TFTC: A Bitcoin Podcast - #506: Q1 2024 Monetary Base Update with Matthew Mežinskis
Episode Date: May 15, 2024Marty sits down once again with Matthew Mežinskis for the Q1 2024 monetary base update. Matthew on Twitter: https://twitter.com/1basemoney 0:50 - Power law trend is trending 5:42 - Govt attacking bit...coin 11:47 - Sponsors 1 13:02 - US debt and inflation 24:27 - Monetary base vs hard assets 34:05 - Top 5 currencies 37:06 - M3 45:58 - Outside money 52:17 - Sponsors 2 53:54 - Monetized debt and MMT 1:05:57 - Late stage central planning 1:10:06 - Bitcoin free banking 1:13:51 - Bitcoin price chart 1:23:37 - Bitcoin network and fee market 1:30:28 - Antpool 1:39:56 - MineOne and nationalization of hash 1:50:23 - ASIC commodification 1:54:29 - Nukes and tyranny 2:04:23 - Last chart 2:08:28 - Final thoughts Shoutout to our sponsors: River Unchained Zaprite Gradually, Then Suddenly 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
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you've had a dynamic where money's become freer than free
If you talk about a Fed just gone nuts, all the central banks going nuts.
So it's all acting like safe haven.
I believe that in a world where central bankers are tripping over themselves to devalue their currency, Bitcoin wins.
In the world of fiat currencies, Bitcoin is the victor.
I mean, that's part of the bull case for Bitcoin.
If you're not paying attention, you probably should be.
The power law trend line wars are upon us.
we're sitting down with one of the generals
your model's hot right now dude your model is hot good to see you yeah it's getting some traction
it's exciting uh we're just chatting a little bit pre-show about it's pretty funny this uh
giovanni fellow who um some of my followers pointed out to me this year uh he's been tracking
this for a long time actually he was doing some stuff on reddit like way back i don't know 2014
2015 doing some power law regressions and then he did a sort of the a big one in like september or
so 2018 which was you know 10 full years of bitcoin at that point uh showing how it seems
pretty natural that Bitcoin's following a power law trend line. And then I posted on Twitter
in the very end of 2018. And so I had never seen his stuff. Mine was, as I wrote on the post,
because I was talking to him about it. I had seen, well, I had been inspired by this Trolo
low low this is username on bitcoin talk from about 2014 2015 he was plotting this stuff in
excel um but he was on logarithmic so different we've talked about this now i think with with
you and i it's been almost two years we've been we've been trend setting over here okay
i saw it blowing up on twitter fred krueger had giovanni on yeah yeah yeah so those guys are
working hard back people like we found this new model i've i i like dove in i was like all right
let me look and i was like no we've been talking about this model on our monetary base update for
two years now different circles different circles indeed yeah but i i hadn't i never heard of him
until this year so it's nice to uh see that other people were doing it uh and he's definitely like
he's a hardcore statistician fella and uh he's he's running it in lots of different ways like
in hashrate uh addresses all the rest and uh doing good work and i definitely like what he's doing
and he uh is is uh is is happy to promote my stuff as well so it's cool but the point of the
story going back in time which i think is just funny is like we were all just doing our own
things you know i'm not a prolific tweeter like you but i i go back to that tweet of 2018
which i posted again the first time that i'd seen anyone post coefficients and like find it
and actually you know do the regression which is pretty easy now with a lot of the statistical
models that are out there like statistical programs you could plot it pretty easily but
you know that was three or four months before our our friend Plan B posted his infamous stocked flow
model which was somewhere in early 2019 I went back to check recently and I just think it's
funny because you know we're just doing our thing not claiming anything groundbreaking at least I'm
not i'm just looking at the data having fun with it and seeing how bitcoin is uh reacting
to these things but uh there was this whole sort of other uh what's the word hysteria might be
too strong but people got really excited about this stock to flow model which uh you know i've
posted in these monetary base updates which you know i've been doing now this is six full years
it's crazy marty it's the 24th update so six full years in one of them around 2019 when stock to
flow was getting a lot of early hype i just did a slide i posted it recently as well giovanni
retweeted which was nice but you know i was just confused why stock to flow was getting a lot of
uh coverage because you could do stock to flow with silver with gold uh you can measure it in
a few different ways if you include jewelry if you don't include jewelry um if you include
industrial usage if you don't include industrial users you know in many different ways and i saw
a lot of cherry picking from this camp that was very excited about stock to flow uh and i just
look you know laid it all out there the different stock to flows and didn't really see much
correlation between gold or silver was curious why there might be that for bitcoin uh and yeah
i i i didn't there there that's a whole different battle i don't really care about but there's a lot
of people that were uh coming out against that model over the years but um in any event we still
have the old 95 percent or squared for the power law trend line and uh it's it's continuing on
we're right on trend i feel and everybody's bearish right now you fall 10k below an all-time
high that was hit for a few days and people are the sky is falling yeah well there's a lot of
obviously negative news on the back of that or the front of that um i know you've been talking
about it how would you sum up all the uh the pretty for government amazing coordination
against bitcoin mining privacy uh developers any takeaway for you
in retrospect in hindsight it should have been obvious going back a year almost a year
looking at the etf filings and the somewhat rushed approval of those
everything's lining up perfectly um you get the etf filings blackrock stamp of approval
back and forth with the sec are we going to get it are we not we get it you have the
the blessed institutional players in bitcoin and billions tens of billions hundreds of billions of
flooding into their products in parallel tether um becoming a large buyer of treasuries
onboarding the fbi onboarding the secret service now onboarding chain analysis
um and it seems like last year was a big infrastructure build out for the compliant
bitcoin side of things get that off the ground open the floodgates and then you start coming
down on quote unquote non-compliant self-custodial bitcoin right after um yeah and still going on
still going hard on even those that have been blessed like coinbase like coinbase is clearly
the blessed the blessed one right i mean they're doing most of not all but most of the institutional
custody um and clearly the you know the komodo is getting opened for them to come into wall street
but i thought it's still interesting even with coinbase you know they're still going through
these lawsuits with the sec and uh you know whether they're offerings or securities or not
and i don't know you know i know as bitcoiners it's not as big a deal a lot of the shitcoin
products that they have but the uh a little bit of some conflicting messages from the sec there
that they're still they're still going on with coinbase trying to put them in their place even
though coinbase is clearly clearly picked as being the the wall street crypto baby yeah i would say i
think the sec is on an island a rogue institution if you will within the federal government
Um, I would focus more on like the treasury.
I think they're looking, I had a good conversation with Tom Luongo last week that we posted on
Monday and I'm, I'm really coming around to his theses is that there's up on a massive
power struggle, multiple power struggles at that Larry of the fed versus the Davis class,
the fed versus the current administration.
Then you also have like the treasury in the mix.
It's looking at demand for the debt, us debt.
You look at the size of U.S. debt, and I think there's a good case to be made that someone somewhere or a group of people somewhere within the federal government, maybe the Treasury, maybe the Fed, have recognized that we have a pretty massive problem in the fiat monetary system and the U.S. Treasury market.
And they may or may not, they may have identified Bitcoin as a viable collateral asset that they would like to have exposure to.
And I think laying the groundwork for compliant Bitcoin within these institutions.
And at the same time, I'd be interested to get your thoughts on Tether and what's happening there,
because they're obviously becoming a material part of the treasury market.
uh 110 billion dollar market cap now um a boatload of treasuries um in their treasury
and i don't know it seems like they're they're hedging their bets um in terms of
maybe creating an escape valve for themselves via bitcoin in these compliant rails this is
the musings of uh pepe silvia here but um i think uh i don't know i could see something like that
happening behind the scenes hedging a bet i saw that bloomberg uh that bloomberg interview with
paul ryan and i saw nick carter comment on it which he was saying that he was even quoted his
presentation where it was like you know stables are the 16th largest buyer of treasuries among
nation states and paul ryan parroted that uh comment uh but that was interesting as well that
he uh he commented on it and he but he also said unprompted in that interview i believe was that
there was a debt problem and there's possibly a debt crisis so there's two interesting sort of
signals that he as a i don't know if you want to call him successful or not but relatively unscathed
politician in the in the in the private sector now has said we have a debt crisis possible he
said we have a possible debt crisis and it's possible that we could have good stable coin
legislation so yeah that's pretty much lining up with what you're saying uh i can show you it if
you want to see the um i think there's a lot of hot air there and as usual uh you and i were not
so confident on the noise look at the signal more but let's see if i can find this episode was
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promo code tftc at checkout unchained.com so here's the debt
and uh this is the debt in the united states
let's see well first of all i have the entire history if we want to look at it
we looked at this before we got you know civil war huge bump in the national debt andrew jackson
expunged the national debt but you see it's pretty small on uh on linear scale until you
get the 70s that it's a but it constantly grows uh but if you look here in the dark green
so again 34 trillion 34.6 trillion at the end of the month 34.6 uh at the end of april 2024
but that again does not include the entitlements the sacred cows so everybody knows there's a
problem now as if you know we haven't been saying that for 15 years but um the dark green here is
what the fed actually owns and if you do that as a percentage this actually shows me that they have
quite a bit of room to run still not saying that that that has to happen or that the market will
accept that but you saw that the worst that it got was the federal reserve owned 28 percent of
treasuries in peak covid end of 2021 sorry 20 22 28 and now that is all the way down to 20
so again one that's literally saying that one dollar out of every five of the uh that the
united states treasury issues is that is monetized it's full inflation without representation this is
actually the graph that's that's what you're looking at the graph of monetized debt i think
it could certainly go more and if you think about the scale of that you know what's what's what's
100 billion what's what's 100 more billion of stable coins gonna do or 500 billion or even a
couple trillion which i think ryan said in the interview i mean yeah it's gonna it is gonna
create a demand for treasuries and it is gonna allow them to have sort of this as you sort of
phrase it right an escape hatch of their own making where they can get by themselves more time
but um i don't think it fundamentally changes the structure of the debt problem in the united
states as we can see it's pretty pretty massive no we've discussed this in episodes past looking
at this chart i have to bring it up again it's just amazing looking at the change in the way
this chart operates from the beginning in the early 2000s just it seems somewhat regimented and
smooth relatively smooth if you will it just gets a little bit even more mark based up and down
yeah then becomes completely cock-a-danny
history and pretty uh pretty uh you know like planned not market guided but you know this is
where you know ben bernanke was saying okay we're gonna buy eighty thousand dollars worth of
treasuries every week okay we're gonna sell twenty thousand dollars worth of treasuries every week he
It was a very systematic, we're here to bail you out, Mr. Market.
We know that you need our fresh dollars.
Very, very systematic problem of, in our view, a problem of U.S. solution,
but of just purely monetizing the problems of the United States government
and of the economy.
