What Bitcoin Did - The True Cost of the Dollar Empire w/ Lyn Alden

Episode Date: May 16, 2025

Lyn Alden is a macro analyst, investment strategist and the author of Broken Money. In this episode, we discuss the structural imbalances underpinning the U.S. trade deficit and its link to the dollar’s status as the global reserve currency. We get into the mechanics of capital surpluses, why U.S. treasuries are at the heart of global liquidity, and how foreign ownership of American assets introduces systemic fragility. We also discuss Bitcoin as a neutral reserve asset,, gold and tariffs, Bitcoin’s market structure, and why $150k might be in sight. Follow: Danny Knowles: https://x.com/_DannyKnowles or https://primal.net/danny Lyn Alden: https://x.com/LynAldenContact or https://primal.net/lyn 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/

So, you know, I think we're kind of geared unless some sort of liquidity shock happens, to probably grind up to new highs in the next 12 to 18 months. I would think so. I mean, I'd be surprised if we don't see 150 by the end of this cycle, whatever we want to call this cycle, whether it's 18 months or whatever the case may be. Broad strokes, I'm bullish with an 18-month view, unless I see something that makes me update that view. So at least where I sit now, you know, I'd be kind of surprised not to see 150 or more.

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It was just perfect timing before this show. I assume that's not true, but I don't even know who the person is. But I thought in this we'd get into, so it's funny, you've obviously, we may as well just start. You've been writing about the trade deficit, basically as long as I've been following your work. There was a chapter on it in your book, Broken Money. You recently released a newsletter on it as well. And it wasn't until I read the newsletter, I'm a little bit slow, that the penny actually kind of dropped, that maybe this isn't just like a technical economic thing. It might be like the core issue that the US is facing right now and whether they can actually sustain being the global reserve currency. Is that fair? Or am I overstating that?

So I think it's one of the core issues. I think it's certainly in the top few. And so it's not surprising that it got elevated to become such a mainstream political issue from relative obscurity 10 years ago. So, yeah, I think my first article on it was back in 2019 with some references to it before then, but that was kind of the first dedicated article. And then highlighted it in a 2020 article on the structure of the global reserve system. Like you mentioned, I kind of repurposed that for broken money. And so it has been this kind of substantial background thing worth covering. And so it's interesting that that is finally getting a lot of emphasis just because of the politics around it. And one of the arguments that I've made is that a lot of times when you see academics analyzing the trade deficit,

they'll look at kind of numbers in an ivory tower sense and say, oh, there's still room to go here. The numbers are still workable. But then there's this kind of this, there's this real politic or this populist overlay on top of it, where it doesn't have to hit the absolute breaking point to get elevated to become a pretty serious place. political issue. And instead, it just has to accumulate enough that there's enough voters and enough politicians willing to elevate it. And so you generally, when you ever you have a major imbalance, usually you get a rising populist tension against that imbalance. And I think that's what we've seen with the trade deficit. Yeah. And is part of that like the populism element of

that down to how complicated it is to actually explain the issue that we're facing here? I do think it's, that's one of the downsides is very complex. And And then so usually the ways that is then explained are incorrect at worse or very incomplete at best. There are certain topics that are inherently easier to cover. And there's always that saying that, you know, if you know something well, you can simplify it. But that's true to a degree, which is that some topics are more complex than others. And in political speeches in particular, you generally want to have a clear, like, enemy kind of. like it's their fault, therefore we're going to fix it.

Whereas if you have this kind of tangled mess, it's easy to say it's their fault. It's kind of like saying it's our fault. It's our predecessors fault. It's part of the system. It's kind of nobody's fault. It's kind of all those answers are partially true. And so it's this big Gordian knot that's been tied over the course of arguably 50 years, if not longer. And so it's, but it's a cumulative thing.

So for example, a handful of years of a trade deficit are not a giant deal. but when you have 50 years in a row of them, that's a massive trend and it's accumulated on one side. It's like you keep taking kind of pieces off one side of the table, put them on the other side of the table. And when you do that for 50 years, that one side of the table has almost no pieces left. The other side is just overflowing.

And that's when you get pretty big pushback. Okay, so I want to get into all of this. Like I say, this was a bit of a penny drop newsletter for me. A few pieces fell into place, but I still have tons of questions around it. I think before we get into the trade deficit, what would be a useful starting point would be, like in your book, Broken Money, you describe the U.S. being the issuer of the reserve currency with the Sword of Darmacles as an analogy. Can we start there? And can you explain that analogy and then we'll get into the trade deficit? Sure. So the sort of Damocles, it goes back to a very old story, a parable, where basically this person was kind of flattering a king and saying it would be so cool to be a king, like you have all these luxuries and power. and the king is like, oh, you want to see what it's like?

Okay, I'll let you be king for a day. And he lets the person sit in the throne and have all the luxuries he wants. But the catch is there's this sword hanging above his head by like a thread. And the point is to emphasize that power often comes with a lot of stress. And it took a lot to get to that position. So, for example, the king's worried about assassins. It's the classic heavy head that wears the crown analogy. And so there's downsides of being in this kind of,

very powerful position and the work that it takes to maintain it and to have gotten there in the first place compared to living somewhat of a simpler life. And so with the global reserve currency, it does come with a lot of advantages to be the issuer of that world reserve currency, but then it's not without costs. And I think one of the downsides is that the costs in some ways are more cumulative than the benefits, which is that early on, it's almost all upside. The benefits are very clear, and the downsides are marginal and far in the future. But then when you play that future out by 50 plus years, the benefits are still fairly linear and limited, and yet the costs are kind of exponential and cumulative.

And so we've arguably gotten to the point where the costs are greater. It's like you've expanded your empire so much, you're constantly fighting border wars to maintain it, and you're kind of wondering if it's good to even be an empire anymore. That's kind of where we are with the global reserve currency. And so if we kind of back up and say, what is a global world? So there's something like 180 Fiat currencies in the world. And if they try to all just interact with each other, that's basically barter. Like money lets us bypass barter, and that would basically be barter.

And so what happens is in practice, whether it's fiat currencies or whether it's other types of money, money tends to gravitate toward network effects, toward the most saleable money, which is generally one or two major monies. and so the whole kind of world has all these different ledgers that have all these troubles communicating with each other and if one country is lending to another or making a contact with another, there's all these disputes, whose ledger do we use?

What unit are we going to use? And the answer is in the current era, they refer to the kind of the dominant powers ledger. That's the one that kind of gets this escape philosophy of network effect around it, either by design or by accident and usually a combination of both. And so the reserve currency has four main functions.

