Fiat Brokenness Ep. 256

Join the BV panel with guest speaker Infra for a macro update

Episode Transcript

(00:00):
Thank you.

(00:30):
all right good morning everybody and we are back at it this wednesday that feels like a tuesday
thank you everyone for joining and uh yeah this is bitcoin veteran spaces episode number 256

(00:53):
where we talk about Bitcoin.
My name is Bob Van Kirk.
I'll be one of your hosts this morning.
And we do have Texas Toast up here as well,
which I appreciate as always.
And something new for everyone.
We actually have producer Eric on the BV handle today.

(01:15):
So thank you, Eric.
And we will get better at this as we kind of transition.
um also we have another eric on stage good morning eric good morning neil good morning bfp
captain trips pubby and robert better known as in for some who have been on x for a while uh but

(01:36):
yeah hopefully we can get the kinks worked out with new producer eric really appreciate him
stepping up and helping out as long as we treat him nice you might come back tomorrow so all right
Let's look at the time chain today.
It's Wednesday, September 3rd, 2025, with the Bitcoin block height at $913,018.

(02:00):
And the price is approaching $112,000, which means you can still get your hands on 895 sats for each U.S. dollar.
All right, a couple of announcements.
Since Bitcoin Veterans is having the second annual summit on November 10th and 11th in Nashville, Tennessee.

(02:20):
Day one is going to be a conference.
There'll be speakers, panels, hands-on building of things.
Maybe some nodes, maybe some seed signers, a bunch of different stuff.
So it should be good.
And if you want to get your hands on some firearms, day two will be range day.
And everyone is welcome to join.
practice some safety, but also some nice competition.

(02:44):
So if you're interested in that, please visit BitcoinVeterans.org forward slash summit 2025.
Sorry, BitcoinVeterans.org forward slash summit 2025 to get that correct.
If you're interested in volunteering, being a speaker, throwing out a panel topic,
or building a seed signer or something of the like, please do go there and get plugged in.

(03:09):
We're also happy to announce that the tickets are live on the website.
So if you've been thinking about attending, you can go to the website today and actually get on there and get a ticket if you'd like to attend.
All right. I think that's the main announcement.
I did want to start off this morning.

(03:31):
We haven't had Robert in a while.
So we're going to get to him here in just a second.
kick off this with maybe a macro update. And before we do that, would love to go around the
horn and just hear how everyone is doing this morning. Texas Toast, thanks for joining. How
are you this morning, sir? Morning, Bob. Morning, everybody. It's a beautiful morning. Fall is in

(03:55):
the air. The cool breeze of the north is coming in. You know, the rock gets ready for launches.
I was like trying to like, share and comment.
I found a starship and I thought, you know, Bitcoin's a lot like the starship right now.

(04:16):
We don't know if it's going to make it all the way to the stratosphere this time, but eventually it will.
All right.
So you just never know which one of those is going to not blow up and just stay up there forever.
Thank you for that and good morning to you.
Eric, how are you doing this morning, sir?

(04:38):
Morning, guys.
Yeah, I appreciate you guys always having this here on Mondays or every day at 9 o'clock.
I wish I didn't have a 9.30 team call, but very excited to hear what's going on right now.
And, man, Bitcoin is just positioned perfectly in every trilemma that exists around the world.
All the volatility you see around the world, Bitcoin is literally positioned to win in all possible areas.

(05:00):
So I'm excited to hear Robert's take now that the 30 year is back at five.
I think we are entering an era we didn't expect.
Some of us didn't expect.
A lot of us did, but very interesting times ahead, guys.
Yeah, and gold at all-time highs as well.
I think, though, that 30 year is on a lot of people's minds,

(05:20):
and so it will be fun once we get to Robert to kick it off with that.
Neil, thanks for joining.
How are you this morning?
Yeah, yeah, good morning.
It's a great day.
I'm just grateful to be joining you guys again.
The man, BFP, missed you yesterday.
How's it going?
Hey, it's going great.

(05:41):
Yeah, I got family in town, so I had life happening yesterday.
But it's good to hear your guys' voices again.
It's always fun to be here.
Yeah, I don't like my family either.
No, just kidding.
Captain Trips, how are you doing this morning?
uh good morning good morning and last but not least do want to thank robert for showing up this

(06:06):
morning and wanted to kick it off with you sir how are you and uh tell us a little bit about
macro like what's uh going on in your brain with all these things firing off as we see them
uh on the broader landscape yeah hey good morning um sorry i haven't been able to
catch more of these. I do the morning finance space and then I start working on my video,

(06:31):
try to get that out right around now. So yeah, but definitely a lot going on. So
not really in the US, you know, for the Americans here, it seems like the US is relatively quiet.
But I mean, I would say in regard to the U.S. and kind of the S&P 500 and kind of general direction of things, I really think NVIDIA topped the day after earnings.

(07:04):
It did a pretty wicked stop loss hunt where they pushed up the price like in the first couple minutes at the day, the morning after earnings when the market opened.
pushed the price up to an all-time high, and then just immediately unloaded like three times the average volume.
And the thing has been straight down ever since.

(07:26):
So what that spells for something like the S&P 500 and the NASDAQ,
I think that like an IWM, you know, small-medium cap rotation out of MAG7,
that's kind of what I've been feeling for the past month or so.
So that's kind of the direction I would say broadly, I would see, you know, us moving in.

(07:49):
It's not to say SPY and NASDAQ can't make new highs, but and this matters, of course, for Bitcoin because of how it trades, unfortunately.
But, yeah, it's not to say they can't make new all time highs.
I just think, you know, small and medium caps or equal weighted S&P 500 will outperform over the next couple of months, probably.

(08:09):
just due to the rate cuts and kind of a broadening out.
I think the concentration got a little too stretched.
I think valuations got a little too stretched.
I think AI Euphoria got a little too stretched.
Data center revenue came in weak for NVIDIA.
So, you know, it kind of has all the hallmarks of like a short-term top.

(08:30):
So, you know, if that drags NASDAQ down, we could see, you know,
Bitcoin, unfortunately, trades to some degree still like a kind of triple levered NASDAQ.
So that's, I think, why Bitcoin is not doing too well.
I think that this has been really building for like a couple of weeks, I would say.
And Bitcoin, we know, kind of leads in terms of risk assets.

