TFTC: A Bitcoin Podcast - #443: Q2 2023 Monetary Base Update with Matthew Mežinskis

Episode Date: August 30, 2023

Marty sits down again with Matthew Mežinskis to discuss the Q2 2023 Monetary Base update. Follow along the charts here: https://twitter.com/1basemoney/status/1696117186236989686 Matthew on Twitter: https://twitter.com/1basemoney 6:05 - eNaira and CBDCs 26:08 - Top 5 currencies 32:30 - Compound annual growth rate 36:06 - FHLB exposure 42:27 - Inflation is impacting people 45:08 - Bitcoin chart 56:49 - Scandinavian physical currency 59:17 - US federal debt 1:15:08 - Canary in the coal mine 1:23:30 - Nations using Bitcoin and BRICS gold 1:40:02 - Optimal outcome Shoutout to our sponsors: ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Unchained⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠River⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠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 it's your boy marty here to introduce this rip of tftc i sat down with matthew misanxious to do our quarterly update on the monetary base bitcoin in the top 10 number eight coming up for india incredibly insightful episode as always it's been a few months i'm not gonna lie it's been a few months since we read boost so i'm gonna read the top four boosts from the last two tftc reps we're gonna get back on it i'm sorry um i've been slacking uh rip 422 launching flex with bitcoin talent code no boost it's probably because i haven't been reading them for you so i'm sorry uh rip 441 miniscript and bitcoin risk products with rob hamilton blockchain bug 5000 sets miniscript sounds a bit scary hopefully

the templates stop people from making huge mistakes i agree templates are a good thing go check out that rip of rob if you haven't listened to it yet at michael matt taloof 500 sats miniscript is fascinating and then at paez 500 sats thank you gentlemen thank you for contributing to the show via podcasting 2.0 2.0 i can't speak i'm sorry freaks it was raining here as you'll find out there was a lot of lawn care going on during this episode a little frazzled right now rip 440 climate change is a bad excuse with anas el haji blockchain bug 3 000 sats and two clapping emojis thank you blockchain bug and at paez 500 sats great conversation thank you thank you too for boosting consistently if you guys are listening via

podcasting 2.0 apps you're supporting the show thank you apps like fountain podverse it really means a lot you guys are contributing sats directly to the show this rip was also brought to you by good friends at river river is the best exchange in the game it's the most secure place to buy bitcoin and they have a new referral program if you go to river.com slash tftc you set up an account and you buy a hundred dollars worth of bitcoin you're going to get five dollars worth of free bitcoin river.com slash tftc if you buy a hundred you're you get five dollars of free bitcoin on top of that it's the most secure bitcoin exchange because they don't rely on third parties they built everything in-house their wallets um their

their lightning wallets their infrastructure their apis they build it all in-house they also have zero zero fee dollar cost averaging so you set up dca you buy on this uh once a week once a month once every two weeks if you set that up you're not going to pay any fees other platforms charge large fees and have giant spreads go with river and avoid that and river also has a relationship management team based in the u.s that you can call by phone this is a big value add customer service is something that's lacking these days river has pristine customer service you can actually call them if you're an individual or a business and again it must be noted that all bitcoin is held one to one in a multi-sig cold storage wallet that they built but they encourage

self-custody so river wants you to get in and get out into a wall that you control so go to river.com tftc set up an account today take advantage of that free bitcoin on the table this trip is also brought to you by your friends at unchained unchained is here uh to leverage bitcoin's native multi-sig properties to bring you financial services you can buy bitcoin on unchained using their trading desk they have their lending desk which allows you to use bitcoin as collateral to take out us dollar loans they have their ira product which they just updated. I believe last week, the onboarding flow for the IRA product is much simpler now. So if you have an IRA and you're looking to transition some of those funds in your

traditional IRA into Bitcoin, Unchain makes that extremely easy. They have a white glove concierge team that'll walk you through the process and get you set up quickly. And the beauty of that IRA product again, Unchained's building using Bitcoin's native multi-sig properties. So you can actually hold your own keys in your IRA. It's a beautiful thing. So go to unchained.com, tell them the TFTC sent you and check out all that they have to offer. Last but not least, this report was brought to you by Bitcoin Talent Co, a recruiting firm built by Bitcoiners for Bitcoiners. They just announced last week, if you listened to the previous episode, they have a new flex program. so if you're building a company out there and you're recognizing that it's pretty pretty hard

out there with where interest rates are and you're being hyper cognizant of your burn rate and whether or not you're going to bring on full-time employees bitcoin talent co has launched flex so you can get access to talent on a contract basis or a per project basis so you don't have to bring on a full-time employee and take on their salary and the cost to come with all the benefits and options you may provide them so if you're looking to wisely scale your business with burn rate in mind go check out bitcoin talent coz flex product they just launched it last week this is a great way to continue building through the bear market without taking on a lot of opex in the form of salaries so go to bitcoin talent.co slash flex to check this out and enjoy this rip with

our good friend, Matthew Mazinches. 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. We're live. We're back for our monetary base quarterly update, which in recent updates, we've glossed over the monetary base and just dove into a bunch of charts and tangential discussions, which I'm sure will happen today.

I'm sure of it, my friend. I'm sure of it. what's on your mind right now uh not too much you know uh got a honey badger this week uh you were there last year you're not gonna be there this year i presume no i have to get back to austin have a wedding cool max i'm actually not make it i'm actually not gonna make it uh this year either unfortunately but if any listeners are in europe and last minute want to go to a very high signal conference definitely do check it out it's a great one so coming up this weekend i think it's the most high signal conference in the world and rig is a beautiful city high praise

high praise yeah yeah it's a great one so cool um yeah got that coming up and uh you know just sending you some fun little text last night about the naira you know one of the early cbdc pilots and uh not just pilots but active uh programs championing the cbdc and um do you have the press release i actually didn't pull it up do you have the press release yeah i just gave the first paragraph of it yeah we'll pull it up but long story short Yeah, it's pretty funny. Long story short, yeah, E-Naira future uncertain after, I don't have to say, it's the former central bank chief, Emma Philly, ouster. And basically, they said, CBDC looks very uncertain. The former central banker is now in the custody of the state security services, also likely to be questioned on the funds used to deploy and push the adoption of the E-Naira from inception. so uh quite funny i mean it wasn't so tragic you know about playing with people's lives and people's money but uh those we we've talked about this before i mean i'm sure you have heard the

story marty i'm not i'm not an expert on nigeria but earlier this year they really pushed it uh they even tried to make other bitcoin crypto withdrawals illegal um and it just failed miserably there were protests uh they massively cratered the physical stock of money actually and so that's what i wanted to show you um yeah so the story story was they were trying to phase out cash right they didn't position it like they were phasing out cash they positioned it like they were recycling notes or creating new notes that would then go into circulation so the nigerians had to turn in the notes that they had the physical notes they had before a certain date and then they turned all their money in and they didn't have the new money on the back end

cratered the money supply and actually i can show you the physical supply here so uh if you want to go back to that logan where we were my screen um pretty wild uh so this is like a 60 year chart the naira started in the 70s actually uh but they must have done a little bit of a revised money supply i'm not sure what they had before in the 60s but i have that uh that sort of matched up to it but regardless this is the money supply and before this year they were at about 3.2 trillion naira uh this is actually one of the biggest currencies in africa let's take off the growth rates there you see it so it's start of uh in december about three trillion it's going down a little bit and it just cratered it to by february it was 980 billion naira and then didn't work out

so well already back up to 2.6 trillion naira i don't actually have the supply i was looking for it if anybody sees it please do send me a link uh i haven't actually seen a transparent supply of the cbdc itself but this was the physical stock and it's very eerily similar to india which i will refresh the uh the listeners on and the viewers if you're watching this uh in a second which that what they did in 2016 but basically yeah try to roll this out not very transparent causing a lot of problems in india there were even deaths i'm not sure if there were deaths here i'm sure there were lines i'm sure there were issues but there were definitely protests in the street which i read about and uh yeah look the famous cbdc uh promise it's not

delivering and they're already back up and i'll put a trailing 12 month percentile change here so at the worst of it they were down 70 percent year on year all right in early early this year february 2023 and now uh they're only down 20 percent uh but as you can see it's rising back up And the compound growth rate, just in case you're curious, over the lifetime of the Naira is 17%, 17% year on year growth. So this is what I've been saying for years. And what I'll continue to say, and you know, we got the CBDC tracker coming out, but everybody wants to talk about cbdc no one is acknowledging the blunt reality of billions of people's needs for cbpc central bank physical currency very basic thing uh of course even before central banks you had private banks

