The Wolf Of All Streets - Bitcoin Sell-Off SHOCKS Markets. Here's Why Investors Are Flocking To Gold! | Macro Monday

Episode Date: March 17, 2025

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Hello everyone! Noelle Acheson here. I'm the author of the Crypto is Macronown newsletter and I am filling in for Scott today. Very big shoes to fill, but it is an honor to be here with you all, not to mention a lot of fun. And there's so much to cover. I'm thrilled to be joined by the usual gang, Dave Weisberger, Mike McGlone, James Lavish. Hi guys. Before we dive in, so much to talk about, please do hit the subscribe button right below. And if you've already done that, then you'll see right next about, please do hit the subscribe button right below.

And if you've already done that, then you'll see right next to it, there's the like button. Please hit that also. So let's dive right in. Things are moving fast in the world. Mike, what are you all talking about at Bloomberg on the macro front? Well, I'm a bit concerned after our morning meeting. Our two major economists and equity strateg equity strategies Anna Wong and Gina Martin Adams What kind of came out for me from them is it's clear that they're not influenced by senior management

You're on a sell-side shop. You have to be very careful being bearish and they were very hawkish today I was quite surprised to keep some key quotes is from Anna the FOMC is coming up market Her quote is markets not ready for a hawkish hawkish FOMC is coming up, her quote is, market's not ready for a hawkish FOMC. The Fed puts not there. The Fed is very reluctant to put a basis of whatever happened, to really put a put on base of what happened the last few weeks. Expect them to revise core PC up to 2.8%.

20% increase in tariffs is part of it. And the same thing from Gina, just very bearish the equity market. So that's the key theme from our morning meeting with the Chief Bloomberg people. I just wanna tilt over a little bit to stuff I'm seeing is, so we've had a 10%, finally got that 10% correction in the equity market.

We all knew that was overdue. We finally got we have a little drawdown in S&P. I'm sorry and in Bitcoin 25% that's the beta I talk about S&P down 10% down 2.5% Okay, good news is it's not down to 3% which is it's volatility difference the S&P 500 typically on a one-year basis and we also had the Bloomberg Galaxy index, it trades about three, four times about the SMB 500, it's down 40% from the peak. Now these are just drawdowns, but overall I certainly feel much more relieved

that we finally had a little bit of backup to questions, where do we go from here? And Mike, I wanna pull on one thing you mentioned there, the change in tone that you've seen over the past week, do you think there's one, is there one catalyst to that or is it just the confluence of, as British PM Harold Wilson said back in the day, events dear boy? I think it's more the latter, but it's not been recent. Gina's been quite bearish for a few months now. Anna has been, she predicted the recession way too early and had to pull back on it. Now

we're kicking in. And those things, I think, are what the point is now they're getting the confirmation. Sure, the market's dropped 10%. We all know it's supposed to bounce. I mean, Crude Oil got to three year low, it's supposed to bounce. Bitcoin dropped really fast, it's supposed to bounce. That's me 500 proposed bounce. But I can show you if I can share screen, show a few things. I think the macro, they're kicking in. If Misha can do that. But to me, the key thing about retail sales that came out weaker than expected is if you go back, I just take retail sales minus inflation. Most people know I've been writing about this for over a year. This level here, it's basically flat versus inflation. Last time we did that in history was

two times right before the recession, 2001 and 2007, 2008. The difference is if you look at stock market cap to GDP, it's almost two times what it was back then. That's starting to go back down. The key thing I'm also worried about as a commodity guy is the rollover and the S&P 500 versus gold. It's very similar to what it did in 1972. And I love when Dave kicks into the history. It's starting to roll over. At the same time, you see stock market cap to GDP. All the things on the same scale here just starting to roll over. Hopefully it's over. Hopefully this is not going to be normal. And the best leading indicator for all this stuff to continue lower is the highly volatile speculative digital assets as measured by Bloomberg Galaxy Crypto Index, which has dropped 40% from its peak. Dave, what odds do you place on this being just a correction or the beginning perhaps of a bear market? I hate labels because look, I think that it's very, very clear that the cent came out this

week and he hit the talk show circuit. So I'm actually very internally happy and hopeful and optimistic that we finally have an adult running the, as the secretary of treasury that understands where we need to go as opposed to how to kick the can down the road. I think that that is a good thing. And curiously, that probably decreases my long-term bullishness on Bitcoin from thinking it will plow right past gold towards some stratospheric heights to probably somewhere around three quarters gold, still substantially above where we are today.

But it decreases the... What they're targeting is next year. They don't want to see the market get absolutely annihilated, but the matter is that they really need to do some things. They need to cut the long-term cost of financing our deficits and they need to deregulate and they need to get us back to what they want is a fair, you know, economic footing. You know, you probably, if you look at the rhetorical use of words, the word you're seeing the most, if you did a word cloud of articles about tariffs that weren't written by MSNBC or other liberal commentators, you would see the word reciprocal as the largest word, because that's actually

what they're trying to do. And the fact is we haven't had reciprocal tariffs in this world for a long time. Now that's by design, who was one of the Trumpers who says, oh, well, you know, they're taking advantage of us, that's bullshit. We knowingly entered into relationships on a trade basis where we would export our services, export our dollars, and we would import stuff.

