What Bitcoin Did - BITCOIN & THE GLOBAL ECONOMIC REORDERING w/ Matthew Pines

Episode Date: December 21, 2024

Matthew Pines is the Director of Intelligence at SentinelOne and Head of Strategy at the Bitcoin Policy Institute. In this interview, we discuss the concept of a Strategic Bitcoin Reserve, the feasibility of executive action to acquire Bitcoin, and the game theory behind nation-state adoption. We also get into the geopolitical competition between the US and China, the risks of global economic reordering, the impact of stablecoins, the role of treasury bonds in the financial system, UAPs, and the potential for Bitcoin to shape the future of global monetary policy. MASSIVE THANKS TO OUR SPONSORS: IREN: https://www.iren.com/ RIVER: https://river.com/wbd CASA: https://casa.io/

Bitcoin has not reached the point. It's not quite gold. Gold is a $20 trillion asset. Bitcoin's a $2 trillion asset. If you're going to make that play right now, those are the relative proportions you've got to work with. And so if Bitcoin were to monetize relatively more than gold, then if we hold more Bitcoin than most of our adversaries, then we stand a game in this sort of global economic reordering. But then any prudent strategic planner

has to consider different scenarios over like the longer term. And if Bitcoin is part of that initial play, what would that look like as a future trajectory? Then you're potentially then have to realistically consider future scenarios, not too far out, you know, five, 10, 15 years where Bitcoin is monetizing to close to parity with gold. But then you consider a second scenario, which is, okay, it reaches parity with gold, right? Which would now be a dramatic, much more significant shift in the balance sheets of large portfolios. and where Bitcoin is seen essentially as like a digital gold reserve asset. Hello there and welcome to the What Bitcoin Did Podcast.

I'm your host, Danny Knowles, and today we have the amazing Matthew Pines on the show. Now, Matthew, along with the rest of the people over at BPI, have been busy. They've recently dropped an executive order draft proposal for a strategic Bitcoin reserve, which we obviously get into that in the show. He's also coming out with a letter early next week called a global economic reordering, US China competition and Bitcoin as a tool of US statecraft. This letter is intended for Scott Besant, who's the incoming Treasury Secretary, and honestly it's incredible.

So I think that's going to drop on Monday, so make sure you check that out. But we get into that in detail in this show. And then, of course, I couldn't let Matthew go without talking about UAPs. We got into everything that's going on in New Jersey at the moment and what he expects the Trump administration to do. All right, I hope you enjoy this one. Again, the only thing I'm going to ask is please make sure you've subscribed over on the YouTube and any way you get your podcast,

it really makes a big difference. And if you can leave a review also, that's amazing. But I hope you enjoy this one. If you do want to get in touch, it's Danny at what Bitcoin did.com. Matthew Pines, good to see you, ma'am. Good to see you again. How's everything going down there in D.C.?

You've been busy. You know, times they are changing, so just trying to ride the tiger. So when we initially talked about doing this show, we were going to cover your speech that you gave in Mina. But since then, you've dropped an executive order piece with BPI and you've teased the letter that you're going to write for Scott percent. So I think we're going to have to get into them.

We'll see if we have time to get around to the meaner thing. But first of all, let's start with the executive order. Do you want to take just like a big overview on that and explain what you've done? Certainly. So this idea of a street of Bitcoin Reserve was sort of like a meme, right? Like what would it look like if the U.S. government were to create such a thing, right? And I think the original articulation of this idea was put forward at Bitcoin Nashville by both President Trump and Senator Lumas as well as RFK. And it kind of, you know, ran the gamut from on the, you know, certain more, more signaling end, just drawing a box around the existing holdings of Bitcoin the U.S. government has as a result of these criminal proceedings and essentially committing not to sell them.

And on the high end, it was essentially RFK laying down a marker of. of acquiring up to four million Bitcoin, right? And then in the middle, Senator Loemis had introduced her Bitcoin Act, which targeted one million. So that was kind of like set the terms or the frame of this type of idea. But it wasn't like fleshed out in like operational detail, right? Like what, well, like, well, what are the legal authorities both on the executive side to create such a thing and then what would be necessary on the legislative side to sort of codify

or expand executive action? And, you know, that's what DPI does is do policy research. It's like, you have an idea for something related to Bitcoin. What are the both intellectual merits or demerits of such a policy? And then operationally, right, like what would underpin it from either existing law or future law? So that's, you know, it's sort of in a wheelhouse. So that's what we have done. I kind of did some research on the executive side.

What existing laws are available? What existing funds are available? If the president were to decide this is a policy he wants to actually implement, what's the most effective, what's the most justified, what's the most advantageous way of executing such a policy. And so that's what we designed in that executive order. Again, you know, just our take put out there for comment. Obviously, it simulates lots of discussion. That's kind of what you want to have happen is folks in a broad range of communities and different perspectives kind of chew it up. add feedback, you know, ideally it gets to a point where it reaches, you know, a really good spot. And if that's what you want, a good policy. So why did BPI do this right now? Were you asked by the Trump administration to draft something, or is this something you've just gone out on your own and done? Well, after politicians came to Bitcoin Nashville and articulated such a thing, you know, at least I and other folks of BPI were like, okay, is there, is there a plan

written down? Is there an executive order or, you know, Bitcoin, the Bitcoin Act was introduced in law, but it wasn't clear like what, what would, what would this look like if, uh, incoming, if an incoming administration were, were to want to execute it. So I, I just started doing research on like, okay, like, if President Trump were to do this, right, how would it be done? Um, and we just started drafting it. Uh, and, you know, it was put out, it was put out there. Uh, so we'll see. I don't, I don't have no idea, you know, if, someone in the Trump administration will take that or do their own version or whatever, right? But at least we wanted to put out what we felt was a solid proposal to implement such a policy.

All right. Let's dig into the actual draft letter. I've not done my full course on executive order influencer yet. So a lot of this is kind of new to me. In terms of this is structured within the Exchange Stabilization Fund. Can you explain what that actually means? Yeah. So when we're doing our research on if the president wanted to establish something like a street of Bitcoin Reserve, as I mentioned on the low end, he could just essentially do it as a signaling, right? It could just take the existing coins, commit not to sell them, and could instruct the government to like do a bunch of studies and do a bunch of reports on, you know, what it would look like to expand that SBR. So that's still a live option, right? I think that would still be a quite. a strategic move by the United States to create something like an SBR to call, you know, a certain collection of Bitcoin in its custody, its strategic Bitcoin reserve would still be a significant move. But that wouldn't require any additional mechanisms for funding, for purchasing, for custody, because those existing coins are self, are custody by, by a third-party

custodian. And so that's, okay, that's, that's an option. And that's, but that's kind of relatively well-establish, require any sort of new mechanisms or funding sources. And so if you wanted to build on that stockpile, if you wanted to build, you know, add to that reserve, you need funds, right? And you need funds that the administration has existing legal authority to use to purchase Bitcoin, which is, okay, well, this is, that's a novel thing, right? You need to like find the right mechanism. And we did, you know, a lot of research in, you know, different candidate ways, right, that this could be, this could be established. And the one that we felt or that I felt, you know, and we debated it in terms of how we wanted to formulate our proposed executive order.

But the most tractable, feasible, and justified, you know, existing authority is the Gold Reserve Act of 1934, which was amended in 1977. And it created this exchange stabilization fund. And essentially, which is, you know, it's in certain prosaic terms like a slush fund for the Treasury Secretary. It has been used for a lot of different things, both like currency interventions as well as loans to different governments. It was the pot of money that Congress sort of dumped hundreds of billions of dollars of COVID funding to do all sorts of loan guarantees and, you know, sort of emergency relief after COVID. So it's like it's sort of like the Treasury Secretary's sort of like rainy day fund, slush fund for all sorts of things. But it's not completely blanket authority, right? it has specific statutory construction where it essentially gives the Treasury Secretary the authority to, under the obligations of the U.S.

government to the International Monetary Fund Agreement on orally exchange rates, the Treasury Secretary is authorized to deal in gold, foreign exchange, or other instruments of credit and securities. So that's the core clause, right? And so when we were researching this, okay, it's okay, Bitcoin is not named in that statute. is there a legal, you know, clear way to interpret some of those clauses in a way that would allow the government to purchase Bitcoin. Now, Bitcoin is clearly not gold. You know, you can't just, you can't squirrel out of that one. And you could maybe argue that it's for an exchange in the sense that it's, you know, say in El Salvador used as legal tender. But it's a bit thin. If you look at the sort of precedent and existing statutory definitions of foreign exchange,

essentially it's currency issued by a sovereign. And Bitcoin is not currency issued by a sovereign, right? But, you know, it's clearly not that. So that might be a bit of a thin read to stand on. And then you left with that last clause, other instruments of credit and securities. And Bitcoin is clearly not a credit or security. And so then you're left with sort of two options, right? You either essentially have the government just buy a security.

that's linked to Bitcoin like the ETF or an ETF share or a basket of ETF securities. And that's a fair approach. At least our policy preference, though, was to try to get the government to be able to purchase actual Bitcoin and eventually self-custody it. Right. Like that's a policy objective that we should aim for. And so while buying an ETF would be an important signal, you know, is operational issues with like, you're essentially, are you privileging one ETF provider over another? And you're still sort of owning this sort of security. You're not really owning Bitcoin.

And is that sort of undercut the policy objective of such a, of such a Bitcoin Reserve. And so then the mechanism that that we came up with was essentially, you know, the language is other credit or securities instruments. So you can structure a credit instrument that effectively is dollar denominated, but essentially is redeemed in Bitcoin. And you could have that be like an overnight note. That's a pretty simple contract with a contract.

with a counterparty, you know, a big exchange, a Bitcoin mining company, you know, whoever, be up to the discretion of the government to make that a competitive process potentially or however they want to implement it. But it would be a simple note, essentially, that says, we'll give you this amount of dollars and we take on a certain amount of credit risk overnight, but in the next day, we get Bitcoin in return. So I think that's a fair read of the statute, right? People might have different opinions on it, but at least there was no, you know, obvious

problem with the way that that could be structured. And so if the objective is to create a Bitcoin Reserve, where the government at some point we'll be able to take self-custody of the actual Bitcoin, if that's your objective, this is, you know, and you want to use existing laws and existing funds, this is the way to do it. And the state civilization fund is about $230 billion total and about a $38 billion net positive position at the end of the last annual report, which was FY23. There should be another report coming out soon. So there's about, you know, $40 billion essentially of sort of spare change, right, in that in that fund. And we basically proposed the government within 365 days of the order being signed, $21 billion, a nice sort of memetic target to be acquired under this authority and put us into a, essentially a new program established under the Eustain Civilization Fund to create this strategic Bitcoin Reserve.

