If Trump Takes the Strait & AI Takes Your Job… What Happens To Bitcoin?

[0:01] Yo, welcome back to another edition of
[0:05] the Jack Mallers Show. I am your host
[0:07] Jack. And you are listening to mailbag
[0:11] Monday episode 126.
[0:14] Today's title, if Trump takes the
[0:16] straight and AI takes your job, what
[0:19] happens to Bitcoin?
[0:21] Uh should be a fun episode of the Jack
[0:23] Mallers Show. I am your host, not a
[0:26] professional podcaster. Should be a fun
[0:27] episode, um but it will be a shorter
[0:29] one. Just a heads-up, I got a lot going
[0:31] on this week. Uh you guys will learn.
[0:34] And uh Dylan doesn't have unlimited
[0:36] time, either. So, we've got no
[0:40] uh
[0:41] uh uh uh
[0:42] no grind my gears, excuse me, and uh a
[0:44] little bit shorter of an agenda. But,
[0:46] we're going to take a look at I mean,
[0:47] can't ignore uh the war is back on. Uh
[0:50] fireworks going off in the straight
[0:52] again. Uh and I want to keep digging in
[0:56] in the AI topic. Um I don't know what to
[0:58] make of it,
[1:00] but there's really interesting stuff
[1:02] going on. Some of the stuff we've been
[1:04] talking passively about over the recent
[1:06] months, and it is really gaining my
[1:09] attention. And then, of course, we'll
[1:11] check in on yield soaring, the dollar,
[1:14] Bitcoin, where this leaves us within the
[1:16] bear market, uh and we should have time
[1:19] for some Q&A.
[1:21] Shall we?
[1:22] I hope you guys are well. Let's do it.
[1:25] Okay, ladies and gentlemen, I'm talking
[1:27] to you all at a Bitcoin price of 62,060
[1:31] US dollars. That puts Bitcoin's market
[1:33] cap at 1.24
[1:35] trillion dollars.
[1:37] Our all-time high has not changed.
[1:44] Where is it?
[1:48] There it is.
[1:50] 126,160.
[1:52] We are now over 50% off our all-time
[1:54] high at 50.8%.
[1:56] October 6th, 2025. It's been 280 days
[1:59] since Bitcoin was at its all-time high.
[2:03] The last Bitcoin block mined since I hit
[2:07] stream was block height 957,907.
[2:14] Okay, let's go. As you guys know, we
[2:17] asked the same four questions for quite
[2:21] some time now cuz I've held the opinion
[2:24] I don't think the street is going to be
[2:26] back to normal anytime soon. It doesn't
[2:29] make sense to me how this conflict is
[2:30] going to end.
[2:32] Politics aside, that has a lot to do
[2:34] with energy, strategic petroleum
[2:37] reserves,
[2:38] inflation, commodities, and then of
[2:41] course decisions the Federal Reserve is
[2:43] making, decisions the US Treasury is
[2:45] making. Therein lies the future for
[2:47] Bitcoin's price in the immediate term.
[2:49] You know, I've said Bitcoin is both
[2:52] technology plus fiat liquidity. It's a
[2:55] combination of both. It is both like a
[2:58] tech stock in that it's a new disruptive
[3:01] technology. It's a technology
[3:03] phenomenon. It solved the Byzantine
[3:04] generals' problem. It created digital
[3:06] scarcity. So, there's a tech aspect to
[3:07] it. And the more the technology
[3:09] improves, the more companies adopt it,
[3:11] the more banks adopt it, the more cool
[3:13] [ __ ] we can do with it. Cross-border
[3:15] payments, different ways to save wealth.
[3:18] You got multi-sig, you got proof of
[3:20] reserve. So, it will dematerialize and
[3:22] disrupt existing financial industries.
[3:25] But then the other part of Bitcoin is
[3:26] more like a hard asset, more like gold,
[3:29] more like precious metals, which is just
[3:30] an expression of fiat liquidity. It's
[3:33] it's currency debasement. It's how you
[3:34] monetize short dollar. How you monetize
[3:36] chaos. And Bitcoin kind of lives in this
[3:39] really interesting hybrid where people
[3:41] say, "Is it a tech stock or is it gold?"
[3:44] Both. It's a new technology network
[3:48] that is also the hardest money mankind's
[3:51] ever conceived.
[3:52] And so the reason we care about conflict
[3:55] in the Middle East as Bitcoiners
[3:57] is obviously there are proxy wars being
[4:00] fought about the future world reserve
[4:02] currency,
[4:04] how oil and energy is priced. Is it
[4:07] going to be priced in dollars? Is it
[4:08] going to be priced in gold? That is why
[4:11] we care. So the four questions: Is the
[4:13] Strait of Hormuz still closed? Is the
[4:15] conflict still ongoing? Are global
[4:17] supply chains still disrupted? And can
[4:19] global that survive this disruption?
[4:22] Until these are answered, the political
[4:25] noise is irrelevant.
[4:27] Okay, what has happened over the last
[4:29] week? Well, in the last 24 hours, um the
[4:32] war is back on. So just for context, if
[4:35] you're new to the show or if you're born
[4:36] yesterday, a little bit of a recap, um
[4:40] this war started arguably the last days
[4:42] of February or the first week of March,
[4:44] depending on how you count, and we were
[4:46] told oh it's it's going to last a few
[4:48] days, it's going to last a few weeks.
[4:49] Mind you, this was on the back of the
[4:51] Venezuela operation. So there's an
[4:53] argument to be made that maybe the US
[4:54] thought this would be smooth sailing, it
[4:56] would be very easy. They were maybe
[4:58] riding high on how well the Venezuela
[5:01] operation went. I have no idea. I'm not
[5:03] in the war room, so who knows? I don't,
[5:05] that's for certain.
[5:07] But this has dragged on far longer than
[5:09] what we have been told. Uh we are now in
[5:12] the middle of July, past Memorial Day
[5:14] past July 4th, and
[5:17] we're still we're still in it, and the
[5:19] strait is still closed.
[5:21] Over the last few weeks, we had seen an
[5:22] MOU,
[5:24] and it looked like
[5:25] the countries had agreed to terms,
[5:28] the countries were going to resolve of
[5:29] the conflict, the strait was going to
[5:31] get back to normal, inflation was going
[5:34] to go away,
[5:36] and we would go back to a pre-forever
[5:39] war type world in the Middle East. Trump
[5:42] has midterms coming up. It seemed to all
[5:44] make sense, and everyone was like,
[5:46] "Okay,
[5:47] That was weird. Lasted longer than we
[5:49] thought.
[5:50] Trump probably didn't want all this
[5:52] inflation.
[5:53] Yada yada yada, but we solved it. And
[5:55] then you wake up, and all of a sudden,
[5:58] what hits the headline? Trump, "We're
[6:00] taking over the Strait of Hormuz." Uh
[6:03] this from Trump earlier today. The
[6:06] Hormuz Strait is open and will remain
[6:08] open with or without Iran.
[6:11] "We are reinstating the Iranian
[6:12] blockade, so named because it is
[6:16] ships or customers from entering or
[6:17] leaving. All other countries will have
[6:20] fair and open use of the Strait. The USA
[6:23] will be from this point forward known as
[6:25] the guardian of the Hormuz Strait. But
[6:27] as such, and as a matter of fairness,
[6:30] will be reimbursed at the rate of 20% of
[6:33] all cargo ships
[6:34] for any and all costs necessary to do
[6:37] the job of providing safety and security
[6:39] to this very volatile section of the
[6:42] world. The process information will
[6:45] begin immediately. Thank you for your
[6:47] attention to this matter. President
[6:49] Donald J. Trump."
[6:52] Javier adds commentary, says, "Breaking,
[6:54] US President Donald Trump says
[6:55] Washington is reinstating a naval
[6:57] blockade against Iran, but also says the
[7:00] US will demand a 20% fee on all cargo
[7:03] shipped to guarantee the Strait of
[7:05] Hormuz is open to other countries. On
[7:07] first reading, that equals to $15 per
[7:11] barrel."
[7:12] Wow. So, I was laughing with myself, and
[7:15] hopefully a lot of you listeners can
[7:17] laugh with me. Does this mean that the
[7:19] Strait of Hormuz is open? Is it closed?
[7:22] I don't know. Trump literally says in
[7:25] the screenshot, "The Hormuz Strait is
[7:27] open and will remain open to everyone
[7:28] except Iran." Now, can we take his word
[7:31] for it? I have no idea. This is I mean,
[7:35] this just again, guys. You guys know how
[7:36] I feel about governments, about
[7:38] politicians. I'm not the biggest fan. Uh
[7:40] far from it, actually, as you guys are
[7:42] aware. So, you know, can you take
[7:44] politicians at their word? Can you trust
[7:46] the mainstream headlines? No, right? The
[7:49] war was ending, the war is open, the war
[7:50] is ending, the war is open. If you have
[7:51] been following and trading off of and
[7:53] trying to plan your life around what all
[7:56] governments around the world have
[7:58] promised you and communicated to you
[7:59] over the last months regarding this
[8:01] conflict, I mean, you'd be dead, right?
[8:04] It's just gotten silly. So, this was
[8:06] Trump uh on Fox News this morning. Um I
[8:10] just wanted to play the clip cuz there
[8:13] are no words uh of mine that could do it
[8:15] justice.
[8:19] >> We hit them very hard last night. Every
[8:21] time they send a drone, we hit them very
[8:22] hard. But we had a deal. What nobody
[8:25] knows, we had a deal. It was a done
[8:27] deal. And then they broke it. They
[8:28] always break it. We've had 10 deals with
[8:31] these people.
[8:32] And so, we're just going to hit them
[8:33] very hard. And we're going to we're
[8:35] going to keep the uh strait, and we'll
[8:37] probably run it will become the guardian
[8:39] of the strait. Maybe we'll call it the
[8:41] guardian angel of the strait. Yeah. And
[8:43] we should be reimbursed for that. When
[8:45] we do that, we're going to be reimbursed
[8:46] because the other nations are very
[8:48] wealthy, they're on our side.
[8:50] And we can't be expected to do that for
[8:51] nothing, unlike we had for many years.
[8:53] You know, if we
[8:54] we guarded the strait for 50 years more,
[8:58] and we never got paid for it. They made
[9:00] all the money, and the United States was
[9:02] just, you know, not they wouldn't It's
[9:05] amazing. It's uh we we never make We
[9:08] guarded it for nothing.
[9:10] And now we're going to guard it, and
[9:11] we're going to get paid for guarding it.
[9:12] A lot of money.
[9:14] But we just want to be reimbursed for
[9:16] doing all of this, for putting our
[9:18] people in danger.
[9:19] But we're really not putting people
[9:21] We're really saving people.
[9:25] >> Okay, so is the strait open? Is it
[9:28] closed? Are we in war? Are we not?
[9:31] I have no idea anymore, man. I have no
[9:33] idea anymore. Um we'll try and answer
[9:36] our own questions based on charts, based
[9:39] on data. So, taking a look at the Strait
[9:42] traffic, as we do, we are back to zero.
[9:46] So, right now, nothing is getting
[9:49] through the Strait of Hormuz. So, today,
[9:51] as I'm talking, is the Strait of Hormuz
[9:52] open? No.
