What Bitcoin Did - Is the Fed Losing Control? W/ Matthew Mezinskis

Episode Date: May 21, 2025

Matthew Mezinskis is a macroeconomic researcher, host of the Crypto Voices podcast and creator of Porkopolis Economics. In this episode, we discuss fractional reserve banking, why it's controversial among Bitcoiners, the historical precedent for banking practices, and whether fractional reserve banking inherently poses systemic risks. We also get into the dangers and instabilities introduced by central banking, and why Bitcoin uniquely offers a pathway to financial sovereignty, the plumbing of the global financial system, breaking down money supply metrics, foreign holdings of US treasuries, and how all these elements indicate growing instability in the dollar system. Follow: Danny Knowles: https://x.com/_DannyKnowles or https://primal.net/danny Matthew Mezinskis: https://x.com/1basemoney THANKS TO OUR SPONSORS: IREN: https://www.iren.com/ RIVER: https://river.com/wbd ANCHORWATCH: https://www.anchorwatch.com/ LEDGER: https://www.ledger.com/ CASA: https://casa.io/

If the government chooses to sort of pad its debt with the asset of Bitcoin, then that's great for Bitcoin price. Likewise, if the Federal Reserve has to step in and print more money to support a floor in, you know, not allowing prices of bonds to fall, i.e. the rates of bonds to rise to unsustainable levels, that is also good for Bitcoin. At some point, it's just going to become clear that Bitcoin is now the risk-free reserve asset in the system. And yeah, I think it's sooner than we all think. What Bitcoin did is brought to you by our lead sponsor and Massive Legends, Iron, the largest Nasdaq listed Bitcoin miner using 100% renewable energy. Iron are not just powering the Bitcoin network. They also provide cutting-edge computing resources for AI, all backed by renewable energy.

So whether you're interested in mining Bitcoin or harnessing AI compute power, iron is setting the standard. Visit iron.com to learn more, which is iriR-E-N.com. Matthew Mizinski. How you doing, man? Good to see you. Good morning. Good morning, Danny. Yeah, it's good to finally have the tables turned for me because usually I'm recording in the afternoon evening, you know, with Americans' Eastern morning time or even earlier, Pacific, and now speaking with you in Australia, it's morning my time. So it's nice change for me. Yeah, this is a novelty to me as well. So I'm just going to try and stay awake for this one.

But I watch a lot of your videos that you put on YouTube. I think it's super, I love like the short format that you do. It's really informative. And one of the videos I was watching recently, you said that you're not against fractional reserve banking, you're against central banking. And ever since I watched that video, I've been thinking I want to make a show with you on it. So I do want to get into all the base money stuff. I want to get into power law because I know you're a power law influencer now.

But before we do that, can we talk a little bit about fractional reserve banking on Bitcoin? Of course, of course. So maybe can we start off with that phrase? And explain what you mean by that. Sure. Well, it's obviously a slippery topic. My old co-host Fernando Ulrich, who's a big Austrian economist down in Brazil. He used to say it's like quicksand when you talk about fractional reserve banking.

I always say it's better to just, when you hear the word fractional reserve banking, drop the FR and just leave banking. It's just banking, basically. But of course there's an ethos in Bitcoin, as there has been with gold bugs for decades or centuries, that there's some inherent instability or lack of safety when you have Fraction Reserve banking. So that's why it's better to hold the gold yourself. Or what really becomes a hobby horse with economists is, let's just legislate full. reserve banking. And that was never really appealing to me because, you know, I've gone through many waves of reading about Mises and Rothbard and Hayek and Austrian economics in my life.

But, you know, I started reading a lot of this stuff after the global financial crisis in 2008 and was for maybe, for me, maybe like six months, I was thinking, okay, this is actually interesting full reserve stuff. But then I started to just back up, read more. general banking history read about the economists that supported competition in banking or what's called free banking. And I've had two of the big names on my show that is George Selgin and Larry White. They've always been on this side of the debate. Rothbard would be a traditional Austrian who's on the full reserve banking side of the debate. For me, it's just became sort of a

debate without a meaning and you know you just sort of look at the broader reality, the broader picture and no one really is pushing for full reserves

other than maybe a few politicians or Ron Paul obviously famously wanted 100% gold reserve standard if possible but if you look throughout history the bottom line is well let's sort of define it first

very briefly banking throughout the centuries could have two forms. One was that if you would protect your wealth, protect your gold. And then the other is sort of a lending service, basically. The idea of fractional reserve banking as a problem would come when people wanted to, not necessarily even worry about their loans or even making payments,

but if they just wanted to take their gold out and there was, you know, the gold wasn't there, the bankers didn't reserve enough, and then there was a run on the bank. And there certainly were plenty of bank runs throughout the centuries. But the idea, there's sort of this conspiratorial idea that pops up throughout a lot of the literature that, you know, this is basically, kind of a scheme by the goldsmiths, first by the goldsmiths, then by like the bankers in London, and then throughout the whole world,

that they are sort of smarter than all of us. They're using our money to make interest that they somehow don't deserve, and then anyway, the deposits are unstable and the whole system will, you know, collapse. There are like little grains of truth, and some of all of these arguments, but the bottom line is, there's no, throughout all of history, there has been no bank,

which has never been illegal, by the way, which has cropped up in the market, offering full reserve services. So you have to ask why that is, right? Because if this is such a dangerous, shadowy practice, why hasn't there been, you know, a bank? You can just imagine, right? I mean, and this has been written about by the free banking people. The bottom line with any of those services is if you want to have the big doors and the security

of having your money protected and the insurance and all the rest, you got to pay. You got to pay for that. And it becomes a then, it just simply becomes a tradeoff of having the security of having your base money or gold in the vault versus having all the services that typically come with banking, which then allow for other things like payments or even lending at interest in an easy and clear way. There's just never been a system that has allowed for everything

where you could have your cake and eat it too. It's either if you want to actually put your gold into the bank and lend it, you're either going to have to pay in some form and that payment might be, okay, your gold is going to be lent out. And then the argument is always, the argument sort of shifts to like, oh, well, they're lending it out, but we don't know what they're, they're lending it into. Like, what,

what businesses are they lending into? It doesn't matter. You signed a contract. This is where, again, it comes to legal, like jurisprudence as well. It very well is going to be in your banking contract where you are a creditor to the bank and they are a debtor to you. They actually owe you the gold at some point. And yeah, they may, they may have to delay it for a day or something. That's a bad bank, of course, if they can't give your gold back for a day or two days or a week. And that happened throughout history as well. Also during war, you know, banks always suspended these payments. So there's all, like, there's no, there's just no easy answer. But the beautiful thing, let's say, just to short circuit all the problems. Like gold bugs, you know, you can read any newsletter from

the 80s. They talk about, this is not a new topic. All right. This has been debated for decades, for centuries. But the beautiful thing about Bitcoin is, you can short-circuit all of these debates. And with relatively low cost, no insurance really required. You don't need big doors. You could just have a little creativity of where your seed is. You could use multi-sig, and you could even be,

which is what I always recommend, and I personally do because I'm sort of international myself. You can have your multi-sig keys in different jurisdictions. You can do many, many things, and there's many, many levels of creativity where you can achieve this. You can basically become your own bank, and you can have this fully reserved base money,

which is what Bitcoin is, what Bitcoin UTXOs are anywhere in the world. And so that is a fantastic feature of Bitcoin. and to me, that's like the best thing about Bitcoin. Everybody, you know, everybody has their own idea about how they want Bitcoin to scale. And, you know, I'm sure you've had many shows about that. But to me, Bitcoin is most analogous to something like gold, digital gold, we always call it. But it's way easier to store where you don't even have to engage in the process of banking.