that issue notes we haven't had that you know worldwide for 100 years nonetheless billions of people need physical cash and i think it's a pretty illustrative example of just how difficult this is to actually roll out these cbdc programs do you think that need for the physical for cash is a phenomena that's isolated to emerging markets things no i know that it's not i mean based on the supply we i'll pull up another one there shortly but to explain it you know um there's only two countries in the world that i've seen that have really uh even though you think and i know like i'm sure you know if you're gonna go out to dinner tonight or whatever like you're gonna pay with credit card or maybe lightning

somewhere but you're probably gonna pay with credit card you're not gonna use physical cash most likely. I understand in the West, in Europe, in America, we typically can't see the cash. We don't think that the cash is around, but it still is. It's just a function of, I'd say probably lower income velocity transactions, lower income jobs and payments and purchases. But there's only two countries that have literally, that I've seen have tried to physically, besides what we just saw here with nigeria which again they failed uh really tried to stagnate the physical currency stock those countries are norway and sweden and even there it's kind of like they were trying to pull it down and it's just kind of it's like almost it's almost floating back up right now

it's kind of flat uh but it's a worldwide thing that they that cash is still being printed i have a number for that that i've blended as well weighted average it's about 10 and a half percent per year. 10.5% per year is the rate of growth of physical cash. And by the way, the rate of growth of people on the planet is 1.5% per year. So that's a ratio of seven. The supply of... It's the most basic form of money, right? We don't need to pontificate about bank reserves or deposits or cbdc is like still the most basic form of money is physical cash and the supply comes out seven times faster than the demand i mean how how could a yale or harvard economist talk around that and try to make it seem like it was a good thing for the economy i just i just don't know it's obvious

you're going to have price inflation with such you know with such mechanics of the money supply Yeah. Yeah. Debasing the physical stock of cash pretty rapidly. Was it 10.5% annually? Yeah. 10.5. About 10.5. 10.5% per year. That's the number. And the reason I asked that question is because it popped up last week. I saw Peter St. Onge was covering it, but it seems like the San Francisco Fed has a few job postings for people to work on CBDCs within the Federal Reserve System. Which begs the question, like if these pilot programs, most notably in Nigeria, are failing pretty miserably, like why would the Fed even go down this route if they have this evidence in front of them that there's really not demand for it? people want the physical cash are they seeing something are they trying to make fetch a thing just wondering and then it very much sort of counteracts a lot of the public statements that jerome powell has made in regards to cbdc's which gets to another point which is

like the different fed banks whether it be san francisco dallas minneapolis they seem to have pretty um pretty objective takes uh individually where i think the dallas fed came out this week and said we have to stop raising rates it's really gonna affect the the capital formation of of industries that that we need to deliver goods to market um so i wonder is the san francisco fed just this uh federal reserve bank with a particular leaning that's trying to make this thing happen even though the chairman of the federal reserve jerome powell has publicly stated that he doesn't see the need for a cbdc where it actually functions i don't have a direct answer to that but i mean they're obviously going to have to look at these use cases i mean nigeria

is pretty much after south africa it's the richest country in africa and if you can't get them to do it uh you know what are your chances of getting a less developed country in africa or south america or wherever even getting on these cbdcs and then like okay well we'll do it here and i have said uh i mean this is my contention although i've talked to people in these countries and they don't think it's going to happen either i like i just said if there were two countries that would do it i think it's norway and sweden that they they have they're small enough you know their environment they're they want to be environmentally friendly enough they're they're they have the wherewithal they're rich enough they have the wherewithal to push it out and and and cover the

cost of doing so you know kind of socialists in some endeavors right so i it seems to make sense to me that they're the ones that could do it like like actually make it work but um i've talked to people in those countries as well and they don't they don't see that happening necessarily i mean they think that you know like an argument is like well you know maybe your bank will lock you out maybe if you're a lower income you just need to have access to some instrument where you can pay and a cbdc being based money it's something that should theoretically like only the fed or only the central bank right could turn it off uh and they will by the way once they run they will turn off transactions that they don't agree with but you know the idea is that you know you

could even get around the political problems of bank accounts which is funny because you could solve that problem by just loosening regulation in an instant but they're not going to do that as we know so it's funny that that would even be an excuse for it but even if that was an excuse people that i've talked to in norway and sweden are saying that's not a good excuse because you By law, banks have to keep accounts open for individuals, and they don't have, apparently, those problems like they've been having in the UK right now, although I've had problems with Swedish banks here in the Baltics. But regardless, I think that this is a good example of the problems that are really coming.

And I was reading that article. I don't know the political leanings of that publication, but it seemed a little bit statist, And they were saying, well, you know, it's not the end. It's probably just going to be going back to the drawing board, understanding the value proposition, why people will need it, so on and so forth. But I mean, for the fact, for them to even publish an article like that, which said, you know, its future may be limited or move to the back burner was something that they said. i think that's just extremely illuminating about what the real use case value proposition cost rollout of these things is and i think one more to close on this one uh let me just roll the other tab logan this is india now i've shown this maybe on your show before i've done videos on this just this had nothing to do with the cbdc but i think this is illuminating they They had the 500, and let's take off the rates, the 500 and 1,000 Mahatma Gandhi notes that they wanted to get out of circulation.

They said it's in the name of digital improvements and having more digital payments and everything. And so they tried this at the end of 2016. You see here about 17.7 trillion rupees of physical cash, 17.8. And then it was cratered. Same thing in a matter of months, almost in half, 9.3 trillion. By December 2016, 9.3 trillion rupees. And literally by the next, let's look at the percentages now, already by December 2017, they'd increased the money supply 80% year on year

to get back to where they started a year prior. And now you're like, yeah, three times, no, double. You're double. roughly, where they were in 2016. In 2023, you have 33.6 trillion rupees of physical cash. And the all-time growth rate of the rupee for the data that I have, which is quite limited, actually, only 20 years, 12.9% compounded. So a little bit better than the Naira. But yeah, I mean, I think it's just, you know, even, of course, this was not a CBDC case, but it's illuminating to see exactly what, almost the exact same case, very swift,

roll out declaring illegal uh turn your bills in and in india people actually died of exhaustion and it's big waiting line at the atms right yeah uh it was it was a big it was a big deal um so what's the point of all this like what is how how much longer can they go on with these games well in both directions right like i think they're so that's i want to make two points here one that builds on what we've been discussing and bringing in another sort of twist to the story but yeah like what are these countries finding out like is it you just can't rip physical supply of money off the market abruptly like are they going to go back to the drawing board and try and do it in a more methodical fashion moving forward but looking at the growth rate of those charts it

seems like the way these economies are running they need more physical cash to be circulating to to prop up their economies and then the other thing too i'm not sure if you saw this but the bis came out with a blueprint for the cbdc earlier this summer um and i read it and when you dive into the details of how they sorry we got some weed whacking in the background of how they nice effect of how they um plan to implement it like they're technically not competent they're they're talking like if we think ethereum's complex and completely centralized and going to collapse under its own weight in the future like the bis blueprint is is laughable in terms of the implementation of how they think they're going to do this yeah yep and uh you know that

physical cash constant need to grow, which as I said, globally, I got a number for you. That's 10.5%. I recall even part of the narrative in 2019 when we had the repo spike and they were finally theoretically more normalizing their balance sheet. The Fed had not increased the balance sheet since 2014. And it was even decreasing by late 2019. Of course, this was before all the madness of 2020. But I remember part of the discussion in 2019 after the repo spike was, well, we might need to increase a little bit more. And plus, we're running into this lower bound barrier of physical cash, which needs to grow. I remember people saying that on Bloomberg. Of course, it was at a policy point or whatever, but they're aware of it. I mean,

obviously they're aware of it they never talk about it i think it's just the funniest thing that the central bank the institution in control of the money you know yes they publish these physical stocks i get them from their websites but uh it's such a small component of the discussion and you know it was nine nine trillion bucks of them around nine trillion dollars it's nine trillion dollar equivalent market which is massive right when i say nine trillion 2.2 or something it's actual dollars 2.3 maybe it's actually you know benjamin's hundred hundies and and all those things like most of them are in europe or outside of the u.s but uh you know the rest seven trillion is euros, yen, yuan, nairas, rupees floating around.