And then we recognize that, you know, the implementation of self-custody may take additional steps, right? So you'd want the government to study that, to task the relevant organizations inside the government that are responsible for, say, cryptography and hardware security and software assurance to do their homework, essentially, on establishing the protocols, the mechanisms that would be needed to take full self-custody to establish it like a digital Fort Knox, right? Physical security, you know, other sorts of security measures. But in the meantime, if you want to just the government to just buy Bitcoin, there, you know, there might be a mechanism that you'd want to establish in that executive order to use the existing custody arrangements that are trusted by the government say that currently hold U.S. Marshal Service coins to essentially store those initial purchases. So we were trying to think it through, given these policy objectives, given these existing constraints, what's the most effective and feasible way to go about doing such a thing and, you know, writing up the, the language and putting it out there and folks can, can, can, uh, comment and we'll see where it goes. So you think the likelihood is that it will be custody by someone like Coinbase in the interim and then hopefully self-custody at some point in the next few years?

Well, I think the current custody provider, and I could be wrong because they might be, they might have changed this without much public announcement, but I believe the current custody service provider for the U.S. Marshal Services, uh, Bitcoin Holdings is Anchorage digital. Okay. And so, you know, it would be within the government's discretion to essentially, you know, that what's what it basically says is the Treasury Secretary is instructed to evaluate the current custody service provider arrangements, whether those are sufficient operationally from a security

perspective. And if they're not sufficient, right, then the Treasury Secretary could issue essentially a new RFP to the market and say, we're interested in custody service, you know, services. for this holdings and we put in place these different, you know, requirements. And we'll take, we'll take offers and we'll select. That's sort of what they did for the U.S. Marshal Services coins. And there might be additional security provisions.

There might be additional requirements that the Treasury Secretary may want to impose on like a new contract. That's fine. There are some implementation constraints there. It's like it takes time to develop an RFP in the government and issue that to the market. So, you know, there is a tradeoff between. If you want to acquire these additional resources quickly and you want them to be securely custodied, using your existing service provider might be like the path of least resistance.

But again, that's up to the government to decide. But we want to give different options. And that's certainly an option to do so. OK, so you have suggested that the US government get $21 billion worth of Bitcoin. Obviously, Cynthia Lummis' proposal is a lot higher than that? Is that just because of the restrictions in the exchange stabilization fund and just how much money actually have to go about about this? Yeah, I mean, Congress has power of the purse. You know, the government, the executive can't just, you know, create trillions of dollars,

right? And so we want to be responsible and be practical and fit within the authorities and funds available to the executive. And that, yeah, that's basically, maybe there's a little bit more that you could, that you could appropriate. I mean, we don't want to, like that 21 billion, I think was reasonable given the public information. about what essentially is the net position of the exchange stabilization fund. So it wouldn't require selling any existing assets. Wouldn't require, you know, selling Japanese yen or euros, which could create, you know, other other effects, right? It may be undesirable that the, you know, you wouldn't want to necessarily cause currency disruptions in those other markets.

Again, that's an executive decision. But like the there, at least as of the latest report, there essentially is a net positive position. that wouldn't encumber any additional assets or cause any other market effects, wouldn't require issuing of any new debt. So it seemed like a pretty straightforward thing. And I think it will, I think truly it does require, you know, congressional input to make this a strategic level decision for the United States over the long term, right? Like, this is going to require potential additional assets be funded, or, you know, purchases being being funded. and that's that's that's that's that's that's that's that's that's that's Congress's mandate there so um you know

the executive move would be the sort of first move would would be send a strong signal would meaningfully add to that position uh potentially under our deaf under our version of the of the order but you know the the full scale of such a street to Bitcoin reserve as envisioned by lumas would require additional you know appropriations and that would have to come from Congress okay so if this is to be signed um presumably this something that Trump could just sign on day one and that's that's all that has to happen doesn't have to touch congress in any way yep yeah that was that was the the binding sort of constraint that we put on ourselves for for drafting this particular executive order is is it such a thing that he could sign on day one right uh you know

in terms of it's operational um uh implementation in terms of you know it's other you know we don't want to put something in there that would be like a poison pill to somebody in the administration somewhere else in the bureaucracy where they look at this and they go oh that's going to have these other second and third order effects and it's a problem or it's going to take us weeks or months to kind of understand or or or put in place other other other measures and so yeah well like what's what's the what is the most effective way of writing such a policy um that it could be uh you know very very quickly um implemented and what is their mandate in terms of selling bitcoin yeah so we have a provision in there specifically about that uh sort of the provisions for

for sale. And this is a matter of people's different policy preferences, right? And we felt that, you know, it's important to, it would be important as part of this for the U.S. government to signal its intent to hold for the long term, right? Of course, operationally, right, like there'll be many different presidential elections, right, right? Over the next several years, you know, over the lifetime of the holdings of this, ideally, and future presidents could revoke this executive order. And so it's long-term endurance would be subject more to whatever Congress does than whatever the president does. But in signing such an executive order, sending this long-term intent to hold is important. So we write in essentially proviso that any sale would have to be approved by

the president and would have to be justified by written explanation from the Treasury Secretary. that there's some sort of urgent national security crisis that requires the selling of the Bitcoin, right? At the end of day, it's always an executive, if it's done by executive mandate, it could be undone by executive mandate. And the president at any point could decide to sell, right? There's nothing that's going to stop him. But we wanted to at least send this signal that the government isn't just doing this as like a short-term trade, right? Or is that the government is going to like pump and dump, right, in the four-year term that Trump is going to hold. that like it was important to send this long-term signal, you know, to to huddle what the government

decides to acquire. And I think it's, you know, that's an important signal to send. So if this didn't go through the executive order route and instead went through Congress, would that then be more robust? Well, they're not either or, right? These are separate branches of government. They have their own mandate and authority. Nothing the president does would obviate anything Congress can do. But certainly, right, like laws are laws. They are the abiding constraints and funding source for whatever the executive branch does. And so this 21 billion, you know, there might be a little bit more or less in the tank of the Exchange Civilization Fund that potentially could be, you know, added to the SBR as a result of executive action, you know, still within Trump's term. But, you know, it would not be sufficient to meet like, say, Lumas's objectives.

And that would require specific appropriations. or specific actions that the president may or may not have the executive authority to do so. Like in the Lumas Bill, it's sort of this revaluing of the gold certificates and then using that additional liquidity that is essentially just sort of like as like an accounting trick credited to the Treasury General account from the Fed by revaluing those gold certificates. And then using that those new reserves essentially now on the ledger for the United States Treasury General account to go out into the open market and purchase Bitcoin. And so that would require congressional action.

And, you know, the legal mandate to, you know, buying this for future presidents would have to come from Congress. So they're not, they're not mutually exclusive by any means, but there are different, different time frames, right? Like the executive can move quicker, but has constraints. The legislature takes time. And it's, you know, no guarantee that this would be a policy priority for the next Congress. And so it may not even happen, right? And so if it's going to get created, you know,

the most sort of feasible route and the most, you know, sort of short-term route is the executive. So we're not in the print dollars to buy Bitcoin stays just yet. But if you, are you guys dealing with anyone in the Trump administration at Bitcoin Policy Institute at the moment? I mean, we provide all of our research publicly. So that's why we want to, you know, produce this thing for public awareness and the folks in the Trump campaign or Trump transition team look at it. I know that that paper we might get to is written for the incoming Treasury Secretary, you know, but it's going to be published, right? So he hasn't read it before we release it. You know, ideally, you know, it would be great to have a meeting with him, have met with him.

And if I ever get that chance to meet with them, I'll, I will articulate what I've written here, right? I don't have any secret plan or secret, secret lobbying. strategy that's different from what we're putting out in our public documents. And if they, you know, want to ask us questions, like we provide research and policy analysis. So this is what we did with the executive order is like, hey, Trump had said such a thing. Like, how would this be done? Like, let's do some research and let's put out our version of what, you know, would be a feasible way to execute on that policy. But it's really up to them to decide if they want to use it or not. So on that, internally, like a BPI, how, what kind of percentage chance?

you're putting on this getting signed by Trump? I mean, this is the, I guess, billion dollar question. And you know, you talk to different people. People will, you know, give you this isn't happening at all, no chance to like 100% it's happening.

Right. So like through the whisper grapevine, right? I've heard both of those. I've heard both the like 100% guaranteed it's going to get signed. And I've heard, is it not a priority? Probably not going to happen.

From like apparently credible sources. And it's just like, okay. Like, you know, I don't think it's a monolith there. There's a lot of, you know, strong personalities. The Trump team consists of a lot of different individuals. You know, I don't have a, like, it's criminology to understand at any given point, right? Like, who's in, who's out, who's got the ear, who doesn't have the ear. And the transition time in particular is a period of intense flux, right?

Yeah. Where those dynamics of like, who's close to power. Like, it's like a exponential fall off, right? in any white house of like, you know, the first ring has like, you know, 10 times more power than the second ring does, right? And so it kind of matters a lot whether the information you're getting on such a thing is coming from first ring individuals or second ring individuals. And, you know, people can quickly go from first ring to second ring and back. And that, you know, so this is where people trying to handicap, right, like literally will he sign this piece of paper on day one.

That's essentially the dynamic you're trying to model. Yeah. And I just think, like, nobody. he knows, right? But I think, you know, putting in place, like, providing essentially a practical, tractable piece of paper that ideally you work out in public to say, this is the, you know, these are the objections, these are the, these are the constraints, you know, makes it more likely to be implemented. And also makes it more likely there isn't like a thing you didn't think of that causes a snafu, right, like after it gets signed. And then if it screws something up, that you weren't aware of and then he has to like rescind it well that would be bad right right like you wouldn't want like this sort of sort of technical rug pull uh to happen because you didn't think

of something or someone in the bureaucracy goes oh wait a second like we we have an issue here um so yeah I mean I would might I would rather it be done right than quickly um I think there's certainly and you know that's but if it gets done day one that would be I think the target to to shoot for. But to do that, you want to make sure you do your homework. Well, it's amazing. Congratulations to all you guys for putting this together. It's very, very cool to see. There's obviously been quite a lot of debate on Twitter over the last few days since you released it about whether this will sort of strengthen the dollar or it really signifies lack of trust in the dollar and may end up weakening it. I know you're on the sort of the former side,

but do you want to explain that and the dynamics that come with this? Yeah, and I'd say, you know, I have a caveat to that, right? Which is like there clearly is a scale of purchase the government could engage in, that would be negative for the dollar, specifically negative for the treasury market, right? And just to like, as like a thought experiment, right? Like, if the government were to announce that it's going to purchase four million Bitcoin on day one, right? I think that would likely have negative effects on the treasury market. Because essentially it would be the government committing to buying, and I don't think like legally, like, there's no, there's not enough funds in the tank to do such a thing, but just like hypothetically, it, you know,

would be like, well, why are, why am I buying the thing the government is, is, is not buying? And why would, I should buy the thing the government's buying, right? But I think it's a matter of signaling and scale, right? All, as with all things, uh, essentially there's like a metastable equilibrium. And if you go to the extremes, you can get extreme outcomes. Um, and so I think nothing that we have put forward, I think is touching any to that sort of danger zone. Um, and prudent policy always tries to calibrate, right?

