The real economy is broken because of the printing of money that it distorts the actual operation of money, the function of money, the price signals of money. Your money is losing its value. The printing of money is the problem. Bitcoin is money that can't be printed. It's the solution for that problem, and it's expressly built to solve them. It's fixed supply is the source of all fundamental value in bitcoin. It will only ever be twenty one million detcoin.
It's volatle for the reason that has a fixed apply and that everyone's adopting bitcoin for the first time. It's naturally volatile, it's necessarily.
Valt So the volatility is there, the price of bitcoin going up and down. I think that's a good thing. But in regards to like being in media a stable medium exchange today, maybe it's not. So how do we think about the volatility, as you said, in regards to payments today versus like an evolution of.
That great question?
So, so, Parker, you said that bitcoin is the most important innovation in the world. Why should someone listening to start this out maybe scaled on the fence. Why should they right now be dropping everything and paying attention to bitcoin?
I think oftentimes people look at bitcoin as a solution in search of a problem, and that the reality of the situation is that people do not understand the problem
that they have. They might know that they have problems, but they might not know the root cause of it or the source of it, and that, in my view, the most pressing problem that everyone is suffering is that their money is constantly being debased, and that bitcoin is the solution to that problem, and that they're seeking out somewhere on the range of imperfect solutions to bad solutions for the problem because they misunderstand it, and that bitcoin
solves the most important problem for the greatest number of people on Earth, and it's still very early and not well understood, and that once they figure out bitcoin coin and they can also most efficiently go down that rabbit hole because it might be complicated, it might be unintuitive at first, but it's a finite surface area, and all the other derivative problems that they might perceive in their life stem from in most circumstances, maybe not all circumstances,
but in most circumstances at least from a financial perspective, because their money is constantly losing value, and so all the time and energy they're putting in to accumulate money or to acquire money to pay for various things in their life is being destroyed. And biitwin fixes that.
The biggest problem in the world. It fixes And so when you solve a big problem for a lot of people, there's a lot of value created. Let's just push on that for a second, because what you're saying is it solves the biggest problem for the most people, which is their money is losing values. They have to work harder and harder to maintain their life. But do you think most people, when we talk broadly the masses, understand that, Like, do they see that as a problem.
They see it as a problem, but they don't understand extent of it. I'd say most people are engineered to know that their money loses value, so they try to address it on the margin. They invest in the equity markets to offset inflation, or they invest in real estate passively to offset the problem. And one of the things I like say is like, Hey, if there's a business that needs to be funded that is going to deliver a lot of value in the world, those businesses still
need to be funded. If you dig up dirt and build a piece of real estate that delivers value like that is a necessary piece of equation because ultimately money is helping to facilitate exchange and to deliver real goods and services to the world, which is really what improves people's lives. But in the circumstance where people know that their money loses value but not knowing why or that it ends a lot worse than they think that it's not just their money losing too per a year, three
percent or five percent that ultimately stops working. And there's there's plenty of historical evidence, and there's also a fundamental underpinning it that humans can't work and convert their time and energy into something that can be easily produced money being created at thin air. That it's that they know there's a problem, they just don't know the root of it, or the extent of it, or how negatively asymmetric. The end consequence of money being debased really is, I.
Would just go step further. I think most people see prices going up and things keep getting more expensive, and so if I don't invest, how will I buy them in the future, Which is the same thing as you're saying, But it's the opposite side. Right, the money is being debased, it's losing value, which is why prices are going up. But they don't see the money being debased and going down. They just see the prices going up.
Yeah, safety and amuse. The author of the Bitcoin Center has a great quote that I consistently see circul We're saying, the groceries aren't getting more expensive. Your your money's losing its value, right, and it's the other side of the same coin. But it's really important framing to shift your perspective in your understanding of the root problem.
Right. And we saw in the last election that we just had where Trump won and inflation was probably one of the one of the hottest subjects going But people aren't really understanding that the root cause of this inflation or as they see CPI going up and so yeah, so not understanding the problem at hand. That's the number
one obstacle to bitcoin. They think of it as a solution looking for a problem because they don't realize the problem is that the reason why your life keep getting more expensive is that your money's losing value.
Or connecting it to bitcoin, that bitcoin's a solution to that.
Right, Yeah, yeah, yeah, got it. So, you know, you used to write a lot. You've still been writing some stuff. I want to talk about some of the stuf you're written, But the big one is that gradually then suddenly, which is amazing, and you sort of took like a first principles approach to sort of explaining bitcoin. How would you put that into maybe like a three step framework for people to like think about and then maybe go dig into and research more from there.
Yeah, So the three things are the problem the bitcoin's actually solving. That's that is not a solution in search of a problem. That it's an express solution to an express problem, and the problem is printing of money.
So start there, start there.
You have a problem. You know, one of the things that you just mentioned is in the last selection, it's in the United States, inflation was a big focus area. I never saw one politician who was talking about it on the stump. Connecting it to the printing of money. The printing of money is the source of that. You have a problem. The printing of money is the problem. Bitcoin is money that can't be printed. It's the solution for that problem, and it's expressly built to solve it.
So connecting it to the problem is one frame. The second framework is understanding bitcoin from a bottom up perspective as to why it actually solves the problem and how. And the quick high level of that is that it's fixed supply is the source of all fundamental value in bitcoin.
