Why Governments Will Never Let Physical Gold Be Money Again | Saifedean Ammous
Summary
Bitcoin Thesis: Guest strongly advocates Bitcoin as long-term hard money, arguing it is resilient to geopolitical noise and best held over multi-year horizons.
Institutional Adoption: Bitcoin’s integration via ETFs, corporate treasuries, and stablecoin rails is seen as inevitable second-layer adoption, even if self-custody is preferred.
Gold vs. Bitcoin: Gold’s monetary role is constrained by settlement and custody frictions and paper markets, while Bitcoin’s halving and digital settlement improve scarcity and liquidity.
Mining Economics: Mining is deemed structurally low-return versus simply holding Bitcoin; network security persists despite miners being temporarily underwater.
Stablecoins: Stablecoins extend dollar rails and buy Treasuries, but some demand is displaced; their Bitcoin purchases may have outsize impact on BTC’s market cap.
Macro & War Costs: Rising fiscal strain, potential oil shocks, and war costs likely surface in higher U.S. Treasury yields, reinforcing the hard money case.
Sovereign Adoption: Bhutan, El Salvador, and select sovereign entities illustrate Bitcoin’s use as a treasury asset, with periodic sales viewed as normal cash flow management.
Practical Allocation: Keep some fiat for expenses, consider a small gold allocation if needed, and build a Bitcoin position gradually to manage volatility risk.
Transcript
In focus with Jeremy Saffron is brought to you by Swan, the real Bitcoin company. >> Welcome back. I'm Jeremy Saffron. Markets are dealing with a real monetary stress right now. We have roughly 10 trillion in US government debt set to mature over the next year. Treasury yields remain elevated and digital assets are being pulled deeper into the traditional institutional system through ETFs, stable coins, and tokenized products. And at the same time, physical gold has been under extreme pressure this March. While Bitcoin has held steady in the low 70,000s despite war headlines and some pretty sharp volatility. Now, I say this because today is not just a con conversation about Bitcoin's price. It's about whether money is becoming harder, more digital, or simply more controlled. So, where is the real safe haven when debt, liquidity, and trust in the system are all being tested at once? Joining me to break this all down is Dr. Sephine Amos, Austrian economist and author of the Bitcoin Standard, the fiat standard, and his newest book, The Golden Standard. Sephine, it's great to have you on the show. Thanks for making the time. >> Thank you for having me, Jeremy. It's a pleasure. >> Uh, I want to start a little bit going backwards for a moment because back in 2022, I mean, your framework was mostly built on, you know, first principles, but we fast forward to 2026 and Bitcoin is much more institutional. is it's it's more financialized and it seems wrapped into the traditional system through ETFs, you know, corporate treasury strategies, these stable coin rails. Has this new reality strengthened your thesis or has it complicated it? >> No, I think it's uh everything's going according to plan if you were to ask me. I think um uh probably if you asked me 5 years ago, I wouldn't have expected to have this much institutional adoption. I would have expected more individual adoption. U seems I was wrong about that. It seems that a lot of people just uh um aren't going to get into it individually. They're going to get into it through institutions. But I think that's normal and predictable. And uh if you remember in the Bitcoin standard in my first book, I looked at the numbers for Bitcoin scaling and I just said the demand for Bitcoin as a hard money, as money that resists inflation is far larger than the demand than the uh supply of Bitcoin block space. So, it's going to be impossible for everybody to be able to get their own uh coffee transaction on chain for Bitcoin, but everybody's going to want to have a piece of the Bitcoin action. So, inevitably, the majority of people are going to end up using second layer solutions in order to use Bitcoin. And one of these second layer solutions in a sense is institutional adoption by um buying an ETF. You're effectively getting exposure to Bitcoin without uh having to use it yourself. Of course, it has its draw downs. I don't recommend it personally. I don't buy ETFs myself, but it works for some people, and I think it's going to continue to be the case. There's uh there's no use fighting it. It's a it's a it's a great financial asset that has beaten pretty much all financial assets over the last 10 years or so. Everybody's going to want a piece of the action, >> you know. I mean, if we kind of look at the actual math driving some of this right now, I mean, you know, from an Austrian perspective, what does this $10 trillion debt refinancing wall suggest the Fed is likely to do, you know, this year? On the flip side, I mean, what would Jerome Powell have to do if he, you know, if his real goal was to protect the dollar's credibility rather than just propping up the system's short-term stability? >> Well, that's a very uh difficult question to answer. If he really wanted dollar stability, you know, the answer is a lot more radical than uh what he studied in his grad school. I think if u if he really actually wanted dollar stability, he'd peg the dollar to something that wasn't a Ponzi scheme like the dollar and he'd make it redeemable in it. So gold or bitcoin are the only two choices as far as I'm concerned. And uh then that would limit inflation and that would actually provide credibility for the dollar. But uh if they don't do that then of course they're not going to do that because of the political realities of u democratic politics. People want the free lunch. People think they can get the free lunch and they're going to always vote for the um con artist who tells them they can have the free lunch. And uh the uh the realities of just democratic politics are always going to mean that there will be inflation. So given that there is inflation um you know the I I I wish them the best of luck but uh there's no way to make a dollar uh stable while continuing with inflation. I mean they can try all these um uh fiat economics tricks of managing the price level managing the money supply but in the long run all of these things lead to the destruction of the value of fiat money. Uh it's it's all uh rearranging deck chairs on the Titanic. If you zoom out and look at the long term, the dollar loses 90% of its value every 20, 30 years or so. And there's no stopping that train. There's going to be more government spending. There's going to be more inflation. And it's only a matter of, you know, politics is the the matter of moving around winnings from this inflationary system to benefit some people at the expense of others. But I think the only radical solution ultimately is hard money, gold or Bitcoin. >> Yeah. Well said. I mean, we've had Judy Shelton on the show. Obviously, we've talked a little bit about what that could possibly look like. Would a would a gold peg, you know, restore monetary discipline or would it just expose how mispriced the dollar already is relative to real asset uh real reserves? No, it'll do both. I think, you know, if you wanted to peg the dollar to gold, that would necessarily require a large revaluation of the dollar. You could say revaluation of gold depending on how you look at it, but I think it's more accurate to say it's a revaluation of the dollar. um you're going to have to basically I mean you can back the current dollar supply with the current gold supply at a much higher price of gold. I I haven't run the numbers recently, but I presume it's going to be at least $10,000 an ounce of gold at that kind of price levels with the supposed I should say supposed gold reserves that the US government supposedly has. Apparently, there's this crazy conspiracy theory that the US government has 8,000 tons of gold. Um but you know, I don't I'm not a big fan of conspiracy theories. So, I'm not so sure about it. I'd like to see an audit, but you know, apparently audits are uh are are crazy hard to come by. >> Conspiracy. >> Yeah. So, presuming they have the gold, it's a very big if, uh then they could probably balance the u they could go into the hard money standard if they revalue the gold at a price that backs a sufficient amount of the dollars that they have issued, preferably all of the dollars in order to have a proper gold standard. And if that were to happen, I mean, I think it's going to be a painful adjustment for the first few months. Uh, a lot of uh people are going to get u wrecked in a certain way. There will be a massive monetary adjustment over a few months, but I think after that we would get on a sound footing and the world economy would be a lot better. And of course, the politics would be very different because governments wouldn't be able to print money. They'd have to get taxation. And that makes politics a lot more complicated for them and a lot better for people. Well said, Sabine. I mean, you know, you look at today and I'm kind of bringing this up in a more macro picture. We'll kind of get into more specifics, but I mean, we're we're watching global markets suffer extreme whiplash this week. I mean, we saw a brief rally on ceasefire hopes, but this morning Iran outright rejected the US proposal, laid out a list of demands and and Brent crude has popped right back over $100 a barrel. I mean, for the average investor watching their portfolio whip around on these escalating geopolitical headlines, how do you practically disting distinguish between a violent geopolitical supply shock and actual fiat debasement? >> Yeah, I mean um it's it's difficult to distinguish between the two because both of them are taking place at the same time. So the dollar is always being devalued. I think that's just the uh that's almost like the water in which we swim as fish. We don't even realize that we're in water because all we've ever experienced is water. So, we're just normalized um the idea that money loses its value. But, uh yeah, the geopolitical shock can of course be real. And this one, I think, is very, very real. And I think uh the market reaction so far has probably, if you ask me by my opinion, it's probably been understated compared to where I think things could go. But uh I mean it seems u initially it's you know initially the reaction was all right the Iranian regime is going to be decapitated. They're not going to be able to do anything. This is going to be like Venezuela. It'll be over in 3 4 days. That didn't work out. Then there was the idea that well they're not going to be able to close Hormuz. Their military capacity is done. Turns out that they managed to close it and after two three weeks of government propaganda and media lies and just absolutely hilarious uh uh cope and seething by the administration about it. Well, you know, the straight is open. It's just that Iran might shoot you if you go there, but we recommend that you go there and try. We're not going to send the navy obviously because we don't want them to get shot, but you know, all these commercial tankers should go and all these u other countries should send their navy. Well, then it became clear, you know, after all the um um delusions and lies died down, it became clear, no, the homes had actually closed and they have an iron grip on it. >> Uh so that looked like it was a problem. I think now things are being resolved as we speak right now or I would say the price is probably nowhere near as high as it could be because it seems clear that a lot of boats are leaving the straits of Hormuz because they have struck a deal with the Iranian regime. So the Iranian regime has effectively installed a toll booth on the straits of Hormos which seems to be charging about 1% of the market value of the oil on tankers based on early estimates that we've seen. So, if this uh sticks and if this continues, I mean, it's not going it's going to cause very little disruption in the long term because it's just a 1% tax. Obviously, there's been a lot of disruption over the past few weeks because of uh the destruction of infrastructure. So, that's going to likely affect the markets for a while and you know, the the conflict is not really over. But if the Iranians succeed in in imposing this toll booth, then likely the oil market normalizes. um prices will remain high for a while, but it'll likely be normalized over time, but uh it's a it's a big question if they can keep it up. I mean, I think militarily they have a very good case because they have all these distributed drones all over and they just need to hit one tanker a week to scare away or maybe one tanker a month to scare away all the other tankers. And it's a very very very complicated military operation for the US to try and stop all of these drones. likely, I would think probably it would require the largest military deployment by the US since World War II to try and conquer Iran completely, comb all of the coastline, clear it from drones and missiles, and make it safe enough that commercial tankers can cross without paying the Iranian toll. It's not an easy thing. It's an extremely difficult thing to see. So, it's difficult to tell. And I would say I mean um I I follow this because I happen to live in the region. The rockets are flying over my house and the signs are u bursting out uh several times every day. So of course I'm very into following what's going on. But I think financially >> I'm generally not a fan of uh trading the news. I'm not a fan of >> uh sitting at watching TV, reading the internet and then um managing your portfolio actively based on that stuff. And of course, if you're in the fiat markets, you have to do that because the fiat markets are all about the news and it's all manipulated and it's all about what the Federal Reserve says and does. So, you have no choice but to basically be a part-time hedge fund manager. No matter what you do, you need to pay attention to all of these things that are going on. But that's why I like being in Bitcoin. >> Yeah, >> Bitcoin is completely immune to all of this You just buy Bitcoin, you wait five years, and you look back five years later and all of this stuff is noise. You know, I remember for instance when the um Russian Ukrainian war started and it was four years ago >> and there was so much discussion about what Bitcoin is going to do and how is Bitcoin going to react and is it going to go up or is it going to go down and and you know depending on the time frame if you looked at the first day it crashed or then the next first week it went up then the first month it went down or something like that. I I don't remember the exact specifics but there was a huge debate about well it's it's going to rise it's going to go down doesn't matter ultimately what was the effect of the Russian Ukrainian war on Bitcoin? I don't know what was the effect of this u uh Iranian uh Israeli uh US war on uh Bitcoin. I have no idea. I think in the long run Bitcoin just marches to its own drum beat. I think it's still too small to be uh a um a macro asset that is affected by macro movements. I still think the uh dynamics of Bitcoin supply and the psychology of Bitcoin holders, particularly the oldtime holders who held it for a long time, I think these are probably far more effective to price determination in the Bitcoin market than geopolitical events. >> Yeah, that's interesting because we're going to kind of pivot there. I mean, how how these assets actually behave under stress. I mean, you know, you talked about four-year cycle with me kind of coming before before coming on air, and I I wanted to ask you because I mean, if Bitcoin still trades a little bit