The Breakdown - The End of Money as You Know It

Episode Date: June 8, 2025

On today's Long Read Sunday, NLW explores Hugh Hendry's provocative essay "Sovereignty 3.0," examining how rising Treasury yields signal the collapse of traditional financial structures and the emergence of Bitcoin and stablecoins as new forms of sovereign power. Is the dollar becoming a weapon, and can Bitcoin actually replace it as global collateral? Source: https://x.com/hendry_hugh/status/1929917531159920951 Brought to you by: Grayscale offers more than 20 different crypto investment products. Explore the full suite at grayscale.com. Invest in your share of the future. Investing involves risk and possible loss of principal. To learn more, visit ⁠⁠⁠⁠⁠Grayscale.com⁠⁠⁠⁠⁠ -- ⁠⁠⁠⁠⁠https://www.grayscale.com//?utm_source=blockworks&utm_medium=paid-other&utm_campaign=brand&utm_id=&utm_term=&utm_content=audio-thebreakdown)⁠⁠⁠⁠ Enjoying this content? SUBSCRIBE to the Podcast: https://pod.link/1438693620 Watch on YouTube: https://www.youtube.com/@TheBreakdownBW Subscribe to the newsletter: ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠https://blockworks.co/newsletter/thebreakdown⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ Join the discussion: https://discord.gg/VrKRrfKCz8 Follow on Twitter: NLW: https://twitter.com/nlw Breakdown: https://twitter.com/BreakdownBW

Welcome back to The Breakdown with me, NLW. It's a daily podcast on macro, Bitcoin, and the Big Picture Power Shifts remaking our world. What's going on, guys? It is Sunday, June 8th, and that means it's time for Long Read Sunday. Before we get into that, however, if you are enjoying the breakdown, please go subscribe to it, give it a rating, give it a review, or if you want to dive deeper into the conversation, come join us on the Breakers Discord. You can find a link in the show notes or go to bit.ly. All right, friends, back with another long reads episode. Today's read is actually not all that long, but it is an interesting one.

This is from Hugh Hendry. Now, Hugh, if you've ever seen him in interviews, he's been on this show before, a long, long time ago. He is quite the character. His Twitter bio reads, former global macro hedge fund manager distilling market insights via his alter ego, the acid capitalist. Now, he does have a paid substack called The Ascuit. Acid Capitalist, but this piece was published on Twitter slash X, with a very cool image of an eagle with a Bitcoin B on its chest, and the caption, The Death of Money, the Birth of Power,

and the piece itself is called Sovereignty 3.0, the end of money as you know it. Hugh writes, The dollar is no longer a currency. It's a weapon. Bitcoin is no longer a trade. Regime change is live. Ever sit under the Caribbean sun, spike your coffee with MCT oil, and feel your brain light up like a circuit board, that's where this begins. I just got off the phone with George

Gammon. We started with my St. Bart Summer Camp. Strangers arrive as guests, they leave his tribe. This is not vacation. It's an odyssey. August 17th to 22nd, ideas are currency. And one idea haunts me now. The 30-year U.S. Treasury yields sitting at 5%, whispering the death of money. Editor's note, NLW, here, one thing that I should have noted before I dug in is that, as you will see, Hugh's writing style is not traditional when it comes to finance. In any case, let's reinforce that last line. One idea haunts me now. The 30-year U.S. Treasury Yields sitting at 5%, whispering the death of money. The financial system cannot bear it. Too much debt, too much leverage. The superstructure creaks under its own weight. Treasury yields scream what the headlines

dare not say. Something deeper is breaking. The signal keeps flashing one word. Bitcoin. Gold has a thousand years of data. Bitcoin doesn't need it. The chart writes its final chapter. Gold sits at $20 trillion, Bitcoin at two. Coil is set. One violent clip, a nudge, and it's a million dollar a coin. You will not have time to react. Coil never gives second chances. Meanwhile, I hunt for wind, not random gusts. Government wind. Elon caught it with subsidies. Now it blows towards Bitcoin. The state wants this. They don't want gold. They want control. offshore euro dollar system haunts Washington, a private, digital, unregulated world of dollar creation beyond U.S. sovereignty. The Fed doesn't own it, Treasury doesn't control it, yet it dwarfs official

