TFTC: A Bitcoin Podcast - #381: Q3 2022 Monetary Base Update with Matthew Mežinskis

Episode Date: December 7, 2022

Join Marty as he sits back down with Matthew Mežinskis of Porkopolis Economics to discuss the Q2 2022 monetary base update. Follow Matthew Mežinskis on Twitter Read everything discussed at: Porkopolis Economics 5:54 - Criminal charges against member of Swiss government 12:35 - Damages from vaccination 16:35 - German military confirms jab worsens health 18:51 - Connection to WEF and Davos 22:57 - The state of Switzerland 27:38 - Opinion on Bitcoin 34:06 - Pascal's history 37:20 - African governments 40:28 - Christine Lagarde 42:05 - Ukraine 49:42 - What happens next in finance 54:40 - Jab is about control 1:00:54 - Call to action Shoutout to our sponsors: Unchained Capital Braiins Upstream Data TFTC Merch is Available: Shop Now Join the TFTC Movement: Main YT Channel Clips YT Channel Website Twitter Instagram Follow Marty Bent: Twitter Newsletter Podcast

what's up freaks it's your boy marty here to introduce this rip rip 381 with matthew mazingtious here for our monetary based quarterly update q3 2022 matthew brought some new charts and new data with them specifically for this show that we'll be referencing moving forward when we do these quarterly updates it's a pleasure as always to catch up with my good friend, Maddie, out of Latvia. A lot going on. Talk a lot about FTX in this one. We started the new trend of reading the top four boosts

of the previous episode at the beginning. However, I did leapfrog Matthew's episode with 380, with Pascal Najadi. So I'm going to go back and read the top four boosts from episode 378, building a billion-dollar payments company with Ryan Breslow at Tetsu. It was a thousand-sat boost, trying to understand what this was about. Went to their website, no lightning, no Bitcoin integration, just credit cards. Something, something, one-click revolution.

And why this dude is talking crypto, crypto, crypto. I understand building a Bitcoin company isn't easy, but should we instead switch into some la-di-da startup business because VCs get interested and then maybe in the future we come back to Bitcoin. Is that the way? This episode was straight up black pill, Marty.

Maybe it was needed. Yeah, I mean, I wasn't trying to portray Bolt as a Bitcoin company. Maybe I should have been more clear. I wasn't trying to mislead anybody by pretending that Bolt was a Bitcoin company. I thought Ryan's background,

starting the Bitcoin group at Stanford and creating a payments company was just an interesting story and his comments on VC. At Pubara, 500 sats, no touchy the money page. At user 3427520383471958, 500 sat boost, no comment. At Blockchain Bug, never heard of Bolt until today, 500 sat boost. Thank you for the boost.

There's another 500 sat boost from SatsOnToast. lots of subjects covered in this one enjoy the conversation, thanks those are the top I think I just read five by accident top five boosts, we'll do the top four moving forward if you're listening via podcasting 2.0 compatible app in the value for value model, thank you

if you're getting value out of these conversations and you want to send it back podcasting 2.0 is a great way to do that, you can download Fountain, Breeze Podverse, there's a slew of podcasting apps that allow you to do do this, to boost the sets directly to the show, to my lightning note. It's a beautiful thing.

This trip was also brought to you by our good friends at Upstream Data. Upstream Data is here to build Bitcoin-focused infrastructure for people who want to mine Bitcoin at home, off-grid, behind utilities, companies. And then on top of that, they build infrastructure specifically for oil and gas companies, upstream oil and gas companies as well. I am the proud owner of many hash huts. I own 50 kilowatt hash huts. They come obviously with a data center and then a generator that's purpose built for mining with natural gas. I'm scooping up stranded wells and plugging in Upstream's incredible generators, plugging in miners to the data centers and mining Bitcoin off the strand of natural gas. it's a beautiful thing. Upstream is building this type of infrastructure. So if you're in the oil and gas industry, you want to diversify some of those greedy profits into Bitcoin mining with some of your stranded gas or wasted gas. Upstream is building the infrastructure that's

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still chugging doing beautiful things and most importantly they have brains os plus auto tuning firmware, which allows you to download firmware onto compatible ASICs. And it's going to make your ASIC more efficient. It's going to help you stack more sats, and it's going to elongate the life cycle of that machine so you can mine for longer. If you have an ASIC that's compatible with BrainsOS Plus firmware and you're not running it, you're an idiot. You're leaving sats on the table. In this type of price and hash rate environment, you need to be getting every edge that you can, and BrainsOS Plus firmware is a significant edge. So go download it if you haven't already go to brains.com b-r-a-i-i-n-s.com and enjoy this quarterly update with matthew

you've had a dynamic where money's become freer than free if 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 matthew massing massing chis of course i told you i was tired it's been a long morning already i hear that it has my friend you uh you're gonna manage i'm gonna manage period i'm gonna manage

you got data specifically traded for this podcast so yeah i'm gonna manage i'm gonna have to i'm gonna learn something new we'll get the hardcore charts out early i wanted to uh continue where we left off in our quarterly update uh from q2 and you asked me about price predictions which i never give but then we were talking about uh running some trend line analysis uh which which i've done through the years on my site but also i thought it was a good time actually because this is finally you may recall we've talked about this for like a year um i'm finally getting a little uh chart engine running here with a lot of the data that i've collected over the years um you know we got the monetary based stuff that we do every quarter

uh which is which is pretty good you know running through the 50 largest currencies but i think it's going to be helpful to start doing uh start doing some youtube uh or rumble i'm not sure yet uh channel uh videos shortly yeah do both um and uh and give kind of my perspective over the long the long scale of a lot of these assets and liabilities are getting out of whack since the global financial crisis and uh and beyond so it's not going to be just bitcoin um it's going to be kind of like monetary based stuff money supplies economic stuff looking at debt, looking at GDP, but maybe in a little bit different way than people are used to. So finally got this little engine built up and I wanted to give you a little preview

on the show here and your listeners. And also, um, we can, we can loop it into our discussions of where Bitcoin's price would be, uh, for, for any price prediction actually. So, so, so let's do it. Yeah. Um, let's, uh, I love new charts, new data. we're iterating on this quarterly discussion this is good to see we're not just getting stale doing the same thing we're venturing into other areas price predictions power trend explainer for marty what the hell am i looking at so there's been a lot of models about bitcoin's price over the years um i posted these these are very like simple throughout the years on my feed um we all know a famous one stock to flow uh

lot of different models that have uh maybe some work some failed whatever but without like even getting too deep in the technicals and everything like there we can do like applied statistics like i use this a lot for my my work which doesn't involve crypto at all you build models and you build a trend line it's very simple it's one variable you don't involve anything else like stock the flow nothing else you just take one thing and that is price there's one dependent variable that is price the independent variable is just time and you can take data such as price run some coefficient calculations to find coefficients that will give you the slope the y-intercept it's very simple you can you can calculate trend lines from that four types of

trend lines linear very basic straight line right across the chart then there's four that are logarithmic the four that uh sorry sorry three that are logarithmic uh there are um exponential which most people know that's kind of how the that's kind of how the uh world works population growth interest rates uh if you look at you can run exponential trend lines over markets uh stock markets all the rest it usually works r squareds are pretty high um logarithmic which mostly works for like stuff in nature uh work for bitcoin hash rate in earlier years like really high growth like super high hockey stick at the beginning um and then flattening out and bitcoin actually did that in the very early years was logarithmic but it's like super straight up at

the beginning then levels out this one actually fits bitcoin the best today it's it's power it's a power trend line so there's four linear log exponential and power and power is the best um you don't need to do anything else it just fits it the best nothing fancy but you got to look at the data and see how it fits it so let's check it out uh without you know applied statistics here right we don't need to go full classroom we don't need to explain how i calculate it just it is a power trend all right that i'm running um but it's cool because i have a couple different years through bitcoin's price action to run okay so the first i want to show you is through 2010 i got this data um new liberty standard was the best in the early days there's there's different

ones obviously 2009 we know there really wasn't much data i started mine from roughly bitcoin pizza day all right and um may to may 22nd 2010 and i carried it forward to today so obviously 2010 is pretty iffy but you know you still have it you can run a trend line based on let's say if i look only at this data stopping december 2010 which is roughly here where the mouse is all right and what price are we looking at for the people who are listening at home not 30 cents 27 cents was bitcoin in december 2010 so if you go from like sub one penny bitcoin pizza day i think it was point zero zero zero two five cents something like that like 40 dollars or 30 pounds roughly i forget which number i even used in my set but um very very small

number right per bitcoin um and then we move to the end of december 2010 this is a really fast growth actually to give us 30 cents all right so i'm going to run this trend for you i'm going to show you boom it's like super high and if you look at the rest of the price growth based on this trend we sort of failed this model right so bitcoin was growing really fast on this curve uh but it but it failed it's a power trend again so it's kind of the opposite of exponential exponential goes like this goes higher at the end power starts out higher and then it levels out but it's not as extreme as the logarithmic just again and the little basics there so that's the trend that's the trend line and we can even uh push it out even though you can't see it on the chart

whether you're listening or watching because i maxed this chart out at a million dollars per bitcoin uh we can extend the trend through this little cursor here and look at it till today i think this is actually yesterday's data um 833 million dollars of bitcoin if if bitcoin had continued the exact same power trends that it was running in 2010 we'd be at 833 million dollars of bitcoin today obviously we're not there but that was the trend all right now i'm going to show you the worst so that was the best trend in bitcoin's history like bar none uh we didn't we didn't quite make it there but that was the absolute most extreme fast trend now i'm going to show you the worst trend only looking at year ends of course but again from the beginning of 2010 when

price start may 2010 till end of 2016 that was the worst trend like all the price action during the crypto winter we just finished crypto winter get to 2016 this is the worst trend all right so i know we're we got listeners only here but basically this trend line looks much better it intersects the price much more uh the r squared is 90 that r squared by the way finishes it in 2016 the rest is just extended out but um yeah it's uh it looks much better the price is above the line it's below the line currently below it yeah i'm gonna remove 2010 just to uh clear it up for everybody who's watching um we can take it all the way till today we are at as of, you know, yesterday, uh, roughly 16,900 as of yesterday. Um, the trend, uh, says that we

