Bankless - Arthur Hayes: Money Printing & The Crypto Bet

Episode Date: May 19, 2025

Arthur Hayes returns to Bankless for a wide-ranging macro and crypto conversation. We cover why ETH ripped, why the Trump administration might walk away from US treasuries as the global reserve asset, and why capital controls—not tariffs—could redefine the global economic order. Arthur lays out his full thesis on how a massive shift in global liquidity is unfolding, what it means for crypto, and why he’s betting big on Bitcoin, gold, and “buying everything” as the money printers rev up again. ------ 📣SPOTIFY PREMIUM RSS FEED | USE CODE: SPOTIFY24 https://bankless.cc/spotify-premium ------ BANKLESS SPONSOR TOOLS: 🪙FRAX | SELF SUFFICIENT DeFi https://bankless.cc/Frax 🦄UNISWAP | SWAP ON UNICHAIN https://bankless.cc/unichain 🛞MANTLE | MODULAR LAYER 2 NETWORK https://bankless.cc/Mantle 🌐SELF | PROVE YOUR SELF https://bankless.cc/Self 🟠HEMI | BTC & ETH, ONE NETWORK https://bankless.cc/hemi ------ TIMESTAMPS 0:00 Intro 0:34 ETH’s Back? 2:25 Bretton Woods 7:38 The Petrodollar 9:37 The Petroyuan 17:47 US China Trade Imbalances 20:22 Liberation Day & Tariffs 33:19 Capital Controls 38:42 US Capital Flights 44:51 Dual Monetary System 49:08 Bitcoin as a Reserve Currency? 50:19 Buy Everything Except Bonds 53:07 Scott Bessent 57:02 QE is Inevitable 1:02:15 Stablecoins 1:06:55 Trump’s Pro-Crypto Campaign 1:11:44 Global Liquidity 1:21:20 Gold Reevaluation 1:25:18 Hot War Scenario 1:29:54 Arthur’s Bags 1:30:33 Crypto Cycle 1:35:07 Closing & Disclaimers ------ RESOURCES Arthur Hayes X https://x.com/CryptoHayes Arthur’s Blog Post https://cryptohayes.medium.com/fatty-fatty-boom-boom-52e47a03f487 Arthur Hayes IG https://www.instagram.com/cryptohayes/ LinkedIn https://www.linkedin.com/in/arthur-hayes-b493b42/ Substack https://cryptohayes.substack.com/ Maelstrom https://maelstrom.fund/ ------ Not financial or tax advice. See our investment disclosures here: https://www.bankless.com/disclosures⁠

Again, what do we know happens whenever the markets go down, especially the bond market and the volatility goes up, they print the money. And so the consequence of capital controls is that the Treasury of the Fed and politicians must all do their part to create policies to provide dollars to replace the foreigners who are leaving. And they're just going to print them. And the consequence will be gold and Bitcoin go through the moon. Bankless Nation, we've got Arthur Hayes in the podcast again. Arthur, how are you doing, man? Good. How are you, Ryan? Hey, I'm feeling pretty good on the prices today. First question, this is going to be a tough one for you. Why did Eith go up 50% over the last seven days? How the hell did that happen? Everyone thought

it was dead. That's why. Yeah. The most hated coin or more hated asset goes up the fastest in the next cycle. Just human nature. I don't know why. There's like no other explanation for this. There's nothing that your sloths have found in the order books or anything. I'm sure someone can concoct. It's the, was it the Petra Upgrub it's, you know, Vitalik becoming a little bit more active on social media, whatever. You can come up with any sort of rationale as to why the price is going up. Or it's just, you know, it's been hated, you know, for the last two years because Solana went from 7 to 300 and now, you know, people think it's, oh, this is the new, the new, new thing.

Yeah, this was kind of my take. It was time. I mean, I know you were saying this back in March when it was like, that was probably peak, at least lately, hate on ether. I mean, Bitcoin, ETH ratio was going down. and Solana was kind of like running all of crypto is just like just hating on it, right? It was kind of dead. And I think I saw an interview from you like some tweets or something and you were bullish

at that point in time. So I'm not going to say, I'm not like, you're not vindicated, right? Because I think you're looking for a price call around 500K or something like that. You're still looking for a run on this thing. But it's starting to feel good for the Heath Bulls in the room. Yeah. I mean, obviously there's a long way to go, right? What is the $2,700 or whatever the price is?

Yeah. It was, you know, what Bitcoin was $110,000. before is like 4,000. So like it's definitely not performing like as well as it could. I didn't buy any Eve, but I'm long a lot of it. So, you know, I'm happy. Yeah, it's great. Great. It's going up. But like, okay, let's talk at 10,000 or 15,000 or something meaningful here. Oh, definitely. Actually, let's put that invite in the calendar. Let's definitely talk at 10K. Okay. Come back on bank this. We'll have some things to talk about at 10K. Okay. I want to talk to you about what's going on in macro. You are one of our favorite people to kind of relate

macro and all of the chaos going on to crypto, right? And actually, like, dumb it down so that, so that we can kind of understand this. And so we can talk about Trump tariffs. We can talk about, like, you know, capital flight trade, all of these things. But I actually want to ground this at a higher level, because I think this is fundamentally maybe like your thesis. And I think personally, this is the crypto thesis, which is just like we are in the midst of transferring to a new monetary system, like a new monetary structure. And Trump is kind of like ushering this in. But if it wasn't Trump, you know, it would be someone else.

And if it wasn't like this year, it would be some other year near in the future. You had this post that I read back in December. It was called Trump Truth, all right? This is like, this felt like kind of an end of year prediction type post where you're just kind of contemplating the incoming president Trump and like what he would. was going to do, what his agenda would be. And I think in order to talk about tariffs and everything else in macro, we have to set the stage for like this new monetary phase change that it feels like we're experiencing. And in that post, you talked about three monetary structures, like

from since World War II. Everyone is familiar with Breton Woods, 1944. You also talk about the 1971 Petro dollar. And you talk about the 1994 Petro won. Actually, could you just like take us through the history of monetary policy since like post-World War II, starting with Bretton Woods? What was the Bretton Woods deal? Yeah, essentially, you know, the U.S. and the Russians defeated Germany. And, you know, the ally sat down. Like, well, how are we going to divide up the world economically trade, all these sorts of things? And, you know, obviously they shut out. Russia because of bit back communist or whatever the ideological rift was at the time. So it literally was the United States and how it was going to construct the system around its economy

and sort of rebuild its allies with the purpose of sort of creating a containment wall around Soviet Russia. And essentially, Britain Woods, I think it's in New Hampshire. It's just like, you know, we'll call a country retreat. All the, you know, great minds of the time, economists and politicians got around a table and sort of discussing how they want to create this new system. And a lot of these ideas are quite pertinent for today because the things that weren't done are some of the things that Trump is trying to do

or whoever would be in power today. And, you know, obviously Maynard Keynes, famous, very famous economist, was sort of championing this idea of a sort of a customs union where there were the good guys and the bad guys. If you were good, we're all going to sit here together and trade with each other, but we're going to have mechanisms to rectify

imbalances between our economy. So the massive trade deficit and surplus that U.S. and China have versus each other would not be able to happen in this sort of customs union that Keynes had theorized. And he said there's going to be some sort of capital controls like user fees. He would call it on the financial markets of the surplus country. And this would help balance things. Now, for various reasons, that was not the plan that went forward. Essentially, whatever we did was they pegged their currencies to the dollar and the dollar was pegged. to gold, you know, the U.S. government promised that if you were a large, if you were a central bank, that they would give you the gold if you gave them dollars. And that was sort of the arrangement of Bretton Woods. And then the United States essentially financed the rebuilding of Europe and Japan and allowed Germany, basically Germany and Japan, to export their way to prosperity after losing the war. Why did they do the gold peg rather than Kane's idea? It was like Kane's idea just like a little too experimental, a little too crazy at that time.

I'm not in the super-volverse in the minutiae of exactly why Keynes' plan was not eventually adopted. But I think the Bretton Wood system worked for that period of time. It worked for the United States. It helped them sort of do the Marshall Plan and sort of rebuild post-Award Japan as well.

So it worked for essentially up until the 1970s when the U.S. basically started running very, very large deficits. The foreigners were like, oh, well, if you're going to spend all this money, you know, the great society programs of LBJ and, you know, the Vietnam War and all these sorts of things, then we want our gold back. And so you started seeing, especially France, requesting, hey, here's some dollars, give us the fucking gold back. And at some point, this got too much. And in the 1971, Nixon informed everyone that, okay, well, there's no longer a link between the dollar and the gold. then this currency is now going to freely float.

And that was basically the end of Bretton Woods and the beginning of sort of the petro dollar. It's interesting because like Bretton Woods was a nice phase off of the British pound sterling, which was kind of the global reserve currency, like prior to the dollar. And like Bretton Woods really established the treasury, like US treasuries as kind of the global reserve

that most countries kind of held. And this is all hard-backed by gold. But then, as you said, 171, something changed, got off the gold standard, and this is now the next phase change, I guess. And by the way, these phase chains happen every like 30 to 40 years, it seems like. So you get in about 30 years, 1971, and Nixon takes the U.S. off of the gold standard and bases it on something else, like the petro dollar. So what's the petro in petro dollars? Does that imply some sort of oil backing?

And how did this work? Yeah, so there was basically a very casual or strong. like how we want to describe it, link between the dollar and oil. So I forgot the Baker, I forgot the name of the Treasury Secretary. Basically, they made a deal with the Saudis and like, hey, if you sell your oil. Of the time, right? Yeah. If you sell your oil and dollars, we'll sell you weapons and make sure that your tribe of

Bedouin nomads can take over the peninsula. And that was a deal. And when you earn all these dollars, you need to put them in banks, U.S. banks. And so that's what they did. And what do you buy with these? you buy treasuries. And so if the largest marginal cost producer of petroleum, Saudi Arabia, was only going to sell the fluid that makes the global economy work, you know, hydrocarbons, oil in dollars,

then everybody else had to have dollars because you have to have oil. If you don't have oil, you have no, you do not have a modern civilization. And so that was essentially the backing of the dollar. And obviously, you know, the U.S. military was there to beat the shit out of anyone who thought that they were not going to do that. Okay, so I guess the petro dollar era, that was like also linked to a commodity asset, not gold this time, but it was sort of proxy linked to oil and also military involvement and, you know, as kind of as the global hegemon, the U.S. could kind of command this sort of

linkage. I kind of thought we were still in the petro dollar era, actually. And I think maybe a lot of crypto listeners sort of think, oh, roughly, look, treasuries are still the global reserve asset. We're in kind of Brettonwood slash petro dollar era. But you mark another phase change here, which is like in 1994, you call this Petro Juan. So how did China enter the picture? And like what happened in 1994 for the next monetary structure phase change?

