Moody's Talks - Inside Economics - Cuts Confirmed to Crypto Caution

Episode Date: August 22, 2025

From Fed Chair Powell’s confirmation of coming interest rate cuts to digital wallets, this episode dives deep into the evolving world of digital currencies with guest Ananya Kumar from the Atlantic Council. Whether you're managing your portfolio like co-host Crypto Cris or just trying to keep up with changing technologies, we’ve got you covered.Guest: Ananya Kumar, Deputy Director of Future of Money, Atlantic CouncilFor Ananya's article on Chinese Stablecoin click here: https://www.atlanticcouncil.org/blogs/econographics/everybody-wants-a-stablecoin-even-china/Hosts: Mark Zandi – Chief Economist, Moody’s Analytics, Cris deRitis – Deputy Chief Economist, Moody’s Analytics, and Marisa DiNatale – Senior Director - Head of Global Forecasting, Moody’s AnalyticsFollow Mark Zandi on 'X' and BlueSky @MarkZandi, Cris deRitis on LinkedIn, and Marisa DiNatale on LinkedIn Questions or Comments, please email us at [e-mail]. We would love to hear from you.  To stay informed and follow the insights of Moody's Analytics economists, visit Economic View. Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

Welcome to Inside Economics. I'm Mark Sandy, the chief economist of Moody's Analytics, and I'm joined by my two trusty co-house, Marissa Dina Talley, Chris DeRides. Hi, guys. Hi, Mark. Hey, Mark. Happy Friday. You've got a, yeah, happy Friday.

You're in sunny Southern California. Where are you? You look like a movie star. What's going on? I am on Catalina Island, so I just took a ferry over about an hour and a half ago. and now I'm attempting to work from the rooftop of my hotel, and as we just learned, the internet connection is a little spotty. So we'll see how this goes.

But yeah, it's beautiful. I'm going to scuba dive tomorrow. Very cool. Very cool. Yeah. Yeah, we're hanging in there. And yeah, I can see the palm trees in the background. You're looking good.

Yeah, excellent. Thank you. Good. All right. Well, and Chris, how are you? Your background is not quite as a little. Mine is also real. It's also real.

It's a real wall. Very good. And I should say we're on YouTube, everybody. So if you really want to see the backgrounds here, you can sign on on YouTube. We've got a guest, Ananya Kumar from the Atlantic Council. She's going to join us in a bit here to talk about digital currency. Crypto, your favorite topic, Chris? Of course.

Yeah. Stablecoin, Central Bank, Digital Currency, all that. stuff. All of it. I know that's all kind of confusing to lots of folks, but it's really important. And Ananya does a great job of kind of explaining things. So, and she's really good at the game. And she's really bossy, I learned.

She's, I'm following orders from her. So, but that's all good. It's all good on Ananya. All good. All good. But let's, before we ask her to come on and we go down that path, big day to day, right? This is Friday, August. August 22nd.

This is later in the afternoon. And Jay Powell, the chairman of the Federal Reserve, gave a speech in Jackson Hole earlier today. And I guess he made news, sort of. I'm a little confused. Chris, did you read the speech? Yes. The magic six words are May warrant adjusting our policy stance.

And that set off a mega rally in the equity market. Yes. Why? Cut is guaranteed now, right? According to a lot of market investors, and not just one. Multiple cuts, I think, are what they're thinking of, and that will spark a lot of activity. Yeah, I'm confused. I mean, the speech itself, I mean, I read the speech.

It was really two parts. Part one was about the economic situation and what it means for monetary policy. He ended that with, I guess, with those six words you articulated, which is basically saying they're going to cut, the Fed's going to cut interest rates at the September meeting. But that's not a surprise to anybody, right? No. So what's interesting. So we watch the Fed watch, right?

We look at futures to determine what the activity will be. And I've been watching those all day. So what do you think is the probability, market implied a probability of a Fed rate cut at the September 20, September 17th meeting? A quarter point cut? A quarter point cut. A quarter point cut. A quarter point cut. Per percentage point.

today after all this news and everything. Well, before all this, I think it was like 85%. So now I'd say close to 100, right? That's what I would say. It's 85%. Oh. But it had climbed up to about 90 right after a speech. I was looking at it this morning.

Yeah. But then it fell back down to... Right. Now it's back where it was. Yeah. And it's where it was a week ago, right? So there's a little bit of a comment. A little bit of a cognitive disconnect, I think, or just a euphoria.

Could it just be technical factors, like short covering? People were kind of, investors were kind of positioned for, you know, maybe he would be more circumspect about the rate cut. And they were positioned for that because the market was kind of on the last few days. It's been down. Could that, maybe that's what's going on. Yeah, it did. The implied probability was lower a day or two ago, right? So the market was kind of inching towards that direction that, oh, maybe it's not guaranteed.

Maybe given inflation, they're going to keep the rates higher. So, yeah, there could be some of that in why, but it seems like an awful large reaction. Right. Totally due to that technical and why. But I guess the next few days. Yeah. I mean, I was just looking at the S&P, it is, it's back close to its record high, but it kind of was down all week. and now we're just back to where we were last week.

So maybe it's just coming full circle, you know, saying, okay, this was not, nothing's changed between now and last week. Therefore, the stock price should be the same as last week, I guess. I guess. I guess. Maybe. Yeah. Hey, Mercia, did you, I know before you took off for Catalina, did you have a chance to read the speech?

I watched it. I watched it live. Yeah. Well, you did. Oh, okay. Yeah. And was your impression the same as ours that there was, like, there was no news here, this was no big deal, that he's just saying what everybody knows?

Yeah. Yes, I think so. I think he was a little more, I don't know, going into this, I was wondering if they would still be more heavily weighting the risk to inflation over the labor market. But he seemed to be pretty clear that that's not the case, that they're more concerned about slowing in the labor market and that he thinks actually slowing in the labor market may just take care of some of the inflation picture on its own, right? That if, if demand in the economy is much weaker and the labor market is much softer, then the Fed probably has to do less on the policy

front to combat inflation. So I think he made that clearer. Yeah. Okay. Okay. Did you, and since you listened to the speech, the second half of the speech was about the policy framework. So every five years, the Federal Reserve reevaluates its so-called framework for setting monetary policy and communicating that policy to the public. And I don't know. I kind of read that and it was not much there. I mean, it was kind of on the margin, more in the weeds. I don't know. Meres said, what was your interpretation of that point?

Yeah, I mean, he kind of did sort of a historical overview of the last five years, right? And he talked about where inflation was heading into the pandemic and interest rates being at the zero lower bound for a long time. And this notion that they thought inflation was going to be transitory during the pandemic. It wasn't. And then they had to kind of reevaluate how they were balancing the risks. And it's kind of a history, a little history lesson, right? And then leading up into reevaluating where they are for the next five years, he reiterated that they're still comfortable with a 2% inflation target. on the PCE.

