If nobody's going to buy our crazy government debt, then we have to monetize it ourselves.

Literally, the only solution is to print money and to fill in that gap.

The outlet valve is the currency, so the currency gets debased.

I think we're intentionally pulling back from the U.S.

and the dollar being the global reserve asset.

I wouldn't get too excited about the price of Bitcoin until you start seeing signs that the U.S.

economy is starting to take off again.

or if we have some really good news come out of like, say, Congress, I think it could quickly go to 150 or 200K if that happens.

Is this an age of abundance or is it like another Great Depression?

Deflation is incompatible with the credit-based fiat monetary system.

So if it takes hold and continues, I actually think that's the end of that government's fiat currency.

At the other side of that, the world is priced in Bitcoin.

Dr.

Jeff Ross, I think the big question that everyone has for you right now is, is Dr.

Bearback?

So we're just getting right into it, huh?

We're kicking off.

So let me just start right.

So I'm just going to come right out with it, right?

The last clickbait title for the last time we got together was Bitcoin to $475,000, right?

So let me acknowledge that I was wrong.

Okay.

So everybody who's listening, wrong.

Why was I wrong?

I think that everybody talks about Bitcoin moving according to what global liquidity is doing, but it also is very strongly correlated to what the global economy is doing and especially what the US economy is doing.

What I really did not expect to happen in 2025 was that the U.S.

economy would not get out of a recession.

The manufacturing sector in the U.S.

has been literally in a recession since 2022.

It spiked briefly, the ISM manufacturing PMI briefly spiked above 50.

So basically, it went from contraction to expansion briefly, I think in late 2024, early 2025, basically right after Trump was nominated.

But then, of course, they came out with Doge and then followed that with tariff stuff.

And that has just beaten down the economy.

So besides that little blip where it went above 50, it's been in a contraction or another word for that is a recession since the end of 2022.

I did not expect that at all.

I thought that the manufacturing economy would be just booming by now and that we'd actually be peaking and rolling over at this point.

So people ask, I see people still asking this, is the four-year cycle dead?

And I'm like, of course it's dead.

Of course it is.

It's not even a question about it.

It died because the economy is not in this four-year cycle anymore.

So the question is, is what is going to happen going forward?

And that's stuff we can probably talk about.

But I think things look very good for a reversal of fortune.

So just the way that 2025 surprised to the downside for the US economy, which is still in a contraction and for Bitcoin, which is bearish, very strongly bearish right now.

Although I think it's close to a bottom.

I think it's at or near a bottom at these levels.

I think 2026 is looking good.

And I think that's because the One Big Beautiful Bill Act will finally basically start taking effect.

I think the accounting rules that are going to be in place starting in 2026 are going to start taking an effect.

And I think people shouldn't underestimate how strong that impact will be.

So I've basically, yes, I'm bearish currently.

And I flipped to now being instead of bearish for 2026, I'm actually quite bullish and constructive on 2026.

with one more caveat, and then I'll stop, is that I think I wouldn't get too excited about the price of Bitcoin until you start seeing signs that the US economy is starting to take off again.

So I closely watch the ISM manufacturing PMI and it's still, the latest thing just came out recently and new orders are actually down again.

So still very contractionary, still in a recession basically.

Until you see new orders start to peak up above 50 and then rise higher, and then finally the ISM manufacturing, PMI itself, start to rise above 50 to 55 and head towards 60, that will be the point that we'll start seeing Bitcoin making tremendous moves higher.

But until then, I would definitely temper expectations.

I mean, I definitely don't hold the price prediction against you, Jeff.

It's one of those years where I don't think anyone called this.

I don't know anyone who was saying 2025 was going to be a down year.

I remember when we spoke back in June, I think you called that Bitcoin was going to go to 120 by the end of summer, which it did.

And then obviously, I think you were saying 475 by Q1 next year, possibly, or first half of next year, at least.

Again, things change.

That's off the tables now.

I think everyone would probably agree with that.

But my question I want to get into is you talk of recession, because in macro circles, this has been a kind of debated thing for quite a while now.

There's been people saying we're in a silent depression, or we're entering recession, but you think we've actually been in one for the last couple of years?

Yeah, it just depends where you look.

And I think even more now.

So first of all, what I like to tell people too is we are not in a free market economy.

This is not free market capitalism in the US or Europe or basically anywhere in the world.

People kind of, you know, hack on China for being this communist country.

We are as centrally controlled and commanded as China is here in the US.

So what do I mean by that?

I mean that the US government has for many, many years, not just with the current administration, but especially with the current administration, is picking winners and it's picking losers.

Why does that matter?

Because when you modify regulations and taxes and you funnel fiscal stimulus into certain sectors, you're picking winners.

Those sectors are going to do well.

Sectors that are not included are not going to do well.

And so basically the manufacturing sector has been left for dead in the United States for about 30 years, 25 to 30 years or so.

And so we've just seen an absolute gutting of the middle class and an absolute gutting of manufacturing capabilities in the U.S.

and also throughout Europe, as you know, and I know you've discussed with lots of your guests.

I think that's going to change, but it takes time for this to change.

And we discussed this the last time we were together.

It takes time.

It doesn't just happen.

You don't just suddenly start manufacturing somewhere, You have to build the equipment.

You have to build the buildings.

You have to get the electrical grid in place in order to do all this.

This costs a lot of money and it takes a lot of time.

I think we're finally going to start seeing the effects of this happen in 2026.

It has implications across the investment spectrum.

As a macro hedge fund manager, I'm focused on picking these things out and saying, okay, who will the winners be 6 to 12 months from now?

Where is the regulation and the taxation and the fiscal stimulus being directed, and where is it not?

And so I think if you look that way, you can actually see who will be the winners kind of 6 to 12 months into the future.

We had a sneak peek of that in 2025 because markets look ahead, but I think those trends are going to really accelerate as we head into 2026.

So Trump obviously made a big deal about bringing back manufacturing to the U.S.

Like you say, that takes some time.

But why would all the capital that's being funneled into different locations, like you say, them picking winners and picking losers, why has that money not been going into manufacturing while it's been in this kind of contraction, recession-type environment?

