Transcription
They haven't got a plan for the war. They haven't got a plan for the peace except to frustrate it. I think it might lead to disaster.
This is a unique combination of a disgraceful strategic perspective that Europe has taken with a disgraceful ethical position. And that's sort of the hypocrisy of the European position. They want to fight Russia, but they want other people, the Ukrainians, to do the fighting for them. And they don't even want to pay for this.
Stable coins are part of the Trump team's plan for securing the dominance of the dollar.
Europeans like to think of, you know, Donald Trump as a very stupid man. The opposite is the case. He's very cunning. This is probably one of the smartest strategies I can remember.
Bitcoin will never die. I have no doubt about that. The point is that Bitcoin was never macroeconomically significant and never will be.
If this thing crashes, there isn't going to be, you know, a bailout. There isn't going to be what what happened before. It would be a destruction of the financial system.
Hello and welcome back to the econocclass, the podcast from unheard where Vulcan and I, what we do is we take assumptions that politicians, finances, bureaucrats, journalists, many of you out there have been convinced are self-evident truths and we expose them as intellectually flimsy and even potentially dangerous. So, hello Vulcan. Great to see you again. What false orthodoxy shall we disparage today?
Hi Jiannis, good to see you too. Today I'm going to debunk the orthodoxy that the ongoing war in Ukraine increases Europe's security. I will argue that this is a strategic stupidity on the scale of World War I. What's yours?
My focus today will be last week's mini crypto winter. And I shall argue you that this event demonstrates that contrary to received wisdom, the crypto world is moved and shaped by an unholy alliance between big government and big finance, not by the animal spirits of free agents trading crypto independently of the oligarchic money system that they so hate.
But first, let's discuss Russia and Ukraine. The orthodoxy specifically is that Ukraine protects our security and buys us time to upgrade our armed forces. This is a very cynical orthodoxy because Europeans have realized that they're not ready to defend against Russia should there be the calamity of a war of a direct confrontation. So Ukraine is very much a proxy war and some European strategists think should go on for as long as possible until we are ready. This explains why Europeans are continuously frustrating peace plans.
I you you can see this whenever Trump comes up with something and it's usually not thought through. I we we know how Trump, you know, does these things, how suddenly he comes up with uh with with peace plans and how he sort of dispatches his envoy to Moscow who comes up with a a 28point plan that was sort of leaked through various Russian telegram channels on on the weekend that was not coordinated with his own secretary of state. So there's an awful lot of stuff that wasn't quite right in this. But the first European instinct was alarm. Whenever they do something, the Europeans basically want to knock this down. And the reason they want to knock this down is because I feel they don't want a plan. They don't want a peace. They're making demands. They came up with their own proposal. Negotiated not with the Russians, not even with the Ukrainians. Negotiated amongst each other. They finally agreed with each other what the plan should be. Obviously completely unacceptable to Russia. A plan is for the bias. It's just an occasion to state your position, which Europeans have done before. It's not like it contains anything new. My sense is that they are trying to frustrate peace. The question now is, you know, we're recording this on a Monday, so viewers of this podcast will have more information on the ongoing diplomatic process than we did when we when we talk about this. So, I'm we're not I'm not going to predict what's going to happen.
Where I see a real problem coming down the road for the Europeans in particular is that they haven't got a plan for the war. They haven't got a plan for the peace except to frustrate it. And that's not going to end well. And I'm going to go into details a little later what the European game plan is at this point and why I think it is not only not going to work, why I think it might lead to disaster.
European game plan. I wish there was one. There isn't one. And I think that you agree with this. Again, we are on the same page. Um, this is a a unique combination of a dis graceful strategic perspective that Europe has taken with a disgraceful, absolutely unacceptable and incontrovertibly um, impossible to defend ethical position because Europe has done nothing to win a war that may be unwinable and everything to frustrate and to obstruct peace as you said.
Now, as long as Joe Biden was in charge, it was an alignment between what the Europeans and what the Americans were trying to do. It was still ill thought out, but at least it wasn't as farical it is today. Now, before we continue, Vulcan, I think you know this as well as I do. We are about to be accused by several of our audience as uh uh reading out of the speaking points of Moscow and of being Putin's handmaidaiden to kill this early on in our discussion. Let me make the point that if you think and it may be a legitimate argument, I don't agree with it, but if you think that Putin is the new Hitler, what you should do is you should send your troops in. If you're not prepared to send your troops in, and the Europeans are not prepared to send their troops in, this is very clear, then you seek peace. If you try to do neither, neither seek peace nor send your troops in, then you're acting as an enemy of the Ukrainians while wrapping yourself up in the Ukrainian flag. And in the end, you are being Putin's handmaidaden.
