TFTC: A Bitcoin Podcast - #605: When This Trade War Will End with James Check

Episode Date: April 11, 2025

Marty sits down with James Check to discuss the game of chicken being played between the US and China. James on Twitter: https://x.com/_Checkmatey_ Checkonchain: https://charts.checkonchain.com/ Newsletter: https://newsletter.checkonchain.com/ 0:00 - Intro 0:36 - Tariff bomb 6:32 - Recession incoming 9:30 - Fold & Coinkite 11:08 - Yen/dollar devaluation game of chicken 15:33 - Gold and Bitcoin’s price floor 25:02 - Unchained Event 25:27 - Bull case is more likely 34:15 - Thesis meeting reality 43:51 - Bitcoinization of finance 46:59 - Bessent reset 54:26 - Closing monologue Shoutout to our sponsors: Fold https://tftc.io/fold Coinkite https://coinkite.com Unchained https://unchained.com/tftc/ Join the TFTC Movement: Main YT Channel https://www.youtube.com/c/TFTC21/videos Clips YT Channel https://www.youtube.com/channel/UCUQcW3jxfQfEUS8kqR5pJtQ Website https://tftc.io/ Twitter https://twitter.com/tftc21 Instagram https://www.instagram.com/tftc.io/ Nostr https://primal.net/tftc Follow Marty Bent: Twitter https://twitter.com/martybent Nostr https://primal.net/martybent Newsletter https://tftc.io/martys-bent/ Podcast https://www.tftc.io/tag/podcasts/

You've had a dynamic where money has become freer than free. When 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. No countdown, James.

No, I got it. Thank you for joining us. What did you just say we're living through? We're living through history. How do you want to describe it? Everything is happening. We're living through something very, very big. The world is changing in front of us.

Is it happening? Is the big one that everybody's been talking about finally happening? Oh, man. Well, this is the thing. So something I've been certainly grappling with and I've been trying to like process what is going on at the moment because obviously it's massive. And some of the kind of talking points I've got is that there's no undo button. This feels like a freezing Russia reserves type thing where the tariffs have come in. It's very like what do we got, 117 percent or something is the current number on the U.S. onto China.

China's 84 percent back. we've started something now that there's no undo button for um and the other thing i'm playing around with is you know as bitcoin is we've all we've thought about this stuff we've contemplated what it looks like when the system starts to change we've studied it we've listened to podcasts we've you know listen to what experts have to say it's one thing to learn about it's another thing to start seeing it unfold and actually running through the mental loops of what does this actually look like to live through this event and i think that's where we're at at the moment we're starting to see some early signs and in many ways like the memes are out there but

eventually people are going to realize that like there's a lot of really oh no lost there you are lost everything let's start again no you're you're uh your internet is like in and out i lost you a couple times there before you ultimately dropped off it's ellen bedford so you can blame pete mccormack for that yeah bedford looks like they need a new merida to lay down some fiber optic cables well it's funny actually i was in uh i was in dubai on the way here and uh to stop off and uh run some calcs on my my website and the internet was running i think it was like i did the capture like 20 times faster than my home internet in uh in australia so the dubai airport is 20 times

better than my home internet it's uh you think it's 2025 we should have dubai level internet everywhere you think so i mean we spent an absolute four it's a classic example of a government program right they built all this um internet infrastructure and they uh they fluff it all at the end and uh now it it flags out all the time yeah um getting back to it the tariff wars are in place seems like many people are saying world war three has started but it seems like some sort of cold economic war has certainly started and i wrote about this in my newsletter last night which was posted this morning i think it's particularly interesting in the last 12 hours because you're beginning to see the domino effect hit and zero hedge wrote

this great piece last night highlighting something that they've been warning about for the better part of two years which is this basis trade that a lot of the multi-strap hedge funds have been putting on for for years now and that seems to be getting off sides they're 20x levered i believe on close to two trillion dollars in value and you have trump show this tariff bomb at the world uh yields start getting a little wonky and then eventually that basis trade those hedge funds get off sides and they're forced liquidators of of these treasury assets the 10s and the 30s specifically and so we have spreads blowing out these yields blowing out and yeah it seems like it could be could be the big one i would not want to be drone pal this morning

that's for sure no and i've been thinking about like a game of chicken you've got trump and or US and China, which are two apex economic predators going at each other. So there's a game of chicken there. One's the debtor, one's the creditor. One produces everything, one consumes everything. Which one backs down first? Neither. Neither President Trump or President Xi are the type to back down. So you've got one game of chicken played out there. You've got another game of chicken between, I would say, Congress and Trump. Because at some point in time, if things continue to get hairy, we know that the US is a hyper-financialized economy. Equity's come down too much. It's going to start impacting employment. And just the tariffs. How do businesses make

economic decisions? If a key part of your business chain, the supply chain, is importing from China, which many will be, suddenly you don't know what your fulfillment prices are going to be. How much are you going to have to pay? Is it going to eat your profit margin? What if you've got contracts that are already set up? So that's going to start to hit some kind of an employment wall, I would say. And then when you get to that stage, it's like, well, does Congress try to take away the keys from Trump. So you've got, because they need to get reelected in the midterms. No one wants to go through that in a stagflationary or highly inflationary or a depression. So suddenly there's a tension there. And then you've got the Treasury and the Fed.

