TFTC: A Bitcoin Podcast - #268: Q2 Global Monetary Base Update with Matthew Mežinskis

Episode Date: September 1, 2021

Join Marty as he sits down with Matthew Mežinskis to discuss his report on the Q2 2021 Global Monetary Base. Follow Matthew on Twitter Check out the report here Check out cryptovoices.com Shoutout to this week's sponsors. Cash App. Start #stackingsats today. Use the promo code: "stackingsats" to receive $10 and contribute $10 to OWLS Lacrosse when you download the app. Lend at Hodl Hodl is a new non-custodial bitcoin backed lending platform, that allows peer to peer lending and borrowing between users, globally, anonymously & on your own terms. Create you offers & set your own terms on lend.hodlhodl.com Compass Mining. Compass wants to democratize bitcoins hashrate and give everyone the ability to strengthen the network while mining bitcoin profitably. Thanks to Compass, it’s never been easier to mine bitcoin. Check them out at compassmining.io Braiins. Braiins are leaders in the mining industry; running Slush Pool, creating firmware to make miners more profitable (Braiins OS+), and building out Stratum V2 to help further decentralize mining and make Bitcoin more robust. Check out their mining profitability calculator.

What is up, freaks? It's your boy, Marty Bent, here to introduce this episode of Tales from the Crypt. Please disregard my screaming niece in the background. I don't know what's going on down there. She may be a little hungry. I don't know what it is. We're here for a quarterly update with Matty Mazinchus from the Crypto Voices podcast, CryptoVoices.com. The teams have been doing an incredible job of bringing data about the monetary-based monies, excuse me, the global-based monies to individuals around the world. To the Q2 2021 update, dove into a lot of things.

There are some new charts, new metrics added to the quarterly report. Matt and I walked through all of them. She's really pissed off down there. I don't know what's going on. This report was brought to you by our good friends at the motherfucking Cash App. Cash App's out when you stack sats, send sats, receive sats, and sell sats, if you so please.

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well as the s17 s17 plus s17 pro t17 t17 plus and the ones just added the s17e and t17e next up apparently are what's miners i think i'm gonna i'm gonna be that meme of the skeleton at his computer desk just waiting for the what's minor firmware it's gonna be your uncle marty that's how he's gonna die literally waiting for the what's minor firmware along with s19s from bitmain stay tuned tm for more updates on the firmware and slush pool and check out insights i-n-s-i-g-h-t-s dot brains dot com for content stats charts and mining profitability tools to stay on top of everything happening in the mining industry enjoy this rip with our good with our good friend matthew was anxious

you've had a dynamic where money's become freer than free when you talk about a fed just gone nuts all all the central banks going nuts so it's all acting like safe haven i believe that in a world where central bankers are tripping over themselves to devalue their currency bitcoin wins in the world of fiat currencies bitcoin is the victor i mean that's part of the bull case for bitcoin if you're not paying attention you probably should be probably should be but uh i won't i won't record locally then or do you need my local no i'm recording locally here on my on my uh external hard drive going live first interview the meeting is being live streamed we are live we're recording what is up freaks

welcome back to tales from the crypt it's our quarterly check-in with matthew mazingtious matty how you doing doing well marty i always look forward to how you're going to say my name and that was uh that was one of the better ones better as in more funny so thanks uh doing just fine doing just fine very uh very happy to be back what's that let's look it up uh no it's uh it's mizinskis is the latvian version mizinskis would be the american but uh either way it's it's it's fine it was good don't worry it was it was good last name down i know how to spell it i know how to like hold the z down hit one to get the uh what is that a little uh the the carrot on top there the um it's the in the latvian term i don't know there's different terms i guess in each

language but it's the soft theme the literal translation is like the soft sign because it makes like if you have like a z it'd be like a j or if you have an if you have like a s with the carrot over it'd be like a sh so and like i know that's similar in many slavic languages and stuff latvian is a baltic language a little bit different but uh yeah just go ahead and re-listen to how you said it and that's a little bit funnier but it's fine i'm sorry it's no offense taken at all i mean growing up in the u.s with that name and now being over here with matthew as the first name it's always uh it's always going to be uh some interesting conversation about it so it's no worry yeah you can't go anywhere without having some name conversation

Lafayette State's first name in Lafayette. I guess, whatever. Did you pull up the slides on your side? Because I didn't see them. No, but I can pull them up. Unless you want to share your screen, I can allow you to share your screen. No, you go for it.

It'd be better just for you to click on the side. It's not like I have any porn or anything on the screen, but still it'd be better for you to... Yeah, let me pull it up. I'm going to pull up the thread. While we're doing that you were mentioning before we went live and hit record that you uh you've been traveling for the first time in 18 months you said you're happy but then you're also depressed what uh

what uh well i mean it's the same story that uh you you talk about many times on your show um you know we're just slowly slowly being coddled into this new brave new world and um yeah i mean uh i was talking with a uh friend of mine in the u.s whose wife is australian they were eventually thinking maybe to live in australia um but for now they're in they're in my hometown in cincinnati um they can't go now to australia because the like word on the street is as i was told i don't know the latest but like you know we might not be able to guarantee that we can let you leave if you come at least to his wife so like australia new zealand as many people know it's going a little bit crazy with their restrictions but um especially you know in

mixed marriages like i'm in a mixed marriage um where one partner does not have the other's passport it's just makes you think more than ever about where you you know if things go sideways where you might be able to go of course marriages make things easier but you know regardless you know do you have to be married to you know be able to fly a plane and take your spouse or significant other loved one or child i mean it's just it's it's uh it's you know everybody knows everybody's got their own opinion on all this stuff but um yeah i was i was talking on his podcast as well recently like he always says this thing about be a better person at the airport and stuff and you know don't get up early and and and block people and try to like get out of the plane

first you're all you're all going to get out at the same time roughly and you know if you just look at the way people are so stressed and planes and airports and everything these days i mean it's uh it's just sad and it's clearly the regulations the controls everything you need to do makes it even more sad um and you know no that's it's not a new normal new normal i do not like airports i did not like them before looking the lockdowns and the mask mandates and all the fear going around but now especially it's like whoa and considering what's going on i know right before we hit record i was a guy i hate talking about this shit i'm happy that i'm busy because i don't have to focus on it but it's the first thing first thing we bring up like considering like all the freedoms

that were taken from us under the guise of protecting us from terrorism and mainly in airports with the TSA that were forced to go through that embarrassing, dehumanizing process of taking our shoes off, standing up, getting frisked

and all that. Again, in effort to protect us from terrorists who are going to use the airport and the airplanes to take our freedoms. However, just leave $85 billion worth of weapons to arm the terrorists and yeah and always you know when it comes back to us it's always temporary

measures right always temporary temporary temporary and then you know 50 years later the gold window is still closed well that's well that's maybe that's a perfect segue into the topic we're here to talk about today the monetary base update q2 2021 since we last met to go over the q1 2021 update as you just alluded to and mentioned we had the 50th anniversary of nixon officially ripping us off any connection that was remaining to a gold standard and it was temporary how temporary was it supposed to be uh i'm not sure it was described that way uh like they they ever you know give a hard and fixed window there um so i don't know the answer to that but uh we had two interesting conversations fernando uh my former co-host who's really uh

blowing up his portuguese uh based brazilian youtube channel these days uh he did a whole series this summer on 50 years so i definitely recommend uh listeners to check it out not only i mean there are some interesting ones if you want to read the subtitles but uh we did two in english i did together with him one was larry white uh big free banking scholar another was Dr. Mark Faber, who is a hilarious old school Swiss investor, spent a lot of time on Wall Street, was on Wall Street during the closing of the gold window. And yeah, it's incredible to think that it's been 50 years and you literally have probably more confusion than ever today when it comes to people's understanding of money what is money some people think that gold still backs

money um the disconnects are just uh just probably as large today as they were as they were then and um and yeah so anyway those are interesting uh interviews if you want to check them out over on fernando's youtube channel um but yeah to your question about how long it was you know it's just always it's it's always like that back to the security thing as well i mean i remember just briefly going back to the security thing i remember a couple years ago because you know i get back to the states three four times a year at least i used to um you know i remember very well it was like springtime summertime lulls of uh travels and then they were just gearing up for the summer and then they uh they just rolled out the uh you know those those body scanners

um you started the super groping um and now they have the dogs that walk across with you oh god the dogs just like scaring children uh it is dehumanizing but anyway we i don't we don't have to go back to that but yeah it all always in the name of temporary measures to help us uh and protect us uh that never go away never go away so it is uh it is something to keep in mind both for our you know like i said it's it's more it's more that i need to think about as a traveling expat um you know multi-national uh person multinational marriage uh you know and people that think that they need another passport to get out maybe or you know if if if restrictions come so bad you want to go somewhere in the caribbean like i know a lot of people have