The result of that is something this administration wants to change. Now that's going to create pain. There's no way around it. If you want to decrease the importation of stuff, you're going to have to make that imported stuff more expensive. But it's not like domestic stuff is going to be cheaper immediately when you deregulate. That takes time. And that's Mike's point. And it's very well stated. I think the two charts he showed are very clear. So the question then becomes, what are they going to do to keep things from imploding? And the obvious answer, as I often use with, you know, often use with fun graphics from Game of Thrones, is printer is coming. You know, Lawrence Leopard's been on the show a few times.

He's written a book called The Big Print. It is very clear that they're going to increase liquidity. Liquidity is already increasing by all means anyway. Throughout Europe, throughout here, throughout the world, liquidity has turned up a couple months ago. And traditionally Bitcoin lags that by around six weeks or so. The S&P is still elevated because of that liquidity.

I always think that it's important, and that's why, you know, I have this liquidity in the short option in the long term as far as Bitcoin is concerned. That's about delinking. But that liquidity is what's going to end up in the markets. Now, is there a Fed put? Not necessarily. It depends on what you do, right? You know, they're being very, very, what they're trying to accomplish. But I don't see any way that they can afford. And this is where Mike's

point is incredibly important. The wealth effect that Mike always talks about. I'm going to bash Mike later on stuff he's written, so I'm going to be, I'm being all be all nice and happy. But when Mike talks about the importance of the wealth effect, don't underestimate it. American consumption right now is upon that wealth. And so if the stock market did correct 30%, you would see real pain in retail sales. This morning is nothing. Is it even surprising that retail sales undershot? No. In fact, I'm thinking. I think these things are interrelated,

but people need to be cognizant that the Fed is not necessarily, we don't know if they're gonna completely play ball, but if I had to guess, I'd say they would. And the expectations are weak anyway, as we're seeing the various surveys that are coming out. Weakest, some in some cases weakest ever and others the weakest is the 1990s.

But I wanna tee up James, I want things. So James, but we should all be optimistic anyway, because the Nostradamus prediction of 84,000 came true. Right? So, you know, 444 in July. Hey man, Josh. Anyways, we're starting off with way too much agreement. James, you take. Don't worry, we're going to get to it, Noel.

But this is just so organized and so civilized with Noel at the helm here. What can I say? They're all so nice. I know Josh through the Twitter sphere. He's an old Solomon trader. I mean, he was around when during liar's poker days, right? We actually overlap, but I can't remember him. Yeah, I mean, really smart guy.

I mean, I haven't talked to him. It's kind of funny. We'll see how much he's messing with people or in how much he's just having a vision. I don't know. But the reality is, look, the word, the key word here is uncertainty. I mean, if you look back to last few prints of inflation, you could say,

oh yeah, inflation is coming down. It's still stuck well into the 2% range. It's like 2.5 to 3% range. PPI numbers were 3 over 3, which is the producer price index, you've got uncertainty about Doge, how many jobs they've cut, how much of that spending coming out of the government, which was, we can all agree, last year, there's absolutely no question about it. The, the Biden administration was juicing the economy by hiring, uncontrolled hiring at the government level. And so now we're kind of clearing that out. How much that gonna impact us? How much is gonna impact the housing market in DC? How much is gonna impact the spending out of DC? And then all of those people who are now unemployed

and crying about it, because they weren't doing anything and they don't have jobs now. Welcome to the private sector, everybody. So now the question is, how much pain does it cause for Doge to come through here and clear house? Just start burning the weeds and the brush and getting it cleaned out?

Well, we're gonna find out pretty quickly. On top of that, we have tariffs. We have now the threat of and real tariffs are coming, that are coming down the pipe right now. So is that going to be inflationary? Remains to be seen. So again, uncertainty. How much of that spending? We've cut about $200 billion just under that, according to the debt clock. How much of that spending is going to impact the economy? Remains to be seen. All right, so I shared a window here, Amesha, if you could pull that up for Noel. But Mike is right, we've been talking about the mean reversion for a while. And the question is, was there going to be enough liquidity to meet the, the expansion of multiples on the S&P and the NASDAQ,

or are we just gonna have a drawdown? Well, we've had the drawdown, one of the fastest corrections in the history of the market. This is top 10, 10% drawdowns, fastest drawdowns in the history. All right, so we can all see that, yeah, it's due for bounce, just like Mike said.

Is it gonna bounce? Are we gonna draw down further? One correction that I want to make on Mike is that Bitcoin has actually drawn down 30% from its all-time high. And so it has had a real steep drawdown here. I use closing basis. Close to close. It's something you can actually trade. Selling to high and buying low, so I use actual closing basis. Yeah, well, Bitcoin doesn't close, but that's fine. But, you know, we... VWAP, then a VWAP price and a close. It's something you can actually trade. Selling the high and buying the low, so I use actual closing basis. Yeah, well, Bitcoin doesn't close, but that's fine. Well, VWAP then, a VWAP price and a close. But the reality is that we've had a really steep drawdown here and we're finding footing. Question is, is the money supply expanding quickly yet or not? And the answer is the money supply is expanding. The question is just how quickly is it?

And Bitcoin does lag all of that. So it's been lagging two to three months on the money supply for years. And so you can go back and chart it right against the global money supply and it follows it lock and step. So did it get ahead of itself? It did get ahead of itself and now it's drawn back. So, yeah, go ahead Mike. I want to hear what you...