Which one of those is going to blink first? So it's hairy stuff. And you mentioned credit spreads and like. I'm writing a piece at the moment. The move index, which is the, when I was talking to Nick Bartia, that's the number one metric. He's modeled all sorts of liquidity. He's built his own liquidity metrics and indexes from the ground up. And he was saying that the move index, volatility in treasuries is the number one thing. That's the number one factor that he looks at. And it's currently getting to the level, it's above March 2020. So it's above the COVID peak. And we're up in 2008 and 2023, which is, you know, are we starting to get to like a bit of a Liz Trust moment in the bond market, especially if they start going up to

tax cuts next it's starting to look a little bit like the guilt market back in uh 22 yeah and i was responding to somebody on x this morning and they're like how do you get this under control it's like you can't control frankenstein and i think that's really what is being brought to light today is that trump and percent i think the way in which they Trump, I don't know if Bessette had the hand in how tariffs were presented to the world with the calculation that they did. It didn't seem to be exactly reciprocal. Out of the gate was a bit of a wild card. But even if they were to do it correctly, I think everybody in the analyst world, the macro cognoscente, the pundits, and even the policymakers really underestimate just

how fragile the system is and any little deviant uh deviation from uh just making sure that the debt is taken care of will create these externalities that lead to these cascading events which is certainly what we're seeing now 100 and that's where i call this game of chicken like at some point in time and i often talk about like the gravity of the situation and then the managed response if you allow the system to just do its thing yields go higher right because why would you lend to a government it doesn't make any sense so yields want to go higher so they have to at some point at some point it's going to get bad enough whether it's because equities come down enough unemployment goes up enough recession like and i think we should all be very careful here

the odds of recession are much higher now much much higher because how can how as a business can you make decisions in this kind of environment? You can't, because you don't know what the tariffs are in the next six hours, let alone what they're going to be in six months. How do you plan your orders? How do you plan your margin? How do you plan your staffing? It's a real tricky scenario. So if we get to that type of scenario, who blinks first? Because at some point in time, you need to find buyers for the bonds. And you mentioned the carry trade. If I understand correctly, you look at where the biggest owners of treasuries are, and is it Cayman Islands as number one by some margin. It's all these offshore hedge funds running this trade. And as we know,

with hedge funds, they're flaky as. Once anything is not profitable for them, they're out. Once volatility gets too much and their risk management taps on the shoulder, they sell first, ask questions later. So if that's your marginal buyer, China's, I mean, I can't imagine China's going to be buying too many treasuries at this point in time. If anything, they would start to lean on it and actually sell them if they really want to pressure Trump on the other side. we are watching two apex economic predators going at each other and unfortunately the stability of the system is kind of the pawn in the in the game of chess so it's a it's a really tricky scenario and i think everyone should be just really really careful and cognizant that

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for five percent off if you're a power user of bitcoin like i am if you're running a business on a bitcoin standard if you're just a bitcoin or wants to secure your bitcoin get the most secure hardware wallet on the market go get the cold card queue it's a beautiful thing that's another part of it too because yesterday during the day everybody's like china's definitely dumping treasuries um yields are going back up and then after markets closed it became apparent like nobody's dumping treasuries like like if they were yields wouldn't be screaming this high if It was China doing the controlled selling of their U.S. 10 years and 30 years. Like something's obviously gone wrong.

And so I think that's the question in my mind right now. Like is there a temporary clearing sort of environment that we go through where these hedge funds have to get out of this basis trade, things settle down, and then China, Japan, Europe, the U.S. get to the negotiation table and figure out, all right, let's just. rip the band-aid off figure out how we reset the uh the chessboard here and make sure that we don't blow up the global financial system uh or is like the trump administration thinking like all right i mean besant came out this morning and said this is um something along the lines of hedge funds are overexposed and what we're watching is just a clearing mechanism of those positions getting offside like is dissent thinking like we can because i i would like to get your thoughts on this like do you think their mindset is it looks like china's being forced to devalue the

yuan rapidly and to levels of which they were they were holding previously and is there sort of like a game of chicken where it's like they just need we just need them to devalue the the yuan to such a point where they're forced to come to the table and negotiate in terms that are preferable to us. I mean, and this is, I think that to be honest, I don't even have the macro chops to properly understand all these dynamics. And that's what I think is for me as a student of markets, this is just a point where I'm like, wow, I'm just absorbing what's going on and trying to get my head around it. There's the devaluation side, but we also know that if the US wants to be competitive, they actually need the yuan to strengthen because they need

the dollar to be weaker, right? So when I look at this whole dynamic, the US obviously wants to onshore. They're trying to move from a Wall Street-dominated economy to a Main Street-dominated economy. And that means bring manufacturing, production, and that's a national security thing as well. So you've got to bring all these production back onshore. But the thing that I keep coming back to is the sequence of events. Luke Groman talks about this, the sequence of events. You have to devalue the dollar before you do all this stuff. And the way I'm looking at it, It's all great to have this tariff policy. And, again, I'm not – how do I know what order these things should be in?

But when I look at it, you don't have the production capacity. And if you want to build the production capacity in the U.S. or in neighboring allies, you need to probably buy the equipment, the parts, the components from China in order to build it in the first place. And also, you don't just pop a factory out of nowhere. That's going to take time. It's going to be expensive. There's going to be investment involved.

there's just a lot of moving parts that to me it feels like they've got i mean i get it they've gone in to try and create maximum leverage and i think something else i find challenging is you can't trust anything out of out of china right do you know are they in a depression that there's a lot of commentators who say that china's on their knees and you look at other people and say well us is kind of not doing so well either right on a relative scale and where are these two what are the real tipping points we're going to have to find out but you know bond markets are going to tell a story. Equity markets tell a story of what's going on in the currencies. I also think if you look at commodities, commodities have been absolutely slammed. The Australian dollar

lost 5% in one day, just straight down, because we saw that all commodities went down. We're obviously a commodity-driven nation. We don't export anything except commodities. And when you see that, that means China is the biggest buyer of commodities. So if you think about it from like the Dr. Copper perspective, if all these commodities are saying something ain't right, it's probably something ain't right in China's backyard rather than elsewhere. So I think that's just one of those dynamics to pay attention to. It tells you China's probably not in the best position. Maybe that's why they're doing the tariffs so hard and fast up front. But at the same time, someone's going to have to back down, whether it's the Fed, whether it's China, whether

it's trump man tricky stuff very tricky stuff and i think the the way i'm what i'm anchoring to is you can try to point out one thing or another whether it's tariffs on china the back and forth sort of tariff war that's going on right now the basis trade and the hedge funds going offside europe in a weak position whatever you want to point at you can you can try to say it's this that or the other it's probably in reality a combination of all those things and that's just swinging at branches where the core of the problem is the money like we're in this situation because we live in this debt-fueled global financial system and this is ultimately what was going to happen eventually maybe not this exact situation was uh predicted by people but i think

