The Wolf Of All Streets - The Fed Vs. Bitcoin? | CryptoTownHall

Episode Date: August 21, 2025

The Crypto Town Hall live stream tackled the current state of the crypto market, focusing on the so-called summer doldrums—a period of reduced news and trading activity. The discussion ranged from meme coins like the speculative Kanye coin saga, to broad questions on market psychology, to an in-depth dive into banking, stablecoins, U.S. macroeconomic policy, interest rates, liquidity, and their impact on both traditional and crypto markets. The hosts and guests analyzed the mechanics of the banking lobby against stablecoins and speculated on Fed policy, inflation, and the direction of long-term interest rates, ultimately tying all these to the continued case for Bitcoin and other hard assets. The aim was to cut through meme coin hype and focus attention on the systemic drivers of value and risk in the evolving financial landscape.

Good morning, everybody. Welcome to Crypto Town Hall every weekday here on X at roughly 10.15 a.m. Eastern Standard time. Dave, I think it's fair to say, and I find this actually exciting and kind of relieving, that we finally have found the summer doldrums, and we have a week where not that much news is happening. It's kind of nice to be able to take a breath for a second. Yeah, you know, you know, it's funny. I read the title that you guys picked, and it is amusing, right? I, you know, so Kanye gets, has a $3 billion thing. But I will point out that my favorite bellwether, fart coin, is now below 90 cents. And I was making fun of it at, you know, a dollar, went up to $1.50. You know, it's, it's funny. I think the meme cycle is now finding its universe and is recycling money. And that's what's going on there.

And that is fascinating to me. But it's not surprising because in the, what is the summer doldrums? The summer doldrums are, you know, it's like, Think of a cruise ship, you know, you go on a cruise ship and in your plan, you have a poker game on a cruise ship and nobody can get on the cruise ship other people that have started it. Well, after a while, the good players are going to take the money from the bad players and the game's going to dry up. You need new blood, you know, to come into the market. And the summer doldrums and crypto is very much the same way. It's like, you know, the smart traders, the no people are taking money from the dumb ones.

And that's what's going on in the meme coin cycle until new money can come in. Now the new money might come in because people make money in big. Bitcoin they may come in because people make money in Ethereum, but not in the summer because we're on the cruise ship. Yeah, and admittedly, listen, I agree that the title is kind of nonsensical, but, you know, Kanye teased a meme point and said he wasn't going to do a meme coin. I mean, he's an insane person, so I don't know why anyone listens, but for many, many, many months. And many viewed the Trump meme coin as basically the ceiling of what could ever happen in that industry fairly. Right. But then a lot of people, when Kanye started teasing, it was like, well, this would be the second biggest person you could ever have basically launch a meme coin just because of the personality. And this one topped at $3 billion and settled right back to a billion. And what's laughable, I read one article on it. I actually wasn't aware of this happened until this morning. And it was like, flames of insider trading and people digging into the wallets and the supply controlled by one wallet. Like how what did people, how is that even a story anymore? That is literally the mechanics and purpose. of these things, is to enrich some celebrity and their team at the expense of everyone else

with the exact same nonsensical tokenomics and stupidity and insight. Did people really believe this was going to be like a fair launch of some sort? My father, you know, basically had a twist on P.T. Barnum, you know, there's a couple of famous ones, you know, the suckerborn every minute, a fool of their money is soon parted. My father had an interesting way of looking at it. And he basically said, one never gets, we'll never go broke betting on the stupidity of the general public. It's, you know, effectively people in herds do stupid things. They will always do stupid things.

And you should understand that, you know, it's like Lucy, there's so many different examples in popular culture of it, but it, but it happens time after time after time. And, you know, it's, it's like, we always use the meme, the sideshow bob stepping on rake meme from the Simpsons, you know, the Lucy pulling the football away from Charlie Brown for those old people, you know, those are all memes. But the reality is, I mean, the fact that that the world effectively that half the people in meme coins don't understand what MUV is, don't understand how people can front run while, it don't understand any of this stuff and fall for it time after time after time. It's one of the reasons that statists use to justify

stupid regulations, right? But the truth is you can't stop it. And it happens in every market. it's not necessarily illegal and it's really hard to make illegal, you know, letting people do stupid things and getting screwed for it from it. But that is what it is. Tony. Tony, can you hear me? Yeah, your hand up. Hey, guys.

Can you hear me? Yes, we can. Yeah, Dave, Scott, I was just going to say if there was any proof that we needed that we're still in a bull market, here it is. And Dave, the piggyback on what you were saying. I don't know, maybe we all have this degenerate, speculative gene in us, and we got to control it, but some people can't. Well, it's not about, look, that is true. I mean, you know, I always said that, you know, back when I was younger, you know, people ask me, you know, I've matured a bit, you know,

that someone's going to write a book, condress, confessions of an adrenaline junkie. But the truth is, is we are hardwired as human beings to really like the afterglow of a major adrenaline rush. And you can get adrenaline rush going to an amusement park, you get an adrenaline rush going to Las Vegas, you can get an adrenaline rush in a poker hand in a home game. You can get an adrenaline rush sitting on your screens and trading meme coins. But it's really about the adrenaline rush and the dopamine that gets released. And we're hardwired. That is true. That said, you know, the same is true in the stock market.

