0:07

You've had a dynamic where money's become

0:09

freer than free. If you

0:11

talk about a Fed just gone nuts, all

0:13

the central banks going

0:15

nuts. So it's all actively safe haven. I

0:18

believe that in a world where

0:20

central bankers are tripping over themselves

0:22

to devalue their currency, Bitcoin wins.

0:24

In the world of fiat currencies,

0:27

Bitcoin is the victor. I

0:29

mean, that's part of the bull case for Bitcoin. If

0:31

you're not paying attention, you probably should

0:33

be. Yeah,

0:36

sitting down with James Lavish, the number

0:38

one trending trader in Substack's finance

0:40

section right now. How's it feel, sir?

0:44

I gotta admit, it feels

0:46

fulfilling. It's satisfying. Yeah. I've

0:49

put a lot of work into that

0:51

newsletter. Well, it's really good.

0:53

I've been a paid subscriber for,

0:55

I think, a couple of months now, not

0:57

too long, but you wrote an article

0:59

on the treasury basis trade. And

1:02

when I hit the, you must pay.

1:04

to read the rest of this. I was like, you know what? I'm

1:07

going to actually pay because I want to understand. It's

1:09

better. Awesome. Awesome. What

1:12

do you think is driving people towards the information that's

1:14

starting now? Well,

1:16

you know, it's funny

1:18

because this morning Scott

1:20

Bassett was, he was quoted as

1:23

saying that we need to make people

1:25

in America financially literate. We're not

1:27

financially literate. We're not taught these things. You

1:29

know, Marty, we're not taught them in grade school,

1:31

not in high school, not in college. even

1:34

a lot of these concepts are not taught when you

1:36

go get an MBA, even a finance

1:38

MBA, not marketing. And

1:41

there's a need for

1:43

just education, general, big macro

1:45

picture education, how all

1:47

these things work, the Fed,

1:49

the Treasury bonds, bond

1:51

yields, and then of

1:53

course, the new asset

1:55

classes of Bitcoin and how

1:57

it all kind of works

1:59

together. the real

2:01

need is for it to be simple. And

2:04

so I started the newsletter

2:06

a little over, I guess it's

2:08

almost three years ago, because

2:10

I'm on what's got to be

2:12

over three years now, because

2:14

I'm on I'm an issue over

2:16

162, 163. And so once

2:18

a week, you get there. So

2:20

but I started it because

2:22

I noticed that there's just everybody

2:24

talks and acronyms

2:27

and high, real, real,

2:29

like high concept, confusing

2:31

topics. And I just

2:33

constantly had people ask me, what does this

2:35

mean? What does this mean? What does

2:37

it mean? And so I just decided to

2:39

start the newsletter that simplified it for

2:41

them. And so the newsletter is supposed to

2:44

be educational, really big concepts and the

2:46

stuff that's really important about these, you know,

2:48

it's not it's not the it's not

2:50

the simple stuff, but it's simplified. You

2:53

know, so that was the point.

2:55

And it and it's been very

2:57

well received. People really like it.

2:59

So correct me if I'm wrong.

3:01

But if I recall correctly, one

3:03

of the things that led to newsletter,

3:05

you did a long thread on Twitter was

3:08

Twitter at the time on Treasury auctions and

3:10

how they worked. Yeah.

3:12

Is that the inspiration for the newsletter?

3:14

There was kind of one of

3:16

them, you know, quite honestly, what it

3:18

would really happened is I was

3:20

toying around the idea of doing something

3:22

crypto, something something

3:24

financial. And so he'll

3:26

bloom of all people put out this

3:28

request. And he said, hey, is

3:31

there anybody out there who wants to team

3:33

up and do a financial newsletter? There's a

3:35

great need for a simplified financial newsletter. And

3:38

so I reached out to him. He

3:40

didn't respond. I only had like 10 ,000

3:42

followers at the time. So I wasn't

3:44

a big enough account to, you know, to

3:46

be a teammate of his, I guess.

3:48

So and about, you know, two or three

3:51

weeks later, I said, you know, I'll

3:53

do it. I can write,

3:55

I've written many letters over the

3:57

years for our fund and I

3:59

simplify stuff and I'm pretty good

4:01

at simplifying topics for people. I

4:04

like to make

4:07

people smarter. It's

4:11

really fun to explain to somebody when they

4:13

say, well, how did you start on

4:15

Wall Street? I tell them about arbitrage and they're

4:17

like, what is that? And then at

4:19

the end of the four or five

4:21

minutes, they're like, God, I think I

4:23

could actually understand it. I get it.

4:25

And that's fun. I like that. So

4:27

it empowers people because then they can

4:29

turn around and use that, not arbitrage,

4:31

but they can use these concepts in

4:33

managing their own portfolio, their own wealth

4:35

and understanding what's happening around them. And

4:37

that's really the most important part. And

4:40

it's what you and I get to

4:42

every single day, which is why is Bitcoin

4:44

so important today? Why is it

4:46

so important for everybody to understand

4:48

this new asset class? And

4:51

that really I like to lead people along

4:54

the path and have them make their own

4:56

determination. Yeah, it's a no brainer, of course.

4:58

This is what I need because of the

5:00

evidence that's out there. So. Well,

5:02

on that note, I think for

5:05

me personally, I actually sent it a

5:07

tweet out a few hours ago

5:09

before hopping in the studio that it

5:11

has never been clear to me

5:13

that the world needs a neutral reserve

5:15

asset for the digital age than

5:17

it is today. If you

5:19

hold Bitcoin. tying in everything

5:22

here. Yeah. You are basically

5:24

arbitraging the information asymmetry that

5:26

exists because I saw that.

5:29

Actually, I saw that. That's a great and that's a

5:31

great quote, actually. I love

5:33

that. So actually, I want to

5:35

actually read the tweet because there's

5:37

actually is a great tweet and

5:39

and I and it resonates because

5:41

it's exactly what we're talking about.

5:44

There's an asymmetry. There's an there's

5:46

an arbitrage of understanding, right? Yeah.

5:51

And again, I think that's something, me

5:54

personally, many people in Bitcoin,

5:56

they understand this, but

5:58

they don't understand that most of

6:00

the world doesn't. And I think to

6:02

what you're just saying too, I

6:04

think why the information is so important

6:07

right now. I paid a subscriber,

6:09

but a big fan, following your threads.

6:11

But you've wrote about something that

6:13

I really don't understand, which was this

6:15

basis trade. I

6:17

paid to understand that you read about it

6:19

very clearly, and I understood it way better

6:21

after reading it. But I think, as

6:24

you mentioned, Scott Bassin out there, we need

6:26

better information. I think people are looking at the

6:28

world, looking at what Trump's doing with

6:30

tariffs, looking at equities markets right

6:32

now, looking at bond yields and saying something's

6:34

wrong here. Where

6:36

is the signal? And I personally

6:38

think Bitcoin's the signal, but there

6:40

is this information asymmetry that people

6:42

don't realize. And I think what

6:44

excites us is people We're

6:46

in Bitcoin for many reasons, one

6:48

of which is if that information arbitrage

6:51

sort of that gap closes, that

6:53

means that Bitcoin's going to go up

6:55

significantly. And so I think it's

6:57

trying to tie all those things together

6:59

to basically highlight to people. There

7:02

are some alarm bells over here. You should be worried

7:04

about it. Here's why Bitcoin's a solution. Yeah.