(08:54):
So I think that that sell off that we've had going back to kind of early to mid August,
I think that that was really kind of forecasting this weakness or underperformance of the MAG7 and NASDAQ, if that makes sense.
But yeah, it's not to say that the U.S. economy is in rough shape.
If anything, IWM, it's kind of the real economy.

(09:15):
RSP is a better look at the real economy, equal weighted S&P.
So it's not to say the U.S. economy is in the worst spot.
But I do think that, you know, in other countries like the UK, that's really where the issues are.
I know a lot of people look at Japanese, the Japanese economy, Japanese markets, Japanese bond deals and think that it's some kind of horrible chaos and crisis over there.

(09:41):
I don't really think so.
If you look at their currency, it's not really indicating that.
It's been basically range bound going back to early July.
And you don't see that in a country that is going through a fiscal crisis or sovereign debt issues.
So if you look at the UK, on the other hand, the pound is weakening and kind of big picture, the pound has been weakening.

(10:07):
But then also zooming in on a shorter timeframe over the past couple of days, the pound has seen some real weakness, real sharp weakness.
and it's coincided with weakness in their equity market and weakness in their bond market,
especially pronounced at the long end.
They have, you know, we think the 30 years is long end.

(10:29):
Over there, they have, I think it's up to 40 or 50 year.
But their long end, even if you just take the 30 year, is moving up.
The yield is moving up.
The value of the bond is moving down pretty disorderly.
I'm not typically one to say that there's a crisis or things are falling apart.
But yesterday, that word kept coming to mind, looking at bond market in the UK and in France specifically.

(10:58):
Those are kind of the two that really caught my eye.
And of course, Great Britain, they have their own currency, right?
So France, part of the euro.
and the euro is not going to tell you as much signal about France in particular because there's
other countries in the euro so it's a little harder to gauge kind of what's going on in France

(11:19):
but you look at the long-end yields in France and they're like vertical and they've been vertical
right like as the US we've had kind of like yeah grinding higher on the 30-year yield back at 5%
ish. But like there, if you go back the past year, every couple of months, those long end rates in
France have been setting a new all time high. And same thing for the UK. So, you know, the kind of

(11:45):
relative performance, long end bond, you know, the long end of the yield curve is not doing well
anywhere, but it's especially not doing well in France and the UK. That's not to say the US
long-end is doing well, right? It's just that it's doing worse in France and the UK. You have
that coincide, at least with the UK, with weakness in the currency and weakness in their stock index.

(12:11):
That's capital flight. That's what we saw. It's what I saw back in January, February here in the
US, starting signals of it. And of course, the UK has really had, to some degree, capital flight
around the margin going back like two years and the Liz Trust moment and all that, right?

(12:33):
So like they, for the UK, it's been happening around the margin for a long time, but then
it's kind of accelerating on a shorter timeframe, if that makes sense.
France is also really not great shape.
And, you know, as we saw yesterday, that coincides with, you know, longer, the long end of the

(12:53):
curve here moving higher and yield lower in price because, you know, now everything is so
interconnected. So I would not call it like a full blown crisis. I still wouldn't, don't think it's
like, I still feel a little uncomfortable calling the UK and France what's going on there as a,
as a, you know, okay, it's red alert, it's crisis time. But like that word is definitely coming to

(13:18):
mind a lot more than it generally does. And, you know, as we saw a bit yesterday, that can have
consequences for our bond market. And everything with currencies is a relative gain. Now, gold,
right? So that's kind of the TradFi and the FX story, macro story. Then you got to include gold.

(13:42):
And what's happening with gold is, and I put out just like a little thing this morning,
put it in the nest. But, you know, you a lot of people look at the gold price, right? Gold dollar.
And the thing is just like parabolic. It's just going straight vertical. And they're like, whoa,
gold is up a lot. But they don't realize what it's actually indicating. What's actually indicating

(14:05):
you invert that chart and then you're thinking of dollar gold, right? Think of it like a currency,
the euro slash dollar.
When you look at that chart, if the line's going up,
the euro is strengthening versus the dollar.
Well, if you invert it, now you're looking at the dollar euro.
And so, yeah, you do the same thing with gold.

(14:26):
When you look at it as a FX pair, as a currency pair,
you invert the gold price, and that is what the dollar is doing.
In real purchasing power terms, the denominator is failing and it's been failing.
It's just failing at an accelerating rate.

(14:46):
That is what the gold market is really indicating.
And once you start to realize that the denominator is fundamentally broken, all these currencies,
right, the euro, the pound and the dollar are getting devalued against real scarce assets
like gold.
You know, what they're doing on a relative basis to each other is generally what the kind of TradFi world fixates on.

(15:11):
But they don't fixate. Bitcoiners, of course, appreciate this and understand this, but they don't fixate on the more important thing, which is what are all these fiat currencies doing relative to gold?
You know, I hope that one day I can say gold and Bitcoin.
But, you know, like gold has thousands of years of track record of being money, right?

(15:34):
Everything else is just credit, as JP Morgan said.
So, you know, unfortunately, Bitcoin has underperformed gold somewhat significantly.
I'd like to see that pick up.
But, you know, it's to be expected when people trade it and think of it like a levered NASDAQ.
you know, you start to get weakness in NVIDIA and NASDAQ,
all the stuff we were talking about, rotation into IWM,

(15:57):
you're going to see weakness in Bitcoin.
It's not going to trade like gold, unfortunately.
I hope one day it does.
And I think we are moving in the right direction.
But at least today, I don't think it's safe to say that, you know,
it's in the same camp, unfortunately.
I wish, and I know one day it will be, but, you know, just today,
it's just kind of not.

(16:17):
And it's okay.
You know, it's a new asset.
It's a maturing asset.
It'll get there. But, you know, the great decoupling, I think, is still, you know, a fair bit away.
But yeah, the signal that matters, right, if you're a macro nerd, you can, you know, talk about these currency pairs and the DXY and the euro and the pound and rates relative to each other.
Right. So like the French 30 year yield relative to, say, the Italian 30 year yield, you know, you can look at all this stuff.

(16:44):
But really the clearest signal of all is not only is the long end of the sovereign bond market kind of failing and not not not doing too well at the very least but the currencies themselves And it doesn matter whether it the euro dollar or the pound this
none of that shit matters.