No, you go ahead. Well, no, can I just piggyback on that? Because I have, first of all, I want to fire up Noah a little bit being English. Happy St. Patty's Day. I have my, I don't think you celebrate that too much in your country, but the key thing I want to point out is I'm glad, I don't want to motivate that too much in your country. The key thing I want to point out is I'm glad Dave mentioned Larry LaPole because his book, I hope he sells a lot of copies, is great. But realistically, historically, it should have been published in 2019 because we have had the biggest money pump in history.

And now we're starting to see the hangover from it. We had the Fed stay too low for too long, created all the inflation that was part of it and then got way too high. And then we all pointed it out this last year. from it. We had the Fed stayed too low for too long, created all the inflation that was part of it, and then got way too high. And then we all pointed out this last year, if they start cutting rates, throwing money at the punch bowl when they should be taking a rate, it's going to create a big pump in assets. They're going to go up too much. And the risk is when they go down, they just started going down. Let's point out where that is now. Maybe we'll get lucky. Bitcoin's the best leading indicator in that place. The thing is the facts have changed in all these places

We don't have the Fed put that's gone. We the fiscal monetary put we had basically one-third of the economy It's been us deficit spending for how many years now that's gone And then there's a sentiment of looking around and seeing people getting fired and it's way overdue So to me, this is a key thing that's kicking in macro. We're seeing it in markets So our friends as I mentioned like gold gold got to three000 an ounce partly because Bitcoin peaked at 100,000. It was way too expensive in drop. So yeah, I use 4PM prices for that. But now to me, gold's a put on the stock market. For gold to go above 3,000, and historically when it gets this stretch versus like the 50, 60 month moving average, I used to use five years, it's five, 50% above that.

It basically needs the stock market to go down to stay up. So what does that mean? What is the key thing to make the stock market, indicate the stock market's going down is cryptos. And the most significant crypto on the planet is Bitcoin. So I still think, and honestly I said it already, I think Bitcoin is, just like I said in 2018, on the way down, it can easily drop to zero

and get to 10,000. Still in the big picture, it means the same. If we get a normal, let's say we get another 10% correction to stock market, that's very serious. That gets Bitcoin to 50. We get another 10% and it gets it to close to 20. It's not a big deal. Maybe we'll get lucky and we'll see that divergent strength.

But my point is what we've seen now is the facts of beta. When beta goes down, risk assets are traded much higher than volatility and beta go down a lot more. And it's key things that Scott, I really enjoyed listening to his podcast this weekend with Sergei Navaroff and Dan Taparro. They've really solidified my view what happens in the space. I'll point out what happens from commodities.

When you have, you turn on the markets for markets, for entrepreneurs to create businesses and create supply and commodities. Buy those markets. Buy those entrepreneurs. Buy their companies. They create revenue and profits, but don't buy what they're creating. You can create gold and you can mine gold and you can create crude oil and mine and

create crude oil and corn. Those prices go down, but the companies will go up, that's my point is there is an unlimited supply of cryptos and that's showing up in the Bloomberg Galaxy Crypto index. It could drop another 50%. It's still just a normal market. Yeah. Okay. So, but part of that, Mike, is, okay, let's go back to a little bit of like the 100,000

foot view. Misha, I shared another screen. This is one of Mike's firm's screens also, and it shows the probability of interest rate cuts. This week we have the Fed. Once again, let's just talk about the reality of the situation we live in and the, and the Fed put. We live in, in a, in a system that is driven by central bank manipulation. Let's just face it. Let's admit it. That's what it is. We have central bank market money manipulation. Reality. That's reality. You can't argue that. That's what it is. And so now we're looking at the, the probability of having Fed rate cuts through the end of the year.

Well, the probability has dropped to about two and a half rate cuts through December. You can see that right there, the 2.449. That's where the market is now pricing in how many rate cuts. Why are we doing this? We're doing this because it's so important about what the Fed is, how their stance is. Are they going to be restrictive or are they going to be restrictive? Or are they going to be expansive? And so a lot of that's going to depend on the words that Powell uses on Wednesday, when he, when he steps out in front of that microphone and uses the words. Look, it, the, the, the fact of the matter is right now we're doing QT that it's super insignificant. So it's like $25 billion a month and all they're really doing is letting

treasuries roll off the books, mature and not replace them. Okay, so we're going to at some point here, we will have a Fed put because of exactly what you said, Mike. The fact is that we are incredibly financialized in this country. And if you have a drawdown of 25 to 30% in the market, that will be so economically painful for this economy that the Fed will have no choice but to step in. Why? Because it will impact the treasuries. And once that happens, then you have a problem because you need liquidity to keep soaking up these treasuries. So now let's tilt over to crypto.

Well, the crypto reality is that we're gonna have some sort of regulation and clarity around all of the Tether and USDC stable coins. Why are we going to have that? Because the government understands that we need those markets to keep buying the treasuries because who else is gonna do it?

We need the treasuries to be able to get into everybody's hands in the world. And that's reality. But people don't understand. That's right, I'm gonna jump in a second and bring up the question of liquidity that we've all mentioned here. And I'm going to push back slightly on something that Dave said is, and where is this liquidity going to come from? True, there may be some liquidity coming from the Fed when they meet, especially the wall of maturity that's coming later this year, all of the bonds that were issued during COVID, very low rates, they mature this year and somehow they have to be refinanced.

