:04:35,848 --> 01:04:43,528
I mean, on that note, I have my thoughts on this, which are very bullish, but I recorded

816
01:04:43,528 --> 01:04:44,228
with Francis.

817
01:04:44,848 --> 01:04:49,568
from bull bitcoin a few weeks ago and it was really jacked up over that because he confirmed

818
01:04:50,288 --> 01:04:57,728
something that i believe particularly during this bear market is that the the the um the rumors of

819
01:04:57,728 --> 01:05:04,448
bitcoin's cypherpunk roots being completely ripped out of the ground and dead are are greatly

820
01:05:04,448 --> 01:05:11,168
exaggerated the freedom tech movement uh particularly within bitcoin as it pertains to

821
01:05:11,168 --> 01:05:18,668
the usability around payments, the ability to achieve privacy in a much easier fashion,

822
01:05:18,668 --> 01:05:24,648
and just optionality in terms of how you actually use Bitcoin as payments.

823
01:05:24,648 --> 01:05:30,448
Or now with these ARCs launching, I know the Arcade team and ARC Labs,

824
01:05:30,648 --> 01:05:35,248
they're thinking about interesting covenant solutions on top of their protocol.

825
01:05:35,248 --> 01:05:43,248
I'm very bullish on the ability to use Bitcoin as everyday money and obviously Square launching

826
01:05:43,248 --> 01:05:48,008
the ability to receive payments for Square merchants this year.

827
01:05:48,568 --> 01:05:55,448
I think the calls for the demise of the cypherpunk movement within Bitcoin are greatly exaggerated.

828
01:05:56,088 --> 01:06:01,848
And yes, they've been drowned out by the suit coiners and TradFi making its way in.

829
01:06:01,848 --> 01:06:03,188
The suit coiners.

830
01:06:04,088 --> 01:06:04,648
Yeah.

831
01:06:05,248 --> 01:06:09,648
I'm living over here in Europe, so I don't hear all the parlance.

832
01:06:10,088 --> 01:06:11,628
The ties and the suit quarters.

833
01:06:12,068 --> 01:06:12,928
Yeah, that's funny.

834
01:06:13,608 --> 01:06:14,848
Dude, you're totally right.

835
01:06:15,648 --> 01:06:17,348
I'm 100% on board with that.

836
01:06:17,468 --> 01:06:19,688
I've never not believed that myself.

837
01:06:20,308 --> 01:06:26,508
And the more and more you explore Bitcoin, the more layers you find just in general and how the thing works.

838
01:06:26,508 --> 01:06:32,848
And surely it just can't be who's the best regulator of Bitcoin policy.

839
01:06:33,448 --> 01:06:34,788
That's the future of Bitcoin.

840
01:06:34,788 --> 01:06:35,648
surely not

841
01:06:35,648 --> 01:06:36,928
no

842
01:06:36,928 --> 01:06:40,548
I'm bullish

843
01:06:40,548 --> 01:06:42,248
let's get back to the charts

844
01:06:42,248 --> 01:06:42,588
what

845
01:06:42,588 --> 01:06:43,628
what's

846
01:06:43,628 --> 01:06:45,848
Q1 monetary base

847
01:06:45,848 --> 01:06:46,368
looking like

848
01:06:46,368 --> 01:06:47,908
okay

849
01:06:47,908 --> 01:06:50,928
let's look at

850
01:06:50,928 --> 01:06:52,048
the Federal Reserve's

851
01:06:52,048 --> 01:06:52,968
balance sheet here

852
01:06:52,968 --> 01:06:53,488
really quickly

853
01:06:53,488 --> 01:06:54,368
back to

854
01:06:54,368 --> 01:06:56,128
a little bit more

855
01:06:56,128 --> 01:06:56,648
concrete

856
01:06:56,648 --> 01:06:57,648
price stuff

857
01:06:57,648 --> 01:06:58,428
you see the craziness

858
01:06:58,428 --> 01:06:59,488
of 2008 right

859
01:06:59,488 --> 01:07:00,308
Q1, 2, 3

860
01:07:00,308 --> 01:07:01,208
this is the asset side

861
01:07:01,208 --> 01:07:01,648
of the balance sheet

862
01:07:01,648 --> 01:07:01,928
by the way

863
01:07:01,928 --> 01:07:02,448
monetary base

864
01:07:02,448 --> 01:07:03,288
on the liability side

865
01:07:03,288 --> 01:07:03,808
but I just want to show

866
01:07:03,808 --> 01:07:04,448
your asset side

867
01:07:04,448 --> 01:07:09,008
currently this is not uh this week's because that's not going to be released for me at least

868
01:07:09,008 --> 01:07:17,108
until tomorrow but uh you see uh we topped out at the pandemic almost at nine trillion dollars and

869
01:07:17,108 --> 01:07:29,708
now we're at 6.74 last week um last wednesday and what i wanted to i want to show a couple

870
01:07:29,708 --> 01:07:33,368
things here so first of all you can obviously see it's been growing so my monetary based stuff

871
01:07:33,368 --> 01:07:35,548
and it's going to continue to be this way

872
01:07:35,548 --> 01:07:37,208
because I'm really...

873
01:07:37,208 --> 01:07:53,045
AI is taking me to other levels like many people with this but it still I trying to make it more encompassing Anyway they release stuff very slowly the central banks So on a worldwide level we actually still going to do Q1 And it mostly flat still even down actually

874
01:07:53,105 --> 01:07:59,445
but you can see the Federal Reserve through Q1 itself is rising a little bit. It's balance sheet

875
01:07:59,445 --> 01:08:06,645
in total and even throughout the year. So we can continue to expect that a little bit more.

876
01:08:06,645 --> 01:08:08,244
obviously people are wondering how

877
01:08:08,244 --> 01:08:10,524
Orsh is going to be here

878
01:08:10,524 --> 01:08:11,605
in the next few meetings

879
01:08:11,605 --> 01:08:14,945
is he a dove in hawk's clothing

880
01:08:14,945 --> 01:08:17,265
or is he a hawk in dove's clothing

881
01:08:17,265 --> 01:08:17,665
he's kind of

882
01:08:17,665 --> 01:08:19,605
he's being very cagey about things

883
01:08:19,605 --> 01:08:21,325
but most people expect a hold

884
01:08:21,325 --> 01:08:23,024
and maybe even a hike in September

885
01:08:23,024 --> 01:08:23,904
so we'll see

886
01:08:23,904 --> 01:08:24,904
but

887
01:08:24,904 --> 01:08:27,524
again backing out again

888
01:08:27,524 --> 01:08:28,424
and we talk about hard money

889
01:08:28,424 --> 01:08:30,985
this is kind of an interesting chart

890
01:08:30,985 --> 01:08:31,584
I just want to show you

891
01:08:31,584 --> 01:08:32,765
let's look at this on

892
01:08:32,765 --> 01:08:34,084
percentage

893
01:08:34,084 --> 01:08:35,945
this is

894
01:08:36,645 --> 01:08:42,524
This is the Fed's balance sheet over 100 years, percentage-wise.

895
01:08:42,684 --> 01:08:48,105
Now, this light red shade area is the MBS, right?