you can just distill everything to there's too much debt not enough dollars to service that debt and regardless of what ultimately the catalyst was for pushing markets to the brink where they are right now um the underlying problem is this debt issue and we need to figure out how to reorient the global economy around better better money and get away from fiat and i think and there's a case to be made that's um no i agree and you know when you think about it what else do you hold at this point in time like imagine bitcoin didn't exist what else would you hold i mean it gold is the only answer at this point in time you're just like hands off i can't own equities can't own bonds can't own commodities what do you own you just gold's hand off just

see what happens, right? Because it is that neutral reserve. It's the shelling point. It's the ultimate shelling point. I'm just going to buy something that is going to be there on the other side of that. Now, we obviously live in a world where we've got Bitcoin as well. And whilst it's, you know, if you look at the general performance, the equity market, both NASDAQ and S&P, they have more or less given back 100% of their gain since the start of 2024. Bitcoin hasn't quite given back as much on a relative basis, right? We've started the year it's 42K back in 2024. We're trading at 78. So yes, Bitcoin is down 32% off its all-time high, but it's still doing much better since 2024 relative to equities. Equities are giving

everything back. And again, I'm not saying that there's some kind of decoupling going on. I think that's a little bit overblown here and there. But at the same time, if we take just a really big honest snapshot from the 1st of January 2024, gold is kicking ass, basically at all-time highs, barely come off its peak, up 3% today as well. Equities have given back pretty much everything, up 2% in the last, whatever it is, 15 months or so. And Bitcoin's up almost 2x for round numbers, 40k, 80k, it's up 2x. So that kind of gives you a bit of a ballpark that Bitcoin is somewhere in between gold and equities on a relative basis, just by that very crude, simple metric. but that kind of shows you the the lay of the land right there is and even though bitcoin is down

there's a lot i mean man the sentiment on twitter is just destroyed um it's been quite very interesting actually watching sentiment on twitter i find it a very interesting gauge a lot of people feel like they were cheated this cycle they didn't get the returns that they wanted so on so forth and i just look at the you know the stats i just mentioned even with this correction from all-time high, Bitcoin's up 2x since 2024. Just that simple dynamics, like people are missing the forest or the trees, sound money is doing a whole lot better than pretty much anything else you would buy. And relatively speaking, I mean, NVIDIA has come off quite a bit. I haven't checked the numbers recently, but NVIDIA has been the only asset that has outperformed Bitcoin over any

meaningful timeframe. And I would say, if we were to run the numbers over some recent history, I would say NVIDIA is giving back a hell of a lot more than Bitcoin is on a relative basis. Yeah. And that begs the question, what are you seeing on chain? Your newsletter, it's been, this week's been a whirlwind. I can't remember if this is a newsletter you wrote over the weekend last week or earlier this week, but basically- I think it was called Monday, mate. Top of the chop. It's Wednesday. Top of the chop. We're back in the seventies and in that newsletter, in the video you produced love love what you're putting out by the way it really helps settle me

i say this every time you come on but um i was using sort of what you were seeing on chain to sort of gauge like all right how how low could we potentially go and who knows this could be a respite bitcoins up a bit this morning um but what are you saying what do you think bitcoin does moving forward based off of what's happening it looks like we touched mid-70s we're floating back up you know i think on monday you said there's potential that we could go back to the 60s but you believe that trillion dollar market cap is sort of a floor that showed really strong support last year and is likely the support level if we head that direction moving forward. Yeah. And I view markets as a confidence game, right? And I think the quote that I used in

that piece was, in a sea of sand, a single flag becomes a target. I was just talking to Alex Thorne about this concept. It must be Return of the Jedi when C-3PO and R2-D2 get launched down and they start on Tatooine, they're in the sand. And then they say that little thing poke up and they start walking towards it because it's the only, I think C-3PO walks towards it because it's the only obvious thing to walk towards. So now think about that in the context of markets. We're out there in this sea of sand. You can't see anything. It's a shelling point. Suddenly, you see something that is crystal clear like, oh, I know that there was demand for eight months between $70K and $50K, that chop consolidation range. The market has a pretty decent idea that

there's confidence. People bought there. It's likely if we go back there, people are probably going to see demand again. So to me, it made sense. That's why the air pocket was just a really obvious thing for the market to want to go to, find out how much demand is down there. If you liked Bitcoin at 100, you liked it at 90, how do you like it at 75? Prove that you actually want to bid this thing higher. So to me, it's one of those just like natural gravity things that the market wants to test. Now, if we were to keep going lower, and in that post, I tried to identify like across a whole bunch of different metrics, MVRV, mayor multiple, all sorts of cyclical oscillators. This cycle is very different to previous cycles. Every cycle has its own resonance.

And when I say cycle, actually, I'm not talking about your four-year halving cycle. The more I look at the data, the more I start to just like piece together where things transitioned and changed. The first cycle, in my opinion, was a very retail-driven adoption cycle, ended at the 2017 peak. Everything had a different characteristic back then. The phase from 2018 till FTX blew up in 2022 also had its own unique characteristics. Lots of booms, lots of bust weather. 2019, straight up, bear market. 2021, straight up, bear market. Lots of vertical up and down. You can see it in the oscillators, big divergences, large amplitude, big up, big down. 2023 onwards much more structured an institutional type cycle has its own frequency has its own

amplitude it's smaller amplitude but it's far more stable we're down 30 and people are as bearish as i've ever seen them it's a really interesting dynamic so within that context the 75 zone top of the chop it is an area where you want the bulls to mount a defense this is about as bad as it's been in there's been two previous corrections the yen carry trade and kind of the late stage chop consolidation, and there was another one in August, September 2023. And all of those had about the same amount of damage, lots of fear, lots of realized loss, lots of investor response that was saying, this looks like a capitulation point. You want to see the bulls actually mount a defense here. So if they don't, the next step is we go

back down to the chop consolidation range, and we find out how deep into that we go. And the flag in a sea of sand for me down there, 65K is a model that I call the true market mean. It's basically the average cost basis for active investors. So if we get down there, you can roughly say that the average Bitcoiner is probably really, really sensitive. Or if you've been around for five years, you're probably underwater in your position. You're not enjoying it. You're not having a fun time anymore. So 65K is a really sensitive point. 67 is where my strategies cost basis is. I don't think it's going to liquidate strategy. I don't have any concerns about the business model of strategy, but you can imagine the headlines. Imagine the Bitcoin obituaries that are going