[9:54] Is the US going to open it? By the way,
[9:56] this idea that we are like
[9:58] the new What do you say? Hold on, I
[10:01] don't want to misquote him. It's a It's
[10:03] a hilarious line. The guardian of the
[10:05] Hormuz Strait? If we are the future
[10:07] guardians of the Hormuz Strait, um, that
[10:10] kind of sounds like a forever war. It I
[10:13] mean, I don't know, guys. I, again, not
[10:15] politician. But, it doesn't sound like
[10:18] uh our
[10:20] uh
[10:20] deployment of weapons and troops and
[10:24] time and energy in the Middle East is
[10:27] ending anytime soon, especially if we
[10:29] are now the emperors of the Strait of
[10:31] Hormuz. Is that going to work? How's
[10:33] that going to go? Are we going to agree
[10:36] to terms? Uh obviously, the Iran side,
[10:39] I'm American, right? So, what news do I
[10:41] get? American news. The other side says
[10:44] they're the ones that shut down the
[10:45] Strait. They're the ones that control
[10:47] the Strait. They will open the Strait
[10:49] only when the US starts to cooperate.
[10:51] Who's telling the truth? Who's not?
[10:52] What's going on? Nobody knows. Only if
[10:54] you're taking a swim in the Strait of
[10:55] Hormuz, would you probably have the
[10:57] slightest idea of the truth. But, we can
[10:59] look at data, and the data says
[11:01] nothing's getting through the Strait.
[11:02] Um, oil is starting Oil futures is back
[11:06] on the rise. So, um the price of oil is
[11:09] going the wrong direction if you are the
[11:11] Trump administration, if you are Western
[11:14] sovereign nations, you do not want to
[11:15] see oil back up because that's
[11:17] inflation, those are how you lose
[11:18] elections. Um, that is how you lose the
[11:21] confidence of the people. Now, other
[11:24] data that we can look at. One way to
[11:26] understand, hey, are energy markets,
[11:29] commodity inflation, oil, are things
[11:31] taming down? Are we starting to see
[11:33] signals that the conflict is slowing
[11:35] down, is getting easier, and we're
[11:36] getting back to normal life? Uh that is
[11:39] the Strategic Petroleum Reserve, the
[11:41] SPR, because if the United States
[11:43] continues to drain theirs, then it
[11:45] doesn't really matter what anybody is
[11:47] saying. We're We're not seeing normal
[11:49] flows of oil and broader energy markets.
[11:52] We're needing to deplete what is a
[11:54] reserve for emergency. Now, the Wall
[11:56] Street Journal
[11:57] came out with an article about 10 hours
[11:59] ago, I believe. So, it was very, very,
[12:01] very early this morning, US time. And
[12:04] the headline of that article read,
[12:05] "Frequent oil draws from the US
[12:07] Strategic Reserve push the old system to
[12:09] a breaking point."
[12:11] "Fracturing wells, leaky pumps, and
[12:14] other wear and tear are straining the
[12:16] Gulf Coast."
[12:17] So, on the right, Mohammed tweets from
[12:20] the Wall Street Journal article on the
[12:22] US Strategic Petroleum Reserve, noting
[12:24] that the reserves have fallen to their
[12:26] lowest level since 1983.
[12:30] Not good. And you can see in the image,
[12:33] highlighted, is where the SPR was
[12:37] pre-COVID. So, May 1st, 2020, right when
[12:40] the virus really hit, at least America,
[12:44] in my life. Obviously, it depends on
[12:45] where you are, where who you are, and uh
[12:48] uh the listener, it depends on your
[12:50] life. But, for me, that was right around
[12:53] the time where I wasn't allowed to go
[12:55] outside. The world changed as we know
[12:57] it, and you can see that the SPR has
[12:59] just been taking dives and dives and
[13:01] dives and dives lower. Reasons for this
[13:04] are varied. Obviously, we needed to dig
[13:06] into the SPR when the world effectively
[13:08] shut down due to COVID. And then we
[13:10] needed to dig into the SPR when we
[13:12] sanctioned Russia off the global
[13:13] financial system. And now we need to dig
[13:15] into the SPR due to this conflict in
[13:18] Iran. And again, I'm just a data guy. Um
[13:21] care about Bitcoin. Uh I don't care
[13:24] about politics. Just trying to make
[13:26] understand what's going on. It gives me
[13:28] insights into the bear market. It gives
[13:30] me insights into decisions people are
[13:31] making. It gives me insights into where
[13:33] the world is going and what I want to do
[13:34] about it as a Bitcoiner. Um probably
[13:37] just stay humble and stack sats, but we
[13:39] will see. So, TLDR is the straight open?
[13:42] No, not today. Might be open tomorrow.
[13:44] I'll check.
[13:45] So, but that's why we ask these
[13:47] questions. I don't know, guys. Long time
[13:49] loyal listeners know that once I really
[13:51] started to get my head around this
[13:52] conflict, I thought there's no way it's
[13:54] any ending any time soon. None of this
[13:56] makes any sense. Um boy, is this hairier
[13:59] than the media and politicians are
[14:02] leaving us to believe. And here we are,
[14:03] halfway through July, and it looks like
[14:06] the conflict may escalate to its highest
[14:09] point. It may not
[14:11] This may be the hottest part of the war
[14:13] to date. And it's the middle of July.
[14:15] Interesting. So, we'll keep a pulse on
[14:17] it, obviously. Uh we'll ask the same
[14:19] four questions next week, but quite the
[14:21] updates which had a material impact on
[14:24] financial markets and Bitcoin, as I'll
[14:26] get to in a second. Uh firstly, I didn't
[14:28] want to go through this episode without
[14:30] checking in on our AI overlords. So,
[14:33] chapter one, checking in on our AI
[14:35] overlords. The reason this just really
[14:37] caught my eye cuz taking a step back,
[14:39] guys, um I didn't have the time this
[14:42] week to put all of this into slides. So,
[14:44] let me just try and voice over it
[14:45] quickly. But AI has become a national
[14:49] strategic imperative.
[14:50] It is both considered national defense.
[14:53] It is national strategy. We must win the
[14:56] AI race. That comes straight from the US
[14:58] government and the Trump admin. And that
[15:00] seems to be fairly bipartisan. That
[15:02] there uh is nobody's interested in
[15:05] losing the AI race to China. And both
[15:08] because we think it is important for
[15:09] domestically for us to grow ourselves
[15:11] out of the debt. For a country that is
[15:13] riddled with so much debt, so many
[15:15] deficits, that level of growth is
[15:18] necessary to grow your way out of your
[15:20] fiscal situation. And so again, that is
[15:22] both both sides of the political aisle,
[15:25] everybody can agree that we need growth
[15:28] to fight off the deficits, the debt,
[15:30] inflation, destruction of the currency.
[15:33] Um on top of that, it's considered uh
[15:36] defense strategic from a defense
[15:38] standpoint and that if we are going to
[15:40] continue to have the world's leading
[15:41] military and lead the world in many of
[15:43] the facets that we as a country find
[15:45] strategic, being the best at AI or up
[15:49] there with China is an imperative. You
[15:51] cannot underinvest in this industry.
[15:52] We'd rather overinvest, potentially
[15:54] misallocate capital at the margins, in
[15:57] an effort to ensure that we win. Now,
[16:00] one of the things that I had flagged and
[16:02] many others, by the way, it's not my
[16:03] unique idea, but one of the things that
[16:05] would be interesting is AI is in many
[16:08] ways a physical industry.
[16:11] You're seeing companies like Meta,
[16:13] Amazon, Microsoft, these Google, these
[16:17] tech giants who previously were
[16:19] producing lots of profit, lots of cash
[16:21] flow, and they would take their cash and
[16:22] buy back their stock. And it was an
[16:24] infinite money glitch in a way because
[16:26] it gave such a premium to the equity
[16:28] itself. These things were trading at
[16:30] such growth multiples, and you could buy
[16:33] these equities as like a sure-fire
[16:35] savings account because the company
[16:37] would keep growing, keep producing
[16:39] profits, and pour those profits into
[16:41] buying your bags.
[16:42] And so, now, why are equi- why is equity
[16:46] in a business not money? Well, you have
[16:48] counterparty risk. What if the world
[16:49] changes? What if leadership changes
[16:51] their strategy? You you have you know,
[16:53] Bitcoin, you don't do not have
[16:55] counterparty risk. There's nobody,
[16:57] there's no management you're trusting,
[16:58] there's no pivot to the strategy. It's
[17:00] 21 million. That's it. And so,
[17:02] obviously, you should not mistaken
[17:05] equity as savings, but the world has had
[17:07] no choice. They've had to monetize
[17:09] things in replace of the US dollar
[17:12] because
[17:13] fiat has just been destroyed and saving
[17:16] in it uh has destroyed your life. So
[17:18] anyways, you live in this world where
[17:19] these equities are savings accounts and
[17:22] you have these tremendously cash flow
[17:23] positive industries, but when AI started
[17:26] to become an imperative that everyone
[17:29] had to compete in and it was worth every
[17:31] penny you own and some to try and win
[17:35] this race, you started to see people
[17:37] rotating their cash flows not to buy
[17:39] back their stock, but to invest
[17:41] physically in AI. And this is so
[17:43] important because you're you the world
[17:45] is really changing and that these tech
[17:47] companies do not just have traditionally
[17:49] it was such a low cost business to run.
[17:51] You have to host your servers and you
[17:53] have to pay your engineers. And that's
[17:55] it. Now you're having to buy physical
[17:57] commodities, you have to build physical
[17:59] sites, you have to reinvest. I mean
[18:02] computer chips need to be rebuilt every
[18:04] few years. We know this from Bitcoin
[18:06] mining. We Moore's law.
[18:08] And so all of a sudden you had these
[18:10] tech giants which were just software
[18:12] companies, now they're hardware
[18:13] companies. Now they're physical
[18:15] businesses, right?
[18:17] And what makes that interesting is China
[18:20] has been for quite some time now better
[18:23] at building physical things than us.
[18:27] They can do it cheaper. They can do it
[18:29] faster, right? The story of China is
[18:32] they've been able to build whether it's
[18:33] the electric car, what whatever type of
[18:36] physical tool, physical utility,
[18:39] physical market good, they're able to
[18:41] build it relatively on par as far as
[18:44] whether it's the user experience, the
[18:45] quality, the quantity, but for a
[18:48] fraction of the price. And so the thing
[18:50] that I've been flagging is has anyone
[18:52] checked on the viability of China being
[18:55] very, very competitive or outcompeting
[18:57] us in AI? Like what's going to stop
[18:59] China from having an AI model that's
[19:01] just as good as Open AI or just as good
[19:04] as Claude or just as good as Grok, but a
[19:07] tenth of the price?
[19:09] I mean, would you pay
[19:11] 200 bucks a month for open AI or you
[19:13] know, $2 a month for the Chinese
[19:16] version? And mind you, I'm not asking
[19:18] people to pick whether they think the
[19:20] CCP or democracy is the future of the
[19:23] world. That's less to the point. When
[19:25] the US is so hyper financialized and
[19:27] everything's about margins and
[19:29] everything's about profit, right? Why
[19:31] isn't the iPhone produced in the US? Why
[19:34] is the iPhone produced in China? Does
[19:36] Tim Cook and Apple executives think the
[19:38] CCP is better than democracy? No, of
[19:40] course not. It should be abolished. The
[19:43] reason it's produced in China is because
[19:44] it's cheaper. It's better for their
[19:46] margins. It's better for their business,
[19:47] which means it's better for their stock,
[19:49] which means it's absolutely necessary to
[19:51] keep the US, you know, Ponzi-nomics of
[19:54] infinite deficits going. Keeps bond
[19:57] yields low. That's why. And so, what is
[20:00] the US going to do? Everyone's going to
[20:02] adopt these Chinese models if they're
[20:04] significantly cheaper and relatively the
[20:08] same strength.