896
01:08:48,124 --> 01:08:51,885
So basically real estate, bad real estate that the Fed has held on its books since 2008.

897
01:08:53,105 --> 01:08:56,145
But notice here, the blue, all right?

898
01:08:56,684 --> 01:08:58,645
The blue is basically corporate debt.

899
01:08:58,645 --> 01:09:07,545
so when they were started they basically just held uh gold and loans to corporates

900
01:09:07,545 --> 01:09:13,725
which is quite interesting throughout their first part of the history and then world war ii came a

901
01:09:13,725 --> 01:09:18,325
lot of gold came into the u.s and the u.s itself had more gold this is just the u.s's gold here

902
01:09:18,325 --> 01:09:25,924
which gold actually became 86 percent 87 percent of the fed's balance sheet at the start of world

903
01:09:25,924 --> 01:09:32,244
war ii and then brenton woods started dollarization started treasury purchase buying

904
01:09:32,244 --> 01:09:36,964
you know continuous treasury purchase buying started after brenton woods fully ended

905
01:09:36,964 --> 01:09:45,945
only even here gold standard ended here um and by the way this is uh fed valuation of gold at

906
01:09:45,945 --> 01:09:53,344
that same value 42 dollars an ounce that's another thing to keep in mind here but it left room for

907
01:09:53,344 --> 01:09:57,725
are lots and lots of treasury buying and it is kind of interesting if you look at this chart

908
01:09:57,725 --> 01:10:05,484
again bitcoin is our gold analog at least that's how i look at it in many ways uh does this gold

909
01:10:05,484 --> 01:10:12,205
remind you of any other chart that you've seen like the way that it looks shit coin chart uh

910
01:10:12,205 --> 01:10:17,164
it's a good guess there's this famous kind of famous i don't know i have like a shirt of it

911
01:10:17,164 --> 01:10:21,624
like where it shows the purchasing power of the dollar over the last hundred years that actually

912
01:10:21,624 --> 01:10:22,904
The Fed doesn't publish it.

913
01:10:22,945 --> 01:10:26,964
The BLS publishes it in U.S. cities.

914
01:10:27,124 --> 01:10:29,385
So if I put that on it, kind of interesting.

915
01:10:29,964 --> 01:10:31,364
Yeah, that's pretty.

916
01:10:32,085 --> 01:10:33,364
Tracks it pretty nicely.

917
01:10:34,205 --> 01:10:35,404
A little bit different here.

918
01:10:35,484 --> 01:10:37,785
My tooltip is too much in the way,

919
01:10:37,864 --> 01:10:40,164
but you can see that a little bit different

920
01:10:40,164 --> 01:10:42,364
during the Great Depression.

921
01:10:44,085 --> 01:10:47,044
But generally, let's track that pretty well.

922
01:10:48,585 --> 01:10:51,364
And again, I look at all this as...

923
01:10:51,624 --> 01:10:54,664
an analog of what's going to come to Bitcoin, I think.

924
01:10:55,085 --> 01:10:55,785
No doubt about it.

925
01:10:55,844 --> 01:10:57,505
Whether it's the treasury, whether it's the central bank

926
01:10:57,505 --> 01:10:58,964
that's going to hold Bitcoin, and they will

927
01:10:58,964 --> 01:11:00,524
before we get to any of the things

928
01:11:00,524 --> 01:11:02,905
that you and I were just theorizing about.

929
01:11:05,945 --> 01:11:07,445
Bitcoin is the only way that they're going to be

930
01:11:07,445 --> 01:11:10,964
truly be able to hold the value of currency.

931
01:11:10,964 --> 01:11:13,885
And I think this chart actually shows it pretty well.

932
01:11:14,445 --> 01:11:19,124
Back to the way that the money base is growing again.

933
01:11:19,224 --> 01:11:19,964
Here's the ECB.

934
01:11:19,964 --> 01:11:23,604
ECB, again, just keeping in mind, so these are weekly charts, so they're a little bit more

935
01:11:23,604 --> 01:11:29,184
current than what I'm going to show you next. You can see that ECB, same deal. They got to,

936
01:11:29,184 --> 01:11:33,664
you know, it's almost like the Fed. They didn't get to 9 trillion euros. They were

937
01:11:33,664 --> 01:11:39,385
flirting with it, but never got to it. And here, you know, I have, again, this is exponential

938
01:11:39,385 --> 01:11:44,684
charts, a straight line on log linear. You can see that they're in very, very low, historically low

939
01:11:44,684 --> 01:11:53,265
quantiles, you know, between the worst and the 10th percentile of their, of their monetary base.

940
01:11:53,265 --> 01:11:59,104
And they're about, uh, uh, the monetary base is on the liability side. I'm just showing you the

941
01:11:59,104 --> 01:12:03,945
total assets just here, just to kind of see the trend, but it's $6 trillion, which obviously,

942
01:12:04,065 --> 01:12:10,244
you know, they've worldwide central banks have cut a lot in the last six years and we're still

943
01:12:10,244 --> 01:12:18,145
there. I'm not hoping for runaway crazy inflation, but if you did want to worry about that, here are

944
01:12:18,145 --> 01:12:25,104
the global numbers. Again, so you can see here, this is a new dashboard, by the way. We can look

945
01:12:25,104 --> 01:12:31,065
at other currencies if you want. And all this stuff is going to be released shortly, soon,

946
01:12:31,385 --> 01:12:37,165
very soon for people in the fall. So that's another good update I have for people where

947
01:12:37,165 --> 01:12:40,165
where people will be able to subscribe to get some of this data.

948
01:12:42,165 --> 01:12:45,864
2021, we topped out again over 30 trillion in the money base.

949
01:12:45,864 --> 01:12:49,565
And now through the first quarter, which as I said,

950
01:12:49,565 --> 01:13:04,261
is a little bit less current than the figures I shown you we at 26 trillion a little over 26 trillion at the end of fourth quarter 2025 So even still slightly down But at the end of the day

951
01:13:04,981 --> 01:13:15,021
your CAGR is about 11.3% in native terms or about 1% per month compounded. And

952
01:13:15,021 --> 01:13:17,801
it's

953
01:13:17,801 --> 01:13:20,001
quite low, interestingly.

954
01:13:20,221 --> 01:13:22,181
I mean, they have not done much

955
01:13:22,181 --> 01:13:23,661
money printing at all since

956
01:13:23,661 --> 01:13:25,481
the pandemic

957
01:13:25,481 --> 01:13:26,681
worldwide.

958
01:13:27,561 --> 01:13:29,761
The TDA chart is to me. You'll see

959
01:13:29,761 --> 01:13:32,001
it's a coiling band here.

960
01:13:33,121 --> 01:13:34,201
Getting ready to explode.

961
01:13:34,681 --> 01:13:35,141
Right here.

962
01:13:35,861 --> 01:13:37,761
It looks like suppressed volatility.

963
01:13:38,441 --> 01:13:40,201
Yeah. And here's

964
01:13:40,201 --> 01:13:41,021
actually the

965
01:13:41,021 --> 01:13:42,861
money-based chart

966
01:13:42,861 --> 01:13:46,021
across time.