And so I think that's a beautiful thing. And so I've never really even, I know that a Bitcoiners are very fond of full reserve arguments, but, you know, why would you even need to bother any, with any legislation about exchanges or whatever in Bitcoin? If you can just, with a few steps and maybe a few weeks or months or even a year, learn how, you know, something pretty sophisticated works compared to the regular financial system, like multi-sig, you can fully reserve your coins and it can be relatively safe, even from a, not even relatively extremely safe,

even from something like a $5 wrench attack. That's just never been possible in the history of banking. In the history of banking, we got into this sticky situation where, okay, you got to leave some of your gold at the bank, but maybe you want some gold, you know, you want to make payments. And that means you got to sacrifice some of that security and, you know, you have some risk and whether the lender is going to protect your money, all that stuff. So anyway, the point is, I've never really bought the argument that fractional reserve banking is inherently dangerous because it's, it's never been illegal, and there's never been a full reserve bank that has cropped up in history.

There have been some monopolized full reserve banks, like the Bank of Amsterdam. It failed pretty quickly after. They were a full reserve bank, fully reserved with some government bonds and gold. like you weren't doing sort of regular lending there. But it just never worked. It never worked and never seen a problem. Now, having said all of that, where I would meet absolutely with any Bitcoins, and I've been saying this for years myself, is that central banking still is an inherently unstable feature of any banking system because central banks are not the market, right?

Just before we got into central banking, sorry. Because I do want to come back to that. But I just want to carry on on the fractional reserve side just for a minute. Because there's a couple of questions I have that I think one might be why Bitcoiners care. But before that, you say no full reserve bank has cropped up in history. Caitlin Long obviously tried to do this and was denied a Fed master account, I believe. If we got a fully reserved bank, does it pose any threat to the financial system that we have now that we live within? Yeah, I think so.

And that's obviously a problem for competition. But there's a key distinction in what I'm saying. I'm not saying I don't want someone like Caitlin Long to open up a four reserve bank. I would love it if she could. And it's clear that in the current political environment, her bank would in fact be too safe for what the Federal Reserve is doing. It doesn't mean that the Federal Reserve always misses the mark, although, you know, usually they do because all they know is.

that you know it's always a pendulum swinging uh the market is always going to have the best answer of what the reserves should be yeah uh but i think you're right and it's absolutely true and she's talked about it we've we've had kately on our show as well i like her a lot i totally would support everything that she's has been trying to do i don't actually know the latest uh on how her uh situation is or you know with with uh with the bank but um the, I think the over, just the overall point there is it's a, it's a different situation than what I'm talking about because there have been plenty of banking systems. And not just the ones I just mentioned. They've been in Latin America, in parts of China. There have been, there have been plenty of banking systems throughout the centuries that have not had a central bank. They've not had the government really encroach on their operations. And they've never been full reserve.

That's the key point. There has been historical precedent where a full reserve bank could have cropped up in a competitive system, and it has not. It has not been the situation of Caitlin Long where she is compelled to not open a full reserve bank. So that's a different story. And I think it shows that even though, yeah, I think she would get a lot of interests, you know, she'd probably certainly get a lot of bitcoins or Bitcoin funds and people that would like her style to, you know, to hold some deposits there to hold some money there. It's just too expensive. It's not efficient enough. And, you know, these banks in Sweden, in Scotland, in Canada, they would get down to 1% of gold in the vaults versus deposits outstanding. So it's just like the proof is in the pudding to me. There's

just not, there's no example where it's worked. But if, for example, like, if Caitlin was allowed to open this bank and do the fully reserved thing, I think there's a lot of, lot of people within Bitcoin that would happily pay a fee, depending on what that fee was, to make sure that both Bitcoin and dollars or whatever were kept in for reserve at a bank. What is the threat that that poses, though? Is it the fact that it sucks liquidity out of the system that they need to continually perpetuate dollars? Yeah, all of those things. I think, again, no one, neither Caitlin Long nor Federal Reserve knows the break-even reserve

ratio or not the break even, I should say, but the equilibrium reserve ratio for any market, right? And I say this all the time. Like, there's no reason, even though the Federal Reserve has these 12 different banks and they're also like antiquated, there's a Federal Reserve Bank of Richmond, which is just, you know, doesn't really make any sense. But there's no reason that the Federal Reserve Board in Washington, D.C., knows what's happening in Richmond or in Montana. They just, they cannot legislate that, right? You need to do it on a local. level to understand local businesses, local needs, how much liquidity should stay in reserve versus be out in the form of basically certificates that are circulating around, allow for the

velocity of money, allow for payments, you know, and also allow for a healthy banking system where you can have credit and loans as well. So, you know, it is a sad situation, I'd say, because it's a clearly way over-regulated system that the United States has, the Federal Reserve's, you know, the most powerful central bank, probably in the history of the world, and they're not going to give up their power easily. I certainly wish that we could have Caitlin Long

open up a full reserve bank and many others. It would be great. But my point is a little bit more subtle than that, and I just, I think that the nice thing is, and it really gets to where I think, these arguments kind of just fall on what's the analogy I want to say that they just kind of lead their bridges to nowhere basically because generally people want a little bit more interest and a little bit less saving or sorry a little bit less risk averse sort of savings type instruments

you know people like to gamble people like to go to Vegas they just like it you'll see that a lot, I'm sure, at the Bitcoin conference. And, you know, just things like, I mean, it's, it's just a, it's sort of a thing of human nature. And the market usually sorts it out pretty well. Having said all of that, even though it's not allowed, and I think it's bad, that it's not allowed at the Federal Reserve level, you can full reserve it yourself. You can full reserve Bitcoin. And it's just, it's, it's, it's unlike gold in that matter, in that, in that situation, because it's so easy to do with Bitcoin. Yeah, 100%.

And like when it gets back to those Austrian arguments, like Rothbard versus Selgin as an example, like I definitely agree with Selgin more. Like I think anything, like if you're entering into a contract with someone and you're both completely aware of the terms, I think you should absolutely be able to do fractional reserve anything. And that's already happening in Bitcoin. Like there's these lending products that will re-hypublicate your Bitcoin.

So do we already live in a world where Bitcoin is fractionally reserved? 100%. And we should, you know, no irony to say 100% there. I mean, we should think about the history of Bitcoin. Because Bitcoin, with our own eyes in real time in the last 15 years, has gone from literally the most obscure anarchic wild cat financial system in the history of the world to now being pretty institutionalized, as we've seen obviously with ETFs, although there's been an interesting drop. in the last week in ATF holdings, but nonetheless, there was nothing stopping anybody in Bitcoin from staying full reserve. We saw a lot of scams, of course. Again, I'm not defending the scams, but we saw a lot of people tried different things.

The tendency, as far as I can tell, with all of the marketing projects of the exchanges that did have sort of that were beyond reproach and were good, you know, like Cracken or CoinBenzhen, or Coinbase. I know a lot of people always have their druthers with them, depending on how hardcore of a Bitcoiner you are, and if you don't want shitcoin trading.

But basically, what I can tell of all of these exchanges, no matter how beyond reproach they are and how secure they are with their Bitcoin, they're still offering plenty of earn services or staking services, whatever they call them. Again, those are very risky, in my opinion. I personally don't even partake in those, and I wouldn't recommend it myself. But again, it's just people want to experiment with that and play around.