should be at 41,000. So we're under, all right. Also, we notice here that with this trend, um, typically it it's under a little bit longer than it's over. So the numbers, I haven't run them actually, but it's probably roughly like two to one to two times longer. You're, you're under the trend line then and then above it usually get the booms then it might come back down so that's the trend line and this this is the worst performing trend line in bitcoin's price history if you look at the data you calculate the coefficients you run a power trend and you finish in december 2016 which price is about a thousand bucks uh those who might remember is 900 and some bucks 960 bucks at the end of 2016 you only look at pricing data from bitcoin pizza

day in 2010 to 2016 you get this trend and it's um it's uh it actually looks you know looks pretty good and i'll extend this one out actually i won't extend this one out yet so so that's that's 2016 now uh so i showed you the best 2010 showed you the worst literally the worst trend line that bitcoin has ever run uh you know finishing an annual basis it's 2016 now i will show you the current which takes all of the whole entire uh data of bitcoin and it's going to come out as a red line there you see it and it's you will notice if you're watching it is very close to 2016s but it is above it so very slightly even with a crash or whatever that we've had it's still above it of course every day this this chart updates right so it gets pulled down gets pulled down the current

trend always changes a little bit so every day that it's below the current trend which is again the 2016 curve is about 40 000 our current curve says it should be 45 000 which is the all-time all-time price history action of bitcoin so first of all i think it's pretty interesting that it's still not below, you know, no matter what the FUD is, it's not below the worst year, which was end 2016, end of the crypto winter. That trend extended till today. And also I can say, I'm going to remove 2010 here, but you look at these two, they're actually really close trend lines. I didn't want to plot them all, but if you plotted all the data up till year end 2020, or year end 2019, or year end 2018, they would all be very close to this. So they all kind of

get stamped around this this trend line uh you can again you can draw whatever trend line you want based on whatever time uh time series like how much time you calculate the price is at but they all start sort of get stamped around this area and we're not at a low so that's kind of interesting and then from here i'm going to take out 2016 now and look at this is the trend this is the power trend line to 95 r squared r squared is a little bit iffy with these logarithmic scales um it just means that the variance uh of the price around the line all right so the way the price moves up or down around the line is 95 better than if we had a line that showed the average and how the price moved around the average so it's obviously that works much better for

linear than uh than logarithmic type scales but the r squared can as i understand i'm no stats expert or quant but that can trick people if you if you rely on it too much but nonetheless you also have to use your eye test in this stuff and does it does it look pretty good through the uh all the years of bitcoin price it does so uh 95 r squared 46 000 40 yeah roughly 46 000 is where the trend line says bitcoin's price should be now obviously we're about 17 000 so we're under it but we can still predict it so here's where we come to the predictions and you said at um at the end of our last show last quarter i checked it today actually because you asked when bitcoin get back to 60 000 that'll be close to the british pound monetary base again unless of course they're

printing more so it's a little bit higher now uh bitcoin if it gets about 60 000 it'll be the size of the british uh central uh the bank of england's balance sheet basically the pound sterling and as far as market cap goes and so let's let's just run this let's just look at it this this chart that i made goes out to 2030 let's see when it would hit it you actually said do you remember what you said i don't tell you but you said q3 2024 i love how you gave me the q the quarter quarterly update as well so he said q3 2024 so let's see what the current trend line predicts we're at 40 i'll remind the listeners we're at the trend lines about 45 000 now if we just scroll out and see what it predicts uh we're at 50 000 in january 23 52 in march 2023

uh may 56 000 june we're getting pretty close already july 2023 the trend line the current trend line of bitcoin which is the best trend line you could draw uh predict 60 000 bitcoin in july 2023 it's actually a year earlier than uh than you thought um but yeah that's it and then of course we can extend this even longer you know again this is just it's just math there's nothing there's no stock to flow there's no weird sort of variables i'm putting in there it's just price we extend this out all the way to december of 2030 and we get about a seven hundred thousand dollar bitcoin so that's the uh that's the trend uh progression that that is the regression analysis using a power trend uh coefficient set of variables for bitcoin it's about 95

r squared thus far it looks looks pretty good and if you did 2016 uh now let's go back to the projecting for 20 if you looked at the 2016 trend out in 2030 it would project about 600 000 bitcoin so the worst trend bitcoin's ever drawn would end in the year 2016 end of the crypto winter and that even that projects a 600 000 bitcoin in december 2030 so again no one knows not investment advice fast performance doesn't equal uh future results etc etc but it's a pretty interesting asset where it hugs these uh curves definitely is not 2010 oh this is funny by the way if you look at the 2010 curve we can take it out to 2030 the price projecting 120 billion dollars of bitcoin let's get back on that trend line yeah that trend line it would be fun really fun to be

on 120 billion but uh we we failed that we pretty much failed it you can use the eye test to see that uh we're far away from that one and all the rest are in between basically you can imagine all the other years they're in between but most are pretty close to the red in the uh the 2016 line so so there it is man little uh little trend light analysis for you just wanted to start the show off for you with that no i love this i think i mean i've always been averse to these types of charts and price predictions but they are helpful to help contextualize what's going on right now and i think that's the main signal i'm taking from this is this is not the worst bear market the bitcoin's been through 2016 2015 2014 2015 beginning of 2016 based on

this purely based on this you can say not yet yes might pull it down that's but you're gonna have to have a while first because i mean we're still uh the trend line itself is at 46 000 so that's gonna have many many that's going to need many many days of uh you know low low prices to pull it down even below the 2016 line so that's yeah that's one thing yeah no it is crazy how tightly this price chart is hugging the the trend lines yeah another characteristic of um so this is a power so it's a log scale all right and if it was exponential as you might know if it was exponential and i drew a trend line an exponential trend line it would be a straight line that's just how it would look on log scale this is a power so it's still curved it's curved

upwards even though it's log uh but if you did uh log log if you made the x-axis log this would turn into a straight line so power trends turn into straight lines on log log and log log just look screwed up and i apologize for our listeners for my bantering on these charts but i'll make log on the bottom so like it's extremely compressed you look at like january 3rd 4th 5th and it's it's all that the timeline is messed up on my chart but basically you see that it's turned into log log and it's a straight line so that's how a power that's how a power well that log log chart looks like we're we're far below where the trend line is yeah it does if you're eyeing a trade looks like a good buying opportunity again not financial advice that's a good point i never uh thought

about it quite to look at it that way but um yeah it's a lot of i mean obviously infinite ways you can analyze this stuff but uh very simple price predictions it's only using price you don't use anything else no other variables uh the independent variables time the single dependent variable is price and uh this is basically the trend line that bitcoin follows it's not linear it's not log even log doesn't really fit it um a log trend line it's not exponential it's it's a power power series and those are the four types hell yeah that's my applied stats for you well it'll be fun to keep keep track of this as we as we meet quarter in and quarter out yeah i think it's a good one actually i think it's a good one because i again i i plan on when i start up some videos

showing the viewers listeners you know all of the different years that it ended just so you can see but i can tell you that it's like it's really starting to to be consistent around the trend line that we have which is interesting like the last five six seven years even really only a few of the early years 2010 2011 were shooting up like kind of in the stratosphere and you know just not no no no uh really potent no no reasonable uh expectation that we'd get back to that trend line but the other ones uh stick pretty close 180 billion dollar bitcoin by 2030 it's not out of the realm of possibility we can get back yep well let's strive for no i think this also provides a great opportunity to dive into i'm that was one thing i'm really interested

to get your perspective on is obviously right now if you look at the 2016 trend line the current trend line we are more than 50 50 below where the trend lines both of them sit uh and obviously a lot is going on since we last met here to talk about the q2 update and what do you like what's your perspective on everything that's happened with ftx and um genesis block fi we're finding out very hard lessons about bitcoin's truly scarce nature and the product of not respecting net scarcity in applying incumbent financial product models to to a bitcoin world doesn't seem to work yep i mean just let's hold off i guess on the base money stuff but regarding ftx obviously i've been paying attention a little bit this last

weekend it's been entertaining to say the least but um the i did actually launch this uh the base money update as the ftx saga was unfolding so the bitcoin price was also falling um but it's close back to where it was when i when i posted it but um it is first of all it is still wild to see that um after all of these years people don't understand the difference between custody bitcoin and sovereign bitcoin holding your own keys i mean that is the lesson and the gift that just keeps on giving like i i don't know man it's it's it's not good to say but like because obviously many people just got destroyed and wrecked over this but i mean i'm watching this thing unfold and this just unbelievably woke asshole that's like probably had like i don't

know silver spoon the his whole life everything given to him and i mean he's just he's just destroyed so many people that didn't need to have anything happen to their savings if they just custody bitcoin themselves if they just hold held their own keys i mean it's it's the lesson that just keeps on giving i mean it's it's just funny to see i'm watching these these i mean again it would be funny if it wasn't so sad like it is sad i understand that but if you're in our headspace and if you're in our sphere like you have no need for a company like ftx and just so many grifters coming out of the woodwork i mean i don't i'd like to get your thoughts i haven't heard actually what you've been saying but i mean like kevin o'leary i think stuff's going to come

out with him bill ackman yeah yeah and like the there's there's a lot of deep state activity obviously everybody knows the whole thing with his parents with uh gentler and and the uh the econ professor uh from mit yeah the father-in-law not the not the in-law but um caroline's father right uh i mean the the the the connections to be made like are so beyond like they're so in your face like i don't know how anybody can call us conspiracy theorists with this stuff i mean it's just this is this is it's just funny i mean it's just so funny because it's completely avoidable yet these were the motherfuckers that were trying to create your legislation you know be the future of your new finance in the united states i mean um it's it's unbelievable it's

unbelievable to see it really is it's like clown world on crack or on stimulants like like the whole ftx alameda team what was on but no i mean and sam the i mean i matt and i on rabbit hole recap we've been going back and forth on whether this is just pure greed driven incentives that drove ftx and alameda to take undue risk and get blown up as the interest rates got hiked at the federal reserve level and they got caught in that liquidity crunch or is there something that's that's i i think matt would agree that's his perspective or is there something a bit more nefarious to this in term when you begin to piece together the different data points of the connections between

SPF, his parents Gary Gensler Caroline, her parents the Democratic Party all this stuff I mean Miss Waters Did I hear Miss Waters' husband

is the ambassador to the Bahamas? Is that right? Yes, that became apparent last week I don't believe he's the ambassador anymore however he was former former ambassador um so there's some connections down there yeah then you had that whole instance where the bahaman equivalent of the sec sees their assets

they're saying they seize their assets but then like you had all this laundering of ftx's assets and to like wrap Bitcoin on Ethereum and then they were converting it to Bitcoin and sending it to a centralized mixer. And it's like the Bahaman SEC did seize those assets. Why wouldn't they just freeze them? Why are they doing all this cross-chain activity and taking on a lot of slippage

throughout that activity too? I think they lost 30% of the value of the assets That's just by doing all these cock and any like cross chain rapid coin shit and eating significant losses on those, on those trades. And then, yeah, sending it to a centralized mixer, not even coin joining. It's all very odd. And then, yeah, you mentioned Maxine waters. She came out with a tweet last week and was like, Hey Sam, it's been great to see you talk publicly about what's happening.