967
01:13:46,621 --> 01:13:48,201
Really, I need to go to here

968
01:13:48,201 --> 01:13:50,181
for you in the modern era.

969
01:13:51,001 --> 01:13:53,241
Same chart, but the total here,

970
01:13:53,321 --> 01:13:58,501
you can see 26.2 trillion.

971
01:13:59,141 --> 01:14:01,461
That works like still working on my rounding there,

972
01:14:01,561 --> 01:14:05,661
but 26.2 trillion here

973
01:14:05,661 --> 01:14:09,861
in first quarter.

974
01:14:10,201 --> 01:14:12,061
Again, that slight difference from the other chart is

975
01:14:12,061 --> 01:14:18,601
is Claude gotta work on some of those things but anyway 26 trillion basically but notice it is again

976
01:14:18,601 --> 01:14:24,821
where this is the worldwide figure so we went from the top of the band during COVID to now

977
01:14:24,821 --> 01:14:31,361
we're at the bottom of the band so like yeah again I don't know I mean like this is not this is where

978
01:14:31,361 --> 01:14:36,181
this is clearly an exponential curve we could go on for maybe another year they try to fight

979
01:14:36,181 --> 01:14:41,601
inflation. They tried to, you know, keep the money presses down a little bit, but yeah.

980
01:14:42,801 --> 01:14:48,681
And I'm not even hoping for crazy central bank inflation, but they have really taken it down to,

981
01:14:48,681 --> 01:14:59,341
let's say, trend historically low levels. And, you know, if bad things happen, we know that they

982
01:14:59,341 --> 01:15:05,861
usually solve things with the printed press. So I certainly would say all of this shows signs of

983
01:15:05,861 --> 01:15:11,821
Bitcoin as usual being a good place to run if the printing presses do really start up globally.

984
01:15:11,981 --> 01:15:14,361
But they're not actually that crazy.

985
01:15:14,361 --> 01:15:22,201
$26 trillion is where we are basically, which is $4 trillion less than four or five years ago.

986
01:15:23,401 --> 01:15:24,341
They're still keeping it low.

987
01:15:25,621 --> 01:15:30,081
It's fascinating how it aligns with Bitcoin hitting the nadir.

988
01:15:30,221 --> 01:15:30,961
Is that the right term?

989
01:15:32,601 --> 01:15:33,921
Nadir being the low, yeah.

990
01:15:34,441 --> 01:15:35,361
It's power trend.

991
01:15:35,861 --> 01:15:42,441
um although notice notice i have another chart to show this but bitcoin actually went up here too

992
01:15:42,441 --> 01:15:46,061
so this is where bitcoin i think is still so small but i think the power curve is more

993
01:15:46,061 --> 01:15:51,001
actually important for bitcoin's movement than the money base because as money base was coming

994
01:15:51,001 --> 01:15:55,981
down from 30 to 26 trillion over the last four years bitcoin did go through a bull it didn't go

995
01:15:55,981 --> 01:16:02,421
through as strong a bull actually interestingly as it had in prior trends right so you know i'll

996
01:16:02,421 --> 01:16:08,841
show you this in a second, but we barely got to the trend line basically in the last three years.

997
01:16:08,841 --> 01:16:14,481
And we kind of front ran it with the ETF approval in January, February, March of 2024.

998
01:16:15,721 --> 01:16:22,081
So all those things are true. But what's also true is the money base actually went down

999
01:16:22,081 --> 01:16:26,341
when Bitcoin had a bull. But that's also something to keep in mind.

1000
01:16:28,321 --> 01:16:30,981
Bitcoin is still small enough that it can do different things, right? I mean,

1001
01:16:30,981 --> 01:16:36,221
the money base can go down and bitcoin can still go up so we'll see but yeah i think bitcoin's still

1002
01:16:36,221 --> 01:16:40,081
the the main story for me as far as like directionally and where bitcoin goes

1003
01:16:40,081 --> 01:16:45,701
is actually the power curve again you get more comfort there than you can have in the value of

1004
01:16:45,701 --> 01:16:53,041
the money base all right can i share a chart and this is like completely not aligned with what we're

1005
01:16:53,041 --> 01:16:56,941
talking about global monetary base but i'm thinking again about exponentials power trend

1006
01:16:56,941 --> 01:17:02,621
which pulls which switch and how do you make the argument um do i need to stop sharing yeah stop

1007
01:17:02,621 --> 01:17:07,981
sharing i'm gonna share but like this is a a chart i've been talking about this week as well because

1008
01:17:07,981 --> 01:17:11,941
again it's been like all made this problem i'm sure you've seen this the henry adams curve yeah

1009
01:17:11,941 --> 01:17:21,421
and so 1971 you just showed the charts when we clearly went off the gold standard um made a

1010
01:17:21,421 --> 01:17:27,901
clean cut. And I say again, like just from a narrative perspective, thinking about despite

1011
01:17:27,901 --> 01:17:35,461
the fact that we can talk from across the world at very high latency, do things that are incredible,

1012
01:17:35,841 --> 01:17:42,341
there's like, how do you articulate the lack of necessary investment in the economy? And this

1013
01:17:42,341 --> 01:17:49,661
chart highlights the lack of investment in energy infrastructure that would keep energy consumption

1014
01:17:49,661 --> 01:17:55,821
per capita on that red line, which is the Henry Adams curve, which was true for many,

1015
01:17:55,821 --> 01:18:00,381
many centuries. And so like, yes, the stock market may be going up exponentially, monetary base,

1016
01:18:01,661 --> 01:18:18,217
similarly so but the products of that have led to a ton of fiat gains that make people feel rich on paper And many people feel rich in real life because they able to buy a bunch of financial assets and real estate assets and things of the such

1017
01:18:18,377 --> 01:18:25,737
But there is this neglect to the base layer of our economy, which is the energy system that I don't think is sustainable.

1018
01:18:25,737 --> 01:18:41,237
If we were trying to continue to grow exponentially and the fiat system were to allow the misallocation of capital to the base of the economy around our energy systems, it feels like it would collapse on itself.

1019
01:18:41,237 --> 01:18:46,837
So that's another, I guess, thought experiment framework is like everything's exponential until it isn't.

1020
01:18:47,097 --> 01:18:52,477
Are we barreling towards a complete collapse of the system?

1021
01:18:52,477 --> 01:18:54,137
because systems are complex.

1022
01:18:54,357 --> 01:18:56,257
And if you don't tend to them,

1023
01:18:56,437 --> 01:18:58,017
they will collapse in their own themselves.

1024
01:18:58,237 --> 01:18:59,897
And everybody may be rah-rah.

1025
01:19:00,857 --> 01:19:02,997
Google's growing at 25% a year right now.

1026
01:19:03,497 --> 01:19:04,117
Pile in.

1027
01:19:05,257 --> 01:19:07,877
But I do fear that there's extreme neglect

1028
01:19:07,877 --> 01:19:10,137
to critical parts of the economy

1029
01:19:10,137 --> 01:19:11,577
that actually make it function.

1030
01:19:12,377 --> 01:19:12,477
Yeah.