So basically, it's because we've been waiting for 2026 to start.

So some started with the fiscal new year, which was in October for the US, but we don't see the tax breaks basically to take effect until 2026.

So what does that mean?

So most people have heard about the depreciation rule.

You can do 100% depreciation.

I'm not an accountant, but here's what I do know about that.

So if you are going to build a data center or a manufacturing center and buy a bunch of equipment, or if you're a Bitcoin miner and you're going to buy a crazy amount of ASICs and plug them in, you're going to wait until January of 2026 to do that.

Why?

Because then you can do 100% depreciation right away, right off the bat in 2026.

And the businesses, they start having effects from their taxation as early as January 15th.

So that's kind of the first little milestone date for them.

What that means is, say, a Bitcoin miner who bought a lot of ASICs can depreciate 100%.

That moves directly to their cash flows, and it lowers their taxes by that amount.

So they pay less taxes.

There are some Bitcoin miners that I think will be paying close to zero taxes for 2026 and probably 2027 and probably roll forward all the way into 2028 because of this depreciation rule.

That, even though it's a little accounting gimmick, it means they have higher operational cash flows, which means they can actually use that extra cash flow to buy Bitcoin with.

And so basically miners that have been waiting to say buy Bitcoin, they're going to wait for this rule to take effect in 2026.

And then I think what that means is they're going to suddenly free up a ton of cash flow on their on their statements, on their balance sheets.

And they're going to they're going to start buying Bitcoin in size and it's going to be very beneficial.

That's just Bitcoin miners.

The manufacturing sector itself is also going to be doing that.

And we're going to see the effects.

And that's what Scott Bessent has been hinting at.

He's like, hey, I'm also the head of the IRS, as it turns out.

And I'm telling you, you're going to see cash flow starting to move in huge amounts to the manufacturing sector, to the people basically that we're favoring.

If you're in one of these sectors and you're building your business aggressively, you will be rewarded for that.

And I think people are underestimating the effects that this is going to have as we head into 2026.

So you think hash rate is going to go absolutely exponential in 2026 then?

Because if it's essentially a full tax write-off to buy Bitcoin miners, then I'd expect that to be an insane year for Bitcoin mining.

It's like the hardest business in the world just got harder.

Right, right.

And so with that, the difficulty adjustment will also get much harder.

So that's the fun part about Bitcoin.

If you're a miner, it's a dog-eat-dog business.

It's really tough, as we both know.

But I think that people need to take this seriously.

this is really going to have a significant effect on basically the muscle of America, like bringing manufacturing back to America.

I think we're finally going to see the effects.

And I would not also underestimate the desire for the Trump administration and with Besant at the helm financially.

I look at Trump as like the CEO now of America and Besant is the CFO and they kind of work in tandem.

And I would not underestimate the desire of those two to goose the economy before midterm elections.

And so I think we're going to have a smoking hot economy by kind of second quarter, somewhere in there, second, third quarter of 2026.

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So this obviously isn't like anything to do with the Fed or the Treasury or money printing, but it's massive amounts of money from public and private companies going into the economy.

Does that have any impact on inflation and things like that.

So somebody has to pay for this, right?

So we know that this fiscal stimulus, as Lynn Alden says, nothing stops the strain, and I agree with her.

And I think that that's actually going to continue and probably accelerate where the U.S.

runs massive fiscal deficits.

When we say that's running massive fiscal deficits, that's sort of a fancy term for basically the Congress in the U.S.

is spending more money than it has.

So it's borrowing money to spend money.

And the way it borrows money is by creating treasuries.

And the way that the current Treasury Secretary Besant and Yellen before him like to do that is by issuing tons of T-bills.

So when the government wants to spend money, the Treasury issues a crazy amount of T-bills.

Right now, most of those T-bills are being held in money market funds across America.

I think the last time I checked, there's about $7.6 trillion held in money market funds right now.

As the T-bill yield comes down because the federal funds rate is coming down, that would be less and less desirable for boomers to park their cash in, right?

So they've been super happy at 5% yields.

They're a little less happy at 4.5% to 4% yields.

Now that the Fed funds rate is even lower, now those yields are going to go down to kind of 3.75%, 3.5%.

After a while, the American boomers are going to be like, you know what?

That's not a good enough yield for me.

I like 5%.

I don't love 3%.

It's just not great.

And so we should start seeing tremors in the bond system even more.

So that's why I believe the Fed just recently started doing, what do they call it?

The...

Not QEQA.

Yeah, it's not QEQA and I can't remember.

It's the Reserve Management Operations.

RMO, Reserve Management Operations.

That's why they're doing that because basically what they're doing is they're saying, okay, we're going to start buying $40 billion worth of T-bills a month.

And they say they're only going to do that through taxis, basically through April of 2026.

I think that that will continue once you start QE It really hard to stop QE They don call it QE but it is QE So basically all they doing is they saying we got your back treasury You print as many T-bills as you want.

We'll use our intermediaries.

And this time it's going to be the money market funds to basically, we'll indirectly fund them.

They'll buy the T-bills and we'll buy it all back by creating reserves.

And so basically they're funding the treasury and that's the way QE always works.

And whether or not people want to call it QE, it is QE.

QE is traditionally the long end of the yield curve, so long dated treasuries.

Just because it's shorter end money market, you know, T-bill kind of terms, it still is QE.

It's still the Fed buying the debt of the government, which is the Congress spending more money than it has, and it's being issued by the treasury.

So yes, that's bullish for risk assets.

Yes, that is inflationary, but it will be selectively inflationary, I think, as throughout 2026 and 2027.

Is it even more inflationary than normal QE on the 30-year bonds because it's more money-like?

So not really.

I think what matters more is how much is Congress spending, how much is the monetary supply expanding faster than underlying economic growth?

So like in an ideal situation, the monetary supply would expand at about the same rate as the economy.

If you have a fiat money system, that would be a responsible fiat management system.

But what they're doing is they're expanding the monetary base faster than the underlying economy is growing, basically.