[20:09] So, what are you going to do? Are you
[20:10] going to tell American companies they
[20:12] can't use Chinese models?
[20:14] Or are you going to let the free market
[20:17] and capitalism and, you know, you want
[20:20] these companies to have low cost, high
[20:21] growth. Like think of uh Square block,
[20:24] Dorsey's company.
[20:26] He fired half his company and he's using
[20:28] AI.
[20:29] If a Chinese model would save his
[20:32] company like 90% in expenses,
[20:36] as a shareholder, would you want which
[20:38] model would you want him to use? Well,
[20:39] it's it's a no-brainer. Who cares who
[20:41] [ __ ] built it?
[20:43] You And And a lot of the Chinese ones
[20:44] are open source. Use the cheap one.
[20:47] Right? So, this this implies the
[20:48] question. And the problem is that so
[20:51] much of the US economic growth recently
[20:54] has been AI and tech. I think it's 96%
[20:58] of GDP growth in the last four quarters
[21:00] is AI and tech related. And so, my whole
[21:04] point is if this AI bubble even gets a
[21:07] little bit of a pop,
[21:09] it's going to be a huge, huge, huge
[21:11] problem. And obviously, the US Treasury
[21:13] and the Federal Reserve can decide to
[21:15] paper over that potential misallocation
[21:17] of capital. And when I say misallocation
[21:19] of capital, the issue is
[21:22] people have invested trillions and
[21:23] trillions and trillions of dollars in
[21:26] American AI, whether it's in these
[21:28] companies directly, whether it's in the
[21:30] infrastructure, well, it's whether it's
[21:32] in the semiconductors. And if we realize
[21:34] like, oh [ __ ] Anthropic and OpenAI
[21:36] aren't worth close to a trillion dollars
[21:38] because the Chinese one is better. Well,
[21:40] how many people lose how much money? And
[21:42] what ripple effects does that have? You
[21:44] lose a bunch of money. [ __ ] now I got
[21:45] to sell my Bitcoin. Now I got to sell my
[21:47] bonds. Now I got to sell my stocks. And
[21:49] you get this cascading effect where the
[21:51] US financial system can't afford to have
[21:53] all these assets sold off.
[21:56] Tax receipts go down. So, you you get
[21:59] into like a very quick bailout level
[22:01] scenario. Like, AI has become that
[22:03] imperative to the US economy. So,
[22:05] anyway, sorry. Voice all that over. Now
[22:07] I read these articles that are on the
[22:09] screen. Uh the article on the left
[22:11] reads, "Chinese AI models surpass 30% of
[22:13] US developer traffic on OpenRouter as
[22:16] cost gap over OpenAI widens."
[22:19] Guys, I'm telling you
[22:21] Chinese AI models are now over 30% of
[22:24] the US developer traffic. So, US
[22:26] developers, companies, people in the
[22:27] United States are opting to use the
[22:30] Chinese models cuz they're either
[22:31] better, cheaper, or both. The key points
[22:34] is on the left, I'll I'll keep reading.
[22:36] "Chinese AI models have held above 30%
[22:38] of US originating token traffic on
[22:40] OpenRouter every week since February
[22:42] 8th, peaking out at 46% up from 4 and
[22:46] 1/2% in 2025."
[22:49] DeepSeek V4 Flash costs 0.09
[22:53] cents per million input tokens versus $5
[22:58] for ChatGPT and Claude Opus 4.8, Roughly
[23:02] 55 times cheaper. And what's funny is
[23:05] the writing has always been on the wall.
[23:08] China graduates more engineers per year
[23:11] than Americans have in some, in total.
[23:15] They just have an advantage in building
[23:18] [ __ ] right now because the dollar is the
[23:20] world reserve currency, because
[23:22] globalization, because
[23:24] hyper-financialization. These are all
[23:26] policy decisions.
[23:28] It's not like Americans are getting
[23:29] dumber. It's not like we aren't focused
[23:31] in value engineering enough.
[23:33] If we stopped printing money, made hard
[23:36] assets the world reserve currency, and
[23:39] brought jobs back home, and started
[23:41] reinvesting domestically, you solve the
[23:43] problem. This is a This is a policy
[23:46] choice. You want easy money, you want to
[23:48] print pieces of paper out of thin air,
[23:50] this is just what happens. It's just a
[23:52] matter of fact.
[23:55] It's It's as clear as day. It's like,
[23:56] wait a second. Why are we going to be
[23:58] better at China of an industry that
[24:00] requires physical goods, physical
[24:02] resources, infrastructure?
[24:04] What makes us think we're going to be
[24:06] competitive? Unless we get government
[24:08] backstop, tons of money money printing,
[24:11] really sincere strategic investment in
[24:13] the industry, which
[24:36] Test. Am I back?
[24:38] Sorry. Not a professional podcaster. Let
[24:41] me check the chat. My mic blew out.
[24:47] Um
[24:49] I think I'm okay. Dil, let me know
[24:51] otherwise. Uh so, anyways,
[24:53] uh yeah, I just I I think that this is a
[24:56] serious concern. I think that this is a
[24:58] serious concern. I mean, obviously
[25:00] personally I'm not concerned.
[25:02] The
[25:04] the AI race, I mean, I'm a free markets
[25:07] guy. I want whoever builds the best tool
[25:08] to win. That's who I think should win.
[25:11] Those are the tools that will be built.
[25:12] Let's see what Dylan says. Sorry about
[25:14] this guys. Uh sound is a little weird.
[25:20] Sound is weird.
[25:23] Sorry. Dylan's now talking to me.
[25:26] Sounds like I'm in a can.
[25:33] All right. Don't want that.
[26:11] Yeah, I don't know what happened to uh
[26:13] my my microphone here broke.
[26:19] Damn. That's super shitty. Let me bring
[26:21] my laptop close to me so that you guys
[26:24] can hear me better.
[26:26] That sucks.
[26:35] Okay. Can you guys
[26:39] Can you guys still hear me?
[26:45] Okay. [ __ ] it. Whatever. Life goes on.
[26:48] Sorry, my mic just broke. Bear markets,
[26:50] man. They spare nothing, not even my
[26:52] mic.
[26:56] Um
[26:57] Okay.
[26:58] So, this is Let me bend my computer
[27:01] down. I'll just talk into this laptop.
[27:03] Uh this is the problem. The problem is
[27:10] Uh the problem is that we're just not
[27:12] necessarily equipped to guarantee that
[27:14] we're going to win in this industry.
[27:17] Which, I mean, it is what it is, you
[27:20] know?
[27:22] Take this out.
[27:25] There we go.
[27:38] All right. Sorry, I'm getting too much
[27:39] chat about my mic. I got to fix it.
[28:12] Okay.
[28:13] We got to just roll with the punches,
[28:14] guys. I don't have unlimited time,
[28:16] unfortunately. Just going to talk into
[28:18] this computer.
[28:19] Um okay. So, that's the issue. We move
[28:22] on.
[28:23] Uh
[28:25] So, more articles that I found
[28:28] concerning
[28:29] uh China tightening the screws. So, on
[28:31] the left from the Wall Street Journal,
[28:33] China weighs limits on the AI models
[28:35] that American companies love.
[28:38] And the subtitle of the article from
[28:40] Wall Street Journal reads, Beijing talks
[28:42] to top companies about protecting their
[28:44] technology after it wins fans in Silicon
[28:47] Valley.
[28:48] So again, if you're a company in the US
[28:50] and you can use something 55 times
[28:53] cheaper than the other companies, like
[28:57] it's a tough sell to be like, "Nah, nah,
[28:59] nah, don't use that." Um
[29:01] it makes for a very interesting time.
[29:03] And then on the right, CEO of Chinese
[29:06] Anthropic rival tells Elon Musk that
[29:08] China will have Fable 5 classic AI model
[29:11] before next year.
[29:13] Quote, "It won't take that long."
[29:16] So
[29:18] again,
[29:19] um
[29:20] this will be interesting. And
[29:22] like from from a Austrian economics free
[29:25] market guy, who cares? Let whoever
[29:28] builds the best technology win the
[29:29] market, and competition breeds
[29:31] innovation. It's good for all of us.
[29:34] It's good for the consumer that
[29:35] everyone's competing, that everyone
[29:36] wants to give you cheaper stuff, better
[29:38] stuff. It's good.
[29:40] But what's it mean for the US financial
[29:42] system? What's it mean for the price of
[29:44] equities and some of these stocks? Are
[29:46] people still going to want to buy
[29:48] Facebook at a crazy multiple if they've
[29:51] they're using all their cash flow in an
[29:53] industry that they might not be able to
[29:55] win?
[30:06] It's not using my laptop mic.
[30:11] Man, I could cry.
[30:13] Bear market is kicking my ass.
[30:19] Sorry.
[30:22] Going to keep trying here.
[30:27] I can't even get a working microphone,
[30:29] huh?
[30:32] Oh, man.
[30:46] >> You know what I'm going to do? I'm going
[30:47] to grab my uh AirPods. Sorry, one
[30:50] second.
[32:00] Okay.
[32:01] How do I sound now? Better?
[32:06] Hopefully.
[32:08] Should be connected uh to my AirPods.
[32:12] Whatever.
[32:13] I tried. Okay.
[32:16] Um
[32:18] Sorry, guys.
[32:20] Bear market is whooping my ass. On that
[32:22] On that uh topic, my essay should come
[32:25] out this week as well. I think it's it's
[32:27] a fascinating read. We'll see.
[32:30] Um
[32:31] Okay.
[32:32] So, yeah, China is getting far more
[32:35] competitive in AI. If there's any
[32:37] takeaway, just let it be that. Why does
[32:39] that matter? Ultimately, for us
[32:41] consumers, it's a good thing. We're
[32:43] going to get cheaper AI, better models.
[32:46] I mean, competition is good for us. We
[32:48] do not want too much regulation. We
[32:50] don't want governments telling people
[32:52] what they can and can't build. It's all
[32:54] good for the end user. But, it might not
[32:56] be good for US equities. It might not be
[32:59] good for the US financial system because
[33:01] all of this AI investment was creating
[33:03] jobs. It was bringing, you know,
[33:05] physical infrastructure back to America.
[33:08] It was helping with GDP growth. And if
[33:12] China comes in and says, "Wait, you
[33:14] know, all these companies are not worth
[33:16] what you think they're worth, then
[33:19] that's going to be a problem, right?"
[33:20] And so,
[33:22] the other thing I wanted to resurface
[33:24] now cuz these are topics that I've been
[33:25] talking about over many months.
[33:28] And now it seems to be resurfacing or at
[33:31] least I think it's worth bringing them
[33:32] up once more.
[33:34] Um AI doesn't need to take everybody's
[33:36] job. It just needs to take some jobs.
[33:38] So, this is Philip Su,
[33:40] early OpenAI engineer who shipped the
[33:42] ChatGPT desktop app.
[33:45] He says, and I quote, "Winter is coming.
[33:47] That is my warning. His math is the part
[33:49] nobody says out loud. You do not need AI
[33:52] to replace 98% of jobs for a collapse.
[33:55] In America, 4% unemployment is already a
[33:58] world of hurt. 6% is depression
[34:00] territory. So, AI, even taking 5% of
[34:03] white-collar work, is enough to break
[34:05] the whole system."
[34:07] He's not predicting that your job
[34:09] vanishes. He's predicting the small
[34:10] slice that does is enough to drown the
[34:13] rest of you.
[34:14] His advice is brutal. Get into the top
[34:16] 25% of developers or start gathering
[34:18] nuts like a squirrel.