1031
01:19:12,897 --> 01:19:14,737
Yeah, this is a great chart.

1032
01:19:14,797 --> 01:19:16,477
I do need to get this up

1033
01:19:16,477 --> 01:19:18,917
as part of my data as well

1034
01:19:18,917 --> 01:19:21,257
because I think that last dip there

1035
01:19:21,257 --> 01:19:28,757
should be right about, I would assume that last dip is Fukushima and the Germans, many other

1036
01:19:28,757 --> 01:19:35,697
countries as well, completely, completely are a part of this collapse by taking out their nuclear

1037
01:19:35,697 --> 01:19:42,337
energy, their cheap, efficient, amazing nuclear energy away from the markets. And I mean, Merkel

1038
01:19:42,337 --> 01:19:49,377
did a lot of stupid things, including making Europe reliant on barbarous Russian energy. But

1039
01:19:49,377 --> 01:19:52,737
But in any event, they had nuclear, they had more energy security.

1040
01:19:53,917 --> 01:19:56,077
Energy independence isn't the right word for people, by the way.

1041
01:19:56,117 --> 01:19:57,717
It's energy security, if you have security.

1042
01:19:57,897 --> 01:20:00,537
And yeah, the world is way behind there right now.

1043
01:20:00,717 --> 01:20:02,557
And I think that's going to be a huge...

1044
01:20:02,557 --> 01:20:04,717
I hope that there's like sort of a renaissance here.

1045
01:20:05,237 --> 01:20:05,977
I don't know.

1046
01:20:06,217 --> 01:20:08,837
I'm not as much of an expert in this industry as you are,

1047
01:20:08,917 --> 01:20:10,677
but I think Bitcoin can certainly be a part of this.

1048
01:20:10,677 --> 01:20:13,957
I absolutely think Bitcoin can be a part of that as well, turning that around.

1049
01:20:15,477 --> 01:20:15,797
I agree.

1050
01:20:15,797 --> 01:20:19,037
I'm sorry for derailing our

1051
01:20:19,037 --> 01:20:21,217
no no no it's a that's a great chart

1052
01:20:21,217 --> 01:20:23,217
and by the way actually speaking of

1053
01:20:23,217 --> 01:20:24,597
going off the trend

1054
01:20:24,597 --> 01:20:25,997
let me

1055
01:20:25,997 --> 01:20:28,497
let me go back to this one

1056
01:20:28,497 --> 01:20:33,197
not this one actually

1057
01:20:33,197 --> 01:20:34,697
but shoot sorry

1058
01:20:34,697 --> 01:20:36,857
before you go forward Logan is

1059
01:20:36,857 --> 01:20:39,237
Maddie's video frozen

1060
01:20:39,237 --> 01:20:39,777
for you too

1061
01:20:39,777 --> 01:20:43,077
should be fine you're recording

1062
01:20:43,077 --> 01:20:45,037
luckily but you've been frozen for the last couple

1063
01:20:45,037 --> 01:20:51,997
minutes for me yeah for me i we're both moving at least okay look it must be uh taking a bathroom

1064
01:20:51,997 --> 01:21:00,817
break so proceed your your according locally i did not um i did not hit my local recording but

1065
01:21:00,817 --> 01:21:07,237
anyway hopefully it'll work they're going back to this chart which is again the trend of the globe

1066
01:21:07,237 --> 01:21:14,437
on money and as you go back into history the data gets a little bit thinner but if we go from here

1067
01:21:14,437 --> 01:21:20,617
which is Brenton Woods ending. And it does actually relate to your chart. So I'm showing

1068
01:21:20,617 --> 01:21:28,677
actually the inverse of what you just showed is money as well. Interestingly, so we started this

1069
01:21:28,677 --> 01:21:36,317
conversation talking about the faster and faster treadmills of super exponential growth in the

1070
01:21:36,317 --> 01:21:41,557
stock market, which is undoubtedly happening. But it's almost like they're kind of worried in the

1071
01:21:41,557 --> 01:21:45,937
funny world too. And like they, they actually understood that they were, um,

1072
01:21:47,477 --> 01:21:51,637
at least I'm giving a different explanation than what you are, but they were 10, like,

1073
01:21:52,377 --> 01:21:56,457
notice how this is, I'm just showing this from 2008, basically the start of Bitcoin,

1074
01:21:56,557 --> 01:22:01,817
all these trend lines start from the 2008 crisis, which also happened to be the start of Bitcoin.

1075
01:22:02,377 --> 01:22:07,957
That is a slower rate of growth in dollar terms, right? It's only 7.6%, 7.6% CAGR

1076
01:22:07,957 --> 01:22:15,457
on basically the OLS here. If you went back to 1971, you can just see, obviously, the gaps here.

1077
01:22:16,017 --> 01:22:21,157
The data is all real. You can clearly see that it's growing faster from 1971.

1078
01:22:21,797 --> 01:22:23,717
So I'm showing kind of the inverse of what you just showed me.

1079
01:22:24,877 --> 01:22:32,517
The money base was growing at 10%, 11%, even 12% at times, CAGR. So it was actually growing faster

1080
01:22:32,517 --> 01:22:38,817
until 2008. And then even if it did seem like crazy amounts of money printing at the beginning

1081
01:22:38,817 --> 01:22:47,637
of the financial crisis, and it was, they tapered off a lot from about 2017 until that repo crisis

1082
01:22:47,637 --> 01:22:54,397
in 20... The US in particular stopped even in 2014 until the repo crisis of 2019. And then,

1083
01:22:54,397 --> 01:22:58,797
of course, the world went nuts in the pandemic. But in the last four years as well, they've

1084
01:22:58,797 --> 01:23:04,577
safer it off massively. So the net net of all this is actually slower money growth rate in the last

1085
01:23:04,577 --> 01:23:12,857
16 years, 18 years, say, compared to the last 60 years. And that's also another, it's kind of a,

1086
01:23:13,397 --> 01:23:17,597
I don't know what you want to call it. It's a wrench in the calculations. It's kind of weird.

1087
01:23:18,077 --> 01:23:19,757
You might expect it to be going the other way.

1088
01:23:19,993 --> 01:23:23,873
But it's actually the money supply is growing slower.

1089
01:23:25,253 --> 01:23:28,233
I'm basically showing the same chart that you had, but the trend lines are drawn differently.

1090
01:23:28,993 --> 01:23:29,093
Yeah.

1091
01:23:29,773 --> 01:23:34,793
And do you think that was an explicit recognition by the powers that be to slow the growth or just sort of?

1092
01:23:34,853 --> 01:23:35,253
Yeah, I do.

1093
01:23:35,393 --> 01:23:36,533
I do in some ways.

1094
01:23:36,533 --> 01:23:49,013
I mean, this Basel, Basel initiatives, Basel 1, 2, 3, 3 in particular, which, you know, came in light of all this stuff talking about, you know, different levels of capital, tier one capital.

1095
01:23:49,013 --> 01:23:54,113
you know, gold had a more higher place and holding treasuries and holding treasuries.