So it's a massive market. They ignore it. They don't talk about it. All of a sudden, we're going to turn this $9 trillion ancient market. It's a thousand-year-old technology, physical cash. We're just going to turn this over the next few years into this thing called a CBDC, which we take inspiration from Bitcoin,

but we're going to be better than Bitcoin. It's laughable to its core. so do you think it's literally impossible for them to implement it due to the mechanics of this physical stuff well i wouldn't say that and like i said i i i personally think you're going to see it from norway and sweden uh i think that they have the wherewithal but these sorts of stories encourage me and uh you know we'll track it we're doing the cbdc tracker with the human rights foundation we'll be launching that by the end of this year but they've tried dumber things which we can talk about for the rest of this show

they've certainly tried dumber things this guy's literally right next to me so let's jump into some of the dumber things all right uh all right i'll just quickly go through a couple of these um logan if you want to go to the next one here yeah so we got the top five currencies highlighted uh you know if you've been following us with these quarterly updates for for a few years now this is going to look familiar but uh we can build them back out right so the rest of the world it's about 18 of it it's here that means 45 different currencies including the two we just discussed the indian rupee which is the one of the next biggest after the swiss franc uh one of the next biggest

in the world and then ira all in this bucket here okay which uh totals about 4.8 trillion dollar equivalent uh then you got the pound sterling which is less than five percent 1.23 trillion japanese yen and when the next four of the big four japanese yen chinese yuan European Euro, US dollar. Now, this is the monetary base. So this includes that 9 trillion of physical currency I mentioned. And it also includes about, at the moment, $18 trillion worth or so of bank reserves, which is basically the most core fundamental asset that a bank can hold in a banking system. It's their account with the Federal Reserve. So those two things together, the bank reserves and the physical cash make up the monetary base. And the total is 27.2 trillion,

a little bit under $27.2 trillion equivalent. And again, when I say that number, I have to describe this with some unit of comparison, right? So that's the dollar, but you really need to think that these are different currencies that are making up this group. This is the core of the system. This is why we compare it to Bitcoin because Bitcoin is the core of its own system. It's not a Coinbase account. It's not a Kraken account. Those institutions can hold Bitcoin, but they are not the actual UTXO. So that's why we also call this outside money.

Okay. So central bank money is outside of the, you know, it definitely is connected to and highly corrupt in some ways with the current financial system. And they make the rules for the financial system. But at the end of the day, they are the monopoly that sits outside of the financial system. So it's called outside money. So that's why Bitcoin is also outside money. Gold and silver as well are analogous to this in history. They are also outside money.

So this is the number that would really compare to Bitcoin. We can talk valuations in a second. But $27.2 trillion. Notice that is down from the COVID peak. Now, you know, it was going steep down by the end of 2022. Then they raised it a little bit this year. you see it went down to like 20 uh it was 26 and a half trillion by the end of last year about a year ago uh and then they raised it back up to 28 now it's down again to 27.2 trillion but it was

30 trillion 30 and a half trillion uh at the end of 2021 that was the whole covid stimulus and remember when i started doing these monetary base exhibits and working on this research it was 20 trillion. Okay. So lots happened in the last three, four years. We've gone from a $20 trillion global monetary base up to a $30 trillion one. And now we're down $3 trillion to $27.2 trillion. And this actual reduction in the monetary base, and as I've told you, it's only the bank reserves that are reducing, right? Because physical cash is generally growing in every country. so it's this this this actual reduction in the bank reserve volume or value uh in banks deposits that is actually the thing that causes these interest rate spikes so this is the transmission

mechanism as they call it they don't just they have targets of course but they can't just like put into a computer we want interest rates to be this they have to do something and how they do that thing is that they remove money from the system credit becomes more scarce interest rates rise that's basically how it works so this this is this is what this is the core of the global system that you're looking at here and uh yeah i think it's a good it's a good primer for anybody that's interested to learn a little bit more about money because uh you know they don't teach you the stuff in imf uh briefs or bis publications they just no one no one seems to want to compile this up on a global basis is the guy still weed whacking no he's gone the rain's coming now

but we'll be good more soothing yeah and i mean it seems like in building on the cbdc conversation the physical cash i mean it seems like all these central banks are essentially their backs are pressed against the wall and they have no other option but to print more over the long term medium to long term like that reduction from the 2020 peak i mean it's still up 35 percent from when you started doing these reports when it was at 20 trillion i guess it's been reduced a little bit and is that recent bump because of the btfp um facility uh not really no uh the overall balance sheet has fallen uh for the federal reserve from the nine trillion peak uh you know like a year more than a year ago um

it's the facility is more of a guarantee it's not enacted yet you know we'll see more crises happen um but it's it's not necessarily from that uh but the yeah that's all i'll say with that it's it's just not i i haven't globally i haven't actually uh pinpointed which one is more it might be europe i actually see europe looks a little bit high compared to the rest that's kind of keeping it a little bit and it looks a little bit more stable there if you just look at the euro there but i'm not sure uh of the of the bump that happen in the in the very last year but the u.s themselves even with the early banking sort of crises that we had at the start of this year has not not exploded the balance sheet yet uh

if they do then we know that you know it's more money printing and bitcoin's gonna continue to go up but even this is another thing i can put the next chart actually up uh uh, Logan, um, even if they do continue, you know, Powell just gave another speech, you know, they have the Jackson hole thing and trying to put a happy spin on this more pain that's going to be happening to so many banks and financial institutions, balance sheets overall, they're still, they're still going to keep printing at the end of the day. I mean, at some point they're going to go back. So this is an interesting one. This is a trailing 12 month change. It's the same chart i just you know one green shaded area you can see the massive bump here okay so there have

been three massive bumps in money printing before covid uh on a trailing 12-month basis okay so covid on a trailing 12-month basis by february 2021 went up 38 and a half percent okay the global monetary base this happened three times before twice you know during the gfc years 2009 and 2011 which you know more or less people can understand and once actually during y2k uh we've probably talked about that marty that's kind of a famous thing people were literally freaking out taking cash out y2k bug everything uh and that was a 32.9 percent peak so those are really the only peaks uh major major peaks and you see there in 2019 they really tried to get it down like the only time other than just recently when it when it went negative when they've tried to as they say

normalize or decrease all of this stimulus all this money printing they've done in the past happened at the end of 2019 and it happened this year basically all of this year so january february march you'd see on the tooltip their annualized run rate negative negative and it's just now as of may let's zoom in and catch it and negative again between may and june but it's very close it's very close to zero it's very close to flat at the moment year on year but you can see obviously the the big decline uh you know that was last year seems to be over but you never know maybe they can they can try to do it again and really you know prick inflation and all that stuff but price inflation but again

this is these are things that i'm not even actually interested about in the in the short run uh as i'm sure you're not either it's it's more just a story about what they typically do and for what they typically do that's this line compound growth rate that's the number in red that they're always hovering around. Just like I showed you with the physical cash, there are different numbers. And for the worldwide monetary base, that number is 13%, which means 1% a month. Because you compound 1% a month, it's not just 12%. It's over 12%. It's closer to 13%. Shows you the power of compounding. And that's what's happening to your money at the core of the system at the end of the day, 13%. That's what it's been like since the fall of

brendan woods since the end of the uh since the nixon shock the last 50 plus years so that's that's the number i think to think about and what's the doubling rate for 13 compound growth sub six years that's insane well i've been thinking about you in recent weeks too like going back to our last conversation where dove into the balance sheets of um fannie mae and freddie mack i had john titus on from best evidence he's done some really good research and he essentially is honed in on the fhlb loan exposure that the banks have um and he's pinpointing that as an indicator of stress

Like if you are a bank with crazy assets to FHLB loan exposure, like you're likely to go down as time moves forward. I think Charles Schwab has something like 130% exposure. Their FHLB exposure is 130% of the equity they have in their company, the assets they hold on their balance sheet. um that's like the federal home uh lending bureau i believe and i'm not i wasn't too familiar with them until i uh spoke with john but just building on our conversation from last time where we dove into fannie mae and freddie mac like i wonder if that's connected to that as well did you ask him about how insane those debt balances are just overhanging on the economy no i i didn't um i didn't connect the two dots while we were having the conversation it wasn't until after

where i began to think about it yeah no but i mean there's just yeah serious issues that are still hanging over these companies and big banks balance sheets and you know kovat didn't help it okay kovat made everything worse uh the response the knee-jerk response is typically what they do right they say people are in pain we need to print money and help them and give them stimulus and all the rest and it's just it's like the same story that governments do basically from time immemorial so i i can't i can't really uh yeah i'm not a trader i imagine there are more interesting ways to trade uh some of these charts and some of these some of this news if you really have your hand on the pulse

want to be in front of the screen you know 24 7 or whatever but um at the end of the day i think it's just it's great for bitcoin if we look at this chart again you can put it up logan um it's not the the change in the trailing 12 month rate is not correlated to bitcoin's increase in price right so remember look at the dotted line uh in 2017 well let's start with 2013 right so that was kind of like one of the first big booms went over a thousand bucks for the first time right in the end of 2013 the monetary base was trucking out right about the typical average the all-time compound rate 13 14 percent per year so get the 2017 cycle same thing 13 14 percent per year and then they tried to to slow everything down because of course all the other markets were hot then as

well. And then COVID, a lot of markets boomed, a lot of meme stocks, so did Bitcoin. That was an extreme bump, right? We're up to 40% year on year increase of the monetary base. But even here, when it was, I'm looking at 2019, I'm highlighting the 2019, which is a relatively flat year on year increase of the monetary base, really when they're trying to normalize, when they had the repo spike and all that stuff in the season of the repo market in the end of 2019. Even during that period, there were little mini booms in the Bitcoin price. It's just not like it's necessarily correlated, in my opinion. Yeah, you can say that 2018, 2019, 2018, of course, definitely is a down year.