thought about that these days yeah i mean probably more than ever you know just really got to think about it more, plan more, and think about where you want to spend your time during certain seasons or whatnot, because it's hard to see that it's going to get better anytime soon there. We'll jump into the monetary-based stuff. I'll just have to repeat a story I've told on this podcast many times is, again, when I was working at the Managed Futures Fund in Chicago, our chief investment officer was a gentleman by the name of dimitri who immigrated to the united states from russia in the 90s and

he had this just one comment to me when i was 22 21 stuck with me for ever now or at least 9 10 years since we had that portfolio i mean he was like he grew up in soviet russia and he really does not like communism and he's looked at me scared shitless one monday we got on the subject of tsa somehow and he was like marty like the tsa like ever since the patriot act like what's going on here it's it's turning into the soviet russia i ran away from it's like holy shit man like what the communists make you used to make you take your shoes off uh and all that stuff during interrogation and you know america is now the only place you have to take your shoes off the airport ironically it's just uh it's just bizarre yeah it's very what's going on in the world of base

monies well you know our favorite hobby horse over here uh at the crypto voices podcast uh couldn't find any place that was really uh presenting this information well so decided to do that uh ourselves it's been about three years actually since we uh started publishing this yeah thank you thank you sir but uh yeah also of course we've had other uh guests we've talked about this stuff all the way from our first guests about the real role of Bitcoin as ultimate settlement in Bitcoin's financial system. It's done in 10 minutes. What does that actually compare with in the fiat system? So that is a lot of people just misconstrue that. They compare Visa and Amex's 50,000 peak transactions per second as some sort of a

global settlement. No, that's not what's happening because you didn't pay the credit card company from your bank account right at that point. Neither did the merchant receive money from Visa or MasterCard or Amex immediately at that point. There could be 30 days to months, depending on when that credit card is paid off for that money to settle. And even there, that is money that's literally credit. The only time it hits the money supply is when you pay your credit card off with your checking account, which would be part of the M1 money supply. They call it M1. So this thing is very, very stretched out and takes a lot longer than people think when you talk about ultimate settlement in the current fiat financial system. People just forget this

again and again and again. And it's a basic concept once you understand it, but just open up any philistine financial press uh these days or any day and you're still going to get the bitcoin is slow and clunky argument bitcoin can only do three to five transactions per second argument uh they have no idea that bitcoin is comparing with uh central bank money or base monies of the past like gold and silver when you're talking about ultimate value and ultimate settlement so that's the story um here we've done it with the top 30 floating relatively floating currencies in the world um because peg currencies just by the nature of i just said there's actually these floating currencies are backing some of those peg currencies so there's not even final

settlement for a lot of those floating a lot of those uh excuse me pegged currencies and so there i actually said in that uh in these uh this title cards you got 30 currencies 61 currencies uh actually directly use those 30 currencies. 52 other currencies are pegged or boarded to those 30 currencies. So you're at 94% of GDP in this exhibit, 78% of global population. And if you put it in US dollar equivalent, which is all we can do at this point, because Bitcoin is not valued at $30 trillion, I'm sure it will get there. Yes, we can't really put this in BTC terms to make sense, but it does come out to $28.8 trillion. And if you go back about two years pre-COVID, say fall, winter 2019, moving into 2020, we were under 20 trillion. So that's about 50%

increase in US dollar terms over two years. But we do have inflation we can talk about actually in the actual units, increases of euros, increases of yen, increases of UN. The Euro, actually, at the moment, is the largest monetary base, about 6 trillion euros, about $7 trillion. The dollar itself is ranked number two at $6 trillion. And that's where we have it. So Bitcoin is still remaining about sixth, sixth globally, the sixth most valuable currency money, I should say, the most valuable money in the world behind the dollar.

Chinese Yuan is sort of in GDP order right there. So you have the US dollar at the bottom, Chinese Yuan. European Euro, Japanese Yen, and formerly Great British Pound. There's that lighter shade of blue before you have the remaining 25 in purple. So that is the money supply. That is the printing press. That is global central bank money. This is what you need to be thinking about if you want to think about where Bitcoin can go or the arena that Bitcoin's playing in or what Bitcoin is doing or how Bitcoin settles, this would be the arena that you should be thinking of.

All the other stuff, credit cards, debit cards, checking accounts, Venmo, PayPal, Elon Musk, all that comes very, very, very, very, very distant second to this money supply. Trey Lockerbie , Yeah. And in the context of where we were Q1 2021 to where we are at the end of Q2 2021, what i found pretty interesting was the fact that bitcoin held its own at number six in in terms of base money even with the price volatility in the bitcoin world and the money printing going on alongside of it um so it seems like it's a mainstay in the top 10 and approaching the top five and again i think the the fact that it remains static at six from q1 to q2

considering again money printing and the price volatility bitcoin is a very bullish sign to me personally i think that's just a very boring uh development in in bitcoin when when you compare it to to other base monies like it is a base money that is competing with the biggest base monies in the world right now yeah absolutely completely agree and i think that um that unless some catastrophe happens in Bitcoin land, which none of us can foresee, I don't see that changing at all. We're already in, as you said, the top 10. We're in the mid-major players. So if you want to rank them again in dollar terms, the pound is about at a $68,000 Bitcoin price that would match the Great British Pound Sterling. The Swissie is a Bitcoin pass for the first time

this year ever. So that was a big one, a Bitcoin pass for the first time this year. That's about $41,600. And then Indian Rupee is down there, 26,000. You just get currencies that you never want to hold otherwise if you were in their country. Like the Canadian dollar, the Canadian, the loonie, there's $16,000 Bitcoin. It's got to fall to $16,000 to match the Canadian. And that actually is a huge, they had a huge amount of inflation from COVID. Canada was even outside of the top 10 before COVID. It just ironically held its value in dollar terms in the last two years. And the Russian ruble and South Korean won. Those are the largest floating currencies that you have. You have a couple others that are kind of close. Every once

in a while, they'll bounce in the top 10, but I'm not including this exhibit because again, they're pegged like the Hong Kong dollar, the Danish kroner, but the Danish kroner is completely backed by euros, Hong Kong dollars, a currency board to the dollar. So eventually a website will get those currencies compared with their economies and stuff, but that's not what we're doing at the moment. So these are just the floating currencies. So really all there is after these mid-major currencies is, as I said, it's just the dollar. It's massive paraded distribution. You have the dollar, the UN, the euro, and the yen, and even really the euro and the dollar are the only two currencies yes we're speaking from the west and from our you know lens point of view but um it's

just you don't price too many goods even in asia in uh in uh british pounds you know so maybe back in the days of british rule you would have some better uh connection there but um really it's just like the dollar and the euro are the two like global currencies where you could have people that want to hold you know i think the panama papers 30 trillion dollars of value was in there those are those are the currencies that typically hold across uh across borders and now bitcoin and now bitcoin so bitcoin you know it's another interesting one if you go back to tweet two actually uh this one i think might pique your interest with uh with all your endeavors in the mining world um and and just click on the uh the chart there thank you for driving this

So I decided to add the global electricity consumption. Our good friends at Cambridge have their mid-range. It's basically, I put 100 terawatts. I think it's a little bit below 100 terawatts right now, but basically at 100 terawatt hours, over 22,000, 23,000 terawatt globally um it's very interesting that bitcoin has accreted in value faster against traditional monies like silver so non-industrial silver it's it's passed uh last year for the first time uh that's like silver bullion jewelry etfs all that stuff um it's like six seven hundred billion so bitcoin's now larger than that 133 of that value uh gold's about 10 trillion it's a bitcoin you at 900 billion or roughly about 9.2% of gold. Then there's that global fiat number, which is about

29 trillion. We're at 3% there. And that it's interesting with all the fear mongering they have with electricity, at least on an annual spend, annual security spend, as they say, Bitcoin is only 0.4% of all the electricity that's spent around the world. So I don't really know if that's bullish or bearish or what to say about that i just think it's interesting that it's accreted faster against money than it has against what everybody says you know the latest fear mongering about bitcoin is that uh obviously everybody knows it but that's only 0.4 roughly 0.5 of global electricity yeah it seems like the uh the criticisms are a bit overblown if you will the utility

by the Bitcoin I mean we can go down the energy debate for hours but it's something that we've overcome but you're more than 6 if you just look at it compared to global money global monetary base we're talking roughly