Like, it takes a lot of courage, and we'd love to have you on Capitol Hill. And then you had the CFTC coming out and saying, this looks like a stereotypical bank run. It probably wasn't due to undue risk. It was caused by a bank run like mania. And it's like, no, this is overt fraud. They were commingling user deposits and trading them on leverage. they didn't they didn't have any bitcoin at the end of the day they were supposed to have

they had claims of up to 70 000 i think greater than 70 000 bitcoin on the exchange and what has come out in the wash with their balance sheet is that they had less than 10 bitcoin on their balance sheet it's all yeah fucking weird i did want to do the little my standard soapbox uh you know difference between uh like what is really reserved bitcoin which is every versus everything else which is a claim and commingled but i'll i'll hold myself up we should do that a little bit later but i mean this whole ftx thing is it's just so embarrassing it's so funny to watch from afar but again i know so many people have gotten hurt from it but i do feel like it's wild because it's it's absolutely a big blow up i mean enron was what 50 billion something

like that i think mf global um they were a 50 billion dollar fund but i think they the creditors were much smaller than that i think i think most of them got most of their money actually at the end of the day you know so they lost like a billion dollars but this one being 10 billion it's big it's absolutely big but then you look at the rest of the system which is corrupt and screwed up by regulations coming out of uh you know washington black rock was freezing withdrawals and they were limiting withdrawals to what 125 billion in a property fund which is huge which is huge blackstone came out last week too and said they're pausing redemptions on their 69 billion dollar real estate fund oh yeah oh i didn't see that one okay so um is that the same one i is

same one i saw no i saw 125 million so there's blackrock and blackstone yeah yes i know black rock for sure was certainly scooping up a lot of real estate during the covid lockdowns well and a lot of that stuff i mean those guys were they've been doing this since uh post uh financial crisis i mean this is stuff that started to be um you know scooped up on the cheap um um, uh, you know, post global financial crisis, 2010, 11, 12. I'm sure a lot of that's been levered up, not able to sold on to new suckers, new investors, and the assets aren't able to sustain higher rates that are coming, uh, for, um, for, uh, for their, for the holders. And so, yeah, the renters that are paying, they're not, they're not covering as much interest as the

owners need to pay because those are obviously huge rental portfolios that they have. But, um, um these are big numbers i mean much bigger that's happening with uh ftx so from that side the main system like is still the big boss it's corrupt um there's just so many issues there but with this man i mean it's just so obvious the way that like the grifters are like kind of trying to go away kevin o'leary is trying to say you know i mean his his talking points have just been hilarious before and after but um just everybody just cheering on this woke mit i don't know just spoiled brat and who was totally going to ruin uh the the bitcoin and and digital asset in industry trying to bring it all under his umbrella and it was the absolute

most corrupt embarrassing just clown world shit show that you could possibly imagine and these were the people that were giving you know pointers to capitol hill on on this legislation like it's it's it's unreal like how could this not have like a full full review congressional review hearings all that stuff to try to get to the bottom of this i mean the money is pretty easy to find in bitcoin land it's pretty easy to find where it went so i mean i hope people have to answer this especially the politicians that took his uh what 40 plus 40 because he said he really did even though he was he was uh you know seen as this democratic kid you know blue blood liberal he was supposedly giving money dark to republicans in the same amount so at least 100 mil probably

super packs yeah that was his uh which his mother is right working on uh yeah she runs one for the democrats yeah no you know there's so many smoking guns like how the hell was an ftx subsidiary able to purchase ledger x which is the cftc regulated clearing house they bought another exchange as well i believe and it's become apparent that they were running everything through alameda's bank account at silvergate like they didn't even have like segregated accounts for the two different companies he told a wall street journal reporter recently that it was he he stumbled he said at least half and then the guy's like half of what so well half of you know the assets that he's like what does that mean it's like at least five billion at least five

billion was customer deposits that was going directly to alameda directly and then credited on ftx at least five billion and probably much more i mean the stuff that he said on this tour i couldn't bear to watch the sorkin interview i mean that's like i hate ftx or i hate ftx sbf i hate sorkin i could not even bear to watch that so i didn't but i did listen to the uh the shit coin uh twitter one that he did over the weekend i guess it was kind of over the weekend my time end of the week uh last week that was pretty funny uh that coffeezilla dude gets in and questioning him did you see his questions no this this guy i don't even really know he's youtuber coffeezilla yeah i know i know i know coffeezilla yeah and um he got on he got on that

channel he just slid in like other dms said it like you know all right i need to ask some questions and he was asking the best questions it was like the worst interview possible by the other guys like they were just like so slow and i don't know trying to be lawyers or whatever and then he got on another one the next day because spf had to leave he basically left after this guy started asking questions and then he got on the next day on a different street just snuck in and started asking him more questions to which he left right spf left right after these questions i mean it was hilarious but he's just squirming he can't like when his feet are actually put to the fire i'm like you know how could you have possibly

co-mingled you know at least five billion dollars and where did that money go like is that in congressional budgets right now is that in your you know parents uh massive portfolio and of property around the bahamas and everywhere else as we all understand um i mean it's just outright fraud it's outright fraud like you know you you can say all you want about banking and you know we can talk about that later it's hard to defend bankers these days but look i mean there are assets and liabilities to match he wasn't even matching them i mean he was basically just it was full-out ponzi he was taking the money spending it somewhere else and crediting you with a made-up synthetic balance on his shitty ftx exchange that was and i can't even understand

how people i never liked ftx i logged in there trade a little bit like it looks shitty to me the whole interface looks shitty like all other exchanges have been around for 10 years looks so much better and you have to question like how could it be that this like rising star takes three years to just explode on the crypto space all these stadiums all the rest like can it can it does it really work out that way like ever or is it usually you know uh sweat equity working hard uh you know like actual like real work that brings people you know success it's usually the latter like there's it's very rare that you just explode onto the scene with some natural raw wunderking wunderkind sort of talent that apparently this guy was just endowed

with but obviously he wasn't or if he was and i'm i still think he kind of was in in some respects with his kimchi premium trading which apparently was pretty good i don't even believe that well whatever maybe not maybe not um but whatever if if he made money in any legitimate way uh he's smart enough he's smart enough to uh to fucking lose it and but so this defense that he say like i just didn't know anything is bumbling like you know first of all it's not a defense legally again i'm no lawyer here as well but everybody knows that ignorance is not a defense in fraud fraudulent criminal activity like you can you can go to the court and say hey oh i didn't know i was supposed to do that sorry i didn't know i wasn't supposed to uh

you know just take the money and send it to politicians and spend it on houses and he invested in like 400 companies that were 100 owned by him yeah by him i mean they were giving out like never happened they were giving out like multi-hundred million dollar loans to themselves yeah that never never would happen in any sort of legitimate fundraise i forget if it was you know russia and stuff but it definitely happens in russia actually 100 i know exactly cases like that but but not not in you know supposed to be some dynastic you know amazing uh template for the future of crypto regulation in the united states type of a firm like it's just it's so embarrassing it's so embarrassing i cannot see how this uh i cannot say this is you called it

early i saw a tweet from i think it was dylan who showed some of your other tweets which i remember seeing you were calling out spf like a couple years ago about his um yeah it's just you know when you listen to him talk about proof of work and everything else yeah when you listen to talk about like bitcoin and other cryptocurrencies it became obvious to me i was like you don't understand this shit like why yeah why do people think you're a wunderkind and yeah the there's so many smoking guns like came out of nowhere this big lore with the kimchi trade which again even if the kimchi trade was successful the the work it would take to set that trade up was setting up all the bank accounts

globally like that just doesn't happen like some yeah kid of a lawyer doesn't figure it like figure out a way to make that happen without help so i'm leaning towards like this is a big operation like he was put on this pedestal and in this place to i don't know if it was to create a a massive crash to allow the regulatory backlash to seem like a like a welcome occurrence or like so there's another possibility here too that cz completely just spoiled the party by seeing the balance sheet and wrecking everything early.

Like, there's a reality in which I could see they thought this was going to go on longer. He was going to get his templated regulation passed by Congress and take over. And then maybe once that was done,

they'd be able to hide all the malfeasance behind the scenes and keep chugging along, kicking the can down the road and just create like a regulatory hellscape for the rest of the industry i think that's possible but yeah like when you add everything up the fact that it was obvious to anybody who actually understands bitcoin and its competitors in the cryptocurrency space that when he was speaking about these things he didn't really understand them i mean in july 2021 he was parroting the

electricity use per transaction metric which is completely bunk um it doesn't make any sense on its face uh the marketing to save the planet by cancelling my bitcoin transaction yeah i think the marketing budget like the fact that they're able to get multiple stadiums get all these commercials get all these celebrities in such quick order just stunk i mean i did call them out many times it started in july 2021 and i i wasn't really like a ftx sbf sleuth i wasn't like trying to yeah raise the alarm bells like we get them week out but whenever he would pop up and talk i'd be like how did like it was just a meter going off like how does anybody take this guy seriously right right right right no i i mean but but that you put all that together

it seems very very low probability to me that he was completely incompetent because you have to have some strategy that is pretty grand if you're gonna if you're gonna have the balls i don't think you can call it like stupidity but i mean like you gotta it you it would take a lot of balls to just go there and run all this stuff if you didn't have some powerful people backing you who knew exactly what they wanted to do with your company exactly how they wanted it to work and i think kevin o'leary is one of them i mean this guy is like i don't know the ultimate grifter as we know so like um if you're if you're if you're setting up the future of crypto regulation supposedly in the