(17:05):
They're all failing against gold.
Look at the gold price in pounds.
Look at the gold price in yen.
If you think the gold price in dollars is crazy,
just look at it in these other currencies.
Every single fiat currency basically except the Swiss franc is failing against gold. And the only reason the franc is not is because of their gold holdings and their kind of monetary policy and their way of conducting economic and monetary policy.

(17:35):
So, yeah, I think the main story, yeah, you know, we can talk all day about, you know, interest rate differentials and currency this and the dollar, all that stuff.
But like the clear signal is that when you invert that gold price, all and it's the same with the yen, the euro, the pound, like pick any currency outside of the Swiss franc.

(17:57):
They are all doing awful next to gold.
And I think that that's really the story.
Now, the sovereign bond market ties in, you know, the long end of the yield curve across kind of sovereign debt markets does tie in with that theme that, you know, it's all one thing.
You know, it's all one story. It's all one trade. It's all one theme.

(18:20):
And that is that the kind of old sovereign debt based monetary system is under significant pressure.
You could even say that it's, I think, starting to really have cracks.
And, you know, I'm not saying it's failing completely and we're going to be eating cat food under a bridge, but it's starting to show significant stress.

(18:40):
And so then the simplest trade, the simplest thing to do is you do not want to be in dollar denominated assets.
Right. If the denominator is a dollar and the denominator is failing, you don't want to be in dollar denominated assets, whether that's housing, whether that's S&P 500.
people need to really kind of shift their mindset away from everything being priced in dollars

(19:06):
to being priced in, say, gold or Bitcoin.
And, you know, I think that's really the main story that the vast majority of the kind of CNBC crowd
and kind of market participants, that they still cannot grasp.
The denominator, which is the dollar, is failing.

(19:26):
Once you start dividing housing by gold, it's at an all-time low.
People, this blows their mind.
Like, housing is so unafforded.
Yeah, divided by gold, and it's at all-time cheap prices.
You know, look at the S&P 500 divided by gold.
For example, the last time we really saw a pronounced leg lower in real S&P 500 was the mid-60s into the early 70s.

(19:50):
By the way, the last period of time where there was populism in the US, what did S&P in gold terms do? It fell 92%. So yeah, it went sideways in US dollar terms. But once you look in gold terms, it was down 92%. I mean, it was like, it just cratered.
And I think that, you know, that sort of environment is kind of what we're, you know, if you look at the S&P gold, it broke that kind of support, broke that uptrend.

(20:18):
Like, I'm not saying we're going to see a 92% decline again, but you divide housing by gold, divide S&P 500 by gold.
That's really, I think, the way that people need to look at things in a regime where the denominator is breaking.
I am saying that, by the way, we are going to see a 92% reduction in Bitcoin terms, that's for sure.

(20:42):
Yeah, and look, Bitcoin is, I don't want it to seem like I'm bearish on Bitcoin, because I would throw Bitcoin into the camp of gold.
I just think we're going to see more volatility with Bitcoin, whereas gold, it's a much more kind of straightforward or pure expression of this trade. Right. So I think gold is just kind of more a little more straightforward, a little less volatility.

(21:08):
But Bitcoin is very much going to do insanely well in a regime of yield curve control, QE, whatever you want to call it, as the long sovereign debt and the long end of the yield curve all around the world continues to be under pressure as gold continues to devalue all these fiat currencies.
You know, I think that the Bitcoin will do obscenely well.

(21:33):
It's just going to have more volatility because of that kind of NASDAQ, you know, does that hopefully that makes sense?
Well, yeah, it makes sense. But is it you know, the thing I see with gold is that they're not going to be able to get it, you know, and as as people, especially the sovereigns, especially as they're all loading up on gold, thinking they're going to use that as their neutral reserve asset for this kind of world.

(21:57):
they're starting to step back into.
And it's going to get really hard to find.
And that's why the price is going to go up.
But what are people going to use alongside that
or as an accompanying unit for that?
I don't think it's going to be silver.
I think this is when kind of like Bitcoin turns into

(22:17):
what silver was for a while,
but it actually makes sense because of its properties.
So we'll see.
I totally agree.
I think around the margin, because gold, for example, the sovereigns that you mentioned, they're not going to accept some GLD paper gold bullshit.
They want real physical gold.

(22:39):
And like you mentioned, there's a lot of derivatives in the gold complex.
There's a lot of paper gold.
There's a lot of funny business in the gold market.
And they are not going to settle for paper gold.
They're going to want real physical gold.
And with all the funny games, funny business going on, that means, like you said, a real, you know, a significant move higher in the gold price as that kind of as all that shit kind of unwinds and gets squeezed.

(23:09):
That means a much higher gold price. Bitcoin starts to emerge.
I mean, again, you know, I'm very bullish on Bitcoin being adopted as a gold like instrument.
I just think it's going to take a little bit of time.
But, you know, if you're a sovereign and you're starting to look at, I don't know, $100 billion current account surplus each year and you go, well, yeah, gold is gold, but like we want to diversify a little bit.

(23:36):
You know, we're getting out of the dollar, we're getting into gold, we're spreading out our national savings across the euro and a little bit in the renminbi.
And, right, there's not so much of this unipolar sort of approach to reserve asset.
If you're already kind of moving away from a unipolar approach, which is dollar above everything else as reserve asset, sovereign reserve asset,

(24:02):
But then, you know, if you're already starting to kind of diversify a little in the euro, a little into the renminbi, you're already in that mindset.
Well, it makes perfect sense that you're not going to just go 100 percent gold because you learn the lesson of what, you know, you don't want all your eggs in one basket, even if it's gold, even if it's, you know, relatively stable.

(24:23):
And right. All the all the kind of traditional way of looking at gold there.
I just don't see how these sovereigns that run current account surplus are not going to, as they diversify the currency side, go, you know what?
Like, screw it.
We'll put 5% in Bitcoin.
5% of that annual current account surplus, we'll put in Bitcoin.

(24:45):
It has the same properties of gold.
It's more portable.
It's more verifiable.
It's more secure.
You go down the list of all the properties.
So I think that the diversification away from the dollar as primary reserve asset for sovereigns, I think that that is like that's basically the same way of saying that Bitcoin will start to see marginal flows from sovereigns.

