TFTC: A Bitcoin Podcast - #407: FedNow is not a CBDC with Matthew Mežinskis

Episode Date: March 23, 2023

Sitting down with Matthew Mežinskis to discuss the Q4 2022 Monetary Base update, the banking crisis, CBDCs, and more Follow Matthew on Twitter: https://twitter.com/crypto_voices 9:14 - Q4 update, just in time for Q1 13:32 - Bitcoin price 22:29 - The results of raising interest 24:42 - Bond duration risk 32:30 - QE5 34:40 - Choke Point 2.0 38:14 - Balaji's price prediction 46:53 - FedNow 55:04 - CDBC destroying big banks 1:00:09 - US state rights 1:05:21 - Flaring natural gas 1:11:00 - Blood in the water, Bitcoin is the way out 1:19:18 - Custodia Bank 1:27:17 - Black markets and civil disobedience 1:31:09 - Monetary base 1:39:09 - Back to CBDCs 1:45:33 - Bitcoin's rank in monetary base 1:47:22 - We're gonna win 1:59:39 - Gold and Silver 2:06:19 - Wrapping up Shoutout to our sponsors: ⁠⁠Unchained Capital⁠⁠ ⁠⁠River⁠⁠ ⁠⁠CrowdHealth⁠⁠ ⁠⁠Bitcoin Talent Co⁠⁠ 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 howdy it's wartime out there sat back down with maddie mazinctius from crypto voices from porkopolis economics for quarterly update q4 2022 but obviously we talked a lot about everything going on in the banking system right now uh a lot of charts in this one i think matt did a incredible job of verbally describing the charts but if you want to actually see the charts uh recommend you go over to youtube put this on twitter if you're on spotify you can watch the video have it on rumble and bitcoin tv as well if you want the charts but again i think matthew did a great job of describing what was on the screen at the point in time and we'll link uh to the thread where a lot

of these charts can be found uh as well uh haven't read boost in a few weeks sorry freaks been very busy uh but we'll get to it rip 406 debt-based colonialism and structural adjustment with alex gladstein at eric 99 50 000 sats great rip thank you eric appreciate it at bfg 86 5000 sats prediction 10 years from now alex will win the nobel peace prize and we'll be referring to him as sir alex would be pretty cool at karil sukov 1000 sats heart emoji and at gert 1000 sats peace sign emoji thank you for the boost on rip 406 we're gonna rip 405 as well the biden laptop report with garrett ziegler spicy one i think an important one honestly i get that republican democrat don't really care

what your political leanings are i think we can all agree that corruption is bad and garrett uncovered some corruption in this laptop highly recommend you guys go check it out if you haven't already at eater editor e editor let's go with that 1500 stats great conversation tftc continues to impress thanks well e-editor thank you for listening we're going to try our best to keep impressing you and and setting the bar higher moving forward at hugh janice hugh janice i get this it's hugh h-u-g-h-j-a-n-u-s hugh janice hugh janice it's a big gas 1069 sets this was a cracker loved it bftw shakabra brown heart emoji island movie i think that might be costa rica or croatia i'm not sure thank you hugh janus for the boost

i wonder if you actually have a huge butt and look when we say hugh janus is that like the The butt or the butthole? I mean, it's Janus. That would be a hole. Okay. I wonder why you have a big butthole. At Mark C, 1,033 sats. Spicy one, eh?

Yeah, I think so, Mark. And at I Love Sushi, 1,000 sats. A great listen. Thank you, freaks, for contributing via the podcasting 2.0 value for value model. If you're listening on apps like Fountain, Breeze, Podverse, Echo, whatever it may be, you're contributing. Thank you dearly. We really appreciate it.

Love that you're getting value out of the show. The show was also brought to you by good friends at River. Banking system seems to be pretty crazy right now. We have Balaji calling for a million dollar Bitcoin. They're going to cut off the on-ramps, the off-ramps. so probably want to move in haste and sign up for a river account go to river.com slash tftc get bitcoin i mean this is the best bitcoin company out there to acquire bitcoin they built their whole infrastructure they hold bitcoin that you own on the exchange in reserves 100%

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best talent to build out the bitcoin standard we're going to win freaks they will never ever ever destroy the human spirit enjoy this rip 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. Are you comfortable? Comfortable. Good, you look comfortable. You're like leaning back a little bit. i just figured you know when we do these quarterly chats you need to you need to settle in yeah well we're settled in we're at block height 782 141 fantastic q4 2022 quarter or monetary base update yeah now the q1 is almost now the q1 is almost over q1 is almost over that's how they do it though you know it's a full month you have to wait until like pretty much all the stuff is

published and then you get like the stragglers like you know i still haven't gotten on the bank of iran's website since june of last year because of the uh you know that country's on fire basically so you can't like if anyone can actually get on their website just dm me i'd be interested but um yeah take some time uh but this one took a little bit longer very interesting things going over in Iran right now sorry or China brokering a quasi peace deal with Saudi Arabia yeah I saw that I don't know China's brokering peace deals everywhere apparently trying to at least and then I went to Russia there's rumors that they're gonna try and get Vladimir and Zelensky at the table I'd like to see

should he try but uh yeah it's a lot going on man a lot going on in the world we are uh you know it's it's standard status quo over here we're supporting ukraine best we can just because we know that they would have us in the crosshairs next yeah even though even though we're in nato it's just geographically very tight for us very tough there's this thing the sovolki gap you know about that no it's a it's a small town right in uh right south of lithuania uh in poland and they've been building it up over uh the years actually just drove through there uh last week it's like the the highway is much better now it's it's but it's basically the only road there's 100 kilometers 60 miles of road between lithuania and poland and on the um on

the west you have kaliningrad which russia never held historically never had any claim to but they took it over after they pushed the uh the germans out uh in after world war ii and in uh the east you have belarus which is uh obviously like basically a russian surf state at the moment so there's there's a there's 100 kilometers 60 miles of open land border between the baltics and the rest of the european union so it's it's it's always something that we're thinking about yeah yeah it's crazy times right now man i wrote about it last night and we seem to be completely in la la land over here in the west we have china brokering this deal between saudi

saudi and iran obviously met with putin this week to strengthen their relationship obviously the rumors we just mentioned about we'll see if you can get them to the table uh you have mexico signaling that they like to join the bricks countries which would be interesting and obviously you have a a banking crisis at the same time who would have thought that rising interest rates would have been a problem for banks who would have thought it after 15 years of near zero rates but that is where we are yes where should we start should we start with uh the bellagio prediction yeah let's do a let's do a chart to start it can you see my screen okay sharing okay um are we sharing his screen or do

have our picture up let me let me pull actually so i can see you too that's his yep yep it's all good thank you logan um so uh just you know do this quickly i did a daily on this this week um running these these dailies now with uh on the back of some good open source software here and as we know you can't look at anything with bitcoin in linear scale which this is we put it and log you can see about 15 000 trend lines which i'm going to take all of them away um just really quickly as as we start the show to look at some of this because uh you know as as we as time goes on it's harder to look at numbers as uh you know as the morning goes on for you i understand but uh i would say uh this is quite interesting obviously here's his

bet all right 90 days away from a little less than 90 days from from st patrick's day when he made it price up a little bit this is price ending yesterday uh as i showed you last quarter you might remember this uh this power regression trend line so this is not like stock to flow stuff this is just this is solely based on the price as historical data it's the only variable that i'm looking at this is not even any like fancy trading view lines or anything this is just a statistical regression there's logarithmic exponential linear and power power is the best one that fits bitcoin uh for many years actually and in many different things like hash rate it's pretty good power curve uh market caps even better than this there's a 95 r squared

which is pretty incredible r squared just means that the price moves around the black line the trend line 95 better than it would move around like a flat imaginary average line which is like eight thousand dollar bitcoin so obviously it's going to move around a curved line better because that's as we know that's how bitcoin grows all right so that's the basics um last time i showed you some different trend lines based on other years here i'll do some percentiles just quickly so like one sigma down one sigma up there's uh you know kind of standard deviations one sigma two sigma right so anything inside these blue bands is two-thirds of the time 66 percent of the time 67 percent of the time uh that's that's inside the blue bands two sigma what is that

that is 95 percent of the time that's a two sigma move so still if you're inside the purple bands all right that's a 95 percentile event and if you go out that it's a five percentile event and more specifically it's two and a half above the top band two and a half below the bottom and so stuff works so you see with two sigma uh we didn't hit it even in 2021 you see in 2017 we didn't hit two sigma up we did hit it though back in the day we hit it in 2013 and we hit it in 2011. okay now let's go three sigma so one sigma two-thirds of the time two sigma 99 of the time three sigma that's 99 of the observations will be inside these bands around the trend line three sigma And I know my tooltip always gets in the way in this way, but let's zoom in.

So obviously, 3Sigma didn't happen later, but earlier, based on this trend line, it still nicked it in 2013 there and then in 2011. This was the first empty Gox hacking. I think this was the first time Mark got his exchange busted up. Went from like, you know, we were at the start of 2011 under a dollar, right? Slash that article right here. That's a big jump. of course there's like extremely thin data but this is my this is my data that i've used to build it here started bitcoin pizza day uh by june you're at 35 bucks so that's a massive

massive pump right yeah was this still jed's exchange in 2011 no no no i don't i don't uh believe so no mark mark suffered all the hacks uh this was the first one out of like three um and then uh yeah i mean it probably just took it over at this time and and so yeah you see that that's that's uh it would be a 99th percentile event like an extreme move from the trend from the trend line which the trend line at this time is two bucks that's the trend line and the price was 35 on june 15th i think i catch yeah 35 bucks all right so i'll reverse 17x over the trend line yeah i'll take out the one segment the two segment to clear it up a little bit uh and now let's look at what bellagio needs to do what he needs to have happen to get to a million

by uh june 2023 90 days out this is going to be his trend line all right so it's outside of a three sigma move which means it's it's it's less likely than one percent of the time and i put in the in the in the tooltip there in the in the legend 99.9289 percent of observations are below the slide so let's just show you and we can walk it out now okay so here we are the our trend line by the way the actual bitcoin trend line is 50 000 so we're under trend right at 28 000 27 000 whatever it might be at the very moment um you know but this this chart is built as of yesterday right and so our trend line should be at 50 000 and this is on log scales this is also interesting to see this the magnitude of the of the number here i mean i know people know this in their head

but i still want to point it out so let's even take out three sigma down three sigma up okay so the 99 it's actually 99 and a half percent because remember the three sigma down which i just took weighs the other half percent so it's 99 and a half percent is above three the three sigma up line there that's 523k is the trend line that it should be to hit to hit that rare event and then his of course he should be at 900 000 right now and you just walk it out let's see if i got the numbers correct june 11 12 13 14 998 000 15th 16th i think it actually changed in the last day uh i think it should be 15th is the bet finishes anyway you get it um million by june 16th so this is the trend line that he needs to hit so the point is it's obviously rare i mean we've never

been above 70 000 everybody knows that intuitively but let's just see i was actually surprised at this let's see if there was a pricing history which hit his trend line uh remember it's going is going to be back in the day 2013 did not hit it but this pump in 2011 did hit it it was outside of a 99.9289 event which also is uh in sigma terms you remember the old operations management classes the old jack welch six sigma yes so that's extremely insane i actually thought about that more looking at this doing this research but that's like three defects in a million so that's not as hard as as what bellagio is trying to do actually his uh he's between three and four sigma three and four sigma is is what his would translate to um and yeah it's like four days

uh one two three four four days we were above the trend line and then it fell so the point is just to say statistically uh for that to happen it's less than 0.1 percent of the time it's 0.07 percent of the time and you have to also ask yourself like if we talk about just the way that it's worked historically the price always pumps gets over its skis and then falls right it never stays there it doesn't like go to a million and stay that's the first thing but then the second thing i would say is i'm totally if you're watching this and you're thinking i'm like gonna start dissing him not at all um i commend him for what he's been saying i think it's extremely interesting especially right now that he's actually like with this bit signal thing