I agree. I very much agree. There is a nuance of a difference. I think there's a third viable position and that is to support Ukraine militarily to a point that they could achieve some of their war goals. The Europeans talked about this and they never put their money where their mouth was. I feel the whole sort of rhetoric about Ukraine. It sort of has a has the quality of sort of an Oxford Union debate, sort of an intellectual exercises of self-righteous, you know, self-confirmation and in the end we take a vote and then, you know, the the Russians lose and that's not how the war ends.
Now I think there would have been a feasible situation. It's not it's not happening and I would actually not have recommended it for the very reason that I know I mean we know what the Europeans are like. We know they don't have fiscal money. Look there's this you know this British government not knowing whether to tax or whether to cut spending and you know being completely in a straight jacket and you talked about it last week Janice there is the the Germans with their debt breaks and with their with their fiscal constraints. The French are completely out of control and have no money for Ukraine and they're basically admitting that they have no money to control. Italians and Spanish don't care. You know, this is not a policy. To do this properly, we would probably have to spend about 150 billion militarily uh each year to match what Russia is spending. 150 billion each year. That's, you know, for countries like Germany like 3040 billion. Uh for the UK maybe 20 to 30 billion. This cannot be raised through debt because this can continue for a long time. It could be raised through a mixture of taxation or spending cuts. But it would have to be a realization that it costs us money. It it is a political decision. We would have gone to our electorates and have said, "Look, this is an important thing. You're all in favor of helping Ukraine. We see this in the polls. But you actually have to put up your money." And that's sort of the hypocrisy of the European position that they want to fight Russia, but they want other people, the Ukrainians, to do the fighting for them. And they don't even want to pay for this. And this is why it's failing. And I actually talked about this game plan at some point. It's about the Russian assets. The game plan is to to to sequester the Russian assets which would buy them two years of support for Ukraine but not of the scale that I mentioned because the Russian assets would only be 130 billion of for two years. The fiscal spending is made half of you know military spending and half of other stuff. So only about half of the money would be used for defense. That's not enough. Not nearly enough. I mean, we're looking at at gaps between what between this spending and the Russian spending on defense of, you know, several times the proportion and the Russians are several times more effective. Uh they their cost of producing ammunition tanks is much much lower than ours. So if you compare the sort of bang for the buck type spending, the Russians are outspending us on a scale of 1 to5 and 1 to 10 on the current commitments. In the summer, the European contributions to Ukraine have collapsed. There used to be four billion euros per month on average. They're now at 1 billion a month. This is a complete disaster. The emperor with no clothes basically a scenario. There's the Europeans still fuming, still pretending they're they're counting their matter in the world because they have 500 million or 450 million people. They they have a single market. But they haven't got it. They have they have they're weak. And it's a weakness that was chosen. It was a self-imposed weakness. So there are three options. this option is excluded. So, so fighting Russia, which which is what you said, committing your own troops, that's not going to happen. The European, you know, revealed preference. The Europeans will not fight Russia. So, the peace is the only only chance and the only person who can impose peace is Trump because Trump has is the only Western leader who has diplomatic channels open with Russia. One of the things the Europeans did in 22 is they cut off the the the diplomatic channels. They tried for a while. They talked on the famous telephone call that Macron held with with Putin that ended up nowhere and that actually cost them votes in his election campaign. They basically cut it off and there was no more no more channels of communications. And this is something you do in war. You keep up channels of communication. This didn't happen in Europe. There is very little understanding. This is why the Europeans are negotiating with each other rather than with the Russians. The European position is um is weak. It's not supported by money. uh and it is supported by someone else's money which is the Russian assets and there are a lot of questions and I think one of the things that Trump will do he will kind of double cross the European strategy on the European assets and one of the points in this 20 in this leaked 28 point plan and by the time this recording is out that might be a you know a 35point plan or 15oint plan who knows but one of the points in it was that these assets should be unfrozen and the Europeans are severely resisting it because you know this is how they wanted to finance their support and and Trump is essentially cutting off the financial the financial idea that they had. It's a stupid idea because it is a theme uh from the from the underworld of structural finance the same kind of instruments that brought us the global financial crisis designed to fool electorates about where the real risks lies because ultimately the money will be paid for by the European taxpayer. There's absolutely no doubt about that that Russia will not pay it because it is premised on the idea that's why it's called a reparation loan. It's premised on the idea that Russia will lose the war and that an international court will condemn Russia to to reparation payments given where we are today. That's delusional.
