The Exchanges

Q and makes it easier to build factories. I don't know. That's, that's a question, but what you're saying is unless something dramatic changes, we lose our reserve currency status and things are messy and they fall apart. Like what you're saying is like, when do we lose that? When do we lose it? Is that the next, that's the next decade, but we don't know when, or you think sooner?

A So basically what I said in this thing was, you know, 10% months, 70% years, 19% decades, one percent centuries. So, um, you know, like for example, just this default that might be coming up, people think, you know, this debt ceiling vote, right? It's not just like a clean thing, by the way, even if, uh, and by the way, I'm actually, I'm sympathetic, of course, to the idea that we shouldn't keep spending money ad infinitum, right? The issue, of course, right? The problem is, I think, uh, and many of the Republicans might realize this, but it's kind of past the point of no return. That is to say, like, you cannot, even, even the extreme cuts by Republicans or whatever, they're not actually getting to a balanced budget or anything close to that.

AI assessment note: “10% months, 70% years, 19% decades, one percent centuries”

Q get our money? If let's say like I personally own a lot of Bitcoin and a lot of gold and a lot of equities and companies, you know, it's my main thing I do. And I have both, and it's partially, like, I'm worried, even though I'm bullish on Bitcoin in a medium to long-term sense, can't they just, like, totally cut it off for, for years, potentially, for us?

A So, so here is where I think some important things are, are going to happen and have to happen. So, um, fortunately, there are pro-freedom people in the US, um, and there's both red tribe and gray tribe, right, versus blue tribe. And the hour is late, so I have to kind of talk about it in terms of tribes, okay? But, like, The, you know, red tribe and gray tribe like conservatives and tech libertarians versus blue status. It's not exactly that because there's going to be reds who side with the state and blues who don't like RFK and Greenwald, but let's say that's like, 6040 or some, some, some fraction of it. So Basically, I think in red and purple States, um, you're already seeing in Texas, for example, the right to buy, sell, send, receive Bitcoin shall not be infringed. You've got Colorado accepting, uh, crypto for taxes. That's a purple state, New Hampshire doing something similar. And obviously you've got Wyoming and Tennessee with the Dow laws. You've got DeSantis in Florida saying he's against CBDCs. Um, you've got Mississippi in Montana with the Bitcoin mining protector acts. And, uh, so you're having good things happening at the state level. As opposed to the federal level where bad things are happening. And you're also having good things happening outside the U S in states like El Salvador or Dubai. I mean, most countries, most regions in the world are actually like, i…

AI assessment note: “you're having good things happening at the state level. As opposed to the federal level”

Q But couldn't you, couldn't you have like a really cheap out of the money puts that are some of your, that like somehow protect you if you were thinking really creatively about how to hedge?

A So, well, first of all, the guys who are currently at the major banks, there are no, all the creative people have come into crypto or fintech or whatever, right? These are the people, the people who are left at these institutions are not thinking about like creative hedges, maybe with the exception of Goldman. These are rule following people who essentially what happened was fed lied, banks died. In mid-twenty-one, the fed and the treasury assured everybody That they were going to have low rates for a long time. Come on in by billions and billions of dollars at one percent interest rates. And then what happened was even six months later by early 2022, they totally reversed and started hiking rates to the moon. And, you know, an analogy for people who don't know the bond math is it's like, imagine, um, you know, that you've got Best Buy and a bunch of retailers and Apple is telling them, Buy billions of dollars of our iPhone. We're not going to release a better iPhone for a long time. Buy billions and billions and billions of dollars of it. So Best Buy, all these guys, they buy billions of dollars of the iPhone X, okay, based on Apple say so. And then Apple releases, boom, a new iPhone X. That means that all the billions of dollars you just bought of that iPhone X are now, that's worth like 30% less, 20% less, and it's on your books, and Apple just totally screwed you. That is e…

AI assessment note: “the people who are left at these institutions are not thinking about like creative hedges”

Q wouldn't have to mark to market. But at SVB, all of a sudden they're losing all this cash because all of a sudden tech's not raising the same money they were before. And so now they have to sell those bonds and they have to realize the losses, right? And so, so, so, so the tech exposure caused the bond thing to hurt them more. I think it's partially true.