So, I mean, if you take a look at thousands of view of human civilization, and the largest economies in the world were always China and India. It was only in the last sort of 200 or so years where there's not been the case. And it's been Western European and sort of next North America as the global economic center of the world. So, you know, after China got done fucking up for a century or people fucking them up, they did a change up and, you know, centered on this sort of state-sponsored, you know, fascist capitalist system that they have today. and at the time, you know, they wanted to become a manufacturing powerhouse. So, you know, I don't know what the population of China was, it would be it was a billion or whatever so, people. So between, so the 1980s were a great period for efficiency of the economies.

If you look at some productivity charts in the United States, the oil intensity of the economy fell dramatically after the oil embargo of 1973 and sort of the high inflationary period of late 80s and early 70s and early 80s. So oil became less important to the global economy. And there are major discoveries in Mexico and Alaska that basically diminished the role of OPEC as the swing producer of oil and brought more sort of sovereignty in terms of oil to the United States. And obviously, you have North Sea oil for Europe and the British Isles as well and Norway and all these sorts of major discoveries. So, you know, Iran and Iraq and Saudi Arabia, while still very important, became less important as there was much. more non-OPEC supplies oil that came online in the 80s and early 90s. And then what it became of, okay, well, we've built this massive capacity. Like, what are the new markets? Labor is expensive. And China has come along and said, hey, we want to be, we want to be like Japan. We want to

export our way to prosperity. First of all, you know, very high inflation in China in the late 80s, early 90s. Basically, that was the cause of Tiananmen Square issue. They had there. And coming in the 90s, Denchoping, and I forgot the name of the president after him, decided they were going to, they redid the tax system in 94, centralized more of it, and they did a shocked evaluation of the Yuan to sort of get their currency very undervalued versus their productive capacity so they could go out there and export. And that's what they began to do. So if you could take a look at charts of Chinese GDP and it sort of starts really, that hockey stick starts to build in the mid-90s as they decide they're going to export their way to prosperity. And the rest of Asia did the same thing. So

the Asian Tigers, Hong Kong, Malaysia, Thailand, Indonesia, Taiwan, South Korea, all a similar sort of situation. We had a bit of a hiccup in the early 90s with the Asian financial crisis. And after that crisis, it was basically known that if you are an exporter, you're number one, you're going to undervalue your currency. And then to make sure you can always access dollar commodity imports, namely oil and food, you are going to ensure that you stack up a lot of treasuries. So the marginal accumulator of treasuries is China and North Asian and Southeast Asian exporting countries. And so their central banks are now hoovering up treasuries. You can look at the data in terms of the foreign ownership composition of U.S. treasuries debt pile. And this is sort of the,

you know, the petro-Ewan or this system. that was kicked off by China, they did the first evaluation, Russia was in 98, and then follow the rest of Asia devaluing their currencies and basically switching to this mercantilist policy whereby they're going to take all their very cheap workers, allow Americans and Europeans to basically deindustrialize and financialize their economies and keep their inflation low and increase corporate profits for shareholders. And so that is a system that basically lasted, you know, up until let's call it COVID, or the 2008, the 2008 period, that's a sort of major delineation of the end of this Asian-based accumulation of treasuries as a means to essentially buy food and oil when you need it. In the wild west of Defi, stability and innovation are everything, which is why you should check out Frax Finance.

The protocol revolutionizing stable coins, defy, and Rolex. The core of Frax Finance is FRAXUSD, which is backed by BlackRock's institutional biddle fund. FRAX designed FRAXUSD for best in class yields across DFI, T-Bills, and carry trade returns all in one. Just head to FRAX.com, then stake it to earn some of the best yields in DFI. Want even more? Bridge your FRAXUSD over to the FRAXTL layer 2 for the same yield plus FRAXTL points and explore FRACTL's diverse layer 2 ecosystem with protocols like curve, convex, and more, all rewarding early adopters.

FRAX isn't just a protocol. It's a digital nation, powered by the FXS token and governed by its global community. Acquire FXS through Frax.com or your go-to decks, stake it and help shape Frax Nation's future. Ready to join the forefront of Defy? Visit Frax.com now to start earning with FraxUSD and staked FraxUSD. And for bankless listeners, you can use Frax.com slash R slash bankless when bridging to Fraxel for exclusive fractal perks and boosted rewards. Uniswap is your gateway to a more efficient defy experience. With Uniswap swapping and bridging across 13 chains is simple, fast, and cost effective, helping you move value wherever, whenever. Thanks to deep liquidity on the Uniswap protocol, you'll enjoy minimal price impact on every trade,

and now Uniswop v4 takes it even further. Swappers benefit from gas savings on multi-hop swaps and ETH trading pairs, while liquidity providers can create new pools at 99% lower costs. The best part, you don't have to do anything extra. Each trade is automatically routed through Uniswap X, V2, V3, and V4, so you get the most efficient swap without even thinking about it. Whether you're swapping, sending, on-ramping, off-ramping, or bridging, Uniswop's web app, and wallet gives you the tools to unlock.

defy's full potential on Ethereum, base arbitralum unichain, and more. Use Uniswops web app and wallet for a more efficient way to use Defy. Imagine verifying yourself without handing over personal data. No hacked databases, no unnecessary personal exposure for airdrops, and no AI bots ruining community governance. Meet Self, the on-chain identity verification protocol built for privacy and control. Self-Proticle uses zero knowledge proofs to confirm your identity safely. Users prove key details like age or citizenship without revealing sensitive personal.

information. Self never stores your data. It only generates cryptographic proofs. Here's how it works in three steps. First, register and verify. Use the self app to scan your biometric passports RFID chip. Self verifies authenticity with zero knowledge proofs. Each passport creates one unique identity. Second, you can share proofs privately. Third party apps request identity proofs like confirming you're over 18. You can also link proofs securely to public wallets for airdrops or governance participation. And then last secure verification. Apps validate your proofs instantly on chain, like on cello or off chain. Audited by ZK security, the self app is live on iOS and Play Store. Visit self.xyz and follow self protocol on X. Okay, so China and the Asian tigers were effectively

exporting, like, you know, products, exporting their labor in exchange for treasuries. And the reason that was a good deal is because treasuries were basically in the dollar was basically the reserve currency to purchase oil. That's why you call this Petro Wan. Right? It's because then you could purchase oil. You could purchase all the other goods, kind of lifts the population out of poverty. And can you talk about the effect this had on America in some more detail in the U.S.? Because that kind of gets us to present state and why we're seeing, again, 30 years later in 1994, another monetary structure phase change. So like, what did this cause in the U.S.? It certainly positions the U.S. as an export or not of goods, but of like the dollar itself in treasuries. What happened to the U.S.? Yeah, so if you want to be the global reserve currency, you have to run and you're going to have an open trade account, then you have to have an open capital account. Because if I can't take these dollars that I earned by selling you stuff and invest in dollar assets, then I have to take those Fiat A units by my own domestic currency, which pushes up its price relative to the dollar. And then things balance.

So again, because we have these manipulated currencies, they're Fiat. They're not based on a gold. standard, these imbalances build. And so, you know, the U.S. has to export dollars. That's what the world wants as global trade increases because they need to buy commodities to fund their expansion. So essentially the world finances U.S. consumers and then the U.S. consumer who's very wealthy because they have a bunch of debt, they can buy a lot of stuff. And so it's a virtuous cycle that feeds on itself. And eventually, if you're, you know, a corporation that's, you know, first directive is make more money than the cheaper labor is in Asia. And so that's what I'm going to do. I'm going to

export my manufacturing base to Asia. And then I increase corporate profits. And then I do debt finance stock buybacks. And I don't build new factories in America because that doesn't make any sense from a capital usage perspective. And everyone gets rich who owns stocks. Everyone who doesn't own stocks, just is essentially the bottom 90% of America, you know, watches slowly as, you know, that high paying job, you know, that your parents had in the 50s and 60s, and now you're an Uber driver or a DoorDash delivery person. You're in the gig economy now. That's your state in life. If you don't have a university to degree, right? Which 65% of Americans do not have a university to degree. Yeah, those 65% were the ones that elected Trump, essentially. Basically.

So that brings us to kind of today and why, you know, Russell Napier, who I know you follow, So, you know, he sort of talks about the current era of being one of financial repression and also national capitalism, basically. And this is effectively, I think, what we're seeing in this new turn of the wheel of monetary structural changes. So we're no longer in the petro dollar. It seems like the petro one is not going to be able to hold, like these balances can't hold. Maybe just for social reasons alone.

Maybe there are other factors at play. but it's just not a sustainable equilibrium. So we are starting, maybe this is post-COVID. Maybe this is even 2024 with the re-election of Donald Trump. We're entering this new monetary system, it seems. I know there's not a name for this yet, but what are the characteristics and what are we seeing now? So I think the biggest thing that people can take away

from the whole tariff, melodrama, liberation day is that effectively U.S. treasuries are no longer the reserve of assets. and it's not that the and it's a direct policy choice that Trump and his you know, consular advisors believe that the post-1971 situation where the U.S. Treasury bond was a reserve asset has led to all these bad social situations, right? Wait, Arthur, do you think they'd phrase it like that? Do you think they'd say that like consciously that that's what they know that they're doing? I can't pull out the name of the direct speeches, but if you listen to some of J.D. Vance's

campaign rhetoric and stuff he said while he was in the Senate and on the campaign trail and post, he's referred explicitly to 1971 as the date at which the demise of America, or at least the people that elected him and Trump started and it was that they went off the gold standard. Okay. So I was wondering how much of this is conscious because I know the pieces that they would say politically certain certainly are like re-industrialized America, bring the blue-collar jobs back, right? Basically this national capitalism type of movement. I know they'd claim that.

I know they'd also claim that they're stepping back as kind of world police and, you know, global hegemon and, you know, securing all of the things across the entire globe. They're stepping back from that. It's not clear to me that, like, Bessent or Vance or Trump are also saying, hey, we're stepping back as the global reserve currency. Like, no, the global reserve currency is the dollar. The global reserve asset is what they're saying should not be the U.S. Treasury bond. it should be, you know, gold or Bitcoin. I don't think they would, I don't think they would say Bitcoin. I think they would hint at it being gold.

