Hello, and welcome to another episode

of the Jacob Shapiro podcast.

I am producer Jacob.

Uh, I really don't have much for y'all today.

This is a fantastic conversation between Jacob Shapiro and our friend Matt Pines.

Um, they talk about what's happening in the markets.

They talk about market opportunities.

They talk about doomsday, they talk about China, they talk about agriculture.

It's a good conversation.

Um, I got nothing else.

Stay safe out there.

Get offline.

Go touch some grass.

Uh, Matt, you're a, you're a fan favorite and you're one of my

favorite guests to have on the podcast.

I have to say this to all guests, but like, you're actually one of

my favorites to have on the podcast 'cause A, I like you, and B uh, I

always learn something from you.

So thanks for coming back on.

I appreciate it.

Well, you're one of my favorite podcast hosts, and I'm not,

I'm not just saying to butter you up.

Well, that's nice.

Uh, listeners, a lot of you probably can't see this,

but I was warning, Matt, that I, I have to, there's a whole long story

of why I'm in this office today.

My daughter has a stomach bug and she had to stay home, and

then my wife had to go anyway.

It's not, it's boring, but like I can only record from this very

specific place in my office right now.

And the sun is like, sort of like when it peeps through the clouds,

it's beating down into my face.

So I've already apologized to Matt, and if you watch this on YouTube, at

certain points, I may put sunglasses on.

It's not 'cause I'm a douche bag.

It's just 'cause literally, I can't see, I don't put sunglasses on in

the context of this conversation.

Um, Matt, the last time you, you, you were on the podcast, you had a

different role, a different position.

So why don't we, uh, just start off, first tell people about the Bitcoin

Policy Institute and, uh, tell us a little bit about why you made such

a, I mean, it seems like a pretty big shift in your professional life.

It seems like that in retrospect, but you know, in

retrospect it was inevitable.

Um, yeah, so I've, my, my whole professional career has been a series

of these sort of, uh, step function hard turns, uh, 'cause I did physics

and philosophy undergrad, decided not to do PhD. Sort of went to London to

do a Master's in public policy, came back to the states, worked at the

National Science Foundation, thought maybe I would go to law school.

Hard pivoted into international security consulting for the

government for about 10 plus years.

Really looking at kind of, um, worst case scenario planning, uh,

horizon scanning technology, um, assessment and experimentation.

Then went over into sort of private sector consulting.

Joined a boutique, uh, firm doing sort of geopolitical and cybersecurity, uh,

risk advisory for mostly multinationals critical technology companies.

Uh, some venture private equity firms where I was director of intelligence

and then that firm was acquired by a publicly traded cybersecurity company.

And so that was kind of the last era, the last epic.

Um, but along the last five years I've had this interest in Bitcoin and,

and the intersection of Bitcoin with these strategic kind of, uh, national

security and geopolitical questions.

And so I got involved with a think tank that got started, um, in 2021,

dedicated to that objective, which is to provide kind of a serious, you

know, peer review, quality research and analysis that's objective,

independent, non-partisan, that can sort of speak the language of dc Right.

Sort of translate kind of the in-group kind of, uh, economical lore and sort of

the, the weird, uh, shibas of Bitcoin, uh, to policy makers, uh, on the

assumption that at some point it will become strategically relevant and it

will intersect with a lot of these other.

Instruments of national power.

And so I was, you know, a contributing fellow early on to that think tank.

The first national security fellow wrote the first white paper on Bitcoin and

national security, and then progressively engaged more and more, you know, as a

quote, influencer in the Bitcoin space.

Um, but because I'm based in DC I would also brief policy makers and contribute

to the think tank's activities and, and, uh, you know, and sort of quote

thought leadership, yada, yada, yada.

Um, but obviously things have changed, uh, in the overall external environment,

uh, and the policy relevance of Bitcoin.

Uh, and so after the election, I was paying close attention to whether

the incoming administration would, um, make good on some of these

rhetorical commitments, right?

Whether their pro Bitcoin policy was just a kind of a patronizing pat on the head to

their campaign supporters, or whether this marked a more structural shift that would

translate down through the bureaucracies.

Um.

And the ship of state being turned decisively in appropriate coin

direction, uh, you know, was a, was a, was a key question in my mind.

And so I was assessing that over the course of the winter time.

And then BPIs, I think Tank took a hockey stick up in terms of its ability to,

to influence policymakers and our, our, our, our overall, um, sort of impact.

And so, so the timing was right to sort of jump in as executive director, where

I feel like the leverage points to kind of shape good outcomes long term now that

the government, at least at a rhetorical level is committed to these things.

How to sort of maximize the, uh, strategic upside and

minimize the downside risk here.

Um, and I'd also just like working with a small team.

You know, the vibes are immaculate.

We're, you know, building something from scratch.

We have downtown offices.

We're gonna be, you know, kind of building like essentially a Bitcoin embassy.

Um, and uh, it's just fun, right?

It's just really fun to kind of engage in these things and, and not have

to be a PowerPoint monkey delivering the same China bad briefing to, uh.

Corporate C-suites that increasingly don't care.

So, um, that, so that's been fun.

Uh, and then along the way as my life, you know, increasingly took, uh, um,

you know, weird twists and turns, uh, almost the same week, I decided to

kind of jump in as a executive director at the Bitcoin Policy Institute.

I was approached by folks that were starting essentially a, um,

a, uh, a, a very serious effort to try to collect, uh, data on

unidentified num almost phenomenon.

So I joined as a strategic advisor to a Sky watcher, uh, which is

staffed by folks with very relevant professional experiences and background

in these sorts of activities.

Um, and, uh, so that's been a whole separate thing, right?

Which is, uh, the more exotic flavors of my professional

interests, uh, now converging.

Um, and, uh, yeah, so that's what I'm doing now.

Uh, it's, uh, never a dull moment.

I, I believe it's never a dull moment.

I would've, by the way, the vibes are immaculate.

I'm gonna fight with the podcast producer to make that the title of the podcast.

It doesn't get much better than that.

Um, I would imagine though, like at least in, in.

That there would be demand for the types of old briefings that you were doing,

because, I mean, China's never been batter from the US perspective, or maybe not.

Maybe there's gonna be a US China trade deal in three months.

'cause apparently Trump is talking to Xi, he's not talking to xi, things like that.

So, I mean, I assume your, your old colleagues are also

up to their ears in this stuff.

Is that correct?

Yeah, no, I still talk with them, uh, quite regularly.

And, um, you know, though, I would say one observation that, that I had, you

know, leading into this, this, this year is just the demand for specific types of

consulting services that require C-Suites to, um, you know, change their budget

outlays on consulting services are, um, just like the market for those services

you would think would be on a bull trend.

But it's actually, I think then more on a bear trend.

Um, I think there's, there's pockets where you can still demonstrate value, but.

At the end of the day, right?

Like nobody knows what the heck is happening.

And so everyone is just coming in there with their kind of

like, you know, BS essentially.

Uh, and there's not really sufficient.

You have that.

You need to have that like ideal, uh, middle ground where, um, there's

enough chaos to motivate action and motivate, uh, a willingness to

pay, uh, for something like this.

But it can't be too chaotic that nobody knows, you know,

how to even get started, right?

Um, and so there was this kind of sweet spot post Russia invasion Ukraine, where

when I was doing this, um, there was like, uh, acute demand kind of in that

sweet spot across lots of companies to sort of reassess their mental models

of globalization, reassess their supply chain fragility, reassess the intersection

between geopolitical risk and disruption, and kind of the typical more like,

uh, technical risk from cybersecurity.

You know, where are these countries exposed in terms of the network

architecture, IP theft, um, et cetera.

And so those kind of.

There was like a window where that was like acute and people were taking pocket

money out of, you know, the CEO's, um, discretionary budget to fund these sort

of high impact strategic assessments.

Um, but I think over, over time it kind of just get leveled down

to, uh, to the CISO's office.

And then my overall observation of cybersecurity in general is going through

a massive consolidation phase, um, where a lot of these boutique firms are

getting gobbled up and then even specific verticals are now being sort of stacked

in with the major cloud service providers.

And effectively there's converging to become a wrapper on ai.

Right.

