The Breakdown - The Global Economic Order on the Brink

Episode Date: May 1, 2025

In this episode of The Breakdown, host NLW explores legendary investor Ray Dalio's recent update on the shifting global monetary order. Dalio asserts that the U.S. is nearing a significant decline due to unsustainable economic fundamentals, and nations are now actively reducing their dependence on the U.S. dollar. NLW discusses Dalio’s vision for a cooperative, negotiated global financial realignment rather than a chaotic collapse, highlighting the potential roles of Bitcoin, stablecoins, and digital assets within this transition. The episode concludes with a comprehensive overview of how key countries—including the U.S., Canada, Russia, the UK, and South Korea—are shaping their crypto policies in response to these global changes, underscoring digital assets' increasing influence in international economic strategies. Sponsored by: ⁠⁠⁠⁠⁠Crypto Tax Calculator⁠⁠⁠⁠⁠ Accurate Crypto Taxes. No Guesswork. Say goodbye to tax season headaches with Crypto Tax Calculator: Generate accurate, CPA-endorsed tax reports fully compliant with IRS rules. Seamlessly integrate with 3000+ wallets, exchanges, and on-chain platforms. Import reports directly into TurboTax or H&R Block, or securely share them with your accountant. Exclusive Offer: Use the code BW2025 to enjoy 30% off all paid plans. Don’t miss out - offer expires 15 April 2025! Ledger Ledger, the world leader in digital asset security, proudly sponsors The Breakdown podcast. Celebrating 10 years of protecting over 20% of the world’s crypto, Ledger ensures the security of your assets. For the best self-custody solution in the space, buy a LEDGER™ device and secure your crypto today. Buy now on ⁠⁠⁠⁠⁠Ledger.com⁠⁠⁠⁠⁠. Enjoying this content? SUBSCRIBE to the Podcast: https://pod.link/1438693620 Watch on YouTube: https://www.youtube.com/nathanielwhittemorecrypto Subscribe to the newsletter: https://breakdown.beehiiv.com/ Join the discussion: https://discord.gg/VrKRrfKCz8 Follow on Twitter: NLW: https://twitter.com/nlw Breakdown: https://twitter.com/BreakdownNLW

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 Wednesday, April 30th, and today we are talking about the monetary order on the brink. 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 slash breakdown pod. Well, friends, legendary investor Ray Dalio has added a new chapter to his thesis about the changing world order. In an essay shared on Twitter, Dalio wrote, It's too late. The changes are coming.

Dahlio's previous thinking had been all about the transition from American to Chinese leadership in the monetary order, informed by the long debt cycle that inevitably brings empires to their knees. People around the Trump administration are obviously familiar with this thesis. It's referenced constantly on the All In podcast, which of course has very direct ties through crypto-NAIs are David Sacks. What's more, administration figures like Scott Bessent, Howard Lutnik, and Stephen Moran move in the same hedge fund and finance circles. Their prescriptions for reversing the decline of U.S. hegemony seem targeted at the symptoms pointed out by Dahlio. However, in this new writing, Dahlio suggests it's all for not. Dahlio claims that trade partners

are expressing a need to drastically pull back from the U.S., quote, recognizing that whatever happens with tariffs, these problems won't go away, and that radically reduced interdependence with the U.S. is a reality that has to be planned for. Dahlio's thesis isn't about trader manufacturing. These are just part of the picture as the U.S. loses control of the monetary order. He writes that the United States' role is the largest consumer and the greatest producer of debt to finance that overconsumption is unsustainable,

adding, assuming that one can sell and lend to the U.S. and get paid back with hard, i.e. not devalued dollars on their U.S. debt holdings is naive thinking. So other plans have to be made. According to Dahlio's indicators, quote, we're on the brink of the monetary order, the domestic political and international world orders breaking down due to unsustainable bad fundamentals that can be easily seen and measured. He reinforces his view that these patterns are

consistent throughout history, not a newer unique phenomenon. Dahlio further argues that there is a growing risk that the U.S. by imposing these challenges on the world will, quote, increasingly be bypassed by a world of countries that will adapt to these separations from the United States and create new synapses that grow around it. Concluding, Dahlia suggests that a calm, analytical, and coordinated approach to reorganizing the global order and dealing with the U.S. debt problem would be best. Quote, with the imbalances and needs for self-sufficiencies treated as shared challenges, to produce the beautiful de-levergings and rebalancings that need to take place. Under the Trump administration, Dahlio comments, we haven't seen the better ways and have instead

seen disturbing fighting and volatility that are teaching lessons that are leading to irreversible bad consequences. Ultimately, Dahlio seems to suggest that time is running out, concluding, I fear we are moving beyond the ideal time to be knowledgeable about and properly plan for these big changes in the world order and believe that investors, policymakers, and other decision makers need to stop undulating their views and positions in reaction to the day-to-day market moves and policy announcements, and instead deal with these big fundamental changes in the world order calmly, intelligently, and ideally cooperatively. Now, Ray Dalio's long debt cycle thesis is one of the most resonant in the current economic climate.