[34:20] So,
[34:21] again, I've this is something that if
[34:23] you're a loyal listener to the show,
[34:25] I've been saying over and over and over
[34:26] again.
[34:27] Um when you have a financial system
[34:29] that's so levered,
[34:31] that's sitting on so much debt, It just
[34:33] takes a mere gust of wind to blow it
[34:35] over. It doesn't It It You don't need AI
[34:38] taking everyone's job. You know, cuz
[34:40] people's uh retort back to that is, "No,
[34:44] AI's not going to like How is AI going
[34:47] to spread cream cheese on my bagel? Come
[34:49] on, get the [ __ ] out of here. Get a load
[34:51] of this guy." Yeah, I know. I'm not
[34:53] saying AI is going to spread cream
[34:55] cheese on your bagel and pour your uh
[34:58] Frappuccino or whatever. What I'm saying
[35:00] is AI will probably
[35:02] and already is taking some jobs, and
[35:06] that's enough. That's enough to be the
[35:09] gust of wind that can blow the whole
[35:11] thing down.
[35:12] Um
[35:13] to me, now it makes sense why everyone
[35:15] flipped on the AI jobs topic. So, I
[35:18] found this article from The Wall Street
[35:20] Journal incredibly timely. The title
[35:23] reads, "Big Tech has suddenly flipped on
[35:25] the AI job AI jobs wipeout scenario. As
[35:28] public opinion of AI shifts into the
[35:30] negative, warnings of mass employment
[35:33] reductions diminish." And we pointed
[35:35] this out on the show long ago. We're
[35:37] like, "Whoa, remember when everyone was
[35:39] like AI is going to do everyone's job.
[35:42] We should be focused on UBI. No one's
[35:44] going to need to work anymore." And then
[35:47] all of a sudden it changed where
[35:48] everyone is like, "Whoa, why are you
[35:49] being so doomer? Everyone's still going
[35:51] to have a job. What are you talking
[35:52] about?" And it was clear that the the
[35:55] big tech industry had flipped um and was
[35:58] growing concerned with this broader
[36:00] topic. And to me, I'll just bring it up
[36:02] again. This is from Time magazine this
[36:04] time. "OpenAI wooes Trump administration
[36:07] as an investor." And to me,
[36:10] I had highlighted this last week and
[36:11] I'll do so again.
[36:13] What is the nature of this relationship?
[36:15] Would you say that this is strategic for
[36:18] OpenAI and the US government? Is this a
[36:20] bailout? Because what does the US
[36:22] government do?
[36:24] Does the US government because
[36:26] I guess my like just passing thought for
[36:29] you guys is
[36:31] is the US government going to begin to
[36:32] subsidize some of these AI companies to
[36:36] make sure that they're competitive with
[36:37] China and the investment keeps going.
[36:39] And all of this obviously is highly
[36:41] inflationary and good for Bitcoin. At
[36:43] the end everything is good for Bitcoin.
[36:45] But just trying to make sense of the
[36:46] world as it's playing out in front of
[36:48] us,
[36:49] this relationship doesn't make any sense
[36:51] unless it is an effective government
[36:53] backstop, unless it's an effective
[36:55] effective subsidy. And if you're the US
[36:58] government, what do you do? Do you tell
[37:00] the Squares of the world, the Strikes of
[37:01] the world, no, you guys aren't allowed
[37:03] to use Chinese models, you need to pay
[37:05] extra to American companies?
[37:09] Well, that's incredibly dangerous
[37:10] precedent to set. That's also not very
[37:12] good for these equities. Like obviously
[37:15] if Dorsey's able to grow his profit
[37:16] margins even more
[37:18] and his whatever is net profit even
[37:21] more, that's good for the stock market,
[37:23] good for American wealth effect, good
[37:25] for tax receipts. If you start
[37:27] destroying the equity value of these
[37:29] businesses by forcing them to use more
[37:31] expensive models because America is more
[37:33] expensive as a result of monetary
[37:35] policy, globalism, etc. etc. being the
[37:38] world reserve currency. So you see
[37:41] the uh the the
[37:43] How do I say it? And we'll get into it
[37:45] uh in a second, the next chapter.
[37:47] Everyone's trapped. Like there's a trap
[37:49] everywhere you look.
[37:51] So anyways, let's keep a tab on the AI
[37:53] stuff. Um
[37:55] uh you know, as I I don't want to be too
[37:57] repetitive, so next week if nothing's
[37:59] materially changed, I won't bring it up,
[38:01] but as I start to see potential cracks,
[38:04] cuz by the way, I'm not making an out an
[38:07] outright prediction, I'm not saying AI
[38:09] is going to fail. AI is here to stay.
[38:10] It's materially changed my life. I'm a
[38:12] big fan of AI. But it has implications
[38:16] on national security, on our strategic
[38:20] priorities, on growing our way out of
[38:22] the debt, on monetary policy. I mean, it
[38:26] is now too big to fail.
[38:28] Unless we're willing for like Western
[38:31] civilization as we know it to fail and
[38:33] go through like a severe depression as
[38:35] I've mentioned. So, we'll keep tabs on
[38:37] it.
[38:38] Uh chapter two
[38:40] is just checking in. Before I get to
[38:41] Q&A, let's just check in on the dollar
[38:43] yields in the orange coin. So,
[38:44] basically, how is the combination of
[38:47] Trump taking over the straight and AI
[38:49] potentially taking your job? How is that
[38:51] impacting financial markets? Well, um it
[38:54] says a very obvious direction here. So,
[38:56] one yields uh this bond yields is number
[39:00] go up yields edition. And it's not just
[39:02] in the US. So, right here we're looking
[39:04] at the US 10-year, the US 30-year, the
[39:06] US 2-year, the Japanese 10-year, the
[39:08] Japanese 30-year. Everything is up into
[39:10] the right. And just to remind you guys,
[39:13] bond math, when yields go up, that means
[39:15] bonds go down. So, there's an inverse
[39:17] relationship there. Um you know, the
[39:20] less demand there are for bonds, the
[39:22] higher effective yield people are asking
[39:24] to need to own them, to need to lend to
[39:27] the government. And why would yields be
[39:29] going up? Well, there are lots of
[39:31] reasons. Obviously, if you think
[39:32] inflation is going to rise, you need to
[39:35] demand higher yields for lending money
[39:38] to a sovereign nation cuz why would I
[39:41] lend money to the United States and get
[39:42] paid 4% when I know that my food and my
[39:45] housing and my travel is getting 5% more
[39:48] expensive. That would be real rates
[39:50] negative. I would be sure I'd be getting
[39:52] 4% yield, but everything around me is
[39:54] getting more expensive than I'm getting
[39:56] paid. That's stupid. I'd have to be an
[39:57] idiot. And so,
[40:00] inflation expectations, conflict. Um
[40:03] now, what else are we seeing? Uh well,
[40:06] is the United States slowing down their
[40:08] spending? You know, someone that is
[40:11] having challenging time making money,
[40:14] challenging time bringing in revenue or
[40:17] income, Maybe they got laid off from
[40:18] their job. Well, the rational thing to
[40:21] do and what you would want the free
[40:22] market to enforce is to slow their
[40:24] spending down. Hey, maybe you shouldn't
[40:26] be ordering the Uber blacks. Hey, maybe
[40:28] you shouldn't be flying first class.
[40:30] Hey, maybe it's time to rein it in.
[40:32] Get on top of your finances.
[40:34] Maybe you should stop hiring. Maybe you
[40:36] should shut down your R&D department for
[40:37] the time being.
[40:39] But, what is the US doing? Well, the
[40:41] spending is getting increasingly out of
[40:43] control. And this goes back into the
[40:44] nothing stops this train in fiscal
[40:46] dominance where the United States both
[40:48] can't keep spending like this cuz it's
[40:51] destructive to the currency cuz
[40:53] eventually there's so much inflation
[40:55] they have to monetize these deficits,
[40:57] but they also can't not spend like this
[40:59] at all because it'll result in a
[41:01] sovereign debt crisis. And so it's
[41:04] it's a you know, which way Western man.
[41:06] Both both ways you lose, you know.
[41:10] Heads heads you lose,
[41:12] tails you lose.
[41:14] And
[41:15] So, anyway, the tweet reads, "The first
[41:17] 9 months of the full year 2026 produced
[41:19] a deficit of $1.37 trillion.
[41:22] That is more than the same period last
[41:24] fiscal year. The deficit and debt are
[41:26] only going up." So, we're on pace
[41:29] to run an almost $3 trillion deficit.
[41:32] And by the way, Trump is now wanting to
[41:34] grow the defense budget by 50%. Like the
[41:37] spending is only going to go up. So,
[41:40] again, what is this doing to markets?
[41:41] Yields are going up, which means bonds
[41:43] are going down. What else is going up?
[41:45] The dollar. Mighty king dollar is going
[41:47] up. And we've talked about recently on
[41:48] the show, this is critically important
[41:50] because not only is it the world reserve
[41:52] currency, but it's what everyone owes in
[41:55] in regards to debt. So, if the thing
[41:57] that you owe strengthens,
[42:00] then you're going to need to finance
[42:02] those debt payments by selling off other
[42:04] things. If the dollar is getting
[42:05] materially stronger, like shoot, in
[42:08] order to meet my debt obligations, I got
[42:10] to sell some bonds. I got to sell some
[42:12] stocks. I got to sell some stuff, some
[42:14] Bitcoins, some gold. So, does it
[42:16] surprise me that bond yields are up,
[42:20] which means bonds are down? No, it's a
[42:22] combination of inflation expectations
[42:24] and the dollar strengthening. Well,
[42:26] let's check in on the gold rock. Even
[42:28] the analog rock can't handle this form
[42:29] of pain. So, you would assume war. You
[42:33] would assume conflict. You would assume
[42:35] commodity inflation, energy crisis. You
[42:37] would assume that this is
[42:39] uh good for gold. Well, gold touched
[42:42] below 4,000 an ounce briefly. It's
[42:44] crushing gold. And so, same thing with
[42:47] Bitcoin. Um
[42:49] let's take a look at how the almighty
[42:50] dollar is striking the hearts of retail.
[42:53] SpaceX traded at an all-time low today.
[42:56] Now, that's fairly misleading because
[42:58] it's only been trading for like a month,
[43:00] so I'm not talking [ __ ] But, SpaceX
[43:02] falls to the lowest closing price in
[43:04] history and has now lost nearly $1.2
[43:06] trillion in value from its all-time
[43:08] high.
[43:09] And this is something that I've been
[43:11] saying on this show repeatedly as well.
[43:13] There's not enough liquidity in the
[43:15] system to support everything.
[43:18] You need an ever-flowing amount of
[43:20] credit in dollars to kick the can and
[43:23] keep the Ponzi going.
[43:25] How do I know this? Well, Bitcoin's been
[43:27] telling us this for quite some time,
[43:28] since October. It's told us there's not
[43:30] enough liquidity to keep the train
[43:33] going.
[43:34] We're going to need money printing.
[43:35] We're going to need credit expansion.
[43:37] We're going to need something, or else
[43:39] everything will reach its inevitable
[43:41] fate, meaning there's been more money
[43:44] borrowed from our future than growth in
[43:47] productivity we have produced to pay it
[43:49] back. It's really as simple as that.
[43:51] Misallocation of capital. For example, I
[43:53] think we spent $9
[43:55] on the Iraq war in the Middle East. What
[43:58] do we have to show for that?