There will only ever be twenty one million bitcoin. What it represents is money that can't be printed, and that how Bitcoin is able to enforce its fixed supply is of significant consequence to the equation that it is not random, it's not by happenstance. It might be complicated or complex. There's a lot underneath the hood, but you first have to understand why it's relevant, why a form of money
that can't be printed would be relevant to somebody. To then be able to go down and connect the dots as to how the economic incentives are able to be held together. S has to Bitcoin incredibly enforce its fixed
supply without the need for trust. So that's the second thing, And then the third framework is all the common misconceptions about bitcoin, which are that it's too volatile to be money, or that it can be easily copied, or that it's just for criminals, which just for criminals is becoming less of a of a knock on bitcoin. As governments around the world and corporations around the world are adopting it as money, it's becoming more difficult for somebody to posit that.
But basically understanding things that are difficult to see. If you could say, hey, it would make sense that if there were a form of money that can't be printed, that everyone would adopt it, adopt it. But how does that marry with the fact that bitcoin goes up ten percent in a day or down. That doesn't That's not how I have known or you know, I say I. But the person that's evaluating it might look and say, well,
bitcoin can't be money for that reason. And in reality, if you realize that it's volatile for the reason and that has a fixed apply, and that everyone's adopting bitcoin for the first time, it's naturally volatile. It's necessarily volatile. So people have to work through those mental blocks in order to come back to the highest level ideas behind bitcoin to see how they're consistent with each other and
not inconsistent. So the problem the fundamentals the bottom up, and then the common questions that are logical to ask but have coherent, consistent explanations.
So let's dig into the volatility and why it can't be money. So obviously with you work on bitcoin payments, that's sort of your life right now with zapp, right, So I want to dig into that. I want to talk about stable coins and the Genius Act and maybe how that compliments or doesn't compliment bitcoin. But let's just talk about the payments piece overall, and we'll talk about those things. So the volatility is there the price of bitcoin going up and down. I think that's a good thing.
But in regards to like being a media a stable medium exchange today, maybe it's not. So there's today and there's a future, so like will it ever be versus the best today? So how do we think through that? Because if I want to, if I'm in a country with a failing currency and I could maybe go to the dollar, I could go to bitcoin, but I don't have that much money. And if I go to buy groceries next week but I can't buy as much, that
could be a problem. So how do we think about the volatility, as you said, in regards to payments today versus like an evolution of that.
Great question? So one I think that to start, you have to understand why bit coin's volatile. You have to understand why it's volatile and why volatility is not a risk. And when I say that is that volatility can be a risk depending on what your time horizon is right, And so you have to be able to explains yourself first why bitcoin would store value over time despite being volatile, that it's volatility is actually to your benefit that you know.
One way I would think about it is if only one percent of the world has any material exposure to bitcoin, and if you marry that with this idea that everyone in the world, if they understood that there were a form of money that can't be printed in that bitcoin is that, and that it's fixed supply of twenty one million is credible that ninety nine percent of the world is yet to adopt it, but they would adopt it for the very same reason that someone would who's already
adopted it. Understood that it holds value because more of it can't be created, but it's also necessarily volatile. If one percent of the world has figured this out, well, if ten percent were to figure it out, then that means that nine out of every ten people in the world that are buying bitcoin for the first time are pricing bitcoin, are putting a value on it the first time in their life. Right, Well, if more can't be created, there has to be price discovery, right. That price discovery
is naturally volatile. But the volatility for people who already hold it is a benefit because if ten times the number of people are demanding an asset, even if they're pricing it for the first time, are having to bid the price up to deliver value to people that already
do hold it. Again, that is in your benefit. So first you have to anchor to that fundamental that is volatile for the very same reason of why someone would demand it in the first place, and that that is connected to its ability to store value.
Let me hind on that. So, because it's a fixed supply and we have more people coming in and maybe something going down, I mean there's EBB and flow a little bit, so we get price moving up and down price volatility because of that. Now, if we look at the long lens of bitcoin, the price volatility moves to the upside, and so as an investor, we want the price to go up, right, We don't want to be in the stable poin that never moves, and so that
volatility is our advantage. It's a necessary good. I think it's the point that you're making. Yes, right, So it's volatile, but volataile tipside, we like that, but depends on the duration correct.
So then the way that I would think about that is and it is this difficult problem. If you have no savings and you are barely saving more than like when I say no savings, you have no Yeah, if your paycheck to paycheck and bitcoin is volatile, then you still have to figure out how to get savings. And the form of money that can't be printed is going to store your value best over time, but you have
to get to that point in time. And so it becomes the identical equation of saying like, okay, I first have to produce more than I consume and then I have to start saving a small percentage. And bitcoins is that as it's volatile, it doesn't put me back in that negative position of being paycheck to paycheck. So another way to say it is someone that has a lot of savings can more easily adopt bitcoin than someone that has no savings at all. But everyone has to accumulate
savings to get out of that rat race. To get out of living paycheck to paycheck. So it becomes a world to say, well, hey, maybe you need to have enough dollars or a stap quote stable coin that might be losing its value slowly but is maintaining its value day to day better saying I need to cover myself for a month or two months or three months to have that security buffer, but then saying well, anything that is more than three months, I need to be exposed
to the asset that stores value over time. And so it's marrying the short term needs with the long term benefits and such that someone that has no savings realistically like they still need to be saving and bitcoin, but it might be able to have a smaller percentage because their personal working capital is non existent and they need to build that up. And so they still have the
problem and there's no easy way out of it. But it becomes a function of each month saving more than you than you spend and putting a small amount away. But now somebody that has a lot of savings that doesn't have, you know, a working capital need of six months or a year that then they start looking at the equations saying, hey, if I have this in cash and in a form of money that loses value, that's
engineered to lose value. I need to be thinking longer than just a month or two months or three months. I need to be thinking about a year or ten years, and the more that you can save an asset that's volatile but stores value better than anything else for very logical reasons that everyone needs money, everyone needs set money, and people are adopting bitcoin for that reason. Then it becomes a kind of time horizon and managing short term volatility for the benefit of long term purchasing power.
