What you're telling me is that music is about to stop and we're going to be left holding the biggest bag of odorous excrement ever assembled in the history of gutless 1974198792972000 and whatever we want to call this, it's all just the same thing over and over.

We can't help ourselves.

I.

Say when we sell.

Hey, OK, I say when we sell.

All right, we're back near all time highs.

This week we sat down with Tyler Neville.

We discussed a number of topics.

It was an engaging conversation, enjoyed it quite a bit.

We first started with the generational divide and the policy distortions that Tyler has lived through in his career post great financial crisis to the present day and the dynamic playing out between short volatility and long volatility and ultimately why you need to own scarce assets and be long volatility to preserve and grow your wealth.

We also got into the topics of the AI productivity shock, what that could mean for labor markets and financial markets going forward.

And then toward the end of the conversation got into Bitcoin treasury companies and institutional appetite for these companies as well as spot Bitcoin directly.

And then at the end of the conversation, we had a little bit of an internal RIP Brian, Michael, myself, we had some interesting takes.

I would say Brian and Michael came out swinging for the fences for the end of the year and into next year.

So you want to stick around for that one to hear where they think this is all going and ultimately what the price might look like.

And if you're bullish Bitcoin, if you're a long scarce assets, if you own Bitcoin, then you really need to have a plan for securing it for the long haul.

And that's why you may want to speak with on ramp.

We focus on multi institution custody.

What that means is Peace of Mind for you, your family, seamless inheritance built in without your family needing to know how to manage devices and see phrases.

You also have insurance, Bitcoin back loans, Bitcoin Iras quite a bit being built on this foundation of multi institution custody.

So if you're not in touch with us already, reach out to on rampbitcoin.com.

I would love to speak with you.

All right, we are back.

It's the last trade got Tyler Neville and we're joined by Brian and Michael from on ramp as well.

Tyler, thank you for joining the last trade today.

How's it going, man?

Going well, man, it's getting less hot here in Austin, so enjoying the weather finally.

Tyler Yeah.

Excited to have excited to have you.

We, we're curious about how you feel about Jacksons wall art, because it's been commented that he it looks like he he's in a cave.

And so we just wanna, we're trying to work, you know, help him level up the podcast appearance.

Curious if you have any recommendations.

Yeah, you know, like I gotta roast you.

Mike.

Look, what do you, what do you got going back there?

It's nothing special either.

I know I I at least had something on the wall, so I felt good.

I just got back to Texas.

I'm in a office that we have here in Wimberley and it's going to be revamped.

I got nice art, but I just got it put it together.

I got back late last night, so it's been a little bit difficult.

Jackson does not have that excuse.

He just likes to to look like he's in a cave.

Yeah, he's.

Very loved one.

I love when it blows up in Michael's face.

It just happens.

It happens every show.

He'll never admit it, but it does.

He makes Jackson makes up for it with it.

Look at that.

The gold golden locks, long flowing hair.

No background needed.

You don't need a background with that.

You're a lot Tyler, man.

This is going to be a fun one.

You, you kept us waiting.

We wanted to record with you a couple months back and life happened.

So this is even more highly anticipated show than it, it originally was.

And so been really enjoying your takes recently the past few months on X.

That's where I follow most of your work, but then also your podcast with forward guidance at the Block Works team.

But why don't we start?

It's a really big topic and so take it however you'd like.

But you write a lot about just the the policies and the macro forces that are really driven A generational divide, particularly in the United States.

And would love to better understand just over your career, the policies that you've observed and the the forces at play in the markets that have ultimately led to this massive concentration of wealth with boomers, inability for, you know, millennials, Gen.

Z to afford homes, to marry, to have children.

I think this ultimately gets at a lot of the when you dig into the financial system, it really explains a lot of these trends.

So I'd be curious to hear what you've observed in your career and how you ultimately categorize all this.

Sure.

Yeah, I, I guess the easiest way to start is I started in 2007 at this firm called KBW, which was, it was an investment bank that just covered other banks.

So you figured out how the hell banks worked.

This is only my first job out of college.

And I was doing like financial modeling for all these, like regional banks right before the financial crisis hit.

And you essentially see like as people stopped paying their mortgages, you saw non performing assets just go skyrocketing.

So these banks were essentially like walking zombies.

And I realized at that point, you know, KBW was one of the first banks to actually say like, this was a it's going to be a bad recession in 2008.

And then I realized across the street, Wall Street, no one actually knew how the system was made.

It was literally just a bunch of people pressing buttons and making shit tons of money, excuse my French, and they had no idea how the banking system worked.

And so like, I don't know, I probably, I became a little too obsessed with it and read a bunch of books about how the monetary system was made, etcetera, historical books of like Fiat paper currency, you know, sovereign individual, those types of, of, of books, the ascent of money by Neil Ferguson.

And I basically realized that like it's after 19, you know, 70 was it 79?

Nixon got off the gold standards.

It's just a money printing Ponzi scheme backed by debt.

It's really hard to actually say that in an institutionalized setting like these investment banks, but that that whole premise of just like feeding debt and just debt fueled growth hit it today.

Newmont in 2008.

And then everyone I realized didn't know how the system was made.

So that basically formed the the basis of of all this stuff.

And after 2008, we've basically been in the same money printing scheme for the last, you know, 17 years.

It's fascinating to me that no one really realizes it.

Like we've been diluting our currency at like an exponential rate.

But if you, if you actually say that in an institutionalized setting, like they, they don't really want to hear it, but that, that's essentially the backbone.

We can go anywhere from there.

But where do you guys think we should go from there?

But.

You could, maybe you could just expand a bit on from 2008 to where we are today, like the, the proverbial can kicking that has occurred as you referenced, like we're, we've sort of just extended and pretended everything that we sort of instituted in 2008 in the wake of GFC.

Maybe just a little bit more color and detail around like what those mechanisms have been, what they're sort of evolving into in the current age and kind of what you expect going forward.

As you know, there's a ton of pressure on the Fed obviously to, to cut rates and cut rates into an environment where everything's at all time highs.

So that seems a little bit counterintuitive, like curious just, you know, mapping from 2008 to now those mechanisms and and what you see today.

Yeah, it's, it's just to simplify it.

I think what it is, is it's the boomers don't want to take a haircut any out of their financial assets.

And so they keep coming up with what I call the acronym FACTORY, where if you go for the past 15 years, every single time there's a hiccup and credit markets to come up with some, oh, it's TARP, it's, you know, LARP, it's whatever the heck it is.

They'll bail it out in 2 seconds and create some acronym to make sure the money markets are are functioning fine and there's no credit problem.

And that's, that's been the backbone of of the whole thing for the past 20 years essentially.

And it's all because boomers are heading into the late of their latter years and they do not want to take a haircut on their assets, especially homes.

Housing prices need to stay higher because that's the majority of their retirements.

100% there's something that caught my attention, Tyler, on your ex profile more recently.

And it ties back into the original point that you made where if you're existing within the institutional finance world, it's either people are dishonest or they still don't recognize the inherent foundation of the financial system and how this ultimately drives asset prices.

But you had quote tweeted, I guess, a podcast interview talking about how you know, people who are in this case, like a finance professor.

But it really extends out until like what these people are taught in university, then they're taught early in their career, and then these, these umm, portfolio construction ideas and theories that we've pretty much agreed to in this industry to.

And so now people operate under the false assumption that inflation is like 2 or 3%.

If you're generating A7 or 8% nominal return in your portfolio, you're doing great.

But there's very little acknowledgement within institutional portfolios of the true rate of inflation, the debasement of the currency.

And if you were actually to start measuring returns against that benchmark, the returns would look far less attractive across the board.

So I'm curious what thoughts you have there.

Yeah, one of my favorite things is after 2008, playing not to lose in in hedge funds was the really cool thing to do.

So you, you had a massive boom in beta neutral hedge funds, meaning like, you know, if you were long $100 or something, you were short $100.00 of something else.

And if you could make 8% in that world, you are a genius.

And you could charge 2 and 20 and maybe 3 and 30.

And you know, if you, if you just made money from now in up markets and down markets, you were great.

But the problem with the whole thing was it just ignores like history and debt bubbles in general.

And so if you actually do the math, it's say it's an 8 Rau Palace is 8 to 10% dilution in Fiat currency per year.

So that pretty much makes every single functional bond.

You know you're losing money every year by investing in bonds like if the high yield bond is right now is yield to worst is like 6% to buy the riskiest credit debt, you would still lose 2% in real terms against the the dilution of the currency.