And I keep pointing this out. People, you know, and it's funny because I know that. The current SEC understands this. But when you look at the single most successful financial product in traditional finance over the last five years, it is single-day options on the S&P 500. There is literally no other use case for that other than dopamine rush adrenaline junkies trading. I'm sorry, but that's it. And, you know, it's in traditional finance. So every time people, they go, oh, those crypto DGens, you don't understand.

Crypto DGens are amateurs when it comes to being DGENs. being degenerate in terms of gambling. And I just wish it wasn't, you know, in fact, there's so many Bitcoiners suffuse within crypto who effectively are willing to, and I listen to the show with you and C.J. This morning, Scott, so I'll say it, or effectively are willing to, you know, live on a far lower lifestyle than their wealth because they're trying to accumulate it. That doesn't happen in traditional finance. I can assure you, you know, I spent years on Wall Street and I was always appalled by people

who has their salaries and bonuses went up, they would spend all of it thinking that it will never stop. Now, of course, the music always stops, and those people, God forbid, they get divorced and lose half their money, then they're gone. I know more bankrupt people you could possibly imagine who made seven-figure, you know, total compensations for years for this reason, but it's, it's endemic. And to assume that it's not is just silly. Anyway, that's enough of a polemic for today. I see you got Austin up. Austin, you want to talk about, about, about about the banks and their most recent lobbying efforts? Do I want to?

You're doing this on purpose. Of course, we've got mentioned it this morning, too. It is lappable, but it is important, I think. It really is. And like I would start, so context is important here for anybody who's listening and thinking of this as a non-banking expert, which is remember that if you're an American and you're the average user of a bank, the deal you've been getting for about the past, you know, 15 years post-crisis on your bank is deposit your money. We're going to pay you zero.

We're going to go make a bunch of risky loans with that money. If it goes well, we're going to pay ourselves giant bonuses. And if it goes poorly, you're going to eat the losses and, you know, have to essentially beg for a bailout. This is the classic like heads-eye win tails you lose behavior that made everybody hate banks in the first place. And like, you know, He wrote that amazing article about Goldman Sachs back in the day. So fundamentally unfair and a shitty way to treat consumers. And the only reason it's happening is banks kind of inadvertently have this monopoly over electronic payments.

Now that stable coins are legal, right, with the Genius Act at the federal level, and there is the ability to at least in limited fashion pay yield, like create incentives, the banks are having a collective meltdown and lobbying to try to try to, ban this rather than say wait a minute our value prop to consumers who want to use the system for payments is like fundamentally evil they're instead saying it's a problem that people can compete with us this is the definition of like special pleading for industry protection from competition and the part that i think the banks will lose on and i hope our politicians are fully aware of is that this is not purely a local thing if we ban this in the united states that doesn't

stop it. That just stops it here, right? All you're doing is ensuring that foreign stable coins will dominate the market and eventually build in and be used by U.S. consumers. So the good news is I don't think Congress is going to fall for it. Like the BPI and the ICBA were pretty decisively defeated on the lobbying front. But I also think it tells you something about the mindset of the banking lobby and what you should be watching for. Though I will say not all banks agree with them. Like the ICBA is probably catching more internal fire for what they did around genius lobbying than anything I've seen since 2008. So this isn't even a uniform stance, but be aware that's what's going on, Dave. Yeah, I mean, look, there are people, the people who

have controlled the government for the next three and a half years understand that a system that is fully reserved, that is forced into holding treasuries, is better than a system that is fractured. reserved that can hold treasuries, can hold whatever the, excuse my language, whatever the fuck they want, can take whatever risks they want, and with very limited supervision, with a massively expensive regulatory apparatus behind it and paying themselves tons of bonuses to do it, might, you know, be able to, you know, influence what's going on, you know, in the treasury, that the treasury has a much more stable source of funding in that, in a stable coin system. They get that joke.

I mean, it's obvious math, but they get that joke. They understand that the notion of Fresh Reserve banking to create a multiplier of investment in the economy can be achieved in other ways because it's not only banks. Deposits are notoriously, you know, it's, well, you've said it before. There are lots of pools of capital that can invest, and you want to appeal to those pools of capital. And the notion that we should have the same banking system with all, of the regulatory hair on it as and declare it sacrosanct,

when the world has changed, we have the thing called the internet and capital flows are now mobile, it just doesn't make any sense. And so there's a core of people in Congress as well that understand that, which is why I don't think they're gonna have a chance to change. It's one thing, they might have been able to block the Genius Act.