7:06

I mean, today, Bitcoin

7:08

diverged the divergence from

7:10

Bitcoin and risk on assets

7:12

like the NASDAQ and

7:14

regular stocks. at the

7:17

same time that bonds,

7:19

bond yields are going

7:21

down, you know, actually,

7:24

I'm sorry, the bond yields are going

7:26

up. So bonds are going down. So you

7:28

would think that the flight of safety

7:31

would be to bonds. And for people who

7:33

are new to this whole game, when

7:35

you buy bonds, you know, you're buying them

7:37

at above or below. par, right? And

7:39

if you buy it below par, that means

7:41

you're buying it at a discount, which

7:43

means that the interest rate you're effectively paid

7:45

because you're paying, you're getting paid coupons

7:47

on these things, those coupons are set. So

7:49

if you paid less for the

7:51

bond, then that coupon becomes just a

7:53

larger percentage. And so that's

7:55

why yields go up when bonds

7:57

go down. And that's kind of

7:59

the, that's the way it works,

8:01

right? So what you would think

8:03

stocks going down will then bond

8:06

yields would probably be going down

8:08

too, because bonds are going up,

8:10

because that money would be flowing

8:12

into safety assets, like the risk

8:14

-free asset, which is the US

8:16

Treasury. Not really risk -free. We know

8:18

that. We talk about that all the time. But

8:20

that's the quote on Wall Street. Risk

8:22

-free is the US Treasury. It's not.

8:24

It's not risk -free. We learned that

8:26

the hard way during the pandemic, when

8:29

we way overprinted money,

8:31

not we, the central bank,

8:34

the Fed, way overprinted

8:36

money, caused massive

8:38

inflation from the expansion of the money

8:40

supply, massive asset

8:42

inflation, massive inflation

8:44

across financial assets. And

8:46

because we're so

8:48

financialized as a nation,

8:51

everything went up in price along with supply

8:53

issues and supply chain issues and bottlenecks

8:55

and all that. But that was kind of

8:57

a goat that should have gone through

8:59

the boa and gotten out the other side.

9:01

It never did. And we had these

9:04

and like this crazy inflation for years and

9:06

years because of the expansion of the

9:08

money supply. Let's just call it what it

9:10

is. So you

9:12

saw bond yields. What

9:15

happened was bond yields spiked

9:17

because Fed funds went up

9:19

and bond yields went up

9:22

in order to compensate investors

9:24

for that high inflation. So

9:26

if you're a bond trader,

9:28

you're not going to buy

9:30

a 10 -year treasury at

9:32

2 % if inflation is at

9:34

5%. You want to be

9:36

compensated for that. And

9:38

so when that interest rate

9:40

goes up, the bond price goes

9:42

down, and all these banks,

9:44

all these community banks that were

9:47

holding these treasuries got absolutely

9:49

annihilated. And that's ultimately what caused

9:51

the collapse of Silicon Valley,

9:53

Silicon Valley Bank two years ago.

9:56

And that's kind of, if people

9:58

remember back, well, That's not

10:00

risk -free to me. That sounds risky

10:02

to me. It's risk -free

10:04

in the sense that, yeah,

10:06

if you hold it to

10:08

maturity, it's a

10:10

non -zero probability that the US

10:12

will default, hard default on that.

10:14

But it's about as close to

10:16

zero as you can think of

10:19

because the US Treasury has the

10:21

ability to team up with the

10:23

Fed. and print money to buy

10:25

its own bonds. So of course,

10:27

they're not going to default. They're

10:29

just going to just print money and

10:31

make sure that these things are always trading.

10:34

And so it's called the

10:36

soft default. And that soft

10:38

default is inflation through expansion

10:41

of the money supply, which

10:43

is debasing the US currency

10:45

every single day in order

10:47

to keep this whole debt

10:49

charade going. And that's kind

10:51

of the point, right? Listen,

10:54

Briggs, I know you're tired of me talking about Fold,

10:57

but I'm gonna beat the drum. I'm gonna beat

10:59

the dead horse. If you're a Bitcoin or

11:01

living in the United States and you're not using

11:03

Fold, I'm just gonna ask one question. What

11:06

are you doing? You're leaving sats on

11:08

the table. They've got gift cards. They've got

11:10

their debit card. You can use your

11:12

credit card. Just connect your credit card to

11:14

the Fold app. Use the Fold app

11:16

to pay off your credit card and you're

11:18

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11:20

Bitcoin as well. They even teamed up with

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11:24

membership at no cost. Don't leave sats on

11:26

the table. Go sign up for Fold

11:28

today. Go to tftc .io slash fold. There's

11:32

nothing to lose except sats that you

11:34

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a beautiful thing. And I think

12:30

that's the question of my mind right

12:32

now. I've jumped the gun quite

12:34

a few times over the last 10

12:36

years trying to say something like

12:38

this. But this is one day of

12:40

price action, but yields going up,

12:43

stocks going down, Bitcoin going up, divergence.

12:46

People have been throwing the decoupling meme. out

12:48

there, not quite confident enough to do it.

12:50

But I think for the longest time, like

12:53

you said, treasuries have been that flight to

12:55

safety. You know that the Fed

12:57

is going to monetize the debt if the

12:59

government needs them to happen historically. Many

13:01

people rightly or wrongly assume

13:04

that it will continue to happen.

13:06

But I think is there

13:08

something special about the environment we

13:10

find ourselves in today, particularly

13:12

with Trump posturing as he is

13:15

towards Jerome Powell that is

13:17

beginning to stoke

13:19

uncertainty in bond

13:21

investors and the

13:23

Fed's willingness, ability

13:25

to do that moving forward.

13:27

And that's why we're seeing

13:29

this dislocation of markets that

13:31

one day could be anomalous.

13:33

But if it continues, is

13:36

that what that's signaling? Well,

13:38

there could be cross signals here.

13:40

There are a bunch of signals. Right.

13:42

So let's just let's back it

13:44

up and talk about like big picture

13:46

what's been happening. Well, Trump has

13:48

threatened to enact these to enforce these

13:50

tariffs on all these countries and

13:52

big tariffs. And so that has caused

13:54

quite a bit of angst for

13:56

a number of reasons. There's

13:59

angst with people who import.

14:01

materials and goods to

14:03

sell here in the United

14:05

States. So you're getting

14:07

some misinformation of the actual

14:10

demand, the underlying demand

14:12

of the economy, because you've

14:14

got manufacturers and suppliers

14:16

who are importing goods in

14:18

order to get ahead

14:20

of that tariff. The

14:23

underlying economy has not been doing

14:25

that great. There's a

14:27

lot of negative indicators

14:29

out there. And

14:31

so we're just watching these

14:34

things and seeing if they

14:36

continue to snowball, especially

14:38

things like the unemployment rate now that

14:40

you've got government jobs coming out and

14:42

all of that. So you've

14:44

got the economy is

14:46

clearly softening. You've got

14:48

cross -current of information of

14:50

what are the actual trade

14:53

numbers, what are the actual purchasing

14:56

and index and the

14:59

PPI and all that. What

15:01

is PMI? What are

15:03

all these telling us? And

15:06

then at the same time,

15:08

you've got investors who are

15:10

worried that the earnings of

15:12

companies are going to get

15:15

negatively impacted. At the

15:17

same time, you've got bond

15:19

investors worried that, well, if

15:21

we're going to hammer China

15:23

with these huge tariffs, they're

15:26

going to turn around and they're

15:28

going to shore up their own currency

15:30

and they're going to turn around

15:32

and the way they do that is

15:34

by selling treasuries that they have.