(25:09):
Yeah, lots of good things there.
Did want to give folks on the stage a couple of seconds to maybe ask some questions.
Kelly, I see your hand.
Thanks for coming up, sir.
And go ahead.
Absolutely.
I always love Aaron Roberts takes on this.
And I loved that chart with gold because I just happened to be 41.

(25:31):
And so that chart showed from 1984 to now.
And it's very interesting just not to look back at 1930 or 1913 or, you know, these abstract random numbers that people picked to show the devaluation of the dollar and also of just how assets are priced and what's going on here, especially with U.S. debt.

(25:51):
But when we look at it compared to your own exact timeline of when you're born to now, it's very interesting.
It's of note also that I just did just ask Grock, at what point did the U.S. get to one trillion dollars in debt?
And it said it was 1981. So that means it was 205 years to get to one trillion dollars in debt.

(26:13):
Well, I also saw some information this morning that we have increased the U.S. debt in the last two months.
in the last two months by $1.1 trillion in two months,
whereas before it took 205 years to even get to $1 trillion in debt.
So obviously there is an absolute parabolic move here,

(26:33):
not in the way that we'd like to see,
but for those of us that are investing and studying
and getting activated outside of the dollar,
whether it's gold, whether it's other precious metals,
whether it's other investments, or in this case,
I think all of us have some focus very heavily within Bitcoin.
I think it's the issue of our generation to really pay attention to this because there's no, as Lynn Alden says, there's no slowing down of this train.

(27:01):
There's no stopping this train.
That train, there's two of them.
One of them is the parabolic debt and the fiat crisis.
The other one is the inverse relationship to that, which is Bitcoin.
So it's just very interesting to see all of this data coming in now.
And people still relying on historical trends based on past economic cycles of issue and not really fully considering, you know, how different the world is now, even compared to 2010 or 2000, with the advent of how much has changed from technology, from social media, from even the monetary instruments and monetary tools that are used within governments to shape and misshape, you know,

(27:45):
and address different issues.
So for me, it's like, I mean, I see that $1.1 trillion since July 2nd,
we've increased in debt.
And it's just like, we need to have as many of these spaces as possible
and get the word out to as many people as possible with enough voices
just to help people get educated on this.
Because it is insane.

(28:06):
But I always love having these spaces.
Thanks for having me up.
Yeah, Kelly, and I think, I don't know, can you guys hear me?
Give me a thumbs up if you can hear me.
Okay, there we go.
Sorry, my screen's glitching out here again. But I was thinking about that, how Robert kicked it off with the denominator being broken. One of the things that he kind of touched on was that AI and other U.S. equities may face some downward pressure.

(28:35):
I think people are starting to figure out that, yeah, the dollar is not the denominator anymore.
And that's something, a key takeaway for me this morning.
But Tomer, welcome to the stage.
Thanks for coming up.
I see your hands there.
Hey, good morning.
Yeah, that was a great rant from Robert.
Really, really good.
Just my own reflections on what he's saying is the space, like finance in general and money in particular,

(29:04):
is getting so complicated to analyze because there's so many things happening at such breakneck speed
and people are running for solutions.
You know, it seems that there's a greater sense of urgency to find a different denominator than the dollar.
But for many people, the dollar is, you know, they've just been programmed

(29:25):
and habituated to using the dollar to denominate everything,
including things like Bitcoin and gold.
Bitcoin is $110,000. Gold is $3,600. Everything is just on a per dollar basis. And until you break
free of that, you're going to continue to think about it. So you think about stocks, you think

(29:47):
about everything else. But there's so much data now and so many feces and so many different things
to point to, it can get very overwhelming and you can lose your confidence in any one particular
strategy, which may lead you to a diversification strategy, which may be okay. But, you know,
it's like you need some anchor tenets that are easily verifiable and reliable, you know,

(30:17):
to make life simpler for you. And I think that's where, you know, that's certainly where gold
can come in where you say, look, you know, it's reliably pretty scarce. It doesn't go up much.
There are problems with it, with the paper gold and, you know, and the ETFs.
And we don't know exactly how much supply there is.
And it's very hard to take physical custody of gold.

(30:40):
It's very expensive to secure it.
It's very hard to spend it.
Like, it's hard to divide.
And so gold has a lot of restraints behind using it.
If you've got millions of dollars and you want to put some gold in a vault to protect millions of dollars, sorry for using the denominator, if you've got hundreds of ounces of gold and you want to simply protect them, that's easier than trying to spend some fraction of an ounce on a regular basis.

(31:12):
And I think this is where the case gets made for Bitcoin as the superior long-term asset.
It is easy to store.
It's easy to back up.
It's easy to secure in ways that gold isn't.
You just wouldn't keep a million dollars of gold at home, but you might keep one key of a multi-sig securing millions of dollars of Bitcoin at home.

(31:34):
And so there's a lot more optionality.
There's obviously a lot more divisibility.
There's a lot more verifiability.
and there's even greater scarcity, right?
There's certainty about the scarcity.
We're starting to encounter some of the issues with paper, Bitcoin.
But again, if you want to avoid paper, gold,
you have to take physical custody of an asset

(31:55):
that's dangerous and hard to take custody of.
If you want to take physical custody of Bitcoin,
it's actually quite easy.
So that's my attempt to kind of simplify
this really complicated space down.
And I love thinking about it.
I love entering some of the complicated arenas
to either verify or introduce another rabbit hole to go down.
But I think if you're looking for something simple that you can validate yourself,

(32:20):
that's the story for Bitcoin.
And one secondary point to it, I think in terms of relationship
between Bitcoin denominated and gold or gold denominated and Bitcoin,
I know Fred Kruger is pushing pretty hard on the power law,
pointing out that Bitcoin has a power law when using dollars as a denominator,

(32:40):
but he also points out when using gold as a denominator too.
And it's positively sloped.
So that power law, if you buy into it,
is also predicting growth of Bitcoin denominated in gold.
Yeah, I do think that's interesting to think about.
I have some other thoughts, but we have a lot of hands.
So I wanted to go to Puncher.

(33:00):
I think he was next.
Go ahead, sir.
Good morning, guys.
Just getting the kids off to school.
Robert, as always, just a great analysis.
I will say that, you know, it's almost like the snowflake that started the avalanche.
Even though everybody's got a bias to denominate things in dollars, the rest of the world has stopped doing that to a large extent.