And you and I kept very vocally, you know, pushing among with a lot of other people, Perry Ann and others in Washington. But the truth is that undoing Undoing it is going to be very, very hard. If anything gets undone, it's going to be the prohibition against yield. That's more likely. You just hit the nail on the head because the industry was lobbying hard ahead of genius for yield to be included.

And legislators pushed back hard against that, obviously buoyed by the bank lobby. And that language effectively was left out. There's not supposed to be the ability for yield. But on a reread, the banks are finding loopholes. where they think yield can be included. So, hold on. Hold on. I have to step in and say, are those loopholes or is that working as intended? Like, I will remind everybody. The banks are viewing it. Yeah, the language is that there were loopholes. I'm sorry, in the media. I, yeah. So, one, 100% agree with your characterization.

But two, I think the banks know that's dishonest, right? To have a complete prohibition on, like, paying any sort of marketing or incentive or, you know, like essentially taking money out of the vehicle in any way to drive growth would be deranged. Like we don't apply that anywhere else. And if you think logically about it, if that's such a distortionary thing, it probably shouldn't only apply to stable coins. We should go reapply that to like, oh, I don't know, bank deposits and credit card rewards programs and like all of those things. And the other part that, again, the banking lobby if you really want to see why they're doing this. If you can't pay that to consumers, where does it go? It goes into the pockets of executives, right? It goes into the pockets of the

bankers. That money doesn't vanish. It doesn't go back to the U.S. Treasury. It just goes to the management of these entities. And if you want to drill down to the heart of this objection, it's, oh, no, my bonus is getting smaller. That is fundamentally what everybody is upset about. I also think that the way that I understand this, and we've been building PRUSD, and I look at Coinbase, and we looked at their infrastructure and what's most important is how the funds flow through the balance sheet. So they take the deposits, they buy the cash equivalent, they earn the interest, they book that as interest earned, and they pay taxes on it. Then they redistribute it to the marketing fund and they pay rewards from the marketing fund. So that's the mechanism, at least that from what I understand, that Coinbase has been using to be doing this even before Genius became law. And that seems to be, you know, whether it's codified or not, there's going to be different mechanisms that you can use to incentivize your depositors.

Craig me some wrong, Dave, but wasn't Citadel first to this party? Like, yeah, they weren't the banking lobby, but a few weeks ago, we kind of laughed at Citadel said, whoa, whoa, whoa, whoa, whoa. stop the stablecoin stuff so we can catch up, right? Oh, yeah, that's been their playbook for their entire lifetime. And I could give you plenty of examples and keeping in mind that I'm actually friendly with the head of Citadel Securities. So I know from whence I speak. But it's much more basic than this.

I mean, there was always go, always the most important loophole that it's not a loophole. It's a design. It's a feature. You know, programmers like to talk about features. versus bugs, the feature of stablecoins is it enables tokenization and immediate transfer of the stable coin itself or value. So as tokenization of, for example, money market funds or, you know, longer duration funds or whatever, you know, or Bitcoin, you know, directly, you know, gains prominence among the financial community. You're going to have rails where you can hold stable coins

for small periods of time and exchange into those assets as you wish, which has always been the loophole. The problem that people have today is savings accounts at banks that are close enough for immediate transfer into checking pay very, very little interest. The savings accounts that pay more interest are these things called CDs, which are locked for six months, where they got you, or you have to go off platform, which, by the way, takes days sometimes to move money and or wires don't happen and then you end up overdrawn and you have all sorts of problems that people don't want that hassle so the the sand in the gears of the current system which stable coins get rid of is the ultimate issue anyway so all this other stuff is really just

a lot of arm waving right yeah i'd actually say dav i think there's an interesting thing that what your time out with savings account there's no technical or legal block on it there are some high yield savings accounts there that aren't cds that don't require lock up the pay three and a half, four percent on it. It's just that consumers aren't really moving over to them or even like taking the hassle of like swapping it between their checking account and their high yield savings. Right.

And you can chalk that up for, I mean, look, we've all seen like the nerd wallet and there are lots of services that help people find those things. The truth is it is a pain in the ass to switch your payment processing and all the other stuff around. people will do it for the ability to make more than a couple of percent. You know, I don't know where the line is. A lot of money is in money market funds. I mean, I heard this morning on your show, Scott, people are talking about $7 trillion.

Yeah, C.J. said that. That was C.J. Right. So you have $7 trillion. You still have $6 trillion plus in checking and savings account that pay nothing. But so more than 50% is moved. It's just slow. But that velocity is when the entire system is faster than that movement is going to be, you know, far larger.