He's been very vocal about it. I think it's very commendable, certainly as a Bitcoiner, for him to say that. Certainly, it's possible that hyper Bitcoinization could happen in the next 90 days and then that would happen. But just to show you statistically how this has worked around the trend line, it's less than 0.1% likely based on all 6,500 plus days of Bitcoin pricing data. So what I'm hearing is that you're saying there's a chance. exactly there is a chance yeah yeah there's a chance for x we could do it buckle up no we were i mean we were talking about this before we hit record it's uh there is a chance it's a very small one if you're well if we're looking at the historical data it has happened before this type of uh was six sigma event between three and four actually not as crazy as six sigma but still i mean three sigma is the 99 percentile event it's extremely rare only had it a couple times and his will be like we've had it one time

for four days yeah and that's uh yeah we were having the discussion before does he really think it's going to hit a million dollars or is this a campaign to try to incite urgency in people to get into bitcoin before they shut the doors on the banking system which dovetails into the conversation about the banking system i know you mentioned it um when we first hit record here like what do you what did the fed think was going to happen when you raise interest rates as quickly as they have over the last year and a half after 15 years of essentially zerp um what's going on in the banking system in your mind i mean they caused it like this is this is what all of us have been saying for years and years this is like this is why we do bitcoin this is why we don't believe

that you need a centralized actor a monopolistic actor to artificially um to artificially set the interest rate but then more crazily do that by pumping up their own sovereigns bonds which is how they actually do that and uh i mean could you just imagine like the riskiest asset on your book is a 10-year treasury note i mean it's like they caused it they caused this this problem and not just i'm saying in the last year and obviously in the last 15 years and of course before that you know there's always it's like that hayekian thing it's like look before look at the uh the boom before the bust like it's the same thing before 2008 alan greenspan took interest rates to one one and a half percent uh which were all-time lows at the time after 9-11 and dot-com

bust same thing happened with ltcm you know the mexican peso crisis in the 90s asian crisis in the 90s it's like there's all they're always coming down down down on the rates actually another thing i showed this week uh dear viewer if you like some of this stuff like because i i wanted to visualize that um we can pull it up if you want it's a sensitivity of bonds i don't know i don't want to just run charts the whole show so i don't know if you want to do it but i like charts let's do it all right let's do it let's do it uh so this is the sensitivity of this is bond it's called bond duration risk okay so how you know smart you are if you're silicon valley bank asset manager to be you know buying government bonds at a time where they're

at all-time lows uh so the point of this chart is to show you well the rate at all-time lows and the prices yeah sorry sorry absolutely that's a very important point with bonds that price moves inversely the value of the bond moves it's inversely correlated with the rate so if the rates fall price rises if uh rates rise they've been doing price will fall so this is the last 20 years basically complete happy days in the market we see the ytm is yield to maturity it moves down down down so just this is not really the the the rates you see are a little bit higher bonds are weird you can't look at like a stock chart right of any one stock to see how any one bond does you have to look at the yield and then back into that based on your book value how much

your book value of your bonds are worth but if you just look at this say that you know you bought a one, this is a 1% yield to maturity bond, which is exactly what they were in a case of SVB Bank or whatnot. They were 1%, 1.5% maybe, actually maybe even over, or excuse me, under 1% notes in 2020, 2021, the 10-year, which is the bond that they had. And by the way, the mortgage-backed securities pay the same as the treasuries just because they nationalized it. The 10-year note was bottomed in 2020 at point almost a half of one percent point six percent incredibly low the 10 year unbelievably low and that's when they started to buy these things so all-time high prices in other words uh anyway if you just continued on owning a bond look at the tool

tip here you see that yields maturity unchanged right you had a one year 10 year 50 year bond the u.s doesn't have 50 year bonds but other countries do by the way austria has a hundred year bond um i encourage you dear viewer to read some news articles about how the bond holders there are feeling pain at the moment argentina was talking about a hundred year bond at one point yeah trump was even floating a 50-year bond idea a floating one um so it's just to show you this is just statistically it's it just works exactly like this say you start at one percent yield to maturity now we're going to the positive side the happy days and since bonds in the 80s were like 15% 10-year treasuries. They weren't 1% yield to maturity as I have here. Your profit actually

isn't going to be as extreme, but it's still extreme. I have to keep everything at a flat yield curve just to start to show you. So basically, if tomorrow you had a one-year bill at 1% and the yield fell 1%, on a one-year duration, you see in the tool tip, the one-year bill value, you only gained a percent. That's literally what you would gain. But as you go up duration there, right? If you have more time left in the bond, you're accreting more value. Like you're gaining more value on your books to lever up or to do more things. So look at a five-year note, you just gained 5% in value. 10-year note, you gained 10%. A 50-year bond would gain 64% simply with a 1% drop in the interest rate. 2%, double, basically 3%, triple, and a little bit

more, so on and so forth. Where if you only get five percentage points, and imagine if you were doing this in 1980 you had 15 bonds again the my base is one percent here so this is actually like a negative rate if you get there which the u.s never had but other countries had you might have not been on the 50-year bond like 1100 profit you might be like 800 it doesn't matter the point again is just to show you this is the pattern when rates fall you are just it's a boom like this was the last 40 years. It's like my entire lifetime was rates falling. Of course, it was not uninterrupted gains and we had crises and they're always the punch bowl, the Greenspan put, as they called it in the Bernanke put. They're always there to rescue the markets, but that's what they've done.

They've taken them lower and lower. I mean, this is not rocket science. We've all been talking about that. Then you go to this side. This is the pain. This is what's happening now. this is what's been happening over the last year is the yields have gone up from where they were. So good old SVB bank, they started precisely here at 1% yield to maturity, maybe a little bit less, maybe a little bit more on 10 year bonds. All right. So let's even, well, let's leave them all on there. I have the whole spread here, the whole, all durations.

You go 1% up in rates, your bill. Now look how it's still good in this case to have only a one year bill. Bill's a short-term bond, right? No, it's midterm. uh you only fall one percent that's your face value your face you only you know you're expecting one percent total on your money yield you you lost a little bit less than one percent of race moves up okay so that's that's uh that's okay but then the 10-year look you've lost already nine percent on your face with just a one-year move 50 50-year bond of course extreme you've already lost 38 percent go to two percent it's doubled all right not not quite double but you're you've

lost on the 10 year which is now we're in the svb bank territory the blue they were losing two to three almost four percent let's just take it to three that's a 25 percent hit on the value of your book and that's what everybody this is the thing about banking this is like why it's hilarious that they're trying to like you know stifle this and say the system is fully backstopped and why bill ackman keeps capitalizing tweets about how we need to fully you know guarantee the whole country and everybody's deposits. It's because this is what they all hold. The debt markets, the bond markets, they dwarf stocks. Bank loans work the same, by the way, if your interest rate needs to be repriced and your interest rate risk. Bonds, of course, are more liquid, but

this is all that banks hold on their balance sheets is debt-based instruments as assets. So, if the market demands only a 3% more move, you know, depending on your duration, okay, you wouldn't be bad if you had just a bill. You'd only use 3% of your capital value. You know, you're going to be repaid in par pretty soon. But if you got to deal with that 10 years, 20 years, 30 years, you're effed. I mean, that's just, that's, the stuff moves too quickly these days. It's repriced. And you remember, they didn't have to mark this to market.

Remember this whole, they moved it stealthily. They entered this hold till maturity category, these bonds. So they didn't have to market to market. And everybody knew that there were reports from the, not everybody, I should say. More people were calling this out than others. But reports were coming out from the Fed that these unrealized losses were climbing over the last year. But it took a couple of newsletter writers, Peter Thiel, whoever. I mean, the run itself actually screwed them.

and it's interesting to me that those are the bonds they chose to sell because you know you might think uh it's good to get the bad stuff off your books first but obviously in their case that's not what happened i mean that was just showed even less faith and and that was it maybe they did view it as the bad stuff yeah it's it's pretty insane because they didn't have to mark to market but the sleuths were doing a lot of research and i mean you had that chart that's been going around for the last month that the unrealized losses of the banks have between like six and seven hundred billion dollars yeah way more than 2008 has ever came close to yeah and so that gets to the question has qe5 started i talked about this with parker lewis last week but obviously they

had that facility that they spun up the btfp where they're essentially telling the banks all give us your bonds uh we'll hold them on our books and give you a loan at par value for a year number one what's the likelihood that that facility lasts a year and number two what's going on behind the scenes in terms of money creation it's technically not qe so not printing cash and giving it back they're lending it out yeah i mean they're expanding the balance sheet it's a corporate it's a corporate loan and it's expanded the balance sheet. How that will play out to the monetary base in the future, you'll have to see.

But we saw that in the last week, and I'll do a show on this tomorrow because I guess today it's probably released, the Wednesday level, which I haven't even checked yet, of the Fed. But as of last week, it went up $300 billion. And they had spent all that time over the last two years trying to cut like double, $600 billion maybe.

so in a week they reversed the size of their balance sheet by half what they all that work they were trying to do they reversed it by half so uh in other words they're back to square one they're they're printing again where it will shake out and the bank reserves also they have this reverse repo facility which is for non-banks which is actually i don't have in my monetary base stuff uh because i just they don't classify it yet so i wasn't sure i should put it there yet but that's essentially money base money from the fed that's for not banks so we'll have to see how it shakes out but it's absolutely i mean when you're talking about balance sheet expansion like whatever they choose to call it it you know and and and they haven't done what bill

ackman wants they haven't done the full system wide like guarantee of every deposit regardless amount like what you know they haven't done that yet they're trying to say that everything is safe and also what i wanted to ask you about is i'm seeing some tweets this morning follow this stuff that closely we don't live in the united states but it seems like operation choke point 2.0 is coming you know what nick carter's been writing about so that's another thing where they're trying to basically not allow any sort of you know riffraff from the sides for people like us come in and say buy bitcoin or people like biology so um i don't know what do you think what do you think about chokepoint 2.0 do you think that's what they're going to try to

to implement because and i want to talk about biology again too because i think it's interesting what he's been saying it would not be surprised i mean obviously i think i've seen similar tweets to the ones you were just mentioning where people are sharing screenshots of correspondence with their banking partners saying, hey, we're going to limit the amount of money that you can wire to these particular entities. They just so happen to be Bitcoin exchanges.