1096
01:23:54,853 --> 01:24:01,213
You know, I actually forget now that full tier one, I think at 90 days is a special place

1097
01:24:01,213 --> 01:24:06,493
in bonds that hold treasuries, but it's not just 90 day bonds. It's, or even year bonds

1098
01:24:06,493 --> 01:24:14,073
have a special place in Basel III Capital. It is any expiration date that expires within 90 days.

1099
01:24:14,113 --> 01:24:18,713
So it could be a 30 year bond expiring within 90 days or a year that would count as two,

1100
01:24:18,713 --> 01:24:28,553
your two one capital. So I think that they have tried to, um, they've tried to add to

1101
01:24:28,553 --> 01:24:36,693
the appeal of buying, uh, central bank treasuries, but treasuries to, uh, you know,

1102
01:24:36,753 --> 01:24:42,953
to protect balance sheets, let's say. And they've also tried to stop some of the rehypothecation

1103
01:24:42,953 --> 01:24:47,393
that we were just talking about earlier. So I do think that there is a, an effort there.

1104
01:24:47,393 --> 01:24:52,713
but that you know these are centralized monopolized slow-moving institutions and i don't think that

1105
01:24:52,713 --> 01:24:58,253
we should read into it as anything like some really genius moves here's another example

1106
01:24:58,253 --> 01:25:05,233
i just show you this chart this is one of my favorites is basically notice how i told you

1107
01:25:05,233 --> 01:25:10,833
before the fed was holding basically when they so this is u.s federal reserve ownership of u.s

1108
01:25:10,833 --> 01:25:18,733
federal debt. So back in the roaring 20s, before the Great Depression, they owned basically zero

1109
01:25:18,733 --> 01:25:23,033
government bonds as part of the balance sheet. It was corporate bonds and it was gold.

1110
01:25:23,833 --> 01:25:30,393
And you get all the way to the end of the Vietnam War. And actually, this percentage starts to go

1111
01:25:30,393 --> 01:25:34,693
down, not because the Fed holds less treasuries, because the United States has more debt

1112
01:25:34,693 --> 01:25:40,473
growing. And so all of that continued basically until here. They thought all this was like kind

1113
01:25:40,473 --> 01:25:45,873
a fine. The Federal Reserve can just buy proportionately less debt, but the United

1114
01:25:45,873 --> 01:25:51,493
States can issue more debt. And then you get this ratio of something like 10% or something.

1115
01:25:52,233 --> 01:25:56,813
And then this goes down because of corporate bailouts. But bottom line, if you look at the

1116
01:25:56,813 --> 01:26:02,473
crazy days, they got up to 20% ownership of the Federal Reserve, as you rightly said,

1117
01:26:02,473 --> 01:26:10,953
monetized 20% of the US federal debt in 2021 at the height of the pandemic. And now it's down to

1118
01:26:10,953 --> 01:26:19,673
like 12, 11, actually 11.38% to be precise as of June 30th. So Warsh, actually Powell gave Warsh

1119
01:26:19,673 --> 01:26:25,633
plenty of runway to work with should they need to monetize again. And again, I'm not cheerleading

1120
01:26:25,633 --> 01:26:33,113
for them to do this. Maybe they know more than they let on how dangerous some of this can be.

1121
01:26:33,273 --> 01:26:38,953
And you can kind of see it with the shallower money supply. But if they need it, they could

1122
01:26:38,953 --> 01:26:44,533
certainly bring out the monetary bazooka and buy more treasuries. That was basically what Powell

1123
01:26:44,533 --> 01:26:50,613
left Warsh with, which by the way, is actually better than what Greenspan left Bernanke with,

1124
01:26:50,613 --> 01:26:52,273
for sure.

1125
01:26:53,973 --> 01:26:57,033
Well, I mean, you mentioned Basel 1, Basel 3.

1126
01:26:58,193 --> 01:27:02,893
But now with the second Trump administration,

1127
01:27:03,473 --> 01:27:04,313
Warsh and Bessent,

1128
01:27:05,073 --> 01:27:07,113
many believe in working somewhat in tandem.

1129
01:27:07,593 --> 01:27:12,993
We have this new SLR ratio rule kicking in.

1130
01:27:13,653 --> 01:27:16,153
The thesis there is that the Fed doesn't want to

1131
01:27:16,153 --> 01:27:18,213
be looked at as the reason

1132
01:27:18,213 --> 01:27:20,813
for monetary and credit expansion.

1133
01:27:21,173 --> 01:27:22,693
So they're pushing that to the commercial banks

1134
01:27:22,693 --> 01:27:25,933
by messing with the reserve ratio requirements,

1135
01:27:26,053 --> 01:27:28,253
the short-term liquid reserve ratio requirements.

1136
01:27:28,513 --> 01:27:31,393
And so have you thought about it?

1137
01:27:31,393 --> 01:27:33,613
I need to get that up there.

1138
01:27:33,753 --> 01:27:34,573
That's very important.

1139
01:27:37,373 --> 01:27:40,173
Let's say it'll come back on our September call

1140
01:27:40,173 --> 01:27:45,853
or October call because both the banks holding treasuries

1141
01:27:45,853 --> 01:27:53,333
and foreign banks, both central banks and non-central banks, are something that I want

1142
01:27:53,333 --> 01:27:56,733
to get a better handle on. And I think that's a big shakeup that's coming here too.

1143
01:27:58,333 --> 01:28:03,573
It'll probably play a part. But yeah, theoretically, at least, better reserve is not,

1144
01:28:05,093 --> 01:28:10,373
it's monetizing still a lot. Let's look at the number, by the way, and say what it is.

1145
01:28:10,993 --> 01:28:14,733
All right. So the Fed owns four and a half trillion, which means basically they money

1146
01:28:14,733 --> 01:28:17,613
print on the other side, money bases on the other side of this.

1147
01:28:17,613 --> 01:28:24,193
But as far as what they own, $4.5 trillion out of $39.46 trillion, it's not as high as

1148
01:28:24,193 --> 01:28:40,202
it ever been It been closer to the uh worst of the pandemic but still uh they have i think they have room to buy more and they probably will yeah and it weird too

1149
01:28:40,202 --> 01:28:46,362
like i'm looking at the chart and it doesn't look like btfp had any effect on this but it gets into

1150
01:28:46,362 --> 01:28:52,122
like the weird accounting tricks that they so like there was a period there like post 23 banking

1151
01:28:52,122 --> 01:28:59,802
spasm banking crisis where they did at least temporarily bring on treasuries held by the

1152
01:28:59,802 --> 01:29:05,162
banks onto their balance sheet um it doesn't look like it's showing up on this chart though

1153
01:29:07,002 --> 01:29:11,722
because it was considered like a loan right they they actually brought on corporate debt to their

1154
01:29:11,722 --> 01:29:18,362
balance sheet and they uh the banks took the treasuries onto there they swapped basically so

1155
01:29:18,362 --> 01:29:21,842
So that gave the banks more liquidity.

1156
01:29:22,622 --> 01:29:22,902
Yeah.

1157
01:29:23,022 --> 01:29:23,582
I mean, Fed.

1158
01:29:24,062 --> 01:29:25,722
Didn't the Fed take on the risk, though?