[44:00] What growth in productivity did we
[44:02] produce to show for that? Now, I'm not
[44:05] saying it wasn't morally correct or
[44:06] incorrect. I'm not being political. I'm
[44:08] speaking from a a place of economics.
[44:11] You borrowed $9 trillion from our
[44:13] future.
[44:14] We have nothing to show for it
[44:16] economically.
[44:18] So, the day to realize that loss will
[44:22] come, unless you keep printing the
[44:24] money, which monetizes the deficit,
[44:27] which debases the currency you owe,
[44:29] which pushes asset prices higher. This
[44:32] is why Bitcoin is both technology plus
[44:34] fiat liquidity. It finds its growth and
[44:36] its place in the world both ways. It's
[44:37] both disruptive, new, innovative
[44:40] technology, and it is the most sensitive
[44:44] smoke alarm that we have available to us
[44:47] that tells us fiat liquidity in the
[44:49] world. And when Bitcoin starts to fall
[44:52] off and doesn't look healthy, it's just
[44:54] telling you the truth. It's telling you
[44:56] the state of the free world. There's not
[44:58] enough fiat liquidity for the current
[45:00] world to survive. And so, people say,
[45:02] "Can you believe SpaceX is down? Look at
[45:04] this slide. Can you believe the New York
[45:06] Stock Exchange and the Nasdaq is down?
[45:08] Can you believe bond yields are this
[45:10] high?" Yes, I can believe it. You should
[45:12] tune in to my show every single Monday.
[45:14] No ads. Signal.
[45:16] No noise.
[45:18] Yes, I can believe it.
[45:21] Am I a genius? Can I tell the future? Do
[45:24] I have an economics degree from Harvard?
[45:26] No, none of those things.
[45:28] I look at the Bitcoin price.
[45:30] I'm a simple man.
[45:32] Bitcoin tells the future.
[45:35] SBF and FTX blew up
[45:37] before Silicon Valley Bank.
[45:39] When a market is so free,
[45:42] it cannot be interrupted, interfered
[45:44] with, manipulated before the public sees
[45:46] it.
[45:47] Bitcoin is giving you the raw feed, the
[45:49] raw truth, the raw world as it is.
[45:53] It's forecasting where the world is
[45:55] going.
[45:57] And make no mistake about it.
[45:59] When enough liquidity is being pumped
[46:01] into the system, whether it's from the
[46:02] US, China. We haven't I didn't have
[46:04] enough time today to go get into Japan.
[46:08] The liquidity can come from anywhere.
[46:10] Bitcoin's a global asset, right? Global
[46:12] market.
[46:13] It will tell us when there is enough
[46:14] liquidity
[46:16] for the can to be kicked. It will tell
[46:18] us. But as I sit here and Bitcoin's at
[46:20] 62,000, I'm telling you guys right now,
[46:23] ain't a chance in hell.
[46:26] You'll say, "Oh, no, it's because AI is
[46:28] winning out on the attention race with
[46:30] Bitcoin." Or "A Solana is now
[46:32] outcompeting Bitcoin for memes." No, no,
[46:34] no, no, no, no, no. You're
[46:35] overcomplicating it. None of that is
[46:37] true.
[46:38] It's all a game of liquidity.
[46:40] It's all like Look at King Dollar.
[46:43] Dollar strengthens, bond yields up,
[46:45] everyone has to sell things, raise cash.
[46:48] It's very simple.
[46:50] So, Bitcoin can win two ways. Either we
[46:52] go through extreme austerity, a level of
[46:54] depression the world has never seen, and
[46:56] we end up having to remonetize and build
[46:59] a world around a new money. I think
[47:01] Bitcoin is as strong a competitor for
[47:03] that world as I'm aware of. It's the
[47:05] best money mankind has ever conceived.
[47:09] Or they keep
[47:12] kicking the can and inflating their way
[47:15] out, monetizing the deficits, debasing
[47:17] the currency, burdening the people with
[47:20] the losses,
[47:22] and Bitcoin wins that way as well, cuz
[47:24] it will continue to outperform anything
[47:26] because nothing is more scarce.
[47:30] I mean, if I go back to this mighty
[47:32] dollar, this caught my eye as well.
[47:35] I mean, look at the the dollar's
[47:37] performance over the last 5 years. It's
[47:39] up almost 10%, and people say, "Well,
[47:41] Bitcoin's 5-year CAGR, like Bitcoin's
[47:44] relatively flat over 5 years." Yeah, cuz
[47:46] we haven't had a real bull run since the
[47:48] COVID money printing bonanza.
[47:51] The dollar's been relatively strong
[47:55] over those five years.
[47:59] Now, let's get into
[48:03] the obvious question that you guys
[48:05] probably have, which is well, can the
[48:06] dollar keep being strong? What if the
[48:07] dollar is strong forever? You know, I've
[48:09] said, what's the biggest threat to
[48:11] Bitcoin? I'll tell you the biggest
[48:12] threat to Bitcoin is if governments
[48:14] never print another dollar again.
[48:17] And they also let you do whatever you
[48:19] want with your money. You want to take
[48:20] drugs, you want to you like you're a
[48:22] free person, you have free will, we
[48:24] believe in free markets, we don't
[48:25] believe on believe in telling people
[48:27] what to do, telling them what they can
[48:29] and can't take, and we're never going to
[48:30] print another dollar. Now, Bitcoin would
[48:32] still win
[48:33] cuz, you know, we still need dollars
[48:36] can't transmit themselves over uh
[48:39] communication channel like the internet,
[48:40] they can't physically settle. So,
[48:42] Bitcoin would still win, but it would
[48:44] take longer.
[48:45] That's the biggest threat.
[48:48] That's what would slow Bitcoin adoption
[48:49] down if governments were responsible and
[48:53] central banks were reasonable.
[48:56] Anyways, so the question is, well, you
[48:59] know, can they keep doing this? How long
[49:01] is this bear market going to last? And
[49:03] to be clear, I have no idea. Not not not
[49:05] on here to make predictions. I'm on here
[49:07] to try and make sense of the world, come
[49:08] up with fun ideas. It's one of my
[49:10] favorite things to do is have clever
[49:12] insights.
[49:13] Whether they're right or not, time will
[49:15] tell.
[49:16] But, um I kind of brought this up on I
[49:20] think it was two episodes ago, maybe. Um
[49:22] but Luke tweeted this out today, so just
[49:24] want to resurface it. Um the Fed is
[49:27] trapped. So, the question is can the
[49:28] dollar remain this strong? Uh the answer
[49:30] is no. So, Luke tweets
[49:33] uh
[49:33] we want to talk right down to earth in a
[49:35] language that everyone here can easily
[49:37] understand. So, here's a thread in two
[49:39] charts. Warsh and Yellen, so Warsh, the
[49:42] chairman of the Federal Reserve, Yellen,
[49:44] the US uh Treasury Secretary, they have
[49:47] two choices. One is to be dovish.
[49:51] Dovish means lower interest rates, easy
[49:54] money, easier monetary policy.
[49:57] Uh
[49:58] that is bullish for Bitcoin and assets
[50:00] because that is monetizing the deficits,
[50:03] printing money, it is inflationary.
[50:06] Um it is credit positive, yada yada yada
[50:08] yada yada, okay?
[50:09] Being dovish means you do not blow up
[50:11] the US the US and Western fiscal and
[50:14] debt position.
[50:15] The second option they have is to be
[50:17] hawkish, which is tightening monetary
[50:20] policy. This is where we talked about
[50:21] raising rates, restricting the balance
[50:23] sheet, restricting credit conditions.
[50:26] Now, that will blow up the US and
[50:27] Western fiscal and debt position. If you
[50:29] think War Shines Best in will blow up
[50:31] the US's own fiscal and debt position,
[50:33] then the so-called debasement trade is
[50:34] over. Our view is that there's 0% they
[50:37] will do that. Thank you for coming to
[50:39] our TED Talk. And let me zoom in on
[50:41] these images here from Luke. Um and
[50:43] we've reviewed them on a prior show.
[50:46] The The point here is
[50:49] in blue, you have US revenues. So, you
[50:52] know, primarily tax receipts.
[50:54] And then in orange, you have total
[50:56] estimated federal uh budget trends.
[50:59] And if the US is dovish, their revenues
[51:03] will grow in dollar terms. The dollar
[51:04] will get weaker, but in dollar terms,
[51:07] their revenues will grow.
[51:09] And the total uh federal budget trend
[51:11] will start to taper off.
[51:13] So, obviously, if you're lowering
[51:14] interest rates, if you're producing lots
[51:16] of growth,
[51:18] it's weaker, it's highly inflationary,
[51:20] it's weaker for the dollar, so it's bad
[51:23] for people saving in the currency
[51:25] itself, but it's good for asset holders,
[51:27] right? It's good for those that carry
[51:29] dollar liabilities. Like this is good
[51:31] for MicroStrategy's balance sheet,
[51:32] right? Like they owe dollars.
[51:34] And are they own Bitcoin and owe
[51:36] dollars, right? Now, the opposite would
[51:39] be the opposite, where you'd see if they
[51:41] hike rates, the blue line comes down
[51:45] because people are not hiring and
[51:47] creating as many jobs, starting as many
[51:48] companies, um paying out as many
[51:50] bonuses, stocks come down, bonds come
[51:53] down, Bitcoin comes down, gold comes
[51:55] down. People are less wealthy, which by
[51:58] the way, if we've misallocated $40
[52:01] trillion of capital, we should probably
[52:02] rein it in, not spend as much, gather
[52:05] ourselves, get our feet expunged of all
[52:08] the leverage and the credit and the
[52:10] misallocation in society and go from
[52:12] there. That's how like a truly free
[52:13] market would operate. Unfortunately, we
[52:14] don't live in one. And you can see that
[52:16] if you hike interest rates, then the
[52:18] expense of the the debt goes
[52:20] skyrocketing. So, you quite literally
[52:23] cannot do what they're saying they want
[52:25] to do. So, they're trapped. There's only
[52:28] one way out of this and I can say it in
[52:31] so many different ways, but the dollar
[52:33] has to get debased, the debt has to be
[52:35] monetized, uh inflation has to commence.
[52:39] It just it is what it is for the math to
[52:41] work. Unless, to Luke's point, you think
[52:44] that these guys are willing to destroy
[52:46] the United States and Western
[52:47] civilization as we know it, which is
[52:49] also an option. I don't think they're
[52:52] going to win the next election. I think
[52:54] whoever runs on a campaign of I'm going
[52:56] to keep printing money and giving you
[52:58] free [ __ ] and making your life feel cozy
[53:00] and manipulating metrics so that you
[53:01] don't really notice. I think though that
[53:03] person's going to keep winning
[53:04] elections, but they can try and put us
[53:06] through extreme austerity. Bitcoin will
[53:07] still win and it will just be, you know,
[53:09] much more painful path for everybody,
[53:10] but that's fine, too.
[53:12] Um and so anyways, just to kind of round
[53:14] it out, where does that leave Bitcoin?
[53:16] Again, I didn't have too much time to go
[53:18] through all the nuts and bolts of some
[53:20] of the data I look at. Um hopefully next
[53:22] week I'll have plenty and plenty and
[53:24] plenty of time.
[53:25] But to keep it simple, I love this tweet
[53:26] from Ansel, who's OG Bitcoiner. I
[53:28] recommend giving him a follow. Uh I've
[53:31] been following him for a long time. Um I
[53:34] I mean, man, he's been in Bitcoin at
[53:36] least as long as I have.