But apart from that, how is there going to be new liquidity in the market when we have collateral values going down, when we have either corporates or end users paying higher prices, and when people are just afraid to spend? Where's that liquidity gonna come from? Well, what I'm talking about liquidity, Noel,

is the deficits that all the governments are running. There was exactly one country in the civilized world that didn't have a fiscal deficit, and they're now projecting to have a 500 million euro deficit. This is liquidity that is 100% structural, can't be changed. They're trying to change it with Doge, but Doge is a, the Doge impact will be on regulation. The Doge impact on the deficit is incredibly hard. All you have to do is look at the stories and the rhetoric. And I'll make the point that I think that

this may be the only opportunity we have because, you know, other than someone like Elon Musk, the amount of crap that he's taking for cutting anything is ridiculous. It's like everyone screams that the fat they're cutting, there might be a fragment of bone or a fragment of muscle in the fat and they scream about it. You know, I personally have no care. I mean, I call me heartless, call me whatever, But, you know, Biden didn't care when 10,000 people were put out of work with a stroke of a pen on the Keystone pipeline. And those are engineers that have been working on a project forever. They didn't care when our industry had thousands of jobs shift offshore, thousands and people who had to move to other industries or get put out of work. And I had quite a few of those people because they clamp down on our industry. So honestly, I'm tired of what I would would laughingly call, you know, whipping to a popular

frenzy based on anecdote. I like data. And actual data is, as James said, we hired way too many people at the federal government level as a percentage, and we need to normalize that. And so you can look at that. but the liquidity is coming from the fact that they need to kick the can down the road. The, you said it, they need to refinance debt. And Scott Besend has said, and he feels that this kind of ridiculous theater, kind of like the debt ceiling theater,

the idea of having debt that's really short term is very problematic to him, and to me too. So he wants to, what we use the words, we say term out the debt. What we mean by that is being able to finance the debt up to 10 years from now so that we have time to work on what's going on structurally. And so that's where liquidity is.

But let's make no mistake, the entire system is based upon the notion that asset prices will go up over time. And so when Mike is talking and when Gina Martin Adams is talking, when Anna Wong is talking, what they're basically saying is there is a structural threat in the short term to what you think you need in the economy in order to keep Americans buying stuff. And that matters. And so a correction can happen. I mean, sure, 10%, 20%, that doesn't really matter as long as it gets back up on the train.

The real question is, is there a risk to the train itself? Now, Bitcoiners will tell you lots of them. Of course there's a risk to the train. The train, there's no track up there. Look at that. And if you did a cartoon, you would see a train going along a track happy and not realizing that there's a drop in the track and a thousand foot drop on the other side. They say the fourth turning is among us, you know, all sorts of things, things are going to break down. Let's just be really simple about this. Politicians don't want that track to go, the train to go off the tracks. I got a follow-up, pick up that. So we can agree, I think, that a lot of the over, we could say 12 million cryptocurrencies, so-called millions of them, can lop off three zeros. I mean, some of them are silly speculative. Can I stipulate to a fact here?

I would make the argument that there's probably fewer than, I don't think there's even a snowball's chance in hell that in three digits of cryptocurrencies right now that have any value. Okay, so let me take you back and I'm glad and so to me then it's logical when that happens to say okay well then Bitcoin lops off one zero in fairly not a big deal it's still much better performance getting Bitcoin dominance to 90 percent. Fact is and it was upon the launch of ETFs that really started tilting my bearishness. And I was waiting for five years. So on a one-year basis, we're right after the big pump in ETFs, gold's up about 40% and Bitcoin's up about 22%. So everybody

starting getting those ETFs, starting to realize they bought leverage bait. And I want to show a screen and show exactly what's happening and to try and expect it to continue. And be sure if you can show my screen is this is what's happened. We had four years of outflows from Boomer rocks One of those great Vernacular words, I love learning from crypto from crypto people gold. It's oh ETFs are just starting to turn up That's what you see here The same time the whole entire come, the entire crypto markets is just starting to turn down. You expect that to stop overnight.

I'm like, good luck with that. We're just going to mean revert a little. That means another 50% in total crypto, which means pressure for everything. To me, I want to point out another key thing. So I'll make some predictions. Recently, so also, and it's what you said, James, it really strikes me is the technology is awesome. It means we're going to be able to tokenize everything,

particularly the dollar. Okay, so the dollar is gonna mean, why did Kai Sheffield point out how he's, you know, Viso is starting to use stable coins to help close their transactions years ago, partly because why would he bother to use Bitcoin when we can use a dollar token that has no value? That to me is part of tilting over my problems.

I'm gonna make the prediction. So recently, XRP flippant the total market cap of Tether and then flip back down. I think it's gonna continue. Let me finish. And I think Ethereum is gonna get flippant by Tether. Now there's a bunch of other stablecoins that are better because that's just a trend.