And that's just how it is. It also should be said, if you could lend your Bitcoin. And also, even beyond exchanges, you know, there are plenty of companies like Leden or what, you know, Honey Badger is doing where you can loan out your Bitcoin directly. The interest rates are difficult, I think, at this point for the borrowers. They're pretty high. And also for the lenders, you want to be quite careful about the sanctity of your collateral, you know, how good it is if you really want to, if you really want to lend out that Bitcoin, even for a 15% rate or 40% or whatever it is. It's very, very, very risky at this point. But that's going to come. I think that will

come, and that could even come outside of the banking system. Because again, it's been said many times at the Federal Reserve that they don't have jurisdiction over Bitcoin. So, yeah, but the question is going to be, what does they, you know, what does deposit taking and lending in Bitcoin actually look like? And I think that stuff is still getting hammered out actually right now, even though we're just talking about, you know, holding Bitcoins on exchanges right now with the current legislation and these things. And now stable coins are coming into the picture. Obviously, it's a huge topic. But lending and depositing with Bitcoin, we don't have that yet, but we have sort of on the edges. We do have it. And so there you go. It's already happening naturally. This episode is brought to you by River, the best place for

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This is their weekly newsletter that drops every Thursday and it covers how authoritarian regimes use money as a tool for control and how people are pushing back against that using privacy tools and of course Bitcoin. It's an amazing newsletter, it's pure signal, and you can subscribe for free at Financial Freedom Report.org. A lot of Bitcoiners are constantly saying the big print is coming. I'm not trying to bag Larry LaPard here. I just happen to use the phrase the big print.

But you look into the plumbing behind the banking system more than probably anyone in Bitcoin. Do you think there's a crisis coming? Yeah, it would be an egg on my face if I said, if I said no. definitely things are are pretty wild uh you could look at say the trajectory of bonds over the last 40 years you know the bond yield has gone down from the 80s till you know till 2008 to basically zero but from covid when they really tried to you know when they had when they theoretically as they would say had to put all the stimulus into the system of course they didn't have to do that but they did and then they had to put the 10 year rate back up and the 10 year is kind of staying up even though they're

lowering the base rates it does seem it does seem that the uh the quote bond vigilantes are maybe uh you know and all the things that happened with the the liberation day right that was a while that really scared bescent and uh and people that thought the dollar was just this sort of sacred thing because the the markets were falling and the 10 year was rising, and that is a very, like, rare thing. Typically, when the markets fall, you go risk off and you go into that safe haven U.S. Treasury asset. So it does seem very tenuous at the moment. Obviously, it's tenuous politically. You know, I live here in Eastern Europe. We're always worried about our neighbor to the east. So there's a lot of things that suggest we could have a crisis.

On the other hand, everybody knows how bad it can get now. Like, there's still a lot of institutional memory from 2008. Like everybody knows how bad they screwed it up. So I do think we have more sort of more in tune to it. It's hard to give you a yes or no, Danny. But I will say that, and I've said this since the beginning of my show, like everybody wants to sell you something. Everybody wants to say, you know, buy my product, especially in our market.

like buy my Bitcoin product, buy my gold product. It's the same type of people, gold bugs, Bitcoin bugs. Governments are out to get us, the evil, you know, you're losing your freedom, all the rest. There's always some truth to some of these things. But you could go, you know, if you were a gold bug in 1980 and gold was at $850 an ounce for two seconds, which it was on the Komex for only about two seconds, that was the high. And then it went into a 20-year bear market. like you would have thought that you like we're on top of the world at that point, but you ended up going to a 20 year bear market.

Now for reasons we're going to talk about in the show, the power curve, most prominent of those reasons, I don't think we're at all in that situation with Bitcoin. We're still being adopted. This is still a network that is expanding not exponentially, but in a power fashion. So I see plenty of evidence that we're still going to grow there. but as far as, you know, a crisis around the corner and what will that do to Bitcoin,

I think Bitcoin is actually showing a lot of resilience from what it, you know, what it should do. And that's be a risk-off asset, be that risk-free asset that the Treasury used to be. And it might actually even take that role, I think, in the next 10 years. So again, I'm sidestepping your question. I don't know exactly. We can look at some money supply charts that will show you that things don't look great for the Fiat system at the moment. Let's do it. Let's get into some of them. Okay.

So just one quickly here on the old fractional reserve banking topic. This is total money supply in the United States. And this is like really detailed. I got M1, M2, M3, M0. I have this until the end of 2024. This is a very sort of lagging indicator. You won't be able to find this anywhere because you got to go really tear into the numbers and some of it's only quarterly, it's not monthly.

But they don't even publish M3 anymore. Okay, so this M3 at the top right there that I'm highlighting, that's not even published, and neither is this portion of M3, which includes re-purchase agreements. Let's skip all the technical jargon here and just show you. And here's another thing. The Fed kind of lost control of it. They stopped publishing M3 officially in 2006, February.

So you see, that's the red line. Then after the global financial crisis, they went back and republish some data so I can sort of, you know, do another, do a sort of historical back-tested money supply for M3. But you see, they don't even match. And why did they stop publishing that data? They said two reasons. The one is they said that there is no economic, you know, inherent value of publishing the M-F3. broad money supply. That's just the complete hand-wavy nonsense because there absolutely is economic value. And the second one is, which they didn't, actually, I don't know if they even publicly

said this, but clearly what happened was the repurchase market got out of control because repurchase agreements, there were a lot of bad government bonds, mortgage-backed securities that were falling into that market, and they lost track of it. basically they didn't publicly say that. They just said that it wasn't a valuable indicator anymore. But of course, that wasn't a very honest statement because, you know, after the Global Financial Crisis with the Dodd-Frank bill and all that stuff, they were forced to go back and publish more M3 data.

And again, it's not complete. You have to sort of regress some of the data. But bottom line, what's the difference between M2 and M3? So really quickly. M1 is all of your cash in the system, like your physical currency, plus your deposits. This is that sacred demand deposit, which everybody in fractional or banking worries about. Again, that's not the only deposit in the banking system. But that's M1.

Okay, so there I'm showing here is M1. Okay. And then you have M2. What's M2? That's M1 plus other retail deposits. Okay, so that would be savings deposits, smaller time deposits. some money market funds. Money market funds are basically like a stable coin. That's M2. But then the Fed just stops publishing M3. Their M3 is right here, all right, this red tomato line. Well, what's that? First of all,

we have to define M3. M3 is all institutional deposits. Okay, so like institutional money market funds, repurchase agreements, also Euro dollars are in M3. Now that I have not been able to replicate because it's theoretically Euro dollars are in the red line, but they are not in my M3, which tells you it's even more crazy than what we can track. So Euro dollars are basically like an offshore dollar or a dollar that's in Britain or Australia. You know, any bank could issue in any currency. It just depends on if they're ready to take the risk and what's on the other side of the trade. So hopefully if the bank gives someone a dollar deposit in Australia, they're going to have a reserve or an asset of U.S. treasury bonds, that would make sense. And then they can take the difference of interest from the treasury bond. It's exactly like a stable coin. Take the interest from the treasury bond and then they can issue the dollar certificate or the dollar account. Bottom line is, not even Euro dollars or an M3. So all of this stuff got out of control in 2006. But look, what you can see specifically from the global financial crisis, I'll zoom in here. If you look at the difference between M3 and M2, it peaks here in March 2008,

just before the global financial crisis sort of officially hit in the fall of 2008. We got way over our skis. You can see that the delta is way higher. And so this goes back to your question before is, let's now look from the COVID times. Okay, let's just take off the other stuff so we're not even, you can see exactly what I'm talking about.

The difference between M2 and M3. We do a lot of printing with COVID. Yeah, that hits with M2. But then this delta, you see this delta is increasing. And that is, you know, And that is, again, that's institutional money market funds. That's repurchase agreements. It's a lot of instruments that are just, they're like deposits, but they're broader.

