CD85: Bitcoin and Global Recession with Dylan LeClair

Happy Bitcoin Monday, freaks. It's your boy Odell here for another CIL dispatch.

The live unedited

show about Bitcoin and Freedom Tech.

I'm your host, Odell.

We're here for another great rip with Dylan LeClaire. I'm very excited about this rip. But before we get started,

I wanna thank all the freaks who continue to support the show, whether that's through podcasting 2.0.

You simply

download a podcasting 2.0 app, like fountain podcasts,

breeze,

podverse.fm,

echoln.com,

search Zillow Dispatch, load up your wallet with some Bitcoin, choose how many stats per minute you think the show is worth to you, and then as you listen, those sats are streamed directly to my node.

Using podcasting 2.0, you can also do something called boostograms.

Boostograms

are comments that you leave with attached with a certain amount of Bitcoin.

I read those out on air, the top 4,

from the previous episode.

Our most recent episode was actually,

just 2 days ago,

but we already have some freaks who have supported the show. We have Eric 99 with 50,000 sat saying, this will be one of my last 50 k boost for a bit. My work is no longer allowing overtime.

Was able to stack 55 hours a week and now back to 40

sad face. I will still stay humble and stack sats. Just going to be spraying less sats going forward.

Thank you for the continued content. Well, thank you, Eric 99. I appreciate that. Wish you the best of luck with your job.

We have at mrmrormistermister

with 8 1,674

sat saying, great topics, great guest, great host, rock on. We have rider die freak, ape, mithrander,

777

7 sats saying, Odell, time for you to take a break from stacking sats and start stacking kids. You'd make a great

father given how many Bitcoiners you successfully raised.

We have at Owen Lewis with a 1,000 sats saying, homeschooling sounds great in theory, but for 99% of people, only having 1 parent working is simply not feasible.

Not sure how we get around that in the short term. Interesting episode, though. Thanks.

I know homeschooling was a little bit out of our wheelhouse.

I do think it's a tangential topic that's extremely important. I think we'll have more

homeschooling discussions

on the show going forward, so if you freaks have enjoyed it,

you know, definitely hit me up with more feedback, and, we will be covering all those different

concerns and issues.

You can also listen to

dispatch through any podcasting app. You just search cildispatch.

And if you do that, you can still support the show by going to cildispatch.com

and clicking,

sil dispatch.com/contribute,

or going down to the bottom of the sil dispatch.com

page

and clicking that big link that says donate Bitcoin. If you go there, you can go to the geyser.fund

page through that link,

and you can see all the contributions that happened to the show. You can see,

the leaderboard. The leaderboard is extremely cool because the leaderboard includes

both streaming stats and one off donations.

If you go I'm going in the leaderboard right now really quick.

It's really cool. You can see ride or die freak, Chad Farrow at number 16 on the leaderboard with 82,000

sats. You can see God Family BTC on 17th with 73,000

sats. Vik at 18th with 71,000

sats.

It's pretty cool to see the leaderboard. Uncle thinks at 7 with 450,000

sats. Anyway, freaks, I appreciate all the support.

Keep it coming. I really do appreciate it. You keep putting me and dispatch on the top of the podcasting 2.0 charts at Fountain, which are really cool.

If you're not listening through a podcasting 2.0 app, my favorite app is antennapod,

just FYI,

fully open source, really fantastic app. And I know it's a bear market in a recession. You can always support the show by subscribing on your favorite platform.

Dispatch is available on Twitch, Twitter,

YouTube,

Rumble, Bitcoin TV, every podcasting app,

sharing with friends and family, leaving reviews. It really does help. Joining in the live chat, dispatch is unique in that we have a live unedited show with a live audience.

The live chat is broadcast from Twitch,

YouTube, and our matrix chat. All those links are at silodispatch.com.

Every link is at silodispatch.com.

Okay. I will stop boring you with this intro. I know I'm talking a little bit slowly.

It's been a long, long busy day for both me and my guest,

but we made it happen because it'll be a fun conversation, and Dylan's in town in Nashville at Bitcoin Park in the studio.

So let's have a little fun with it. How's it going, Dylan?

Never been better, man. I'm excited to, to rip. Thanks thanks for joining me. I know it's been a long day.

Yeah. I just recorded,

with, old friend, Peter McCormick.

Don't know when it's released. Don't care. But,

yeah, it's popped over.

Appreciate it. Yeah. I,

I cornered Dylan the other day at the park,

and we we we figured out a good time to to meet up. So, Dylan, I mean, I have,

I have the title at Bitcoin in global recession. Are we in a global recession?

I don't, officially, I don't think so.

I think we're headed for 1.

Yeah. We're headed for 1.

But

Officially, we're not in a recession? I don't I don't know. They really redefined the

the terms. You know? Classic just, like, changed definitions.

I feel like when I whenever I say we're in a recession, I get people commenting on Twitter, we're not officially in a recession yet. And then when I say we're gonna enter a recession, I always get comments on Twitter, Matt, we're already in a recession. So you're kinda fucked either way. Yeah. No. I mean, like, I think we are. I mean, because because, like, the

the inflation numbers because okay. How's,

a recession defined?

It's 2 quarters,

I believe, it's 2 quarters of negative real GDP,

which real GDP, gross domestic product,

is defined as nominal GDP. So how much the economy expanded in in dollar terms divided, minus,

the inflation rate. Right? So

if inflation rate number is cooked, then, you know, that could change the

technicality

of whether we're in a recession or not,

which I'm not saying it's cooked or not or that it's just cooked this last 2 years instead of cooked throughout the last 40 years. I mean, it's definitely cooked. Right? It's cooked. It's always been cooked. It's always Maybe it's getting more cooked. Is it getting more cooked over time?

I don't know. I mean, like, there's, like, some interesting,

like, inflation. What's what's that,

what's that inflation gauge reading? Like, the,

with something index? It's like,

I don't know. With the CPI? Well, this the CPI The consumer price index? Yeah. That one. No. There's, like, the

it's like a shadow index or whatever. Like, that's, like, unofficial, but, like, you know what I'm talking about? It's like and it monitors, like, city by city.

That's not the, like, the official index.

No. But I think, like okay. Over the last 2 years,

inflation is, like, officially is, like, compounded is, like,

14% or something. But, like, have prices risen by over 14% in the last 24 months? Yes. Of course. Like like and everyone has a different basket. Well, I mean, even the official CPI number, the most recent one was was 7.1%.

Mhmm. Which is, like, the official Cook number. Yeah.

So, like,

I don't know. I think this recession,

as in, like, if we're in 1 now, are we entering 1, whatever, is gonna be different from, like,

people's,

like,

understanding of a recession because,

well, one, like, I mean,

financial assets have have been pretty much destroyed. Not destroyed, but, like, stocks, bonds down 20% plus, like, hasn't happened in modern history. Right.

Crypto, Bitcoin, obviously, down 70%, 80%.

You know, a lot of them are,

you know, 100%.

Well, like, the Financial Times had that cool chart that they released. That was it it's been the single worst year for a combination of stocks and bonds,

and then it's been the worst year for bonds ever. Mhmm. And then it's, like, the 4th or 5th worst year for stocks.

Yeah. And so, like,

interestingly, like, for the last 40 years, like, I mean, the modern the modern financial portfolio is built upon the assumption of stocks and bonds being inversely correlated during stock market drawdown.

What wasn't taken into effect and, like, what screwed everybody in in finances last year was that interest rates were already so low. Bonds were, like, yielding 1% or whatever the hell they were.

Like, the 30 year bond

in 2020 was was 1%,

like, 1.2%.

So it's like you lock your money up for a 1% yield in in dollar terms, not in inflation adjusted terms for the next 30 years.

So what's happened as as it inflation has reemerged for the first time meaningfully since the seventies.

Obviously,

bonds have have sold off. And so stocks have only repriced

based on, not earnings, not like how much the the companies are expected to earn or take in,

but they've repriced based on the cost of capital,

which was artificially low in 2020. Right. So

so, bonds people people always assume bonds are inversely correlated to stocks during a bond market a stock market downturn.

But stocks are inversely correlated to bonds during a bond market downturn.

Okay.

So so stocks in o eight Right. Fall 30%, 40%, whatever it is. O eight zero nine. But in that time, bonds rallied 20%. 12 at that point. Yeah. Not either. Sorry. Continue. I was, like, 7. Okay.

But in that time, bonds rallied 20%.

Because as stocks were falling, interest rates got cut, and there was deflationary forces, like CPI was negative year over year Right. At some point. And so deflationary

bust, bonds get bid. Flight to safety, who's the most likely to pay me back out of anybody in the world? The US government. Right. Because they can print their own money and whatever.

And so for anyone, like, in the 6040 portfolio or for hedge funds or for, like, you know, whatever, like, whoever's, you know, like, pensions, whatever, they have their, like, flight to safety. But in this recession or not even And they were presumably already holding bonds, so they recovered in that regard. Yeah. And, like, not even holding bonds, but they, like like the Ray Dalius of the world, lever up on bonds. Right.

And so

this time around, it wasn't,

as it wasn't a stock market downturn. Well, it was a stock market downturn, but it was a bond market downturn which led first. Which that led first. Like, stocks were in la la land in, like, January, February, March, April as bonds were selling off. So as the cost of capital was was repricing higher. So all that's happened right now for stocks,

and, like, for whether it's, like, Facebook,

fucking I mean, like, a lot of these were, like, micro bubbles in themselves. Like like, Tesla was $1,300,000,000,000.

Right? Like, you know, that these are these are, like,

large bubbles.

But all that's happened is that the cost of capital is repriced upwards,

so bonds repriced lower. What hasn't been priced in at all, if we're just talking about financial assets, is, like, an earnings side of the thing Okay. Or credit risk. Right? So so what hasn't been taken into effect is, like, you know, one of the biggest,

drivers of stock of stock market financial asset returns over the last decade is stock buybacks. And how do they finance stock buybacks? They just borrowed money at And bought their own stock. Yeah.

Like what Michael Saylor did, but buying their own stock instead of buying Bitcoin. Essentially. Yeah. And so so Apple could borrow at Fed Funds plus 20 basis points.

Right? Like, they're, like, basically the US government.

Free money. Free money. Yeah. In a world where inflate like, they they Apple borrowed for 30 years at, like,

2%. Right. Which is just madness.

Less than inflation. Less than inflation. And they locked that in. So it's, like, negative rate. Yeah. Yeah. Negative rate. And that was, like, the standard for, like, really post great financial crisis.

Was that, like, we had, like, a disinflationary economy where they're pumping pumping money to the system, and and there was no consumer inflation, only asset inflation.

Conveniently,

the way that our, you know, awesome financial system works is that that's not included in in the inflation gauge. Right? So asset inflation, housing doesn't matter.

I guess rent matters, but that's that's a little bit of a of a nuance to take.

So, like, in terms of, like, what we're gonna see this recession,

employment is still really, really strong. Like, the job the job market is actually still really, really strong. Yeah. There's some, like, white collar jobs that are seeing some layoffs.

But, like But is this the calm before that storm? Or

I think so.

Like I said on rabbit hole recap this week, I was like, the recession's gonna get worse because

when I asked a bunch of, like, my college friends and my high school friends if they've had layoff at layoff set their, you know, non Bitcoin businesses, they're all like, layoff? Why would there be layoffs?

Yeah.

So, I mean, we've seen we've seen, like, to a a certain extent, like, the I mean, the crypto bubble has has burst. Right? Clearly. Clearly.

As is traditioned. As is tradition.

The VC bubble has burst. No more cheap money. No more free money. So, like, the Ubers and the Lyfts of the world whose business model was Lose more money every year. Lose money More money. Like, they were scaling up their losses. The scaling losses by design in the sense okay. So, like, I'm gonna grow at all cost, acquire,

revenue and users at all cost,

because of, like, you know, this network effects type vision.

Right? And

and, like, the run rate doesn't matter because there's always the next seed round. There's always the next rate. We can raise more money, we can borrow more money. It's fine.