with macro risk sentiment during these geopolitical shocks like we saw maybe this week, why should gold investors treat it as a true safe haven right now? >> Well, I mean, it's it's difficult to tell uh with uh gold. I I used to be a big gold bug before I got into Bitcoin. I was a massive gold bug. I uh rode the gold uh bubble in around I think it was 2008 to 2011 and then there was a big crash after that and um that crash forced me to reconsider and revise my assumptions about what was going on and that's how I discovered Bitcoin and I opened my mind up to Bitcoin and became a Bitcoiner. So it's a difficult question for me to assertain what's happening with gold. I would say you know the recent run in gold caught me by surprise. had not expected to be this quick and this um >> this vast this big of a rise and um it's um it's I guess for me the question is what happens next. My honest opinion I I I can't feel comfortable recommending that people hold gold for the long term because I think the um you know you look at 2011 the price went from 1,900 crashed down only recovered I think in 2020 or something like that maybe 21. So, you know, there's a 9 10 year bare market in in gold uh that you have to sit through if you buy uh at a very high rate. >> And then when 1980, the year when I was born, the gold price hit 800 and then it crashed and only got back to 800 in 2008. So that's 28 year bare market. That's a whole generation. So I don't feel comfortable telling people to buy gold anymore as I used to when I was a gold bug. I think ultimately the fact that governments control gold clearance, the fact that they don't allow the creation of gold banks is almost a fatal uh hit to gold's monetary role. It's just as long as you can't have a bank account in gold and you can't just send gold directly. You can't use it to settle payments. You can't uh run your accounts with gold because you have to run it with your local uh national currency. Then gold's monetary role is always going to be limited. People are going to buy into it and out of it and they're going to incur significant transaction fees every time they do that. And that will likely um just undermine the salailability because ultimately what money is the most important property of money is its salailability. So if people aren't able to accept it as payment, if people aren't able to trade it with one another directly, that's going to massively undermine its salailability. And it looks like for me that's why uh you know gold didn't recover from the bull market in 1980. I think this is the difference with Bitcoin. Bitcoin is just in a sense a more advanced monetary technology because it has the having. So in 1980 when gold hit $800 or something like that, it crashed down. Now imagine if in 1982 annual production of gold dropped by half, >> the bull market in gold would have returned a lot quicker. but instead in physical gold in 1982. Probably that was a time when production was ramping up because of all of the investment that was made into gold mining in 1977 8 9 and 80 during the big bubble. So people overinvest in mining and then that results in a lot more uh production coming on at the time uh when the bubble bursts and that's why the thing can stay dead for a significant amount of time. So with the difficulty adjustment uh sorry with the having bitcoin fixes that because it ends up making sure that the supply drops every four years. So even if the demand doesn't go up the fact that the marginal supply declines causes a an increase in the price. >> Right. Right. So I mean if if gold can still store value but cannot move freely or settle kind of globally or you know escape those custody checkpoints then you're really saying Bitcoin is not replacing gold's theory but solving I guess the political weakness of gold. >> Exactly. So if you were to ask me all right so what do you do about gold? How do you do it? Well I I don't know. I mean if you can shut down your local central bank or force them to take gold then by all means go ahead. But the only practical solution we have, the only accessible solution, the only realistic solution for the problems of gold is Bitcoin. It's something that recreates the monetary properties of gold but makes it digital and there and then improves upon it by introducing the having by introducing the difficulty adjustments which ensures that we're always going to get a declining uh supply growth rate and that more mining cannot result in more production taking place. That for me is the case for Bitcoin. Bitcoin is the gold that is built to defeat governments and that's a flaw that physical gold doesn't have. Unfortunately, governments have managed to kill it. >> Here's a question for you. As a former gold bug, you know, just I'm sure that you've been paying attention a little bit to comx the price discovery, you know, this paper market. I mean, when we when we look at the current mechanics of the paper gold markets, do they actually help liquidity and price discovery or do they weaken gold's function as a monetary signal by creating, you know, leverage that can just swamp the physical market? >> It's a it's that's a great question. I don't quite have strong opinions on this question. I think you know initially when I used to be a gold bug I um was very much on board with this idea that these uh futures markets are being manipulated and that's how the fiat system survives because naturally everybody wants to buy gold everybody would buy if everybody buys gold there's no way of printing more gold the price of gold goes up eventually gold dominates cash balances the fact that it's not doing it suggests that there's some manipulation going on and you know gold bugs have spoken about this for many many years uh As time has gone by, I've I have less confidence in that the hypothesis. I would say the reason is the reason that the gold doesn't go up might not necessarily be the uh paper market manipulation. It's the fact that it can't trade, that you can't use gold for direct payment. And so therefore, you're always switching in and out of it. And therefore, you're always incurring um transaction fees, which is essentially undermining the role of gold. So since I if if that were really the problem then it might be the case that the futures market is not really the guilty party that is causing the problems of gold and and preventing gold from monetizing. But it could be um it could it could also be seen as the um um another way of looking at this is that you know within these futures market ultimately the only way that you're able to essentially manipulate the price is if there's some kind of monopolization of the movement of physical gold and this is what we have with gold because there is no easy large clearly transparent liquid market for people to be selling and buying physical gold in the same way that the LBMA is supposed to function, but it functions in a very opaque way. So if we had 100 LBMAS all over the world where people are able to get physical uh gold for their paper almost seamlessly then it would be a lot harder for uh shenanigans in the futures market to affect the price because ultimately there's a day in which you need to deliver physical and you can only screw around with paper so long before you get called out with the physical. But if you run the rails on which the physical settles and if you have a monopoly on these rails, if you have a monopoly on the banking system and if you have a banking license that allows you effectively to print money, well then that can allow you to rig the game and that can really change how the entire game is played. So I think the uh this is this is this for me ultimately is another flaw of gold that Bitcoin fixes which is that by being digitally native, Bitcoin allows for the large liquid market for people to settle with one another directly in Bitcoin to be a huge and liquid and available 24/7 all over the world which makes futures markets shenanigans a lot more difficult. >> Yeah. I mean, do you believe that the US gold is is fully there, fully kind of accessible, truly usable for for modern monetary reset, or do you think Fort Knox is kind of more as a symbol than a credible monetary back stop? >> I mean, fortunately, I don't have to answer that question because I'm in no position to be answering. I I don't know. I I I wasn't the one who put it there and I don't have access to the keys, so I have no idea. But, you know, if you ask me to get if you ask me to bet, I'd say it's not there. just I mean saying we can't have an audit is just an admission of uh theft essentially. So something fishy is going on and of course you know the way that Elon Musk was just completely lobbomized about this topic and it was just it was almost like you know they removed the software from his brain and then he was never allowed to talk about it ever again after he brought it up. Doesn't inspire a lot of confidence. That's not what people who have 8,000 tons of gold would be doing. You know, if they actually had the 8,000 tons of gold, they'd have tours open for Americans to go and see the 8,000 tons of gold. I mean, >> it's an enormous sum of gold. Americans should be very proud of it. They should have it on display. They should have it in several different vaults across the country and people come and see it and people should be able to redeem it. The fact that they don't, I think, speaks volumes. But >> yeah, >> I know. >> I hear you. Uh we'll we'll continue to ask all of our guests. Um Okay. Okay. Well, let's move on to kind of miners margins a little bit on Wall Street because um you know the economic stress inside the Bitcoin mining industry is is interesting and we saw reports in in mid-March estimating average production costs near 88,000 per Bitcoin while the spot price was sitting in the low70s. How does this network sustain itself economically when a large part of the mining base is underwater at the current prices? >> Oh, it doesn't matter. It's a problem for the miners. The network will continue. Um it it it um in a sense you can think about it in gold terms. There's gold that's being circulated and used monetarily. And if uh an earthquake happens that um harms one of the miners and puts one of the miners out of business, that's just going to mean that a little bit less new gold's going to come on the market, but it's not going to affect the function of gold um as as a money that is being used every day in coins and bars. With Bitcoin, it's even less because with Bitcoin, the new supply that is going to come on will be the same regardless of what happens to the miners. So, if we have uh $10 billion of capital mining Bitcoin or if we have $10 of capital mining Bitcoin, we're only going to be getting I think it is where what are we now? 450. No, I think we dropped by half 225 uh new coins a day or maybe it's 450. I forget. Anyways, but we'll be getting the fixed number of uh Bitcoin every day. And regardless of what happens with the mining industry, um now generally you look at Bitcoin cycles, this is generally the time where uh Bitcoin miners start hurting a lot because a lot of miners get um overexited and they start overinvesting during the during the bull market when Bitcoin's price is going up. And at that point, you know, the price is going up and u mining Bitcoin looks like a no-brainer and uh it seems like it's a great idea. You have in great margins, but then of course the key thing with Bitcoin is the difficulty adjustment. The difficulty of mining goes up. So the cost of mining Bitcoin goes up and generally it's always going up to catch up with the price of Bitcoin and then it declines roughly if the price of Bitcoin declines. So um after they've overinvested in the bull market then there comes the crash which you know we had we we had the top in October. It's been 5 months now. We've crashed and I think we'll u you know we may be getting few more months of sideways or downward action which is going to be very stressful for the miners because they invested they the ones that were investing during the bull market. They bought their equipment at high premiums because the equipment was in high demand at that time and at that point the difficulty was relatively low. Price goes up, difficulty goes up, more and more capital comes along, more and more investment comes along. So this is the point of maximum pain. We're coming up to the maximum pain point for miners, which is price is declining, difficulty is still going up because a lot of miners are still um coming online because of the investments they made in the bull market. So this becomes the most brutal time for Bitcoin miners and generally I generally just think as with gold I I I have a strong very strong opinion on the idea that you should just stay out of Bitcoin mining and gold mining. I think uh you know if you have some kind of technical uh understanding of the industry if you have some advantage that allows you access to say very cheap energy then maybe you should consider mining bitcoin. If you have some engineering or capital advantage that allows you to buy to mine gold, then maybe we should get into it. But that I think misses the point. In other words, the maybe the mining part of gold or Bitcoin is by design supposed to be trifling insignificant and the real use case is the money. It's the trading. That's in fact as I explained in the Bitcoin standard, the whole reason that gold becomes money and by extension the whole reason why I think Bitcoin becomes money is precisely because mining is inconsequential. It's small and it's unprofitable usually and it doesn't grow. If mining was profitable, if if mining gold and Bitcoin was usually profitable, then we'd have inflation. It would suck as money. But it's designed to be a zero- sum game with Bitcoin and it's close to a zero sum game in gold because it's very difficult to find gold and then the more that you uh invest the more expensive it becomes and then it becomes difficult to find significant enough margins. So my advice is money is made for spending and holding not for mining. Mining is uh it it's supposed to be an unprofitable business for those monies to work very well. And I think if if you follow the gold industry, you know, gold miners have been uh complaining and people who invest in gold miners have basically been complaining about it forever. Gold mining has underperformed Bitcoin. Uh sorry, gold mining has underperformed gold. And I think Bitcoin mining has likely underperformed Bitcoin. I ran a poll on my Twitter once where something like 5,000 people answered and the question was, if you've mined Bitcoin for more than 5 years and calculated all the expenses that you incurred, would you have been better off just putting all of the expenses into buying Bitcoin instead of going through the mining? And something like 78% said yes, they would have been better off just buying Bitcoin. So, you're getting into a massive headache and um introducing all kinds of risks. And there's a 78% chance that it's going to give you fewer Satoshi's than you would have had otherwise. And I would probably say it's actually likely higher than 78%. Because I think people are not very good at calculating uh opportunity cost and calculating all the costs that they've incurred. So probably among those 22% who think they outperformed holding, I think if you count all the costs, particularly the time invested in mining, I think a lot of them would realize they would have been better off just holding Bitcoin. Yeah. Hold don't mine. >> Yeah. Hold don't mine. Uh I mean your thesis since the beginning has been somewhat of the same. I mean um you know on this I guess we could kind of talk about the sovereigns too because you frequently advise on building digital treasuries