to be flashing across the screen. Imagine the Bloomberg terminal. Every TradFi guy in the world is going to be adding an obituary to that chart. That's a level where if you want to have a full scale capitulation, probably going to happen somewhere in there. I struggle to see the market going down to 40K. That's kind of the next major stop because then you're undoing the ETFs. And you're undoing a trillion dollar market cap. Can it happen? Of course. Do I expect it to happen? It's not my base case. It could happen in a flash event. If we go into some kind of really nasty recession, anything is possible. But I think 65, that's just a level where the damage would be so bad. I can see it starting to form. We'll see if we get there or not. The new administration is

pushing hard for government efficiency, but can Elon Musk and Doge fix the dollar? On April 16th, Ph.D. economist Peter St. Onge explains why Bitcoin is the most important tool for government efficiency and how the principles underlying the global shift towards sound money can help you protect and grow your generational wealth. Register now at Unchained.com slash RHR. That's Unchained.com slash RHR. Yeah, I'll be the resident bully here. I find it hard to believe that we're going to get there, going back to your flag in the sea of sand, because you have to, this basis trade is truly blowing up.

I mean, that was the really interesting part of the zero hedge piece from last night that reminded me. People forget the repo spasm of 2019, September 2019. The Fed literally created new facilities for these hedge funds to tap into the Fed window to get liquidity, to make sure that they were on side so that they didn't incite this long-term capital management like blow up that had rippling effects throughout the financial system. And I guess that's the big question and what Zero Hedge posed in their piece last night. It's like Jerome Powell's, it's like literally the man over the two buttons meme. Like, do I let the hedge funds fail or do I bail them out?

But by doing so, essentially let the market think that I'm bailing out Trump and his tariff policy and sort of bending the knee to what he's been beating the drum for the last year, which is lower rates, lower rates, lower rates. And it's just a very interesting predicament. I find it hard to believe that. I mean, just the history of my life, past performance is not indicative of future results, and past actions are not indicative of future actions. But every pattern recognition alarm bell of liquidity crisis Fed step in is going off in my brain.

I find it hard to fathom that they're not going to step in and bail this out with lower rates and probably they probably won't call QE, but QE by another name. And if that's the case, it'll be interesting to see if the long end of the yield curve reacts like it did last September when they began lowering rates and went in bursts to what people would have expected. And if that happens, then it's all bets are off. It's like you can't trust treasuries. There's no faith in this credit system and in the U.S. dollar system. As we've known it, like we need to find safety in assets that are completely detached from this, which Bitcoin, I think, will be very, very clear that it is one of these assets that is completely separate from this debt-fueled system. Yep. No, and I think that's relevant.

If you think about just tariffs, the simplest thing, if you're a company, suddenly your import costs have gone up. You're going to have to reshore supply chains. You've got to rethink about this stuff. Bitcoin doesn't have to worry about any of that. It literally doesn't have CEO risk. It doesn't have company risk. It doesn't have import risk.

It doesn't have employee risk. The whole point of it is it doesn't have any of these things. So gold and Bitcoin are clear examples there. There's another crazy world where you can say, well, Apple is probably going to pay back its debt, even if the US government is going to struggle to or print the money to do so. So in a way, people might pile back into equities just because they're a better option than, and I put out a tweet, it was a bit provocative, but the tweet was US equals EM, because in many ways, the US is trading a little bit like an emerging market, right? We're in the

times of stress and distress. People sell the bonds. They don't want to keep their money in the debt because they know that the debasement has to come in. And then they're not going to get paid back in real terms. And it's very interesting because I know that as Bitcoin is we've spent a lot of time thinking about this. I also know that just based on, you know, you and me, our age, there's a lot of people who've never experienced, right, properly when you're in your adult life and you've properly thought about and understood markets. I only got into markets in 2017. And even then, there's a learning process from here to there. And whilst I've spent a lot of time doing it, I'm not going to pretend to say that I've got experience trading in 1970s

inflationary crisis, right? Of course I don't. So there's a lot of us who we've thought a lot about this, but then to see it play out and to take all the new information in and see if it actually hits your thesis. Does it change anything? Does your way of thinking have to shift? And I think it will. We're all going to have to rethink our approach and how we think about these markets. But there's also a lot of things. I agree with you in full that the alarm bells are ringing. I remember, I think it was Christmas 2018. I was living in London at the time, and I remember the Powell pivot. Markets started selling off. It was a really nasty Christmas, and then suddenly assets start going higher again. Repo rate spasm in 2019, same thing.

COVID. I think COVID is almost a relevant example here because if you've got all these tariffs, some companies, they're not going to be able to get, you know, you can't drive a car or build a finished car if you're missing one chip, one computer chip that just stops the car from working completely, whole supply chain's wrecked. So there's going to be some component somewhere in the mix. That can't be found at some point in time because of these tariffs. And as a result, there's going to be shortages of things. There's going to be a slowdown in certain industries. There's going to be things that you didn't expect just aren't available and aren't there. So all of these dynamics, I mean, it's going to be so variable and so dynamic. I think people

should be really cautious. But at the same time, for me, what do you do? Bitcoin and gold and just wait, right? Have enough cash so if something goes really wrong, you're not going to get yourself in hot water because the most important thing, be solvent. You do not want to get yourself in a position where you've got to start selling your Bitcoin at a distressed price because you've got to pay bills. That's the worst possible thing. So make sure that you've got enough to get through some storm in the near term because I think that should be your base case. But I agree with you. You look at the alarm bells, you say, no political party wants to go into the midterms or any election in a in a deflationary bust they don't want to go into in a recession they don't want to

go into into a stagflationary environment they're gonna have to deal with all these things right all these variables but you know there's all these different tension um around the system and we're just waiting to see which one cracks and breaks first yeah it makes me i was wondering there's people tweeting about it last night went to bed thinking about it woke up thinking about it uh And if the bond yield situation gets out of hand, let's say the Fed steps in, their lower interest rates, QE, by another name, does nothing to prevent yields from continuing to scream higher. Is the U.S. government forced to think creatively and do something like a BitBond? Like, hey, we're going to put Bitcoin in the 10-year treasury, or at least some of the offering. and attach a lower yield to that just to make sure that we can service it.