They can be traded faster. They're not insured. All sorts of differences of types of money. But all of this stuff is a liability on the banking system. So any bank, you know, pick it. And this is increasing. So I would say if I was something that was worried about, you know, how the economy was looking or to go back to your question about if a crisis could be

around the corner. This is a concerning sign. Why? So what does that signify? Is that just the banking system becoming more and more leveraged? Yeah, precisely. This is pure leverage. Okay. And what is leverage on? Well, you can say it's on M0. This is the actual cash that is in the system. And it's actually not even this one. It's down here. This is the bank reserves plus vault cash. So this is none of us can use the negative in this video, which is the bank reserves involved cash. And right now, as you see at the moment, that's about $3.3 trillion in the United States. And then there's $35 trillion in deposits. Okay.

So it's this sort of ratio that obviously is, you know, increasing. Not all the time, I should say. This ratio actually crashed, you know, here because they were flooded with money to bail That's that, you know, I'm looking at the negative now, right, which is way increasing. Just take everything off. You can see that the bank reserves and the vault cash just, we get flooded with money after the global financial crisis, QE1, 2,3, right here. And then COVID, a lot of flooding of reserves.

But this is, we're, what we're seeing is they're trying to normalize. They're trying to get the banking system working without the Federal Reserve intervening. The risk there, it's the same risk that you probably heard many times, is you have a risk of price inflation. You have a risk of too many dollars chasing not enough goods. And again, this is the problem with fraction of our banking. It's not any one bank doing this. It's the central bank intervening beyond what the free market otherwise would do.

So that's the big problem that I see with the banking system. So is this a problem that the Fed are aware of trying to solve then. And if it is, how can they try and get this back under control? Well, they can get it under control by raising interest rates, which they're not doing at the moment. I mean, they're keeping interest rates kind of steady relatively, but Trump, of course, wants them to lower interest rates. And he's obviously pulled back that rhetoric because this is supposed to be at least the one sacred thing about the monetary system is that the central bank is independent from the rest of the government. Yeah, of course they're not. Of course they're not. And the president will

always have his influence and he's trying. But with all of the craziness that he has put on the markets, you know, with the tariffs and everything else, he's had to back off that. But basically, to answer your question, they need to raise rates to really cut that off or at least keep rates stagnant and this black negative black number needs to um it needs to not keep expanding basically so you see that they've tried to do that right so it's it expanded a lot here during covid went from you know they they tried to normalize it it was even going down to under two trillion dollars here just before covid on the eve of COVID and then of course COVID blew it out and went back up to four fortune I'm only looking at backwards and then

they would put the repos on, which is repos are basically like non-bank, bank reserve. So I'm going to put that on. That was another $2 trillion more in the Fed balance sheet. So that's there. And now you can see the repos they've let go off their balance sheet. Yeah. So you see how the repos are disappearing? I know it's kind of weird with the negative, but that's just how the banking system is working.

Basically, the Fed liabilities is the banking system's assets. And the green shader is the banking system's liability. So you see that the repos are going back into the system, there's a big risk there that there's just too much liquidity in the Fed doesn't know what it's doing. And if it happens to be that there's too much liquidity in the system, they themselves will try to take that liquidity out of the system by buying those assets that might not have a buyer. And that means they would expand their balance sheet again. But that would be, that would happen during a time of dislocation,

during a time of crisis. They hope that that's not going to happen, but of course there's no guarantee of that. So if, like, presumably they're not going to raise interest rates. Like Trump is pressuring Jay Powell already in a big way. So if they don't, is the only alternative then that they have is to start printing money again and buying treasuries? Right.

Presumably, at some point, they're going to have to make this black shaded area. let's take off the repose. So this is the core of the banking system money is this black shaded area. This is, by the way, the most analogous money to Bitcoin. We'll talk more about this. This black shaded area, which is $3.3 trillion at the moment in the United States,

roughly this is out of December. They'll have to increase it. If they want to lower interest rates at some point or drive a little bit more lending and investment, then they'll have to increase that value. And of course, if they're, do that, then it's going to be good for Bitcoin, but that will drive inflation. And so, yeah, I do think this is concerning beyond all the other things with trade, which I think is just way

bad right now for the markets. In terms of tariffs, do you mean that? In terms of tariffs, mostly, yeah, but, you know, I'm one of the other things I'm tracking. I'm sorry, I don't have it ready for you at the moment, but I'm starting to look more at what foreign, in terms of, investors hold in U.S. treasuries. And if that goes, actually I have, I do, I can't show you a look. Let me move over to this chart. So this is a good chart that I show off. And this is the United States debt over, I have it over the course of the entire United States going back to the, to the ratification of the Constitution. But anyway, let's, let's move, let's sort of zoom in here. Let's build this up. So what we're going to talk about now is holdings of foreigners of U.S. debt versus holdings of

the central bank. So this is the Federal Reserve's balance sheet. In other words, it's the assets of the Fed. This is when they print money, which is back on this chart, the black and the zero, which is in public. It gets a bit confused. There's paper cash that the public can hold, and there's the bank reserves, which only the banks can hold. But on the asset side of that balance sheet of the Federal Reserve is this green, big green shaded area. You can see QE1, 23. Same thing. This is treasuries that the central bank owns, okay? You can see they've tried to drop that off. This was the Jackson Hole speech. You know, Powell's really trying to be sort of a vulgar type character to not, to not go crazy and buy more treasuries, even though the government might want it to do. So obviously,

you see the debt is still rising the United States, but the Federal Reserve's portion is falling, okay? So let's put that as a percentage. This is going to be helpful to understand. So this is at the at the end of the day even though this is not exactly base money because the base money is a liability side of their balance sheet this is the asset side this is basically the printing press so the federal reserve has basically subsidized the government this is a historical high max it's never been this high in 2021 of about 28 percent almost 30 percent okay yeah that is a never been that high in the history of the Federal Reserve of the United States. You see it's coming back down.

You also see that from 2014 to 2019, which is what I've always said, you know, a lot of bitcoinsers during this time were saying all the central bank does is print money. They were not printing money here. They were going down both as a percentage of U.S. debt and in gross terms, it was flat to down. So they tried. And then, of course, COVID happened,

but COVID sort of masked an underlying problem. of too much debt in the system anyway, so we got to repeat the process. And, you know, this, they went way down. They went from nearly 30% down to 17.8% right now as of March 2025. This is a key question, you know, will they have to print more money to subsidize all this? We saw that the U.S. was just downgraded by Moody's. Now there's no AAA bonds anywhere in the world. you know, this is a big question.

And so that's the, if you think of the entire pie of United States treasuries, Federal Reserve owns 18%. Now, let's look at another thing. Let's look at the holdings of foreigners. Okay, so this is another interesting thing. It's down as well. Okay, and this is a combination of China, not buying as much Japan as we've heard as a big, the big player here.

This is, I only have this as March, but when this gets updated through April, I think you're going to see this lower. This should be concerning, right? Because at this stage, the U.S. is going to want people to buy their bonds. And this should be concerning if this black line goes lower. Where on this chart was it that the U.S. throws Russia's treasuries? Because I think that was a huge signal in this market. That was 2020 February when they invaded.

So it's here. Okay. I'm actually surprised there wasn't a bigger drop-off then, because I think if you're China watching that happen, you are going to want to hold as little U.S. debt as possible. Yeah. Yeah. That's a whole issue that plays into this, right? We have, you know, the criminal war of Russia on the one hand, but then you have the basically destruction of an international sort of Basel, Swiss, not Swiss, but what is it? international settlements type system where you have all these reserves that generally, uh, you know, represent the core of the system. And yeah, it is down even from there. So it was about 25% foreigners holding of U.S. debt from that moment and now it's down to 23. And it's going to go lower. So that is, you know, lower ownership of U.S. bonds is going to mean a higher price of bonds.