I do think there's a lot of signal in the way Silvergate happened and then Signature. Silvergate obviously had the bank run, weathered it pretty well for a bank that had billions of dollars of outflows. they were able to facilitate the withdrawals um pretty seamlessly obviously they shut their doors very interesting to note there and very important to note they shut their doors they didn't have the

fdic or uh nydfs step in and shut them down um but then signature going down on a sunday and getting shut down by the nydfs was a signal um that nick carter has been talking about that that is a bit odd i mean you did have barney frank come out um and say hey we were we were pretty fine like we didn't need to uh to get shut down and i mean he of all people it's just it really is um but there has been some data sleuths hopping into their balance sheet and apparently they had an obscene amount of commercial real estate exposure which obviously has not been faring well last few years so maybe there was some problems with their balance sheet but with silver gate and signature particularly if we're pulling on the choke point 2.0 thread

they had sen silvergate had sen and signature had signet which were these internal networks that allowed the exchanges to to send funds 24 7 365 so taking those down by having silvergate shut its doors and then forcing signature to do the same um is certainly a shot across the bow of the industry um in terms of a critical infrastructure that was just taken out and then yeah i mean i've seen the tweets i haven't experienced it personally i've bought bitcoin in the last week and haven't had a problem but that seemed like kraken and other exchanges are being prevented from having money wired to them. Who knows whether it's related to Signature Bank, Silvergate,

and Silicon Valley Bank maybe. These exchanges just had a lot of exposure to those three particular entities and other banking partners are aware of that and saying, hey, we don't feel comfortable with you guys sending money here. Who knows? I would not be surprised. i mean because they have to stop bitcoin at the end of the day if well this is why i think it's so interesting what biology is saying right now i mean i give him credit i really do back to my

chart i'm not trying to i mean i'm saying it's extremely unlikely but if he's right it would be the call of the century obviously because that would be hyper bitcoinization because if it's just a pump like all pumps they will be temporary but this would have to be permanent it would have to be a hyper-Bitcoinization event, which seems more likely to me than a pump at the moment, you know, as like a three Sigma move is 500K and Bitcoin's never even hit 70K. So again, do the math. But I don't know. I mean, I can't, I don't know what to make of it. It's a bit Pollyannish, but it's also a bit alarmist. But at the same time, I mean, maybe he's just had enough and he's he's ready to um i don't know put out the bit signal like he says and just have

everybody just tweet about bitcoin all the time i i'm not i'm not quite sure that um well let me let me let me ask you this do you think that the stuff that he's saying about like you know fed now he says fed now is a cbdc it's not a cbdc we should talk about that but do you think like the there's the kind of things that he's saying like within the next 90 days like i'm not living in the u.s i don't know exactly the pulse there but is there anything i don't know when you go to like coffee shops and stuff or is this what people are really worrying about where their money is with all these bank runs or people kind of like more or less thinking this was like okay one off two off few sort of minor bank failures it's a tough question but where's like the pulse of

people right now not on twitter but like if you're talking to normal people exactly like unless you're extremely online and particularly on the corner of the internet that focuses on the financial sector and economics i don't think most people realize what's going on i'm not seeing any of that in my day-to-day i've had a few one-off texts and people who've been bitcoin curious like oh yeah like is it really happening like what's going on with the banks that i've had to respond to but i think generally broadly speaking in terms of the broader member american populace i don't think anybody really understands yeah what's going on but i mean it could happen could happen but it seems a bit bit weird that he pumped it and also he's got

people going on about like he could be manipulating the market like he was paying a million dollars basically to get one bitcoin whereas matt levine was writing you know you could just buy 35 bitcoins or 40 bitcoins uh i'm not a i'm not a believer in market manipulation but that is the kind of thing that they might come after you for if you're if you're making off uh regulated sort of in quotes here air quotes market manipulating bets where you're trying to pump something much more than you personally would benefit uh then you're you're doing some sort of weird manipulation like you may benefit on the back end later but obviously he could just buy bitcoin if he thinks it's going to a million right now by 35 bitcoins but he didn't do that he's going to get one yeah

no i don't think he's trying to manipulate the market i do think he's trying to send a signal like hey something's really wrong here so that's where it gets like something is and we've known this we've talked about this why we're in bitcoin we understand that the way the the banking system works is inherently fragile um and that fragility has been laid bare over the last month specifically and so yeah I think Balaji and others like ourselves understand the gravity of the situation yes the broader American populace may not be aware of what's going on right now but if things continue like did you see Powell answering questions yesterday particularly about Credit Suisse he looked very nervous he did he did like a lot of a lot of like

physical cues like touching his face and blinking his eyes like it seems like at that level of the power structure they they really understand the gravity of the situation and that's the thing like these things it's like gradually then suddenly yes we have silicon valley bank and credit suisse and everything going on in europe right now um the stuff can cascade pretty quickly so and he's he's walking the tightrope i mean look we have this you know kind of inverted yield curve like 10 years three and a half the base rate now is five 4.75 to five and we're in this territory folks like we are you know he's still raising because he wants to you know cut off the price inflation but like that that means you know the base rate is even higher

than the 10 year it's it's a wild thing right now and um and that's that's what he's signaling he's not signaling to go the other way he's not signaling to bake bail out you know more these uneasy investors as it always they always talk about you know the bond vigilantes are winning uh right now so that is a very uh a very difficult thing for them yeah when you mentioned inflation like that's i think that's where like the social contagion when it begins to get into the broader populace is i don't think they'll understand how like interest rate targeting really affects inflation but intuitively get like we're doing these interest rate hikes to drive down inflation yes cpi hit

six percent but as we've discussed throughout the year cpi is completely borked we went to the grocery store last night and bought half a bag of groceries it was a hundred dollars my wife we're in the car she was like guess how much that was it was like a hundred dollars like inflation is certainly still very elevated we had uk had a 10.4 percent print of their official inflation numbers yesterday so the inflation problem in my mind has not been solved no matter how much people want to point at cpi falling to six percent and if the banking crisis persists which you imagine another 25 bit hike um doesn't seem like that much but in terms of the unrealized losses that are sitting on bank balance sheets and the precarious situation we find ourselves in with people being

pretty jittery like that 25-bit hike can deepen the hole that exists on these balance sheets pretty materially it's huge i mean every every hike is huge you see what even one percent will do ten percent down on a 10-year so um you know yeah people are going to be moving into shorter term notes and trying to avoid this duration risk but then that just you know that stifles the economy for longer you know longer investment projects and all the rest so it's not it's not looking good really in any way it's the tightest tight rope that probably any fed chair has had to walk and it's all thanks to his predecessors yeah and his his immediate predecessor janet yelling it's not making the problem any better she's out there yesterday saying no we're not

going to backstop all deposits so just loosely inciting a bank on all the or a bank run in all the regional banks yeah i mean they may have to get there like if people like bill ackman keep tweeting in all caps or whatever uh non non uh indented paragraphs as he was doing before but like you know i mean it's just uh it's there's no there's no easy way out of this and everything would just be obviously better if we had free banking but we don't so we have to do bitcoin that's the next best thing uh i do think it's it's very interesting i haven't i haven't heard maybe from such a i don't know what to call biology i mean obviously he's an investor like very influential figure but i think he's like the most mature name maybe that really

is yeah akman's a hack akman's a hack well and he's not a bitcoiner so he's yeah totally a hack but but the way that i mean in bitcoin terms what biology is saying it's pretty interesting to me it's you know and i like i said even though i his math doesn't check out on the price like i totally sympathize with everything he's saying so although he does need to not say that fed now is cbdc all right now let's dive into that what is fed now i'm still i'm actually i'm not well versed on fed now um and why is it cbdc in europe we have this goodwill payment system which is exactly what fed now is it's called sepa um it's the actually my what's the abbreviation i have to look it up it's you're a wide payment area something and um it may be secured i don't know

and uh it's been around for 15 plus years sepa and in the last five plus years they've had sepa instant it's all it is basically once the european central bank came along and kind of knocked out the regular central banks and their countries out of a job uh you saw these like they wanted to try to figure out what to do like oh at least make payments better and it actually was a goodwill project from the central banks around europe where uh a sepa account is an account like it's basically a european type of an account in any european bank right like you have weird looking numbers in us we have weird looking numbers in europe but we have you know delineated by country and when you make a separate payment it immediately goes to the central bank like there's no clearing

that needs to happen on a bank level or an interbank level whatever like it can go i mean all banks will see it right but of course the banks that are involved it they immediately see as well as a central bank. So all it is, is just a very quick way to clear. And they've had SEPA instant, literally SEPA instant for five years. That's all the Fed now is. Fed now is simply a payment rail for banks in the United States to clear transactions at the Federal Reserve. Is this where the USIP numbers come in? I don't know if that's what they're going to call them, but no, I think they'd have to have their own specific is that what they're calling fed now numbers i'm not sure i thought there was like a

usip number attached to each bank and i don't know maybe but but regardless it's there would be a it's a program every bank would have to sign up for it and then they would have an account it's going to look differently like then you're checking routing number ach it would replace that it'd be much better and yeah it's it's like nice but it's not new or novel it's certainly still centralized within the banking system. It's nothing incredible. All it is is basically, if you think of like, there's a bank teller, a digital bank teller now at the central bank that sees everything. So it sounds a well in, it sounds like the CBDC, but you're still only looking at bank accounts. You're not looking at individual customers. You're not looking, a CBDC is a liability from

the Federal Reserve that acts just like hard physical cash or bank reserves. It's literally on the Federal Reserve's balance sheet. FedNow has nothing to do with that. It's basically just they're looking at all of the banks. All of the banks are going to get in this FedNow program, just like there's a separate program. And when a payment is made from one bank, the bank doesn't have to wait and whatever, clear its books. And then maybe at the end of the day, look at the bank reserve account, and then we do some changes. Everything is going to be instantaneously cleared through this sort of digital bank teller window at the federal reserve. So it's just a faster way to clear. And just one more point, like the federal reserve clears all