So it really makes that right now does not make any sense because why the hell would any millennial and genzier buy a bond right now?

It does not make any sense because they just continuously torch the currency.

And if you were to, when you say this in an institutional setting, they're like, well, you know, if you risk adjust it and you it's been 17 years of this and these academics just still can't get their mind out of it.

Meanwhile, you have the crypto Bros who just absolutely have crushed it continuously year after year after year.

And it's like a difference of the mid, you know, they mid curve it all the intellectuals, but I think they're starting to realize, Oh my God, there's really only two trades.

You stay ahead of the Fiat dilution through like, you know, fast growing tech stocks or frontier, I call them frontier stocks or space stocks or whatever they are.

Or you go to stores, stores of value because there's no other way out of this thing.

I call it the Ponzi scheme.

You know, everyone makes fun of me for calling it a Ponzi scheme.

There's pockets of real things happening obviously in the Ponzi scheme, but they continually see just never ending dilution of your currency at higher, you know, higher valuations.

But it's like this deceptive game just to keep the boomer system going.

And I think what they're really trying to do is just hand off the assets in a more.

It's like a the great rotation they call, they almost called this the great rotation in 2008, except it never came.

But it's a giant debt for equity swap.

Like you slowly move out of the bonds.

Boomers still will invest in bonds because they're mandated to and they just hold.

The supply of the bonds is getting smaller and smaller as the boomers have more and more cash and then that money slowly seeps into equity markets because they're the ones keeping the yields down with constant reinvestment through pensions, etcetera.

Yeah, it's a great take.

I mean, it really ties back to the whole notion of sound money or Bitcoin is more of a common sense test.

And I think maybe we talked a little bit about the existing status of the world in the market inertia.

And we see this across just legacy infrastructure in general.

There's the market sentiment.

It's hard to go against it calling bonds impaired.

We talk to people at Fidelity, it's very hard for them to even discuss that even though it's pretty straightforward or the math is the math more curious changing a little directions on this great rotation because we naturally see this happening.

I think there's been a calls for the dollar demise for since the beginning in 71.

I think what's different in where we potentially might be in a suddenly phase is really gold because gold is this thing has been suppressed for decades and it's making its move.

It's close to $4000 a tryouts, which is just absolutely insane.

We saw what happened was in Shanghai we could talk a little bit about and effectively different countries coming together that are going to start net settling oil on the commodity that underpins everything in different currencies, whether it's, you know, backed by gold or in gold.

Just curious how you see this rotation playing out into particular sound assets with gold and a Bitcoin I.

Don't know.

It's like 40 years of breaking down institutionalization is like really hard to do.

So I think it's just going to happen slowly and steady.

We're getting into some sort of euphoria here in gold and Bitcoin starting to move as well.

I don't know if this is going to be like, I think it's going to be slower because there's so many mandated things from the institutional world.

It's like you get, you know, money from taxes goes up.

These taxes go to pensions, pension, have to invest into these asset classes.

So it's really hard to like rotate fast into all these things.

It's just going to be this gradual, like slow default I think on a lot of the Fiat bonds is my read.

But I don't think it's going to be like you wake up 1 morning and it's limit up and gold and Bitcoin every single day for like months and then the entire Fiat system kind of folds.

I, I would, I would generally agree with that just in the sense that, you know, the, the 6040 is so ingrained, as you mentioned, particularly with, with boomers and older generations that they're just going to hot swap out of all their bonds.

Like that's not what's going to happen.

And I think you brought up a great point around the generational divide and the perception of debt markets, right?

Because if you're someone younger, you're exactly right.

Like, why would, why would I lend the US government money to receive a negative real return?

Like it's completely nonsensical to someone who has grown up in a world where the, the general trust in institutions has eroded at, at a pretty remarkable clip.

And so like, that's the big disconnect in my mind is like, it's this generational divide of, of people who have grown up in a world really post GFC where the trust in institutions, the trust in government is maybe not at an all time low, but it's it's on a steady decline, right?

And so I think that that is sort of a pivotal component of why those younger generations will opt for, you know, they'll probably still buy equities, but they're not going to buy bonds and they're increasingly going to look to a Bitcoin as their digital gold portion of their portfolio.

So I think it's, it's a very astute observation in terms of again, that generational divide in terms of, you know, just how you perceive stores of value, how you perceive of investments and, and it really all comes back down to institutional trust waning in my mind, like that's that's sort of the critical juncture.

Yeah, As a side note, I used to trade at one of the largest 6040 portfolios in the country.

It's called the Franklin Income Fund.

Is this $100 billion fund essentially what it was?

It was just like the the boomer fund where everyone just plays not to lose.

They just want their income every month.

It's it it this guy that manages absolutely brilliant.

What it what it really is is over time, he he shorts volatility, he sells overwrites call calls in the equity position.

And what you really do is you're picking up nickels in front of a steamroller.

And I think that synopsize my experience with that is over a generation when you're just looking to clip yield and you're not actually investing in new ideas that really that whole product.

I call it the short volatility trade in general because like that mimics almost every baby boomer product, which is I want to clip yield instead of invest in something new because I don't want to the risk of investing something new.

And herein lies the the irony is that over a generation, when you clip yields and you create more debt, you're just moving wealth from one part of the social class to another.

So it's like you just annihilated the middle class through Fiat printing and clipping yield.

And it's tell me if I'm going down a rabbit hole here.

But it's the same premise of insurance where it's like Warren Buffett shorts volatility.

He offers, you know, he takes premiums and he goes and buys bonds.

And that whole mechanism that it's a similar to the 6040 is, is gone on for too long.

And we're at the point where the secular stagnation is so bad because no one has invested in new things, how the government has to make up the gap for the nominal growth that we need to pay off the debt, which makes the risk reward of going out on in the risk spectrum like way better because otherwise the system doesn't exist.

You just you'll have like social discord if you just keep doing this clipping yield short volatility trade.

So now retails figured it out.

It's like this is just, and this is what I meant by you go from a short volatility products to long volatility products is like an easier way to explain it is back like 40 years ago, you know, our grandparents had China like the plates and they would say, oh, you got to get a good piece of China.

You're going to pass it down and like it's going to be a great store of values, this China.

And then like you go in our generation, it's completely worthless.

And that was not a store of value at all.

It's the same thing as like bonds now for for us is like, that's ridiculous.

Like what?

Why would we ever own a bond?

And so I when I mean from going from short volatility is like you created this whole risk adjusted return theory about how to invest in assets for 40 years.

All these institutionalized people did it, but then they forgot to pay.

It's the most important thing, which is the dilution of the fucking Kurds, excuse my French.

And So what now we're at this point where because of the way the system is set up, you need to force nominal growth higher through the dilution of the currency and fiscal spending.

And so that money has to flee into the new frontier assets to create the growth for the next cycle.

And so we perverted risk adjusted returns is sort of what I'm saying is like you've pushed it so far where the risk now lies in owning, you know, a home and your your wealth is generated in stocks in frontier stocks now because of the this generate generational gap.

And I had a good chart on Twitter about that, which is like, we saw the blow off top and home values.

And now there's just like anything that's been used as leverage and squeeze, the middle class is now an asset that will relatively underperform in this new like next 20 year cycle.

Sorry, I just rambled there.

You guys tell me to shut up if you want.

No, that's, that's the point of the podcast, right?

That's why you're here.

It's funny because it was timely.

I was over at my in laws a couple days ago and my wife just found these treasury bonds that were gifted to her when she was born.

And so it's just it's funny because to your point, Tyler, China right, as a store of value 40 or 50 years ago, it's the same idea as gifting, you know, a newborn baby Treasury bonds 30-40 years ago.

And so now you go to redeem a bond and it's a nice gesture.

And the person who gifted that thought that that would be worth something today.

But then you go to redeem and it's like, well, this doesn't actually buy me anything.

Yeah.

And so it's interesting because a lot of this is generational investing and just.

A lot of things, I guess in the markets are just human psychology, but in terms of how we perceive what a good investment is or what a good store of value is, a lot of it has to do with narratives, but then of course properties as well.

So like Bitcoin is like partially A narrative, but also the objective monetary properties of it.

And so I think like kind of ties into what you're saying that generationally both the macro and the micro as well as technology and narratives kind of inform what people perceive to be good stores of value.

And so I am curious to kind of try to bridge this, how, how do you think about like the short volatility trade kind of coming to an end of the road where you have pretty much every asset class at all time highs?

I mean some of the illiquid ones are starting to show impairment and pretty remarkable markdowns relative to what they were purchased like 5 or 10 years ago, say in commercial real estate.