And when you get that, you get inflation, but you don't always see it just in prices.

And we saw that throughout the 2010s, right?

We didn't have the CPI wasn't going wild back in the 2010s in the US, but but assets were ripping.

And so what happens is it's where is that where is that money going?

If you're if you're taking payments and now Trump is talking about the warrior check or whatever the war, you know, 1776 to two soldiers.

That's that's great.

You know, they're talking about other forms of basically entitlements.

Whenever you just directly give money to people in their checking account, that is inflationary.

But if you take this money, say, and put it into things like the manufacturing sector or directly into AI or semiconductors or military companies, you know, or rare earth materials, pick your winner that they're choosing for the next year or so.

I would expect because they're directing the fire hose in those areas, those things will increase in price relative to the rest of the economy.

So it's not necessarily inflationary in terms of price terms, in terms of like, you know, soup and food going up or real estate going up, but it will cause the price to go up and the winners that they're choosing.

So they're choosing AI as one of the winners in this.

And this might be a bit too tinfoil hat, but Scott Percent is a really smart man.

He knows that the economy long term is in a really tricky spot.

And one of the questions I've had for a while is, are they choosing AI as a winner because they want to get the productivity boom from AI to save the economy longer term.

Definitely.

That's one of them.

Also for military reasons.

I think what I appreciate about this administration is even though they don't talk about this publicly, I think they have, and I side with Luke Groman in this way, is I think they have sized themselves up to China and realized we can't win in a war against China.

We probably can't even win in a war against Russia, even though We tend to think of them as they don't have quite the asset base that we have.

I think looking at the geopolitical world order, and if we want to get into this, I actually really enjoy talking about this kind of stuff because I think the world order is changing.

I think we have reached the end of American imperialism, and they're pulling back from world domination and controlling all of the world's choke points and military bases everywhere.

I think they're being, even though they're not saying this publicly, they're withdrawing and we're going towards the Monroe Doctrine.

Like we're focusing on the Western Hemisphere.

And God bless Central and South America if the U.S.

focuses on you from a military standpoint.

And I think we are, right?

We're seeing the military buildup outside of Venezuela right now.

I would not want to be in Venezuela's shoes right now.

But I think we're pulling back from the Middle East intentionally.

We've already pulled out of NATO.

We basically left Europe up to fend itself against Russia.

Super interesting.

I mean, you see quotes coming out of Europe right now talking about basically buckle up for the next world war.

And, you know, we might have to start the draft again in some of these countries to fight Russia.

I mean, that's crazy.

They don't have even a they have a barely functional military right now.

So we're going to see all of them, all of these countries ramping up military spending, trying to build up their industrial bases and build up the military industrial complex, which has been non-existent for about 30, 40, 50 years or so as they've relied on the U.S.

and gone green.

They're paying for that now.

And then also interesting is watching Japan and China trade barbs.

and the U.S.

is just sort of loosely supporting Japan and Taiwan, but not aggressively supporting them.

And I think that's also intentional and a sign of things to come.

I think if we look five to 10 years from now, there will have been war between China and Taiwan.

And I think they're going to take back Taiwan.

I think they're going to be going toe to toe with Japan.

And I think China, after about 60 years or so, is going to break out of the fence that they've been in.

So, you know, along the Pacific Rim, basically, there's been, you know, from Alaska, South Korea, Japan, and down into the Philippines, we've been hemming in Russia and China along the sea there, basically not allowing them to do what they want to do.

So their economy, for their ships to run through there, they have to go through straits that are controlled by the U.S.

and controlled by the West.

I think that they're going to break free from that in the next five to 10 years.

And that's going to really change the whole geopolitical world order.

China is going to break free from the fence that they've been in and been contained by the West and predominantly by the U.S.

And I think the U.S.

and the Trump administration recognizes that.

And so we're already pulling back in advance of that.

And then focusing, we're basically making Venezuela, Colombia, that whole region, which happens to be very oil rich.

That's sort of the new Middle East.

I think that's going to be the new Middle East policy for the US.

And we won't have much of a presence in the Middle East going forward probably 10, 20 years from now.

So it's going to be a very different world order, I think.

that's super interesting do you think that's part of the reason that trump's pushing the kind of america first agenda not that i think that's probably a good thing anyway but do you think it's almost like a positive spin on saying we don't have what it takes out here against china let's focus on ourselves i absolutely do i think a lot of people don't agree with that or see that but to me it's very obvious and i'm i'm actually thankful they're doing that and i think a lot of the world is thankful we're finally doing that i think america has been stepping on toes around the world too much for too long.

And we've been funding it by exporting treasuries to the world and basically gutting our entire manufacturing base.

And now we're paying the price for that.

And so I'm thankful and I get why they're talking about that.

They're issuing all of the, I don't, so, and I think I said this on your show before, I like most of the policies of the Trump administration.

They're basically recognizing like, look, we've been basically shooting ourselves in the foot for the last 20 years or so.

And we're basically giving all of our manufacturing capabilities over to China and Southeast Asia.

And now like if they want to break free and go to war, we have no way to stop them anymore.

And if we try to stop them, we're literally buying our weapons from them to fight them.

Like there's no way we can win this battle anymore.

And we have our huge tankers and destroyers, and I shouldn't be talking because I'm not a military guy at all, but we have our huge warships that seem super powerful that we would just totally crush.

If we went back into World War II, I mean, the US would just dominate, right?

But we're not in World War.

We're about 80 years beyond that now.

And so World War III is the age of hypersonic missiles and drones.

And we are woefully underprepared.

The whole West is just, we have nothing on China and Russia in those areas.

And if you have just massive destroyer or aircraft carrier, what is it going to do against a hypersonic missile, right?

China has an arsenal of missiles that travel five times the speed of sound.

Like, how are we going to stop that.

And so they're just sitting ducks.

And so is Europe.

So anyways, and I don't mean to get too pessimistic about this, but I just think it's what I appreciate about this administration is I think they have a realistic view of where we are, even though they don't necessarily share it publicly because we don't want to break the spirit of America or necessarily of the West.

But we're way behind the eight ball right now.