[53:38] Um and this tweet he I I just resonated
[53:41] with it immediately. He said, "Bitcoin's
[53:43] doing fine. Boring, but fine." And
[53:45] that's kind of, you know, as my dad
[53:47] always says,
[53:48] "Don't let it scare you out. Don't let
[53:50] it wear you out." Um yeah, Bitcoin's
[53:52] choppy. It's boring. You're going to
[53:54] think, "Oh man, the bear market's over.
[53:55] Here we go." And then you'll find
[53:57] another low. And then at the low, you'll
[53:59] see everyone Here Here comes everybody.
[54:01] It's going to 40K, 30K, 20K, 10K, and
[54:04] then it bounces again. You zoom out and
[54:06] Bitcoin's been at the same price since
[54:08] February. It's just chopping you around,
[54:10] whipping you around, wearing you out,
[54:12] boring you out, scaring you out. You got
[54:15] to just earn more than you're spending.
[54:18] Breathe. Stay humble. Stack sats. It's
[54:20] testing your identity. It's testing your
[54:22] conviction. Um but from the looks of the
[54:25] charts, Ansel's chart dates back to
[54:27] 2020. And
[54:29] it looks normal. It looks like we're
[54:31] getting some bullish divergence, meaning
[54:32] prices are getting lower,
[54:34] but on less momentum. It's a sign that
[54:37] sellers are exhausted. And I went on
[54:39] this rant rant last week where
[54:41] what happens is people that have to
[54:44] sell, sell. Nobody wants to sell.
[54:47] Okay? Sure, there are people that borrow
[54:49] Bitcoin to go short. Sure. Okay.
[54:52] I'm saying
[54:53] Bitcoin miners, you know, leveraged
[54:56] companies, leveraged individuals. These
[54:58] are the people, and I mean leverage not
[55:00] literally, like a Bitcoin back loan or
[55:02] like a treasury company, but also just
[55:05] metaphorically, like I own more Bitcoin
[55:09] than I should own if,
[55:11] you know, my mortgage rate goes up or if
[55:14] I don't get my bonus at the end of the
[55:16] year, then I'm going to have to sell
[55:17] some to make ends meet. That's a form of
[55:21] leverage. It's a form of borrowing from
[55:23] your future. If the world goes the way
[55:25] you need it to go, you're fine. But if
[55:27] the world doesn't, then you're not okay.
[55:29] And so
[55:31] people that sell need to sell. You sell
[55:34] what you can, not what you want. Okay?
[55:37] If you need to make rent, if you need to
[55:39] pay for an emergency or whatever, people
[55:41] are dumping Bitcoin. Now, the price
[55:42] starts to bottom out and the market
[55:44] loses momentum when the Bitcoin market
[55:47] runs out of people that have to sell.
[55:50] Where their Bitcoin wasn't Bitcoin
[55:53] wasn't treated well
[55:55] at that destination. These people were
[55:57] too levered, couldn't meet their means,
[55:59] weren't earning more than they spent.
[56:02] Signed up
[56:03] wholly predicated for a future that they
[56:05] could not guarantee. Their identity and
[56:08] their life was predicated on specific
[56:10] outcomes.
[56:11] They didn't factor in what if an Iran
[56:13] conflict kept going. They didn't factor
[56:14] in what if the AI bubble might pop. They
[56:16] didn't factor in what if Warsh pivots to
[56:18] be a hawk in his first FOMC meeting.
[56:21] And it's like, oh [ __ ] I got to sell.
[56:24] And it bottoms out when the sats land
[56:27] and arrive in the hands of people like
[56:29] you and I.
[56:30] We have jobs, we earn more than we
[56:33] spend, and we have no need to take these
[56:36] sats off ice ever.
[56:38] These sats have a nice comfortable home
[56:41] where they're treated well.
[56:43] They're not put at risk, they're not
[56:45] made promises that they can't keep.
[56:47] And that's when the market starts to
[56:48] lose momentum because nobody is puking
[56:50] Bitcoin out despite not wanting to.
[56:53] And this is kind of what we can see.
[56:55] We can see sure prices remain depressed.
[56:58] But momentum
[57:01] is starting to lose steam.
[57:03] Now, does it mean the bear market is
[57:05] over? No. Could it take another day,
[57:06] another week, another month, another
[57:08] quarter? Yeah, all those things. I have
[57:09] no idea.
[57:10] But I'll say it
[57:12] again, say it every episode, great time
[57:15] to turn on your no fee strike DCA,
[57:17] withdraw those sats to cold storage for
[57:19] free. So, perfect time to try and reduce
[57:23] your spend in your life. You want more
[57:25] cash flow, you want to get wealthier
[57:28] on a paycheck to paycheck basis, find a
[57:30] way to cut your expenses,
[57:32] you know? Hey, order your meat wholesale
[57:34] from Buck and Bello that takes Bitcoin
[57:36] and and are Bitcoiners. Order wholesale
[57:38] meat once a month and cook your meals
[57:40] during the bear market. You know, stop
[57:42] going out to the fancy restaurants,
[57:44] getting the nice wine.
[57:45] You know, literally. I mean, this is
[57:47] [ __ ] I do.
[57:48] Cook cook your meals, grill at home,
[57:50] reduce expenses to the best you can, and
[57:52] find ways to be more valuable, you know?
[57:55] Um find ways to to earn excess income or
[57:58] rotate assets that you're not nearly as
[57:59] bullish on than Bitcoin. And and that's
[58:01] the truth. You want to get richer?
[58:03] Either be more valuable or spend and
[58:06] consume less stuff. That leaves you with
[58:08] more excess cash to save.
[58:10] And this is a perfect time to turn on
[58:11] those DCAs, stay patient. Um you know,
[58:14] the problem with Bitcoin is when it goes
[58:17] up, people say you're lucky. When it
[58:19] goes down, people say you're stupid. And
[58:22] no version of that feels rewarding and
[58:24] validating. Um
[58:27] the journey starts and ends with you.
[58:29] It's very testing to your identity, who
[58:32] you are as a person, what you believe
[58:34] in, the convictions you hold.
[58:36] Um
[58:37] you know, if you were here, if you
[58:39] joined Bitcoin
[58:40] because you wanted a certain career path
[58:43] or you you wanted a certain level of
[58:46] success, a certain level of fame, a
[58:48] certain uh net worth, you know, the bear
[58:51] markets are going to invalidate that
[58:53] identity that you've built around
[58:55] yourself. And it really challenges you
[58:58] for that. Uh and and and this is mostly
[59:01] what my essay is about is just 14 years
[59:04] in the game. I've been through many many
[59:05] bear markets, but
[59:07] you know, it doesn't make you immune to
[59:08] them.
[59:10] You know, experience helps you identify
[59:11] the weather, but it doesn't prevent the
[59:13] storm.
[59:14] And so, this is just just my raw advice
[59:16] to you guys. I'll publish my essay later
[59:17] this week. I'm really looking forward to
[59:19] that. But um stay humble and stack sats,
[59:22] man. It all makes sense. It's all like
[59:24] nothing that's happening is out of the
[59:26] ordinary. None of it flies in the face
[59:29] of anything we've talked about on the
[59:30] show. The street is still closed, oil's
[59:33] back up, inflation is expected, bond
[59:36] yields up, bonds down, stocks falling,
[59:39] SpaceX below IPO price, Nasdaq and New
[59:41] York Stock Exchange indexes feeling some
[59:44] pain. The AI bubble is starting to
[59:46] question for the next 5 to 10 trillion
[59:48] dollars that the collective populace has
[59:50] to invest, are they really going to
[59:52] double down on AI?
[59:54] I don't know. At this point, I wouldn't.
[59:57] Right?
[59:58] This is how bottoms are made. The
[60:00] stimulus has to come, the Fed is
[60:02] trapped, stay humble, stack sats, stay
[60:05] the course, or not. Or this is the last
[60:07] episode you listen to and I wish you
[60:10] well genuinely. But right, like you
[60:12] either believe in it or you don't.
[60:14] Okay.
[60:15] Uh
[60:16] strike updates. Um
[60:19] I again didn't have too much time to
[60:20] delve too deep into we're launching a
[60:22] ton of stuff. Next on deck, interest on
[60:24] cash, beneficiary stuff. We're launching
[60:27] and rolling out which is really
[60:28] exciting. So next week I'll go into a
[60:30] lot more depth. This is just a very busy
[60:33] week for me.
[60:34] But I did want to spend a little bit of
[60:35] time talking about the volatility proof
[60:36] loans. So
[60:38] obviously some people really really love
[60:40] them and are very excited about them.
[60:41] Some people were disappointed with the
[60:42] terms. Yeah, I mean my message is
[60:44] listen, I remember how hard it was, you
[60:46] know, the internet has such a short-term
[60:48] memory. I remember when we launched our
[60:50] original plain vanilla Bitcoin backed
[60:53] loans, 12-month term. Like very
[60:56] transparent pricing and the internet
[60:58] blew a gasket. They said and literally
[61:01] some of my some of the other Bitcoin
[61:03] companies that consider me a competitor,
[61:05] they were implying I was a criminal,
[61:06] implying I was rehypothecating, implying
[61:09] shady [ __ ] about me. People forget this.
[61:11] Like I mean I obviously have it all
[61:13] screenshotted.
[61:14] I I wouldn't let a moment like that pass
[61:17] me by. But
[61:19] people forget just like how ruthless it
[61:21] was for us to just get the plain vanilla
[61:23] product. Now we're, you know, one of the
[61:24] top retail lenders in the world. Um the
[61:27] products worked as advertised. We have
[61:29] proof of reserves on a quarterly basis
[61:31] for our our lending product. And like
[61:34] everything that everyone accused me of
[61:36] and was so confident in was a lie. Was
[61:39] competitors using kicking me
[61:42] um as to their benefit, as marketing.
[61:45] And so
[61:46] given all that context, I actually
[61:48] thought the launch went well. And I just
[61:50] want to remind everybody, you got to
[61:51] start somewhere.
[61:53] Um we're in the depths of the bear
[61:54] market. Interest rates remain elevated.
[61:57] I mean, we're dealing with inflation
[61:59] while interest rates are relatively
[62:02] high.
[62:03] Uh and the Fed is talking about hiking
[62:05] them some more. The market is pricing in
[62:08] more rate hikes.
[62:10] It's not easy for me to come across tens
[62:12] of billions of dollars to lend out
[62:14] against Bitcoin.
[62:15] Um so it's going to be like I have to
[62:18] start somewhere. And I totally get if
[62:21] where we start isn't appealing. Um the
[62:24] story of my life is to just keep
[62:26] working. Keep chopping wood. Keep
[62:28] pounding pavement. Keep proof of work.
[62:31] We'll get there. But I got to start
[62:33] somewhere. And just so everyone knows,
[62:36] the way that the product works is I
[62:38] source dollars or any fiat. We lend
[62:41] euro, British pound, stable coin.
[62:44] I source fiat from somebody else.
[62:47] And so I owe them that money. So they
[62:49] tell me what they're willing to give me
[62:51] money at the terms for Bitcoin back
[62:53] lending. And then I go out and I'm the
[62:55] facilitator to the end customer, to you
[62:57] guys.
[62:59] But
[63:00] you know, I wish I could give a 100-year
[63:02] loan at 0%. But I'm not getting those
[63:05] terms myself.
[63:07] So just bear with us. I think the idea
[63:11] that you can get a loan, a Bitcoin back
[63:13] loan, that is not going to margin call
[63:15] you and liquidate you no matter what the
[63:17] price is
[63:18] is a first of its kind. It's going to
[63:20] grow in popularity. We're inventing an
[63:23] industry as I speak. And we have to
[63:26] start somewhere. Our flag is planted in
[63:28] the ground and it's only it's only
[63:30] progress from here. So, that's my
[63:32] response to what I assume are a lot of
[63:34] the questions and commentary on the
[63:36] product, but you know, there's a whole
[63:37] other world. We got far more hate when
[63:40] we first launched Bitcoin back loans.