And you're seeing that in the 10 year yield. So that's a risk. And of course, a higher price of bonds means a higher interest rate and also a risk of inflation. So if the Fed aren't buying bonds, the foreigners aren't buying bonds, who is it? Is it US-based hedge funds that are like picking up the slack here? It's got to be Americans, yeah. It's got to be Americans. So here's the American percentage. And this is very just simply the delta of those other two. So now it's up to 60%. And it was that this should have been an all-time low. Yeah. The all-time low was here. of about 42% American ownership of U.S. debt, 42, now it's up to 60.

So, you know, we have other assets to buy. Interesting that the president of the United States is bullish on those assets, at least personally. But government-wide, I don't think they are bullish on Bitcoin. So a lot of cross-currents right now, it's a very interesting time and also very, very tenuous, because if United States investors can't make up the difference, they're going to demand then a higher interest rate to invest. Well, exactly. And presumably, if we do presume that rates are not going to go higher in the short term, or maybe even drop, then surely demand from Americans is also going to drop. So then just, again, it all compounds to the Fed is eventually going to have to step in and buy these bonds.

Precisely, precisely. The only escape. day patch that the government can have here is the central bank coming into basically put a floor on the price of those bonds and buy more because the more bonds that the central bank buys the larger the support basically for that, you know, not making interest rates go higher. Now, of course, there's another option. There's another option, which is backing, backing this debt with Bitcoin. that's an option. A lot of bitcoinsers will like to see that happen. And if that does happen, you'll have sky high Bitcoin prices, which is great.

So in any case, I think in either case, this is good for Bitcoin because if the government chooses to sort of pad its debt with the asset of Bitcoin, then that's great for Bitcoin price. Likewise, if the Federal Reserve has to step in and print more money to support a third. floor in not allowing prices of bonds to fall, i.e. the rates of bonds to rise to unsustainable levels. That is also good for Bitcoin. So I think Bitcoin is in a very good spot here. And of course, we've seen it with gold, right? The legacy trad-fi system still equilibrating with gold. They haven't quite got it in the Bitcoin game. I was looking at Rodolfo's Bitcoin treasuries. I think

it's still only something like 50 billion that governments worldwide hold in Bitcoin, $50 billion worth, right? And so that's what, 500,000 coins? Yeah, it is 527,000 coins. Right. So, 54 billion at the moment. So that's not much. And in gold, in gold, this will help the listener as well put this stuff in proportion

worldwide governments, and this has obviously increased a lot with the price of gold. It used to be like one, two trillion. Now it's up to about four trillion. It's about four trillion dollars in gold in central banks worldwide. So again, just with Bitcoin, it's about 50 billion. But if you looked at gold, with gold, you have something like $4 trillion in central banks. So only 50 billion in Bitcoin, $4 trillion in gold. That will again give some perspective for the listener. Firstly, I think that shows Bitcoin has a lot of room to grow. And secondly, I think that that just shows the safe haven status that gold still has, and for now it's holding on. But, you know, I think Bitcoin being the digital gold can easily help to fill that potential. But I want to be

clear. I am not, again, I really encourage the individual to do their own, you know, to do their own research here. Like, if you're just thinking about holding a Bitcoin ETF or holding Bitcoin in an exchange account, that's okay. But you're still, you're not really doing Bitcoin in the way that, you know, if you really want to pontificate about sovereignty and liberty and freedom and holding your own, you know, money in a sovereign way, you got to hold them. You got to hold your own coins because you never know. Maybe they will try to, I don't know, nationalize some of the bitcoins in these exchange accounts. I don't see that happening anytime soon, but we've seen it with gold. We've seen it with gold. Just very quickly on this, before we move on to the Bitcoin stuff,

the Fed's obviously in a very precarious situation in the sense that if demand does drop from the Americans, where's it going to come from? It's going to come from them. How long do you think they can actually hold on to this position they're in now. Like, how long do you think they have before they essentially have to prim? I don't know, but it's been, we are at historic lows of, say, the trend,

right? So, I don't have that chart ready, but, like, they're, you know, if you could draw bands of where, let's just sort of zoom in here, if you go and you look at just the central bank holdings here, okay, so here's the total debt, here's the

central bank. We're getting back to trend. And if you look at this in other metrics, like if you would aggregate this to all central banks, we're actually getting to historically low levels of the trend, right? So they've pulled back from this $8.5 trillion. They're now down to $6.5 trillion. But still, compared to all the money that they've printed over the last 15 years or so, they're just not going to get back. I just don't see it a possibility at all. that they could get back to, you know, I don't know, a couple trillion in debt. And that goes for all the central banks across the world. So bottom line is, I don't know how much longer they have, but I would say, you know,

in the next year or a year and a half, they're going to have to start printing again. Good time to own Bitcoin. So we should get into your power law stuff. I've always had a bit of a problem with the power law thing. And last time you were on the show on the old what Bitcoin did, I said that. and I got a lot of heat from the power law guys on Twitter. But the thing that I've struggled with, partly is like the people selling the message.

Like they are basically saying this as if it's absolute, it's science that Bitcoin has to go up like this, which is a huge red flag for me. But you're someone that I, I trust quite a lot. And I think when you show so much interest to something, I should probably pay attention. So do you want to give me the kind of the shill on the power law?

Sure. So the sort of two things that I've been researching a lot since 2018, and I actually both started that year in 2018. The first was, after we've talked so much about, you know, fractional reserve banking and Bitcoin and where can Bitcoin be in the banking system, my conclusion, and this was as well as my old co-s, Fernando, you know, who's an Austrian economist and the free banking guys, we've asked this question. Bitcoin is not analogous to bank money.

It's analogous to base money. It's analogous to either those liabilities that the central bank can create ex neelio because that's the core of the system, just like Bitcoin UTXOs are the core of its network. And it's analogous to gold. So gold used to be the core of the financial system. Now we know it's not attached to the financial system anymore via redeemability, although, like I said, there still is, you know, 4 trillion.

dollars now equivalent in central banks holding gold. So that's one thing, is pinpointing that Bitcoin really is this sort of core of the system-based money. The other thing that I was analyzing was there was this old post that this is kind of famous on Bitcoin talk, this user Tro, Low Low, Low had done. And he had just done an Excel chart. where he had modeled Bitcoin growing as far as a logarithmic trend line. And it's not really important to go into the differences now. But basically, when most people talk about trends and when they talk about Bitcoin, they sort of default to this word exponential.

Bitcoin has exponential growth. And what I'll show you in a second is exponential growth is for most things in the financial system. But in my view, and others have sort of verified this, you know, around the Twitter space and the Bitcoin space. But in my view, and I was also, I did one of these charts on Twitter in 2018. Bitcoin is not, at least if you look at price, if you look at hash rate, if you look at address growth, the trend line is not exponential, but it forms this sort of a power trend line.

The bottom line difference between exponential and power is this. Exponential growth is constant growth. Okay, so it's why when we talk about stock returns or bond returns or yields or interest rates or GDP, we can use a constant figure and we can understand that's the growth rate and we can extrapolate. It's true that that figure might change on the margin, but overall it's constant, actually. So what that means is, you know, 5%, like the historical rate of interest rates throughout, you know, the millennia, let's just say, 5%. The U.S. has actually seen as high as 20% in the 1980s,

and it's seen as low as 0% today. That's true that that changed on the margin, but the trend is still the same and it's about 5%. And if you put that trend on a log scale and you would look at the trend of like the growth of anything, like the bond market or the stock market, it would become a straight line. Okay, that's what an exponential growth does.

Let me just pull it up for the stock market so you can see it. So before we get to power, it's easiest to just stick with exponential. I'm going to pull up the S&P 500 and then I'll put my screen back to that. But most things in the financial world, and it's whether people know it or not, they are exponential, right? So we talk about I'm trying to get 10% in the stock market or I'm trying to get 15% in the PE market, the private equity market. Those are constant returns. That's what you expect to get per year.