Even if you don't agree entirely, his views are being considered and integrated into global policymaking as well as being debated around Wall Street boardrooms. In this essay, Dahlio is calling for a calm negotiated shift in the global world order that can be beneficial for all instead of a disorderly collapse. In other words, a new Breton Woods rather than a repeat of the fall of Rome. Dahlio doesn't express a view on what this would look like. He never has beyond the need for hard money. Instead, his role is to call attention to the signs of deterioration of the system. One of the key criticisms of Dahlio's thesis over the years has been that the Chinese Yuan is not a suitable replacement for the dollar. Even as,

As the U.S. begins a painful rebalancing, we see no movement from Beijing to open their capital account and take on the mantle of the global reserve currency. Now, in that context, it's plausible that Bitcoin rises to play a role at the center of the new global monetary order. The arguments both for and against Bitcoin as a global reserve asset are numerous and well-trodden, so at least in this show, we will not repeat them. The important point is that between Bitcoin, stable coins, and tokenized markets, digital assets very clearly have an important role to play in whatever comes next. This does not necessarily mean that Bitcoin will be come the dominant reserve asset replacing U.S. treasuries. But even a minor shift leaves Bitcoin

in the global order in a very different position than it is today. With Dahlio's updated reasoning across the financial world, I thought it would be a good opportunity to take stock of where various countries are regarding crypto policy and adoption. Each nation is moving at its own pace and adopting its own set of priorities and how it engages with digital assets. A few years ago, these policy discussions seemed like they were only relevant to regulation of a fairly niche part of capital market activity. But if digital assets play a major role in the shift that Dahlio sees coming, we could be observing nations establishing themselves as early adopters or cutting themselves out of the next monetary order. So let's start in the U.S., where former chair of the House Financial

Services Committee Patrick McHenry is predicting a, quote, wicked hot summer of legislation for crypto. Although he has resigned from Congress, McHenry still has an ear to the ground in Washington. During an interview with Bloomberg on Tuesday, he said, it's go time for digital asset policy. Congress is back in session this week and Stablecoin legislation is near the top of the agenda for Republicans. Politico reports that Senate leader John Thune told the caucus that he plans to hold a vote on Stable Coins by Memorial Day at the end of next month. And yet there are still a number of unresolved issues with the bill. Bank lobbyists are pushing for issuers to require a banking charter, giving the incumbents a leg up and bringing new regulated stable coins to market and cutting out tech companies. Meanwhile, there is a tether-sized elephant in the room with debate on how much leeway to grant international issuers before they come into compliance.

overarching at all are reports that Coinbase lobbyists are pushing for stablecoin and market structure bills to be bundled up into one megabill. Their logic is that with stable coins crossed off the list, there may not be an appetite to come back and sort out market structure legislation, which is a much heavier lift. Opposing lobbyists have criticized this view, suggesting it risks ending up with nothing instead of taking the win on establishing clear rules for stable coins. Now, it's encouraging to see stable coins stay front of mind in the Senate as there is a lot of noise in Washington that could drown out the crypto agenda. Ron Hammond, Senior Director of government relations at the Blockchain Association pointed out, Congress has a slog ahead of them with a big multi-trillion budget bill carrying a large part of Trump's domestic policies, corresponding cuts,

and setting the stage for the big tax bill. That bill will dominate DC's attention for the next several weeks, and this highlights a newer dynamic for crypto, floor time. Rarely have we had crypto bills get to the stage of needing a full House and Senate vote, but this is the year and already stable coins are in that position. Floor time is precious and every minute counts. One factor not to be discouraged, though, is Trump's consistent message that he wants a crypto bill to sign by August. Hammond flagged that market structure is set to be discussed at a House Financial Committee hearing next week, with a draft bill typically prepared ahead of these hearings. Hammond expects that the crypto industry will have wide-ranging views on the bill, commenting,

unlike past efforts, this bill has a very good chance of getting signed into law, so text matters. And of course, in all of this, there is a political dimension. This could easily change. But one of the consequences of the tariffs right now is the potential for upheaval when it comes to power in the Senate and the House in next year's midterms. If Democrats come back into power, the crypto industry could once again find itself with a hostile Congress by the beginning of 27. In other words, if crypto legislation is going to move, it really needs to move now. Today's episode is brought to you by Crypto Tax Calculator. If you're looking for accurate