[63:42] Like this time around, nobody said,
[63:44] well, not everybody. You know, there's
[63:46] always someone out there. But the
[63:47] rhetoric wasn't that I'm a
[63:48] rehypothecating criminal and I'm the
[63:50] next version of Sam Bankman-Fried and
[63:51] all this stuff. Like that wasn't the
[63:53] rhetoric this time around. It actually
[63:55] was far more positive. It was, okay,
[63:57] this product is awesome. It makes a lot
[63:58] of sense, but I want better rates. Okay,
[64:01] I'll take that and I'm working on it.
[64:03] So, just so you guys know, we'll get
[64:04] there.
[64:05] Um okay.
[64:06] Let's do some quick Q&A. I got maybe
[64:08] 10-15 minutes uh before I got to let
[64:11] Dylan go. Uh Dylan's got [ __ ] to do and
[64:14] Lord knows I do as well. Big week.
[64:19] Really excited to share this essay with
[64:21] you guys, man.
[64:24] Okay. Guys like my bear market scruff?
[64:29] All right. Let's pull up these
[64:31] questions.
[64:34] Sorry about the sound earlier. That is
[64:36] just classic. Um okay, macro question.
[64:41] I've been wanting to ask this question
[64:42] for some time. What are your thoughts on
[64:43] dApps?
[64:45] Uh like Tao, Filecoin, Chainlink. If the
[64:48] world looks for more decentralized
[64:49] options, won't these win as well?
[64:51] I don't think so, no. I mean, my opinion
[64:54] on shitcoins broadly
[64:57] sorry, not to be harsh, is that they are
[65:00] solutions looking for a problem. They
[65:02] are excuses for people to print their
[65:04] own money. I mean the easiest way to
[65:08] monetize the the best business model
[65:11] ever of all time, no matter what genre
[65:14] or era of the world, the best business
[65:16] model of all time is printing money out
[65:18] of thin air.
[65:20] Like if you have had the luxury of doing
[65:22] that, there's no easier way
[65:25] to accumulate time, energy,
[65:28] you know, resources if you could just
[65:30] print it out of thin air.
[65:32] And so a very successful business model
[65:34] for people is, you know,
[65:36] don't buy Bitcoin, buy the fast coin or
[65:39] the smart contract coin or centralized
[65:41] coin or the file coin or the chain coin.
[65:45] Why do these things need their own
[65:47] token? Should we have decentralized
[65:49] storage? Sure.
[65:51] But why do you need your own money?
[65:53] Wha- why do you need to be the central
[65:56] bank of your own currency? Riddle me
[65:59] that. And the answer is they don't. The
[66:02] answer is
[66:03] they want to print these things to sell
[66:06] to someone like you.
[66:09] And that's that's been my consistent
[66:10] opinion. Listen, I've been in Bitcoin
[66:13] long enough where Bitcoin was the only
[66:14] coin. Imagine that.
[66:17] There was once a time where Satoshi
[66:19] invented a thing, a totally new thing,
[66:22] and there weren't thousands of other
[66:23] copycats trying to sell you that their
[66:25] thing was better. Can you believe that?
[66:30] And so ever since I've seen all these
[66:32] other things, it was like when Litecoin
[66:34] came around, okay, why is Litecoin
[66:37] valuable? Oh, well, you know, uh it has
[66:41] slightly faster block times. So you
[66:43] know, it might be it's kind of like
[66:45] well, if Bitcoin is gold, then it's kind
[66:46] of like silver.
[66:48] Doesn't make sense. Okay, why is
[66:49] Ethereum valuable? Well, Ethereum can do
[66:52] smart contracts where Bitcoin can't. No,
[66:54] Bitcoin can. It's just not a very good
[66:57] idea. It introduces lots of security
[66:59] risks. None of this is ever going to
[67:01] work out. The Bitcoin developer
[67:02] community looked at the idea and said,
[67:05] "No, it's a bad idea." So what's been
[67:07] the success of Ethereum? None of these
[67:09] things like have ever really panned out.
[67:12] People say, "Oh, well, you say stable
[67:13] coins haven't worked? What about Tron?
[67:15] What about Solana?" These are all
[67:17] regulatory arbitrages. There's nothing
[67:19] specific to Ethereum that has worked.
[67:21] There's no value accrual to the actual
[67:23] token. Is it distributed, you know,
[67:26] internet?
[67:27] Interesting, sure. Does it need its own
[67:29] money? Does it need its own token? No.
[67:31] Who's benefited the most from Ethereum?
[67:33] The people that got to print it out of
[67:35] thin air and sell it to people like you.
[67:39] So, be careful.
[67:41] Should Can we Can we benefit from
[67:43] distributed file storage?
[67:45] Potentially.
[67:47] Can and should we use something like
[67:49] Bitcoin for any monetary use cases for
[67:53] distributed networks? Yeah, probably. Do
[67:56] we need a totally new money that a bunch
[67:58] of people are going to print out of thin
[68:00] air and just try and sell? No, I don't
[68:02] think we do.
[68:03] So,
[68:04] that's my shitcoin opinion broadly.
[68:07] There's no need for Bitcoin is the
[68:10] perfect money. It solved the money.
[68:13] There's all sorts of other things in the
[68:14] world to solve, but does it need its own
[68:16] money?
[68:17] Its own token?
[68:19] Does someone else get the luxury and the
[68:21] god-like ability to become a central
[68:23] bank? I don't think so. I I would not
[68:25] buy anyone's central bank token. [ __ ]
[68:28] that.
[68:29] I'm buying Bitcoin.
[68:31] Uh Jack, I haven't seen any repeal of
[68:33] the Illinois Bitcoin tax law filed. Any
[68:35] news from your end? Yes, uh I do think
[68:37] it's being repealed. Um I'll follow up
[68:39] next week uh with some more specifics. I
[68:41] don't have the time. Um but I do not
[68:43] believe that uh the Illinois Bitcoin tax
[68:46] law will be passed.
[68:48] So, I'll follow up next week, but that
[68:50] that's the update as I sit here today.
[68:53] Uh question Jack, was Bitcoin supposed
[68:55] to replace fiat dollars? And if so, why
[68:57] is the stablecoin market going like
[68:59] crazy? Will it surpass Bitcoin? Thanks,
[69:01] I love the show. Thank you so much. I
[69:02] really appreciate uh the compliment
[69:04] there.
[69:05] Um is Bitcoin supposed to replace fiat?
[69:09] I think it kind of depends. Um it's such
[69:11] a complicated question. Um one, it
[69:13] depends on what time are we talking? By
[69:16] tomorrow? No.
[69:18] By next year? Probably not. By next
[69:20] decade? Probably not. Within our
[69:22] lifetime? Maybe. I don't know. What's
[69:24] your diet like? What's your heart rate
[69:26] and your blood pressure? I don't know,
[69:28] right? Like I
[69:29] you know, markets can remain irrational
[69:31] far longer than you can remain solvent,
[69:32] right? Like things take longer than we
[69:34] think. Once you understand Bitcoin, you
[69:36] understand fiat, you read the right
[69:38] books, you engage with the right people,
[69:39] you're like, "Holy [ __ ] I've got it all
[69:40] figured out."
[69:42] And then
[69:44] you realize change takes a while.
[69:46] Broken [ __ ] can last longer than you
[69:48] think, right? So, over what time frame,
[69:51] I'm not sure. And then let's inspect the
[69:53] actual dollar itself. Now, the dollar is
[69:55] the world reserve currency, but there's
[69:58] been this type of separation of unit
[70:00] account and store value. Now, do I think
[70:03] that that will last forever? No. But you
[70:06] know, the dollar has lots of network
[70:09] effects and economies of scale when it
[70:12] comes to actual payment and being the
[70:14] unit of account.
[70:16] But it has long not been the store of
[70:18] value. Nobody in their sane right mind
[70:21] stores their savings in dollars. Like
[70:23] central banks don't hoard bunches of
[70:25] dollars. The richest people in the
[70:26] world, like Elon Musk doesn't have a
[70:27] trillion US dollars.
[70:30] You'd have to have gotten smacked over
[70:32] the head with a pan. I mean, there's 0%
[70:35] chance.
[70:36] What has become the world reserve asset
[70:38] up until very recently were US
[70:40] treasuries,
[70:41] right? And so, if your question is, is
[70:44] Bitcoin meant to displace US treasuries
[70:47] and you know, Western sovereign bonds?
[70:50] I think so. And is it?
[70:53] Yeah, it's I mean, gold just flipped
[70:56] US treasury like just treasuries broadly
[70:58] on Central Bank balance sheets.
[71:01] So, we're already moving towards this
[71:03] more neutral reserve asset era.
[71:07] Now,
[71:08] can Bitcoin flip gold?
[71:10] Eventually, again, over what time frame?
[71:12] But I would divorce them. Like, can
[71:14] Bitcoin compete for the world's store of
[71:16] value? Like, the de facto store of value
[71:20] for the world's balance sheet. So, if
[71:22] you have money to save, whether you're a
[71:24] central bank, a corporation, a family,
[71:26] an individual, the de facto best place
[71:29] to put it is Bitcoin. Now, if you want
[71:31] to invest in a company and take on
[71:32] counterparty risk and buy into their
[71:35] vision, sure. If you want to invest in
[71:38] real estate and take on the fact like is
[71:39] there going to be a hurricane there?
[71:41] Like, the expense of being, you know,
[71:43] managing tenants and all that stuff.
[71:45] Sure. But like, the de facto store of
[71:48] value, can Bitcoin is Bitcoin meant to
[71:50] replace that?
[71:51] Yeah, it it looks like the world is
[71:53] moving that way. And, you know, Bitcoin
[71:56] is going to end up competing against
[71:58] assets like gold.
[71:59] Now, when are we going to be walking
[72:01] into the grocery store and using Bitcoin
[72:03] instead of dollars?
[72:04] It's just so pointless to speculate on.
[72:07] I can tell you philosophically, I think
[72:09] the world would be a far better place if
[72:10] that was the case. And I hope and pray
[72:14] that I'm alive for some form of hyper
[72:16] Bitcoinization. But it just would be
[72:18] pointless for me to sit here and tell
[72:19] you like, yeah, that's what's going to
[72:21] happen or no, no, no, you'll die long
[72:23] before then. I don't have a clue. I
[72:25] mean, I could put together a
[72:26] presentation based on, you know, loosely
[72:28] defined metrics and make an interesting
[72:30] guess.
[72:31] But how valuable is that to you? I don't
[72:33] know.
[72:34] Uh and yeah, and then I also just found
[72:36] the framing of your question
[72:37] interesting. Is Bitcoin supposed to
[72:39] replace fiat? I don't know, you know,
[72:41] coming from
[72:43] free market libertarian worldview,
[72:46] nothing is supposed to do anything. You
[72:48] know, the world is what it is.
[72:50] Um I think Bitcoin will succeed as money
[72:54] because it is better money. I think, you
[72:57] know, the incentive to use the best
[72:58] money is like life or death.
[73:01] If you don't adopt the better money, you
[73:04] just get poor. And again, money is your
[73:06] claim on energy consumption. Everything
[73:09] around you is a derivative of energy.
[73:12] You want to get in the car and go get
[73:13] coffee? You want a house with air
[73:14] conditioning? You want a roof over your
[73:16] head? You want to travel? You want kids?