And in general, like I saw this coming, like, you know, tightening budgets at

the C-suite level, especially on cyber and it spend, um, combined with the fact

that everyone's basically converging, converging to kind of like a wrapper

around, uh, frontier AI models that are gonna be, uh, dominated by a handful

of the major cloud companies anyways.

And then what I do is essentially just interpret events and slap it

down to PowerPoint and be a smart guy to like, you know, jibber jabber to

the senior leadership of companies.

And that was fun.

But, uh.

I don't know.

It just, you know, doing the same sort of thing and then seeing like the marginal

impact or the marginal uptake of that, um, of that analysis kind of falling,

falling down, just didn't, didn't, didn't get me up in the morning anymore.

Uh, so, you know,

yeah, I think it's, I relate to that.

I relate to that deeply and also like answering the same question

over and over and over again.

Like, how many times can we discuss whether China's gonna invade Taiwan and

how many times can I give the same answer?

And how many times is it like, no, but this, you know what I mean?

Yeah.

And also I think my assessment of what were the truly defining disruptions

coming down the pike were not the things that are I. Salient or politically

acceptable for most c-suites to like seriously consider, right?

They're sort of outside the over two window of what they can like

legitimately hire a consultant to discuss.

And so they've sort of bounded themselves in this box of like the

safe questions to analyze the things that they can safely justify briefings

on and, you know, consultant on.

And so that creates a sort of self looking ice cream cone

where consultants know that.

And so they all focus on these like highly salient risk questions and

they all just kind of like parsing out their minor little hot take

divergences of opinion or they're kind of going against consensus wisdom.

And, you know, that's, that generates sort of transient demand for your

services if you're really compelling and, and, um, and, and, uh, coherent,

uh, sort of expository, uh, you know, avatar of that type of position.

But that's like a, that seems like a never ending game.

And I was just like progressively more interested and now exposed to these

like coming outta the left field Overton window kind of breaking things and I

just couldn't ignore those anymore.

It's like that's, that's what's gonna happen.

Like that.

Those are the things that are gonna.

Smack you in the face in a few years.

Uh, and, but I can't put those in a PowerPoint presentation for

the C-suite of whatever company.

Right.

They're just, they're not, they're not there yet.

Right.

So just go.

Yeah.

I

mean, this is, this is the whole tetlock foxes and hedgehogs thing

where like the fox can bring you the stuff that's actually happening, but people keep

paying the hedgehogs and listening to the hedgehogs because, you know, they have the

point that they actually want, like, you know, if you're thinking outside the box,

people actually don't want to hear that, or that's not the thing that people can,

they don't have the brains to process sort of things changing in that amount of time.

And it's funny you say that about budgets tighten, I mean, tightening,

I mean, I remember I'm much more in the investment world now, but still do

some consulting and you know, how to, how to pass and consulting as well.

And it, the, the last couple of months have reminded me a bit of covid in the

sense that after, after Covid, like in the initial first phase is after the,

after the lockdowns, everybody wanted to talk and nobody wanted to pay.

So there was like more interest than ever, but no checks worth coming.

And then there was a nice sweet spot in the middle, and I've noticed the

last couple of months, everybody wants to talk, but everybody's

completely paralyzed by the level of uncertainty or the volatility.

Like nobody can sort of make strategic decisions.

So they wanna talk, but they're not sure like what exactly they wanna do and

where they wanna put their resources.

And I sympathize for them like big departments and big companies are,

you know, trying to navigate changes and communicate with their C-suite.

And the C-suites, to your point, are listening to the

hedgehogs that they trust.

And then it's like this whole never ending circle jerk.

So,

yeah.

And also like, I, I, I was a consultant basically in various forms and

consultants have clients, right?

And fundamentally there's this asymmetry where you have to make sure

the client's happy and you wanna like, you know, yada yada yada with them.

And, you know, at a certain point you have to like intellectually, um, you

know, muzzle yourself or kind of bracket how you present your views because you

wanna make sure you got, you wanna push them a little bit further, but you don't

wanna like completely, you know, um, you know, confuse them or, or overwhelm them.

Uh, and you know.

I'm done with that.

Like I don't, that's don't wanna have, have to like, you know, contort

my intellectual and analytical, um, models to, to sort of keep the, keep

the, keep the contracts flowing in.

Um,

yeah.

So, well, well you seem unburdened, so congratulations on making the

shift and let's, um, get into some more interesting stuff.

I mean, that's sort of inside baseball, but it's interesting to me.

Um, okay, well let's do a little, uh, how it started and how it's going.

So, um.

Here is a tweet from July 11th, 2019 from President Donald Trump.

Quote, I am not a fan of Bitcoin and other cryptocurrencies, which are not money, and

whose value is highly volatile and based on thin air, unregulated crypto assets

can facilitate unlawful behavior including drug trade and other illegal activity.

Sent it a civilized 7:15 PM in the evening, not normal for his, uh,

usual, uh, social media policy.

Uh, then let's go to March 6th, 2025, uh, an executive action from the White House.

It is the policy of the United States to establish a strategic bitcoin reserve.

It is further the policy of the United States to establish a United States

digital asset stockpile that can serve as a secure account for orderly and

strategic management of the United States' other digital asset holdings.

Uh, so first question.

What the f like what, what, what is the shift here?

Like why did President Trump go from sounding like just about any other

boomer talking about cryptocurrency to embracing it wholeheartedly and

using every single power at his disposal to, to seem to put the White

House fully in, not just Bitcoin, but cryptocurrencies corner in general.

Yeah.

I mean, I think there's a political economy story to, to explain that,

and then there's like a structural kind of, um, reinforcement to that.

Uh, the first is just the fact that, um, the broader crypto industry

has felt, uh, you know, in the last few years, uh, under acute attack,

almost under existential threat.

And so, you know, not being a very well organized group, they kind of got their

issue together in 2024 and decided to fund large political campaign, um, activities.

And those were quite successful on, you know, not just at the top of

the ticket, but down, down range.

They kind of finally self organized and decided to pick a side.

Um, and that was not inevitable.

I know there were folks, um, you know, in the course of the spring and the summer

that were approaching the Kamala, uh, campaign, um, and they basically said

like, we, we, we can bundle you like a hundred million dollars, uh, but all you

have to do is just commit not to like, keep up the attacks on the industry.

And they said, no, we'll take your money, um, but we won't commit to that.

Uh, and so it was like, okay, well I guess those a hundred million

dollars are not gonna go to you.

They might go somewhere else.

Um, and, uh, they were just maybe confident or they, you know,

for whatever reason, they didn't wanna, um, go that direction.

Uh, so this is just like a political economy, right?

Like every election is spent, uh, every election is, is,

is a function of spending.

And this is the first election cycle where, where, um, you know, there was

like now this new, new source of capital that was highly politically motivated.

Um, and, uh, the, the two candidates took very opposing, um, views on, on

what they, you know, would, would, uh, pursue in terms of policies.

And that's, you know.

That's just how politics works in America, right?

So there was that kind of just like, why did Trump trade just mind?

He wants to win.

And he is like, all right, there's folks out there that are gonna, you know, gimme

$200 million to help fund my campaign.

Like done.

Right.

Uh, it's, I don't think it's as complicated as that.

Um, Becca, you know, in the, it's, so that's, that's like the

politic, the political economy, uh, you know, explanation.

Um, that's probably the first order, but I think there's a second order trend

underway by elements you could say of like the security apparatus that was

taking a look at, um, the shifting.

Geo-economic system.

And this has been my sort of main analytical focus for the last few years,

making this kind of case to like, we need to kind of like, you know, keep

Bitcoin as a live option on the table for America over the long term, uh, for

a number of strategic, uh, reasons that we have an asymmetric advantage for.

Uh, and those voices were kind of, you know, tucked behind the curtain

folks in various, you know, bunkers writing, writing internal memos.

Um, but, but you know, there was a sense that, uh, things were gonna come to a

head pretty soon, especially us China and, you know, part of the Trump, uh,

campaign and their sort of increasing, um, as they kinda got staffed up with

kinda their policy team and the sort of formulate what was gonna be their

strategic vision in 2025 into the, into the, um, the rest of their term.

Uh, there was, you know, already an accreting consensus that

they were gonna shake things up.