But still things are at all time highs.

Yet you pointed out that money markets are there's a ton of cash and money markets.

And so, like, how do you think about the fact that traditional assets are in all time highs, the fact that younger generations want to own different assets than what their parents or grandparents owned, and the fact that there's still much cash on the table still, you know, like, does everything go up?

Or how do you think about markets in like the next handful of years?

I think it's a relative game where the Weimar Republic I, I bring up a lot because it's, it's this extreme example of money printing where you know, your, your German currency was basically devaluing at an exponential rate and you'd have to go get your paycheck and wheelbarrow it over and pay for your eggs.

And I call it why America now?

Because I think we're in this relative game where the dilution is just going to keep happening at an exponential rate unless, you know, the caveat is unless AI is really massively productive and creates like a massive productivity boom, which is possible, very possible.

But my point being is that in this world where you're constantly pushing fiscal spending, monetary spending, it's basically MMT is what we're doing.

And in that world, there's going to be relative winners and relative losers.

And commercial real estate is a perfect example.

It was like, but we thought this was, you know, it was like a Thanksgiving Turkey right before Thanksgiving.

He's like, oh, it's great, this big fat building.

You can charge all these rents and then all of a sudden, like boom, generational change, no one wants to go in the office anymore.

We realized, why are we paying?

You know, why are corporations paying a 20% tax to the commercial real estate owners when we have all this technology where we can do our jobs anywhere just and then all of a sudden that Thanksgiving Turkey is, you know, toast.

But a lot of the pension fund flows were were funneling into that for generation because it was risk adjusted yield.

But like if you've all adjusted, it's great return over 30 years, but then all of a sudden bam, done.

So like a lot of those types of assets where it's just a tax on someone else and if there's a technological disruption, it really can go to the wayside.

You're better off like ironically, investing in new ideas now rather than the the, the stuff of the past.

I mean, there's different.

I would change my tune if the Fed all of a sudden decided to be like, you know, tighten rates, like then you have to, you know, adjust it or if credit spread starts widening and you need to get a little bit more conservative.

But where we sit today, they're trying to delever the debt to GDP, which is, you know, 130%.

They need to get that down so that our deficit isn't so huge and we can actually grow our way out of the debt.

So that's like we're in basically war, wartime finance.

They just can't actually say it.

Yeah.

It's so true.

We have Luke Grubman on the podcast about a month ago and we're talking about the idea, his idea of you don't really like in wartime, you don't ask permission of the bond market to do something right.

And so the idea kind of what you're describing as well is there's a fiscal constraint now in the treasury market is, as we all know, heavily manipulated.

And the Federal Reserve controls interest rates and they're far below what the market would actually price them at.

If you have a country that is 120, a 130% federal debt to GDP in order to retain or in order to, I guess where I'm going with this is we're pretty much at the point now where there needs to be an acknowledgement that it is kind of like wartime.

And you have to start intervening even more in the bond market, IE driving rates lower, purchasing more of the Treasury debt by whether mandating banks like the private sector or just doing it on the, the, the Federal Reserve's balance sheet.

But ultimately there just needs to be more and more intervention, which to your point I guess will be more liquidity, faster dilution rate and ultimately play into the store of to your assets more favorably.

Yeah, I think that's spot on of what's gonna happen.

The Acronym FACTORY will do whatever I call them, the Valve controllers and the Acronym FACTORY.

They will do whatever it takes to make sure the bond market stays calm and salubrious and and no one questions.

It's like you ever see The Dark Knight where he's like, it's all part of the plan.

You know, they blow up a truck full of soldiers.

It's all part of the plan.

But kill one innocent person, everyone freaks out so that that you can't you need to have it stay all part of the plan and the bond market needs to stay copacetic.

As soon as you get volatility in the bond market, like just get the hell out because that ruins all the asset, the relative asset values.

And that's that's the one thing I watch.

Was that a good impression or?

It was pretty good, actually.

One thread I wanted to pull on that you referenced earlier was like, you know, this notion of the productivity miracle from AI.

And I keep coming back to this because it's a nice story for people to tell themselves that like, Oh yeah, we're going to grow our way out of this productivity boom, etcetera.

I think they're not.

Handicapping is effectively what that forces the government and the Fed and the Treasury to do in response to something like that, which is actually print more money and dilute the currency even faster because they can't afford that type of deflationary boom when they have this much debt.

And I think that's a big disconnect that people are overlooking today.

And one example of it is another acronym like Ubi.

Like if a ton of jobs are lost due to this AI productivity boom, there's probably going to be pretty, pretty loud screams for some form of Ubi and that dilutes the currency even further.

So I think people are not handicapping this appropriately in terms of this theoretical productivity boom.

There's a great paper by this guy named Leopold Ashbrenner.

It's called situational awareness.

I don't know if you guys have read it, but he basically says there's going to be as AI scales, there's going to be massive problems in the social contract because if you have massive productivity, something you've never seen before, 1002 thousand percent product productivity growth, a lot of the people that capture that productivity growth are wealthier.

And you know, the lower in middle income, you might have inflation come down due to the productivity growth, but you know, you might lose your job, right, like you said, and you have Ubi or something.

So this battle is just going to be getting worse and worse.

And there's a great chart.

Do you know infra?

His name is Robert on Twitter.

He put up this, he's awesome, by the way, does great, great macro work.

But he put up this chart of like jobs jolts going down as the stock market goes up.

And it's the first time they've disconnected the line of the line in the sand was when ChatGPT was actually created.

And you saw like now people are getting more productive.

One person can do a lot more things.

So I think I'm a believer in the AI productivity boom.

I think it's going to create massive imbalances and it's going to be there.

It is right there.

It's perfect.

It's a good one.

Like, right, you see, look at that right as ChatGPT is released, you know, jolts go down.

And what's even scarier about this is if you're a college educated kid who just paid, you know, 200 grand in student loans and you have no real skill set.

And I mean, I use Grok AI Chachi PT all the time.

It's frightening how like they can do what I used to do in a week in 5 minutes.

So like, this stuff is coming fast and it's frightening.

I don't know whether to be like happy about it or sad about it, but it's going to cause major issues.

And like, you have to protect yourself.

And I mean, I think crypto is a way to protect yourself specifically.

And you're going to the government, they're going to do some wacky stuff.

The next 10 years is just going to be bizarro.

But there's one thing that I think secularly works in that environment is the crypto ecosystem.

Yeah, I think two things to call out.

You're exactly right.

Like things are to get insanely weird with AI, but the amount of energy required is just going to naturally be inflationary because it's going to cost so much more for energy across the globe, which is going to help in that case for like Ubi, because it's going to be very expensive just to like heat your home or like do anything productive.

Where I end up coming back to, and I know this is jumping forward, but it comes back to what's the difference between savings and investing?

Because I get like, there's going to be a time between here to 10 to 30 years, but the rational decision is to save, not to invest, especially one, because it's an order of operations.

You can't really invest until you have savings.

But also because in this situation we're talking about, it doesn't happen in a vacuum.

So as the amount of monetary units come into the system and people go further out in the risk curve, that means more things are going to naturally not work out.

More things will, you know, people are going to be left holding the bag effectively zeros, and then you're going to start to look at what is the risk free rate and that ends up going back to gold and Bitcoin.

And with these breakouts, I think nobody wants to catch a fallen knife.

But at the end of the day, like wealthy people do not want to see their money be debased.

And at a certain point they naturally start to go in and out of the, you know, bonds and, and equities and say, well, like, look, you know, it's just self preservation game theory.

So just curious like how you see that fitting in?

Because I know that there's been a really nice story for the past 30 years to kick the can down the road.

But it feels like things are different specifically because depending on where gold goes in the amount of sovereign bid, it ends up being the treasury or the reserve asset.

We've already seen amount of gold being held versus treasury.

So these are just like different sentiments and different like inertia moving in a direction that we've never seen before that I think kind of adds a different like a wild card to a lot of the discussion that is just going to it's unknown unknowns effectively.

Yeah, the whole premise of what is saving in this world is just, you know, you for for a brief snippet, when Trump was putting the tariffs on and they were being like, you know, they're they really wanted to shrink the spending and Doge happened.

That was like, I might have to save my money again.

The liquidity of the dollar system just like shrunk yeah, that, that was probably time to save your money, but now they, they didn't Now the now the charade is up and everyone knows that, oh, they can't stop this trade like they can't stop it.

So our our idea of what saving is like here's a great there was a great chart was like median rents are going up higher than wages.

You know, say it's like your, your rents are going up 5% a year.