[73:19] It's all You You want food? You want to
[73:21] consume calories?
[73:23] It's It's all energy consumption. And
[73:25] so, if you use wrong money,
[73:28] then your right to consume energy from
[73:30] the world and live a life worth living
[73:33] is drastically decreased. So, over time,
[73:36] people adopt the better money. Like,
[73:38] damn, my neighbor's flying private,
[73:40] bought a massive house on the Miami
[73:42] Beach, and is now a part owner of a
[73:43] professional sports team. Meanwhile, I'm
[73:46] getting, you know, the wholesale grocery
[73:49] list. I can't go on vacation this year,
[73:52] and my wife and I want kids but can't
[73:54] afford it. What the [ __ ] am I doing
[73:56] wrong? Oh, they use Bitcoin and I save
[73:58] in dollars. Well, [ __ ] me, right? Like,
[74:01] adopting better money, it's it's just
[74:03] how the world is. It's not supposed to
[74:06] It's cuz supposed to you kind of has a
[74:08] almost like political affiliation or
[74:11] religious affiliation as if it's like
[74:13] some belief system. You know, Bitcoin
[74:16] will
[74:18] be adopted because it is better.
[74:21] It's It's more scientific in my opinion.
[74:23] Okay, Strike questions. Hey Jack and
[74:26] Dylan, any updates on when you you will
[74:27] be back in Australia or have some way
[74:29] that we can get stable coins into our
[74:31] Aussie accounts?
[74:33] Yeah, so Australia's tough. I mean, all
[74:35] the regulations uh really choked banks
[74:38] out of wanting to support any Bitcoin
[74:39] companies. Um,
[74:41] we are working on a longer-term plan,
[74:44] but I just don't have any timeline for
[74:45] you guys. So, we're looking at all
[74:47] options, partnerships, bank
[74:49] relationships, getting licenses
[74:51] ourselves. Um we're just going to keep
[74:53] grinding. Um but I apologize for that.
[74:55] It It was obviously not We didn't want
[74:58] to
[74:59] uh
[75:00] lessen our support of the region. Um and
[75:03] in fact, we plan to be there over the
[75:05] long term. It's just
[75:07] you know, one day you wake up and banks
[75:09] say, "Sorry, governments are forcing us
[75:12] forcing our hand." I mean, it's a
[75:14] difficult situation. Very bear market.
[75:17] Uh question, "If I move my Bitcoin from
[75:18] Coinbase to Strike, and I sell some
[75:20] Bitcoin to pay a bill, does it sell my
[75:23] moved Bitcoin or the Bitcoin that I
[75:25] bought from Strike?"
[75:26] So, we operate off of HIFO, HIFO. Um
[75:33] it's highest in, first out.
[75:35] So, we use the lots with the highest
[75:38] cost basis, which is better for your
[75:40] taxes. If you bought Bitcoin at 120,000
[75:43] and you bought Bitcoin at 1,000,
[75:45] we use the one at 120,000, which would
[75:48] allow you to have a tax harvest loss as
[75:52] opposed to needing to pay a capital gain
[75:54] on the Bitcoin you bought at 1,000. So,
[75:57] that's the accounting standards that we
[75:59] use at Strike, which is to your benefit.
[76:01] So, it actually doesn't matter if, you
[76:04] know, the Bitcoin, you know, the
[76:05] Coinbase Bitcoin or the this Bitcoin, we
[76:07] use whatever the highest cost basis is.
[76:11] So, uh
[76:12] it's beneficial to you. Does that make
[76:14] sense? If If not, feel free to look at
[76:16] our FAQ um where there's more
[76:18] information or reach out to our support
[76:20] staff.
[76:21] Uh Dylan, question for Jack, "How do you
[76:22] consistently give the best rates on
[76:24] Bitcoin buys on Strike compared to
[76:26] everyone else?"
[76:28] Um I'll read uh
[76:30] what uh my colleague wrote in here um
[76:33] word for word cuz I think it's a good
[76:35] answer.
[76:36] Uh one of our company values is to
[76:37] obsess over customers, including in how
[76:40] we think about pricing our products.
[76:42] Our product, finance, and data teams
[76:44] work closely together to have a low time
[76:46] preference and ensure their pricing is
[76:48] both fair and Strike is profitable.
[76:50] Having multiple business lines like
[76:52] brokerage and lending also helps us
[76:53] think about pricing holistically rather
[76:55] than in a silo.
[76:57] Yeah, so I would say a few things to add
[76:59] on to that. It's a great answer. One of
[77:01] the answers
[77:02] is oh, we've become incredibly efficient
[77:05] as a company and efficiency matters
[77:07] because it has implications on our cost.
[77:10] So, Strike, I mean, one of the reasons
[77:12] that we're going to be able to get
[77:13] interest on cash out as quick as we do
[77:15] is that we're heavily using AI
[77:17] internally. We run an incredibly lean
[77:19] business for as as big as we are, lean
[77:21] in regards to people, how we spend our
[77:23] capital, and this comes from a very
[77:25] Bitcoiner mentality. Like, we obsess
[77:27] over profit because we want to stack
[77:30] sats, um and we do not waste money on
[77:33] R&D or fanfare projects. If we come
[77:36] across money or new investment capital,
[77:38] we don't blow it on vacations or crazy
[77:41] retreats cuz we'd rather stay stack sats
[77:44] and build for the long term. And so,
[77:46] we run a very cost-efficient business,
[77:48] and when you run something that's very
[77:49] cost-efficient, obviously it gives us a
[77:51] lot of flexibility in regards to
[77:53] offering products cheaply while
[77:55] retaining profitability and and a way to
[77:57] scale. And profitability again is not
[77:59] just for us to hoard bunch bunches of
[78:01] Bitcoin, but it it makes the business
[78:03] resilient. You don't want to use a
[78:05] company that isn't long-term viable
[78:07] that's relying on some VC check to meet
[78:10] payroll. Like, we want to be here I want
[78:12] Strike to be here long after I die. I I
[78:13] want it to be the Bitcoin financial
[78:15] institution. We we carry a very low time
[78:17] preference around that vision.
[78:19] Uh the other as the previous answer said
[78:23] is Strike is becoming your one-stop
[78:25] Bitcoin shop. And so, when we have a
[78:27] customer, imagine they have a Bitcoin
[78:29] back loan, maybe they're using a line of
[78:31] credit, maybe they're buying some
[78:32] Bitcoin with us, and if we get into
[78:34] custody services, if we do interest on
[78:36] cash, there's all sorts of things that
[78:38] we'll increasingly offer and that gives
[78:40] us
[78:41] you know, when we're monetizing a
[78:42] customer many different ways, we can
[78:44] bring down the marginal cost of certain
[78:46] services because we're making the money
[78:48] across holistically. Versus if someone's
[78:50] buying their Bitcoin on Coinbase and
[78:52] getting a loan on Ledn or something,
[78:54] right? Like Ledn has one chance to make
[78:57] their money on you.
[78:58] And it's the loan. You know, another
[79:00] service has one chance to make their
[79:02] money on you and it's when you buy
[79:04] Bitcoin. And the more that we become a
[79:07] true institution where your financial
[79:10] life, at least your Bitcoin one, can
[79:12] live,
[79:13] then the more flexibility we have. This
[79:15] is actually something Dylan and I are
[79:16] exploring is can we further reduce the
[79:20] cost to our customers for those of them
[79:22] that use us for many things. Like let's
[79:25] say you buy your Bitcoin somewhere else
[79:27] and you get your Bitcoin back loan
[79:28] somewhere else, you know, we might be
[79:29] able to say, "Hey, if you bring both of
[79:31] those services to us, we're happy to
[79:33] slash the cost on both of those things
[79:35] and you'll get even cheaper rates than
[79:37] what are advertised on the website
[79:39] because you're you're you know, it's a
[79:41] very transactional thing, right? Like I
[79:43] need to pay my employees bills. I need
[79:45] to build our treasury to make sure that
[79:46] we remain a strong company and you know,
[79:49] God forbid Australia banks sever our
[79:51] relationship, then I got to be able to
[79:53] go out and spend money and get licenses,
[79:55] right? So, as long as I am in a fiscal
[79:58] financial position to do that, then I
[80:00] can I can reduce the cost for you guys.
[80:02] So, I would say that's that's the
[80:04] reason.
[80:05] And I'm very proud of the team.
[80:07] I mean, how much we've been able to get
[80:08] done and how effective and efficient we
[80:11] are from a cost standpoint. We don't
[80:13] compromise on speed to market. We don't
[80:15] compromise on product quality. I mean,
[80:17] it's really just it's just been a joy to
[80:19] build this company with these people.
[80:22] Uh okay, question for Jack. With bill
[80:24] pay as an option, uh I have my current
[80:27] bank mail a physical check to my
[80:29] apartment for monthly rent payments.
[80:31] They don't have online bill pay. Will
[80:33] Strike ever allow this option? Yeah,
[80:35] eventually we will. This is something
[80:36] that we hear all the time and it's in
[80:39] our, you know,
[80:41] I have written here product backlog, but
[80:42] it's on the road map, so to speak. You
[80:44] know, a lot of what we think about
[80:47] holistically from a product standpoint
[80:49] is just these these small things that
[80:52] Well, they seem small, but they're
[80:53] really things that allow you to
[80:55] continually make Strike your primary
[80:58] financial account. So, okay, you need an
[81:01] ability to have,
[81:04] uh, you know, uh, ability to write
[81:06] checks or deposit, uh, checks mobilely,
[81:09] or maybe you guys need a card, or
[81:11] there's all sorts of things that people
[81:14] need at the margins to go from, "Okay, I
[81:16] buy my Bitcoin at Strike. Okay, I can
[81:18] get a loan with Strike." Maybe we come
[81:20] out with some custody stuff, and then
[81:21] are we giving interest on your idle cash
[81:23] balances? Um, right? Like and we just
[81:26] keep
[81:27] slowly but surely becoming this global
[81:31] financial institution that just rethinks
[81:33] your relationship with money. That puts
[81:35] this hard money in the center of your
[81:38] financial life as a as opposed to the
[81:40] fringes.
[81:43] Cool. Okay.
[81:44] Um,
[81:46] let's see, that's all I got for today.
[81:48] Again, sorry for the shorter episode.
[81:50] Sorry for the audio issues. Not a
[81:52] professional podcaster, but on that
[81:54] note, you know, I really do from the
[81:56] bottom of my heart appreciate, uh,
[81:59] those of you that unconditionally
[82:00] support me and are able to laugh at this
[82:02] type of stuff with me. You know, bear
[82:04] markets are very challenging. Um, and
[82:08] they teach you a lot about yourself.
[82:09] They teach you a lot about a lot. They
[82:12] teach you a lot about a lot. I'll leave
[82:13] it at that. I won't spoil, uh, my essay
[82:16] and some of the future podcasts I'll be
[82:17] doing. So, I do genuinely appreciate the
[82:20] support. Hang in there. Um, you know,
[82:22] the love you guys give me, I give you
[82:23] right back to you. No one said that this
[82:25] was going to be easy. Um, anything worth
[82:27] doing is hard. Hang in there. We'll be
[82:29] okay. Stay humble. Stack sats. Comments,
[82:32] questions, feedback, leave them in the
[82:33] replies. Um, and you guys will be
[82:36] hearing from me, uh, this week for sure.
[82:38] So, uh, I will talk to you then.
[82:42] And, uh, take care. Much love. Thanks
[82:45] for listening.
[82:46] Bye.