Well, it's funny you say that because they'll never admit that they're
monetizing the debt um not even our mmt friends no oh how about those guys they've had a rough
but i mean the unbelievable thing was that i haven't watched that movie i i just i need to
watch it i i do need to watch it too but i mean where that uh where that clip was taken from
the gentleman uh what's his name chairman of the national security council or national uh
economic council the economic advisors the president who could not even
a little bit explain how monetization of the debt works and money printing by central banks
was unbelievable uh no you didn't know you didn't know it was like basic treasury markets worked
he was like we're printing money you're issuing debt he was doing this on a on a documentary
where they want to do more of it it just shows how bizarro clown world it is like it's not even
a documentary where they'd say this is a bad idea it's like oh yeah you don't know what you were
taught you're talking about at all let's gas it harder that is just money we owe ourselves
yeah it's just money we owe ourselves look at the other side of the ledger uh that was another thing
forgot to get this quarter i'll get it eventually but i've looked at the other side of the ledger
there are no assets there just everybody knows the united states has some land they have a few other
loans as assets but it literally is a huge imbalance so this 30 trillion in debt it's
not matched by 30 trillion in assets it's only matched by the net present value of tax
expectations of their of their tax cows there's no there's nothing there on the other side that's
literally unlike you or i who you know if we have credit card debt you know or with a house loan
you have to balance it by the actual house on the asset side of the ledger uh it's literally just
the net present value of tax receipts in the future that is on the asset side of the united
states uh it's funny to bring this up okay we're gonna kick you off the screen look and pull up
this week because bellagio was actually tweeting about this i saw he got into a debate with
somebody on this subject where he was basically like the dead is getting crazy and then somebody
retorted him like you gotta look at all the assets and like pulled up this chart and bellagio's like
yeah i'm proving you right like because these aren't assets owned by the federal government
these are just like all the assets owned by americans yeah the system-wide assets that
the federal reserve tracks and who knows if that's even correct um yeah i know this number
it's like yeah like if we're going down and you're like you're expecting these assets to
cover that debt that means you're going to have asset seizure by the federal government to cover
all this i mean if you think nationalization of every industry is a good thing and you go back
to communism then okay we're okay but uh obviously that's not that's not where we need to be and
again this is where it really comes back to basics you know you have to understand that
capitalism is better than communism freedom is better than tyranny uh it's tough days man
we'll we'll hold off our our war in eastern europe conversation until maybe later go through some
charts but uh i think there's two things at least in my view that are different about like what's
happening now which is what happened 30 years ago 30 35 years ago when berlin wall came down
there's a lot of peace and freedom in uh in the world after the soviet union collapsed and one
was you have had less dictators you had more democracies you have the opposite of that now
having more tyrannical governments specifically led by the likes of putin so putin is not gorbachev
uh but then the second thing which i think relates to everything that we just talked about and
everything we're going to talk about is that the is that the interest rates were falling back then
that's a huge thing that not enough people talk about with all this you know it's it really is
a cyclical problem that gets exacerbated by the government and you know if you looked at your
chart of interest rates which unfortunately i don't have one handy but most people probably
know you i'm sure you do as well like in the united states interest rates topped out to prick
the gold bubble at 20 depending on the market could be 25 in 1980 and by 1990 they were trending
down well below 10 probably even at that point definitely at that point um to where of course
by 2008 as usual governments went too far especially after the dot-com boom and bust to
bail out everybody and the bailout as we know everybody even more after the financial crisis
and then we continue on to today so that trend of 20 to zero was a 35 year process and only now
it's turning around everybody understands the gravity of the situation that we just can't have
free money all the time like this past 15 years of zero percent i mean that wasn't all the time
as we know at zero percent but it was just such an anomaly and so crazy that they would try it
and it's no coincidence actually to me and that i think that's another huge factor it's just the
government intervention of the credit markets is the other main scary thing to work out to watch
about and it's scary for people like myself and people live you know on the eastern front here
some tyrannical wars going on so uh yeah rising interest rates yeah i'm not gonna make
inflation's not looking good the job market's not looking good here in the u.s
white pills we need white pills though we can solve this we can nothing
I mean, yeah, actually, that's what we're here today. Matthew and I are going to solve this whole problem. We're going to solve the world's problems today. No, it is in all seriousness. It is. I mean, I'm not as well versed as you on the economic history, obviously, but it does feel like we're in this anomalous period where they truly have lost control to a certain extent.
um yeah and it was already the trend was wasn't really good after world war ii like we've talked
about this uh you know the period i just described in the 1980s was some of the highest interest
rates ever you'd have to go back to like ancient sumer to see 20 interest rates and it's just
probably didn't even make sense yeah this in this book you can you can see them
city homers history of interest rates and uh you know the it's it's they've never been that high
at 20 which they had to be volcker pushed them up that high and he was a big fan of gold by the way
to prick the gold bubble once the gold uh the gold standard uh collapsed in 1971 actually i
got a good one for you we can look at to talk about that so um we can look at this one so
the monetary base remember uh this is the we'll give you some other uh charts of that of course
but this is what i've been tracking now for six years uh worldwide all the central banks in the
world this is literally all the cash all the physical cash that they print which is about
nine trillion dollars worth of that only two trillion is actual dollars seven trillion is
approximate dollar valuations of yen euros so on and so forth so it's nine trillion
plus another 18 trillion or so of what's called reserves which is basically each bank in the
system it's the core of the system each bank's account the central bank put those two together
that's called the monetary base you find it on the balance sheet of each central bank
and what you're looking at here is a percentage of worldwide gold in central banks market price
over the last 50 years divided by that monetary base value uh so again this is probably another
anomaly um that had never happened ever because gold standards never meant 100 backing the best
data we have is like 40 but basically here we're looking at 1969 here and you see that the central
banks gold in the world as a percentage of the monetary base was about 25 by 1980 when gold went
to 100 800 an ounce for about two seconds paul volcker took interest rates to 20 percent uh
we were over collateralized the value of gold was flying and we're over collateralized actually of
of uh base money in the world there's more gold value versus uh actual cash outstanding
of central bank cash in the economy and then it just fell precipitously from here all the way
until it's just starting to trend up again fell down to like six seven percent it was that for a
few years now with the gold price rising and central banks buying a little bit but it's not
a ton to be honest you hear that a lot they're buying a ton it's not a ton but you see that that
is now up to 10 so it's back up to 10 gold versus the monetary base that's the gold backing and then
you see Bitcoin here. It's a small number, but it's coming. It's just the Bitcoin value. No one's
really reserving that yet, except for El Salvador and ETFs now, big companies, but no one's really
reserving it on a national level. Still, if we look at the Bitcoin market cap versus the monetary
base, we can see it's, as I say, it's lurking and it's coming up pretty quickly compared to like
covid uh when we had the last big boom it was about there we see in march 2021 four percent
3.8 percent of the monetary base and now if we take it till today or you know last full month
4.4 percent and this was of course 70k bitcoin uh april end of april 2024 gold in central banks
valued at 10.2% of all central bank money in the world.
And Bitcoin is 4.4%, which is pretty crazy.
And then these create questions, just as we talked about earlier.
Are governments really going to want to get involved here?
Are they really going to reserve Bitcoin?
The United States holds a lot of Bitcoin still, right?
Which they confiscated for various endeavors.
in the past.
They want to sell it.
They have sold some of it.
They haven't sold all of it.
Will they keep that?
Will they move it to the books of the Treasury
or the Federal Reserve?
Are the central banks buying this,
thinking about this,
that this increase of this percentage
of the Bitcoin value versus
all the central bank money that they print,
will they want to start actually doing
the unthinkable and reserving Bitcoin?
And then once they do,
if that holds if that catches on around the world then again it could be off to
to the races as far as as you know the bitcoin valuation goes
but another point of caution just one more thing i'll turn the mic back over
uh you know you never quite you never quite know right so
gold bitcoin is totally different i i will submit that like look at the bitcoin price here on log
scale at the same time. You can see, obviously, it's flying up in an amazing power law trend
on log scale here in the last 15 years, right? But you see gold here when it got over 100%
of the monetary base value, $800 an ounce. If you and I, Marty, were in a gold bug conference
or some Mises Institute that was founded in 1982,
but some gold bug hard asset conference in the end of the 70s.
I've said this before.
We would have been like, this is it.
This is over.
We're back to sound money.
The world is going to return to sound money principles,
and it's great.
We're good to go.
But central banks succeeded in making people think
that that wasn't really a viable asset uh alan greenspan was quoted somewhere here in the 90s
of saying central banks stand ready to sell gold should the price of gold rise
which is curious and and for this you got to go to people like gata the gold antitrust action i
think it's gold antitrust advisory i don't know whatever it's gata uh you know there's really
hardcore gold bugs that know a lot of the history of this here but um the united states hasn't
changed the value of the gold on its books the federal reserve all right which is included here
has something like you know 260 billion ounces worth of gold and by the way it's 1.2 billion
ounces is total central bank gold okay just so you know that's about 2.7 trillion dollars at the
moment 1.2 billion ounces but uh did i say 260 billion 260 million uh of that is is the united
states federal reserve we don't even know if it's even there right ford knox these things haven't
been audited uh probably and again it's probably not they've probably they're probably recording
it as both an asset and a as an asset that they hold but also a receivable uh where it's basically
They could have leased it out, which is essentially selling it to, again, to try to dampen the price over the years to try to get a hold on this fiat standard that they unleashed in 1971.
And what we see, they succeeded.
And this gets the gold bugs excited that perhaps we'll have a return to these high numbers here and gold will return to its rightful place.
But we see how tyrannical they are in other aspects of government.
It seems hard to believe to me that gold is going to be sort of the saving asset here, but this is why Bitcoin is exciting.
And I think Bitcoin totally took the gold bugs by surprise in that it's accreting such value compared to what gold is doing.
and as i've shown on my summary there you know gold would have to only go up you know a couple
times basically uh in value because gold is well not a couple times i don't do the math in my head
because i can't remember off the top of my head but basically the upside for bitcoin is much higher
than gold and regardless you have to start asking questions like where's the gold in the first place
are you sure it's there is it audited is it actually in the central banks do we actually
have this trust in governments to manage this barbarous relic as some people call it is it
actually there and that's a big question and that's why i think uh gold is has a lot more
doubts for the future of gold than there is for bitcoin yeah well i think 1971 proved it the whole
reason nixon ripped us off is because people came and said hey give us our gold yeah was it france
in germany specifically and they're like well that was charlotte gold charlotte the goal it
was his last uh one of his last heroic acts actually was he was telling the united states
to give him give him his gold back and he got it back and that's when nixon went off the gold
gold window so we can't have this anymore we can't have people come and ask for gold we don't have
yeah roth and germany was trying to do it germany was trying to do it for like a decade they didn't
actually get most of it back until the start of the 2010s. And yeah, so it continues on. And I
don't think that that's going to stop. But here's the thing. You still could have, even without
rectifying this on central bank balance sheets, even though they say that they have 1.2 billion
ounces of gold on their books, $2.7 trillion equivalent at the current prices, which has
increased a little bit in the last couple of months, right? Went up $300 an ounce. Even with
all of those doubts about where that gold might be, it still could accrete in some value while
also Bitcoin accretes in value. And while fiat money doesn't accrete in value, but also just
more tickets come out and so it comes higher in value. So let's go back to this chart.