I mean, this was coming, going back to, to Beston, um, speech

of the Manhattan Institute, you know, earlier, earlier in 2024.

And then, you know, kind of the, the seeds being planted about.

They were gonna do some pretty dramatic things in 2025.

Um, it's exactly the scope and scale and how effectively those be implemented.

Um, TBD, but like, it was very clear they were telegraphing like the status

quo is not gonna not gonna endure.

Um, and so they were gonna like flip, flip the table over essentially on

the global economic monetary system.

Uh, and so in that regime, you know, you're like, okay, the, the, the, the, the

cies and assumptions around the structure of the global monetary, uh, arrangement,

treasury security as the global reserve asset, the kind of foundational collateral

and the offshore dollar system, the combined with the fact that we're

running structural peacetime deficits.

The fact that China's now, you know, climbing value change is now aggressively

to competing, um, uh, you know, higher up, higher up the, the strategic ladder,

uh, on lots of these different domains.

It's like there's a sense that like lots of things are gonna have to

change and now the options on the table that would've never been previously

considered are now on the table.

Um, and so that's like where Bitcoin kind of found its way in right, is just

the, the, the, the parameter space.

The aperture of policies, um, that could now be considered once you basically

make the strategic decision that we're gonna change things, we're gonna break

things, and there's gonna be this massive complex phase transition to some sort

of new arrangement, um, that provides a door for other things that would normally

not, you know, be allowed into the discussion to come into the discussion.

And so I think the combination of the political economy shifts as well as just

the strategic, um, aperture being opened up, allowed kind of Bitcoin to flow in.

And then of course, just the general cycle of Bitcoin kind of doing its thing and

just, you know, overall, um, you know, movements of ETFs and kind of the, the,

the legitimization of it as a global asset class, Larry f and basically a bunch

of these elites kind of getting orange.

Um, and then that sort of filtering down.

Uh, so I think it's like multi causal, right?

It's no like single, um, you know, point of, of explanation.

But, uh, it's, it's been a clear kind of strategic shift in how

the US government views bitcoin.

And is it just Bitcoin?

And, and I'm trying to get to Trump's like real intentions here because

you know, Trump has also talked about Ether and Solana and Carano.

Um, he has a mean coin of his own, the Trump token, um, which, you know, just

reeks of corruption and things like that.

So like, do you think it's just, oh, I see an opportunity for money and I grab here.

Do you think that there's been some like actual internal change

that No, it's crypto in general.

That, that, uh, executive statement I read, um, you know, Trump has

talked about some of these other, um, cryptocurrencies that are out there.

Like the executive order says, no, no, no, Bitcoin is the original cryptocurrency.

It is the one that like we need to focus on.

So how, how do we think about Bitcoin versus some of the others that he

has raised and then backed off on?

And it's not really clear like where all these fit in.

I know it's been my view and, and DPI's view that like

there's one really serious thing here and that's Bitcoin, um, and

that that's the true strategic asset.

But of course there's a lot of money floating around crypto and those

folks can, you know, donate money to get a lunch and get a tweet, right?

Uh, and so that's kind the system we exist in is this superposition of like serious

strategic kind of, um, undercurrents as well as like, you know, the froth of

grift and uh, you know, just sort of the traditional transactional politics inside.

Inside DC so that it's like both are happening at the same time.

Um, and that makes it hard to kind of discern like signal to noise here, right?

It's very easy to kind of look at these things and be like, oh, this is

just this kind of rifting operation, self-enrichment sort of court

politics, kind of elite, sort of, you know, filling each other's pockets.

And of course that is happening, uh, that happens in like every elite SY system.

Um, uh, it's just now it's sort of the norms are down and so

like it's more visible, right?

Um, like it was always a function of our American political system.

It's just there are ways of kind of obscuring it from public view or we had

norms about not doing it so brazenly.

Um, uh, but I mean, I think so that those are, those are things

that are clearly occurring.

Um, but I think underlying this, uh, and I think the executive order demonstrated

this, like you kind of, kind of can see it in how it's written is like we

kind of have to kind of pay us, so to the crypto people, we're gonna give

them this digital asset stockpile, but we make no commitment not to sell it.

Right.

Whereas the Bitcoin strategic reserve, we, we explicitly commit not to sell it.

And we have a decisive instruction to the commerce and treasury departments to find

budget neutral ways of acquiring more at no incremental cost to the taxpayer.

So those reflect kind of a very different valence and strategic attitude

to Bitcoin and then everything else.

And so everything else had to be in there, but it was kind of given the

bare minimum kind of like lip service.

Then all this strategic attention you can kind of see is

shifting back towards Bitcoin.

Now, seeing, you know, I'm in DC Bitcoin Policy Institute, we're kind

of a relatively new think tank kind of now, like jockeying with these

existing institutions and advocacy groups and lobbyists, et cetera, that

for many, many years have been sort of funded by the crypto industry, right?

Bitcoin is a leaderless, decentralized peer, you know, open

source software project, right?

There's no inherent leader or kind of corporate board or, you know,

it can't hire lobbyists, right?

Whereas there's like crypto VC firms and token, uh, you know, issuers and

exchanges, uh, and miners, those, those are incorporated entities.

Um, and, and the most incorporated entities, you know, by like political, uh,

capital and also by incentive structure are on the sort of the crypto side.

So they've been heavily pushing, uh, certain legislative priorities

on market structure legislation and stablecoin legislation.

And then, you know, Bitcoin is kind of this kind of, oh, yeah, yeah, Bitcoin's

important, but it's, it's not directly relevant to the business model of most

of the, of the digital assets industry.

And so, BPI kind of exists to kind of represent kind of like the, the lump

in proletariat of digital assets.

It's like just Bitcoin as this project, as this like open source, um, kind

of, uh, you know, emerging technology.

And it has industries attached to, it has bitcoin mining, it has custodians,

it has, um, you know, major investors, uh, you know, companies now using

Bitcoin as a treasury reserve asset.

So there's a lot of like actual entities that have, you know, vertically integrated

control structures, you know, that can advocate for themselves inside dc.

Um, but we're, we're not an industry association, so we're there to kinda

like rebalance the, the scales, right?

If roughly speaking, you know, Bitcoin is 60 to 70% of the total market cap.

If you actually throw out a lot of other junk, it's probably more like 80 to 90%.

But if you actually look like the total amount of spend by like,

advocacy groups and lobbying groups on digital assets in dc like 89% of

it's spent on like non Bitcoin stuff, stablecoin stuff, market structure

stuff, token, you know, security, you know, sort of designation stuff.

Um, and so that's, I think you see that reflected in the political economy.

That's kind of b you BPIs sort of raise on debt is sort of, you know,

try to try to at least rebalance things so that the advocacy in the

industry is at least market weighted.

Um, so yeah, that's, that's where we're now, but uh, it remains to be seen, right?

Like how we're gonna, um, see these different trend lines,

uh, start, to, start to, uh, diverge potentially is, you know.

Bitcoin is a global asset now, right?

And so I view this as a lens.

I, I view this through the lens of what's really strategic, going on,

trying to filter out the noise here.

And I see Bitcoin and stable coins, right?

And then in a global system where now gold is increasingly being, you know,

rem monetized and brought in, in the global, um, kind of competitive dynamic

between major capital pools that are being weaponized by these, you know,

uh, confronting hegemons, um, aspiring in Asia, and then the legacy in in, in

sort of, uh, the West Oceanic system.

And we're all kind of looking at these emerging tools, um,

and, and assets, stable coins in particular Bitcoin and gold.

Um, and that's a, that's the most important strategic dynamic

I see playing out right now.

Um, so yeah.

Mm-hmm.

Are there, to your knowledge, like is there a, is

there an Ether Policy Institute or a Carano Policy Institute?

Like is anybody making the argument that you guys are making about

Bitcoin, about some of these others?

Or is it almost like self um, self-segregating in the sense that like,

Bitcoin is the only one that's serious, that is serious enough to create this

kind of, I don't know, intellectual, strategic ecosystem behind it?

Yeah, I mean, there are, I mean, it was kind of funny, like

literally like a month ago, um, there was a, a new thing, creative Cut

called the Solana Policy Institute.

And like, like, like branding and everything was kind of

like very close to ours.