One, international contracts have a very high ratio of being denomated in dollars. So if Japan is buying commodities from Brazil, it'll often be in dollars despite the fact that it's neither of their currencies. That's the ledger that they can agree on as like a third party ledger. Two, it's 90% of currency trading pairs. And so out of those over 100 currencies, there's not that many of them that are liquid-reled to each other. So, for example, if you want to turn Korean currency and trade it for Egyptian currency, there's not a lot of volume between Egyptian and Korean currency. And if you do the math for like 180 currencies and how many pairs are there, it's a ton of pairs.

And so they can all be liquid. And so the shortcut is that you trade Korean currency for dollars and then dollars for Egyptian currency. and that's why it's on 90% of all trading pairs because almost every currency is liquid with the dollar and then you use that as your intermediary. There's a handful of other currency pairs like maybe UK pound and the euro or the Swiss franc and some other currencies

and maybe the yen. So that's the other 10% is this kind of mix of other reasonably liquid trading pairs but it's mostly the dollar. The other one is as a reserve asset. So when countries are cumulative assets that they might then sell to protect their currencies, they want a big liquid market to do that with.

And so the main two are U.S. treasuries and gold. Those are the two biggest reserve assets. And so the dollar and other dollar security serves that role. And then lastly, it's the biggest currency by far for cross-border funding. So if an entity in the UK wants to lend to an entity in, say, Indonesia, it'll often be done in U.S. dollars, again, despite the fact that it's neither of their currencies. Euro is the number two cross-border currency. It's a distant number two, and yen is like a distant number three. So it's like one of those things where there's really no second best here

when you look at the numbers. And so the dollar serves those four big roles. And what that means is that that's the shared leisure that, you know, dozens and dozens the countries use. And the downside is that, and it sounds like an upside at first, is that there's all this excess demand for dollars because all these different entities need dollars for one of those or all of those four purposes. And so for most currencies, you only buy that currency when you're choosing to interact with that economy. Like I'll get Egyptian pounds if I need to interact with Egypt in some way. I want to buy a property. I want to buy stocks. I want to go there on tourism. Whatever the case may be, I'll go in and out of that currency on a pretty limited basis because there's no reason to really

stay in that currency. And that's true for most currencies around the world, including, for example, Norwegian currency. It's a very wealthy country, but I have no reason to really hold any marginal value in Norwegian currency or bonds. That's true for entities around the world. So outside of wanting to interact with that economy, or just if you're a speculative trader, you might get in or out, not a lot of reason to hold those assets long term. The dollar is different as the biggest, most liquid one and the one that your liabilities are often denominated in, in a global sense. That's the asset that you also hold. And so what that does is that overvalues the dollar on a trade basis.

He says, okay, all these currencies are used for money, the dollar is used for extra money. So it makes the dollar pretty expensive. And then the second question is, so the whole world's using dollars for all these purposes, how do they get the dollars? There's trillions of dollars floating around there that they're all using. How do they get them? And they need to be able to get them to actually use them as a reserve currency. If there was no dollars outside of the U.S., it was very limited, they wouldn't be able

to use the dollar as the global reserve currency. And the answer is they get them. those two things work together. The combination of the dollar being overvalued and them needing a lot of dollars means that the U.S. spills those dollars out into the world via structural trade deficits. They overvalue our dollar, therefore they boost our import power, and they hurt our export competitiveness, especially for lower margin goods, aka manufacturing. And so year after year, we buy more from the rest of the world and just spew dollars out into the world. And that's our trade deficit. So we get pros from being the main ledger that everyone uses, but the imbalances of that pretty crazy scenario.

I mean, for 4% of the population, 15% of the purchasing power GDP, 25% or so of the nominal GDP of the world, and yet by far the biggest ledger, and the imbalances from that come back and hit us in our industrial base. So that's obviously one of the cost of this, is that the US has to run basically a persistent trade deficit. They have the benefit of being able to print the currency that all the debt is denominated in. So when does the trade deficit actually become a problem?

Because I assume you can't pinpoint that to be like 2015 is when it became a problem. But where, like, what is the key kind of thing that you look at to be like it's becoming a problem now? The answer to that is that because, and this is true for most countries, but especially the United States. I mean, the U.S. is the size of a small, of a continent, basically. and there's different parties in the U.S. that are harmed or helped buy it. So if you're in Washington, D.C., it's been pretty good to be the Global Reserve issuer.

If you work in New York and you're issuing all these securities that all these entities are buying, again, you're the central global finance. That's a really good position to be in. For the more industrial parts of the country, this started being bad in the 1980s. I mean, the Plaza Court of 1985 was done. because like U.S. auto manufacturers and others were complaining about the strength of the dollar. And that, of course, was like a temporary band-aid. It lessened the severity of it temporarily, but it didn't undo the kind of imbalances that were coming from that. And so, like, there was this analysis that showed from 1982 to 2002.

They kind of measured the income changes of like every county in the U.S. and you kind of map it out red and green, red, of course, being negative and green being positive, you'll see all the Midwest just, like, spotted in red, all, like, their incomes are going down, they're struggling, and all the green is like New York, Boston, kind of, you know, this, like, coastal northeast area, and then, of course, like Silicon Valley in L.A., Chicago, you know, these kind of coastal and city areas, and you had deindustrialization in the heartland. and that's really only continued in the 20 plus years that have gone since then. So the short answer is there's been losers of the system for 40 plus years,

going back as far as the term rust belt in the U.S. We call the industrial area the rust belt because to some extent it's literally rusting. A famous landmark in Bethlehem, Pennsylvania is these big steel mills. And they've kind of turned it into a novelty. There's this big rusted, really kind of punk, like industrial punk kind of looking like stacks. And they kind of shine really cool lights on it. And it kind of looks like you're in Gotham. So you kind of lean into it.

But there's things like that around the country. And that's literally the rust belt. And it's been going on for four plus decades. So that was going to be one of my questions. Is the U.S. being the issuer of the global reserve currency? Is that good for America, but not necessarily good for Americans? That's how I describe it, or at least not all Americans. There's a couple ways to describe it.

You can do it regionally, like I just said. If you're in a financial hub, it's generally pretty good for you. If you're near D.C., it's generally pretty good for you. Whereas if you work in manufacturing or if it's a manufacturing heavy area and you happen to be in like a service industry, like you don't want to be operating a restaurant in the rest bill, for example, compared to if you could operate a restaurant somewhere else, statistically. And so it has been a geographical and industry migration of wealth and success. And then another way of kind of phrasing is like America, the Empire versus America of the Republic.