Because that's the other thing. The deficit here in the U.S., it's on pace to be well over $2 trillion this fiscal year. You had Trump saying we're going to lower taxes. Obviously, this downturn in markets is severely going to hinder capital gains, taxes that the government's going to take in, and that's not going to be good for bond yields. And like, are they forced to think creatively? That's the thing.

Like, they've got no cap gains now. They just wiped out the whole year's worth of gains. So that's going to hit receipts, tax cuts. In this environment, going for tax cuts, that feels to me like the kind of thing where the bond market's going to go, nah, that's it. We're done. Can't own this shit anymore because where are you going to get the money from? How are you going to pay for any of this?

So, oh man, that's another variable, right? What do tax cuts do? receipts go down, if employment goes down, all of these things, it's going to make it worse and worse and worse. And then you look at it from the perspective of the negotiating table. China's aware of this. They know that the US is a hyper-financialized economy. They know that they're going to have all these hits. Which side starts to bend the knee first? I can't see it. And again, as a student of markets, I'm fascinated. This is the most fascinating. I think this is the most fascinating thing that's happened in a very long time. I don't know if they end up doing

BitBonds. And a lot of stuff when it comes to Bitcoin reaching that kind of adoption, I'm happy to be pleasantly surprised. I assume that none of that will happen. I still assume the government won't buy Bitcoin. I'm still in that camp. I will believe it when I see it. i still sit there and then i'm always pleasantly surprised when they do something like this but i just like i think they've got so many fish to fry right now and they're real real big suckers it's a uh it's a hairy environment interesting though i mean endlessly fascinating watching two lions go at each other yeah it's uh are we masochists because this is

it almost feels bad to i don't want to say getting enjoyment but it's like exhilarating watching this go on we've we've been talking about it for many years like pointing like hey probably should have run a global financial system using all this debt something's going to happen now it's happening and it's i'm not trying to be uh to let me shot schadenfreude on people and say look i told you so haha but it is like fascinating that the bitcoiners have been right we've all many of us have said like don't know when it's going to happen but just looking at the dynamics and the mechanics of the system as it's laid before me it seems like at some point in the future things are going to hit ahead and it seems like it's happening and not only that i

think the the uncertainty that has been introduced by this second trump administration is to such a degree where that is acting like an accelerant that can really really drive uncertainty to levels that were probably not believable only a year ago no i agree and i think the i don't think it's masochism i think i think at the end of the day we've done a lot of thinking and it's almost like having read the history book and then watching it and i had one of these experiences recently so i've been i'm traveling in the uk at the moment and on the flight over i finally sat down to read stephen mirren who's one of trump's economic advisors he's got that paper he uses guide to restructuring the global trade system. It's six months old now. And I'm reading, I'm like, man,

I wish I read this six months ago, because it paints the picture of what's going on. It's almost like saying, oh, yeah, that happened yesterday. They're talking about all these different ideas of how tariffs work, how currencies adjust, all these dynamics. So in many ways, I think it's just an appreciation for the scale of what's happening. There's 99% of the world who has no clue. In fact, there's another interesting thing. In all the hotels and just like as I've passed through public places where there's the news on here in Europe, so that's Ireland and the UK, every single time without fail, doesn't matter what time of day it is, Trump tariffs is the thing that's going on on the news. That is what has been on every single television I've walked past here in the UK. So that's an interesting dynamic.

I think there's also the scale of Europe sees what's going on and the rest of the world sees what's going on differently to the way America probably sees it. And even then, there's going to be divergences of two different Americas, right, on the political spectrum. So the whole world is looking at different perspectives, different views. Most people have no clue about the financial plumbing that's going on under the surface. It's a very, very small pool of people who've really done that work. I think a lot of Bitcoiners have done it as like a hobby. um you're probably the same as me i understand it what i would say like a cursory view at a hobbyist view i find it fascinating i don't fully understand i'm not going to pretend to

fully understand it but i certainly like putting the puzzle pieces together and so far a lot of it is matching up with the thesis a lot of the stuff we've been talking about right as we've all been and that's what i like about the um the i know people give shit to the bitcoin podcast scene it's a collective learning experience right i've been listening to you and matt for years we're just learning about how this shit works iterating through different ideas talking to different people who do have the experience and overall bitcoin has developed this interesting collective psychology just by learning from each other around the world which is a pretty cool concept to itself and now we're seeing it happen or the early signs of the big earthquakes we've

seen tremors here and there but now we're seeing the first real shock wave right covid was a shock wave. Russia invading Ukraine, that was a shock wave. This is another shock wave. And we're starting to see the frequency increase. The magnitude is getting bigger. And I think what makes this one really fascinating, you can reason about the scale of how good and bad it could get. You can see a world where they do, in fact, come to some kind of trade agreement. America does, in fact, reshore. And they do, in fact, get their production back online. You can see that golden era environment. And it's promising. I can also just as easily reason a world where it doesn't go so well and things get really, really hairy. And you can start to just understand the scale

of it, right? It's almost like you're kind of watching the moment when World War I started to just go from small spot fires around the world to like a mass configuration. So we're in that kind of environment. And I think it's just a recognition. It's just a recognition that we can sit we're observing it it's kind of playing into the thesis that alone is scary but you've got to be ready your thesis is going to get challenged the bitcoin thesis is going to get challenged i still think it's going to play out in the end because what the hell else do you own but it's uh yeah these are big puzzle pieces moving around the board yeah building on the steve mirren thread i don't know if it was that paper that you finally read on the plane or

something he said recently but he's been getting a lot of flack on on twitter for his comments that the reserve the u.s dollar as a reserve currency is actually a hindrance to united states economy because we basically explain triffin's dilemma like over the course of five decades it's hollowed out our manufacturing base and put us in a relatively weak position from a national security perspective and that alone like just acknowledging that triffin's dilemma exists and in some ways it's incredibly beneficial for the u.s economy if you believe that being a hyper financialized economy a service-based economy is an extreme privilege that allows us to accumulate a lot of wealth per capita without having to do many hard things outside of creating financial products