And that's really the point. I mean, it'll be pretty much all of it. And that has a knock-on effect. That's really the point. And it also is the point of what does it mean for all assets and the rails underneath everything, whether it's crypto or securities, it isn't going to matter. And if you listen to what Paul has been saying, Paul Atkins, recently is he understands the fact that it doesn't, it shouldn't matter to the capital structure of a company, what rails, you know,

what the underlying infrastructure is. is for the assets that they use for fundraising or for their capital stock. It shouldn't matter if they're selling revenue streams or utility or they're selling equity or they're selling debt. It's eventually going to all be the same. That's his point. And that's true. That is going to happen.

Now, there's lots of investment implications of that, but so be it. Anyway, it's definitely a rabbit hole that people could go down if they wanted to. Yes, CJ, you're the one who kind of brought up that $7 trillion money market number. You have a pretty strong thesis on what that means for the market. I mean, this Kanye, I'm just laughing that we saw have this Kanye title. Maybe we'll change it. But let's pivot sort of to where the market's at. As much as it's boring, you know, we can talk about the Fed and Powell and what's happening in Jackson Hole.

And CJ, you have a pretty strong view on that. Well, I don't think Powell was happy at all with Trump's visit to his construction site. I mean, we got a couple good memes out of interaction. So I think it's going to be payback time. And as you mentioned, Scott, earlier, it was 100%. The CME futures were at 100% of a rate cut. And then they blamed it on, I think, employment weakening, even though we know the data is not that accurate anyway.

Somebody got fired for revisions. How many revisions can you make? I mean, the marketplace is really waking up that there's a problem in the data. There's a problem in the state and anchored interest rate. yield curve control is not a sustainable solution and people's money is going to move and and a lot of that money moved when they started raising interest rates that's why we got the bank term funding program it went over to the money market so it could get the yield and and yeah there's dumb money but there's a lot of smart money to i think just over four trillion out of that seven trillion is

actually corporate and institutional in the money market funds so that's that's going to move probably before the retail figures out what's going on. But this slow and steady climb, in my opinion, is really based on the incentives. And people right now, they are getting that yield. They're incentivized. But I think the writing is on the wall. Powell is on his way out. So whether he lowers rates or not, next May, he's gone. Trump's putting in who he wants. And that is basically going to be a printer. And they're going to lower rates aggressively. Even Secretary of Scott percent came out and called for interest rate cuts. The whole administration is looking for interest rate cuts. Interest rates are going to go lower. I think the hesitation at the Fed is not so much

politics, even though maybe it is at this point because you know who likes being made into a meme. But really, if the Fed lowers interest rates, and we talked about this on the show earlier, Scott, but I'd love to get everybody's feedback here on the board, if they lower interest rates and interest rates don't go lower, like they already had, right? They had cut twice. And the two year and the 10 year did not participate. And if the Fed lowers interest rates and the two year and 10 year again do not participate and maybe even mortgage rates go up higher, we can have an even bigger issue on our hand. Right now the real estate market is frozen because everybody, you know, everybody wants to sell. They want to try to get something out of that appreciation they've seen

in their property, but nobody can afford the homes because the rates are too high. And the general thought is, well, when rates go lower, the real estate market will unlock. and the liquidity will flow because things will become more affordable. But what if they lower rates and the free market disagrees? What if the two in the 10 stay or even go higher? Because now the lenders are saying, look, you're giving me, I'm lending you money, you're giving me this cash equivalent collateral. While I'm holding this cash equivalent collateral,

you're printing two trillion more units of this collateral per year. I cannot lend you the money at a lower rate. I cannot swallow deeper negative real interest rates. I am not going to deal with it and I'm going to demand a higher rate. And if that happens, this whole facade, this whole thing where people are sitting on the edge of their seat just waiting for a small group of men to tell us what the price of money is going to be and that they actually have the ability and authority to do that, if that paradigm breaks down, we can be heading into some really, really big problem. And those problems, of course, are going to be too big to fail, which is going to lead to massive amounts of printing to make sure that it doesn't fail. So no matter which way we go, you got to hold Bitcoin. It's just a question, is the paradigm going to hold?

Are we going to be able to kick the can or are we going to need to switch to a new path and a new narrative based on the Fed not being able to control rates as much as they are claiming that they can? So many hands went up from that. Duane, go ahead. Oh, thanks. Good morning. Yeah, I think there's some, there's some profound comments from the speaker there. I think it's C.J. So, yeah, it's really a question of, you know, what, what Powell is going to do. I mean, I think the, you know, the general idea here is that Powell is going to hold fast. It, you know, reminds me of the Roarshack meme from the Watchman movie. I'm not locked in here with you. You're locked in here with me. So I think he's going to continue to hold the line and stay off. There were some comments from Mr. El L. Larry and yesterday saying that he thinks that Powell should step down. But, you know, if we look at the grand scheme of things here, you know, it is true because, okay, say what if we do get that rate cut coming in September? But what if it's a, you know, basically a perfunctory rate cut? What if it's, say, 25 basis points and nothing really happens?