We'll figure out how to monetize in the future.

So money is no longer free.

And so that

and and also, like, this is this was, like, the madness of 2021 was, like,

CPI was, like, you know, it was as it was climbing up post COVID, it was, like, 3%, 4%, 5%, 6%. And the Fed funds rate was still at 0 when they were still printing money. It was, like,

okay, well, some money is increasingly

not even free. It's negative.

Like, so so borrowed money is an asset.

Right?

Like, if if I can borrow at 2% and inflation is 5. Right. And I can lock in my rate. It's not it's not variable. It's fixed. Right. The the humble saver was punished. The humble saver was If you you were leaving money on the table if you didn't borrow money. Yeah. Because because in a world where the cost of capital is negative, and I understand that that in 2022, the story was that rates repriced higher. But in in 2020 and 2021, the magic, and even, like,

post great financial crisis, like, that entire decade, the magic was, like, oh, it's like money was free. And then as CPI started to increase, it was, like, increasingly negative. So why did valuations continue to go up only? It was, like, well, if you, like, plug in a, you know, basic, like, discount cash flow equation

with negative

cost of capital,

the theoretical value of any asset on the planet is like, well, it doesn't compute. It would just like your calculator would give you like an

Excel would give you, like, an error. Right. But it's it's infinity. Like, you know what I mean? So that's why we got, like Just keep borrowing and buying. That's why you got, you know, fucking monkey j, rock JPEG selling for $6,000,000

or whatever it was. Like

Right. And that's why you have, like, condos in New York City that were just unoccupied,

but people were just buying them and creating them. And so so that game is is over. And baseball cards were at all time highs. Yeah. All the collectibles.

That at least for the time being, that game is over.

We're we're talking, VC the VC bubble burst.

Crypto bubble burst. Crypto bubble burst. I mean Stock market bubble has is bursting. It's bursting. It's not done yet. But, like, here's the thing is, like and I I, I was talking to someone earlier, and I posted a little bit about it. But, like, okay. If we just look at, like, the S and P 500. Like, the biggest company in the S and P 500 right now is Apple. Right. So Apple throughout the 2010s

traded at, like, 10 to 15 price to earnings ratio.

So $1 in earnings,

that they they they made in the year, they traded at a 50,

at $15.

Right.

So at at a 10 PE ratio, their earnings yield, if you flip the equation around earnings to price ratio,

that's what's that's your yield. So they if they make if if they're, if they're valued at $10, they make $1 in a year, you get that that return on capital is 10% a year.

So they traded, like, 10 to 15 PE ratio for all for as a growth name,

as they were you know, they launched the iPhone. They had all these products, the iPad. You know, they were scaling, growing, and growing.

They were trading at this at this valuation

during the 2000 tens.

Post COVID, or not post COVID. In 2018, they became the first $1,000,000,000,000 business.

I'm not sure that when they became the first $2,000,000,000,000 business, but, I believe on the 3rd January of 2022, they became the first $3,000,000,000,000

business. And again, this, like, this is a company that every single,

pensioner 4 zero one k,

participant in the United States in the world owns. Right. Because it's it's passively indexed. It's the blue chip. It's the blue chip of blue chips.

That,

yeah. So so

post COVID, this company now is a $3,000,000,000,000

business.

And essentially, like, their their main new innovative product is, like, the iBuyBack.

They just buy back their shares, and it's, like, Apple's, like, a deflationary

stock.

Like, they're not really doing anything more innovative other than just, like, like, Apple's

recent innovation over the last decade is financial engineering.

That is borrow money, buy back their shares. Because they're like AirPods.

Yeah. And AirPods.

Because everyone just keeps buying more AirPods. I say this with someone you know what? I'll give I'll give them credit. I I've owned 5 pair of AirPods. Exactly. There you go. Okay. So never mind. My thesis is broken. The gift that keeps going.

But but now this, like, Apple is trading at a PE ratio of, like, I believe it was, like, I got as high as, like, 2027

or 25 or something. Right now, they're trading at a PE ratio of 20. Right? So an earnings yield of 5%.

Okay. But but the but here's the thing that, like, I think many people are missing. And this isn't just about Apple or the S and P or whatever. This is just like in general. When when someone goes, oh, well, the stock market's 20% from the highs. It's cheap.

Well,

no.

Because Apple was trading at a, you know, a 10% earnings yield, while the cost of capital is 0. Right. Now the cost of capital is 4%, and I guess you could adjust and you could do it in real terms or whatever.

But now the cost of capital is, let's say, 4%. Still negative.

Yeah. Well, it yeah.

Right?

It's it's negative,

but there's, like,

that's CPIs year over year versus, like, what forward

inflation expectations are. Okay. Like like, the bond people always get mad at you when you say real yields are negative. They go, no. Well,

forward inflation expectation any bond people. Yeah. And what so what do they say? Forward expectations are lower. Because CPI is trailing 12 months. So everyone's trading that everyone's trading under the well, a lot of people, the professionals are trading under the belief that inflation will go down.

Exactly. That is transitory.

Yep. And and,

you know, to give the people that are, like, saying, you know, the bond people are idiots credit. Right. Forward inflation expectations in 2020 and 2021 were were horribly wrong Right. To the upside. So it could happen again,

which would send everything to hell if it if it was true. If inflation gets worse. If inflation expectations were wrong to the to the debt, like,

As in they get worse. Right? Well, not even if they get worse. If they just, like if inflation

doesn't abate. Like like, it's priced in that inflation is gonna go from 7 to So even if inflation stays consistent?

Then financial assets are fucked. Okay. Like, mega fucked.

But, like, just to go back to the Apple analogy, and I I I think it's it's entirely relevant,

is, like,

equities and financial I mean, all financial assets are are relative.

Right? If you can earn 5% in set, you know, security b and 6% in security,

a,

they're comparable. So so now that, like, the Apple earnings yield, instead of being 10%, it's 5%, because the price of earnings is 20.

Right? But the cost of capital is 4%.

So now Apple,

despite being,

you know, despite being 30 or 40% from the highs,

it's actually more expensive than it was last year

because

the the discount rate's repriced. Right. And so people look

at people look at Tesla, and people look

at Apple, and people look at, like, business x y z, and they say, oh, no. It's cheap because it's free. It's a it's a it's a sale. It's a sale. Mhmm. But it's not a sale

because

money is no longer at least currently,

is no longer free.

Because in like, energy repriced the discount rate, and the discount rate repriced the valuation of everything on the planet. And so, like,

you know, the title of this is, like, recession and and and Bitcoin or whatever. Bitcoin and global recession. Bitcoin and global With Dylan LeClaire. With Dylan LeClaire. Yeah. Correct.

I I think the the thing that I I worry is that we've seen throughout history is that is that

asset

asset bubbles of this scale, which actually we've never seen before. We've never seen this kind

of Ever. All encompassing everything bubble. Yeah.

We've seen, like, relative asset bubbles burst.

And there's probably, like and this is in like, inexact, but, like, a 6 to 12 month lag,

for that to feed back into the real economy. Like like, all the Keynesian economists

talk about the wealth effect. Right. And, like, Greenspan, when the tech bubble burst, they literally, like, in the fed minutes,

were, like, talking about how in order to restimulate the economy, they're gonna blow a housing bubble. They were talking about this in, like, 2002. Right. They're like, we're gonna blow a housing bubble so that the real economy gets moving again.

So when you see an asset bubble burst like this, there's the opposite effect. Like like, there's a lag time, but it There's a lag for everything pretty much, always. Always. But it feeds back into the real economy negatively.

And so I think that the thing like, I kind of believe that we're gonna and I don't know, like, how long it takes. One of the things I was wrong about in 2022 was that I thought it was gonna happen faster. I was like, there's no way the fed can raise. The fed raised. I was like, it's gonna be bad. And I think it's still gonna be bad. But I'm surprised,

that it hasn't I I guess I was surprised that You didn't think the Fed was gonna raise much, if anything. Right? I thought well, because because they outlined this. They're like, here's the playbook. Debt's too high.

It's unsustainably high.

There's we have one way out.

Let inflation rip

and keep rates low. Right. And just keep the bubble going. Keep the party going. Well yeah. Don't tank don't tank the stock market. Don't tank real tank real estate. Don't tank capital markets, and just keep the party going.

Well, correct. I mean and I think that was And as a Bitcoiner, it would have been great because then Bitcoin would have kept pumping. Yeah. Just number go up forever. Yeah.

Well, I mean, yeah, that's that's what

but but less so about, like, the asset prices, which are certainly in effect, but more so in the fact that, like, debt burdens at this level, whether it's, like, federal or aggregate or whatever you wanna measure.

The the only way out

is a, like, historically is a is a default on the peg, which there is no peg. It's just fiat. So the only way out is a sustained period of of inflation above interest rates

to to to lower the the real debt burdens.

Right? So, like, how do I get debt from a 120% of GDP to 80% so we can keep this game going? Well, you let inflation rip high for 8 years and you keep interest rates low.

That's still the game,

but I think what the fed didn't understand. Because if you look at what they said in 2020 and 2021,

they're like, we need inflation hot. We need inflation hot. We need inflation hot. Inflation got hot,

and then there was so much social pushback and political pushback.

And the and, you know, the Republicans were, like, look what Biden did. Right. And and, like, the Fed is ultimately it's a political establishment.

Even though it's supposed to not be. Yeah. And so they were like, oh, fuck. Like, we gotta raise rates. Yeah. Like, they didn't want to. That's why they'd like, the first 25 basis point cut was, like, in February of 22. Well, I mean, I think the the

the the amount they've raised rates have caught pretty much everybody off guard. Yeah. And they're gonna raise more. I mean, like, Marty committed I remember January of last year, Marty committed the cardinal sin of podcasting, which he spoke in absolutes, and he was like, there is no shot they will ever raise. And I was sitting there, and I was like, they probably won't raise too much, you know, but even I was way off on that. Like, they just kept going. Yeah. Kept going hard. I mean, you could probably look. Like, I probably said, like, the fed couldn't raise either. Yeah. And I think They were cut we kept saying they were, like, stuck between a rock and a hard place. Like, if they raise, they're just gonna end up tanking markets, and then they just went with that route. I

think I think it will ultimately, like, honestly, be correct in a way of, like,

there's this lag time. We're gonna see we've already seen the valuations and all these things plummet.

If we start to see employment really turn,

it's one of those things where, like, once the train starts teetering off the train track

like, we've we've seen this before where they're, like, oh, like, you know,

subprime's contained or, like, you know, they all they say these things and and, like, 12 dudes in a room don't understand the second and third order implications of, like, anything they're doing. Right. It's crazy that 12 dudes in a room is what decides this. And they, like, go on CNBC, like, every other Tuesday and, like, Mike literally, like, micromanage the tick by tick, like, stock. They're like, you know, he's like, oh, we will we'll moderately

cut or and, like, and you see just, like, the futures market just, like Just change based on, like, what they're wearing, what they say. Yeah. And and, like, they know that. They like, they're literally trying to, like, centrally plan these things.

But I I do believe that the the tightening policy will

will lead to actually some pretty some pretty bad outcomes,

due to, like, 1,

like we said, the the historic

relative size of this bust.

But 2,

and this is at a federal level, but this is at, like, this is, like, a global balance sheet thing,

is that the interest rate shock, the interest expense shock. Right? Like, I don't know. Like, anybody that has variable rate debt is, like, fucked. Completely fucked. Totally fucked. And what we don't real what Americans don't realize is we're fortunate enough that most of our housing is fixed rate Yeah. Mortgages.

But, globally, that's very rare. Usually, people are and and it's literally their home that they're living in,

and those rates just keep going up. Yeah. Like, you the UK, Australia.

Yeah. Most places. Yeah. Yeah. And so Meanwhile, in America, like, the people who have, like, a 30 year fixed rate, 2%. That's a flex. They're like, oh my god. I'm never moving. Yeah. And that's also, like, one of the interesting things with with housing is, like, no there's, like, no one really

trying to sell. But so there's, like, a lag time there, right, where people are just hoping that it'll come back down. And it's not, like, we're not gonna see 2% rates.