So having the global Zerbysv currency is very powerful for power projection. Like, you know, Luke Roman and others have argued that probably having the global surplus of currency played a pretty big role in winning the Cold War. You know, one side can print money for oil and the other side can't. It's a pretty big advantage. And that goes back to my also prior point, then in the beginning of the system, the benefits generally dramatically outweigh the costs.

And so there was a time when this is probably net benefit for the whole country. But then as the cost accumulated, there's like a bigger share over time where it starts to kind of balance out or even turn against them. And I think we're in the phase where probably the median American

is, if anything, probably harmed by it, then helped more so than helped by it. This episode is brought to you by Anchor Watch. The thing that keeps me up at night is the idea of a critical error with my Bitcoin called storage. This is where Anchor Watch comes in. With Anchor Watch, you're protected by their time-locked multi-sig vault and with your own A-plus rated Lloyds of London-backed insurance policy. You get to hold your keys, Anchor Watch holds the risk. Whether you're worried about inheritance planning, wrench attacks, natural disasters or your own mistakes, you're protected by Anchor

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You describe the problems with the trade deficit as being when it becomes persistent and when it's driven mainly by overconsumption and malinvestment. And when I read that, I wasn't exactly sure how you can sort of define over consumption in that. Like when do you know something isn't just consumption, it's over consumption? So the short answer is that it usually doesn't matter because usually structural trade deficits are bad. a year or two of trade deficits, it's not a big deal. Nine times out of ten, if you're running a trade deficit for like five, ten, 15, 20 years, it's usually not an economy that's doing very well, or at least part to the economy. You know, I highly Egypt as an example.

Pretty structural trade deficits and there's like productivity issues in the country. There are certain exceptions. They tend to be exceptional cases where a country can run a pretty persistent trade deficit and still do very well. And the biggest example would be India, which is generally speaking, the trade deficit is things like energy and like lower level inputs that allow them to accumulate capital on top of those trade deficit inputs. That tends to be a sign that is not due to overconsumption, that is due to a rational level of consumption. It happens to be where things are flowing because that's where demographics are growing and that's where some combination of productivity and demographics are strong enough. see if India is one of the fastest growing economies in the world, despite their trade deficits,

because the trade deficits are not like high-end finished goods. They're like lower-level goods that, you know, India is just not an energy-rich subcontinent. And like, so that's generally how you can do it. Is it inputs or is it high in the capital stack? And why does being the reserve currency make it so much more expensive in the U.S. to actually manufacture goods? And I'm not necessarily comparing that to like China or Vietnam or something where they can pay low wages and there's all those other dynamics. But even compared to like Germany as an example. Partially, I mean, if you're if you're just 20 to 30 percent kind of overvalued on a currency basis compared to what you would be based on.

So most currencies trade on what the trade deficit is doing and then also industry differentials, things like that. So there's a handful of fundamental metrics that currencies kind of trade each other on. and if your currency happens to be 20 to 30% overvalued compared to what it otherwise probably would be based on those metrics alone, in a pretty competitive business where profit margins might be 10 or 20% and you're working at a 10, 20, 30% currency, you know, limiter. Like you're kind of fighting with one hand but tied behind your back. It's like comparable to your little profit margins. So unless you're so much dramatically better or unless you're not even competing with them, like if you're, if you're a domestic manufacturer that's mostly selling to domestic audiences,

and either because of tariffs or because of just travel logistics or something, you're not really competing in the global market. You can do okay. But it's generally going to be easier, all this being equal, if you can get similar skilled workers in a place that doesn't have that currency disadvantage. There are other variables. Like, for example, Germany is now facing issues from energy pricing. So it's not like the currency is the only.

thing. But when you have a combination of a product, highly productive labor force, access to energy abundance and other things, and then the currency, those are kind of three really big variables that matter a lot. And then the other one is kind of simply by definition, which is the sheer fact that the dollar

is the globals of currency means there has to be tons of dollars out there. And it's kind of like that quote, like life finds away. Well, the trade deficit finds away, which is by definition, if the whole world continues to use dollars to the globalism of currency, it means dollars are getting out there. And, you know, with the exception of emergencies for like things like swap lines and stuff, the primary mechanism that they get out there is through trade deficits because the whole world's kind of finding a way to like overvalue aspects of the US,

kind of force the trade deficit open, make certain industries less competitive and then it just kind of happens. So that gets on to like the world needing this just ever expanding amount of dollars. Can we dig into that a bit more? And maybe can you try and explain where those dollars come from and probably in that the difference between sort of broad money and base money? Sure. So there are, and this was a lot of things I was covering back in 2020 when the COVID stimulus was starting to happen. There are two primary mechanisms for how broad money comes into existence. So first we, I guess we can define base money and broad money. Base money is basically in the current era, it's liabilities of a central bank.

In older eras, it would have been things like how much gold exists in a country. If you're on a gold standard, gold is kind of your monetary base. In the era of central banking, the central bank's liability side is basically the monetary base. So like when a bank has cash, it's two primary forms. Either have a reserve account with the central bank, kind of like how you have an account with your bank, the bank has an account with the central bank, or they, they're a bank. literally have physical bank notes, which are liabilities of the central bank in most countries. So we use the U.S. here as an example.

So the Fed's liability consists of physical dollars and bank reserves. That's the monetary base. And the only entity that can really control that is the Fed, the central bank. Certain actions by the sovereign can force them to change it, but that's the mechanism that it changes. On top of that, there's broad dollars because we exist in a fractional reserve banking world. So a typical bank in the U.S. will have, you know, like 10, 15% of your deposits actually in cash. And the rest of the deposits are backed up by loans and securities that they made.

So when you borrow from a bank, it's a liability for you, but it's an asset from the bank. And, of course, the bank is hoping that, you know, out of their thousands or millions of customers, no more than, you know, 10% of them are going to want their money back at any one time due to some statistical anomaly, and so they run the system. And so the two main ways that broad money comes from existence are one, when a fractional reserve bank makes a loan, they loan new broad money into existence. Or another way of putting it is that they increase the aggregate ratio between how much broad money there is and how much base money there is. So they can't make new base money, a commercial bank, but they can make new broad money relative to that base money because they're

basically creating more IOUs for that base money. So that's mechanism of And mechanism two is the U.S. can run structural, like fiscal deficits that then the central bank monetizes or banks by the securities of that issuance. So even when banks aren't lending much, sometimes you'll still get rapid money supply growth because the federal government is basically doing the lending. So those are the two main mechanisms that the broad money supply increases. And that place is, a role in how much dollars get out into the world. And what complicates it is that for the global reserve currency, it's kind of a third layer. Historically, it's been called the Eurodollar market, which refers to not just dollars in Europe, but any dollars outside of the U.S. basically. These are kind of fractional reserve built on fractional reserve. Because in addition to a bank being a fractional reserve as compared to the central bank, there are foreign banks that will issue dollar accounts to their customers. And then they have an account, say,

a U.S. Bank, which is itself a fraction reserve bank, and it's kind of turtles all the way down. And so when you say that if the broad money supply stops growing, that's when essentially the Fed will step in and increase the base money. Is it as simple as saying, like, if this stops, the system collapses? So someone has to be expanding the money supply all the time? All the time is certainly on a sustained basis. Now, during parts of 2022, for example, the broad money supply contracted. Now, we saw markets didn't do well, pretty much any asset did pretty poorly, but it didn't collapse just because of 12 months without growth. So you can kind of contract for short periods of time. And the broader metric you go, kind of the shorter it can ever contract for.