So to summarize that, then we have to understand that both dollars and bitcoin are both volatile price moves, but bitcoin is more volatile to the upside, whereas the dollar
is just always constantly vaulted to the downside. So we want to look at those over different time horizons, where think of it as a checking in the savings and a little bit And depending on my time horizons and the amount of money that I make, then I want to be storing in the more volatile asset because it holds value better over longer periods of time, But I might be willing to put a little bit into the less volatile asset that holds value better in a short period of time.
Right, Yeah, correctly, So you know, I always try to use it to a tangible examples like, hey, if I need to go buy beef at the grocery store tomorrow or over the next week, and there's a possibility that bitcoin drops by ten percent and I can't then go buy the amount of beef that I need, I haven't solved my problem. But if I know that the price of beef, you know, looking at ground beef, if it goes from six dollars a pound to ten dollars a pound to fifteen dollars a pound, that I need beef
in six months too. And if I'm just saving in this form of money, that is the other side of that same coin, which we discussed before, like your your groceres aren't getting more expensive, your money is losing value. That you need beef next week, but you also need beef in six months. If you do the same thing for the next week that you're trying to solve for in six months or a year, you're gonna end up in a far worse place.
Yeah, because the dollar might buy you more beef next week, but it's most likely guaranteed to buy you less beef in a year. Yeah, let's talk about than the dollar, but more specially stable coins. So sort of maybe somewhat historic here in the United States, we just passed this genius Act, the Stable Cooin Act. Scott Assent, the head of the Treasury, whose job is to sell US debt, right, that's his primary job, sell the treasuries. He's some dude
pushing towards these stable coins. He said that he sees stable coins growing by three points set to three point seven trillion by twenty thirty. I saw you were talking about the difference of dollars in that, but I think I saw you make a tweet something about it being like regulatory capture. Yeah.
So the if you play it out again, this is, you know, balancing short term of long term. That the short term benefit is that there's a a positive regulatory stance towards the digital currency world, which it is. And yeah, we can say that that's I won't say it's undeniable, but it's close to undeniable.
It's like, hey, there's a regulatory stands too.
That's that's positive, that that's welcoming to this in the US right now. Yeah, Yeah, And that's better than if Elizabeth Warren was going out trying to whack the mole. Everybody working on bitcoin or the broader what people refer to is the crypto space that you want that that it's better to have a regulatory apparatus that is friend,
not foe. But long term, if you think about stable coins that are that are backed by dollars, it's not actually solving a problem, and that the very same interests that are helping to instantiate stable coins do not have an interest in in private versions of the dollar existing.
Long term, they get immense control and power out of having a digital version of the dollar that's controlled by the Fed, and that the larger that a stable coin grows, the more control that the the Fed and the Treasury or the Office of the Presidency would want to have
over it. Right, it becomes unavoidable, genuinely, and so that the law in my view, the large interest that we're pushing the stable coin apt or special interests that wanted their stable coin to be able to be the winner because they have seniorage and they will extract value out
of that. And so in the short term it can feel like a positive because there's you know, women, I'm picking from a bitcoin lens that there are advocates that are that are friendly to an adjacent industry, not bitcoin specifically, and that there might be short term benefits that come from that, and it would be certainly better than an
active foe trying to go stamp out bitcoin companies. But the larger that a stable coin grows, the more control the existing state apparatus is going to naturally have over it, and the interest of companies like coinbase and usd C or anyone that interacts and helps move that stable coin is going to be to you know, use our stable coin, not that stable coin, and that that's ultimately the root of you know, tether has worked perfectly well all over
the world without this. Why does it need this? The only reason it needs this is to ensure that the state apparats doesn't come to shut it down. But then the other side of that coin is control. You know that, you know why, why if the free market has been working, why not allow the free market to continue to work.
The logical explanation of it is is control surveillance, And it might not play out in the next week or the next month, but that's the direction that it's heading and in my view, we have serious problems they need serious people to solve them. The fact that bitcoin was de emphasized for stable coin legislation or market structure legislation, it just yeah to me, it points to regulatory capture versus innovation.
Yeah. Part of the Genius Act, there was a couple of bills that went through. One was also called the Clarity Act, And that's how I felt about that bill specifically, because like in America, we're the land of the Free. We're supposed to be able to do whatever we want and then laws are meant to tell us what we can't do. But here they're passing a Clarity Act to give us clarity on what we can do, which I thought was kind of weird. So I see that going that way. But let's just kind of go back to
what you're what you're staying here. So it seems like, well, number one, the government's not a monolith, right, So there's like multiple factions that have different interests that they want to see. I think both Trump and Thescent want to see the dollar maintain some power around the world. Sixty percent of FX transactions or something like that. Right now, we just drop down to a fifty nine percent. The cent wants to sell treasuries. Who's going to buy the treasuries?
And so by getting people around the world who use dollar stable coins, it sort of keeps the dollars sort of demand. And then for the regulatory part that we make those stable cod in companies by US treasuries and then sort of de facto you get the people around the world to buy US treasuries. I mean, would you say that seems to be what's that play here?