So it doesn't seem like that. We've talked a lot about that. Should the Fed's inflation target be higher? Should it change? But he was pretty firm that they feel comfortable with the 2% target going forward. Right. Ish. Right?

It's a target, right? So it doesn't have to, as we know, it doesn't have to hit 2% and stay there for an extended period of time. But on average, it should be around there. Round two. Chris, anything strike you about that second? half of the speech? Yeah, it was more technical, as Mercer mentioned. I think on the inflation targeting, though, right, there had this been this notion of a flexible average inflation target. Yeah. And now it seems like a little bit of walking back on that. The notion being,

well, we would allow the inflation rate to rise, right, in periods where it goes above the 2% for a while before we really clamp down. And then if it's below target, just more of a gradual, because we're going to look at kind of a longer-term average. And it seemed like he was walking that back, that that can have some potential downside consequences. So that, to me, sounded like being a bit more firm in terms of... More hawkish, right, meaning higher rates on that. That's what confused me a bit as well, if you just did that stance.

Yeah. And you can see why back in 2020, that's the last time they did the review, that they adopted that so-called flexible inflation targeting. So if you're below inflation, which we had been since the financial crisis, you'd want a period of above-target inflation, which we actually got in the wake of the pandemic. And for a while, that inflation above target was deemed to be good inflation, not bad inflation, because here we were.

We were doing exactly what the Fed wanted, getting average inflation over the period back closer to two. It's really only when Russia invaded Ukraine, and prices really jumped and inflation accelerated that, you know, things became a real problem. The other thing that struck me is what he didn't talk about. You know, I did, this was his last speech as Fed Chair. I was thinking maybe we would, what's that? Maybe.

You know. Okay. Is it amazing? He said maybe he could be reappointed. Yeah, he could be. Yeah, for sure. Yeah. That's a for, that's definitely a scenario, I guess.

way out on the tail of the distribution. Yeah. Possible, I guess. That, you know, he'd give us some kind of critique or evaluation of his performance at Fed Chair, because he lived through a pretty tumultuous time, which was very difficult for any Fed to navigate, any Central Bank to navigate through. And I think at the end of the day, he did an admirable job, but he didn't do that. He didn't go down that path.

And the other thing he didn't talk about, and here I thought, you know, less of a chance that he would do it. But I thought I was hopeful that he would was talking about Fed independence. I mean, the Fed is under siege here, you know, from the executive branch. And that has all kinds of implications, but, you know, he didn't touch that one. What do you think? Versus some passing references, right? Did he? Did he? I kind of missed it.

Where? Just in the sense that they would always, the Fed would always kind of always do the right thing, right? Oh, I see. It wasn't really that direct, but. Right. Right. Sideways comment, I guess. Yeah.

I mean, you know, it doesn't seem like investors are all that, at least not to this point, worried or nervous or upset or anything about that independence. Isn't that confusing, too? I find that the whole thing confusing, right? Why? They are when it's in the headlines. They are? You know, like when, not on an ongoing basis, but I feel like when when this first started, you know, what was it a month ago when the president came out and said that he has to resign and he doesn't know what he's doing and he's ruining the economy. Markets did react to that pretty strongly, but it's like a two-hour reaction and then they're back.

So anytime there's a headline about something like this, it seems like there's a very, quick, swift reaction, but it's not something that lasts. I mean, you certainly don't see it as a, that they're pricing this in as a persistent and real long-term risk. At least that's the way I'm interpreting it. Right. Yeah, I, I, I'm surprised. I would have thought we'd see more reaction. Maybe in the bond market, you know, maybe long term, I expect. Yeah. I could see short yields coming down. They're saying, look, the Fed's going to be more aggressive. I've got a Fed that's influenced by the executive branch or captured by the executive branch is more likely to keep short-term rates down. So I can see that. But long rates haven't risen all that much either

in this period. So that I would have expected to see, I think. Or maybe we're missing something. Maybe it's not that big of deal. I think you have a large number of candidates now, right? It's not clear who exactly is going to be appointed. So, you know, you look at that. that panel, they're not all going in one direction or the other. There are some experienced Fed members that if they were appointed probably would be just fine in terms of maintaining the Fed independence to some degree. So I think that's, I think just like the terrorists, perhaps, it's like it's trying to understand the willingness of this administration to pivot.

So perhaps that's not fully baked in. into the into the then then you see what's happened to Lisa Cook the I mean the the president came out and said he was going to fire her if she didn't resign and you in the does that lend any confidence to that to that argument that we're going to get responsible but he's actually going to do it okay okay right it's a lot of chatter fair enough yeah fair enough I think that we you know maybe we're becoming complacent yeah and ignoring all the chatter, but I think that's how markets are reacting here.

Why, they're not immediately taking the bond rates up. Right, right. Okay. All right. Well, I think it's a very intrepid affair to try to interpret what is going on in Mark, certainly on a day-to-day basis. I don't think we should get into that, the habit of doing that. But I'll have to tell you, I read the speech, and I go, okay,

exactly what everyone anticipated, no market reaction. Then I go over to the stock futures and I go, what the heck? Yeah. What are they looking at? I missed it completely. So anyway. Okay. Before we call on Ananya Kumar of the Atlantic Council, anything else you want to bring up

about the week in the week of economic data or anything at all? Anything that strike you as noteworthy, Marissa in the day? data that you want to call out? Yeah, jobless claims jumped. Yeah, did you see that? I noticed that. Yeah. Yeah.

I mean, it wasn't extremely dramatic, but it is a significant increase in people filing for unemployment insurance benefits. And if we look at continuing claims, which is the number of people that are on, you know, getting benefits week after week after week, that is as high as it's been since. middle of 2017. And the insured unemployment rate is the highest, which is the people getting benefits as a share of all the people that are covered by the UI system is as high as it's been since early 2018.

So we know that there's been evidence of people having a harder time finding a job if they don't have one. But this jump in new claims suggests maybe companies are actually laying people off. but I'm not ready to panic about it yet. We have to see, you know, several more weeks of that before I think we can say that that's what's going on. And I think that this is the week of the survey, right, the Bureau of Liberal Statistics survey that is the basis for the employment. So that doesn't bode well. The timing doesn't bode well.

Chris, anything you want to call out in the data? We got some mixed data on the housing market. Right. In terms of, you know, it looked like sales, existing home sales and starts were up. That's the good news. But then permits are down or soft. And Home Builder sentiment came out this week as well. It's at extremely low level.

So I think we got some pickup over the summer, perhaps, a little bit of rate-induced buying. Although it wasn't a massive jump either, right? It's just relative to the bottom, we had some additional sales. but looking forward, it's still pretty much a frozen housing market here. Yeah, I didn't take any solace in the housing data, right? Four million existing home sales? I mean, just because it's up from 3.9. Yeah, I mean, that's abysmal.