And it was like donated.

It was funded by one guy and it was just kind of this, you know, thing.

I, I never actually met anyone from them.

Um, uh, but they exist.

They exist now.

Um, like Ripple, right?

The sort of, um.

You know, I won't get into the details of that, but like they, they committed

like $40 million to spend on like marketing campaigns essentially.

Um, and, uh, but there's some legacy institutions that we

work, uh, collaboratively.

You know, where we're, we're, we're, you know, we're friendly

as the blockchain association, the Chamber of Digital Commerce.

Um, they've been around for a long time, so they, you know, we're

the sort of vanguard for this sort of stuff for, for many years.

Um, but they're more like industry associations, right?

So they're, they're explicitly there to kind of represent the

digital assets industry, right?

But we are the only, and we are the only, um, you know,

significant think tank, right?

Um, that's dedicated to, to these open monetary networks.

Um, there's one, it's called Coin Center, which is really good.

They're small, but they're most mostly focused on like, um, civil rights sort of

advocacy, sort of litigation protecting open, so open source software developers.

Um, but, uh, but yeah, I mean, I would say, you know, we,

we do the think tank thing.

We put on events, we wear, put on white papers, but our main focus

is trying to understand like, and try to shape, uh, the, the, the.

The system of government, right?

And the international structures associated with these, with these changes.

Um, and we're finding that like there are a lot of folks inside what you call the

deep state, right, that have been paying attention to Bitcoin for a long time,

that are now very serious about Bitcoin.

I would just note that there is a interesting statement made just yesterday

by the deputy director of the CIA where basically he said Bitcoin is here to stay.

Like more and more institutions are adopting it.

That's a great trend.

It's another area of technological competition where we need to make sure

the United States is like well positioned against China and other adversaries.

And he said, I think we need to make sure we are a leader in these fields

internationally and not a laggard.

Um, which is kind of an interesting statement for like the deputy of the CI

doesn't come out and like talk very much and to have him like just come in harder,

the paint and say we Bitcoin is critical to technology competition with China.

Um, I was, I was like, oh, that's interesting.

Um.

So I think there's, sometimes it's hard to filter out signal of noise here, but I'll

tell you, I've had lots of conversations with folks like DARPA inside the

intelligence community, inside the Defense Department, um, and Bitcoin is like, uh,

squarely on, on their, on their agenda.

Um, I'll just point out the crossover with, with China, um,

Emerald Papapa, who's the, uh, four star Indo-Pacific commander.

Uh, he's responsible for, you know, planning to fight

and win our war with China.

But of course, he has a lot of, you know, sub-threshold responsibilities

as well for economic warfare.

You know, operational preparation of the, of, of, of the battlefield, you

know, shaping activities, um, in that, in that theater that involve a lot of,

you know, economic statecraft, financial warfare, um, et cetera, et cetera.

He's a, like, raging Bitcoin, uh, like he is, he is not like

a, you know, a casual guy.

Like he is very pro Bitcoin and is advocating inside the administration.

So that's a, these are just, these are, these are shifts that are not as visible

to the outside where it's like we're Liberty Financial and the Trump token and,

you know, all the sort of crypto stuff.

Right?

And, and I mean it might even be like a clever ploy to like have that

as kind of be the, the, the screen.

Um, and one of my colleagues was just in Hong Kong, uh, recently and um, you

know, was invited to have meetings with a number of senior, senior officials there.

And, uh, they were one extremely well read up on like the ins and outs of the policy

dynamics that I pay attention to, like the ideas of gold certificate revaluation

and the reconciliation process, you know, different means of financing and

funding the strategic Bitcoin reserve.

These are like super inside baseball things in, in DC that, like I

talked to a lot of people even in the crypto policy industry.

And like the folks in China had like a much better read on what

was happening than most of the folks that like we talked to in dc.

So that was, that was a, that was a clue, right?

Like, these guys are paying attention to what really matters.

Um, and, uh, they're sussing out, you know, what is the

government really doing here?

Like, are they preparing some sort of like, you know, big pivot, right?

And, and, and there's a lot of chaos, a lot of noise.

Um, but if you wanna try to see where things are going in this kind of phase

transition, then you can't ignore the policy moves happening on Bitcoin.

That reminds me of a, a funny story.

I might've said this on the podcast before, so apologies to listeners if

this is, if you heard this story before.

But I was in Moscow, I was like the token US guy, uh, speaking at the

conference of a bunch of Russian analyst.

This is before the Russian Ukraine war.

I remember I got cornered by this one, like he was the us,

the Russian US analyst, and there was some election happening in

Alabama for some congressional seat that I'd never heard of.

And he was like, tell me what do you think about the, the potential

implication of the US government, of this Alabama congressional seat?

And I was like, I have no clue what you're talking about.

Like, I don't care about Alabama.

Like, like the, the nitty gritty, granular focus.

It just kind of reminds me, um, of that well, okay.

That, that all makes sense to me.

So maybe let's back into sort of a, a bigger question, which is, um, I think

even some of President Trump's most ardent supporters are coming around

to the notion of even if he had the right strategic goal in mind, the way

that he is implementing and executing policy has become self-defeating.

Just the level of volatility.

It's tariffs one day, no tariffs the next day.

Like all of these different things.

Um, it's, it's, it's defeating the purpose and you actually see like countries

losing faith in the United States, even the countries that the United States

says that it wants to do business with.

So, okay.

The drug administration has followed through on many of its promises on the

campaign trail to the crypto industry.

Um, is that good for Bitcoin going forward?

Is it, is it bad in the sense that maybe the implementation or execution, like

with tariffs has been all over the place?

Is it actually better for Bitcoin that the dollars value continues to go down

and that yields continue to go up and that the deficit fingers continue to go up?

Because that just underscores the argument for Bitcoin in the first place, sort of

map on sort of crypto policy versus what I would call the haphazard implementation

of a lot of the other sectors of Trump's policy towards the economy.

Yeah, and I, I kind of, I have, I have.

Different perspectives, but I think my view as executive director

BPI is, um, trying to find policy paths that are win-win, right?

That are good for Bitcoin, because I think Bitcoin is a good thing and

good for American strategic interest, good for the American society, right?

Over the long term.

Um, and so there's a, you know, a multi-level thing isn't just advocating

for like, number go up, right?

It is advocating for a vision of, uh, technology and financial networks

in the 21st century that are funnily aligned to our values, right?

If we're in this battle between open and closed systems, between, you

know, concentrated, um, elite, uh, kind of gated capital markets and,

you know, open particip participatory markets where, you know, individual,

um, autonomy is reinforced.

I think ultimately, like my, my like ethical and political attitude is,

is much more like classical liberal.

And, and if we're in a world system that's, um, being driven by geopolitical

competition and technological acceleration, it's gonna be naturally

centralizing of authority, right?

Both in terms of just the access to say frontier AI models.

And then when states start to fight, right, they tend to wanna a, a

arrogate more authority to themselves.

They wanna gate their economies, they want to sort of put up the put up more,

basically more, uh, more clubs and fences.

Um, that's implicitly gonna mean us, you know, uh, I come,

I come at the cost of, you know, individual spheres of, of autonomy.

It's like my, like overall political view is to try to, um, you know,

steer our, our policies in a way that like keep to our core values.

And that we don't try to become more like China in order to defeat China.

Right?

Uh, and that's, that's an inherent tension, right?

That's exists at the, at, at the government level.

So that's like 0.1, right?

And I think Bitcoin is fundamentally, um, more on the side of classical

liberalism versus sort of closed authoritarian surveillance systems.

Um, and I think just, I think we wanna fight against that and we wanna use

technology and tools to like reinforce the sphere of freedom for individuals

in, in, in the next few, next few, uh, next few years and, and decades.

Um, now on the economic side, right?

Like when you, um, I think you try to assess my, my sort of model, what was

happening in the last few weeks and months, the Trump administration is,

there were like two major factions, right?

And this is not, this is banal at this point, but there was the sort

of technocratic faction, Bessett Moran, and they had a vision and

they were telegraphing this, it kind of, um, won forward guidance

when it comes, uh, uh, to tariffs that would be geopolitically gated.