I think that's the that's the line of thinking. That's a first derivative, that sounds good, sounds right, sounds plausible, and so people run with it. They say, hey, these stable coins are great for the US dollar safety and muse again. He gave a great presentation at the Bitcoin Conference where he basically explained that it's substitute demand. It's not creating demand for the treasury. Somebody has to own all treasuries at all times. If you think about what's
actually happening in the financial system. If somebody is choosing to convert a deposit at a at a US bank to a dollar stable coin, somewhere in the background, a reserve at the Fed is changing from one account to the other, and that somebody was holding a treasury and now somebody else is holding the treasure.
Is it and is it the government holding it they had to print the money on buying their own or is it someone in Argentina or Venezuela.
Right, But if somebody, you know, imagine the scenario where there's a a central bank in Africa and the person African says, I want to hold a US dollar stable coin. Well, the dollar doesn't just disappear. So the central bank in Africa might have bought a treasury. Now the you know, the private company that issued the stable coin is buying the treasury. You know, it didn't it changed the treasury, It changed hand. It didn't create demand for the US treasury.
And so I think that realistically, what it more so is is it's a new rail to move dollars. I think about it more as a method of payment. It doesn't. It doesn't. It genuinely does not create demand. Like as an example, Blackrock is the largest holder. I think if it's not the large holder, it's one of the top two or three holders of US treasuries. If their assets shift to some other party and say it's a party that wants to hold stable coins. It's like somebody is
banking blackrock, somebody's back banking the stable coin. That's the foundation. It's like the stable coin is not creating demand, shifting demand.
It's shifting demand. But I want to we'll get into sort of the failing system that we have in a little bit, But just to talk about this for a second. If there's a massive demand external demand for US treasury, is easier for the US to sell the treasuries into the market and manage the debt. Whereas if the government has to, as we've seen many times other countries around the world, have to print money to buy their own debt,
it goes into a deep, a pretty fast doom loop. Right, So if we have to print money to buy our own debt, that's a problem. Versus if there's a massive demand externally for our debt, then it's not as bad. And so I would say to the point that you're making, Yes, the Treasury has to whatever debt they need to send out, they need to send out, so there's the demand. But as far as shifting the demand, if they have to
print and buy it themselves, it's much worse. Than if some and I think you said, Zimbabwe, Africa buy is it right?
What I'm saying is we all have to accept that the only way that thirty six trillion or thirty seven trillion of debt is getting repaid is because the FED is going to create more of it. Sure, everything else is moving chairs around on the on the deck. Because two things are categorically true. The Treasury sets the number of treasuries that exist, and Congress based on the amount that they spend. First, the amount that they take in is in relation to that.
But the Treasure is the budget.
The budget the budget. So if you know the report that came out the other day is that just in the next two quarters, the Treasury is going to have to issue net incremental treasuries of one point six trillion. The debt of the United States is growing by one point six trillion over the next two quarters. That's the Treasury. In Congress, the FED is the single entity that sets
the number of dollars that exist in the system. If the FED is not increasing the number of dollars that exist in the system, and the Treasury is having to increase the supply of treasuries by one point six trillion. It's having to take out money from somewhere else in the system to replace that demand. Right, so as as more treasuries exist, if the amount of dollars didn't increase, it's sucking money either out of the private sector or
out of some other public sector need for money. And the only way it gets solved, the only way the leaky ship gets solved, is the FED creating more dollars. You know, That's why Trump's going to the Fed and saying you got to increase the interest rate by three percent. Well, the only way to lower interest rates in terms of the like the real the real interest rate is printing money. Right, so more dollars have to exist to release the pressure of the market rate to borrow.
But does the Fed have to create the dollars because the euro dollar market is dollars increasing, well, not the Fed doing anything.
Well, the same dilemma exists on the euroside, like the European Centi Bank ultimately has to create more euros to satisfy euro denominated debt. Well, euro dollars is the intersection of that.
But the.
Dollars need to be supplied, I don't say need to be but the way that the current market is structured, is that ultimately more dollars need to support more dollar nominated debt. You can again, like, if the FED isn't creating any more money, the Treasury is issuing one point six trillion, there are one point six trillion more deposits credit claims on dollars that exists out there without the FED.
My point is that the market figures out that the actual funding currency is becoming more scarce to the amount of claims on it. That causes interest rates to rise. The only way to actually solve that is the FED singularly sets the number of dollars that exists in the system, the dollars that can move from bank to bank.
And your a dollar market can't create those.
They can create more claims on the base money, but they can't create more of the base money.
What about if billions of dollars of Argentine pesos convert into US dollars.
Again, there's a relationship between the actual number of pesos that exist in the world that are created by their central bank, and there are the number of dolls dollars that exist created by our central bank, and then there are claims on those dollars. So it's like, yes, if somebody wanted to convert pesos to dollars, creates demand for dollars, creates lack of demand for paces, which dictates that the peso issuer needs to issue more pasos or their system collapse.
So it's Robin, Peter pay Paul is shuffling cars on the deck.
But what it's doing, but the foundation of it that dictates all of it is the central issuer, right, And if you are creating more debt on top of the existing money supply, Ultimately people figure out that there are enough chairs on the deck and they saw all going to sit down at the same time to get there the dollars that they need at the paces that they need. That causes a credit collapse, that causes interest rates to rise,
that induces the acceleration of money printed. There's no way around it.