So probably one of the broadest ways to look at it is that in the U.S., you can look at total debt, or at least total non-derivative debt. So if you look at loans and securities, public and private in the U.S. It's currently somewhere around $102 trillion. And if you look at like literally 70 plus years of that figure, it has never gone down for a 12-month period with one exception. And that was 2008-2009. There was like a 12 to 18-month period where that's,

and it went down like 1%, because that was the generational banking crisis. And then it started going up again. And so that's one of the, the broadest metrics, that can almost never go down for, again, more than like 12 months and like 1%. And that'll be true for almost any country you look at. When you get to broad money, again, a little bit more wiggle room. You can go down some percent for 12, 24 months. But there's a reason why every fee of currency broadly in every country is growing all the time. It's because

that's how their systems are constructed. It's different from a more sound money equity-based system. It's an unsound debt-based system. And so the way it's structure to kind of always has to grow or die. Like some sharks have to keep swimming. People often assume it refers to all sharks. It's not true. Some sharks can stop swimming and be fine, but there are a subset of sharks that if they stop swimming, they literally die.

And the other analogy is musical chairs. You have more kids than chairs, which only works while the music's playing. Because the number of chairs needed when the music's playing is zero. No kids have to sit down. But only when the music stops, does the ratio between kids and chairs matters? and the same thing's true for the Fiat currency system. And what's at the heart of this? Is it the U.S. Treasuries?

Is it, like, under no circumstances, the demand for U.S. Treasuries can break? Is that kind of the crux of the issue? It's broader than that. The crux of the issue is, so going back to my prior numbers, there's $102 trillion in debt in the U.S. It does not even count derivatives. So that's just loans and securities. There's something like another $18 trillion in dollar-denominated debt

outside of the U.S. So we're not even talking about Euro-denominated debt or Chinese-won-denominated debt, just dollar-diamid debt. It's about $100 trillion, $120 trillion, I mean. And again, not including derivatives. Base dollars in existence under $6 trillion. So you have about a $20 to one ratio between dollar IOUs, contractual obligations to give someone dollars in the future by a specified date, and only $6 trillion unlevered

everything else is some sort of fraction reserve or an IOU. And so that works like a game of musical chairs where the relatively small number of dollars has to kind of move around with some degree of velocity to be where it has to be at any given time. Loans and securities coming due. It has to keep flowing to all these things, which, you know, during a normal market environment is happening. But then any sort of shock to the system when you're levered 20 to one, it doesn't take much of a shock to damage things.

And then when that starts breaking, because it's lever 20 to 1, all these entities don't trust each other because collectively they're all lever 20 to 1. And so it starts to kind of implode on itself. And if you just kind of stood back, the system kind of eat itself from top down. And yeah, you'd eventually get a sovereign default. You'd get, you know, major banks failing. You just kind of eat itself because it's just way more dollars than there are base dollars. And so what happens is whenever they even start to, you'd get to.

have that happen if the treasure market goes illiquid even briefly. If the interbank like repo lending market goes in liquid even for a 24 hour period, that's like an emergency scenario for the Fed. And they come in and start doing things like QE and other aspects. We saw that in the UK guilt crisis, for example. The UK has got a similar, I don't know what their exact ratio is. When you add up all the different types of debt in the country compared to what the UK-based money is, you can get these cascading things that are. kind of only fixed by more base money. And that's kind of an artifact of the fee currency system. It's not ideal. And it's not how things were on like, say, a distributed gold

system. But that's how we are in this kind of central banking period. Yeah. And I want to get on to what the US can actually do about this trade deficit because they've obviously started trying. I think that's kind of what tariffs are. But before we do, can we just talk about the other side of the trade deficit? So the country's running a trade surplus. What do they do with the surplus because I think that's quite an important aspect to this in the sense of it's probably just buying US assets. Yes, we have a capital surplus, which means that we have a trade deficit, meaning we're buying more goods than we're selling, but then we have a capital surplus, meaning that there's more dollars that want to flow in and buy our financial assets than we

want to go out and buy others financial assets. And so it's often characterized that the U.S. sells goods and services, no, buys goods and services for paper dollars, which sounds like a really good deal. Like, we're giving you kind of something that's worth nothing and we're getting actual good and services. That sounds great. But the next step is that the rest of the world takes those dollars, either paper dollars or more riskically electronic digits, and then the surplus areas go and then buy our financial assets. It used to be that they primarily invest in Treasury, So they would fund our government and we would increasingly be levered to foreigners. Now they increasingly own stocks instead, as well as corporate bonds, government bonds, private equity,

real estate to varying degrees. They own these broad swathes of assets. For the U.S. is primarily the stock market now. That's the biggest individual component. They literally have tens of trillions of foreigners owning U.S. stocks. So we basically sell shares of our appreciating assets. Like we sell increasing ratios of our S&P 500 to the rest of the world to keep buying the things that we're buying from this. So we're buying depreciating assets.

We're giving them pieces of our appreciating assets. And therefore, they have future bigger entitlements to our dividend payments, to our voting rights, to our interest expense, whatever the case may be. And that's what's flowing to the rest of the world. And that's also what gives the rest of the world power when the music stops or when there's kind of dollar shortages. Because all that foreign capital that the rest of the world has, which is currently something like $60 trillion. They've got like $60 trillion U.S. assets gross. And whenever they're short on dollars, the creditor nation subset of the foreign sector has a lot of ammo that they can sell to get dollars. So they can say, well, if dollars are short, we can sell treasuries, break your treasury market,

until the Fed is forced to basically print new base dollars, buy some of those treasuries, and then fill that dollar shortage. So that's kind of part of the Gordian knot. So it's like a double whammy where if this thing starts showing signs of weakness, then also on top of that, you're going to get all these foreign countries selling U.S. assets as well. Yes, I mean, and that's what we saw during COVID. So during March 2020, initially when the market was freaking out because obviously uncertainty and everything's shutting down, people were selling stocks and buying bonds. That's what you do.