Ever

until the fall of the dollar?

That's I mean, that's Should we speak in absolute? No. Don't speak in absolute.

Well, like, I see I love the in persons because I could just look in his eyes and smile at him as I say it. Oh, yeah. Like, I I don't I don't really know how it how it's gonna all play out, like, at all.

So this is what I was, like, talking to about with Marty on rabbit. First of all, to the to the new listeners, we have a lot of listeners in the live audience right now. Dispatch has no ads, no sponsors.

It's completely audience funded through Bitcoin donations. And then the second thing that makes Dispatch different is it's live, unedited with direct audience participation. So if you're in the live chat, whether that's Twitch or YouTube or Matrix,

all those links are still at dispatch.com. Feel free to put your questions in. Feel free

to put your comments in. You guys make the show unique.

Where were we? It just distracted us.

I said I don't know how this plays out. Oh, right. Right. Right. Oh, yeah. So so

so I was having this conversation with Marty. Right? And

the Fed controls

their main lever is the Fed funds rate, right, which is is what they're lending money at to banks. Right? Yep. They're like the start of the siphon of money. Yep. Right? Yep. But what they can't control is they can't control the rate that

people lend them money.

Right? And they can't control the rate, which is essentially t bills. And they can't control the rate

that individuals

lend to each other. Right?

Yeah. So if inflation continues to be hot, even if they cut rates, which will make inflation even hotter,

that doesn't mean like your consumer mortgage, your just average person's mortgage actually goes down in rates. Right? Like, those rates would still stay high if not go up in that situation. Am I, like, am I wrong there? Like, I'm I'm trying to think in my head. If inflation's running at, like, 10%

Mhmm. And I'm a bank Mhmm. I'm not gonna lend you a 30 year fixed at anything under that. No. Otherwise, in 30 years, I'm fucked.

Yeah. Right? Yeah. So there's the fed the fed controls

the fed funds rate, and indirectly,

because of that, they control the front they control the front end of the curve. So so, like, if you look at, like, say the 2 year treasury bill. Right?

Right. The 2 year treasury bill is, like, more or less,

it it's basically

the like, if you the Fed there's a thing called Fed Fund Futures. You can look at it in trading view. It's the expected Fed Funds rate.

The the 2 year,

treasury bill

is literally just the

blended average of the expected

2 year Fed Funds rates.

So, like, they control the front end of the curve.

What they don't control, and this is why, like, QE was such a radical thing in o eight, o nine, or whatever,

was when they started buying the the long end, like, when they started buying 30 year treasuries

and and mortgage bonds,

that was, that was a big deal because they they were actually stepping up and and and influencing the long end of the the the bond market, which is, like, something that, like,

they had never done. Right.

So so,

yeah, they control the front end. The the,

the long end is something that they don't control,

and that's something that Unless they're, like, actively participant. That's what they were trying to do is what you're saying. Yeah. And and that also, you know, the act of buying long duration financial assets stokes a flame of inflationary pressures.

The the interesting thing and, like, some really smart, like, geopolitical strategists think that the Fed is gonna start restart QE or yield curve control in some form of way in 2023,

like, that Zoltan

guy. Right. I love Zoltan. I do too. He's gonna be speaking at Bitcoin 2023. He's he's he's actually, pretty brilliant and has a fantastic understanding of, like, money

some of his his theories are a little wacky with, like That's why I like him. Yeah. Like, you know, the Bretton Woods 3 and all this other stuff. But I mean, Bretton Woods 3 is, like, straight

dream fuel for Bitcoiners.

Yeah. It's, like, you know, ditched the dollar and Moved to commodity, backed currency. Yeah. Like even mentioned Bitcoin in that one. Yeah. I think the end of it was And then we started dumping, and he stopped mentioning Bitcoin. Yeah. Yeah.

I think yeah. He'll come back to it.

I mean, Bitcoin's a the the whole ecosystem is a shit show, so I I wouldn't mention it either.

Was it where was it? But to bring us back, I mean, the point I was

so I'm all of this shit is

way above my pay grade, which is why I brought you on because you're just a young kid who's just obsessed with it. Yeah. Right? And you've you've you've basically self self taught yourself all this stuff

through the Internet Yeah.

And just having a lot of time on your hands, and you're very intelligent.

But I don't get any of this. I I I have a very

base level understanding. I'm like a new corner when it comes to the Compared

to, like,

99% of normies,

you are, like,

so far. I know. That's what we're fucked. But continue on. No.

That so so this is why I'm trying to grapple with it because I, you know,

that that concerns me. Yeah.

No. So basically, my basic understand so

I'm trying to figure out so I am at a certain point in my life, where, you know, I would obviously

like to, you know, have my own land for my family. Yep. You know, my own house. I don't own a house yet. Right?

I could use I could use another car.

You know, my car is older than Bitcoin. I'm driving a 15 year old car. Right?

And

I'm essentially all in Bitcoin. Yep. And I wake up every morning and I say to myself in the mirror, stay humble, Stacks ads, and then I tweet it out. Mhmm. Right? Like, this is this is the current state of Odell. This is where Odell is sitting right now. Right?

And I'm trying to figure out what happens next. I'm not necessarily trying to actively trade it. Yep. But I'm at least trying to get like a basis of where the fuck we stand. And it seems like we're in a completely unprecedented situation.

Yeah.

We're sitting at the back end of this massive macro bull market that we've never seen in human history that was fueled by this cheap capital. Yep. That was only possible because we moved to this fiat regime in in the seventies, which is still relatively new in the And globalized the entire world. Right. Yep. So we've literally never been in this situation before. Never.

So how do you look at it? Like, what what happens next?

We're like, we're sitting here

in January 2023.

Yep.

You come back to Nashville, Bitcoin Park, January 2024.

Right? Yeah.

What's going on at that point? Like, where are rates? Where is inflation?

You know, like, I I'm not asking you to like, not a crystal ball. Right? But I'm trying to you know, where do you see us going here,

and how do you even prepare for that type of situation?

Yep.

The next 12 months is harder.

The next 12 years is much easier in my opinion.

To so

like we like we kinda post at the beginning, the only solution to this massive debt bubble because because the asset like, think of the global balance sheet, assets and liabilities.

We have this we have this global

everything bubble

fueled by debt. Right. And so the asset side up only, liability side up only. Right. The asset side because you're an idiot not to borrow money in that situation. Idiot. It's the game. It's the entire game. And then you buy assets with it, so the assets go up. And and, like,

I mean, I know people. I know family, like, direct family,

like, involved in real estate and whatever,

that for the last 40 years played the game. They played it magnificently.

Borrow money Buy real estate. Buy real estate. Borrow against it. Borrow against it. Buy more real estate. I said buy buy more. And it was up only.

And and it works because it cost capital went from 20% to 0.

Not that that game is over, but the game has changed in the sense that,

consumer price inflation emerging has has,

thrown

a new variable into the mix.

Where whereas for the last for the 40 years where there was no consumer price inflation or diminishing consumer price inflation because of globalization,

because of demographics, all that,

that wasn't a problem.

So so what does the next 12 months look like is is certainly a tough question.

I think the labor market weakened significantly

by design. They live in People lose their jobs. Like yeah. People people are saying,

you know, like, the the mantra of, like, anybody that's made money in the last 20, 30, 40 years is don't fight the Fed. Right. The Fed is telling you,

don't fucking buy assets.

Right. They're like, we're gonna get inflation down, and we're gonna maul you in the face to do it. Right. This is why I'm ranting. Yeah.

They're, like, they're they're telling you. Yeah.

And so,

I mean,

have they have they certainly been wrong or shifted policy before in both ways? Yes. Pretty much all the time. All the time. Yeah.

But,

I think

the only way they they shift the policy, the only way they like, everyone's talking about pivot, pivot, pivot. The only way that Now people are saying soft landing. Like, they're actually gonna pull it off. They're They're gonna pull off their soft landing and pivot. I don't believe it. Yeah. I think that a pivot will come because things are bad.

And and, like and I I do sympathize with the the crowd that's like, dude, it's all fucking tea leaves. Just, like,

they have a little sex. But I was giving you shit about it in February. I was like, when did this become Fed Twitter? I thought this was Bitcoin Twitter or whatever. I was like, the Fed doesn't matter. So

worst take of the year.

Yeah.

I'll own that. Yeah. No. And that and, like, I did. I didn't, like, sell my Bitcoin and play it perfect. Like, I didn't No. Like yeah. Like, I, you know, got cute, shorted some bonds, you know, did this or that, but, like,

How the fuck do you short bonds anyway?

Like, you just short sell short sell. But, like, where? Like, you go to, like, TD Ameritrade or something? Yeah. Like, interactive brokers or something. Okay. Sorry. Continue. Or, like, I don't know. You can, like,

like, with Robin That's, like, so far out of my Yeah.

I don't even okay. Sorry. Continue. Like, half the reason I'm not, like, totally wrecked this year is despite, like, having a a decent gold storage stack is, like, just,

like, shorting

shit goes and bonds.

But regardless,

like so for the next 12 months

for the next 12 months, I think inflation comes down a bit. Regardless if it doesn't or not, I think you're gonna see the employment cycle turn,

just off of, like, all of the leading economic indicators, whatever, just, like, historical precedent. These things are pretty well documented.

So more pain, not just in the tech names, but potentially, like

like, the cyclical names, like like, actual, you know, not like

Ponzi companies, not Ponzi tech software as a service companies, but, like, real real economy types. Not.

Yeah. Yeah.

Yeah. It's a funny story.

And so,

I mean, by design. Right? That's they wanna literally reduce aggregate demand, and they're doing that by by tightening the belt around everyone's fucking neck. Like, that's literally what they're telling you they wanna do.

And so I think

in that world,

it's gonna be tough for really any financial asset that that relies on inflows, passive inflows,

which is every asset.

It relies on passive inflows. Like, the the the financial assets have been financial markets have been kind of zombified over the last 40 years. Okay.

Because, like like, think about, like, 401 k's, pensions, whatever.

Like, the stock market on a day to day basis doesn't trade because

the company released new results and said, hey, you know, this like like, Apple goes up or down in a day. Why? Not because their computers are good or bad or because people think that their earnings are gonna go up or down. I mean, that matters, but it it it's more so like

what are the the passive inflows of price agnostic buyers

from

50,000,000

Americans.

What are they doing? Right? Like, that's Right. Like, that that that that's what fiat has done to their economies. Right. They're like and,

you know Everyone needs to be an investor. Yeah. Everyone needs to be an investor. Because your money is shit, so you have to

outperform it. Like, say say what you want. Do you need to be an investor or hire an investor and pay him points to fucking do it? Yeah. And and your or pay, you know, index funds, fees Right. Aggregate a basket of these things.

Say what you want about Mike Green. He's done actually a lot of good work on the on the passive zombification. He hates Bitcoin, though. He's I saw him in,

Unchained Capital's office, like, at At Bitcoin takeover. Right? Were you there for that? Yeah. I was like I was like, he was a special guest. We invited him for that. Oh, did you? Yeah. Okay. I was like, I was I was in my back on my laptop. And I was like, do I like docs Mike Green being at big, like, Unchained App? Sat in the front row. Yeah. That's pretty fun. He'll come around eventually.

They all do. He's a smart guy.

But, yeah, definitely doesn't love Bitcoin.

What was he saying? Zombification of assets. Yeah. Zombification of assets.

What is your problem? You move too fast. You're just I know. I'm Your brain's going a mile a minute.

Slow down. Take a sip of beer.

Yeah. And have the beer will help or not. I'll I'll slow down the clock.

I, like, I don't know if it happens in the next 12 months.

It could happen at Well, I agree. That's always been the smart play. Right? The smart play is you never make short term bets. Yeah. Because short term bets are always almost always gambling. Yeah. Especially when you have 12 guys in a room that kinda can just rug pull you at any point Yeah. On what your short term bet is. Yeah.