There's no way around it. It's inevitable how that looks, and the timeframe of those things vary based off of how good they can shuffle cards around the deck. So the milkshake theory from Brent Johnson is that all it puts a lot of pressure on Urgerden payso they collapse and then the dollar kind of just keeps sucking more and more, and things keep collapsing faster and faster and faster.
Right, so one system could collapse faster than another system. But again, if the Treasury is issuing one point six you know, like using the microcosm of the example that it's a real example based on their own estimates, they're issuing one point six trillion more in dollar denominated debt, that is more, and if the Fed is not increasing the money supply, that is more claims on the same
amount of dollars. That forces the dollar interest rate higher, right, you know, so it's like, yes, you know, the dollar milkshake theory can can be accurate, and that the PASO could collapse faster than the dollar, but the same dynamic existence.
Just a function of the system.
It's collapsing slower, it's not not collapsing.
Sure, Sure, it's a function of the system.
And then ultimately Bitcoin becomes the release valve because as the market figures out, okay, well, the Treasury had to issue one point six trillion more dollars, that's more claims on dollars competing with the same amount of dollars. The only way to satisfy that demand is to force interest rates higher. Oh well, now the FED steps in and prints more dollars. Shit, there is no rate of interest I can get on a dollar nominated claim that performs better than just holding the form of money that is
agnostic to this whole charade. And so to come back to this idea that stable coins create demand for dollars, No, they just shift from one party, and one party might be more inclined to buy US treasuries over some other instrument in the US financial system, depending on you know, it's moving out of one bank holding reserves to an other. But it's all like you miss the forest for the trees if you don't realize that all of that is just debt chairs shifting. And what really matters is the
total amount of system debt. That isn't just the US Treasury, it's every private issuer of credit, every state, local municipality issuing debt. The relationship of the total debt stack to the actual number of dollars that are in the system that can support it. Because what happens is for intermittent periods of time is that debt expands significantly without the
actual number of dollars increasing to support it. The market figures it out, there becomes a credit collapse, they print more money twentsand and eight nine twenty twenty, guaranteed to happen again. And the only true exit valve from that is to get in the money that is not subject, that is entirely divorced from the function of credit.
Get off the deck where they're shuffling chairs and onto something else. So let's talk about the relief valve. So Howard Lutnik, Secretary of Commerce, before he came into the Trump administration, through his fund, Cantor Fitzgerald, was jumped into bitcoin, big zoime right, two point or two billion dollar credit line,
major stakes in micro strategy, major stakes in tether. Now, with the Trump administration building a bitcoin reserve, maybe this sovereign wealth fund his son now is deploying billions of dollars into bitcoin companies. Trump himself just bought two billion not himself but through his company which he owns control and interest of bought two billion dollars worth of bitcoin a week or two ago. Trump seems to have a way of maybe front running the markets and even telegraphing
what's coming. He said, you might want to buy stocks right right before the tariff deal was announced. I think there could be a case where the government wants bitcoin and gold maybe to run really hot. So we saw elon musk leave dose. We can't cut. It's never gonna work. We have to grow away out of it. It's cop a cent goes on the TV saying we have to grow away out of it. So we need to let inflation run hot. Hopefully GDP goes up faster than the debt.
Maybe stable coins can fuel some of that by maybe getting some money into directly to the market, maybe get more inflation going. We have to grow away out of it. But the problem is if we have a lot of inflation prices going up too fast, people get unhappy. But bitcoin is this liquidity sponge that seems to be not
seems to be. Is much more sensitive to liquidity than other assets, and so potentially if gold and bitcoin could absorb a big piece of that liquidity and go up maybe faster and higher than most people think, it could keep the other assets and prices down a little bit. What do you think about that.
I think that it's again one of those things that can sound right in terms of a first derivative that fails to see the forest for the trees and is not functionally possible, and that this idea that you have to grow your way out of the debt. It's like, first you have to accept that the US credit system has grown faster than even if GDP is a terrible metric to measure economic activity, the debt system has grown grown faster than GDP for the last thirty years. And
you're basically saying, Okay, well that has to reverse. But what if there's a relationship that dictates, given the level of debt that it's not possible. So my point is that there's an amount of debt that exists the world, and there's amount of dollars that exists in the world, and to inchor people into what that general relationship is is no, it's like one hundred and two trillion dollars of dollar denominated.
Debt to three hundred and fifty trillion, oh to.
About six to seven trillion dollars. Oh, and there is a mathematical equation. Now, not all of that one hundred and two trillion dollars of debt that's owed is due in a month or doing two months, or a year or five years. Some's not due for thirty years. But there's a mathematical relationship between one hundred and two trillion dollars of debt to six to seven trillion dollars that actually exists in the system, and that the one hundred and two trillion dollars debt cannot be satisfied by the
six to seven trillion dollars. So the idea of like, you know, if you would relate this to the idea of GDP, like to grow our way out. How do you grow your way out if you didn't increase the number of dollars? How do you grow out of the one?
Well, you don't grow your way out. But could we go from one hundred and ten to GDP to eighty percent? That to GDP change?
So ratio, Well, we'll set aside debt to GDP for a second.
The real.
Of consequence ratio is the amount of debt that exists to the amount of dollars. How do we how do we de leverage that system? There's two ways. There's allow the debt to reduce, or there's create more dollars. There's no other mathematical way right now. The way that debt is reduced is that as debts become due, they get
repaid and more credits not issued. The problem is that because of the extent of the leverage that as soon as that credits is so that credit system that was one hundred and two trillion went to one hundred trillion to ninety eight forces interest rates higher. Okay, and basically the market because because the money that because those are those are those are dollars that are in somebody say
account that are no longer there. People are tight. So like the economy starts to shrink, or first it starts to grow slower. Like basically growth is tied to credit expansion. If the credit expansion starts to slow or then decline, the absolute amount of leverage is so high it starts to feed on itself. One you know, credit contraction begets credit contraction ultimately induces a credit collapse that induces the
printing of more money. And so it's like you can't get yourself out of the mathematical equation.