um you can see that logan yep so here's just same chart uh last 50 years with this monetary
base i've showed this many times top five currencies make up you know 85 percent of the total
uh or so it's actually down to about 82 percent and
you know when when when i started doing this and i've been talking with you marty for most
of the releases that i've been doing that right so it's like end of 2018 monetary base was 20
trillion got up to 30 trillion now it's down to 27 trillion this is all a nebulous thing
witgenstein's ruler right because we're using the dollar but you know the yen goes down or up and
obviously that's making news euro goes down or up so you know it's it's hard to measure that
it's hard to think about that but by and large we can still see that in dollar terms
all of these currencies are inflating so i think this is another thing that people aren't thinking
about enough is i might just be wondering when hyper bitcoinization or when fiat collapse
i think it can go it can go on a lot longer than we think and i think all three could happen at
once that is gold goes up bitcoin goes up and the fiat money print goes up and to speak about what
we this uh this little uh comparison that some stock to follow people have have made which we
talked about earlier this this hundred trillion usd figure knows that might even be correct even
though uh right now the monetary base is only valued at 27 trillion you add in gold and silver
that's another 14 trillion you're adding bitcoin that's another trillion uh so we're you know we're
little over 40 trillion in value at the moment uh i'm not sure it's going to be a it's a huge break
one way or the other in bitcoin's favor and we know we know that they're we're in the now they
fight you phase right so i think that this could continue for for a long time is my point yeah and
that's the one thing i've learned over the last decade if you talk to me in 2013 to 2015 i was a
young naive everything's melting it's gonna collapse bitcoin's gonna hyper synchronize
and that's what i and now my mindset is they can kick the can of ways in which i can't even
fathom so it can go on forever and now i'm wondering i'm like double jinxing myself i'm
like now that i'm in this state of mind is it like the time where it just like rips away and
um right we could be wrong we could be pleasantly wrong um
let me say my thoughts on that before we uh let me show you a couple other interesting ones
uh again this is another kind of a cross-current interest one so this is m3
uh i don't even know if you've heard of m3 because most of the time you've probably heard of m2
right it's the one that's easier easiest to receive from from fred the federal reserve uh
what is it educational database but um they stopped publishing m3 in 2006
m3 includes all outstanding liabilities from the system so it would be uh not just
savings accounts and time deposit accounts and checking accounts but it's also going to include
money market funds which is basically like a stable coin right it's companies that hold dollar
assets like treasuries uh and and most of the time your money market funds are in your brokerage
accounts right so they're non they're not regulated like bank accounts they're not fdic insured which
means nothing anyway it's not because the cash of fdic insured money but this is another game that
they play which they've started in the 30s uh under roosevelt but you know money market funds
are not insured uh that's included m3 also uh institutional money market funds which are
not in m2 but they are in m3 uh repurchase agreements which are basically when treasury
uh treasury bills and bonds and notes get wrapped up in a little contract and they kind of trade
like cash but there's basically levered up treasury bonds uh so all those things you put
together and it's in m3 but the federal reserve being the geniuses that they are the uh you know
It was the overlord of our monetary supply.
They said that it no longer conveyed adequate economic information.
This was their static, their political news release somewhere in about February 2006.
And it's very unfortunate because they do provide some of the information.
I've recreated one here.
But one thing that I don't have, which was in the original M3,
and I've just taken it out, whether in the past or the future,
it's Euro dollars.
And so Euro dollars are offshore dollars.
Those are dollars in our Panama Papers, Paradise Papers,
all the offshore accounts in Europe, whatever.
Called Euro dollars back from World War II.
It has nothing to do with the Euro.
It's just offshore dollars.
Dollars outside the regulation of the Federal Reserve.
So that is potentially a huge number, but I don't have it.
But regardless, I can calculate the rest.
So I've done that here, got this M3.
But let me ask you a question, Marty.
We see here in 2008, we had a big peak and it fell off.
And then we see, of course, in COVID,
increased again, massive money printing
to where in 2008, the peak before the crisis
was 16 trillion in M3, again, without Eurodollars.
But Eurodollars at the time weren't that big.
They're probably much bigger now.
It's like $500 billion or something in the old Federal Reserve numbers from 2006.
Anyway, now M3, as I can back calculate it, $34.8 trillion.
Do you think that it's been growing faster or slower from 2008?
Don't think of it as a trick question.
Is it going faster here?
Just look at the chart.
Is it faster or slower?
than what was happening here yeah slope looks about the same maybe a little steeper yeah yeah
so let's draw an exponential trend line this this uh most of finance doesn't follow the
it follows exponential trend line because it's compound growth compound interest
uh let's draw the curve see how it fits until 2008 pretty crazy yeah it's actually way slower
so it fell off a lot and a lot of people were asking me at a video about this recently like
how could that be uh and well you have to go to well let me before i answer that question let's
just show you what the actual growth rate was after 2008 all right certainly increased during
covid but the growth rate is only about six percent per year or 12 year doubling after 2008
But before, all the way up to 2008 from the, you know, they started this data in the 60s.
Paul Volcker as well was a big part of this at the Fed at the time.
A few other, a lot of other economists, but he was one of the famous ones.
They started to, you know, put these different money supplies together.
This is the most broad money supply.
And all the way up until 2008, it was growing at 8.5% per year.
If you put that on log scale, let me just do it there for you guys to see that.
put on log scale it turns into a straight line that's how you know it's compound growth basically
just means constant growth and yeah you can see it's pretty wild but the m3 money supply
is not growing it's not like you know you talk about money printing and things going crazy
uh everywhere it's actually not happening in the m3 broadest money supply of the united
States. So that question could be, where did it go? Well, it went right here. So this is the assets
of the Federal Reserve. We can see it's a complete opposite of what happened with M3.
So here, I'd ask you the same question, Marty. The Federal Reserve's balance sheet until 2008
grew at 6.6%. Yeah, it grew at 6.6% per year. What do you think it was here?
9.8 percent per year from 2009 and that's such an accounting gimmick and that is a trend that's
going to be very hard for them to get back to normal too because the market is used to that
i mean there's gonna be so much pain so much bankruptcies so many things this is this is the
zombification of the economy right here and you can say yeah you can say yeah okay well actually
it's not so bad and not so much money printing here, but this is the base money. This is the
stuff that's equivalent to Bitcoin. Again, this is total assets. It's not the exact thing as
monetary base. Monetary base is on the liability side, but it's basically the same thing, except
it actually includes this reverse repo account, which is a whole nother thing. It's basically
repos for non-banks, for money market funds, hedge funds, other institutions.
and so if we put this on log scale we can see that um yeah you can just see it's a totally
different monetary epoch than anything uh all the way through its entire history
a little bit again elevated world war ii but yeah going to go ahead left side the bell curve caveman
chart analysis here it's just like looks weird it's like just something is
the mmt crowd says it's no problem we can just continue it we owe it to ourselves uh it's
absolutely no problem it looks like a cancer on the chart yeah the easy response to that by the
way which uh i've heard people ask them this question i never they always dodge it uh you
just have to ask why this sort of money printing doesn't work for the likes of zimbabwe belarus
argentina brazil iran uh because it doesn't and it's it's just it's literally the same
keynesian economics that everybody every one of us who studies austrian economics knows it's just
like even more extreme pedal the metal exactly like this video they don't even know how money
printing works and these mmt people says no problem at all do it even harder faster well
It's not even money printing.
I can understand money printing being somewhat hard to explain for somebody with an MMT brain,
but he was being asked to explain like treasury auctions, debt issuance.
It's like it's debt.
And he was completely mixing it up.
I mean, in its pure form, a treasury auction should have nothing to do with money printing.
They print the money, they buy the bonds.
He was saying all this stuff.
like actually no in a treasury money they already have yeah it's already exactly it's not uh there's
there's nothing exogenous to the system it's the money's in the system some banks that hold you
know pension fund money decide if they want to buy this bond or not if they want to the price
might rise with the bond if they don't want to the price might have to fall for the bond uh but
it's just markets supply and demand and what people might want the exogenous problems which
is another reason why uh there's another thing this is this is the bottom line with this i've
said this many times but still this is the bottom line with this monetary based stuff people is
if if if you're speaking to an economist and doesn't know that the definition of the monetary
base is first of all physical currency and bank reserves you just forget them right there but
there is a word like an old economic word for this and it's called outside money and the original
monetary base of the entire global financial system was silver first then it was gold also
in between there was some you know copper bronze alloys but it's actual real goods you know
commodity type money that they could hold and then on the margin in the economy the fiduciary
economy this goes back to like roman times even before you would have different types of
ledger based money different types of receipts and that's all that there is so everything like
you just said it's it's already it's not that they it's not that they issue the bonds and they
print the money that's never how that's not that's not normal economics it's normally if you want to
go into debt you're gonna have to go into debt and it has nothing to do with printing money it's
someone giving you money that they already have endogenous in the system that has nothing to do
with with the monetary base or money printing it's a completely different thing so the monetary base
is outside money it's exogenous only the central banks can do it in our modern fiat world that's
fully exploded in 1971 the only other assets that are like this are silver gold and now bitcoin
so those are at it literally it's in the name outside money bitcoin is outside money it's
outside the banking system and if an economist can't go through that disentangle that for you
then they have no idea what they're talking about and um not only an economist but the
head economic advisor the president he's literally running economic policy for the country he doesn't
know how treasury auctions work ah it's incredible it's incredible so should we be scared or should
Should we laugh or both?
I'm glad we have Bitcoin, man.
I'm glad we have it.
So just so I can.
You got to pull up the Ralph meme.
I'm in danger.
Yeah.
This just, did you see this, Marty?
Did you like it?
I did.
I like the production behind it.
So we got some good, a bar chart race here.
We got gold, silver, and Bitcoin.
You can see it from the end of the gold standard.
uh is also here we got
uh-oh we just lost your audio oh sorry i'm not gonna play it then you hear me now yeah okay so
another one here is another uh one i was happy to create for everybody so i divided it up between
the top four banks how much money they print and the rest so it's in my analysis it's 46 banks
um because i do 50 so the smaller central banks and the big four and then gold and silver and
you can just see that as it goes 50 years uh these are real things you should think about
when it's you worry about inflation you worry about bonds and they buy the bonds they sell
the bonds they print the money like people that don't understand any of that just look
at what they do not what they say what they do see how fast actual apples to apples money that's
comparable to bitcoin grows versus bitcoin versus gold versus silver um and by the way you know
again gold silver they have continued to have the same stock to flow ratio for like 100 years more
than that hundreds of years uh and it just doesn't line up according to these old stock to flow
models so i don't take much stock in that but the you know you can still see it you can see how
gold's been about 1.8 percent silver is actually better it's better than gold uh just because the
nature of how much silver there's already out 1.5 percent and a bitcoin you can see how it comes
down of course because there was no bitcoin on january 3rd 2009 uh to the 19 almost 19.7 right
million that we have right now and you can see that that growth rate is pretty comparable at
the moment to gold. So outside money, completely different. And this is the, that's the big
picture that I would just, I would encourage our viewers and listeners to just not worry about
that. Here's my site as well, just to pump this. I have no trackers on this. I really have improved
this over the last year. A lot of people have been wondering, wanting to see more interactive
charts. So you can see it. You can see here the top 10 assets, the breakdown between actual
physical cash and bank reserves. You can see where they rank. You can see gold, the different things
like how much gold is in central banks, how much is in bullion, how much is in jewelry, how much
is in industrial usage. Same with silver, Bitcoin, different address, different spending levels based
on how many years it's been in a certain UTXO,
even if you want to compare Bitcoin to stocks.