Which is how stay humble stack stats was born. That's how the whole Bitcoin thesis I have, it was born, which is this long term thesis.

Yeah. No. It's But that's no fun. So, like, what happens over the next 12 months?

Yeah.

I think regardless if it happens in 2023 or not, what what's going to need to happen

from, like, a mathematic

from a mathematical perspective, from, like, just,

basic economics is that,

5% rates

bankrupt the world.

And They're bay they're currently bankrupting the world. Yeah. And and Like, didn't the UN ask the Fed to stop raising? Yeah. Like, yeah. They're like, dude, chill. Humanitarian crisis. Yeah.

And like the Fed controls interest rate policy for the world. Right? Like the boj like,

Bank of England, none of them really matter. Like, they we think it's bad because 12 Americans are deciding this shit, but imagine being in another country

because we're the reserve currency of the world. So what we do affects all of them. Yeah. And and especially, like like, for instance,

El Salvador, like, what and and, you know, some people will say, like, oh, it's dumb to bet on, like, a hyper volatile tech asset, blah blah blah. Like, well, no. It's logical to seek out alternative,

Were you saying because they didn't even have their own currency? They were using the dollar Yeah. So straight up. So, like because, you know, there's an economic recession, right, that happens in in o eight.

Things go bad, global global recession.

Well, the Fed comes in, stimulates,

congress comes in, passes a fiscal package,

hands that like, not handouts, like, that was more normalized in 2020. But, like, for it, yeah, we'll just go to 2020.

Fiscal packages,

PPI, all this all this garbage. Right.

Stimmy checks.

El Salvador didn't get that. They just got the inflation

as a result of that. Right. Yeah. We exported the inflation to them, and we gave

And what checks to a lot of Americans. And right now,

via the tightening of,

interest rates and monetary policy,

we're exporting our inflation to the world. Right.

I understand that much. Yeah. And so, yes. That's just that's literally, like, their goal. It's just fucked up. Is sort of like, alright. We're just gonna, like, tighten enough to where, like, you guys are fucked.

But, like,

year over year, like, I and this is the this is so dumb. Like, we're literally, like, arbitrarily deciding

what the cost of capital is by what's the 12 month

rate of change

of this

basket of goods and services that arbitrarily changes Right. Via hedonic adjustment. What does hedonic adjustments even mean? No idea. No idea. Stupid.

I was gonna ask you. I don't know, man. It's okay.

So but

I I ultimately think, like, whether it's the next 12 months or then 18 or 24 or whatever. Yeah. We could talk 24 months if you wanna talk 12 months.

At some point my, like, car and house purchasing

time frame. The the the car purchase window.

At some point,

just due to the interest rate shock, due to the real economy slowing as a result of the financial economy

crashing Right.

There will be a point of reckoning,

to where

basically

the the treasury, but not just the treasury, like, globally,

there's a debt crisis.

And, like like, it's just it's just a math game. Right. Asset liability mismatch, interest rate shock,

And and at my So there's so much debt outstanding, and the interest rate on that debt continues to increase. Right? And then you have a debt crisis. Yeah.

We're I mean, we're headed or maybe,

like, history will view this as, like, in the middle

or, like, the the second inning of a sovereign debt crisis. Yeah. I think when, like, you read the history books Yeah. Like, that chapter has already started. Yes. Yeah. Yeah. It might have even started in COVID. Right.

Maybe even before that. Right? Yeah. Yeah. Yeah. Well, like, depending how far you zoom out, like, maybe even over. How good the history book is. Yeah. But the chapter's already begun. The chapter Like, when our kids are are reading that history book, like, the chapter's already started. Yeah. And

and, ultimately,

I believe,

you know, we we've already, like, they've already exhausted the interest rate policy. Yeah. They they, you know, they're getting some ammunition back. Like, some people will say, oh, you know, they've raised up to 4% now. Like, they've got some ammunition back in their belt. Well,

kind I kind of, but, like, even then real it's, like, not like real interest rates, like, are all that high. Right? Like Right.

And they've they've done the 10, 11, 12 years of QE. I mean, it just shows how fucked it is. Right? They're, like, they go up to you know, it's like a 7% mortgage, and everyone's like, oh my god. Rates are so high. Right? Interest rates are 4%, and, like, the fucking world's burning. Yeah.

So it's a joke.

But I think at some point, like, they're gonna come out. And I and honestly, I given,

the structural the factors of inflation, like, there's all these really smart people I read

talking about, like, globalization

forces. Right. And, like, like, the fact that inflation was 2% for so long despite, like,

you know, free money or, like, near free money,

was because,

you know, China industrialized all these, like, developing nations industrialized. We, like, basically exported all our cheap labor to all these, like, third world countries and, like, you know, in the, you know, Nike and Apple and whatever

in their sweatshops,

like, gave us cheap shit. Right. Like and, like, also we found new energy energy sources, like the shale revolution, whatever.

But we have no more, like, cheap energy sources, at least that we know of.

We actually have, like, an energy deficit.

The ESG policies have fucked everybody,

and, like, we're just kind of reaping the

reaping the consequences of that.

And so I think at some point, they're gonna have to come in, and and it's gonna be like a word jargon facility.

They're gonna, you know, it'll be like a treasury,

stabilization

fund, like, whatever the hell they call it. It's gonna be Right. 6 6 letter acronym.

It's gonna be yield curve control. Right. They're gonna be like, at we're not gonna let rates go above 4%,

or we're not gonna let rates go above 2%, or whatever, like, the inflation rate is and whatever, like like, the the what the BOJ is doing right now. So what what explain that.

What does that look like? So Impract it. Right now,

the Bank of Japan, they they actually just changed this.

As of, you know, like, 2 months ago, the Bank of Japan so they set interest rates. But they also,

like so quantitative easing. Let's let's step back.

Interest rate policy, they set the interest rate, like you said earlier,

for, like, the bank lending rate. So if the bank wants to borrow money,

they can go to the Fed or they can go to the, you know, whatever, x y z central bank, and they can borrow money Right. Overnight.

That's that's, like, monetary policy 1. Monetary policy 2

is like is is QE in the sense of we're gonna come buy a fixed amount

of bonds, of of debt securities,

and we're gonna buy, you know, a 100,000,000,000

a month or whatever. They they were doing a 120,000,000,000 a month during, post COVID. Eighty 80,000,000,000 of treasuries, 40,000,000,000 of mortgage backed securities.

Yield curve control

is instead of

a fixed amount at any price Okay. Yield curve control

is a fixed price at any amount.

Okay.

So so instead of a $120,000,000,000

of treasuries

at any price, it doesn't matter if the bond yields 1.2%,

1.5%,

whatever. We're just gonna buy them and put them on our balance sheet. Yield curve control is

we're a buyer at this price, and it doesn't matter how much we buy. We're just gonna buy it. And you print money to buy it. Print money to buy it.

So so the bond market so basically, like, the BOJ, the Bank of Japan,

said if the 10 year JGB, Japanese government bond Right. Trades above 25 basis points, 0.25 percent.

We're buying it. So so and and for, like, those that aren't well initiated in bond market jargon,

or bond markets in general. Like, overwhelming majority of people.

Bonds and interest rates are inversely correlated.

Right. So if bond yields go up, the bond price goes down.

And so when when they say we're not gonna let yields go

below or above 25 basis points,

when they say we're not we're gonna yield cap at 0.25%,

They're saying we're not letting the price of this secure of this bond, of this debt security. We're not letting the price fall below this. If it falls below it They're the buyer of last resort. We print money Right. And buy it. And buy it and keep the price inflated.

Why do they keep the price inflated? Well, because debt burdens are too high.

They're trying to inflate the and they're trying to inflate the debt away, and they need low interest rates to do it. It's a multifaceted approach. They wanna keep that long term interest rate

down. They want yeah. They wanna they wanna keep the long term interest rate down. Right. And they wanna do that because they wanna erode the real debt burden. So my my belief, my my my thesis

I'll take another one. Thanks. We just had Rod enter the studio, cofounder of Big Point Park. Shout out, Rod.

How do I open this? It's gotta be a twist off. It's American. Oh, I was about to say. I was like, you didn't go to college. I was gonna show you college.

Appreciate it, man. Thank you.

Cheers.

We're in the middle of

yield curve control.

I see his name.

Interesting beer.

But, yeah, I I kinda believe,

and this is, like, independent of the Bitcoin thesis, but this, like, plays big,

this, like, broadly, this this

section of the of the podcast plays, like, a big role into why I'm I'm so,

bullish on Bitcoin. Why I I mean, I think I I I think I would support Bitcoin

and its role as, like,

a a political neutral money,

that no one can mess with regardless of

if the debt situation was was this bad.

But the finance nerd in me stumbled upon Bitcoin through this lens,

and I think that's prob probably one of the best ways that I can communicate it to to people

is through this, like, econ finance angle. It's like, listen. Like,

there's no other way out of this

except

printing, except debasement.

Right. And so, like So the the debasement is coming

Yeah. Eventually. Eventually. And, like 24 months.

And people are like you know? Like, right now, the the USD is in number go up mode. Right. The feds tightening. It's, like, in political the the the dollar has a number go up mode. It's just politically induced. Right.

And every once in a while,

to kinda keep the gig going, they can they can pull this out. But

it's very, very short term because

the negative externalities of the monetary tightening is gonna lead to bad outcomes. So they will they will reverse, and they will and I I mean, I believe,

and who knows, maybe putting a a a number target on this is is a bad, not not Bitcoin, but, the Fed balance sheet is, like, 8,000,000,000,000 right now. That's crazy. Like, I I I would

not be surprised if the the decade came,

and went,

and the Fed balance sheet was was 50,000,000,000,000.

Like or or maybe not decade. We'll say 10 years. Or 10,000,000,000,000,000 by conference day?

Yeah. Yeah. Fed balance sheet targets.

Okay. So let's let's bring it back a little bit because I'm I mean, I'm a little bit confused,

which means the listeners are very confused probably.

Let's bring it back to Bitcoin. Yep. Let's bring it back to Bitcoin. So I like it. Bitcoin is a money that's independent of governments and corporations.

Yep.

The dollar is a currency that is obviously

controlled by

essentially 12 people in a room. Right?

Correct.

Do you think

let's talk about my

my strategy of staying humble and stacking sets. Yep.

Working my jobs. Yep.

I'm

I'm cash flow positive as an individual. Yep. I'm paying my expenses, and then I'm saving in Bitcoin.

And I'm not really I'm I'm price agnostic. I'm just saving in Bitcoin long term. Yep.

Is that a good strategy?

Yes.

But I think it could be optimized.

Okay. So how do I how do you optimize the strategy?

I

I think

and maybe this is ill advised advice because next cycle is different and it's a super cycle.

There's no super cycle next cycle. You're wrong about that. I was just steel manning it. Okay.

I think But I reject that on principle because that is not that is not why I I don't stay humble in Stacks ads expecting a super second. No. No. I know. I think

if you just, like, run some numbers,

on, like and

and the beauty of it is, like, that the humble sat stacker doesn't give a shit about their cost basis. Right. They don't care about their average price. Because in 10 years, it should be the purchasing power. I should be able to buy significantly more cars or significantly more cows or significantly more houses Yeah. For the Bitcoin I have than I can today.

Yeah. And I agree with that.

But

for instance,

right, like, if big Bitcoin right now is is 17 k. Started the year in 2020 at 6 k or 7 k or 8 k or whatever it was. In 2020. Yeah. Yeah. And it went to

69 k or whatever. Well, first, it went to, like, 35100.

Yeah. Yeah. Yeah. But then, yes. March 13th. Right.

But, like, if you DCA'd that,

and, like like, make let let's be clear. I'm not, like, saying DCA is bad or whatever. Like, he sounds like you're saying that continue.

No, like, oh, my God. I saw like I saw like 3 months ago. I was like, Udi was like, fucking like saying DCA was done. Yeah. And then he was like, I'm blocked continue.