Like you could.
You could take a piece of debt that's sitting on a on a productive asset, say like an oil and gas well, and say, well, you know, cancel the debt and now it has a new equity holder. It's just that we live in a world that's so leveraged that would create you know, and it ultimately will. There's you know, it's a catch twenty two. There's no way out of it. The way out of it is printing of money or the more accelerated decline of the dollar via hyper inflation
and a credit collapse. So you know, everything else of like GDP growth, it's like one hundred and two trillion dollars of debt six to seven trillion dollars. The Fed sets the number of dollars that exists, and then the market creates credit on top of that. But every time since you know, realistically two thousand and eight nine, the market figured out that something was inherently broken, not everyone knows the source of it, and guaranteed they print more money,
you know, and there's no there's no chasing it. So you know, one thing I last one I want to say is like when people talk about GDP and outgrowing debt, if you lose sight of the real economy and what money is supposed to deliver to the economy more goods and services that and just think in terms of GDP and GDP growth and relationship of you know, how much money,
more money needs to exist to satisfy it. It's like, what is actually broken is the real economy, and the real economy is broken because of the printing of money that it distorts the actual operation of money, the function of money, the price signals of money, and we're not going to get to a more stable world until the
fly is taken out of the ointment. The ability to print money is no longer exists because governments adopt bitcoin and then they can't print money, and they have to be honest in terms of how they finance their operations because what happens as a natural consequence is that one point six trillion ultimately gets financed by the creation of more money.
Right, the inevitability of the system is we are on a debt based monetary system, and because of that, the debt has to always grow, and because of that, we never pay the debt off, and so the inevitability of the system is eventually it ends.
And the real economy gets destroyed because of that.
And the real economy gets destroyed because of that. Now we have a solution with bitcoin that that can allow people, businesses, individuals, businesses, nonprofits, churches and corporations, and even governments start offloading onto another ship to maybe try to save itself from the inevitable collapse. I guess I was just thinking more in terms of shorter term moves. Yeah, the next four years of the Trump administration, we saw in the eighties, Israel was facing,
you know, triple digit debt to GDP ratios. Let high double digit inflation happen for three or four years. Inflated the GDP, which changed the ratio down to seventy five percent.
But the only way to do what they I mean, I I'm not an expert in that, about what I would presume is they printed more money into dealers.
Sure. Yeah, and that's that's my point. So we're going to print a lot more money. Trump wants, as you said earlier, right, he wants Powell or the Fed to drop rates three points, you know, down to one and a half. That's going to print a lot more money. Potentially, we can get there's what three point three trillion dollars of sterilized reserves sitting in the banks that they could issue stable coins against and put that onto the street. That's more money. And so that's a lot of inflation.
But but yeah, it is.
It's a lot of inflation.
It's a lot of inflation. And and again I'm not an expert in the history of of why More Germany, but i I know some of the history. And there is this natural phenomenon that that when they say the price of bitcoin goes up, you think that you're getting richer. When the when the value of your stock market goes up, you think that you're getting richer. But it misses what
wealth is. It misses that the your the day to day delivery of goods and services that you consume, and the and the increasing base of capital capital and not in terms of dollars, but capital in terms of productive capacity delivering real goods and services to the market. Right, That that's wealth. That that's the thing that improves the day to day living of more people. And that when you know, someone like Trump might buy bitcoin and think that bitcoin's helping the dollar, he might just not be
seeing the forest for the trees. And that it might feel good to all of us when the dollar value of our bitcoin goes up. But if more businesses are being destroyed than are being created, we're kind of we're the boiling frog, right you know. And so it's very
easy for people to not realize. And I'm talking specifically about people that are putting forward legislation or regulations or even Trump, you know, buying bitcoin and not seeing the endgame, thinking like, oh, it's a good thing if you know, the stock market moves up. But like, think about the
craziness of the stock market. I think, really, you know, reach all time highs or the sm P at least, and like, you know, it's at an all time high and Trump is sitting there telling the Fed chair that he's going to fire him to reduce interest rates by three percent? Yeah, Like, what good is your stock going up if the actual you know, fabric of the productive capacity of an economy and being destroyed along with it.
Yeah, that is certainly correct. Most people, unfortunately, don't see it. As we started at the beginning is most people don't understand the problem. And so part of the CP lie is to get us confused on prices going up as inflation and that we don't understand why electronics went down and this went up, and we don't understand it's the money supply. I think the average American would much rather see their home value their retirement accounts go up, even
if gas went up. A little bit then to see all of their life savings get cut in half and gas stayed the same. I went down a little bit, right.
The problem is that they have to consume their house every day and they have to consume gas that they have to have both.
Yeah, and you you've mentioned several times like thinking through first order derivatives. So if you think through second, third, fourth, fifth order, where does this go? And then what then then what you see the impending doom that it creates. But most people just unfortunately can't see that. Let me ask one more question then we'll wrap this up. So we've talked about the impending doom, the inevitability of the system. It was never going to work, right, it's a function
of the way the system works. But maybe we're starting to see the world waking up to this reality you mentioned earlier, you posted a chart of the guilt market in the UK is like plunging, and if we look at like the long bond around the world, they're all like basically making new all time highs. And you mentioned
it's like a regime change. Yeah, a regime change where maybe the entire world there starting to wake up and realize that the only way to pay those is printing lots of money and we have to go find something else or what was the regime change?