So there'd be, you know, red, yellow, green, and they would start off

at a certain level and they would, you know, incrementally rise at

different, at different levels, right?

For whether you're, you know, a rival, whether you're a balancing power, whether

you're, you know, whether you're an ally.

And the objective there was to like more explicitly demarcate the boundaries

around the American monetary and security tech trade zone that they see

that the global commons has essentially been exploited by free riders.

The Merc list policies in Asia as well as, you know, defense free riding in Europe.

And there's all these conflicts that are draining our, our national, um,

morale and our national capital.

We have lots of debt.

We need to kind of like re-underwrite the security zone, uh, and we have a

certain set of advantages to do so, right?

We essentially can do a bunch of levered bargains, if not like shakedowns, um, to

sort of force folks to pick a side, right?

And to sort of now re-underwrite the, the fiscal health of the,

of the hegemon in this sort of, um, imperial dollar system now.

Um, and so that was their plan was to kind of come out with these kind of different

tiers and it kind of then ratchet it up and then pull, pull our allies into this

circle and lock 'em in, and then, you know, do a variety of different swaps and

exchanges to, you know, extend out our debt, uh, force them to buy century bonds.

Uh, and we would, you know, leverage the fact that, hey, well do you want access?

Do you want, you know, not get hit with export controls on, on, on GPUs?

Do you want, you know, us to, you know, impose more restrictions

and access to, you know, open ai, you know, frontier models?

Um, do you want not to be hit with a, a large tariff increase to kind

of force people inside the club and they have to pay an entry fee?

So that was like the technocratic kind of like, oh, this is the master plan,

you know, idea where a bunch of, you know, sort of gig, a brainin hedge

fund PhD folks like Moran and, and Bessett kind of come up with this idea.

And then there's like the Lunik Navarro idea where, and, and maybe some folks

on the, um, you know, the heritage side, which is just like, no, no, we need to

punch on one of the face throw chaos.

And, uh, and then also some like, like an idea that we'll actually make

revenue right from, from tariffs.

So we'll actually like, be able to like fund our budget and we'll

go back to like the McKinley era.

Uh, but the problem with the, and I think, um, you know, you've had, you've

had cousin Marco on this, and he's made this point, like in the McKinley

era we're, you know, we, primary governor of expenditure, uh, was like

two, was like two to 3%, um, of GDP.

Now it's like 30 to 35% of GDP.

So you just, sorry, that dog won't, won't hunt now, right?

And they just, just weren't looking at the macro models of the fiscal balance

sheet and the fragility of the treasury market and then just tried this move.

And I think I, I also had lutnick versus bass at the Oval Office kind of pitching

and, you know, Bassett's a bit of an egghead, a bit of a, kind of a Dante.

He kind of, you know, um, not the most articulate guy, not the most, doesn't

like exude confidence when he talks.

Whereas Lutnick is, he is not,

he is not charismatic, he's not charisma, he's not charismatic.

Whereas Lutnick is just like.

You know, telling Trump, oh, like, of course, like they're gonna take it.

You know, we're America, we're like, you know, we're, we're a superpower.

Well, I'm, I'm glad you I'm, I'm glad you brought that up.

'cause, um, just to, just to pause for a second, um, like maybe

Lutnick has charisma, but he is, the things he says are so stupid.

Like, he seems like such a moron to me.

I'm, I'm not saying that pejoratively.

I just literally, I, I listened to him talk and I'm like, did you take

like an economics class in college?

Did you finish high school?

Like, do you know basic arithmetic like this?

Like, it, it, like, it blows my mind.

Like, I don't know what's there.

Is it just the, is this, it is, and he must be successful 'cause

he is gotten to where he is.

He is more successful than I am in my career.

So like, I'm, I'm, I'm in this weird like twilight zone where I'm like,

how is this, like, this guy is in this position doing I, I don't know.

Uh, anyway, take it any direction you want.

Yeah.

I mean, I, I mean, I don't know his, his, you know, I,

again, how much of this is, um.

Intentional chaos.

How much of this is just the bumbling mm-hmm.

Clown show, right.

And I think it's a mix of both.

Right.

Um, but now they did it right?

So they did Liberation Day.

Right.

And I think Bestin was, you know, able to come back and sort of take the wheel

on that Sunday, you know, flew down to Mar-a-Lago and convinced Trump to

ship, pivot away from this idea that we were gonna like literally go full

McKinley and more back to the try to steer things back to the original play.

But, but you know, they had, it wasn't as, you know, it was like, oh, they're in

the middle of the, of the, of the storm.

Now you gotta gotta like now scramble to get to get Japan and scramble to get South

Korea and send JD over to, to to to India.

You know, try to like do things in a much more haphazard way with

a bit more urgency than I think they were originally planning.

Um, and I think this is also where the tension with the Fed came in.

'cause the bond market started revolting and they're like, oh crap, we're gonna get

Liz trust and uh, we need to stop that.

And so there was this like acute sense of, um, of, of.

We need to like dial things back a bit.

Uh, and that's it.

I think that's generally speaking of the story of the last few, few weeks.

And so I think they've been mostly focusing just firefighting

because of a strategic policy era.

Uh, and now, you know, the, the ambition by the best folks is that maybe they've

gotten more valent control of the policy apparatus here to a certain extent.

And they can try to, you know, the chaos and volatility has been somewhat dampened.

They can try to steer things back.

Um, but there was never a plan to like have full certainty, right?

It was, you know, forward guidance, but it would be kind of geopolitically tiered.

And now I think you're seeing the, the contours of the original plan kind of

come back into, into form where it's very clear that they wanna get, you know,

their allies into a zone that's like tightly locked so that they have free

trade agreements with us, but they have high tariff barriers with, with China.

This goes back to like versions of the British Imperial Preference System,

the European continental system.

Even has flavors of the, uh, you know, cold War co, you know, you know,

coordinating committee, uh, system where if you have like a, you know, a block

effectively that, uh, can, um, you know, reinforce, you know, a certain hegemons

power and have like preferential trade as well as now technology exchange,

um, maybe you can hold a line against an ascendant China that has a lot of

power, has a lot of capability to sort of challenge your, your, your, um,

your position in various, various ways.

So there's this, I think this acute anxiety driving this inside

the security apparatus that if we do nothing, China will just

like, like run over us basically.

Um, but I also think the trade war trade wars are slow to play out, you

know, to actually change business investment and, you know, reshore and

do the currency adjustments over time.

It's taken a long time.

But what, what the declaration of a trade war does is that immediately

triggers, you know, a financial and supply chain war, right?

Uh, because we effectively embargo China.

No more purchases of, of, of goods, right?

Means less, much less dollars flowing into the Chinese system that, uh, destabilizing

a lot of the financing, uh, you know, balance sheets, uh, that they have in

a highly leveraged domestic economy.

Um, and then they can retaliate, right?

By pulling capital out of our asset markets.

And, you know, you wield different instruments to try to put stress

on, on the sort of shadow bank, um, and dealers that intermediate,

uh, the treasury market.

So there's like, there's been I think a trade war that turned

into a sort of financial and capital war and supply chain war.

And because the system is so highly leveraged just in time, it's like

we have just in time repo and just in time delivery, right?

That, like, I think we both realized as soon as we flipped into this

regime, like the wheels will start to come off the global economics,

you know, uh, car pretty quickly.

Um, and that everyone is basically mutually assure economic

destruction at that point.

So I think that's now, you know, there was a lag in that, 'cause obviously you had

a lot of inertia in the trading system.

You know, invoice is still being paid and, you know, ship's already in motion.

But I think you, you're, you're pointing at data and I think you talked about, it's

like there's like a, a that's like once that stops then it's like, you know, you

know the why, the coyote moment, right?

And, and maybe that's why both, both sides are now trying to change their

tune about being a bit more, uh, conci in their, in their conversations.

Um, that's a bit more tactical.

So.

Yeah, and I mean, I mean we've already seen initial sign, whether

it's, you know, Walmart and Home Depot going to the White House, and then you

see some purchases starting to begin and China exempting some things from tariffs.

Like, you know, there's a little bit of motion.

I, I still think like a recession, like it's already in, like you probably

saw the GD print, GP print from yesterday, the first quarter was down.

But how, so how does that, where does Bitcoin intersect with that?