And then no, it was funny. It was he was just like, he was like, if you DCA Solana, it would be better. And then so yeah, we're down like, literally everything you shield is just got a rug pulled. So continue. Oh, my gosh.

But I I just think,

like, the volatility of Bitcoin,

in both ways He also said, like, the best Bitcoin privacy tool was was wrapped Bitcoin using tornado cash.

Oh, boy. Yeah. Anyway, continue.

You're DCA ing. You don't like DCA ing? No. No. No. No. No. Like like, I have a small I have a small DCA

regardless hourly.

Okay.

It's not my it's not my stacking, but it's not my You heard it here at first, Freaks. You're staying humble stacking stats. I am. I am staying humble stacking stats. But it's not all of my powder. Right. Like, I my cash pile is growing. Right.

And so,

yeah, I just, like,

I think it's, in the staying humble and stacking stats below all time highs,

and especially 70% below all time highs

is a win.

Historically, it's always been good.

Well, if the assumption is Bitcoin makes an all time high again. Or or, like Do you not think Bitcoin's gonna hit an all time high? So we hit the sovereign debt crisis. Where does Bitcoin stand in that situation? Well,

what comes after what comes after the sovereign debt crisis,

and,

a debt crisis presumes, like, a deflationary bust. Right. Of sorts, whether it's in a real economy or financial terms. Okay. So what does that look like?

It looks like

global monetary authorities,

fiscal authorities

printing. Like, the Fed just starts printing like crazy. Yeah. And and it it'll be,

like,

maybe it's the CBDC.

Right? Like, maybe that's

the play.

Well, not the play, but, like, maybe that's their their play.

It's like,

I mean, like like You launch a CBDC, and then you say if you download this wallet, we'll just

helicopter money you. Just send you money directly to your wallet. In the way that COVID was like like this is okay. This is one of my, actually, like, biggest conspiratorial

rabbit holes. Let's go.

And I think I I mean, honestly, I, you know, maybe you and Marty, like

like, kinda planted the seed, in 2020,

as I was binging,

all the rabbit hole recaps. But

fed,

10 years post, QE,

We've

greatest bull market in history.

Start they they the Fed starts to taper their balance sheet. Things are going good,

but not great.

You know, there's the taper is gonna be what did they they say? It's gonna be like, Yellen said it's gonna be like watching paint dry.

2018,

December,

corporate bond market freezes up. Tech stocks Right. Crash.

The Fed says, okay. They get rates up to 2 a half percent.

They start cutting again. They're like, alright. Shit. Sorry, guys. My bad. They start cutting again. Like, that was a little too much. Markets recover. Tech stocks recover. Bond market

gets a little, like, unfrozen.

Going into 2019,

you start to see the yield curve flatten, which the yield curve,

is is the spread between, like, a long duration

Treasury. Year a 2 year government loan to, like, a 30 year government loan. Right? Yeah. Or, like, the 210 spread. Right? So if if the yield curve, the 2 tens inverted, that means the 2 year treasury yields higher

than the the 10 year.

Okay. So the 10 years at 3%, the the 4 years at 4%. You get paid more to give a short term loan than the long term loan. And that and that is indicative

of

something in the financial system or the economy,

kind of being out of whack. There's, like, a whole bunch of reasons. Because usually you should get more money for doing a long term role. In a logical world. Right. Like, if I was gonna personally give you a loan You'd want more for a longer duration. Right. If it's 30 years, you know, who the fuck knows what's gonna be happening in 30 years? Yeah. So so when that's inverted, like, there's problems. And, historically,

in the United States, every time the 10 year and 2 year is inverted,

there's that's predates a recession. Okay. So that starts to really flat, and then it actually inverts. I think, like, intraday inverts. Right. And it was like, oh, boy. Like, this is a big thing. And then, like, 2 months

later, the repo market

blows up. Like, so the overnight rate for banks to lend, not to the Fed between each other. I remember that. And there was, like, this this big thing, and it was, like, they they shot up to 8%. And it's, like, basically, it was a telltale sign that, like, liquidity in the banking system was really, really terrible. Right. And so the Fed comes in, like the next day or 2. And they were like, okay, this is like a temporary repo facility. Where, like, we'll inject we'll, like, inject,

the system with some liquidity.

But, like, guys, it's not quantitative easing. It's not QE. Like, this is it was QE. Like, it was QE. Right. But it was, like, a different facility,

more jargon.

They called it, like, r r like, like,

repo blah blah blah blah. I don't even remember what the word was. Market operations. Yeah. It was something stupid.

And but their balance sheet was expanding. Like, let's and and stocks started to melt up again.

All of a sudden

and, like, this this was this was, like,

you know, the not QE kind of thing was probably the end of 2019. Yeah. And this was pretty obvious to anyone that was paying attention. All of a sudden, you start to see CEOs just everywhere resign. I remember that. Yeah. And there's this mysterious virus in in China. Yeah.

And they're like, no, guys. It's not a big deal. Like, don't worry. Yeah.

And then

gets to the US, you know, the drill, like, oh, this is a big deal actually

locked down the world, like, boom, print $10,000,000,000,000

everywhere. And you like, see the chart. The charts crazy. It's just like,

straight up line. Straight up. Yeah. They're like, oh, like but we had to. It was, like, an emerging Yeah. We had no choice. Lives were on the line. We had no choice. And, like, and, like, go down the Whitney Webb, like, Marty rabbit hole, like, event 201 and all that shit, where they were planning this in 2019.

BlackRock in August of 2019 is like, guys, during the next recession,

we're gonna have to give money directly to the people because we've exhausted monetary policy 1 and monetary policy 2. What is that? We've exhausted

interest rate policy rates are at 0 or, like, the next downturn rates will be at 0. They're at, like, 1%. Right. And we've already printed

money and stuffed it in the bond markets. We can't do that anymore. Like, the it's already pretty bloated. So what are we gonna do? Well, we'll have to give money directly into the hands of individuals. And they wrote this in 2019.

6 months later,

oh, wow. Just like a black swan event comes out of nowhere and, you know, this thing, like, somehow mistakenly just, like, leaks out to Wuhan and, you know, here we are with COVID.

So I mean

So what does this have to do with staying humble and stacking sites and optimizing that strategy?

Okay.

To go back to that,

what how did I get to this?

I don't know. Did you finish your point there? Well You're just saying that COVID could have been used as an exam as an as an excuse to earn money. COVID was used as an excuse.

Right. COVID could have been the COVID crisis could have been created

to to cover it. The COVID crisis was created to cover it. Right.

And so It was definitely used as an excuse for sure. Yes. Because that's what happened. Yeah. Yeah. I'm maybe taking a step further here. Right.

Regardless of that,

they they successfully kicked in for, like, 18 months,

and now we're going into this kind of next downturn. We're in the early innings of it. Very early innings. Very early innings. But I think it could happen faster than most people think.

Gradually means heavenly as Parker always says. Yeah. But, like, but let's let's be clear, like, nothing has been resolved.

Nothing was resolved post great financial crisis.

Nothing was resolved,

post

COVID.

Like, it's actually 2020.

Like, this it's actually worse than it's ever been in the sense

of debt burdens,

interest rates,

and financial asset valuations. It's worse than it's been. It's not better, it's worse.

And so

the solution or not the solution, but, like,

where we

are, not like nothing has been solved. Like, I don't anybody that's saying that, like, we're in a good place now is wrong,

in my humble opinion.

And so I I ultimately think, that logically, like, the the the solution or not the solution, but the response

to whether, like, to whether this happens in 2023 or 2024 or, like, kind of, like, this

hyper volatile boom bust pattern, not in Bitcoin, but in the in the real economy.

Well, Bitcoin is not part of the real economy? Oh, no. No. It is.

But, like,

what what happened in in,

in

Weimar, Germany Okay. During the during the bus, if you let me remember that. Yeah. Yeah. We were there.

When you look at the price of of paper marks in gold terms Right.

It's Dylan was, like, negative 80. Yeah. I was, like, negative 80 then.

It it was up only and even even on a log scale. It's just a

parabolic on a log scale.

But if you looked at the the month over month change, the year over year change,

there was multiple

80, 85% drawdowns.

And so, like, why why was gold drawing down so much?

It's not like gold is a, you know, hyper volatile shit coin. No. It was it was the the and and it's like the situation is very different. Like, Weimar had, you know So you're comparing right now gold

during

post World War 1 Germany

Yeah. Hyperinflation

to Bitcoin

current US,

potential hyperinflation.

Right? That's what you're comparing here. In a sense. Yeah. And that, like, where

where right now, I think the boom and bust of the real economy

are happening faster,

despite, like, we had the, you know, 10 year bull market or the longest bull market in stocks ever post great financial crisis.

The the the current boom cycle we just had was, like, one of the shortest ever. It was, like, 18 months Right. Before before,

you know But the 2020 collapse to To the peak. To the top to the bottom to now. Yeah.

And I think this this decade will be characterized

as, like,

kind of, like, deflationary shocks,

like like the pendulum. Right? If you wanna think of it, like, you know, this kind of spectrum of, like, you know,

melt up

asset

boom and,

downturn economic drawdown

asset bust.

I think that pendulum

is swinging faster than ever,

And it's almost, like, more volatile than ever in terms of, like, the debt cycles because there's so much debt involved. Okay.

And so, like,

you know, the the pace of that of that metronome between those, like,

those those left and right tails of, like, like, the right tail being hyperinflationary

melt up. Like, literally, like, disaster hyperinflation.

Right. And,

disaster hyper deflationary

crash. Okay. Sovereign debt crisis. Like, those as the two left and right tails,

I think are more likely than they've ever been.

The world is volatile.

Yeah. The world is more likely than least controversial statement ever, I think, right now. Yeah.

But but I think we're towing the line between those more than we've ever we ever have. And not that I'm rooting for either outcome or I expect either outcome. But I think that when you get to where we are today in terms of the debt burdens,

that's just the natural outcome is that these are these are

increasingly becoming

binary.

And really, it's not even binary. It's like

a singularity in the sense of it all ends in debasement,

hyper debasement. Hyperinflation.

Yeah. Like, that sounds

yeah. Like, and I'm not and I I think The hyperinflation chapter already started as well in the history book.

Yeah. Well, yeah, if you're looking at, like, a, what, like, 500 year view or something? 100 year I mean yeah. I mean, when my kids are reading the history book, like, hyperinflation's already started.

And I don't think we should want it to start. Not that we're I mean, we don't I don't think we have to say that disclosure every time.

Disclosure. We don't want the world to devolve into chaos.

Yeah. Yeah.

But I think

I think,

yeah, we're in late stages here.

We've already we've had the boom time.

The bus has started. People people are still pretty So how do I optimize staying humble in stacking sets?

Yeah. I mean That's how we start. You said it can be optimized. How can it be optimized? I would say I would say next time Bitcoin makes an all time high and then doubles again after that Yeah. Slow down the DCA or stack some cash because everyone's gonna say this time is different. Right. Well, I mean, that's obviously a good policy. But Every everyone's gonna say this time is different. Yeah. When Matt comes out, when I'm all caps, like, wait 3 months, and then, you know, takes them off the table potentially.

Because I think it's I probably won't, but It's almost, like, self reinforcing the way that, like, people are gonna, like, okay. The dollar's actually going to 0, which on a long enough time frame is correct. The dollar's going to 0. Bitcoin is approaching infinity in dollar terms.

The speculative attack thesis of borrowing dollars, which creates more dollar supply, like the Pierre Richard speculative attack piece. That's correct.

You know, you have you have 20 Michael sailors that are all bigger whales doing the same thing he did. Right. He's a, you know, he's a billionaire, but he's a small time billionaire. Small fish billionaire. Yeah.

And and when the chart literally is up only parabolic,

and looks like the dollar is gonna hyperinflate to 0,

then we're gonna crash 85%, and it's gonna crash the Like, it happened in Weimar with gold.