29 trillion dollars in US dollar equivalent I mean that's over 6x more than Bitcoin's uh pollution into the global energy consumption grid and i and pollution is a bad word because i don't believe that uh it's polluting obviously there's value everybody knows that there's value uh in what miners do well it's all relative and and net pollution you can i think there's

cases to be made particularly i mean obviously i'm biased to great american mining i think we're a net we've reduced pollution particularly fugitive methane emissions so it's like a net go on i'm totally with you i mean i was just using that word as a as a you know descriptor of an output if you will yeah but just to uh just to kind of flatter the philistines again i mean it's not it's not really you know it's not there's no there's always positive value that's coming out of that for sure um it's just you know pollution is it's such a relative term that um i i just think that it's it's way overblown and it's amazing just right there to see that it's six times less than the global value compared to money uh what it is it's net

effect on electricity consumption so and again you know it's not just straight up pollution i mean there's so much value and security and safety and uh you know wealth protection that's coming from that electricity spend i mean yeah being too verbose on that but yeah pollution is obviously not the right word no but it's it's like what the fuck happened in 1971 i'm not going to pull this chart up uh on the live stream but i have it here on my other computer uh have you ever seen this the henry adams curve i don't think so that's too it attempts to basically predict out electricity production and consumption um into the future and as society grows obviously you're gonna hope that you're gonna use more electricity because that means society is

flourishing and right around 1971 uh the the henry adams curve just gets completely borked um and i do think bitcoin is here to help fix that i'll put it in telegram I'll send you this tweet interesting yeah no I've actually never uh never analyzed this so the correlation is that the more electricity that you're using presuming that that presumes a higher you know net wealth and and standard of living for everybody yes yes yeah which is makes sense makes total sense right it's all demonization of electricity yeah it's anti-human at the end of day um i would argue a lot of that going around these days no doubt so this is a new addition to the report what what else sort of stuck out to you uh compared to q1 2021 or quarters passed

throughout the history of you guys putting this out uh every quarter is there anything q2 that shocked you um anything that you think we should be paying attention to or or looking into in more detail now i would go to um 35 slide tweet 35 slide there that goes back to the so i mentioned in dollar terms if we're roughly you know 29 29 trillion uh equivalent now under 20 trillion uh two years ago that's roughly a 50 bump in two years but if you look at this slide this is again uh in native terms for each currency but you can still do a blended average of those if you look at again their their u.s dollar weight in the basket and you know that can change over time right because china in this chart china the data on

China only started in 2000 and in other countries, you know, it came along the way and only like 15 of the currencies started in 1970 in this exhibit, but still that's just the best data that you have. So for example, the US dollar is weighted at like 40% back there in 1970, whereas now it's closer to like 20% because you have other currencies, namely China is a big one that came on. but anyway taking the actual inflation and we talk about prices now or at some point whenever you want always everybody's favorite topic in uh in bitcoin land especially after this uh

nice pal speech and whatnot but um this this is so much higher than you would ever think or be taught or whatnot all through the decades um and it gets even more crazy as recent years have come to pass. 1999, that was Y2K bugs. People were actually taking physical-based money out of ATMs faster than central banks and keybops. They really had to

prime the pumps a lot there. Then when the quantitative easing experiments started in 2009, 2008, 2009, you see that happening there.

The numbers that you're seeing on this slide are annual supply weighted growth so that's it's the monetary that's like the traditional that's the austrian economics definition of inflation that's the actual unit growth money growth of uh of the actual money supply uh year on year and and you can blend that you can blend that you just need a common unit of account so i'm using the dollar to do that maybe that will change over time we can blend it in satoshis or whatnot when we have uh more market penetration but for now it's it's fine to use the dollar and it's just you know it's so much higher than you were ever taught you know it's it's interesting they've tried to unwind it in 2018 2019 uh they really really

tried but as much as they tried they still finished positive a little over one percent in 2019 and um and then they just blew it out again of course last year with covid and then this year they're on track for about 20% growth again. So again, what you need to think with this chart is rule of 72. So very simply, this is the compound growth. This is a very strong number. So just take 72 and divide it by this number, drop the percent sign. Percent signs already dropped on this chart for ease of reading. But when you see numbers like 35, 34, those numbers are going to to 72 twice. So 72 divided by 35 is roughly two, right? That gives you doubling time. So your doubling time with those rates of growth is two years. And I'm not saying that price inflation

equals monetary inflation. I'm not saying that at all. But look, one of those is an arbitrary sort of voodoo mess. And I actually had a recent article from Bloomberg highlighted I wanted to mention with you. But anyway, when you talk about CPI, that's like just a voodoo sort of made up thing. This is at least real figures. This is actual supply. This is what you're talking about when you're talking about comparing Satoshi's 6.25 Bitcoin every 10 minutes. This is actual supply of these currency units. It's far larger than you would ever see here or think about on the mainstream corporate press. It's far larger. And blended, that white line, will blend it over the entire 50 years now that we've had basically since the collapse of gold

window. It's close to 13% now, 13%. So 13% year on year, which is three times higher. Sorry, six times higher, I guess, than the targets that have been in place since the 80s and 90s from some of these banks, Bank of New Zealand, Federal Reserve Bank. European banks have always had different targets, but Bank of England, 2%, 2%, 2% to 3% they're targeting of inflation, as they say, but their actual money growth is much, much higher, much, much higher, blended close to 13%. So that's also the story of this exhibit, this sort of monetary-based exhibit, is that what more basic data can you look at than the money growth rate of basic money? Ben Felix , And you can actually

look at that pretty easily in one chart, if you blend all of the different figures together, like actual increases of dollars are inside this number, actual increases of yen, of uh yuan of euros of aussie dollars canadian loonies it's all inside of this number and it's much much higher than you would have ever learned in bad university econ classes just a dumb uncle marty question here like does the weighting of the individual currencies and that overall growth rate or the the i guess the contribution of any individual currency based money to the growth figures does it really even matter where does the the combination of all them grow so my waiting yeah my waiting um with the waiting is important and it

will it is true depending on your numeraire and in my example here the numeraire is the dollar dollars you know world's reserve currency pretty much still you know brent woods was all set around the dollar, all that stuff. You pretty much have to use the dollar. Every central bank uses a dollar base rate on their website and publishes dollars, their first exchange rate. Luke Gromen , It is true that the exchange rate of the euro, the yen, the yuan to the dollar will affect the weighting of that currency. Luke Gromen , As I mentioned, if you look back in 1970, you're looking at a dollar's weighting of about 40%. There's a 40% of the movements of those

currencies is 40%, but now it's only about 20%. If there were one currency that would kind of make this thing weird, it would be the Chinese Yuan because it's not a fully floating currency. It's been more floating than fixed since 2005. You can look that up. But but they just make up their numbers, their communist party. Everybody thought the Soviet Union had money until they didn't, and then it all collapsed. So that is a made up thing, no doubt. And everybody knows they weren't transparent about COVID. You think they're going to be transparent about their monetary base? Definitely not. And maybe that's the case for many of these currencies, who knows? But it's the best that we have. I mean, I'm going to the

source of each i'm not finding this from like the imf or anything i'm going to each central bank's website to find this so it's all i can do and you know would i prefer that the un was like a more floating currency it might make more sense yeah but i mean it's it has to be there it's it's a major it's just a major store of of wealth in the fiat world so the un is now um let me just anyway so answer your question like yeah it does change it but it's it really doesn't change if you look at uh say the dollar um let me just let me answer the first question first about where the yuan is one second sorry uh the yuan you know if you want to pull up any charts so it's about it's about 17 of the pie right now the chinese yuan um dollar is uh it's 20

21 sorry i gotta get better charts on my other computer look to make this more smooth anyway uh yes the waiting that that's how it's weighed it's weighted by the monetary base of that particular currency at that particular period but it morphs and changes over time like i don't I'm not just like a lot of these CPI indices do, I'm not just waiting this and then forgetting it and making it up based on my constituency or whatever. It morphs every single month, whatever month that effective currency's dollar value is, that is the weight of the pie that you would accept its actual currency's growth into the blended average. So that's how this is done. So I think it's pretty rigorous, I guess, is the words to say how that's calculated.