We're like two decades behind in our capabilities.

And so the best thing we can do and i think these are what the closed door meetings with uh trump and putin and trump and xi from china i think it's basically like we won't mess with you if you don't mess with us we'll give you the east we'll focus on the west and like we won't outright say we're going to defend taiwan you can break free we'll we'll give them some of the weapons that you gave to us that we bought from you we'll sell it back to taiwan um but we won't directly confront you And if we do, it'll only be pretend, right?

So, and if Russia and NATO and all of Europe go to town, we'll sort of support Europe, but not really.

We're just going to kind of say you're on your own and we'll supply some weapons that you made.

And we'll give it back to them to fight you.

But we're not going to get in your business if you don't get in our business.

I think that's the new policy.

You get the Eastern Hemisphere, we'll focus on the Western Hemisphere.

Because we can still be a big bully to Venezuela and we can still take their oil, like we did in the Middle East for the last many decades.

But we can't do that anymore against China and Russia.

So it's just a different world now.

Yeah, it's kind of scary.

Like one of the things I think is interesting, I can't remember who I heard say this, but it was on a podcast.

Someone described the Russia-Ukraine war as almost like R&D for the US and China to like watch what war looks like right now.

And it's a really funny mix of like World War II style trench warfare and drones.

And if the US is going to go to war with China, they're never going to compete them on drones.

I don't know how many years behind, but decades.

And the interesting thing that can come out of this now is like, with the BRICS countries, if they do get to market with an actual currency, whether that's like a basket of different fiat currencies, if there's commodities, whatever, if it's Bitcoin, that is going to be a real shot across the bow to the US because really the only thing left for them is their financial markets.

I think that Besant and Trump, Besant mainly, has realized that it's no longer constructive for us to be the global reserve currency.

And China realized this 10 years ago and so did Russia, especially after we sanctioned and stole their treasuries from them.

And I used to think that the bricks were going to come up with their own currency.

I actually don't think that anymore.

I think they're just going to all have as much gold as possible.

So they're using gold as their reserve asset.

They're backing their currency and their economies with gold.

It remains to be seen what the West will do.

But I actually am hoping that they say, OK, you got your gold.

We also have gold.

But I also hope that they focus more on Bitcoin and that we see some progress on this in 2026.

That's the better horse to bet on, I think, even though it's much smaller.

And I think as Bitcoiners, we agree that it's a better form of sound money.

So I'm hoping that we make the right decision and actually focus on Bitcoin.

And I'm kind of optimistic that we will do that, that we'll actually start at a congressional level buying Bitcoin as like as a strategic asset here in the U.S.

But remains to be seen.

I'm not I'm not holding my breath for that.

I think we're intentionally pulling back from the U.S.

and the dollar being the global reserve asset.

It's another unsaid thing that's happening.

I think we're realizing that sanctions just don't really work against the BRICS nations anymore.

We don't have that power.

And all we're getting now because you have the whole Triffin dilemma thing.

Now we're only seeing the negative consequences of being the world's reserve currency and reserve asset.

So I think that's just going to continue to scale back.

I think gold is going to continue to rise significantly against the dollar.

And I think that just the global reserves in the U.S.

dollar and treasuries is going to continue to drop.

And the effects that that's going to have on the U.S.

economy, I think, are profound.

In fact, when we talked for our last episode, I showed that chart of the S&P 500 divided by gold.

over the last 100 years.

And that has only accelerated since we last talked.

And I think that that is going to continue for the next 10 years or so.

Basically, where the smart people are putting their money into hard assets and especially into gold.

And I think Bitcoin will join that party here probably in 2026.

And us in the US, even if our economy looks like it's doing well, and even if it looks like the stock market is doing okay, in real terms, it's going to be losing so much purchasing power that we actually will be losing.

Even if your balance sheets are going up, if you look at your broker's statement and it's up 10% at the end of the year, you still might be losing purchasing power because of how fast the dollar is debasing.

And I think that trend is going to continue and possibly accelerate for the next 10 years.

So I want you to tell me if I'm being stupid with this theory.

This is another harebrained scheme that I've got, and it could be complete nonsense.

But one of the things that I've been thinking about is the writing is on the wall that fiat currency doesn't work long term, especially if you're running a trade deficit.

But China have a ton of gold.

They're running a trade surplus.

Could they go to being a gold-backed currency again in a way, in a move to try and put pressure on the US?

They certainly could.

And I think in a way, they kind of already are, just by stockpiling gold as much as they have been and using it as a reserve asset.

I don't think they'll want to peg their currency to gold.

Governments don't like doing that.

And the problem is, is when you get into fiscal trouble at some point, and most countries do at some point, you don't want to be constrained by gold if you can help it.

And so I don't think they'll actually link their currency to gold, but I think they will continue to back their currency with huge stores of gold, if that makes sense.

And I think the other BRICS nations will do that as well.

I think they're all just going to pile up gold as much as they can, and they're not going to buy any U.S.

treasuries.

And they're also going to continue to wean off of buying U.S.

stocks like the mega cap tech stocks.

They're going to wean out of that and wean off of that and focus on their own economies.

And as they do that, that's less liquidity, less capital coming into the U.S.

from outside sources.

And again, we're just going to be left on our own.

And something is going to have to pay that price.

And it's going to be the interesting times ahead.

It's super interesting.

Like, these are the things that make me think we're living in a simulation.

Like, we live in the most interesting times.

Yes.

But if, so if they did this, if the US dollars stopped becoming, stopped being used as the world reserve asset, is that actually a good thing for the world, given enough time?

Like, is this the painful period we need to go through in order to have a better future?

Oh, I think so, for sure.

And I mean, I think we're, I'm kind of a believer in the fourth turning theory.

I think we're having multiple cycles converge right now.

We have our business cycle convergence.

And at the same time, we have kind of the fourth turning, which is every 80 to 100 years or so you have this major world war which kind of cleanses and globalizes the system and starts over And then I think we also at basically a 500 cycle that they talk about in The Sovereign Individual, basically, where we went from the Dark Ages to the Industrial Revolution, and people moved into cities and started working in factories and things like that.