They don't want to say it's gold yet because I don't want to tell people what you're going to do in the future. What's the distinction between reserve asset and reserve currency? It's like just make that clear for people. So the currency is, you know, I bill my goods in dollars, right? So the widget that China, Japan, Germany, South Korea, Argentina, whatever. The widget's price in dollars. Everybody buys their widgets in dollars.

Now, I've earned these dollars. What do I do with them? Do I buy a treasury bond? Do I buy a bar gold? Do I buy a Satoshi? What do I do? And so that's the choice, right? So if I'm buying a U.S. Treasury, then I'm basically, you know, continuation of this post-1971 situation where the financialization of America continues. And, you know, the folks that believe they got a bad deal over the last 50-odd years, now if I buy something else, and I essentially, you know, in a real term, default on the value of the U.S. Treasury debt stockpile, then I'm completely changing how the capital flows work

and eventually things will rebalance. Now, eventually it could be two, three decades, but again, timing is, you know, up in the year on that one. Okay, so this administration you're saying does not want treasuries as the World Reserve asset any longer. Correct, but they can't, they're not going to outright come out and say that because at the end of the day,

They still need to fund the government. And everyone just throws and tries and dumps the treasury. That's not a good situation. So they want to manage the pace of this change, right? Because, again, you don't want to be going up to election in a year and a half and it's 10% yield on the 10-year bond. Okay. So what are they doing to manage this change?

Is this where tariffs come in and Liberation Day comes in? So, again, I think basically, and I'm about to release an essay on this maybe in the next week or so, there's two ways to do it, right? So a trade account deficit is a capital account surplus. You deal with a trade account deficit via tariffs. That's what they've done or they're trying or they tried. No, let's put in the past sense. They tried to do. Or you can attack it on the capital account with capital controls or user fees as Keynes call them or some sort of taxes on foreigners ownership of stocks, bonds, and real estate. There's two ways to do it. I believe that the tariff, and I think we find this out in real time is a very politically destabilizing tool because what you're

saying is, okay, cool, I want to rectify this imbalance. So I'm going to put a tax on demand. 60, 70% of American GDP is consumption, right? So, you know, the toy, the knick-knack you buy on Amazon, the piece of shit clothing you buy on Sheena, Timo. Okay, that's going up 200%. Now, you still don't have a good paying job yet. So it's not like you can go out and buy the good old boy American 5X the price thing, assuming that it exists, right? So there's no supply and the demand can't afford the locally produced goods. And so people feel poor because there's goods inflation. And they're like, well, what the fuck? Like, I thought this was supposed to benefit me. And as a policy, you're like, no, no, no, wait five, 10 years until all these manufacturing

companies come back. Okay, that's not happening, right? Get out of office. Democrats. You try it out. Right. So that is why tariffs are not really, I think, a politically sustainable tool. And I think, you know, that's why this 90-day pause, which I believe will become a permanent thing happened because the feedback from the ground from Republican legislators was Trump, you're fucking my shit up, right? How am I supposed to go out here and, you know, be all about Trump if I don't get reelected in 2006 because people are pissed off. That's shit costs more and they still have the same shitty job they had. at the start of the presidency. So that's why I think tariffs are not going to work. I think you're hinting that maybe they're going to try something else. But before we get off tariffs, let's bring people up to speed on just like what's happened, basically. And this has happened over the last, I don't know, 30, 45, 60 days something. So April 2nd was the Liberation Day.

That was the 10% tariff on everybody, 34% in China, 20% for the EU, et cetera. And then there was like a few weeks of this back and forth tip for tat game between kind of the U.S. U.S. and China, you know, escalating tariffs. I think the U.S. got as high as 145 percent. And then just yesterday at the time of recording, so this is May 12th, there was this 90-day truce, right? China and the U.S. met. They're going back to a 10 percent tariff baseline. I believe both sides have committed to this. And you tweeted on the back of this, buy everything. Chai America lives. So, I mean, what does this mean? Because there's been a longstanding prediction that many have had, and I think you've maybe shared that China and America,

they're heading for divorce, right? They're going to the divorce courts. But maybe this sort of stays off the divorce and the separation, like they're staying together for the kids or something right now. I don't know what's going on. But what, like, what do you think is happening with the tariffs? Is this basically the Trump administration kind of capitulating on the whole idea of tariffs and walking the whole thing back? I don't think they're capitulating on their main aim, which is rectifying the abalances. That's a bipartisan issue. you. The problem is how do you implement it? And then how do you get reelected while implementing it? So, you know, there's a pro-tariff camp led by, you know, Howard Lutnik and the sort of Trump cabinet,

who is, you know, some believe is basically the architect of these maximalist terrorist or Trumpauer for some academic papers written about how you would rectify some of these things. And we, you know, they tried that. And the markets threw a fit. They had to walk, you know, most fit back within the first seven days. And then they had to walk the China stuff back as, you know, it would become clear that there would be no goods at a reasonable price available for the median voter within the next, you know, 90 to 180 days. So that had to stop. And that's sort of why, you know, they've gone back to this. Oh, we'll go back to the baseline, you know, we'll renegotiate, take our time, blah, blah, blah, right? So that's sort of where we are today. But, you know,

the divorce is going to happen. China and America will get divorced, the question is the speed. And they couldn't handle the speed that they put themselves on at the April 2nd. We're going to go to a due speed now. So we'll come back to China America because I think that's important as we sort of figure out what this new monetary structure that we're heading towards actually is when all of the dust settles. So if tariffs haven't worked, and it sounds like you're, you know, bearish that they will work. No, I'm not saying they haven't worked. I think they work. The problem is you can't get reelected while they're working.

Right, right, right. Which means they're not, yeah, they're not an effective solution then for the Trump administration. What do you think they're going to try? Because you said they're still dedicated to restoring this imbalance. What are they going to try next? So my, well, I'm borrowing other people's ideas here. My prediction is that it will be capital control. So they'll affect the same change, but they'll attack the capital account,

the capital account surplus and the foreign ownership of financial assets as a way to have the same thing happen. It'll take a longer period of time, but they can still get reelected doing it. And Vittanya, J.D. Vance, could still be the president in 20228 pursuing this strategy. He will not be the president if they continue doing these tariffs. Wow. What would that look like? What would attacking foreign capital in the U.S. look like? So if you want to read sort of a, it's called the user guide to rectifying global trade imbalance. That's kind of the name. It's written by Stephen Moran. He is the chairman of some economic advisory council in the Trump administration.

Previously, it had a hedge fund called Hudson Bay Capital. And he wrote this 50-page sort of essay on all the things that the incoming administration could do to close this gap that we were talking about. Capital account deficit, current account deficit, trade account deficit, capital account surplus. How can you narrow this? He wrote all these different policy recommendations and what they're. could and couldn't do the consequences of each one. And so one of the things he recommends is capital controls. Another very astute economist who, you know, American who lives in Beijing is a professor at Beida, Michael Pettis. He predicted exactly what would happen. China and America

can't handle tariffs, neither side. So they'll both go back to where things were and then capital controls will be introduced by America to affect the same change. And that was his baseline prediction as to how this would unfold. And you have some other very influential macro economists who have the ear of policymakers who, again, are preaching capital controls, capital controls, capital controls. There's all sorts of different flavors. It's century bonds. If you have a 10-year bond, Japan, well, you're my ally, so fuck you, take this 100-year bond and take a 90% evaluation. But if you need some dollars, that's, that is, literally, that's a proposal. You just kind of bully them into buying that, like, shitty 100-year bond?

You buy, buy this thing that's worth 90% less, but I'll give you 100% of the face value of it if you need dollars today. Essentially, they'll build a bank term funding program like situation, but for the entire U.S. Treasury market, that's a proposal. That's a tax. There's a, you know, let's put a small, you know, user fee on holding any sort of American asset. If you're a foreigner, you know, one, two, three, four, or five percent, whatever. that is, right? I think that's probably the easier solution. Then you have sort of the hard line situation, which is like, you know, in Texas where they've just banned certain countries from

owning land, right? So I know that's only in Texas, but that's sort of a harbinger of what is to come, which is this is America's stuff for Americans or allies. You big, bad Chinese, get the fuck out of here with your money. We don't want you in here. So you can't own land. You can't own this. You can't own a steel mill. You can't own this kind of factory. Right. That is capital controls. Well, let's talk about that Texas legislation. So I think you tweeted this out. Capital Controls, not tariffs, will be the driving force behind the eventual Chai American divorce, right? And this is quote tweeting a story.

And the title is, Texas bans China, Iran, North Korea, Russia from buying land. So it looks like there's some legislation that passed in the Texas House that any national from any of those countries that I listed can no longer buy land in the state of Texas. and you're saying that's an example of foreign capital control, right? You just like, you can't participate in this U.S. market. It was previously open to anybody. Yeah, you sold us. I gave you all these dollars for these things that you sold me, but then I don't let you buy anything with those dollars.

Now, as a lot of people rightly pointed out in the comments, that is a state of play for every other country in the world. So I live in, I lived half my life in Greater China and Southeast Asia, right? You cannot. The only place you could buy property as a foreigner, mainland China a bit. and Japan. And that's because the Americans created a Japanese colony after the war. So they let them, you know, fordust get by land there. But everywhere else in Southeast Asia, unless you are a passport holder,

and most places don't allow you to have dual citizenship, you cannot own land. And that's just how it is, right? But America wants to be the reserve currency issuer so you can't have a closed capital account. So yes, I agree, everywhere else does it to Americans, but that's not the point. Everywhere else isn't a global reserve currency issuer. And if you have the global reserve currency issuer, you must have an open capital account. So anyone who talks about China or any other country saying they want to supplant the dollar doesn't understand economics because they don't want to be America. They don't want the problems that America has. Right. Okay. So these capital control, and these capital controls, by the way, can they be executive order, just like the way terrorists are?

I'm not sure. So then depending on what the flavor of the control is, is, you know, what sort of power is the president or Congress? I have no idea, right? So they'll figure out a way. It'll be a pick and mix of things that they want to do. and then depending on how things are tax, capital will flow in and out of certain types of assets. I'm wondering what you think of this. So this is another Russell Napier take. And I've been kind of digesting some of this content recently. So sort of absorbing it, you know, like partially for this conversation. So he thinks, like basically capital controls and financial repression will be a hallmark of this new monetary structure primarily, you know, emanating from the U.S. Because as you said, other countries, many of them already have some strict capital controls. He thinks that the things that you'll see prior to strict capital controls in the U.S. are, like, number one, some sort of trigger event. So a spike in T bill yields or something like this, right? where I believe like 4.5%. I'm not, that seems like maybe for Bessent, that's uncomfortably high.