And that trailing 12-month rate was going down. and then in 2022 i guess we can say it was a down year and yes this this rate was going down as well but how much that's going to relate to bitcoin in the future you know i'm not i i just can't i can't say with that but i could definitely we can look at some bitcoin uh trend lines which i have as well those are the fun ones uh you know we just know that we're generally increasing there on a power curve uh trajectory that's much better uh you know at preserving your purchasing power so so again don't want to sound like just a extreme buy at any price sort of hodler but i don't i don't necessarily see any

of these big swings as being like super good or super bad for for bitcoin yeah i mean an external to where bitcoin fits into this conversation and just looking at this chart it looks like we're going to need some sort of mean reversion at some point soon like where where it's sitting and trending upward a little bit yeah and then you think about like the posturing from the government here in the united states really beginning to grease the wheels for more lockdowns or a climate crisis that could bring about a new form of lockdowns it seems like they're beginning to look for an excuse to turn the money printers back on at some point this fall or later this winter yeah and if they do you see the mean reversion that happened with covet i mean

if it's as bad as that one, you're just going to blow right through the meat and go the other way. So from that side, yeah. I guess that's definitely, definitely good for Bitcoin. But as we know, there are a lot of other spillover factors that happen from controlling the money supply, these planning boards that think they can control all the prices and everybody's actions in the entire economy. A planning board of just a dozen people so it's it's just insane it's uh it's an insane way to do things yeah and and then it's really unnerving to an extent because i'm sure you've seen it but like in recent weeks last month or two the amount of videos that have been popping up on social media people experiencing

in extreme amounts of stress due to the inflation they're seeing in their everyday lives whether it here in the united states or more particularly pronounced up in canada like it just paints a really scary picture if all of these insane moves that the fed has made over the last couple years to get rates up to tame inflation um it brought it down to 3.2 percent but if you look at core inflation it's still above 4.7 pretty consistently i believe and then as we all know those metrics are completely bunk on their face um inflation is much higher than it's being reported and we get to a situation where something happens in the banking sector who knows what happens probably happened in the banking sector and they're forced to turn the

money printers back on like again it's a bit unnerving because it does not mean to me at is that they've properly tamed inflation. They may show up in the CPI that they made a lot of progress, but if you anecdotally looking around, it doesn't seem like any material progress has been made. Right. And again, that's where I always fall back to this, like look at the all-time trend line, right? I mean, that mean reversion may happen.

It may not happen for another six months or so. So, but, you know, if the GFC was any indication after the fat years of the early 2000s or obviously COVID, you know, you can just see that mean reversion is never just, especially in recent years, it's rarely kind of hugging that mean. It just flies right through it. And that's why you just got to think about, I mean, what is it going to do when the base money of the world increases at a rate of 13% per year? or i just looked it up by the way uh it's 5.7 year doubling time so a little bit more than every five years and six months uh the money supply has doubled the base money supply i mean that is going to affect the rest of the economy and you have to prepare for it you have to prepare for it yeah yeah get some bitcoin freaks yeah you want to look at a bitcoin chart yeah let's

look at the bitcoin chart because i was like actually looking at the rainbow chart earlier today yeah so it's very similar to the rainbow chart they probably whoever is i don't know as many people that create rainbow charts but it's some sort of a trend line like this it's called a power trend line it's four basic trend lines just remind the listener viewer we could do a linear trend line which is like a flat trend line straight through uh we could do an exponential trend line which would be also straight on log scale this is on log scale so it would also be a straight line on log scale uh there's also a logarithmic which is a bit steeper than this and there's power power curve is kind of a blend of of those it's a it's it's a more shallow on a log

scale type of a curve uh but it's uh it does decay a little bit the rate of growth is faster at the beginning on log scale and it does decay kind of like logarithmic but a little bit more shallow uh so you know the beauty of these very simple charts unlike other you know more hyped charts which don't take into account demand and other things uh this is a very simple one variable uh model it's uh time is the independent variable price is the uh price is the dependent variable and you just calculate your coefficients you can run this trend line and then from there once you have the trend line you can do these bands as i have them these red and blue bands and so we can zoom in here and you can really start to see more interesting things so these

bands as you see there i have the two sigma band and the one sigma band basically everything between the blue bands is a one sigma move what does that mean that means that anything between those blue bands is basically a two-thirds of the time event it's a one sigma event it means it happens two-thirds of the time and anything between the red bands is a two sigma event or a 95 percentile event it means 95 of the time the data is going to be between those bands but if we ever get outside of those bands or close to the edge of those bands that's where it's an interesting phenomenon that's where it's an interesting move so you see here in 2017 we got up to 20k it's very close to a two sigma move not quite based on this trend line uh it was a two

sigma move and you see after the ftx debacle the final nail in the coffin of all the nonsense of 2022 uh we we we bumped along a two sigma move to the downside okay so when we when we went uh pretty much right after ftx fell for bankruptcy we fell down to 15 16 000 there for a few months end of 2022 started 2023 as a two sigma move to the downside so we've we've pulled back up from there we're around a one sigma move now okay uh you know getting outside of one sigma move i should say and we actually just did with this fallback from 30 000 i know we had a little bit of a bump today, up to 27 or so. I'm not looking at the price right now, but this is only from a couple days ago. It doesn't matter. It's not going to affect the all-time trend, but that's where we

are. And then the fun thing with this is you can actually use this to predict out. And this 95% R-squared model that I have by December 31st, 2030 takes you to about $600,000 per Bitcoin. so it's a nice thing to think about and again uh you know this these are statistical models i'm not doing anything crazy it's very basic stuff at the end of the day uh maybe compiling it in an interesting way but this is like this is no fancy math here nothing to do with the bitcoin emission schedule or anything it's simply based on the price and uh yeah if you have any bets or something we can look at we can look at how the bands shape out these guys are really going at it right now

okay let me uh let me switch over to the next one i i you you're froze a little bit too i thought i completely lost you but i got you okay this one as well this is a good uh this is a good chart to look at because it can show us how good or strong of a black trend line this chart was, right? Black trend lines in the middle, roughly in the middle, right? That's the actual trend line. As I said, if prices continues to fall below this line, this trend line will fall. If it rises up, the trend line will rise. So the trend line moves every day. It's not like it's a fixed thing. I'm trying to predict the future or anything. It does move. But we can still ask ourselves, how strong is this black line? For that, we can look at this chart. I've showed you this before,

Marty. We have different years of trend lines where I just stop them based on that year's data and then move forward. So let's take off some years here and just look at 2010. This is like the best trend line ever. It'd be great to get back on this one. But as you see, the early years, the first year basically where there's real pricing action of Bitcoin, very thin pricing action i started from bitcoin pizza day so it's not even the full year but you're just you know you have this slash dot article you have uh a lot of things that are exciting and bitcoins you know going over a dollar going over to a few bucks uh maybe not a few bucks by the end of 2010 yeah still still in the 20 30 cents range but anyway quick quick escalation from nothing if you just

look at this year's data do the same calculation and only do a trend line from there you get this trend line, which is monster. So if you take it to today, the trend line, you're not reading this wrong, predicts that Bitcoin's price will be $1.3 billion per Bitcoin. $1.3 billion. It's a great trend line to be on, but unfortunately, Bitcoin lost the trend, which is okay. We revise our trend lines with this stuff. And by 2030, actually, it's like $128 billion. It'd be a great trend line. We're off that. Obviously, the way that the price in the market has worked, it's pulled it down. So we're off this trend line. 2011, 12, 13, I don't have those, but know that they're somewhere between this blue line and the black line. But here's the interesting thing. From