transactions in the system. I'm not saying I like it. I'm not saying it's a good thing, but that's how it's always been. So if you think about old school checks in the United States, right these are bankers uh bankers instruments bankers tools where you have a check from uh from from ubs you're gonna check from bank of america you have a check from wells fargo right they all go throughout the system and at the end of the day you know bank of america needs to look at and of course this this is a rolling thing so it could you know a check from five weeks ago might still be clearing through the the coffers of bank of america that's a wells fargo check and then finally it gets there it gets to the top of the of the stack and wells fargo and bank of

america go to the fed and they say okay we got a little bit of a of a discrepancy we got to clear this and you clear that with bank reserves so it goes up up up it always that's just how that's what a central bank does it's the it's the not really it wasn't originally the lender of last resort it was a clearing bank and there were free market banks like this in the united states there's one called the suffolk bank it was in new england it did a lot of this so this could totally happen in the market if if if that was like ideal of course we're now at bitcoin we don't need it but uh it's just a it's just a method of clearing just like checks but checks take a long time and eventually you got to get something that's not even a check to clear between banks and that's

that bank reserve account so when svb was withdrawing svb depositors wanted all their money out they were going and and obviously they were doing that like with a digital check they were doing that online they said we gotta get our money out out out they didn't have any bank reserves. So they had to sell those bad assets to raise bank reserves and then to transfer those deposits to other banks because that's what their customers wanted to do. So it's a multi-step process, right? But with FedNow, it's a recognition by all banks that this transaction is happening. It can happen, you know, in real time through the Federal Reserve. But it's still bank money. It's absolutely still bank money. It's only with bank deposits. It's not with anything that

even remotely resembles a cbdc so i don't say it's good i don't say it paves the way for more uh you know individual innovation in society and everything but that's what fed now is it's just a it's a digital clerk at the central bank that's going to clear uh bank payments all at once so the question in my mind after that explanation is just this is just like semantics because the fed is backstopping everything and they are spinning up these facilities does it really matter at the end of the day yeah i think so for now uh again i i would not disagree with someone if they said this is like again paving the road to tyranny and everything i agree with all that like look i'm on the uh me and janine from this month of bitcoin privacy and nick anthony from

kato we we uh got a grant from human rights foundation to work on a cbdc tracker so we're going to do that this year and so i'm all like i'm all about understanding the dangers of cbdc's um but cbdc's are very very different in that with the cbdc that's literally like there are no bank accounts it's just the central bank and there are no bank decisions it's just the central bank and the central bank is the one that is going to tell you like okay you could your money which is literally like a physical dollar, but in digital form. It's located on the Federal Reserve's balance sheet, not on any other bank's balance sheet. And they're going to say, okay, you can take that money and spend it on alcohol this week,

or you can't, or you can take that, you know, you spent too much this week in general, or we're going to have to limit you this week. And that has a whole host of other Orwellian problems that are different. This is not like, it's not like light years better Fed now, but at least as far as the antiquated you know horribly slow ach system that the u.s the u.s has now which is still like you know not you know we're still using checks in the u.s right so uh i know ach isn't checks but like all of these different things the idea is just to simplify it standardize it like europe did succeed with sepa no one uses a check in europe everybody uses sepa it's instantaneous

basically and it's easy and everybody sees it all the banks see it so from that side i understand it understand why they're trying to do it but it's absolutely not a cbdc cbdc is uh it's it's currency that is on the central bank's balance sheet and nobody else's and that's not what bank money is so with bank money you have m1 m2 m3 demand deposits time deposits all the rest you know banks still making decisions banks still lending into projects in the economy you know cbdc is like full-on nationalized digital digital money yeah well that gets in to another discussion which is we've talked about this many times throughout our monetary base update series which is you don't believe that a cbdc is likely because of the role of commercial banks and the fact that they be cut

out of this equation and i think the events of the last three weeks have brought something like I've been looking forward to this conversation because I wanted to pose this question to you, like throughout to the CBDC, it's just destroying all the commercial banks. Like you start with the regional banks, they roll up to JP Morgan bank of America, Wells Fargo. And then which seems like it's happening right now. And then you get all the money centralized there.

And then all you got to do is take out the big four, big five and boom, CBDC is here. Yeah. Well, the systemically important banks, the Sib banks, right, they are certainly in control. They are certainly benefiting from this. They're certainly going to benefit from as well as the speculation, people that want to take money out of the smaller regional banks and go into a more national, important, you know, hand in the cookie jar Sib bank. So that's always been the case. That's always been the case.

It's definitely going to be the case. Again, not good. It's why we Bitcoin. this is why a central bank isn't good um and it's not needed you know again just a little bit of history like the united states has always had a problem with this like in in canada in sweden and scotland you know in the 1800s 1900s you you didn't uh canada all the way to 1935 um you could have a banknote you could have a bank money right it doesn't matter what you call it a bill a banknote uh something that actually has pictures on it that is from this individual bank

but it's under a gold standard dollar uh which was an important thing to keep in mind uh or or a gold standard pound whatever it might be and you could have that note and you could go across the country whether it's canada or scotland's not as big sweden you could go across the country and you could redeem it at any other bank at par and it would be fine it would work that's like the beauty of free banking the u.s didn't even allow that so like from the 1850s the u.s had this national banking act which you know everybody talks about the fed in 1913 but there were really bad central banking practices from the u.s from the federal government's perspective by by the civil war by lincoln's time first of all he made all banks invest in federal union bonds war bonds

um you know i'm not commenting on the civil war i'm just saying uh you know obviously slavery needed to end that was part of it and everything else but like the he uh he made he made banks invest in in federal uh bonds that was like the first time in united states history and if you were a state chartered bank you could not you could not branch outside of that state like there was no there were no banks that that could could move like that so you always had this like you know these massive discounts and notes if you go from one state to the next and you started to get some national banks that came in bank of america uh was one of the early ones and you know you start to like solve that problem a little bit but you know compared to canada which was just

operating just fine across the border like the money supply looked great the you know it was very seasonal it'd go up or down during the harvest and just like very predictable it's just it was you know the history is much better without a central bank and without federal banking regulations than it is with a lot of people probably think these arguments are just moot now because we have bitcoin and i understand that um i'm not for you know just going back to something without bitcoin absolutely we need to have bitcoin a bitcoin standard i just don't think that the uh perhaps pollyannish view that it's going to be like all bitcoin all the time only that without any what you know what i call fiduciary media which is the term is not going

to exist um i think you're going to have to have uh certainly i mean we know this is a generational thing right you think about us hardcore bitcoiners we tell everybody put your keys you know if you want full reserve Bitcoin and fully reserve your Bitcoin, right? Like I'm, I am 100% for full reserving your own Bitcoin, uh, you know, and running your own note, but a lot of people can't do that. And this is why you have things like banks that's, you know, sprung up and you have fiduciary media and all this stuff. It's fine. It helps things scale. So I don't know. I don't want to get on too many different tangents there, but the regardless Bitcoin is a new form of base money that's what i do with the you know the quarterly updates and that's uh that's that's

fantastic but i think we're definitely and and biology's probably if not picking this fight he's definitely like uh acknowledging that this fight is probably really on which i agree once you see this operation choke point stuff i mean i think we're definitely at the now they fight you stage um i you know he he makes this claim i heard i heard a clip of him i actually agree with this very much. He said, like, in the context of the United States, it could be like red states, blue states, you know, you have red states, friendly states, Florida, Texas, you know, Wyoming, so on and so forth. I agree with that very much. I think that that's, that's rational and normal. And, you know, it's not going to be just one Orwellian hellscape of a capital like

Hunger Games style, and everybody else is just impoverished. I just, especially in the United States, where we have such a strong private property and justice system generally, which doesn't always work for the people as it should as we all know there's plenty of bad things to say about the way that the justice system works at the end of the day at the united states federal level but uh the states rights stuff and everything united states i think is very very good and that's all going to come to the test now uh but if what i saw that the u.s did uh during covid happens again with this banking stuff i'm i'm pretty encouraged by it actually because uh we were a mess over here in europe i mean way too draconian of lockdowns nobody thinking

clearly rationally and if you didn't like that in the u.s you just go to florida or come to texas yeah yeah so i from that side i'm actually very encouraged and um again bellagio sounded a bit too doom and gloom with some of these things but i but what he said there i really rung home true to me at least yeah and i read about this last night too because here in texas uh one of the state representatives put up a bill that no texan should uh have their right to hold bitcoin uh taken from them so not all texas legislator votes i believe every two years and this year is one of the uh one of the years which they'll be passing laws and so this is one of the laws that will hit the floor and hopefully it passes and i think it actually is

essential that it passes in 2023 we don't have to wait till 2025 because i do think that then they fight you stage is upon us and it is going to come come down to the states to stand up for this stuff yeah that's huge and that that's so reminiscent of like the these fights that you know that the federal reserve is the fourth national bank of the united states right there was actually the bank of north america which was before the u.s was founded then there was the first two banks central banks the united states they both failed andrew jackson brought the second one down famously and um it's the same thing it's the same thing like these same types of fights between bankers in the state banks versus the national bank basically and and the

u.s held out long but again still had bad federal regulations still had bad you know you had to buy everyone's banks couldn't branch and all these bad things it was much worse in the u.s than it was in like say canada or scotland or sweden but um the the fact that the state's right stuff is really coming to the fore here and i really i could tell you from across the pond i saw it uh it was very strong in the u.s and i think it's very encouraging really encouraging yeah i mean it's part of the reason i moved to texas um obviously there's a lot of stuff going down here in the bitcoin industry but most importantly it seemed that texas was one of those beachheads it was like a we'll protect your rights and hopefully that continues and i'm very bullish

on texas making the right decision with this particular bill that's hitting the floor this year because i've spoken to many politicians and people throughout the energy industry here and it it's undeniable that mining specifically is helping the the texas grade and is helping drive tax revenues and people get it down here and i know that if that law passes the texas legislator um it's going to be massive that's like a massive signal to other states like hey you guys should be adopting similar laws if you if you believe in freedom and private property rights because the war is upon us they're going to try and cut off the on and off ramps and that's what i said last night in the newsletter like it's all up to the states to

begin standing up for for their citizens against the federal government because you look at dc it's they're not going to get anything done they're just going to keep getting more draconian and more draconian and i think many people in the country are putting their hands up like hey it's it's time to begin ignoring these people in dc they're completely detached from reality and if you look at the incentive just the pure incentives of dc and the federal reserve like they they have to try to maintain their grasp of control over everything and bitcoin severely hinders their ability to do that so it just makes sense that they'll try to cut it out at the knees and then again it comes up to the states to say hey we're not playing this game anymore yeah speaking of

mining. You want to talk about that methane versus flaring? Yeah. Yeah. I'm sorry I didn't respond immediately. It was morning your time. I rolled over. My son woke up in the middle of the night so I read it like 2 a.m.