But then in the actual worst part of it, it got so bad that bonds started to sell off again after you're initially rallying. And then the treasury market literally broke. So this gets wonky, but there's on the run and off the run securities. An on-the-run security is like the government issues a 10-year treasury, and it's still brand new, so it's got 10 years of duration, that's an on-the-run security. If, on the other hand, if they issue a 10-year treasury and it's been six months, and that's now a nine-and-a-half-year treasury, and there's newer treasuries, that weird nine-and-a-half-year treasury is now an off-the-run security because it's kind of an irregular number. It could be, you know, maybe it's a 10-year treasury with only like three years left to maturity. It's kind of a weird number. less liquid market for those. And that portion of the market broke. It kind of went no bid,

which is not supposed to happen with the deepest most liquid market in the world. And so the Fed was forced to come in and relinquify it by the fastest ever expansion of base money. And the reason that was happening is not because it's not like a lot of foreigners got together and said, oh, the dollar is done and we're going to sell it. Instead, it was, we have dollar obligations that are due, there's the game of musical chairs just stop. The music just stopped. Global trade is now, you know, cut by whatever ratio it was cut. We don't know when this is going to end. We need dollars. We know other people are going to need dollars. So we're all going to scramble for dollars. And so we can sell things, whether it's stocks, whether there's treasuries, whatever,

to get dollars. And there are certain markets that can break for weeks at a time. And it's not the end the world. I mean, if stocks go down 30 percent and stay there for a year, it's not the end of the world. There are other markets that when they break for a day, it's like the central banks having a meeting that day, and that's like the Treasury market, and that's like the interbank lending market. Those are markets that it's emergencies when they break for any periods of time, and that's what we saw kind of the bottom of the March sell off. So it's not that they're choosing to sell necessarily, it's that they're being forced to sell to get dollar liquidity. Yeah, usually. Yeah. Okay. So just quickly, before we move

onto the tariff stuff. You said that the U.S. runs a capital surplus. If you run a trade deficit, do you have to run a capital surplus? Do those things like go in tandem? Yeah, there's a mathematical relationship there more broadly. And I tried to simplify it before. So there's a trade deficit. More broadly, it's a current account deficit, which is the trade deficit plus things like dividends and interest. So if you run trade deficit for a while, you also, the foreign sector now owns more of your stocks and you're, for example, paying dividends out to them. So when you add that to the trade deficit, you get the current account deficit, and yes, that matches the capital account surplus or for other countries the other way around. That makes sense, because I think Australia

runs a trade surplus, but a capital account deficit. Is that also negative, though, because you're essentially giving away your private industry to foreign countries? And am I right in saying that? Well, the way I would describe it is that any sustained imbalance tends to have issues. And those imbalances manifest in different ways. And so, you know, it'll show up differently. One thing that both Australia and Canada have in common is that their real estate markets are really kind of bubbled up. Yeah. And so whereas the U.S., it's more the stock market.

So, yeah, this pocket can develop in multiple ways. There's also something called Dutch disease. And that basically refers to the idea that, say, there's a country, and they have a, you know, nice, diverse economy. And then they discover that, like, the biggest ever oil deposit there. And suddenly, like, you know, it's booming. And, like, their trade service goes way up because they weigh more oil than they know what to do is. So they're selling oil to the world and their currency strengthening and, like, everything's booming. And then the downside is it can kind of get more expensive to, like, manufacture there and do the things they were doing.

there as well. That's why you generally see, like, oil-rich countries often don't have a lot of else going for them because in some sense, that output kind of prices other things away, whereas like, use of the biggest manufacturing clubs in the world, like China, Singapore, Switzerland, you know, obviously in the smaller scale, those types of like trade surplus nations, they tend to not be very resource-rich, at least for big things like oil and other things. things. So there is this kind of division of labor that happens because certain industries force each other out. Again, on a more balanced system, it doesn't have to be like that, but when we had these kind of separate bubbles of fiat currencies, that tends to happen more powerfully

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Okay, so let's get on to what the US can actually do about this. First of all, do you think this is what they've spotted as being one of the core issues, and this is why they've implemented tariffs? We did speak about tariffs very briefly last time you were on the show, but it was a different time. This is when tariffs were something that Trump was planning, but hadn't yet implemented. And obviously, we've kind of moved on from that now. So I think there are different pockets in the administration, which is the case for any administration. And some of those pockets get it better than others. So near the top of that list would be Trump's chair of the Council of Economic Advisors,

Stephen Myron. He wrote a paper about this in November 2024. And he outlined a lot of what I've outlined here and what I outlined a lot back in 2020. He kind of talked about Triffon's dilemma. That's this kind of currency reserve kind of cost. Kind of point out that issues of the overvalued dollar, the deindustrialization, and kind of outlined that whole thing. Now, he, again, just going back to how wonky and complicated this is, I mean, he's a Harvard economist.

So, and he wrote this kind of academic paper for, like, other academics, and it pretty clearly outlines the issue. There are a handful of aspects I disagree with on it, but it's otherwise a strong paper. Whereas when you get to maybe other parts of administration, it's more, it becomes more political and less understanding of these mechanics. And so it becomes less like, you know, thinking in tradeoffs. Like that paper thinks in tradeoffs because that's what most life is, whereas politicians really like to deal in tradeoffs. They want to promise more but not taxing more, for example. And in this case, they want to fix a trade deficit by saying it's only good for the U.S.