but we're tracking reports this year that Baton has has been actively selling off portions of its Bitcoin holdings. Are are more sovereign states looking to build these reserves? And what are you seeing here? Uh yeah, Bhutan. Uh I I have no particular insight into what they're doing, but they seem to have made a ton of um Bitcoin out of mining. They have a lot of stranded energy there. They've invested in mining Bitcoin over the several years. They've accumulated a significant stash and I mean it was an investment. So yeah, you need to liquidate the investment. They have salaries to pay, but they've accumulated a very significant sum. I mean Bhutan is a very small country and it's not very rich. So they've accumulated, I think, more than a billion dollars worth of Bitcoin at a certain point. I don't know what it is now and how much they've sold. And with the price going down, it's probably declined, but that's a lot of money cuz the entire GDP of the country is a tiny number. So this is a significant chunk of their GDP. Obviously, you should compare flows and stocks, but uh it's it's still um quite instructive. And u other than that, I mean, El Salvador is still stacking Bitcoin. They just keep buying. They don't care. And they've been doing it for five years and it's netted them hundreds of thou hundreds of millions of dollars worth of profit. And I expect them to continue to do that. Now, other than that, I don't really have uh much particular insight into um nation state adoption. I know Abu Dhabi, one of the sovereign ones, sovereign wealth funds in Abu Dhabi uh had been mining Bitcoin for a while and they did really well with that. and it's becoming more and more popular. Um, you know, we had all the uh Trump circus about uh using a strategic Bitcoin reserve, but then he ended up buying pesos to bail out MLE and launched his own shitcoin. >> And so, uh, glad I never got my hopes up on that one. >> You know, this it's it's a fair point. I mean, Batanas is effectively monetized part of its Bitcoin position when they needed it. I mean, but does that prove Bitcoin kind of worked as a treasury asset or does it prove that even sovereign holders still treat it as something to sell into fiat when when real world obligations hit them? >> Yeah. I mean, everything is uh I mean, money is made to be spent. So this notion that you just stack Bitcoin forever. I mean it's uh >> I I think there's there's mimemetic value in it and it's good to drive the point home particularly to new Bitcoiners to just explain that you know you're missing the point if you're just buying Bitcoin from Coinbase and then spending it the next day on your coffee and pizza and then having to buy bit Coinbase again. you're just paying extra fees to Coinbase and then paying extra fees at the terminal and just wasting your time and you're not benefiting from what actually Bitcoin allows you which is uh protecting yourself from inflation. >> I mean we could go into we could go into it more. It was mostly about you know if central banks are ever going to start seeing Bitcoin is kind of a strategic reserve much like they look at gold right? >> Yeah. So I was saying yeah so you should Yeah. But but in in in reality, I mean, everybody needs to spend their money, so it's not there to be held. And you know, when you make an investment into mining or when you make an investment into buying Bitcoin, you've foregone spending. So you could have bought a new car, but you decide, all right, I'm not going to buy a new car. I'm going to stay with my old car so that I can buy Bitcoin and then in three years time, I'll revisit. Well, three years time, three years later, your Bitcoin's appreciated significantly. So now what do you do? Well, now your old car is a lot older. So you still need to buy and that's okay. You're gonna have to sell some of your Bitcoin at some point and that's fine. So I think that that also applies for governments. You know, the Bhutan government invested significant amounts of capital in order to make this happen. And if they can't get spending, increased spending out of this, then um >> h how useful are just reserves that you're never going to be using? It's useful to be able to use them. So, you know, I I I don't know what they're doing, but I would hope that they understand the long-term value proposition and accumulate some of the Bitcoin, but of course, I understand that they're going to have to spend some of it. >> Yeah, I'm glad that you said that. I mean, a lot of people, they just kind of stack, see these draw downs. But, I mean, you know, that four or five year kind of um cycle, as you talked about, is important to understand. I I wanted to ask you about stable coins, too. I mean, they're they're some of the largest buyers of short-term US paper in the digital asset system right now. So, are they really undermining fiat or are they just kind of extending the dollar's dominance through, you know, these new digital rails? >> Yeah, it's a good question. I think there's the obvious answer is they are extending it because they're allowing more and more people around the world to buy more dollars and then they are buying treasuries. So, essentially they are buying the US government's bags. They're bailing out the US government. They are essentially the um holder of last resort in a sense because they are currently one of the biggest buyers of treasuries in the world. they're buying more than most central banks. So in a sense it is increasing demand for treasuries. However, I would make the counterpoint. U I'd say the significant uh evidence to the contrary. Number one, uh a lot of this new demand for USDT and uh stable coins is derived from the fact that well I should say it's it's displacing existing uh dollar demand. So when somebody in Turkey decides to stop using their bank account uh for trading and starts using USDT well their bank account you may have been either in Turkish Las or in US dollars whichever one there's going to be backing it US dollars and treasuries. So when you dump your Turkish leader bank account or US dollar bank account in Turkey and you start using USDT instead, that's not all new demand for dollars and USDT and US treasuries, that's displacing some demand that has already existed. And I think if you run the numbers on it, I think even with the most optimistic scenario for the growth of u tether, I don't see it making a dent in the fiscal situation in the US. And I gave a talk in the Bitcoin conference last year about this topic. And you know that was before the war in Iran. But even even just assuming that we went uh on with the same kind of projections of how spending was going over the past 10 years projected into the next 10 years and you see that the budgets are just going to grow enormously. the debt is going to grow enormously and whatever little amount of purchases that USDTs are going to produce is not going to make a big difference in the grand scheme of things. However, where it will make a big difference in the grand scheme of things is with the small fraction of their profits that they use to buy Bitcoin >> because even though it's a lot less than the treasuries that they buy, it's a lot bigger as a percentage of the Bitcoin total market capitalization. And so even if of course they're going to be buying more treasuries because they're offering a treasury uh stable coin. They're not offering a Bitcoin stable coin. So they have no business use for buying Bitcoin for their operations. They buy it as a treasury asset. So of course they're going to be buying a lot more treasury bonds than Bitcoin. However, they're buying a smaller percentage of the Treasury market than of the Bitcoin market because the treasury market is a lot bigger than Bitcoin. So, I think that the net effect, as long as TA keeps buying Bitcoin, the net effect is going to be that it will likely pump Bitcoin and kill the dollar. God will >> interesting. Okay. Cuz I mean, you know, obviously there's a there big difference between creating fresh structural demand for US debt and simply moving existing demand for dollars onto faster rails, which is kind of what you're saying. I mean, which one do you do you think is is actually happening? >> I think it's both. Uh almost certainly both. uh the but I would just say that since some of that is displaced demand so when we look at tether we say it's $180 billion um new demand for treasuries I don't think that's accurate I think some number significantly smaller than 180 is likely the extra demand so let's say it's $100 billion give or take a few dozen dollars a few dozen billion dollars so it's a hundred billion dollars that's peanuts when you're talking about the US government's insolveny I That's just a that that that's a couple of weeks of the war in Iran be when you count in all of the costs. They're talking about $200 billion now, but you know, they were talking about hundred billion for Iraq. And that ended up costing 100 times that. So, expect something similar to happen here. There's going to be massive expenditure. There's going to be massive, massive pressure on the dollar. And I think um I mean I think the world is getting sick of the US. The world's getting sick of Trump. the world's getting sick of the dollar and more and more people are likely going to be switching away from it to Bitcoin. But I also think uh even you know within the USDT world I think USDT has introduced the new uh XAT which is a gold stable coin and I think that's going to start eating into the demand for USDT. I think um a lot of people all over the world are going to realize gold is just a much better um money than the dollar and you'd rather not be financing the US government as it does all of these crazy insane criminal uh things around the world. So I think we'll see more demand for X aut we'll see more demand for Bitcoin in the coming years and u you know whatever we cannot do as Bitcoin and gold marketers don't worry we've got the US government on our side destroying the dollar for us we can count on them >> you know to this point I mean our time's going too fast if but in in your newest book you explore an alternative you know kind of history when where sound money prevents World War I But you know looking at modern war warfare if you take away the ability to print and lever money does that really restrain a modern war or does the conflict just shift into sanctions blockades and and you know financial coercion? No, I think it's it's it's no coincidence that the century of total war was the century of central banking. And in the fiat standard and the gold standard, I focus a lot on this very pivotal moment in human history of 1914 specifically. That was the year in which the world went into World War I and that was the year in which fiat money came into existence really. That was when we went off the gold standard. Most people think of 1971 and in a sense you could say that because there was still some kind of redemption of gold taking place until 1971. Central banks could redeem gold from the US Federal Reserve up until 1971. But the real gold standard of the 19th century really ended in 1914 with World War I. and it never and it was never really resumed in the same uh kind of uh shape and form that it took before World War I. And so that really was the turning point. And I think that was the most important thing about World War I. We'd had wars before, but this was the war in which all the belligerents had access to a money printer. And so previously wars could only last for as long as the government had money. And the government had to take a hard look at its own treasury which was, you know, in the good old days. It was an actual physical room where piles of gold uh were um sitting. So you'd look at that and you think about the war and you think about the expenses of the war and you think about your odds of winning and you're very very careful because if you run out of gold in that big giant treasury room, it is game over for you. You're no longer king. Somebody else is going to come and take your throne and you know foreigners might invade your country. So you need to really watch that. And the people who are reckless with their gold stashes in that kind of world, the people who act like they have a gold printer are not going to be in the business of running countries for a long time. They're going to be wiped out by people who know how to manage uh how to manage cash balance without a money printer. But all of that is uh completely changed when you move to a world with fiat money because now governments don't just have to uh now governments don't aren't restricted by the quantity of wealth that they have or the quantity of money that they have. They are restricted by the total quantity of wealth held by everybody holding on to their currency. They don't need to go to people and tell them give us your money so that we can pay the soldiers. They just print money. devalues the money in people's pockets and people find themselves paying for the soldiers without wondering. And then this is really for me the most infuriating thing in the world which is that and and it's sad and you know the poor people are stupid people and poor people are being told constantly it's not going to cost us anything. It's a good investment. It's a you know war. It's it's important. Don't worry about the cost. there's all these uh there are all these fallacies that are constantly being promoted about how government spending is good and government spending is basically costless. So when you think of these you know most people just don't draw the connection between the fact that their grocery store is becoming more expensive and that their government is fighting a war and it's just so tragic. I mean, if you ask probably Americans what was the economic impact of the Iraq war, I don't think 20% of them would say inflation. >> Maybe I'm wrong, but I don't think a large number of Americans would say that this is what caused prices to rise. I think they don't draw the connection. They think prices rise because of evil, greedy capitalists or Republicans or deregulation or Democrats or regulations or whatever ideological thing you want to believe in. But really, it's war. It's money printing and it's worth it's war that's robbing you and it's destructive and it's terrible and if you had to actually pay upfront for the war it would be very difficult. So currently, you know, some estimates are that let's say that the Iran war was a 200 is going to cost $200 billion. They're going to ask the Congress for that. Um, first of all, that's a tiny fraction of the true cost because a lot of the costs are not things that are going to require appropriations from Congress. They're just baked in. There's Medicaid and med and and um social security and uh all of these things that need to be paid for the soldiers and all of the expenses that are part of the um budget of the Department of Defense and all the ammunition that's been run down and all the bases that have been destroyed that are going to need rebuilding. All of these things, you know, you had them $200 million going to look like a rounding era by the time this thing is over. >> Yeah. >> But so let's let's say, you know, uh if if you lived in a world in which you had hard money, you couldn't move the troops anywhere, you couldn't start the bombing without having the cash ready, without having to pay them up front. So you'd need to collect the tax, you'd need to pay the soldiers, and you'd need to know that you have all of the money you need for the campaign. So we'd have none of this idiotic garbage that Trump is doing right now. which is oh I don't know maybe it's going to be a 3 4 days or maybe it'll be three 30 days or maybe we'll they'll open hormones