Like would you say that, um, bitcoin is, was, was sort of neutral

relative to the events of the last couple of weeks and months?

Did it negatively affect US strategy towards Bitcoin?

Was it sort of unintentionally positive because it just underscored the

argument for Bitcoin in the first place?

Like how, how is your world reading what's happened in the last couple of weeks

and months and where we go from here?

Yeah, obviously there was, like, we, we were, there was a lot of

meetings lined up before Liberation Day that all got canceled, right?

Because it was just chaos.

It was chaos and every, all the principles and all the decision makers and everyone

was just like, what the heck is happening?

And so Bitcoin was just pushed on the back burn, right?

Um, now it's coming back in to the policy conversation.

There's like, just like inside baseball is, there was an executive order sign.

It instructed them to come with these budget neutral ways of acquiring Bitcoin.

Then they did this, this 180 day report due, due in the

summer, uh, by the president's working group and digital assets.

So that machine is, is turning and it's, it's very high level, right?

It's got the, you know, two, two principles on it.

And now you have the ci, the CI deputy director making public comments on it.

So there's a lot, been a lot more public, um, engagement on Bitcoin and just in

the last week it's sort of turned back up as like a salient priority issue.

Um, I'd say the macro dimension is just kind of obvious.

Like when, when hegemons start fighting, right?

Uh, in that acute, like when the sumo wrestlers come and smack into each

other, the uncertainty and the chaos, the shock leads to people's margin calls

and just, you wanna just dash for cash.

People become very bearish on, on, on risk, on assets.

You saw bitcoin kind of, you know, crash essentially 20, 25%.

From, its kind of, you know, euphoric peaks, you know, post-election.

But I think what people are now pricing in, it's been an interesting, you know,

turn is, um, you know, there's been a bit of a premium now attached to Bitcoin.

Beyond it sort of just sort of a NASDAQ correlation, it's now

trading a bit more like gold.

In some ways it's maybe 20% like gold, 80% like nasdaq.

I think that ratio is shifting from being 5% like gold, 95, not 95% like Nasdaq to

being more, like more and more like gold.

I think that's because institutional portfolios, sovereign wealth funds, major

pools of capital are now reappraising.

This, and then the overall regulatory environment is dramatically changing.

Right.

So banks are now able to custody, uh, Bitcoin.

You're gonna be able to start, uh, buy and trade spot Bitcoin in Charles

Schwab accounts, and that's gonna unlock huge amounts of, of, of capital.

Just people just mechanically, you know, investing in their brokerage that, so

there's like regulatory, under the hood, institutional changes that just funnily

de-risk Bitcoin from being a speculative kind of fringe dark web money asset to now

being institutional assets that, you know, is high vol, high risk, but essentially in

a balanced portfolio can optimize returns.

And that's in BlackRock's pitch.

They're going around the world telling cyber wealth bonds.

You need to have two to 5% in Bitcoin.

And, uh, like they're doing that, it's like it's happening.

Uh, and so we are in this sort of a gradual shift where the financial markets,

uh, you know, are now integrating Bitcoin is just an asset class, while at the

same time looking ahead to this chaotic dynamic unfolding between great powers

where the assurities of the stability of.

The treasury market, the global trading system, the financial networks are

being, um, weaponized and fragmented.

Uh, and so inside money, essentially the inside money of globalization, the

inside collateral of globalization, which was the US treasury market,

um, is now being politicized and securitized and fragmented.

And so in that process, right, people are turning to outside monies as a

hedge and also as a, a way to sort of, uh, potentially posture for

whatever system comes next, right?

But we're in this phase transition where there's high uncertainty and

people just looking for hedges.

But our pricing in, you know, contours of what a future post-transition system

is, whatever the, when we squash the beef in, in the Eurasian periphery,

when, you know, we make some sort of, you know, grand bargain with China.

And you know what, what sort of resettled the balance of how the US demarcates

its security monetary zone and forces financial oppression on its allies.

Ultimately the upshot is probably higher inflation, probably like more devaluation

of currencies, like a coordinated devaluation, whether it's explicit

or implicit against harder assets.

And so I just in general, right, the mechanical upshot of this

is Bitcoin will go higher.

Um, my argument inside DC has been if you're, if you're doing this

intentionally right, sort of upsetting the global economic monetary order,

like what's your plan to maximize upside and minimize downside?

Because like we have a glass draw here, it's called the treasury market.

And we saw that, uh, acutely on, on that weekend.

Um, so you would wanna find ways of kind of shoring up the treasury market

and there's like technocratic ways of doing it and forcing our allies to buy.

Buy long bonds and swap their gold or, or, or short term, uh, reserves for,

for those things, you know, force Japan to take 150 billion out of the FEMA

repo facility to buy 30 year bonds.

Those take a lot of political capital and geopolitical capital.

I have to actually twist elbows to force them to fund our

deficit and term out our debt.

That's, well, that's not costless.

Right.

Um, and people are gonna respond to that by being like, I don't wanna have to be, I

don't wanna be in a position of coercion.

Uh, I wanna, I wanna have more, you know, marginal exposure to these harder assets.

'cause I know the government's preparing to kind of like inflate their dead aways,

which is what indebted hegemons always do.

Yeah.

Especially where they get into great power conflict.

Right.

It's like, sorry, you know, like financial markets take a backseat to strategic

prior pres and, you know, domestic pools of capital are now like, you pull capital

into your country and then you just, you know, force it to take it in the teeth.

Uh, that's just what we've done for hundreds of years.

This is what we're gonna do again.

And so people are looking for outside monies, uh, like scarce art

or gold or Bitcoin increasingly.

If you're in that, if you're intentionally, you know, pushing the

world system into that era, well, if gold re monetizes, you know,

that's, I think marginally gonna benefit our, our rivals, right?

The authoritarians and Eurasia that have aggressively accumulated

gold, um, and then have kicked Bitcoin out to a certain extent.

They still Bitcoin miners under the table there with some arms, you know,

sort of shadow shadow activities there.

But officially you're not really allowed to transact there.

Um, um, uh, unless you're doing it kind of in the Hong Kong sort of,

you know, sort of interstitials.

Uh, whereas we have probably, if you do the numbers, eight to 10% of the above

ground gold stock held by the government, uh, gold ETFs and American citizens,

just jewelry, et cetera, gold coins.

If you do the same analysis for Bitcoin, we have maybe 30, upwards of

40% of the, of the available Bitcoin supply held by American custodians,

Americans, uh, American companies, and the American government and

the, uh, street Bitcoin reserve.

So just if you assume in a world where hard assets are gonna be

increasingly, um, you know, more valuable relative to fiat currencies,

uh, which is probably the safer bet.

And then on a structural trend, uh, Bitcoin appreciating at the same rate

as, as gold Kase has, has a four to one asymmetric upside for the us But

Bitcoin, because it's a much smaller asset, it's about, you know, 15th or

you know, the size of, of, of gold.

It, it'll, it'll much, it'll move much faster.

Um, so I think it just makes more sense, right, for the US to kind of hedge itself

pretty low cost weight with a significant Bitcoin exposure, uh, as it's gonna

sort of allow this evaluation to happen.

Um, which it's right, it's gonna bring the Dixie down dramatically.

Um, they're gonna do crash domestic techno industrial reinvestment to meet the energy

objectives that they have for, for, to, to beat, um, China in the a GI race.

So all these things are inter, are, are, are interdependent and they have a vision.

Of remaking the global order.

It's gonna be expensive.

Uh, and someone's gonna have to pay for it.

It's likely gonna be the bond market.

And, uh, you know, the first, for the first person to eat it is gonna be the

foreign, the foreign sort of allies like Taiwan, South Korea, Japan, the,

the Norwegian, uh, cyber wealth fund, you know, the Australian Pension Fund.

Like, we're gonna like, force them to like, eat the losts.

Um, now they could, they could be like, screw you.

Like I'm turning to China side.

And that's, that's a high risk move, right?

If you're gonna like, you know, like the mafia enforcer who goes around

the neighborhood and says, you know, sorry, the rake has just gone up.

Right?

Uh, and everyone's like, well actually there's a new mob boss down the street

who's maybe more credible providing protection to me, isn't as aggressive,

you know, has like good, good, good EVs that I can buy, you know, cheap

goods that support my domestic economy.