I think Ethereum's more likely to go to 1,000. It's bumping up against resistance now 2,000, but it's got tons of competition. And same thing, I don't want to get Dave into his rant is when you can transact instantly in a stable coin without the risk of XRP, why would you use XRP? I still don't get that, I understand it, but here's the macro of what's happening

is lean to the chart, cryptos are heading lower, gold's heading higher, and we've only had a 10% correction in the stock market. Now we get to 20%, the Fed turns back on. That's the key point where we are right now. There is going to be no Fed put until we get risk assets to go down more, and then maybe it'll be time to buy, and there's certainly going to be no fiscal stimulus for a long time. Everything that's the market's been driven up, and then we have tariffs. Tariffs means corporate profits are going to get hit hard. These are things that have driven markets for decades are just starting to revert right away. So I look at it just okay, trend is gold should continue to go up. Cryptos continue lower, hit tilting towards deflation. We definitely need for cryptos to go

up. You basically need the stock market to go up. All right. So let's unpack some of this. I agree with you on two points wholeheartedly 1000%. Number one, we are not going to get a Fed put until we have more of a correction. I agree. We're not going to until we get more of a correction. But when we do get their correction, we're going to get the Fed put. There's just no way around it. You have to print more money. You have to expand the money supply. So that's number one. Number two, XRP has no, there's no reason for you to be buying XRP over a stable coin. Fully agree.

Have no, have absolutely no argument there. Number three, let's go back to the expansion of the money supply. Because here's the problem. And you know this, Mike, you know this. You're a bond trader. We do not have real returns in bonds. We do not have real returns in bonds. We do not have real returns in bonds.

The return for owning a treasury is a negative real return for anybody who's held them over the past however many years since at least 1971. So if you're looking at bonds and you're looking at Tether and you're looking at USDC as a store of value, you're making a mistake. You can put your money there, but you're going to lose money on it. Why? Because you're putting your money in the US dollar. The US dollar is a great and will continue to be. I am not one of these maximalists who think that in the next few years, we're going to, Bitcoin is going to overtake the US dollar and it's going to become the global reserve currency.

The dollar is going to continue to be the global reserve currency and USDC and USDT are going to be a key part of that because it's going to enable people to buy Treasuries anywhere in the world very easily and put them on any platform that they want to be in. And by the way, we haven't even talked about SOB 121 being repealed and the fact that banks are going to be able to hold all these things too. But now why would they hold Bitcoin? Why? It's not because it's the oldest crypto. It's not because it's, you know, the, the boomer crypto. It's because it's the only one that's fully decentralized. It's the only one that is completely trustless. It's the only one that cannot be expanded. It's going to continue to take market value as the US dollar continues to debase. Bitcoin will continue to rise in value. It's that coefficient.

There's just no way around it. Now I did share something that I'm going to tease Dave back up here, I did share something, Misha, if you could bring it up, talking about the expansion of the money supply and liquidity. Not that one, buddy. That's, you can see it's probably an orange screen here. There you go. So this is Michael Howell. He does a lot of work on global liquidity. You can see that global liquidity bottomed out in this mini cycle. He says it's like four to five-year cycles or five to six-year cycles on the total money supply expansion and contraction.

But in this little cycle, we bottomed out at the end of 2024, beginning of 2025, and we have risen sharply. Okay, why does that matter? It matters because we've been talking about this. I've been saying this for so long that you have Bitcoin got way ahead of itself. Yes, we all agreed.

So the question was, was Bitcoin going to correct down 50% or was the money supply going to come up and meet it somewhere? We could see what's happening. It's meeting it. Remember, this is a this is a money supply curve that's that's delayed by three months, because it's the way that the you would be because Bitcoin lags. But look at where it's about to touch. So I just disagree wholeheartedly that we're going to see

Bitcoin at $10,000. That makes absolutely zero sense to me. It doesn't make any mathematical. There's no difference between 10,000 and zero. Okay. So look, there's two assumptions that Mike made that are completely flawed. I mean, that literally may as well be comparing, forget apples and oranges. It's apples and oranges. Noelle, you thought that this was gonna be civilized. Now we're getting real. The first assumption he talks about is,

well, cryptos can't go up because they can create infinite numbers of them. Let's go back to the internet bubble. And people learn from mistakes. People sold Amazon because of two reasons. Reason one, it's only books. The people who were Amazon bulls were looking at what Bezos did with the two billion dollars that he raised and knew that he was going well beyond books. And I find it one of my

favorite things about the XRP people, I'm going to make fun of them and piss off the whole XRP army in a heartbeat, is like Brad Garlinghouse said about Amazon and books. But just remind me of that, Noel, because it's a funny anecdote. But in any case, in the internet bubble, there were 14,000 internet companies that popped up in the OTC world. And IPOs went absolutely ballistic. And that is the playbook that Mike's coming from. He's saying, well, look, all of this took liquidity away and all of them dropped. At the same time, what you're not seeing are two things. First, people overreacted on Amazon and it created generational wealth opportunity. If I'm looking at that, my learning is don't throw the baby out with the bath water.