There's no downsides for the U.S. And that's just not, that's the issue. And then President Trump's interesting because the trade issues. has generally become a major issue in the past 10, 20 years. He uniquely has been talking about that since 90s or 80s. That's kind of a pet like concern of his that's different from most other politicians. So I would say he's more uniquely focused on it in a way that doesn't necessarily tie to what we talked about here, which is like tied to the reserve currency. So I would not be confident that, for example, he would articulate it and have kind of an accurate retelling of the tradeoffs where he

has picked certain people in his administration that could fully kind of articulate the tradeoffs. Yeah. And I think I don't know what you think of Scott percent, but I assume he would be one of those people. Like he seems very smart. So what can the US actually do? Like so I wrote down some of the things that I thought of, but you may tell me these are wrong. But obviously they could run a surplus, but I don't know if they could actually do that. Capital controls, again, I don't think that would be a good thing, but is that a potential? And then is the most obvious one to just do anything they can to weaken the dollar? So I would say that there's tactical and strategic options. Tarticle would be weakening the dollar. And that was brought up by Stephen Myron in his paper,

something akin to the Plaza Accord, which because it's often named after the hotel, Bretton Woods was named after the region, Plaza Accord was named after the hotel. It'd probably be the Mar-a-Lago Accord to work with trade partners to weaken the dollar. ever since this system came in operation like in the early 70s, this kind of current era of the system, there's only been three dollar cycles, like three really big bull runs and then bear markets in the dollar, and some of them have been engineered,

whereas other ones are kind of inadvertent. You kind of like, you kind of pictures like bouncing between guardrails, and when something kind of breaks, the forces kind of push it back, and then when something breaks the other side, the kind of forces kind of push it back. And currently we're in a strong dollar period, the third strong dollar period within that 50 plus year system. So one of their options is tactically give us another downlink on the dollar,

another kind of five plus year bare market, and that would kind of keep the system perpetuating. And that really solved the underlying issue, I would say. The other option is to go out it more strategically and say, we don't just want another cycle. We want to actually end this like 50 plus year period. That requires more than just weaking the dollar. That requires giving up a,

portion of being the global reserve currency, which is a totally different discussion. And more broadly, there is no, like, you don't have to be the reserve currency or not. I mean, there's a spectrum of being the global reserve currency, which is, for example, I mentioned, like, we're 90% of on currency trading pairs. We could be 80 or 70% and still be the plurality, the majority, actually. or for example, you know, instead of being responsible for, say, I don't know the number offhand, but let's say, let's say 80% of cross-border debt is dollars and 20% is everything else, you could have a scenario where 50% is dollars and then the other 50% is everything else combined. And so, for example, China could do more cross-border trading and lending in its own currency in, say, the east. And that could that could kind of alleviate and decentralize the system to some degree.

But that's almost like in martial arts, it's something like Aikido. It's kind of like feigning weakness for strength, which is hard to do. Most martial arts, you want to be aggressive and hit. And so countries rarely ever voluntarily kind of decide to give up their global reserve currency status. It's kind of like how the same thing, like an empire rarely decides, you know what, maybe our border is a little bit too big to realistically defend. Let's pull back while we're good.

like let's strategically do this. Instead, it usually kind of happens to them. But yeah, the bull case would be to say, look, we like having our ledger be so valued around the world, but these imbalances are extreme. And so we're going to do things like elevate neutral reserve assets. Say, look, central banks are in the world. Maybe buy fewer treasuries and stocks and maybe buy more gold or if Bitcoin gets big enough, buy more Bitcoin. And or, look, China, if you're going to lend to other countries, lend in your currency.

But that's currently not the strategy we're doing. The US currently wants to maintain the global reserve currency and have all these other countries using it for those purposes while trying to shrink its trade deficits, even though those trade deficits are what provide the reserve currency units for them to keep using. Before we get into the US potentially giving up, at least some of it states of the global reserve currency,

can you just give me your take on tariffs now that we've seen Trump actually implement them and what's happened? Well, I mean, the history of those have changed over time. It used to be a primary income source. Now it's a much smaller income source. And this is where there's always kind of partial truth to things. So it is true that there are some countries that have done very protectionist mercantilist policies where they try to tariff things that come into them while trying to exploit others.

But that's kind of an overlay on top of these deeper structural issues that I covered. Like China is more. competitive in manufacturing, not just because of tariff differentials, it's because of all sorts of reasons, including global reserve currency, as the cost of manufacturing there, the buildup network effects of being a manufacturing hub, and all those types of things. Healthcare costs, all sorts of stuff. And so tariffs are certainly a tool. And for example, in that Stephen Meyer and paper I referenced, he references him as a tool.

but tariffs alone and one, they start to make a more kind of fractured world in general and so, and they increase uncertainty. So I would describe that when you have an extreme imbalance

like this, there's certainly a tool that's on the table. And then the question is how well is that tool used? Some of the proposals in that paper were to like say gradually and transparently

start ratcheting up some of those tariffs to gradually increase U.S. negotiating position to then get a currency accord, as well as a thing to say, look, if you're our ally, this is your low tariff rate. If you're not our ally, this is our like higher tariff rate because we want a little bit, we want our economy to less intertwine than yours, even, even just military and geopolitically, like there's just more risk there. We want to have more of a buffer. So there's reasonable ways that those could be implemented. And I think the issue now, of course, is that we kind of rushed it. We front ran it. We got triple digit tariffs in a matter of months. And then

businesses kind of froze because they say that we literally can't, can't do anything right now. We can't even, it takes years to relocate. So what do you want us to do? So yeah, it's a tool in the toolbox when you have really big imbalances. Is the problem also with relocating that if the US does manage to reshore a ton of the manufacturing, that's not necessarily going to create the jobs that maybe people will think because it will be propped up so much by just all. automation and AI and these kind of things? Well, I think, yeah, high ratio of them would be automated. It's hard to say how much.

Automation also depends on labor economics. So, for example, if you're making textiles in Bangladesh where labor is very cheap, you're less likely to automate because labor is so cheap. Whereas if you're operating in a high labor cost area, you're far more likely to automate because the ratio wages to robot costs are markedly different. So the more higher cost jurisdiction you go into, the more like you are to automate. And then there's also just the higher cost. Even if you don't automate, the challenge that the average consumer is probably not benefiting

from the manufacturing jobs, but is now paying more for the same product in the U.S. than they would from China or Bangladesh, wherever the case may be. And one of the overlays is the fact that the U.S. is the highest per capita health care costs in the world. and so every U.S. manufacturing employee you hire compared to China or elsewhere, a big component of it is the health care. So you're not even necessarily paying them more. You're paying this kind of health care bureaucracy on top of them more, which is also a source of disadvantage.

And it's one of those things is kind of like how like if you don't work out for a while and your muscles like atrophy or if you only worked out like your right arm and you never work out your left arm, you can have these weird imbalances, the U.S. kind of has built that up as a side effect of this global reserve currency status and structural trade deficits, which is that health care differential is one of them. We've kind of built up this like, I mean, you have the military industrial complex, you have the health care insurance complex. These like inefficient complexes have built up.

And then they also make it harder to unwind because part of being able to do things in the U.S. would have be involved having competitive health care costs. which is yet another problem to fix at the same time. Yeah, this is one of the things that I've struggled with. Like, even if you just assumed that, like, you take it at face value that reshrowing manufacturing is a good thing. It's a very long-term play. And you don't often see politicians going for very long-term plays because they have a four-year term or whatever. Do you think Trump will have the sticking power to stay with this?