different policy objectives. But I think, yeah, within a certain regime, and I think that regime is pretty wide, there's a very strong positive reflexivity between Bitcoin and the U.S. dollar system. In particular, right, there's like a direct channel in the sense that, you know, Bitcoin and dollar-based stable coins are quite directly connected. And dollar-based stable coins are directly connected to the bond market. So the more Bitcoin goes up, the more,

stable coins have to be issued essentially because it's the dominant meaning of exchange and currency markets. So, you know, to just buy and sell or margin trade, you know, a unit of Bitcoin requires, you know, more USDT or USDC when Bitcoin price is higher. And that especially expands the balance sheets of the stable coin issuers. And the stable coin issuers are properly reserving those expanded balance sheets. They have to expand their purchases of treasury bills. And so now there's a net new buyer of treasury bills in the market. And so just that basic sort of mechanical link is positive for the treasury market. And then the proliferation of stablecoins themselves as a sort of a dollar, a sort of crypto

euro dollar around the world expands the dollar network. And so Bitcoin monetizes more, gets more popular as a store of wealth for some people around the world. and sort of crypto markets take off as a sort of a second derivative function of Bitcoin expanding around the world, that expands the dollar network. So I think this Bitcoin dollar positive synergy is quite strong and quite empirically and sort of theoretically validated. Now, some people who think that's a bad thing, right? Some people who think that like Bitcoin strengthening the dollar system is like strengthening the terrorist state.

Yeah. It's strengthening the sort of evil hegemonic imperial system. And that in fact, you know, we want the we want Bitcoin to undermine the dollar. And that's a certain ideological view that some Bitcoiners or some other folks have. At least I don't have that view. I don't think Bitcoin, I don't think BPI has the view that the U.S. government is, you know, effectively the world's largest terrorist state, although they've engaged in, you know, very malign activities. But I think to a certain extent, Bitcoin and dollar by stable coins, if they continue

along trajectory, they've been, they've been moving, help reinforce, you know, what we think of as, as like, traditional American. values, right? Like property rights, empowering of the individual relative to potentially oppressive kleptocratic regimes, giving people the ability to transact peer to peer without an intermediary to store their wealth in something that the government can't inflate away or expropriate. And it also kind of ties them in to kind of a digital economic system that ultimately is, you know, a way of growing U.S. soft power influence and counters China's efforts to do their own version. of that, right? Export their own vision of techno-authoritarianism that rides on their digital

financial rails, right? So things like the cross-border interbanks payment system, Embridge, which is now a Bricksbridge, the digital currency system, as well as their actual technical infrastructure that they're deploying around the world. So we're in this competition, right, clearly. And, you know, there are different actors in that competition. I would prefer the Western value system to be provided and the Western digital system to be the one that lays the foundation for the 21st century and not, you know, essentially a Eurasian power block that has a very different model of, of, you know, relationship between the citizen and the state, a different model of governance in the 21st century. And, you know, I would prefer that, you know, the ethos

of Bitcoin is, is the one that succeeds. And if, you know, at the end of day, this is about, you know, the inevitability of Bitcoin monetizing, states are going to get in the game, right? It maybe happened sooner than most folks were expecting. But like, this was part of the, this was part of the trajectory, right? Like, if Bitcoin was going to do what's going to do, states are going to get involved. And the question is then at that point, how do you put in place policies? How do you steer essentially nation state adoption in a way that preserves the core ethos of Bitcoin that tries to maximize, you know, the political vision. that you have for it in its next phase. And so that's, you know, that requires people in open society engaging and articulating a vision

for what they want their government to do. And, you know, I think just while it is limited, we still live in a participatory democracy. And we should take full advantage of that fact that we should avail ourselves of all opportunities to say, hey, there's a new administration coming in. You know, let's change their minds. And it for me to understand, you know, try to handicap everything Trump might do. but I think it's interesting that like Donald Trump, first administration, was very hostile to Bitcoin, right? Steve Mnuchin was coming after self-hosted wallets was coming after all sorts of things.

It was not clear by any means coming into a potential second Trump administration that that the policies would be in a different, right? And, you know, you could go back and rewind the clock and tell this sort of contingent historical story of how a Trump, you know, this sort of this opinion shifted. But it did, right? And I think that's that's a marker of how, you know, Bitcoin succeeds as a political project and actually changes, like, how the entire U.S. government apparatus could potentially view it and make it a much more permissive environment for Bitcoin developers, Bitcoin holders to pursue what they believe is the right thing. I mean, I definitely wasn't expecting this to happen in 2025, but I'm here for it. This sounds great. You said that the stable coins are going to strengthen the treasury market, which I understand

the dynamic that you're talking about. But are they not buying almost? entirely short-duration bonds. And what does that do to the sort of long end of the treasury market? Yes, for certain. They're buying like, you know, like three-month notes, essentially. Yeah. Bills. Yeah, it doesn't help the 30-year. But at a certain extent, the government has been issuing more on the front end recently. In fact, it's become kind of an issue where that was called like activist or active treasury issuance was sort of a subtle QE-ish-like policy that Yellen put in place. Can you explain that? Is that because the short duration bonds are more inflationary than, and they're more money-like than long-duration? Yes. Well, yeah. So the basics is,

you know, there's a yield curve. The government issues debt instruments across the yield curve. And the further you go out, the more you're exposed to duration risk, the less money-like that instrument is. The closer it is in terms of its duration, the more money-like it is, So like obviously federal reserve notes or reserves at, you know, a bank, those are your IRAUs. Those are like redeemable on demand, right, for cash, right? There's no duration associated with those, right? And T bills, right, essentially within three months are very cash-like, right? So they trade almost as if they're cash-like collateral.

And the further you go out, one, two, year, three, five, year, 10, 30-year, the cash-likeness of that instrument, you know, sort of as a measure of sort of convexity decays. And so yes, the government, though, when it's borrowing money, is trying to decide how much do they issue across that yield curve. And there's a whole complicated strategy the government has engaged in over many decades to try to optimize where it issues along the curve. It targets roughly, I think, an average duration of six to seven years that has shifted here and there. But they try to keep a balance across the yield curve. And they're very close. They're very sensitive to market conditions, right? because they're selling this paper into the market.

And one major change that's happened in the market for choice of securities is the role of primary dealers has really become less and less important. It used to be these primary dealers, these, you know, major banks would be the sort of the intermediary for the government. Like they would sort of agree to sort of like take that paper at the auctions. And they would take down a certain percentage of all the new issuance. increasingly you're seeing more and more Treasury securities being intermediated by non-primary dealers. And it's particularly hedge funds in the sort of the secondary market for Treasury securities have become like the marginal like new balance sheet that's expanded.

You know, people that want to essentially do this called, like sort of a relative value trade, essentially. Is that with interest rates going up or is that something different? That's just where they're buying the spot and they're shorting the future. and they're sort of trying to caps with this little arbitrage. It gets a bit technical in the sort of treasury market plumbing. But the activist treasury issuance was sort of the term that some economists actually was a Rubini and a guy named Stephen Moran, who was a former senior advisor in the Trump Treasury Department.

We're doing this analysis. We're like a long paper detailing the mechanism and quantifying its effect. essentially the bottom line is the government had to issue a lot of debt in the last few years, right? We're just, as people have looked at the chart, just like hockey sticking up. And as the Fed has increased interest rates, right, that has made the interest burden go up. And we've gotten to this point now where we're essentially spending more interest than we are in the Department of Defense, which isn't great from a strategic perspective, but just parking that aside, we're having to issue a lot of debt. And the government, apparently, was concerned that if they were to issue, you know, more. of that debt at the long end, that there may not be sufficient buyers or that the clearing price

for that debt would require interest rates to go up. And the government didn't want interest rates to go up because if long end interest rates go up, guess what, 30-year mortgages go up? And guess what? The median voter in Pennsylvania that is trying to buy, you know, their first house or is sort of, you know, stuck in their first house and they haven't been able to level up because they got a low interest rate is now looking at mortgages at 7, 8%, not great. And so there was a strong pressure. And also, the government borrows, right, at those longer end, they like to try to borrow as much as they can, but they're paying a high interest rate for. It's going to be very expensive. And it locks that rate in for 10, 20, 30 years. So you're kind of like, it's not ideal to do that.

And so the government essentially shifted more of its issuance to the short end. and started issuing a lot more short duration paper. And because it's more cash-like, there's a lot more demand on the front end, right? So you don't get that interest rate volatility that you get if you try to smush it all out on the long end. And because you're issuing a lot of at the short end, you're essentially, you know, you're sort of artificially reducing what otherwise would be the same market rate for the long end bonds if you were behaving normally. And they quantified that effect that I think I'm forgetting the exact, but roughly 50 basis points. It could be, you know, wrong on the exact number.

But it was a material amount, you know, equivalent to, you know, to rate hikes or whatever. So, yeah, so back to stable coins. Stable coins are at the short end. There are some, you know, plumbing issues associated with, you know, potentially having so much extra demand on a short end. But the other day, it's a buyer of U.S. debt. And importantly, like most stable coins don't, like issuers don't, don't like, provide a yield themselves, right? And so the government is effectively,

it's sort of like a form of financial repression that the government is able to impose on the crypto market. And, you know, especially if they can, if they can, if they, you know, because this will circulate around the world, these dollar claimholders don't own, don't own, you know, like a reserve account

at a correspondent bank where they get paid at yield. Yeah. So yeah, there's all sorts of technical tweaks that maybe the government could put in place. You know, there's a lot of the tension on a market structure and a stable coin bill that would try to, you know, resure some of the stable coin issuers because right now it's all in the offshore market. But if you can resure issuance, you could, you know, essentially, you know, can create like a such a private sector digital dollar that proliferates around the world. Again, some people don't like that. Some people don't want the dollar to get strengthened. That's a policy perspective.

I think the U.S. government will have the view that the dollar system should remain strong. And it's very clear that President Trump wants the dollar to remain strong. And so just as a matter of like strategic alignment, it is the case. And it's a good thing to emphasize to the extent that Bitcoin and dollar-based-dapal coins reinforce the strength of the dollar network and demand for for treasury assets. When we were in Nashville on what Bitcoin did V-1, we had Preston Pish and Luke Groman on the show. And they were talking, Preston specifically was talking about the idea of putting Bitcoin on the long-duration bonds as a way of incentivizing people to go further out on that yield curve. Do you think that's a realistic outcome that may happen? I mean, we're thinking in terms of like if then, right?