15:36

So if they sell US treasuries, what

15:38

does that make the treasury do?

15:40

It goes down in price and yields

15:42

go up. Something

15:44

we may be seeing here, right? And

15:47

so, or it could be

15:49

traders getting ahead of that, worried

15:51

about that. scenario where China starts

15:53

selling bonds and not just China,

15:55

other countries too, selling US Treasuries

15:57

in order to get dollars to

15:59

sell those dollars and buy their

16:01

own currencies. Those are all,

16:03

those are possibilities. You're seeing

16:05

the dollar go down in value

16:07

against other currencies across the board

16:09

here. The DXY is down and

16:12

that suggests some of this is

16:14

happening or just the confidence in

16:16

the US dollar, the US Treasuries

16:18

is waning. That's all happening.

16:20

And then you layer on top

16:22

of it, Marty, that basis

16:24

trade I was talking about. And

16:26

that's kind of like the powder

16:28

keg that is behind the scenes

16:30

that the very, very intelligent investors

16:33

know about. They understand it

16:35

and they're watching carefully. They're

16:37

watching credit spreads. They're watching the

16:39

spreads of the bonds to

16:41

the futures, the bond futures, and

16:43

they're gauging whether or not

16:46

this trade is going down the

16:48

path of blowing up in

16:50

hedge funds' faces. And

16:52

there's a reason that this matters. And

16:55

we have a history of

16:57

this. So you are younger

16:59

than me. You

17:01

likely weren't paying much attention to

17:03

this back in 1998. I

17:08

was a trader at a hedge fund, and we

17:10

were doing all kinds of arbitrage strategies, convertible

17:12

arbitrage, merger arbitrage,

17:15

risk arbitrage, pairs trading

17:17

between different companies. We had books and

17:19

books and books, billions

17:21

of dollars to work in these

17:23

arbitrage trades. There's

17:27

a hedge fund, large hedge fund, called

17:29

Long Term Capital Management. People have heard

17:31

me talk about this before. In 1998,

17:33

Long Term Capital Management was doing very

17:36

similar things that we were doing, plus other

17:38

things, which included something along the lines of

17:40

the basis trade that we talk about today,

17:43

where they're arbitraging bonds that

17:45

are similar, and

17:47

they're just pulling out a few basis

17:49

points from these trades. But

17:52

in order to make it really profitable, they

17:54

had to lever it up. And so they

17:56

levered their book up. We

17:58

estimate it was

18:00

$100 ,000. or more,

18:02

100 times leverage or more. They

18:05

had $1 billion of capital,

18:07

but they had over $100 billion

18:09

of trades in swaps that

18:11

we estimate. Go

18:14

back to 1998 when all

18:16

this is going on. These are

18:19

geniuses that came up with

18:21

the Black Shoals model, by the

18:23

way, the pricing model for

18:25

options. They weren't

18:27

very good portfolio

18:29

managers. took on way

18:31

too much risk. And so the problem

18:33

with this is it became binary. And

18:35

what I mean by that is

18:38

that once the Russian ruble was

18:40

devalued and these bond spreads kind

18:42

of blew out just kind of

18:44

overnight, all these trades,

18:47

they went against long -term capital

18:49

management so quickly and so largely

18:51

that the entire street heard

18:53

about it and started unwinding all

18:55

their similar trades that they

18:57

had on that were similar to

19:00

these arbitrage trades that they

19:02

had on. Even stuff that had

19:04

nothing to do with the

19:06

basis trade, had nothing to do

19:08

with currencies. It was

19:10

just like merger arbitrage. So

19:12

we had a billion dollars

19:14

of merger arbitrage positions, and

19:17

these positions blew

19:19

out huge. When

19:21

you have a spread in a

19:23

merger arbitrage trade, it stays very

19:25

tight. From the time it's announced

19:27

all the way to the close, that

19:30

spread gets smaller smaller smaller until it

19:32

closes and then it goes away. You

19:34

deliver one security to another, you take

19:36

that arbitrage and walk away. Because

19:39

it doesn't matter what the market's doing. The

19:41

only thing that matters is whether or not that

19:43

merge or closes. Well, all those trades were

19:45

blowing out not because of anything that was going

19:48

on with the companies and whether or not

19:50

they were going to all merge or not. It

19:52

had to do with liquidity. And everybody

19:54

knew that long -term capital management was unwinding

19:56

these massive trades. They're like, oh, get out

19:58

of the way. I'm going to let this

20:00

thing go. Let them unwind their trades at

20:02

a loss. And then we'll come in and

20:04

scoop them up, which is exactly what we

20:07

did. We came in and scooped them up.

20:09

We made these huge spreads that we should

20:11

never have been able to make. We had

20:13

an extremely good year in the merger arbitrage

20:15

book because long -term capital management blew up. Going

20:17

back to the basis trade, what

20:20

happened was these guys had

20:22

those interest rate arbitrage trades

20:24

on, and they started going

20:26

against them in a big

20:28

way. Their counterparty

20:30

risk in this whole

20:32

trade was their main... main

20:36

prime broker, which is your main broker

20:38

for a hedge fund, Goldman

20:40

Sachs was on the hook for a lot

20:42

of this stuff. It

20:46

spread around the street that they were

20:48

going to blow up, that Goldman Sachs

20:50

is going to go under. If Goldman

20:52

Sachs goes under, they're going to take

20:54

down the whole street with them because

20:56

the counterparty risk then it would It's

20:59

called contagion, where it goes from one bank to another

21:01

bank to another bank. And all of a sudden, you have

21:03

all these banks that just fail. And

21:05

so the Fed, the New York Fed

21:07

was in panic. They orchestrated a bailout

21:09

for Goldman Sachs overnight. So

21:12

that sets the stage for where we are

21:14

today. It's been done before.

21:17

The Fed helped orchestrate the trade. They

21:19

didn't print any money. They didn't do anything,

21:21

but they helped orchestrate it. They

21:23

led that bailout, basically. by

21:26

strong -arming other banks into helping

21:28

Goldman. Well, now

21:30

you fast forward to

21:32

today and you've got

21:34

reportedly $1 trillion, a

21:37

trillion dollars of these basis

21:39

trades on, 10 times

21:41

the size of the long

21:43

-term capital management books. But

21:46

the difference is it's spread across all

21:48

these hedge funds. It's not just one hedge

21:50

fund. And it's spread across all these

21:52

banks. It's not just one bank. And A

21:55

lot of these positions are, they're

21:57

levered 20, 50, 100 times the

21:59

one in order to make that

22:01

one or two basis points into

22:03

something that's actually attractive, right?

22:05

Those few basis points, whatever it may be.