Bitcoin is completely different than the rest of crypto. Bitcoin is a store of value. We're going to talk about bitcoin and gold in a second but other than that the other big difference is it was enormous generational wealth made by vcs internet bubble because there were companies that were not publicly traded and they became the vanguard of what we now call the mag seven right none of those are publicly traded except for for for amazon all of them were owned by VCS now in the world of crypto Those ones exist almost as soon as they get as they get started. I am NOT smart enough I am NOT prescient enough to know whether XRP ether

Solana obviously Avax Cosmos, whatever I don't know which layer ones are gonna be the ones that are run inside the financial system What I do know is this step one stable coins and the review read the editorial from the American Bankers Association Guys that have come out over the weekend. They are Unbelievably funny. I'm gonna give a props to Austin Campbell. He wrote a thread that I can't possibly I couldn't improve it I was hoping to quote tweet it and come up with something that he missed but he didn't miss anything it's a brilliant takedown of just how insipidly dumb the the criticisms of the bankers

are but the reason the bankers hate stablecoins has nothing to do with why Bitcoin should hate it it actually helps Bitcoin people use stablecoins to buy Bitcoin they know it doesn't compete Bitcoin is a store of value stablecoins are for people who want to buy dollar-based shit. But understand something. The banks make a lot of money from float. And stablecoins, instead of three days or a month or a week or whatever it takes for where the money can't move, takes that float away from them. They're going to fight it tooth and nail, and they're going to lose. You had two-thirds, you know, two-thirds majority in the committee. That bill will pass. And so the banks are going to lose, and you're going to see, it's, it's

what the first step of disintermediation. The other thing that's going to lose, other people are going to lose, are companies that rely upon inefficiencies throughout every other aspect of the financial system. inefficiencies throughout every other aspect of the financial system. The capital. I would also argue, Dave, that they're not going to lose because they're going to, they're going to pivot mature into a new set. Well, let me finish the thought, right? I just want to finish the thought. So when we look at crypto, there are, there is a major pivot that's going on.

And I want to acknowledge something that Mike has said, because he's right. But I also want to say where the assumption is. What's happening in the world of crypto, despite what you see in crypto Twitter, is because there is going to be, and we know this already, it's already happening, the regulatory shifts are changing, people who are building real stuff are going to be able to raise money again and actually provide some of the value of that real stuff to investors And so cryptos that provide no stuff I mean people buying coins that you know fart coin I'll pick on that one, but it doesn't matter You can pick on lots of them

Investors buy that with zero hope of anything else other than to sell it to the next investor Bitcoin you're buying it most of the people who are buying Bitcoin, a huge percentage, think that it's going to flip in or at least materially come close to gold's market cap. So when you start looking, you could believe that. But I pointed out, they already, it already reached its cap at ETFs. I want to get us away from the debate about whether Bitcoin is going to succeed or not, because it's something that we've done many times on this show already. And I want to get back to the fundamental assumption. But the fundamental assumption that Mike is making is that the adoption part is literally

irrelevant. Okay, so let me make that irrelevant. Okay, so sorry, James, rather than continue to go down this debate about the adoption, because again, I've watched the shows and I know that we do this quite often, let's focus on what really is changing these days, and that is the liquidity narrative. And we've got the FOMC coming up this week, and maybe we'll get some indications on what they're going to do with the quantitative tightening.

It'd be good news if they let that, if they stop doing that. But I want to go even further back and leave the United States for a second and talk about liquidity, new liquidity coming in from China, from Europe, from other areas in the world that are going to, that is going to impact global demand for risk assets, global demand, not US demand. It's the largest market easily, but it is not the only market that can move these things. So let's again, get away from the, from the arguments, which we enjoy. And that's why we're here, but let's

go bigger picture because the liquidity narrative that you brought up at the beginning of the show is what is changing these days. Do you guys see China impacting crypto markets anytime soon or do you see what's happening in Europe impacting crypto markets anytime soon? They're fighting for survival. Let's remember what's going on. Dave, I want to hear your views, but right now you have to completely expect fiscal monetary stimulus from China just for the regime, one person, Z, I mean, there's no natural check

and balance in that country to survive, to not get kicked out. They're doing what Japan did 30 years ago. Those of us who trade JGBs in the night, we've seen this before. And Europe are doing exactly what they have to. What just imagine magic Donald Trump succeeds What's Europe gonna do what you're seeing in Germany? They're breaking some of the rules They learn from the Weimar Republic partly because there's a war in their backyard and got to do something So I definitely want to hear days of you, but this is fighting for survival. I

Agree, I was actually say over the weekend. I was reading, you know, China is accelerating their their provision of liquidity And so that's that's provision of liquidity. And so that's that's part of it. I mean, Noel, there is this in a world in a fiat world, there is no way for governments to juice the economy other than than than adding liquidity. What are we really talking about? We have a debt fueledfueled economy. And it's not we. We is not the United States we. We is the global we. I mean, you borrow money to build stuff, hope that people will lather, rinse, repeat. And that's been going on everywhere. And so what are we talking about? The reason that I get so agitated about the adoptionist thing is because there is a cadre of people who buy based upon the notion, we don't know when it will happen.

But, and it's the same people buying gold. The same reason I own gold is the same reason I own Bitcoin. The difference is one is an option and one isn't, right? I mean, I put up a chart last weekend that I saw, which is that gold has done incredibly well at preserving purchasing power parity based on CPI. And my first thought when I heard this,

and James, you've looked at this data and Mike, you had to, is that hedonics and it's CPI, except for the stuff we really need like insurance, education, et cetera. But when you take the financialization into account, gold bugs will tell you it's lagged now it's lagged less now I think the average gold bug thinks gold probably at five thousand takes into account Financialization and so that's still a pretty substantial rally from here, right?