(33:26):
That is accelerating.
And I think that was maybe the glue that was keeping the dollar mindset all together.
whether it was after Bretton Woods and then with the Eurodollar system, that system is broken now.
And you're seeing things like over the last few days, Xi and Putin getting together with Modi,

(33:48):
discussing who knows what.
But the world doesn want dollars I think to a large extent because even though the system was fragile we weaponized it when we seized those Russian treasuries and reserves And I think that now accelerated this unwind of the dollar globally
Now they're going to try to band-aid it up to the maximum extent possible with stablecoins to get dollar ubiquity.

(34:13):
But again, I think that's more triage than anything else.
I'm curious what Robert thinks about that.
But the quickening is happening, right?
It's slowly then suddenly.
And I think we're in the beginning of the suddenly phase.
Yeah, I don't know.
The stablecoin thing, I'm just not sold on it really being as big of a deal.

(34:36):
Look, it could be.
I could be wrong.
It's not a high conviction feeling, you know, thought on the stablecoin area for the dollar.
Let me just say why I think it might be a triage of sorts.
Access to dollars when your local currency is debasing much quicker is an important thing, right?

(35:03):
You've got a cell phone and a Wi-Fi connection, and you can convert your whatever, your local currency into dollars.
At least you can take a breath.
It also provides an on-ramp to Bitcoin that you probably didn't have previously.
But I think the ability to spread those stablecoins worldwide quickly might be a kind of a bandage, and it certainly provides for purchasers of treasuries.

(35:32):
I'll stop there.
Yeah, I get the argument. I just, I don't see how much demand for negative real yield, because Trump wants to cut the federal funds rate by like an absurd amount. Last I heard it was 300 basis points. So you're talking about core CPI at 3.1, M2 growing at 5.5% per year.

(35:55):
So you're talking about negative real yield, even using the government's own inflation data, which we know is undercounting actual inflation.
You're talking about a negative real yield of like at least three inner basis points because inflation will start to pick up in that environment.
And like, you know, are some people going to buy that?

(36:15):
I guess.
But I think.
Well, I mean, it's as compared to what?
Right.
I mean, as compared to the boulevard.
I mean, you know.
That's the next thing I was going to say. I saw, I didn't look into it super deeply, but I saw a story of some kind of exploration for China of some sort of like gold linked stable coin version of the yuan.

(36:43):
I didn't look into it super deeply, but if you start going down this kind of tokenized fiat gain, all a country has to do is come out with some gold-backed, gold-influenced, gold-incorporated sort of stablecoin, and then all of a sudden it looks way less appealing, in my opinion.

(37:06):
Well, that's the second-order effect, right?
And governments typically don't look at the second, third, and fourth order.
effects. But yeah, I agree. Yeah, I think it's a good topic of discussion. I was actually on a
webinar for continuing ed yesterday for my, I'm a certified treasurer professional, and lots of
corporates represented their corporate treasurers. And the whole topic was stable coins. And I know

(37:32):
we were concentrating here on this discussion with, you know, euro dollars, essentially,
access the dollars outside of the United States for people's currency, who is getting
the base faster than the dollar. But as far as U.S. corporate goes, there was a lot of polls
in that continuing ad. And man, it was really like, these guys are starting from ground zero.

(37:59):
They're just starting to think about it. So I do think it'll have an impact globally first,
and then in the United States later.
But this is all gearing up for these guys to be doing their homework,
to figure out who their counterparties are, how to hold this stuff,
that they can maybe self-custody, so to speak, on behalf of the corporates.

(38:22):
All those things have to be built out.
Those systems have to be created.
And so I do think it has an impact, but I think it's going to be a while.
Neil, you've had your hand up for a while.
I wanted to go to you, sir.
Oh, yeah, thanks.
I just wanted to kind of take Tomer's point on making it simple and just push it even farther.
It just kind of hit me.

(38:43):
It's like a different way of articulating the same message is just money is an emergent property of an immutable human nature.
And if you understand that principle, you will understand why ethics is to economics, what physics is to engineering.
and like i don't know i i like hearing all the stuff and diving into the data it was just to me

(39:06):
though i always need to enter it can you tweet that can you tweet that line neil ethics is to
economics as physics is to engineering i think it's such a powerful point and i'm sorry to interrupt
you but you were moving on and like that was my only point there's so much to that yeah that was
my only point i didn't want to uh clog up the space i just wanted to throw that out there

(39:27):
Well, make a tweet of it and I'll definitely share it because I think it's so important.
It's like, you know, people take the people, people who are people.
There are some people who take the view that morality has nothing to do with a whole lot of things with business.

(39:48):
You know, you just conduct yourself for maximum shareholder value.
That's the right thing with how you treat other people with with all sorts of things.
They try to make everything into an amoral, not immoral, but amoral, like that morality doesn't apply to it.
And we all know deep down inside that we're driven by a sense of what's acceptable and what's not acceptable, what's right and what's wrong.

(40:14):
That these aren't just flimsy concepts that we've all been tricked into thinking that right and wrong exist.
We may have been tricked into thinking that some things that are wrong are right and some things that are right are wrong because we're obedient and goodwill towards our neighbors.
But there is morality and there are different ways to derive it and there are different ways to come to it.

(40:37):
But there's also an emotional test where you feel that you're doing something wrong or you feel that something is wrong.
and with a lot of things going on in the world today,
you may not know exactly why they're wrong.
You may not have a fully developed philosophy around ethics,
but you sure as hell know that something is wrong with some types of conduct.

(41:01):
And you need ethics to inform how you act in the economy with others.
You need ethics to inform what you support politically,
which is, you know, economics is that which it should be,
that which we interact with voluntarily with each other, politics is kind of like, well,
what do we not allow? How do we not allow people to behave? What's outside the realm of freedom?

(41:25):
Or how do we protect freedom? And in both of those cases, there's a lot of right and wrong.
And those who try to push the wrong and present it as the right are doing wrong. And those who
try to say that there is no right and wrong are also doing wrong.
And we could have a whole other discussion about that because I know that's not where

(41:46):
we're coming from right now.
But it's such an important point.
And I like the analogy because it's like you can't really do engineering if you don't
understand the physics or the chemistry in some cases of what you're working with.
And if you don't have a moral basis for developing your economic model, then theft is fine.