A I, I, I, I want to talk about the hedging thing for a second and I'll give you like a note on this afterwards, but just a few points on that. Basically the seatbelt on the plane versus a plane crash is the right analogy. You can hedge if, if it's like a one percent, you know, if you expect a one percent interest rate and it turns out to be 1.2% or something like that. Fine. You can hedge that. That's when the normal envelope, if you are told and everybody's told that it's going to be at one percent forever. And, and, and if there's hikes are going to be gradual as Powell, November third, 20, 21, he's still saying rate hikes will be gradual. And then suddenly you're put into, boom, it's five percent in like a year. That's just out of envelope. You can't hedge that, right? And nobody can hedge that. And the way to prove that is if this was a, if this was one bank that messed up, okay, that's a bank problem. When it's all the banks that are dying, that's a central bank problem. Right. It's like all your passengers are being thrown around and turned into paste on the walls of the plane. That's the pilot's fault. That's not the passenger's fault for not fasting their seatbelt. Right. And so these, these entities could not, I mean, you're talking about the safest asset in the world. You're talking about a country that markets itself as being financially stable, not wildly veering up …

AI assessment note: “I want to talk about the hedging thing for a second”

Q Should we build a forum? It sounds like we should build a forum and go bring it to him.

A Maybe we should. Okay. And now this, all they have to do is give state chartered banking support so that wires can come in and out. So it's just USD BTC exchange. That's it. And then what does the government do? It takes, let's say, one percent of every transaction. So Florida and Texas start accumulating a Bitcoin reserve, number one. Okay. And then number two is, um, You have like a feature on the exchange where it charges somebody, I don't know, maybe 10 bucks or, or .1% or something like that, like a significant penalty for keeping your Bitcoin on the exchange because they want people to pull it off. Ok, so you want local custody. You do not want it to be custody there. Ok, so that you have the decentralization baked in. What I just described there, you make that open source and that order book can be shared with Coinbase and Binance, but also across all of the Bitcoin states. And I actually think this becomes a very important dividing line and political issue where it's essentially the Bitcoin states where, um, you know, people are allowed to hold Bitcoin in private hands and the dollar states where they're not. Basically meaning you, you literally can't hold it in private hands, like guns being banned in private hands, right? Shall the right to Bitcoin shall not be infringed. Like that's already in Texas GOP platform and other, other states or something where they're goin…

AI assessment note: “Maybe we should. Okay. And now this, all they have to do”

Q You talked about how 90 years ago the government responded to bank runs by doing all sorts of Crazy things. Like, is that what's gonna happen this time? We have a whole nother really crazy cycle ahead. What's, what are they gonna do?

A So, okay, here's my view, if you want my view. Is, um, I think history is running in reverse where. 1950 is like peak centralization and you had one telephone company and two superpowers and three TV stations. And as you go forward and backward in time, you see a lot of the same events, but with the opposite outcome, for example, 1991, the internet frontier opens, 1890, the American frontier closes. Okay. Or you go forward in time, you've got. Which was global coverage, 24 seven. Backward in time, you have the Spanish flu, which was totally censored. Okay. Forward in time, you have, uh, the tech billionaires actually beating the journalists, you know, backwards in time, you have the robber barons getting beaten by the journalists. Like Ida Tarbell got, you know, basically beat Rockefeller, forced the money into foundations and so on. Now I think, you know, the, the tech founders are winning. Right. And so lots of other examples, like for example, today, China's a senior partner in the China-Russia relationship. In the past, Russia was a senior partner. And, uh, say India is the senior partner in the India-UK relationship. And there's like an Indian and Pakistani guy that are partitioning the UK. And the past was the reverse. It was, you know, UK guys partitioning.

AI assessment note: “I think history is running in reverse where. 1950 is like peak centralization”