Like if the government were to create a street of Bitcoin Reserve, then they have Bitcoin holdings, material Bitcoin holdings. If they decide to expand those Bitcoin holdings and adopt a much broader pro-Bitcoin strategy, what could be the elements of that pro-Bick-Bink strategy? I think it's curious to explore. I wouldn't say it's like, you know, the immediate thing that's likely to happen. But you could imagine this sort of building to a point where there could be interesting novel financial instruments that the U.S.

government could develop and deploy that would provide, you know, essentially like doing sort of what Michael Saylor is doing for certain sort of trap pools of capital that otherwise can't or won't buy Bitcoin. Sort of he's like shaving off some of the volatility of Bitcoin by kind of like running the raw Bitcoin through his sort of financial balance sheet and then creating a bunch of different financial instruments on the high end he's got his stock and he's got the ETF that is triple as like double leverage his stock, which is itself, you know, a leverage play on Bitcoin. And then you have, you know, these convertible debt instruments and you have

corporate bonds that, you know, provides some of the upside, some of the volatility upside at Bitcoin. But, you know, it's been it's been sort of stepped down, right? And so the government could essentially do something very similar. And issues that do treasury bonds that have like a Bitcoin kicker, right? So it takes some of the upside and sort of graft it on to the to the payoff profile of a traditional. So treasury note, I think operationally that would be, you know, would take a lot of work to figure out how that could be structured, the mechanics of designing such a note. But in principle, nothing, nothing about it is implausible to me or nonsensical.

It's a very sensible sort of financial instrument to construct. I think it's more of a political question of how the government would want to signal this, right, to the market, right? Because you can imagine a scenario where it becomes so successful that like, just like with micro strategy, you can't feed the ducks anymore. And then it could create a problem on the rest of the market, which is like, well, I don't want the normal treasury bond. I want the treasure bond with the Bitcoin kicker, right? So this is where I think it is important. And I recognize, you know, the concerns, but some people might have is you're sort of your, you know, it's a slippery. slow, right? The government is like, all of a sudden gets, it gets in the Bitcoin. It could be like,

okay, at a certain point, does it start to undermine the credibility of these other instruments? I think it's a matter of forward guidance, the matter of prudent policy, it's a matter of calibration, it's a matter of timing and implementation, where you can get the best of both worlds. But I would not recommend just kind of like, you know, yoloing or or just sort of throwing a bunch of things out there because, you know, you want to, you want to like go all in. I, you know, from my perspective, I wouldn't recommend that. I don't think the U.S. government will do that. But yeah, this idea of a Bitcoin bond is an interesting idea.

It's worth exploring, doing the research on. And the government has issued, like, you know, novel. It's tested out 20-year stuff. Even the TIPS product was relatively new. Is that the inflation-adjusted bond? Yeah, yeah, exactly. So maybe you could do something similar, which is like a, like a bits, like a Bitcoin indexed treasury security.

I don't know. Like, it's worth brainstorming. folks that are experts in sort of treasury market infrastructure and the bond market. And you'd want to do lots of, you know, analysis and market research. Consider the second and third order effects. But it's worth exploring. What Bitcoin did is brought to you by our lead sponsor and Massive Legends, Iron, the largest NASDAQ list of Bitcoin miner using 100% renewable energy.

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Visit iron.com to learn more, which is iri-en.com. This is going to get wild. All right, we should talk about Scott Bacent. I was talking to you a little bit privately when Trump was looking at who he should bring in as his Treasury Secretary. and you were quite excited about Scott Bissent. Do you want to give a bit of background on him and explain why? I mean, he is, he's like a markets guy for one, right?

So he's a hedge fund guy. He's, you know, been trained under the, like, the tutelage of first Soros, but really Drucken Miller, who haven't recognized as kind of like, you know, a living legend understands both like financial market plumbing as well as for these big macro geopolitical things. And so he's had a front row seat to, you know, the, what really, goes on, right, in the global financial system. And really, like, what are the, what are the, no kidding, like power structures at play, capital flows, major shot callers? So we understand the lay the land. He understands, like, you know, how the game is played, right? And he's respected by folks

around the world for that knowledge and for that sort of operational market acumen. And so that's just, you know, it's good to have somebody who, like, knows what they're talking about and like brings practical experience to the job. Isn't like a PhD economist who spends most of their life, you know, writing papers and going to sort of think tanks meetings is like, he's a market guy. He's like, you know, he knows how the real world works, which is important. And I think he's coming in with pretty broad ambitions for,

for sort of what he called a global economic reordering, right? and it is going to obviously take a number of potential different forms and no plan survives first contact with reality, right? But I think it's important to understand like what is at least is the outlines of such a grand, you know, economic reordering. And like monetary reset is even the term that has been thrown around. Like what would that entail, right? And in 20% does it align with like what Trump's sort of economic and geopolitical vision, you know, would result in. And I think it's, yeah, so I've done a lot to kind of try to research what I think

Bessent is coming in to do or what his, what the contours of his plan are. And what sort of geopolitical and macroeconomic and monetary landscape is he facing, right? What are those constraints? And so, yeah, I wrote this paper, hopefully, you know, be released pretty soon after this recording goes live, that tries to at least replay my understanding. of, well, what is that external environment? What are these sort of structural fragilities and imbalances in the legacy system that the next administration is going to have to manage?

What are the apparent, you know, strategies that Besson's team may be looking to deploy to, you know, reset the terms of the global economic and trading and financial system? And then to articulate a view of how I think Bitcoin aligns with that larger geo-economic play, right? That's kind of the, I'm trying to like, okay, replay back. I think this is how I see the world and the constraints and challenges you're going to face. Hopefully those resonate with how you see the world. The second is, okay, well, then here's how I think you may go about doing it, right? Like, I don't think Besson's coming in there with like Bitcoin as like the primary tool. And nor should I, I think, it be the, you know, one weird trick that's going to save, you know, fix the whole global economic

system or compete with China, et cetera. But so like, okay, here's how I think. And so like, okay, here's how I think you're thinking about the different tools of state craft that you're looking to deploy. And then frame, here's where I think Bitcoin fits it. So like as part of your larger play, you know, you're the quarterback or you're the, you're the coach on the sidelines drawing up all these different plays in your book. Like, let's put the Bitcoin play in the book, right? And understand how it fits it. Right.

And I don't think that had been done where I think the Bitcoin thing was that it's on its own track. It's like, yep, Bitcoin's good for America. We should do something that's like pro-Bitquick. you know, but it's kind of its own lane, right? And I think it's important for the U.S. government to think about a holistic, geo-economic and monetary, you know, essentially strategy, you leveraging all the different tools of state craft. And I think Bitcoin is now potentially, you know, a useful tool in that regard. So that's how I wrote that report.

You know, again, it's just my take. Yeah. And what are the threats that you think he sees here? Is it really, is the big one China threatening sort of U.S. dominance? That is one of the big ones. I think there's lots of things that are in the mix. Okay, let's go through them. Yeah, because, well, I just see the China, China, I mean, I titled the paper, essentially, a global economic reordering U.S. China competition and Bitcoin as a tool of U.S. statecraft. So I put U.S. China competition in the title because it is like, I think, the defining

geo-economic and geopolitical relationship in the world system. And so, like, a lot of other things are sort of downstream of that relationship. And so it's important to sort of, you know, put that in the front. But there's lots of other things also happening in the world. So I don't like just make it like a China thing, right? And there's sort of a paradox associated with the China challenge, right? Which is they're, on the one hand, they rapidly become, you know, a peer competitor to us on all these other dimensions, on all these critical dimensions of national power.

Right. So there's the scale of the military build up their technological, build up in the military domain, but also their broader technological ecosystem that they've been able to develop, essentially indigenous state, you know, national champions and then deploy those technologies around the world and start eating market share higher up the value chain and become not just the sort of industrial low-cost producer for the world, but also like high, in high-value manufacturing, electric vehicles, 5G, subsea cables, satellites, new energy systems. Like, they're coming for the full gamut of next generation technological domains that are going

to become like the next industrial paradigm. Right. So there's a major strategic challenge to U.S. economic and technological military dominance from China. So that's on the one hand. And is that the reason that the U.S. can't just continue doing what it always has and it now has to make a change? Yes, I think, yeah, if you're like the bottom on the front is like what our basic strategy for the last 30, 40 years, you know, beat the Soviets and then sort of dominate the global system and try to, you know, sort of cement the American rule, the Western rules based liberal and national order and the sort of geo-economic system that we're on top of, that's been our play for 30, 40 years essentially. And, you know, it's starting to to lose its juice. And certain aspects of that of that system are now sort of being turned together. against us. And so there's a need to kind of, again, like, reset the terms of the global geo-economic system. And yeah, I think that's sort of motivating us. It's like, what has been working isn't working anymore. We need to do something different, basically. But the China challenge is, again, it's a paradox because China, at the same time that they are a true

strategic pacing threat to the U.S. on these different, say, military or technological or sort of industrial dimensions, they're also a potential risk because of how fragile their economy is. They have this sort of paradox, right? Like they're a state-run system and they're experiencing essentially debt deflation at the moment.

And they have potentially the balance sheet to absorb or try to inject liquidity to try to stave off that. But there is a scenario, there is a risk scenario where China hits an air pocket in their economy. And there's a risk of a sort of a debt deflationary wave that gets export to the world. Like they do a shock devaluation of the yuan. And that triggers a whole bunch of these other second and third order disruptions to the monetary system, to our financial

markets, etc. Just from like a layman's perspective, can you explain why that is a massive negative. So, like, you've seen this example, like the Japanese yen over the summer, right, when it had that like collapse, that triggered, unwind up all these carry trades and the stock market fell like 10% in a day, right? So just in general, right, the global financial system, especially these offshore sort of euro dollar markets are very highly leveraged. And when any major economy, like, does anything really, like dramatic, especially in their currencies, those can have like a whole bunch of like cascading effects that just start breaking things, right?

So you can get a financial crisis, right, be triggered just because of this domino that, that starts falling through, triggers de-leveraging, triggers fire sales of assets and then forces a whole bunch of like emergency interventions. And ideally you want to avoid that, right? You know, that was the Japanese yen. the Chinese economy is much larger. And our systems, despite, it's a paradox because unlike with the Soviet system during the Cold War, we were, we had some, you know, integration financially, but it was pretty, you know, pretty thin. Like these systems were much more like semi-autarchic blocks.