or maybe they won't maybe we're going to destroy their power plant or maybe we're having uh great negotiations with them. You'd have to be a grown-up unlike this stupid clown and you'd have to have a clear idea about what you want to do with the war. You have to think all right we have $400 billion and that would allow us for four weeks. So here are our objectives or what we want to do in the four weeks and here's how we're going to do it. And if things turn out in a different way, this is what our plan B is going to be. And you'd have to just very consciously and sely manage your money. And that's just something that no government does today because they're all ruined essentially. They're spoiled by the fact that they have a money printer. So that's why Trump can launch this war first and ask questions later. Same thing happened with Iraq. The war happens first, you ask questions later. The bill doesn't come. Imagine how different it would be if they had to specify, let's say $400 billion is what we need. Let $400 billion is about $1,000 per capita in the US. There's a little bit more because there's about 350 million Americans. So, let's say it's $1,000 per capita. Imagine you go around to Americans right now and say, "Everybody needs to pay me an extra thousand on their taxes this year because we want to bring democracy to Iran. We want to save Iranian women. We want to stop Iran's nuclear program. We want to help Israel steal more land and make sure that nobody in the region bothers them in any way. And we need you to cough up $1,000. Imagine going to a family of five in the US and telling them you have to pay $5,000 this year to fight the war in Iran. I mean, there's 350 million people in the US. That's a lot of people, a lot of money. A lot of them can't afford to pay that money. And only the absolutely most stupid and the absolutely most despicable and violent of them would be willing to pay for these kind of senseless wars that don't affect the US in any way that for which the US stands to gain absolutely nothing. >> If that's how they wanted to launch the war, they'd probably have maybe $5 million. If if it was voluntary, if Americans had to actually put the bill, who knows how much they'd have. 5 million, maybe 50 million. wouldn't be enough to do enough to do any of this stuff. Wouldn't have been enough to Iraq or Afghanistan or any of these stupid wars. But if somebody actually attacked the US, if Canada or Mexico or Germany or Britain or China got on aircraft carriers and wanted to attack the US, well then it wouldn't be a problem for the US government to raise money to defend it. Every American is going to want to put everything that they can and they're going to want to fight and they're going to want to use their own guns and they're going to want to invest in anything that they can do to help because they would realize then that there's a real um threat and it's worth fighting for it. So it wouldn't be difficult to get funding for war that actually is viewed as legitimate by the population. it would be very difficult to get funding for essentially criminal mass murder which is what the US government has been doing for the past several decades. >> So I mean you know I mean we go into so many different places there and our time is almost up but I but I will ask you one more. I mean, if if fiat doesn't make war free, it just delays and disguises the bill, then, you know, we're talking about investors looking for it to show up and bond yields, currency weakness, commodity prices, I mean, even declining real purchasing power as we've seen. Where does the monetary cost of war surface first in the real world where before the public fully recognizes it? >> Yeah, it's a good question. I think, you know, initially I was my focus was on uh oil prices. I thought that would be the uh first thing. But I think you know the way that Iran Iran has managed to just completely take control of the strait and allow traffic to go through essentially uncontested while all the aircraft carriers of the US are hundreds of miles away unable to come anywhere near suggests to me that uh maybe the oil shock might not be that thing. Of course, this can change cuz you know the one US attack on oil infrastructure in Iran means Iranian retaliation Gulf oil infrastructure and that could cause a massive crisis. But my u my dark horse pick for the most uh important place where this cost of the war is going to show up fingers crossed is in the uh 10-year bond in the bond deals on the Treasury. I think that's what's really interesting and it's uh it it's really fascinating to see it because a year ago was the last time Trump had well not the last time he's had many but maybe his last very big uh stupid tantrum that he threw when he decided to impose all of these very idiotic uh tariffs on foreign countries. It was an incredibly idiotic thing to do for many many reasons which is beyond getting into right now. But the important point here is that Trump chickened out and backed out of his stupid tariffs exactly at the point where the 10-year yield came close to 4.5. I think it's was when he at 4.5 that he made the uh that he walked back his tariff and he gave a 90-day u uh what was it relief from tariff and something like that and and and then basically the whole thing fizzled out and uh essentially he was saved by the Supreme Court which prevented him from doing this. I mean, it was an extremely expensive and stupid thing. But in any case, the important thing is that as the 10-year yield hit 4.5, he had to back down. And we had something very similar happen this weekend. The 10-year yield on Monday morning was nearing 4.5. And that was exactly when Trump chickenened out and said, "Oh, we're making great progress in negotiations with the Iranians, so I'm not going to destroy all of their power infrastructure and kill millions of people in starvation and disease. I'm not going to do this war crime that I very casually tweeted about a couple of days ago. We're going to give them another five days. Well, you know, the 10-year yield went down then, but I think if there's going to be further escalation, I think the cost, you know, I think the market realizes that all of these numbers, I mean, all all of these numbers that are being given about the cost of the war are ridiculous nonsense. Uh they're fiction. They are similar to the numbers that were given about the cost of Iraq. So anybody who's not a who watches TV constantly and believes what this government tells them is going to factor it in that the cost is going to be a lot larger. You know, they already got the Pentagon budget up to $ 1.5 trillion. They already need $200 extra billion dollars for this. And um you know the way that the US fights his wars as has become very obvious now is you know the last 50 years the the Pentagon has innovated basically nothing except budget increases. How do we make everything so much more expensive? How do we make it so expensive so that our friends in the military industrial complex make a lot of money and then give us great jobs when we retire? That's basically been the Pentagon. While China, Russia, Iran, and other serious countries have spent the last 20 years building the hypersonic missiles and the drones that are the most important weapon of the 21st century. The US was spending $10 trillion dollar on fighting Israel's wars, murdering people so that Israel could uh uh steal more land, subsidizing Israel as it murders people in Gaza and as it sets up its torture goolag camps in Palestine. And u that's just the that's just the reality of how the US government has been operating. It's so ridiculously incompetent. It's absolutely astonishing. And that's why, you know, China, Iran have hypersonic missiles and drones that are much more effective than what the US has. And the US is building these $14 billion monster aircraft carriers that are essentially obsolete. I mean, here they are. They're fighting a war. And their stupid $14 billion aircraft carrier is in the Mediterranean thousands of miles away. Why? Because it's dysfunctional. Why is it dysfunctional? because it's an overpriced stupid piece of junk whose only purpose is to make money for military industrial complex. Whatever this stupid aircraft carrier and these jets can achieve can be achieved a lot cheaper and a lot more reliably with a few drones. You can just have drones fly and achieve whatever it is that you want. this notion that there's all this um that all of this technology in the US is making it an a military superpower is I think it's coming crashing down and the US's ability to enforce it will in the world is likely being severely compromised. So all of that suggests the fiscal problem is getting more and more serious. I think >> you know the the burden of the debt is enormous and as the yields go up the uh impact is just going to go up. So >> I mean I've been waiting on this for many many years. I >> yeah I think uh the implosion of the treasuries market is really vala as far as I'm concerned. It's uh if we can put government bonds out of business that's going to be the best thing that we can do for human for humanity and for world peace. So, uh, I've been excited before. I've been burned before, but I'm it's not going to stop me getting stop. >> Uh, okay. Well, listen, our time goes too fast. I'm not going to finish just up on that. I'll ask you one former uh, you know, just kind of question just on practical wealth protection in this environment because I mean, former gold bug, of course, you know, you're still long Bitcoin. Um, we got a big audience that watches this. If a retail investor has some savings today, but they don't want to become a full macro speculator just to protect their purchasing power, what does a sane hard money allocation actually look like for them in practice? >> I mean, it's difficult to give a one answer for everybody. As far as I'm concerned, it's really Bitcoin. That's it. I mean, I think you want to have some fiat to cover expenses for a few months so that you don't have to be buying and selling with Bitcoin all the time because the volatility can mean that essentially you're playing the lottery with the price that you get when you need to buy and sell if you have major expenses. So, you want to keep some fraction of your wealth um as an individual or let's say as the operating cash for a business, you want to keep some fraction of that in uh fiat. You probably want some gold. um as a you know it depends on your level of conviction in Bitcoin. The higher your conviction in Bitcoin, the less gold you're going to need to sleep better at night. But beyond that, I don't really see a compelling case for investing in um in in in in other asset classes except where you find a very clear uh compelling advantage in the market where you have a very strong thesis and you're looking at balance sheets and you're doing due diligence and you've got a very clear idea about let's say well you know AI is going to explode next here. So, I want to buy Nvidia or something like that. Like, if you have these kind of thesis where you're willing to put your money where your mouth is and you have a strong level of conviction and you have an understanding for it, then by all means, go ahead with it. But I think um you want to get rid of this melting ice cube in your hand that you need to get rid of this idea that, oh my god, where am I going to put my money? What's going to happen to the S&P? Should I move my money from the S&P to the NASDAQ? Should I go from the NASDAQ to the Should I buy bonds? Should I do this? If you're stuck in this u this cave of fiat assets, I I I don't have clear answers about how to navigate that and I don't think that uh trying to navigate that actively will work out well. I think your best bet if you insist on remaining in fiat assets, your best bet is to just buy the index. >> All right. But uh beyond that, I think uh you know ultimately as long as you're just able to build a significant base in Bitcoin over time, you know, the risky thing about Bitcoin is if you go all in initially, there's enormous volatility. So you could buy the top and then witness a 70% draw down and that can be devastating. So you want to go in probably gradually, particularly if you're going in at a time when Bitcoin is hitting all-time highs because could be a top and it could be a big crash. So, you don't want to be going in um aggressively at a time when Bitcoin is near all-time highs. You want to be gradually going in and then gradually building your position, increasing the size of your position until the position is essentially comfortable for you to uh be able to have a very large position there. So that even if it were to draw down 70%, you're fine because you've got other assets, you've got fiat to manage your expenses, and you don't need to be selling the Bitcoin during these big draw downs. All right, that's safe Amos, uh, author of the gold standard, the fiat standard, and the Bitcoin standard. Great book, that last one of yours. >> Thank you. Thank you. I'm glad you like it. I mean, it's a it's still a bit of a Bitcoin book, but it is also a gold bug book. So for all of the gold bugs out there, I mean I let me just do a little bit of an advertisement for it. It's an alternative history of the 20th century where fiat money dies in 1915. >> So we were talking earlier about war. This is a thought experiment of what happens if we'd had a clearing mechanism that allowed people to settle gold. Remember the first question that we uh discussed in this interview that ultimately the limitation of gold is that it's difficult to have a market where it clears and it can be used as money. Well, in this book, I introduce an airplanebased settlement network in gold in 1915. Uh, well, it starts in 1911, but it's uh taken off, if you'll excuse the pun, by 1915. And that results in u the collapse of all of the major central banks of the world in 1915 because people take their money out of the banks that are financing the war and they start trading with one another directly. So, we have essentially a peer-to-peer distributed network for trading gold. And that means nobody needs to keep their gold at the central bank with a lot less gold than the central bank. The central bank's ponzies collapse and then the war ends in 1915. So then we go back on a gold standard, but it's a lot better gold standard than the one that he had in the 19th century. It's an industrial technologically advanced gold standard. So this whole book is trying to imagine what the world what the gold standard could have looked like with 20th century technology and what the 20th century could have looked like if we had had the gold standard instead of fiat standard. Spoiler alert, a lot more prosperity and a lot more peace and a lot less war and a lot more technological advancement. >> History repeats itself. It feels like uh always a sharp serious conversation that forces us to rethink the mechanics of money. Appreciate your time. Thanks again for joining us today on Kicko. >> Thank you so much for having me. It's a pleasure. >> All right. And a big thanks to our sponsor, Swan Bitcoin, your partner for generational wealth. You can get started at swan.com/kickco. And thank you for tuning in. And if you want to stay ahead of the macro trends and get independent, hardthinking analysis you won't find on mainstream networks, make sure to hit that subscribe button right now. I'm Jeremy Stafford. Thanks for watching. I'll see you next time. Swan is the premier Bitcoin wealth platform serving leaders of families and businesses. Swan's missiondriven team simplifies Bitcoin investment, custody, and security, bringing you concierge service, worldclass research, and exclusive events.