united states and your platform is going to like take all of the functions of the tradfi system you know like exchanges to broker dealers to you know just on ramping and everything else i mean like i just can't see how you don't have some sort of a a pretty wide net of powerful people that are working pretty closely with you and none of them looked at this just shit show of a balance sheet which uh what's his name what's the what's the uh administrator's name ray is it ray uh i forgot already the enron guy that's running it now ray johnson or something like that yeah he said he said it was the uh the worst you know operation that he's ever seen like the loot the worst controls that he's ever seen and this is from a guy that wound down enron i mean like i just don't

see it man i don't see incompetence there i do see you know fuckery and conniving thievery and fraud and elitism and all the rest but i i don't know man i think they they were they were swinging for the fences but like not just blindly i think they had to have very connected people you know on their on their side there and it's just it's amazing to see it's amazing to see that all these people i think that they probably thought you know these regulators whoever was involved this is like their best chance to really you know get in on this game where they've been laughing and ignoring right as uh as gandhi said right the first few phases uh so far and i think they just thought this was their best chance i really how how fucking i'm embarrassed must you be like to know

that you know there wasn't even proper balance sheet in your in your company that's supposed to be like the new nasdaq the new the everything app i really hope this is the case because then it just proves that those at the top that play these games the kleptocrats are getting sloppy they're getting complacent they can't even control their puppet anymore yeah like it's i think he's gonna get away with it i mean everything uh in regards to like the media blitz that's been happening and maxine waters coming out and being like oh it's okay sam like you've been doing your best to communicate with the market we really appreciate that it's just very transparently like they're trying to brush us under the rug can we be like

and obviously the the uh liberal media didn't catch any of it didn't do anything and um new york times and even the wall street journal are writing puff pieces oh that's that's just it's so embarrassing it's it's hilarious it's embarrassing you get the shit coiners on there with their twitter spaces trying to figure it out like this is just we have been dealing with this for 10 years already so from that side it's just you know i'm a caveat m3 guy like always um and like it is bad everybody you know even people in the bitcoin space like you know we do need some more regulation now some more pointed regulation all this like it's it's uh depressing to hear all of those things right and those uh sentiments are not

going away even with established you know long standing professional bitcoiners you know they're they're still talking about like how regulations need to be proper and prudent yeah i'm not sure if you've seen the uh the regulation drama with all the people in the space who want to be the ones who are in the rooms in dc framing the i thought that was spf it was it's like ryan selkis and oh yeah a bunch of other people there's some drama i saw over the weekend where dms were being leaked and apparently there's some power plays being made in the background on behalf of the industry by a very select few individuals who i would not trust to craft regulation for the space i mean this whole thing proves anything is that regulation doesn't do shit these were

the insiders that found it this is insiders that fixed it and by the way that's the same thing that happened to Enron Enron uh was brought down by short sellers well before any regulation and Enron bought brought in a wrath of regulation like I studied accounting in college and this was like the whole that was my whole college accounting career was Sarbanes-Oxley which was brought in precisely because of Enron fuckery and you know telling people to uh you know power down their their generators at like odd times a day and like not market to market and all these things on their books and all this fuckery but like that even that that didn't work before it hasn't worked after it won't work in this industry um you know we had the global financial crisis obviously a few

years after it's all about you know cheap credit as we know um for what this kind of stuff that we we follow that causes these cycles it's well beyond any sort of regulatory environment and if there is um a problem from an actor in the space it's always always going to be sniffed out by by the best actors by the people that can capitalize on it could short it or just screw them out right sell their uh kind of shorting in a way as cz did um it was a power move for sure what he did i'm not necessarily saying he's like a champion either of no he's running bnb bnb is same scan that ftt is or was no i know that it is but at least it's funny that he doesn't like have an official headquarters he just like moves around the world like he's got you know

thousand different entities no no one really knows i mean who knows he could be involved with china i mean who knows uh he came out and denied that over the weekend did he yeah no involvement with china but yeah but i mean you know like he's he's an interesting one was he may be the last to go as far as the centralized players go but um you know but then of course you got the good players all right like obviously like let's not talk about coinbase but i mean jesse i like jesse a lot at kraken and i mean i know you got chick coins that you gotta trade with to make money on a platform but look this caveat emptor stuff if you want to go on trade chick coins whatever but he at least tells you like it is he understands that he's like look don't don't put money on

exchange for me it's just a liability for me i heard him say that in an interview in the last week or so like it's just a liability for me which is true the only way the only reason uh crypto exchanges are different than banks like traditional banks in the united states with one currency with the dollar uh that have you know been going on for a couple hundred years or whatever in you know england as well modern banking system because you're always you're locked into basically one currency and your business was was in lending but with crypto exchanges their fees are not in lending at all they know how risky it is they could lend when they they are starting to which is what happens if you're going to stake if you're going to stake some bitcoin or stake some usdc or

whatever other shit coin um then that is for sure a lending operation but at least that's transparent uh but other than that they're not you know they're not lending it out i mean they you know obviously we knew what happened with mount gox lost the coins lost the cold storage access marked it and all the rest there's some hacks and problems there in the past but most of these exchanges are not going to do that for sure and they're not making any money on it the only money that they're making is from trading shit coins so that's a completely different business model than has ever existed from a from a prior bank uh so that's still kind of working its way out i think like it's working its way through the system like we've

just never seen something like an exchange that uh that actually holds custody of assets and could lose those assets um as as fdx did or steal those assets outright um but the good ones even the good ones like like kraken i mean look it's just caveat emptor like don't put your money there you don't need to put your money there if you want to trade a little bit if you want to try to get some alpha i mean be my guest but it's going to be harder and harder uh as this stuff continues to get flushed out and you just don't need you just don't need to do it even the best will tell you jesse powell tells you it's just a liability i'm not making any money on storage fees or anything else for bitcoin he might they may have to do that in the future

with more regulatory costs that come on to their uh you know into their platforms and other operations but the only money they make is from trading shit coins the only money they make is from you basically losing your bitcoin to other shit coins that's the only money that exchanges make they do not make money storing your bitcoin you need to internalize those freaks i'm sure many the people listening to this already have internalized this and then even if i mean you mentioned the lending side of things that we've seen celsius block fi go down i mean i think lending bitcoin re-hypothecating it and lending it out to people is just critically insane clinically insane considering the price volatility that exists in the space i mean even genesis dcg

is getting dragged into this this mess what interest rate is it worth it to you marty to lend your bitcoin out i don't i don't know if there is one because i mean you could say like 20 but like what does that mean like yeah 20 is appealing but how do they get that 20 they give it to somebody i would say like 40 i would say like 40 and then because even there like you're the risk the higher it gets the higher it gets like the worse it seems because it reflects more risk it reflects more risk obviously the higher it gets and that there is a volatility quotient in that uh calculation for sure um but yeah the the risk of losing your principle is just too high to me losing your principle is the main thing i mean like if you

you lose your breath if whether it's it's someone here's the thing when the bitcoin is being lent out it's not really being lent out in the real economy you know it's just from people going to shitcoin speculate yeah like edge funds and traders like it's not like people are really you know like hardware store down the street is taking a bitcoin loan because it needs you know a bitcoin loan like it's the people that are borrowing it are speculating the hell out of it yeah it's literally a more buttoned up prototypical twitter scam bot give me one bitcoin i'll give you back one and a half that's that's essentially what it is the scammers are at least more overt where the the lending yield chasers are that they try to put on more of a

professional face and say hey you can trust us with your bitcoin but at the end of the day it's Again, considering the stage we're at in Bitcoin's monetization phase and the uncertainty that exists in the shitcoin world. You never know what's going to happen with these shitcoins. And like you mentioned, that's what the Bitcoin's being lent out to do, is to trade those. You can have one actor like CZ come out of nowhere and completely bork one of these chains.

Like your entire exchange and liquidity providers and market makers and everybody that's on there i mean just so many people got wrecked on this exchange and it was interesting to see i mean again sad to see but some of the hedge funds are on there people that you know it's a coil you're writing puff pieces like it's really come on people these people how do you invest that much money hundreds of millions into these jokers um and again i don't know this is where again i get confused back not to dwell too much on our prior conversation but like some there's something different going on there yeah i heard a yusko a yusko uh interview not long ago and he said you know he remembers the mf global one

and that was like or no i guess it was made off which one was he mentioned but it's like you know within 24 hours made off was in handcuffs yes that was on shore within 24 hours he was in handcuffs and i mean like that didn't happen to mashinsky that didn't happen to uh you know some of these other big ico blow-ups or centralized clearing blow-ups and it didn't happen to spf obviously he's in the bahamas but i mean the fuckery that must be going on with bahamian regulators and financial insiders they're uh clearly connected to you know big players in the us i don't know if it gets off it will be it's just like a there you go moment i mean never trust why would you ever trust these guys why would you ever trust this was the

motherfucker that was going to be planning your cryptocurrency legislation just look at him all you had to do was look at him i'm a pretty left side of the bell curve grunt uh my bs meter i have to look at somebody like no no this ghoul he literally looks ghoulish yeah yeah i mean and this tour what do you think about this tour that he's doing though i mean he's just he looks so bad so dumb he's not even giving real answers again i i could not watch the sorkin interview i would not subject yourself to refuse refuse to watch it but the twitter space is one is a little bit more manageable you know just washing dishes or whatever doing something you listen to that but like you listen to this guy just every word coming out of his gross mouth which probably you

know just stinks i could smell it from here yeah i had some just took some drugs and had a big pot of spaghetti you know from an unwashed plate like i mean this guy like is just like how could how could you possibly possibly trust this motherfucker but you know he's going around like still kind of getting these puff pieces glowing reviews and i mean he's lost 10 billion dollars yeah well he's personally lost 27 billion so that's part of the puff pieces he's not a yeah multi-deca billionaire anymore he's only got a hundred thousand dollars in the bank account he lost everything he's hurting too i mean he doesn't answer any questions the coffeezilla questions were funny i would encourage you to listen to to those i think

he did a standalone video actually today um of those two interviews but like no one will hold his feet to the fire on these interviews even the shitcoin guys that were trying to the shitcoin guys are fucking idiots yeah well i mean they should be they should be getting drilled too because i've done a little research into their history is their chronic shitcoin pumpers and which ones that mario narwhal guy or whatever the fuck his name is yeah i see yeah so well if you got dot eth doesn't he have dot eth in his handle and he got that probably but um yeah a lot of those guys i mean there's you know this there's cross currents everywhere with some of these yeah some of these guys you definitely got to be careful everyone's a scammer