Bitcoin is number seven in the world right now
if you want to compare it to stocks.
Bitcoin doesn't compare to stock, the stock market,
but it's incredible that Bitcoin is the seventh largest asset
in the stock market worldwide.
I think it's a good comparison too
because most people are using stocks as their savings vehicle.
Yeah, it's something to see.
It's why I have it on this page, this top money page,
but it's not it still is um you know you cannot just very simply you cannot send your apple share
shares of apple to a friend in you know australia or something you just can't do it uh it's not
money like that but you certainly can do it with bitcoin so many reasons why it's not it certainly
is stocks or store value but anyway i got it all there top 10 i got no trackers on the site and i
got my btc pay uh donation there so if you want to donate that way but they got all the uh
uh, the, uh, the breakdowns basically. Quick break here, freaks. This rip is
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40 off i mean going back to that complete kerfuffle this guy not being able to explain
treasury markets i think they intuited like what i think what he was really trying to explain was
the monetization of the debt and he couldn't like connect it to right and that's where the outgrowth
and the the where the system is perturbed is that fine detail in the fed monetizing the debt to the
treasury has been issued exogenously or not exotic endogenously people have taken money
into the system the system the banking system the people pension funds yeah yeah and then where
things get corrupted is when those treasuries the auctions have already been conducted they're free
floating on the market and then the fed prints money to buy those from the free market like that
monetization of the debt yeah and i know we've talked about this before like what you need to
think about when you see this and this is just the united states right other central banks do
this as well of course uh learning from the united states also japan which had major major fails in
the 1980s um what you need to think about when you see this black line all right which has been
as high as almost 30 percent of the debt now down to 20 percent you think about this is the level
that it has taken for the united states government to be happy with the price floor that the federal
reserve creates as a buyer the federal reserve creates as a artificial demand buyer of bonds
because the federal reserve wasn't there not even presumably just in economics the federal reserve
wasn't there you would not have that buyer and the price would have to fall i.e the interest
rates would have to rise the united states would have to spend more of its tax dollars received on
interest payments and they'd have to pull everything back it's the natural the southern
market works when you have you know high expenditures it's very this is not even
economics when it was just capitalism 101 like if you have higher expenditures
than you receive in income you're going to go bankrupt unless you either boost the income
through productivity or growth or tech or something or you cut your costs that's the
only way to do it. But you and I and everybody else in the market, we don't have the luxury of
having the monopoly on the printing press. And so this is also why it's completely nonsense to say
that the Federal Reserve is an independent body of the treasury. It's clear. They talk to each
other. They know each other. It's just complete nonsense to say that the Federal Reserve is just,
it needs its independence and whatever. This is an institution that over the last 50 years has
bought anywhere from 5%, and by the way, I can inform listeners and watchers why it was so low
here at the global financial crisis, 5% to as high as 30% of the debt at any one time. That's
how much they have owned of the United States debt. And if they were not there, the price would
just simply be lower. The price of bonds would be lower, the yield would be higher, and it would be
harder for the United States to service their interest. This little dip, by the way, this was
another sleight of hand they did. This was the bailout of Wall Street. So they actually unloaded
their... This is before QE sort of took hold as an idea. They unloaded some treasuries
off of their balance sheet and they bought corporate debt. So this is a lot of corporate
debt this is the talf the tarp all these government programs uh it made wall street i mean
some failed like lehman but most of them were made flush with cash a ton of government guarantees
and then eventually uh they got those corporate bonds off of their books on the back of just
massive government guarantees and that's how they sort of saved wall street there but then they had
to go back and uh bail out the government as well because there was also what they did is they took
on a lot of this m3 back to what we were just talking about they took on this m3 money which
were these mortgage-backed securities and so that came on as well which was just a huge component
it's still on their balance sheet you know trillions of dollars of mortgage-backed securities
they're just absolutely worthless pieces of paper that the housing bubble was all about and that was
again just bailing out wall street so uh and bailing out the government because you know
the government printed a lot of uh excuse me the treasury issued a lot of uh debt during zcqe1
qe2 qe3 it's basically the united states uh federal reserve taking a larger and larger portion
of the debt balance uh during this crisis and again it's just so systematic smoother line
fear ben bernanke telling we're going to do whatever it takes mario draghi saying we're
going to do whatever it takes in Europe. And you can see here, the Federal Reserve only started and
opened its doors in 1914. And you can see even here at the beginning, it came right on the
heels or exactly when World War I was happening. Even with a big increase of debt, of World War I
debt, Federal Reserve was mostly financing companies at that time, which is interesting.
it's very different than what happened you know that those things had to change
in the great depression but most of what they were doing here at the beginning was it was
uh very limit very little government debt they held on their balance sheet it was only uh it was
only corporate paper that they owned in the early days well yeah it's a again it's an example of
something that was launched had a particular mandate try to stay close to that mandate early
on and then fast forward to today and i think that's the important message going back to these
mmt people and how they fundamentally misunderstand this and whether it's how money's created how the
treasury market operates it's it's really the sleight of hand in framing and propaganda like
the fed is marketed to individuals today as a lender of last resort for the banking system
the dual mandate great price stability and make sure that we have a good jobs market um
the one thing they leave out in their market is this lender flash resort to the private banking
sector but they're also the buyer flash resort of this public debt which is a very important thing
that really enables a lot of the uh in irresponsible fiscal spending that we
that we that we are witnessing today again to your point matthew it's like the um like floor
they're the floor that they're able to set like it's not a free market operation that's it's not
independent at all the treasury has an account at the federal reserve and vice versa like they
have essentially morphed into one being at this point and there is no free market the that the
monetizing of the debt it was mmt guy completely fucked up because he didn't understand this very
minute detail which is the treasury issues the debt at auction it's bought by the free market
and then the fed will come in on the back end and buy that debt from the free market with newly
printed money and that's how this gets into the system and here's another thing i wanted to point
out uh so this is federal debt and uh now we're looking at the uh 19th century okay so 1800s
mostly um you know because we got a little bit of the 1700s just for people that are listening
we got civil war massive explosion of debt okay went up from uh you know 60 million 60 million
dollars all right uh to to 2.6 billion uh obviously the south was destroyed uh so it was a lot of debt
actually to uh fight the south but also to help rebuild the south but what is interesting here
is this was an explosion of after the civil war uh what happened in the united states was the
strongest economic growth in the history of the world still until this day. You can argue that
China has been matching it from like, say, 2000 to 2008. But they also, as we know, have a lot of
ghost towns that are completely funded by debt as well. And they have a lot of problems there as
well. So this was the strongest growth in the history of the world. I'm not showing the growth
rate. But what you see here to the debt level is it was flat or even down or even down. So
this period here, the latter half of the 1800s, it just proves, it proves to you that you do not
need a bloated government. You don't need a nationalistic government. You do not need
a nanny state. You do not have people taking care of you, paying for everything. You don't
need 50% of the economy, government employees. The debt can actually go down or be flat
and you can have the greatest growth in the history of the world so i think that's another
interesting lesson just to think about uh you know economics is still economics doesn't matter
that there wasn't an internet at that time uh you know just hard work productivity
uh sound money as well of course gold standard was going on at this time
even the classical gold standard which was a very brief thing but
uh started here actually in the united states in 1873 went until world war one so
you know another good example yeah but you know would you consider mmt economics or some voodoo
science fernando my old co-host used to call all of it voodoo and uh i think he's probably
he's probably right i mean you know mises uh mises uh was trying to divorce the sort of political
thoughts from the study of catalactics as you call it a study of prices and it's hard to do uh but
uh you know i think that that clearly is a better it's it's a more it's a more pure way to look at
the economy is okay we have the state here it's clearly monopolized whether you like it or you
don't like it it's monopoly and any institution including central bank that operates within it
is a monopoly it's going to do certain things maybe we all agree that everybody needs you know
water and plumbing and electricity and we need to really artificially keep the prices down of
course you're also going to artificially keep the quality down as well that's what you're going to
do when you do these things but um that was one of the things that he was trying to do a lot was
basically to uh give that pure definition of what an economy is with or without a monopoly
i think he was the first one to do it and he said that you know there is no such thing as a natural
monopoly it's not like this uh and tom woods right about writes about this as well you know it's not
like this monopoly man going around that's not you know with just sacks of cash and running around
trying to raise rents on everybody that's not the definition of monopoly that's not how it worked in
the past monopoly was literally only from the days of adam smith a monopoly was a firm that had a
special privilege from the government and once you understand it in that way i think that's like
true economics that's a true study of prices you can see the prices are going to react one way
and the government is involved versus react another way and the government's not involved
as we see very clearly here in two different centuries the united states with the money supply
that seems to be a better way of looking at economics than uh yeah it was my friend
fernando says this it mostly seems like voodoo stuff here and when you i mean when you watch
that documentary man i mean even the clip you can see it's pretty voodoo they don't even know what
they're talking about yeah well they don't and that's white pills giving out white pills but
with that being said look at where you pull up this tweet the conversation around economics
in the general public that's another thing that these people have done
is really blur the line of what is like a true free market system and people want to blame the
capitalist for all the problems that exist today when um it's really driven by central planning
the problems and here's a great example of this this guy was tweeting yesterday if you ever want
to know why capitalism sucks think about how many people you've known who want to open a 24-hour
coffee shop and bookstore with a cat if they ever get rich first how many don't do that um
he's saying capitalism is causing this problem then jake gotta quote to hit him with places
where it's legal to open a 24-hour coffee shop slash bookstore with or without a cat in san
francisco and green um this isn't capitalism it's state central planning gone horribly wrong
and it's i think this chart is a perfect indication of the misconceptions that people
have people are blaming all the problems on quote-unquote late-stage capitalism it's like
no it's actually late stage central planning yep and i think that's uh to me that that sums it up
like the look at look for the monopoly if you see the government involved it's probably going to
cause higher prices it's probably going to cause lower quality we may agree that like it needs to
happen and when i say we may agree i know that nobody listening or watching the show right now
agrees with me with that statement you're saying you know this is this is what they say this is
their this is their shtick this is why we need these things this is what they say but um if you
can really try to focus in and laser in on what the government is doing versus what the market
would be doing i think you can the problem is usually clear like that chart perfectly or that
picture perfectly shows and then again i would just bring it back to the to the money stuff
that's why it's really important to understand what money supply bitcoin is comparable to and
it's only comparable to the exogenous money, i.e. the outside money, i.e. either the central bank
money or gold or silver. And Mises also makes this point. I mean, they all make the point as
far as I know. Rothbard was kind of a hardcore gold guy, but at least when you talk about
economics of what market money the market might choose, they don't necessarily say it has to be
gold but the market has clearly chosen gold you know over the last couple thousand years like
platinum i know platinum has risen above in price per ounce of gold recently but it used to always
be below gold platinum but there was there's less platinum in the world than gold above like platinum
is more scarce than gold so you would think the platinum would always command a higher price than
gold per ounce but that's not the case and wasn't the case in the past because it just you know
because of the the malleableness of the metal the availableness of the metal all these are the
sale saliableness of the metal uh gold won out so again it's just the trying to look at what
the market chooses versus what the state chooses and uh it's a very interesting time it's very
interesting time we're in because in the last 50 years we've seen gold completely go from being
adopted by the state controlled by the state uh to just paper money or digital money on on a ledger
to now we have this amazing uh decentralized money bitcoin and yeah we're definitely in the
nowadays fight you stage i think we're definitely yeah i guess that's a big question we could segue
way into the bitcoin charts but also prefacing the charts with i think it's clear we're in that stage
can we win the battle um yeah that's what i've been reflecting on the last couple weeks and i
do think a lot of the actions that i've been taking into session um very scary obvious
chilling effect on the industry but again white pill silver lining it seems like they're rushing
a lot of this stuff um which would signal to me that they're somewhat desperate um and how much
of what they've been doing over the last couple months is a projection of strength while they're
in a stage of extreme weakness um you know that's something i've been thinking about i think is
there should we be taking um the fact that they're bringing the fight to to bitcoin particularly
self-custodial private usage of bitcoin as a signal that they are extremely vulnerable right
now 100 and you know for those that have been following me long enough you know i'm a fan of
free banking but free banking as well something where uh the central bank is just not involved
in a society there's been many societies scotland and canada even all the way until the 1930s canada
didn't have a central bank. Sweden for a long time didn't have a central bank. And many countries in
South America, in the Far East as well. I mean, countries, different polities at different times.