Why Governments Will Never Let Physical Gold Be Money Again | Saifedean Ammous
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In focus with Jeremy Saffron is brought to you by Swan, the real Bitcoin company. >> Welcome back. I'm Jeremy Saffron. Markets are dealing with a real monetary stress right now. We have roughly 10 trillion in US government debt set to mature over the next year. Treasury yields remain elevated and digital assets are being pulled deeper into the traditional institutional system through ETFs, stable coins, and tokenized products. And at the same time, physical gold has been under extreme pressure this March. While Bitcoin has held steady in the low 70,000s despite war headlines and some pretty sharp volatility. Now, I say this because today is not just a con conversation about Bitcoin's price. It's about whether money is becoming harder, more digital, or simply more controlled. So, where is the real safe haven when debt, liquidity, and trust in the system are all being tested at once? Joining me to break this all down is Dr. Sephine Amos, Austrian economist and author of the Bitcoin Standard, the fiat standard, and his newest book, The Golden Standard. Sephine, it's great to have you on the show. Thanks for making the time. >> Thank you for having me, Jeremy. It's a pleasure. >> Uh, I want to start a little bit going backwards for a moment because back in 2022, I mean, your framework was mostly built on, you know, first principles, but we fast forward to 2026 and Bitcoin is much more institutional. is it's it's more financialized and it seems wrapped into the traditional system through ETFs, you know, corporate treasury strategies, these stable coin rails. Has this new reality strengthened your thesis or has it complicated it? >> No, I think it's uh everything's going according to plan if you were to ask me. I think um uh probably if you asked me 5 years ago, I wouldn't have expected to have this much institutional adoption. I would have expected more individual adoption. U seems I was wrong about that. It seems that a lot of people just uh um aren't going to get into it individually. They're going to get into it through institutions. But I think that's normal and predictable. And uh if you remember in the Bitcoin standard in my first book, I looked at the numbers for Bitcoin scaling and I just said the demand for Bitcoin as a hard money, as money that resists inflation is far larger than the demand than the uh supply of Bitcoin block space. So, it's going to be impossible for everybody to be able to get their own uh coffee transaction on chain for Bitcoin, but everybody's going to want to have a piece of the Bitcoin action. So, inevitably, the majority of people are going to end up using second layer solutions in order to use Bitcoin. And one of these second layer solutions in a sense is institutional adoption by um buying an ETF. You're effectively getting exposure to Bitcoin without uh having to use it yourself. Of course, it has its draw downs. I don't recommend it personally. I don't buy ETFs myself, but it works for some people, and I think it's going to continue to be the case. There's uh there's no use fighting it. It's a it's a it's a great financial asset that has beaten pretty much all financial assets over the last 10 years or so. Everybody's going to want a piece of the action, >> you know. I mean, if we kind of look at the actual math driving some of this right now, I mean, you know, from an Austrian perspective, what does this $10 trillion debt refinancing wall suggest the Fed is likely to do, you know, this year? On the flip side, I mean, what would Jerome Powell have to do if he, you know, if his real goal was to protect the dollar's credibility rather than just propping up the system's short-term stability? >> Well, that's a very uh difficult question to answer. If he really wanted dollar stability, you know, the answer is a lot more radical than uh what he studied in his grad school. I think if u if he really actually wanted dollar stability, he'd peg the dollar to something that wasn't a Ponzi scheme like the dollar and he'd make it redeemable in it. So gold or bitcoin are the only two choices as far as I'm concerned. And uh then that would limit inflation and that would actually provide credibility for the dollar. But uh if they don't do that then of course they're not going to do that because of the political realities of u democratic politics. People want the free lunch. People think they can get the free lunch and they're going to always vote for the um con artist who tells them they can have the free lunch. And uh the uh the realities of just democratic politics are always going to mean that there will be inflation. So given that there is inflation um you know the I I I wish them the best of luck but uh there's no way to make a dollar uh stable while continuing with inflation. I mean they can try all these um uh fiat economics tricks of managing the price level managing the money supply but in the long run all of these things lead to the destruction of the value of fiat money. Uh it's it's all uh rearranging deck chairs on the Titanic. If you zoom out and look at the long term, the dollar loses 90% of its value every 20, 30 years or so. And there's no stopping that train. There's going to be more government spending. There's going to be more inflation. And it's only a matter of, you know, politics is the the matter of moving around winnings from this inflationary system to benefit some people at the expense of others. But I think the only radical solution ultimately is hard money, gold or Bitcoin. >> Yeah. Well said. I mean, we've had Judy Shelton on the show. Obviously, we've talked a little bit about what that could possibly look like. Would a would a gold peg, you know, restore monetary discipline or would it just expose how mispriced the dollar already is relative to real asset uh real reserves? No, it'll do both. I think, you know, if you wanted to peg the dollar to gold, that would necessarily require a large revaluation of the dollar. You could say revaluation of gold depending on how you look at it, but I think it's more accurate to say it's a revaluation of the dollar. um you're going to have to basically I mean you can back the current dollar supply with the current gold supply at a much higher price of gold. I I haven't run the numbers recently, but I presume it's going to be at least $10,000 an ounce of gold at that kind of price levels with the supposed I should say supposed gold reserves that the US government supposedly has. Apparently, there's this crazy conspiracy theory that the US government has 8,000 tons of gold. Um but you know, I don't I'm not a big fan of conspiracy theories. So, I'm not so sure about it. I'd like to see an audit, but you know, apparently audits are uh are are crazy hard to come by. >> Conspiracy. >> Yeah. So, presuming they have the gold, it's a very big if, uh then they could probably balance the u they could go into the hard money standard if they revalue the gold at a price that backs a sufficient amount of the dollars that they have issued, preferably all of the dollars in order to have a proper gold standard. And if that were to happen, I mean, I think it's going to be a painful adjustment for the first few months. Uh, a lot of uh people are going to get u wrecked in a certain way. There will be a massive monetary adjustment over a few months, but I think after that we would get on a sound footing and the world economy would be a lot better. And of course, the politics would be very different because governments wouldn't be able to print money. They'd have to get taxation. And that makes politics a lot more complicated for them and a lot better for people. Well said, Sabine. I mean, you know, you look at today and I'm kind of bringing this up in a more macro picture. We'll kind of get into more specifics, but I mean, we're we're watching global markets suffer extreme whiplash this week. I mean, we saw a brief rally on ceasefire hopes, but this morning Iran outright rejected the US proposal, laid out a list of demands and and Brent crude has popped right back over $100 a barrel. I mean, for the average investor watching their portfolio whip around on these escalating geopolitical headlines, how do you practically disting distinguish between a violent geopolitical supply shock and actual fiat debasement? >> Yeah, I mean um it's it's difficult to distinguish between the two because both of them are taking place at the same time. So the dollar is always being devalued. I think that's just the uh that's almost like the water in which we swim as fish. We don't even realize that we're in water because all we've ever experienced is water. So, we're just normalized um the idea that money loses its value. But, uh yeah, the geopolitical shock can of course be real. And this one, I think, is very, very real. And I think uh the market reaction so far has probably, if you ask me by my opinion, it's probably been understated compared to where I think things could go. But uh I mean it seems u initially it's you know initially the reaction was all right the Iranian regime is going to be decapitated. They're not going to be able to do anything. This is going to be like Venezuela. It'll be over in 3 4 days. That didn't work out. Then there was the idea that well they're not going to be able to close Hormuz. Their military capacity is done. Turns out that they managed to close it and after two three weeks of government propaganda and media lies and just absolutely hilarious uh uh cope and seething by the administration about it. Well, you know, the straight is open. It's just that Iran might shoot you if you go there, but we recommend that you go there and try. We're not going to send the navy obviously because we don't want them to get shot, but you know, all these commercial tankers should go and all these u other countries should send their navy. Well, then it became clear, you know, after all the um um delusions and lies died down, it became clear, no, the homes had actually closed and they have an iron grip on it. >> Uh so that looked like it was a problem. I think now things are being resolved as we speak right now or I would say the price is probably nowhere near as high as it could be because it seems clear that a lot of boats are leaving the straits of Hormuz because they have struck a deal with the Iranian regime. So the Iranian regime has effectively installed a toll booth on the straits of Hormos which seems to be charging about 1% of the market value of the oil on tankers based on early estimates that we've seen. So, if this uh sticks and if this continues, I mean, it's not going it's going to cause very little disruption in the long term because it's just a 1% tax. Obviously, there's been a lot of disruption over the past few weeks because of uh the destruction of infrastructure. So, that's going to likely affect the markets for a while and you know, the the conflict is not really over. But if the Iranians succeed in in imposing this toll booth, then likely the oil market normalizes. um prices will remain high for a while, but it'll likely be normalized over time, but uh it's a it's a big question if they can keep it up. I mean, I think militarily they have a very good case because they have all these distributed drones all over and they just need to hit one tanker a week to scare away or maybe one tanker a month to scare away all the other tankers. And it's a very very very complicated military operation for the US to try and stop all of these drones. likely, I would think probably it would require the largest military deployment by the US since World War II to try and conquer Iran completely, comb all of the coastline, clear it from drones and missiles, and make it safe enough that commercial tankers can cross without paying the Iranian toll. It's not an easy thing. It's an extremely difficult thing to see. So, it's difficult to tell. And I would say I mean um I I follow this because I happen to live in the region. The rockets are flying over my house and the signs are u bursting out uh several times every day. So of course I'm very into following what's going on. But I think financially >> I'm generally not a fan of uh trading the news. I'm not a fan of >> uh sitting at watching TV, reading the internet and then um managing your portfolio actively based on that stuff. And of course, if you're in the fiat markets, you have to do that because the fiat markets are all about the news and it's all manipulated and it's all about what the Federal Reserve says and does. So, you have no choice but to basically be a part-time hedge fund manager. No matter what you do, you need to pay attention to all of these things that are going on. But that's why I like being in Bitcoin. >> Yeah, >> Bitcoin is completely immune to all of this You just buy Bitcoin, you wait five years, and you look back five years later and all of this stuff is noise. You know, I remember for instance when the um Russian Ukrainian war started and it was four years ago >> and there was so much discussion about what Bitcoin is going to do and how is Bitcoin going to react and is it going to go up or is it going to go down and and you know depending on the time frame if you looked at the first day it crashed or then the next first week it went up then the first month it went down or something like that. I I don't remember the exact specifics but there was a huge debate about well it's it's going to rise it's going to go down doesn't matter ultimately what was the effect of the Russian Ukrainian war on Bitcoin? I don't know what was the effect of this u uh Iranian uh Israeli uh US war on uh Bitcoin. I have no idea. I think in the long run Bitcoin just marches to its own drum beat. I think it's still too small to be uh a um a macro asset that is affected by macro movements. I still think the uh dynamics of Bitcoin supply and the psychology of Bitcoin holders, particularly the oldtime holders who held it for a long time, I think these are probably far more effective to price determination in the Bitcoin market than geopolitical events. >> Yeah, that's interesting because we're going to kind of pivot there. I mean, how how these assets actually behave under stress. I mean, you know, you talked about four-year cycle with me kind of coming before before coming on air, and I I wanted to ask you because I mean, if Bitcoin still trades a little bit with macro risk sentiment during these geopolitical shocks like we saw maybe this week, why should gold investors treat it as a true safe haven right now? >> Well, I mean, it's it's difficult to tell uh with uh gold. I I used to be a big gold bug before I got into Bitcoin. I was a massive gold bug. I uh rode the gold uh bubble in around I think it was 2008 to 2011 and then there was a big crash after that and um that crash forced me to reconsider and revise my assumptions about what was going on and that's how I discovered Bitcoin and I opened my mind up to Bitcoin and became a Bitcoiner. So it's a difficult question for me to assertain what's happening with gold. I would say you know the recent run in gold caught me by surprise. had not expected to be this quick and this um >> this vast this big of a rise and um it's um it's I guess for me the question is what happens next. My honest opinion I I I can't feel comfortable recommending that people hold gold for the long term