But like, imagine if that shot up to 7%, 8%, I don't even know how that happens, but that kind of a trigger event shock, maybe that's a catalyst for this. And then he sees the first thing that you'll see is actually you force domestics to buy government debt, right? So all of the pensioners and pension funds will now a percentage of your portfolio has to be allocated to some sort of government bonds to treasuries or something like that. And then the third piece is like the nuclear option he called this, like, you prevent foreigners from taking any money out of your economy, you kind of like you trap them. And so it's those three things that like really happen

on the capital control side. What's, what's your take on that? I think, and I'm, this is my prediction in the essay that I'm about to write, is that they'll basically put a user fee on it. So, you know, Trump when I made this statement, hey, tariffs are so good because I'm, I'm going to eliminate the IRS for the bottom 90% of taxpayers. So I looked at the data in 2022, 90% of American households paid $600 billion in annual personal income taxes. So let's say, if you can make $600 billion from either tariffs or capital controls, you can eliminate income taxes for 90% of Americans. And then he can go with the political message that America's not paying for this, the foreigners are paying for this. Evil foreigners are paying for.

We fuck them up. We know, no more IRS for 90% of Americans. that is a winning political strategy, right? Sure. So you can do it with tariffs again, but you get the bad effect of immediate, you know, empty shelves and high goods prices, or you can do it with capital controls. And so, you know, the portfolio account of foreign assets in the United States is about $33 trillion. So if you put a 2% yearly tax on that, it's about $660 billion of income, no more income tax

for 90% of Americans, right, paid for it by the evil foreigners. That's a political message. I think that's a lot more palatable than, you know, trying to figure out a way to stop capital from coming in and dealing with all the legal challenges that that'll entail or all these other things that other people are suggesting. Not to say they won't happen, but I think this is an easier in a political layup in terms of a win. You know, 2% tax on foreign capital paid every year, whether you own stocks, bonds, or property, and 90% of Americans do not pay income tax anymore, right, paid for by foreigners.

What about this idea of forcing, like, domestics to buy more government debt? I mean, that'll happen eventually for sure. But I think the easier lift without pissing off, you know, people or certain types of people who might be very large campaign donors is let's just make the foreigners pay for it. I see. So you're putting it through this like political lens too, right? It's just basically like it has to be a passable policy to like to remediate this imbalance, but then also has to be politically popular. So we get elected and reelected. I guess that makes sense.

I mean, what does that imply, though, for, I guess, I mean, what that implies for, I guess, I mean, what that implies for a treasure. is that it erodes as the World Reserve currency asset. But I'm wondering if this is another effect might happen, which is U.S. capital flight, like everybody exits U.S. capital markets. We had in the days following Liberation Day, we had this like weird effect where the dollar was down, you know, stocks were down, treasuries were down, but yields were up. And gold was like freaking mega up. Okay.

And, you know, people like Larry Summers were saying, hey, this is U.S. capital flight, basically. They're all the capital's leaving our markets because, and what Summers would say, right, again, old regime, the old, you know, Petra, Petra 1 dollar type guy. He said, we're an unreliable partner. So, and we're untrustworthy. You know, and some non-Americans were saying things like, hey, is it actually safe to keep my property domiciled in the United States of America? It's like, if you do something like that, the capital controls and you put the tax on foreigners, as you said, like, don't you face repercussions of, just capital exits U.S. shores and S&P goes down and you just get some of the effects that we saw post-liberation day. Absolutely. And that's the crux of why this is the best thing that could ever happen for crypto, right? Because what do we know what happens anytime the markets go down? So by definition mathematically, if you want to reduce the capital account surplus, foreigners must sell stuff. And because it's foreigners parking trillions of dollars of export earnings into American markets that is basically the basis for outperformance of American property,

stock and bond markets over the last 30 years versus the rest of the world, then mathematically they must go down if the foreigners leave or even a little bit of some of them leave. Maybe they don't. They say, I'll pay the 2%. Cool. Whatever. I can keep exporting and blah, blah, blah. But if a few people on the margins start leaving, then you get, you know, April

2nd to April 9th again in terms of a situation. And so, again, what do we know happens whenever the markets go down, especially the bond market and volatility goes up, they print the money. And so the consequence of capital controls is that the Treasury of the Fed and politicians must all do their part to create policies to provide dollars to replace the foreigners who are leaving. And they're just going to print them. And the consequence will be gold and Bitcoin go through the roof. And that's the trade on this sort of rebalancing of the global economy. I mean, it's really that simple, right? It's basically saying, hey, I can't trust my property in the United States.

I have to withdraw. It's not even trust it. It's like, hey, if it costs me 2% extra, let's see the difference between a $10 year treasury and my local bond is 2%. Right? So, okay, now it's a 2% cost. So now I've neutralized the yield pickup that I get from owning a treasury. and I'm afraid that my domestic currency is going to appreciate because other people say this is not a good trade anymore.

Let me sell my dollars come back home. And now this unhedged, effective carry trade that have been running, which the whole world is running against the United States, short their own domestic currency, long the dollar. This is a global carrier trade. As that unwinds, then I have to sell. I have to sell my treasury, have to sell my property, have to sell my stocks. I have to buy back my currency to eliminate the long. losses that I'm going to face domestically, whether I'm a corporate who has

a report in a non-dollar currency or I'm a pension fund or an insurer who has reached for yield abroad and taken this bet or I'm a central bank or I'm a sovereign wealth fund. Everybody is short their own local currency

long the dollar. So the whole world has to basically unwind this trader, even a little bit of this unwind is going to be very painful for a lot of, you know, non-U.S. institutions who are running this carry trade. And that is what we kind of saw last early week of May when Taiwan dollar South Korean won, you know, went up, you know, five and ten percent over a three-trading day period. And these are manipulated, controlled currencies. So the fact that they strengthened that much means that the authorities are not stepping in

to sort of keep the system the way it is and are sort of accepting that things will change. So this is happening exactly what you said. Capital on the margin is saying, hey, I'm going to face the tax, and it might not be beneficial from a financial perspective. My returns are going to be diminished. Let me just get out now before everyone else decides when they see the actual legislation, now I get out, right? That's a wrong time to sell. Right now is the right time I sell.

Take your humble pie. You ate a bit of a loss. Cool, whatever. But you do not want to be selling when this actual capital control gets passed or executive ordered or whatever you want to call it. Then you're getting fucked. Okay. So when the new capital controls drops, like if you're right, right, we're going to see a massive

continuation of dollar down, maybe stocks down. It's hard to know. Stocks have somewhat recovered, but maybe stocks down, treasury is down. Again, gold up, Bitcoin up, crypto up in big ways. That's the base prediction. Right. And I think, again, we have to get the money printing, right? Gold is obviously very attuned to this. I think crypto, people still think this is a high beta NASDAQ. So there might be a bit of a correction in the crypto markets as people sort of like appreciate that this is what's actually going on, similar to how crypto crash with the NASDAQ in the first half of the Liberation Day tantrum and then sort of started outperforming as it became clear that bond market volatility dysfunction means money printing. And so then those sort of decoupled,

we're going to have to learn that lesson again, right? We might be from a higher level. It might be from, you know, 200,000 down to 150 or 125,000, you know, painful correction while we learn that lesson again. But we'll learn that lesson again. All right. Let's come back to global liquidity in a second. but before we do, just finishing out this monetary structure thread. Okay, so, I mean, it's possible to predict the future, but how do you think this whole thing ends? So if treasuries are no longer the world reserve asset, the question is like what is. You know, I've heard people like Russell say probably two systems. There's probably not like one system that is strong enough to replace it.

Like the one is not strong enough at this point in time. No one wants to store value in it. They have their own capital controls. You know, treasuries diminish. And so we're probably looking at like a Chi America detente of some sort. It's like a dual monetary system where you have like a U.S. block. It's like U.S. and friends. And, you know, the dollar remains like the currency for medium of exchange,

maybe not store of value, but it's kind of a reserve anchor except with like this revision of capital controls now. We have much, it's no longer open. It's not like it was in like, you know, 2020. And then you have a China-led block. And maybe what China really needs to do is bolster. it's store a value. Okay, so maybe it needs to go hoard

and acquire a whole bunch of gold. So maybe it's like gold-backed R&B or something like that on the other side of this. But you have these two blocks. You have the U.S. and friends. You have China and friends. You have this dual monetary system. What do you think of that take?

Yeah, possibly. I mean, I think at the end of the day, the higher level thing is if I've got a piece of capital that I've made from doing some sort of global service, do I really want to bet on any, on either system? Like, you don't know what's going to happen. Why bet on either system? When I can say I'm going to hold my money in gold or Bitcoin because then I'm not big

and I'm not taking a bet on either system. But I know that either one of these can move between systems as in when I need them to move. And that's really, I think the real macro take here is that like if you are concerned about the preservation of your capital and access to be able to spend it in the way that you want, the only thing you can ever own is gold and Bitcoin. Because whether you're Chinese trying to invest abroad or American and trying to invest abroad or a European trying to invest abroad, there's going to be all these restrictions. We don't know what they're going to look like today.

We know they're going to be there because there's no way that any of these national governments can afford to rebuild the entire global supply chain that China built for the world over the past 30 years without massive inflation and massive capital repression. So like why would you even try to predict what's going to happen? Just say, okay, cool. I'm just going to own my goal. I'm going to own my Bitcoin. I'm going to sit back. I'm going to watch and I'm going to react from a place of strength rather than reacting from a pace of weakness. of, oh, shit, that dollar, you know, yuan or euro or a yen than I had, I thought I could,

you know, buy whatever I wanted to buy. And now I've got to buy this dollar shit piece of shit government bond. You just got to be short bonds, I guess, in this case. But there's just no reason owed bonds. Absolutely no reason at all to own the government bond buy. So many people, that's the common thing. I mean, so many, like, pension of all, all these are 60-40. There's so many bond buyers out there. They're just going to be bagholders. They're just going to be washed. Yeah, those are the bagholders. And they'll be regulated bagholders. Okay, yeah. You want to, sell? Well, you can't. Here's a $5 million dollar your salary to not sell bonds and fuck over

your clients, but you can't do it because you're a fiduciary. I keep wondering if I'm missing something with this like own zero bonds thing. And I just like don't think I am. I just think it's like institutionally, structurally, they're all oriented to like own bonds. And so that's what they do. It's just like not. I mean, I guess that's a huge opportunity for individual investors who can just like mandate control of their own capital, right? Because they can get way ahead of this and they could just front run the obvious thing that is about to happen. Correct. Like, you just don't buy bonds.