Your wages are going up 3% a year.

So you're, you're becoming 2%, you know, less wealthy every year just by, you know, the rate of, of, you know, change in, in rent.

And I think people are starting to catch on to that is like, God, my, my car insurance went up by 20% this year.

How the hell do I stay ahead of that?

And this is goes back to the why America, things like this is normal in history for governments to do this.

There's no currency backed by government has ever lasted that long.

And think, I think what's going to happen is the government's just going to place the dollar right alongside a Bitcoin.

And that will just be the way it's, it can slowly devalue relatively.

And then you'll have two different, you know, monetary worlds.

You're going to have the China backed gold monetary world in Russia and India.

And then you're going to have the the futuristic 21st century crypto backed dollar in the US and allied countries.

And I think that's just that's probably the most likely outcome here.

But yeah, the premise of saving is just ridiculous.

Like the boomer boomers can't wrap their head around like, my wage not going up commensurately.

It used to be like, oh, I make 5% more every year and it gets cheaper to live.

Like, oh, this is fantastic.

And like, it's the exact opposite now for pretty much millennials and Jen's ears.

Like, that's why they're not having kids.

Like, assets are too expensive and, you know, their debts are too large relative to their incomes.

And that that'll all change here, I think where the, the supply of Labor will shrink.

Everyone's going to start getting paid more.

And you know who's going to actually pay for it is the boomers, because they're all sitting in bonds and they're getting going to get smoked all their pensions and, and all this stuff.

It's just when we get into office and millennials, you know, Jen's ears get into office and younger, they're going to print money to the cows come home because they're like, well, you fed us all this debt, but no one thinks past five years anymore.

We can already see Mitch McConnell's gone, the Pelosi's gone.

All these old people, they're just, they're just going to be gone.

And one of my favorite quotes is like, because of this generation of the villains of the next one.

And we're just going to see these people are going to horrible.

History is going to look upon them horrible when when you see like the fertility of the next generation has been decimated by all these policies.

Yeah, the, the, the distinction between savings and investment I think is a very important one.

And the reason it's not well understood today is a function of the past several decades where subconsciously, most likely, like most people are not conscious of, of this reality, but there's a subconscious notion that you can't save in dollars.

Like if you just hold dollars in a bank account, even if the the individual doesn't exactly know why, they don't know the mechanisms or how CPI is calculated, they know that, you know, they can't just hold dollars in a bank account.

So they're then forced to become speculators, effectively become an investment professional in addition to their day job.

And frankly, because there was no alternative, you know, you could, you could think about gold, but then it's, it's, you know, hard to have a material amount of that in your possession or, or know that your, your counterparty has the gold, etcetera.

There's, there's issues there.

And so now that we do have Bitcoin as this opt out mechanism for savings, we're still very early and people recognizing it as such is, is the main rub, right?

Because people still view Bitcoin as very speculative as an, as an investment, as a technology play.

In some sense we view it as savings, but most people do not.

But that is, I think going to be the important sort of educational education driven evolution that we observe over the next few years is people recognizing like this thing is, is actually not speculative.

It's actually the opposite because it's the it's actually the only thing I can trust going forward in terms of credible monetary policy and a finite supply.

Now how long that takes to actually, you know, pervade and manifest across society, I think is an open question.

But that feels like the the journey that we're going on is, is people recognizing that maybe I don't have to be a speculator and move so far out the risk curve and and Yolo call options on Robin Hood.

If I can just save in a superior form of money, I'll outpace all this other stuff that, you know, would take time out of my day to become an investor.

And when I can just, you know, focus on my day job, focus on my life, my family, and just save money.

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Thank you.

On that point someone derivatives guy, one of the really interesting things is everything is usually just a relative derivatives relative value in terms of volatility.

And what I mean by that is if you look at the volatility in the S&P, it's like 30 day Vols like it's like 8 or something.

And that's come down historically because they keep trying to squeeze yields.

You can, you can actually manufacture equities into bond like proxies with volatility by call overwriting or put underwriting, if that makes sense.

I'm going down a rabbit hole, but you'll like where I'm going in terms of that.

But and what's happened to Bitcoin over time is the volatility of Bitcoin has kept going down and down and down and down and down.

In fact, it's getting in terms of store value.

Everyone's like, oh, it's true volatile.

It's actually getting less and less volatile and it's a yield like if you generate yield, now you have yield generation type products on Bitcoin, which to me is basically, oh, you're creating Bitcoin backed bonds, right?

That's what you're doing as the volatility comes down and the holder base gets more, you know, wide enough to actually sell calls and sell puts and generate yield off your Bitcoin, you're creating a new financial system, if that makes sense, right?

So relatively, would you rather buy a six like a 6% high yield bond or you know what, 11% yielding, you know, Bitcoin back to me, it's a no brainer, but it's all a volatility trade, right?

So you smush volatility and boomer assets, but you have a little bit more to squeeze out from Bitcoin through through the ball.

But overtime you can kind of see the volatility as the adoption cycle gains, you see the volatility drop in in Bitcoin, you know, a long term.

So it's getting more secure is what I'm saying, in terms of that saving store value.

Yeah, that for sure.

Was that too far down the ribs rabbit hole there?

No, not, not at all.

I mean, it makes sense.

It actually ties into something that I was curious to get your thoughts on.

We have mixed opinions on the Bitcoin treasury companies in this group here.

And one of the things I thought that was interesting about how you've categorized them was relative to the junk bonds of the knees in terms of new, like new creation of product in the financial markets.

Curious if you could just like expand on that idea a little bit and share your thoughts.

I think you already did a little bit if you want to share your thoughts in terms of how you perceive perceive these Bitcoin treasury companies in the space.

So I'm not, I'm not a hater on them and I can tell you why.

So one of my old bosses, this guy named Mark Hart and he's like, he's a macro OG.

He shorted the subprime crisis in 2008.

He bought credit fault default swaps on European debt in like 2010, right before the default.

You know, the European sovereign debt crisis.

He bought Bitcoin in like 2014.

He's been on like every big macro trade of the past generation.

And where his theology of investment is way different than like your PE ratios, your EVDBTA ratios.

And he's like, how do people value art, right?

Like how do you value art?

And so you need to have access to the art, you need to have awareness of it.

Like a Michelangelo piece is like, oh wow, that's awareness, right?

That's part marketing.

You need to have a custody and security, you need to be able to borrow against it.

That is a huge one, right?

You need to have patina, which is like it's got, you know, Hutzpah behind it.

And then the potential for price appreciation.

Those are 6 different attributes to any asset of why they hold value and.

The one that really opened up for Bitcoin specifically was used as collateral.

When you can borrow against something it really unlocks a whole new ability to for that asset to unlock value.

Similarly, like the bad examples of it is when in the Tulip bubble, you could borrow against tulips and buy more tulips and lever up right?

Like that was used as collateral that unlocked a huge price appreciation in tulips, but there was no utility behind it.

But so my my point being is like what Michael Saylor did was he used his balance sheet, borrowed money against it to buy Bitcoin.

He created a, you know, Bitcoin backed bond essentially, and that moment unlocked a massive and I could you could go back when I actually wrote about this specifically for block works like years ago, but that I was like the inception of what there are being what he's really are being is the boomer system to the next generation system.

It's a time arbitrage.

You're basically taking money from all these boomer pensions.

They're buying your bonds and you're putting it into this new system.

So I don't really have a problem with the treasury companies.

In fact, as they you'll you'll see in this next if there is a next bull run the treasury companies can utilize lower cost of capital can issue a high yield bond at 6%.

Go buy more Bitcoin.

I mean, I would lever my company up, you know, 10 times over, especially if my my shitty software company is growing at 5%.

I could use my balance sheet, borrow against it and buy Bitcoin.

So like the treasury companies make a lot of sense.

The only issue I have is if if the government all of a sudden becomes like they actually want to normalize things and raise rates and inflation becomes a problem, then watch out.

Like obviously that's that's a big issue.

But oil still at 60 bucks, like look at all, you know, they're, they're figuring out ways to keep, you know, the inflation at Bay in a lot of senses.

So I don't know, I'm very flexible on these things right now.

It makes a lot of sense when you can borrow at a really cheap rate and put it in Bitcoin.

But maybe that's not true.

If inflation actually takes off and they have to tighten, then these are all it's going to call cause a worse cascade.

So like I can keep those two things in my mind at the same time.

As a yeah, I mean, I, I think, I think that's an interesting way of putting it in terms of funneling in the dollars from the legacy system into the new system via credit markets or you know, in some cases preferred equity.