because I think the um you know you look at 2011 the price went from 1,900 crashed down only recovered I think in 2020 or something like that maybe 21. So, you know, there's a 9 10 year bare market in in gold uh that you have to sit through if you buy uh at a very high rate. >> And then when 1980, the year when I was born, the gold price hit 800 and then it crashed and only got back to 800 in 2008. So that's 28 year bare market. That's a whole generation. So I don't feel comfortable telling people to buy gold anymore as I used to when I was a gold bug. I think ultimately the fact that governments control gold clearance, the fact that they don't allow the creation of gold banks is almost a fatal uh hit to gold's monetary role. It's just as long as you can't have a bank account in gold and you can't just send gold directly. You can't use it to settle payments. You can't uh run your accounts with gold because you have to run it with your local uh national currency. Then gold's monetary role is always going to be limited. People are going to buy into it and out of it and they're going to incur significant transaction fees every time they do that. And that will likely um just undermine the salailability because ultimately what money is the most important property of money is its salailability. So if people aren't able to accept it as payment, if people aren't able to trade it with one another directly, that's going to massively undermine its salailability. And it looks like for me that's why uh you know gold didn't recover from the bull market in 1980. I think this is the difference with Bitcoin. Bitcoin is just in a sense a more advanced monetary technology because it has the having. So in 1980 when gold hit $800 or something like that, it crashed down. Now imagine if in 1982 annual production of gold dropped by half, >> the bull market in gold would have returned a lot quicker. but instead in physical gold in 1982. Probably that was a time when production was ramping up because of all of the investment that was made into gold mining in 1977 8 9 and 80 during the big bubble. So people overinvest in mining and then that results in a lot more uh production coming on at the time uh when the bubble bursts and that's why the thing can stay dead for a significant amount of time. So with the difficulty adjustment uh sorry with the having bitcoin fixes that because it ends up making sure that the supply drops every four years. So even if the demand doesn't go up the fact that the marginal supply declines causes a an increase in the price. >> Right. Right. So I mean if if gold can still store value but cannot move freely or settle kind of globally or you know escape those custody checkpoints then you're really saying Bitcoin is not replacing gold's theory but solving I guess the political weakness of gold. >> Exactly. So if you were to ask me all right so what do you do about gold? How do you do it? Well I I don't know. I mean if you can shut down your local central bank or force them to take gold then by all means go ahead. But the only practical solution we have, the only accessible solution, the only realistic solution for the problems of gold is Bitcoin. It's something that recreates the monetary properties of gold but makes it digital and there and then improves upon it by introducing the having by introducing the difficulty adjustments which ensures that we're always going to get a declining uh supply growth rate and that more mining cannot result in more production taking place. That for me is the case for Bitcoin. Bitcoin is the gold that is built to defeat governments and that's a flaw that physical gold doesn't have. Unfortunately, governments have managed to kill it. >> Here's a question for you. As a former gold bug, you know, just I'm sure that you've been paying attention a little bit to comx the price discovery, you know, this paper market. I mean, when we when we look at the current mechanics of the paper gold markets, do they actually help liquidity and price discovery or do they weaken gold's function as a monetary signal by creating, you know, leverage that can just swamp the physical market? >> It's a it's that's a great question. I don't quite have strong opinions on this question. I think you know initially when I used to be a gold bug I um was very much on board with this idea that these uh futures markets are being manipulated and that's how the fiat system survives because naturally everybody wants to buy gold everybody would buy if everybody buys gold there's no way of printing more gold the price of gold goes up eventually gold dominates cash balances the fact that it's not doing it suggests that there's some manipulation going on and you know gold bugs have spoken about this for many many years uh As time has gone by, I've I have less confidence in that the hypothesis. I would say the reason is the reason that the gold doesn't go up might not necessarily be the uh paper market manipulation. It's the fact that it can't trade, that you can't use gold for direct payment. And so therefore, you're always switching in and out of it. And therefore, you're always incurring um transaction fees, which is essentially undermining the role of gold. So since I if if that were really the problem then it might be the case that the futures market is not really the guilty party that is causing the problems of gold and and preventing gold from monetizing. But it could be um it could it could also be seen as the um um another way of looking at this is that you know within these futures market ultimately the only way that you're able to essentially manipulate the price is if there's some kind of monopolization of the movement of physical gold and this is what we have with gold because there is no easy large clearly transparent liquid market for people to be selling and buying physical gold in the same way that the LBMA is supposed to function, but it functions in a very opaque way. So if we had 100 LBMAS all over the world where people are able to get physical uh gold for their paper almost seamlessly then it would be a lot harder for uh shenanigans in the futures market to affect the price because ultimately there's a day in which you need to deliver physical and you can only screw around with paper so long before you get called out with the physical. But if you run the rails on which the physical settles and if you have a monopoly on these rails, if you have a monopoly on the banking system and if you have a banking license that allows you effectively to print money, well then that can allow you to rig the game and that can really change how the entire game is played. So I think the uh this is this is this for me ultimately is another flaw of gold that Bitcoin fixes which is that by being digitally native, Bitcoin allows for the large liquid market for people to settle with one another directly in Bitcoin to be a huge and liquid and available 24/7 all over the world which makes futures markets shenanigans a lot more difficult. >> Yeah. I mean, do you believe that the US gold is is fully there, fully kind of accessible, truly usable for for modern monetary reset, or do you think Fort Knox is kind of more as a symbol than a credible monetary back stop? >> I mean, fortunately, I don't have to answer that question because I'm in no position to be answering. I I don't know. I I I wasn't the one who put it there and I don't have access to the keys, so I have no idea. But, you know, if you ask me to get if you ask me to bet, I'd say it's not there. just I mean saying we can't have an audit is just an admission of uh theft essentially. So something fishy is going on and of course you know the way that Elon Musk was just completely lobbomized about this topic and it was just it was almost like you know they removed the software from his brain and then he was never allowed to talk about it ever again after he brought it up. Doesn't inspire a lot of confidence. That's not what people who have 8,000 tons of gold would be doing. You know, if they actually had the 8,000 tons of gold, they'd have tours open for Americans to go and see the 8,000 tons of gold. I mean, >> it's an enormous sum of gold. Americans should be very proud of it. They should have it on display. They should have it in several different vaults across the country and people come and see it and people should be able to redeem it. The fact that they don't, I think, speaks volumes. But >> yeah, >> I know. >> I hear you. Uh we'll we'll continue to ask all of our guests. Um Okay. Okay. Well, let's move on to kind of miners margins a little bit on Wall Street because um you know the economic stress inside the Bitcoin mining industry is is interesting and we saw reports in in mid-March estimating average production costs near 88,000 per Bitcoin while the spot price was sitting in the low70s. How does this network sustain itself economically when a large part of the mining base is underwater at the current prices? >> Oh, it doesn't matter. It's a problem for the miners. The network will continue. Um it it it um in a sense you can think about it in gold terms. There's gold that's being circulated and used monetarily. And if uh an earthquake happens that um harms one of the miners and puts one of the miners out of business, that's just going to mean that a little bit less new gold's going to come on the market, but it's not going to affect the function of gold um as as a money that is being used every day in coins and bars. With Bitcoin, it's even less because with Bitcoin, the new supply that is going to come on will be the same regardless of what happens to the miners. So, if we have uh $10 billion of capital mining Bitcoin or if we have $10 of capital mining Bitcoin, we're only going to be getting I think it is where what are we now? 450. No, I think we dropped by half 225 uh new coins a day or maybe it's 450. I forget. Anyways, but we'll be getting the fixed number of uh Bitcoin every day. And regardless of what happens with the mining industry, um now generally you look at Bitcoin cycles, this is generally the time where uh Bitcoin miners start hurting a lot because a lot of miners get um overexited and they start overinvesting during the during the bull market when Bitcoin's price is going up. And at that point, you know, the price is going up and u mining Bitcoin looks like a no-brainer and uh it seems like it's a great idea. You have in great margins, but then of course the key thing with Bitcoin is the difficulty adjustment. The difficulty of mining goes up. So the cost of mining Bitcoin goes up and generally it's always going up to catch up with the price of Bitcoin and then it declines roughly if the price of Bitcoin declines. So um after they've overinvested in the bull market then there comes the crash which you know we had we we had the top in October. It's been 5 months now. We've crashed and I think we'll u you know we may be getting few more months of sideways or downward action which is going to be very stressful for the miners because they invested they the ones that were investing during the bull market. They bought their equipment at high premiums because the equipment was in high demand at that time and at that point the difficulty was relatively low. Price goes up, difficulty goes up, more and more capital comes along, more and more investment comes along. So this is the point of maximum pain. We're coming up to the maximum pain point for miners, which is price is declining, difficulty is still going up because a lot of miners are still um coming online because of the investments they made in the bull market. So this becomes the most brutal time for Bitcoin miners and generally I generally just think as with gold I I I have a strong very strong opinion on the idea that you should just stay out of Bitcoin mining and gold mining. I think uh you know if you have some kind of technical uh understanding of the industry if you have some advantage that allows you access to say very cheap energy then maybe you should consider mining bitcoin. If you have some engineering or capital advantage that allows you to buy to mine gold, then maybe we should get into it. But that I think misses the point. In other words, the maybe the mining part of gold or Bitcoin is by design supposed to be trifling insignificant and the real use case is the money. It's the trading. That's in fact as I explained in the Bitcoin standard, the whole reason that gold becomes money and by extension the whole reason why I think Bitcoin becomes money is precisely because mining is inconsequential. It's small and it's unprofitable usually and it doesn't grow. If mining was profitable, if if mining gold and Bitcoin was usually profitable, then we'd have inflation. It would suck as money. But it's designed to be a zero- sum game with Bitcoin and it's close to a zero sum game in gold because it's very difficult to find gold and then the more that you uh invest the more expensive it becomes and then it becomes difficult to find significant enough margins. So my advice is money is made for spending and holding not for mining. Mining is uh it it's supposed to be an unprofitable business for those monies to work very well. And I think if if you follow the gold industry, you know, gold miners have been uh complaining and people who invest in gold miners have basically been complaining about it forever. Gold mining has underperformed Bitcoin. Uh sorry, gold mining has underperformed gold. And I think Bitcoin mining has likely underperformed Bitcoin. I ran a poll on my Twitter once where something like 5,000 people answered and the question was, if you've mined Bitcoin for more than 5 years and calculated all the expenses that you incurred, would you have been better off just putting all of the expenses into buying Bitcoin instead of going through the mining? And something like 78% said yes, they would have been better off just buying Bitcoin. So, you're getting into a massive headache and um introducing all kinds of risks. And there's a 78% chance that it's going to give you fewer Satoshi's than you would have had otherwise. And I would probably say it's actually likely higher than 78%. Because I think people are not very good at calculating uh opportunity cost and calculating all the costs that they've incurred. So probably among those 22% who think they outperformed holding, I think if you count all the costs, particularly the time invested in mining, I think a lot of them would realize they would have been better off just holding Bitcoin. Yeah. Hold don't mine. >> Yeah. Hold don't mine. Uh I mean your thesis since the beginning has been somewhat of the same. I mean um you know on this I guess we could kind of talk about the sovereigns too because you frequently advise on building digital treasuries but we're tracking reports this year that Baton has has been actively selling off portions of its Bitcoin holdings. Are are more sovereign states looking to build these reserves? And what are you seeing here? Uh yeah, Bhutan. Uh I I have no particular insight into what they're doing, but they seem to have made a ton of um Bitcoin out of mining. They have a lot of stranded energy there. They've invested in mining Bitcoin over the several years. They've accumulated a significant stash and I mean it was an investment. So yeah, you need to liquidate the investment. They have salaries to pay, but they've accumulated a very significant sum. I mean