I mean, at some point, if you can, right, so if you have a retirement account and they've mandated that you can only own bonds, well, then that's what you got. Sorry. Right, right. I mean, like, I know you trade. So I'm sure you, like, go back and you hold, you know, treasuries or dollars. It's just some. The only bonds that I hold are T-bills, because the T-bill is basically a high-yielding cash

deposit. The banks don't pay you enough money. T-bills are basically a cast substitute. Everybody loves T-bills. Foreigners, U.S. private sector, but nobody wants to own the long end of any government bond. But you're not storing your value in T-bills at this point. It's kind of like an interim

currency to just like deploy into the next market opportunity, basically. Okay, is there any like case for just the crypto fantasy land where like, okay, the next reserve currency asset is actually cryptocurrency, is actually something like

like Bitcoin, right? So like just skip the gold phase. Why are we talking about, you know, a U.S. treasury thing and, you know, China backed in gold? Maybe it's just Bitcoin. Do you think that could actually happen or is that just crypto fantasy land? I think that's crypto fantasy land because if you think about what's the median crypto person, probably like a 35 to 45 year old person, 30 to 45. Yeah, they're not running things yet. Yeah, exactly. None of us are running shit. You might think you are because you have a lot of money, but you don't run shit. So human civilization understands gold. Central banks understand gold. You know, they might not have owned a lot of it pre-2008 versus historical periods, but they understand gold. And so gold will be the, you know, neutral reserve

acidity like it has been pretty much the most of civilized human history. It's just for the past, you know, 100 years that it really hasn't been. So I guess don't see the institutions ready to own crypto just because that's not what they understand. Do you think as part of this, the S&P takes a big hit, right? So, You know, obviously, no. No. S&P goes to $10,000. But goal goes to $50,000. Why? It's like your thesis is like buy everything. Okay. Like your thesis is kind of like, except bonds, obviously. Correct. Okay. There's a macro trade, which is money printing will happen. Okay. So I have a unit of Fiat. I got to decide. So your goal as an investor or, you know, is to maximize how many units of Fiat, what you have bought is worth. So maybe the stocks go out 50%. but Bitcoin goes off 500%.

So if I wanted to maximize the number of units of Fiat that I can then buy units of energy with, then Bitcoin was a better trade than stocks. Not to say that stocks didn't go up, but they didn't go up as much as Bitcoin. So I shortchanged myself in energy purchasing power of a unit of Fiat if I believe in this construct. So yes, stocks will go up.

And if you can't invest in crypto, and a lot of people can't, don't go short the stock market. don't go into fucking 10 and 20 year bonds because some fucking dumbass high net worth Muppet told you, oh yeah, this is good yield. No, fucking buy NASDAQ, buy S&P, you know, buy your local domestic stock index. Don't buy bonds. Yeah, there's no way it's going to be good yield.

What's your take? Do you think this financial repression could get worse? I mean, so it's one thing, yeah, for somebody's living in the U.S. if sort of the foreigners have to pay, right? But it's another thing if capital controls sort of come to us in the way maybe they're China, maybe they're in some other countries. You know what I mean? Like, worst case scenario in U.S. history that crypto people always talk about is the FDR executive order, which is like, you know, sell your gold basically back to the U.S. government. Do you think this cycle, it gets

into that territory? Like, do we have to be worried about any crypto assets that are custodied? Too many people, you know, you did have the internet and sort of mass dissemination of information back in the 30s and a lot more, I think, implicit trust in the government. I just don't think they can run that a play again like they did. Nor they did, nor do they really need to, right? Because you have all these fiduciary pools of capital of people who have to do what the regulator tells them to do because that's how they have a license. And so why go through the socially, you know, destructive thing about saying, oh no, your capital, your property is not yours, blah, blah, blah. Let's just, you know, change regulation 15,001 to you can only own government

bonds, boom, you've achieved the same thing. Your retirement account is only in treasuries. Your pension account is only in treasuries. Your university endowment is only in treasuries. Okay, cool. I don't have to like try to fuck with property rites of like gold or Bitcoin or any of those other stuff. Yeah. Let's talk about Scott Besson for a minute here. Like, what's his job? Is it, is his job really to sell treasuries? And like if treasuries are such a shitty deal, like who is buying them? Because it seems like countries are no longer. are buying them. I mean, like, over the last 10 years, I think as a proportion of supply, treasury supply, like foreign national countries, purchase of treasury is down like 17%. I mean,

other things, it's kind of flat. So how are you to entice countries when you have capital controls to buy your treasuries? I guess maybe you sort of bully them. You were talking about, you're going to the Bank of Japan, basically saying, hey, yeah, buy this 100-year like bond or something like that. But like, where is Scott going to find all the treasury buyers? He's going to find in the U.S. commercial banking system, he's going to find it the Fed, and he's going to find it in U.S. retirement accounts. That's who's going to find it. So I think, yeah, maybe in the back end they're, you know, they've tried this like, hey, take this 100-year bond and people like, fuck off, dude, not happening, right? So, and then he's got to go to the harder thing is, okay,

well, well, not really the harder thing. So, you know, let's take the Fed, right? Supposedly Jerome Powell is this like anti-Trump zealot who, you know, try to help Kamala Harris when the election by cutting rates in September of last year and all this kind of stuff, right? And then he's like, I'm not leaving the Fed. I'm going to stay the chairman. I'm fighting inflation. You can't fire me. Yeah.

Yeah, all that shit, right? That's all kabuki theater for people who don't understand what's actually going on. It's really a good chart that I saw that Luke Roman posted from. I forgot who was the actual author. But it basically showed the Fed's balance sheet in the bucket of 10-year and above maturity bonds. Now, supposedly the Fed is supposed to be doing quantitative tightening, which is reducing the amount of bonds on their balance sheet. And the Band-Dade is to do that on a net basis. So every month on a net basis, the balance sheets shrinks, the amount of treasuries that they own.

But the mandate does not tell them what buckets they need to have. It's not an even reduction of their balance sheet. So what has the Fed been doing behind the scenes? They've been buying 10-year bonds. So they've been doing quantitative easing within a quantitative tightening regime to help Yelen and Obescent keep that 10-year yield down. So as much as, you know, people were freaking out about a 5% treasury 10-year treasury yield, you know, back in early April and I wasn't now at 4 and a half or whatever it is, right? That's with the Fed doing QE in the 10-year bucket.

So Powell's there. He's going to do what he needs to do. He's going to do his duty and, you know, provide the monetary easing that the Treasury Department needs to do its job to fund the government, regardless of what he says in public or regardless of who is in charge, whether it's Powell. or Kevin Warsh at the next chairman, whoever the fuck Trump chooses in the Senate confirms in the United States. It doesn't matter. They will do what is necessary to fund the U.S. government because that's really their goal. It's not to preserve the value of the dollar.

It's to preserve the empire. And so I think people get lost and all this Fed speak of like inflation and this and that. But when you dig down and actually what they're doing, they're standing ready to provide the money necessary to fund the government. So the Fed's going to do what they need to do. What do they need to do? They need to stop QT. Well, that's pretty much done for Treasury.

It's just only $5 billion a month. They need to restart QE. If you look at the large commercial banks, basically, you know, Jamie Diamond and his cabal, they said that quantitative easing will start in 20206. This is the chart that they have in their presentation to the Treasury. So they believe, and these are the most powerful bankers in the world, who literally control the government,

that quantitative easing is starting in 2006. And they have a chart publicly available. Anyone from the Internet connection can look at this chart and say, oh, Jimmy Diamond thinks that quantitative easing is happening, starting in the middle of next year. What Jamie Diamond wants, Jamie Diamond gets. And so we're getting quantitative easing next year. Regardless of what the fuck Fed Powell or anyone else is telling you right now about how they're going to fight inflation, quantitative easing is coming back. So you think this whole thing around the Fed funds rate of like Powell refuses to like reduce

the funds rate and Trump, even another tweet today is like telling Powell to go like you should reduce the interest rates. You should have done this long time ago like basically saber rattling. You think that's all theater. Theater. Doesn't matter. Right. Like the interest rates don't matter. The price doesn't matter. The quantity is more important than the price. If I'm going to give you infinite quantity of stuff, the price is irrelevant.

And that's already happening? Is QE already happening in a way? In certain buckets. In certain buckets. Okay. But we're no longer in a QT regime. Right. We're in a net QT regime.

Cool. But on certain things we're doing QE. Certain things we're actually purchasing bonds and helping the Treasury keep this yield. You know, best said, my focus is. the 10-year treasury. Okay, cool. Paul is it out there buying bonds, right? There's, you know, talk about the supplemental leverage ratio, which is essentially a way that banks can have infinite leverage when they purchase treasury bonds. That will happen. That's a Fed decision. And we'll get the banks behind that and the banks will front run the Fed. The Fed says, I'm going to buy this.

Big said, great, I'll buy it first. Then I'll sell it back to you. I'll earn a profit and pass it on to my shareholders. Happy days, right? My stock price goes up, right? That's literally what QE is. And so these are the people who are going to buy all the treasury bonds that the foreigners aren't buying because, you know, they're in this regime of let's reduce these global imbalances. So the money printer is the lynchpin. Because without the money printer, then the consequence of the Tri-America divorce is very, very severe. COVID-level pain kind of severe. Well, I mean, the COVID down there in the market lasts of, what, a week was over when they sort of, you know, infinite money printing. So again, there's just no appetite for that. And no politician, whether

they're Republican or Democrat in the United States, is campaigning on austerity, or let's go back to the pre-Fedder Reserve situation where there were booms and busts and the amount of credit supplied and businesses got overextended and then they went out of business during the panics. That's not the system that the American politicians nor the voters are voting for. So we can take that situation. We can take the Argentina, type, you know, melee austerity, shock austerity situation out of the picture for now, which is the major risk to this whole thesis about the money printing crypto going to a million or Bitcoin going to a million dollars and that kind of stuff. That's the risk to this strategy.

Wait, why is that the major risk? Because if they're going to end to extinguish the credit, the thing that's been driving the price of Bitcoin, then the nominal price of Bitcoin could fall a lot. And then it's a question of whether it retains enough real power versus, you know, say, oil prices or something like that, right? So you could have SEP down 75% Bitcoin down 60%. So on a net basis, yeah, it did outperform, but everyone feels like they got wrecked. And then the question is, did I outperform or did I keep maintain purchasing power versus oil?