(42:08):
inflation is fine. What's wrong with it? It works. But there's a moral argument against
inflation. There's a moral argument against theft. And that's the only argument against
inflation and theft. Some people will make a utilitarian amoral argument saying, well,
if you have inflation, people are less encouraged and you have a smaller economy and we want the

(42:29):
biggest economy. But it takes you right back to why. Why do we want the biggest economy? Well,
because we want people to be well-to-do.
Well, why?
Because that's a moral imperative
that we want people to not suffer.
So you can't evade,
you can't escape the notion
of having to come back to morality.
And that means that you have to study morality

(42:50):
or have a view of morality
because that's what's going to be used
to justify all the conduct in the world.
Tomer, some of the most shocking conversations
I've ever had in business is when I turn to somebody and I say, well, we can't do that.
And they say, why? And I say, because it's wrong. And they look at me deadpan, like,

(43:13):
what are you talking about? What does that have to do with anything? And you've been partners
with someone for a few years and you finally realized that, oh my gosh, they don't, they don't
see the world the way I do. It's just, your little rant there just reminded me of all the things that
about sideways and why i've been there i've been there too and it's like it it leaves you feeling

(43:35):
hopeless because if you can't justify an action on the basis of it's morally wrong to not look it's
morally wrong to do this and therefore we shouldn't and you're find yourself in some other basis of
we can do what's morally wrong if it makes us more money you're you're like there's no conversation
to really be had right like there's there's i need to defend myself we're not going to get caught

(43:59):
We're not going to get caught.
I'm like, what is, it doesn't matter.
It doesn't matter.
We're not going to get caught.
Okay.
I think that's another huge point, equally as important as Neil's point, right?
Like in our current culture and the reason why our current culture is collapsing is because
many people hold that view and they say, we think we can get away with this thing.
We can reduce the quality of our product, reduce the size of our product, but put it

(44:22):
in a bigger bottle and, you know, and call it a new and improved.
and we can get away with that because the laws don't prevent us from it
and the consumer doesn't have the tools to figure it out or we can fool them.
This is why our civilization is collapsing.
Now, sometimes that behavior is fueled because of inflation,
but sometimes it's just fueled because we've let go of the moral imperative

(44:45):
to do what's right and what's honest.
And if you think of a civilization in which it's morally frowned upon
and the person behaving in the way that Pantcher just described
gets quickly terminated from their job or demoted or at least has to have a meeting with a superior
to explain why you don't do that, which is immoral, all the consequences of it.

(45:06):
And if you have a civilization in which everybody's gradually doing wrong onto each other,
the civilization declines to the point of collapse eventually.
And that's a big part of the problem.
I know in some of the debates I find myself having about Bitcoin with others,
it's like you i've i've posted in a couple of replies like spoken like someone who lives in a

(45:30):
collapsing civilization right it's okay for me to do harm to bitcoin bitcoiners yada yada yada
because there's not going to be any consequence or penalty to me and that's first of all just
first order thinking right if you're like if you're living on bitcoin and you're doing harm
to bitcoin you're harming yourself you're harming the environment in which you're living

(45:51):
But if you're harming other people, you're harming the civilization that you're involved in.
And it's one thing to harm other people who have initiated harm, but just to initiate harm against other people because you can get away with it is not how civilization is built.
That's how the law of the jungle operates.
And human beings can live in that, but not 8 billion of them, not with energy and electricity and computers and the Internet.

(46:17):
Like, primitive existence is where we had to.
And our history shows us that, right?
When empires collapse, we go into dark ages.
And the expectation that it can't ever happen again, because of what?
What's protecting us from it?
It's behaving in an ethical way that supports the continuity of civilization.

(46:37):
If we all start behaving in a manner that destroys civilization,
civilization will be destroyed.
And that's the moral battle that's being fought,
not with guns and bullets, but with ideas.
and it's important that we not lose it.
Sounds like a Sunday topic, Tomer.
And by the way, people are shocked when they do violate these kind of rules of society

(47:03):
and then they just rely on normalcy bias to protect them and it collapses in front of them.
How many times have I heard people say, like, you know, we all, we hear these things,
Like even from, you know, Normie land, people talk about, oh, groceries are more expensive.
But I think what I really like about what Tomer is saying is I have been hearing more and more from people things, this idea of shrinkflation.

(47:32):
Now, is that illegal or is it harming people when a bag of chips used to have 14 and an eighth ounce and now it has nine ounces and it's mostly filled with air?
Maybe, maybe not.
But in the end, like people are looking like how many times have you heard someone say, well, you just can't get anybody to work anymore.
So I think like some of these things that you're talking about, Tomer, are, you know, we're starting to see the evidence of it.

(47:59):
And I think even normal people are starting to see it.
The interesting thing, though, as we zoom out kind of back on the topic, like what Robert was sharing, is that we tend to I think we tend to think that the world revolves around us.
Right. The United States and the West is where all the economic power is.

(48:21):
And so it's very interesting to now see some of these sovereigns outside the United States say, hey, we're not going to go along with this anymore.
We're going to opt out. And this is why we see gold and Bitcoin rising, right, in terms of demand and cost or price.
And so I think, you know, I do wonder, like, is it some huge collapse or is it just this slow bleed of sovereigns and corporations saying, hey, we're opting out, this denominator is broken, and we're no longer interested in subjecting ourselves to the U.S. and their insurmountable debt and their overspending.

(49:04):
Curious to hear people's thoughts on that.
Well, I'll weigh in very quickly and then see that.
I think the United States was, and I hate to say was, but it was the greatest country that ever existed because it stood for something that no other country before it did, which was the rights of the individual, the right to life, the right to property, the right to the pursuit of happiness.

(49:28):
And it became widely imitated, maybe not imitated as well as in the United States, but the whole world moved to democratic forms of government from monarchist forms of government because the whole world wanted to be America.
And unfortunately, what we're seeing now is a degradation of the institutions that made America great.

(49:53):
But is it something mechanical? No, it's the ideas of the people in the same roles that people held in the 1800s and the early 1900s. It's just the people have bad ideas and they're executing those ideas poorly. They're executing at the expense of others to the benefit of themselves.

(50:15):
It shows the fragility of the system, but when everyone shared the same ideas, the system itself was much more robust.
And so it goes to show that the ideas held by people and enforced by people as a matter of how they conduct themselves matter.
The system is not independent of the morality of the people who use it.