So there was lots of commodity trade, etc. But like the financials, you know, capital flows were really, really restricted between these, you know, these two competing geopolitical blocks. in the Cold War. Now we have this geopolitical competition taking place while our systems are like Siamese twins, right? And so this is essentially the paradox that Bessence is trying to manage, which is how do you fight and win a competition with an adversary like China while sort of also creating like agreements, ideally like accords with your adversary that are in your mutual interest to preserve financial stability, right? Because nobody wins if there's a glitory. global financial crisis because, you know, that de-risking gets out of hand or there's a flashpoint

military confrontation over Taiwan or the South China Sea. Those would destroy, you know, the global trading system or severely damage it, would be crippling for China's economy, or crippling for our economy. It'd be a no-win situation, right? So how do you negotiate, essentially a new agreement, right? At the end of day, I think what we're heading towards is some sort of new Bretton Woods style agreement, right? But between now and then, you have to, you know, improve your bargaining position, right? You want to, you got to threaten. You got to bring as many of your allies to your side of the fence as possible. You got to wield all these different carrots and sticks to try to improve your, your bargaining power, undermine your adversaries'

position. And then ideally, when you think the moment is right politically, geopolitically, you try to negotiate a new settlement, right, a new agreement, trade agreements, currency agreements, maybe even diplomatic military treaties, you know, again, like the vision is very high, like the ambitions are very high, right? There's a lot, that requires a lot to put all together to make it work. But I think we're heading into a period of history where there's a recognition that all of these things, like the geopolitical competition, the technological competition, the financial integrations and instabilities and fragilities in global trade and the imbalance in global trade is is not sustainable, especially from the U.S.'s perspective.

And even from the Chinese perspective, they recognize that the playbook they've been running can only go so far. They can only try to like steal so much manufacturing capacity from the West. And essentially this run this mercantiless playbook, you know, just keep keep, keep juicing their exports. And, you know, they're facing a lot of economic and political issues internally as well, right? There's been reports of these, like, you know, domestic incidents rising. You've had, like, people, you know, like massive youth unemployment, you know, a lot of grievances at the local level that, you know, there's like, you know, unfortunately, there's like these, like, incidents of like people driving cars into crowds or stabbing school children.

Like, this has started to increase. And that started saying, I've not even seen that. extending, it's sending concerns up the sort of party apparatus of discontent, right, at the local level. And their economy is really never recovered from COVID. So there's a lot potentially on the table to sort of do this global economic reordering, right? But it's, it's a non-trivial task to sort of get all those pieces in place. And yeah, so I just think Bitcoin, I try to write the piece to sort of put Bitcoin in the mix of like, okay, here's how, again, it's not going to be the one weird trick. but, you know, there's different visions of how the system could be reconfigured.

China has been trying to, you know, put in place the different mechanisms, the different geopolitical, geo-economic and technological platforms and relationships and systems in place so that they have an alternative, right? It's not going to replace Swift or the cross-border or chips of like the clearing system in New York. But it's like a failover network that they're trying to construct. with say Bricksbridge, Mbridge, Sips. It's not as efficient.

It's not as large scale. But it could work. It is working as like a backup, right? Most of the Middle Eastern banks and Asian banks and central banks are essentially connected in this alternative monetary network to China. And so, yeah, that does, this is the new game, kind of digital great game playing out. So is the challenge here really for Bessent to come in and try and bring China in line, say, you're okay doing your thing, but you're still a little brother in this negotiation.

I mean, I don't know how he would, what sort of terms or relative status. I mean, if I read the tea leaves of some of the people that they're bringing in on the economic state craft and kind of China competition side, there's a view that in fact, China potentially has a structural advantage over the U.S. They would never admit that publicly, but there's a sense of like, if push came to shove and we got into a war, obviously global economic system is in the tank. But like, you're in a war. You got to win, right? Like, that's the game. It's like not about marginal GDP growth. It's like you got to man up and like get ships in the water, planes in the sky with missiles.

You got to get your troops. You got to get your allies. You got to fight in space. You got to get it done. And that requires like fundamentally requires material. It requires industrial capacity. It requires supply chains. It requires, you know, workforce to produce those things. It requires, you know, the political will and energy to rewire your economic system to fight and win a war. Take losses. I'm not saying we're going towards war, but like that's the job of the militaries, like plan to fight and win a war. Like, that's their whole point. So they got to look at and look in the mirror objectively and be like, if we had to fight and win a war against China, like what would be our chances? And they've done the studies.

They've done the war games. And it's not great. And a lot of it comes down to our industrial base, not being up to the task, right? Looking at a number of different scenarios that are very plausible where you get into sort of a fight, right? It's not nuclear, but, you know, conventional naval fight over Taiwan or, you know, in the Philadelphia, you know, South China Sea. And there's an initial engagement, you know, a week or two with whatever assets, you know, each side. side has in theater and they just sort of throw it at each other. And if that's not decisive, then it's kind of like everyone has to reset, recharge and then redeploy a second wave. And then

the question is who's got the industrial capacity at scale to create another 200 ships, to create another thousand missiles or 500,000 drones? And it's very obvious. That's not us. That is clearly China's strategic advantage. Yeah. So unless we win that initial decisive confrontations, with whatever technical super whiz-bang stuff we've got tucked away, that's a high risk. Because if we don't, you know, really decisively win that initial engagement, that industrial capacity to recharge for a second wave is not going to happen, right? China's going to roll over. And so that's been now like the acute, like strategic vulnerability that has now become

front of mind to folks like percent, but all these other defense analysts that realized just how poorly suited or poorly situated the U.S. government is for military confrontation with China in that in that respect. So that's motivating one of the motivations behind, you know, resetting the global economic system, right? Like the current architectures, we issue, you know, scarce equities and treasury securities to the world. And we buy their finished products, essentially to power our consumer economy. But, you know, they get our manufacturing base in return, right? So that's been a good trade for Wall Street.

It's been a good trade for finance more broadly. It's been a good trade for political elites that, you know, in sort of a, you know, corrupt relationship with our financial system have engineered our entire economy to absorb foreign surpluses into our scarce assets and take a cut, right? So our political markets, our financial markets have become essentially the money laundering mechanisms to get to to systematically absorb foreign surpluses from OPEC plus and China. And now we're waking up to the strategic effects, the pathologies that that has created in our political system and our social system, right?

It's generally a lot of wealth inequality, the atrophy of not just the defense industrial base, but manufacturing more broadly. That's kind of been Trump's whole mantra, right, along with letter, you know, and it triggers Trumpism. It triggers sort of nativism. It triggers all these other political effects. And, you know, I think you're seeing this, this is not working, right? It's not going to be sustainable.

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knowing that River has monthly proof of reserves and holds all client Bitcoin that wasn't withdrawn to self-custody. Open an account for yourself or your business at river.com forward slash WBD. That's r-I-V-E-R dot com forward slash WBD. So where does Bitcoin fit into all of this? Yes. So I think this is where Bitcoin has some interesting properties, both as a emerging novel global reserve asset, as well as a global digital financial network. And so if there are challenges but also opportunities in the world system that are on both of those fronts, right, we have a challenge when it comes to the stability of the present global reserve asset, which is the Treasury security market. And it's also it's the sort of pathologies that having to keep that market stable and growing has on our domestic economy and our military capacity, right?

Because we have to just be the reserve currency issuer, reserve asset issuer, reserve equity issuer to the world, that has had number of these strategic effects, right, on our industrial base that we were talking about. And then there's also this digital payments network system competition playing out, right? that China is trying to rewire the world kind of in its image and in its geopolitical kind of network. I think Bitcoin plays in both of those competitions in a way that favors the United States, right? So as we talked about earlier, Bitcoin dollar-based stable coins provided, you know, essentially a net new issuer for, or demand for that issuance of a treasury market debt, as well as help expand kind of dollar-based payments network around the world.

And so the extent the United States could sort of put in place policies that would reinforce the adoption of Bitcoin, the dollar-based stable coins, it would sort of tip that geopolitical and network competition back in our favor. And I don't think it's like the one weird trick that will solve all these different problems, right? The reason why you might use tariffs for certain things, might use export controls for certain things. I think it should be a part of that suite of tools that you can, you know, reinforce as a way of securing our national and geopolitical advantage over the long term.

And I think it's just important to start, you know, again, I have that idea. There might be other ideas, especially along the way where you can think about now you have this other tool in your toolkit. And as you get into these different negotiations, you get into these different potential points of challenge, you know, have this thing that you can, that you can use to your advantage, right? So that's basically what I, you know, I'm not actually being super dramatic, right? I'm just saying this is a thing. It's a good thing for us. We should think about how to maximize its advantage, especially if you're going to do all these other potentially dramatic shifts in the global system. There might be downside risks that those other things might result in. And maybe Bitcoin

would help defray some of those risks, right? So in particular, right? One scenario, and again, this is just thinking of scenarios, but I've seen, right, Zolt and Poser, for example, has written about what a besent kind of Bretton Woods style shift would entail. And in his imagining, it's like a gilded Breton Woods two,

which essentially wields like geopolitical, carrots and sticks to impose like essentially financial repression on the rest of the world or friends and allies as well to kind of geopolitically control the long end of the yield curve

and the mechanisms that that could involve would be like forced swaps right in particular say swap forced swap like out of a geopolitically coerced swap of say short term bills or treasury notes for like long

longer-dated instruments, say 50-year or even 100-year bonds. And those might even be like non-marketable debt instruments where that, you know, countries, say, you know, could be Japan or South Korea or Taiwan or Gulf countries, maybe even Europe, although they don't have much spare change, essentially agree to swap their short, there are short-term holdings for longer-term bonds where they can't sell them easily. They can only repo them at the Fed essentially at par. And that effectively solves this kind of problem the government has. The reason why they were doing active treasury issuance in the first place is because they were scared to issues too much in the long end. Well, here essentially forcing, you know, non-marketable buyers or buyers of non-marketable debt at the long end.

So it helps you, you know, expand the duration of your yield curve and maybe even locks in. Can I ask you a question on that? Yeah, jump in. Does that not completely disincentivize these nations from then buying further treasuries? Depends, right? I think this is a high-risk maneuver. One interpretation of the strategy is that it locks them in to the U.S. Geo-economic orbit, right?

It forces them to choose, right, aside, essentially. And it would essentially involve creating a, you can imagine doing it in concert with other things. So there's like the currency reserve asset play. there's a tariff threat on top of that, which is, you know, if you don't do this deal, right, will also slap tariffs on you. And maybe you add a third piece, which is essentially export controls or restrictions on accessing our advanced technology, say AI or other breakthrough capabilities that could be coming online.

And essentially this sort of tech, tariff and currency club, right, is saying, we're going to create this club. We are the core of the club. We admit or expel members from the club. You want to be part of this club. You got to pay an entrance fee. And maybe it may be an annual membership fee, essentially, to that security zone that accesses our markets, gets privileged access to our advanced technology. But if you want to be a member of that club, you got to pay.

And, you know, this is one form of payment, essentially. This sort of, you know, reserve asset swap may involve gold, right? In some cases, like, hey, give us your goal. and we'll give you 50-year bonds, right? And then the government takes that gold, and then in Zoltan's view, like, could revalue the gold. And then now you've got, you know, a very similar to alumnus plan. You revalue the gold, maybe even above market value.