But even if you were to do that on like a dollar basis, total blended, like just look at the total amount and look at the dollars fluctuation, it would be probably even less than that. It would probably be like 10 percent maybe instead of uh 12 so uh so it's actually you get a more you get a a a little bit higher figure and in my opinion more accurate figure uh when you actually look at each currency's growth and then weight it that way um i don't know anyway that's that's that's that's how it's done that's this that's just this example this one blended uh chart soon i'm not sure when i always say this whenever i'm talking about this stuff i will have a better website where you can easily just scroll through every single currency's growth rates and see it

much easier but on this this exhibit i only post uh i only post this blended blended uh average but there's a summary table at the very end where you can see it uh what is this chart saying to you i mean obviously like the the doubling effect of the monetary doubling on the monetary base seems to be happening much more frequently these days but it seems like particularly after 1999 there's maybe outliers or things just are tending to get more volatile certainly it tells me things are getting more volatile uh anybody you know like a child will notice that what's the more like what's the more crazy side of that chart uh certainly getting more volatile um but it tells me that even back in the day, because again, look at the stagflation period of the 70s or

after the gold bubble pricked in the 80s and Wall Street days, all that stuff, great moderation. There's no number there that is like 1% to 2%. And if the theory is that you're going to target a price rise of 1% to 2%, you might think that it would be closer to that. Now, again, I've said it in the report. I say it here. Yeah, I have to use the caveat. Yes, this price inflation does not equal monetary growth inflation, but ceteris paribus, ceteris paribus, an increase in the money supply will always lead to a rise in prices. How big is that rise in prices? I don't know, man. I think this is where I've said it before as well, probably on your show. Everybody has their own balance sheet. Everybody has their own

own um cpi index right every person every day every family that's just why this stuff is just completely voodoo so that's that's what i wanted to bring up before was the bloomberg um article about this um yeah well you're bringing that out i'll just riff on that like like you said like there's imperfect information and you don't know where people are going to spend their money uh how allocators institutional allocators are going to allocate their funds and so you You can't exactly identify where prices are going to rise as a result of this monetary inflation, but you can just have the base layer understanding that prices are going to rise somewhere in the economy or many parts of the economy. Yeah, exactly. No one knows that, but I would say looking at homogenous assets that have to do with money are probably the best place to start. So here you have it with

base money, you have with gold, silver, and Bitcoin. These are homogenous assets. And seeing where some rise relative to others will give you a pretty good idea of what might protect you from that purchasing power. This one, it's actually back from June, the end of June. It's a Bloomberg article. It's nerd out over the two flavors of inflation, CPI and PCE. So they point out how I guess Bloomberg is going to try to now reconcile these two different indices for the reader because the Federal Reserve doesn't use the CPI, they use the PCE. The Bureau of Labor Statistics CPI is used by some hedge funds, used by pension funds, those things. It's used by social security as well i believe um but the fact that they're using two different indices

anyway is just hilarious and then like here it's just like an example of a little chart like this which i'll i'll just basically read it for you is you got you got things like uh weight of shelter weight of gasoline weight of health care other effects that they're going to try to reconcile while in May, the CPI was 5% year-on-year, and the PC was 3.9%. First of all, those are actually high numbers for the corporate press to ever report. And as John Williams has pointed out for years and years, they've changed the hedonics of all the variables of all these inputs, basically. But it's just like we could make a thousand, we could make a million charts of this, of

trying to do a little bar chart of, okay, why was this one five? was 3.9 you and i can make up our own indices um there's better indices which i i think are more uh more uh apropos like the chapelwood index um there's just none of these are saying that they're like two three four percent uh yes it is finally you know the narrative in the media now that yeah it really might be a little bit higher than two three four percent but even five percent i mean who knows like you know i could tell you my university was it's definitely more than double within 15 years i mean it's it's not sitting at two percent year on year that would be a that would be a doubling every 30 years so um it's just it's voodoo like if if you maybe we've

discussed this before but it's trickling down to like high school private education too i know i to a private high school and tuition when i was a freshman was around eight thousand dollars when i left it was around 12 and we thought that was pretty high now it's around like 25. i graduated in 2009. it's 25 now and you're in 2009 it was eight yeah or it was 12 in 2008 it was 8 in 2006 whenever i went in yeah yeah there you go i mean let me just do that really quick keep talking i'll do that actual calculation no it's i say this a lot maybe it's a bit uncouth and abrasive but it is in an attempt to jar people awake like this the fed will reserve and the corporate media and individuals spousing and

that cpi is a an accurate measure of inflation and that inflation is actually subdued and we need to target higher rates of inflation and so that the fed can reach its mandate of peak employment it's just these people are pissing in your face and telling you it's raining they're they're seeing what they can get away with because if you actually just live in the real economy and have to transact in it and you're just minimally observant over a long enough time period it's blatantly obvious that prices for a lot of goods have changed your eyes all you have to do is use your eyes and they just try to just dumb it out of people it's it's so it's so embarrassing so anyway that's that comes back to why why these charts why i try to focus on them and try to

educate on the compound growth and all these things and it's a you know the compound growth is not that hard, but you got to take into account the periods that have passed and whatnot. But anyway, your example, Marty, was what? Eight in 2006 and 25 in 2021, basically, right? Yes. All right. So it's 15 years. That is a compound annual growth rate of 7.9%. You could do that on your... Anybody could do that on their financial calculator. Just check my math there. 7.9%. So- Or exit inflation target.

it's not three uh remember you know years and years ago like that's all that it was it was you know that was the target two percent um even when they had zero percent is their uh fed funds rate and you know it's just it's just laughs i mean it's just like it's it's completely flies in the face of the mainstream dogma so uh eight percent is a grows a hell of a lot faster that's up you know it's going to double four times faster than something that is is two percent yeah yeah and as obviously we talked about the volatility on the right side of this chart again the volatility would you argue it has to increase from here due to the debt obligations uh that the fed and the us government have and the need to service those and they're not going to be able to do that

i wouldn't even say in a high interest rate environment but just in an interest rate environment that is uh higher than it is now yeah yeah and you know i don't know i like the the the recent fed speeches and uh well i guess just one since the jackson hole conference was was canceled but uh yeah you know tapering is tapering is just around the corner but you know don't expect it yet and it's just this this fed speak just well let's dive into this because there's a couple things going on right now um obviously all the institutional investors are like taper taper taper it's time to taper and how well versed are you on the inner workings of the repo market and what's going on there

because obviously in september 2019 we had spasm in the overnight repo markets where over the course of that year jp morgan transitioned out of cash and into treasuries and in that overnight market jp morgan would have typically provided liquidity but they didn't have that cash liquidity anymore because they again transitioned into treasuries and so the fed needed to step in in that time and provide liquidity to that market and now it seems we're in a completely different scenario in which these reverse repo markets where the banks have a shit ton of excess cash and nothing to do with it so they put it in this overnight cash market that'll get them a little bit of yield and it's an insane amount of money it's at the overnight repo reverse

repo excuse me as it's hit at like 1.2 trillion 1.3 trillion at some points in the last three months and to me as an ignorant observer watching this that signals to me that there's just like so much cash they've printed so much and then the banks just don't know what to do with it so So they're just willing to put it in an overnight money market fund to get yield instead of putting it somewhere else, like stocks or other types of assets. Preston Pysh , Yeah. The places to park cash, and if you are able to track pension funds, hedge funds, large banks, the inner workings of the repo market there, I haven't seen a great indicator that

can track that over time. But it does seem strange to me that you'd have something like that that happened in the fall of 2019. The repo market's going crazy, short-term interest rates spiking. And at the same time in 2019, if you looked at this example of base money, so base money is comprised of actual physical cash and then reserves, which is basically when the Federal Reserve wants to put new money into the market, it buys treasury bonds from the banks. It doesn't buy them from the treasury, it buys them from the banks and the large pension funds basically. So the fact that large banks at the time thought that, and so basically the reserves that banks hold right now, they're higher capitalized on a global, let's say at the US. At a systemic level,

they have more reserves now per deposit and everything else than they've ever had. They have so much. And they have that now, and they also had that in 2019. Why that sort of hiccup happened in the market, I don't know. It's really like short-term strange new stuff to me, and I don't exactly know. I'd need to see some sort of better index to kind of track why you have these uh these major spikes in in interest rates um but what i will say is probably five percent sorry five not five percent five banks uh in the united states control maybe 80 to 90 of the reserves so when you see um haywires like that that happened in 2019 september it has something to do with the liquidity of the five largest banks. It doesn't have really much

to do with Main Street or mom and pops or the real economy. Yes, those large banks feed into the real economy and they subsidize and fund a lot of companies, but it's very, very top heavy. That's the most that I know about the repo market that I could say that may be unique about it because the system is capitalized, really. I mean, the system has had it in 2019. It has now more reserves per deposit than it's had ever. So why banks seem to be running towards the door in 2019 for those reserves, I'm just not sure.