2016, I have all of the different trend lines as we've gone through. So I'm just going to draw them all right now. Okay. See if you can spot them. 2016, 2017, 2018, 2019, 2020, 2021, 2022. You probably can't even see them because they're all stacked up let's take a look at the 2010 line they're all stacked up on the black trend line which is a good sign this is even better i've done this analysis on my youtube channel of like gold this is even better than gold would look from 2011 you know the 2011 and being very very favorable to gold like from 2011 back to um back to not even like through the 80s but only like through the 90s with like the bottom when gold was at $200 an ounce then went to $1,200 an ounce that's you know the 2012 trend

line would have taken gold to $30,000 an ounce something like that but all the other trend lines from then on have gold like down to $5,000 an ounce $6,000 an ounce so gold has even more extreme swings uh than bitcoin bitcoin is very uh and and they're they're spread out by the way the point is that they're spread out but this is pretty interesting from bitcoin's 2016 trend line which is the lowest in fact we're not lower than that zoom in a little bit even more if you can see it uh 2016 it's in red you know as of august 28th the the all-time trend should be 56 000 per Bitcoin. 2016's trend line is $55,700 per Bitcoin, $800 per Bitcoin. That's a little bit lower than the current trend. But all the other ones are a little bit higher and close. So again, it's a

nice example of the model, which shows that it's pretty consistent. The trend line is pretty good for the last seven years. And yeah, we're below it. We're pulling it down. We might make an all time low. We just, 2020 was also a low trend line. You see it's $57,940. We just, I had to change the color because we just went below that one. So that's a blue one now because it's above our current trend line. So it's only one year, which is below. But even with one year, it's quite interesting. It shows that this Bitcoin trend line goes up, goes down. It doesn't just go down all the time and yeah we might we might make a new low on that trend line with this cycle uh nobody knows but um if we if we don't that'll be even cooler because then we'll

we'll have not put in that bottom of 2016 on the trend you know on the trend line and and as long as that bitcoin price keeps trending up and starts to get above that trend line it will pull the trend line back up the all-time trend line so it's a lot of discussions about trend lines there especially if you're listening to this dear listener and not watching but the point is that this uh this nice power regression trend line which is which i have a lot of videos on this on youtube you know it's it's a pretty solid it's a pretty solid i think representation of where bitcoin's price has been over the last seven years what's funny because you mentioned gold sort of went off its historical trend line in 2011 2012 that was right when like gld dropped

right that's when gld launch was around then gold it was and it was getting up to two thousand dollars an ounce at the time that was like an all-time high for gold but then you know went into a 10-year bear uh from there so so they're kind of the point is they're kind of all over the place if you do the same analysis with gold whereas with bitcoin yeah they all are all over the place in the early 2010s but we're just i mean that's that's a monetary system just getting started like give it a couple years uh you know am i saying that they're all years after this are going to be you know stamped right around this trend line no but it's pretty interesting that they have been since 2016 yeah no that's the point i'm trying to bring up is like with all the news

around the etfs that may or may not be coming to market does that sort of throw an interesting externality in the mix that could that could push up this all-time power trend yeah i think a lot of people are hoping that it does and i saw there's some good news for gbtc as well but i'm not too deep in that saga it seems like a complete mess but regardless of blackrock it's proved that's that's obviously a huge deal for institutional money coming in yeah that's a big question right now is it similar to like the cme futures launching in 2017 where it's selda sell the news by the rumor yeah you you still got the uh the lawn mowing services near you right yeah they should be done soon they should be done now i'm just saying we can move on

uh it's just a couple bitcoin charts they're interesting uh uh check my youtube channel for more on those. Which one do I want to talk about? Here, I can show you this one really quick. This is the Scandics. So let's even take out Denmark. These are in their own currencies. Like they're all kind of similar. Actually, it's in Kronor. They're all called Kronor. But here you see Sweden in blue. Norway in red. Sweden really from 2008 from the GFC really tried to get rid of cash and did uh they were at you know over a hundred thousand 110 not a hundred thousand be a hundred 110 billion kroner swedish kroner in physical cash by 2017 that was down in half basically 56 billion and norway more flat let's say they didn't you know really have to cut it much but they they

were at say 50 uh billion kroner around the gfc and now they're at 40 billion but you can see in both cases particularly with sweden like it's kind of reversing floating back up as we said and that's that's again interesting and denmark never they're pegged to the euro so they never really did it anyway this is kind of just doing what the euro does as well so denmark is still is still growing but the scandics you know norway sweden in particular they're the ones that are really really trying with this you know it's like at least get your physical cash if you say you want to go into cbdc see if you can actually get the physical cash out of circulation and so far we've seen no country that's been able to do that yeah well when it comes to sweden i'd be

interested to see if this chart is telling a story about their immigration policy over the last five years like our bunch of immigrants coming in don't have bank accounts and the demand for cash has simply gone up because you have a new labor force entering the market that doesn't have bank accounts and needs to get paid yep very good point as the syrian crisis in particular was you know 2014 to 2016 there uh and you can see from 2016 that bottomed out their uh attempt to get rid of cash and now it's slightly up from there so very good point and all of these things issues that are just not going to go away for countries that are trying to trying to uh

control yeah so yeah uh yeah sorry go ahead no i mean pull up like the national debt chart that you that up there because i think that's important to touch on as well i mean obviously we had the debt ceiling impasse earlier this year the debt ceiling essentially got eliminated until 2025 probably won't be re-approached till 2026 because we'll have a new president coming in then we'll have to pick his committees and it'll take time or it could be never reinstituted man for all we know i mean yeah we could be in a whole new world by then uh yeah but go ahead you have you have that i believe it was june or july uh we added another trillion dollars worth of debt then you

had the treasury come out and say hey we're actually going to issue 1.85 trillion dollars worth of bonds between now in the end of the year so rough math there is about four trillion dollars being added to the debt in the second half of this year yep uh just a quick note i i can put these in log to your listener viewer some some people have requested that but it's actually better i think to just you know this is a 250 year chart so yes log helps but with the tool tip and with zooming i think it's better just look at it in linear so that's what i'm gonna stick with but if we zoom into you know the last 30 years here uh and i talked about this actually recently on peter peter mccormick's show because i you know he was having a discussion about okay

we're gonna get more liberal classical liberal minded politicians in maybe it seems like something may break and and he may be right on that i mean who knows i i'm still not i'm still pretty disillusioned with politics particularly u.s politics but as i know you are as well uh but regardless of if they do think about this so here we got it you know in 1990 if you're listening with 3.6 trillion dollars 3 600 billion 3.6 trillion dollars in national debt now we have 30 uh 31.5 it's even higher than that i think in june whatever 31 and a half trillion now okay So up 10x in 30 years, I assume is a little bit wrong, sorry. Something like this. But think about the Clinton years, okay? A big deal for Bill Clinton was balancing the budget, something he

still talks about to this day, such a big deal, right? And he did that for a couple of years, three years maybe, it was mostly his second term, going into the new millennia. That was here. if you think about like how much this is talked about how much this is like put on a pedestal as the best thing the divided congress newt gingrich all these people working together and uh yeah you know sex scandals and he was a bad dude and you know maybe killed some people bad things were happening uh but but they still had some good you know they had some good things with this divided Congress and it was just a really good thing for the country. That is just like a little crescending, like descending plateau there,

just a little bit, like almost, okay, we're leveling off this increase in debt to about $5.6 trillion at the end of the millennia. And then up $27 trillion over the next literally, what, three, four administrations? baby bush obama trump and biden i mean it's uh all of them have increased the debt significantly 30 to 40 percent during their uh during their reign and i i just i don't see what you do to that otherwise unless there's major outside external factors um i you know i i don't i just don't see how this is stoppable i don't see how a libertarian candidate you know he mentioned how dave smith coming in and might want to do something and uh

or he's on joe rogan and look even as as well-intentioned and well-spoken and principled as a lot of these people are that want to get into politics i just don't and i i don't see it i don't see i don't want to sound too you know throwing my hands up in the air it's never going to be done but if you just look at this over the long term you know all countries look like this by the way you know argentina looks worse some countries look much worse some countries might look a little bit better uh but all countries look like this and something usually breaks something usually breaks and they reset yeah i mean let's steel man it what like extraordinary name measures would somebody need to take to fix this just like a pure default well i would i would

say if you want to steel man it i would say default is not the option that they would take right because we've been soft defaulting for decades right we've been rolling over uh devaluing the currency devaluing the dollar and that's that's the soft default the hard default i would say is yeah not the steel man argument the steel man argument that was what they say in debates It's what they talk about. You know, I saw an interesting tweet from Taleb, actually, as much as he's just proven to be a complete dolt on Bitcoin. He was quoting some people in the Trump campaign saying,

like, this time, Trump is going to really clean the swamps, really going to do it, and all this bullet point list of things. I can't remember the guy's name. He does this like CPAC. You probably know who he is, but I'm not in U.S. politics too much anymore over here in Europe. But the point is, Taleb called it. He was like, look, I mean, only a fool, only a sucker goes in twice for the same candidate expecting a different result.