Okay, so I'm going to pull up this now. This is the stock market from 1950. Okay. And let me take this off. But basically, like I said, this is log scale. Okay, so you see this is base 10. So each step up is 10. okay so 1,000 to 10,000.

And it's a straight line. Okay, so it's on log scale. The trend line will be a straight line. You can see, of course, it can be above trend. It can be below trend and back above trend. And now currently we still are above trend, even with all the, you know, the money printing and stocks. Maybe we'll revert to the mean.

I don't know. Nobody knows. But it's a straight line. That's how things grow, okay? And you can even put the bands on. So back in the day, we're actually growing a little bit faster than this. And then in the 80s, we were growing slower. And then we went back up after the worldwide web started.

And just big booms here. You see the dot-com boom. It's 2008 boom. And then we fell massively. Went down to 666 in March 2009. I'm catching the month in there. But you can see across the all trend, like we pierced the downside there, way low. March 2009. And now we're back up above trend. Bottom line, this, if you look at the slope of

this trend line, no matter where you pick it, if you invest on this black line, you would get a 7% per year a turn. That's the since 1950 trend. If you reinvested those dividends, you would get 9%, usually about 2% more. Actually, if you've invested in the stock market from the nadir here, you'd get well more, even like 12%. Because if you picked it here, like 700, way to the downside, now you're above trend. You're getting way more than 7%, like 10, 11, 12%. So that's just how it works.

It could be, you know, it's not always constant per se, but theoretically when we talk about an exponential return, it's constant. So bottom line, population, the stock market, the bond market, interest rates, all these things when we talk about rates of return, it's usually exponential. Bitcoin has been a unique beast in that with Bitcoin, let me do, let me show you here. If you just draw that line across, this is the price of Bitcoin throughout its history, starting in

2010 is when I pick up my data. You see that this is log scale again. We don't have a straight line. We have this sort of gently asymptotic sort of decrease in the rate of growth. each day, but it's still growing. That's how it looks. So I sort of first observed this in 2018, the same year that I did the power loss stuff. Giovanni is another famous Twitterer who likes to talk about this.

And there are others as well. But he's the one I copped all the shit from. Yeah, well, I can imagine. He's a bit cantankerous. on Twitter, let's say. But from about here is when I recognize that, and again, to say I recognize it is not like a big deal to me, it's drawing, it's putting the values in Excel and then telling Excel, give me the trend line, whether it's, you can do this on your own, right?

Just draw an exponential line, draw a power line, draw a logarithmic. And you would find that the power fit very, very well. So why do you think Bitcoin follows this power line instead of the, exponential line. Right. Because it's a network. Because it's a network. That's the main reason. So a power, remember the key word that I said for exponential is constant, constant growth. What a power growth means is it's proportionate. It's proportionate. And for that, actually let me go to my website, which is right here. And, I'm going to pull up.

Oops, sorry, actually this. I have this on my website, so you can see it. You can see how it goes, you know, if you want to play right. It's a different kind of a chart. It's hard to host this stuff. So mine is a little bit less fancy than the one I'm showing you on the show. Anyway, you can see the power curve. And here's the key with power curve.

This is what it means. It means if we run all the data, we draw, we use the function, which is power, which is here, by the way, it's simply the price. is Y. The price is a X raised to the B. So the B is the really important thing. That's the power. It's just the way the formula looks. The X is time. And when I say time, it's not the date, but it's days since the Genesis block. That's just, that's kind of how you've got to figure it out to make it work.

And what was the A in that, sorry? A is a scale factor. It's basically like, in this case, it's not always with these functions, but in this case, it's the intercept. So, There's a value basically where if you pulled this black line all the way back to the time zero, that would be the value of A. Okay. So it's the Y intercept. So that works for power. That will also work for linear, linear growth.

The Y equals MX plus B or AX plus B. So we go down to this table now and I have it very hopefully nice and clear here for people to understand. but the, oops, sorry, this table. If you take that power trend, you plot it out, you have different,

different days here, and, and you want to understand doubling time. So I, you know, like with exponential, we have a constant growth, so things double,

uh, with exponential basically every, uh, at 10%, 10% things with exponential growth will double every seven years. Okay, that's the rule of 72. You just take 72 divided by the interest rate without the percent signs.

So 72 divided by 10, that's 7.2 years. That's constant growth. Okay. It's slightly counterintuitive, right? You would think an investment date's 10% return would double every 10 years, but with compounding with exponential growth that will double every 7.2 years. So I know we're getting hard into the numbers here for the listener. But the difference with power is it's proportionate.

growth. The key word here is proportionate. Okay, so with Bitcoin, it's not a straight line. It's not a straight line on log scale, but it is a straight line on log, log. So if you put the y-axis on log and you put the x-axis on log, which means you sort of, you scrunch up the back numbers and you sort of stretch the numbers that are closer to us or closer to the beginning of the chart, you'll get a straight line. And once you see this relationship, you can see, wow, that really is how the scatterplot of Bitcoin works. And if we think of price is the evolution of a network because it's just supply demand and users who want to hold Bitcoin for whatever reason, obviously price is going to reflect that. You can see that this is a very interesting straight line on log log scale. This is very rare for anything in the financial world. again, mostly in the financial world, you get this. You get a straight line on log scale, but not, you don't have to do anything to do the x-axis. With Bitcoin, if you contort that X-axis, you'll get that nice straight line of the price and you can just see. This is sort of like

the line you can't unsee for a lot of people because, you know, if I just show the range of the bands here, the two and a half and the 97th and a half percentile, the price is, you know, most of the time around this black line. And right now, at the moment, we're actually right at the regression. The regression trend line ending June is going to be 105,000. We're, you know, we're right at that. This episode is brought to you by CASA, the leading Bitcoin self-custody solution. I've been using CASA since 2019, and I can't recommend them enough. CASA have options for all Bitcoiners from a two of three multisig to a three of five and a private client option for absolute best in class security.

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more convenient. Whether you're a long-time holder or new to the world of Bitcoin, Leger makes it simple to keep your assets protected. If you want to find out more, visit ledger.com and secure your Bitcoin today. That's L-E-D-G-R.com. So if you put S&P numbers into this and tracked it the same way, it would not work for the S&P? Correct.

do a power curve with the other. I mean, you could draw a power curve, but it won't fit as well as this curve, which is an exponential curve. So basically, let's go down to this table now. Here's the key. Let's try to find the doubling rate. Let's try to shoehorn in this idea of doubling time. Remember, I told you a 10% return doubles every 7.2 years with exponential or constant growth. Here, let's look at this, increase in time to double. This is what this says. Notice how I'm getting a value that's about 12.7, sometimes 12.8%. But see how it's, this is our sort of constant number here. But the question is now, let's answer, what is this telling us 12.7%.

What it's saying is for every increase in days in the Bitcoin network of 12.7%, the price doubles. That's what the power curve says. So, for example, if we just look here, let's look back in, 2011, you could do this at any date, by the way, but I'm just, I'm doing it from my first day, which is May, Bitcoin Pizza Day, May 22nd, 2010. But let's just look, I don't know, 11th, sorry, November 3rd, 2011. The price was three, was four bucks, all right? And we were 1,034 days into Bitcoin.

So an increase of 12.8% in the life of the network would be another 117 days. Okay, so you see it right there. You add that, or actually it's 132 days. It's got to go down to yours. So take 134 plus 132, you'll get 1,166 days. The price doubles on the trend. So that's a, and you just keep doing that. But as your denominator, as your base grows, the increase in days will also grow, right?

But it's proportionate. It's proportionate. And so that will give you this factor. this function that will look like this, this sort of beautifully sloping curve, but also on log log, it will be a straight line. Have you, like, picked these days,

or does that work on every single day? And does it ever miss? It will work on every day. It will work on every day, yeah. And it doesn't miss? It doesn't matter. No, it doesn't miss. So I'm not measuring the price.