Yeah. And, like But the people that just stayed humbled and stacked bars or

coins, like, they were good.

Yeah. Yeah. Just, like, don't put your money in, you know

You need to have you need to be able to to survive. Yeah. But also, like, there's gonna be people that come in

at, you know,

like like, people that realize, okay, like like, Mike Green's gonna come in

in, like,

6 months 6 months before they get get top and be like, alright. I'm a start my DCA. Right. And it's gonna be underwater for 4 years.

As is tradition. Yeah. Yeah. As it yeah. So the basic supposed to come in at Bitcoin. Exactly. So, basically, I agree that the DCA strategy for the average pleb is great.

Yeah. Yeah. Like, if I'm not gonna go on to, like, interact with brokers and short bonds,

like, what

and then, like so, like, okay, cash pile. Okay. I I am not

Do you have cash? Yeah. Okay.

I have to pay rent in dollars. You know, we have expect like, Bitcoin Park is a crazy endeavor. All of our expenses are in fiat.

Mhmm. Some of my income is still in fiat. So, you know, any income that comes in Bitcoin does not get sold for cash. This is different question. Do you have any income denominated in Bitcoin?

No.

I mean, maybe the the freak sending stats Yeah. Podcasting 2 point o, but it's not like it's price set in that. Yeah. Yeah. We did for rapid recap, we had some podcast ad deals that were in Bitcoin terms for a year Nice. Which was brutal this year. Yep.

Yeah. I guess yeah. The maybe yeah. So, like, a minor amount is denominated in Bitcoin. But, usually, it's denominated in fiat and get gets paid out in Bitcoin, or I'm getting paid in fiat, and then I have to actually manually convert it. So I do have some cash.

But if you, like, if you did percentage wise,

like, the operating cash I have in in a checking account or under my mattress is,

you know, less than 1% of my net worth. It's just something to Yep. To carry me. Right?

So that

if if Bitcoin falls, I'm not in a really bad situation.

Yeah. But

for all intents and purposes, I'm

way, way, way all in Bitcoin. Yep.

Out of respect.

But, like, where else so, like, let's unpack this a little bit. Right? You're not and,

I mean, you keep doing disclosures. We don't want chaos. I I I, obviously, I prefer if we didn't have chaos. I I I think a a key thing that people should realize is

if we could trust our institutions

Yeah.

Our governments and our corporations

to to manage the world, you wouldn't need Bitcoin in the first place. Yeah. You wouldn't need the free and open source movement in the first place. Like, the whole reason you need these trust minimized solutions

is because trust is breaking down in our institutions. And in a world where trust is breaking down, people are gonna look for tools,

including Bitcoin,

that don't require that trust. Yep. And that's the core thesis. Right? Yep. Now,

you keep saying the disclosure,

you know, we we don't wanna see chaos. I'm gonna say the disclosure

of I consider you a good friend, and

I have a ton of respect for you, but I wanna drill in harder here.

So you you have cash. Right? You you keep it in a bank.

Like, they're gonna be bank runs. Right?

Like, I I think, like, Bitcoin Is it with the FDIC? Like, yeah, like, quote, unquote, crypto, like, they lead everything else is is what's happening now in, like, macro environments. Usually, what we see is, like, okay. 2020,

Bitcoin fell first, and then the stock market started going down, and they kept shutting off the stock market. Right? They just, like, kept shutting it off. So the stock market went down slower, obviously, because they were just turning off trading. They're like, no trading. You you can't go down.

And then the stock market collapsed, and then Bitcoin rebounded first, and then the stock market rebounded. Right? And so this year has been the year of bank runs in, quote, unquote, crypto. Right? Like, we've seen insane bank runs. I think that's the lead up

to bank runs in the real world. Yeah. Right? Or, like, traditional finance,

actual banks. And if you look, if you type into into DuckDuckGo

or Google,

list the the bank failures

in America.

Yeah.

The list is insane. But what happened was so we had a good friend, Jason Brett here, and, we were sitting in Bitcoin Park. Former FDIC guy? Yeah. And we were sitting there in in in the other building at at this Bitcoin Park campus, and he pulled up on YouTube the IndyMac

bank run-in 2008.

Yep. And what happened with IndyMac was it was this California bank. They had over $1,000,000,000

in withdrawals, and they couldn't survive. And the FDIC took it over.

As soon as the FDIC took it over,

everyone was, like, well, now the government's managing my bank. We're fucked. So then the bank run intensified. Like, people got even more crazy. So what they did after that was when banks failed, when small banks failed,

they would basically backdoor

do a deal where a a larger bank would acquire the bank. So if you if you go on DuckDuckGo or Google or wherever and you type in list of bank failures in America,

the list is, like, a 130

banks long. Yeah. Like, this is not something like foreign they've been failing this whole fucking time. Yep. But they just keep getting acquired by larger banks. So now we have, like Yeah. 5 banks or whatever for all intents and purposes. We have, like, 5 banks in the US. Yep. They have no reserve requirements. Nope. They do not have any money there.

And we live in an age of social media and panic where, like,

who even fucking knows how quick that could turn if if people just started to lose faith in those banks? So it's like, where do you put your money?

And then at the same time so, like, will we see bank runs?

And then if we don't see I mean, yeah,

will we see bank runs?

And then,

you know, what as that loss of confidence happens, you mix that with the fact

that

we just found out that everyone's been trading paper Bitcoin,

Whether you were Barry at DCG or FTX or Celsius,

like, there was just all this rehypothecated

paper Bitcoin. So is there actually any Bitcoin to go around? And you combine the 2,

and all of a sudden you could end up in a situate like, I am too humble

to sell my Bitcoin, which is a weird thing. Right? It's because

I

I think we're entering a global recession, potentially a depression.

Mhmm. But at the same time, I feel like I could wake up at any morning and people just, like, all of a sudden they realize

there's there's not enough Bitcoin to go around and that Bitcoin's a solution to the shit because I can't trust the money in my bank. Yep. And so then I just end up in kind of like a paralysis or like a zen where I just go, okay. Stay humble, stack sets.

Yeah. Well, like,

and I agree that that the banking system consolidation

is insane. It's scary.

Also, like, if you just look at if you wanna, like, a instance of a bank run, and it hasn't yet failed.

But, like, if you look at Silvergate's

stock

well, no. Silvergate was actually impressive.

Yeah. Because Silvergate

my understanding of Silvergate is that they're a regulated trust institution. So they actually had reserve requirements. They were supposed to be keeping 1 to 1.

Mhmm. Well, the like, Citibank doesn't have to do that shit. Okay. So Silvergate actually had $8,100,000,000

withdrawn from their deposits. Yeah. And they had, like, an 80% drawdown in deposits. Like, 80% of the money that they were holding

was removed from that bank. Yeah. And they were able to pay it out. Yeah. Like, who knows if they continue to survive? I'm not gonna, like They had to sell their secure they had to sell their securities for Right. But they did it. They lost a shit ton of money. Yeah.

But not every bank could do that.

Right. But they survived. Yeah.

If If Citibank had 80% of their deposits

withdrawn, the only way they survive is if the government prints money and saves them.

Yeah. So there's there's $9,000,000,000,000

of FDIC

insured deposits in the US. How much? 9,000,000,000,000.

Okay. I believe there's

$200,000,000,000

of And the only way your money's insured is if you're a poor person, because it's only up to 250 k. Yeah. Which, like, doesn't really buy you that much anymore. No.

So, yeah, I I believe off the top of my head I'm gonna get shit for that. You're not poor if you have less than 250 k in savings, but I'm just I'm just saying, like, if if you're someone that. If you're someone sitting there, if you're a small fish billionaire, right, and you're sitting there and you have,

you know, $3,000,000,000

in net worth, like, where do you put your money?

Yeah.

I mean, certainly, you have a Bitcoin allocation.

I don't see why you wouldn't have a, a Bitcoin stash fund if even if you didn't even believe in Bitcoin. Like, why wouldn't you have? Because, like, I I mean, they don't understand it is why they don't have that.

Okay. But continue. So we have how many 1,000,000,000,000 in FDIC insured deposit? 9 9 they have 9,000,000,000,000 in the FDIC insured deposits, and I I believe the number is

it's either a 120,000,000,000

in insurance or 200 1,000,000,000 in insurance. Okay. Insuring the 9,000,000,000,000. Right. You were mentioning it earlier, and I cut you off with Jason Brett. Like, the FDIC meeting where they were like which is a publicly broadcast meeting, just no one watches it because it's super boring. They're like, what happens if people realize that, like, we can't do anything? He's like, yeah. People need to understand there will be balance.

Which is when they take a haircut where they just take your money. Yeah. It's like what happened in Cyprus Right. In the post great great financial crisis. They're like, the Cyprus banks had to run, they were insolvent.

And so the your balance said $100,

and they didn't have it, and they took your money to recapitalize.

Right.

So yeah. I mean, you're making me nervous about my, my t bill my my t bill position right now.

Yeah. And and that's the risk. Right?

I you know, we have to be maybe be careful because, inciting a bank run is a is a felony. So I'm not inciting a bank run. I know. I'm kidding.

I'm kidding. He comes on my show and accuses me of of a felony.

After Friday, that's okay.

Yeah. I will say out of all the felonies I have

to get accused of, I didn't expect a bank run. So I'm kidding. I'm kidding.

But yeah. No. I agree. These things can spread really fast on social media.

The fact that the talking heads in suits in their stupid little meeting are are actually discussing this is worrying. So are they committing a felony?

No.

Because they're the FDIC, and they're fucking telling people you're fucked.

Yeah. Well, they write the rules, so who knows? But they I mean, like, in that instance,

if that happened, right, or any of the doomsday, you know, recession scenarios,

then there's they're just gonna print the money.

It's gonna be a congress x y z,

you know, act where they just recapitalize

the bank. Emergency bill or whatever. Yeah. And then so, like, you're gonna get your money. And and this is both creditors and It'll be everyone just gets debased together. Yeah. So this is, like, the the thesis what I didn't get when they said balance. Like, there wouldn't be bail ins in that situation. No. It would I mean, it would just print there would there would be a bail in that was bailed out by

the, you know, fiscal authority or whatever or like Fed or or whatever it is.

But this is I I honestly it's I I will say this is probably one of my my favorite tweets of mine ever. And it was like a it was our reply guy tweet.

But it was like, hyperbitcoinization,

is is the greatest wealth transfer ever from fiat creditors to Bitcoin savers.

So it's it's fiat creditors in the sense of, bond holders. You you're you're giving your money to, you're lending your money to a a debtor for a 30 year period, a 10 year period, or whatever,

or a saver. The the losers of the next decade are the are the bond holders

and the savers.

Right. Of the last decade.

Or no. Well, I should rephrase this. The losers of the next decade, and even the last decade,

are the bond holders

and the Fiat denominated savers. Oh, okay. Yeah.

Yeah.

The winners,

I believe, in my opinion,

and it hasn't met true of of 2022,

are are the people that acquire Satoshis and hold it. The the humble stackers is what you meant to say. Yeah. That's what I meant. I love it. You won't even give it to me. Like, the people who acquire satoshis.

No. That's not what I that's not why I said that. The people who love that excess.

Yeah. That's what I believe. And and like who knows the timeline? I think ultimately, like, if you put yourself on a timeline,

like,

this is way maybe admittedly where I've I've made a mistake in the sense of, like,

you know, giving, like, a like, an in 2020, I was like,

guys, like, Bitcoin's gonna be x x dollar amount in,

you know,

6 months. And it was, like, sweet. And it was right. Yeah.

But then it, like, crashed again, and people, like like, setting expectations based on price performance just Right. Led led to bad outcomes. Like, if someone said, like, 200 k by Converse Stairs. Yeah. That'd be that'd be pretty dumb. Pretty stupid idea. Yeah. In all caps too. Yeah.

No. I I

it it happens, man. I I think,

what do I think a lot of things?

But so let's just unpack this again. Yeah. So you expect bank runs?

