0:04

Welcome back to the breakdown with

0:07

me and LW. It's a daily podcast

0:09

on macro, Bitcoin, and the big picture

0:11

power shifts remaking our world. What's going

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on guys? It is Sunday, April 13th,

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and that means it's time for Long

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Read Sunday. Before we get into that,

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however, if you are enjoying the breakdown,

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please go subscribe to it, give it

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a rating, give it a review, or

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if you want to dive deeper into

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the conversation, come join us on the

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breakers Discord. You can find a link in the

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show notes or get a bit.li slash breakdown pod. All

0:35

right friends, well, like it or not, we are

0:37

living in tariff land and of course today's long

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read Sunday is about that exactly. Still, I think

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even for those of you who are getting a little bit

0:44

tired of this, you'll like this piece. It comes

0:46

from Gafar Hussain originally published in Bitcoin

0:48

magazine and is called why Trump's tariffs

0:50

can't fix the broken fiat system. The

0:52

Trump tariffs will not revitalize the American

0:54

economy like he thinks, but maybe Bitcoin

0:56

can help where tariffs can help where

0:58

tariffs can. Let's turn it over to the AI

1:01

version of myself to read the piece and then

1:03

we will come back and discuss it. Trump's

1:05

America First platform, which he built

1:07

his successful campaign around, promised to

1:10

reconfigure global trade in favor of

1:12

the US. This involved encouraging businesses

1:14

to manufacture domestically, bringing jobs,

1:16

industry, and prosperity back to

1:18

parts of the country that

1:21

liberalized trade and outsourcing left

1:23

behind. The US had, or so the

1:25

argument goes, become more and more

1:27

reliant on competitively priced imports that

1:30

were often manufactured by countries where

1:32

labor and transportation is much cheaper.

1:34

This led to the emergence of rust

1:36

belt states, in which blue-collar workers saw

1:38

their living standards decline, whilst the cities

1:41

they lived in were hollowed out. The chosen

1:43

tactic for this grand economic

1:45

reconfiguration, it seems, is trade

1:47

tariffs. By imposing tariffs on foreign goods,

1:49

especially Chinese imports, Trump hopes to

1:52

make it more expensive for consumers

1:54

to buy products that are made

1:56

abroad, and for companies to outsource

1:58

manufacturing. This, he claims, will breathe

2:00

life back into the US industrial heartland

2:02

and make the country more self-sufficient in

2:05

times of crisis. It will also reduce

2:07

the trade deficit, making the US less

2:09

vulnerable to currency manipulation, which Trump accuses

2:11

China of, and less dependent on consumption.

2:14

Another critical aspect of Trump's tariff policy

2:16

is its effect on the US dollar.

2:18

By imposing tariffs on foreign imports, Trump

2:21

hopes to weaken the dollar, since global

2:23

demand for the dollar will decline as

2:25

a result. As such... This would make

2:27

American-made products more competitive in the global

2:30

market, which in turn will boost exports.

2:32

This, Trump hopes, would provide long-term stability

2:34

and prosperity for the American economy and

2:37

reward blue-collar voters who overwhelmingly backed him.

2:39

However, not only do tariffs have serious

2:41

economic drawbacks that make their success uncertain,

2:43

they also fail to address the root

2:46

cause of the problem. Tariffs are essentially

2:48

taxes on imported goods, and while they

2:50

may benefit some domestic producers in the

2:53

short term, by making foreign goods more

2:55

expensive, they also increase the cost of

2:57

imports for U.S. consumers and businesses. These

2:59

higher costs, combined with potential retaliatory tariffs

3:02

from trading partners, could hurt U.S. consumers

3:04

who would face higher prices on a

3:06

range of goods from electronics to clothing,

3:09

which would hurt economic growth. In fact,

3:11

China has already announced a retaliatory tariff

3:13

of 34 percent, and they are even

3:15

considering not enforcing U.S. intellectual property rights,

3:18

which could have a devastating impact on

3:20

U.S. businesses businesses. The European Union, as

3:22

well as India and Turkey, are also

3:24

preparing countermeasures which will harm U.S. exports.

3:27

Whilst the U.S.A. does have a huge

3:29

domestic market that the entire world wants

3:31

to tap into, U.S. businesses are also

3:34

heavily reliant on consumer markets around the

3:36

world. Tariffs can have unpredictable consequences since

3:38

there are so many moving parts and,

3:40

as such, they are no quick fix

3:43

for the economic woes of the U.S.

3:45

It is not possible to simply revitalize

3:47

domestic industry overnight after decades of outsourcing.

3:50

High quality manufacturing requires significant

3:52

investment in machinery, skilled

3:54

workers and infrastructure,

3:56

all of which have

3:59

been in steep

4:01

decline in the US,

4:03

whilst countries like

4:06

China have been forging

4:08

ahead. This gaping chasm

4:10

cannot be narrowed in a few short years.

4:13

The increased adoption of automation in AI

4:15

also means domestic manufacturing is less

4:17

likely to bring jobs and economic

4:19

prosperity back to depressed parts of

4:21

the US since these technological advancements

4:23

reduced dependence on physical labor. Even

4:25

if there were suddenly a lot more blue -collar

4:27

jobs in rust -belt states, they would not

4:29

have the desired effect Trump supporters are hoping

4:31

for. The average salary for

4:34

a blue -collar worker in the

4:36

US is around $53 ,000, which

4:38

after taxes amounts to around $3

4:40

,300 a month. The average monthly

4:42

rent is around $1 ,750. The

4:44

average monthly health insurance is

4:46

around $700. The average monthly food

4:48

bill is around $350. And

4:50

on average, utility bills amount to

4:53

around $600. In

4:55

other words, this average salary is barely enough

4:57

to let a single worker live, let

4:59

alone raise a family or support a partner.