I think we're clearly moving into the digital age right now, and that has just astonishing repercussions as well.

I don't think we'll even recognize the world 20 years from now.

If we could fast forward 20 years, I don't think we'd even really get what's going on.

That's how different it's going to be.

So we have all of these things converging.

But to your question, about every 80 to 100 years or so, the monetary system gets so out of sorts and there's so few winners who are winning so dramatically.

And the rest of the masses, the poor plebs, the working class, whatever you want to call them, they're just getting crushed.

And the income inequality is just outrageous right now.

So like the poor working class, not just in America, around the world, because of government fiat currencies are getting just absolutely decimated.

They have no purchasing power.

They're just they're working two or three jobs just to try to pay their rent, just to try to buy groceries, just to try to have gas for their car.

And they're still not making it.

And they're getting super depressed.

The deaths of despair are rising dramatically.

in the US and around the world, violence is starting to increase dramatically.

I think there's more conflicts happening around the world than the last time we had this many conflicts happening around the world was World War II.

So the world is reaching a boiling point again, and then you have this big systematic reset.

So what I appreciate, again, coming back to what the current administration is doing in the US, is I think they see that and realize that this is getting to be a serious problem.

And they're doing things like these Trump accounts and they're encouraging people to like, okay, boomers who have all of the world's wealth right now in the US, it's the wealthiest generation in the history of humanity.

They're like, dude, you got to give that money back to the Gen Z and these kids that are just dying to make it.

They can't find work.

They can't afford an apartment.

They're living in their parents' basement.

They can't afford food.

You have to start giving that money back or they are going to come and take it from you.

And it's not going to be pretty, right?

I mean, I think we're at that point now where you start seeing like civil wars where the poor working class just can't take it anymore.

And so they basically overrun the ruling class and the ruling elites need to make some decisions and they need to do it quickly.

Or when the system reset happens, they're going to be the ones who pay the steepest price for it.

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Can we go back a little bit to something you were talking about earlier, when you were saying that you think there's going to be some kind of conflict between China and Japan.

And I want to talk more specifically about Japan and what's happening with their bond yields at the moment.

Because I don't fully understand it.

I've seen yields are going up.

There's a bit of a crisis happening there.

But what's actually happening?

Well, so what we're finally seeing in Japan after a very, very long time is inflation is coming back to Japan.

So, and that's, you know, they've been begging for inflation and doing this easing over, you know, for decades and decades trying to revive it.

And now that it's back, they're like, oh, shoot, what do we do now?

Like they kind of let the genie out of the bottle.

And so that's what we're seeing.

And then we have and then the investing repercussions of this are the unwind of the famous, you know, yen carry trade.

And as leverage unwinds, that has effects throughout basically the Western world and the way that this leverage was used.

So basically what's happening is future growth and inflation expectations are finally increasing in Japan for the first time since basically the 1990s.

And these are the effects of that.

You see the yields rising in the long term.

Money has a price again.

If you want to borrow money, it actually has a cost to that capital.

And so you have to start making decisions of where do you want to invest your money?

Do you want to keep it in bonds?

If you have projects that can make money, they have to make more than the underlying cost of capital.

And so that's what Japan is dealing with for the first time.

And this whole yen carry trade concept has been going on for so long that the unwinding of that is fairly dramatic.

When you have these jolts, each time the interest rates pops up a little bit higher, you see jolts in the financial system.

And that's because these hedge funds all around the world have to unwind these trades that are no longer profitable or they're less profitable.

So the end carry trade, am I right in saying that's basically them borrowing money in Japan at really low rates and then investing it elsewhere and just catching the spread, basically?

Yeah, basically, that's the easiest way to think about it.

So as the yields rise, it gets less lucrative to do that.

And it was a huge trade, like trillions of dollars, maybe billions.

Yeah, I got to be careful about how much I'm talking about it.

But yes, the way I understand it is like in the trillions.

I think the low, like below 10 trillion, but trillions.

Yeah, my real question there would be like, what are the potential consequences from that carry trade unwinding?

Will we see repercussions in like Western markets?

I think absolutely.

And especially in the US market.

So basically what people were doing from around the world is borrowing cheap money and buying US mega cap tech stocks.

So the magnificent seven stocks, basically, because they were can't lose.

So everybody from central banks, from Switzerland to Japan to wherever you were in the world, whatever hedge fund you were running, you're looking for cheap liquidity.

You're looking for cheap capital to borrow.

And then you just put it in basically the NASDAQ and you make a lot of money.

And it was very easy.

And that's been the trade for the last 15 years or so.

But that is, I think, again, coming to an end.

And we're at the point now where it doesn't really make financial sense anymore.

As the interest rates start to rise, you start to think, well, let's see, is this actually safe to do anymore?

And you don't.

And a lot of people, so what people do then is they withdraw their capital, their purchasing power out of the US, leaving the US to sort of fend for itself to do this whole buildup of manufacturing and the military industrial complex and the AI complex and the energy complex, which is all woefully behind at least energy and manufacturing.

And Europe is sitting here like, oh, shoot.

So the US just bailed on us with NATO.

And now we're going to go to war with Russia.

And we don't have a military really to speak of.

And we don't have manufacturing capabilities much to think of.

And we don't have real energy sources to think of.

We got to pull our capital out of the U.S.

just to help build up our own bases.

So that further drops U.S.

assets and it doesn't support the U.S.

treasury market anymore like it did in the past.

And then Japan, with their conflict with China coming, is doing the exact same thing.

They're like, sure, we'll invest in the U.S., but if you're not going to back us militarily, then we need to get our own military going again.

So now they're going to have to do that and they're going to have to put their capital in there.

So I just think this whole, you know, the last 15 years or so of basically everybody levering up, just putting all your money into the US financial stock market system, and just you can't lose.

That age is over now.

That ended, I think, basically in 2022.

And if you look at the charts, again, that's the chart I showed you last time, and that just looks more like the trend is even more pronounced now, is you go in these periods of 10 to 15 years or so where for 10 to 15 years, you can't lose investing in America, you just buy bonds, and you buy stocks and you'll just crush it.