It doesn't really have a, you know, have a really, you know, a big, you know, a big outcome. So I really think the Fed is looking at inflation, and we can see that inflationary concerns here are going to possibly overtake an unemployment concern. So if the unemployment number doesn't really raise significantly, then there you have your narrative to hold on to rates as they are today, right? So, you know, the last time that we had, I think we're on maybe say the 10th month here where we've had a Fed pause. So generally, a Fed pause on average will last about eight months. And then, you know, basically the Fed does cut, right? So I think on either side, you have two narratives going here. And they're both positive, at least in my view, for gold and Bitcoin in the sense that when you have a rate cut, you know, historically, it's very good for Bitcoin and it's very good for gold.

But then on the other hand, with the other side of the narrative, if we say that there's, I'm going to do no rate cut because we have inflationary fears. We have debt fears and crises potentially coming here. That's also good for Bitcoin and gold as safe haven assets. Because, you know, if we look at institutions here, they're still not holding a lot of Bitcoin in the grand scheme of things. So I think there's a lot of, you know, there's a lot of potential here, but we'll have to see what happens. I mean, it's Andre. You haven't spoken yet.

Yes, hi, thanks, but I think what CJ has mentioned is essentially fiscal dominance, right? And I agree, since the fat discontinued cutting rates in December, right? And even despite the very first rate cuts since September, the long end moved higher, right? And the curve steepened. But what's also interesting is since the fat discontinued cutting rates, the yield curve has continued to steepen. And I'd argue that even though the long end might not come down via rate cuts, the the yield curve will probably continue to steepen. Because like the historical pattern is once the fat cuts rate, the yield curve steepens.

And why is that important for Bitcoin other crypto assets? Because the steepness of the yield curve actually correlates with a. M2 money supply, especially the M1 money supply, liquid money supply. So, I mean, US money supply grows already accelerating. And when we see a further rest deepening of the yield curve via more rate cuts, it will accelerate even more so. And I know, I mean, we all know, like global money supplies at a new all-time high, the Chinese credit impulse already accelerating, right?

So I think it will definitely, it will definitely, yeah, it will definitely support the bull case at least until the end of this year, right? If you believe in this relationship between global money supply and Bitcoin, some people don't, right? I mean, that you can definitely show over long periods of time at least that there's a long term relationship between global money supply and Bitcoin. So I think that's definitely bullish. And because the initial topic of the space was top signal, right? So based on this macro observation alone, I don't think we've seen the top, right? Well, Andre, let me, I want to add something to what you said because what you said was spot on. And I want to explain to some of the listeners in here who might not be as macro savvy why that happens.

And why that happens is because there's a difference between. nominal and real. So if you don't know the difference between nominal and real, just do a quick AI search and get a description. But when you're looking at interest rates and you determine nominal rate, you're just looking at your bank account number go up. So if you're lending money to the government, you're getting four and a half percent or you're in a money market fund, you're getting four and a half percent. At the end of the year, the value of your account will be higher. You will have whatever principle you started with plus your interest distributed. nominal. But in real terms, we're talking about in terms of purchasing power. And these are the

big players in the marketplace. Some people might have a savings account or this or that. We're talking about people who are parking hundreds of millions and billions of dollars of liquidity. And they need to know and understand in real terms, especially from the business side of things. I've had clients who have had treasury strategies that they've been employing since 2016. and they were in 2026, they were supposed to be able to build two new factories. Well, now, because of all the dilution that took place in 2020 and beyond, they're going to have to finance just to build one factory. So people cannot save because the real rate of return is negative.

And that's why the yield steepens. Because as the interest rates go lower, typically it signals economic weakness. Well, how do we help that weakness? We help that weakness through printing, through subsidies. So we're going to see an increase in money supply. And as the dollar gets diluted, long-term lenders need to be remunerated for that risk, for that duration risk. So they require a higher barring weight because what happens is when they get paid back

principal plus interest, they want to see a neutral or they want to see a positive real rate of return. And a real rate of return versus nominal rate is in terms of purchasing power. Who cares if I lend the government a million dollars and get paid back a million 40,000? Because the house I was looking at went from one million to 1.15. So now I can buy smaller house, a less nice car, less goods and services. So the difference between nominal and real is nominal is what's on paper. Real is in terms of purchasing power. So when we're talking about this stuff, guys, what we're saying is the market, the sophisticated money in the market,

they're focused on real purchasing power. They're focusing on returns in real terms. So as the rates go lower and the printer accelerates, they demand a higher rate and that steepens the curve. Maybe you end up in some kind of doom loop, right? Steapening curve because of high sales, more money printing, even higher long-term yields and so on, right? It's absolutely a doom loop.