money supply. More dollars are created out there than onshore. Trump's people see it. They want that financial energy back. Stablecoins backed by treasuries. The fusion of Bitcoin and sovereign power. The stable coin tethered Tee bill is their weapon to drag global capital home. Why? Because the old money game was rigged. China trade washed its exported goods, collected dollars, recycled them into treasuries, kept its currency cheap, and ran infinite surpluses. A global imbalance locked in place. But economies must balance. The surplus model is dying. Trump wants to force recalibration. How to fix this? Let me be provocative in the extreme. Don't cut the deficits. Cut the surpluses. Make China and surplus nations consume. Force them to buy goods, not paper. And that's exactly

where we're headed. End America's twin deficits. That's the pivot. Now imagine U.S. nominal GDP holds at 5 or 6%. Shorn of the mercantiless surplus, American debt stops outpacing growth. Scarcity forms, like island land that cannot expand. Scarcity always attracts capital. Stack on the stable coin architecture. This is regime change. We began with sovereign gold, then euro dollars offshore with infinite leverage. Now comes money 3.0. The state fuses stable coin with Treasury collateral. banks become irrelevant. The state merges with a ledger. This is how banks die. You don't need loan officers. You need sovereign sponsorship. You need code. In the old world, gold was collateral. In the world I see, treasuries and bitcoin sit side by side as new high-powered collateral.

And whoever controls that stack controls global credit. The stable coin carry is simply banking profit stripped of banking regulation. Tether proxies will be the best banks in the world. No branches, no regulators, just a machine spinning yield off sovereign collateral. Coil tightens, the system trembles. This is not theory, this is the edge. Today's episode of The Breakdown is brought to you exclusively by Grayscale. Grayscale is almost certainly a name you know. They've been offering exposure to crypto for over a decade now and offer over 20 different crypto investment products ranging from single asset to diversified to thematic exposure to crypto and the broader crypto industry. They have long been innovators at the intersection of

tradfi and crypto, and one of the benefits for a lot of us is that Grayscale products are available right through your existing brokerage or IRA. Now, of course, investing involves risk, including possible loss of principle. For more information and important disclosures, visitgrayscale.com. Go to grayscale.com to explore their full suite of crypto investment products and invest in your share of the future. So the game's shifting, the old order breaking. You want to trade it? Here's where I'm putting my attention. One, Bitcoin. Washington wants it. Bitcoin no longer a rebellion. It's becoming state-sanction collateral. A digital sponge to pull global liquidity into America's orbit. I want more exposure before it detonates higher. Two, Boeing made in America. The Saudis aren't just

buying treasuries. They're now buying planes. Lots. Boeing's running at 35 a month. Demand wants 100. You're buying 20 years of underperformance, but the demand cycle is only just starting. 3. Soft agriculture. Corn, wheat, beans. The surplus nations need to rebalance trade flows. America grows what the world eats. Global recalibration equals rising food exports. Four, natural gas. The graveyard is turning. Political barriers are falling. America will export energy like never before. And China's trillion dollar surplus needs to hide somewhere. This isn't advice. This is the edge, the coil snapping live. The playbook the financial media can't see. All right, back to NLW here.

Obviously a fun little piece. Certainly pretty rah-rah for us Bitcoiners here. Now, one of the things that's interesting is that this piece comes at the time that for a little while, the most interesting story was Circle going absolutely mad the day after its IPO. Now, of course, that was a little bit upended by the political version of the Drake v. Kendrick fight,

which I assume I don't need to get too much into here. But before that, it was very clear that bankers had fundamentally mispriced how hard Wall Street wanted exposure to the stablecoin ecosystem. The IPO went out at like 30, 31, and Circle got all the way up to 96 at one point. I don't think that that's people just because all of a sudden decided that they liked the company. I think it's because they have no place to put stablecoin exposure elsewhere. Now, of course, speaking of the political Kendrick-Drake fight, those moments of instability also certainly push people for totally different reasons to the same sort

of thoughts he was having here. All in all, it was a very interesting piece at a very very very interesting time that got even more interesting in the context after it was released. Anyways, friends, fun little food for thought on this long reads episode, but for now, that's going to do it for today's breakdown. Appreciate you listening, as always, and until next time, be safe and take care of each other. Peace.