22:09

And they're doing it with very little capital. And

22:11

so here's the significant part about it,

22:13

Marty, is that we're watching all this

22:15

and I don't know if these trades are

22:18

being unwound. But I can tell you

22:20

that their hedge funds are anticipating problems

22:22

of other hedge funds with them. And

22:24

so they're getting out of some of

22:26

these trades and that's why you're seeing some

22:28

of the movement in the yields, I

22:30

believe. And so, but

22:33

what's happening is, and

22:35

what's so important about this

22:37

is that this is

22:39

to get an idea of

22:41

how impactful and how

22:43

explosive this trade is. They

22:46

had the Brookings Institution, for those

22:48

of you who don't know what

22:50

that is, is the think tank

22:53

out of DC. And

22:55

it's basically a tacit research

22:57

arm of the Fed. I

22:59

mean, it doesn't, that's

23:01

a very strong statement. But what

23:03

I mean by that is that there

23:05

are a lot of former Fed

23:07

officials that work at Brookings Institution. And

23:09

they research and float ideas and

23:11

policy there to kind of see how

23:13

they're received. you know, and what

23:15

people think about it and what the

23:17

Fed thinks about it. And

23:20

so they, for instance, they

23:22

did, and I've said this

23:24

before, the

23:26

SOM rule, the Claudia SOM, worked at

23:28

Brookings Institution. She was a lower Fed

23:30

official. She worked at Brookings Institution. She

23:32

came up with something called the SOM

23:34

rule, which is that unemployment rate rule

23:36

that if you to keep

23:38

the numbers very simple for everybody. Basically,

23:41

if the unemployment rate goes up by

23:43

more than half a percent from the bottom

23:45

in a cycle, that means we're in

23:47

a recession. We've gotten very close to that.

23:50

But that's a rule that the

23:52

Fed looks at now. That's something

23:54

they use as a gauge to

23:56

say, okay, we're in a recession.

23:58

We've got a lower rates. They

24:00

haven't seen it yet. It's very

24:02

close. But that came out of

24:04

the Brookings Institution. go

24:07

flash forward to today, you've

24:09

got this basis trade. And

24:12

the Brookings Institution put out a

24:14

paper, a research paper, and they

24:16

said that this trade is so

24:18

big and so it is so

24:20

dangerous that the Fed has to

24:22

come up with some way to

24:24

ensure that we have liquidity in

24:27

our bond market if this thing

24:29

blows up. Because what happens if

24:31

a trillion dollars of bonds comes

24:33

to the market, from this

24:35

basis trade. Well, it doesn't stop there.

24:38

It causes margin calls on everybody

24:40

that is close to a

24:42

margin call, which will cause margin

24:44

calls on more people, so

24:46

more investors. So if

24:48

you remember back to the UK

24:50

guilt crisis a couple of

24:52

years ago, what happened

24:54

there was something somewhat similar where

24:57

pension funds in the UK

24:59

where they were leveraging up their

25:01

bond portfolio in order to

25:03

get better returns because the yields

25:05

on bonds were so low

25:07

because all these central banks were

25:09

running very low interest rates

25:11

for so long for over a

25:13

decade that you couldn't. 2 %

25:15

was not getting you what

25:17

you needed for your liabilities in

25:20

the future for these pension

25:22

funds because they know what their

25:24

obligations are and they weren't

25:26

keeping up with those obligations. So

25:28

what did they do? They

25:30

levered those trades up. What happened?

25:32

Well, you had a finance

25:34

minister come in and announce all these

25:36

tax cuts in the UK without a

25:38

way to pay for them. And

25:41

the bond market said, oh my god, that means they're just

25:43

going to print money. These bonds are

25:45

worthless. We need a

25:47

higher interest rate to be

25:49

compensated for that. for

25:51

that higher

25:53

inflation rate.

25:56

So I get a real rate of return.

25:58

So we need to step back and let

26:00

these bonds go to a price that actually

26:02

makes sense. And what happened was the pension

26:04

funds blew up because they had all these

26:06

levered trades on, right? So then

26:08

the Bank of England comes in because the

26:10

pension funds basically just, they called up

26:12

the Bank of England they said, we're like

26:14

all gonna fail this afternoon unless you

26:17

bail us out. And so what did they

26:19

do? They swept in, they came in,

26:21

they printed money, they bought bonds, they bought

26:23

the UK guilt and they saved the

26:25

market. Well, why does all this matter? Well,

26:28

it matters because what happened

26:30

was one pension fund started selling,

26:32

then another one had to

26:34

sell, then another one had to

26:36

sell because it kept going

26:38

to prices that were tripping these

26:40

margin calls for everybody, even

26:42

in these treasuries, the UK guilt.

26:44

This is crazy, right? Well,

26:46

the same thing can happen here.

26:48

And that's what the Brookings

26:51

Institution and the Fed is concerned

26:53

about. Oh, my God, what

26:55

happens if we start tripping margin calls

26:57

on treasuries? The pristine

26:59

asset of the world. This

27:01

is literally the base asset

27:03

of the world. It's the

27:05

benchmark bond of the entire

27:08

world, the 10 -year treasury.

27:10

What happens if that starts

27:12

selling off rapidly, violently? Well,

27:14

then you're going to start

27:16

tripping these margin calls, and

27:18

it's going to snowball. First,

27:23

you get disorderly bond markets,

27:25

then you get disruption, then

27:27

you have a catastrophic sell

27:30

-off, and they can't have that happen. We

27:32

can't have that happen because

27:34

we got $36 .5 trillion

27:36

of Treasuries. that are out

27:38

there, that is on our

27:40

debt, and we are running

27:42

multiple multi -trillion dollar deficits, regardless

27:44

of what Doge is doing.

27:47

We're running deficits that we have to

27:49

keep borrowing. The bond

27:51

market must go on. The US Treasury

27:53

market must be liquid. It must

27:55

be stable. And if it becomes unstable

27:57

because of something like this, then

28:00

it's a big problem. So here's the

28:02

punchline. The Brookings

28:04

Institution came out with a solution. Well,

28:06

we've got it. We've got the solution. What we're

28:08

going to do is instead of printing money this time,

28:11

the Fed will just take the whole trade off

28:13

of the hedge fund's books. They'll take the

28:15

long side and the short side. That way, the

28:17

Fed is hedged. They don't have

28:19

any risk. And we save

28:21

the hedge funds. You

28:23

know, hallelujah. The bond market's liquid.

28:26

Everybody just go home. Thank you

28:28

for playing. And we'll just keep

28:30

going on our merry way. Absolutely

28:32

utterly fucking maniacal. Like literally.

28:34

It's insane. The thought of the

28:36

Fed becoming a hedge fund. It's

28:40

nuts. But that's a paper

28:42

they put out for everybody to read.

28:44

And they've floated this as an idea for

28:46

policy. And if you have

28:48

any question about how dangerous this

28:50

trade is, that should tell you

28:52

everything you want to know and

28:54

need to know. Yeah. So

28:57

is that a roundabout way for them to introduce

28:59

yield curve control without calling it that? That's

29:02

a direct. Like, well,

29:04

we're just going to come in and

29:06

just take this. So stabilize the

29:08

yields exactly where they are. Exactly. Our

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29:39

so this was happening, I

29:41

think April 9th. It's April

29:43

21st today. So 12 days

29:45

ago, it was Tuesday night.

29:47

And people, it was right after, it was a

29:49

week after liberation day. And everybody, like

29:52

at market close, yields were going out and

29:54

people were like, oh, China's dumping, they're pissed at

29:56

us for terrorists. But as the night got

29:58

longer and we got later into the day and

30:00

towards the, uh, towards the 10th and the

30:02

30 year and the 10 year were screaming, people

30:04

were like, it doesn't seem like This

30:07

would be China dumping. This is not

30:09

how they would sell they were doing it

30:11

and zero hedge wrote their piece that

30:13

by two where they highlighted two years ago

30:15

the Citadel point 72 millennium all these

30:18

multi -strat hedge funds that are doing the

30:20

space is trade yeah at the time two

30:22

years ago were 20x leverage and You

30:24

just play that forwards it today and you

30:26

know people were saying a hundred x

30:28

leverage now I guess the question is like

30:30

is there any feasible

30:33

way to unwind that

30:35

trade outside of overt intervention

30:37

from the Fed. Not

30:39

rapidly. Not quickly.