That's I that's we are allowed to talk about bank runs, because it's not first of all, it's ridiculous that, like, the concept of a bank run

is a negative thing.

Like, in a healthy environment, a bank should be able to handle

withdrawals.

Like, this idea that, like, you go Fractional reserve banking just, like, as a normalized concept.

Well, I mean, now that it's fractional reserve, it's a fucking issue. But, like, if you We have been fractional reserve for the last century. But you should be able to just withdraw like, if you can withdraw your money from a bank, like, what's the point of the fucking bank?

They're supposed to be holding your money to your your money at interest. Yeah. I mean, that's if you like, this was what this was, like, kind of one of my

red pill not even red pill, like, black pill moments, that black pill or red pill or orange pill, whatever,

was I was reading the creature of Jackal Island Right. And the or the origination of fractional reserve banking as a concept. And it was literally,

blacksmiths

that,

would, like, forge the gold bars. Right.

They'd and they had, like, huge massive safes. They'd, like, sell the gold bars or whatever the gold coins, and people would come back and be like, Yo, can you just hold these?

And they were like, sure.

Here's a receipt, I guess. And then they realized they're like, no one ever comes back for their gold.

And so they just started printing the receipts and and making interest on it. Right. And then they were like No. Like, as long as everyone doesn't come for it at the same time, we're good. And then it was like you know, these guys were like, oh, like, we just, like, start printed money. Like I it's probably was pretty amazing at the time. And then, like, the first time it happened where, like, people were, like, oh, shit. Like,

blacksmith

blacksmith guy doesn't have my gold.

And so everyone withdrew, and he didn't have the gold. This is the first bank run. And so, like, I mean, the Fed yeah. The Fed as a concept

came about to, like, monopolize,

to monopolize,

basically, the coordination of of cost of capital. Because if if you're a fractional reserve bank and I'm a fractional reserve bank,

and I say

and I say, your your interest rates are 1%.

And I say, okay. Hey, guys. My interest rates are 2%. You're gonna get run. Right. So you're fucked. And so you collapse.

And then you collapse. And even if I'm good,

people are like, holy crap. I gotta go withdraw. And so then the whole thing screwed. So the fed came in, like, alright. We're like and it was really, like, kind of a a backdoor plan by, like, the wealthy elite and the the bankers

to establish a monopoly. And they they did it to, like,

as a sense of, like,

to stop the monopoly. Protecting the common people. We're protecting the common the common plebs. Well, so, like, I mean, I was talking about Jason Brett show because he's a former regulator. He showed the IndyMac thing. And then after IndyMac, at that point, FDIC insurance was a 100 k.

So not only did they switch instead of FDIC doing receivership and taking over and having the government actually take over your bank and instead they sell it to a big bank, they also raised the insurance up to 250 k to try and, you know, calm the people and be like Yeah. Stop withdrawing. Yeah. Because once you get into that kind of bank run momentum Yeah. It's hard to stop the panic. Yeah. But so, like, bank runs, if if

the word of the day.

They'll probably start in other countries first. Right? Like, the US is running in Russia. Right. We're already seeing it kind of happen. Yep. And then it kind of comes over to America, and we see the inflationary events happen in other weaker currencies first, and then it comes over to America. So we have our American privilege gives us a a delay on it to a degree. Yep. But I think we both expect that trust in banks will

probably devolve going forward. Yeah.

And that is a realistic threat

if you have over the FDIC insurance amount.

Yeah. Over that 250 k in a savings account. Yeah. Which is why which is why

there's no billionaires with a $1,000,000,000

in in a bank. It'd be ridiculous.

What they do, and this is like no better because this is again, like how a stupid financial system works. The money isn't even there. They go buy.

And by buy, I mean, they lend money to the government over a long duration of time or a short duration of time. Like, the reason like Right. They buy T bills. They buy T bills or T bonds. Right. Which is the same thing, just a technicality over over length. Because they know the US government will just print to pay them back. Yeah.

And and and because or even if it's the same thing kind of with with yield curve control of the sense of, like, they're, like, saying they will do something, so it kind of keeps the market at bay. Like, we will print

if the if the rate gets to x level. So the market never even like, the market maybe occasionally test that level, but, like, they never fully test it because everybody kinda knows that, you know, they have

the biggest stick at the table. Same way, like,

for a 30 year treasury.

Like,

say, a 30 year treasury is valued at a $100. That $100 doesn't, like, doesn't exist today. It's like a future pay a future promise for the next 30 years to pay you. Right. And so everyone's kinda like, yeah. Like, they'll pay. And then they will,

but, like,

the government has a business. Like, if the government wasn't,

the government with their own money printer and, you know, ability to throw people in prison and enforce taxation.

Like,

the government is functionally, like,

insolvent.

Like like, they they spend more money than they bring in every single year.

Right. If they were an individual, their credit score would be horrible. They'd

they wouldn't be able to fucking get a used car. Right.

Right. So but people willingly lend them money

because, like, and and will, you know, buy buy bonds for 30 years because

well, I don't know why they would do that. But, because they have nowhere else to put their money. Yeah. Essentially.

And that's They have a gun to their head, essentially. And that's the yes. And and a lot of I mean, the people that are buying, like, Japanese government bonds or really any government bonds are pensioners

that are not gun to their head, but it's being forcefully, you know, their their life savings are just being

invested into these vehicles

that are that are purposely losing money. So,

I I mean, I I said I own T bills. I own short, short duration treasuries. Just

basically, it's a savings account with a 4% yield. Right.

I

but the thing that I

probably lose sleep in at the most is like that, you know, one day transition from, like, those fiat rails to Bitcoin. That's I mean, that's, you know, that's it. The amount of time it takes to get Yeah.

Into real money. Yeah. Into real money. No. A 100%. I agree with you.

But

yeah.

So

bank runs,

hyperinflation,

paper Bitcoin.

Yep.

Also, yeah, there's there's not I mean, the Bitcoin exchange rate is the price set at the margin. Is it bullshit? Right.

I don't think it's bullshit. I think it's just a price set at the margin right now. And the reality is, like, probably 90% of the float

isn't available to be bought.

Right. It's just the same Bitcoin being traded back and forth. Yeah. I mean, like, cz turned off fees. It's just the volumizer

bullshit on the only market that actually matters.

Not the only market that matters, but, like, Binance. Like, if you look at, like Well, like, arcane came out or whatever. So, like, 92% of volume is on Binance.

And 92% of Binance's volume is fake. Right. Because they have no fees, so there's no cost to just trade back and forth. Yeah. That's why You can even have 2 accounts and just trade with yourself. That's why they did it. Yeah.

So, yeah, like, if there was actually

a flood into Bitcoin,

you know, a specific catalyst,

never mind a bank run. Like, even if if it was just, like, the next Fed stimulus

thing. There's gonna be like, probably,

you know,

a similar type event that happened in 2020 where, like, the price

consolidates at a like, consolidate at 9 k, and it was held down for 3 months. And then once it snapped, it snapped and snapped really hard. Right.

And then, you know, it's because short sellers or whatever else or, like, traders trying to keep it in a range

to do financial market games. But, like, there's probably 2,000,000 Bitcoin. Maybe 3, 4,000,000 Bitcoin available for sale.

Yeah. And so Probably on the lower end of that. Yeah. And I I say I went from 2 to 4 because, like, as price go up Then more gets available.

More people will be incentivized sell. But I think at this point and, like, probably one of the best parts about 2022,

and just the evisceration of FTX, Celsius, LUNA, altcoins,

Bitcoin, whatever.

Everything. Everything is that

the people and I can see this in the data and the on chain data thing gets, you know, made fun of, like, rightfully so or not.

But I can see, like,

there's there's price agnostic buyers and holders. Like, I mean, you can you can see this because use your mantra is stay humble stacks at Literally tweeted out every day for, like, the last 70 days. Yeah. And and you and you know anecdotally, like,

10 people, a 100 people, a 1000 people that all do the same thing. Right. And and likewise. And I can also see it in the data. I I mean, you can too. You could pull the data off your own private node.

And so those people aren't gonna sell on the first

20% pump. We've wiped out all the weekends. They're all gone. If you're gonna sell, you're gonna sell already. If you're gonna sell, you're gonna sell over the last 12 months. And maybe you sell a little bit because you wanna, you know, buy a new car that's not 15 years old. Account. Yeah.

So maybe a little bit.

But,

yeah, the next time that the Stanley Druckenmiller's and Paul Tudor Joneses of the world wanna buy 10 yards of Bitcoin,

it's gonna be hard.

There's not 10 there's not 10 yards of Bitcoin that are gonna be easily available for sale.

So stay on BONEstack Sets. Yeah. Moral of the story.

I'm just trying to unpack this with you. I'm, like, trying to figure it out.

Yeah. I mean, I like, I don't think this is happening tomorrow or I like that we have Rod in here because we have 3 generations.

Boomer Boomer Jenna. A 100%.

So, I mean, I have a couple comments in the

in the live chat. Sure.

Dylan, thanks for the great content. This is from Tainted Umbrella. Great name. Love it. Dylan, thanks for the great content on Twitter. What are your thoughts on Bitcoin price being sensitive to Fed rates and liquidity? Will adoption rate ever make it insensitive?

Insensitive to Fed liquidity?

To the Fed, I guess, in general. Yeah. Yeah. I mean, I think as as long as we're in this global,

monetary system where there's a $100,000,000,000,000

of short dollar position.

Like the biggest short position in the world is is dollars. Right. Like,

if if not, like, say you you bought a house. Yeah. You have 30 years of short man can dream. A man can dream. I'm in that same camp. You have 30 years of of short dollar payments. Right. So you have you're a price agnostic. Like, you are an accumulator of dollars by by force.

Otherwise, you lose your home. Right. It's the same the US government is $30,000,000,000,000

short dollars. Right. 30 30,000,000,000,000

of short dollar position. Right.

And so there's this massive global short position, which is why,

especially, like, to the downside and, you know, in the subsequent upswing of a credit boom, all assets or maybe all risk assets,

all financial assets are correlated to the upside and downside

because of this liquidity tide. So, like, I I just talked with this on on Peter's podcast, like, 2 hours ago, 3 hours ago.

I I think Bitcoin can be a $50,000,000,000,000

asset.

Well, like, you know, let's let's Right now, it's, like, 300,000,000,000.

Yeah. Yeah. So, like, that's a big That's pretty bullish. It's a big statement.

And some people would be like, you know, like, it goes further than that. You know? You know, why so bearish? Yeah. Bitcoin, like, is gonna be the global unit of account, etcetera. Whatever. Probably. Let's let's let's,

we'll meet halfway and just say it's only a $50,000,000,000,000.

It's a humble $50,000,000,000,000.

Humble $50,000,000,000,000.

We'll say humble $10,000,000,000,000.

Okay. We can do that.

Like, it can be a $10,000,000,000,000 asset and be correlated with equities. And I think it it it would be, it should be.

Bitcoin, like, developed, like, if you think about the global balance sheet, assets, liabilities,

what Bitcoin has done for the last 14 years

has slowly,

gradually, then suddenly, and in, you know, volatile boom bust patterns, monetize

on the asset side of that global balance sheet. Right. So there's still the liability side. There's still the asset side. There's

there's euros, yen, dollars, stocks, bonds,

and then debt on the other side of that,

of which bonds are one person's asset, other person's liability.

But Bitcoin's all it's doing is just monetizing and accruing value on the asset side. If we if we expect that to continue,

then, logically, it will be correlated with the asset side of the bucket.

Right. Because it's the asset. It's the asset. Right. Against a whole huge basket of liabilities. And to get to the asset, it has to share the same liquidity pool with global equities, with housing, with bonds And gold. And gold.

Like, there's a reason like, during the COVID limit down days, gold was falling. Right. It's not because gold is not a safe haven. It's because gold's denominator is dollars. Right. Bitcoin is BTC USD. Yeah.

So to answer the question, like, I think Bitcoin has its, obviously, its own native adoption waves.