But it is strange that you have basically the top five banks controlling 80% plus of global reserves in the United States. And that acutely highlights the Cantillon effect, or the Cantean effect, however. Yeah, I think it does. I think it does. I think that makes the

Cantillon a very valid argument. Yeah. Gold would reach certain players in the market and cause inflation. So does it when big banks get to it first.

they benefit first and then we all suffer later yeah and then like especially after 2019 uh you know to focus too much on repo markets but i think this is important to note too like they added the list of individuals that could leverage the cantillon effect by essentially when that liquidity crisis happened in the fall of not essentially they did expand the list of primary dealers and access to the fed window to include the ficc which is essentially a vehicle through which to fund the margin trading of hedge funds like millennium 0.72 citadel um because apparently they were at systemic risk of of failing yeah that's true it's it's it is strange again that you have um so much liquidity on a systemic level but you still have to keep adding these special

purpose vehicles these special facilities these extra lines of credit basically uh for for so many different entities um when again systemically like you have more reserves than you've ever had so uh again i obviously i'm with you and i'm with most people that buy bitcoin like i don't trust it you know saying that you have more reserves than you've ever had is not like a it's not a good thing it's a supply and demand thing but um yeah i wish there was a better signal to really track uh what was happening there with top banks and the repo markets and all the players but i mean other than the short-term interest rates themselves and when you see them spike um i don't know i'd be curious if any listener has a good a good indicator there

to track a little bit better well if there's an indicator that i can point anybody to but it just says to me like there's just so much notional leverage in the system like even if it is that well capitalized like the leverage and derivative exposure of these entities is to such an extent that even being more capitalized than ever is not enough which highlights the volatility on the right side of the chart we're looking at like they have to continue pumping more and more liquidity into the markets to just keep yeah and it's also interesting if you note that the 2019 annual growth again i'm not looking at the this is not the dollar the dollar still is probably roughly 20 of the pie of this number but in 2019 there the event we were talking about

um you know just before this whole covid nonsense uh nonsense but drama um the uh that was literally the lowest they had tried to uh globally expand the monetary base since the year 2000 um and really one of the lowest in the whole modern era like they really were trying to unwind all of the stimulus uh those years 2018 2019 the fed hadn't been printing at that point since 2014 actually um hadn't been printing you know so it's they were just letting the the purchases slowly roll off and uh it still was a huge amount of reserves relative to the rest of the economy but it's interesting that yeah you went from like almost one percent growth to again after after the whole covid situation 35 percent uh just massive massive swings and you know they'll tell you that that's

for flexibility and saving the economy and it's all needed and and and whatnot but i think a currency that can divide into 100 million units is probably a better way to track your wealth agreed i would agree there um it's only going to get weirder from here freaks that's that's my prediction um i'm gonna pull up these compound you know i like because we went over this last quarter and i just think again we came to the conclusion have touched on it during this conversation as well that trying to measure inflation in this way over time looking at doubling rates and compound annual growth rates is probably a more potent signal than just trying to find one index that works

and go this is what we're looking at yeah yeah so this this is one exhibit here that it's a bit more it's not chart form but it's more US focused and so then

compound growth again so monetary base in the year 2000 was like 600 billion now 6 trillion that's 12.2% compound growth they're doubling every 6 years so So again, back to our discussion of price inflation before, you might as well think that annual good consumption, value-added goods would have gone up by a similar amount.

Well, no, it's only gone up by about 3.9% a year. So while money has gone up by 12.2% a year, GDP has only gone up by 3.9% a year in the last 21 years. So another way of saying that is it costs you $1 base money. It would have gotten you $17 of GDP in the year 2000. Now it only gets you $3.63. Broad unemployment was about this one. It's a bit more snapshot-y, but 6.9% in the year 2000.

Base money per 1% of unemployment was $87 billion then. now $597 billion of base money per 1% of unemployment. So what's the growth rate on that? That's 10.1%. So compare that 10.1% with whatever you hear in the corporate press. It's a bit higher. Same thing with government debt. Same thing with gold. But again, a lot of people use the gold price. That's the wrong lens of gold, in my opinion. It's just like Bitcoin. The right lens with Bitcoin is to look at Satoshi's, the supply of Satoshi's now versus the supply of Toshis five years ago. It's the same thing with gold. So still keeping it in dollar terms, it's about 10 trillion of gold now available, including jewelry. It's about 1

trillion of gold 20 years ago. That's a 12% compounded growth. S&P would have gotten you 8% with dividends and then bonds gotten you only 4.7%. So the point is all those other assets were growing and not necessarily in good categories, like government debt or gold. Everybody who hates gold, well, gold went up 12%. The whole gold, the supply of gold value in dollars went up 12%. And while GDP was only going up 3.9% and theoretically inflation over probably 20 years, typically goes by your 2% target, as they say in central banks. Even though in recent years yes like very recent you know corporate headlines it's now like four or five percent but that's not your that's not what they've said over the last 20 years yeah and i i think

for anybody who's watching this on youtube uh i have my mouse over these two numbers right now the gold cap uh growth between 2000 the year 2000 and q2 2021 uh and the monetary base expansion they're very similar. Monetary base expanded and compound annual growth rate at 12.2% and then gold market cap at 12%. So that would allude or give credence to the fact that gold is still living up to the store value and has been historically. Yep. And it goes back to that same argument, ceteris paribus, just a growing money supply will lead to a rise in prices. So yeah, the gold price per ounce has gone up a lot since the year 2000 and if you look at the total gold value which is what you're doing

there uh interestingly it's about the same as as uh as the monetary uh base and if you probably don't have to scroll back to it sorry i interrupted you earlier but that was just about bitcoin um so if you look at gold in its native ounces right so native units which are ounces i mean they use tons but i like to use ounces because um you know gold just a little bit higher go up to the bitcoin one This is fine, too. But what I was just going to say about a little bit higher, there, that one. So that's Bitcoin now over its lifetime, its lifetime. And this is the same formula that I use for all the others.

So I'm taking the monthly growth and compounding to annual just because with my new website, probably do different methodologies for that, but this works mostly the same. So in 2021, in 2021 only, Bitcoin is actually right at, if not slightly under the growth rate of gold, which is very interesting. So gold has traditionally in its native units for about 200 years, actually closer to 300 years, been growing about 1.8%, 1.8%. And now Bitcoin is Because from the recent halvening and then also just the continued less Bitcoins for higher stock, you're getting very close to gold's annualized inflation rate. So it's about 1.7% this year in 2021 and fully as a year on year basis that will happen probably

next year where it will actually on a year on year basis be less than gold. And so this is another interesting one just from Bitcoin as well. If you look at 2009, yeah, that's the way the protocol was, there was a massive annualized inflation rate, it was 2,800%. Same thing in 2010, 2011, and the line shows the lifetime. So it is true that if you looked at Bitcoin in 50 Bitcoins, you just took as a stock 50 Bitcoins in January 3rd, 2009, and then you took 18.8 million Bitcoins today, run that compound annual growth formula.

It is true. You actually get some number that's close to 60% a year. So that seems big. That seems bigger than anything else we've been talking about. But obviously, as we know, the unique thing about Bitcoin and this protocol is just that's never going to happen again. This was just the way that Satoshi did it to distribute the coins. And until 2141, the rate of growth is probably less than 0.1% per year, less than 0.1% per year from now until when the coins are fully issued. So it's just an interesting and different way.

no money's obviously worked like that but it's you know it's different than even gold or silver um we know that the supply is 21 million and that's it so it's just another way to look at it yeah when it comes to the supply distribution of bitcoin particularly i really like the front the like front loaded just like getting half the coins out in the first 210 000 blocks and then 75 out by block 420 000 many people think it's very aggressive and could hurt the protocol in the long run but i think it's i mean hal alluded to this and a bunch of other bitcoiners have in the past it was probably necessary to to create and spark a flywheel of interest so that people were incentivized to to drive value to the network and ensure that it succeeded and then on top of

that i think considering the lack of attention on the network in the first five years of its existence it allowed for like a grassroots movement of people to distribute that supply as opposed to other entities whether it be governments or large banking entities that could co-opt the supply of the network pretty pretty trivially the incentives of the network so i'm a fan of of the the aggressive distribution early on yeah i very much agree with that i think um obviously he never knew what could have been happening 12 13 years on but the fact that uh that it's got this much value and uh these many coins are you know are out and it can't necessarily you know massive

buy orders can't be placed by any single government it's a very very interesting feature yeah we do have whales and Satoshi himself is a whale and there's all those issues and Coinbase is going to write about that as a potential risk in their in their but

you know that's it is what it is and it's a it's just like a money that we've truly never seen from that side so I think it's it is i am as well and so you mentioned obviously this chart we're getting to the annual growth rate that of the supply or at least the distribution of the supply we already know what the final supply is

that is comparable with gold like so what do you see is like in terms of comparing bitcoin to other base monies as the next checkpoint or milestone hit? Is it more falling below that supply rate growth or is it overtaking? I think we're in, I mean, we're out of the early adoption, no doubt.