(50:38):
And I dare say that's true about Bitcoin too.
Right. There's a lot of people who seem to think Bitcoin is immune to any wrongdoing by any people.
And if the community of Bitcoin becomes degenerate then Bitcoin won do what it supposed to do because it a community that enforces its usage its rules the changes to it and so on and so forth So that I feel like I

(51:03):
been really doing a lot of lecturing this morning. So I just said that. It's outstanding, Tomer.
It's outstanding. Yeah, I always appreciate hearing Tomer's insights. Robert's as well.
it's funny how we can blend these things, right?
We've gotten into some philosophical things,

(51:23):
but we've also been able to touch on,
I think the broader picture and see what's going on.
All of these are kind of science, right?
Gold, the 30 year,
like people look at these different things.
And what I think we're trying to say
is the trend is your friend.

(51:44):
We're going to continue to see these types of,
things happen and you should be paying attention to them if you're not already.
So thanks for joining us, guys.
10 a.m. Eastern every day.
We'll do this again tomorrow.
We'll start winding down the show, but I did want to go to Captain Trips.
He has his hand up.
Go ahead, sir.
Oh, yeah.
God bless Tomer.
That was just a wonderful lecture.

(52:06):
Just trying to keep up chat, T-B-T-ing, questions upon questions as you were going through it.
So denominating in gold using the stock market index and also real estate is an interesting, it does put it in perspective.
So trying to find a frame of reference in time.
In the 1970s, when we left the gold, the Brenton Woods Agreement, gold went from about 35 an ounce to almost 800 between 1970 and 1980.

(52:32):
In that time, the Dow Jones went up about 50 percent nominally, not adjusted for inflation.
So an entire decade, imagine only getting a 50% return in your 401k, but yet all the commodities are exploding.
So it seems that we might have a echo of that same phenomenon that was in the 70s.
yeah i wonder robert uh if you're still with us wonder if you've seen any correlations like uh if

(53:03):
you've drawn any um parallels there to what captain trips was talking about um or if that's something
that maybe you'll use on a future uh episode of of your youtube channel yeah uh actually actually
Yeah. Very early on in the channel, like I guess it would have been April or May.

(53:24):
I started talking about that concept that there's I don't I'm not big on analogs or like bars patterns, you know, for people who use straight.
Like that sort of stuff is generally pretty kind of dumb, in my opinion.
But historical analogs on a fundamental basis, I think, are useful.

(53:46):
given the structural demographic theory that Peter Turchin and, you know,
Hal and those guys have pretty extensively documented, I think,
and, you know, demonstrated to be, you know, accurate.
So by doing that, you know, you find that the last time
that there was really a surge in populism in the U.S.

(54:10):
was back from about 65 to kind of the mid-70s.
Well, if you look at that period of time, there was high inflation. There was very, very poor real returns. Right. We mentioned the S&P 500 divided by gold declined some absurd amount. I think it was like 90 something percent.
We know 1971, we know Nixon closed the gold window.

(54:35):
We also know, by the way, that corporate profits declined or were kind of choppy, range bound, right?
What we have been living in over the past 30 years, to Tomer's points, that he was making so eloquently before,
We have been living in this kind of broken economic system for the past 30-ish, maybe 40 years, depending on kind of when you started, arguably was the early 80s, where shareholder value is the only thing that matters.

(55:04):
Corporate profits are the only thing that matters.
Nominal U.S. dollar returns of financial assets is all that matters.
And, you know, that was not always how it's been.
That's how it's been for our entire lifetime.
But that's not how it's been, you know, like talking to my grandparents.
They remember this 1950s, 60s, 70s when it was kind of a different regime.

(55:27):
Like the S&P 500 didn't necessarily do that well, especially price in gold, obviously.
But even in nominal dollar terms, you know, this period of populism where, by the way, the average corporate profits and real returns of financial assets did poorly.
Corporate profits in dollar terms were basically sideways to slightly down.

(55:50):
The S&P 500 in gold terms was straight down.
And Robert, one interesting thing to note about that previous generation, they were wealthier than us.
Oh, for sure.
Despite all the stuff that we've invented, they all could have a single family income at a decent and safe job that provided a house and education and healthy food.

(56:11):
On one income, yeah.
Yeah. And the other thing, so we mentioned corporate profits and financial assets were not doing too well. You know what was doing well? You know what was outpacing money supply growth? Personal income. Right? The average American, the wages, the income of America, of the American worker was increasing at a faster rate than the money supply.

(56:39):
We have not lived under that sort of regime for at least 30 years.
But the average American, as Tomer said, you know, just kind of generally was we were wealthier, right?
The average American was better off.
But it's backed up by the data.
If you look at personal income over M2 money supply, you can see the personal income over M2 grew.

(57:00):
And what that means is the numerator was growing faster than the denominator.
We've been in the exact opposite regime over the past 30 years.
But like, yeah, you had one income. You didn't need a college degree. Right. Like the 68 percent of Americans don't have a college degree. You could go to work. You could on one income, raise a family, buy a house, start a family and all of that.

(57:22):
Right. So what I put forward as the thesis for like, how can it be that despite all of the innovation and technological improvement and productivity gains, we've gotten poorer?
There's a number of different hypotheses there.
And I don't want to say that the explanation I'm about to offer is like 100 percent.
But the values, the morals of our civilization changed.

(57:44):
And we no longer look out for each other and expect to see ours and our neighbors income growing.
We tolerate the pillaging of the value of the society, right?
Like to trade off the welfare of the population, the well-being of the population for higher corporate profits.

(58:04):
You can cite 100 million examples.
You just need to go down the most valuable companies and you start to see, well, you know, offshoring manufacturing, offshoring jobs,
elimination of jobs through automation without consideration, the pillaging of pension plans,

(58:24):
which were meant to help people into their old age, the exploitation of systems that have been
captured by unions. And I don't mean for this to be political, but a system captured by unions
takes care of its union members at the expense of the customers served by the industry often.
And not that a corporation has been doing a whole lot better, right, and shrinking their product and removing quality from it, unbeknownst to the consumer, so that they can get away with higher profit margins.

(58:54):
And just like there's no pride in work.
There's chasing after the almighty dollar.
And when you lose that pride in work and the purpose in work, the purpose becomes chasing the almighty, although easily conjured out of thin air dollar, you're chasing thin air.
and you're deploying all of your life's energy towards thin air.