we live in the all-time high cloud world it only seems to be climbing higher every day i mean this whole situation a lot of people want to he certainly deserves considerable amount of blame but again this is like weimar vibes like everybody thought that they were going to put their bitcoin into this casino ride the shitcoin pumps become immensely rich get out be smarter than everybody else and it's i think it's a product of the the age that we live in where people want a free ride people want easy money uh there's no concept of hard work it's very hard to find these days and and nobody wants to take personal responsibility like like we've been mentioning this could be completely avoided if you took the extreme ownership over your bitcoin that you should

be taking and holding your own keys you could yeah we have been sitting on the sidelines feeling bad for people but also laughing there's been i'm not going to lie there's been a lot of of shouting freud coming from my end like fucking told you so um we've been screaming on our platforms for for years now half a decade on this end saying hey just if you're going to buy bitcoin on exchange buy it on exchange and put it in your own wallet secure your wallet and sleep happy get some peace of mind yeah i mean just if you want to keep funds there to trade or shitcoin whatever i mean minimal minimal like the maximum maximum amount of uh your wealth should not there's no reason jesse powell himself will tell you there's no reason to keep it on an exchange and

again for him uh it's just a liability your money on his exchange which is just liability something to possibly lose the only way he makes money from his trading shit coins and most of you motherfuckers are not going to be good traders i'm like 99 of people who trade lose money so you may think you're gonna oh that's what i was gonna ask is like even the uh the old the og like um good trading enterprises let's say like bitmex all of the conflicting signals you know you had you had bitmex they try to take out bitmex and then like the next week or maybe two weeks after when uh the ny dfs like started their injunction started their process with bitmex a couple years ago like the next week kraken got their banking license now granted that was like wyoming so it's

a different it's a different jurisdiction wasn't like the same it wasn't a pure uh oxymoronic sort of sequence of events that it would have been if it was in new york but then in you got you got what happens with uh obviously plenty of other uh shitcoin enterprises like some seem to be okay some not and then obviously this one with ftx they were a favored bunch they were the favored ones as well so it's it's completely arbitrary who your regulators are going to work with there's nothing magical about being regulated there's nothing magical about having your bitcoin on this exchange like you just you have to do the work you have to do it yourself and this it's another thing i'm listening to some of these uh so i'm listening to uh simon dixon in particular

uh who was on the call i don't know what you think about him like he's been around yeah i mean he's got his uh banks of the future platform which uh uh you know it's yeah it's been around but uh maybe a bit more like tradfi kind of straddling but still uh definitely definitely uh leveraging a lot of trick coin space but he's using these words that i this is now starting brief brief soapbox moment which i usually do about the about the free banking stuff like he's using words like commingling of funds which sam was doing and they did him and ran they did get him to say that he was commingling funds uh on on alameda but the stuff about he would then go in to talk about they would talk about spot versus margin like if you had you know spot versus margin if

those funds were commingled if it was fully backed and you see this and it doesn't matter we're talking about ftx crypto banking crypto exchanges uh they always use things like one to one phrases like one to one or fully backed or proof of reserves all of this shit drives me nuts because no one understands that you are literally not addressing the main problem and the main problem is that you should fucking custody yourself your your own bitcoin like that is the problem in this financial system the problem is you know there's not enough self-custody you're putting too much trust in these motherfuckers that are regulated in just stupid and uh self-interested and conflicting ways so that's the problem and all this stuff about co-mingling so the alameda

stuff is blatant fraud and that's true like that's absolutely fraud that should never it would never happen even in a uh fairly reputable normal wall street bank i mean you're just not gonna like take money that you raise from investors take money that you raise from customers and have it in a separate company invested in your own separate companies like no one knows where it is buy yourself some property all the rest uh that's absolutely fraud like that's ponzi scheme level fraud that is co-mingling of funds meaning you have it like in a completely different uh it's actually not the word co-mingling it's just like taking the funds and spending them ponzi schemes but this word about co-mingling and like if it's a difference between spot and futures

and if you have bitcoin exchange where's the actual bitcoin versus synthetic stuff that i see on my dashboard all that shit all of it from like a thousand years ago till today is the same it's just a claim it's a ledger entry it's someone that someone created for you yes if you're a proper business you will match your assets with your liabilities banks do it it's not there's no drawer with your name in it when you take a federal reserve note and put it into the bank it's actually impossible to do that that's why uh banks do co-mingle funds like there's no drawer with your name um you know with with your funds sitting in a bank vault it's not it's money is fungible which is actually a unfortunate phrase that sps trying to been using he's like you know

dollars are fungible dollars are fungible he talks about how they fucking lost he keeps saying dollars are fungible i heard of these stupid interviews but all of these motherfuckers they don't like dollars are fungible co-mingling proof of reserves all these things at the end of the day it all means the exact same thing it means you have your money in custody with ran by a fiduciary So what they give you is not the real thing at all. What they give you is called fiduciary media. It's fiduciary media. You log on to Kraken, Bitfinex, whatever.

You see on the screen, I have 0.5 Bitcoin, 1 Bitcoin, whatever it is. That is definitely not your Bitcoin. We all know not your keys, not your Bitcoins. Definitely not your Bitcoin. But it is something. So what is it? Well, those exchanges do have their assets matched with their liabilities. They have Bitcoin and they're cold storage and some in hot storage and hot wallets.

But what they are showing you is not you don't have to worry about it being one to one or whatever. The assets are always going to lie equal liabilities. They may have some loans that they give out. It definitely happens with both index and tether. There's loans that are going between those companies and they may be sound. They may not be sound. It's going to be up for you to judge. Don't be a baby and say you want more regulation for it.

All the rest. Just judge it yourself. See if you want to put money on that exchange. Um, but all of that, the point is that everything that exists inside of one of these entities, these third parties, these fiduciaries, which is the old term, these fiduciaries, it's basically they're taking your real money. They take your base money. They take your Bitcoin. They take your hard paper dollars, your hard currency. They mix it up. They try to do, you know, they try to lend it out. They try to get some yield, all the rest that none of that is criminal,

but what they give you in return whether it's a debit card check online banking account dashboard that stuff is fiduciary media it is it's just it's it's a representation of what you gave them it's not one-to-one it's not fully backed it's definitely co-mingled it's always co-mingled doesn't matter if it's spot or margin i mean do you think do you think when you send money to kraken like they even and you never use the margin like say you never use leverage doesn't not a cracking coin base do you think that they have a cold storage wallet with an individual x-pub for you individually just sitting there somewhere fuck no there's no individual cold storage x-pub just for you with one address just for you that like they happen to manage that you

know that for it's all it's all with them all of the bitcoin goes into one you know as we know and as armstrong said which is a lot higher than i thought it's a lot higher than i think a lot of people that he said there's two million recently two million bitcoin on their balance sheet which is insane i'm quite sure about that number because other like glass and other people don't have it that i i haven't read any breakdowns after he said that but regardless that's a lot of bitcoin for one person to custody but um but regardless all of that is it's not yours it's not yours it's theirs it sits once you make the deposit it sits as an asset on their books and they have a liability to you to repay it if and when you might want to receive it and that liability is called a deposit

it is called your account so again i know it's a soapbox i do it every time but it's like people these words like these it's just it's just exasperating to listen to like co-mingling proof of reserves all this the only proof of reserve you have is if you reserve it yourself like everybody should know that that's only proof of reserve you're going to have if you hold the base money yourself the one exception the one exception sorry you're gonna say something i was gonna say proof of reserves has been a hot topic the last few weeks sure sure and i you know it gets sophisticated i have no problem with people trying great good on them you know nick carter's been shouting from that hill for years and i've been great to try to do something to

make it better and you know at every individual depositor can look at something that seems to represent a proof of reserves of their bitcoin attached you know every hour or day or whatever cracking does a pretty good job of that for others you know can try but it's not the same thing you're still not going to know for sure that those are the liabilities that exist the only liabilities that exist for that uh that company i mean it's at some extent you just can't do it it's not it's not it's not bitcoin it's not how it works only only with bitcoin do you have a fully i've said this before bitcoin balances its budget every 10 minutes every 10 minutes you know for sure uh that you know the next block is there yeah okay you're gonna wait a few confirmations

you've made a transaction but like that's the only thing when you hold your keys and you hold utxos on uh on on the bitcoin network that's that's when you have proof of reserves that's when you know that it's your bitcoin nothing else is your bitcoin so i it's like i understand from a legal perspective why people got to say these things and like of course if i had money you know one of these exchanges and it went under like i would want to get my money back and i'm doing air quotes for the listeners here i want to get my money in air quotes back but all this stuff about it's my money you shouldn't let it out i didn't know you were lending out i didn't know you were doing this didn't do that first of all you know don't rely on cryptocurrency exchanges

just terms cheats right now i mean this is an early industry uh i'm not i'm not calling for regulation in that respect i'm just saying you know this is an early industry they're making money from shitcoin trading that you know they don't have maybe they don't have good cold storage policies all the rest but regardless like it's just i understand from a legal perspective say it's my money it's my fund it's my money but it's just not you have to understand that you have a claim it's an iou there's like you you're going to get in line with everyone else when they go if and when they go bankrupt and it's been you know a little bit more like when not than if this year in 2022 but you're just going to get in line it doesn't really matter what it says on the terms

there's no you may be first in line depositors you know should and are often first in line in the banking system and also they have this scam called fdic insurance in the united states bank system which is another reason to give people false confidence but economically economically you have no money there is not all you have is a claim you have no money there is no money there it's nothing it's just an asset and a liability relationship on the it's not fraudulent it's not like you know it's it's none of that i mean this is not an alameda situation i'm just talking in general i would work in coinbase or whatever but all this stuff is like oh cool co-mingling like oh did you mix spot and margin like spot and margin are always mixed there's no there's no

way to determine this and it's just like you put money into a bank vault like it's always mixed with the bank's loans which on the bank's books are its assets it's it's there's no you know unfortunately to use an sbf saying that they are fungible that's that's how it works that's why that's why you have the banking system work the way it is it scales payments it scales uh finance and everything else so anyway that's my little i knew i was gonna get on that soapbox i love your soapbox rants i mean sure i mean again you can beat the dead horse here but not your keys not your coins is the same yeah yeah the one exception which is an exception that confuses people a lot is a bailment called a bailment you probably know this right so