I guess like where where I stand with this is there's in this space in particular, there's like a lot of copycats, especially in the past quarter or two.

And there's this overarching narrative for the Bitcoin treasury space that the critical role that these companies play is that the narrative being is, oh, well, people can't access Bitcoin directly for XYZ reasons.

So we need to have vehicles to allow people to access through the fixed income and equity markets to Bitcoin.

And what I've seen, and this is specifically for institutional investors as part of this narrative.

But what I've seen in practice and in reality is the fact that the equity for the copy, you know, for a lot of the small, let's say the smaller Bitcoin treasury companies are owned by retail investors.

And on the margin, the only real places you see any sort of institutional adoption of these companies is the strategies play in it.

Like probably the top five companies we actually see participation and it's on the equity side.

But I think more importantly, to your point, Tyler, it's on the, you know, the fixed income side, right?

Because there's, there's a lot of opportunity there.

And that's kind of like where, you know where I'm at in terms of there's competing there.

There's the narrative that I think they go to market with in terms of, oh, this is how you get $300 trillion of whatever fixed income or capital into Bitcoin.

And in reality, it's still really a retail phenomenon.

And on the margins, you're seeing a little bit of institutional interest.

On the equity side, yeah, I, I kind of agree.

I don't, I wouldn't particularly play in those pools, to be honest.

Micro strategy, you know, I can't speak of, of single stocks.

That's a big enough balance sheet where you can do a lot of different things now, like if your equity is undervalued, you could buy it.

You know, if, if it's overvalued, you can sell it, you know, and there's so many mechanisms in the, the, the financial system, like I, I don't think it's a bubble.

If Bitcoin goes up by 100%, like a lot of those treasury companies, they're going to do better than a lot of other companies out there.

So, and the, the interesting thing is, is that as their equity goes up, they can issue more equity.

And it's like this self reinforcing cycle into Bitcoin, if that makes sense.

So I, I don't, I don't know.

I all I know is that if the credit markets were to shut off somehow, those smaller balance sheet treasury companies are going to be really hurt, especially because the retail investors are so pervasive in them.

But yeah, on the whole, here's one other macro thing.

Last thing is there's $7.31 trillion in money market funds.

What does that tell you?

That tells you that there's $7 trillion that's looking for yield, right?

And so there is actually too much capital and not enough good ideas to put it in.

When you think about that whole premise is like as rates come lower in that money, those money market dollars seep out and go into other assets.

Like we might be at the beginning of a cycle rather than the end of a cycle.

Like you don't see that many people saving at it's like a peak $7.31 trillion in cash.

Like you don't see that in at the end of a bull market euphoria.

I think you see the money markets, cash coming down and forced into equities and it's like, yeah, there we go.

Which is just wild like that.

I would think it would, it wouldn't be like that, but it's but think about how much this is how much money boomers have that are looking for yield.

It's why rates aren't spiking, right?

They keep reinvesting it in yield assets.

And they don't even care about losing money because they're like, I don't care.

I'm wealthy.

I'll just going to.

I just don't want to lose my money.

Yeah.

I think there's two, there's 2 core aspects.

They're really hard to discuss because we live in a world where we're talking about outcomes that maybe are sub not here, but before earlier in the caller sub optimal.

But they're relative because of the situation we're in.

That makes sense in a relative basis, you know, in real versus nominal returns and where the treasury trade gets a little trapped.

And I agree, like we're still in the early stages and they're going to come back with a resurgence.

And it's not because they're good products are needed in my view.

It's because of the relative situation we're in coupled with everyone's effectively short Bitcoin.

And if they understood that they were short Bitcoin, then they would be holding Bitcoin based on its kegger and opportunity to grow in a risk free like view versus taking additional execution risk with a treasury company.

And the way to underpin it is if you said every treasury company from here for the next call it 36 months will not go under and meaning whether it's custodial risk, their own custodial risk.

You know, a lot of these are going to be generating are trying to generate additional yield outside of some of the examples you said with leverage.

And if none of them went out, then I could see it persisting.

But what is going to happen and I can promise you this is that some will blow up and they will blow up specifically because for 15 years objectively no net new financial product has come into Bitcoin and just succeeded tremendously.

The last one was 2022 and everyone seems to forget block by Celsius FTX.

And then you can go back two years before that.

You can go back two years before that.

So this is just the next thing.

And it's not to say it won't persist because yes, every company should hold a better form of money on their balance sheet that outperforms everything else.

And then they can just take market opportunities by acquisitions.

But the notion that like the companies are buying Bitcoin to take leverage, it's like, well, the individual can either just hold the Bitcoin and risk adjusted would outperform on a long enough time horizon.

Some of these firms and it's going to become apparent when some blow up because most aren't wrecking, they don't even really recognize that custody is a thing in Bitcoin.

So they don't even know that that's actually an issue and everyone you know forgets the past 15 years of all of it.

So I think it's just basically if I had to encapsulate the treasury trade, it is effectively opportunistically, I don't want to say taking advantage, but it's it is taking advantage of the early stages we are and the rest of the markets understanding of crypto or Bitcoin.

Let me ask you this question on that when you, I don't know if you own a house, but what's the, what's the loan you take out of your house generally?

Like what?

What do you put down?

Well I got lucky.

I have some property out here so it got in 21.

It was like 2 and two and like 2.3%.

Oh, you, you put, I mean like you put, you normally put.

I guess you said the interest rate.

Yeah, yeah, yeah.

What do you put down to?

So normally you're like 4X.

1120% Yeah, yeah.

So like when you think about, I don't know, a lot of the treasury companies, idiosyncratic things, but like if you're levered on your house, you know, 4X and these these treasury companies are barely levered.

I don't, I don't know, maybe, you know, I think they're over collateralized rather than under collateralized like relative to a house.

When you think about that.

And if they have to stifle rates to grow out of it, maybe this could go along a lot longer.

My point is that like we take a lot of leverage out on our own houses in in terms of debt and then we criticize it when they do it on Bitcoin.

Like I don't even think sailors that over lever relative, you know, compared to like my own leverage on my house.

I think it makes sense in a vacuum if that's all that was happening.

But the problem is that as we get further with more liquidity and interest rates going down, these products will go further on the risk curve.

And again, if we go back to relative base, somebody had Bitcoin or gold as their savings.

And I think this is the problem as we look at in the future of like where a lot of people have been and have benefited from just recognizing in bitcoins and gold are some of the best stores of value, if not the best that it makes sense for a little risk capital.

Again, going back to investing, if you're going to park a sliver of your portfolio into something like this and to your point, could use some returns on BTC, but that's not what people are doing.

People are put parking their Bitcoin sleeve in this and then it's insanely volatile and then they're going to get shaken out because withstanding Bitcoins volatility frequent is objective properties that give it value.

These other things don't have objective properties, they're subjective properties.

They're financial arbitrager machines.

Yeah.

You know, in a heavily financial arbitrage world that will be insanely, incredibly more chaotic and volatile and to expect that it's just going to work out and you're going to make more Bitcoin or higher real return than Bitcoin this early in Bitcoins monetization is the main point versus just holding spot.

And the kicker is once institutions and individuals recognize that, that trade effectively compresses because it's just taking again advantage of the markets unsophisticated view of where we're at today.

But that see, I agree, I agree with you and I'm like very cognizant that that could don't get me wrong, but I think it could also.

But it's like gravity.

It's just gravity.

It has to unwind.

A lot but does it though?

What if the government's passed the point of, I mean, if this why, why am our America type backdrop where they're constantly devaluing like, I don't know, maybe, but over a year?

But you see, that's, that's the big problem is this happens.

That view is a similar view that a lot of people say, well, if Bitcoin like hyper, you know, just dollar hyper inflates, Bitcoin runs, nobody will spend their Bitcoin because everyone's going to hoard it.

It's like that makes zero sense because it's the price is running.

People are going to naturally want it for goods and services and they'll require people to spend it, among other reasons.

In the same view.

The cut, the cousin is what you said is if that world happens and we go to Whymar, that means that monetary units are getting pushed out at an exponential rate, meaning that capital is moving to ways that it shouldn't be and things are blowing up.

And then people are recognizing what is the risk for your rating goes back to savings.

So this is just like this is unwinding all the mental fucker of like the Fiat system back to like first principles.

And we can't expect people not to do that.

And that's where we build like the way we build because eventually people are waking up and they increasingly do and they're like, we'll wait.

So I really want Metaplanet holding like my Bitcoin for additional, you know, 20%.