That's pandemic shutdown, GFC crisis lows. I mean, and on the housings, you starts were up, but I think multifamily starts up and no one believes that. That's just not happening. Well, it's very lumpy, yeah. Yeah, so I don't, I'm going to try to believe it. And the permits, which are more of a leading indicator of starts, right? You've got to get a permit before you start.

They were down. Down, yeah. So that doesn't longer well. So I didn't come away thinking the housing's doing any better. Maybe it's not doing it. No, no. It was just maybe a little better than initially thought over the last couple months. But when I had doesn't.

Right. And I'm not going to, I'm just going to tease the next part of this conversation because the LEI, the leading indicator, right, Marissa? Uh-huh. We won't talk about the economic indicator because we're going to talk about that later when we play the game with Ananya. Yeah. Okay. All right.

All right. Well, anything else before we move on here, guys? Anything? No. And let's bring in our special guest, Ananya Kumar from the Atlantic Council. Hi, Ananya. It's good to see you. Hi.

It's nice to see you. All. Thank you for having me. Absolutely. It's great to have you. And we're going to be talking about the future of money, digital currency, crypto. Chris's favorite topic. Before we kind of dive into all the issues there, and there are plenty,

maybe I can just turn the conversation right back to you, and maybe you can give us a sense of who you are. I'd love to know more about you and the Atlantic Council. And why is the Atlantic Council focused on the future of money digital currency? You know, what's the deal there? Sure. So I am the Deputy Director for Future of Money, sort of a title that I made up. A few years ago, but...

You made that up? It's a great title. I did. I know. Don't tell anyone. And I guess the thesis of my center, I work in a part of our center, which is future of money. We covered two other issues, which is the future of capitalism. So you're sort of normal macro issues, China's economy, trade and tariffs increasingly. And then another part of my team covers sanctions and statecraft. So sort of the punitive tools of economic tools that are used by states.

And I guess the bigger thesis around our center was that increasingly economics was intersecting more and more with geopolitics. And it was doing so in the reign of sanctions in the vein of judicial currencies sometimes. Although that was evolving when we first started looking at it, we just sort of had an idea that it was, but weren't able to completely prove our thesis there at the time. And I'm talking like five years ago. And we wanted to work in a center that combined the sort of foreign policy and strategic perspective that a think tank like Atlantic Council brings with the economic perspective that economists at the IMF and World Bank and central banks around the world think about.

So that's sort of how we built the center. And how did you get to the Atlantic Council? What's your path? Sure. Kind of Sir Curtis, I would say I was in graduate school working on issues at the intersection of foreign policy and economics, again, a little bit of sanctions, a little bit of export controls. And at that time, we didn't really have a vocabulary to talk about it in the sort of hard defined fields of foreign policy or economics. So I was struggling to find or to reconcile my interest in both of these in either discipline. And then I met Josh Lifski, who's a senior director here, and he was like, okay, here's my idea. I want to do this. Let's sort of build a part of it together.

And that's how I got in here. And how long have you been at the only? I've been here three, almost four years. Almost four years. So kind of sort of since the pandemic, you've been? Yes, right after the pandemic. Right after the pandemic. Right after the pandemic.

Well, I'll have you know that Chris has been dying to have you on. You know, such a huge crypto investor. Yeah. I can't wait to just pick his brain about investment strategies and learn more from him. He was looking for tips, actually. Yeah. What's the next hot crypto coin out there? You know, this is the point of every conversation where I have to say I can't give any investment advice and you shouldn't be taking it.

Yeah. it's good to have you on. And you were telling us before we got on that we're your maiden voyage with your new podcast room. Yes. So the Atlanta Council set up a podcast room this week and they emailed all of us about it. And I said, hey, guys, I've got to be on a podcast. So can you please help me? And so I have like two producers behind the scenes in the room to help me out.

And I'm very grateful for their help. Yeah. Did you notice, Ananya, that Marissa's background, that's that's her. podcast room. She's like on the beach somewhere. Look at that. This is my podcast room. That's right.

So Ananya, down to business, digital currency. Let me frame it a little bit. Tell me if I've got the frame right. I mean, kind of the way I think, there's a lot going on here with regard to digital currency. And the way I think about it is in three buckets. Bucket number one is crypto. That's, you know, the poster child is big.

Bitcoin, Ethereum and meme coins and all that stuff. And that's where a lot of investors are focused. Bucket two is stable coin. This is more recent. And we'll definitely go deep here because this is becoming more important from a policy perspective. And there's been a lot of legislation recently to kind of cement stable coin as a vehicle for transactions. And then bucket three is central bank digital currency. So central banks around the world are considering whether to adopt some form of digital cash. The Chinese are kind of leading the way here. The U.S. is kind of lagging behind. But this is also entrained. Is that a fair way of kind of thinking about the digital world, the digital world of money? Is that kind of a, am I getting all, everything that's going on in those

three buckets? Yeah. And, you know, what you've done there is divide them. by who is issuing or is like the centralized authority behind these different kinds of currencies. Although I'll say in sort of a market sense, crypto and stable coins, yes, there's a difference technically, but in the market they move together. So they're sort of seen as the same block, although we can talk a little bit about what those differences are

and how they've become more significant more recently through legislation. So yeah, I'd say those three, are correct. Okay, so maybe we take them one at a time. And by the way, at this point you're making about crypto vis-a-vis stable coin, obviously stablecoin is a cryptocurrency. But I kind of view it differently because I don't think people are using it as a investment view. Well, I guess it is investment. It's a form of investment. Yeah. Yeah, let's talk about it a money market fund or something. Yeah, yeah, it's like a money market fund sometimes. Sometimes it's kind of like a depository token.

But we'll see. We'll talk about it. it a little bit and see how they differentiate in terms of use and, you know, importantly, regulation and their adoption widely. So I sometimes think of stable coins as like a natural evolution of crypto, but both are sort of moving together when we say, oh, Bitcoin's really high. It also often indicates stable coins are doing pretty well. Okay, so those three buckets, where do you want to start? Which one do you, which makes sense? Let's start with CBDC, actually. Okay, all right. So, CBDC, Central Bank, digital currency, the game is in the name,

and the central bank is the issuer of a digital currency. We started tracking CBDCs in our research about four years ago now, and we were looking at 35 countries at the time that were interested in issuing a CBDC. What that looked like was the central bank was like, hey, we're interacting with this new kind of technology called blockchain. How do we incorporate it into some of our payments functions or some of the other things that we know how to do well? I currently look at about 190 countries, 137 of which are interested in sort of exploring CBDCs

across various stages of exploration, obviously. Some are piloting a CBDC like China is, as you talk, about some are interested in like the proof of concept creating a product essentially and seeing where it goes and others are just sort of in the initial research state so various kinds of exploration happening in CBDCs and the momentum sort of increased over time. So yeah in fact you have a pretty cool tracker on your website I just call that out you go country by country and kind of

explain what's going on and the rate of adoption and all the legislation and everything else. Yeah, it's pretty cool. So what is it, can you just explain it very simply? Is it just, what is it? What is it? What is a CBDC? So a CBDC is a digital form of the money that you currently use, which is issued by a central bank most of the time. And you use your bank account, which means that it's intermediated. So the central bank issues the dollar, for a example, and you get access to the dollar through your JPMorgan, Bank of America, PayPal account, and you can use it to buy a cup of coffee or whatever it is that you want to do with your money. But aren't we doing that now? I mean, like no one uses, when's the last time you use actual cash? I mean, I found a quarter of the other day. I was surprised. It was at the bottom of my briefcase.