There's nothing we can do about it. If they lower rates, all that demand comes rushing in to the hard assets and into good and services, prices go up and long-term lenders demand higher rates. If they higher rates, the interest burden goes up and we'll pay more and more on the interest. No matter what we do, we're printing trillions of dollars year after year, no matter what we do. And that is the definition of the doom loop. Maybe one last point on doom loop, if you consider the Treasury General account, there's another kind of doom loop mechanism because in order to avoid liquidity prices in the banking system, that needs to continuously increase the amount of bank liquidity, right? bank reserves because the TGA will need so much liquidity right will soak up so much liquidity if like debt increases all the time and and the repo is draining so what do they

come for after repo drains where do they go bank reserves after they go to the bank reserves what happens credit tightens interest rates go up Andre you're spot on thank you yeah I mean all the hands yeah go ahead go out I mean say I think I think if if you just need any more evidence that like this is exactly what's going to happen and that just the Fed cutting rates doesn't cut the long end of the curve like just look at England right now they I think what cut a point and a half two points off their rates and their long term and mortgage rates went up and I think this is actually why the Fed has been correct not too aggressively front-hand cut is that the more it looks like they're trying to on it the less

the market's going to believe it and honestly the far, far worse thing is if, you know, ultimately this is all tied to like inflation expectations as like CJ is talking about and things. And so the more it looks like the governing policy is disconnected from the reality of the world, the worse that that's going to be, right? Because the less the market's going to believe it and the harder it would be for them to correct in the future. So I know like lots of people want to cut, obviously a lot of the numbers are weak. I know there was like a real shit report out of like the Philly Fed today on manufacturing numbers there. But them moving too fast or too aggressively, especially looking politicized, the irony of it is it's not going to actually cut the rates if they do that.

And it's trust, trust base too. Yeah. I'm sorry. I didn't mean to cut in there. Not okay. I just think comparing the U.S. to the U.S. to the U.K. right now is exceedingly. myopic. The UK is a complete fiscal and policy mess and has four more years of the government we didn't vote for. And there's a very big difference. I mean, there are so many problems in the

UK fiscal situation right now. The market, it was going to punish them regardless of whatever the hell they did on the long run, on the short end. And the sterling is even farther from being the reserve currency. It's just, it's just not an apt comparison. The thing about the U.S. that's interesting is the market, there's a lot of cross currents that go along with our interest rates, and they keep getting ignored. I mean, yes, we all saw a, we have one data point, exactly one, the Fed cut in a surprise to boost the election odds of the incumbent, of the incumbent regime. the president auto pens, you know, whatever, picked successor, and it failed, and the bond market, long end went up. There is 20-some odd years of data, on the other hand, that suggests the opposite will happen. I mean, we literally had 20 of 25 years of negative interest

rates, real interest rates on the short end, where interest rates were well below, over a percent below, the published rate of inflation. Right now, and there have been five years in the last 25 where the interest rate was 1% or more above the published interest rate of inflation. The two were the two before the financial crisis. One was the year before the internet bubble pricked, and the other two were the last two years. If you're doing it quick, what is wrong with this picture? It's pretty simple to see it. I think it is far from obvious that the long end will spike if they cut rates.

I don't think that's clear at all. I think there's a lot of policy levers that the government can follow in order to decrease that. But I, so, you know, making the assumptions are interesting. But that said, it is absolutely true that the seven to ten year period, which is what or two to ten year, which is where mortgages are based, is what really does matter. And that is true. And that's why, you know, we'll see what happens as we approach the end of the Powell regime. In the Powell regime, I mean, he may give a big FU to Trump, you know, in his speech tomorrow.

He may not. My guess is, is it'll be a kind of moderate, you know, kind of feeling like it's going to be a big fuck you to Trump and people are going to react that way. That's why the markets are reacting the way they are. But I guess we'll see. The question is, how much pain will he take? He wants his legacy to be the adult in the room and make Trump look like a child. So I think him acting childish seems unlikely to me. But we'll see what other people are saying.

So just to come back, well, number one, I agree 100% with you on the Powell thing. his entire play has been being the adult in the room. So I agree with you. The idea that it's going to be some kind of falling down to Trump's level or getting in a spat there is not going to happen. On the comparison thing, I'm not saying that I think the, like, oh, you can just look at the UK and the exact same thing will happen to hear. You're right.

They're very, very different. The point I was more making is that the market and investors have made very clear of the last year. Similar dynamic happened after the tariff stuff on April 1st. where, you know, you had the admin trying to make a bunch of moves to pull down rates and the market saying, fuck you, we don't believe you, and pushed rates higher on it all. So my only point there is that markets and investors are very primed and looking to basically speak their own voice on what they think is going to happen on the long end, regardless

of what the government policy is. So just because they cut or don't cut doesn't mean it's going to go one way or the other, it's all about what the market actually truly believes at the end of the day. And this is not something where the Fed can just waive their want and it will be instituted and happen. Yeah, it is worth, I will note that if you go back over the last year, you know, effectively a year ago we were, the long end was well below four, it was like 3.8, right? You know, so and even if you look at November, you know, from the time of the election, right, right? On the election day, it was like 4.4%, and we're now, you know, roughly where we were. It's, we're more or less in the middle of the range since the election, and there was a ramp up in yields as we went into the election.