30:43

It could be catastrophic

30:45

to the market. I

30:48

would imagine some of these,

30:50

some of them are unwinding some

30:52

of it, but I'd also

30:54

imagine Marty that you've got hedge

30:56

funds who are stepping into

30:58

it. They're looking

31:00

for opportunity. If they see an opportunity, they think

31:03

that they can stomach, they're going to step into

31:05

it. So it might just be moving from book

31:07

to book. We don't know. It's

31:09

hard to tell. And so much of it is on swap.

31:11

You just, it's hard to tell. Yeah.

31:13

And that's, I mean, considering the,

31:15

the nature of how large this

31:17

trade is and how entangled it

31:19

was and the knock on effects

31:21

it could have on broader markets,

31:23

it doesn't mean like, because that's

31:26

another sort of narrative that's been

31:28

Floated out there and it seems

31:30

to be confirmed by the

31:32

administration is that you know the

31:34

Our economy isn't let them

31:36

eat flat screens. It's got percent

31:39

and Trump saying What's good

31:41

for the Mac 7 isn't necessarily

31:43

good for MAGA Americans and

31:45

like is there a Sense within

31:47

the administration that they they

31:49

don't care about these hedge funds

31:51

blowing up on this trade.

31:53

Yeah, but here's the thing though

31:56

We're so financialized, like I was

31:58

saying, as a country, as

32:01

an economy. If

32:03

the stock market blows up, I mean,

32:05

really blows up, we're headed for a

32:07

deep recession. And the only way we

32:09

can pull out of that is by printing more money. So

32:12

what happens to bond yields? Bond

32:15

yields will go up in

32:17

that scenario because the bond

32:20

traders, the vigilantes, are going

32:22

to want to be compensated

32:24

for the clear And obvious

32:26

inflation is going to come

32:28

from another expansion of the

32:30

money supply. And

32:32

so that's the issue

32:35

here. So do

32:37

bond yields go down to

32:39

2 % because we just grind

32:41

into a slowly grind into

32:43

a recession here? Or

32:45

do they spike up to 5%,

32:47

6 % because we have blown

32:49

up the economy and the

32:52

Fed's turning around and printing money?

32:54

to oblivion to save it. It's

32:57

a good question. And that's why you're seeing

32:59

a lot of uncertainty in the market. People

33:01

don't know where we are on

33:03

that spectrum. And

33:06

some of it has to

33:08

do with headlines and a

33:10

tweet from Trump. I mean,

33:12

he could just tweet something that just

33:14

spooks the market to the point where

33:16

you have the NASDAQ sell off %

33:18

or 4%. Oh, well, look at that.

33:20

It's down 2 .5 % today. It

33:22

was down over 3 % earlier, I

33:24

believe. But

33:26

here's the telling thing. The telling

33:28

thing is that bonds are not

33:30

acting like they should as a

33:32

flight to safety. That's number one.

33:35

And number two, gold is

33:38

absolutely ripping higher,

33:40

rocketing higher because it

33:42

is a flight

33:44

to safety. And

33:46

investors are looking for a

33:48

place to put money

33:50

to just... it. And

33:52

gold has been a strong store of

33:55

value for centuries. And

33:57

now we get to the question

33:59

about Bitcoin. And Bitcoin

34:01

diverging today is very interesting. It's

34:04

interesting because is it following

34:06

gold? Are people just realizing,

34:08

like you said, that arbitrage,

34:10

is that closing, that understanding

34:12

arbitrage? Is it just because

34:14

the dollar's so weak, which means

34:16

that the dollar Bitcoin price goes up?

34:19

That's part of it. You

34:22

know, we were talking this morning

34:24

on a different show on the macro

34:26

Monday show and Dave Weisberg brought

34:28

up a great point that over the

34:30

weekend, Charles Schwab talked about having

34:32

a platform to trade crypto. And,

34:35

you know, I've been talking

34:37

about this for a number

34:39

of months now that SAB

34:41

121, the repeal, the full

34:43

repeal of that through issuing

34:45

SAB 122 for those who

34:47

do not know what I'm

34:50

talking about. This is where

34:52

The Fed a couple years

34:54

ago did an end zone

34:56

run around legislation and they

34:58

put out this bulletin that

35:00

basically said that banks had

35:02

to hold Bitcoin as a

35:04

liability on their balance sheet,

35:06

even if it was just

35:08

in the customer's account. So

35:11

it basically prevented

35:13

banks from dealing at

35:16

all in crypto. And

35:19

this was kind of an aspect of

35:21

chokepoint 2 .0, where they just didn't want

35:23

the banks to be involved. And

35:25

you can kind of

35:27

speculate who would be driving

35:29

that. But

35:31

up in DC,

35:34

it's clear that Elizabeth Warren and

35:36

her anti -crypto army were a very

35:38

big part of all this. Because

35:41

when the Fed did

35:43

that, and then A

35:46

number of months later, almost a year later,

35:48

I think, Congress

35:50

met and both Congress

35:52

and the Senate passed

35:54

legislation to repeal SAB

35:56

121, which is that

35:58

bulletin. And then it

36:00

got to Biden's desk and he

36:02

vetoed the repeal. And

36:05

that was clearly,

36:07

clearly he was pushed

36:09

and advised by

36:11

that psycho. The

36:13

psychopath from from Massachusetts Elizabeth

36:15

Warren who has absolutely she has

36:17

done nothing good for this

36:19

country clearly just a lot of

36:21

talk and a lot of

36:23

you know money going into her

36:26

pockets insane I don't know

36:28

how Massachusetts keeps voting for that

36:30

person, but in any case

36:32

He was advised by by her

36:34

team and other teams to

36:36

repeal it to veto that repeal

36:38

Finally we get Trump come

36:40

in Trump comes into the office

36:43

Gensler resigns, a new Bolton

36:45

comes out, SAP 122 that

36:47

repeals SAP 121 and says

36:49

that banks can own and

36:52

hold crypto and Bitcoin for

36:54

customers without having to put

36:56

it as a liability on

36:58

the balance sheet. And so

37:00

now that's a very, very,

37:02

very, very, very big deal.

37:04

It's a really big deal

37:06

because you will have banks

37:08

like Chase and Citigroup and

37:10

Wells Fargo start dabbling

37:13

into this space, especially

37:15

in Bitcoin, then I

37:17

expect other ones. I expect Ethereum

37:19

and Solana and other ones, but they're

37:21

going to start dabbling in these

37:23

and allowing customers to buy and hold

37:25

them right there at the bank,

37:27

which is new. This is huge because

37:29

you don't need a brokerage account. You

37:32

can do it right there. You can

37:34

do it right to your bank there,

37:36

and they'll hold it for you. This

37:38

is going to be a big deal,

37:40

and I think it's underappreciated. just how

37:42

important it is that banks will now

37:44

get into this game. And

37:47

this is part of

37:49

the first they fight

37:51

you. And at the end,

37:53

they join you. And here they are.