You can't really say an early adopter at this point. Everybody pretty much has heard of Bitcoin. Everybody's grandma has pretty much heard of Bitcoin. uh so we're at an interesting uh phase with mining security where as we saw with what happened in china this year i mean you know 40 plus hash power has basically moved um i don't know if it ended up being that high that actually moved um you tell me but the certainly came off the network for yeah yeah um but but the the threat from governments is real uh to use the word that we were talking about earlier pollution is going to be a word that's going to be thrown around a lot

when people don't understand that there's actually real value behind that consumption of electricity so it's not polluting the world like many other things are polluting and uh you know whatever not back to that whole argument but uh we're we're we're here i mean governments can step in what was that i mean there was that meme or gif or whatever from like malaysia where they were like steamrolling a bunch of um things like that are like that's just that's propaganda i mean that's that's that's unbelievable propaganda um you know we're only at a trillion dollars i mean you know yes money is so skewed that there's only five currencies bigger than bitcoin at the moment um this is where we are i mean like the the the threat from governments to walk in and

shut down your miner is real so i think the ability to mine in secret the ability to mine in a distributed uh just just uh risk averse censorship resistant way all those things like where you can resist government coercion, that's going to be important for Bitcoin at this point. And so I think we're already there, we're right in the thick of it. The next milestone, as far as I could tell, is just people start to start pricing things in stats and they start to price things in Bitcoin and things like that, because we're already there with 3% of the monetary base, 3% of the money supply, half a percent global electricity. Yeah, you're going to have a lot of regulatory battles and stuff,

but as long as the Bitcoin can remain census resistant, resist 51% of tax, I don't see any other milestone other than just being priced in Bitcoin, where I would start to to have these charts and at some point we'll start to switch them not from being the US dollar as the main unit of account there or the effective exchange rate that's the most easily for most people to understand, but start to use Satoshis or Bitcoins. And yeah, it's going to take a long time, maybe 10, 20 years. Preston Pysh , Is it though? Trey Lockerbie , Before we hit record, Maddy and I were discussing

the nature of hyperinflationary events, which I'm a very strong believer that it is a combination of the expansion of the monetary base and the inflation of the units of the overall currents coupled with a collapse in confidence of the users of that currency in the maintainers of, of the monetary policy to actually do it competently. And I think here in the U S around the world, And then another thing too, like why I think it may happen more quickly is because it seems like the powers that be are losing confidence in their own ability, especially as they posture to transition to the central bank digital currencies, which sort of provide a scapegoat that allows them to potentially paper mache over the systemic problems that they've created in this very analog monetary system that they're running.

yeah i'm i'm very skeptical on cbdc's i'm very skeptical um that they'll ever come to market or that uh that they will overtake the value of reserves and um paper paper notes in a way that's like more dominant than bitcoin overtaking those same things meaning the global monetary that you're looking at right now, the charts up on the screen. I need to write this stuff down more. I need to start doing daily events like you. But I was looking back for some of my comments. I was actually not looking back, like listening back to early shows. And I did find it actually in an interview that I did with you. It was in New York. That was like three years ago and uh stable coins were kind of like that was you know we're still in like this ico

boom maybe pop at that point was like just after 2017 uh highs and the tether and tether's problems with bitfinex whatever they were doing were front and center um but you had other players like gemini was really touting their uh regulation of that and you know as they always do being properly regulated and all this stuff. You didn't have USDC then, but you had Maker was doing their thing and whatever. This is free real estate. People that have listened to my show, they know I've been talking about this more lately. It's not like I've made any money on this prediction or whatnot, or could make money. At least I don't know how, but I think it's much more likely in a world where the US dollar is still the relatively freest market compared to something like China

or Russia. No one had confidence in the ruble or the UN. The US dollar is still the relatively most stable market. In the most stable market, it's still the most reserved currency. Luke Gromen , And you have players that have taken risk and they're totally doing like ripple type stuff. I mean, the stable coin is just, it's not really decentralized. I mean, you have these entities that are just a couple entities running these distributed ledgers. But it is working. It is working. Things like USDT, USDC, even the Gemini dollar, they want these things to be seen appropriately in the eyes of regulators more and more. No CEO there wants to go to jail. And they're working.

And the US dollar is the largest market. I really do think that stablecoins will... I mean, it's probably 120 billion in total value in stablecoins right now. I really do think that that increases much faster, much, much faster than any CBDC. I mean, you got from like last year, I think the Bank of England had an official task force to get a CBDC out for their currency. But again, it's the pound. Like, yeah, I guess they need a better currency now with Brexit, but, you know, they need to hold more value and they can't rely on the European Union as much.

But it's just the dollar is the main network effect of currency around the world. Everybody knows that. It's not a secret. And stable coins are doing well in this crypto space for as weird as they are and not centralized or not purely distributed or whatever. They are doing well. So my point is, it's not a profitable venture to do a Euro-backed stable coin or a Yen-backed stable coin because those currencies, all these other large currencies have negative

interest rates. So why would you do it? Why would you trade? Why would you back this with assets that bear interest in that currency when you're getting negative interest rates? Now you could try to hedge and swap the Bitcoin that you might receive while you issue those tokens, but that's a different thing than what the commercial paper and the treasuries and the bonds that Tether and USDC are using. They're using US dollar denominated interest paying assets

to fund their operations. And that's working. So that's working. But you can't, you literally in the world we're in today, you can't do it with the Euro. Maybe you can do it with an algorithmic coin and there's people that are talking about that, but you can't do it with a stable coin. So stable stablecoins are out there. So the only other way is the CBDC. But that CBDC at most is going to go alongside the reserves. It's going to go alongside the... The Bank of England says this as well. China might want to truly try to squash physical cash. And just everybody knows that with Tencent and WeChat, Alipay, all that stuff, they're trying to do that now. But the CBDC aspect of that at most is going to go alongside these other base monies that we're charting on this

presentation. And I got to talk to someone who's really working on these projects in depth, but who's to say that the security of a central bank board running a public-facing ledger that's going to be on every citizen's phone, who's to say that's going to work? Who's to say that's going to really work. We haven't really seen it. Everybody talks about it, but the most you have is task forces. I think the US is the farthest away from doing a CBDC. So all that leaves is stable coins. My point is, I think you're going to have stable coins, particularly if the US dollar variety grow a lot faster. I'd love to see them pegged to some Bitcoin sidechain or whatnot but that's uh that's a whole another can of wax bitcoin still and as long as

you have the proper vision you know that that one bitcoin is one bitcoin so that's fine but in the in the short to midterm i really see stable coins being a much bigger market share in like the global crypto market than than cbdc's yeah a number of things there i agree the ability for these governments to implement it successfully get into the hands of citizens and create a transition that is orderly it seems unlikely to me though in china at least in china the ccp has proven that via proxy of companies like alipay wechat they can exert a considerable amount of control um but would they consider those systems digital currencies probably not not in the form not a central bank digital currency certainly but they are going to try the digital yuan it seems

um and then beyond that too like when it comes to stable coins i said this over the weekend a bit block boom like it may rub some bitcoiners the wrong way but it's undeniable and particularly in emerging markets stable coins provide an immense amount of value um for the individuals living there that need to sort of separate Bitcoin's price volatility from their need

to interact with the day-to-day economy. Yes, they'll save in Bitcoin. Matt Auerborg's done a lot of great research on this and helped surface a lot of this information on the ground. Information that, yeah, I think stable coins are going to be here

at least during what may potentially be a transition to a bitcoin standard in which every everybody starts pricing things in bitcoin yeah it's uh it's interesting you see like visa adopting rails of usdc and those things um and i would say when you bring up the chinese companies i mean those are on the same level of that like yeah they could be totally but so is tether i mean like tether's this whole issue of tether so so like this tether company or group of companies whatever it is now in the It's still in the Caymans. I don't even know. But it's a totally centralized thing. It's a basket of assets backing this instrument. And that happens all the time in the stock

market today anyway. And it works and they say it's regulated, it needs to be regulated. And that's obviously the low hanging fruit for regulators because it's something that's They don't actually have to do it themselves because they're incompetent themselves, obviously. So they can say, we're protecting investors. We are here for the investor. You just need to be under our orbit of regulations and, hey, we will let you do this. Preston Pysh , I'm not sure, but USDC, Gemini, some of these other ones, I think they're planning on being well, you know, greasing up their shoulders