I think, I mean, especially for him, I mean, like, he didn't need to do a second term. I mean, different presents will go for different things. I mean, if you want to be known for a legacy, if you're known for a turning point, right, that's one thing. I don't think they're going to make meaningful, like, progress in terms of shrinking the trade deficit in this four-year period. I think, like, if somehow it was on me to try to figure this out, my goal would not be, we're going to fix it in this term. It'd be, I want to be known as the one that started to turn that ship around slowly. and then, you know, communicated to, like, my successor to hopefully keep doing the same thing and to change maybe the public narrative. So I guess one thing that's already been done is it's now

in public consciousness. Ten years ago, this was not really in public consciousness. Now it is. And then now there's also, you know, the first term had pretty small in the grand scheme of things, like small efforts to fix the tariff, which didn't really work. I mean, fix the trade deficit, which didn't really work. But now it's front and center. Now it's like what everyone's talking about. And that genie's probably not going back in the bottle. Even if it temporarily gets a little bit pushed back in the bottle, it's kind of more structurally out now. But yeah, I think that these things often don't align with short political terms. Same thing's true for fiscal deficits.

That's even harder. And so I think these are at best beginnings of very long-term transitions. Yeah, that makes sense. Okay, back to the US giving up at least partially on being the global reserve currency. if they actually did that. And I don't know if this is me being a bitcoiner and thinking everyone thinks about Bitcoin as much as I do. But is this where Bitcoin actually can fit in? Because instead of giving up a portion of your global reserve currency status to China or to Europe or whatever,

you could give up to this neutral reserve asset that is Bitcoin that you also potentially hold on balance sheet. And I don't know if I'm overstating that because I am a bitcoiner. But when I read your newsletter, it kind of made the US government's play. in Bitcoin make a little more sense to me? That would be one of the smart moves to do. And Stephen Myron in his paper, again, I keep referencing that paper. If you asked me five years ago, would the chair of the Council of Economic Advisors talk about Bitcoin in his paper for restructuring global trade?

I would say, of course not. Whereas he did. I mean, he used the phrase cryptocurrencies, but, you know, Bitcoin X-stablecoin is like 70% of cryptocurrencies, and that's the one we're talking about here. And so he talks about that basically if you do kind of reshift global trade, it ideally involves elevating neutral reserve assets. And he says gold and cryptocurrency, benefit from this, probably. And so I do think Bitcoin's a beneficiary of this.

Should it be in any way directionly successful? And then if the U.S. wants to mitigate its own impact, yeah, one of the ways is to get into Bitcoin and then try to, you know, establish Bitcoin as a, you know, a neutral reserve. asset. It's better to be early. Now, there's challenges. There's like kind of past dependent or network effect issues here, which is part, like those four mechanisms I mentioned for the dollar, like the four components being the global reserve currency, they kind of tie into each other. The reason a country might want to hold dollars in their reserves is for a couple of reasons. They know that most commodity contracts are priced in dollars. So in emergency, if they want to able to buy commodities, they want to have dollar assets on hands.

Similarly, because all this cross-border funding is happening in dollars, if their banks are lending in dollars and they get caught out with a dollar shortage, the sovereign wants dollars to put a lend to their own banks to keep them solvent, even if, for example, the Fed decides not to do swap lines with them or something. So assets, to some extent, have to kind of match with liabilities. Maybe not one-to-one. Like, they can hold gold for some percentage of their reserve assets because that's the kind of the part they plan to never touch, ideally. the part that they actually provision, like maybe having to touch an emergency, they want that to ideally match their liabilities. So one of the headwinds against Bitcoin and gold in general, but Bitcoin being smaller and more volatile, is that because it's not really used as liabilities, that also to some extent

limits its use as an asset. And the mitigant for that is that there's a path dependence, which is, for example, we see it popping up in sovereign wealth funds rather than the central bank. because nations can say, well, this is an investment. We're treating it like gold where we don't plan to ever really touch this. And we're not really thinking of it as backing up our liabilities. It's a separate thing that we expect, we kind of analyze this thing, we think it'll get more valuable, therefore we want to have some, whether it's Kingdom of Bhutan, El Salvador,

Abu Dhabi. They're saying, we don't need it. We want to have it, though. Whereas things that they're trying to match their liabilities is more than, like need it. And that's that's the harder part to change over time. And that's kind of the network effect that takes years and decades to resolve. Yeah. So that's going to be something that will just take time. Like as Bitcoin matures, you think that may change that dynamic. Yeah. I think that that and that's a very long term thing. It's kind of like how like people

often say, you know, Bitcoin's price in dollars. Therefore Bitcoin is not worth anything. It's kind of a bad argument. I mean, there's a time where the dollar is priced in gold. meaning that what was the dollar? The dollar was equivalent of a certain amount of gold. And eventually the dollar system became so big that when it got cut off from gold, the dollar system became bigger than gold. And now gold's priced in dollars. Generally speaking, pricing happens in whatever is the most liquid thing,

the most saleable money. Right now that's dollars. And if Bitcoin eventually gets large enough, then a similar thing can happen where right now Bitcoin is primarily priced in dollars, If Bitcoin becomes so big and the dollar starts to eventually have issues, you can think of like dollars priced in Bitcoin. But that's, I mean, we're talking like at least another zero on the market cap in a whole different era. I don't know if you've not been on Twitter for a while, Lynn, but Bitcoin's priced in teeth. Yeah.

That was one of the most frustrating things I've ever seen. I can't believe people are comparing Bitcoin's teeth in 2025. I'm bullish on it because it shows that it's still just poor than understood. If everyone understood it and this was the price, it'd be like, well, is this how far we're getting? But the fact that so many people still don't understand it, I'm like, well, that's why we're only this far. That's why Bitcoin's worth 2.2%. So 0.2% of global assets roughly are Bitcoin's equal to that value. Gold's 2%.

And that's partially wise because people are still like, well, my teeth are scarce. Why aren't they worth billions? It's like, well, because they're not part of a dominant network effect, fungible, protocol, you know, it's like, it's like, why isn't my little pet like protocol competing with simple mail transfer protocol or USB? Because it's not even close, right? It's just, you know. They needed to interview you on that financial times piece. But so when the tariffs hit and markets all over the world were like tanking, there was this kind of Bitcoin decoupling narrative. I think people were way too quick to kind of jump on that. But as we've kind of moved on a few months,

have passed. Do you think that the potential for Bitcoin decoupling is actually real? So I think that there was some reality to it. So in the 2020 to 2024 environment, liquidity was the biggest driver for most asset prices. It was such a crazy macro environment. The liquidity was a, you know, liquidity always plays a role, but it was a bigger than normal role given the roller coaster of macro and printing and contraction that was happening. And so most kind of liquidity sense of assets were going up and down together. stack and Bitcoin up, and that can Bitcoin down, and what separates them as magnitude over that multi-year period. Now, there are other regimes that can happen where they decouple more firmly.