And then it gets just too overdone.

And people are like, wait, why are we doing this?

And I don't really trust America anymore.

And like, they're going to have to debase the heck out of their dollar in order to pay for all of these crazy things they're talking about.

And so people start pulling their capital away from it.

And then it starts to decline relative to gold.

And so gold starts to go up and hard assets start to go up.

And I think like Bitcoin and basically any hard asset with a limited supply should do well, relatively speaking, to financialized assets relative to the last 10 years.

It's funny, as you're talking, a load of pennies are dropping all at once because I don't know if you saw in the last couple of days, it might have even been today, I'm losing track, but the EU came out and said they were going to do a $90 billion print to help Ukraine in the war effort.

I didn't see that.

And that kind of fits in with what you were saying in terms of America being, you know, giving it a bit of a further reach, trying to stay away from that, the EU have realized they have to step in and do something.

So printing $90 billion is a decent start.

Right.

And all of these Western nations like Japan, I consider them as part of our coalition, right?

So Japan, US, Europe, they don't have any choice because they don't have a foundation to build on.

They gave all of that to China over the last 30 years.

We just literally, the only solution is to print money and to fill in that gap.

And so we'll see how long that lasts.

And if nobody buys your debt, so when they say print money, that basically means the central banks are monetizing the debt of their government, right?

So the government saying, we got to spend a crazy amount of money that we don't have to pay for this war that we're getting in and is only going to increase and get more expensive and get worse.

And if nobody's going to buy our crazy government debt, then we have to monetize it ourselves.

And what that means, if your central bank is buying your government's debt, the outlet valve is the currency.

So the currency gets debased.

So they're stealing the purchasing power of everybody who uses their currency in order for the government to spend money that it doesn't have.

That's how the whole system works.

And that's happening in every Western nation right now.

And that's going to, I believe, accelerate dramatically in the coming years.

It's one of those tricky things where it sounds terrible, but it's good for Bitcoin.

And it's like, it's not necessarily the way you want Bitcoin to win, but it might be the way that Bitcoin does win.

Just one more question on Japan before we get onto Bitcoin a little bit more.

They were always seen as this like crazy outlier that could survive having 250% debt GDP or whatever they're at.

while not having inflation.

I guess this is like a two-part question.

What's changed that's no longer the case?

And will they be able to survive now they have got inflation coming back?

So inflation is absolutely coming back in Japan and America and Europe.

Absolutely.

And it has to.

And it has to accelerate.

And what all of these countries are banking on is AI and robotics to save them.

because AI and robotics, as people understand now, is extremely deflationary once it takes hold.

And in fact, we're seeing a great example of AI and robotics taking hold in China right now.

They're manufacturing, they have automated manufacturing that makes the rest of the world just look embarrassingly sad and terrible.

And they're having massive deflation right now, and they can't even stop it, basically.

So I think we're going to see a lot of printing in China of their currency just to sort of try to keep up with the deflation that's happening.

And I don't think they'll be able to.

And I think that what the Western world is banking on, Japan to your point, but also the US and Europe is like, you know, a decade behind, they're hoping to build up their robotic and manufacturing capabilities enough to actually spur a deflation and have it spur across the whole AI and robotics sector enough that they can get out of this crazy bind we're in.

And so I think that's definitely the plan in the US here, is that they're basically going to just dump money into AI and robotics and energy and manufacturing.

And they're going to try to goose the GDP just off the charts high.

And I think they're actually probably going to succeed eventually.

I don't know if it happens in 2026, but it's going to take hold at some point and it's going to succeed.

And when it does, it's going to start out to be very inflationary because they're going to have to borrow money to do that.

And people aren't buying our treasuries anymore.

So we're going to have to monetize our own debt and that causes inflation.

But as it takes hold and finally starts to turn and we start to have the capabilities that, say, China has currently, we're going to see, I think, a wave of deflation hit America and hit the Western world and actually hit the entire globe.

Probably in the next sort of three to five year time frame.

And then I think everybody is going to be dealing with how do you deal with deflation on a global scale?

well, is this an age of abundance or is it like another Great Depression?

And we're going to see how the different governments handle that.

So that's what Japan is doing.

Japan has terrible demographics.

They're banking on AI and robotics to help fill in that gap.

And as they kind of deal with this 250% debt-to-GDP ratio, they're going to first have to try to inflate their way out of it, but they have to grow their economy to try to grow their way out of that.

and the only way they can do that is by basically going all in on AI and robotics.

So I think that's what we're going to see in the coming years.

It's super interesting.

So I want to talk about Bitcoin more short term, but you just said something that I can't ignore.

So if in three to five years we do hit this runaway deflation event where you basically can't stop it, what do you think that means for Bitcoin at that point?

You know, I think a lot about that, Danny.

First of all, deflation is incompatible with the credit-based fiat monetary system.

So if it takes hold and continues, I actually think that's the end of that government's fiat currency.

So I would keep a close eye on China.

And as they continue to accelerate their robotics and manufacturing and AI I think that deflation is going to get so bad that I don know It might be the end of their currency And I think that why they stockpiling gold And I think Bitcoin will do well, too.

But they obviously don't like Bitcoin because they can't control it.

They can't fence it in as much.

I think we're going to see fiat currencies really struggle in the next 10 years or so.

So what does that mean for Bitcoin?

I think we're going to see at some point, you know, probably if we get that massive, you know, deflationary event.

It's hard to know because historically speaking, when we have deflation, at least here in the U.S., that's actually been negative for the price of Bitcoin in dollar terms.

I don't know.

You know, honestly, I don't know how to think about that.

because I think the only thing that survives are actually sound money, are gold and Bitcoin.

But you don't get those huge price stakes.

I think what you just get is you have Weimar Germany type movements in fiat currency.

So you'll see that in the price of Bitcoin and the price of gold as well.

And then the fiat currency will just die at that point.

And then the only thing left standing will be these sound monies.

It's really hard to predict though what that means going forward.

I think just at the other side of that, the world is priced in Bitcoin.