to rub with uh with with all the regulators in washington yeah no i mean it's inevitable and so would you feel comfortable labeling labeling these as quasi sdrs stable coins yeah no stable coins i would say are just um it's like a money market mutual fund that trades like cash so you know when warren buffett says he's in cash right he got out of stock, he's in cash. He's in cash in his brokerage account, but that's like, I forget these, like Premier Reserve. These are like these major money market mutual funds that are basically just dollar assets. They're dollarized assets. He can say he's in cash, but it's basically a stable coin that sits in his brokerage account. It's a slightly different thing, but the challenge to

that type of money market mutual fund is it's it's sits in one brokerage account or a group of brokerage accounts but a stable coin can move very easily from one brokerage account to another so from that innovation where it just trades like cash it trades like cryptocurrency uh that's light years ahead of holding your money in cash with your brokerage on a money market mutual fund so it's more like m3 money which is by the way the repo market is in m3 money as well which goes back to the discussion we had at the very beginning, all of this stuff is just claims based on a single issue. Or if that single issue fails, or if they issue too many tokens that don't back the assets properly, or their assets fail, or they don't do their due diligence, or their

investments fail, their leverage, that's all like free banking stuff. And I'm totally fine with it in principle, whether it's a good idea to do some of those transactions is a whole nother thing, but I'm certainly not putting my faith behind regulators to figure that out. Luke Gromen , Ph.D.: the same time, it's the lowest hanging fruit for them. Again, it's free real estate. I'm not making money on that prediction at all, but I've said it for years and years. I think stable coins will be here. That's what's going to happen in the Western world is US dollar denominated stable coins are going to be the thing that they regulate in crypto. I can't see the Federal Reserve doing any

cbdc anytime soon but i mean i could be wrong could be wrong but that's what i think yeah i think if they're smart too why try and do this by yourselves if the free market's already doing it and an argument to be made that the free market via the creation of these stable coins creating demand for the dollars globally um which the fed should like correct i think that i think they do You've heard a little bit of those, you get some very negative, damning, stable coins are dangerous articles. And then you get a little bit of, I can't remember this name of one of the governors that wrote, oh, we should embrace stable coins. They're doing exactly these things.

But again, this is all regulatory stuff that look more at what they do, not what they say. And for stable coins, but back to the monetary based stuff, look at how much the money supply is actually growing that's the important thing and uh that's just what i think people should get out of those exhibits i know you got the stock to flow one up i don't know if you uh i just want to put another chart up you think we should focus on this or ones um there's a little bit i i'll you know i get on these tangents but this one like there's there's uh people that like gold and hate silver and there's people like silver and they think it's going to do much better than gold And both of those, in my opinion, aren't looking at the correct lens of each asset.

So a lot of people will say gold has a great stock to flow. It's usually like 50, 60, it's closer to like 50, as you see there, all the gold things. There's different ways to measure that. I'm doing trailing 12 months, I'm doing trailing 12 months of just bullion, not jewelry. I'm doing trailing 12 months of stuff with jewelry, I'm doing trailing 12 months of stuff with new all-time units, which include industrial. These are all different stock-to-flows that you can create. It's just the inverse of the rates that we've been talking about, which I actually prefer the inflation rates because they compare to interest rates, so on and so forth. But there's

a stock-to-flow. People like to talk about stock-to-flow sometimes for obvious reasons in the Bitcoin space. But for those that like gold and hate silver, they usually point out that, okay well silver actually has a very small amount of monetary bullion that is it's true uh monetary bullion where you take out all the industrial silver you take out all the the uh jewelry and you're left with a very small percentage it's like sub 10 percent it's true of the silver all-time silver it's like 56 billion ounces of silver have been mined throughout humanity so maybe I can't remember the exact amount, but it's sub 10% of that is in silver monetary, like bullion form, coins and bars.

To say, if you do that, you get a stock to flow. If you take the actual, so you take the total inflation rate of all the silver that's for industrial, all the silver that's for jewelry, all the silver that's for monetary stuff. and then we'll take the stock of only monetary silver stock to flow, divide that stock by all of this new inflation, you're going to get a very low number for silver. And it's true. It's about four. That's the number at the far, far right of the spread of the chart there. So you have monetary metal units, but you have new flow, all the new flow that comes for industrial, whatever. But then they'll just go back and there's a gold bugs I'm talking about now. They'll go back and

use the gold uh the old like the the most cited gold of like 50 60 but that's the wrong comparison first of all i don't like this i think it's a bad it's not you cannot no one uses it for anything but whatever you want to use it to pump gold that's fine the uh you gotta use you gotta do the same discounting of gold's uh stock as well if you're going to take all of the gold flow each year which includes industrial includes dentistry includes jewelry you can take all of that But you have to also divide gold by a discounted flow of only gold bullion. And it's true. It's better.

It's better. But no gold bugger will quote that. So really, the comparison, if you're going to call it, it's 22. It's the far left. So that's gold's just monetary metal stock divided by all new flow compared to silver's just monetary metal stock divided by all of its flow. So anyway, the point is gold bugs need to take heat and use that number, not the other ones when they compare that four for silver because they're trying to make gold look so much better. Anyway, that's for gold bugs.

Then for silver bugs, it's the opposite. It's in other charts. We don't have to look at it or other graphs. But basically, people like to say that since gold's price is like 90 to 100 times silver's price in the last few years, they think that that's how much it's going to rise. But of course, if you looked at the old ratios of 16 to 1, 15 to 1, 12 to 1, we're actually at that right now. You're just not using the correct metric.

You don't look at the price. You look at the price in a market cap form. You look at the price in a total value. And so in that case, silver would actually have to fall slightly to reach its historical ratio of about 16 to one. So that's one where I'm trying to tamper the gold bugs a little bit and tamper the silver bugs a little bit. Both of them usually make kind of spurious comparisons among each other's sort of stock

and flow, but it's a lot of stock and flows. You can do many different definitions of stock and flow. i'm not necessarily a fan of it but uh there it's it's there if you want to read more about it yeah it's been interesting seeing silver bugs specifically become more prominent or widespread if you will like silver's the precious metal bug to be in the last 12 i had a cousin reach out to me he's like yeah you got to be buying silver not bitcoin sell your bitcoin i'm like i don't know what to tell you sir but i'm certainly not buying any silver Yeah. Like I said, it's not going up 100X. I can't predict the market, but if you're going

to use these fundamental analysis, you got to think of the... So here, that chart's a good one to show it, just that gold one. So just take the 11.18 trillion right there and divide that by let's say the silver all time, which is 1.31 trillion in dollars. It'd be the same, it'd be slightly different if you do it in monetary metal units, but no, it'd be the same, the exact same. So that's a gold to silver ratio of eight and a half, eight and a half. So you'd actually need, if you want to get back to the gold to silver ratio of 16, if the gold price needs to rise the price needs to fall oh so that's that's that's the point out so silver bugs there if you really think that it's going to go 100x you're you're not looking

at the correct lens it's not just simply the gold price divided by the silver price you got to look at the actual stock of the stuff and that and those other charts as well but anyway this way this thing compares all the different supplies you got all-time gold gold with jewelry gold with bullion silver all time silver available so with jewelry and then where does bitcoin fit into that golden central banks that's what this slide is yeah the gold bugs or excuse me the silver bugs was like the industrial use case is so high there's only gonna be more demand with like tesla and all these batteries and it's like uh maybe i wouldn't put any of my uh stock so to speak behind tesla but that's uh yeah we've done that before he's got a government monopoly so that's

you know that's why he's uh he's doing all right making his money from those government subsidies yeah how long will that last i'm not so sure freaks i'm not so sure of course i've been wrong for now so what do we know do we know anything really we just like yeah hey at least we can put out some good charts and you know talk about why bitcoin's a good bull case yeah again i think i love that you do these these updates and i think years from now we'll look back in posterity and be very thankful that you were documenting all this in real time i'm not sure so many will say that but uh yeah it's it's nice to uh i think it's just nice to use the correct lens of the actual supply that's going to compare to these to these 21 million