So, you know, a lot of histrionics around this are interesting, but we are in the middle of the range. You know, yes, we flirted briefly, you know, at one point earlier, I guess we hit on a daily close, you know, 4.8, and people were terrified that we're going to get back to five, and that was what they wanted to avoid. but, you know, at the end of the day, they don't give a crap as long as we stay below four and a half right now. The, where they really want to do it, if you really want to understand the politics, they want the long end of the curve to be down this time next year. They want to look at it. How we get there is much less important than as you're approaching the midterms that the long end of the curve is lower and people feel better about their ability to buy houses, cars, and shit like that. And I think that ignoring that that's the goal is wrong. So, you know, we'll see what all goes.

Agree hard. This is ultimately all about the midterms. I think Austin and Andre both had your hands up. Go ahead, Austin. Yeah, so I'm going to bring all of this back around and make the point that cutting rates is almost certainly going to lead to increases in long-term rates. And if we're thinking about mortgage affordability, just as a mechanics point for everybody, mortgages are priced off the tenure, not like Fed funds, right?

So if you're thinking about how do I bring borrowing costs down for the average person, there's only one actual answer, which Congress is not going to do, which is spend less money. And the reason I'm so confident about this is leaving aside even England, just zoom out and look at the world. You could see the lesson of fiscal dominance and large budget deficits from the majority of emerging markets. it is very common behavior in those markets when people cut the front end for political reasons that it unleashes inflation in higher, longer term rates. We've seen it in Brazil. We've seen it in Argentina.

We've seen it in Turkey, et cetera, et cetera. We only have so long. So I'm not going to keep naming countries. But the point is this is a well-understood problem. And what I would flag for everybody is this is the first time in the modern history of the United States that we're experiencing this. So everybody here is going to act like it's something new. it's not zoom out go talk to people who have traded em rates or em credit and they can already

tell you what's happening and why with shocking levels of specificity Andre I agree I mean that's also my my thesis that like the US treasury bond market is moving closer to a kind of EM bond market emerging market bond market but I also agree with like UK guilds are probably even more risky than your treasury bond for obvious reasons, right? They probably have the same kind of rating. But like in terms of liquidity, liquidity in the UK guild bond markets way worse than in the Australian market. So there's definitely a case to be made that like the US Treasury bond market and

also the German bond markets are the cleanest among dirtiest shirts still, right? And I'd say UK guilds and JGBs are on the other side of the spectrum. They're actually showing the worst liquidity among all these major sovereign bonds, right? And I think going back to the question, why has the long end decouple from the short end? Why hasn't it reacted to head rate cuts in the first place? I think because of liquidity, right? Because of liquidity has been going down in the longer end, because of decreasing demand, and this case is even more pronounced in, yeah, UK Gills and JGVs.

And it's probably just not another cycle. I think it's important for everybody to take a 30,000 foot view and know that the 10-year treasury note yield topped out back in 1981 at just over 15%. We have been in a 40-year treasury note yield. downtrend. And since 2020, we have bottomed and we have now broken out of that downtrend since the mid-2020. So from a chart perspective, there could be some interesting signals here where a 40-year cycle, a 40-year trend is now breaking. And why is that trend breaking? I think 2020 has to play a big role in that. The chart says that. The macro says that. The decisions

that were made says that. But if we are seeing a huge trend change, there could be huge implications in the wider marketplace. There is no guarantee that we are going to see interest rates go as low as they were during the famous ZERP period and through the COVID crisis. We may never get back down to those levels ever again. So I think it's really important. to understand that your thesis doesn't bank on that becoming a reality. Nicholas? Yeah, I mean, just continuing on that thought of the macro macro, right? If you go from the, I think you were saying, the 10-year bond yield curve, but if you

even go like to the 30-year bond yields, it exactly looks up into the right for U.S., Germany, Japan, UK. And I continue to come back to this as an indicator of where we're going, right? Since 2022, everything is up and to the right. And that is not going to change. I don't think there is any way that we come out of this trend. And what does that signal to me? It signals to me that this is like this death spiral of demonetization. And what does that mean for Bitcoin? Well, it's like a hyper bullish case, right, where we have where we have hyper bitcoinization and what does that mean to to reserve currencies around the world? I'm not entirely sure, but I think it's, you know, these in this is like the death throes of global reserves. Yeah, the equity, what I think the trend change is, and I think that's such a great point, Nicholas, is that the whole world is realizing.

that dollars and fiat currencies are debt derivatives. The foundational layer of the system is debt-based, and it's not sustainable. And Bitcoin and gold and silver offer an equity-based layer. And I think that could be the climax of this trend change, that we're ultimately heading towards a point where the system itself realizes that if we don't make a change, we're going to lose trust.