Aren't we kind of there already? Yeah, we are. From a consumer standpoint, we are. are kind of, well, some people are kind of there. It depends what kind of economy you're talking about. And the penetration of digital services in that economy. But yeah, you and I are basically there. I haven't used anything outside of my phone in a very long time. So there is a very real question about what is the utility of this? And sometimes the utility is in the sort of technological backing of a CBDC, right?

So if I can move that money across banks slightly faster. and slightly cheaper and with better visibility into it, that's an added advantage. Now, I would say that most CBDCs are seeing if that advantage exists. It's an advantage in theory that they're exploring. They haven't been able to fully come up with an answer on whether that technological advantage is worth issuing a CBDC. And then if there is a demand in their economy for a problem,

product like that, because especially in advanced economies, there's quite a good system of digitized payments already. Now, in the case of the U.S., there's a system called Fed Now. This is a relatively new system. But what would you consider Fed now to be? It's a payment system to kind of accelerate the payment process, but it's not CBDC? No. So CBDCs, I'll say, can be two types. They can be wholesale so they can connect bank to each other or they can be retail sort of the let you buy a cup of coffee use case right right a Fed now is a what I would call a real-time payments network which as opposed to an RTGS or retime growth settlement network which is what Fed wire is sort of settles the transactions immediately as they happen instead of waiting and batching them at the end of the day or

the end of the week the some of the incentives of Fed wire now are the same as the incentives of CBDC, but technologically Fed Now is different. It still relies on the same technology that FedWire relies on. It just does it faster. So it's really, it's the same thing. It's just the technological backbone. One's blockchain, one is it? Yes. That's kind of the difference. Okay. Yeah. Yeah. And so the Chinese have adopted this wholesale, right? They've been pretty aggressive here. And the Fed, the U.S. has been quite reluctant. What's going on there? Why are these two countries taking very different approaches to this? Sure. I mean, I'll say that when we were looking at 35 countries four years ago, the incentive

for most people to look into this was to see what the Chinese interest was really all about. And even before coming to CBDCs, you know, China has a really good digital wallet system in the form of alley pay and we pay really good penetration, like 95% of the economy, has access to Allipay and WePay. So it's sort of a model of successful wallet system and has been for the last decade plus, really, since 2008. So the question was, what sort of upgrade could they really do with a blockchain-based system?

They launched a digital yuan, which at this point is a retail payment system, so really a competitor to Allie Pay or We Pay. And some of the things that they're able to do right now with it, are you buy a bus ticket pay a government employee give certain kinds of rewards using additional yuan things like that but they've struggled with adoption you know it's grown over time but it's not been as high or even close to as high with other forms of payment in china and i'd say they're in this point of questioning these assumptions that they had about if the state encouraged the use of

digital yuan, everyone would want to use it anyway. Sort of gets you back to, you know, tech products need to be designed for consumers and not pushing consumers into products that they don't really want to use. It's a hard lesson for a central bank to learn because they're not usually trying to convince people to use currency. It's not like you build it and they will come kind of thing. Yes, exactly. So a few realizations there, but I mean, the interesting part about digital yuan is that

about 250 million users, that's a lot. We classify it as a pilot. Yeah, there you go. That's almost the population of the, I guess the population of the U.S. is 350. Yeah, but when you think about the number of people who use Apple pay, like, you're getting to comparable numbers there.

But, yeah, I mean, really big, really interesting pilot, really sort of interesting technical programmability features that people are looking at. All of that stuff is still going on, but there are some sort of questions about the initial assumptions of digital yuan. On the U.S. side, I think the U.S. has taken the exact opposite approach, which is that CBDC, we don't really see a use for it on the retail side. That's been the argument in Congress for a long time, where it's been discussed most extensively. the U.S. had been doing research projects on retail CBDCs,

one was called the Project Hamilton outside Boston Fed. It no longer does those projects, and President Trump's executive order sort of put an end to any sort of research and study of retail CBDCs. The concern that's put out is on privacy and surveillance, and, you know, if the Fed is giving everyone accounts, they're going to presumably stop transactions at some point and things like that. So there's a very serious privacy and surveillance concern that has overtaken like exploration

of CBDCs in the U.S. Is that a reasonable concern, the privacy concern? Yes, of course. Yeah. I mean, you're thinking about the Chinese government having access to better data and more data that's more in line with like consumer behavior, consumer patterns. Like, you could, in the wrong hands, these things could do a lot of damage. What we've also seen with research is that you can create privacy preserving CBDCs,

but you have to regulate alongside in order to preserve those privacy rights. And where I find this argument to weaken is when we say, or the Congress says that our public private sector options, like those provided by big tech companies, are going to. to be more privacy preserving. Now, I think they're more used by other people, but I'm not sure if that's a one-to-one comparison of privacy preservation there. So listening to you, if I do a forecast of the future of CBDC, it doesn't look like a bright future to me. Am I missing something? I mean, I would say it's a mixed future. It's a wholesale level, but there might be something. Yes, I think on the wholesale level, there's still experimentation going on.

Central banks are clearly interested, so are sort of the big banks that connect to each other across borders. I'd say the more interesting work is happening in Europe with the Digital Euro project. Again, Europe has a different set of objectives than China does. It sees its reliance on card networks as sort of affecting its sovereignty and largely, American card networks affecting its sovereignty. You mean like a visa or a master card or... Exactly. Yeah, MX. Yep, right.

Yep. And wants to create a more resilient payment system, wants to get to like, you know, the 5%, the 7% of people who don't have access to cards in their economy. So, and they're currently in the pilot stage, likely to decide to launch by next year. But really, sort of a forward leaning on CBDC in Europe. Okay. Okay. Okay. So it may depend on where you are in the world. Yes. And then emerging markets, I'd say there's quite a bit of interest. Oh, there must probably interest there. Yeah. Yeah. Got it. Got it.

Hey, Chris, Marissa, anything before we move on to stable coin in crypto? I know Chris is, he's very impatient to get to crypto. Chomping at the bit. Chomping at the bit. Chris, anything? I guess one maybe observation or question around, commercial-backed digital currency, right? That, to my mind, most of our money is actually not created by the fact. It's created by banks, right?