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Ledger and their ecosystem what they have available to you. So thanks, once again, to Ledger for sponsoring the show. Now, north of the border, Mark Carney has won the Canadian election and will lead the Liberal Party in a fourth consecutive term. If your lens on recent politics has been the globalists against the Bitcoiners, then nowhere in the world was that more apt than in Canada. Carney was previously the governor of the Bank of Canada, then served for seven years as the governor of the Bank of England up until 2020. In 2025, after Justin Trudeau called a leadership challenge, Carney won a party vote to become the next prime minister, despite not being a member of parliament at the time. Carney's career began at Goldman Sachs, where he became the co-head of sovereign risk,

playing a role in resolving the 1998 Russian financial crisis. In short, Carney is a poster boy for the established world order that Dahlio believes is coming to an end. In his victory speech, Carney actually referenced the changing world order declaring, our old relationship with the United States, a relationship based on steadily increasing integration is over. The system of open trade anchored by the United States, a system that Canada has relied on since the Second World War, a system that, while not perfected, has helped deliver prosperity for a country over decades, is over. Carney's opponent was Pierre Poyleev, a hard money conservative and declared Bitcoin holder. He had a massive lead in the polls up until Trump's Canadian tariffs sparked a back

backlash against conservative politics and a rally around the flag effect for liberals. The conservative leader performed so poorly in final polling that he's now projected to lose the Ottawa seat that he held for two decades. And with the defeat, crypto will be far from the top of the agenda in Canada. Carney's mandate seems to be largely about pushing back on the Trump agenda and holding the line on Canadian national interests. That doesn't preclude negotiations across the northern border, but there's probably not political capital to be gained for spending any time on crypto policy, which is increasingly associated with Trump. Carney himself has few comments. on crypto beyond the application of blockchains to payment infrastructure. Unsurprisingly,

for a former central banker, he has in the past been dismissive of Bitcoin, stating in 2018 that it's failing to compete with traditional currencies. Many Canadian bitcoiners are largely convinced Carney will usher in a Canadian CBDC as a top agenda item, but that remains to be seen. Meanwhile, over in Russia, interesting headlines continue to come out as the pariah state investigates crypto as a path forward. Over recent months, reports have suggested the Russian government is beginning to encourage Bitcoin and stablecoins to be integrated into global trade. Last week, local reporting stated that the central bank in collaboration with the finance ministry was preparing to launch a state-run crypto exchange. This news came shortly after Russian

exchange, Garentex was sanctioned and had its website seized in a global crackdown. Speaking at the Moscow blockchain forum, Garantex founder Sergei Mendelieve proposed a replica of tether in his keynote speech. He presented seven key criteria, including no KYC on usage, untraceable transactions, and no freeze function on the smart contract level. Mendeleave also wanted to use Dye's over-collateralized model to create the ruble-denominated stable coin. The founder noted the token would need to comply with Russian legislation so is skeptical the product could emerge soon. Hopping around again, the UK continues to be one of the most will they or won't they jurisdictions in the world. The domestic financial regulator

has a longstanding history of writing crypto regulations and then finding fault with almost every crypto firm that attempts to register. On a recent trip to D.C., Chancellor of the Exchequer, Rachel Reeves met with U.S. Treasury Secretary Scott Bessent to discuss collaboration on digital asset regulation. This could indicate a thawing of sentiment from the UK's labor government, and indeed, in a statement, Reeve said she's looking to make, quote, Britain the best place in the world to innovate. She added, firms offering services for crypto assets like Bitcoin and Ethereum will be subject to new, clear rules, boosting investor confidence and driving growth through the plan for change. A main point of collaboration seems to be a cross-border sandbox for crypto and tokenized

asset markets. This pilot program was proposed by SEC Commissioner Hester Perce last year and would allow large financial firms in each jurisdiction to experiment with blockchain-based market infrastructure. Alongside the announcement of new regulations to come, the UK Treasury also flagged a crackdown on bad actors, stating, today's announcement sends a clear signal. Britain is open for business, but closed to fraud, abuse and instability. The government will bring forward final crypto asset legislation at the earliest opportunity, following engagement on the draft provisions with industry. Ian Silvera, the associate director for the Self-regulatory Trade Association, Crypto-UK, lauded the announcement, calling it very much welcomed in a big victory for crypto firms.

However, he criticized the slow progress, adding, the UK government first committed to becoming a global crypto hub in 2022. Progress has been slow since then, but as the Chancellor has recognized herself, the mainstreaming of the industry has continued, with now 12% of all UK adults owning some sort of crypto up from 4% in 2021. Now moving through a few more to wrap up our global view quickly. South Korea's ruling party has pledged a wide range of crypto reforms if they're successful in the June election. The right-wing people power party said that they would allow trading of spot crypto ETFs as well as expanded bank access for crypto exchanges. The promises to the crypto industry could be cynically viewed as a last-ditch effort to boost the party's

chances. While crypto regulations are strict, South Korea has one of the most fervent retail trading communities on Earth. Local crypto volumes frequently outpaced the domestic stock exchange. And the ruling party could definitely use a crypto boost, with the opposing Democratic Party holding a dominant lead in the polls. Meanwhile, in Italy, the central bank has warned that Bitcoin and Stablecoins represent a financial stability risk. Over in the European Union, Krakken has announced a new partnership with the second-largest neobank in Europe, called Bunk. in Abu Dhabi, Circle has been approved and is one step closer to full operations as a regulated money services business in the Middle Eastern Financial Hub. And so all of this is to say that crypto

adoption moves a pace, that the sense of trajectory around the world is clear, and that whatever the new global order that comes after the end of this one, crypto and digital assets definitely are going to have a seat at the table. For now that 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.