37:56

They're right on the cusp of that. And

37:58

that's a big deal. So that could

38:00

be part of this too. But

38:02

I think it's a combination

38:04

of things, Marty. First of

38:06

all, I think unless we

38:08

get another Meltdown

38:11

of the market where everything correlates to

38:13

one and that's just that that's just

38:15

reality it you know The only thing

38:17

that may not go down in that

38:19

case is gold But I think that

38:21

even gold would because when everything correlates

38:23

to one it means that You're getting

38:25

margin calls everywhere and you sell what

38:27

you can not what you not what

38:29

you want to you know and so

38:31

Everything ends up going down because you

38:33

have to meet you have to get

38:35

cash to meet margin calls because everybody's

38:37

levered so In that

38:40

case, Bitcoin will go

38:42

down. But as it stands

38:44

here today, it appears

38:46

we've hit a local bottom

38:48

in Bitcoin down at

38:50

the $74 $75 ,000 range. And

38:53

we've recovered from that. And now

38:55

we're bumping up against some serious

38:57

resistance at the $88 ,000, $90 ,000

38:59

level. And we've got

39:01

to break through that mentally and

39:04

hold that for this to

39:06

stand. I think that

39:08

Bitcoin is catching a wave

39:10

similar to gold, where you've got

39:12

investors who are putting money

39:15

in both gold and Bitcoin and

39:17

that the US dollar being

39:19

weaker is making Bitcoin stronger as

39:21

well. And so that's a

39:23

long way of saying that the

39:26

decoupling, I appreciate it. I

39:28

like it. I want to see

39:30

it continue. And we're going

39:32

to have to see, you know,

39:34

weeks and months of this

39:36

for it to really hold. But

39:39

it's that information, understanding arbitrage you were

39:41

talking about. And that's really what's going

39:43

to drive this long term. And

39:46

and that's going to make people understand that Bitcoin

39:48

is something that should be allocated separate to every

39:50

other asset class out there. Not

39:52

only that, but to your point of

39:54

first, they fight you or first they

39:56

ignore you, then they laugh you and

39:58

they fight you. Then you win or

40:00

they join you. Like

40:02

that, you wrote about it

40:05

a couple of months ago,

40:07

too, or maybe last month,

40:09

but like if now a

40:11

Sab 122 with this administration

40:13

and the regulatory overhang that

40:15

existed under Biden, Gensler

40:18

Yellen is gone,

40:21

like embracing Bitcoin as a collateral

40:23

asset in the private sector and

40:25

in the public sector, like

40:27

everything you just described at the

40:29

base of Strait and the amount

40:31

of debt that exists in the system and

40:33

how everything is levered up. It's unnerving just

40:35

to look at it and the gravity of

40:38

it and think, oh my gosh, how do

40:40

I, how do I fix this? You're

40:42

going to have to print money. But at

40:44

the same time, when you're doing that, it's

40:46

like, all right, you begin to introduce

40:48

the antidote to that. And I think like

40:51

Bitcoin as collateral, whether it's via something

40:53

like Bitbonds, so that the

40:55

Treasury can roll over debt at

40:57

lower rates to solve that interest

40:59

expense problem. and hopefully take care

41:01

of the debt at some point

41:03

in the future. We're the private

41:05

sector where it's like you're underlying

41:07

collateral as either treasuries or assets

41:10

that are suboptimal as collateral assets

41:12

and using SAB 122 as a

41:14

way to begin introducing Bitcoin as

41:16

better collateral into the system. Right.

41:18

And that's exactly right. So we'll

41:20

come up with all these different products

41:24

that are just not available now, lending

41:26

products, collateralized products exactly you're

41:28

talking about. Put them in mortgages,

41:30

allow you to borrow against

41:33

them to have lines of credit.

41:35

It's going to be interesting. That's not

41:37

going to happen today, but that's

41:39

happening. It will happen. What

41:42

do you think this does

41:44

for Bitcoin? If we truly do

41:46

decouple and you basically run

41:48

with the fact that Bitcoin is

41:50

more receptive, banks can

41:52

use it. Seems to be decoupling now, but

41:54

also taking the fact that how much money

41:56

is probably going to need to be printed

41:59

to solve this. Well, yeah. Yeah. And

42:01

so when you take

42:03

that into account, Marty, what

42:05

happens is the smart

42:08

investors start reallocating money out

42:10

of bonds and into

42:12

Bitcoin. And then that's it.

42:14

That's like Bitcoin will

42:17

gain so many assets. It

42:21

will be the

42:23

total market value could

42:26

double very rapidly. I

42:31

still believe that's a little

42:33

bit ways off because of what

42:35

you said in your tweet

42:37

earlier, your post earlier, which is

42:39

there's an understanding arbitrage. There's

42:41

an information arbitrage. People are not

42:43

getting it yet. But when

42:45

they do, and it

42:47

does decouple completely, and it

42:50

starts acting a lot more

42:52

like gold does. But

42:55

it's gold on rocket fuel because

42:57

it's in its adoption phase. And

42:59

of course, it's going to have

43:01

its volatility because any asset in

43:03

adoption phase is going to have

43:05

a volatility. But volatility

43:07

to the upside, of course, you

43:10

and I have talked about this both

43:12

before, it's a gift. Volatility

43:14

is actually attractive in a

43:16

rising asset. because it gives you

43:18

the opportunity to dollar cost

43:20

average in or find spots that

43:23

if you're a savvy investor

43:25

to find spots to add extra

43:27

capital during those super volatile

43:29

periods. So yeah,

43:31

I believe that that's

43:33

the key though. When

43:35

you start seeing investors

43:37

allocate, reallocate out of

43:40

bond portfolios or out

43:42

of their bond allocation

43:44

into Bitcoin, man.

43:46

That's it. That's going

43:48

to be that. That to

43:51

me is where that's really

43:53

the. That's

43:55

the that's the pool that

43:57

once Bitcoin starts drawing from,

43:59

it's a three hundred and

44:01

thirty trillion dollar pool. Once

44:04

Bitcoin starts drawing from that, lights

44:06

out, game over and watch out. I

44:08

would not be short this thing.

44:10

Do you think strategy and how they've

44:12

been tapping the convertible debt markets

44:14

as a canary in the coal mine

44:17

for that larger trend? It's

44:21

a little bit different for them because

44:23

what are they doing? So, what MicroStrategy,

44:25

now known as Stragi, what they've been

44:27

doing, and I've had

44:29

long talks with their treasurer,

44:31

Sharish, about this, they've

44:34

found a way to

44:37

capitalize on the underlying

44:39

volatility of their stock

44:41

that's tied to Bitcoin.

44:43

Well, how did they

44:45

do that? Well, volatility

44:47

is attractive on Wall

44:49

Street in some instances.