You know, how many times has this been done in any industry, politics, business? I know there are people that are really big fans of Trump and are very principled and whatnot. not but you you just cannot it's a definition of insanity if you're like trump did not do that much during his first term you can't blame it on oh he was learning the system he's kind of outside of politics uh to expect if trump wins to expect that he's going to come in and like really clean house drain the swamp do everything you want him to do just look at this debt chart and tell me that he's going to flatline that and make it go down even i i say no way his wall his wall alone is going to explode the thing if he ever gets that done but she won't i mean he's proven i mean this

is just like the visible debt we're not even talking about the 220 trillion in unfunded liabilities social security medicare and medicaid are off balance sheet it's another nice thing the united states like to do which most countries don't do and we people have to remember in the context of trump like he oversaw the largest expansion the monetary base ever like and yeah i think he wouldn't use those tools again when push came to shove is like you said insane we didn't even mention that did we yeah i don't know i don't know what you're thinking i don't know what you think about this election season i mean it seems scary to me uh but why do you say scary just because two old guys again going at it and you know their hands on the codes and

all the rest uh i mean as we know it's a pretty you know their hands are tied regardless the system itself is completely institutionalized uh i mean i i see some podcasts i see people really trying to interview these people hold their feet to the fire uh i saw trump on tucker like maybe trying to say like okay will you what will you do about the agencies you're really going to clean house going to do this and of course it's like non-answers that he's given but you know that's the steel man argument it's just their their non-answer flowery comments that they're going to try to do and say during the debate but when push comes to shove when you're actually sitting there i mean it's just an institutionalized uh thing and that control

has not given up easily uh it's certainly not given up from the inside no yeah i think it's an absolute shit show i mean just looking at the last chart you showed like we're approaching the vertical point of the chart where it just goes straight up it's going to happen at some point in the next couple years and obviously that's why we focus on bitcoin try to get people to the life rafts while all that happens and hopefully can provide some sense of a soft landing a soft dish landing a relatively soft landing a safety net if you will but it's going to be chaotic i mean again those unfunded liabilities alone like that's never getting paid back no this is an interesting one if we layer in the central bank holdings so this

is basically it's essentially the monetary base it's a little bit of a different number i'm taking here the asset side this is actual assets uh united states government bonds securities on on the federal reserves books so just reminder again the way that they get money out into the system they could buy anything but they typically buy government bonds right so obviously who's the husband who's the wife central bank the uh the government it's there they're in there it's a corally uh it's core related institutions and yeah the central bank's in charge of monetary policy they get money out into the economy but how they do that is they buy assets they could buy anything they could buy real estate they could buy stocks like japanese government swiss government uh

central banks but um nonetheless mostly it's it's uh it's treasury securities so it's a little bit higher than the monetary base it's a couple trillion higher it's because it's reverse repo facility on liability side we don't need to talk about that now but nonetheless here's the number you compare this with the national debt and do a percentage term here and uh we can see that the peak was during trump's term i guess it was but when did trump leave december 2020 is that right uh so i guess the start of biden's but it was going up to it at the end of trump's term The peak was 28%, again, on book government liabilities of the United States, which are well under the unfunded liability number that Marty keeps mentioning, 28%. And that's an all-time high if we just zoom out.

In the 70s, stagflation, it went up. Vietnam was ending, went up to 17%, the central bank owned. but the fed only being around for the last hundred years never owned this much debt and that is coming down okay since jackson hold of a couple years ago that is coming down they are trying to normalize again same thing they were trying to do in 2019 uh but again we we saw the monetary base the the year on year looks like it's kind of dipping like you just said doesn't look like that yet here uh but how low they're going to get this like if they're going to get this below this level in 2019 of 15 i'd be very surprised be very surprised if

you know this is a matter of months i think as we're talking about right six months 12 months i mean you're really going to pull this this 23 percent uh ownership of government paper down to 20 or 15 percent i think it's just too much pain it's too much pain to to do otherwise so this is the whale in the marketplace of the photo reserve what they they purchase of united states government bonds yeah i mean just taking a caveman's view of this chart like looking at any point in time where it's the the black line has dovetailed into the green shade the late green shade it seems to have had to reverse um i don't think there's any mathematics behind it that is it that's a good

view of it yeah but yeah it's it's i think it's just a visual on the right axis but that's a that's a good stf uh view of it no i mean you're right you're absolutely right i mean look at that like it's it's trending up and uh that's a that's pretty funny actually i didn't think about it that way you could be right yeah it's a matter of months man it's a matter of months and we already know that it's that that is going up this ceiling is suspended like that was a surprise like that was the secret it's this song and dance and we act like we don't know that it's going up every single session of congress you know this has happened like 30 times it's uh yeah and this republican congress is trying to say they

came away with a bunch of wins it's like no you didn't you suspended the ceiling for for two years likely three or more yeah um yeah so this is a big one this is a big one i think and um i don't see i don't see an easy way out of this one at all no i don't see libertarian democrat republican any candidate that can change the trajectory of what this is i mean this represents like the the guts of the bad promises that governments have made because remember the debt increases when they spend more than they take in taxes in one calendar year so this little happy time with bill clinton his second term it's just a little bit of a crescendo into happiness and then and it just took off again i mean it's just it's unstoppable yeah and after the great

financial crisis it looks like the line's like flat like it's very much being manipulated pretty aggressively wherein if you go back to the longer view of the chart it does look like there's at least some sense of markets trying to determine um or the government letting the market try to determine things yeah it's true it does it does fluctuate much more doesn't it maybe even going down some years, you know, some decades, it's very true, especially from the Vietnam peak. It fluctuates a lot more. You can see it in the black shaded line, whereas here it's just completely more straight. There's no, you know, seasonality or changes there.

And this little dip here, by the way, where if you're listening, which is probably hard for you at this point, if you listen to all these charts. But, you know, we were at eight, nine percent central bank holdings of government paper. before the gfc and dipped down to like five this is where ben bernanke was trying to figure out what to do so basically swapped out government bonds uh for commercial paper and this was just all the facilities there's massive they figured out how to get that off the books after a year but just massive corporate bailouts and everything took over the fed's balance sheet and they had much less government paper during the GFC.

Yeah. I mean, and then you add in with the current interest rate policy, I mean, just the interest expense on the debt that's expected to balloon to like $1.7 trillion a year once treasuries roll over, over the next 12 months. And then we look over to Japan and they seem to have completely lost control

their yield curve which they've successfully controlled for for many decades um which begs the question like obviously japan is the prototype for quantitative quantitative easing as a policy it seems to be nearing its end game and i guess the question is like do you view japan and their inability to control their yield curve in recent months as a canary in the coal mine that this stuff is getting out of control they can't keep the cat in the hat anymore well one thing i always told you was we got to be humble we got to be careful here with uh with where we think we're going with you know bitcoin in this picture and though bitcoin is 500 billion right which is a lot higher than it was you know five years ago and when the monetary base was 20 trillion now it's

27 trillion globally and uh bitcoin is 500 billion bitcoin's you know the eighth largest uh currency if you call it that way if you if you if you frame it this way which it is uh outside money you know you have the the four including japan which you just mentioned the big four then you have the pound sterling you know this was frank the indian rupee and then you have bitcoin and bitcoin actually around 27 000 when you get up to 30 000 you're already bigger than india again so we're at number eight number 10 if you include gold and silver but it's an amazing achievement for what bitcoin has done nonetheless i always caution you know imagine you're a gold bug like right here in 1980 it's like chaos uh vietnam war is ending a lot of chaos stagflation

And gold, if I'd layered in the gold price here, it'd be going up to $850 an ounce for two seconds on world markets. But everyone would be loving it. You would think that sound money was returning. You would think that we were, you know, that you had won. I say this all the time. And I know I've said it on your show before. But that's the only risk. And I think that Bitcoin mitigates the risk.

Bitcoin, it's clear based on those power trend lines that we saw, it's clear that the trend is up. It may go tens of thousands of dollars under the trend line for years, but it's clear that the trend is holding for now. I shouldn't even say for now, it's a clear trend that Bitcoin has and we know the value proposition and all the rest, whereas gold has a lot of antiquity baked into it literally and figuratively that just hasn't held its trend lines well at all so there's a lot of good things that are happening for bitcoin there but we still have the lessons of the past and in the modern era in the modern era you know the united states government debt when gold was 850 bucks an ounce was you know 830 billion dollars you would think as a gold bug that

that would be a signal that okay the markets don't trust u.s government paper they don't trust the dollar uh it's time to return to sound money after 10 years of being off the gold standard and you see what happened you see what they did so i just have to say that to your canary in the coal mine comment because i totally empathize with it i sympathize with it but you know japan particular they have been impressive at kicking the can down the road and markets like normalcy even during the you know we had a ridiculous few years here right from 2020 to now and everyone wanted to get back to normal they wanted to get back to you know a little bit of lower interest rates a little bit of uh

of uh predictability in the markets and they're not getting that right now so that's that's that's that's interesting but i you know if can they can they extend this for another cycle of 10 20 years right if everybody just if everything goes to shit and they have to take interest rates from where they are now which are pretty you know i don't have an interest rate chart for you next time pretty high right five six seven percent people suffering on their car payments mortgage payments or whatever might be adjustable credit card payments pretty high rates all around the world can they take those back to zero yes they can they can take those back to zero will it destroy the currency again i think if you were a gold bug you would have been loving life in 1980