And then you essentially can create hundreds of billions, maybe even trillion plus dollars of liquidity, like in the Treasury General account that the secretary could deploy for, say, strategic domestic energy investment or critical technology buildout semiconductor or fabs, et cetera, right? Essentially saying to the world, we are going to be the core provider of these public goods and private goods, global public security, the security zone, our military enforcing, you know, trade around the world, and also, you know, private goods in terms of our breakthrough AI and other technologies. And you, the rest of the world, you want to benefit from that, you're going to have to subsidize it, right? You're going to have to give us some of your gold,

and you're going to have to do this set of swaps. And then if you're going to do that, essentially it's like geopolitically induced yield curve control, financial repression on the periphery of the imperial dollar system, it's high risk because there might be members of that club that are now kind of like trying to play both sides,

right, and say the Gulf or in Asia. And they may call the bluff, right? They may not join or they may decide, hey, you know what, you know, I can get a better deal from China. China is going to give me similar AI tech. And I don't actually think your security guarantees are all that credible. And by the way, like this threat of tariffs, it doesn't matter because, you know, I got markets that I can create for myself and for my goods. So it's a, it requires a lot of very like adroit statecraft and very country-specific negotiations to sort of put in place a term of an arrangement with that particular country.

that forces the issue, like forces them to pick aside. Then you lock them in, you know, by making the swap happen. And then they're already committed to it. Right. They've already made the deal. Right. So it's going to be very costly for them to undo the deal. So that's, that seems to be, you know, a potential play coming in. Right. And, you know, interesting thing about Bitcoin in that respect, which is, okay, that's a high risk play, right? A lot of geopolitical deal curve control, right? It effectively would require capital controls, right, in that club. It's going to be very cost is going to have, you know, it's going to require other measures to like, you know, patch up things on the margin that start getting squirrely, right, when you do something like

this. And you can see assets like Bitcoin and gold would benefit from that, right? Like that is a scenario where essentially the government is, you know, laying down the line and it would, it would, it will likely come in with other liquidity measures, right? Like the Fed is probably not going to remain entirely neutral in this type of strategy, right? Because if there is marginal selling of Treasury securities, if there is this liquidity provision that has to be provided to those friends and allies to make, you know, make the system look good, Bitcoin and gold are going to benefit, right? This is like Russell Napier's thesis, right, sort of thing. And if that's the case, you're going to do this play that's going to potentially, you know, any financial repression, any capital controls, any yield curve control is going to lead to a run towards scarce assets.

And Bitcoin has historically shown itself to be the most sensitive, you know, liquidity barometer, right? Like Luke Grom and like that's the one last functioning sort of smoke alarm in the global system. And so it will likely go up. The question, though, is like is the U.S. government in a position to benefit from that effect, right? In effect, if it's going to do this sorts of, you know, like like BTFB at scale, like geopolitical BTFB, right, like all these banks that had this sort of treasury net or treasury gross loss, right? that was all of a sudden like a banking panic and the government had essentially guarantee the the that debt um at par that was de facto liquidity injection right so if we're going to be

doing this sort of thing at scale at a larger scale um bitcoin's going to go up right uh and you know if they could if they hold if they own bitcoin it's kind of like you know they win as a result right whereas if it's say the Saudis or the Qataris or the Emirates or god forbid the Chinese that hold a marginal Bitcoin position, then we don't get into benefit from that, you know, results of our geopolitical actions, right? So it's okay, you know, Bitcoin essentially is a shock absorber of those sorts of global liquidity developments. And we've seen this with Bitcoin's response to the SVB failures as well as the Russia-Ukraine invasion. You know, Bitcoin's immediate move in the few weeks after that, like showed essentially as a positive response to those types of banking and

geopolitical shocks. So putting Bitcoin on your balance sheet, right, essentially engineers a positive relationship between any geopolitical or banking shock that you may trigger or that an adversary may trigger in response to one of your moves. But you've already built in kind of a structural hedge, right? And you sort of win either way. And if, you know, the old standby gold wins, well, you already have a lot of gold in your balance sheet, but also a lot of our adversaries have a little gold on their balance sheets. And they've been scrambling to acquire more gold, China, Russia, Iran, even India.

And so if you, you know, he's all called it a gilded Bretton Woods, too, which sort of re-anchors the gold monetary system and kind of almost does what like Dickon has been talking about with kind of like trying to graft the stability and global reserve asset of gold to the treasury market and use American geopolitical power to kind of fuse those two things so that American fiscal position and our geopolitical position, uh, hedged, on treasury securities benefits from, you know, a re-anchored global monetary system around gold. Gold bugs, of course, would love that. I just think, okay, you can basically do that exact same play, but with Bitcoin as well, right? Maybe not, I think you could, you know. And then you have first mover advantage or early mover advantage with Bitcoin as well. Yeah, and there's an extreme version where you do it with Bitcoin instead of gold. And that's almost like the sailor, you know, thesis.

It's like just sell all the gold. Rugpole Eurasia, right, that's been acquiring gold. and then go all on a Bitcoin. There's something to be said for that. It's like it's a marker that's sort of like at that at that end of the at the end of the spectrum. It seems to be hard pressed to convince, you know, the Trump administration to go that far. But I think there's there's variations much further in between that are kind of best of both worlds where, you know, there isn't as much of this sort of zero to one, you know, Bitcoin Breton Woods, but it is a, Bitcoin slash, you know, gilded Bretton Woods system evolution.

You know, sometimes it might be certain parts of it that are done as like a surprise shock, like the 1970s, you know, stuff with Nixon. But I think there are also parts of it that will be negotiated settlements, like a negotiated accord to manage, you know, fluctuations in, say, currency markets that nobody wants to get out of control. And so this is where I think it's, Bitcoin has not reached the point. It's not quite gold, right? So I spend a lot of time in the paper at the end being like, okay, gold is a $20 trillion asset.

Bitcoin's a $2 trillion asset. If you're going to make that play right now, just like those are the relative proportions you got to work with. Right. And so if Bitcoin were to monetize relatively more than gold, then if we hold more Bitcoin than most of our adversaries, then we stand a game in this sort of global economic reordering. But then any prudent strategic planner has to consider different scenarios over like the longer term, right?

So there's like a short term window. What is Besson going to try to put in place? What are these, you know, big, big moves of the next six, nine, you know, 18 months? But then what is this longer term, you know, system? Like what is it potentially going to evolve to? And if Bitcoin is part of that initial play, what would that can, what would that look like as like a future trajectory? right? Like then you're potentially then have to realistically consider future scenarios, not too far out, you know, five, 10, 15 years where Bitcoin is monetizing to close to parity

with gold. You could imagine a scenario like that. I put in sort of three scenarios. It's like reaches, you know, some meaningful fraction of gold, say half of gold. And it's a global monetary asset. It's not replacing gold, but it's becoming a serious part of portfolios, including at the nation state level. And maybe it stops. there. But then you consider a second scenario, which is, okay, it reaches parity with gold, right, which would now be a dramatic, much more significant shift in the balance sheets of large portfolios and where Bitcoin is seen essentially as like a digital gold reserve asset, right? And that's, you know, maybe a 10x from here, right? 10, 20x from here,

depending on what gold does, right? And then there's a third scenario, right? This would be, you know, not the sort of hyper bullish, you know, Sarah, some people put out, but like, okay, reaches maybe half of the current global bond market, maybe $30 trillion in total market. Somewhere around that, right? Again, these are kind of just like mood math. But where it's essentially now diversified into a lot of these, it's eating from stocks, it's eating from some real estate equities. It's now like the dominant global reserve asset. And, you know, if the U.S. is going to essentially start this trajectory and, you know, a very in a very incipient stage. I think it's prudent now to start thinking through different scenarios over the longer

term, right? And then consider the primary and secondary effects that you could sketch out for a world system where Bitcoin is at these different levels of monetization. And then, and I don't do this in the paper because it's already 40-some pages long, but then like the next real analytical task for the government and outside researchers is to think about what's the ideal path between here and there, right? Because you could get to a point where Bitcoin is monetized to say reach parity with gold. And that could happen, I would say, like in, like you can put it in like a two by two, right, of just, if you're just analyzing that scenario, there's like it happens. It's almost like the like AI timelines. It's like, it's like a short time. It's like a short takeoff, right?

Or a long takeoff, right? Either happens like in a step function or it happens in kind of like a linear, a linear growth, right, or some sort of, you know, smoothed out exponential. And then the other part of the axis is U.S. holds more Bitcoin or non-U.S., maybe rivals, hold more Bitcoin, right? And so you want to consider, like, what's the ideal box to be in? I think the ideal box is like, U.S. holds more Bitcoin, and it's like a slow takeoff, right? Because then it gives time for the old system to evolve. It gives time for Bitcoin to sort of mature in all these different institutional and existing systems. And, you know, when things are, when a very highly leveraged system undergoes

a change quickly, things break. And, you know, that can have like negative, like a negative positive, like a net negative result, right? Because you just, you know, it takes a lot more effort to build something than to build, than to break it. So then if I just have that two by two matrix of like, if Bitcoin, in this scenario where Bitcoin is monetizing to say reach pay with gold or more, the ideal scenario is like, US holds most of it and it goes slowly. right? That might not be the most like a practical scenario. It might practically mean it has to happen fast. And if it has to happen fast, then you want to make sure that it's the U.S. that holds the most and not our adversaries. Because like the worst scenario is a fast monetization where where non-U.S.

rivals hold the most Bitcoin. That's like that's the worst part of the quadrant. Right. And so you need to put in place strategies that ideally steer the trajectory towards, you know, the bottom right, if it's like U.S. and slow takeoff, while also mitigating the top left, meaning fast takeoff non-U.S. holders, right? And that requires lots of policies. It requires forethought, right? If you just do it by accident, if you just do it, you know, without thinking through second, third order effects, then you may get adversaries get the jump on you. And then leverage, you know, their maybe more authoritarian systems to do things quicker. You know, we are democracy. we have to do things in a participatory and deliberative fashion, right?

So I think that's sort of my take, right? This is why you need to have this conversation start. This is why when I think about Street's Big Core Reserve, it's sort of the, you know, step one, right? But you need to think about what step two, three, four, five look like and think about it with these different scenarios in mind. And have this be part of our strategic planning. Have this be part of our approach to statecraft. And that's essentially my pitch to this end. And you talk a lot about the sort of.

game theory in this, and the threat that other nation states do get the jump on the US. And in the paper, you specifically mention the Gulf states. And now I've heard rumors that some of these Gulf states may have already like 300,000 Bitcoin. We don't know exactly, I don't know if that's true. But do you think that's going to force the US's hands and make a move quite quickly? I heard similar. Again, I don't have like primary evidence of, you know, their wallet address.