It can be viewed as a positive. It certainly worked in the benefit of the United States for a period of time, but I think we're reaching that sort of cresting point where the marginal return, the marginal benefit of being this hyper-financialized economy is beginning to become a marginal detriment to the well-being of the country. And that alone, that signal sent by somebody in the Trump administration that the U.S. dollar is the reserve currency is actually beginning to hurt the U.S. economy is a wild addition. Totally. And at a national security level, that's what I find so fascinating about it. It is if we don't look after Main Street, that's going to become our biggest problem. If we don't look after our people, that's going to be your biggest problem. you've got to look after your citizens. And it is, it's a fascinating, like, you know, moving of the Overton window. But I think that's the other thing, all these, could you imagine having this conversation three months ago, six months ago, no chance. The rate of change of

very large events is accelerating itself. So it's, yeah, it is, it really is wild to live through it and starting to theorize about what happens beyond here. But at the end of the day, the The Triffin Dilemma is ultimately pointing to you can't have a global reserve asset based on one nation because eventually the domestic needs get in the way of the international needs. So this way near the neutral reserve asset. It's just it's just that simple that they must be settled in that neutral reserve asset. And frankly, there's only two examples for that. And I've been on the on board with the idea of a hard money, soft money standard, like a jewel standard. I know there's a lot of talk about like, oh, you know, Bitcoin doesn't do the meter of exchange.

I'm not sure we're going to get to the point of doing the medium of exchange. What I think is going to happen is we're going to have stable coins, and there's a few elements to this. I think stable coins are just one highly clear piece of evidence that fiat isn't going anywhere anytime soon. And that is not because it's not evil. It is just because the average person on the street is so far away from understanding Bitcoin and gold and sound money.

they just how many bitcoin is i i run this thought experiment all the time just think about your circle of friends how many of them have you managed orange pill it's a small handful it's not it's not you're lucky if it's 20 so apply that across the whole society they're just a long way from understanding that fair money is a problem and you've also got governments who don't want to let go of that power so in a way my base case not what i want to happen what i think is going to happen is we're going to have a sound money, hard asset savings base, Bitcoin goal being the national to individual savings vehicles. And then you borrow soft money against it. If you've got Bitcoin, you borrow soft money against it. It actually makes a lot of sense. The collateral

keeps going up in value. The debt gets smaller. It's a way to recapitalize the system. So in a way, fiat almost has to have a second leg of existence where it kind of borrows itself and inflates itself out of the current debt problem because if they don't do that no one wants to go into the depression no like we can all say we want fiat currency to die no one wants to see it i'm telling you right now it's an awful situation no one wants to see it happen so i think the best possible way is it it almost like it fades away to irrelevance because you've got the hard money standard to bolster it from the background no and this computes with what i've been saying is that we should really be fostering it and a lot of the the individuals who want to go straight

to a bitcoin standard clamor against us but the bitcoinization of finance is the only way of my mind to manufacture the soft landing that people have been talking about for years just just like you said the system needs to be recapitalized with better collateral and there is going to be this transitionary period i i would agree where you have this dual currency system where bitcoin's collateral we're taking out loans against it into this ever-inflating fiat just to make sure that the average joe the common man can go about his life and you can have some semblance of a somewhat functional economy on the way to a bitcoin standard because if you just rip the band-aid off let everything collapse that's it's going to be much harder to build from there

i think a slow and the beauty of it is like the free market can make this happen and there's nothing we need from governments to sort of mandate this transition you're just going to see people issuing debt saying you know what if i'm going to give these dollars to you i know that they're being debased and the equity value of the asset you're trying to to purchase with this debt like i'm not too sure about that to make me more comfortable i want you to either bring some bitcoin to the table to put as collateral on this loan or we'll take some of the loan proceeds and buy bitcoin and hold it within the structure so that as a lender i sort of have um i sort of have my downside risk limited because i know it's the trust component yes i have assurance that i'm

going to get something at the end of it even if things go pear-shaped uh no totally and you know my background's in uh in civil engineering but specifically it's ground engineering and without fail if a building is going to have problems it's almost never the structure it's almost always the foundation. Because the foundation is what everything else is built on. And in the structure, you can build whatever you want. You can put steel there, you can put concrete there, you can fine tune it. We know a lot about those materials. In the foundation, you get what Mother Nature gives you. So if we bring the, I think Preston Pish has talked about this as well, because the foundation of the monetary system are treasuries, when they start having these tremors

and these shockwaves run through them, the whole building above shakes. So there's a process of actually replacing that foundation. It's not going to be easy. It's going to be damn expensive. It's going to be super volatile. But if we're putting in gold, Bitcoin, hard money as that foundational collateral asset, and slowly but surely swapping out the treasuries, now you can actually remove that Triffin dilemma. And you're basically delegating that risk to assets that can't fail, right? Bitcoin, gold, they can't fail. They don't have an issuer.

There's no CEO. There's no risk. So in that instance, there's no Triffin dilemma. So, you know, it's going to be a hairy process, and I think it's not going to be weeks. It's not going to be months. This is a multi-year process. It's a real fourth-turning shit, which, again, fascinating.

Yeah. I've had a few analysts on over the last few months, Mel Madison specifically has come on three times in the last four or five months, and I think what he put out there beginning of December last year was that if the Trump administration hopes to get to midterms and make sure that the Republicans hold the House and the Senate, he needs to rip the Band-Aid off immediately and let markets correct and figure out what's going to happen from there. And then you couple that with what Scott was saying in the lead up to the 2024 election before he was even being flagged as somebody who could be potential secretary of the Treasury was like he said publicly, like, I believe there's going to be a Bretton Woods 2.0 Plaza Accords like monetary order restructuring. And I want to be a part of that. And a lot can be lost in the fog of war. I think it's very safe to say that specifically today we are very much within the fog of war. There's people throwing shit all over the place, pointing fingers, blaming people. But if you look at the U.S. debt situation, the need to roll over trillions in Treasury debt.