Like what exactly are you offering here except for like a thuggish,

you know, um, you know, uh, implicit threat and, you know, security

protection from big bag China.

Uh.

That's kind of what it is, right?

It's like competing mafia is going around and being like, okay,

now everyone has to pick a side.

Um, and uh, ultimately it's about perceptions of who's still, still got the,

still got the juice, uh, and then who's, whose, you know, coercive or inducement.

Um, you know, tools of statecraft are gonna be more compelling,

but I think in that era, Bitcoin is now this tool on the table.

Um, one, it just will continue to run.

And I think the strategic implications for us is, you know, Bitcoin when it,

it's, it's usually does nothing for a, a, a, a certain period of time and

then it just like goes crazy, right?

Most of the positive upside for Bitcoin and like a trailing 12 month basis

happens in like nine trading days, right?

So like, you know, you can be lulled into complacency and then

all of a sudden boom, right?

It's now double.

Right?

And that was fine when Bitcoin was like a hundred billion

dollars, $200 billion asset.

Now it's a 2 trillion asset.

So that going.

Like meaningfully towards parody with gold, which is not implausible scenario.

I'm not saying it's like my base case, but it's not implausible

by the end of the decade.

Bitcoin could reach, you know, some measure of, you know, start to eat into

gold, maybe even reach parity with gold.

That would be a strategic shift in how we think about the function of

reserve assets in the global system.

And I think most people don't even think about that as a scenario.

Right?

If I say you folks inside the US government are very much thinking about

that as a scenario and, uh, I don't know, like update your update up, update

your mental models is what I would say.

Are they also thinking about it in terms of, um, you, you

mentioned, you mentioned gold and about, uh, eight to 10% of above ground gold.

I had Will Freeman on the podcast maybe six months ago now, and he dropped

the statistic that I wasn't aware of.

It's something like 15% of the gold that's mined every year is mined illegally.

Smuggled and pirated and, and sort of other things like that.

And that, you know, gold is not traceable in that sense where you can

make it hard to trace so that different criminal groups or non-governmental

groups that wanna hide from, or even governments that wanna hide from

sanctions, like this is a way for them to.

Sort of transact.

Um, isn't that sort of also true of what we're talking about here?

Like we have the rise, uh, I just recorded a podcast yesterday.

It's, it's not out quite yet, but I was talking with, um, ELO Menard on the

podcast about, um, the attack on French prisons a couple weeks ago by these, uh,

you know, basically gangs that have had a surge of, uh, money and power because

of the increased cocaine trade from South America, strong enough that they're

literally attacking French prisons in daylight to break out, you know, some

of their bros who were in the prisons.

So is there any concern in your mind that actually the, like, if you

as policy does push some of these allies away, and by the way, early

returns are not good, like Japan.

If you look at Japanese behavior and statements in the context of what you're

talking about with the mafia boss coming by, you would expect them to be like bend

the, they're not bending the knee at all.

They're saying, oh, we're not gonna do anything to jeopardize

our relationship with China.

Thank you very much.

We will like take an alternate path.

So if that's the approach, not very good, but, so is there a world in which, um,

if like, this is actually challenging to us hegemonic order, because right now the

dollar, you can use the dollar in lots of different ways to achieve different,

you know, national security goals.

But to your point, like the US government can't use Bitcoin.

That's, in some ways that's the point.

So help me with the tension that I'm, I'm struggling with there.

Yeah, I mean this is Bitcoin as an asset is what we've

mostly talking about as a digital goal, just as a fixed supply asset.

But of course, Bitcoin, the network is this global permission,

peer, peer payment system, right?

There's no choke point, you know, surveillance.

There's no choke point ability on Bitcoin.

There's a large surveillance ability on Bitcoin, right?

You can track all these.

Yeah.

That's the whole function of it, right?

You can see exactly which Bitcoin is moving where, and it's been a.

Large investment by the US government and private sector in, uh, chain

analysis to be able to track, uh, flows on, on the blockchain.

They're really good at it.

Um, so if you're a criminal trying to fund operations with

Bitcoin, it's not a great idea.

There are other protocols and other ways of kind of getting around

that stable coins have become very useful, uh, you know, kind of in

gray markets around the world.

And I'd say the US government has kind of approached this in the same way they

kind of approach the proliferation of the, the original Euro dollar market, right?

Which is a way for the Soviets to kind of get, uh, you know, to kind

of recycle their dollar surpluses.

'cause they were still in the global trading system, but they were officially,

you know, not allowed to like, engage.

Um, and so, you know, there was this sort of market response to create

dollar IOUs and offshore balance sheets to sort of intermediate, you

know, this kind of gray trade, right?

Um, and the US government had kind of a mixed view of that, right?

One was like, oh, well it's the bad guys, right?

Taking advantage of the dollar system.

Uh, but you know, we also have ways of kind of taking advantage of that, right?

Right.

Like that's actually, it spreads the dollar now all these dollar, now

all these, uh, your dollar banks.

Have to kind of, you know, buy our debt, right?

And also they can become means of our own sort of covert finance activities.

And I think the same is true with like Tether, right?

It's like, you know, a thing that's used by criminals isn't necessarily always a

bad thing for the US government, right?

It's like one, we can now see where the criminals are doing their

business and we can get close to them.

And the US government likes doing things offshore in ways that are deniable, right?

So I'd say it's a, it's a, it's a, you know, it's always a mixed opinion, right?

Um, the US government doesn't want the global system to be

entirely transparent, right?

It wants it to be maximally transparent to itself while

minimally transparent to its rivals.

And that's, those are not like perfect objectives.

You have to make compromises.

Uh, and so the question is alternatives on the table.

Would you rather.

Have those countries be increasingly bluely, um, uh, ensnared by a Chinese

techno authoritarian and digital currency stack that has WeChat, Alipay, the

DCEP project, Enbridge, uh, you know, sort of ion ZTE, uh, you know, Huawei

phones and their AI models, you know, where now most of the global south

and increasing the large, large parts of, of Eurasia are now in this sort

of techno authoritarian stack that's fundamentally, you know, controlled,

has, you know, root access by China, uh, and has a payment system that you know

is fundamentally, um, uh, you know, has a network, a topology that's entirely

independent of the network topology that cans to the US sort of financial networks.

So stable coins are kind of like a natural kind of, okay,

you don't get perfect control.

You have to give up some things.

You have to accept the fact that rogue bad actors are on the

margin, are gonna exploit it.

Um, but that's just the nature of open, right?

If you wanna have full control, then you gotta accept, you

wanna just become China, right?

Just totalitarian lockdown and everything gets surveilled and controlled, right?

In a free society, you have to accept.

Criminal activity, right?

Uh, it's just like the compromise we make in a, in a democracy.

'cause you don't wanna have the big daddy government looking over your

shoulder, everything you do all day.

Um, so just, you know, those are trade offs in, in, in, in reality.

But the strategic advantage is those countries get essentially

semi dollarized and they're, you know, they're properly regulated.

You expand stablecoin balance sheets.

Well, that's a marginal, extra buyer of US debt.

Um, and there's this synergistic flywheel between adoption of

Bitcoin as a hard asset, uh, in this increasingly fragmenting world

system where the treasury market gets essentially financially repressed.

And, uh, the dollar price of Bitcoin being intermediated by stable coins.

More demand for stable coins, more demand for stable coins equals more

demand for US treasury debt at the property regulated and reserved.

Then, you know, you can sort of expand the dollar network, uh,

while competing against China.

So that's kinda been the pitch here.

There's no, there's no, and it's always gonna be a cat, cat, cat and mouse game

when it comes to counter threat finance, um, sanctions, evasion, et cetera.

Um, but I'll say like, doing things on an open blockchain is not as

ideal from a criminal's perspective.

It's, it's fast and it's uh, it's efficient.

Um, but they're, they're exposing themselves.

Um, you know, most serious money laundering still happens, you

know, you know, not on crypto.

It happens with offshore LLCs and, and the Caymans are not really Caymans

anymore, but, um, used to be, uh, in, in, in other, in other locales and

gold bars are still, you know, very, very serious things that are, um,

you know, being, being weaponized.