and you thought we were returning to it but but we didn't so i think bitcoin protects you i think bitcoin is the steps that you need to take but i just i don't have an answer for what comes what comes next do you no i'm not gonna pretend like i do in the midst of all this what's going on whether it be the banking crisis earlier this year back to covid stimulus the expansion the monetary base i will say it does seem like it's getting to the point of insanity like to such an extent where it's like all right it seems like something has to break but i do also have to recognize that i'm in somewhat of a bubble and i'm a bit autistic about following this stuff and really immersed in it well most of the world probably is not um and like you said they've

proven time and time again that they can kick the can down the road and then analoging to gold i mean there's a lot of i think pretty strong theories that the governments and banks essentially work together to artificially manipulate and hold down the price of gold um so that it didn't send a signal to markets that they were losing control like to think that they wouldn't try to do that with bitcoin as well is probably a bit naive if i mean it's it's proven we we got the london gold fixing scandal i think another jay morgan trader was just arrested for for fixing gold prices um so i think oh yeah i think it's a theory yeah i think it's been confirmed um to be a reality to some extent it's probably still going on to this day and to

think that these governments that have so much control and so much power right now and really want to hold on to that will not employ those same tactics against bitcoin because the bitcoin price runs um that sends a signal to the market like hey more people are trusting this money that's completely separate from the state maybe you should adopt it too people start dropping their dollar bags for sats um the government does not want that to happen um so i could certainly see that playing out but then other side of that coin pun intended is that uh i don't know i think bitcoin is such a unique animal in terms of the fact that it's digital it's globally distributed it's very easy to acquire and to opt into like does that create

a condition where it's much harder to suppress that price particularly if people are actually benefiting from the natural properties of the network that allow them to actually take control of it um i think if enough people do that it makes the government's job of controlling prices a bit harder um then they just throw more weight behind it i don't know i can see going one or two ways i can see jack dorsey's hyperinflation tweet being extremely prescient we'll look back at that five years from now and be like yeah he was right we could be in the middle of it right now um and if we are people are going to need alternatives bitcoin obviously we believe is the best it'll benefit massively from that but i guess the question the unknown known is like how much

more power gun power powder gun powder does the government have to sort of manufacture a facade of stability and what if they actually start to reserve bitcoin or buy bitcoin yeah i mean we do know i mean oman came out last week announced that they're investing 1.1 billion dollars in uh exahertz which is a bitcoin mining company obviously we had the kingdom of bhutan come out unwillingly earlier this year due to the fact that they got swept up in the bankruptcy proceedings of celsius and block fi they basically have to come out and say yeah we've been mining bitcoin since 2020 and yeah we're going to double down uh obviously it's been public that gazprom and bit river have uh have a deal together and so gazprom is a state-owned oil and gas

company in russia so russia's got some skin in the game to some extent obviously historically venezuela el salvador are in the game seems like argentina may have maybe may have a president that's um very open to bitcoin you could see proliferation of adoption down there and i actually saw i think it might have been river dropped um a research paper highlighting that argentina's actually got more bitcoin adoption and usage than el salvador does at this point without any legal tender laws or anything like that so it does seem like i'll check that out yeah i can i can absolutely see that as being the case it's a huge country yeah and it does seem like so yeah it's hard to tell i guess let's just prepare for both outcomes i mean selfishly

um for the stability of the world and to avoid a mad max scenario while also be able to stack more sats at lower prices like hopefully they can kick it down the road a bit more um but then the acceleration this to me is like the negative externalities of these can kicking policies build up and compound so much that maybe in the long run it's probably better to just rip the band-aid off sooner rather than later and begin rebuilding yeah i think uh in the short run too it would probably be good for and it has been good and will continue to be good for price when you have more of these announcements or leaks or whatever with governments government entities or government energy companies mining uh and stacking uh but even if like the federal reserve said that

we're gonna you know are they secretly did it and then we have like you know a certain amount of bitcoin we want to add to the stability of the dollar or something that's where i think it starts to get a little bit dicey because then you're on the same circle that you were with gold we know that the bitcoin market is much more uh at least we believe that the bitcoin market is much more resilient globally due to its digital nature rather than physical nature than gold has been because you're absolutely right and i agree like the alan greenspan quote you know he said during the 90s central bank he said it you know gatta quotes it all the time like central banks stand buy ready to sell gold should the price rise like they was absolutely price suppression scheme they

probably don't even have a lot of the gold that they say they do they probably leased it out so it's a whole thing uh and that was but interestingly over the long term you know whether it's due to bitcoin itself outshining gold literally you know pun intended as well i uh i'm not sure but gold Gold is just still stuck there at 2,000. Still got all these gold bugs. I just think it's the worst type of a boomer who's so excited that these BRICS countries are announcing more gold stuff. I just think that's the worst type of boomer. You know how I feel about Russia, but these are human rights abusing China.

These countries are not model countries that you want to stake the stability of your currency around. And just to think that that's going to be a beautiful thing for your asset, I just think it's way off. It's way off base. And I would feel the same way about Bitcoin. Not in the same way that you're mentioning it because still it's, you know, they're just doing what they need to do. Nothing is, I mean, other than El Salvador, there's nothing like major legal tender. But those might come and, you know, we'll have Bitcoin people championing those things as well. but i i go back to the speech i gave in prague you know i talked about um how easy it was for

the nazis to just come in and take gold and you know it's one other way if you're talking about a nation's treasure this is literally the first thing that the nazis did it's how they funded their war machine throughout the whole war because the reichsmark was worthless in western markets and they traded you know legally of switzerland and everything or not illegally but uh just in a very uh shadow shadow market way but that was gold it was gold that kept their war machine going and it was the first thing they did when they went into czechoslovakia it was the first thing that they did uh when they went into austria and it was the first thing that they tried to do when they went into poland and i told a story about the polish gold which i might have said a

little bit on this show before but it's an amazing story of how the poles got the gold literally it's They got the gold out of the country in September of 1939 as they were being firebombed. Bitcoin is different, of course. You know, the distributed nature of keys and how you would do this and hold this and all that stuff. But I still think it's kind of like microstrategy, right? Like, it's great that they're buying all this stuff,

but, you know, you don't want to pin the hopes of Bitcoin on microstrategy. And at the end of the day, they're just one central actor that can easily be seized. It would be the same way if Bitcoin was under the purview of the Federal Reserve. So it's a catch-22 as well. I haven't quite thought through the endgame of that, but I don't think it's a great thing if we rely on these governments that have just ruined, trashed all their other currencies, manipulated the value of gold. Literally, you can say that. You can't say all markets are manipulated, but you can say that about the gold market for sure.

and uh in fact i think you and i would agree like most markets are not manipulated they're mostly free and always trying to get around stupid laws but uh if they try to do this stuff with bitcoin yeah i think it's like short term maybe good but over the mid long term uh we just got to keep working more to keep it distributed and not having the same fate as gold because gold has had a terrible fate over the last hundred years and if you're a boomer gold bug tweeting about BRICS countries accumulating gold which they don't even have that much but if you're if that's what you're pinning the hopes on for your you know 401k or your investment portfolio shame on you yeah you're fucked too well let's talk about the

BRICS so you had the BRICS plus meeting in South Africa last week this is leading up to COP 28 I believe I forget what number they're on for that UN climate event but it seems like from what I can tell these are like back-to-back events that the bricks country is bricks plus whatever we're calling them these days are going to attempt use to essentially announce like a pivot uh on their strategy and how they interact in the international markets um and obviously there's been many theories i've written about them in the past and i think um at one point um i had more confidence in their ability to actually do something than i do right now because as i've thought through it like like you mentioned you have a hodgepodge of different types of countries democratic republics autocratic

regimes um sort of monarchies if you will to a certain extent that are coming together and i think just purely from a logistics standpoint like i just think that these countries would be able to coordinate and get along in the long run i think it's short-sighted i don't see i see being a massive coordination problem number one like who holds the gold how does it settle what else is in that basket of goods that they're trying to launch and again who custodies those assets who audits them like i just find it hard to believe that they're going to be able to create a consolidated and cooperative regime that works in the long run i just think there's too many competing world views and it'll just turn into a dick measuring contest that erodes

the confidence in anything they launch at the end of the day yeah i mean and you know china's probably going to be demanding to dictate most of that dick measuring at the beginning and always and if they start to filter off or people start to not trust them which is already happening you know what happens then uh i i think you know the whole idea of bricks box or this bricks gold uh basket or whatever they might do uh i don't think there's anything yet that's like coming out of this and like you said uh i think it's rife with potential problems but i'm not i'm not saying that i'm championing you know the the old ways of the west either as i know that you're not like it's just we know that there's something better we