That's an open question. Wait, and do you think that is like a possibility here? Do you a possibility if they stood back and they didn't provide the money printing? That would happen. Which they're not going to do. Because again, through the political lens, there's no way they can continue to get elected. That's the bet that I'm making. Imagine a world where your day-to-day banking runs on a blockchain.

That's exactly what Mantle is building, powered by a $4 billion treasury and poised to become the largest sustainable on-chain financial hub. As part of their 2025 expansion, Mantle is introducing three new core innovation pillars that bridge traditional finance with decentralized technology. First is their enhanced index fund, aiming for $1 billion in AUM by Q1. It provides optimized exposure to Bitcoin, E, Solana, and USC, complete with built-in yield opportunities. Next, Mantle Banking promises to revolutionize global value transfer through seamless blockchain-powered banking services, bridging crypto into your daily life. Finally, Mantle X blends AI with Defi to deliver an intelligent, user-friendly experience for everyone. And the best part is that this is all in addition to their already launched products like Mantle Network, ME, and FBTC. Ready to step into the future of finance?

Follow Mantle on X at Mantle underscore official and joined the on-chain revolution today. Have you ever imagined Bitcoin and Ethereum truly working as one? unlocking the full potential of Bitcoin Defi and more. Meet Hemi, a groundbreaking modular network designed precisely for that vision. Co-founded by early Bitcoin Core Dev, Jeff Garzic. Unlike other layer twos that treat Bitcoin and Ethereum as separate silos, Hemi connects these giants into a single, powerful super network. With Hemi, users gain unprecedented asset portability and possibilities,

combining Bitcoin security and value with Ethereum's versatility. Hemi's unique innovation, the Hemi Virtual Machine, integrates a fully indexed Bitcoin node directly into an EVM, enabling daps that seamlessly interact with both networks. And with Hemey's proof of proof, or POP consensus, users benefit from truly decentralized, censorship-resistant Bitcoin-level security. Since its recent mainnet launch, Hemmy has rapidly ascended the ranks as one of the top Bitcoin chains. With a thriving global community and robust ecosystem support, Hemmy isn't just building a network. It's shaping the future of Web 3, Defi, and Beyond.

Visit hemmy.xy-Z slash banklist to learn more, discover ways to interact, participate in the leaderboard program, and be part of the community that's uniting Bitcoin. and Ethereum. Right. I mean, that seems sort of a bet that goes with the flow of everyone's incentive, at least in government. Okay, so when it comes to Scott Besson's job number one, which is to

sell treasuries, maybe Powell and crew are going to be his number one customer. How about stable coins? All right? So there was Bessent last week. I think he was in front of Congress. And like you can see like the U.S. government, or at least aspects of it.

This is like completely 180 from Janet Yellen, at least with respect to crypto. And he was talking about, you know, $2 trillion in, I think he was referring to like, you know, treasuries or dollar denominated assets on blockchains, you know, for the next couple of years. Standard Charter just came out with a report, you're projecting 2028 stable coins at $2 trillion. And then you get that level of stable coins and treasuries. Then things like tether, things like USDC, like the stable coin market cap starts to become like the number one holder of U.S. treasuries, like above Japan, above China.

Like, do you think that Besson is actually thinking that, hey, like, crypto users might be somebody I can sell my, my bonds to? So, I mean, yes and no. So, yeah, Chether owns, it was like, however many billions of treasury bonds. What are they own? They own T-bills, which is not exactly what they need them to own. if you were being like the perfect scenario of, you know, crypto basically providing this out for the government

to determine how to sell treasury bonds. What they need is for Tether to own 10-year bonds, 20-year bonds, 30-year bonds, century bonds. Not the short-duration stuff. Everybody wants the short-duration stuff. There's no problem with the short-duration stuff, right? It's basically a bank deposit, right? That's underwritten by the U.S. government.

Not a bad thing to have. But that's not helping, Bessent. That's not help. It didn't help Yellen either. Right. What would help them is to have their own 200, a billion dollars worth of 10 year and above maturity bonds. But why the fuck would you want to own that? So yeah, I get that they want to use stable coins as this sort of Trojan horse to essentially

take all the world who wants a dollar bank account. Maybe their government isn't really so on board with all this private capital basis to be funneling back to the U.S. when we're supposed to be having this divorce or this change in global monetary system, which is what tether is, right? It's basically exportation of dollar hegemony because if I'm in, you know, bumblefuck, Indonesia or the Philippines, whatever, I don't have a rupee or a peso in my digital wall. I've got tether, which is essentially a treasury bond. Great. Which is, I mean, I don't know why the Democrats, you know, poo-pooed Facebook trying to launch Libra. That was the dumbest thing they ever did. If you, you know, if your job is to preserve the empire. It seemed like it was power struggle.

It seemed like it was just like we hate Silicon Valley, big tech, right? Just like, yeah, whatever. But at the end of the day, right, stable coins are a great way to give dollars. to the rest of the world and have them, you know, buy this asset. Now, I think if they really wanted to make this a force for buying bonds, then they probably have to put some legislation in that forces tether and tether-like structures to buy the long end and not the short end. I wonder if they're doing that. Are they doing that?

I don't know. I am not really super included in on all the different legislations, things in the United States on how they're thinking about that. But if this is my, you know, coup de grace on how I was going to use, stable coins and crypto adoption as this like throzen horse to get people to buy my bonds, I find a way to mandate people to own the 10 year and above bucket, not the thing that everybody wants to own. No, the amount of foreigners owning T-Bowls has gone up.

The amount of private sector of U.S. people earner T-Bowls has gone up because it pays a better yield than the banking system. It's the least shitty bond. Yeah. But not even that. It's a bank deposit. It's literally just a bank deposit. It's cash.

So like, yeah, everybody wants it. Everybody wants a 5% yielding piece of cash because no bank in the law. world offers that. So that's not helping you. The whole thing of issuing more bills at a higher rate than bonds, which has been started under Yollen and has continued under Besson because of no other choice is not helping the situation. Because if interest rates go up because, you know, nominal GDP rises as manufacturing returns all over the world and bank credit flows to these manufacturing companies, then the shorting goes up. And you have to refinance these things every fucking six to 12 months. So you have a ticking time bomb in the amount of time.

bills that are owned because the rate's going to reset higher and, you know, I think they're spending one and a half trillion a year now, whatever it is. That just goes exponentially higher. So it's just, it's a bad state of play having all this issuance in the short end. What they need is it in the long end. What about this broader take of, you know, Trump being the first pro-crypto president, talking about making America the crypto capital of the world. I mean, like, certainly this is like a complete change from the previous administration and any administration, like even Trump v1 that's been in office. I mean, you've certainly been on the tailwind of some, you know, regulatory sticks, right? As have others in crypto, like, is this a meaningful change or is it like all talk? Do you think

do you think this is part of the bullcase for like crypto right now, which is like the U.S. loves it? I mean, I think I take a bit of a higher level thing. I think what we see now is there's a lot of these bills out there or proposed bills to regulate stuff, however that's going to happen and provide regulatory clarity, which is what everyone has been clamoring for, at least in the West. I think that it obviously makes sense if you're Brian Armstrong or Larry Finkar some of these folks who own large centralized companies that make a lot of money from crypto, that you want to basically have a regulatory moat around around your business. And the Democrats weren't going to give it to you. Now, you know, Trump is, you know, David Sachs are saying we're going to put some legislation in place

and help all you guys out, right? Which is nice if you're a coin-based or BlackRock. shareholder. But if you really want, if you really, if it was up to me, which it isn't, and you said, okay, your goal, Arthur, is to make America the best place to have crypto and attract the most people, foreigner or not to be in America to do crypto, then you do what you did with big tech in 1996. You basically allow permissionless innovation. And essentially, there's no rules other than don't defraud people and don't steal their money, right? And so there are no licenses for exchanges. There's no stable coin bill. There's none of that shit, right? It's just, you want to build something. building, build it. You had a product that works? Great. Open playing, fill. Anyone can come here and do that.

So your team of devs, 10x devs, you want to build some new financial product. You don't feel safe wherever you're based around the world. Well, come on over to America. Here's a visa. Go build your thing. Right. And what happens? You create a nice token or whatever makes you wealthy. You buy a house, buy a car, go to a nice restaurants, spend money, blah, blah, blah, right? And so you create this ecosystem of people who feel safe, innovating, and building products, and capital markets form around it because now, you know, there are no rules other than don't steal. And so now the token prices of all these things just, you know, go through the roof and everyone's rich and they're spending money, right? And that's essentially Silicon Valley to the American system from

1996 until the president. You can replicate that in, I know, 100 words of a bill in terms of versus the 10,000 thousands of words and hundreds of millions of dollars are going to be spent on lawyers and consultants to basically ram through some bills that benefit Coinbase and BlackRock. That's my take on. Now, is that better than it was under the Democratic regime? Sure. But is it what crypto and all these people who are donating to these politicians and these political act committees, if they're American, should really be advocating for?

Absolutely not. They're not leveraging the political moment that they have right now. Trump doesn't have an ideology around Trump. crypto. He just wants to win. And if you say, do this and you win, then he'll do it. But if you say, okay, all I'm going to do is support Coinbase getting richer and, no, now they're in the SCP 500, nothing against Brian. He's doing exactly what he should be doing as a CEO of a public list of company. That's just not what's going to benefit the most amount of people globally. If your goal is, I want America to be the home of crypto as it is for Web2 tech. Again,

it's depending on which goal is. That would be amazing. And I wish that was the goal. It just seems like the government machine is not structured and scented toward goals of just like growth. It's more like goals of control. They get other people kind of lobbying and just pushing for things. Well, I think, yes and no, because who's at the table now? It's all, it's the ripples. It's the coin bases. It's the black rocks. It's all these large, very wealthy singular individuals or projects or companies. And their base is saying, let me put a motor around my business so I get even richer. Yeah, they're going to do regulatory capture. Which is exactly what they should be doing. Sure. But they all have clients. Their clients are the listeners on this podcast, right? Yeah. So tell Brian, tell Garlinghouse, fuck yourself. Let's go and do something that's actually going to benefit crypto and not just your bottom line. But you have that that's, that's from the users perspective. That's what has to happen. Don't support these policies. That's a very defeatist attitude to say that government is just under control. No, they'll do exactly, whatever, you know, the people say that they want. Right now, I guess saying, okay, let's let's let Brian go up into D.C. and put a suit on and tell him how he's going to basically put.

a motor round is brokerage exchange. Okay, cool. That's what you're going to get. That's a really good take regulation, Arthur. Let's go back to global liquidity. So you're talking about Q8, QE coming, you know, 2026. Global liquidity, you said elsewhere, all you care about is global liquidity. That basically, like, is the trade. Like, why is global liquidity just like the one thing to look at when you're evaluating, you know, just macro and crypto assets and like, what are the key indicators that you take a look at, that you just like, that tell you what's about to happen. Yeah, so my guiding light behind the value of crypto and it, let's just talk about Bitcoin because that's really the thing that I care about the most. So what is Bitcoin? Bitcoin is

technology plus liquidity. So technology, does Byzantine fault tolerant blockchain work? There wasn't exactly a given in 2010 or 11, right? And that's a thing that's a given now, but it's a lot more given than it was then. And so the amount of changes in the Bitcoin core have kind of ossified very hard to get something, very hard to change Bitcoin for good and bad reasons. And so then the technology isn't really changing much. It works. You know, we're sending, you know, it's worth a few trillion dollars market cap. Then the question is, okay, well, how many units of fiat are chasing a new store of value, a new means of transferring value, a new means of determining who owns what? So that's what I focus on. That's the only thing that matters.