It's pretty clear that the market has usually chosen gold, which is fine. Gold or silver,
silver for smaller transactions. But it's okay to have a fiduciary layer on top, right? And we
talk about this and scaling bitcoin at the time what's the best way to scale it unfortunately
the free banking system which i think has always worked well has also just as gold has been co-opted
over the last uh well you know depending on how you want to count it less a couple hundred years
if you're britain less hundred years if you're if you're in the u.s because gold has also been
co-opted uh and the banking system from you know 2008 is really consolidating it's pretty close to
we can start to say where even free banking is failing as well so that's why you need a
true outside money again a true decentralized alternative obviously that's bitcoin but
with all this stuff with scaling transactions with everything
uh at the core the core of it regardless of how fast lightning adoption will come and i think it's
obviously it's it's awesome still i know a lot of people complain about lightning but i it's you
know you just got to do everything yeah there's a lot of different great stuff you know fediment
and all this stuff people complain about fediment as well but all this stuff is great i think it's
all fantastic and it's going to come but to me it's actually the not the main interesting thing
as as maybe people can figure out because i talk about the monetary base all the time
it's the it's the core of the system the ucxo is the outside money and if you really want to
protect yourself from this chilling effect or whatever don't you know it's very easy to reserve
bitcoin just take custody use multi-sig maybe go multi-jurisdiction you can do a lot of different
things there but um it's very easy to you know where it's easy it's it's kind of easy to do that
with gold but it's also kind of cumbersome and a lot of people didn't do it and the system became
monopolized so again that's that's the that's the point of the exhibit as well of all these
exhibits with the monetary base but this is a little bit of a yeah changing gears now it's just
uh back to the giovanni talk and the bitcoin power law um it's a 95 r square it's fantastic
it's been working for a long time i started this like i said in 2018 so it was it was falling off
off of the 2017 highs and again where as you add each new day of pricing data the this is not a
fixed model this is not any technical analysis whatever it's just the line will go up or go down
based on new days of pricing data so it was a little bit higher actually in 2018 but not too
much higher and really as we talked about this before i don't have that chart uh kicked up and
ready more or less since 2016 since 2016 this line has been more or less the same level that it is
now all right so that's important think about it from all the way here the year end 2016 if you
just keep making and you know adding more data changing the coefficients we don't have to worry
about how all that works right now and just just think about when the price goes above the black
line the blind is going to lift up when it goes down it falls it's been more or less the same
since 2016 so you can see right now we're right on trend and we hit trend fell off it a little bit
uh at the end of april then if we draw these bands one sigma down one sigma up we can see
what happens most of the time one sigma means two-thirds of the time so that's what i'm that's
how i'm defining it here uh and we've talked about this i think i remember last time you know it's
a bell curve finance so you can see that uh there's a little bit more air at the top because
it you know to to count each uh each it's it's like 33 percent that i'm using so to count each
33 above the trend line and 33 of the time below the trend line you got to have a little bit more
space above to catch it all right and so that's all i'm going to try to do on statistics now and
We can go two sigma down, two sigma up, 95% of the time, the price is going to be inside
these bands, all right?
That's not a guarantee, not financial advice, but this is a very interesting thing that
Bitcoin has been doing.
It's been inside these bands 95% of the time.
And then, of course, the cool thing is you can project out of where this might be.
And so if we assume the four-year cycles, December 2025, somewhere like that, the trend
itself 125 000 one sigma up which we hit in 2021 is a hundred and uh let's say a hundred and
it's two thirty thousand oh sorry sorry two two seventy seven yep thank you so the trend line is
125 000 one sigma up 270 000 270 000 and if we go two sigma up which is crazy territory which we
actually did not hit in 2021 but we did hit in 2017 we did hit in 2014 and we did hit in 2011
two sigma that's where you get to the 800 000 dollar number yeah i i have no idea i'm not a
chartist i don't look at waves and elliot wave theory and all these different things it's it's
it's a very interesting simple model that i think if anything it shows more adoption than anything
else because again price is a beautiful thing interaction intersection of supply and demand uh
end of 2025 we know bitcoin moves in roughly these four year cycles roughly a year after
the having roughly roughly roughly uh 120 000 is the trend line yeah to your point
too i think the fact that this trend line has been somewhat stable since 2016
really validates one of the core theses that many bitcoiners pitching bitcoin from a monetary
perspective put out there which is liquidity gets more stability and the fact that we've been on a
pretty consistent trend for almost eight years now i would say like yes there's more liquidity
coming it's becoming more stable obviously it is still volatile but on this power law
regression analysis if you zoom out and look at these power law trends it seems pretty pretty
relatively stable if you will yeah so it's great it's very exciting i think um it's a good guide
and uh you can see this as well this is what i wanted to say before you can see this on my
website and i i can't show it my little charting engine here is i still got to work on the callbacks
but the uh i have it here if you want to just play a lot of people have been asking me about
this for years i finally have it here so you can you can play with this yourself it's only in a
monthly frequency but you get the idea goes all the way out to the 10 000th day of bitcoin which
is uh in the month of may 2036 and in that uh example in this in this power law regression
it's two million dollars per coin all the way out to 2036 but i'll let you play with the one
sigma two sigma bands dear viewer or listener if you want here shows you the coefficients all right
this is the big number by the way is the is the is the uh the slope or the rate of change this is
the exponent that it grows to it's close to six you just keep that in mind and that would you know
if you have stronger power laws there'll be a higher number lower there'll be a less but that's
that's just something and then of course here the log log i i uh this is what i wanted to show is
you can also you can sort of see how this almost seems like it's decaying and it is decaying the
rate of growth is getting smaller but it seems like it's decreasing more than it is actually
and if you can to understand that if you put both the y-axis and the x-axis on log scale
and this is showing days now it's the same chart but i'm just showing days just to show you how it
compresses um so here we're in you know day 5500 roughly of bitcoin uh 5000 yeah 5500 600 roughly
of bitcoin you go all the way up to the 10 000th day uh you'll get the same numbers and everything
but you can see that you know it starts to it's expanded on the left hand side it compresses on
the right hand side and that's just it will give you a better view power law just like exponential
turns into a log into a straight line on log linear or log scale on the y-axis if you do log
on both axes power will turn onto a straight line so that's that's the that's the gist of the power
law and i even show some helpful things here about how the growth rates have changed of the trend
over the years you can see that the doubling time and this will answer again we'll go back to your
question marty is if you looked at prior year trends this last column can you see that the
last column on this zoom in a little bit if you can on your end uh it's gonna be harder on my end
can you do it logan maybe not uh i know hold on there we go hold on see it now perfect yeah
Yeah. All right. So this is an interesting column, in my opinion. If the prior year-end
trend line held, all right, so just looking at the trend line, if you calculated it at that year-end,
what would the Bitcoin price today be? So back in 2010, we had a crazy trend,
all right? Bitcoin was going from nothing to something. So you're not reading this wrong.
It actually would, on the 2010 trend line, it predicts $2.4 billion for Bitcoin. That's the
so we're not on that trend unfortunately anymore maybe we will be at some point but uh we're not
there hundred uh million dollars be the 2011 trend okay and this is think of this as a cumulative
thing all right so it's just you're at it you're not just looking at that year you're looking at
when i say 2011 it's 2010 and 2011 so on and so forth you see all the way up until 2015 you got
high high numbers here hundreds of thousands but then look at 2016 this is what i was saying
earlier. Look at the price projected based on the 2016 trend, 70,000. 2017 trend, 80,000. 2018
trend, 96,000. 2019, 85. 2020, price is coming down before COVID-76. Price goes back up, 21,
91,000. 82,022, 23,072. And the all-time trend is this last row, 71,000. So we're right on trend.
this is I think a good message for it's a good hodling mentality message it's a good
non-fomo message look at what the price was projected by the same trend in prior years
and you see how strong the trend line itself is that's what I'm trying to show here
yeah with this column the variances of the different trend prices at the end of each
year it's definitely constricted yeah much less than the early years where you're at you know
a bit optimistic values let's say 2.4 billion dollar bitcoin wouldn't be bad
wouldn't be bad at all probably wouldn't be here talking about all this but
you know we're gonna i think we said this one time we're still gonna be doing this when we're like
60 marty so i know it'll be fun it'll be fun
People are going to need education.
You're going to have hyper-Bitcoinization.
People are going to be like, what the hell just happened?
And at that point, we're going to have to keep having these conversations.
We're running long.
I don't know how much time you have.
My call got canceled, so we're good.
Okay.
Just a couple more to finish up.
This one I think is important because, again, talking about seeing the big picture, not freaking out.
Fees, obviously.
All right.
And again, I know that this is a big issue.
I know, like, I'm not, I don't want to sound Pollyannish.
I don't want to sound, that is not a concern what developers have been dealing with, with, you know, all the way from a year ago with BRC20 ordinals to inscriptions and all the different buzzwords that you can do on Bitcoin with data these days.
But basically, let me just take this off really quickly.
is just price per transaction per day average i know that the satoshis per byte is the native
unit of bitcoin but i've only had a few days really where it's been like
above ten dollars all right it was in the 2017 boom i say a few days we've had i don't know i
want to be sensitive here yes we have had some months some months where it's been above ten
dollars uh in 2021 in 2017 and it started a year ago again okay and then of course this is the
halving date just insanity averaged 196 dollars per transaction that day and i know that that's
you know there were some blocks that were just all fees i don't know it was it was crazy it was
crazy as as you know uh but that's a lot of noise i still think that that's a lot of noise the best
thing and when i was a lot of noise it's a lot of noise yeah dampen this by looking at how this
looks over the trailing 12 months so here i'll do it in dollars um now switch your brain a little
bit this is this is this is not only fees but it's fees and issuance so it's new coins and as we know
new coins even with a very small proponent you know three and change of uh block uh block reward
that is coming out every 10 minutes um you know from when it was 50 back then it was still based
on the usd price at the time even if you rolled it over trailing 12 months the vast majority of
minor revenue is the block reward okay the only time that happened again where was not so or was
not so much was still the majority super majority was in 2018 or trailing 12 month uh issuance
component was about 82 in 2021 may june got down to 89 and now so we're back to about 2021 levels
if you look at that zoom button out of the way but if you look here we're at 91.2 percent
i think that's just a better way to look at it all right uh it's we've been here before
it's not something we haven't seen uh again not to be pollyannish i know that there's a lot of
developers are working hard to uh make fees more affordable for many people there's a lot of
developers that actually like fees taking over as a uh and and this is going to cross by the way
At some point, nobody knows when, but this green line is going to go below 50%.