I forgot to respond. I didn't expect you to read it until like five minutes before we started the show so no worries. So Matthew sent me the clip of Cal Penn talking about the dangers of Bitcoin mining and methane.

Was it about... Because he's talking about Bitcoin and actually... Is he like a Bloomberg spokesman now or something? It's funny they're bringing on actors to give the news. Yeah, CalPen's had an interesting career path. He did work for Obama. Yeah, from Harold and Kumar to the Obama administration. And now, yeah, he's a spokesperson for Bloomberg

to shit on Bitcoin for some reason or another. Yeah. But this one I sent you was just out six hours or six days before it came across my feed. I can't remember which even. But he was talking about methane and the dangers of methane leaking from all of the natural gas facilities. And I was wondering how familiar you are with your mining research, if you know. Is flaring a component of that? or is it completely different when you're talking about methane leaking because he didn't seem to

mention flaring during that uh obviously i know flaring is good for bitcoin like don't flare your natural natural gas just you know mine bitcoin with it but this you know this whole idea about natural gas being so bad and it's leaking or flaring it seems like bitcoin can help a lot of that certainly can and so with methane leak particularly there's two predominant ways i believe just via my experience in industry that it leaks one you have just abandoned stranded wells that aren't being maintained they're capped but not efficiently and over time the well infrastructure sort of erodes and leaks happen and methane leaks into the atmosphere if you're not maintaining that just happens um and these are just stranded wells that never had pipeline

connectivity to get the gas to market and then flaring yes it does contribute to methane leaking into the atmosphere because the flare stacks are not 100 efficient at combusting the methane particularly when the wind's blowing um right uh rather strongly so if the wind's blowing strongly um the the torch isn't going to get all the gas and some will leak into the atmosphere yeah so yes in both scenarios that's actually um one of the strategies we have at standard bitcoin it's up in appalachia uh there's a bunch of these stranded wells that have no pipeline connectivity that are just not being maintained um so we'll go scoop them up maintain them put a generator on them mine bitcoin prevent the leak uh then yes upstream at the wellhead where the gas

is coming out if it doesn't have pipeline connectivity or there's simply not enough room in the pipeline they'll flare and you can mitigate that flare by plugging in a generator mining bitcoin with it instead of flaring it and then there's i mean we actually had the bitcoin takeover event here in austin last friday and i did a panel discussion really like a fireside discussion with justin ballard where you can bitcoin mining can create this setup in the gas supply chain where you don't even have to send containers upstream to to flare on site on the well pad you can actually suck when the concept is like suck the flare in from the midstream so instead of going up to the wellhead and putting a generator down like where they're

actually extracting the oil and gas out of the ground you go to one of like the the midstream processors and you put like a big mining operation there so you essentially suck a lot of the gas in at midstream which opens up pipeline capacity so you don't even have to flare upstream you just create more capacity in the pipelines to to get the gas downstream to to the midstream providers So, yeah, I think Bitcoin mining is certainly going to make us extremely efficient in terms of utilizing all the methane that we're taking out of the ground or leaving behind after an oil and gas operation has sucked all the oil out and just left the gas well behind. Yeah, something tells me he's not going to be talking about that on Bloomberg anytime soon. No, no. They're trying to kill us, Matthew.

And they want to destroy our energy infrastructure. they want to funnel us into fed now and eventually the cbdc world we're not going to let them there's the marty i know that's going out yeah coffee's dripping into those mates they really are i mean just look at everything they're doing i mean who knows maybe it's just mass incompetence maybe it's just them playing in their incentive system which dictates that they have to keep control at all cost and the cost of keeping control is completely decimating uh freedom your energy infrastructure quality of life all for the control yeah the pretense of knowledge right you cannot control this stuff from a board

from on high as as hayek taught us yeah it's really remarkable that you know we're trying to bumble along this sort of like politburo type path uh when literally you know our former enemies in the well still enemies in the east you know particularly russia former soviet union like definitely not getting any better and you know g and putin having their summits and they're talking about the yuan do you see that yeah i'm talking about the yuan is like going to be the new world reserve currency putin's saying this of course after he's having to you know do biblical things to g at their uh at their meeting you know i mean they're just it's it's just embarrassing so embarrassing all around and uh there's there's no there's no escape man

there's no escape other than bitcoin unfortunately well that was really the crux of last night's newsletter that i sent out it was titled there's blood in the water and it's like the frustrating thing is we don't have our house in order here at the biden administration having the cast of ted lasso show up to the white house on monday really yeah like that's where his priorities are it's like sitting down with the cast of this tv show while all this is going on you have g making power moves with saudi arabia iran with russia and they really think that this is an opportunity particularly and we have a banking crisis going on here at the same time so we're trying to put out all these fires and it seems very obvious to me that the other superpowers of the world

smell the blood in the water and are moving quickly and with purpose to sort of re-architect the financial layer of international trade in their favor and we're just sitting here with our fucking fingers up our assholes just talking to ted lasso it's like it's like fucking mind boggling um but again ended on a positive it's a good lithuanian american but you know yeah but anyway i agree he's a good person but we have uh more pressing needs and priorities that that should be attended to uh than sitting down in the oval office with with the cast of a tv show but um we have an incredible opportunity because they're trying to make all these power moves g putin um even saudi arabia like saudi arabia doing all this stuff with them is like

the signal in the room like hey we are wholly dependent on them uh holding up the the petrodollar system and they begin to cozy up with china and russia more like that's fucked and that's one of the core pillars of reserve the dollar reserve system in the world and that seems to be getting chopped chopped down right before our eyes and nobody seems to be saying anything about it but with that mind it also presents an incredible opportunity for us and why we really need to beat the drums the states it's time to stand up we can't depend on dc to fix this problem for us because bitcoin like they're going to go in the wrong direction i'm going to go like yuan backed gold backed international settlement currency when we have bitcoin and like if we really want

to leapfrog out of this banking crisis and out of this morass that the U.S. finds itself in, the states need to stand up and say, hey, we can all use Bitcoin. We're going to begin trading in Bitcoin. You can hold Bitcoin. You can mine Bitcoin. You can send Bitcoin. You can receive Bitcoin.

And that is how we defeat the BRICS country. I don't want to even say defeat, but that's how we put forth a better strategy to actually maintain control to some extent is let them go do the yuan-backed, the gold-backed settlement currency and we'll leapfrog them with Bitcoin. In terms of taking advantage of an opportunity, things seem pretty dire here.

But if we don't shoot ourselves in the foot, we can maintain some semblance of strength via Bitcoin. Yeah. you would actually bring uh strength back to the country i mean you could even still have the dollar it's kind of the michael saylor talking point which i don't particularly like but you don't have to you don't have to print money to run a government right you can you can you can run deficits even you can borrow money even it's just not going to be as cheap as you like and it's not going to be cheap anyway they're raising rates anyway so stop printing uh you know fully

and uh use something like bitcoin you can still run deficits if you really want or they're just you know you're gonna have to pay for them eventually with tax and with uh with interest rates if you want to do that and um you know then the then you have a much more sound principled like free system that investors would want to invest in more uh as opposed to just trying to go down this orwellian you know cbdc path and stuff and i do i do think that that's going to be that's a tough one for the united states uh we didn't quite touch on that but you know again as i've always said like cash is still in use if it's not from coming from cash right because the cbdc is central bank money if it's not coming from physical cash which is flying around the

world it grows at 10 percent per year per annum compounded uh on a blended rate if they're not going to get uh like liquidity for a cbdc from physical cash which is a direct competitor on own balance sheet then the only other place you take it is a bank deposit and the banks themselves own the central bank you know the banks own the federal reserve they actually own the 12 you know regional branches of the federal reserve and um and i just i have a hard time seeing bankers allow that to happen especially with the dollar status in the world so you can put it back in you know in good uh in good uh form just by using bitcoin and not not printing choosing to print money but that i think is almost as unlikely as biology's prediction unfortunately i would agree there

it all comes back to the states an individual standing up i'm actually extremely bullish and and optimistic because like you mentioned i think covid in the aftermath of the lockdowns and states asserting their rights i think covid lockdowns particularly and the vaccination campaign was a misstep by the government they went too far too fast people had their itena up and they're saying hey i don't want that to happen again and if they were to try to create some orwellian banking system right on the heels of all that i think more and more people are attuned to what's going on and be like hey wait a second you just royally fucked up for the first part of the 2020s like i don't trust you to make a decision with my money i'm actually going to go

use bitcoin thank you but no thank you that's why they're they're doing aspiration chokepoint 2.0 yeah how do we how do we route around 2.0 can we how do we fight well i think there are plenty of yeah i think there are plenty of good tools um and it goes back to like what we used to say in the old days right like you you can mine bitcoin you can earn bitcoin um spang bitcoin but you know don't worry about too much trying to acquire it with fiat now of course that's you know that's biology's message as well right this recently he's given it 90 days but uh i do think that you're still going to find on ramps in the next few years for that but who knows could come faster than not but yeah i still

think that you know even this is the exact point of bitcoin right it's not it's not too it's not to be just sweetly embraced by all the regimes whether that be democratic or totalitarian around the world and you know just come in and be the currency of choice no they want their own currency that they can print precisely for the reasons we just talked about you know you can you could bid up your nation states bonds uh with that process and that's just that's that's alchemy they don't want to give that up no and this actually brings up another point in why operation choke choke point two point oh it's probably definitely happening excuse me and the signal here is custodia bank out of wyoming caitlin long trying to bring not only a fully reserved bank but an

over-reserved bank to market and she's getting stonewalled by the federal reserve and many are people like oh it's because it's a crypto bank but it's no it's because it's a fully reserved and over-reserved bank and if you create the optionality on the market for people to hold their money in a bank with 108 reserves or one with zero percent reserves they're naturally going to choose the fully reserved bank over time for a good portion of their deposits and so you're gonna have a run on the bank so they literally cannot allow that bank to exist because it would open up a scenario in the game theory where you would have a run on the they're not even fractionally reserved the zero reserve banks to this fully reserved bank and that's exactly what

bitcoin is like that's i mean bitcoin's already exists and is already out there most people just don't recognize like if we're comparing bitcoin to the banking system bitcoin is that fully reserved bank that you can run to um and so you have to imagine that they recognize that bitcoin actually exists and is the fully reserved bank that people can run to most people don't understand it yet but at some point the the social contagion and information disparate dispersion is going to hit ahead and people are going to have that light bulb go off and they'll start running to bitcoin yeah and she's the perfect that she's the perfect example and that's like the trouble of the regulated centralized central banking system that we have you know i mean you can winkle by all day

and sing in your band and try to, you know, like be this kumbaya sort of like we have, you know, markets need regulating and this, you know, take out as many Wall Street Journal full page advertisements as you need during the course of your journey, trying to be fully entrenched in Wall Street and all the rest. But at the end of the day, that's precisely like the opposite reason for Bitcoin's existence. It's not to become regulated and clear and part of people's 401k plans that's that's the best advertisement that bitcoin could possibly get is if it's banned in fact so i do think that that's a possibility it's a possibility that they don't understand that they haven't gotten that but like and then you think about that from caitlin long's perspective

like i fully support her she's been on my show and obviously she's great and it's a great noble goal although you would have to pay again this goes back to banking right you would have to pay for storage yeah yeah because she wants it to be a bailment not a uh not a deposit account which is basically every other bank account in the in the world um so that's that's one thing i i totally think she should do it i totally think it's great it's absolutely what we would need we see that they don't allow uh the competition but then you have to ask yourself like like from her perspective but then it's like you as a bitcoin are looking at her it's like what are you going to root for i mean is it are you holding all your hopes on caitlin long like are you are you holding all

your hopes on the success of bitcoin with caitlin long becoming a regulated fully custodian reserve bank you know with the federal reserve master account because that's success in our in our bitcoin dream you know like in our bitcoin goals and like the bitcoin mission obviously not i mean federal reserve having you know more jurisdiction over more bitcoin in their system is actually not the the end goal and this is contrary to what a lot of people think you know it's like oh central banks taking bitcoin on the balance sheet it's gonna be great this and that like no it's it's got to be a complete replacement you can't you can't have that like that this was my speech in in riga uh in september which you might remember at honey badger very good um like