a bailment is a legal term that it doesn't mean a transfer of ownership, which is what everything else I just described is like you put money in a bank, you put crypto, Bitcoin, whatever in an exchange, that's a transfer of ownership. Literally, you went from having the asset to having a liability claim, like they have to pay you when you want it back. But it's their asset now. So that's a transfer of ownership. That's how it works in 99% of the banking world, any world financial world doesn't matter also like coin based custody is not a bailment that's just a transfer well let me let me let me go back to that um so 99% of the financial world world is a uh is uh it's a claim it's like when you put it into a third party any any money it's a claim

the bailment is a transfer of possession legally transfer of possession where you really would retain ownership but that is so small and it's not like in legal dispute the only things that of bailments are there like safety deposit boxes where you actually have something that you know you go in you transfer the possession away you no longer have it you have an agreement the thing is physical it's recognizable it's usually not fungible so it's unique uh and that's a that's an ancient rule by the way for like coins that came into the bank that were sealed and in a bag and you said hey i want you to store this that became known as bailment everything else what was called was a mutuum a mutuum it means it's mutable basically and uh it's a mutuum

agreement which basically that that came to be called a deposit agreement but that's what free banking that's what like the banking system would work for like 500 years all the rest gold money does bailments uh gold money does bailments they they they actually even they pretty hardcore on their bailments too like they have like even cages that are segregated inside of the vault um right for individual customers yeah for individual customers and it's and it's uh it's uh in your name that gold is absolutely in your name um the only company i know in the bitcoin space that does any sort of bailments is voltoro and they do the same with gold but they don't do it with bitcoin because it's not easy enough yet i mean like even though you think

bitcoin is easy to transfer around whatever again do you think every exchange has a cold storage x pub with your name on it like just don't they don't have that it's not uh it just doesn't exist and so anyway the point point being um even bailments this was the point i wanted to make even bailments like it's great you may think bailments are great and like gold you know hardcore gold bugs are always talking about bailments it's like it's my money it sits there it's mine nobody else can touch it it's mine mine mine you still got it first of all you still got to pay that's not free like a bailment you would actually have to pay a fee that's why people don't prefer it because they want to pay the fees but that's the first point and the second point is

it's still kind of not your money like it it is legally it is legally absolutely it's a transfer of possession not a transfer of ownership that's a bailment but you know what if that what if that vault gets robbed i mean yeah they got to pay for the big doors and the security and the insurance and all that but it gets robbed we have not only if it gets robbed what if it gets robbed by your government it happened here in california earlier this year or maybe last year recently where you had a private safety deposit box company which is running out of like a strip mall in california and they were doing no kyc no aml and their customers the fbi found out that i believe it was like one individual customer was storing funds at that safety deposit box company and they went

in and stole everybody's assets like not only the guys that they that they were targeting but everybody else that had their assets in those safety deposit boxes and are they going to get them back or they got to go through litigation i'm sure they have to go through litigation yeah it's unbelievable it's just yeah like stealing assets like interstate commerce laws all this bullshit that would steal if you got cash on you like in you know crossing the border or whatever they just steal it regardless they'll just steal your cash they stop you so just be careful of that obviously but um yeah this is also i don't want to get on another tangent yet and if you want to go somewhere else that's that's obviously the push to cbdc's and all the rest but it's

really it's never your money that's the thing even with a bailment where it's technically technically your ownership like you said it's still at risk still at risk obviously of threat but everything else is certainly a claim and coinbase custody by the way i read their terms that's not a bailment that's uh that's a trust that's a trust so it's supposed to be kind of cool supposed to be secure and interesting and unique because even coinbase doesn't own that so it's another level right so it's a trust coinbase has hired a trustee to hold those assets supposedly you know in more uh let's say less easy to be spent ways which is a trust agreement that's all it is just trust agreement so they have a trustee someone

else that's not coinbase that holds your funds on behalf of you so there's like another level of of trust there but but even that is a economically there's no difference like that it's it's not a bailment and uh and it's it's still a claim like you just got to go one level up you got to go to the trustee then if the trustee loses the trustee could in bitcoin terms trustee could totally lose it too so so none of that matters none of that matters in bitcoin none of that matters in finance 99 of the things if ever you hear a shit coin or someone talking about where we're going to get our money back we can get our funds it was never your money in the first place you're in line as a creditor you got to understand that you are a different you're in a different place than you

were when that exchange was operating you're in you're certainly in a different uh uh headspace like hopefully you learned you should never put your money there because you know you're gonna have to deal with the legal costs and the headache and the time and the weight and the time preference to get your cash back but um you know that there is there's there's no difference there's no difference so co-mingling proof of reserves all of these terms you hear doesn't mean anything it's not it's not yeah sbf was like low low low on the totem pole of of everything as far as like controls and and custody and all the rest and you know typical accounting and yeah he was running a ponzi but um even normal working exchanges like crack and jesse powell says it right i mean that's

like it's don't hold your money on our exchange it's not you know it's it's just a liability yeah so we're gonna learn we're gonna learn i mean i learned that i learned that in like 2015 yeah the minpal exchange yeah and uh the guy around just decided to

take everybody's bitcoin and run it happened that was in 2015 yeah yeah I believe so 2014 or 2015 yeah

yeah um yeah and they've had their hacks you know a lot of a lot of different ones bitstamp

uh bitfinex um obviously mt gox which you know again you can blame it on this blame it on that blame it on negligence but at the end of the day you don't it's not your money there yeah it's just not your money you're you're you're gonna sit in line like everybody else as a creditor and try to get something back and you might not get bitcoin back you might get you know japanese yen or i don't know like i mean you may not get bitcoin back yeah that's gonna be a very

interesting case study mark arpellos was on a podcast last week and he said the mount gox creditors should be getting paid out at some point in the next in the first two quarters of 2023 yeah which is already supposed to be the third quarter of 2022 but yeah sorry go ahead go ahead and they're not getting bitcoin back right they're getting paid out in yen equivalents uh yeah i've heard different things so i don't want to speak on it but um could be let's just say it very well could be yen equivalent and uh there you go like you you i mean And if it is yen equivalent, definitely not inflation adjusted. Yeah.

They make their own rules up, man. It's just like inflation, the price inflation index. I mean, they make their own rules. That'll be a really interesting case study. If it is payback in yen, not inflation adjusted, I doubt every creditor is going to be made whole on the deposits they had on Mt. Gox. So they're already taking a haircut on their deposits, I would imagine.

and then on top of that they're getting yen back which has been significantly debased over the last almost 10 years yeah i can learn how to spin up a wallet hold your own keys freaks it's time like that should be the regulation that comes out of this like you should not be allowed to hold your whole claims to bitcoin on a centralized third party because they've proven time and time again, not to be able to actually secure them or follow through with the fiduciary responsibility to manage them properly. It's going to be more embarrassing hiccups from regulators trying to wade through this stuff. They certainly set the industry back

like many years, but just for all the grifters that are saying like, oh, we need even more regulation maybe you know we just need some good stable regulations you do realize that regulations cause uh nothing but problematic stuff here they definitely didn't help with uh with the solution right whether it's whether it's made off or enron or mf global like it's short sellers typically that find something wrong yeah we don't need regulation we need better education about what people are actually dealing with when they when they think they're buying bitcoin should we hop into the charts yeah man we uh we don't have to go through too too in depth i'm pulling it up logan

yeah yeah the regulatory grifters man we need regulatory clarity that's why this happened there was no regulatory clarity it's like what i can't stand it no more co-mingling of funds dumb fucks that's it's just doesn't mean anything you're saying words that don't mean anything it's always co-mingled um all right so for those that are watching uh just very quickly for those that are that are uh listening i guess we have um doing this about uh five years now i guess um this is uh uh the q3 update takes time because usually another month

uh has to go by after the quarter end we're going to do this in november and then november blew by for us so uh with uh you know not too not too boring of a few weeks here so finally coming on in december started december to do this but this is the q3 so this is end september 30th uh basically as i was talking before if you have base money which is like in today's financial world i know it wasn't in prior financial world like gold standard world But in today's financial world, it just means cash and coin and all of the what's called the bank reserves. So the account that each bank holds with the central bank, that's the you add those two things together. It's a monetary base. And that is going to be compared to Bitcoin economically, economically.

So whether I hold Bitcoin, you hold Bitcoin, you hold Bitcoin and Kraken, whatever, you know, somewhere those UTXOs exist. Doesn't matter who's holding them, just like somewhere gold ounces exist. doesn't matter if uh you're holding them or you know peter schiff's company is holding them uh god forbid no company's okay james turk's a good dude but um yeah uh that's that's that's the idea it's basic money is uh it's something that really it's it's it's the ultimate asset there's typically it's typically the match it's going to be matched by equity you can definitely lever it up but if you hold it and you have no bank debt uh it's your asset it's nobody else's liability it's your asset it's your equity um it would be the same in in uh in any other case

if an institution held it on the other hand though they have the asset and they also have the liability to you so the moment that you put in institutions obviously this stuff gets complicated but you can still trace it back to the core of the stuff the thing that it is so that's physical dollars and bank reserves uh which is very similar by the way it's very similar to the the total assets of the central bank so um but this is on the liability side so it's what the central bank owes to the banks and to all of us uh it's 20 26.8 trillion we got 50 currencies been doing that for a couple quarters 26.8 trillion dollar equivalent and this is an interesting number because uh about six months ago that number was about 30 trillion and really

they're printing a little bit less they're trying to rein it in from covid stimulus but not much maybe it's about flat the money printing roughly but just that number has come down because the dollar has just been screaming it's absolutely been screaming compared to every other currency so that's why uh it's a little bit uh it's a little bit lower it's actually not that they're necessarily printing less it's just you know this is uh wittgenstein's ruler i have to i have to put this in something i can't put it doesn't make sense to put it in bitcoin because you don't get a number that's more than 21 million so you can't do that so it's just sort of the easiest thing is to look at a dollar equivalent so 27 26.8 trillion is a monetary base uh yeah we've had euros actually