And it's not going to be a smooth event.
Sure, that it's going to, it's, it's probably going to be volatile.
I don't, I don't suspect it'll be a smooth event, but this is in dollar terms.
And then if we look at it in Bitcoin terms, just native units of Bitcoin, it's almost
the same thing.
Okay.
So this takes out even the volatility, so to speak of the dollar.
Although you can't really do that because of course the reason that there were so many
bitcoins uh trading and uh uh fees were higher even in bitcoin terms was of course because of
the dollar price i understand that but still in bitcoin terms it was 86 percent was issuance
in 2017 2018 89 almost the same in 2021 and then now a little bit higher is usually as 92 percent
in bitcoin terms is actual issuance versus eight percent fees so for miners they're still on a
trailing 12-month basis the vast majority of their revenue is the block reward are you worried about
a few market development let's have the conversation like i think there's a lot of
noise out there i think people are being completely impatient and i think there's a lot of opportunists
out there that are trying to incite an existential crisis to get things through that
may not be advantageous in the long run i'm not worried about a fee market developing in any way
shape or form i don't think we've even begun to climb the the wall of adoption that we expect
will happen and when that does happen when people are making economic transactions on chain
the fee market will develop i view it like kind of like mining centralization kind of like lightning
kind of like Fettiman. I mean, there's a lot of these big ideas or big concerns that no one person
has any control over and years can go by and like no one even knows the difference, you know,
one year to the next. It was true that in the early days, I'm more concerned or more interested
in your thoughts actually on mining centralization than I am on the fee market. Because, well,
basically to answer your question no i'm not i don't think about it i'm not worried about it and
if you just see this uh the bitcoin network can function fine yes it faces some periods
most notably on these sort of four-year cycles uh which is we're maybe a little bit early you
can say but you know look how this one went started to go down in uh you know january of
2017 at the beginning uh but yeah we're a little bit early you could say now you're in mid 2024
when the four-year cycle should be end of 2025 right but i don't know no one knows no one knows
when these are going to cross and i what i do predict is it's going to be volatile like that's
a pretty volatile day right there on the having to have an average of 200 per transaction even
though i know that the actual numbers were crazy on the top end versus the low end but um
that's all i gotta say about that i'm more interested what you think about mining
centralization because i think that's a conversation that's coming back
and maybe it was actually kind of a risk in like 2014 not sure if it's a risk now we also see uh
the feds coming in saying that the uh mining equipment is uh potential national security
issue read that newsletter which newsletter i read newsletter about that last night
i didn't mining centralization somewhere i think i think the mining centralization conversation
as with many things in bitcoin very nuanced so we have to define the different points of
centralization within the mining ecosystem when it comes to hash rate ownership in terms of the
individual companies or individual people that own um a6 i think that's pretty sufficiently
distributed right now obviously we have some mega miners here in the u.s but i don't think
it's getting anywhere near the point of centralization where we have to worry and you
go up a layer geographic distribute distribution of that ownership of hash rate by multiple players
i think that's doing pretty good obviously we've had a heavy concentration here in the u.s over
the last five years post or four years post chinese mining mem but i think that's beginning
to work itself out just from pure economics then you get the layer up which is the mining pool
layer where are these hash rate markets central we're aggregating to increase the variance of
different individually owned mining operations and that's obviously where the most centralization
exists arguably it's that layer and then the asic chip manufacturing layer those two
points of the mining stack are the most centralized
became apparent last month that and pool is acting as a central bank in the mining pool layer
um for i mean we discussed this on rhr but for anybody who didn't watch that rhr essentially
was happening is again in an effort to increase or not increase but remove variance risk for payouts
for mining operations the payout scheme of choice that has begun to dominate the market over the
last few years is fpps full pay per share the trade-off that miners make in this model is they
say hey i have electricity bills to pay i have employees to pay i need to make sure that i am
getting a consistent revenue stream so that i can pay those bills and pay my employees so full paper
share is a payout scheme where miners pointing hash rate at an fpps pool get payouts every day
consistent payouts and they're getting paid out based off of a moving average of the total block
reward over a certain period of time the trade-off there is you get paid out consistently
but you may not reap the benefits of the full block reward
if you have a run of blocks with abnormally high fees.
You may not benefit from the full economics of those higher fee blocks.
That's on the mining side.
On the other side of FPPS, the mining pools are making the tradeoff of,
hey we're probably going to get more hash rate if we can provide the service of paying out
our customers on a daily basis um but they have variance risk as well as pools they have streaks
of bad luck and to ensure that they can pay out their customers on a daily basis they need to have
a bitcoin treasury that they can dip into during periods of bad luck streaks where they're not
getting revenue on the pool side um so that's created this capital structure at the pool level
where a bunch of the FPPS pools, speculation,
but I think it's a high degree of certainty
that this is what's happening,
did not have a sufficient Bitcoin treasury
to pull from to pay their clients.
And so many of them have gone to Antpool,
which is one of the largest mining pools in the world
and is a subsidiary of Bitmain,
a very well-capitalized hardware business.
and they've essentially come hat in hand to Ampool
and said, hey, we don't have a big enough Bitcoin treasury.
Can we leverage the bank of Ampool in your treasury
to pay out our customers?
And it seems that Ampool has said yes.
However, if we're going to do this economic arrangement,
you need to use these particular block templates
and transaction prioritization lists that we will feed you.
And that has led to essentially this mother pool that is AMP pool with a bunch of other pools that are proxying into it, and they're all using the same block template and transaction prioritization list.
And so that's very centralized.
I think some estimates I've heard behind the scenes that the AMP pool, mother pool, and proxies proxying into it control somewhere between 60% of hash rate, around 60% of hash rate, which is obviously not good.
There's this mirage of a division of labor between the different pools,
and they're made to look separate, but in practicality,
they are the same pool using the same templates and same prioritization lists
and then even the same payout wallets as well.
Not good, but I don't think it's existential.
I think this is a capital markets problem that can be solved by the free market
where instead of, I think the problem is that the mining pool industry is so opaque to outside
investors, particularly credit investors, and these players have been forced to go to their
competitor to get a credit line to pay out their customers, and then that competitor has leverage
over them, and so he's using that leverage, and you can't blame him. It's just the incentives
that they're working with and the way the market is structured right now.
I do think that can be solved in many ways.
Maybe you have Bitcoin banks pop up that these other FPPS pools can go to to get credit lines to pay out their customers so they're not forced to receive block template.
Block templates from AMP pool and transaction prioritization list, they can begin doing their own block templates.
And then obviously there is the option of more pools popping up
to create more competition at the pool level
where people can point their hash to.
And then you always have the fallback option
where the network is forced to just stomach the variance risk
and people just mine individually.
It is a problem.
It's not good, definitely not good optics.
And I don't trust and pool and bitmate as far as I can throw them.
um and you can see with the amount of hash rate that is proxying into ample and the amount of
hash rate that ample has at some point there could be a situation where blocks are being censored but
that's the beauty of mining is that um you have the optionality and you always have the fallback
option to where if you think ample is acting nefariously you can simply put your hash somewhere
else um i don't know what are your thoughts well i agree but i think um i would still start with
the premise that usually uh since there is not a government involved i feel much better about it
but yeah it seemed like a risk in 2013 2014 and then with antpool again in 20 with antpool not
in 2013 but in with ample in 2017 uh obviously leading up to the uh to their fork to their
bcash fork but um the that that proved to be a big nothing burger as well and and so i still
come at it with the premise that there's got to be uh some free market solution if the like you
said, not only the optics, but the economics of this arrangement and the, I don't know,
sort of the Bitcoin operations as well. If they get sort of all clogged up in this sort of
arrangement, hopefully, presumably there can be somewhere else that they can have a release valve
at some point. But yeah, my concern goes to more of what the state is saying about it. And the
state is slow to move but the state can still try to i mean at the end of the day this is this is a
risk of big miners this is the only protection that miners could have at the end of the day is
they're mining in secret and that's becoming harder and harder to do in bitcoin if you're
like a big pool in texas if the federal government wants to come in and take your equipment i mean
they can come in and take your equipment i don't think we've seen texas but i know i know but i'm
just saying that's the at the end of the day that's what a monopoly is if they're going to
start saying that you know only these people can be licensed only these people can do this
and of course we've seen various levels of that in the past i mean i remember after 2017 there
were some countries i think it was like malaysia they were even making a uh fuss of all the miners
they were like steamrolling the asics yeah they were like steamrolling miners to just show that
that you know that's all bullshit they're talking about the environment all this stuff like it's uh
actually what they care about but those would be the things that uh concern me more but um yeah
I wouldn't go to that point let's discuss what happened two days ago which was an executive
order from the Biden administration to kick out a majority-owned Chinese mining operation in Cheyenne
Wyoming and there's been a nuance here I went through the executive order wrote a newsletter
about this last night and so the order was made particularly because the acquisition of the mining
site by mine one was not filed with the committee on foreign investment in the united states
so essentially this mining operation is within a mile of a nuclear ballistics military
base um and there are processes through which if you're going to buy land as a as a foreigner
around these bases you sort of have to go through the processes it seems that mine one
the company in question did not go through the process to file with uh cfis and so actually like
this is one of the few cases where i'm like i it seems like this is a logical move from
the white house and the department of defense to step in and say hey we have processes you
bypass those processes you're within a mile of this military ballistics facility like you can't
be here see ya um and actually as an american i'm like that actually makes sense i'm happy you did
that the nuance here is within the executive order the way they describe the mining equipment
of mine one is a bit troublesome they say as well you know one of the lines is as well as
related risks associated with the presence of specialized equipment on the real estate used
to conduct cryptocurrency mining operations some of which is foreign source most important part
some of which is foreign sourced and presents national security concerns and then in the next
section they reference the presence of specialized and foreign sourced equipment potentially capable
of facilitating surveillance and espionage activities so that's the question i think
there's um there's unknowns right now which is if this if the cases the mine one bought this land
in cheyenne a mile away from this military base did not go through the processes in place to get
approval to do that and they just got kicked out and maybe they were actually um putting
surveillance and espionage technology on their facility and the government found out about that
and kick them out completely fine with that makes sense protect your military bases
don't want to um don't want to mess around with ballistic military bases um however if
they're sort of just catching mine one and it got you you have a situation where
you have foreign nationals who aren't familiar with the legal processes and um just didn't even
know that they had to go through it to get this land and the government's using them
as an example um and then also um sort of piling on saying this mining equipment more broadly
is considered surveillance and espionage technology that's a big problem again going
back to the core language foreign sourced um if you're in the mining industry in the united states
you understand that a lot of the i mean all all the asics are foreign sourced from china
And then even the electrical transformers and data centers, modular data centers that a lot of these miners are housed in throughout the United States come from China as well.