And that kind of fits with my theory.

What I've been talking about for a while now is the multi-decade approach.

So the 2010s was the collectible phase for Bitcoin.

The 2020s, which we're in now, is the store of value phase.

Then comes the medium of exchange in the 2030s.

And by the 2040s, I think Bitcoin is the world's unit of account.

and I think everything is and you don't even think about bitcoin in dollar terms or fiat currency terms anymore it's just the world is priced in bitcoin at that point so like you know sailors projections of whatever 10 21 million by 2045 or whatever things are I don't think they'll even be the dollars around necessarily to think like that anymore I think the world will just be priced in bitcoin and so the way I look at it is how much will like a New York strip state cost in sats at that point.

21 sats.

It's honestly the wildest time.

So maybe a little bit more short term.

You think 2026 is going to be a good year for Bitcoin.

Do you think it's going to be a good year across all risk assets?

So I think it will be good in the asset classes that are picked as winners by the government.

And so I think the way to explain what's been going on is in the rest of the world, so the non-Western world, the BRICS, let's just say that.

So in the BRICS countries, they don't want anything to do with U.S.

assets.

They don't want U.S.

financialized nonsense anymore.

That's why gold has been winning.

So gold and silver has been winning and commodities in general.

And I think that will continue.

It'll have ups and downs, but I think we'll see a continued or even an accelerating chart in those assets.

in the u.s we've picked our winners and we've talked about them already right so the u.s the military industrial complex all things related uh um uh rare earth materials um industrial metals uh as well so your steel your titanium your aluminums the government is doing these private public partnership things going which it gives me the heebie-jeebies by the way i don't like these centrally controlled it's it's a sort of a form of communism um and that's what we're doing we're picking winners and losers, semiconductors, what else, whatever in manufacturing.

So basically, these are electricity.

So electrical, like there's going to be a race to produce more electrons, basically.

So companies that are doing well in that, those are going to do well, I think, at the expense of the dollar and at the expense of basically everything else in the US economy.

So I have kind of low expectations for most risk assets.

I think, though, that the things that the government has selected as winners should continue to do well.

I don't think any of them will do as well as, say, Bitcoin and gold, because the world is going to increasingly look at, like, why would anyone want your dollars?

Like, this is kind of crazy.

And why would we even want your stocks if they're kind of priced in dollars?

What we'd want are hard assets and sound money.

So I think we're just going to continue to see that trend accelerate in 2026 and probably 2027 as well.

Yeah.

In terms of, like, the four-year cycle is obviously coming up a lot now because Bitcoin's been crashing.

And I think there's probably an element of that that is just a self-fulfilling prophecy in that if people think it exists, they'll start selling and then can they create it at least for a short period of time.

I don't believe we're going to have a proper four-year cycle long-term bear market.

I just don't see it.

One of the things Checkmate always says, which I think is probably the best take on this, is that the bull market also is the bear that follows.

And we never had an exponential run-up in Bitcoin.

I don't see us having an 80% drawdown.

It just doesn't seem likely to me.

And like you said earlier, I wouldn't be surprised if we're close to a bottom already.

It's just what I'm not sure of is what does a Bitcoin bull market look like now?

Are we just going to just grind higher for a long period of time?

I think it depends.

So again, I think the solution that everybody is looking for is actually sort of right in front of our faces.

If you see the US economy and specifically the manufacturing sector.

And why do I think this is so strongly correlated?

Well, first of all, let me finish.

If you see the U.S.

manufacturing PMI start to accelerate, I expect Bitcoin to start to accelerate as well.

To me, that's the strongest correlation.

And to your point, what you just said, this is the first cycle since 2010 where you can go back and look at Bitcoin prices.

This is the first time where my system that I've developed hasn't shown a peak in Bitcoin.

You usually have a point where all the lights are screaming.

It's like, it's peaking, it's peaking, it's peaking.

That didn't happen this cycle for the first time ever since basically 2009, 2010.

So but now we're already back at levels that look like we're in deep value territory for Bitcoin.

Like this is the time to be to really be loading up, which tells me and the whole reason for this is because the economy has just been lagging.

It never had a cyclical economic peak for the first time ever in the US since World War Two.

It's never happened where we didn't have a recovery, where we just have just languished in this sort of recessionary contractionary state for three years.

That's very, very weird.

So, yes.

So I think that that this weird recession that most of us were expecting in 2026 just got pulled into 2025 in these last couple of years.

It never did recover.

It's been very weird and strange.

And that's been reflected in the price of Bitcoin.

And I would expect that we'll slowly start to see the effects now of all of like we talked about the very beginning, the tax breaks, the deregulation, all of the fiscal stimulus getting pushed into the manufacturing sector of the US into specific winners.

that's going to start to take hold in 2026.

And as that does, you'll start to see life come back to Bitcoin again.

And if they get the economy just absolutely ripping, which I think they want to do before the midterm elections, I would expect that to be reflected also in the price of Bitcoin.

And I think finally at that point, we could start talking about, you know, when moon, when's it going to the moon again, those kinds of things that could actually possibly happen at that point because people would get, you know, excited about it again.

They'd start applying leverage again, which they shouldn't do.

You should never use leverage with Bitcoin.

and we'll start to see some pretty serious price action.

But until that happens, I would temper your expectations and just see this as a longer-term buying opportunity.

Yeah, I don't want to ask you for a price prediction.

I don't want you to get hate from the people in the comments if they don't come true.

These are just fun anyway.

But do you think there's a decent chance that we get all-time highs again next year, or do you think this takes longer?

Well, I expect the economy to take off finally as we head into the second quarter, third quarter, of 2026.

And if that happens, then yeah, I think we'll absolutely be back at new all-time highs.

I think based on where Bitcoin should be relative to other assets that it's normally correlated with, it normally lags the price of gold by about six months.

And it normally trades synchronously with the NASDAQ stocks.

And it's lag.

So both of those are like, they've diverged like this.

So Bitcoin's down here and the tech stocks are up here because of AI, because those were the picked winners.

And then that's also where gold was and Bitcoin's been laying.