But yeah, I think there's a reason why the Emirates hosted. Bitcoin Mina. It doesn't know why senior government officials were there. It's like they have a strong interest in this. Not just Bitcoin mining, but, you know, seems most likely have a material position, right? Like people have thrown out all sorts of numbers, right? Who knows? But that is a, it's not a trivial amount, right?

Whatever the number is, right? Whether it's 200, 300, 400,000 or 400,000, potentially is more than the U.S., right? Which would be like, if I was like Trump or Trump's family, if I heard that, I'd be like, well, that's unacceptable. Like, okay, these long run things is a different question. But like, of course America, like, has to have the most Bitcoin. Like, we're the most powerful country. Like, this is, you know, an important global asset.

Like, it's absurd if we don't have around. I think that's kind of like, you know, they're not really thinking it through the way that I was just, analyzing a year, you know, for like at the last hour and a half, right? It's just like basic, like, of course, America's got to be number one. We're number one and everything. Like, this is something we should be number one. Right. It's like, that's it, right?

And there's an argument you made that, like, well, we already are number one if you count, you know, our companies, our Bitcoin mining hash rate, individual holders of Bitcoin. And you could make an argument that like, well, that's what you need to be number one. And you don't need to be number one in like official government holdings. But if the guard, if this play is going to occur or if there are going to be potential dramatic shakeups in the global economic market system where the U.S. is potentially in a position of vulnerability for, then, you know, it's very prudent for the U.S. to have a material, if not the dominant position in. or the largest position in Bitcoin. So yeah, I think that nation state FOMO, while it's kind of a meme, like human beings are human beings at a fractal level, right? Like the same sort of psychological dynamics that play out and between humans

also play out between, you know, national leadership, right? But I don't know my observations coming back from Bitcoin Mina gave me a slightly different perspective on this idea of game theory or Bitcoin. arms race, which I know has kind of been memed. Because there's still, it's still a, you know, it's still a diplomatic set of relationships. The global economic system is still very tightly integrated. And many countries still view the U.S. as like the most powerful country, right? And so if you're a middle-sized Gulf state, you know, you have to, you have to kind of think about, right?

Like, you don't want to piss the Americans off. You don't want to insult them by announcing a dramatically larger Bitcoin position saying we're going to keep building more. We're going to get more. You know, there's geopolitics is complicated. There's all sorts of things, right? We have a major, you know, fleet there. We do lots of stuff in the region. There's a highly, you know, convoluted set of geopolitical relationships in the Gulf states. And the U.S. wields a lot of power. And so it wouldn't be prudent as a matter of statecraft for those countries to like, just go all in on Bitcoin as a way to beat America in this Bitcoin race. They were going to want to get assurances. We want to like get the thumbs up. They're going to want to, I think in most states, we're like kind of want to be quiet about it. You know, let America know, give America a chance to like catch up, announce a position. And then they go, oh, that's a great idea, America.

We've just followed you. And we're just a little bit less than you. Right. That's kind of what I would expect. Right. And so people who don't think about this as like, think about this as like a pure sort of arms race and it's just anyone who gets that first advantage is going to just immediately, you know, um, like run ahead. Uh, and people like geopolitics

are much more complicated in that, right? And the differentials of power are, you know, take place in a lot of these other different domains and countries think about all these different considerations here. Uh, but one, one potential implication of that analysis that I've given if it's correct and it's just my kind of, you know, interpretation, uh, is that, if the U.S. government does go forward with something like Strysup Bikor Reserve, and in particular if it does actually start building a position on top of it, right, like per our draft executive order, I would expect that to then trigger a whole bunch of like these announcements

from other countries that essentially would say, hey, we've done something very similar. And we've built a position that just was a little bit smaller than the U.S. And then you can imagine what would happen after that, right? If a few countries start announcing that they've done this, then there is like this sort of domino effect. And yeah, I know just, you know, this could change, right? This is all people trying to read the tea leaves and position. But yeah, I've heard, you know, Hong Kong is very interested in this subject of a Bitcoin Reserve, right?

So we've gotten to this point of what seemed like a prima facie kind of. absurd, memed idea, well, like, facts change, right? Like, once presidents and sheiks and kings and major sovereign pools of capital start to think about Bitcoin as a reserve asset to diversify prudently, you know, some percentage of their portfolio, it's, it's a different, it's a different regime. And, you know, it's prudent to sort of plan for what that would look like, Right, even if it's not guaranteed, it seems to me at this stage a non-trivial scenario. And so it's, you know, maybe that's priced and maybe it's not. Like, who knows?

But yeah, I think about it because I wouldn't want to be surprised. Amazing. Well, so this paper will be out on Monday. Is that right? That's the plan. So we're hopefully, yeah, we try to get it out before Christmas. This episode is brought to you by CASA. For those of you out there who want to protect your Bitcoin, I want to tell you about CASA, the leading Bitcoin self-custody solution.

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Well, make sure you check that out. Check out everything BPI do. Thank you, Matthew. I can't let you go, though, without touching on the UAP thing, just very briefly. What the fuck is happening in New Jersey? Yeah, man. Weird. Weird stuff.

Yeah, there's a lot there. I'll be brief. So it's not just New Jersey. Obviously, New Jersey has been the focus of a lot of social media tension. And I think in general, right, like the vast majority of these videos are of conventional and prosaic things. Because most people don't know what a normal sky looks like. Most people don't look. But now the people have been primed to look, they're seeing Starling terminals, landing lights of nearby airports, planes coming in.

you know, Jupiter Venus, right, helicopters in the in the in the clouds. But there's other things there too, right, that are not conventionally explained. And in particular, over our sensitive military sites. So like Picatinny Arsenal, the Eames Depot reported these coast guard boats being, report being followed. We had the entire airspace of Wright-Patterson Air Force base shut down. you've had four rural air force bases in the in the UK have this panic essentially where they had deploy special boat service you know special forces units to try to bring their special

counter UES kit out there um um Romsstein in Germany was was overflown you've had just like tons of very sensitive sites being uh experiencing these incursions right uh so this new jersey thing is just it's brought a lot of public attention to a concrete phenomenon that's actually happening over restricted airspace in probably other places. But we're shit airspace. Usually there's people with like counter U.S. equipment and they're monitoring it and they detect it. And then they see things that are very unusual like right petters Air Force base. There was heavy UAS activity that deployed their security forces. They like sanitized the airspace. They stopped any other like planes, including like, you know,

medical evacuation transport planes from from flying over. Right. So this is a serious deal. I don't know what this particular circumstance, you know, really is. There is a hypothesis that is, you know, you look back in history. We've had UFO flaps, right? You've had 1952. You've had cases where, you know, you had Belgium. You've had these cases where a certain area just all of a sudden experience is a very anomalous event, right? And the military has experienced these events too.

And they're a little bit more documented, but not as. public, especially over our nuclear assets like Malas and Air Force Base. We've talked about that before. So the government, this is not a new phenomenon. It's just new in the sense that we have social media and we have cell phone videos that create a lot of noise drowning out whatever signals there. So yeah, I think there is potentially, you know, truly anomalous things happening, but they're massively obscured by a lot of noise. And so, I would look out for, you know, it's going to be interesting to see how the new administration handles this. They are coming in with a lot of senior personnel that are very interested in the

UAP topic. So Rubio, who of course was one of the main drivers of UAP transparency and accountability on the Senate Intelligence Committee, helped draft some of those initial bills, you know, with with Gillibrand to kind of get this to the national defense Authorization Act and working with his colleagues to push push the marginal envelope on sort of legislative requirements on the Pentagon and the IC. He's now secretary of who's going to be Secretary of State. You have DNI Ratcliffe, who is the, sorry, he's going to be the CIA director, but he was formerly the DNI acting. He's made a number of public comments about these unusual things in the sky, and these are not conventionally explained, and these are not ours,

is in our adversaries. So he's very focused on this issue. Tulsi, Gabbard, who's incoming DNI, potentially. She gets confirmed. She's been briefed on this stuff. The national security advisor coming in for Trump, Waltz. He's given some statements very clear about UAP transparency.

He's very focused on this. Less in national security position, but very focused on this has been RFK Jr. Even Vivek is very interested in this. So if I just like rattle down, you know, these names, like there's a lot of things. interest. And if you just look at Trump's interview with Rogan before the election, there's a very interesting portion of that interview where they're talking about the JFK assassination records and how

Rogan says like many people are interested in this. And then Trump, unprompted, basically says many people were also interested in the, and he looks up the people coming from space. That's wild. You know, Rogan didn't prompt that. Rogan didn't bring up. UAPs. Trump was the one who directed the transition of the conversation from JFK to UAPs. And he said, people coming from sky and looked up. And then he kind of gave, and then he sort of went back to his standard talking points about he's talked to these great-looking fighter jets and fighter pilots, etc. I know those people he's talked to. And so he knows a lot about the subject. And of course, he came out and gave a very odd statement, right, about the drone thing. It's like,

the U.S. government knows what they are. I wish they would just come out and say it, right? Just stop holding people in suspense. It's unusual. And he's starting to get the presidential daily brief. So I, and it's interesting. Last point of this. There's a lot. So the last year that we were talking about the UAP Disclosure Act and most of the action being in the Congress because the executive was basically intransigent on the subject.

And it basically came down to the fact that the senior national security leadership, Jake Sullivan in particular, was dealing with a president. that was, you know, in their view, like not compensatist, like not capable of, of dealing with this issue. And they absolutely did not want this to, you know, become a thing. They would have to manage, especially while they're doing with China, Russia, you know, Middle East. So their policy was like, nope, shut it down, kick the can, not a problem. And so that was where the Senate then had to, like, kind of do as much as they could to push the envelope and to kind of get this into the public discourse. And that was what Senator Schumer, Senator Rounds in particular were doing with the

UAP Disclosure Act and their speech on the floor and getting some of this momentum around and then trying to get Arrow into a better shape, which is the DOD office that was sort of captured by a lot of these legacy folks and they want to kind of actually use it to further internal accountability at least. So now it's shifting more. to the executive, right? Now this is a much different game, where the Congress is less relevant to the subject than any. They always were. This is always going to come from the president, right? It's always going to have to come from the executive branch. Just no way of avoiding that. And now you've got the senior leadership in place to potentially have that conversation.

We'll see whether external events push, you know, force their hand very soon. So, yes, I would expect this to be a issue of focus. And, you know, Louis Lazzando even was talking, his talk with the family. He gave, he was on a Don Jr.'s podcast. And the clever strategy now essentially is to use the drone issue and the flap and the government incompetence to potentially, like, have Trump appoint a like drone UAP czar, right? to kind of, you know, to first order, you know, crack skulls together and be like, okay, this inter-jurisdictional interagency food fight, Spider-Man GIF pointing at each other.