Bhutan is a very small country and it's not very rich. So they've accumulated, I think, more than a billion dollars worth of Bitcoin at a certain point. I don't know what it is now and how much they've sold. And with the price going down, it's probably declined, but that's a lot of money cuz the entire GDP of the country is a tiny number. So this is a significant chunk of their GDP. Obviously, you should compare flows and stocks, but uh it's it's still um quite instructive. And u other than that, I mean, El Salvador is still stacking Bitcoin. They just keep buying. They don't care. And they've been doing it for five years and it's netted them hundreds of thou hundreds of millions of dollars worth of profit. And I expect them to continue to do that. Now, other than that, I don't really have uh much particular insight into um nation state adoption. I know Abu Dhabi, one of the sovereign ones, sovereign wealth funds in Abu Dhabi uh had been mining Bitcoin for a while and they did really well with that. and it's becoming more and more popular. Um, you know, we had all the uh Trump circus about uh using a strategic Bitcoin reserve, but then he ended up buying pesos to bail out MLE and launched his own shitcoin. >> And so, uh, glad I never got my hopes up on that one. >> You know, this it's it's a fair point. I mean, Batanas is effectively monetized part of its Bitcoin position when they needed it. I mean, but does that prove Bitcoin kind of worked as a treasury asset or does it prove that even sovereign holders still treat it as something to sell into fiat when when real world obligations hit them? >> Yeah. I mean, everything is uh I mean, money is made to be spent. So this notion that you just stack Bitcoin forever. I mean it's uh >> I I think there's there's mimemetic value in it and it's good to drive the point home particularly to new Bitcoiners to just explain that you know you're missing the point if you're just buying Bitcoin from Coinbase and then spending it the next day on your coffee and pizza and then having to buy bit Coinbase again. you're just paying extra fees to Coinbase and then paying extra fees at the terminal and just wasting your time and you're not benefiting from what actually Bitcoin allows you which is uh protecting yourself from inflation. >> I mean we could go into we could go into it more. It was mostly about you know if central banks are ever going to start seeing Bitcoin is kind of a strategic reserve much like they look at gold right? >> Yeah. So I was saying yeah so you should Yeah. But but in in in reality, I mean, everybody needs to spend their money, so it's not there to be held. And you know, when you make an investment into mining or when you make an investment into buying Bitcoin, you've foregone spending. So you could have bought a new car, but you decide, all right, I'm not going to buy a new car. I'm going to stay with my old car so that I can buy Bitcoin and then in three years time, I'll revisit. Well, three years time, three years later, your Bitcoin's appreciated significantly. So now what do you do? Well, now your old car is a lot older. So you still need to buy and that's okay. You're gonna have to sell some of your Bitcoin at some point and that's fine. So I think that that also applies for governments. You know, the Bhutan government invested significant amounts of capital in order to make this happen. And if they can't get spending, increased spending out of this, then um >> h how useful are just reserves that you're never going to be using? It's useful to be able to use them. So, you know, I I I don't know what they're doing, but I would hope that they understand the long-term value proposition and accumulate some of the Bitcoin, but of course, I understand that they're going to have to spend some of it. >> Yeah, I'm glad that you said that. I mean, a lot of people, they just kind of stack, see these draw downs. But, I mean, you know, that four or five year kind of um cycle, as you talked about, is important to understand. I I wanted to ask you about stable coins, too. I mean, they're they're some of the largest buyers of short-term US paper in the digital asset system right now. So, are they really undermining fiat or are they just kind of extending the dollar's dominance through, you know, these new digital rails? >> Yeah, it's a good question. I think there's the obvious answer is they are extending it because they're allowing more and more people around the world to buy more dollars and then they are buying treasuries. So, essentially they are buying the US government's bags. They're bailing out the US government. They are essentially the um holder of last resort in a sense because they are currently one of the biggest buyers of treasuries in the world. they're buying more than most central banks. So in a sense it is increasing demand for treasuries. However, I would make the counterpoint. U I'd say the significant uh evidence to the contrary. Number one, uh a lot of this new demand for USDT and uh stable coins is derived from the fact that well I should say it's it's displacing existing uh dollar demand. So when somebody in Turkey decides to stop using their bank account uh for trading and starts using USDT well their bank account you may have been either in Turkish Las or in US dollars whichever one there's going to be backing it US dollars and treasuries. So when you dump your Turkish leader bank account or US dollar bank account in Turkey and you start using USDT instead, that's not all new demand for dollars and USDT and US treasuries, that's displacing some demand that has already existed. And I think if you run the numbers on it, I think even with the most optimistic scenario for the growth of u tether, I don't see it making a dent in the fiscal situation in the US. And I gave a talk in the Bitcoin conference last year about this topic. And you know that was before the war in Iran. But even even just assuming that we went uh on with the same kind of projections of how spending was going over the past 10 years projected into the next 10 years and you see that the budgets are just going to grow enormously. the debt is going to grow enormously and whatever little amount of purchases that USDTs are going to produce is not going to make a big difference in the grand scheme of things. However, where it will make a big difference in the grand scheme of things is with the small fraction of their profits that they use to buy Bitcoin >> because even though it's a lot less than the treasuries that they buy, it's a lot bigger as a percentage of the Bitcoin total market capitalization. And so even if of course they're going to be buying more treasuries because they're offering a treasury uh stable coin. They're not offering a Bitcoin stable coin. So they have no business use for buying Bitcoin for their operations. They buy it as a treasury asset. So of course they're going to be buying a lot more treasury bonds than Bitcoin. However, they're buying a smaller percentage of the Treasury market than of the Bitcoin market because the treasury market is a lot bigger than Bitcoin. So, I think that the net effect, as long as TA keeps buying Bitcoin, the net effect is going to be that it will likely pump Bitcoin and kill the dollar. God will >> interesting. Okay. Cuz I mean, you know, obviously there's a there big difference between creating fresh structural demand for US debt and simply moving existing demand for dollars onto faster rails, which is kind of what you're saying. I mean, which one do you do you think is is actually happening? >> I think it's both. Uh almost certainly both. uh the but I would just say that since some of that is displaced demand so when we look at tether we say it's $180 billion um new demand for treasuries I don't think that's accurate I think some number significantly smaller than 180 is likely the extra demand so let's say it's $100 billion give or take a few dozen dollars a few dozen billion dollars so it's a hundred billion dollars that's peanuts when you're talking about the US government's insolveny I That's just a that that that's a couple of weeks of the war in Iran be when you count in all of the costs. They're talking about $200 billion now, but you know, they were talking about hundred billion for Iraq. And that ended up costing 100 times that. So, expect something similar to happen here. There's going to be massive expenditure. There's going to be massive, massive pressure on the dollar. And I think um I mean I think the world is getting sick of the US. The world's getting sick of Trump. the world's getting sick of the dollar and more and more people are likely going to be switching away from it to Bitcoin. But I also think uh even you know within the USDT world I think USDT has introduced the new uh XAT which is a gold stable coin and I think that's going to start eating into the demand for USDT. I think um a lot of people all over the world are going to realize gold is just a much better um money than the dollar and you'd rather not be financing the US government as it does all of these crazy insane criminal uh things around the world. So I think we'll see more demand for X aut we'll see more demand for Bitcoin in the coming years and u you know whatever we cannot do as Bitcoin and gold marketers don't worry we've got the US government on our side destroying the dollar for us we can count on them >> you know to this point I mean our time's going too fast if but in in your newest book you explore an alternative you know kind of history when where sound money prevents World War I But you know looking at modern war warfare if you take away the ability to print and lever money does that really restrain a modern war or does the conflict just shift into sanctions blockades and and you know financial coercion? No, I think it's it's it's no coincidence that the century of total war was the century of central banking. And in the fiat standard and the gold standard, I focus a lot on this very pivotal moment in human history of 1914 specifically. That was the year in which the world went into World War I and that was the year in which fiat money came into existence really. That was when we went off the gold standard. Most people think of 1971 and in a sense you could say that because there was still some kind of redemption of gold taking place until 1971. Central banks could redeem gold from the US Federal Reserve up until 1971. But the real gold standard of the 19th century really ended in 1914 with World War I. and it never and it was never really resumed in the same uh kind of uh shape and form that it took before World War I. And so that really was the turning point. And I think that was the most important thing about World War I. We'd had wars before, but this was the war in which all the belligerents had access to a money printer. And so previously wars could only last for as long as the government had money. And the government had to take a hard look at its own treasury which was, you know, in the good old days. It was an actual physical room where piles of gold uh were um sitting. So you'd look at that and you think about the war and you think about the expenses of the war and you think about your odds of winning and you're very very careful because if you run out of gold in that big giant treasury room, it is game over for you. You're no longer king. Somebody else is going to come and take your throne and you know foreigners might invade your country. So you need to really watch that. And the people who are reckless with their gold stashes in that kind of world, the people who act like they have a gold printer are not going to be in the business of running countries for a long time. They're going to be wiped out by people who know how to manage uh how to manage cash balance without a money printer. But all of that is uh completely changed when you move to a world with fiat money because now governments don't just have to uh now governments don't aren't restricted by the quantity of wealth that they have or the quantity of money that they have. They are restricted by the total quantity of wealth held by everybody holding on to their currency. They don't need to go to people and tell them give us your money so that we can pay the soldiers. They just print money. devalues the money in people's pockets and people find themselves paying for the soldiers without wondering. And then this is really for me the most infuriating thing in the world which is that and and it's sad and you know the poor people are stupid people and poor people are being told constantly it's not going to cost us anything. It's a good investment. It's a you know war. It's it's important. Don't worry about the cost. there's all these uh there are all these fallacies that are constantly being promoted about how government spending is good and government spending is basically costless. So when you think of these you know most people just don't draw the connection between the fact that their grocery store is becoming more expensive and that their government is fighting a war and it's just so tragic. I mean, if you ask probably Americans what was the economic impact of the Iraq war, I don't think 20% of them would say inflation. >> Maybe I'm wrong, but I don't think a large number of Americans would say that this is what caused prices to rise. I think they don't draw the connection. They think prices rise because of evil, greedy capitalists or Republicans or deregulation or Democrats or regulations or whatever ideological thing you want to believe in. But really, it's war. It's money printing and it's worth it's war that's robbing you and it's destructive and it's terrible and if you had to actually pay upfront for the war it would be very difficult. So currently, you know, some estimates are that let's say that the Iran war was a 200 is going to cost $200 billion. They're going to ask the Congress for that. Um, first of all, that's a tiny fraction of the true cost because a lot of the costs are not things that are going to require appropriations from Congress. They're just baked in. There's Medicaid and med and and um social security and uh all of these things that need to be paid for the soldiers and all of the expenses that are part of the um budget of the Department of Defense and all the ammunition that's been run down and all the bases that have been destroyed that are going to need rebuilding. All of these things, you know, you had them $200 million going to look like a rounding era by the time this thing is over. >> Yeah. >> But so let's let's say, you know, uh if if you lived in a world in which you had hard money, you couldn't move the troops anywhere, you couldn't start the bombing without having the cash ready, without having to pay them up front. So you'd need to collect the tax, you'd need to pay the soldiers, and you'd need to know that you have all of the money you need for the campaign. So we'd have none of this idiotic garbage that Trump is doing right now. which is oh I don't know maybe it's going to be a 3 4 days or maybe it'll be three 30 days or maybe we'll they'll open hormones or maybe they won't maybe we're going to destroy their power plant or maybe we're having uh great negotiations with them. You'd have to be a grown-up unlike this stupid clown and you'd have to have a clear idea about what you want to do with the war. You have to think all right we have $400 billion and that would allow us