So if it does recover and we start to see the manufacturing sector come back, or if we have some really good news come out of like, say Congress, say they're like, hey, you know what, we're going to do this deal where we do this strategic Bitcoin reserve when we buy a million Bitcoin.

That would be what would get this leg to the alligator jaws to close and to kind of catch up again.

And I think it could quickly go to 150 or 200K if that happens.

But that kind of remains to be seen.

So I don't like making those predictions if it will happen.

But if that does happen, then yes, I think the price of Bitcoin will do really well.

That's the last point I kind of wanted to bring up, by the way, about what we were talking about earlier is liquidity is tight right now.

Everybody knows this.

And that's why the Fed is finally starting to do the QE, not QE again through the reserve management operations.

When liquidity is tight, it can only go to a few different places.

And so the world is competing and the US in particular is competing for that liquidity.

And the government has decided that AI gets to have it and the rare earth sector gets to have it and industrial metals and the military get to have it.

And everybody else kind of struggles.

So I think until there's either more abundant liquidity, which I think is coming in 2026, or until the government picks Bitcoin as a winner, it's going to be liquidity starved until that point.

So if either of those two things happen where the government picks it as a winner or overall liquidity picks up rapidly, until that happens, we're going to see the price of Bitcoin language and the manufacturing sector language.

And then once it happens, though, it will be reflected in the price of Bitcoin.

What would cause a liquidity boost?

basically uh so so we're already seeing that it's planned so with the one big beautiful bill where the spending really starts in earnest and the tax breaks start to happen in earnest in 2026 we're going to see that we're going to see the government spending increase so the fiscal deficit will stay very very high you know two more than two trillion or so of spending money that they don't have borrowing that money which has to be funded by somebody and that comes back to what we talked about earlier, as the front end rates come down lower and lower, the money market funds that have currently been buying that are just going to be like, you know what, it's just not really worth it.

And so that's going to cause issues with the markets, which the Fed will see.

And the Fed is going to be like, you know what, I think I know we said we're only going to do this through April.

And I know we only said 40 billion a month of buying T-bills.

Let's up it to 80 billion a month and let's actually extend it for another three months.

I think we'll see something like that.

and that's where liquidity is starting to pick up steam and gain steam so as we head into about the second quarter of 2026 i think we'll be seeing those announcements and it will be pretty impressive and that will start adding enough liquidity that will start seeing it spread out across different asset classes and into bitcoin specifically well the good news is it doesn't sound like dr bear is back um i want to just close out with one thing which is you were talking last time we're on the show in June about the three burners.

And was it liquidity, the economy, and leverage?

Was that the three?

Yep.

Okay.

So I want to start with which one went out from going from 126K to back down to 80?

Sure.

So liquidity has been basically fine, except for recently over the last few months, we've seen a rise in the strength of the dollar.

So the Dixie has been rising relative to other global currencies.

I think that's peaked in is already going to start rolling over.

Why does that matter?

Because when the dollar strengthens, that means basically that the global liquidity is inversely correlated to that.

So global liquidity has taken a hit.

But now that's reversing again.

So the dollar is rolling over and going to come back down.

So I think liquidity will start to go up again.

And as the dollar declines in strength against other global currencies, that frees up those other global currencies to also do quantitative easing.

So they can debase their currency as long as the dollar is already debasing.

And then they are racing to debase, basically, racing to go to zero faster.

And that's sort of good in general for global liquidity.

So global liquidity has been fine.

It dipped.

Now I think it's going to resume its course.

And I think it's going to accelerate into 2026.

The second is, we've already talked about this ad nauseum, the US economy has been terrible, especially the proof of work manufacturing economy has stayed in a recession basically for three years.

That's directly correlated to the price of Bitcoin, which most people don't get, but is a hugely strong correlation with the price of Bitcoin.

So if that finally takes off, and I think that's if you can tell people, because I know lots of people who are like, I thought it was going to 475 or whatever.

Like, why?

You know, why has the price been so terrible?

I'm like, because the economy has been terrible.

I did not expect that.

I thought the economy was going to rev up into 2025.

It did not.

I do expect it to finally break out of its muddled mess that it's been in for three years in 2026 and start to rise.

And as it does, I think that will be reflected.

And then leverage.

If you remember what happened, I think it was October 8th, 9th, 10th, somewhere where Trump basically threatened 100% tariffs on China.

And he did that, I think, on a Friday afternoon, of course.

And the only thing that has liquidity on a Friday afternoon is Bitcoin.

And so they just had a massive leverage long liquidation cascade.

Basically, everyone got margin called because they needed liquidity right now.

And it caused a wipeout of something over $100 billion worth of Bitcoin got wiped out, something like that.

Liquidity got flushed, excuse me, leverage got flushed.

And then also with the yen carry trade unwinding, that's more cheap money.

So more leverage that got flushed as well, and it's continuing to get flushed.

Those two factors basically have brought overall leverage levels down.

And so there's kind of a direct correlation when the economy is struggling, leverage tends to not do very well as well.

And as both of those start to recover into 2026, we should see that being reflected in the price of Bitcoin.

Let's go.

I think American HODL's green, green, green, red meme might be over, but I'm excited.

I hope so.

I don't think we're at the bottom.

them.

I would love it if this was just a kind of a weekly red year, right?

Like if I'd love it if Bitcoin closed below 93k in 2025.

And so we could give it a red candle.

And then we just had kind of a slow resurgence as we head into 2026.

That's kind of the base case I'm working off of.

Yeah, I think I agree with you.

It'd be nice to get rid of the four year cycle narrative and then we can just get on with things.

But Jeff is always great speaking to you.

One of my favorite shows I do.

We'll have to try and do one in person at some point in the next year, but thank you.

I would love it.

Yeah, thanks for having me, Danny.

I love being on your show.

And we'll have to, yeah, at one of the conferences maybe.

I don't know if you're going to conferences anymore, but we'll find some time.

Yeah, we'll figure something out.

All right.

Have a great Christmas, Jeff.

Thank you, mate.

Thanks, Danny.

Merry Christmas.

Thank you.