And, for example, something that pressures the margins of stocks without hurting liquidity is an example of something that could hurt stocks, but not really Bitcoin. Now, that doesn't mean that if on a Sunday there's some terrible tax or tariff announcement and Monday is going to be a terrible open, then of course, like, Bitcoin's going to sell off on that Sunday night and, you know, that 24-hour period is going to be correlated. But when you kind of zoom out a little bit, outside of these kind of shocks based on news, if you have this kind of a stagnant margin environment, then Bitcoin could possibly decouple from stocks. So basically, or if you have a capital outflow environment. So if just capital wants to pull out of the U.S. to some extent and go elsewhere,

you could have S&P 500 or NASDAQ kind of chop around. and Bitcoin actually does pretty well. So I would describe it as something that is still pretty pro-liquidity, like an environment where there's reasonable amounts of liquidity, there are no dollar shortages or like dollar value spiking. And yet there are other things that are pressuring U.S. assets, whether it's capital repatriation or corporate margins, that's an environment where Bitcoin can decouple,

maybe not on a 24-hour period, but on a multi-week, multi-month period, it can hold it better than you expect. And I would say that Bitcoin has held up better than you probably expect, given the equity volatility, it happened. It didn't fully decouple, but it held up pretty well. And I would say that that were to be on a sustained basis, you can get a more persistent decoupling. Yeah. And do you think those are the kind of dynamics that might actually break the sort of historic four-year cycle in Bitcoin?

Do you think that the four-year cycle could be over? So I think that, I mean, the cycles had some periods where it only looked like three years. The having point to the peak of the bull market does vary. I do think we're going to get more complicated cycles going forward. It's not going to be as simple as just four years. Mining is like a smaller ratio of new coins. A smaller share of coins hitting the market. Obviously, the increasing the biggest pool of coins available are resold older coins, existing coins.

So mining cycles should increasingly diminish. And then on top of that, the more. it gets institutionalized, or the more that you encounter those scenarios, like I mentioned, where you have good liquidity, but maybe not good margins or capital flows outside of the U.S., then, yeah, that can give you totally different-looking cycles. Most of this kind of Bitcoin's 16-year history happened within one particular kind of regime. And if we enter a pretty different regime, you can get pretty different dynamics, as well as just Bitcoin hitting a new scale and therefore having totally different types of

marginal buyers and sellers. Yeah. And in the newsletter, you talk about gold. Gold's obviously had an amazing run over the last six months or however long. But you kind of see that ending, at least in the short term, and you see Bitcoin doing very well. Is that correct? Yeah.

Conviction-wise, I'm not really sure what gold is going to do, but I do think there are increased risks that it maybe pauses here for a period of time. The last time I felt like this was after a really big run in 2020. 20. And then, you know, that point, it actually lasted, the consolidation lasted longer than it would have expected for gold. I thought maybe we'd pause for a year. I think it paused for like two and a half or three years. And I do think gold probably do for a pause here. Doesn't mean it has to happen, but the probability has just gone up so much where like I wouldn't be shocked to see six months of just chopping around or maybe longer. Whereas Bitcoin is interesting because it worked off a lot

of the evaluation pressure. So in March 2021, Bitcoin had the ETF euphoria pump. There are various metrics you can look at. Like, I like market cap to on-chain cost basis ratio. You're one of my go-to. There's other metrics you can look at. It's kind of just a sanity check for how you forked the Bitcoin ecosystem is. It got somewhat elevated in March 24. It spent like seven months kind of working that off and going back down on pretty low levels. And then we got the election pump. And that brought up to similar levels again, where it's not, it's not like you fork, like, one of those multi-year tops, but it's a little rich. So we're at like 100K, and we consolidated from November to the present. So, you know, six months or so of consolidation off top of my head.

And we've kind of, again, worked off a lot of that excessive valuation. So, you know, I think we're kind of geared unless some sort of liquidity shock happens to probably grind up to new highs in the next 12 to 18 months. I would think so. Some of the technical signals look pretty good. Whereas gold is kind of on the other side, where it's sort of overbought and already had a really strong run. So I think we're kind of due for a little bit of rotation. But rather than try to be like too kind of choosy,

I just hold both and kind of let them run. And for me it's more about setting expectations and probabilities. And so when you say Bitcoin will grinds new highs, What kind of price-wise, with your investor hat on, what are you kind of expecting over the next 12, 18 months? The short inches, I'm not sure. I mean, I'd be surprised if we don't see 150 by the end of this cycle, what everyone I call this cycle, whether it's 18 months or whatever the case may be. Ideally, I like to see higher than that. But I always try to be conservative with my estimates.

I would consider it kind of a dud of a cycle if we don't see 150K. I don't think it would take much to see $150K or higher. So, you know, I think first step, let's see new all-time highs. Let's go over 110. And then we'll see what the market looks like then. So I kind of try to break it into smaller pieces rather than look out. But broad strokes, I'm bullish with an 18-month view, unless I see something that makes me update that view. So at least where I sit now.

And, you know, I'd be kind of surprised not to see 150 or more. Yeah, I said the same thing to check, mate. I had him on the show recently, and I said 150K would feel like a disappointing cycle. And he tells me off of saying things like that. He says, I need to reset my expectations. Yeah, I mean, I think it's one of those things. If we want to see Bitcoin become a reasonable share of global assets, it does have to have another handful of pretty good bull runs.

If it starts to become like a 20, 30 percent year asset, that's obviously still great. I mean, it's nice to have that. But, you know, we want to see Bitcoin go from 0.2% to like 1% of global assets and then maybe work its way up toward two. And that requires some growth. So I try to be conservative, but, you know, too conservative is kind of disappointing. Yeah, it is. I'm always way too bullish. So people should ignore anything I ever say on this.

But I massively appreciate the time. And like I said, we've probably spoken about trade deficits at least five times on the podcast before. And until this newsletter came out, that's when the penny finally dropped. So I'm sorry for being slow on it, but I really appreciate the time. And it was a great conversation. Thank you. I appreciate it. Now they're all front and center, so it's fun to talk about again.

Totally. Thank you very much, Lynn, and I will see you in Vegas. Yep, sounds good.