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Chapter 1: What is the main topic discussed in this episode?
Lately, Bitcoin is almost perfectly correlating with like the software stock indices.
Chapter 2: What macro regime are we currently in: inflation or deflation?
Really no way around it. There's just not been a lot of retail demand for Bitcoin this cycle.
Chapter 3: How is money printing affecting productivity and hidden deflation?
I'm pretty bearish on the broader crypto space structurally. And I think if anything, they are weighing on kind of the quote unquote brand of Bitcoin.
Chapter 4: Why is gold outperforming Bitcoin in the current market?
That's going to weigh down probably for a period of time. There's still something like a trillion dollars in crypto market cap that I think is overvalued.
Chapter 5: What factors are contributing to the lack of retail interest in Bitcoin this cycle?
I always think of you as the rational person who uses data to understand what is happening. We've been talking for three days now about what is going on in the market. Maybe we start with the macro stuff. It feels like it is very confusing. There was a lot of concern about inflation.
Chapter 6: What is the relationship between Bitcoin and stablecoins regarding capital flows?
Now there's talk of deflation. I think that a lot of people over the last 15 years, at some point it clicked.
Chapter 7: How is AI impacting jobs and creating deflationary pressure?
If they print money, inflation shows up. They seem to be going back to QE. They're lowering rates.
Chapter 8: Will deflation lead to more money printing in the future?
data is saying that inflation is going down though, that shouldn't be happening. How do you just evaluate, you know, what is the regime we're in and what's really going on?
Well, I think in recent times, the changes we're seeing with the balance sheet and rate cuts, that's not fueling inflation because it doesn't really fuel money supply growth. Even things like tariffs, they're not particularly inflationary in the broad sense because they're not impacting the money supply. They can just around the margins show up. They can obviously increase the price of one thing.
They can also reduce the demand and therefore reduce the price of other things. So it just kind of shifts things around. I think right now we're in a transitional phase in macro, which is we're exiting balance sheet reduction. going toward balance sheet increases, but the numbers are not large, that this isn't, you know, COVID printing that people think of now when they think of QE.
It's more of a steady state. And then we're also in this, because we're in a period of fiscal dominance, a lot of the traditional metrics just work differently now. We have these larger average fiscal deficits, which injects capital constantly and apart to the economy. So senior spending, basically anyone who's on the receiving side of the deficit.
So the defense department, all the contractors there, the healthcare system, social security spending, that's where the capital is going into the economy. And of course, other parts are squeezed. So we're in this like holding pattern. And as long as energy is flowing and cheap, right? So as long as oil is not a bottleneck, that keeps the lid on inflation.
And so they have quite a bit of runway, I think, to go forward with probably some rate cuts. And I don't think the balance sheet expansion will be particularly inflation in the next, call it year or two years.
One of the things that's always interesting to me is if you look at the U.S., that is not the whole world. And so there are times where the U.S. is doing something and the rest of the world may be doing something else. Michael Howell is now starting to talk about liquidity being drained from the system. But I think that it's very interesting. You have these like deflationary forces.
Now, whether we actually get deflation or what the end result is, I think it is pretty clear to people, things like the deportations, artificial intelligence, robotics, tariffs, even to a degree. How do you think about money printing and their relationship to a deflationary pressure, right?
Because there's one argument where it's, okay, if we go print a bunch of money, then that should be devaluing the currency. That should lead to higher gold, Bitcoin, et cetera, prices. If there's this deflationary component to it, though, maybe it's kind of hidden. Like they're printing money, but it's being eaten up by the deflation. Just talk a little bit about how you think through that.
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