I'm measuring the line. Yeah. I'm showing this number here, when I say the price, to be clear, That's the expected price or the trend line price. The middle of the trend line. That's what this is. Right, right, right.

So what a power relationship is, and the keyword, it's not constant. It's not exponential, but it's proportionate or power. And that just happens to be how networks kind of grow. Another feature, let me just put myself back here just to sort of draw with my hands a little bit. Another feature of power function is a distribution of a network. So we actually see this with Bitcoin too. And you see it with other networks like Amazon or Facebook. This is a power relationship is you'll have many nodes.

You say lightning nodes or whatever. Many nodes exhibit themselves in a power function where you can You have a, say you have a network, you have many small nodes, but those nodes will have few transactions. And at the same time, you'll have few larger nodes, like huge nodes, that have many transactions. So the sort of opposite-looking relationship, but if you'd scale it out on a, you know, on a chart, you would see the same proportionate relationship. Okay, so many smaller nodes with few transactions, few larger nodes with many transactions, few larger

nodes with many transactions. That's an example of a power relationship. And that, that exhibit, that idea exhibits itself in networks a lot. So that's, that's kind of a, another way to try to explain what the power curve means. It's, uh, it's, it's a, it's a representation of a network. And when you do this sort of a calculation on price, on the price of Bitcoin, you will get, you know, something that looks like this beautiful power curve. And, and so that's, that's what it is. But the key, you know, again, I know it's a long-winded explanation here, but the key is this last column. And you can see it on my website. The key is this 12.7% growth. It doesn't mean 12.7% per year. That's not what it means. It means for every 12.7% increase in the life of Bitcoin.

Obviously, this line is updating every time you're putting price information in there. If you stopped updating it today, do you still have faith that that would be at least close to the correct trend line in, say, five, 10 years time? Yep. And that's why, if you compare it to say something like Stockton Flow, the power curve looks much better, which is ironic because, you know, again, my $0 marketing budget actually posted the power curve, I don't know, four or five months before. before, you know, the sort of stock to flow thing came popular. And stock to flow is actually a power curve, but he's shoehorning in exponential numbers. It's a long story, but basically he's using gold growth and silver growth.

Those are exponential assets, but he's using a power curve to do his stock to flow thing. So it's another kind of funny thing. It's kind of a ham-fisted way of doing the power curve. If you look at that first chart that you posted before he posted Stock to Flow, is that one still accurate? Yes, it is. Yes, it is. And I don't have it, I think, pulled up to show, but if you looked at about here, the end of 2016, we can just talk about it rather than I show you. But so here's the all-time number.

Like you said, it updates every day, this curve. and one other important thing to say, by the way, this is the beautiful thing about statistics. There's no reason to sort of hype it up or whatever. Just look at the data for two years now, actually, you know, really three years until really the end of last year, a little bit in mid-20, you know, a year ago, but not much. But really for two years, we've been pulling the curve down,

right? Every time you're below the curve, you pull it down. And now we're getting back to the fun part, we're going to pull it back up. Okay. But to answer your question, from about 2016 is when this curve really solidified. So if you looked at, say, the curve only drawing from here, 2011, 12, 13, you would see, you'd see a couple that would line up pretty well with this black curve, but most of them would

be too optimistic. They would be too high. From about 2016, from about 2016, and on 2016, 2017, 2017, 2018, all the way till today, this black line is pretty close. It's amazingly close. And you can find, dear listener, if you want to find some videos that I've done, just search for a trend line or evolution of the trend line. And you'll see where I've shown how that has pretty much since 2016, you've been right on this number. So it's been very much a better predictor of price than the various stock to flow sort of models that that have been put out there by other people.

So, so again, brass tax, bringing it back to to what we've been talking about. There's two things that I've been sort of exploring since 2018. One is the idea that Bitcoin is the core of the system money, basic money, settlement money, the core of system money. And there's a money supply that matches that. That's the monetary base in the government world, but it's also gold in the sort of analog world. And then the second one is how a network is growing. And it's interesting to actually think if we can put these together.

And we can. And I've been playing around with that a little bit. So I'll jump already. We'll explore where the price will go with Bitcoin and the power curve here as well, because that's fun to do. but let me just show you this chart. I've been playing around with it. So this is really like the whole enchilada

of a lot of research that I've done. This is what I'm calling world-based money. Okay, world-based money that this is basically everything but Bitcoin in the monetary bucket. Okay, so we have what I call available gold and silver. That means the actual ounces. So it's like we're close to 7 billion ounces of gold, 50 some billion ounces of silver, you add that up, you multiply by the price, you'll get the,

it's kind of a market cap basically of that. But you have to, very importantly, you do not, it's available. You do not include industrial. Okay, so with gold, you're dropping off about 15% of it. And with silver, you're dropping off about 50% of it. Okay, bottom lines. So you just add those two together. Then you got the Fiat monetary base, all right? And we've talked about the U.S. monetary base, which is like $5 trillion in change. If you look at all the other currencies, the yuan, the yen, the euro, British pounds, sterling all the rest, it's at a very low trendline number, like I was saying before. It's about $25 trillion. The trend is something like $30 trillion, which is another reason why I do think if and when they run into trouble of being

able to finance deficits and debt with higher interest rates, and then they'll have to print more money to decrease the price of those bonds, I think that's, it's got to happen soon because 20, the value of this is 25 trillion in total numbers, like all the different currencies in the world. Like I said, the trend line is something like 30. So it's very low, very low historically. So you add that up. By the way, available gold is something we're getting close to 20 trillion now because gold is screaming in price. Silver is much less, only about a trillion. You add all that up. All right, you're getting over 45 trillion. But then you got to submit. because these things are actually,

it's an interesting thing about all this stuff. So Bitcoin, gold, silver, that's an asset. Government-based money is a liability. Remember, I said they just buy bonds with what they make up as money. It's, you know, again, you can complain about it all you want, but that's how it works. We can add these two numbers up, but the thing is, with the government-based money,

they do hold a little bit of gold in reserve, and now they hold, as we just talked about, 50 billion bitcoins. in reserve, $50 billion worth of Bitcoin worldwide. And the gold is about $4 trillion. So you can add these up because some of this is out, most of the gold and silver is out in the market. Most of all of the government money is in the financial system. So you can't add that out to get a total base money, but they kind of cross a little bit, right, with the gold and Bitcoin reserves. So you got to back that out. So I'll go back to my chart for you. You subtract the government

gold and Bitcoin reserves. So once you do that calculation, you'll get to this idea of basically world basic money that's not Bitcoin, okay? And that's this line. And just to keep this chart very, very simple, we got the actual values here from 2008 when Bitcoin started. All right. So it was about $11 trillion. Again, this is fiat money plus gold plus silver, backing out the gold reserves and governments because that's already counted in the available.

And then we go till all the way, I think it's April, actually. This is the number that I'm going through, you know, today. It's roughly $42 trillion. I have not done my, I do my base money updates by quarter, so it's not completely accurate. This is going to change a little bit, but roughly $42 trillion. Now, then I go to the trend. And the trend here is actually, like I said, it's higher.

It's $44 trillion at the moment. And that's pooled actually, like I said, $25 trillion for the fiat money and $30 trillion is the trend. That's true. But the delta is not $5 here because the gold is actually a little bit over-trans. make sense. So gold is actually screaming well, well more than fiat. But anyway, the trend of this this little calculation is 44 trillion, then just go out. And as you see, this is, of course, everything in the typical financial world is exponential. So the best trend line that fits it is exponential.