Or do I just want to hold the underline and know that I can go to sleep and then I can just go back to being a doctor or dentist or doing whatever I was supposed to do.

And that's basically the Renaissance we're on for the next 10 to 100 years.

I totally agree with that premise, don't get me wrong.

I was just like playing the mental game of like, I think a lot of this stuff is a pension thing where it's, you know, I'm CalPERS, I need to put my money in, you know, X number of convertible bond funds and that money goes there and then they buy some, you know, Bitcoin back convertible bond from a treasury company.

It's that that.

I agree.

Yeah, I, I agree there.

I agree there.

The problem with that part is that's where a lot of the treasury companies are hiding behind.

But the reality is my understanding only strategy and maybe meta planner at a scale to access those markets and so everyone else is just basically fleecing retail to sell them, you know, higher performing Bitcoin.

That I agree with.

I'm sure they're just doing ATMs and like annihilating their equity and stacking, you know, Bitcoin.

But yeah, you make sure you do your due diligence there.

I don't dabble in the the lower tier ones, which I think is, yeah, it's kind of a scheme, but more so like you can make up a lot of alpha if the underlying does go up.

Is that was sort of my.

I do.

I do have a question on the institution institutional adoption of Bitcoin directly like Tyler.

Do you have any thoughts on, do you have any thoughts on that?

Because when I look at the and Brian actually had an interesting chart where Ibid is now, what was it the top 20 in terms of ETF assets?

Yeah, But it's still like if you look at the 13 apps, it's still probably like 7580% retail owned and then you have a lot of hedge funds in there, not a lot of strategic asset allocations yet from institutional investors into Bitcoin.

Do you think that that'll change in the next five years or is this going to be a, are we going to continue to run up against barriers just from like gatekeeping and mandates that'll keep Bitcoin out of spot, Bitcoin out of institutional portfolios for a while?

I think, I think it's changing slowly.

It's sort of like the demographic thing is all these mandates.

Here's a great story.

When I, when I worked at Franklin Templeton, we sat around this big, you know, it's like 50-60 person oak table and they were like a town hall meeting for the up and coming, you know, younger generation.

I, I, this is like back in 2015 or something.

And I raised my hand.

I was like, I think we should start a Bitcoin ETF and every old person there, you Jenny Johnson was the CEO.

They all laughed in my face and we're like, you're an idiot and my my whole point is not I told you so, but they did the Bitcoin ETF years later.

It's more that these things from the giant institutions perspective take so effing long to like undo mandates that I think we're probably on the cusp if we go on another bull run here.

I think it the, the, the walls will come crashing down and they'll say, God, we got to let we got to do more of this stuff.

And we've already seen it like Morgan Stanley has 0 hash like embedded.

A lot of these legislative pieces are going to this institutional money to be kind of allocated to it.

But I do strongly feel that like I don't love the ETFs in terms of the way the what they do to the market structure, like ibit being such a large piece of it.

Like I really do love this decentralized nature where you hold your own Bitcoin and I at some point if everyone piles into Ibit, like I don't like that risk and I hope that naturally gets decentralized at some point.

I.

Mean, yeah, I mean, that's what we're.

You guys got to scale faster.

Preaching.

Preaching to the choir.

There still faster.

So anyway to pump your tires a little bit?

Brian, I was curious on your thoughts.

I don't want to toot her own horn too much.

So I want to Brian, get your thoughts on some of that information you did share ahead of the call though, because there's the two notable things there was the fact that I bit is in the top 20 ETFs.

I mean, we, we spoke to a handful of analysts that have been covering this kind of from the start, Eric and James, to name two people from Bloomberg in particular.

And everyone who's followed the Bitcoin ETFs, you know, pre approval, post approval, have really all been blown away in terms of their expectations on the success of this product.

And Brian, I wanted to hear what you thought just on, I bet now being in the top 20, it's only been around for like 18 months.

So insatiable demand there.

And then the other piece of information that you had kind of married to this was the fact that Vanguard is talking about boomer institutions.

Vanguard is now reconsidering offering Bitcoin Etps to their client base.

There's a lot to unpack here.

I mean, even just looking at the list we have on here, look at how many times Vanguard is.

Above.

I bet in in terms of these these the largest ETF, so the Vanguard news is, is one piece that is interesting in terms of them sort of, you know, signalling that they might be bending the knee.

I haven't seen a ton of follow through on specifics or details there, but it seems like the underlying demand from their end clients likely sparked some movement here.

And then also just observing the success of of these products, you know, a few months ago we had the headline that Blackrock's I bit now generates more revenue for them than their S&P ETF products, which is pretty remarkable.

And the broader signal from all of this to me is like, they're the most successful product launches of all time, the Bitcoin ETFs.

Despite that, however, the access and plumbing for people to get exposure to these is still very early days.

So Teford Digital has a chart that that shows us very clearly in terms of sort of the broadening access to these spot ETFs.

And it's still, you know, there's still a lot of restrictions in place.

Even if they're approved on a platform, there might be stipulations around which which clients can actually get access.

And there's typically sort of firewalls until in terms of direct solicitation to end clients around these things.

So that that's the big signal to me is like it's still so early until in terms of the actual plumbing and people having the ability to get access to these things.

But it's still, you know, 90 billion in assets and I bit and you know, the best performing sort of best product launches of all time really in terms of just ETFs generally speaking.

So it's just pretty remarkable that that that you have that sort of dichotomy occurring here.

All right, quick break.

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Now on with the show.

Looks like Tyler had to jump, but yeah, those are my thoughts.

Yeah.

I mean, I think it ties in a little bit what he was talking about.

And to tie what you were saying, I think we just have we have so much room to run in this cycle.

I think it just lasts so much longer than we expect to given that the amount of flows, whether it's Vanguard, we talked to Ras all day long, banks like everyone's still setting up infrastructure.

And unless we expect some kind of weird blow off top and generally blow off tops, last you know, there's usually certain amounts of leverage in the system or.

Certainty leveraging around counterparty risk, like I don't see any of that happening.

I think the the leverage is pretty tame that we're going to let these flows come in, which is going to be recursive or reflexive because then more people and more companies are going to develop structure products, liquidity pools to get get their existing clientele into it.

It just feels like this is going to last much longer than even next year, which is the injury.

And then that's on the backs of what's happening with gold as well.

So it really feels like just uncharted territory.

And we kind of talked about this a few months ago about the notion of if there's a sovereign bid for BTC, that changes it.

But I think like the Canary and the sovereign bid for BTC is just a sovereign bid for gold because I think it ends up rational if the largest sovereigns are already stacking gold.

I think it gives even more of an incentive, whether it's the US or really challenger countries to just pick up the digital version of it that they can buy, you know, fraction all of the cost.

And I think it came out this past week about like how I think gold's market cap moved.

Is it 10 trillion?

I think it's 10 trillion something, some crazy number.

That's right.

Yeah, in the past year, so to expect that if Bitcoin needed to move up to, you know, $1,000,000 BTC, that would be a will that be a 10 extra here market cap.

But that's only what is that in Cherlin.

2021 probably plus or minus.

Yeah.

So basically double to get to 1,000,000 and gold hadn't stopped.

So point being is like that everything's kind of on the table when it comes to these growth, these assets growing.

The other, the other factor too is Jackson.

I put a chart in there from Catoosa Research on Twitter that shows the market cap of gold, but relative to global assets.

This is one of them that shows if gold basically kept pace with money supply.

So it's doing a ratio of you know M2 in 1980 and then 2011.

But if you pull up the, I put a second one just under this that shows the market cap of gold relative to global assets in 1980 versus today.

And this is just pretty stunning because like what we just discussed, golden ripping added ten trillion over the past year, yet it's still 1/4 of sort of where it was in 1980 in terms of its percentage of global assets.

So like it sort of just speaks to what you were articulating, Michael, and that like we are in uncharted territories.

There is a lot of room to run for both gold and Bitcoin in this context of, well, they're actually smaller than they were 40 years ago in terms of, you know, their actual capture of global assets.

Are we a gold podcast now?

Yeah, I mean, I I don't, we need to almost all do a podcast group instead of a podcast club instead of a group of book club for this Groman Macro Voices pod because I didn't get to fully listen to it.

I want to go re listen, but it ultimately was just describing all these different touch points relative to why we're just in uncharted territory.

And like every mental model is fundamentally flawed because it's effectively the dollar dying in real time.

And we're seeing this happen first hand with what what's happening with gold?

What's happening the Shanghai markets.

It's weird.

I need to get off of Twitter because the algo doesn't even give you any relevant information.