Bitcoin. And this stuff, now that it's built out, we can keep updating it and tightening it up. So hopefully it will help for future analysis as well for people that want to protect their wealth and look at Bitcoin. But there you see on this chart as well, how Bitcoin, which this happened just this year. I mean, at $35,000 Bitcoin, you get to basic... These are rough estimates. I have many sources that I do to come up with these gold and silver numbers. No one knows for sure. It's not like a blockchain but um you're roughly at uh two-thirds of a trillion in available silver that is jewelry plus bullion jewelry plus coins and bars and again the vast majority of that is jewelry and silverware but that's about two-thirds of a trillion bitcoin passed that this year

actually last year i guess it was uh i think last year it hit in the last 12 months yeah And there it is. That's all that Bitcoin has left for silver. But that again, people just even like the corporate press definitely screws us up, but the Bitcoin journalists as well. I remember in 2016, people were saying that Bitcoin had passed the value of silver. That was just way completely wrong. At that time, there's maybe like 15 million Bitcoin. It had passed the value of one year's worth of production of silver, but it didn't pass the stock of silver. So now it passed the stock of silver. Just again, got to be kind of rigorous about some of those points. So that's what it's done this year. For the rest of silver, if you include like

in industrial usage, which again is very rough estimate, it's about another 50% of the silver value. You get to 1.3 trillion. Bitcoin's got to get to about 70 grand a coin to match that. Then you just have gold in central banks, gold that's in bullion form, which would be at 240,000. Once you're there, I mean, again, once you're there, why would we, maybe we still will do this in US dollar terms, but I think you're going to start very quickly looking at a lot of these things in Bitcoin terms. It really will make sense to look at these things in Satoshi's, the closer it gets to

their value. so yeah it'll be interesting to see if these exact price points i mean obviously the the price chart that we're seeing here on top or you freaks are just listening at home we're looking at a chart of um bitcoin compared to gold and silver for different applications and at what price bitcoin will have a higher market cap than the particular applications of gold or silver right now it is in front of silver available for jewelry and bullion gold reported repositories which is bullion silver monetary which is bullion and silver reported in rep repositories and central banks so bitcoin you have to go to 100 back to 100 bitcoin price to reach

the amount of silver in central banks for a silver yeah so right now the the next behemoth to take over is silver all-time mind which would pass that and at june 30th 2021 prices is 69 thousand 800 bitcoin price would surpass that at 1.3 trillion but like as this bitcoin's monetization continues it'll be interesting to see if these price points maybe come down and bitcoin's able to overtake these particular applications of gold and silver quicker because they're demonetizing as bitcoin's monetizing as individuals throughout the global economy are weighing the opportunity cost of holding gold or silver as opposed to bitcoin that's a very good question marty that's that's i was sort of alluding to that without saying it but that's

that you put it basically hit the nail on the head there because i'm not sure in 10 years and to your point earlier it might be faster like there's no reason you know this money is not a measuring stick so these are all fluid so there's no reason that gold and silver quickly go down in dollar terms or not quick you know relatively quickly go down and then bitcoin goes up there's no there's no reason that they all have to go up as Bitcoin goes up, as Bitcoin number go up. They could go down in dollar terms and then at some point, it might make more sense to look at it all in Satoshi. So that's a very good point. It's a very good point. Gold and silver and global fiat could all go down as Bitcoin goes up. It's not like it has been over the last 20 years or 10 years during

in bitcoin's time it's where they've all kind of gone up uh i don't see why that's guaranteed to happen in the future well i think we're seeing it this year particularly gold is what static to down correct especially in this market environment which is very yeah and it'll be interesting to see how that progresses um unfortunately i only have 14 minutes left with you what what should we jump should we go into more charge i apologize i was i was uh you mentioned for the listeners i was i was thinking when a lot i was talking during the show you know that i would be looking at these charts but i kind of forgot that this is uh first and foremost an audio podcast so i apologize if a lot of my ramblings weren't too coherent to the listeners with these charts but um

they do a very good job of explaining what you're describing it's easier when you're when you're looking at it for sure but uh i would just say yeah i mean we're gonna keep you know nothing too nothing too groundbreaking probably to close it but we'll keep updating this every quarter and it's probably not going to happen before the end of this year but there will be uh a very very new and improved and boosted uh crypto voices website at some point where Or be able to, you know, going for subscriptions and making it much better user interface. And we have a lot of data now built up a big, big database. So I think that we'll be able to, if those that want to access it for investing purposes or trading purposes or whatever,

we'll get a little bit better ease of access than just my static charts here. um i i would imagine that this is something that some institutional funds would pay up for pretty considerably this type of data we'll see yeah but um it's hey have more confidence in your your your patterns and your the analysis you're doing i'd like it to be you know i'm a big fan of john williams and stuff i like you know he's kind of a uh you know one man band running his thing um i would like it to be something like that where like people that appreciate it you know can pay up in bitcoin and enjoy it and uh your price in bitcoin will get you know as long as you spend and replace you'll be fine your price in bitcoin will go down every year uh i would very much like

to do kind of a bitcoin only subscription for people that really like it like grassroots stuff i'm not necessarily thinking that would be some corporate stuff at this point because there's so many i mean corporations want to trade all these shit coins anyway right so it's that's not what this is about um at all so uh i would part with some stats for for the ability to to manipulate this data not manipulate it but get more in depth with it uh it's much appreciated man we'll see we'll see it's it's uh it's a pain in the ass working on that back uh the back end i've uh i've learned you know doing doing my own kind of website like this but we're working on it working on it so that's that's coming that is coming i think i probably said that maybe even past two updates

with you i'm not sure but uh it's it's a long time coming well i cannot wait uh i cannot wait to see you again in person you think it'll ever happen will i be waiting forever do you think we get beyond this increasingly dystopian world in which people are are tagged and herded into their pods you think we're at a breaking point at all you think people are starting to like that i haven't bought my vr goggles yet i don't plan on it so let's just uh let's just keep those beers in mind and uh and and and just just focus toward that goal that's all i can say um we'll we'll get there we will get there keep the faith and uh you know stack sats and do all the rest that you guys claim and we'll get there the human spirit shall prevail freedom shall reign

supreme at the end of the day maybe dark right now in some aspects of life bitcoin obviously provides a lot of optimism and reason to be hopeful for for a better future um doesn't it we'll get there i'm confident um but yeah uh let me know you're probably not with your family going to be coming over to europe anytime soon or for the job but uh let me know if you're over yeah i may make it over there and if you ever come to texas let me know yeah congrats congrats on the big move you and every other relatively intelligent person in the america it seems moving to austin so i don't know how that's going to be for local austinites a couple years from now but uh everyone is moving there huh are you you're not i mean you're moving austin

know yeah yeah like everybody's going to austin yeah and like people like oh you're gonna like ruin texas you're gonna like no i hope you people in austin understand that the bitcoiners that are coming at least are coming to make sure bitcoin happens we're retreating to austin getting the mind share there um falling back to the republic of texas and then we're gonna fortify the defenses of the Bitcoin network and the pitch that we're giving the rest of the world, then go out from there and start saving different parts of the country, particularly the Middle East. Preston Pyshke I'm, for the first time in years, slightly jealous of what's happening there. It's very interesting to see the different states'

rights popping up out of this whole crisis. And here I am at the edge of the European onion, the edge of the European onion with Belarus and Russia two last dictators of Europe just breathing down our necks so it's a bit dicey over here for the first time

for the first time since the collapse of the Soviet Union pretty much yeah we talked about Belarus for a bit in the last episode yeah it's dicey there and it's tough and Russia's got some elections coming up another rigged set of elections uh this like very soon and um

yeah i don't know there's like there's more and more exiles russian i think there's more political exiles uh from russia in europe since so like since the brezhnev era of soviet union like since the 80s uh late 70s 80s the soviet union um there's just uh putin just doesn't care you don't agree with them they'll shoot you down stage suicides all this stuff so it's it's rough my heart goes out to the russian and delarusian people and i definitely hope that uh you know can bring some more freedom over here as well but it's going to be a different type of a fight i think than what uh what's going on in in the u.s yeah i think the sovereign individual thesis is playing out right before our eyes here in the u.s i think the like you

mentioned the return to states asserting their autonomy is is very bullish it's interesting yeah and and still try to get a second passport if you can't that'd be my recommendation but you know barring that go to texas yeah i gotta get on that um maddie it's always a pleasure thank you for doing what you do i can't wait for those in-person beers at some point in the future likewise absolutely how should we leave it with the freaks it's all you man i'm i'm uh it's it's late in the day and i probably need a beer myself so um i'll have one i'll test you from afar right it's too early here for a beer yet i have another podcast to record in an hour but with that being said go follow matthew on twitter at crypto underscore voices crypto

voices.com is the website correct uh that's right um and again i think i say this every time you're on this underrated podcast in the space particularly if you like to or have come to bitcoin from an economics background which i did and i just am always fascinated by the content you put out um bitcoin from an economics perspective if you want to nerd out on economics and how bitcoin is playing a world excuse me a role in the new world of economics in the digital age this is a podcast with a wealth of knowledge and incredible interviews with economists and and developers um that have that have built the the theories and technologies that led to to bitcoin appreciate it man too kind all the best to you and uh and your fam as well likewise very

excited for uh for your fall it's going to be a fun one for you i think thanks man we are as well very much all right that's all we got today freaks peace and love live stream done recording