And that's the best thing about Bitcoin is I don't have to care about earnings and discount rates and all these other things. I'll care about, well, how many years of the fiat were they yesterday? How many will they be tomorrow? Where do you see that? Is that like M2 or something? Like what are the kind of the charts that you just like really hung in on? I mean, I sort of break the world down on sort of four buckets. You have U.S., China, Japan, EU.

And then look on sort of like a holistic battle, like what are they doing, right? So taking the United States, the key index that I really look at is excess reserves at the Fed. plus other deposits and liabilities from the banking system. And these are basically a proxy for bank lending and the amount of deposits that the Fed is creating through QA quantitative easing that the banks have to park with it. And so that's not technically M2, but these are the two places where credit is going to emanate from. And so, you know, M2 can get in all sorts of philosophical debates about what should and should

not be included. But at least I know that every week the Fed publishes both of these statistics and I can add them up and chart them. And then you have to look at, okay, well, how, what's the, what's the, what's the policy of the finance ministries, are there pockets of sterilized money sitting somewhere that they're going to incentivize to leave sequestered balance sheets and come into the global financial system? And that's sort of the reverse repo trade of 2022 to 2025, which is there's $2.5 trillion in this sterilized facility at the Fed. Jeline analyst said, I need to pump the markets.

So I'm going to incentivize that money to move off the Fed's balance sheet and into the global markets. The analogous situation today is Besson says there's all these old bonds sitting on dealer balance sheets, I need to free up those balance sheets so they can relever the system. So I'm going to do Treasury buybacks where I issue a new bond and do those proceeds to buy an old bond. So that's why Treasury buybacks are liquidity positive for this system. So I look at things like that. So it's not exactly one metric that I look at because, you know, at the end of the day, the authorities don't want you to front run them in this journey that we have on, you know,

inflation writ large. So they're going to change up. is not like 2008 to 2019, where it's just QE, QE, QE, QE, QE, okay, what is the Fed saying? I do that. I buy stocks every week when they do their purchases. I make money, right? That was then.

Now we're talking about what is Yelan saying? What is Besson saying? What's the quarterly refunding announcement? What's the monthly deficit of the Treasury? So we have to look at different things because they change up. When you get to China, obviously, it's a lot more difficult because the quality of the data and what you actually receive. So it's really less like, okay, what is the fiscal impulse?

what are they spending? What is the PBOC saying? What's the goal of the party? And they'll, you know, they pretty much tell you what they want, what's going to happen there. Japan, bake of Japan, are they easing, what are they buying? Are they buying bonds? Are they not buying bonds?

Where's the yen at? That's just a carry trade situation. And then EU is sort of like a mini United States, right? So what's the ECB saying? Are they buying member country bonds? Is the baking system lending? Obviously we have all these like rearmament provisions in the national budget, like in Germany.

So I don't really have a one number because I think if you use one number, then you're going to be wedded to a past situation, which might not be the future. And again, the policymakers are trying to not have you front run them too aggressively into this inflationary writ large trade. So they're going to change up. The nomenclature is going to change. The methods are going to change if the public hates inflation. So if the public equates quantity of easing with inflation and you're a politician pushing quantity of easing, then you don't get reelected. So I can quantity is a bad word. QE is like the dirtiest word you could ever.

Because even some Muppet on the street in America knows quantity of easing means inflation. Afflation means bad. And when bad things happen, I vote out the incumbent party. So no more quantitative easing. Do they call something else? They do it differently. What are your indicators saying right now and like what are you what are you prepping for? Basically do these liquidity explosions or just like liquidity things happen in cycles, right?

Is it just like kind of a, you know, two to four years cycle? Does it tend to happen? Or is it somewhat stochastic and random? And like what are the indicators right now saying? It seems like you're implying, you were implying early in this episode that we're about to enter with the early stages of entering another liquidity expansion, global money supply expansion. But that hasn't quite started. You're not seeing that in the indicators yet, but it's maybe at the very beginning. And like, where do you expect that to go? So, I mean, obviously China and the U.S. are the biggest players here. China has went on the largest expansion of debt in the fastest time in human history. And they know that. They know it's a bad thing

what they've done. There's been a massive misallocation of capital. And they're very reticent to increase the money printing machine to the levels needed to really reflate their economy. And that's why you've seen sort of a moribound property market and a stock market in China. Xi Jinping does not want to do what they did in 2009 and in 2015. He's not going to just go, you know, balls to the wall printing money. So China's kind of in a box right now. that's risky for him. Instability. It's not instability. It's just like it's a bad use of, they know, they know that this money will get misspent. And so it just makes things worse. So if they're in a box right now, they're not really participating as much as they could be.

Then the United States, which is the most to lose and therefore the most to protect by printing money, that's who I'm really focused on. You probably, you know, the tone of my essence is a very US-centric versus, you know, probably two or three years ago was more China, Japan focus and and what's going on. And in the United States, the authorities react almost immediately to the move index, which is a bond volatility index. When that goes over 135 to 40, there's an immediate policy response. On April 9th, I think it was, it went from 130 something the day before to 172-intra-day, immediate policy response. Jamie Diamond goes on CNBC, and says Trump, you're a fucking idiot about these tariffs. Trump backs off, 90-day pause. Best it gets on TV,

a few days later in Bloomberg, so they've got this big ass dick called the Treasury buyback, so don't fuck with me. Immediate policy response. And so that's what I look at. What's the move? Okay. And then now, as you've seen, April 9th was the bottom. Move is trended downwards.

So this, you know, Treasury yields are now, I don't know, one of four and a half. I'm looking at my screens or whatever it is. If that keeps ticking up as foreigners start to say, yeah, I don't think these capital controls are good for me. Maybe I should get out now while I still, you know, still can't have some profitability, left and that starts, you know, inching up towards the 5% level, we're going to start

see volatility creep back into the bond market. And then, then they're going to get religion again. Okay. I had, I told you I got these surgery buybacks. I told you I got these treasury of buybacks. Well, let's see it, Scott. Let's see the fucking dick. He said, whip it out and he's going to start doing more treasury buybacks, right? Powell is going to, you know, he said he's going to do balance QT, which basically means he's going to let the MBS roll off mortgage back securities. And then with those. proceeds is going to buy treasury. He said this at the March FOMC, right? So we've got

Treasury QE, net Curator QE already baked, already flagged. So the next time the move gets to 140, I expect at a subsequent Fed meeting for them to move to essentially outright treasury QE across all buckets funded by mortgage-backed security

maturities, right? That's when the move index comes down again. And then the foreigners sell more and the move in and it comes back up. And then they come back with another policy, right? So it's kind of this like ebb and flow, ebb and flow. And, you know, obviously, crypto we have this expectations, right? And so if the, if the expectations get too out of hand versus the reality of what's going to happen in sort of the next three to six months and sort of policy, then we get these nasty corrections, right? So everyone expected Trump to save the world. Maybe he will, maybe he won't. But it's certainly going to happen in two weeks. And so on January 20th was, you know, Trump coin mania, blah, blah, blah. And that was obviously the top of the market. And then we went down to 74 or 5 on Bitcoin in the suing, you know, a few months. Does it mean that going to print the money? No, but it just means I'm not going to print the money at the speed and the timing at which makes sense for a leveraged holder of crypto. And that's why we get a sell off.

So that's kind of what I'm looking for in terms of areas where I want to take Milstrom's exposure up in crypto and take it down. Yeah, I mean, only you know your book, but just like judging from some of your posts, I was going back through that, the Trump post from December, basically. And you had a few good calls in there. One was basically like post-inoguration, like markets would go down and we would have kind of like a sell-off, which basically happened. I mean, I think you kind of, you called sort of the tariff. A lot of people didn't think Trump was serious about his America re-industrialization. They didn't think he'd go as hard, even though he's kind of saying in the campaign trail that he would do tariffs. You kind of called that. So you got a lot right from, you know,

like that December post with respect to predictions. Like, hopefully you cemented that in the trades as well. One thing that you did predict that actually didn't happen. I'm wondering if you still see a possibility here. As you said, the first half of 2025, Bessett might actually do like something that seems kind of crazy, which is this gold reevaluation on the balance sheet. So like Treasury still carries something like 8,000. 8,100, 8,133 metric ton of the gold. That's what they say, right? I mean, we can't see it, but I'm sure it's there. So that much gold. And it's all valued, that bullies all valued it. $42 per round. And so you said like one, at one time fix, I guess, or one time trick Besson could pull is just basically

revaluing all of that gold to the current market price. And that would give him an extra like one trillion dollars to spend. Do you still see that as a possibility? I mean, you're looking more to capital controls now, I guess, in the post that you're about to. I think it absolutely is going to happen. The question is... You think that's going to happen still? Yeah. And that's why they want the gold price to go up. They don't want to tell you that it's going up. But how do you have a whole tariff regime and then one of the only things that was exempted from all terrorists was gold, right? So they're saying in not so many words. And every time they ask best and, oh, are you going to do revali, you'll always say, no, of course not. I'm not going to revali you.

Wait, wait. So you're saying, you're saying this, and this would be like kind of a 3D chess move. So you're saying they bring the capital controls again, which obviously causes just like if this follows, right, gold prices spike even harder, right? The tail end of that, gold prices are spiked. I mean, crypto goes along for the ride. That'd be fantastic. We all hope so, right? And then Besson comes out with a one-time trick and reprises that, you know, $42 per ounce gold to the market price, which is up, I don't know, another 20 percent. Like, who knows at this point in time? You're saying that that's what they could be playing at. And then what do you take that, you know, one to $5 trillion of free money that they created? Well, it's time for goodies for the electorate for November 2006. It's time. Oh, that 10-year bond yields at 5%. Well, fuck you bond market. I'm going to slam the fuck out of you. I've got $5 trillion. I'm buying all those bonds back. So get the fuck down yields. Right. And again, it's easier to tell Congress to basically say, oh, the spot price is $5,000. It's $42 on our balance cheap. Do you, politician, want to sit here and tell me you do not want to send money back to your district to get good American jobs by not allowing the Treasury to make use of the gold price. at the current market price.