Yeah, So one way I think about this is that the academic economists which make up the Federal Reserve or central banks all over the world think about pulling levers or pulling you know, basically taking actions expecting certain reactions. So traditionally the world of academic economists that make up central banks think, well, if I increase interest rates, I'll decrease inflation. The person in the real economy realizes that if you arbitrarily increase interest rates, you're not going to
make goods more abundant. You might destroy someone's ability to buy a good, but the real way to make goods
cheaper is greater abundance. I say that to them, bring up the point of well, the consequence of raising interest rates and let's talk about a real example of the Federal Reserve of increasing interest rates aggressively in twenty twenty two, and here we're sitting in twenty twenty five, that the other side of increasing interest rates is the value of the underlying bonds declining in value, and that the past regime was low interest rates manipulated lower for a long
period of time, and it trained this entire class of investor to say, well, the Fed's gonna print money to get these bonds to zero. So even if it doesn't make sense to lend government or money to the government for a long period of time, say ten years, twenty years, or thirty years at this arbitrary low rate, I'm going to do it anyways, because they're going to have to buy these assets to force the interest rates lower. Well by keeping interest rates higher for longer periods of time.
There was massive amount of holders of those bonds that got burned, that lost money doing the quote safe thing, and it's a fool me once. Shape on you, fool me twice, Shame on me. The market has learned that they cannot bet on the fact that the Fed's going to even if the FED is going to have to print money, the time duration matters, and they've lost They've
gotten burned. So it's you're not going to fool me again, and that when the FED starts to lower interest rates by printing money, or the the Bank of England or the European Central Bank, the holders of those assets like, why would I do this again? You know you've already tried to quote reduce inflation by starving the market. I got burned by that. So even if you try to force interest rates lower, I'm not buying your paper. You're going to have to buy your paper. And so that's
the regime change. That the market has gotten burned, and they're not going to be quick to become the boil and frog again to become the bag holder. So that it seems like, and not in terms of a truly dislocated way, but that central banks have lost control that the market is the true set ceenter of interest rate. The what the consequence is that central banks are going to have to be more aggressive in buying their own debt. The only way that they can do that is by
printing more money. Then operation by which central banks buy the debt of the government is creating more supply of the base money, increasing that six seven trillion to eight trillion, nine trillion, ten trillion.
That's then Alden's nothing stops this train.
Yeah, And the truth thing that that dictates that nothing stops to train is the relationship between the debt and the system to the actual number of base dollars or euros or yen. And at the level just below that is that if you have a form of money that is built foundationally with the idea that it can be created by a central issuer at no cost, that the market's going to figure that out and opt in to a different form of money that has a different set of rules, being bitcoin.
All Right, So we've talked about the inevitability system and where this is all going, and one part I didn't really want to I didn't get a chance to hit on is you talked about the volatility of bitcoin and starting to think about how we're allocating to it. So we see the inevitability. You've built that up nicely for us and using maybe some dollars and bitcoin. But I know you have a company's app, right and you're pioneering bitcoin payments, and so I'm just curious what you see
from that regard. You know, I see this as like this evolutionary path. I know you're sort of bringing that forward. What have you seen since you've been working on payments? How has the adoption of that been going?
Well? I think one thing because we talked about this previously, but then connecting it with this idea of why central banks are going to have to create more money and this trade off of short term volatility versus long term destruction of value. Those are those two things coexist with each other and everyone within the system has to solve it. So a lot of people naturally look at bitcoin's volatility and say, well, how could anybody ever accept it as payment?
And it's a very logical dilemma. I'm looking at the surface level, but in reality, it's the same dilemma of buying bitcoin for dollars as accepting it for payment. That if you think about, you know, one of the strategies that people employing bitcoin is dollar cost averaging, buying a small amount every day or every week, and they're taking
a different price. You know, they're buying one hundred dollars and the price of bitcoins x one day and lower the next day, and higher the next day, and getting a little bit more bitcoin one day and less bitcoin. That if somebody has figured out why, yes bitcoin is volatile, but why it stores value over time, that it's money that can't be printed. That and they have a business that they realize the end game and they say, well, if I start selling my goods and services for bitcoin, yes,
the price is different. I'm you know, day to day, and I'm gonna still be pricing goods in or services in some dollar denomination, or if you're in Europe, you're denomination. But it's the same as dollar cost averaging. Because when they turn on the ability to be paid in bitcoin, one hundred percent of their sales do not magically turn up in bitcoin. It might be one percent to two
percent to five percent to ten percent. And say that a business was doing ninety percent of their sales and fiat and ten percent and bitcoin, well, they were going to have to convert that ten percent of fiat into
bitcoin because they wanted to save in bitcoin anyway. And so it it just is a different means to actually acquire the bitcoin, but in a way that de risks the business at the same time that is able to say, well, I can still be paid in dollars and I have my dollar rails, but now I have this new rail that creates redundancy and allows me to market my services, to appeal to people that have bitcoin, and to actually make the transaction more efficient if people want to pay
me in that way. And so we're still early to bitcoin payments. So like the way I think about it is we're early to bitcoin, which means that we're earlier to bitcoin payments because somebody does necessarily need to understand something fundamental about bitcoin, like I do not think, as an example, that somebody that does not know why bitcoin stores value even while being volatile, should endeavor to accept bitcoin payments. It's a it's a reverse order of operation.