Now, why are they saying that they're saying that because they think liquidity is gonna ultimately go in and devalue other assets in real terms Right because the you know, I say it all the time the denominator matters and it assets in real terms, right? Because I say it all the time, the denominator matters, and it's not just dollars, right? It's every currency. And I wonder, the trend that I think is gonna be the most interesting one is if it actually turns out to be true, that Germany goes towards deficit spending,

will the fact that when you look at bond yields, will Germany still have a percent and a half premium over the United States, the UK, and a lot of other countries in the world, will they have much lower long-term bond yields if people seize them joining the party? The obvious answer is no, and do they care? And I think that's another macro trend that matters

because now you don't have any place that, you can't say, well, the US dollar is, you know, you can't go on about the bond spreads. The Japanese and Chinese bonds are obviously manipulated, have been manipulated for so long that we take it for granted. I mean, is there any rational reason other than the Japanese aging population with all their savings in the postal system that are kind of forced to buy JGBs. You mentioned JGBs. Is there any rational reason in Japan for JGBs to be where they are today other than the fact that the government needs them to be there and they have enough control to keep it there? I mean, that's interesting. What happens if JGBs normalize and go 0.5%? And, you know, as Mike is fond of saying, things do tend to revert mean so normalize, they will what we don't know is when but one thing we're looking also is that a weaker dollar does boost liquidity pretty much everywhere else in the world. And again, pushing back on your comparison to Amazon, which is very apt, except Amazon was not necessarily interesting to people in Brazil or India or Bangladesh or Russia, for that matter. So there's a whole different wave of liquidity and demand, potential demand

for crypto coming in there. James, you shared a chart a moment ago that showed global liquidity and crypto prices. Again, it's not just a US question because of the very few assets out there today, crypto is global. Gold, you can argue, is global, but we've seen not so much recently, especially with the scurry to get shipments across the ocean. And the gold bar in the UK, go figure, is not the same as a gold bar in the US. They're different sizes. They got to go to Switzerland to be melted down. So it's not as global an asset as we think if you're actually going to use it or hold it in a self-sovereign manner. Crypto does satisfy that. Yeah, well, I mean, look, the reality is what Dave said is that we live in a debt-laden

society. There's no way to continue to have economic expansion without it being nominal. We have to have nominal expansion. Jeff Booth talks about this all the time. And you've, you have quoted him before, Mike, talking about this. And that's the fact that you have this, this deflationary pressure of, of innovation and technology. It's reality. You know, you've got, you know, I can pick up my phone and have access to millions of songs So I don't have to go down to strawberries or tower records to buy a CD for 15 bucks anymore you know most of people on the show don't even know what the hell that means but The reality is that you've got millions of songs at your fingertips for like 12 or 15 bucks a month now It's just insanity. Okay, so that's that is tremendous

innovation and and deflationary pressure on that industry. So why are those people still worth hundreds of millions of dollars and making so much money? Well, part of it is because global distribution, but part of it is just because the money doesn't, it's just not as worth as much, you know? You've got, you continue to debase the currencies, and I agree with Dave, wholeheartedly. And it's not just the U.S. It's a global phenomenon, and it must continue. And if we're gonna, we're gonna, the reality is those, that inflationary

pressure versus deflationary pressure is, yet that's what you see when you have these central banks step in and have their put. They have to expand the money supply because we are, we are living on debt. And, look, I want to make this clear. Again, I've said it many times before, but the reality is that debt is OK if you use it in a responsible way. What we're finding out is that we are not being responsible in the US, and the whole globe is not being responsible with using it. We have no idea what China is doing, except we can pretty much all agree

that they're going to expand the money supply rapidly to keep the train going. Which, to quote Lin Alden, another one that we love here is that nothing stops that train. Nothing stops this liquidity train. It has to continue to expand because otherwise, all this debt is going to be an avalanche that we can't get out from under. It's already bad enough. So as much as I love what Elon and Doze are doing, they're not going to, they're not going to balance the budget this year. And they probably won't do it over 4 years. I would be shocked, you know, Pomp thinks they will. I just don't see it. But they're not going to balance this budget. We're going to continue to operate in deficit. We're going to continue to issue more debt, which means that we have to have those stable coins and that legislation to have buyers of this debt around the world.

No, Bricks is not going to come up with their own currency. But yes, they're going to find ways around the dollar unless we give them a really easy way to hold it without being subject to being confiscated because they didn't do something that we wanted them to do. We're already already seeing that and we got two opposing forces here competing competing forces even we have one there the liquidity has to keep going up there's no other option at the same time we're also told again and again that it is unsustainable and generally when something is unsustainable it isn't sustained. The US Treasury said it themselves. They put out reports warning the government. Remember, the Treasury is not the one who's spending. The Treasury is the one allowing the spending. They're the ones who are doing the bidding of our government.

And so they're out there saying, stop. Stop. We can't find places for this debt. You've got to stop spending. And what does the government do? Oh, yeah, don't worry about that. We don't even have a debt limit anymore. Just keep, just keep borrowing. Don't worry, but it's gonna be fine. So the unsustainable part may be very long term. I don't think it's gonna come crashing down this year, or next year. I love Larry. He's one of the partners in my hedge fund. I think that he's a little bit, you know, he is a little bit more pessimistic about how long this can go on. I think it can go on for a long time, because the US

dollar is the global reserve currency, you know, and it's going to continue to be global reserve currency. And that's not going to change for a very long time, which means we're going to be able to keep doing this for a very long time. But that's us, not the rest of the world. You will see other, other fiat collapse in a decade, in this next decade. You will see it because they're, they're just being completely irresponsible, and they will lose the buyers of their debt and, and the confidence in their currency. We'll see it happen in some sort of major, in some sort of major sovereign will collapse. Absolutely. So let's piggyback on what's changed.