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6:03

The real challenge facing the US economy

6:06

can be traced back to a much

6:08

deeper issue. The decoupling of the US dollar

6:10

from the gold standard in 1971.

6:12

Before this, the US dollar was

6:14

tied to gold, meaning the government

6:16

could only issue as much currency

6:19

as it had in reserves. This

6:21

system imposed natural limits on

6:23

money supply and kept inflation

6:25

under control. When President Nixon ended

6:28

the dollar's convertibility into gold, it

6:30

allowed the U.S. government to print

6:32

money freely without any backing, leading

6:34

to the rise of fiat currency.

6:36

Fiat currencies are not backed

6:38

by any physical commodity, which

6:40

essentially renders them government-issued IOUs. While

6:42

such a system offers flexibility in the

6:44

short term, it leads to inflation over

6:47

time. As more money is printed to

6:49

fund government spending and cover national

6:51

debts, the purchasing power of each

6:53

dollar diminishes. In practice, this means

6:55

everyday goods and services become more

6:57

expensive, while wages rarely keep pace

6:59

with rising prices, making it harder

7:01

for people to maintain their standard

7:03

of living. This is why the average blue-collar

7:05

worker could buy a house, run a car,

7:07

and raise a family quite comfortably in the

7:10

1980s, but cannot do so today. Quantity

7:12

has a quality all of its own, as the saying

7:14

goes. What the US really needs is an

7:16

alternative to Fiat, and a form

7:18

of currency, whose value is determined

7:20

by market forces, rather than government

7:22

policies government policies. Such a currency

7:25

can provide a hedge against the inflationary

7:27

pressures that have been exacerbated by decades

7:29

of fiat monetary policy. It can also cultivate

7:31

the conditions for fairer trade and

7:33

stabilize the global economy by providing

7:35

an alternative store of value that

7:37

is free from the whims of

7:39

central banks, traditional banking systems, and

7:41

currency exchange rates. Fortunately, such a currency

7:44

does exist in the form of Bitcoin.

7:46

The Trump trade tariffs are unlikely

7:48

to achieve the desired goals of

7:50

revitalizing the rust belt. or solving

7:52

the deeper systemic problems within the

7:54

American economy. This is because they do

7:56

not address the core issue that has

7:58

led to a decline in living standards.

8:00

inflationary pressures caused by fee at currency and constant

8:02

money printing. To address these challenges, a fundamental shift

8:05

in the way we approach monetary policy may be

8:07

necessary and in Bitcoin, with its decentralized nature and

8:09

limited supply, there is now a viable alternative. All

8:11

right, guys, back to real NWW here. Now there

8:13

are no shortage of armchair quarterbacks, myself included out

8:15

there, who are talking about what they think about

8:18

how these tariffs are or are not going to

8:20

work. I think many of the critiques inherent in

8:22

this piece are ones that you see across the

8:24

political and economic spectrum. The concern that US consumers

8:26

are going to face a higher range of goods

8:28

hurting economic growth. The concern that there's going to

8:31

be tit-for-tat escalation with other trading partners. The big

8:33

one, which I think is extremely salient, that, quote,

8:35

it's not possible to simply revitalize domestic industry overnight

8:37

after decades of outsourcing. To me, this is the

8:39

one where I see the greatest percentage of people

8:42

who are sympathetic theoretically with the goals of the

8:44

Trump tariffs, but who don't think that the particular

8:46

strategy being deployed is likely to work, even if

8:48

they wish it would. What's different about this piece

8:50

and why I thought you guys would enjoy it

8:52

is that it offers an alternative argument for the

8:55

core root issue. Now obviously many people do not

8:57

agree that the core challenge is fiat currency. This

8:59

is a very core Bitcoin or belief, but isn't

9:01

necessarily mainstream and other economic circles. and yet still

9:03

the reason that it's a relevant point to share

9:05

at this moment in time, is that if nothing

9:08

else, the tariff process is absolutely smashed open the

9:10

Overton window for just how transformative and big policies

9:12

can be right now. Indeed, I think that if

9:14

you were an alien with no horse in the

9:16

race one way or another, it's likely that you

9:19

would be cheering on all of what's happening right

9:21

now, if only because it's the grandest experiment we've

9:23

ever seen in trying to radically and quickly readjust

9:25

the global economic order. These moves are not slow,

9:27

they are not incremental, they are designed to cause

9:29

havoc and make a major change. And in that

9:32

environment, it makes sense that other people would come

9:34

in and offer their... Bitcoin has into this moment

9:36

better position has come into

9:38

this moment, better position than

9:40

ever before, to be

9:42

legitimate in these conversations. right now

9:45

think offer this have a

9:47

moment right now to offer

9:49

this type of alternative

9:51

take and see if they

9:53

can't get it into

9:55

the discourse. sudden I don't

9:58

anticipate this all of a

10:00

sudden becoming a mainstream

10:02

opinion, but crazy is going

10:04

to feel less crazy or

10:06

at least more realistic

10:09

than it did just a

10:11

couple of months ago. to

10:13

see And so I'm glad

10:15

to see these types

10:17

of think finding their way

10:19

into the conversation. I'll continue

10:22

to share the interesting ones

10:24

as I see them. as

10:26

I For now, For as

10:28

always, I appreciate you listening.

10:30

you Until next time, be

10:32

safe and take care

10:35

of each other. care Peace. other.

10:37

Peace.