Very simple calculus. Now, let's look at Bitcoin, but let's look from the question of market cap. Okay, so this is our market cap. Nothing fancy. Everybody knows it. We're at two trillion at the moment. April, 1.87 trillion, we're actually over it now. The trend, and this is slightly different than, this is a very simple trend line. I'm just drawing on the monthly. That's something to keep in mind, but let's just keep it very simple. If we drew a power trend on the monthly market caps, it would be, the trend would be something like $2.5 trillion, so a little bit under trend, even on the market cap. And then we, you know, we have this asymptote. We can, we can compare it out. question is, let's now put them together. And we have these two ideas now. Basically, we have

Bitcoin is a power curve, which is the network being adopted. And we have this traditional world basic money, which grows exponentially. Now, look, interestingly, when we only look at the one, you can sort of see how it looks. But it really, because Bitcoin is so much smaller at the moment, that you see how that's interesting. The base money just kind of almost goes into an indistinguishable straight line. But that's how it looks. That's how it looks. And as you see, this will cross. Interesting. So this is really, if I had to distill all my research down into one slide, this is going to be it, because this shows you all the world basic money that, as I calculated, $44 trillion. Compare that to the Bitcoin market cap, $2 trillion. Let's now look at what we would

call the dominance, the Bitcoin dominance. This is on the right hand side. It's put on log scale. actually now let's put it on linear because you see it better so at the moment we're at about 4.4% April 2025 4.4% of all the money in the world and again base money not broad money like bank deposits let's now we with our with our nice trend lines here we can scale and notice again this is power versus exponential so uh it's not that Bitcoin is growing exponential and it can, it needs to be exponential to grow fast. It's actually growing very fast with a power curve. It's just that the global money is actually growing way slower, even on an exponential function.

So they're going to cross. And as you can see here, when we get to 100%, which we match it, is May 2038. May 238. And look at that, look at the value. So is that hyper-bitcoinization? This is where I think it gets a little bit more philosophical. Anything can happen. But also, look at this interesting.

Look at the values there in the tooltip. You see them? Yep. So it's quite interesting that the old 100 trillion moniker is very close to 100%. And that may actually be some self-fulfilling prophecy, is this famous idea of 100 trillion. at least as I'm calculating, you know, all the typical money in the world. Because, you know, I think, in fact, I know when people would say $100 trillion before, they were saying that because $100 trillion was all of the bank deposits in the world, right?

Because remember base money, as I've just talked about, let me just, again, draw it. I'd like draw with my hands a little bit. Base money is only $25 trillion. All the Fed money, all the, you know, ECB, all that stuff. It's still a huge number, but it's not, you know, it's only 25 trillion. Gold is even approaching that at the moment. It's getting to 20 trillion. But people think, oh, Bitcoin is going to take over the whole financial system.

What's the broad money, which is really only M2. It's not even including M3 for certain countries. And I don't have that all fully parsed out yet. But people throw around this moniker of $100 trillion, that's broad money. But that's not comparable to be. Bitcoin. It's just not, no matter how much you want to say it, it's just not. But I think it's very interesting that when you do this analysis, it is about $100 trillion anyway. So we may get it. We might actually hit and pass, you know, the world financial system and value at about that

$100 trillion mark. Interesting. And what would the price of Bitcoin be at that point? Yeah. So let's go back here. I don't have. have this out to 2030, but it's over a million. Yeah. So here's 20, it's going to be close to 2 million, I think. This is, this is to 233 in this chart. It's 1.1 million. Let's go back to my, how far am I going? I got 2036 yet. I got 2 million on my, on my table to 2036. Over 2 million. Yeah, I think about 2 million is the number. But here's the other thing. Even this, where you see this gets to 100%, it doesn't mean that Bitcoin is fully backing in this scenario, right? Like, it might be that they're really trying to print more, and we're actually at a 50-50 number.

Yeah. So this is where I really, I caution people where they think that hyper-bitquinization is around the corner or a financial crisis around the corner and everybody's going to get rich on Bitcoin. It's sort of a, you know, it's a tortoise and a hair thing. And if you look at it this way, I've got to take the tooltip off because you really can't see it. But, you know, it is kind of predictable is, I guess, the best word for it. You know, the governments around the world, they want to print money. That's the only thing they know how to do. That's how they can finance their deficits.

So that's that green line. It's a way bigger network, a way bigger value. right now, but that growth rate is only, you know, 7, 8% per year. That's by the way, what you will get when you combine, it's actually closer to 10 or 12% with the fiat money, but when you combine the gold, which remember I'm adding gold and silver into this green line, then it takes it down because gold and silver has grown slowly to trendline of that. So you're down to like 7 or 8% is the growth of this line, basically, the constant growth. But Bitcoin, as we've shown, let's go back to my website, Bitcoin at the moment is

here we are in 2025. This is what it will be by the end of the year, about 42% per year. And yes, the rate of growth declines, but it declines really slowly. That's interesting, actually. So the way that like an exponential curve and a power curve intersect, does that mean at some point Fiat flips Bitcoin again? It does. It does, actually. It does.

But I don't think that that's a worthwhile. I'd be dead by then. Yeah, I don't think that's a worthwhile endeavor to, you know, so if you look at this chart, it is true that the constant growth will continue out for, I don't know, another 50 years or something, and then that black line will go below it. You're right. You're right. That is the nature of the math here.

But I just, obviously, it doesn't make sense to project anything out in the financial world beyond even, you know, a couple of years, in my opinion. So, you know, but this is the, this is the, if I had to put one chart, chart that would sort of show the intersection of all the money in the world plus the growth rate, which is a network, which is adoption, which is a power curve of Bitcoin, where they would intersect. I do think something like 10 to 15 years at the latest, and probably because things are uncertain and markets are discounting mechanisms, it's probably going to be before, you know, maybe two, two halvings from now. I think you're going to start to see major moves, whether that's,

you know, governments fully backing their currency with Bitcoin or partially. backing or, you know, or the rest. But I don't see, and I could be wrong, and I'm not, I'm not angry if I'm wrong. I do not see the hyper-bitcoinization scenario. What I see is more of the same, more of politicians promising what they can't deliver, and Bitcoin being that ultimate safe haven asset that you can fully reserve on your own catching up in utility. And at some point, yes, there's going to be a, whether it's a philosophical change, or a legal change, but at some point, it's just going to become clear that Bitcoin is now the risk-free reserve asset in the system. And yeah, I think it's sooner than we all think,

or perhaps some of us think. It's not one or two years from now, but I do think, let's say, 10 to 15 years. I think is how it looks. Love it. I mean, I can't think of a better way to close out the show. So 2038, $2 million Bitcoin flips Fiat. I love it. I appreciate the time, Matthew. This has been really good. I'm semi-convinced on the power law stuff. Yeah, give a time. Just remember, constant, exponential, proportional, which is power, much more indicative of how a network grows. We're still in that growth phase. Still plenty of returns. Like I said, But we're in the 40% per year growth of Bitcoin. It's just true that that increase in growth will decline, going from 40 to 30 to 20.

Still going to take about 30 years to get to 10% growth per year. So that's like comparable to stocks or whatever. Still going to take about 30 to 40 years to get to that. So plenty of room, plenty of room to run and be bullish on Bitcoin. and never financial advice, but that's where I'm at. Bullish. I'm very bullish. Where can people go to find these charts and find out more about what you do?

Right. So it's porkopolis.io, porkopolis.io. You can find it at also basemone. World Cryptovoices.com. That's my podcast. And yeah, I'm on YouTube as well. My handle everywhere is one base money. so at one base money.

Perfect. I'll put all the links in the show, but appreciate the time, man, and hopefully I will see you soon. Yeah, Danny, my pleasure. All the best with your traveling coming up. And if not Prague or anywhere else, then definitely Riga.

Yeah, I'll be in Riga for sure, so I'll catch up there. All right, thanks, mate. All right.