the yen the euro the pound specifically of have fallen against a dollar everything man everything i don't know if i can't remember if i have a chart in this uh series but literally i mean every currency has just been crushed this year against the dollar so it's changed a little bit in the last month or two compared to the start of the year but everything has literally been crushed so you know whatever i mean uh this these are old theories too whether you're talking you know dollar milkshake or it's the best looking horse in the glue factory like this is uh at the end of the day we all know that the dollar is uh you know the the world's reserve currency which most central banks uh reserve they're not reserving gold they're trying to reserve dollar or dollar

based assets but this is the actual uh just the core this is each central bank's monetary base so uh 6.3 trillion euros is the biggest monetary base dollars actually ranked number three uh 97 percent of global gdp by these 50 currencies 84 percent of the popular 84 percent of the population of the world and so it's about 5.6 billion ounces of gold which is almost 10 trillion that's the equivalent um amount of gold that compares that does not include industrial gold and the 19.2 million bitcoin which is uh at the time of writing it was 0.35 trillion or 350 billion and even at 350 billion where you got like 6.3 trillion euros or dollars worth of euro uh you know five and some trillion dollar worth monetary base bitcoin still there's you know it's

very uh it's very uh pareto like so there's a huge distribution there from the top to the bottom uh weighted uh towards the top top four or five currencies so bitcoin uh really over the last five years has snuck up and it's uh it's about the ninth largest currency if you don't include gold and silver if you include gold and silver it's the 11th largest currency so i don't know i said we'd make it quick so that's really the summary um there's just a lot of stuff on here that you know i really try to break it down for you can see the physical versus the bank reserves you can see it per capita um you can see how this stuff changes you can see it this is another one i want to i don't know did we talk about the physical the cbdc stuff you

want to talk about cbdc's or let's talk cbdc's and i'm not being rude checking your text i'm looking for a tweet that i want to bring up no worries so um here is a uh this isn't the tweet that i wanted to show but earlier this year uh the bank of japan issued a uh very interesting report and they literally worded at this point there are a few countries that have a clear use case for cbdc so the big countries know that cbdcs are awful all right cbdcs are a risk to themselves because uh cbd the central bank exists for two reasons first is for the state for the government it makes the government's bonds look better than they otherwise would be because they can buy them they give them a floor on them they can increase the price by buying them with money

that they create and the second is they exist of course for the banking system as most people know like most central banks not all central banks but a lot of central banks are privately held there's bank uh interests in the central bank and of course uh the banking system you know needs as we say lender of last resort central bank exists for uh the bank so the first is the state the second is the banking system and cbdc's just destroy everything there i mean it's it's it's the central bank trying to act like a normal bank holding cbdc's and uh issuing cbdc's and having you know apps and technology and all the rest interfacing with with the public and then the other problem so that's the first problem basically is that uh they already do cash and they you know

they do cash quite well some countries better than others uh latin american countries in particular like to print a little bit more than they probably should but that no it's not a laughing matter obviously we as we know it harms a lot of people um but the the you have to think that what they're already doing is a huge, huge part of the retail money supply. CBDC is supposed to be retail. So if I show you this chart, this is the physical cash supply of the world right now. It's about $8.6 trillion equivalent, $8.6 trillion or $1,100 per capita. And that, that I literally mean cash money, retail money. So like you think about all the dollars, euros, yen, won, uh, you know, you yuan uh brazilian ral everything pesos and using black market rates by the way if i can so not

helping these central banks if i can um which you shouldn't i mean that's everybody knows the black market rate is typically out there especially for for less well-known central banks 8.6 trillion dollars which is still a lot of money all right so like i i said this at honey badger you may remember i think apple's market cap was a little bit under three trillion at the time so about three times apple uh but again like apple you think about like all the computers phones ipads whatever i mean the market capitalization of that company is 2.7 trillion dollars this is like cash is no joke and people say nobody uses cash anymore well okay but have you actually measured it you know i've actually measured it not on this chart but it grows it lasts like 15 years it's grown at

a 15 growth rate so cash is not slowing down so that's the that's the problem number one for cbdc is you're going to as a central bank compete with your own best product which is physical cash now you may say that you want to do it whatever for the controls and all the rest but it's going to be pretty hard i think to like population is growing at 1.5 percent per year and physical cash grows over the last 50 years by like eight percent uh about eight percent if i remember correctly so there's a miss there's quite a mismatch there maybe even nine percent doesn't really matter the discrepancy is so wide if you understand you know interest rates you can understand it's a huge discrepancy huge delta all right so that's problem number one is that

uh central banks have just a massive massive stockpile of cash and people actually do use cash throughout the world even though in the western world we don't think about using cash it's the stockpile is growing it's not it's not decreasing so they got to compete with that with their cbdc the second thing is once cbdc's get into uh the economy if they were to get in the economy actually compete you know besides competing with their own physical stock which we just talked about what else would they be competing with how like what would be their market share of where they could take it from it would be deposits of the banking system and as i just said central banks exist for the state it also exists for the banks um why would they want to do that to their

own banking system like banks you know in every and again you don't take my word for it this is in every cbdc report in the world basically it's like yeah this could be a problem for depositors we could see deposits if we want to have this it could drain deposits from the system that is fiduciary media right people would take their money out of banks they would get some sort of base money maybe they get hard cash for a time whatever they just do the straight transfer into base money cbdc and once you hold cbdc well theoretically it's great right obviously we know that's orwellian and horrible and awful but if you're a bank you don't like that at all because if you've just taken my deposit where i could lend out and earn interest on it you've you've

taken that deposit out of the bank i no longer have those funds to lend and that makes me less profitable so that's a real issue those two issues they know about they understand everything that's why the euro central bank is saying when their latest you know rumblings on cbdc's that they'll have you know a limit of whatever it is x euros a day that you can spend x euros a day or x euros you can hold in total you know we're talking minimal amounts so far you know a couple hundred couple thousand in certain cases and that's it but then if that's the case like all that is is just it's a whole lot of bureaucracy and again or willing tracking and all the rest and uh systems that have to come in place of course they want it they want to they want the control

but it's going to be a big a big hurdle man i mean you got the bank of japan right here saying like we're not we're not going into this they're they said it they said it they gave a report they said currently it has no plans to issue cbdc and we find few countries have a clear use case this is from a top four currency top four central bank in the world like people should pay attention to this and i put in this tweet like this was a couple weeks i think after this july 2022 report but boj cbdc you know you just get these vomit articles from bloomberg that like have nothing to do with you know digital yen and stuff like you know a few years ago no one would no one is tracking that report. So anything that doesn't fit the narrative, as we know, they don't report

on. So I don't have as many fears about CBDCs as most people do, but don't get me wrong. It's something to track and keep an eye on. Yeah. It seems hard. Have you heard the theory that Tom Luongo has really been leading the charge on this, that what we're seeing in regards to the Fed's interest rate policy this year is actually the commercial banking system here in the U.S. using the Fed as a proxy to wage war against the European-centric cabal that would like to push us into a CBDC world.

Sorry, man. Can you say that again? Tom Malongo has a theory that what we're seeing coming out of the fed in terms of raising rates as high as they have been as quickly as they have been is essentially an attack on european-centric davos world economic forum class that wants to push us into the cbdc's the commercial banking system is using jerome powell as a weapon raising interest rates trying to drain the euro dollar market and put that banking system in a precarious situation because they're trying to send a message like hey stop pushing the cbdc stuff you're going to destroy our businesses um and we will use

we will use the fed as a proxy to to cause you some pain to send the message yeah i i haven't seen that uh particular you know view but i certainly have seen and i certainly have understood that most fed officials have been pretty cool to the idea and of course it's one of the things like why would they need it i mean uh i did see as well powell said if we do a cbdc it's certainly not going to be a bearer asset cbdc he used those words but then if it's not a bearer asset cbdc meaning if you don't have the ability to just self-custody like you know i don't know create your own keys and like you create your wallet where somehow cryptographically you know for sure it's on your phone or your computer or whatever if if he if he's saying like that's

out of the picture we're not going to do that anyway then there's no difference between um between a bank deposit it's it's just a it's a same that would be something yeah it would be the exact same thing as a bank deposit you can say that it's a cool technology that you can cryptographically track better and maybe it's a blockchain maybe it's not and by the way cbdc does not mean it's blockchain it could be you know anything um so there's just these terms that people are using for it um but i my understanding from seeing the people that know the dollars yeah they know the dollar is the best looking horse in the glue factory they want to protect it and they're not they're not seeing the benefits either just like the bank of japan

so it's interesting obviously yeah the euro cabal as you say it needs a lot of work a lot of help in a lot of a lot of areas and um less least of all security but that's a whole other thing and we're not getting to that today but uh yeah i i i could totally see that as a as a viable you know strategy and it that's actually interesting too because it kind of shows that you know it's not a it's not a total global cabal yet right like there's still some competition yeah even among the central banks and it's just there's nothing in it there's nothing in it for the dollar i mean um by the way stable coins might take the take the show you know i said that on your show as well like five years ago i mean that's that's the low-hanging fruit that's the thing

they want to uh go for first and even after the terra collapse which was a stable coin right unstable coin yeah it's bullshit it's all but um the fed i think it was yelling at that time not the fed the treasury came out with uh remarks that were like saying we're going to address this and whatever and these coins i mean like again as you talked about earlier as bad as ftx is and as stupid and probably as insider and elitist and weird as it gets it's it's just a dust mite on on the you know the elephant's ass of of the dollar economy i mean the euro the repo economy the euro dollar economy all of it is just massive you're talking tens of trillions repo maybe not that big maybe like

seven trillion but the euro dollar economy is probably much much larger than that on top of There's the regular dollar economy, trillions and trillions of dollars, FTX, $10 billion, whatever. You know, a couple frauds here or there, Terra, less than that. Stablecoin index is maybe $150 billion. Last I checked, I haven't checked in a while. So Stablecoin is under $200 billion, for sure, right? And $150 billion. These are just rounding errors.

They're so small figures, and the fact that they are speaking so adamantly against it shows that they're scared of it and shows they don't know what to do about it. Yeah. I like to see them scared, but I'm happy you brought this up, talking about large numbers. This is the topic I wanted to end it on. This is a report out of Reuters, which dropped right before we went live here. So we're recording.