But

when, you know, if the VIX, the volatility index for the S and P 500

goes to from 20 to 50

Right. And equities go limit down again,

Bitcoin's gonna sell. Yeah. And that's not like Is the bottom in?

Peter asked me that today. I was like, dude. When we did our last pod, Checkmate said the bottom was in. We did. And

it's we haven't gone under yet. It's held up. What was that? Like, 16 k? Mhmm.

Good call. I think I think the the worst part of the

the price based capitulation is over. I think we got the time based capitulation. Yeah. We're yeah. It's gonna be a grind, right, in the recession?

Yeah.

Yeah. Who knows? That's why I stay on 1st.

Man. Fuck it. But so, I mean, it'll it'll stop being

it'll it'll stop being,

affected by the fed when it makes the fed obsolete.

Mhmm.

If it makes the Fed obsolete, I guess. I'm not supposed am I not supposed to when when it makes the Fed obsolete. Right? I think it's I I believe it's when. When the dollar dies

Yeah. And the world is on a money that's independent of governments and corporations,

that money will exhibit

volatility based on how volatile the world is at any given time. Yeah. Well, I I But because it's scarce, it should increase in purchasing power

over time. As productivity increases. Right? Yeah. I think it's thesis.

That is a thesis. I think at a certain point, there will be an inflection to the point where

Bitcoin's exchange rate is still volatile in in nominal

dollar terms,

but

stable in purchasing power terms.

There's an inflection point from right now, Bitcoin's exchange rate,

is obviously impacted by Fed monetary policy,

but it's it's hyper volatile regardless of the Fed, and it has its own booms and bust regardless of the Fed.

I think Bitcoins there's a future

where if the Bitcoin thesis is is right, you know, we get to the 10, 50,000,000,000,000, you know, these outrageous valuations.

And it's still quoted in dollars because, like, there's dollar denominated liabilities over the next 30 years. Right. It's not going away. Like, it could diminish in value, but it's not gonna snap and go away. It's not,

with the dollar. Yeah.

Like, even if it inflates, it still will be I feel like that's what happens to my dollars. It's Snap goes away. Stay humble.

And it's gone.

That's a good meme with SPF, by the way. Someone superimposed.

Yeah.

Pretty good.

But I think there's a world where

the Fed is still, like, an active body or whatever or still, like, an institution, you know, quote, unquote.

And they're still, like, setting monetary policy per se. But

and this is, like, this is, like, long, long, long term,

you know, hypothetical.

But where so Bitcoin's exchange rate is still influenced by the Fed. Right. But its purchasing power

is more, like, is

more stable than the dollar as a reflection of a unit of account.

I think that's possible. Where Bitcoin is the stable coin. Bitcoin is my stable coin.

And the and the dollar due to its, like, hypervolatile boom, blah, blah. Your utility shit coin that you have to use to pay taxes or something. Yeah. Well, it's like like think if you if you think of, like, an emerging market economy right now Right. And, like, liras and dollars. You hold your savings in dollars, but you pay your taxes in the And and prices are like, the price of your house is relatively stable in dollar terms. Your groceries are stable in But in lira, it's completely off or whatever, in pesos. Yeah.

I think that's I mean, we're not talking about this decade. We're talking about, like

Are we not?

Were we talking about 2 decades from now? I I don't know. Like, when you're Rod's age?

I'm gonna shit talk to you on my

Rod told me he's gonna shit talk to me shit talk me on my on his pod.

You would get

it.

Search builders and Bitcoin in your favorite podcast app and click subscribe for Rod.

So we have another question from the audience. Okay. We have Jay Simpson.

Dylan, what signs are you looking for to mark a bottom in assets?

When would you deploy your cash into Bitcoin?

What are you looking for? Are you gonna text me that morning like I'm backing up the truck?

Yeah. Sure.

Yeah. Like, I I don't I don't, like,

necessarily, like, need to or plan to, like, catch like, I think Checkmate's call is honestly really good.

And, you know, I guess hindsight is is 2020, so we'll we'll see. But, like, there's there's not a lower with, like, the DCG bullshit on the recession? Yeah. I do.

I think we can go higher too. Like, I and if Bitcoin goes to 25 k like I, like, both think we'll go lower, but I'm just I refuse to actually trade it. I'm just Yeah. I mean, I I would not liquidate Bitcoin at these levels. Yeah.

But I just don't know where I'd put it. Yeah.

I don't think there's there's no there's no point in that. I mean, maybe a little tax loss harvest, but,

in in terms of, like, what's

what to look for or whatever, I I just like, kind of along the lines of this convo, like, I think,

and I'll probably start to increase the the DCA in terms of, like, as a percentage of the cash pile, like, start Is that what happens? You're just gonna, like, gradually go into it? Yeah. We'll we'll we'll see, I think.

But I I think we're you know, the dollar,

I believe, and it's it was down today, but I think the dollar strengthened against other currencies this year.

I think risk assets have another down year, and I could be wrong.

And I think that these tightening cycles,

have shown,

that

despite, you know, the Fed's intentions and the soft landing hopium and whatever,

that,

once the train starts to teeter off the tracks, it

everything kinda falls off the rails. The train not

The train's teetering. Like, I feel uncomfortable with my chair because the train just keeps moving back and forth. Yeah. And so, like, you know, you're gonna get whiplashed

off the train.

That was a bad analogy.

I like, the train's gonna crash. I have my seat belt on the train. Yeah. That's good. Because I'm staying home with stegocats. That's that's the seat belt.

Yeah. But you might you might still just smash your face on the next on the next seat. Haven't yet. Yeah. Haven't yet. Just surviving.

So yeah. I mean, when am I gonna I I jokingly I I kinda shit posted, but I'll I'll honor my,

my

call or whatever.

It was, like, May or June of last year. I was, like, add laser eyes at the bottom. It was, like, it was like a shit post. So you're gonna add laser eyes at some point? Yeah. If when you add laser eyes, it will probably go down another 20%. Yeah. I hope so. I'll buy more.

What's the tradition? Yeah. So I don't know. I'm kinda waiting for some blow up in legacy. I'm waiting for some volatility. The only reason markets are up right now is because I said we'd probably go down a rabbit hole recap on Thursday. So global markets respond. Yeah. They everyone is tuning

in. They're like, oh, shit. Max bid.

So it appears Jay Simpson realized that on the show, you're able to ask questions to the audience. He's taking full advantage of it, and I love it. Do you think Fed rate will go back to 0 within the next 2 years? No.

I think it'll I think it goes lower, but I think,

Do you think we'll ever go back to 0?

It would be quite the crash if we did.

I don't know.

Do you think we'll ever be able to get a mortgage under 5% again?

Yes.

That's in.

I

don't know.

I'm just trying to learn here. You can,

the,

like,

2024

Fed Funds is, like, 3%. So that's a 5% mark. But that's the prediction. Yeah. But they're wrong. Right?

That's what the bond market says. I don't know.

It could be wrong to the upside. It could be even lower.

Who knows? Part of me just, like, FOMO into a house at 6%, 7%.

You'll be you'll be the guy at 2% 30 years.

Like

Yeah.

Yeah. Mhmm. Yeah. Like, maybe rates go up to, like, 15% or something on a mortgage.

Do

do do your do your listeners know where you live?

Yeah. We're at Bitcoin Park in Nashville. Okay. Yeah. Nashville is a different I think real estate's, like, interesting because it's, like, not

uniform. Like,

Nashville is relatively

booming, maybe. And so maybe it's a risk. I mean, the market's completely dried up. Everywhere the market's dried up. Yeah. There's just there's just

real estate's an interesting beast

because everyone treats it like it's liquid. That's not Like it's a liquid market, but it's an extremely illiquid market. Like even in bull scenarios with cheap money, you're still sitting on a house for at least 6 months before you sell it. Yeah.

And then when

in this situation where rates go up, so prices on houses should go down, what happens is you get you get stuck. It gets sticky where, like, the sellers

refuse to lower their price. Yep.

And the buyers don't wanna buy. And the buyers don't buy. So just just volume goes down. Like, liquidity goes down. I think I think that And then so it lags. Right? So so right now rates are up, but prices aren't down yet. I think that's coming. Right? So but then as a Bitcoiner, you have this third variable, which is, like, what's the price of Bitcoin?

Right? So you need

it's fine if rates are up as long as prices are down on houses and Bitcoin's pumping. It's like calculus, man. This is Yeah. It's very complicated. Lot of variables. This is why I brought you on the show. Yeah. Because you're supposed to tell me when I'm supposed to buy my house,

but you're not telling us. I yeah. So I'm just gonna stay on those next steps. I have no choice. It's a good strategy. Okay. We got one more question, and then we'll wrap this up. We have Dylan, producer grind,

saying, what are your thoughts

on real estate and home builders this year? I mean, we just kinda answered it. Yeah. What are you thinking on it? I mean, you're so far away from buying a house. You're still, like, you can wait a decade.

Yeah. I my mom was telling me to buy a house.

I should have listened to her. When she was, like, 6 months ago or something? They were telling me last year, when I was I was I was balling in the bull market. You look like a genius. We all look like geniuses. I was like, mom, I was like,

I was like, mom, have fun staying poor. That would have been a great strategy.

What are you reading?

I was deciding whether or not I was gonna ask you this question, but you just put me on the spot. Andy Hahn is asking, Dylan, as a strapping young lad, how many drinks does it take to start talking Bitcoin to girls at the bar? Oh my god. How does it generally go, and is it a deal breaker if they're a shift level hater?

I've

stopped my,

my Bitcoin my Bitcoin pitches at at You don't do it. Yeah. It's not a good idea. I mean, I'll,

you know, maybe I'll I'll get to it later in the night. Have you ever done the meme, like, in the bull market where you're, like, screaming in her ear? I literally did that in, like, high

school. I was like 18 years old like senior year like grad parties just like so

so passionate like

that it was like it was like been there during the it was like 2019

it was the 3 k to 12 k pump like that was like my graduation summer

It's just like I was just like Yeah. That must have been insane. I I turned 18,

and, yeah. It was a shit coin model, but, like, I turned 18, plan b launched stock to flow. I'm like a math guy in high school, and I, like, had already been looking at Bitcoin a bunch. And I'm like,

oh my god. Linear regression, log scale, like, I like, the the plan b stock to flow thing is what, like, got the the difficulty adjustment in having to click for me.

And I was, like,

like, so orange pills, and I'm, like, at parties, like, literally, like, doing the the party meme, like, boys and girls, anyone who'd listen,

like, it was just Boys and girls. It doesn't matter.

So no. I don't. No no no amount of drinks get, get the Bitcoin pitch out of me at at the at the local club now. At the college time. They have to follow you on Twitter if they want the Yeah. If they want the real alpha. Yep.

Awesome. Well, I've kept you for nearly 2 hours now. This has been a great conversation.

I hope to have you on again soon.

When you turn on laser eyes, we'll definitely bring you on.

Before we wrap up, I'd like to end with some final thoughts. Do you have any final thoughts for our listeners?

No, man. This has been, it's been an awesome chat. Fun 2 hours. I gotta I gotta piss.

It's fun doing it in person. Right? Yeah. It is. It's a ton of fun. This studio is fucking ridiculous. Dude, I love it. It's great.

Well, the pleasure has been mine. Thank you for joining us, and a huge shout out to the freaks

who joined us in the live chat, who listened to the show, who shared with friends and family, and who supported with Bitcoin. Couldn't do without you. I appreciate you all.

I know the last two episodes have been a little different for dispatch, but this is a different kind of year, so we're having fun with it. But,

the next dispatch will be

in 2 days in the morning.

Nice morning rip on a very technical Bitcoin conversation about miniscript.

Nice. So definitely tune in, and and let's learn together because I don't quite understand it either, and and those are the most fun conversations.

Love it.

Until then, I wanna thank Dylan again for joining us. I wanna thank Rod for sitting on the couch while I ripped him.

I wanna thank the Freaks for joining us, and

remember, Freaks. Stay humble, stack stats. Love you all.

Can we get this on the table?