That's exactly what happened to the gold market. If you were a gold bug in 1969, 1970, 71, all economists in the world, dumb as they are, thought gold was going to zero, thought gold was going to zero. After 1971, it started to float freely and Americans could own it. The opposite happened. It went to $850 an ounce for two seconds. You're loving it. If you're at a conference about gold in the 1970s, you're just loving life.

If you're thinking this is it, the central bank is owning gold, taking it over. Of course, we know what happened from there after Volcker ended the bubble and they started manipulating the market. You get GATA, all the rest. Central banks own one-fifth of the world's gold, one-fifth to one-sixth of the world's gold. They own 1.1 billion ounces of gold. That's not where you want the gold. You don't want the gold in the central bank because they're just going to take it away from you as they did before. And that would be the case with Bitcoin.

That would be the case. So, again, I'm very much in the fully reserved camp. Just do it yourself. You can't trust anybody else to do that. And so this is where these – I'm kind of like – she should absolutely do it. I absolutely agree with everything that Caitlin is doing. but that's not success in bitcoin is if she gets a federally regulated fully reserved bitcoin bank it actually would be you know showing that it does show their weakness but they're not like they're

not giving up at all at that point they're going to try to take more and more and more once once that uh occurs we would need to have like a full overhaul and a full bitcoin standard uh to win agreed i mean you can easily see the order of operations and again i love what custodians aiming to do i think it should exist i think it's funny agree that the fed is not allowing it but and they're gonna she's gonna uh appeal i mean she she's gonna fight a good fight absolutely 100 i would support her they'll never let it happen though because you have the option of a full reserve bank where a zero reserve bank like people are going to go to the full reserve bank you'll have a run on the system but let's play

through a scenario where it somehow does get through and there is no run on the banks to the full reserve bank i think it starts there well you can make an argument that it wouldn't because like they depend on how they roll it out with marketing and also you have to pay like this is the thing that people that always share full reserves on it you will have to pay and a lot of people don't want to pay so i'm not saying that a lot of people won't pay but you will have to pay for that account it's like a gold money i think silicon valley bank customers are are willing to pay yeah i will pay that anyway regardless continue on with the train of thought let's say it gets through and they get through order of operations you have this bank it is able to

custody bitcoin fully reserved stuff and then that's that's the order of operations that happens then the government points like oh you need to do it this way you can't hold it in self-custody like we need to put up guardrails for you so send all your money to custodia and the competitors that that spring up in its wake and then they'll try to force people to send the bitcoin there it's pretty simple it's a two two operation order of operations you get it and then the government says you have to hold it here we don't trust you with your keys yeah it's uh it's it's it's absolutely uh not like a win for bitcoin if like i don't know the bank of india the fed the central bank of uh the ecb and boj they get together and they just start reserving

bitcoin uh yeah it will make the price explode and we'll be happy for a little bit but like what's going to come later is not going to be fun so that's not that's not the way that you win in my opinion no and luckily for us these people are stupid like they're not letting it happen i don't think they're going to let it happen and that provides an incredible opportunity for us do this right and again that's why again i think the signal with with balaji the tip he's been on the last week isn't bitcoin to a million dollars it's bitcoin in self-custody i think that's the signal in his message it's like hey this shit's happening these people do not want bitcoin to succeed they cannot let bitcoin succeed if they want to maintain their power and they will fight

tooth and nail to maintain that power and part of that fight is preventing you from getting bitcoin so while you still have the opportunity get bitcoin and getting into wallets do you control i think that's a signal of blaji's message deep down i don't think he believes it's going to hit a million dollars it's a great it's a great message the only thing that i would say is this this sort of the end thing you said like why you still have the opportunity i think there's always going to be opportunity there's always opportunities to get gold it's always opportunity we get bitcoin that's probably the part that's most overblown is uh there's definitely ways to get it there's ways to hold it spend it i mean obviously we all know that there's ways to hold

it and spend it uh natively there's no problem at all there's no problem at all it's just a question of uh you know the noobs and the rubes like getting getting uh access which uh might be harder if it's like of course it'll be harder if they try to actually fully ban it but i don't see that happening in america like i said i don't see it happening with uh our property rights and our states rights and everything else i just don't see it happen neither do i but again let's play through the uh scenario where it does happen i still think the uh the common man will get access to bitcoin because he'll just have what's popped up in any country with currency controls strict currency controls you just have a black market for it where you'll have your your dollar price

goods at the pos system and then you'll give the the merchant the eye like hey i'm down to pay in bitcoin and i'll pull out his his blue wallet or something and you'll just pay that and i think uh that'll be the way most people if the scenario plays out who weren't able to acquire bitcoin on exchange and send it to self-custody will be acquiring bitcoin there will be a gray slash black market of bitcoin transactions that spin up and you'll acquire it by providing goods and services yeah that needs to happen before cbdc's take control because if cbdc's replace cash which again i don't see happening anytime soon but if they do then you start to get into more orwellian scenarios yeah i've had enough that's coming i've had enough of this i've had enough of this

fuck these people i'm mad as hell who are they to thrust the cbdc on us they can't even they can't even keep the energy they can't even fucking maintain the railroads who are they to to force us into a cbdc panopticon that's what like again i'm incredibly optimistic because i think this mentality maybe i'm naive but i think deep down the silent majority has this like all right i've had a fucking enough mentality and they will civilly disobey any cbdc order yeah i think you're right i think you're right and i think it doesn't make sense economically anyway for for the banks with this um yeah should we jump into the monetary base update we can jump wherever man we can uh we don't have to go too much longer uh it's getting

I got to get some time, but we can run it on this charting engine that I have, actually. If you want me to put the screen back up, it's probably better than the tweets. So this one is a new one that I made, basically. This is so for all for those of you, I hope there's not too many. But if you're new to my work on this, like this is the money supply, the fiat money supply that works the same as Bitcoin, meaning it's the center of the system as i just talked about with you know banks clearing up up up at the top of the the food chain with with reserves right that's uh that's base that's called base money that's the final ultimate settlement of cash totally different than bank

money totally different than when you put a bank deposit in um obviously you know it sounds like i'm always defending banks when i say this stuff and i am defending banks from the perspective of free banking picture but i'm obviously not defending the banks from a perfect perspective of a central bank picture but the central bank obviously they are the ones that uh at the end of the day they're the tap for all the money okay so this is this is the money that they create when you say the printing press when you say basic money the monetary base that's what this is and it's funny because like you can't find this anywhere you have to go in every central bank's balance sheet to actually find it so here i broke it down this time into the top five like liberal

economies, which for now we're still better than these human rights abusers in my neighbor, in Russia, in China, and obviously many other parts of the world. So the top five currencies there are the US dollar, the Euro, the Yen, the pound, and the Swiss franc. Basically, these are top four currencies anyway. It's just the Swiss franc. You would switch out with the chinese yuan in this chart versus the other so like 85 to 90 percent of this light blue area is china shows you how huge it is actually starts right here in 1999 this big bump of data comes from them uh also comes from y2k but they both happened at the same time and uh so it's interesting i have a gdp also population on this chart you can see here so basically like back here

i can't zoom in always here you have like the nixon shock and going back to like kind of the modern era of fiat banking the vietnam war ended this was a smithsonian agreement this is kind of like a 10-year kind of bullshit like trying to keep the gold standard pegged to the dollar it didn't last very long not even 10 years 10 country uh agreement and it ended by 1976 and then you're basically fully fully fiat but anyway here you see that the top five uh currencies were like 85 90 at times of the global monetary base and i do hasten to say that china isn't in that data but it's just you know i don't have them yet if there's any chinese speakers by the way that can help me find historical chinese monetary base that'd be interesting but they were much

smaller anyway during the 60s and 70s and then um we were also like you know 67 percent of gdp around this time in 1980 17 percent of uh global population so china comes in here they switch it they uh they they influence this a lot so if you look at this that top line is at the u.s dollar share uh the the the dotted line that yeah the top line there that's the top five sure it's these it's these five so it's a dollar euro and it's all five together yeah yeah so we were like 90 the liberal world right it was like 90 of the monetary base here yes i don't have china in these early years but you know china comes here you see this dips here the black line So if you go from here, it was not 80, but 70.

So China was still, is obviously a huge part there. But anyway, 70% of GDP, 70% of the monetary base here in 2000. And then if you go to the global financial crisis, this is what's kind of interesting, is we're still 70% this liberal world money, right? The euro dollar yen, it's still 70% of the monetary base. But as we know, China's like roaring part of the economy. So we're only 50% of the economy here, which I think is interesting.

Falling, of course, a little bit in population as well. We're a little bit higher percentage of population. Now we're only 12% of population. And like you said, this is what they're betting on, that like obviously this new century for them. And even though they're just ignoring all their human rights abuses and nonsense, that's what they want to try to do, just take over the world from their like totalitarian regimes but uh we're still 50

of gdp but uh interestingly we're still 70 of global money which does show some faith uh some faith in uh in these sort of main currencies compared to like the chinese it kind of goes back to what we were saying before right about like how valuable could really a Chinese ruble world currency be. I really doubt that, but you know, that's what they're trying to do. So here you see the big COVID stimulus. We went to the total was 30 trillion.