It's not my responsibility. I don't have the authority. Like the first order get that problem sorted at the executive level. But kind of now that you've got that senior person in place and like this sort of drone slash UAP portfolio is sort of merged together, then you can go, oh, well, this is actually an adjacent problem set that also comes under this mandate and I've got the ear of the president and maybe there's some things that could be put in place, kind of under that framework, right? So I think that's, there's a lot going on now to kind of jockey for position, try to frame,

you know, like senior positions or infrastructure, right? Jisholme was try to do as much as possible via sort of executive action. That was sort of written into law on the, on the UAPDA side, right? right. And yeah, we'll see how much of this is sort of controlled disclosure and versus how much of this is just deal with it. But you think we're getting answers soon? I don't know, man. It's like the conversations I've had, again, everyone is in a different position, but I've had conversations with the number of individuals that are very close to the subject and have a lot of knowledge, both about the core subject as well as the policy sort of, you know, maneuvering around it.

And, you know, it goes back to that like quadrant idea of like, you know, almost the same matrix you could apply. Just like, does disclosure happen, you know, in a controlled slow fashion or an uncontrolled fast fashion? And does it come as a result of U.S. decision making or non-U.S. decision right? And it's like the ideal scenario is a slow controlled US-led process. The worst-case scenario is a fast uncontrolled process that is instigated by non-US stakeholders. And maybe you could bifurcate the non-U.S. stakeholders into conventional non-U.S. stakeholders, e.g. China or non-conventional U.S. stakeholders, e.g. NH. Those would be the more problematic parts of that sort of breakdown. And I don't know which trajectory we're aiming for at the moment.

I don't know what probabilities to put on those different boxes yet. And I think, you know, just like with Bitcoin policy, it's prudent to take a hard look at these future scenarios, not let taboo or old anchored mental models, like, distract you from the seriousness of the issue. And then once you take a serious look at the issue and you realize there are different potential scenarios that we're heading towards, are we heading towards the good scenario or the bad scenario, right? And what do we need to do? What can we do now or in the immediate future to steer everyone towards the good scenario? So, and unlike with BPI, like there's few institutions doing that, right? There's one more recent one called the Soul Foundation, which I went to, I spoke at actually.

and they're, I would say they're kind of like the BPI of UAPs, right? They're trying to do similar things and like bring together professionals, academics, folks from the government, folks with relevant experience to think through all these different questions, right? But the implementation mechanisms for disclosure or law or executive action, as well as the international relations dimensions, the socio-cultural religious dimensions, the financial stability, economic dimensions. And if you think Bitcoin monetizing to reach a parity of gold is potentially disruptive, well, I got I got something else to throw on your plate, buddy, that may require even more prudent planning. And I don't know if we have the institutional capacity to manage that. But I don't know, man, those are two questions I think a lot about. Can I just throw one more thing in before we close out?

So a while ago, you recommended that I read Lou Elizondo's book, which I did, and it's fucking wise. Yeah. But I've heard you say publicly before that you take the name of that book Imminent really seriously. Can you just speculate on that for me? Yes. I mean, yeah, it's tough one. Like I've heard lots of things.

And some things are, you know, it's tough to like put credences on various things. And, you know, I don't want to like just. throw things out there that create a tizzy and it's very thin like speculation. That's exactly why. But I think there is a, yeah, but I want to be responsible. I know whatever I say will be clipped into whatever and people will go, Einstein X and, you know, whatever. But I think there is an urgency.

I detect a sense of urgency by a wide range of folks involved. And it goes back to that quadrant of like, you know, if it's not us, could it be somebody else? And if it's somebody else, you know, well, if it's China, that's a certain thing to manage a downside geopolitical, strategic challenge for us if it was China disclosing some of this information and maybe even doing a performative display of technology that they have that forces us to similarly disclose technology and information. That would be hard to, you know, do in a controlled fashion. And if it's NIH originated, disclosure. Well, then, sorry, man, I can't look through that event horizon. I'll say this.

I do not believe we're facing like an invasion scenario. I do not believe that there's like a clock of doomsday like, you know, ticking in the next year or two, right? Nothing I've been told tells me that that's like a scenario to worry about. But could we be facing disclosures or information revelations that would have a disruptive effect on human institutions, just by the nature of us adapting to this new information, that could be quite disruptive very soon. Well, that is a concern that I do have, where it's less of a invasion type thing and more of a, we now all collectively have to radically shift our understanding of reality and our role in a hierarchy of beings that has a whole bunch of second or third-door effects on our individual and collective

psychology. And then that starts, if I just think of in the financial domain, like, in one critical function of human financial institutions and instruments is to, like, discount the future and to sort of have a smooth pricing function for future investments and future savings that dictate essentially the economic machine, right? Like the shape of the yield curve essentially is a reflection of collective human psychology about the path of our future, you know, economic activities. And if there is a, you know, revelation that caused us to dramatically change how we discount the future, it's a similar question to like this idea of like superintelligence or highly productive AGI. It's like if it causes a, you know, massive disruption to, you know, the long run rate of growth,

productivity shocks, both, you know, in very different sort of potentially countervailing directions, that's going to have a lot of, you know, second order, sort of effects on the financial market. This would be that, but potentially much, even much more disruptive, right? And so I think about that question of like how to, what sort of circuit breakers or how would you, you know, is Bitcoin the, like the hedge for that scenario too? you can make an argument it is in the sense that if if once if one downside risk scenario to disclosure in some fashion is it undermines collective belief in current institutions current political structures systems of power the continuity of those government um social contracts uh i mean

bitcoin essentially is a non-government institution that you know could could help maybe if the government had bitcoin it's like bitcoin would benefit potentially from that uh loss of faith in existence institutions, where I hold my money, bank counts, is it gold? It depends like how panic people get, right? And this is like, all right, is it just moderate panic or like full-blown collapse of state institutions, which I would not like. I don't think that's, you know, the most baseline scenario, but it has to be thought through. So yeah, I mean, other than that, you just shut down financial markets, but that's not great either. Can't do that forever. So people are just going to have to adjust. And there could be a period of adjustment here.

I don't know the timing, but it's clear to me. This is not, this genie is not going back in the bottle. And yeah, I mean, you just, you can look at what some things might be coming out of the new administration once they put these people into office. I think they're going to want to first get their arms around what's really going on. And they want to get personal accountability over these activities that, you know, I assume those, legacy activities are going to resist that, like, you know, the new bosses, right? And so there's going to be some, I think, friction, I would expect, but mostly behind the scenes as the new leadership comes into office and wants to wield their constitutional power in a way that they feel

hasn't been effectively wielded over these activities. So that would expect to happen first, before too much comes out officially from the government because you want to get accountability, you want to get control, you want to get your arms around everything, so that you then have what you think is enough of the, you know, you have all those different levers and you can pull different levers at a time that you think they need to be pulled. So I would expect that to take place early on in the administration before we get, you know, like Trump isn't going to go to the Rose Guard within a month and be like, yeah, the aliens are real. Here they are. I'm not going to say that. But the last thing I'll say on this is that I was, you know, I've had, I've had conversations

about what this could look like. And an interesting scenario was painted to me. And I still don't have, I have different, I have my thoughts shift on it. But like one scenario was, you know, imagine a scenario where the government is acting as if this is all true. But doesn't really ever, or doesn't, doesn't soon say that it's true. They just start to behave. As a if this is true. Say, for example, you have these technologies in a very, very, very, very kind of secure, highly compartmentalized the enclave with very limited access and, you know, very few engineers and scientists, you know, aware of it. You know, in order to mitigate the possibility of foreign technology surprise, the federal government wants to broaden awareness of historic exotic

technology antecedents previously provided by federal government for research and development purposes. Like I've quoted that line before. Like, that's the encapsulation of the issue here. So they need to broaden awareness. So you bring more people in. You bring more talent, more, you know, SpaceX, et cetera, whiz brains. But you want to do that in a way that still, you know, keeps it secure. So it's not just like a free for all. So you have more of a public, private partnership, expanding the security enclave, acting as if this is all true. And people will probably leak more. People will still like, people will still come out with all the, we'll come out with more and more stories about, yeah, look at some crazy stuff. But it will be some more plausible. deniability and ambiguity because people will still be able to say, oh, this is a, this is a very clever sciop to cover some crazy engineering project to try to intimidate China, you know, they're winking and nodding that it's aliens and that's just part of the sciop, right? So that could go on for a while while the government kind of plays in that interim ambiguity brings more people in to try to like accelerate technology transition or technology development, scientific discovery, and also has

the effect of kind of softening the psychological blow on critical parts of our, uh, our economic and defense and capital machine, you know, senior Wall Street, venture capital, big tech companies. They, they, you know, they, you know, they accommodate themselves to this information. And then the rest of society can kind of catch up, uh, down the line. That would be a, that would be the version of the U.S. you know, led kind of soft disclosure, slow, slow process. Uh, that seems, you know, one scenario that some, people have put forward. Seems like a, you know,

a possible idea. But then there's other things that I've heard that's like, I don't know what to make of it, which is like, there's a concern of like a, you know, once this reaches a certain point, that's like a mad scramble. It's like the same thing with Bitcoin. These are nonlinear phenomenon that like you can only go so far.

And then there's some unknowable tipping point where it just cascades, either collective belief cascades, individual actions, starts to shift, you know, and magnify. And you don't know, like, how far you can go in the slow phase before you reach a takeoff phase, right? And I think there's a lot of attention on AI on that question. Like, how far are we on this part of the curve before we get to this part of the curve? There's a lot of attention on Bitcoin.

How far are we on this part of the curve before we get to this part of the curve? In the UAP conversation, there's, you know, within certain circles, similar question. How far are we going to be able to stay on this part of the curve before on this part of the curve? Right. And I don't know. Sociologically, it's very odd to me that those three things are all happening or all making asking the same question. How far are we from the same part of the curve? Because they all just hit that part of the curve at the same time. Well, that would be quite messy for human civilization. But there we are. Very well guarded. Matthew Pines. Thank you very much for that. Where do you want to send anyone who's listened? I mean, I spew on all this stuff on Twitter at Matthew underscore Pines. Check out the Bitcoin Policy Institute. It's going to be kind of a crazy year for BPI. I know that they're, um, Got an injection of some new funding. So we're going to build out an office in D.C. With Pubkey. So that'll be kind of a crazy new thing that's in D.C.

Kind of like a Bitcoin embassy in D. It's going to bring D.C. to Bitcoin and Bitcoin to D. So it would be kind of like an event space of the restaurant, the bar, the BPA offices. So that would be like a cool little spot downtown. So yeah, but just with that. If you happen to want some consulting on China cyber and geopolitical risk, hit me up. I'm a director of intelligence at Pinnacle One, the strategic advisory group. But these are all my personal views and those of Sentinel One.

So yeah, that's where I got. Love it. Thank you very much for that. Appreciate the time. Thanks, Danny. Love what you're doing here. Thank you.