1159
01:29:25,762 --> 01:29:27,402
Because they were essentially just giving them.

1160
01:29:27,702 --> 01:29:28,142
Absolutely.

1161
01:29:28,822 --> 01:29:29,302
Absolutely.

1162
01:29:29,422 --> 01:29:29,822
100%.

1163
01:29:29,822 --> 01:29:36,142
The thing that you don't see is all the guarantees, the assurances, which was basically there anyway.

1164
01:29:36,942 --> 01:29:38,542
This is what the monopoly does, right?

1165
01:29:38,542 --> 01:29:39,362
It's a moral hazard.

1166
01:29:40,402 --> 01:29:47,402
So that was already there anyway when all the crazy bets were happening, you know, after the dotcom and 9-11.

1167
01:29:47,402 --> 01:29:50,082
and before the global financial crisis,

1168
01:29:50,222 --> 01:29:52,122
all that was there anyway that they had the guarantee,

1169
01:29:52,262 --> 01:29:54,382
but yeah, they fully enacted that with the TARP

1170
01:29:54,382 --> 01:29:55,562
and the TALF and all that stuff.

1171
01:29:55,622 --> 01:29:56,782
So that's what that dip is,

1172
01:29:57,262 --> 01:29:59,702
is basically the Fed holding more corporate debt

1173
01:29:59,702 --> 01:30:03,422
than the treasuries.

1174
01:30:03,522 --> 01:30:05,242
And you can actually see it as a percentage right here.

1175
01:30:05,662 --> 01:30:06,182
But look at that.

1176
01:30:07,102 --> 01:30:09,282
They went to 75% of their balance sheet

1177
01:30:09,282 --> 01:30:11,342
as basically corporate debt

1178
01:30:11,342 --> 01:30:16,302
in the global financial crisis.

1179
01:30:17,402 --> 01:30:21,722
it's crazy how volatile these charts can look.

1180
01:30:21,882 --> 01:30:23,322
I mean, just looking at the charts,

1181
01:30:23,322 --> 01:30:26,862
it's like this is very unnatural to me.

1182
01:30:27,122 --> 01:30:27,842
And we've talked about this.

1183
01:30:27,982 --> 01:30:29,442
If you go back to like a couple charts ago

1184
01:30:29,442 --> 01:30:30,342
that you're looking at,

1185
01:30:30,442 --> 01:30:32,622
I think that was the,

1186
01:30:33,342 --> 01:30:35,542
I think it's Treasury's owned.

1187
01:30:36,442 --> 01:30:39,322
Yeah, this one, like this one, right?

1188
01:30:39,342 --> 01:30:40,382
We've talked about this before.

1189
01:30:41,082 --> 01:30:43,602
That was like very volatile leading up to 2008.

1190
01:30:43,702 --> 01:30:46,322
And then it's like, boom, boom, more streamlined.

1191
01:30:46,322 --> 01:30:53,922
streamlined ones yep so yeah it would be good absolutely like you said to show here now okay

1192
01:30:53,922 --> 01:31:00,322
what does the fed own what are the banks own what are the foreign banks own both central bank and

1193
01:31:00,882 --> 01:31:04,642
non-central bank so and then what are the american people actually own at the end of the day

1194
01:31:05,362 --> 01:31:10,402
so because they're american people that own some of that but uh yeah it's it's

1195
01:31:10,402 --> 01:31:20,282
It's the key takeaway you should get from this is that Powell gave Worsh a lot of breathing room after all the stimulus that they had.

1196
01:31:20,282 --> 01:31:28,282
But also, you know, the economy wasn't it was already there was these big hiccups during the repo spike in September 2019.

1197
01:31:29,302 --> 01:31:31,762
And then, of course, we had the pandemic, which is papered over everything there.

1198
01:31:33,602 --> 01:31:39,202
And you can just see it now like the even back in the 80s, at least it was kind of up and down.

1199
01:31:39,202 --> 01:31:44,162
there was still some trend but at least you can see the markets like kind of interacting on the

1200
01:31:44,162 --> 01:31:49,482
edges and here it's just smooth lines with big mountains and it's just showing that the fed will

1201
01:31:49,482 --> 01:31:54,602
just do anything that they want to try to paper over any fears or if any wall street bank's going

1202
01:31:54,602 --> 01:32:06,422
to lose some money um and that's how it looks yeah um i'll probably have to call it here soon

1203
01:32:06,422 --> 01:32:14,582
marty uh gotta pick the daughter up but this is your favorite chart yes all right great chart one

1204
01:32:14,582 --> 01:32:22,862
of the best charts yeah so this is the old uh i've gone just take out any adjusted like if there's

1205
01:32:22,862 --> 01:32:26,742
change whatever i'm counting everything just to show you what bitcoin's technically been able to

1206
01:32:26,742 --> 01:32:32,982
transfer in value uh so the record's still 60 trillion by the way on a trailing 12 months basis

1207
01:32:32,982 --> 01:32:40,362
in 2022. That was a huge, huge number. But still to this day, Fedwire, which is the Federal Reserves,

1208
01:32:41,042 --> 01:32:45,122
that is all those reserves that we're talking about, basically this five, six trillion dollars

1209
01:32:45,122 --> 01:32:49,282
reserves are even less than that, actually, because hard currencies included there, two and a half,

1210
01:32:49,682 --> 01:32:55,662
but in any event, three, two to three to four, if you count reverse repurchase agreement,

1211
01:32:55,662 --> 01:33:11,002
$4 trillion of reserves that the Federal Reserve transfers every year through the financial system through FedWare.

1212
01:33:11,102 --> 01:33:12,442
Yeah, but what's the word here?

1213
01:33:12,822 --> 01:33:15,282
What's the velocity of that?

1214
01:33:15,462 --> 01:33:18,802
How much does that actually transfer in value every year?

1215
01:33:19,262 --> 01:33:20,862
$1.2 quadrillion.

1216
01:33:20,862 --> 01:33:28,762
dollars worth. So it is an incredible number. And it shows you, by the way, that this is not Visa,

1217
01:33:28,882 --> 01:33:33,482
this is not MasterCard, this is the base layer. And so Bitcoin absolutely can compete with this

1218
01:33:33,482 --> 01:33:43,630
because the TPS is about the same 6 7 I think Bitcoin TPS is even a little bit bigger transactions per second And I not showing that here But all the Bitcoin needs to do to compete here is just rise in price

1219
01:33:44,190 --> 01:33:45,290
It can totally handle anything.

1220
01:33:45,810 --> 01:33:48,510
So as far as value goes,

1221
01:33:48,510 --> 01:33:52,570
so there's an incredible amount of money

1222
01:33:52,570 --> 01:33:54,290
that goes through the traditional financial system.

1223
01:33:54,890 --> 01:33:55,890
This is the core of it.

1224
01:33:55,990 --> 01:33:56,650
This is Fedwire.

1225
01:33:57,130 --> 01:33:59,870
There's only $2 or $3 trillion of value,

1226
01:34:00,090 --> 01:34:03,190
of balance sheet value for all the banks in the United States.