know that's bitcoin is like light years better um stateless neutral and i think that's just where probably i mean i know that's where we're focusing our attention so that's that's usually what i just tell people but yeah i i i have no love for the boomer gold bugs that that think this is a good thing and like there there is a lot of them if you look you'll see them on twitter just talking You know, this is like going to be great. So much accumulation of gold and all this stuff. And none of the lessons would be learned from World War II. And, you know, precisely 70% of the gold left Europe and the world

trying to get to the United States during World War II. So it was actually, you know, people talk about many different reasons that the gold standard ended. Really, you know, it ended because of autocratic dictators, like wanting to just walk in and take your gold because it's in a vault. um you know autocratic communist regimes are they going to be much better in the short term maybe but in the midterm you know we're looking pretty bad for for dictators right now in many parts of the world so i i just don't see that as as a viable thing and yeah i know on the other side like again i'm not doing what about as many there's a lot of people that are anti uh you know everything about america and like what what they did to russia freezing the russian reserves i'm not saying that the dollar system is better i'm absolutely not saying that um but what we saw was

if if the if the gold standard uh it wasn't a classical world standard already fell anyway by world war one but if what was a remnants of what was happening with gold around the world and you know fdr was manipulating the price of gold and devalued the price of gold uh in the 30s but as we went into world war ii if you saw that literally 70 of the gold goes into america and then you have by my count less than 30 years yeah 27 years or something of a of an american-based gold standard you see basically how gold handles the extremes right the worst of the worst is what happened in world war ii this doesn't get any worse than that i mean the murdering the pillaging i mean obviously the worst is the they call it the tsan gold it was

the gold that was ripped from you know jews teeth as they were walked into oblivion i mean there was a lot of that uh but that and i gave i showed these charts in my presentation you know i'm not I'm not moralizing each pile of gold, but the most swift, direct way that the Nazis stole was just walking into central banks around the world and around Europe and taking the gold to fund their war machine. So that's what they're going to continue to do. If push comes to shove or come into any hot wars, that's what you'll see with more centralized gold standards. So that's the worst. That's the absolute worst that can happen. the best is apparently what happened when the gold flowed flowed into the u.s it flowed all

into the u.s and we set up this bretton woods standard it lasted from you know 45 to 71 france said hey we want our gold and nixon said wait you're gonna have to wait a few months we're gonna have to find it and then yeah it was one of the last things he did and as president shrawled the goal he uh he he uh in the late 60s he just started to claim and he became like the biggest gold bug ever and the u.s couldn't redeem and i had to suspend and so again it's the same you would have the same problems with bitcoin by the way like if you were going to do this you'd have to say it's nothing magical about the standard you'd still constrain yourself and all those things but i just think it's funny the extremes that we've seen right i mean literally

that does not get any better than that excuse me it does not get any uh well you could say it could get better than what the united states the situation we had in bretton woods but let's say it was like the best kind of that we had at the time and it certainly doesn't get any worse than the nazis so you know what do you think this like mixture of autocratic communist monarchical monarchical however you would say it uh monarch regimes coming together for some new gold standard is going to be better i mean there's just there's no way it has to be neutral it has to be stateless and we're on the the path there so that's where i think uh i just think it's it's it doesn't get out of the gate basically and uh i think it's a warning as

for bitcoin i think it's a warning like you i don't know what you think about like micro strategy or something but i just i i'm still not a i'm not a huge fan boy i'm just seeing all these tweets of buying more bitcoin okay great great for the price and stuff but there's nothing there that that's adding to the decentralization of the network it's no the uh the headquarters being within walking distance of langley is a bit unnerving um my my my podcast i was that like talks about that either in tyson's corner tyson corner i guess it's called and it's like all of the agencies and lobbyists are there like you said walking distance but i i'm not i'm not saying it's a psyop i'm just saying if again we're not we're not putting our shouldn't put your hopes on the

world truly potential new world money that's decentralized that that's going to be like the next catalyst uh no and like i actually do have thoughts on this too we can wrap on this subject but i do think it's whatever bitcoin's permissionless micro strategy can stack as much as they want whether or not they're a front for the government who knows i don't think it's likely but i think it's funny i don't just i don't either i think it's same boat to be clear same boat i don't think it's likely but it is funny yeah um but the hope is that and i've been writing a lot about this and thinking a lot about this because we've implemented it into my business and i can see it actually providing a clear path towards what let's just define as favorable

adoption adoption that leads to the optimal outcome of bitcoin being as distributed and in as many hands as possible outside of governments and that is the utility that the layered stack of bitcoin provides individuals particularly the lightning network and lightning network obviously is not a panacea for scaling i think it's it's limited it'll only be able to scale us to a certain extent and then we'll have to add other second layer solutions to interrupt with it, something like Fediments. But I do think that there is somewhat of a clearer scaling path in front of us right now via the Lightning Network.

And again, things like Fediments and other second-layer solutions that will come to market. And that hopefully in the next three to five years, the user experience of actually sending and receiving Bitcoin over these networks is so far beyond the incumbent system and it enables so many use cases that are literally impossible in the incumbent system that people are almost forced to adopt it because they want the utility that these solutions provide

that literally do not exist in the incumbent system. So to that point, I'm pretty bullish on this, just haven't seen it up close and personal with Podcasting 2.0, with what's going on in Nostra, with something that we're working on at TFTC, with lightning monetization, I do think we're getting closer to the point, a tipping point, if you will,

of people being able to implement lightning and create better user experiences and unique experiences, most importantly, that do not exist in the incumbent system that people will be forced to adopt because they want the functionality that it provides, whether they're consuming content or sending payments around the world.

And I do think we've reached a point, particularly at the Lightning Network, where you have robust competition at the implementation layer. We have things like LDK, so you have development kits that are making it very easy to build lightning wallets and lightning experiences. And then I think on the business side,

you have companies beginning to better understand understand the nature of the lightning network and what makes sense and what doesn't to implement it into their stacks and i think the emergence of ai whether or not it's all hype 90 hype or all signal is yet to be determined but i do think uh what's going on with l402 um and essentially just using the lightning network to do paywalled api calls for the energy intensive uh ai industry is like sort of a natural fit like i i do see a potential scenario um where ai is signal it is useful and people do adopt it in mass and then they're literally forced to adopt the lightning network can do these paywalled API calls

because it's the only way they can ensure that they're going to be capital efficient with their energy cost in mind. So again, that's the hope. I'm, again, optimistic. I do think the things that I've seen developing in the space point towards that being a probability and that probability increasing over time um i do see a path towards that and again favorable

adoption that leads to an optimal outcome of significant distribution and more importantly people getting bitcoin uh into their own hands uh before quote-unquote hyper bitcoinization or the price front's too far away from them i love that man uh sergey cutler would always say that from uh bit refill you know it's like we all love bitcoin obviously spend a lot of time studying it and understanding it and uh you know people go to conferences they love bitcoin it's an easy sell to you know use the next best lightning wallet or like you said some api uh wall even you know for your for your business uh using lightning which is gonna be fantastic and it's gonna be awesome but there's an easy sell for for us it's it's not an easy sell for the average person that

just wants to buy something and wants to do something so it has to be that easy for the people that don't love bitcoin that don't care about it but they just want they do want the utility they need the utility as you said and i agree man i think it's coming i think it is coming soon and that's that's just got to be the way right like it's definitely circling it all back to the start of the conversation it's definitely not going to be the way that nigeria tried to do it or the way that india tried to do it with their good old cbpc uh or cbdc yeah implementations agreed yeah so if you're listening to this we got to go build it i'm going to build the experiences build the utility show it to people make it easy got to make it easier it has gotten

significantly easier i think that trend will continue um that's the goal like armchair pontificating about number go up does have its merits in terms of helping people understand the value prop of bitcoin but then there's also this network side of things that literally needs software engineers to build out in a layered fashion to bring the full utility of the network to more people um and the more utility you have the thesis is the more adoption you'll get um so that's right i love it man good stuff yeah well i love you mr majinxious um this is all likewise buddy i want to never never a chore never a chore i want to apologize for the landscaping that was going on for a lot of this

you know me man i can i can roll off on these charts but uh i hope it was just clear enough for the listener they didn't give up on us too early but uh if you are listening still uh we got the crypto voices podcast and then porkopolis economics on youtube and uh porkopolis.io as well for a lot of the economic stuff yeah very high signal content um any parting thoughts you want leave the freaks with not really uh stack sets uh be humble as you guys like to say and uh i think as you said go build it there's a lot of good optimism in your closing words and i couldn't have said it better myself so nicely done all right that's all we got today freaks peace and love thanks buddy