It's just rage bait because I missed I guess the past two weeks.

I don't know if you saw, I guess Modi.

It was Modi from India, G from China and Putin all meeting and then they were also meeting again.

There was two different events and it was 1 like flexing kind of military capacity, but the other one aligning on the usage of different ways to settle oil.

And these are happening like front and center, you know, to showcase the world like we're moving in this different direction.

And then and so there's that example that they talked through.

And then there was another one that was super interesting, it from a guy that was an anthropologist that broke down and I want to say 1976, the fall of communism effectively from a human capacity when you talk about birth rates and just the different factors that would go in and you know, communism fell 12 years later.

And then he broke down again.

He had another paper, I want to say in 2014 or 20, like late either twenty 2000s, early 2000 and 10s, effectively breaking down how the US could not retain this, this like level of power, given the amount of capital that would be required to sustain it.

And it had like 2021 as the time frame.

And it's obviously gone a little bit further.

And then he just recently posted another piece.

He's only had three and he's older now.

And it was just effectively explaining like where we're at from, whether it's demographics, capital and debt to military and industrial power, Like we're just in a completely different ball game.

And I think that's why we see a lot of this volatility and, and almost because the way it was being described was while this was happening, something happened with like Sydney Sweeney and everybody was talking about that.

It's like we're just like everyone's like being paying attention to these other things while all this stuff is happening in real time.

And I think the main take away there is that if the dollar is in real time losing reserve status like everything's on the table when it comes to other assets and their price relative to dollars.

Yeah, for sure.

And what Michael was referencing was Emmanuel Todd, I believe it was Defeat of the West, published in 2024.

But yeah, what I took away from that and what Luke has been spot on about for probably a decade at this point is the fact that you can't really decouple the United States from China and Russia, which are the biggest adversaries of the country because of the dependence that we have from an industrial capacity to the military.

And so it's kind of like this odd situation where the tensions between these countries continue to grow, but we it's pretty much like a toxic relationship because like the tensions continue to grow.

But the fact that we depend on these countries for raw materials, for creating a lot of the industry that we no longer have in the United States, we actually can't like initiate any sort of hot war with them or even just like to couple economies from them without collapsing our own.

And so that's, I think like the, the, the left bell curve, the simplification of the thesis.

And then the other thing that was interesting that I caught there was essentially Luke's thesis, if you play it out another two or three years, is that gold becomes gold overtakes the US Treasury market as the largest percent of sovereign reserve assets.

And so at that point, you know, I'm sure too, or if that does happen two or three years from now, I'm sure the United States will still continue to think that the world resolves around revolves around the US Treasury market, but the market is actually decided otherwise.

And so does that actually start a conversation around, well, it's gold actually now the neutral not even, yes, it's a neutral reserve asset, but is gold the reserve asset if it overtakes, if it overtakes?

Yeah, in that like Brian, I'd love you to get your thoughts on this because this is, you know, we harp on it and I know it gets a little old, but I just can't help because it feels like we're the only some of the only people saying it or me is about the treasury stuff.

The Bitcoin treasury is everything's the same until it isn't.

And so if we're talking about treasuries taking reserve stat or goal taking reserve status from treasuries, and you know, very smart people have been talking about outside money for so long.

If volatility and counterparty risk increase in this world, which I think we would all agree everyone would, then it makes 0 little to zero sense to hold a large percentage of wealth inside the system because you don't know where the risk lies across a number of different orders.

So again, that's the angle of like you're taking this asset that is meant to be decentralized out of the system, you're parking it right back in the middle of the financial system and a bunch of weird things are going to happen and be prepared for them.

And it's not to say you can't speculate, but it goes back to or what are you doing and what's your plan?

Because if it's speculative asset, well, if you're all in Bitcoin, that's perfectly fine.

But if you have no Bitcoin exposure or anything outside of the system, maybe you want to start with a core position before you start to bring it back in and be susceptible to whatever is going to happen over the next two to 10 years.

100% I mean, that's that's very well said that the other way I would describe it is like, you know, the treasury company wrapper or even just the ETF wrapper effectively nukes a a large portion of the value prop of owning Bitcoin.

And that's sort of what you're getting at in terms of if there's a renaissance around, you know, what is money, what is a store value, what is a reserve asset, holding it in a structure where you don't have the same ownership guarantees or assurances is completely illogical.

And so, you know, I think, you know, part of the disconnect in in the conversation earlier around treasury companies is like, you know, it's fine for risk capital, but but understand that they are trades necessarily.

And you are fundamentally just getting a different, you know, you're getting some price exposure to Bitcoin, but you're not getting any of the other benefits that make it a a reserve asset.

You know, it's price appreciation is not the reason that people are adopting it as a reserve asset.

They're adopting it because you can hold it without counterparty risk.

They're adopting it because it can't be diluted by a government.

They are not holding it purely for the price appreciation.

And I think that that is not well understood at all, just given the uptake in the narratives that and the hype around these treasury companies that we've seen.

But it is, you know, if you just go back to first principles around the merits and the the core value prop of this asset, by putting it in these wrappers, whether it's ETFs or the treasury companies, you're stripping away a lot of that core value, the reasons why you would even want to own an asset like Bitcoin in a portfolio.

Yeah.

And I think like there's too big, I guess there's so much embedded in all of this when it comes to the asset price doesn't happen again in a vacuum as the price appreciates that nobody else is, other people are buying it, other people are recognizing what Brian just said.

And then they will start to demand goods and service be paid in that.

And so you may want the underlying as it appreciates because you may naturally want to spend it or you actually may be required to spend it, right.

There's a lot of pretty like out there examples.

But I remember back in the day, there was a client that came to us.

They needed to set up like without it being publicly known large or a meaningful Bitcoin position from a business continuity perspective around cyber attacks, because naturally when cyber attacks happen and they like steal data and they ransom it, they they don't want, you know, bank trails and they want you to pay in BTC.

Now, obviously that's very on the far end of the spectrum, but there will be increasingly reasons why people will want to accept Bitcoin as the price appreciates.

And if you don't have any exposure and it goes back to well, why would you want the underline is there's a value prop in the censorship resistance, There's a value prop in, you know, the custody aspect.

But there's real value in optionality.

Like that's the purpose of money is to give you optionality on what you do with it in the future, but also how you do with it what you want.

And you can't eat your equities.

You can't do any of these.

Like nobody's going to take your MSTR shares if you know you need to spend them on something.

And so again, I think this is just, we're so early.

There's so much education, but it's going to happen, I think faster than people recognize because once some risk happens inside the treasury company craze, people will start to understand that.

And then also as counterparty risk and more merchants and people just naturally will accept it and incentivize people to give them their Bitcoin.

They're going to be like, well, why am I not holding this?

Or I should figure out actually how to have a small cornerstone position in a similar vein that this business had for their continuity purposes?

Yeah, just be patient, Michael.

It may be maybe a decade, but it was similar to that Luke Roman podcast where Eric, the host of Macro Voices, said what Luke would say on the podcast.

Five years ago people thought he was like a nut job and now like all the same people are saying well shit, he's actually right.

So if you just be patient, wait 5 to 10 years if you might be.

Right.

Just be patient, man.

All right.

Just did you, did you listen to the?

Did you listen to the whole project or you listen?

I didn't make it through.

I listened to a bit this morning.

It is probably one of the best I've listened to because not in a good way.

It was just really breaking down in a very pragmatic, we're like headed to a very weird spot.

And it seems to all kind of be like converging right now.

And yeah, it's not.

Yeah.

Yeah.

It'd be a lot weirder if we didn't have Bitcoin though.

That's what I would say, yeah, we'd be cooked.

It'd be big cooked.

Yeah, I guess that's like that's the challenging thing is it really does tie into like wanting to have wealth outside of the financial system.

And I that would even go beyond just like owning Bitcoin or gold, right?

Like you probably would want to own, maybe some people want to actually raise their own food.

But I think it's like kind of the, the broader theme, the really macro theme over the next like 20 years would probably be moving away from just measuring wealth from numbers on the screen because the numbers on the screen, they can go down in nominal value and then get destroyed in real value.

They could be confiscated from you.

And so that's where that probably goes longer term.

And that's kind of like, I guess what you're saying about, you know, things get weird or things get scary.

Yeah, and that's the main reason I brought it up so many times, and I'll bring it up again is like watch Cinderella Man, because it's a good flick, but it's really a documentary about the Great Depression because all these people lost all of their money.

And it brings you to a real visceral place of like, Oh my God, what happens if all the numbers moved off a screen?