And it exists in these digital accounts, right? I'm not carrying cash. So what's the big deal? Why, it seems like we've had that type of digital currency all the time. Privacy issues exist there as well. What's the government can subpoena bank pretty, easily and get access to my accounts if it has cause. So what's the, is it just a lot of noise, a lot of concern about nothing, or do you see something that's actually real here, that there's

a big distinction between commercial backed digital currency and central bank backed digital currency? Yeah, I mean, I tend to perceive it as a lot of noise, but I don't want to is how I would say it. Right. So like, yeah, there's a lot of political. politicization around CBDCs. And I never thought, like, you'd be talking about CBDCs in Congress or in presidential debates because it's just, like, so wonky and nerdy. And, like, why would normal people think about this this much used to be my reaction? But as I talk to more sort of possible users of a CBDC, I think of privacy is an important

challenge regardless of how politicized or real or hyped it gets, right? Like, ultimately, if you're going to want to create a product that's usable, the people are going to want to use it. So I come back to privacy as a challenge that CBDCs are going to have to overcome, regardless of what form they take in the future. Great. Hey, Marissa, are you a, you use cash? You don't strike me.

Never. Never. Never. I mean, I just started, I barely even take out a physical credit card anymore. Were you born after the cash went away? I mean, or reborn? Do you remember like looking, like when I was a kid, if we wanted, you know, like an ice cream cone, I'd go to the couch and I would like search for coins, right? If you got a dime, back then when I was a kid, a dime would buy a great ice cream sandwich. I don't know how they would taste now. But that's a compliment, Marissa, by the way. Yeah, Mark, sometimes we have to have a conversation about how old you think I am. I think I'm much older than you think I am. Yes, I remember cash.

I mean, but it's interesting just going back to the, you know, the convenience factor and what the benefit would be to the consumer, right? Like I don't even take out a physical credit card anymore. I just, because I was at my phone in my pocket. So I just use Apple Pay. Right. Yeah, it's like I don't even need to leave home with a wallet, really, right? So from the consumer perspective or the retail side of it, it's almost like what is the, what's the marginal benefit I'm getting from this versus the way it exists right now? Are you worried about your privacy? Right now or in a... Yeah, right now. If it cash is anonymous, right? It seems like it seems like it seems like it's not a big.

deal to you. Until a certain amount it is, yes. Right. Okay. Yeah. Yeah. Fair point. Fair point. But I mean, even as we talk about cash, cashless, I think there's a barrier to entry into the cashless ecosystem, which still relies on like analog systems of money, right? Like it's like, and credit. Yeah. And credit. And I think quite a bit about digital identification. Because the way that you KYC people still looks like, oh, here's my passport, here's my driver's license. Still these, like, very basic forms of identification and verification that haven't adapted, even as the forms of money that we use have. So I think we can sometimes discount, like, how analog the back end of all of this is. And I agree, like maybe at the end of the day, if there is a CBDC, it might not

look any different than me tapping my phone. But the advantage of it, might not be to like me as a consumer. The advantage might be to my bank settling that money and charging me less, me not paying. That makes sense. Yeah. That sort of thing. So slightly like a different perspective of how to think about it. I think we should move on. How about you want to go to stablecoin next, Ananya? Yeah. And then we'll play the game and then we'll come back to crypto. How about that? We'll keep Chris waiting. Well, okay, if we're going to go to stable coin, I want to like play the game. Oh, you want to play the game first?

Yes. Whoa, she's taking control here. Sorry. No, that's okay. Her prerogative. She's the guest. You're the guest. Let's play the game.

Okay. And the game, we each put forward to stat. The rest of the group tries to figure it out with cues and deductive reasoning and questions. And the best stat is one that's not so easy. We get it immediately. I'm not afraid of that particular problem. And one that's so hard we'll never get it.

And if it's related to digital currency, then all the better. But should we begin with Marissa? Should we always begin? You can see how it's done inania or do you know? No, no. I think I should go last. You should go last. Sorry to be like so controlling.

No, no, no. No, that's it. I'm all for it. I'm all for. Prisa always goes first. I do. Obviously, Anna has got a plan. She's got a plan.

She definitely has a plan. She's going to make a, I know what she's doing. she's going to segue into a conversation with her statistic. Yeah. So mine is going to be a total break from this conversation because I wasn't actually expecting to be able to join you guys. So my statistic is not about anything related to what we're talking about. No worries.

Okay. It's an economic statistic from this past week. Yeah. Okay. So my statistic is minus 5.3% annualized. Minus 5.3. The stat stat that came out this week? Yeah.

The government stat? Oh, it's so from a trade group. From the home builders? From is it anything related to purchasing managers? Oh, geez. Leading indicators. A conference board came out with their leading indicators. Yes, yes.

Yep, yep. Minus 5.5. Wow. Oh, is that the Eurovere 5 in the L.EI? Is that the year over your decline? No, but you're close. You're close. So it's the six-month change in the L-EI. Okay, okay.

Yeah, so it's the... Ananya, can I ask Ananya? Did you see how I did that? Do you see how... I thought it was so graceful. See that? I would have used the word masterful, but I'll take graceful. Graceful, yeah.

Like a soft landing. Yeah. There you go. There you go. So why did you pick that in, Marissa? Well, I picked it because so this is the, so this is from the conference board. This is their leading indicators index, which is something we watch, right? It's an index that's sort of a mashup of all these economic indicators.

And historically, it's a pretty good predictor of recession signals. over time. So the data, we just got data through July, and if you look at the six month period ending in July, it's fallen 5.3%. And historically, when it's fallen at least 4.1% over a six-month period, a recession has always followed. And I don't believe it's ever given a false signal on that. So the signs are flashing, as we know they are. But that's a really, this is the first time, it's fallen below that 4.1% threshold. Oh, that's interesting. But the LEI from the conference board,

leading economic intercourse, that's been steadily falling now for quite some time. When I say quite some time, that's right. It hasn't fallen at this pace over a six-month period until now. That's right. So it's particularly since March,

it's really been on a kind of nosedive. So now we've gotten to that point where it's actually signaling that a recession is imminent. That's interesting. Well, that's consistent with our, right, Chris, our random forest machine learning recession indicator that we put together. Chris, you want to talk about that for just a second? Sure.

Because I know you're doing a lot of work in that area. Yeah, that's right. So I think we talked about it not too long ago. We run this model every month. It is this large random forest model that considers, thousands of different economic indicators, looks at different interactions, lags. You know, a lot of the relationships that, at least I as an ordinary human, wouldn't find intuitive or wouldn't be looking for in terms of very specific lags.

And using those lags and using that data, it's able to construct this random forest technique of predicting probability of recession. It's a remarkably or historically it's been remarkably accurate, so we've done some back testing. More recently, it's been quite volatile, I will say, acting to a lot of the noise in our economy and in our economic indicators. So not really surprising there. It isn't really, it isn't signaling recession just yet. The latest read was 49%. We use a 50% threshold.