And so I think clarification from the government of whether or not they've determined that mine one had specific hardware and technology that is not included in your run-of-the-mill mining operation across the country, that would be nice to know.
And if not, if they're just determining that ASICs, data centers produced in China, transformers produced in China are considered surveillance and espionage technologies, that's a big problem for the American mining industry because a lot of the equipment, but the ASICs and the electrical and data center infrastructure is coming from China.
And this is a product of globalization and miners trying to drive their CapEx down as low as possible.
i mean it's it's funny it's almost paradoxical because the reason we're buying these foreign
made products is because the triffin's dilemma and the the fact that we had to dollarize the world
true true i mean that's the biggest that's the that's the scariest thing to me when we talk
about this stuff is just it it's it is all the things that you mentioned but it's it's really
at the end of the day it's the monopoly power again so if they want to go in to any of these
states and just like they did here uh for whatever reason and they want to either confiscate or just
say you need a license or say we're shutting you down i mean they can it is it's physical space
that's quite viewable it's quite understandable where it is and um on the other side of course
we have the game theory of countries actually wanting to be in the bitcoin market because it's
a good market to be in. And because they also understand the end game of, you know, fiat
currencies inflating into oblivion and it's either that or gold or Bitcoin. So I'm not saying that
it's all bad there. Even states can understand the benefit of being in the Bitcoin industry,
whether it is mining Bitcoin or holding Bitcoin. But again, even there with holding it, you have
very centralized players that, as we talked about at the top of the show, like Coinbase being blessed
as one of them and you know one coin base node is not necessarily as good as a hundred thousand
it's definitely not as good as you know a hundred thousand individual users across the world running
their own nodes with bitcoin on them and transacting that way so yeah it's i don't know
it's growing pains i'm not sure you know i read somewhere this is way old news so i'm not i'm sure
definitely still holds but the the asics coming to market right and you can see um actually i have a
hash rate i think i have a hash well it doesn't matter um when they were coming to market there
in you know he went from cpus to gpus to asics uh all the way from like 2009 to let's say 2013 right
um you could see the hash rate bump up each time and then from that point it's sort of
been at the top of the trend i i'm speaking to a trend line actually so let me put it on the
here it is uh a hash rate also follows a power law by the way so this is actually
just straight up hashes i should put it in scientific notation but um you know you were
a couple million uh hashes here per second back in 2009 cpus gpus asics and asics coming to market
as i understood i can't remember the exact article but maybe in wikipedia like that was the fastest
technological uh advancement that had ever happened i think the pgas were around for like
three months then it went right to asics yeah so it was unbelievable how quick yeah so i don't know
exactly on this chart how it would uh translate there uh i'm not as familiar with mining as you
are here but the point is it was super fast it was amazing how quickly it did it but then if you
look at the trend um you know again i don't want to get too much on trend line to the show but
we're still growing like crazy obviously we're in you know six comma x a hash territory 612
exahash is that right yeah exahash um so massive growth but you see like here you know from 2018
that was like a even though it was less certainly well less uh it was kind of the top of the trend
and it's sort of like trending down whatever it's i'm not i don't even know it's it's not
germane necessarily to the conversation that you're having the thing is it would be cool it
be awesome if there was some sort of technology that could uh again decentralize it uh so we
didn't have to worry about these problems but i don't i don't definitely don't see that coming
so this is something we have to deal with and i'm not sure how that end game looks because
if the government wants to come in for whatever reason and they want to take your stuff they can
do it uh yeah that's the end game of it you know again i don't know if it's a rabbit hole we want
to go down and you have a whole show for that you do that separately but um you know it's great
you know we got 600 600 700 uh exahash per second on bitcoin it's unbelievable amount of security
i actually had one here which is market cap dollars per now hashes per market cap dollars
all right this is actually interesting is that you see the trend falling there a little bit this
is not this is a lot less about price it's just we don't have to spend too much time again but
you know hash rate is awesome it's increasing it's showing massive security of the network but
you can see that if you if you do a trend of hashes per one dollar of market cap it's kind
of slowly falling uh and really when the price booms it falls even more so like it was here
145 million hashes per dollar of market cap in the 2021 boom and then it went back up
and now it's down to well not I shouldn't say down it's still rising but if you look at it
over the all-time trend it's sort of like standing still yeah this is I wasn't actually
even planning on showing this I was just looking at it seeing if we want to talk about it but since
we started talking about hash rate um i don't i don't have an answer to this long term if if the
governments decide to just make everybody's stuff and nationalize everything i don't know what you're
at the end of the day is it free speech is it everybody coming together you know satoshi had a
actually i have this quote you know the quote that satoshi said at the very early days when
someone said you know this might be a way to anyway i'll find it if but if you have any
thoughts about i mean you know yeah government stuff at the end of the day yeah i think that's
the rabbit hole that i that i don't have an answer to for sure and i don't know how much deeper we
want to go down on the show i think what helps this is the push towards asic commodification
which is happening rather quickly i mean you had gian will come out a month ago and say that he
believes that we'll have two nanometer a6 at some point in 2025 which would be insane um but as we've
reached the physical limits of the advancements we can make at the silicon level um you're gonna
you're gonna reach a point of asic modification and hopefully at that point the barrier to entry
for individuals to get into the ASA game lowers.
And I think we've seen a massive trend of centralization
in terms of the size of these mining operations.
You have Riot building a gigawatt facility.
They've got a 750 megawatt facility,
and there's many other large multi-hundred megawatt operations
across the United States, particularly here in Texas.
But I think that megamind trend, I think, will exist in the future,
but I also think we will also see the rise of the smaller miners.
You have companies like Heatbit out there creating home appliances
that have hashboards in them to replace your typical space heater
with a small miner.
And I think companies like BidX and others that are providing individuals
with at-home miners that use the waste heat to do other things,
I think that trend is going to accelerate as well, and that will have a material impact on the geographic and ownership distribution of hashrate.
These megamines will still be targets.
And as it pertains to the state coming in and confiscating mining assets, I find it hard to believe that that would happen here in Texas,
Particularly since ERCOT is its own grid system, Bitcoin mining has become integrated in their demand response program.
It is 95% of the large flexible loads that exist within ERCOT.
95% is Bitcoin mining operations.
From the conversations I've had with stakeholders here in Texas, I think the benefits of integrating Bitcoin mining into the grid system are becoming apparent.
I think we are reaching the point where it is a necessary part of the electricity stack here in Texas.
And I find it hard to believe that the federal government would successfully be able to come into Texas and confiscate nationalized mining operations.
And I think that's specifically because ERCOT is not connected to other grid systems that are typically run by quasi-federal agencies like the TVA.
um i find it hard to believe i think asic commodification helps and i i've been saying
this for years i think states are going to lead the way and i've always thought wyoming is going
to be one of those states and again that's why i think this executive order
while it is scary and the language is scary it is logical it's like you have a majority
owned business a business that's majority owned by foreign nationals a mile away from
a nuclear ballistics military base that didn't go through the proper processes to be vetted
to ensure they're not doing anything nefarious and as an american was like yeah
actually makes sense like i i'm happy that um the government it one of the few times i'm happy that
the government was like hey we can't have you near this uh you didn't go through the processes
it makes sense that they would do that um but if they were to go and try to confiscate a mining
operation that was not near the military base within Wyoming, I find it hard to believe that
they'd be able to do that successfully. It's a rabbit hole. I think we can not
give your own show for that, but, um, too much more. Let me just read this. I come back to it
often. This was from November 7th of 08. Satoshi was responding to someone. I can't remember,
but remember he released it on November 1st. Uh, white paper was dated October 31st, uh, 2008.
someone says you will not find a solution to political problems in cryptography he responds
you probably remember this quote right yes but we can win a major battle in the arms race and
gain a new territory of freedom for several years government's good at cutting off the heads of a
centrally controlled network like napster but pure p2p networks like nutella and tor seem to be
holding their own and i think impression words like there there still is a uh world for politics
for free speech for private property but they're also coming for those things and it's hard and
i think actually nukes i don't want to go too much more into that but nukes are another nukes
are a whole other thing that uh provides a boatload of problems for a lot of classical
liberal thinking we talked about this on the last show like if you're going to succeed what
what is your nuclear policy?
Do you figure it out yet?
Think about that for the next quarter.
If Texas secedes, what's your nuclear policy?
How many nukes are you going to keep?
Who are you going to bring on board?
Are you going to keep Wyoming?
Are they going to come into your union?
But those are important questions.
And if the Orwellian draconian capital,
you know, like the Hunger Games, the capital,
if it really does become cartoonish and crazy,
first of all i generally think that's not going to happen because americans have a pretty good
track record of you know maybe not nipping it in the bud but generally fighting uh mega tyranny
and i'm sure they're you know secessionists from the south that would disagree with me or something
but um generally uh americans have proven to be you know as reagan said the last place on earth
for freedom but this is where i'm worried back to the top of the show i'm worried about that
in eastern europe i don't have time this show to talk about all that stuff that we usually do about
ukraine but uh we have tyrannical people over here that have no they have no interest in private
property they have no interest in free speech in russia you know pussy riot showed us in 2013 2014
that you couldn't even talk about the Orthodox Church
because that came weaponized in Russia.
And from when Putin was back in power in 2012,
he really never left power.
But 2012, 2013, they installed these laws
where you couldn't protest with more than two people.
If there was more than two people,
it was an illegal protest in Russia,
already back in 2013, 2014.
team so this is continuously continuing you see what's happening in georgia right now i don't
know if you're following this marty but it's wild uh it's the exact same thing that's happening with
ukraine is the georgian people want more freedom there's hundreds of thousands of people coming to
protests every night it's been weeks now and they want to do this russian style uh it's calling the
four that's called the foreign agents law basically and putin did the same thing in 2012
where he's so paranoid and he's so afraid of any liberal opposition,
which, by the way, like the Navalny team, which he killed in his gulag,
indirectly killed.
I know I'm being hyperbolic there,
but they have literally put the screws down of any possible opposition in Russia.