Because it actually happened, albeit it was about 100 years ago.

And so we're just so far removed to realizing that can happen.

And we should post covet realize that anything can happen because everyone before that would have said nobody could get locked in their house and all the things that happened post that and and they did.

And so I think it's just still discounted that volatility will only increase from here because basically the dollar is the world reserve currency is failing.

And so you just have to be prepared for that.

And being prepared for that isn't putting money into the financial system and having a gatekeeper.

All right, well, what do you have to say?

No, I was just thinking about when's the position time to take a little a little bit into gold just because I think I think you might need a little gold in the future.

Jackson.

Yeah, you, you missed the levered, the levered long back at 58 or 62 because we're sitting at like 120 right now.

Yeah.

Price dipped a little bit in Jackson and kind of had, do you say, on the terminal.

Did you say 750 by the end of the year, Michael, I think I, if I'm remembering correctly, that was your price target six months ago.

You know end of end of year is is hard.

I think end of cycle whenever we kind of.

Cycles are over.

There's no more cycles.

Come on.

I think we're what I think is going to happen in the next few months is we're going to get a run up and people are going to think it's the top.

People are going to think it's a blow up top at like 151, sixty, maybe even 170.

Then there's going to be a head fake down, maybe back to like 125 and then into next year bull market continues.

I like, I mean, I think.

Most people are totally sidelined as a result of the head fake.

I think most people are sidelined right now.

Just that's true.

What what, what I think is the most interesting is how Grauman said on the pod that he came to Bitcoin because he understood it as a currency problem.

Because everyone talks about even earlier, we're talking about Whymar as being some like really ephemeral thing.

But like when you look at gold for Bitcoin versus the dollar, it looks exactly like that.

And so, and we're still in the early stages and there hasn't been this amount of devaluation in the dollar.

So, yeah, I think, I think we end up even in your world, which you shared, Brian, I think it ends up at higher numbers because whether it's now or it feels like it's going to be now because there's just been this chop for the past, you know, nine months.

There's too much capital pools sitting on the sidelines that we know want to come in, whether it's institutional capital, the Treasury stuff, the salt.

The US government.

Yeah, the US government and between gold doing what it's doing and this it's just I don't think we're prepared for like where I'll and it could be we could be wrong.

Like there's the whole gradual suddenly and it could take much longer, but it doesn't feel like that right now like the amount of chaos being churned up in the traditional kind of news cycle and what's happening.

We saw the only time we've seen this happen again was like post 19, 2019 when the repo markets broke and we there's like all hell ensued in 2020.

That's what this feels like, that the chaos is getting ratcheted up because the system is just starting to, like, crumble.

Certainly feels like Weimar in many ways.

Yeah, that's what, Yeah.

You feel it when you go out, when you look at it's just crazy, like when you go interact with the normal world.

I limit that, but when I do you kind of hear these.

I just remember sitting the other day at the like pumpkin patch and they were like talking about concerts and and they were like, these weren't like hang.

On I didn't.

I didn't know you went to pumpkin patches, Michael.

I don't, but I have to like, you know, once in a while kind of, you know, do the, do the patch, do the.

Fire off a patch.

Fire, fire up a patch.

But they were just talking about like going to concerts and they're like, imagine the everyday person can't afford this.

And these were like everyday people in my mind.

They weren't like, so they're, they're just referencing like that people can't go to concerts and like they're like all and it wasn't even expensive, I guess relative, but it was like, if you go with your family, it's going to end up X dollars.

So it's not really achievable.

And you look at the groceries and you go buy any meat related product.

It's it's not.

And maybe the last thing is all those charts or like, I don't know, I can't help but feel the other version of Fed speak when you see post 21 and that like stock market, the chart we pulled up earlier where the stock market went vertical and then the jobs declining.

Like I think that's a component of interest rates, not necessarily productivity, but interest rates being, you know, rising.

So naturally, you know, people were laid off.

But then also when you look at the job like recalculation of numbers and it goes back to GDP growth has been measured in the wrong underlying currency.

So it looks like we're growing, but we're not.

And we've.

Basically, yeah.

It's also wildly It's also been wildly manipulated by government spending and government jobs being a large bulk of any proverbial job growth.

Exactly.

So we're like at a true sense of like gross new product.

You can make the case like post 71, we've been in effectively in a recession because there's been more monetary units than actual productivity that's been created.

And that's why you see the world what it is today.

It goes back to the whole tweet of like your clip or whatever.

It's like we want to fly.

We were promised flying cars and whatever.

All we got was like 240 characters.

It's like that's why we're sitting here with the same shit, because there's no actual productivity happening.

There's just people talking about treasury companies and all this other bullshit that produces no real value in the world.

Like that's the crux of it.

And everyone's incentivized to go deliver no new value because they can gain the system to extract more dollars.

Once all these concepts get back and understood, that's when you got to get the real renaissance.

But it's just going to take time.

Pull this up on another pod.

But there was also that tweet that was basically saying like 75% of stock market gains are from AI related stocks.

A lot of that's probably NVIDIA.

But like, that, I think is also an explanation for that chart that we had up that shows stocks going up despite, you know, the real economy suffering is it's being propped up by people just chasing this hype cycle.

And you know what have we gotten out of it thus far?

Like, you know, just this week open AI put out their Sora app, which is basically a tick tock competitor that is just purely AI slot videos, you know, benefits of society, probably negative, generally speaking.

So like, you know, all of this money chasing, you know, this, this AI hype cycle remains to be seen what comes out on the other side of this.

And so a lot of capital will be destroyed in this process.

And so, yeah.

Should.

Get pretty weird.

Maybe the one thing like to tie it all back to positive is this is really where it goes back to the whole, I think it was for earlier about savings.

If you finally get it right, it doesn't even have to be Bitcoin.

But if you end up in gold and you feel relatively good that you are going in real terms to maintain your purchasing power, then everything we talked about and we're focused to pay attention to out of because for sick, you know, ways either because we're interested in or because of the business and doing these podcasts, you don't actually have to pay attention to any of it.

You can just go back to living your life.

But if you don't decide to do that, then you're effectively on the hamster wheel of trying to make ends meet, whether it's with your job, not quitting, you know, not having wealth saved.

That goes back to the optionality.

But then also being glued to Twitter in these screens, trying to figure out what's the latest dat and the crypto and like whatever to get into versus just like opting out by protecting your wealth.

And then you just get your head back because you don't have to pay attention to this.

And if you decide to pay attention, it's because you're just a perverse individual versus, you know, like it's just there's a level to get back to normalcy and it just means you just protect your wealth.

But until you realize what we're talking about, people just are going to end up playing the real versus nominal returns, and they're just going to get absolutely crushed because the risk lies everywhere in that world.

Yeah.

Well, I mean, it's, yeah, it's also what Tyler said too.

Or it's like, it's what you're saying as well, where most people would rather just be in something they perceive to be comfortable and safe, even if they know they're still like not growing on a real basis.

Like most people haven't actually came to that conclusion yet, but still, Michael, it might be your point where a lot of investors or savers are comfortable owning bonds that are not going to actually grow their wealth.

It's actually going to lose wealth over time, then own something they perceive could just like blow up one day, right?

So I think we still have a lot of work to do.

We'll probably have to do the last trade at least for another decade or so, then we can see at least any of this plays out.

Maybe Jack, he'll get a house by then.

Maybe he'll get a house by in in a decade he'll get we'll get armed.

I'm in a cave, but Tyler said The Cave was nicer than whatever Michael's got going on there.

So if you like, if you like where I'm recording from in The Cave, like I'm like the Madam, just yeah, just like leave a, like leave a comment.

We need to call out Jackson's paper hands because the price dipped a little bit and he just stopped with the terminal.

This used to be his favorite chart.

He'd pull it up and we had.

Ripping boys.

We had we had this little clip down here or maybe I don't even know.

I guess this is.

Yeah, it was probably like 2 months ago at this point.

I haven't done it.

It was somewhere, somewhere down here where it just got depressing and and Jackson's like we're going to we're going to end the end the chart.

But, you know, we're, we're, we're back.

120 All right I guess I do have paper hands I sold all my Bitcoin all right I guess we'll we'll call it I'll call it a week if you like the if you like the internal riff at the end of the episode.

Maybe we can make this a standard, but we will have to hear feedback if people actually enjoy it and let us know.

If you don't enjoy it, you can let us know as well because then you know, we'll save your time.

We'll save our time.

We won't do this anymore.

So thanks for tuning in this week and we'll see you next week maybe.

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