So it's getting up there. But it can bounce around. So I don't want to, you know, raise a red flag just yet. Certainly, it is indicating kind of a higher recession risk, given what's going on in the labor market, financial markets, some of the other key indicators that it uses. So it's very consistent with what Marissa is saying. Yeah, yeah. I think he uses some of the same. Yeah, some of the same inputs.

Yeah. Hey, I want to get to Ananya. So, Chris, it's either you or me. So do you have a good stat or do you want to let me go? I have a great stat, but I have a feeling that. I have a feeling that I'm going to steal it from Ananya. I think I have first stat. Go ahead.

I can't have alternatives. All right. Go ahead, Chris. I'm going to throw it out. I knew what's going to happen. $6 trillion. I know what this is. Oh, you got it.

Hold it. Wait a second. If you guys know what it is, hold on one second. $6 trillion. $6 trillion is the daily transaction volume in the, in the, in the, of what is it? Treasury? No. Some volume measure, right, of transactions.

It is transaction volume. Okay. It's not daily. It's a payment system, global payment system. Well, in a very specific part of the global system. Germain to the topic at hand. Bitcoin? Not Bitcoin.

Stable coin? No, stable coin. Yeah. Is it stable coin? Really? So let's bet, yes, this is a reported number, $6 trillion in the first quarter of transaction volume. I say it's reported, it's reported by bitwise. And this number kind of made the rounds recently.

I think there's some debate about the, you know, how much of this transaction volume is true transaction volume. A lot of it could just be people moving between their accounts. It's not really comparable to what we might think of as a. Is that daily? Is that it can't be daily. I think he said quarterly. The first quarter of 2025. And the big announcement was, well, this is vastly higher than what visa processed in the first quarter.

So I think you've got to take the number with a grain of salt. But even if you cut this to 10% or 20%, it's still a huge, bigger than I would have imagined in terms of stable coin transaction. Does that make sense to you, Ananya, that's that significant, the volume? I'm very skeptical. skeptical. This stat. Okay, I'm going to put my number out there because it's related. Okay.

Go far away. 1.6 trillion. That's the actual volume of... It's the right number. Close. That's the right number. Close. So that is, according to a city bank report, the base case for stable corn volumes in five years. Okay.

Wow. So that is way different. Yeah. And the market cap for context right now is around $250 billion. Right. So the $1.5 trillion, I think, makes more sense to me as like a number to get to. But yeah, I don't know where that $6 trillion comes from. I saw it and I was like, whoa, that seems crazy.

Was that $1.5 trillion quarterly too? Or is that? No, that's total volume. Like annual... Like annual... Over the market cap. The market cap. The market cap.

The market cap. Okay. So right now what you're saying is there's $250 billion roughly of stable coin outstanding. Yes. And you're saying that five years from now, city group says $1.6 trillion will be outstanding. Yes. That's their base case. I think they go as high up as $4.5 trillion.

Okay. And then for context, and this goes to my step, but I'll just say it, there's almost four 4 trillion in crypto outstanding. So that includes a stable coin. Total. That's Bitcoin, Ethereum. I think the meme stock, meme coins, I should say. Every coin. Yeah. The future Zandi coin. The DJT coin, that kind of thing. Here's some other 28 trillion in treasury debt outstanding. Yes. 52 trillion in U.S. equities outstanding, although today it might be a lot. than that given the rally in the equity market. That gives you contact.

And the U.S. housing market, I think it's $50 trillion or so based on $13 trillion in mortgage debt. So, you know, it gives you $37 trillion in a home. That kind of gives orders of magnitude. So, okay, we, you know, we're taking a lot for granted here for the listener. What is stable coin? Let's take a step back and to say, Ananya, can you explain stable coin? Sure.

I think we have to talk about crypto to get into stable coins. Damn, I should have gone to crypto. Let's go to crypto. Let's talk about crypto. Okay. So, I mean, I'll just say this, right? So 2015-ish, there are refinements happening

to the Bitcoin protocol that was launched a few years before then. And the whole thesis there was we don't like intermediaries. We don't like big banks. We want to create a peer-to-peer way of transacting with each other and saving that money and using it for all sorts of functions that money is used for.

That's how Bitcoin is created. Over time, it gets sort of refined. Like, it becomes a little bit more efficient, cheaper to transact in it. The market cap grows more and more people are buying it. Between 2015 and 2020. And I'd say, like, at some point, midway there, there's a realization that if we want to create some sort of liquidity for

crypto asset markets, we're going to have to create something like a dollar that is still like crypto and serves our needs to not have the same kind of intermediaries, but can provide us sort of the balance sheet that we need to conduct those transactions in the long term. And obviously, Bitcoin's value and fluctuates quite a bit. So not really a very useful way to transact with other people if tomorrow you know I'm going to give you $5 and it's going to amount to zero. So that's sort of like the thesis of a stable coin is like how do we create it to be stable? How do we create it to provide some sort of liquidity and backstop to our other sort of

crypto asset markets? and make it so that transactions are easier. 98% of all stable coins are pegged to the dollar. That's another good stat. So what that means is that they're one to one with the dollar and they hold dollar-denominated reserves. So that can look like treasuries, that can look like repos, that can look like reverse repos, demand deposits,

all that stuff in order to maintain their peg to the dollar. So I'm an individual. I can go buy a stable coin on an exchange for dollars. I hand over my dollars, they give me the stable coin. Those dollars are invested by the stable coin in treasuries or cash. Yeah, a certain amount of it has to be in cash or in demand deposits. A certain amount of it has to, is usually in treasuries.

And then some of it increasingly is in repos and reverse repos. Right. And because it's fully, the stable coin is fully backed by the, by treasuries, presumably risk-free, that reduces the volatility in its value. It's kind of like a money market fund. Although, correct me if I'm wrong, stable coin doesn't pay interest, right? I mean, I guess there's ways around that, but it shouldn't pay interest. So a stable coin definitionally, as defined by recent genius legislation, doesn't pay interest.

But most holders of stable coin get some sort of reward. and the form that looks like sort of a yield or an interest. So most stable coins are held in crypto exchanges and crypto exchanges provide you a certain amount of yield if you're holding stable coins.