When you frame it like that, there's no way that any Republican legislator will ever vote no on that. You just can't. You can't say I'm not voting for jobs for my district or, you know, goodies from my district before the election before I face a very, you know,

motivated and energized Democratic challenger. Absolutely not. So I think this is a, you know, a wink at a nod, yeah, we're not going to tell you that we're going to do the gold reevaluation, but I would buy more gold if I was really you. Wink, wink, wink, not.

And then, you know, sometime when it's the most politically expedient and the price is high enough, then they flip the switch. And all of a sudden, the Treasury has all this money that they can spend to get reelected and reduce heels. That would be wild. That actually would be like a genius, like 3D chess type move if that's really what they're playing at. Like one thing they could throw all this off is, you know, there's a history of economic wars turning into, you know, this, this Chai America divorce, right? it could get ugly, could turn into a hot war. At that point in the analysis, basically for you, is all bets off, or do you basically like your portfolio construction

if things turn into a hot war scenario? Like, and what's your probability of that? I don't see a hot war. I know people like, oh, China, Taiwan, and all that sort of nonsense. And, you know, every the serious Chinese analyst that has, you know, connections into the party, you know, number one, Taiwan's already owned by China. So if you're wealthy in Taiwan, I love Taiwan, I go there all the time, you have all your money in China.

All your manufacturing is in China. Your demand comes from China. Your tourists come from China. Taiwan is China. Yes, they, you know, nominally try to be the sort of independent thing, but financially they are 100% tied to China. There's no real benefit to China from going in there and trying to launch an amphibious invasion across the strait, which is very difficult. If Russia has been three years trying to basically control the... the Russian-speaking oblasts of Ukraine, how the fuck is China going to cross a straight,

you know, with American missiles and Japan? I guess look today, there's 120 military bases on Japan that the United States has, 120. And you want to go and go over this straight and go get this Taiwan for what? You already own it. You already own all the rich people. There is no Taiwanese economy without China. So I don't see. And then you get, you know, then Xi gets himself dragged into a long, bloody, expensive war. And something that, you know, an analyst BCA pointed out, which is very, I didn't really realize is, if you think about the generation of people

where the men will come from to fight this war, if they went to a war, there's two grandparents and two parents who have one kid. And so you're going to allow, you're going to support she taking your one son and send him to the meat grinder. Now maybe he had two or three sons,

It's cool. Patriotic. They're waiting flag. Blah, blah, blah. I still got some kids left. But you put all this money and all this effort into this one child. And now he's going off to the meat grinder of war. That is regime change.

Not happening. So for what? For a piece of land that you already essentially owned? So I'm not really sure where this, you know, China's going to like go and take Taiwan situation is coming from. And, you know, a lot of the senior leaders in the people in the Chinese government have all their money in America. So they're pretty much, they love it. China is not just Americans, you know, corrupted by the China sort of money they're making

from shipping out there. It goes both ways. Go to California in some districts. It's all Chinese, right? That's all the money. So where do you think it's coming from? So I think it's a mutually beneficial arrangement. It will fray over time. I don't think that it gets to a hot war because there's too many people in political power on both sides that don't want. want that to happen. But you've used the term divorce. So what does divorce mean then in this context, a Thai American divorce? Divorces, you know, in 30 years, you know, there's an American manufacturing base that's making things and there's a Chinese manufacturing base. They're competing in the global economy, whatever, but there's not a war. Now, obviously people think, oh, you're spoken hopium

in the Swiss full thinking. That would be my base case. But even if there is, right, then what do you get? You get capital controls. You get all the same thing you get today. You just get them faster, right? If there's actually a war, what happens? Well, I basically take the treasury record and say that yield at five, now it's one, right? So I'm going to print the money and I'm going to make sure nobody can leave. This is the racial neighbor. You can't leave. Capital can't leave. Foreigner, domestic, whatever, can't leave. Then, you know, everyone owns bonds. And what do you still need in a digital world? It's not like I'm going to shut off the internet. That's a method of control for every government, United States included. Well, there's Bitcoin. That's still going to

move around. So what I want to, before they close the gates, I want to own the Bitcoin. because when they close the gates and they, you know, oh, yeah, Coinbase, you can trade on Coinbase, you just can't withdraw like a lot of exchanges, right? You know, yeah, trade Bitcoin all you want. Cool. Trade that black arcade-f. That's great. You want to buy that Argentinian, you know, bottle of wine?

Nah, sorry. You're buying California wine. So that's what happens. So it's the same thing happens that would take 30 years happens in two. Yeah, I guess in war mode you want to hold the non-cosodial assets in particular, right? I mean, yeah, the closest to, I mean, it seems like at the end of this, the answer for basically everything that's happening in the world right now is like Bitcoin, crypto, maybe a little bit of gold. So what's your allocation right now? Like what, tell me about your bags.

Where are you positioning? I mean, so Mailstream is like 60% Bitcoin, a 20% ETH, and then, you know, a lot of other shit coins and term sheets of token deals and stuff. on my non-crypto stuff, it's physical gold and gold miners and T-bills. That's it. How do you feel about the market right now? So Bitcoin trading above 100K again, 104. I think I read a March post where you sort of were talking about allocating, you know, between like, I don't know, 75K or something and you're like 85K or whatever was trading back then. Now we're back above 100. And that rebound to some people happened quickly. Ether is just like lately. You're like done. fairly well. So 50% weak, it's not, you know, where it could be, but is also overperforming.

Like, what do you think this year is going to end up like for those two assets? So I think we're going to go on a run to like in the $150,000 to $200,000 range between now and sort of like maybe sometime in the summer, we'll get some nasty correction. And then I think we go to $250 for $250,000 on Bitcoin by the end of the year. I mean, I think if we can get to $5,000 by the end of that, it'll probably be good. that'll sort of reinvigorate people and maybe, you know, ETH gets to 10 or 20,000

by the end of the run. But I think, but there's a lot of hard, there's a hard slog between here and 5,000 for Eth, I think. Do you think we get the Bitcoin and then alts type trade as we have previous cycles? Or is this...

Yeah, for sure. I think they'll be an alt season. It might not be the alt that you own. It might not be the overvalued, you know, VC, high FDV, low-float, piece of shit coin with no clients, coin that you own. But there will be new narratives.

There always will be. be there will be a new hot thing that everybody's slinging on the decentralized exchanges. I don't know what that's going to be. I'll be playing just like everybody else because it's fun. And I think we're going to return to cash flows, right? Cash flow, cash flow, cash flow, cash flow, cash flow, flow. So that is, you know, in our portfolio where you have etherfying, pendle, cash flow generating projects, they've got clients.

There are other projects out there that do the same thing. And they're taking some of that cash flow and giving it back to token holders. I think people are going to expect that. If you're a coin that has not, that has been in existence that has launched our Ready? Well, okay, well, we've had time. We're your clients. What are they paying? Don't tell me they're getting emissions that you're giving them from your token. I want to see them spending stables or spending Bitcoin or Eith or some other asset, not your fucking token. And, oh, you're making money? That's great. I don't want to see it all at the foundation showing it up at,

you know, Bitcoin Vegas at the at the fucking awesome party. I want it in my fucking wallet. Right? So fuck you project with all this money. It sounds like value-based investing for crypto that you're advocating, like, not meme coins. You're like, show me the money. Show me the cash coins. I mean, MECR's is hard. Bikort fitting is very, very difficult. I don't really do it that much. And that's saying that meme coins aren't going to be a dog with hat or sort of standout or Trump or some kind of coin that's going to really do well.

But that's a much harder game. Yeah, you can make $100 extra your money. But most of the time, you're just going to get bagels. What's the most interesting thing happening in crypto right now to you? So actually at Mailstrom, we're spinning up a leverage buyout fund because we've noticed a sort of dislocation in the capital markets where, you know, under this, Trump SEC regime,

you have all these SPACs who couldn't despaq back during the previous administration. What does that mean? Right? You've raised this

capital. You have 18 months to find a target. And if you don't, you have to give the money back to the investors. Are these crypto-related spas?

No, these are all, they're just like check companies. Okay, yeah, yeah, yeah. You have to pay check companies,

like, I don't know, high single-digit billions of capital that need to find a target. Obviously, crypto is the hot thing. Interesting. Now, you know,

what is the RJB Mailstrom? We're identifying companies that have decent cash flows profitable that don't have a token. And we're going to buy out these companies, put in new management, dress them up, and then we're going to offload them to SPAC sponsors who must find companies. And, you know, we've seen what happened with UPXI in the U.S. that Solana Treasury. We saw what David Bailey did with the Nakamoto, and I don't know the name of the stock that they reverse merge it into. the market loves this stuff, right? So I think we have a period of time right now to really do some like, yeah, you're not going 100 extra money on this kind of stuff.

But if you are a fund that has tens or hundreds of millions of dollars you need to allocate and you can't allocate to early C.A's token deals because they're like a million dollars total for the thing, if anything that's good. And, you know, you're not going to buy meme coins. You're not, you know, okay, you're not just going to buy Bitcoin because why did your investors pay you paying you $2.20 to buy Bitcoin, right? So I think that there's a sweet spot of a lot of money that can. can't invest in the things that actually make money in crypto, but we want to do public market stuff.

And here's an opportunity. And, you know, this is something that we're exploring at Mailstrom. That's smart. I mean, Coinbase just hitting the S&P yesterday. It's the first crypto company to enter the top, you know, of 500 companies in the U.S. I mean, it seems like the timing is right for something like this to get more crypto companies into the, into the equities market. Arthur, this has been a pleasure, man. Last question, we may be talking to CZ at some point. Do you have any advice on how to get the pardon? How do you get the presidential pardon? Roll the dice. Seriously. All you got to do is roll the dice.

All right, that'll be the message for CZ. Arthur Hayes, thank you so much. It's always a pleasure. Bankless Nation, got to let you know. Of course, none of this has been financial advice. Cryptos risky. You could lose what you put in. We're headed west.

This is the frontier. It's not for everyone. But we're glad you're with us on the bankless journey. Thanks a lot. Thanks for having me.