(59:17):
Yeah, it's really, really good stuff this morning, guys.
Did want to go around the horn and see if anybody has any final thoughts.
I do have a meeting to get to, but this was fun.
And thanks so much, Robert, Tomer, Puncher.
I know you can come up every once in a while and to all our regulars.

(59:37):
But, yeah, let's go around the horn.
Texas Toast, any final thoughts this morning?
He is probably
fiat mining already. Neil,
thanks for your thoughts this morning and anything final here for everyone.
Oh, no. It's just good listening, good conversation.

(59:59):
BFP, go ahead.
Just great conversation and
Nah, kudos to you guys for talking about this crazy, crazy fiat currency denominated gold Bitcoin convoluted mess.

(01:00:22):
Captain Trips.
Hey, thanks, Bob.
We'll have these guys back on to talk about the fourth turning, maybe in a few weeks.
Yeah, that'll be fun.
I'd love to be a part of that, but maybe on a day where you're filling in for me.
That's fine. Yeah, I heard me have come up. So I know Robert and Tomer are familiar.

(01:00:44):
Yep, absolutely. Tomer, thanks again so much for piping in here. Final thoughts for this morning?
I'll leave it at what I said, but thanks for having me.
Yeah, absolutely. And puncher and then we'll cap it off with Robert.
I got my pumpkin spice, so it's fall, but unfortunately it's still 117 degrees here in Scottsdale, so it doesn't seem like it's fall.

(01:01:12):
Just remember, guys, what Tomer was talking about, those are the ties that bind to society.
And that all starts first to rebuild those ties with the individual and then within your family and your circle, in your Bitcoin circle.
So hopefully we can get back to that morality that binds a society and keep that in mind as you go for your day.

(01:01:33):
Thanks, guys.
Yeah, thanks again for coming up, Puncher.
Robert, cap us off here with some final thoughts.
Yeah, so everyone knows like home prices have been just up and to the right.
Stock market, especially on a long-term time frame, just up and to the right.
These things are moving parabolic.
Well, again, the other way to express that, the other way to say that the other side of that coin is that the dollar, if you invert them, the dollar has weakened by that much relative to corporate equities with S&P 500 or relative to shelter, which is the average home price.

(01:02:12):
And then, you know, you throw gold in there as well or Bitcoin.
Uh, so, so it's, it's, I think just once, once people find it can, can get their head
around that concept, that is not homes getting more expenses, not homes getting more valuable.
Everyone's picture of value or conception of value is totally screwed up.

(01:02:34):
Gold is not getting more valuable over the past year.
It's still a shiny rock that comes out of the ground.
That's it.
It's just a shiny rock.
That's it.
It hasn't been anything more than a shiny rock.
Same thing with shelter, with a single family home. If anything, that home is getting, especially existing homes, are getting less valuable because they're 50, now 60, now 70 years old, right? They're decaying. They need a new roof, new plumbing. So if anything, it should be falling in value.

(01:03:00):
But once you realize that it is, in fact, not that housing has gotten 40% more valuable or that gold has gotten 40% more valuable over the past couple months, but rather that the dollar purchases that much less, you need that many more dollars because the dollar is weakening.

(01:03:21):
of the denominator is the issue.
So yeah, I pretty much only want to be
in things that are not dollar denominated,
you know, like Bitcoin.
Yeah, really good stuff.
And I do think we could hammer out a lot more.
And I think we will.
And Bob, sorry, sorry.

(01:03:41):
One final little thing.
So the reason that the denominator of the dollar is failing
is due to the fact that it can be printed at will.
What is the antidote to an oversupply of U.S. dollars, which is why it's failing?
Scarcity.
Do you look at the most scarce assets on earth?
Bitcoin is amongst the top two in terms of the lowest amount of supply increase.

(01:04:05):
So the antidote to the issues with the dollar, the antidote to an oversupply is scarcity.
That concept is going to be the key concept, I think, to grasp.
Yeah, and I do think that...
Great stuff, Robert. What a great simplification. Bring it right down to earth like that.

(01:04:25):
There's a new, well, I don't want to say new, but there's a YouTube video going around from a professor.
And I haven't looked too much into it, but this guy, I'll try to post it later.
But there's this gentleman, I think he's Chinese descent, but from Canada,
who really just lays down the gauntlet for a lot of this stuff that we've been talking about today.

(01:04:52):
Mainly that final point there that Robert put out.
And so I'm going to try to get in touch with this guy,
but he basically is arguing with a lot of his students because they don't realize the new regime.
And I think that's what Robert's getting at.
The denominator is broken and scarcity is the key. And one of the arguments that made me think of this, that this professor is making, is that everyone in our societies, at least Western society, is convinced that the dollar is scarce.

(01:05:28):
And so that's why people spend so much time going after it.
But I'll try to post some of that.
And if you guys get time, take a look at it.
I think you'll find it super interesting.
Haven't seen that he's come to any Bitcoin conclusions yet, but I think maybe we're headed there.
And if we have people in higher education actually speaking truth and asking questions to people that are trying to be educated,

(01:05:52):
why, you know, there's simple things like why is there poverty? Why are there poor people if
dollars can be created infinitely and things like that? I think these are good discussions and
they're fun to see people's eyes open up to this new, like I'll call it regime or these new realities

(01:06:12):
and to see where your biases or how you've been educated so far have really led you astray.
So, guys, if this is your first time being with us, we do this every weekday, 10 a.m. Eastern.
We'll do it all again tomorrow.
Thank you so much again to everybody who joined us, everyone who constantly listens in, all the speakers, people who are coming up.

(01:06:36):
And, hey, we had a record today, a new record for comments, 48 in the space, which I'll give Orion a lot of that credit.
Lots of stuff he posted in there.
So thank you for that.
also wanted to thank our new producer eric uh for keeping that connection steady and uh taking some
of the pressure off me but uh hope to see you guys tomorrow want to wish you guys a wonderful wednesday

(01:07:00):
that feels like a tuesday and uh yeah we'll see you tomorrow wanted to remind you as well don't
shit coin
it's like bringing a knife to a gunfight
that use fiat currency as a store of value.

(01:07:27):
We call them the core.
We call them the core.

(01:07:48):
Thank you.