So that's kind of what it looks like. So you can sort of have a rewards program with stable coins. So you effectively get some form of interest. Yeah, but I would say like lower than money market account. Yeah. Right. Okay. And kind of the fundamental

You said this, but I'll repeat it just so that it sinks in for everyone, that the fundamental reason for the stable coin is to make crypto a medium of exchange. Because crypto before a stable coin, the value goes up down all around. You don't know what it's going to be on any given second. Therefore, it's not a viable medium of exchange. But by so doing the stable coin and you get that stability and value, then it becomes a medium of exchange. I can use a stable coin now, feel confident that I can use it for transatlantic.

transactions. That's the idea. Yeah. I mean, so I guess there's different theories around this, right? The reason why I think that's the main idea is because we talked about like 240, 250 billion market cap of cable coins. Only 72 billion of that exists outside of crypto asset markets. So 72 billion of that is not doing crypto asset liquidity work. It's being used in transactions. it's being used as normal payments. It's increasingly being used in cross-border transactions as well. So there's some theory to the case that there are other uses of stable coin,

but primarily still at this point they're used as a sort of within crypto asset markets. Yeah, the one, this has come to the four more recently, most recently, because of the legislation, the Genius Act to make it, you know, put it on sounder kind of regulatory legal ground. But the other thing that's come up in the conversation is that stable coin will become a significant source of demand for U.S. treasuries and therefore be a way for the government, the federal government, the U.S. federal government to kind of finance deficits and debt. Does that resonate with you, that argument? I mean, you hear this from Treasury Secretary Besson, right? Yeah. Right. I'm very skeptical of that claim.

You are skeptical? I'm very skeptical of that claim. I think, yes, it might lead to some increased purchases of treasuries by foreigners. Right. That's true. But all of that's like on the lower end of the yield curve, right? Like it's not going to impact the interest that we're going to pay eventually. So I'm skeptical of the claim that it's like going to help pay the deficit or lower the deficit

in any way. There's also a claim coming from not just the U.S. government, but others as well, not just this administration, that stable coins can sort of entrench dollar dominance, sort of equally, if not more skeptical of that claim as well. And that's because... I don't think increased purchases of treasuries are going to ultimately lead to, like, the use of dollar everywhere else. I think there's like a sort of weird reading of the demand signal here where, yeah, stable

coin usage is rising over time, what you're seeing, and 80% of it exists outside the US. But that reflects a demand for the dollar outside of the US and not necessarily a demand for like stable coins outside. You know, the technology isn't doing the work there. Right. And then that's a question of how is that used. Because are you using it in low value cross-border transactions like remittances? Are you using it as a form of saving and capital flight in some countries?

Like all of that is ultimately going to determine like the, you know, the impact on currency and interest rates and not, I don't know, it's, I think it's presumptuous to be able to say that it's going to impact the currency and interest rates right now. Are you suggesting it's just substitution or displacements? placement. A foreigner would have used a physical dollar now they used the coin instead. It's just easier to buy a stable coin than it is to buy a dollar because of capital controls. So I think it's just reflecting a substitution effect. You're right. There was a recent paper. Did you just catch it? I think it was some of the National Bureau of Economic Research, I can't remember the authors. But I was struck by it. I mean, they made the point that for every you know, X dollar increase in Sablecoin, you're getting wide decline in interest rates,

treasury yields. Did you see that paper? I haven't seen that paper. Yeah, yeah, I thought it was interesting. Yeah. I think it's interesting. I'll also say the sort of reserve management model of stable coins is changing over time. So where it used to be primarily treasuries and demand deposits, it's now changed to repos and reverse repos, which I do think impacts not just like the yield the consumer is going to get eventually and what the market is going to make or what the sort of issuer is going to make.

It also impacts like how, like ownership of treasuries in the long term here. You know, it seems to me, you know, CBDC, I have a hard time seeing the future for CBDC. But for staple coin, I can kind of feel it, particularly if it makes the payment system more efficient, you know, across the globe. I mean, it feels like it should, right? I mean, the payment, the cost of processing payments should be lower and it all should be faster. And it does open up parts of the world that may not

have had access to U.S. hard U.S. currency, you know, U.S. cash. So I don't know, it feels like this is more viable in terms of its future. Would you agree or disagree with that view? Maybe I'll slightly disagree with that view. You can disagree. You can disagree a lot. Yeah. I think that's a very U.S. centric view. Is it U.S. centric? Okay. Yeah. I think dollar denominated stable coins, 98% of the market. Yeah. We've clarified legislation on it and we're saying let emerging market consumers use them as much as they want. Now, central banks and regulators and other emerging markets are viewing this as a certain kind of dollarization of their economy, which is not

necessarily a positive thing from their perspective. So they're going to sort of come back with a certain amount of regulation and restraint and capital controls in some way over time to be able to restrict those payments, which is why I kind of agree with the bare case here of $1.6 trillion, right? Like, I think there's going to be some pushback from it from the rest of the world. And I guess other countries, Chinese, Europeans could establish their own stable coin and attract U.S. investor could go buy their stable coin.

Yeah. In euro or in one. Yeah, yeah. I mean, there's a European legislation on stable coins, which is called Mika. that's existed for the last few years, there's not that much demand for a euro-denominated stable coin outside of Europe, right? So that's why there's not been that much use of it. But increasingly, China's talked about creating its own stable coin,

maybe as sort of this recessment of its digital currency strategy here. Again, I'm skeptical of who's going to want a yuan-denominated stable coin outside of China and how they're going to drive use of it. But maybe they can compete with dollar-denominated stable coins in sort of a narrow or limited way of a piece coming out on it next week. Cool. Yeah. Definitely.

We'll give that to the listeners of the podcast. Yeah. Well, Chris, anything else on stablecoin before we move to your favorite topic who had the kind of Bitcoin and crypto more broadly? Let's dive in. Let's dive in. Okay. So.

How did the chase. What do you, okay, what do you think, Ananya, about straight up. up crypto, you know, the Bitcoin's, Ethereum's meme coins of the world. What's your view of that? Right. Can we play a mini version of the stat game? Yeah, absolutely. Go ahead. Far away.

8%. I don't know, Chris, what do you think 8% is? It's got 8%. I don't know, a share of Ethereum. 8% is... No? Not a share.

Not a share. Well, yes, a share. But not a share of crypto. Yes. Should we know this, Ananya? Are we just being... No, it's okay. I thought it would be fun just to give context.

Yeah, yeah, yeah. Yeah, no, it is, yeah. I'm stumped. I don't know where to begin with that one. It's the Federal Reserve's reported statistic for the number of people who use crypto in the U.S. Oh, that's an interesting statistic. And it's their household survey of, you know,

economic being, yeah. Kind of cool. So, you know, there's there's some indication that it's low, like it's self-reported, so it's lower, but let's, you know, say 8 to 12 percent, yeah. So you're saying it's not, the adoption is low here. It's not. I mean, yeah, yeah, yeah, it's, yeah, it's, I think crypto is, well, firstly, I think there's a conflation of a lot of things when we talk about crypto, right? You're talking about blockchain technology. You're talking about crypto, token. You're talking about an ecosystem that looks completely different than it did when it started out in around 2015, right? Like you have and a system that's become more and more centralized over time.