Do you have a license for that Internet over there, sir? Testing, testing. Bedford, get your shit together. yeah apparently if you watch i don't know if you watch netflix you uh have to have a tv license as well because streaming's like you crazy are they free in the uk i don't think so um mate i mean i think there's the shades of shades of gray on what is what is free i mean even like australia is we're going through our own shit like we've just brought in this new rule goes live next year that uh if you're under 16 you're not allowed to use social media so how are they going to enforce

that they're going to force the id checks of everyone who is not 16 to prove that you are you know an adult which you just look at this thing it's like guys this is really obvious what this is this is not about under 16s on social media this is about controlling who is on the internet who is over 16 pretty obvious yeah i mean that's a that's another playing to this so that's the liberty-minded individual in me hopes that all these despotic governments get get uh defunded to a degree where it becomes impossible to implement these types of uh these types of surveillance programs and other orwellian ideas but i think i think that's a consequence of the times too these governments are losing

in control and they need to totally they need to like you like you mentioned earlier and the yeah we got the australian dollar fell five percent you have to make sure you id check people so they're not complaining about inflation the ones that are that's it they'll cut they'll cut your shitty internet off but yeah i mean i was listening to um before johnson sorry i was listening to brent johnson talking to danny the other day and uh you know his point was governments you know you may not like it but they're not your friend and uh they are going to bring in and reign in control because they don't want capital to fly they don't want people to escape they need people to hold the currency as the bag holder that's why

they're going to stuff pension funds for the shitty government bonds so you know they don't work in your favor unfortunately yeah that's another thing that's being floated in all this as capital controls even here in the united states you can argue the tariffs are a light form of capital controls where don't send your money outside the country because it's more expensive to buy those goods start start building them here um but yeah i was uh before we need we need peter mccormick to become mayor of bedford so we can get fiber optic cable laid uh in the city so that so that the internet is somewhat somewhat workable but i'm sorry about percent the lead up to this the need to the many analysts believe that if something was actually going to

get done in this administration and we're going to hold the house and the senate and essentially be able to see your mandate through a whole four-year term we'd need this quick and fast sort of correction let's just get the froth get the waste get the filth out of the system reset and move forward and it seems like we're in the fog of war many people are very pissed off right now but if you believe the analysts that are putting this theory out there that this is what they need to do to be able to uh to be able to reset things you have a you have a you have a fallback for a comeback if you will it seems like it could be playing out and i think that talking about fourth turning vibes all that like i think the probability of

people are calling it the mar-a-lago accords has gone up significantly in the last 16 hours i think many are severely discounting the potential that percent trump others really don't care about the long end of the yield curve because they know that it's a lost cause anyway and they just need to sort of force everybody to the table say look this is obviously a problem let's figure out what we got to do maybe we revalue gold um we rejigger oil contracts internationally we figure out we some of the debt maybe some of it gets relieved i don't know what that's going to look like like you mentioned earlier i'm not an expert i'm an observer i've had a lot of conversations over the years on these topics and i think that's been one of the common threads is if you look at

how treasury markets have been weaponized post russia ukraine if you look at how bricks countries have been posturing for the better part of a decade with their intent to diversify away from dollar dominated system um it seems like we could be living through sort of the rip the band-aid off make it very obvious that there's a systemic problem with U.S. Treasuries being the reserve asset of the global financial system and get everybody at the table to figure it out. That's an interesting theory because as you were talking, I was contemplating this idea, you know, how they revalue the gold, this whole idea, it's an accounting gimmick. What if it's not an accounting gimmick? And again, this is just me kind of contemplating things.

If they were to revalue the gold, bring the, whatever it is, eight and a half thousand tons up to current prices. Yes, they would get the deposit of the trillion dollars or so. But then they could also say, well, China's got gold, Russia's got gold, all the big trading partners have got gold. What if we now actually allow gold to flow in and out of vaults and actually start to circulate and settle these differences? So in a way, the debt can be, we can all understand that, yes, things from here on will be settled with gold. And that could be that kind of base level, actual base level settlement and in a way we can then work through because in theory oh man am i cutting out again i'll just rip here while we're waiting for james to come back

yeah i think i would not discount the potential and don't call me a trump apologist okay don't call me just just thinking through this we've been talking about this for eight years now on this podcast yeah money's broken we've been talking about the big print the sovereign debt crisis the unsustainability of the edifice of the financial system for eight years it seems like it could be coming to a head and the optimist in me wants to believe that there are people in positions of power scott percent specifically and some others surrounding him to understand the gravity of the situation like we mentioned he opined on this many times last year there's going to be this global monetary

reordering and i would not be surprised i will not be surprised if we find out at some point down the line may not be this month may not be this quarter may not even be this year but we realize that they understood this and decided to pull the ripcord let volatility spike let the rot of the system be laid bare to the global audience and force everybody to the table to say this is obviously unsustainable we need to figure something out what gets figured out i have no idea there's a very good potential that it's not beneficial for all of us could end up with some more willy and bullshit on the other side

but hopefully we can get the Bitcoin message out there while this is happening what do you do as an individual, as a listener as somebody worried about the quality of life for your family moving forward you know what I'm going to say I think Bitcoin is an asset you want to hold but beyond that

make sure you have a strong local community I truly believe that this Bitcoinization of finance is the only manageable path out, the only way to make things manageable over the next decade, two decades. It's going to take a while. It's going to be a long haul. Get down on yourself.