Uh, but I would say so one other point I would, most folks, when they model

geoeconomics and the monetary system and, um, the, the competition between, between,

say, us China, they're not factoring what is like a dark matter that exists

in the system, which is like the power of, I would say, like transnational,

um, uh, structures of power and money.

That have, uh, become extremely influential, but they're not hard

to, they're hard to pick out.

Right.

I'm not talking about like the Illuminati cabal, right.

Some Davos right there.

But there are large amounts of capital and, and networks of, of, of,

of, um, individuals associated with multiple different countries that

wield enormous amounts of influence.

Uh, and you know, I'll just say the intelligence systems of multiple

countries had a very strong incentive to sort of support the emergence of

such structures, um, over many decades.

And they kind of hyper accelerated in the last 30 years.

Um, and, and so financial markets are not just like, okay, buyers and sellers,

you know, trying to price the future.

They are, um, they are, uh, grounds by which these different

competing intelligence systems try to get advantage over each other.

And I say there's a, there's a long running principle agent dynamic at

play in every system between the political authority, the national

government, the leaders, right?

And then these intelligence systems, right?

Which have existed for a lot longer and perceive themselves as enduring much

longer than the, the, the, the terms of office of the national leadership and

whatever policies they wanna pursue.

So I think no one can, if you don't actually model in what you think, you

know, I don't mean like the CIA Qua, CIA, I mean, you know, the dark matter

that sort of was around that set of set of systems that, uh, he has existed for

a long time and is, you know, gained a lot of, of, of, of capital, um.

They have a certain interests themselves, but they don't,

they don't go on Bloomberg.

They don't, you know, articulate.

There's an op-ed pages.

They don't, um, you know, uh, debate openly their views, right?

They just fight back in the terms of, of the, of, uh, of the fight that they're

engaged in, which is financial markets, capital markets in, um, political markets.

Uh, and so I, I perceive a lot of these things that Trump is

doing, um, as fighting that type of battle at the same time, right?

He's like the US China competition is the main dynamic, but I also, he perceives

there being this sort of structure, right?

They, they call it the deep state, and they're obviously, you know,

wrapped around with various axles of, you know, uh, conspiracies.

Um, but they're not entirely wrong.

Uh, when it comes to like the existence of such a power structure.

Uh, I, it, it's, it's there.

I mean, it's, you guys be very naive to think that that doesn't exist now.

How, how Univalent is it?

How co, how coherent is it?

Um, I think that's.

That's, uh, there's, there's debates on that.

Um, but, uh, if you're not modeling these, these dynamics with that factor

in, you're missing a huge component of, of what's going on right now.

Yeah.

And you know, this, this stuff makes somebody like me, uh,

uncomfortable in some sense.

'cause, uh, there's an old Chris Rock bit where, you know,

uh, we can update it for now.

Like, first, first they came for China.

That was okay.

Then they came for immigrants.

And I was like, ah, I sat up in my chair.

'cause Jews and n words are next.

Like that train is never late.

It always comes.

So we start talking about dark matter and international cabals.

There's capital around it.

Like, eventually the Jews will be blamed for this thing in some sort of way.

Uh, which, you know, it's a coincide that there is rising antisemitism

around the world, some of theses morses.

The irony though, is I, I would associate, you know, whatever this,

uh, structure is, uh, I would associate more with kind of a, a fascist Nazi,

um, orientation than anything else.

Uh, I think if you, if you tell, tell alternative history of the 20th century.

Post World War ii, we, uh, had, you know, basically an alliance with the Nazis.

Um, or I'd say we, I'd say the OSS steer of CIA kind of elite US factions,

which helped finance the Nazis in the thirties and then set up all these rat

lines, even starting in 19 43, 19 44, mainly through Spain and the Vatican

to relocate thousands of SS officers and other Nazi elite to South America.

And then the scientists and the technical folks we portioned off in Operation

Paperclip and brought them to the US to finance our, I mean, to, to drive

our, our, uh, our military industrial complex and created our space program

and created other secret programs.

And so, you know, that's the genesis of this is like we made a deal with

the Nazis to sort of save the key elite and their technical talent.

We brought them into our system and they became the foundational kind of

core of this security apparatus and this technical military, uh, complex.

Um, and that never went away, right?

And, and I think it was, uh, managed to a certain extent.

It was compartmented under, um, government oversight for.

20, 30 years, and I think in the seventies it's kind of peeled

off and did its own thing.

Um, so like, you know, I mean obviously Trump is a, is an authoritarian

by inclination, and I think he's rivaling, he's, he's, uh, ratcheting

up kind of APOE sentiments and sort of traditional nativism.

Um, and that's, that can, that has failure modes that are quite, quite destructive.

Um, but, uh, but I'd say fascism, pure fascism isn't

necessarily ethno fascism, right?

Pure fascism is just a, an alignment of capital with the state.

Um, and especially, you know, concentrated capital, uh, doesn't view, you know,

governments as, you know, as their ultimate authority, uh, or national

boundaries or ethnic allegiances, even as their primary attachment.

Um, so I think, you know, there's lots of things happening at once, right?

Uh, lots of fights always happening, lots of different elite factions kind of

jockeying for power and then we'll whip up popular sentiment, uh, and kind of create

propaganda on both sides to kind of.

Win those fights.

But ultimately it's like an elite civil war, I think, taking place.

But it's not just an elite civil war taking place inside

the US political economy.

It's an elite civil war taking place inside of the global political economy.

Um, and even in China, right?

There are, uh, elites in sort of the Shanghai clique, uh, folks in Hong

Kong that very much wanna squash the beef, get back to business.

Uh, they don't like, she, they want she to be in power.

Right?

And you've noticed there's been a lot of instability in Chinese system.

A lot of very senior folks, very close to Toxi have just been purged.

Um, so there's a lot of, you know, like underneath the surface there's

a lot of like things going on, um, that are indications that the

system is going through convulsions.

Uh, but uh, you know, it's be, it's beneath the surface, right?

They're not, you know, great power of war is too expensive for everyone to fight.

And the Eurasia and obviously the Russia, Ukraine conflict shows everyone that like.

Like even a great nuclear power, like Russia can just get bogged down here.

Um, so like, that's not the way you wanna fight this.

You wanna fight this through covert, you know, assassinations, financial warfare,

cyber attacks, espionage, um, and uh, you know, knocking people off different,

different, uh, sort of political ladders.

Uh, and that's just where we are now.

So you have that elite factional, civil wars are highly personal wars, right?

Literally those tiny ingroup all jocking for themselves.

And in that chaos, there's lots of grifting and corruption that takes place.

But because those people are national leaders of great power

countries, they, they affect foreign policy, they affect trade policy.

And so you have this highly personalized, you know, um, model of what's going on

as well as this highly abstract kind of macro model of what's going on.

And I think because the latter is more salient, you have indicators, you have,

you know, like big policy frameworks.

Takes most of the attention.

And the in-group is what intelligence services focus on, right?

It's like I need to be close to that person to understand like, where

does he sit in this, in this, in, in this, in this, in this fight.

But I think there's a like a, like an availability bias here because certain

things on the more macro side, on the geopolitical side that are like, you know,

obvious are more, um, salient and visible.

Uh, they draw more of our attention.

We think those are the things that matter.

But just because you don't see something doesn't mean it doesn't matter.

And the whole function of intelligence services is not only to see what most

people can't see, but to do things that affect strategic, you know, shifts in

ways that are not, um, uh, traceable.

Uh, the whole, that's the whole function of these systems.

Um, so anyways, that's a bit of a, of a, of a, of a riffing spew.

Uh, but, uh, yeah, this is, I I try to pay attention to the things

that are not as visible as well.

I think that we should leave it there.

'cause I think if we start to go down, uh, your other professional interests,

we're gonna overwhelm the listeners.

So why don't we, we put a pin in it there.

We'll have you back soon and we can talk about aliens and,

and all those other things.

But I think this was a good sort of, uh, good first step for, for the listeners.

Um, you know, maybe.

Baby set, like you said, like, you know, we, we, we can't

scare the client completely by giving them the whole grab bag.

We gotta, we gotta give them some treats first.

So thanks for coming on, man.

Thanks

man.

Next time.

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