And to me, the only difference between inflation and hyperinflation, sure, they try to mathematically define it. But really, when you go back and you study all these different economies, the one thing in common that transitioned from inflation to hyperinflation was the loss of trust. So we have to really, these policymakers need to navigate this carefully because this trend change, which is a 40-year trend change, is signaling that a dynamic is being paid attention. to. And if they don't address this dynamic, then there's going to be really big systemic issues. And to deal with those issues, the only way you can do it is to print over it, which then makes the actual issue, because printing is the issue, it just makes it worse. So their go-to fix

can't fix the problem this time. And we need to find a way to integrate Bitcoin, gold, and silver as an equity layer to stabilize the foundation because a debt-based foundation isn't cutting it. sorry my mic was cutting there uh david any other huge pieces of news that you're looking at today no but i think i don't make a point i got a comment back on on x about how it's supposed to be a bitcoin in the crypto space and we're talking about about macro and rates i think that it's funny if you listen to if you listen to your your talk with c k this morning you know, he made it much more eloquently than I'm about to. But the reality is, is two things people need to remember. Thing number one, crypto and Bitcoin in particular, and I don't

care, Bitcoin Maxis can yell at me, don't group them together, whatever. I don't give a fuck about that. We all know what I think. All in the intermediate term, trade based on liquidity, full stop. The single most important thing that affects all of these assets are liquidity in the intermediate term. And to argue that is silly. If we know we're going into a tightening cycle where liquidity is going to be taken away, markets are going to be lower. Now, frankly, the odds of that are about zero. The odds are there will be more liquidity and they will figure out ways of whether it's yield curve control in the long end to put more in because that's what they want to do because they want assets to go up. And they are helped in their regard by that

by if they can inflate assets, they might be able to at the same time control consumer prices. And we can talk about that. But when you talk about macro, that's why. And so in the crypto world, if you're making plays anything more than minutes or days, you have to care about liquidity. Second thing, Bitcoin cares about adoption. And adoption is what's going to take Bitcoin to 10x or more. It's not going to be anything else.

And whether that adoption is triggered by hopefully not a full unraveling of the Fiat debt basis, system that has been so elegantly talked about, that would be bad. That's what I call the Mad Max scenario. It could happen, but hopefully it won't. It's more likely to be growing awareness and a slow, steady growth of awareness that there is a better system that could be anchored by Bitcoin. And I will once again plug your show shamelessly, Scott, because I think CK described exactly how a system could start to evolve where Bitcoin is the base layer. Now it's going to take a while, we're very early, but that is a big deal. So for anyone who's listening and wondering what the hell I want to hear, which meme coin,

which all coin is going to pump, I thought you were talking about Kanye, and I was really cool about meme coins, and we pivoted to talking about real stuff. It's because meme coins are important for billions of dollars. What we're talking about here for crypto is important for trillions of dollars. So I did want to make that one point because I'm going on vacation. I'll probably not going to – we'll see if I get Internet on the boat that I'm going to be on. But I may not be here for the next week and a half, which means generally when I leave is when all hell breaks loose one way or the other. So expect volatility, but I'll be back on September 1st.

Well, you can be sure that even while you're gone, Kanye won't be the main topic of conversation. It's funny to look at how we've evolved from the – Mario and ran first season of Crypto Town Hall to the Dave replaced them as host second season of Crypto Town Hall. Yeah, so, I mean, you know, yeah, I'm the old boomer guy who actually cares about value, but still is a crypto zealot. So we'll see what happens. But anyway, if that last thing you guys hear, just remember, we care about liquidity

and we care about adoption and value. How's that, Scott, for my closing statement? I think it's a great closing statement. And since we are in the doldrums of August here, we're going to go ahead, and I'm actually on vacation hosting the shows, we're going to go ahead and call it eight minutes early. I know crazy, but first, before we do that, give everybody on stage a follow. They're all amazing. They're all here for a reason because we listen to them and you should too. And this is a quick disclaimer.

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Guys, that's all we got for you today. Dave, I hope you'll be able to make it back from the boat. But if not, we'll do our best to hold it down without you. Much appreciated it. And everybody should look now because they might not have noticed that if you look at the Cryptotown Hall Twitter account, four faces there now on the Hatter, not three. Dave's got his, finally got his credit where credit was due for all of his efforts here, man. So I appreciate it.

And if you don't make it, enjoy the vacation. Everybody else will see you tomorrow. Thank you. Bye. Thank you.