We've talked about this on your show and my show lots. And then it's, they've tried to do quantitative tightening as they call it here. And it's gonna start to come back up a little bit, but now it's about 27, 27 and a half trillion dollars. the fed also has a huge reverse repo position which is basically base money for non-banks like for money market mutual funds and stuff so you could kind of take i'm not counting that here you could kind of take this back up to three uh 30 trillion bless you thank you but uh yeah that is

the that is the figures and i i i think we're still seeing you know you could line up interest rates and it'll be interesting to see here as well most of the time obviously the explosion here of the monetary base the explosion of of what we call the printing press it happened as we said at the top of the show while interest rates were at zero or near zero levels for the last 15 years um especially here during covet and during covet it actually got really right into the economy you know with all the stimulus checks with the uh corporate you know company sort of bailouts or company stimulus whatever you call it right that was like right you know needle to the vein of the system uh whereas here which you can't even see it that much let's even take off

everything but the dollar just to show you here after the financial crisis this looks so actually take off this this was a huge bump like one of the you know biggest bumps ever it went from like under a trillion to two trillion in you know in less than a year and then you know that was qe1 two three went all the way up to four trillion in base money but then here we took it all the way up to even six trillion and you got the reverse repo facility which is still on top of that um but here unlike what happened in covid in here you know you had the fed which is basically just bailing out bad bets but that money didn't get back into the system because they paid interest on these reserves which there's never been interest paid on base money before before this event but um

i i think that it's only a matter a matter of time for him to start uh trying to print again but like you said they're still gonna have to worry about inflation which is much worse than it's ever been yeah well i mean when you get down to like the semantic their balance sheet's expanding already again 300 billion as of last week and probably a lot more it's even posted right now i'll check it yeah you know i know you said you don't think the likelihood is very high but with these power moves being made as this blank banking crisis is unfolding the power moves by china russia saudi arabia iran mexico throwing their hat in the ring like i think they're definitely going to try the yuan back settlement network

of gold back oh they will they will they'll try to use gold and manipulate it that gold is a part of it absolutely which is just idiotic if you buy into that agreed but i wonder if it will materially affect the monetary base charts we check like q2 q3 this year because i think can't go back to saudi saudi is the signal here and they mentioned in january they're open to settling their their oil trades and currencies other than the u.s dollar specifically named yuan and the euro and then you fast forward three months to this week they're shaking hands with iran facilitated by china i think the first yuan settled oil oil deals will will happen later this year yeah yeah i i i don't know i just their human rights abuses are so strong i mean it's like

neither of those countries care yeah and i i've i go on these it's one of the things like going on these central bank websites and seeing how they operate like they're so bad like it's so this is how you talk about cbdc i mean like they can't even you know bank of iran you can't even get on their website and it's all of them are just horrible horrible horrible websites and it's just like that is the backbone of their financial system it's just this crappy website and you don't have to go that far down the list to start to get like massive hiccups in the way that these central bank websites work like really it's like bank of england swiss bank ecb boj and fed are like the only decent working working websites all the rest are just garbage and that's how the

currencies work as well right they're just garbage so i i don't know it's going to be a public private partnership like we don't see the sum of i don't see the sum of those parts being worth more than the whole no they're gonna have to tap they're gonna have to tap in like they have in china like wechat alipay here in the u.s i'll tap sam altman on the shoulder say hey that world coin thing's pretty cool we'd like to uh acquire that and inject that into the federal reserve for circle i think circles on the list too like it seems like the fed's paying more attention to stable coins it seems like circles being cornered into the big systemically important banks and wouldn't be hard to see them getting all their reserves in the systemically important banks and

then the fed saying actually you're systemically important too we're gonna have to nationalize circle yeah you're gonna need to help us out that's gonna take away i mean that's gonna bring in no nationalization is not a good thing but so these are constitutional crises level things so that's where i think these people don't care they hate us matthew remember they hate us they do not care about the constitution you know what happened when uh fdr nationalized gold do you know that there was a supreme court vote over it i did not and uh the vote went like this there were four judges that were for it there were four that were against it and one remained neutral and they issued three opinions

one for it one against it and one neutral from the chief justice and then they just forgot about it that's what happened that's what happened they they didn't they didn't know what to do it would have been a constitutional crisis to take on roosevelt the way that he wanted to do it and um so they just let it happen they just ignored it like they said you know they made they put three votes like three opinions three opinions to the same thing and there was no resolution they just let it happen they didn't they didn't do anything and so that would be the worst that would be obviously the worst thing that happened and it has happened but again i just don't see that happening with uh with bitcoin i think it's too it's too resilient it's too strong yeah

and anyway if they if they really do try to make it illegal and not even one u.s state will stand up for people's property rights uh it's still a good advertisement for bitcoin because you know if you're in like sub-saharan africa you're like well i guess it's something valuable i guess i should get it because matt odell's not gonna like this but hey anybody at the federal government out there any of you states i'm not gonna stop running my node you're not getting my keys i'm holding my bitcoin there's nothing you can do about it come take it from my dead fucking cold hands and even then you're not gonna be able to get it dead fucking cold hands better way to say it does odell want to stealth run those is that the thing

i don't know what he wants he just doesn't he just doesn't like being openly confrontational with the government okay gotcha which is what we should do as americans you're supposed to work for me absolutely you don't tell me what to do 100 man seems like there are some representatives and senators and congressmen that still get that so yeah uh it has been good to see i've had ted cruz i believe massey obviously a lot of the conservatives even uh i think um what's his name from oregon forget his name there's a democratic senator as well that has stood up and say hey cbdc's are no go here

presenting bills that would make it illegal for CBDC. Whether or not they get passed is another question, but it does seem like some are paying attention. Yeah. I don't see a new balance sheet posted yet. Tomorrow, I guess. I think it's day and Thursday usually it gets out. So it's still morning in your time.

Yeah, it's 11 a.m. Central. It's like noon on the East Coast. Where's Bitcoin stand? in the number one man pecking order of well technically the pecking order of monetary base it was six or seven

oh yeah eight or nine can we go back to the tweet Logan do you have it handy just that summary page because I'm too lazy to pull it up myself boom

so it's eight yeah now it's probably like six no ten yeah ten at that time so eight eight eight if you don't include gold and silver ten if you do um so this is as of january 1st 2023 obviously no it's it's uh it's as of posting so it's much the bitcoin price is much more uh oh it's higher but that the rest of the date is as of january excuse me december 31st 2022 regardless i should pull it up just to uh do this with you um you can keep talking while i do this i'll keep talking let me keep keep laying the seeds of civil disobedience don't let them don't let them push you around anymore

they locked you down they stuck swabs up your nose they made you wear a mask force somebody to get some vaccinations like they don't like you they definitely don't know what they're doing no bailing out the banks again they lost control and to think any of you out there who trust the government

to right the ship you're wrong they're the people who created this problem they're not going to solve the problem you don't fix the system internally Buckminster Fuller quote To fix the system You have to create a whole new system

That's external to the one that's failing To actually fix things That's what Bitcoin does Jerome Powell Joe Biden, Janet Yellen They're not going to fix these things There's no magical policy wand That they can

What do you do with a wand You don't swing it, you point it There's no abracadabra Here's the perfect policy that's going to fix the problems It's all fucked It's doomed for failure it's mathematically impossible for them to fix this system this is why we bitcoin but you're optimistic right you're not just pissed both you got to be mad yeah agreed

but you know we got good families eat well live well you got to do that too you got to laugh we just got to laugh at these people they're laughably incompetent no doubt about that and they're all like 90 years old are we really gonna let them really gonna let the 90 year olds dictate what happens to us they're gonna tell you what you can do with your computer and your phone they're six inches away from the grave don't let them wave they wave one that's what you do with you they're gonna try and wave a wand and then they're gonna die and leave you with the consequences of their decisions i'll let that happen that's the that's the real truth brother is like what we're looking at now

is i mean not only the consequences from 15 years ago but from 50 years ago i mean yeah there's no natural reason that interest rates should have gone as high as they did in 1980 and be as low as they did in 2020 literally a 40 year cycle uh it's just unbelievably insane the whole generation yep that's what central bank does i mean it goes it all goes back to the keynesian brain rot of that is only money we all owe ourselves oh it's so stupid these people don't know anything uh and keynes he admitted on his deathbed he's like i'm fucking dying it's not my problem anymore it's your problem this is how these people think the way he said that yeah essentially at the end he's like it doesn't think yeah that's

like the fame one of the famous canes quotes like oh you mean in the long run we're all in the long run we're all dead like it doesn't matter i don't know he said that on his deathbed i don't know if he said on his deathbed maybe i made that up but maybe he did i'm gonna die sounds about right from someone like him to say that at that point yeah we're all gonna die um in the long run we're all dead but when i die my children are still gonna be around my grandchildren hopefully we're still gonna be around i can't leave these problems for them i can't wave the wand and say hey figure it out see you see you on the other side it's not the way to run a society yes sir um

we're bigger than india again again just look at india at year end bigger than uh yeah 510 billion roughly they are at a dollar equivalent so bitcoin right now at 554 billion would be bigger so it would move up from 10 to 9 including gold and silver 8 to 7 not including gold and silver and then we pass over what like a 1.2 trillion dollar market gap yeah we got to get back up to that level which we you know those were fun days in 2021 where we were above silver uh wild that we passed it this also shows you the journalists don't know what the hell they're talking about like this the first news article that bitcoin passed silver you know when that was no it was december of 2016 yeah because silver is what you can search it right now i've linked it

i mean there's news like just memes go around idiots like saying oh yeah bitcoin is larger than silver like bitcoin was you know 15 billion maybe market cap at that point maybe and uh you know because obviously supply lower the price was maybe 3 000 bucks i don't remember this is 20 not the book not the boom not december 2017 december 2016 was the first time this came out and all that was was just morons like reading somewhere about the not the silver supply but the annual silver production the annual silver production and then applying that to bitcoin's market cap it just shows you like i mean people aren't rigorous with this stuff and really understanding it but yeah that was the first time that bitcoin was quoted to have passed silver when

indeed the first time that actually happened was maybe february or march 2021 yeah this is why we this is why we sit down with matthew four times here it's because he's rigorous gets us the good data gotta be rigorous i'm not gonna lie i'm not as rigorous as you are it must be noted i mean the The attention to detail that goes into these quarterly monetary updates is unmatched. There's nobody sleuthing shitty central bank websites like our Matthew here. I go through the pain, so you don't have to. How does this all play out? What happens if Balaji's million-dollar prediction does come true?