So crypto starts with this reaction against centralization, against banks and intermediaries, and it kind of looks like a financial ecosystem like banks and intermediaries now. Yeah. So if there's nothing else that we take from this podcast, I think that's sort of like the biggest point I'll make on crypto. You mean, you mean, there's a bit of dark irony in that crypto was born out of the idea that we want to decentralize. We don't want to be beholden to a fiat currency to a central bank. But now we're beholden to the whoever, the handful of people who are programming these cryptocurrencies. I actually mean that they are the whole ecosystem of issuers, people who like mine crypto,

are becoming more and more institutional over time. Yeah. And centralized. And centralized. They look like banks and other financial institutions. They're doing investments and they have investment strategies. So like I just find that to be sort of a big difference from the way that crypto used to think about itself. Right. For sure. For sure. Yeah, it's kind of lost its way in that regard.

We'll come around to it, sort of. Yeah. The one thing I can't get my mind around, maybe you can help me, maybe I'm just being, you know, dumb, is Bitcoin, at some point, it's going to wind down here, right, by design. There's the amount of Bitcoin that's being mined, doesn't that come to an end at some point here in the near future? Yeah, it's kind of an exponential function that's divided by half every few years. But yes, it's supposed to be like a commodity. So it's supposed to come to an end, theoretically. So I don't understand how that can be used for anything. I mean, how does that work? I mean, it doesn't, I mean, the value of that thing, if there's the same demand, will continue to rise.

I mean, I can see it as a speculative vehicle. You know, it's like beanie babies, you know, because it's an limited supply, you know, maybe. But at some point, that would come crashing in because there's no value there because it can't be used as a medium of exchange. It can't be used as a store of value. It's not a currency in those fundamental ways. So if that's not the case, then what's its use?

What's its value? I just, I'm so totally confused. For some of the other crypto, maybe like Ethereum, it's a live thing. It's evolving. So, you know, smart contracts. So it's a more complex kind of currency. Right. But the Bitcoin, I just don't get.

I don't understand. Am I missing something? What am I missing? I mean, I think you're right about. Chris is making a fortune off of my misunderstanding. I keep asking him to explain it to me. He won't tell me. He won't explain it to me.

Yeah, I mean, it's like the combination of two most opaque financials. and tech concepts. It is confusing by design. I mean, I think you're right. I think Bitcoin is speculative, right? It's what? It's speculative. Speculative, right.

But it has, if I'm going to take like a pro-cryptostance, it has created an entire utility for every other form of crypto ecosystem. Like stable coins come out of this, right? Like, you know, like uses of blockchain come out. of it. So yeah, you can view it as something that's going to eventually run out, but everything else is still going to be impacted by its existence. Okay. You're saying it's Gen 1 and we need a Gen 1 to get to Gen whatever. Right. Okay. Fair enough. Chris, anyone ask Ananya? I mean, she seems to be what I call a cryptoskeptic. No? Are you a cryptoskeptic? That's what I'm

getting from your body language. No? Sure. I'll take it. You'll take it. Yeah, I'll take it. But I will say like the functions of money, right, a store of value, a medium of exchange, it's fracturing over time. And I'm not sure it always looked as cohesive as we think it did, right? So what could be a medium of exchange doesn't need to be a store of value, which doesn't need to be like.

And that is like, I don't know, I'm not sure if it's a crypto idea, but it is, but it is certainly like a digital financial idea, right? Over time, the forms of money that we use are differentiating and they're fracturing the sort of purposes that we use it for. Got it. Chris, anything for an onion before we called a podcast? Maybe give us a, so what is the forecast? So it sounds like Bitcoin's going to zero.

That's what I'm hearing. Like in 10 years, 20 years or whatever, yeah. Okay. All right, that's a forecast. And so stable coin kind of stays at its current levels of 250? Or do you expect that? That goes to $1.6 trillion over? Yeah, I think that $1.6 trillion is probably an accurate assessment for the next 2030 is what their prediction is.

A lot of stable coin interest and then a lot of new kinds of functions coming out of genius, right? Like reserve management, custodial arrangements, all of these new kinds of like financial functions are coming in. So stable coins are becoming, again, more and more like other financial assets and interacting more with sort of the big banks and institutions. And I'll ask you one last unfair question, which is what do you think is the true productive value of all of this, right, in terms of additions to the economy? There are a lot of people out there arguing that this is going to unleash a dramatic increase in productivity growth in the economy. we should be considering this in our models and our forecast. But to me, it seems like it's removing some frictions, right? It's making things a little bit more efficient.

But that seems like it's really on the edges. It's not at least, again, speaking from the U.S. perspective, in other markets, maybe it's much more of a much bigger deal. What's your take on that? Is this really a game changer versus, say, AI or other things that people are speculating on? I think it's actually very similar to AI and the sort of like cycle of speculation of AI. I don't know.

I tend to think about consumer surplus as a good gauge of whether or not something is useful. And I know it's not going to capture like the financial side of the market very well. But I'd like to see some consumer surplus in order to gauge it as really productive. I guess one thing to think about, and this has come more recently before, is a world where the Federal Reserve and other central banks may not be as independent as they have been historically, right? I mean, that clearly is an issue in the context of the current political environment. And if you begin to worry about the independence of the Fed, and the Fed is kind of the keeper of the currency, then you might say, oh, maybe I should put some of my heart. hard-earned dollars into some form of crypto as a safe haven against, you know, the loss of that independence. No?

Yeah, I mean, we've seen this in data, right, where there is inflation and uncertainty, use of crypto is higher. And currency volatility is sort of the thing that drives it, ultimately. I think, you know, as with all conversations of money, it's about trust. trust right and um sort of the the sort of dollar in our hand is trustworthy which is why we continue to use it and it's going to take a lot it's going to be like a really tough witch's brew in order for that trust to be removed in money the way that we use it now so and once that's eroded yes i think we'll see other forms of money but i don't think it's just about central bank independence i think it's going to have to be like a financial crisis and other things added to the mix in order for

real loss of trust in the dollar. Yeah, good point. And I guess there's other reasons to be a little nervous about having trust in crypto. Like, you know, concerns about someone coming and stealing your key or there's got to be some concerns about being hacked, you know, some Yeah, I mean, unless finance is a big risk of crypto. And right. not a completely developed field here. So it's evolving, it's changing, but it's looking more and more like financial markets do right now. That's kind of been how I've looked at it.

I tell you, coming out of this conversation, I don't trust anything anymore. I don't know where to put my mind. I'm totally confused. I'm scared of everything at this point. Stick with the being babies. You don't want to know how the sausage is made, I think, you know. anywhere. Anyway. Well, Ananya, it was really a pleasure to have you on. I really appreciate you taking time out. I know this is late Friday and it's beautiful outside. I think you're in D.C. right?

Yes, that's right. It's beautiful out there. If it's like Philly, it's beautiful out there. So I hope you have a wonderful weekend. And thank you again for participating. And we'll hopefully talk to you again soon. Great. Thank you. Thanks for having me. Bye. Yeah. Bye-bye. And to dear listener, thank you for listening in. And we'll talk to you next. week. Take care now.