44:52

And this is one

44:54

of those instances where

44:56

the volatility of the

44:58

underlying stock allows strategy

45:00

to issue bonds that

45:02

are convertible into common

45:04

stock called convertible bonds

45:07

that the investors, hedge

45:09

funds, love because This

45:11

is a rising asset

45:14

and Bitcoin is a

45:16

rising asset. MicroStrategy's

45:18

stock is directly correlated and

45:20

tied to Bitcoin because it owns

45:22

so much Bitcoin on its

45:24

balance sheet. And

45:26

so the volatility to the

45:29

upside is attractive to convertible

45:31

bond traders, the hedge funds,

45:33

because they can buy these

45:35

and have that optionality of

45:37

converting these bonds into common

45:39

equity later. at a

45:41

price that is highly profitable and it

45:43

goes through the strike price and they

45:45

get a whole bunch of extra money

45:47

out of it basically. So

45:50

that's one part that's attractive. The

45:52

second part that's attractive is just

45:54

the volatility intraday, day to day,

45:56

week to week, because they can

45:58

around these things. What do I

46:01

mean by that? Well, they own

46:03

the bond. It's convertible into a

46:05

certain amount of stock. I know

46:07

you know this. You're a savvy

46:09

investor for 1031, but for the

46:11

listeners out there, it's convertible into

46:13

stock. And so what these convertible

46:16

bond owners, the traders, the hedge

46:18

funds will do is they'll do

46:20

something that's called the Delta hedge.

46:23

The Delta hedge is the

46:25

optimal amount of stock

46:27

to be short against the

46:29

bond. So you're short

46:32

the stock, you're hedged -ish. So

46:34

when the stock goes up, you

46:37

can short more. And when

46:39

it comes in, you can cover

46:41

and you can trade around

46:43

that all the way through to

46:45

expiration and make money on

46:47

this volatility. And so it becomes,

46:50

the volatility is attractive.

46:52

It becomes an asset

46:54

to micro strategy, to

46:56

strategy. And so

46:58

because of that, they're able

47:00

to issue these bonds

47:03

with zero coupon. So

47:05

the bond traders are now like, we don't

47:07

care about the interest rate. We don't

47:09

care about getting five, six, seven percent interest

47:11

on this. We want the big stuff.

47:13

We want the big moves. We

47:15

want to be able to

47:17

delta hedge this thing. So give

47:19

us a better strike price.

47:21

Give us an attractive strike price

47:23

instead of attractive yield. We'd

47:25

rather have that. And so that's

47:27

basically what they've been able

47:29

to monetize that they've been able

47:31

to monetize the underlying value

47:33

of that volatility that's attached their

47:35

stock. And here's the best

47:37

part about it is they do

47:39

it every single time they

47:41

do it. It becomes more closely

47:43

tied to Bitcoin and that

47:45

volatility creates more opportunity to do

47:47

more. And so, of course,

47:49

they continue to do it. And

47:51

so that's that's what they're

47:53

doing. It's so that's a little

47:55

bit different. And I would

47:57

say that rather canary in the

47:59

coal mine, more just

48:02

the largest signpost out there

48:04

that this is an asset

48:06

you should have on your

48:08

balance sheets because this is

48:10

something that is going to

48:12

be extremely viable for any

48:14

company to have on their

48:16

balance sheet in the future. As

48:20

long as you think it's not going to collapse and go

48:22

to zero, which The

48:24

funny thing about Bitcoin is that the

48:26

more it goes up in price, the

48:28

more stable it is, the bigger the

48:30

network grows. The

48:32

higher the hash rate, that's

48:35

the canary in

48:37

the coal mine. What

48:41

is going on with the hash

48:43

rate is it is absolutely screaming to

48:45

all -time highs. And I would love

48:47

to hear your thoughts on this

48:49

because I have thoughts, but it's almost

48:51

mental where this is going. It

48:53

really is. I

48:56

mean, especially considering, I

48:58

mean, we had two

49:00

very good years from a

49:03

return perspective in 2023

49:05

and 2024. The hash

49:07

price, like the value in sats

49:09

or dollar terms per hash you

49:11

produce as a miner is still

49:13

at basement levels. I think it's

49:15

like four and a half cents

49:17

a tear hash per day right

49:19

now, which is not a lot.

49:21

Historically, it's been anywhere. mean,

49:23

I think the mean of last

49:25

cycle was around 10, 11 cents. And

49:27

at the time, it felt very low

49:29

for people. So we're 60 % below

49:32

that. And despite that, hash rate screaming, I

49:34

think it's a combination of things.

49:36

Number one, the machine's getting extremely

49:38

efficient. The amount of terror hash

49:41

produced per joule of energy provided

49:43

to the machine is going up,

49:45

significantly becoming more efficient. So the

49:47

machines, you can do more with

49:49

less energy. So

49:51

that that's definitely affecting a

49:53

hash rate, I would imagine.

49:55

But I have to think

49:58

that there are nation states

50:00

when you play into the

50:02

game theory of Bitcoin, you

50:04

want to acquire it without

50:06

signaling to the market. And

50:08

I think it's very hard

50:10

to keep rumors of OTC

50:12

desk out of the broader

50:14

market. So if you wanted

50:16

to acquire Bitcoin without going

50:18

through that mechanism of calling a

50:20

desk and saying, hey, I'm from

50:22

Y government and I need X

50:25

amount of Bitcoin. And then

50:27

that broker goes and says, hey,

50:29

guess what I just sold to you

50:31

buy a six in an obscure

50:33

way. You plug them in and you

50:35

mind that way. And if you're

50:37

a nation state, you're you plug them

50:39

in and in nowhere, Siberia, that

50:41

nobody can see what's going on. Yeah.

50:43

And you start mining Bitcoin. That's

50:45

right. And you do it with very

50:47

efficient machines at a very high hash rate,

50:49

and you don't care. You

50:51

don't care what it's costing you because

50:53

you're printing your money anyways. It doesn't

50:55

matter. So

50:57

that's what I think, Shravan. And

50:59

we already have examples of

51:02

this. I mean, nobody would know

51:04

that Bhutan has been mining

51:06

Bitcoin since 2020 if they didn't

51:08

get caught up in the

51:10

bankruptcy proceedings of Celsius and BlockFi.

51:12

Like I would not be

51:14

surprised if those companies didn't go

51:16

bankrupt or if the the

51:18

drug holdings, the Bhutan Cyber Wealth

51:20

Fund didn't have assets on

51:22

those exchanges that they would still

51:24

be under the radar today. But

51:27

now they've sort of been forced

51:29

into the public. And I mean,

51:31

that's an example. If if those

51:33

bankruptcy proceedings didn't happen, nobody would

51:36

have known that the small nation,

51:38

the kingdom of the baton has been

51:40

acquiring Bitcoin since 2020. You have to

51:42

imagine. So how many of those are out

51:44

there? Exactly. Yeah. A lot more.

51:47

So it's very interesting. And that's it,

51:49

the game theory. And that goes

51:51

back to, well, yeah,

51:53

the United States is signaling a

51:55

very strong signal that they're going

51:57

to be buying Bitcoin here at

51:59

some point. And it's,

52:01

you know, we've got people

52:03

in the administration who understand it.

52:05

I don't know how well

52:07

Trump understands it. That's kind of

52:10

beside the point. But

52:12

Senator Lummis understands it. Besson

52:14

understands it. Lutnik understands it. These

52:16

guys get it. They understand what this

52:18

is and how important it can

52:20

be. And so you

52:23

were talking about before the

52:25

Bitcoin bonds. Yeah, that could

52:27

be a very important way

52:29

for us to monetize this

52:31

new asset for the United

52:33

States and stabilize. a

52:35

treasury market that could get

52:38

unruly here if we continue down

52:40

this path of money printing

52:42

to save the treasury market over

52:44

and over and over again. And

52:47

so treasury traders and investors

52:49

are gonna demand, they're gonna

52:51

need a higher return. Pension

52:54

and funds can't meet

52:56

their obligations unless they

52:58

have a return that's

53:00

matching inflation or better.