On November 5th, the world changed. We have the most significant combinations of austerity and tariffs ever from this country. Those are major discombobulating events. It's just getting started. You don't know where the tariffs are going to go though. It's very, very early. And it's just not, I mean, like I said, these are things that someone like I was with customers speaking about 30 years ago.

Yeah, everybody in the world wants free trade, as long as they're going to have a surplus with the US. That switch has flipped. It's over for now. We'll see where it goes. But it means major shifts in markets. So I want to correct two flaws. First of all, one thing that Dave says, yes, we learned from our mistakes.

Well, we haven't. We learned from too much liquidity inflation. That's my point about Larry's book. It's great, it should have been published 2019. We've learned that lesson. The next single time we start seeing corrections in the market, you already seen it right now, market's down 10% and the Fed says, we're not easing.

It's just getting to the point, inflation's too sticky. And another thing from one of your former prime ministers, Benjamin Disraeli used to say, what we anticipate does not occur, seldom occurs. It's just anticipating that Bitcoin's the next Amazon is a very, very, very risky thing to think. There's, Bitcoin was launched in 2009, that's why I got to show you this screen.

And now there's 12 million different types of cryptocurrencies. I got to show you what's happened since Bitcoin was launched in 2009. We've had this massive run-up in Bitcoin. At the same time, we've had the biggest had one of the biggest stock market rallies in ever. Misha, if you can show the screen. The key point is if we just get a little bit normal version of stock market, here's Bitcoin.

It's rallied with the stock market. Here's stock market and GDP. Maybe it just drops back from 1.9 to a very historical elevator about 1.7. That's Bitcoin at 10,000, unless we show divergent strength, but at three times the volatility, it's not a big deal. That's just normal reversion. The key thing is now we have the potential that it's going to happen. We have the means for it to happen. So I'll make predictions for the midterms. By the time we get to the midterms, the price of average price of gasoline in this country, I think will go down from three to two. I think the average mortgage rate will go from six or six and change to four.

If you make over 150 or 100,000, Mr. Trump says he's going to make no taxes. I mean, this is all win, win, win. It's all tilting that way. And the key thing for make that stuff happens, and Dave, you said in the beginning, that's one thing I love about Besson. He's a trader. He gets it. The number one way to get the Fed to ease, to turn on the stick is you got to get the stock market to go down. He won't

say it, but he keeps saying we're going to get lower yields and lower energy, I believe. Misha, please share my screen Misha, so I can just, so I can, I can, you know, we can, we can put something in context here. So, okay, for everybody to understand, yes, Bitcoin is only, it's a small, it's a young asset, right? It is the ninth largest asset in the world, Mike. It is right up against silver. This is not something that is just, it is a fly by night. It may or may not be adopted. It is larger than Metta, Berkshire, Broadcom, Tesla,

Eli Lilly, for God's sakes, Walmart. Like this is a major, major asset that people are looking for as a store of value and to talk about how the, the difference between Amazon being adopted and not being adopted. One of the biggest things for the people who weren't around in 1998, 1999, one of the hardest things for everybody to understand and get their heads around was that people would actually put their credit cards online on the World Wide Web, whatever the hell that was, and

actually use it as payment. And they refused to believe that the world would go to that that avenue and have the trust in this internet thing where they're actually put their credit card online and buy something. One of the biggest fights I ever had with a hedge fund manager that I was working for at the time, we were debating about whether or not people would actually put their credit cards online

to buy things on Amazon. And he shorted it from 50 or $60 all the way up to 300 got his face ripped off because he just refused to believe. And we all pled with him, the younger guys around the table were like, please stop, just got to cover this thing. But he didn't because he just couldn't believe that people would use their credit cards. Well, it's the same exact thing. Because habits do, habits do change. We do need to start wrapping up. Same exact thing with it, but the adoption doesn't have to do with just ETFs. There are massive tailwinds for adoption. It's to do with the currency collapse that we're no doubt going to be seeing in a while. No, no, no, no. I'm not saying about the currency collapse in a while. I'm saying it has to do with massive adoption across all kinds of different investors who are looking for a way to save their money other than just gold.

I like gold. I own gold. I think it's great, but I can't go anywhere with it. I agree. And what I mean by the currency collapse, it does add a whole new use case for the global market, because we're talking about global assets and that's new liquidity coming into the market, and it's new liquidity always that moves the price but we do need to wrap up and I want to go back to the predictions that Mike was making earlier between here and the midterms Mike between here and the midterms I know what you're gonna say so let's be brief gold or Bitcoin which outperforms gold Dave when you know I may answer Bitcoin and not by a little not by by a small amount James between

here in the mid coin and the mid terms which I'm going will out out from gold from here by a factor. Yeah, I actually agree with With Dave and and James on this one Mike. Sorry, but that doesn't mean you're necessarily wrong Oh, no, no, no one thing we know is that the narratives are going to change as the stage Changes and we're going to be seeing a lot of that in the coming months. It was amazing to talk to you about this. These are arguments that we will be rehashing many times again, I'm sure, because things do change.

There are new narratives coming into play and we all have deep backgrounds that we're bringing to this. So thank you very much for being here. All of you, thank you everyone for watching and see you soon. everyone for watching and see you soon.