1227
01:34:03,730 --> 01:34:06,030
$2 to $3 trillion in reserves at any one time.

1228
01:34:06,470 --> 01:34:10,950
That goes to the tune of a quadrillion dollars a year.

1229
01:34:11,210 --> 01:34:13,690
It's an incredible amount of money.

1230
01:34:14,930 --> 01:34:16,450
And so Bitcoin is certainly smaller than that.

1231
01:34:16,530 --> 01:34:21,130
Right now, Bitcoin's on a $24 trillion a year clip.

1232
01:34:22,130 --> 01:34:26,410
But you can see my little Fedwire supremacy on log scale.

1233
01:34:28,930 --> 01:34:32,890
Actually, in 2022, we got to only 16, 17 times smaller than Fedwire.

1234
01:34:33,730 --> 01:34:35,750
which is pretty nice.

1235
01:34:35,810 --> 01:34:37,570
But now we're about 50 times smaller than Fedwire,

1236
01:34:37,710 --> 01:34:40,610
47.6 times smaller than Fedwire to be exact.

1237
01:34:42,510 --> 01:34:44,850
When did we hit 200 there?

1238
01:34:45,110 --> 01:34:45,530
What was that?

1239
01:34:45,610 --> 01:34:46,150
What year was that?

1240
01:34:47,790 --> 01:34:48,190
200?

1241
01:34:48,990 --> 01:34:53,890
The last big, I guess, contraction in Bitcoin.

1242
01:34:54,650 --> 01:34:55,750
You mean the ratio?

1243
01:34:55,890 --> 01:34:57,190
So the ratio is on the right side.

1244
01:34:59,670 --> 01:34:59,930
Yeah.

1245
01:35:00,870 --> 01:35:01,650
Say that one right there.

1246
01:35:01,990 --> 01:35:02,270
This one?

1247
01:35:02,770 --> 01:35:02,910
Yeah.

1248
01:35:02,910 --> 01:35:13,070
uh 2023 november the the number is 133 134 134 okay that was 134 times larger than bitcoin in

1249
01:35:14,030 --> 01:35:21,550
2023 november um but notice that actually in the depths of bitcoin's crisis which was the end of

1250
01:35:21,550 --> 01:35:28,430
2022 it was trading a lot a lot of bitcoin was moving etfs had already uh no etfs had not started

1251
01:35:28,430 --> 01:35:34,670
actually started in 2024 but a lot of bitcoin was moving here 60 trillion dollars worth and uh

1252
01:35:34,670 --> 01:35:41,310
you know that was not that was not huge dollar bitcoin that was 16 17 000 bitcoin yeah and so i

1253
01:35:41,310 --> 01:35:48,670
think it's another like so if you go back to 20 november 2023 what was it 130 134 times yeah and

1254
01:35:48,670 --> 01:35:58,270
what is it today 50 40 48 47.6 better by three and so i'm just like eyeballing the

1255
01:35:58,270 --> 01:36:06,210
The price chart right now, November, we were at November 23, we're at between 33 and 39,000.

1256
01:36:06,210 --> 01:36:09,630
So the price is, depending on where you're looking, doubled.

1257
01:36:09,970 --> 01:36:15,690
But I guess the ratio is way less than half.

1258
01:36:16,070 --> 01:36:16,870
Ratio is better.

1259
01:36:18,890 --> 01:36:25,250
Price is even down, right, from, say, 2025.

1260
01:36:26,370 --> 01:36:27,990
And the ratio is still getting better.

1261
01:36:28,270 --> 01:36:31,370
Yeah, that's a pretty high signal right there.

1262
01:36:31,390 --> 01:36:32,250
Yeah, absolutely.

1263
01:36:32,610 --> 01:36:34,210
This is a great chart, I think, to show.

1264
01:36:36,170 --> 01:36:37,610
You could call it the money chart.

1265
01:36:37,890 --> 01:36:43,030
It's literally how much money is going through Bitcoin versus how much money is going through Fedwire.

1266
01:36:43,430 --> 01:36:46,610
And it's certainly the trend on log scale is good.

1267
01:36:46,690 --> 01:36:57,250
If you take log scale off, it's actually got in the realm of something looking normal already back in 2014, which is still 5,000 times smaller than Fedwire.

1268
01:36:57,250 --> 01:37:02,490
But if you look at it in a log scale, you can start to really put these sort of orders of magnitude in perspective.

1269
01:37:02,830 --> 01:37:04,370
And Bitcoin operates in log space anyway.

1270
01:37:04,650 --> 01:37:06,510
So it's going to take time.

1271
01:37:06,870 --> 01:37:07,370
Power law.

1272
01:37:08,650 --> 01:37:09,890
But this is where we are.

1273
01:37:09,970 --> 01:37:11,210
One more before we go.

1274
01:37:11,290 --> 01:37:11,650
I'm going to show you.

1275
01:37:11,710 --> 01:37:13,690
This is log periodic.

1276
01:37:13,970 --> 01:37:15,310
I got to credit Giovanni on this.

1277
01:37:15,430 --> 01:37:17,310
Giovanni actually made a great call in.

1278
01:37:18,210 --> 01:37:19,370
I can't go over this too much.

1279
01:37:19,470 --> 01:37:24,790
But in 2025, he was doing something like this.

1280
01:37:24,790 --> 01:37:29,730
and he published a paper on it and started this year but basically he's trying to measure

1281
01:37:29,730 --> 01:37:34,590
again through math can we measure sort of the wiggle within the wiggle or the cycles

1282
01:37:34,590 --> 01:37:39,330
right can we measure so the power law is the main trend go log log you see it again that

1283
01:37:39,330 --> 01:37:42,690
nice straight line appears in log log so we can tell it's a power curve

1284
01:37:42,690 --> 01:37:48,430
can we measure the wiggle within the wiggle and this is again i usually like to calculate this

1285
01:37:48,430 --> 01:37:52,270
stuff myself but thanks to the power of ai i just let this one go because this is this is not

1286
01:37:52,270 --> 01:37:56,590
This is more directionally than I've ever been when you actually look at these cycles.

1287
01:37:57,410 --> 01:37:59,030
And I'll just run through this very quickly.

1288
01:37:59,510 --> 01:38:01,270
You see here, I got a few different...

1289
01:38:02,030 --> 01:38:02,270
I've actually...

1290
01:38:03,330 --> 01:38:10,610
I just told the computer, give me the best cycles that you can possibly get with the log periodic formula.

1291
01:38:10,870 --> 01:38:11,970
Don't put a limit on or whatever.

1292
01:38:12,070 --> 01:38:12,930
So it found five.

1293
01:38:13,450 --> 01:38:15,270
I would say maybe only the first three are...

1294
01:38:17,310 --> 01:38:19,610
Well, they're ranked by amplitude, basically.

1295
01:38:19,610 --> 01:38:21,450
So 26, 23, 11.