And the bill, because there's a lot of corrupt people in Georgia,
as well that are connected to the old, literally old people, old oligarchs, old people that had
Russian money, oil money. They're following this path, which Ukraine rejected in 2014. It was one
of the many things that Ukraine wanted more. The youth in Ukraine wanted to go more towards Europe
and the European Union. So the old guard literally had to leave. Yanukovych, the president at the
time, had to flee. He's in Russia now in a multimillion dollar penthouse in Russia.
but in georgia very small country very small country uh less than five million i think three
and a half million maybe only um they are trying to introduce this same type of a law which is
it's called the russian law the foreign agents bill and the young georgians are going out to
protest it but it's extremely dangerous i mean they might have their own maidan style
revolution where they have you know literally going up against a government that's not listening
to them but so it gets even more dangerous and it's getting more dangerous by the day because
like i said at the top of the show we don't have people like gorbachev that want perestroika and
glasnost and openness and more integration with the west we have people just through their own
paranoid hard-nosed will are going to try to
just put the hammer down like they've been doing in russia since 2014 2012 actually for sure
um and now in georgia so it's very it's very uh disconcerting for us in eastern europe on the
eastern flank and anything it could go either way in georgia right now georgia could have the
total hammer down. I mean, Georgia has the Russian army and occupied parts of their
territory right now, which has been in since 2008. Russia's busy with their genocide war in Ukraine,
but the Russians could come and try to just lock that country down. I mean, it's a very small
country, but the young people are different there. They're, you know, it's a Christian
company, Christian country. It's a little bit different than, you know, Azerbaijan or
uzbekistan turkmenistan it's it's a christian country that wants uh relations with the rat
with the west and and uh you know georgia and ukraine have always been very sympathetic to
europe and russia's trying to keep them into the fold so
uh yeah i didn't even want to talk about any of it we should skip it because i i it's gonna
lead to more annoying thoughts but they're not annoying i had no idea this was going on in
yeah check it out check it out on twitter you're gonna see massive protests young people speaking
out you know it got violent in ukraine in 2014 but all right last thing i'll say just remember
remember when you talk about helping people i'm not talking about and this this does go back to
to nukes at the end of the day so i don't know how if you know if we want to fight tyrannical
i interviewed peter todd uh a couple weeks ago we talked about this like
if you want to talk about private property freedom of speech the right to assemble the
right to assemble and have your voice heard which russians have none they have absolutely none
they haven't had it since 2012 uh if there is a government that is invading you or occupying you
and you want to try to avoid that it's hard in the nuclear age to do that without maybe perhaps
someone else helping you that looks something like a government but even in the case of america
I know there's a lot of ideological classical liberals watching and listening, and I was even more so when I was younger.
But there's nothing more American, I've said it many times, there's nothing more American than getting help for your revolutionary war from the French.
It's true.
it is just a myth if you think that your ancestors if you're a true american uh were literally maybe
just some brits maybe there's a dutch or belgian sprinkled here or there and they just rose up and
overthrew the tyranny of great britain they had help from go back to that national national debt
chart that we had they had help from the dutch help from the spanish and help from the french
but in yorktown the last battle there was more artillery more ships more uh sailors
more french fighters more french deaths than americans cornwallis didn't even want to surrender
to washington he wanted to surrender to uh the french commander i can't remember his name
rochambeau maybe i think rochambeau yeah um all right the reason i say that tangent is it is
totally natural for freedom loving countries to ask for help so just think about think twice when
you just see all the crazy uh polarized things on twitter about ukraine it's happening now in
georgia and there are young people that really really really want the way of life that we have
the freedom the peace property rule of law and the right to assemble and the right to assemble
russians have never had it they're terribly happy to be under the thumb of an oppressed dictator
so uh yeah interest rates are going up it's harder it's a lot harder right now than it was in 1989
and uh yeah i'm gonna be in case anyone doesn't want to hear this part of the podcast they just
like the bitcoin charts probably every quarter i'm going to be speaking about this marty because
it's not getting any better
over here.
And I'm not going to pretend to have any answers.
Yeah.
Look, I got to go, man.
I'm late here. I'll leave you with one more
if you want to show a chart here, Logan.
And Logan,
if you can... Oh, never mind. It's fine.
It shows up fine.
Remember this one?
Yes.
This is my chart.
Outside money.
outside money bitcoin is still very small here in 2022 the trailing 12 month value transferred
right it's like bank reserves the federal reserve was 16 trillion the federal reserve how much did
they do a quadrillion a thousand trillion they do a quadrillion dollars of transactions a year
uh this is trailing 12 months long term very slow growth here uh so it's you know nothing crazy
to see some you know jaggedness here in 2014 2008 but they do a quadrillion dollars of of
transfers a year bitcoin has maxed at about 18 that's unadjusted i figured before i was
showing adjusted which is only like five you know you take out uh you actually take out the block
reward you take out change you take out the block reward even you take out minor intercompany minor
things it's just sort of like adjusted pure transactions between different parties but it's
Still, now that the block reward is going lower as well,
let's just go ahead and put the actual dollar value of everything.
And the adjusted number here,
what the Fed is larger than,
we had a record, I guess, of being Bitcoin's only 200 times smaller.
But if you look at the unadjusted, which is what I'm showing now,
it's even better.
It's only, Bitcoin's only 60 times smaller.
the fed but that's this this this actually shows you the velocity it shows you the room to grow
here uh even though the value of bitcoin is only a trillion the value of the federal reserve
monetary base is five and a half trillion something like that the velocity is just massive
all right these reserves are just flying through uh again and again and again but bitcoin can do
the same bitcoin can do the same so this is another chart to pay attention to and we're
now that we're moving into another bull, you can see this line going down again.
So who knows when this will catch it, but again, this is even the more bullish chart. If you look
at TPS transactions per second, as we remember, uh, this is, uh, with batching Bitcoin is actually
doing more transactions per second than Fedwire. All right. This is, uh, sorry. This is TTM.
so trend in 12 months bitcoin can do 380 million transactions number this is number now not value
but number uh fedwire does 195 million and if you look at tps bitcoin with batching can get all the
way up to 12 if you like without batching it's a little bit below fedwire but it's catching
almost six transactions per second but bullish as well i think because bitcoin just needs to
working as it's working people can get on layer two with you know green light fetty whatever it
might be wallet of satoshi in certain countries uh you can use plenty of layer two technologies
still but on the layer one bitcoin can actually do more than fedwire is doing
and the only neat thing that it would change or need bitcoin would need to change this chart
is just the price needs to go up.
It happened during the show.
We're approaching $65,000.
There we go.
Fedwire is very slow with their statistical releases,
so this is still only as of quarter one, Q1, March.
But we'll see what happens in Q2, right?
Yeah.
We will see what happens in Q2
because we'll be back at some point in July or August
to talk about this.
probably August or September actually
if we're being honest with ourselves
yeah need a full month
for the central banks to
publish it takes me time to compile
but yeah August sometime in August
so my friend
yeah
you briefly mentioned it
but the whole thing in Japan
maybe there will be some interesting
talk about there next time
I won't make you comment on it at all
but I hope you enjoy your
as well u.s u.s bailing out uh the japanese very exciting yeah it's happening it's happening
outside money exogenous to the system that's what bitcoin is let's let's let's think as well
about the old mining centralization it was always a boogeyman 10 years ago maybe it still is
boogeyman it should always be a boogeyman you should be always thinking adversarially
yeah
one last point
I think on all that
I think the solution
Matt Crowell came on here and was like we need to change
the proof of work algorithm
we need to fire the miners
I think it's a capital problem
on pull centralization
here in America too
I think
many people are trying to find technical solutions
to all the attacks that we've had,
which I think is good.
We should be trying to listen to Satoshi's words,
like get everything to a point
where it becomes almost impossible to attack.
But I am becoming more and more convinced
that I think a lot of the solutions
to a lot of the problems that we're talking about
need social solutions.
We need to end the Bank Secrecy Act.
We need to really rein in the government
and it sounds it's like yeah it's easy to say that hard to do agree but i think we really need
to begin waging narrative campaigns to highlight these problems and like wake the american people
up going back to that chart from san francisco it's not capitalism it's central planners really
get that meme into people's heads which i think because of inflation is people are much more
receptive to these messages as they're seeing the effects of the central planning in their
everyday lives and i think more and more people are beginning to connect the expense uh expansion
of the monetary base in 2020 with the prices that they're paying now um so just leaning into that
and letting people know that the government isn't their friend um and to end it you know on a high
You know, I mean, most of your viewers and listeners should know, I've said it enough by now, you know, I know that we rail on the U.S. government a lot, but I still, like you mentioned earlier, the state's rights structure that the United States has is strong.
I think we saw it in COVID, certainly saw it compared to Europe and watch the space
where I am.
I'm more concerned literally physically for my health, my family's wellbeing because we're
much closer to the genocidal maniacs than you guys are.
That's one thing for you guys to feel better about.
But secondly, you have structures where even if the federal government really goes haywire,
can step in and take the lead and the local municipality as they should steps in and takes
the lead. I mean, most people don't think about some crazy nonsense bills that they're passing
every day in Washington or, you know, K street lobbyists. They just think about what they're
doing in an anarchic way every day. And that's great. We have some tyrannical states really on
our border that we're, we're worried about here. So that's something to stay tuned on. But again,
And just to tie up what I was saying earlier about the French helping the U.S., it might be a bit of a myth to think that America did it all itself or never had any help with people that wanted freedom.
It really was a genuine revolution that the Ukrainians had against a Russia that literally has had no democracy in a thousand years.
and the ukrainians literally had that revolution in 2014 georgia if you follow what's happening
to the protests follow what the young people are saying they don't want to go back to the
soviet union they don't want to go back to anything like this and we're next on the list
by the way the baltics are the next one so you guys are a good example of decentralized freedom
don't be too cynical or skeptical when people say they might need help i'm not even talking
about arms and soldiers and all that stuff i'm just talking about literally help that you can
give through donations or whatever to people over here uh they're fighting on the front lines but um
yeah this is not going away man this is not going away and now we're in the fourth time
it's going to be straights are increasing if ukraine does have to super sue for peace
and actually lose some of its territory that is a major win for a tyrannical russia that is
literally uh ecliptocracy of a mafia state there is you can't assemble in russia you're going to
be thrown in jail beaten uh belarus has already fallen as well we saw that in 2020 belarus tried
to do in 2020 what ukraine did in 2014 ukraine is still fighting a war for that belarus is
fully under a 30-year dictator russians are under a 24-year dictator uh it's tough it's very tough
energy comes into it all the rest i said i was gonna end on a positive note positive note is
you guys do have i mean say you guys i'm an american as well you're american we have a very
good structure uh in the united states so fight for that and there is there is there are like
uh satoshi says uh you know you can win major battles here with uh cryptography and technology
but also some of this stuff especially what we've seen the the chilling effect over the last couple
weeks like you might have to you might have to assemble you might have to do some things
politically to try to get what you want so i would encourage that and i have good i have a lot
of good feelings about what americans can do they always make the right decision as churchill said
even if a little bit I do as well we'll talk about next episode because I got um yeah it's it's
I'm these topics are not going away no recorder it's not it's nothing's changing magically
my uh I mean my my position on this been consistent throughout the last couple years
like we need to get our house in order here and that's that's when i think we'll be able to help
the most is like when we actually like are leading by example like that's like things are devolving
here rather quickly as well that's like i think that's i think russia recognized that and picked
an opportune time to to do all this shit and that's like the really hard thing they saw us
they saw us fuck up afghanistan they saw us quagmire still from iraq and they're pushing
i mean they made the same mistakes we could we could talk about this forever man i mean
they made the same mistakes in the 80s they're a much more brutal regime people should understand
that i mean the bombing that they did in afghanistan in the 80s the bombing that they
did in syria in the 20 uh mid 2010s they're brutal regime they're brutal regime they have
no democracy they have no you cannot assemble in russia you cannot assemble please remember that
if you go to the streets you'll be thrown in the gulag so when you talk about you know
getting your house in order you can do it you can do it in america and so i think you should do it
and be a leading example for everybody else yeah and europe needs to do it too by the way
don't make it i don't want this to seem that i'm asking americans like europe first and foremost
needs to do it europe's completely fucked there's people on a whole nother topic hold it people have
no economy no will no heart some do primarily the baltic yeah yeah you've been there yeah
we work hard we work for low salaries and uh way western should be clear western europe is
completely fucked you know fourth all right we'll be back in a few months
sweat off the rails right thanks buddy we'll see peace