Become a doomer. Say the world's shit, or you can look at it as an opportunity. This waste, this froth, this inherently immoral system that we've been talking about for eight years seems to be faltering, maybe on the potential of complete failure just scary you've worked hard your life your whole

life you've went to school you've gotten your degree you're working in your your cubicle job slaving away in excel and you've always had that that feeling deep inside i'm not meant to do this this isn't human this is inhumane this is the best way i could be spending my time my finite time on this planet. Probably not. You say to yourself, but you get back you do your V lookup you say I gotta do this to get my paycheck I need to get beers with the boys

this weekend. The Masters is on. You have the potential to embrace the chaos and view it as an opportunity to get yourself and society on a path that's more virtuous, that allows you to do things that are worth doing,

that value your time, that actually benefit society in the whole. Like those cute monkey jobs, those B2B SaaS jobs. If you're an SDR out there calling people like, hey, you're an enterprise company. You need to use this B2B SaaS product to make your team more efficient. soulless somewhat soulless I would say

a lot of this is driven by this high velocity trash economy driven by fiat debt which leads to this misallocation of capital that props up these

these soulless businesses these soulless careers we get back to sound money I like to think seen it in my own life you lower your time preference as an individual

enough individuals in your community hold bitcoin collectively you lower your time preference as a small community take that up to the state level nation state level

opportunity cost is brought back to the market and you're forced to weigh the decisions is allocating my capital towards this endeavor worth parting ways with this Bitcoin, this hard money that I've worked so hard to accumulate you begin thinking about first order effects second order effects, third order effects

of parting with your Bitcoin to invest in a business or some sort of endeavor that you're passionate about. And you're forced to think, do I think I can get more Bitcoin at the end of the day by releasing this capital to go do this thing? And I think that'll make people think twice. If I don't get that Bitcoin back,

will I be happy that I did this thing? If the answer is no, it's like, all right, I'm going to keep my Bitcoin and think about something else to do. If I spend my Bitcoin on this and it doesn't work out, would I be proud of myself? Would I be happy with myself? You know what? That's a risk I'm willing to take.

So I'm going to do it because even though there's a possibility I may not get my Bitcoin back, I think this is something worthwhile, something that brings my life meaning. It gives me hope. That makes me feel like I'm being productive and bringing value to society. It doesn't have to be starting a business. It could be working for a business, hopefully. The signal that's sent to the market after an individual goes to part ways with their Bitcoin to start that business. Others out there who maybe don't have the risk tolerance to go start a business, see a business being started and say,

Hey, that seems worthwhile to me. That seems like a job I could go to and feel good about myself at the end of the day. I'm waxing poetic now, but I'm trying to paint a picture. We're in the fog of war. Things are chaotic right now. I walked out my house this morning to take my boys to school. My neighbor's a wealth manager at Morgan Stanley, and he's got a standing desk, like, right in the front window of his house. And he's got a TV on the wall, and he was just, like, arms crossed, watching CNBC. I was thinking about him. I was driving the boys to school and then driving into work today to talk to James.

I don't know if he's coming back, but we'll see if James comes back. But those people, what are they thinking? Stress, fog of war, probably thinking this is the end of the world. It's not the end of the world. Life goes on. The show must go on, Logan. It has to. You got to get up.

The sun's going to rise. The sun's going to set. Your kid's going to wake you up, slap you in the nuts and say, hey, daddy, get up. It's another day. They're completely oblivious to that, to all this going on. And I think that's what we get to anchor to. And despite all the attention, all the energy, myself included, that we've put into trying to dissect this global economic situation,

we find our end sort of detaches us from the reality of everyday life, the important things, your children, going and talking to your neighbor, getting outside, touching grass, basking in the glory of the sun. I know many of you are scared out there right now. There's good reason to be. I would also urge you to look at it as an incredible opportunity to get things on the right path. What do they say, Logan? It's darkest before the dawn?

Is that the phrase? It's pretty dark. it's pretty dark out there freaks I would posit that there could be a dawn on the other side of this darkness we're gonna win it's gonna be hairy

hug your kids talk to your family don't go crazy don't be pointing fingers at everybody certainly people that are culpable for this tariffs could have pulled forward the collapse of this uh sovereign debt crisis that exists globally by a considerable amount of time but it was inevitable it was always inevitable as parker

lewis likes to say every time he comes on the show there's too much debt and not enough dollars the system is forced to expand and hopefully um what's happening right now is the wake-up call there's been many wake-up calls mylife.com bubble 2008 repo spasm 2019 covid 2023 banking crisis now we're here at 2025 if you play that together it looks like things are accelerating the time between each of these shock waves as james describe them before his shitty internet in Bedford, England, crapped out and he had to drop off the call. Shockwaves are getting more frequent and more severe. Hopefully this is the wake-up call that forces people to reckon with the fact, with the fact, with

the fact that the central planners do not have control. They would like to present to you that they do, but they really don't. And I think that's a liberating wake-up call when you realize they don't have control. I should not allocate control over these important aspects of my life to these central planners. I need to take control myself. Bitcoin allows you to do it. That's the beauty of it. We don't need to ask them permission to bring back sound economic policy to your personal balance sheet you can do that yourself by accumulating bitcoin i truly do believe that's why i do this podcast for an episode what 607 i think i produced 607 episodes of this

logan's maybe more maybe more 608 times i've hopped behind this is like six 605 605 so not Not quite yet. Plus a bunch of RHR. Plus a bunch of RHR. We got Bitcoin Alpha now, so cumulatively more than a thousand podcasts. Talking about this in one way or another. It's because I truly believe, I do this because I truly believe that Bitcoin is the signal in this sea of noise to wax poetic and throw out some more platitudes to you freaks before we wrap up here. I think we can get through this.

I think Bitcoin is part of the solution. but another part of that solution is the wake-up call the recognition that we cannot trust these central planners trust yourself trust your neighbors trust your family trust your community that's how we're going to get out of this everybody pointing fingers right now hey it's 0.72 millennium all these hedge fund guys getting over these skis on these basis trades hey it's Donald Trump, Howard Lutnick, Peter Navarro with their crazy tariff policy. Look, it's China. They're selling our U.S. treasuries.

All that may be true. Parts of that may be true. Some may have more influence on the outcome than the others. That's swiping at branches. Slashing at branches. The core of the problem lies underneath all that. Until we recognize that the central planning of our monetary system based on debt is the core of the problem, we're not going to fix this. So hopefully, the shockwave is a wake-up call to anybody listening out there.

Trust yourself. Find safety in sats. Greeks, thank you for listening to the show. I hope you liked it. If you did like it, please make sure you subscribe, rate, review the show. It helps us out a lot. and also if you like these conversations i've come to realize that many people listen to the podcast they don't know we have another sort of layer of this media company we have the newsletter

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