for four weeks. So here are our objectives or what we want to do in the four weeks and here's how we're going to do it. And if things turn out in a different way, this is what our plan B is going to be. And you'd have to just very consciously and sely manage your money. And that's just something that no government does today because they're all ruined essentially. They're spoiled by the fact that they have a money printer. So that's why Trump can launch this war first and ask questions later. Same thing happened with Iraq. The war happens first, you ask questions later. The bill doesn't come. Imagine how different it would be if they had to specify, let's say $400 billion is what we need. Let $400 billion is about $1,000 per capita in the US. There's a little bit more because there's about 350 million Americans. So, let's say it's $1,000 per capita. Imagine you go around to Americans right now and say, "Everybody needs to pay me an extra thousand on their taxes this year because we want to bring democracy to Iran. We want to save Iranian women. We want to stop Iran's nuclear program. We want to help Israel steal more land and make sure that nobody in the region bothers them in any way. And we need you to cough up $1,000. Imagine going to a family of five in the US and telling them you have to pay $5,000 this year to fight the war in Iran. I mean, there's 350 million people in the US. That's a lot of people, a lot of money. A lot of them can't afford to pay that money. And only the absolutely most stupid and the absolutely most despicable and violent of them would be willing to pay for these kind of senseless wars that don't affect the US in any way that for which the US stands to gain absolutely nothing. >> If that's how they wanted to launch the war, they'd probably have maybe $5 million. If if it was voluntary, if Americans had to actually put the bill, who knows how much they'd have. 5 million, maybe 50 million. wouldn't be enough to do enough to do any of this stuff. Wouldn't have been enough to Iraq or Afghanistan or any of these stupid wars. But if somebody actually attacked the US, if Canada or Mexico or Germany or Britain or China got on aircraft carriers and wanted to attack the US, well then it wouldn't be a problem for the US government to raise money to defend it. Every American is going to want to put everything that they can and they're going to want to fight and they're going to want to use their own guns and they're going to want to invest in anything that they can do to help because they would realize then that there's a real um threat and it's worth fighting for it. So it wouldn't be difficult to get funding for war that actually is viewed as legitimate by the population. it would be very difficult to get funding for essentially criminal mass murder which is what the US government has been doing for the past several decades. >> So I mean you know I mean we go into so many different places there and our time is almost up but I but I will ask you one more. I mean, if if fiat doesn't make war free, it just delays and disguises the bill, then, you know, we're talking about investors looking for it to show up and bond yields, currency weakness, commodity prices, I mean, even declining real purchasing power as we've seen. Where does the monetary cost of war surface first in the real world where before the public fully recognizes it? >> Yeah, it's a good question. I think, you know, initially I was my focus was on uh oil prices. I thought that would be the uh first thing. But I think you know the way that Iran Iran has managed to just completely take control of the strait and allow traffic to go through essentially uncontested while all the aircraft carriers of the US are hundreds of miles away unable to come anywhere near suggests to me that uh maybe the oil shock might not be that thing. Of course, this can change cuz you know the one US attack on oil infrastructure in Iran means Iranian retaliation Gulf oil infrastructure and that could cause a massive crisis. But my u my dark horse pick for the most uh important place where this cost of the war is going to show up fingers crossed is in the uh 10-year bond in the bond deals on the Treasury. I think that's what's really interesting and it's uh it it's really fascinating to see it because a year ago was the last time Trump had well not the last time he's had many but maybe his last very big uh stupid tantrum that he threw when he decided to impose all of these very idiotic uh tariffs on foreign countries. It was an incredibly idiotic thing to do for many many reasons which is beyond getting into right now. But the important point here is that Trump chickened out and backed out of his stupid tariffs exactly at the point where the 10-year yield came close to 4.5. I think it's was when he at 4.5 that he made the uh that he walked back his tariff and he gave a 90-day u uh what was it relief from tariff and something like that and and and then basically the whole thing fizzled out and uh essentially he was saved by the Supreme Court which prevented him from doing this. I mean, it was an extremely expensive and stupid thing. But in any case, the important thing is that as the 10-year yield hit 4.5, he had to back down. And we had something very similar happen this weekend. The 10-year yield on Monday morning was nearing 4.5. And that was exactly when Trump chickenened out and said, "Oh, we're making great progress in negotiations with the Iranians, so I'm not going to destroy all of their power infrastructure and kill millions of people in starvation and disease. I'm not going to do this war crime that I very casually tweeted about a couple of days ago. We're going to give them another five days. Well, you know, the 10-year yield went down then, but I think if there's going to be further escalation, I think the cost, you know, I think the market realizes that all of these numbers, I mean, all all of these numbers that are being given about the cost of the war are ridiculous nonsense. Uh they're fiction. They are similar to the numbers that were given about the cost of Iraq. So anybody who's not a who watches TV constantly and believes what this government tells them is going to factor it in that the cost is going to be a lot larger. You know, they already got the Pentagon budget up to $ 1.5 trillion. They already need $200 extra billion dollars for this. And um you know the way that the US fights his wars as has become very obvious now is you know the last 50 years the the Pentagon has innovated basically nothing except budget increases. How do we make everything so much more expensive? How do we make it so expensive so that our friends in the military industrial complex make a lot of money and then give us great jobs when we retire? That's basically been the Pentagon. While China, Russia, Iran, and other serious countries have spent the last 20 years building the hypersonic missiles and the drones that are the most important weapon of the 21st century. The US was spending $10 trillion dollar on fighting Israel's wars, murdering people so that Israel could uh uh steal more land, subsidizing Israel as it murders people in Gaza and as it sets up its torture goolag camps in Palestine. And u that's just the that's just the reality of how the US government has been operating. It's so ridiculously incompetent. It's absolutely astonishing. And that's why, you know, China, Iran have hypersonic missiles and drones that are much more effective than what the US has. And the US is building these $14 billion monster aircraft carriers that are essentially obsolete. I mean, here they are. They're fighting a war. And their stupid $14 billion aircraft carrier is in the Mediterranean thousands of miles away. Why? Because it's dysfunctional. Why is it dysfunctional? because it's an overpriced stupid piece of junk whose only purpose is to make money for military industrial complex. Whatever this stupid aircraft carrier and these jets can achieve can be achieved a lot cheaper and a lot more reliably with a few drones. You can just have drones fly and achieve whatever it is that you want. this notion that there's all this um that all of this technology in the US is making it an a military superpower is I think it's coming crashing down and the US's ability to enforce it will in the world is likely being severely compromised. So all of that suggests the fiscal problem is getting more and more serious. I think >> you know the the burden of the debt is enormous and as the yields go up the uh impact is just going to go up. So >> I mean I've been waiting on this for many many years. I >> yeah I think uh the implosion of the treasuries market is really vala as far as I'm concerned. It's uh if we can put government bonds out of business that's going to be the best thing that we can do for human for humanity and for world peace. So, uh, I've been excited before. I've been burned before, but I'm it's not going to stop me getting stop. >> Uh, okay. Well, listen, our time goes too fast. I'm not going to finish just up on that. I'll ask you one former uh, you know, just kind of question just on practical wealth protection in this environment because I mean, former gold bug, of course, you know, you're still long Bitcoin. Um, we got a big audience that watches this. If a retail investor has some savings today, but they don't want to become a full macro speculator just to protect their purchasing power, what does a sane hard money allocation actually look like for them in practice? >> I mean, it's difficult to give a one answer for everybody. As far as I'm concerned, it's really Bitcoin. That's it. I mean, I think you want to have some fiat to cover expenses for a few months so that you don't have to be buying and selling with Bitcoin all the time because the volatility can mean that essentially you're playing the lottery with the price that you get when you need to buy and sell if you have major expenses. So, you want to keep some fraction of your wealth um as an individual or let's say as the operating cash for a business, you want to keep some fraction of that in uh fiat. You probably want some gold. um as a you know it depends on your level of conviction in Bitcoin. The higher your conviction in Bitcoin, the less gold you're going to need to sleep better at night. But beyond that, I don't really see a compelling case for investing in um in in in in other asset classes except where you find a very clear uh compelling advantage in the market where you have a very strong thesis and you're looking at balance sheets and you're doing due diligence and you've got a very clear idea about let's say well you know AI is going to explode next here. So, I want to buy Nvidia or something like that. Like, if you have these kind of thesis where you're willing to put your money where your mouth is and you have a strong level of conviction and you have an understanding for it, then by all means, go ahead with it. But I think um you want to get rid of this melting ice cube in your hand that you need to get rid of this idea that, oh my god, where am I going to put my money? What's going to happen to the S&P? Should I move my money from the S&P to the NASDAQ? Should I go from the NASDAQ to the Should I buy bonds? Should I do this? If you're stuck in this u this cave of fiat assets, I I I don't have clear answers about how to navigate that and I don't think that uh trying to navigate that actively will work out well. I think your best bet if you insist on remaining in fiat assets, your best bet is to just buy the index. >> All right. But uh beyond that, I think uh you know ultimately as long as you're just able to build a significant base in Bitcoin over time, you know, the risky thing about Bitcoin is if you go all in initially, there's enormous volatility. So you could buy the top and then witness a 70% draw down and that can be devastating. So you want to go in probably gradually, particularly if you're going in at a time when Bitcoin is hitting all-time highs because could be a top and it could be a big crash. So, you don't want to be going in um aggressively at a time when Bitcoin is near all-time highs. You want to be gradually going in and then gradually building your position, increasing the size of your position until the position is essentially comfortable for you to uh be able to have a very large position there. So that even if it were to draw down 70%, you're fine because you've got other assets, you've got fiat to manage your expenses, and you don't need to be selling the Bitcoin during these big draw downs. All right, that's safe Amos, uh, author of the gold standard, the fiat standard, and the Bitcoin standard. Great book, that last one of yours. >> Thank you. Thank you. I'm glad you like it. I mean, it's a it's still a bit of a Bitcoin book, but it is also a gold bug book. So for all of the gold bugs out there, I mean I let me just do a little bit of an advertisement for it. It's an alternative history of the 20th century where fiat money dies in 1915. >> So we were talking earlier about war. This is a thought experiment of what happens if we'd had a clearing mechanism that allowed people to settle gold. Remember the first question that we uh discussed in this interview that ultimately the limitation of gold is that it's difficult to have a market where it clears and it can be used as money. Well, in this book, I introduce an airplanebased settlement network in gold in 1915. Uh, well, it starts in 1911, but it's uh taken off, if you'll excuse the pun, by 1915. And that results in u the collapse of all of the major central banks of the world in 1915 because people take their money out of the banks that are financing the war and they start trading with one another directly. So, we have essentially a peer-to-peer distributed network for trading gold. And that means nobody needs to keep their gold at the central bank with a lot less gold than the central bank. The central bank's ponzies collapse and then the war ends in 1915. So then we go back on a gold standard, but it's a lot better gold standard than the one that he had in the 19th century. It's an industrial technologically advanced gold standard. So this whole book is trying to imagine what the world what the gold standard could have looked like with 20th century technology and what the 20th century could have looked like if we had had the gold standard instead of fiat standard. Spoiler alert, a lot more prosperity and a lot more peace and a lot less war and a lot more technological advancement. >> History repeats itself. It feels like uh always a sharp serious conversation that forces us to rethink the mechanics of money. Appreciate your time. Thanks again for joining us today on Kicko. >> Thank you so much for having me. It's a pleasure. >> All right. And a big thanks to our sponsor, Swan Bitcoin, your partner for generational wealth. You can get started at swan.com/kickco. And thank you for tuning in. And if you want to stay ahead of the macro trends and get independent, hardthinking analysis you won't find on mainstream networks, make sure to hit that subscribe button right now. I'm Jeremy Stafford. Thanks for watching. I'll see you next time. Swan is the premier Bitcoin wealth platform serving leaders of families and businesses. Swan's missiondriven team simplifies Bitcoin investment, custody, and security, bringing you concierge service, worldclass research, and exclusive events.