then it's a 0.07 almost four sigma event but are we number one if that happens which is incredible in itself oh you mean yeah in the ranking um well do the math what's what's uh what is that a truck yeah that would be is it 21 trillion i'll do that right it'd be four it'd be a 40x from 500 billion so yeah 20 trillion 20 20 trillion roughly yeah roughly so of course would be number one yeah gold is uh yeah that's a good question actually it's a good way to look at it gold is uh gold is 10 trillion uh available gold available gold zoom in this again and um and uh yeah but i mean obviously you know no no one currency is there yet but again we could be

in some hyper inflationary scenario which he is suggesting maybe if that does happen but um yeah not no one currency is bigger than six trillion or so and then gold itself being 10 uh obviously at 20 trillion bitcoin would be the key but that's another thing to think about you know the people that don't think there'll be any like fiduciary media again i'm not i don't mean to harp on this it just means to show you kind of how this stuff works like it's not you can have a total closed loop bitcoin system and you can still have fiduciary media like start with the most laughable things and then go the other way so like you can have i mean are you gonna have carnival tickets are you gonna have like can i you know is there gonna be any reason for those

or is it all gonna be on the bitcoin blockchain like that's fiduciary media so that's the most laughable one and then you ask like are you gonna have gift cards or is that all gonna be on the bitcoin blockchain and then you would ask you're gonna have credit cards debit cards i imagine that there's still a role for that i mean even rodolfo is talking about putting some stuff on cards uh of course he's not doing like credit or debit but like you know rolling out uh ordinals yeah you got good old ordinals as well i don't know how you would define ordinals at an economic parlance if they ever have a trading uh a trading value but it is true it is true i should say this that lightning is very unique uh it's a very unique sort of

economic thing full reserved yeah it's like fully reserved locked bitcoin that's something else that's not exactly bitcoin but it is bitcoin trades in a in a second layer it's very interesting so of course that's the that's the full reserve dream of the bitcoiners that only lightning will will work i i just i kind of doubt that that would be the case but again i'm not they should do it it's great like enjoy lightning but if you look at the lightning capacity right now it's it's quite small compared to say you know the on-chain capacity obviously but um you can totally have fiduciary media in a you know closed loop bitcoin system where it's only bitcoin not even any other shit coins or anything could totally have fiduciary media it's

not a problem so that's that's another thing like don't don't don't just hate on all the banks just because they're morons and they're governed by a central bank like there is good good free banking precedent in the market uh in the past so it's hal finney's dream so i don't want january or know december of 2010 yeah i think that's you know the best uh example of a leader in bitcoin who was obviously like super smart uh who probably knew that this was you know possible scenario again i'm not i'm not saying that it has to be like only we're only using exchanges to make payments like absolutely not because you do it all you should have everything it's like you don't just go for renewables yeah like you don't just go for renewables you do everything

you definitely drill and you do gas and you don't flare your gas you mine bitcoin with it like you do everything it's not a it's not a problem yeah and you can even see i can see like fiduciary media popping up with impediments as well yeah impediment impediment's a good example yeah e-cash tokens are they fiduciary media i think yeah i mean that's basically that's basically how you would describe fiduciary media basically if it's you know it gets it gets a little bit weird obviously in the digital world it's always weird right when we're talking about the protocol and then utxos and what does that mean like certainly people are 90 year old leaders in congress don't understand

that but um you know things are going to continue to be more and more creative and interesting uh regardless of regardless of um you know the penetration of bitcoin throughout society and i do think that we'll get there to where like a full bitcoin standard uh but anyway it's not it's not even like an argument that's really worth having we're all on the same side with everybody but uh i think that to the extent that like you want to show that you're a bitcoiner that understands that like this stuff is for the people and it's going to be for everybody like that's just obvious that not everybody's going to be signing up for you know running uh lightning nodes you know within the next year no matter how much biology says it or maybe how much

predictions are true. So it's got to be baby steps. People got to go, like I said, earn in Bitcoin. You can mine Bitcoin, do any sort of different mining. You can earn Bitcoin, spend Bitcoin, do just like we said in the old days, you don't have to buy it. You don't have to trade your fiat check coins even for it to acquire it. As we like to say here, create many sats flows this podcast is producing a sats flow for us we have our lightning address in the rss feed people will be spreading us sats i'm mining right now another sats flow what else noster i don't know if you've looked into that i've got my lightning yeah i got it i got to uh i got to expand my presence there for sure got my i got my btc pay server address on

the old tweet thread if anybody likes it or if they want to infer more information or whatnot feel free to contact me about it go support the work freaks one thing i did want to mention since you mentioned gold have you realized the uh expansion of the gold supplies seems to be increasing if they're finding more gold you're near out isn't the uh i think it's about it's about 1.8 still i haven't noticed yeah i mean you might have noticed uh a collapse in 2020 and then a re-emergence in 2022. So you're on your growth because the base got cut at the knees. But I didn't see anything glaring over the last year.

Just the reports that I looked at, just very basic, basic. But it's probably a little bit more uptake from what happened immediately post-COVID. Yeah, maybe I'm thinking just in overall terms, because obviously 1.8% a year compounded means that there's significant tonnage of gold. Yeah, that's the Fed's number right there. It's doubling every 30 years, right? 1.8%. That's another thing I'm trying to educate on my channel is understanding the importance of compound growth.

And 2% is not nothing. And that's what the gold supply increases by, doubles every 40 years. Silver actually doubles a little bit less, which the gold bugs hate. But silver does double less. It goes at 1.5% compounded because it's just a bigger base of silver. It's just how it works. Stock-to-flow of silver is actually better than the stock-to-flow of gold. Sorry, gold bugs.

Stock-to-flow to Bitcoin is uniquely superior. it is uniquely superior and and they also say oops did i just lose you sorry my computer just locked no you're still here i can still see you got me so you see your face and hear your voice good no but it's uh what do they say now that we're on the topic the gold bugs they hate silver so much oh because uh like it is true like if you talk about industrial gold uh there's maybe only 10 10 to 15 percent of the total stack of all the 6.4 billion ounces that have been mined throughout humanity total of gold only about 10 to 15 percent is industrial okay and it's like constant churn right some that's like recycled some that goes back into

industry conductors all the rest silver it's much more it's like 50 it's 50 percent so what the gold bugs like to do is they like to uh they like to deflate the stock to flow ratio of silver by taking out the 50 of the uh of the stock and keeping the full flow but you can't do that it's either take out half the flow take out half the stock because that's what it is it's still half the flow it's coming in half the stock or if you want to do that way i would grant it to you you can do that and that would take the that destroys the silver stock to flow i can't remember in the percentage terms but in stock to flow like you go from being whatever it is better than gold to being maybe like four four or five where gold would be like 60 um but they don't do the same

process for silver and by the way when i do that i'm taking out not just uh when i did that stock to follow four or five for silver you're taking out industrial and jewelry and silverware which is like a massive part of the silver market too so you're taking you're only leaving gold bullion which is a very very small fraction of silver and then they take the full mining production per year to get this insane that's what they do that's what they do that's why they hate solar so so they give silver like a stock to follow like four but that's so unfair based on if you do the exact same thing to gold it would still be better at this point but it's much lower it takes the stock to flow down to like maybe 20. take this out yeah take out jewelry take out industry uh only leave

bullion and gold it's true that gold bullion is a much bigger slice of the pie but it's still you know just be consistent folks be consistent with this stuff no it's funny uh as many countries are beginning to posture like they're going to go back to a gold reserve or quasi gold reserve system you know stuff like the uh the west australian men sending shanghai bunk gold or very minutely diluted gold yeah a lot of uh a lot of instances of tungsten popping up yeah i think tungsten is more prevalent than people probably think and um we've talked about this before i mean you see all the trouble that like gold money had to go to to really make sure their customers were feeling good and secure you know they would have like dedicated vaults inside of

vaults like separate cages separate areas and you know doubly audited twice a quarter whatever you know the big doors all that like it's fine it's good go for it but you got to pay for that stuff yeah bitcoin is so much more efficient that's funny i've developed a good relationship with roy from gold money i mean this is oh yeah his other company and that's where i got this ring nice he seems like a good guy but he's not a fan of bitcoin right or is he he's he gets it he's coming around to it yeah he gets it i mean he's more partial toward gold we have conversations about it but um he gets it do you talk with him about peter schiff uh not particularly if schiff is an investor in gold money yeah i believe uh turk founded it right and schiff i

think is an investor yeah um you should you should talk to him and report back oh well like to hear roy's uh one of the most interesting men i've ever had the the pleasure of meeting very very uh intellectually stimulating conversations whenever you uh hop on the call very smart dude indeed that's good to hear that he's groks bitcoin though i wasn't sure if he i'd never heard him like fully go off on it i i uh i feel like he's he's always going to revert to gold being superior and and just not really yeah he really likes gold's connection to the physical world um i think trying to get him over the hump that there is a connection to the physical world with bitcoin via energy but that's why we have bitcoin mining yeah yeah yeah um all right

are we gonna win we're gonna win dude i'm more confident than ever and i'm i'm happy i am happy that biology is making these bets and taking these stances even though it's very very rare and like you said that's gonna be that's a good question you're asking it's gonna be 20 trillion dollar market cap which i mean that that is hyper bitcoinization if it happens so uh let's see but yeah i think we i think we covered a lot of ground yeah all right let's go forth let's keep winning it's march 22nd 23rd so you'll start you'll start uh gathering the data on q1 2023 three i'm very interested i'm very excited for for next month's and end of april start of may i will i will be gathering but hopefully yeah we can talk before uh before it gets too close to

like end of june next time it should be a little quicker this time yeah but we've been a bit of a lull or i want to say a lull but there's been a trend for the monetary updates for a year and a half and it seems like that trend is about to reverse with everything going on it seems although even though he hiked we'll see are they still also expanding the balance sheet i'm curious to see what happens this week i'll do a show on it actually tomorrow when i get the uh when i get updated it's not like exactly double speak speak but it's like double speak where it's like oh we're still raising rates which makes people think quantitative tightening still happening but you open up this facility and you're raising rates and still lending out new dollars yeah

they reversed their qt by 50 last week so that's what people should remember yeah all right always a pleasure sir likewise brother logan thanks man logan you got anything to say good episode thanks it was all matthew thank you all right that's all we got today we'll be back in may probably looking forward to it probably middle of june now for i think i think we'll be i think it'll be in may mid-may all right i'll myself to that all right hopefully uh maybe bitcoin will be at a million dollars by then that would be pretty yeah or we could wait till mid-june actually because that's the that's the uh expiry date but now that i think of it what if the next time you sit down here it's at a million

dollars that would be insane i'm glad we're talking about it right now that would be insane uh i'll have a top hat on and a monocle i'll be calling you from dubai and i'll have the baltics yeah i have a top hat a monocle and an ak just in case uh somebody's coming in trying to steal steal shit because everything's gone crazy yeah let's say never never a dull moment my friend no peace and love freaks Thank you.