1296
01:38:21,450 --> 01:38:27,070
and then it goes down to 10. So maybe four. The fifth one is eight. Anyway, they all have decent

1297
01:38:27,070 --> 01:38:33,310
amplitudes. But the point is, look what it finds. And Giovanni worked on this a lot and published

1298
01:38:33,310 --> 01:38:38,230
a paper. So I'll credit him for thinking to do this. But basically, it finds a two-year cycle,

1299
01:38:38,550 --> 01:38:53,838
2 It finds a 3 And it finds a 7 Now these are just not doing anything but looking at the changes of Bitcoin price in log space That it We don have to go into the math more than that

1300
01:38:54,198 --> 01:38:55,418
So you're trying to track the wiggle.

1301
01:38:55,518 --> 01:38:58,678
And then when you sort of squish it all together into one formula, it's still a power law.

1302
01:38:59,078 --> 01:39:02,218
But you can get these, what basically starts to look at these curves.

1303
01:39:02,218 --> 01:39:03,678
And you see how it goes out in the future.

1304
01:39:04,918 --> 01:39:08,658
And this is why I'm fine talking about cycles.

1305
01:39:08,658 --> 01:39:15,278
again i was always thought the four year was a shelling point because of the having obviously but

1306
01:39:15,278 --> 01:39:21,898
um so far they're still there i'm less let's say i'm less bullish on this idea because of just

1307
01:39:21,898 --> 01:39:27,678
being directionally right is quite difficult and just letting the math go on this i would say is

1308
01:39:27,678 --> 01:39:32,358
this can be volatile if i calculated this like a year ago it'd be more volatile than

1309
01:39:32,358 --> 01:39:36,578
than the good old power law which i showed you was just like fifteen thousand dollars off over

1310
01:39:36,578 --> 01:39:40,078
10 years difference of data so this is a different story completely different story i want to make

1311
01:39:40,078 --> 01:39:46,858
that caveat but having said all of that um again you can see that we're way outside the bands

1312
01:39:46,858 --> 01:39:55,318
of probability here to the downside uh and this actually shows slightly a little bit of a faster

1313
01:39:55,318 --> 01:40:04,138
next top but again it's showing end of 2028 so the pure four year would assume 2029 and this is

1314
01:40:04,138 --> 01:40:08,258
showing end of 2028 but it is showing like a bottoming give the people what they want give

1315
01:40:08,258 --> 01:40:13,658
them the bull juice what is what is that the bull the bull juice is by the end of 2028

1316
01:40:13,658 --> 01:40:20,118
the log periodic so the power curve itself by the way which we've been talking about the whole

1317
01:40:20,118 --> 01:40:26,078
episode is 300 000 that's the power curve that's the that's that more flat looking black line

1318
01:40:26,078 --> 01:40:29,978
straight the straight line the nice beautiful straight line 300 on trend at the end of 2028

1319
01:40:29,978 --> 01:40:36,838
if we're on trend 300,000 now this thing tries to track the cycles and its log periodic is 520,000

1320
01:40:36,838 --> 01:40:46,978
and the q90 let's just put the q100 in for fun the q90 uh which was b again 90 of observations

1321
01:40:46,978 --> 01:40:53,218
would be below that based on all prior that assuming this cycle holds 778,000 by the end

1322
01:40:53,218 --> 01:41:01,558
of 2028. You heard it here first. There you go. And the Q100, which would mean it would hit the

1323
01:41:01,558 --> 01:41:11,838
max all time log periodic sort of oscillation amplitude 2.2 million, which is the Super Bowl

1324
01:41:11,838 --> 01:41:18,698
juice. And we haven't been to that sort of a level since 2013, in fact. So I would be very,

1325
01:41:18,698 --> 01:41:23,298
very cautious of that number never financial advice as always but it is kind of fun to look

1326
01:41:23,298 --> 01:41:27,678
at these uh cycles and i'd say yeah this is the most directionally i've ever tried to look at price

1327
01:41:27,678 --> 01:41:35,918
um but yeah so far there is something to the cycles uh and i'm i'm also on board with that

1328
01:41:35,918 --> 01:41:42,858
idea 2.2 million by the end of 2028 get your as an extreme upside as an extreme upside

1329
01:41:42,858 --> 01:41:47,338
you heard it here first people want to hear they don't want to hear leveled uh they don't want to

1330
01:41:47,338 --> 01:41:53,538
statistical analysis based based probabilities uh with sound statistical backing yeah

1331
01:41:53,538 --> 01:42:00,138
no but look i love exploring all this stuff marty i love exploring with you i got uh lots more

1332
01:42:00,138 --> 01:42:05,118
economic data here and i just want to tell people thanks for following me over the years i've been

1333
01:42:05,118 --> 01:42:08,658
saying it for a long time but i finally in the fall will get something where people can play

1334
01:42:08,658 --> 01:42:11,898
around with these numbers i'm gonna hold you to that you've been saying this for years i'm gonna

1335
01:42:11,898 --> 01:42:12,698
I hope you do it this time.

1336
01:42:12,738 --> 01:42:14,678
This one's actually, it's going to be real.

1337
01:42:15,298 --> 01:42:15,658
Okay.

1338
01:42:16,298 --> 01:42:16,538
Yeah.

1339
01:42:16,638 --> 01:42:21,318
You go enjoy your weekend, grab your daughter, and we'll do this again.

1340
01:42:22,438 --> 01:42:23,178
End of summer?

1341
01:42:24,998 --> 01:42:29,398
End of summer, probably even into September, October.

1342
01:42:30,018 --> 01:42:30,298
Okay.

1343
01:42:30,718 --> 01:42:35,878
It's a long way to go with the old central bank publications.

1344
01:42:36,558 --> 01:42:37,178
But, yeah.

1345
01:42:38,018 --> 01:42:39,578
It seems like Warsh is looking to change that.

1346
01:42:39,638 --> 01:42:40,478
We need immediate data.

1347
01:42:40,658 --> 01:42:41,518
We'll see if that happens.

1348
01:42:41,518 --> 01:42:46,318
Well, we got that. We got weekly fed data anytime. That's we can look at that old as we did here.

1349
01:42:47,298 --> 01:42:52,278
Awesome. But thank you, buddy. This has been great. Thank you. Enjoy your weekend. Enjoy

1350
01:42:52,278 --> 01:42:57,478
your night. And we'll do this again. Peace and love, freaks. Thank you for listening to this

1351
01:42:57,478 --> 01:43:02,438
episode of TFTC. If you've made it this far, I imagine you got some value out of the episode.

1352
01:43:02,898 --> 01:43:07,618
If so, please share it far and wide with your friends and family. We're looking to get the

1353
01:43:07,618 --> 01:43:14,518
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1354
01:43:14,518 --> 01:43:20,118
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1355
01:43:20,118 --> 01:43:25,738
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1356
01:43:25,738 --> 01:43:31,938
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1357
01:43:31,938 --> 01:43:34,698
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01:43:34,698 --> 01:43:36,438
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1359
01:43:36,438 --> 01:43:38,698
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1360
01:43:38,698 --> 01:43:39,538
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1361
01:43:39,538 --> 01:43:42,538
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1362
01:43:42,538 --> 01:43:43,758
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1363
01:43:43,758 --> 01:43:46,638
thank you for your time and until next time

1364
01:43:46,638 --> 01:43:47,458
okay