53:03

So that becomes... big

53:05

challenge for them. So

53:07

the point is that other nations,

53:10

they're not asleep at the switch

53:12

here. They're watching this. There's a

53:14

lot of confusion, a lot of

53:16

noise about the tariffs and all

53:18

that stuff, but they're listening to

53:20

what the United States is doing.

53:23

They're watching this. They're saying, Man,

53:25

if they corner this

53:27

Bitcoin market and it really

53:29

does continue to be

53:32

nation -state level resistant because

53:34

of the amount of energy

53:36

it would take to

53:38

create a fork or whatever,

53:41

then they have no choice.

53:43

That's the game theory

53:45

right there, but to just

53:47

start doing anything they

53:49

can to accumulate themselves now.

53:52

And I believe that has begun. I

53:54

don't know how in, you know, how

53:57

large, like how widespread that

53:59

is. We could just have a

54:01

couple of very large nation

54:03

states doing it. And that's why

54:05

hash rate is screaming higher.

54:07

But it's not the public miners

54:09

that are doing it. They're

54:11

not out there pushing hash rate

54:13

up like this. It just

54:15

doesn't make sense. So. No,

54:18

it's not mathematically and financially. I

54:20

think the share of unknown blocks

54:22

mind like the quote unquote unknown

54:24

pool, which is like pools that

54:26

aren't publicly marketing themselves. I think

54:28

it hit 13 percent at one

54:30

point last year, which wouldn't surprise

54:32

me. I could be wrong on

54:34

that exact number, but somewhere in

54:36

a material amount of hash rate

54:38

defined as unknown. There you

54:40

go on the network right now. And when it

54:42

comes to like Bitcoin in the United States,

54:44

so that. Has been

54:46

a bit shocking to me is like this

54:49

outward signaling considering the game through which

54:51

walks through if you're gonna acquire Bitcoin the

54:53

last thing you want to do is

54:55

tell people you want to get it first

54:57

and then And then tell people that

54:59

you got it, which is like that's like

55:01

trading 101. Yeah, you don't say okay

55:03

We've enacted the Bitcoin strategic reserve. We're gonna

55:05

go buy a million Bitcoin The

55:08

Bitcoin would double like that. Yeah. Makes

55:11

no sense. And yet, there's people within the administration

55:13

that get this. And so that makes me wonder,

55:15

like, do they actually have more Bitcoin than people

55:17

think? Right. David

55:20

Sachs. Yeah. Are they cumulating

55:22

in a way? Yeah. David Sachs, another one

55:24

that understands it. Yeah. He follows all of

55:26

us, right? So. Yeah. So

55:28

that's interesting. And

55:30

I do truly think

55:33

like Bitcoin is, if

55:35

it's Bitcoin. combination

55:37

of Bitcoin and gold, like

55:39

I think the Treasury, the

55:42

Fed, and we'll just

55:44

focus on the Treasury is at

55:47

a point where they need to think

55:49

creatively and boldly to reorient the

55:51

American economy and particularly debt markets. And

55:53

I think Bitcoin is one of

55:55

the only ways to do that. And

55:57

it seems like Bascent understood this

55:59

well before he was even tapped for

56:01

Treasury Secretary. I mean, I'm sure

56:04

you've seen at the Manhattan Institute. fireside

56:06

conversation where he's like, there's going

56:08

to be a grand economic reordering and

56:10

I want to make sure on

56:12

the ship while it's happening because my

56:14

whole career is built building up

56:17

to this. And so to your point

56:19

about tariffs and everything, I think

56:21

that's noise. I think there is some

56:23

grander reordering or reorienting going on

56:25

in the back end. I

56:27

can't wait to see how it works out. Neither

56:29

can I. I think Bitcoin's going to. going to

56:31

benefit massively. That's the beauty of

56:34

Bitcoin. Whether or not they're

56:36

successful, I think in

56:38

both scenarios, the government's

56:40

very successful in this geopolitical

56:42

global monetary system reordering

56:44

successful or if it fails,

56:47

I think we would hope for a

56:49

success model because failure could lead

56:51

to some chaotic situations. But in any,

56:53

either of those situations, Bitcoin succeeds

56:55

because If you're going to have

56:58

this for your ordering, it's like, all right,

57:00

we need to do do it around this

57:02

reserve asset. And if that fails, it's like

57:04

nobody can trust anybody. And so everybody

57:06

naturally is going to be like, all right, let's get to

57:08

the protocol that nobody has to trust. Right.

57:11

Yeah. That's the beauty of Bitcoin

57:13

either way. Yeah. Well,

57:16

James, where can anybody listen to

57:18

this find out more about the informationist and what

57:20

you guys are up to at the Bitcoin

57:22

Opportunity Fund? Yeah. I mean, that's

57:24

the whole point of what you

57:27

just said is why we're so optimistic.

57:29

And I know you guys are

57:31

at 1031 also. We're super optimistic about

57:33

the environment. And even if we

57:35

have drawdowns, it's just opportunity for us

57:37

to find. value in

57:39

the market. So we're a little bit

57:42

different for the listeners. The

57:44

Bitcoin opportunity fund is a little bit different than what you

57:46

guys are doing. We are

57:48

a hedge fund. We do

57:50

invest in both public and

57:52

private companies, but we're focused on

57:54

more mature companies. The core

57:56

of our portfolio is on more

57:58

mature companies. A lot of

58:01

them are public companies or private

58:03

companies that are further down

58:05

the road that are revenue generating

58:07

rather than true, you know,

58:09

venture capital. We do have some

58:11

that we think are very attractive, but,

58:13

you know, our portfolio is definitely different than

58:15

what you guys are doing. And

58:18

it's and we just launched one,

58:20

too. And we're we

58:22

are now open for for investments. As

58:24

you guys, I think I think you

58:26

guys are raising to you, but different

58:28

again. I think they're the kinds

58:31

of things that you ought to have in

58:33

your portfolio. You have to have your Bitcoin. And

58:35

you've got different

58:38

ways to invest in

58:40

the network, the

58:42

protocol, how this growth

58:44

engine. But

58:46

it's for accredited investors

58:48

like yours is. But

58:51

if you're interested, you can go

58:53

to bitcoinopportunity .fund and just fill in

58:55

some information. We can talk to you

58:57

and we'd be happy to. And

59:00

then the informationist is

59:02

on Substack. There's a link

59:04

to it right in my bio on Twitter

59:06

on X, which is just James Lavish.

59:08

That's me on X. There's a lot of

59:10

clones like we all have out there,

59:12

so make sure it's the one with the

59:14

blue check mark. I

59:16

appreciate being on here.

59:19

It's good to talk to you finally for

59:21

a longer period of time than just

59:23

passing at a conference. I

59:25

appreciate kind words. It

59:28

was a long time coming. I can't believe it

59:30

took this long, but I'm happy. Hopefully, this is the

59:32

first of many. James, you're

59:34

crushing it. Thank you for coming and educating

59:36

us about all of this. And like I

59:38

said, hopefully we can do this again at

59:40

some point the future. Absolutely, Marty.

59:43

It's great to be here and I look forward to

59:45

the next time. All right. Peace and love, Freaks. Freaks,

59:47

thank you for listening to the show. I hope you liked

59:49

it. If you did like it, please make

59:51

sure you subscribe, rate, review the

59:53

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59:56

also, if you like these conversations, I've come to

59:58

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