We'll post this tomorrow on December 6th. So this story came out today, December 5th in the morning, and the Bank of International Settlements has come out warning UK pensioners specifically that they need to begin being aware of this quote-unquote blind spot they have, which is an FX swap debt of $80 trillion. So they have like off-balance sheet exposure. upwards of 80 trillion dollars um in fx yeah yeah i'll have to read it so obviously this is

derivative it's these numbers are eye-catching but you know again that's that's a tough one because like derivatives are weird so so that i'm sure that that 80 trillion is a notional value it's it's a made-up thing it's it's a it's it's a it's total value of all future cash flows but um like that can change very quickly and i'm not saying like i'm not downplaying it it's absolutely a huge thing but yeah derivatives are crazy they they uh they don't know how to how to count them they don't know how to track them um that's that's a that's a tough one that's a tough one and uh yeah but regardless we're talking again how small bitcoin is compared to this stuff i mean 80 trillion i'll definitely read this but um the derivatives are way i mean you could have

a quadrillion dollars of global derivatives no one really knows and it's insane it's crazy the question is like legacy financial system is done to us yeah legacy financial system well i think that's where the big question is that so there's a total credit i'm sure it's m2 a cigarette i can't quite read it but uh on the right the green chart what are the two shaded green boxes on the right i know one of those has got to be like total credit and or m2 no no you're on it what can you read it marty the green i can't read it there we go on and off balance sheet debt and then on and off balance sheet debt for non-corporates or for For U.S. banks and non-U.S. banks.

Yeah. I wonder what they're defining as off-balance sheet debt. I presume it's derivatives. Well, that's a quite like, is there like an FTT-like situation happening in the traditional financial space where, yes, it's $80 trillion of notional value, but are these banks able to use that notional value as collateral to take out other positions? yeah absolutely and they absolutely do they love levering that shit up so again it's uh caveat

emptor do not believe any of these people you don't have to custody your own coins that's the main lesson as always uh but um not financial advice of course but uh you know the uh the uh what did i want to just say this no um here's another big number here's another big number is one of the things i'm tracking is i'm trying to reconstruct which is proving pretty difficult but i'm trying to reconstruct for for this this these charts and this chart engine that i'm telling you about that i'm going to start doing uh videos on probably at the start of next year uh the the m3 money supply hasn't been calculated by the united states federal reserve since february of 2006 m3 money supply they started to cut that off that was the broadest

money supply it'd give you kind of the best view of the most liquid dollars that were out there and again the vast there there is a little bit of physical currency which is base money which is real money as far as like real ultimate asset which no one theoretically can hold that and it'd be your asset in your lab your your equity as well so uh that is included as well that's that's called m0 and any any cash that's outside of the central bank and bank vaults but then there's all the other stuff right so the deposits money market mutual funds which is basically like the fiat version of a stable coin um uh all of the time deposit accounts savings accounts all the accounts that companies have businesses private individuals all the rest so you have

these liquid money supply measures and the fed is just horrible at measuring this like they've changed the definition of m1 due to regulations it's almost basically the same thing as m2 and so many people have been confused you might have seen it like if you look at an m1 chart like it just goes like this and like two years ago it just goes like straight up and it goes over they they just they didn't even reclassify it they didn't make it historically comparable it's basically they just turned it into m2 because they changed some regulatory laws and people think that actually increase that much it's just but the fed is so stupid for like putting a chart out like that on their website but anyway they don't they don't none of this stuff is is easy

to calculate and um again i know we're all about bitcoin too but if you do talk about a liquid asset that is easy to calculate i'm not sure how secure it is but but a stable coin actually is easy to calculate so it is a challenge uh it is a it is a competitor to the incumbent system nonetheless um i want to recreate an m3 money supply just to see how it will go because a lot of the data is still there it's still published by the federal reserve it's just in weird pieces they don't they don't have it you gotta you gotta sort of dig to find it euro dollars are not there so that's that's a problem like euro dollars are very difficult we'll leave that aside but even if i would do an m3 without euro dollars there would still be something still be something

but a big piece of the m3 money supply that is um that is uh not calculated today it's not even clear it's not transparent is is this repurchase agreements so repurchase agreements are these very very they can be very short term sort of midterm loans we know that there was a big problem with the repo market in september of 2019 conveniently just before covid and all the rest is kind of a papered over a huge spike in the federal funds rate and it's it's a very sensitive market basically when all these banks and not just banks it'd be pension funds hedge funds whatever they have they want to sort of make their capital ratios adequate they might need to scramble at the last minute to have a high quality asset which is a at least typically

known traditionally known as the uh united states government bond uh treasury bond right which i like to call you know risk uh return free risk but most people call the risk free return um obviously we know that that's changing everything but point is there are repos that the federal reserve is involved in those those are part of the bank reserve amount it's not the full amount it's part of the bank reserves part of the monetary bay but then there are a lot of repos that um banks are not even and so those repos the banks are always involved and they kind of mirror what the bank is doing but there are repos that pension funds do hedge funds uh broker dealers people that don't aren't able to hold deposits like normal banks they do repos as

well is that a product of the reaction to september 2019 because i remember the fed expanded the facilities it was high it was high in the global financial crisis uh it spiked a lot and then it went down and it was trying to come down down now it's actually fairly flat when that spike happened in the rates so i don't know the full post-mortem on that but it's i mean there's i i know that that's a that's another show probably to go through it but but i would say um it was extremely it was at an all-time low and they were trying just like they're trying to bring monetary based on how they were trying to bring the repo level down that the federal reserve was involved in at that time and then the blow-up happened so you know they just they had

to intervene again basically but it was higher than that than it it had been higher before it's not like it just happened after that but anyway the point is it's it's screaming again it's high they only publish this data quarterly the one i track um i don't have it off the top of my head it's something 207 i think if you a dear listener or a watcher want to actually track it yourself it's a l207 maybe account and they track repurchase agreement but it's all unorganized like they have assets liabilities because what the repo is basically is it becomes the security moves but since we're not you know we don't want to double count money right so we're not talking about deposit and tying deposits with the rest we're talking about the security itself kind of

becomes like money it's like i need to hold the security so just give me the security say literally the broker dealer someone will give the transfer the security over someone will have the new security so they have it but it's actually a liability that's the repo they need to pay it back and the person that gave them the security has the asset that's a reverse repo anyway it doesn't matter they're supposed to mirror and match and that's it's it's the reverse repos will always equal repos theoretically but here's the thing they have a uh they have a column on their account in this exhibit which shows like discrepancies in the account discrepancies in the accounting of the repo uh because they're counting assets that are reverse repos and and

liabilities which are repos and repos are typically which we call as like a new type of not a new type of money but a type of kind of liquid money like which is counted yeah it's but it's basically securities that are flowing through the bank system so we'll end here but but the point is the max number that i've been counting from this chart of all of those repos is something like and does not include uh fed funds it's not include the stuff that the banks are doing that would be double counting the monetary base but it's something like four trillion four trillion dollars gets up to like seven trillion if you count the fed funds in there in the repo market it's like four five trillion but the the discrepancy is like 200 300 billion now

so they just they literally have hold on let me just pull it up really quick just to see it they have on their report a discrepancy between reverse repos and repos that they can't even count up themselves that's now $200 billion, $300 billion. So you talk about, like, just put that in perspective, all right? Trillions in repos, no one knows when that will crash that market again. And hundreds of billions, which they can't even count themselves. And, you know, this drama over this moron with losing $10 billion, you know just it just shows you how insane the financial market really is yeah that's like a

five percent discrepancy potentially more if it's on the higher end there it can be even higher than that um i just want to make sure i give you the right number because i was looking at that just uh today actually for something oh where did this 300 billion dollars go oh we don't know yeah it got up it was up to 400 billion last quarter this quarter was 288 billion the discrepancy um yeah i wasn't uh yeah i would say i was a non non-bank non-federal reserve repos something like four trillion four four trillion dollars and and uh yeah 200 200 billion of that so five percent something like that could be a discrepancy but the federal reserve on its own reporting can't even count can't even count up the difference because all reverse repos should

should equal repos and they're trying to count this this this transaction that occurs between companies to transfer these securities around these these it's just treasury securities and they can't they can't add it up how does that not happen automatically well it's a legacy system yeah this is yeah how how does how do we not know what you know this you know gross moron in the bahamas is doing i mean let's just say he's he's got a cryptographic company you know it's like this is this is why it's never going to work man it's never like proof of reserves all this stuff i mean again i don't want to be too fatalist with that there's there's you know it's always improvements to make but you want you want proof of reserves you've got to hold your own keys

got to hold your own keys great bitcoin does the accounting roughly every 10 minutes and you can check the budget baby balances the budget every 10 minutes you don't have to worry about co-mingling of funds stupid term anyway if I hadn't made that clear you hold your keys you produce an xpub you send bitcoin to one of those addresses

then you just spin up a full node and check hey my bitcoin is still in that address that's good by the way I know everyone has xpubs and exchanges and hot wallets but I doubt that they have like a separate ledger for you with a cold

storage xpub sitting in a box no it's not for the cold storage component right it's it's all it's all commingled there's no just from a logistical standpoint that doesn't even like could you imagine and if you have hundreds of clients let alone thousands tens of thousands hundreds of thousands millions like it's yeah logistically impossible it never has it never has worked in that way with any institution that you can't it can't and it's not a problem it's not i'm not saying it's fraudulent i'm just saying we have a we have an escape hatch now we have a different way of sort of interacting with the financial world that we never had before which is incredible yeah it is incredible meeting with you quarterly is incredible as well i love these

these reps and now we have new data to look at and to track yeah yeah thanks for letting me show that off uh i hope to improve it and uh maybe we can we can yeah revisit some videos next quarter yeah no i'm very excited to see where the price is and where the more importantly where the power trend line is next time we meet um where should we send the freaks uh porkopolis.io porkopolis.io that is the uh that is the site you got the base money updates the podcast is there crypto uh the crypto voice podcast um and and uh i've literally for those who've been paying attention i've been saying this for about a year but it's finally coming we'll have this new sort of stream this new kind of uh new kind of interfacing with uh with my listeners and i guess viewers now start

doing some videos so i'm looking forward to that start of next year grow your no freaks go follow porkopolis follow matthew you're gonna get smarter you're gonna understand base money better understand the global financial system better and he's gonna keep beating the number one rule of bitcoin into your brain day in and day out which is the only proof of reserves that you can have full confidence in is holding your own keys until next time i appreciate it brother i really appreciate it always a pleasure never a chore peace and love freaks