It's the wrong it's decidedly the wrong order. But if everyone is on this curve of understanding bitcoin understanding the problem that it solves that the people that were earlier to understand bitcoin are increasingly asking to be paid in bitcoin. So we're seeing growing trends. Is you know, there's a recognition that it's early to the ballgame, but somebody has to be early, and that the amount of adoption that we're seeing feels like, you know, we're you know, an
inflection point. Doesn't mean the majority of the world in a year or two not just accepting bitcoin, but but doing more than fifty percent of their sales, but that there's a critical mass that's more that it's going to materially accelerate Companies like Square turning on the bitcoin payments, in my mind, is a watershed moment for everybody working on bitcoin payments, but also for everyone out there that's providing a payment service that doesn't have bitcoin incorporated, because
it becomes a differentiation. Yeah, for any platform.
And we've seen the I mean the best case was at the Bitcoin conference like two months ago Steak and Shake and Now so they were going to start accepting bitcoin. And I think it was the president maybe of Stake and Shake got up and gave a talk and he gave some numbers out I forget what it was, but they increase like per store visits like fifty percent or
some crazy number. You may know that, but I mean you could see that first move or advantage where all of a sudden people wanted to go spend the bitcoin. And of course, as the wealth of bitcoin continues to grow, people are going to want to spend it.
So yeah, and you know someone might say, well, why would somebody spend bitcoin? You know if it's values going up so much, And it's not really a spending bitcoin, it's a spending for savings because if you were going to spend your dollars, you could have decided not to consume and to buy the bitcoin.
And so.
Yeah, and so you know, for a lot of people that have owned bitcoin for a long time the vast majority of their savings are in bitcoin. Now that that is again a small percentage of the population, but for those people, spending bitcoin is actually easier than converting back into dollars and spending dollars. And if there's more people adopting bitcoin, there's more people holding bitcoin, and there's more
merchants that want to accept it. And it's just this organic process of growth, and there will be accelerations of it and decelerations and accelerations again, but it ultimately needs to exist for bitcoin to work long term, and that when I look out into the future, I think this shift to bitcoin happens a lot faster than people think, and we're seeing the amount of blumes of people being interested in it, and the trend will only accelerate, and
the bitcoin payments might be a small segment of the economy, but it becomes a massive differentiator for platforms that have
it versus those that don't. And what's becoming clear with an example of Stake and Shake is that bitcoin is large enough that you can either service one hundred percent of the of the economy, the fiat economy and the bitcoin ecomy, or you can you can service a subset of it, and it still might be the majority of it, but you risk being at a disadvantage to one of your competitors that does accept it, and that will be
a force that also drives acceleration. That bitcoin sales might be one percent or two percent or five percent, but if you don't have it, a large share of the economy, even if it's still small on a percentage basis, is going to shift somewhere else.
Yeah. Yeah, I love that. I love what you just said there because the reframed my brain. It's not a spending bitcoin. It's a spending question or thought right where it's like I'm gonna spend dollars, but those dollars good about bitcoin. Yeah, so it's really a spending problem and I hadn't really thought about that. That's a good reframe.
Yeah, And there's a there's a thing that Jack Mallers talked about on the podcast that I think is is really right that like, when you hold very few dollars, you think about it as an opportunity cost some bitcoin, and when you hold a lot of dollars, it's like I'll go I'll go spend on, I'll go spend my dollars on anything because because they're loser value, and so it does as a as a consumption model, it shifts your framing of do I really need this? Am I
willing to spend my bitcoin on this? And there's a lot of cases in my life just because you know, I move the vast majority of all my savings are in bitcoin, where it's a no brainer, I need this. I need to get the transmission of my car fixed, I need to spend this vacation money for my for my family. And then there's other things where I'm like, do I really need that?
Yeah?
Do I need to go spend five hundred dollars on that dinner?
Yeah?
Or can I cook steaks at home and enjoy and and enjoy the dinner more? Yeah, not just because I'm saving because yeah, I'm at home with my family rather than you know, so it does. It makes you essentially a better consumer the more bitcoin that you have in less fiat.
Because better capital alligator. Yeah yeah, yeah cool. Let's wrap it up with that, Parker, as anything else that people should be fans in to do. I think you wrote a new piece recently, right, bick one can't be copied, No.
Someone just recirculated that that was that was an older one. But my blog, I you know, I do write less. It's kind of like feeling that I only want to write when I have something that needs to be said. But I do post kind of from time to time on my blog. So gradually, then suddenly dot x y Z my book which is on Safety's web how website the safe house spelled s A I F so the safeouse dot com. They can get my book gradually than suddenly. And again I say, if you know, if you don't,
you know, people shouldn't just jump to bitcoin payments. So they're still exploring why is it? Why are people saying this thing bitcoin's money? Why is it sore value? Read a book? You know, there's there's a number of other great books linn Alden's books on the safe House, Safety's books, But you can get my book there graduate and suddenly, so there would be where I point people. And if you're further down that path you understand why bitcoin store
is value. You are a business owner, you should I would urge people who grock it to realize that accepting bitcoin is just a more efficient way to acquire it, and it eliminates risks for your business at the same time that if you're one of those people, check out our website zappright dot com. If you reach out to us, I'll likely be the person that's helping serve you day to day.
So learn about it you know, inquire about it perfect. Thanks scraping Up