Of course it is. And look, let me try to sum up for our audience's sake. The three main moves that Europe took from the beginning in order to preclude peace. The confiscation of assets and the demand of reparations. As you mentioned, you can only demand reparations of somebody that you have defeated in the battlefields. uh something that the Europeans are not prepared to do except through sending pitiful amounts of weaponry to the Ukrainians. The second move was to demand the recapture of land of captured land through diplomacy. Something that you don't need to be an expert in geopolitics to know that it is ludicrous. And the third of course is uh the Kmer Macron and maybe Friedick Merge commitment or project of creating a coalition of the willing that would station troops along the border the ceasefire line when it's utterly I mean they haven't thought it through what would happen if they have 20 35 you know 50,000 pe soldiers there and suddenly there is a confrontation are they going to start a war against uh Russia When the Americans ended the Korean War or negotiated the ceasefire with the North Koreans in Korea, they stationed hundreds of thousands of troops and nuclear weapons and the result is this iron wall going through the Korean peninsula. Well, the Americans are not prepared to do that. They didn't fight in Ukraine. The Europeans didn't fight in Ukraine. So there cannot be a coalition of the willing that is offering the guarantees that Ukraine quite naturally wants to have.
Now I would say a couple of other things and I will do so as a Greek. Surprisingly people on Twitter and elsewhere who are accusing me because I have similar views to yours of playing the Putin game. Uh they ask me sometimes and it's a legitimate question. Uh what would you do if Turkey invaded Greece and demanded uh peace on terms that would effectively confiscate parts of your land? Well, they did. They did in 1974 invade the northern part of Cyprus, which was almost 90% occupied by Greeks since ancient times. Now, it would be madness for anyone like me being a Greek to expect that diplomacy is going to get uh Turkey to say, "Okay, sorry, you made a mistake. We're going to get out of here." The notion of land for peace is a second best, but it is a lot better than the third and the fourth best.
Now, the Europeans, as you have been explaining, have been at it since April of 2022. There was a pretty good deal that was being hammered out as you know in Turkey between Russia and Ukraine and it was the Europeans that stepped in and said to the Ukrainians don't do that. We are going to make sure that you take Crimea back. So they led them down the garden path. You know I hear them say that we should never accept border changes brought about by military action. Now that's a brilliant concept, a brilliant principle. I wish we could remain faithful to that. But what on earth did they think they were doing in 1999 when they were bombarding Yugoslavia to change the borders of Serbia? They changed the borders of Serbia Serbia uh to some extent by pushing the Serbian border back beyond Kosovo uh through military action. Now this duplicity, this this this hypocrisy, it is absolutely astonishing. It is as if they're giving arguments to Putin. Not only are they giving arguments to Putin, of course, but through this obstruction of peace, they are making him more and more dominant within the Russian Federation, which is a terrible outcome for Russian Democrats.
You're absolutely right. And I think I think there is a you know, I I also get this push back and people think that I'm doing doing Putin's bidding and which absolutely is not the case. I mean, I was probably one of the very few German journalists who pushed back against Nordstream 2 before it became popular to push back against Nordstream 2. I pushed back against it in the last decade before the war. Europeans are people who go into process. They don't do strategy. You once said that at an echoin meeting you were told that we don't do economics uh when you were finance minister. Exactly. They don't do economics in in the finance ministries and they don't they don't do strategy in the foreign ministries. And it is because what we do in Europe, we do pro process, we do procedure, we do the next meeting. And this is how we come up with stuff like like these peace processes. We have an a view. We have a sort of a position that we all agreed on that Crimea must be returned and therefore we reject a peace plan. Strategic people, you know, would think about it differently. the plan that they negotiated back in or that was on the table in Istanbul in 2022 in the spring of 22 was better than the one that that they're getting now with each you know passing year the plans it will get worse. So, so, so I think you know a point I would like to really press home to to viewers of this of this podcast is that we are going to cause damage to ourselves in the way we are acting and that this that this h the idea that that Ukraine is protecting our our freedom is not is not true and increasingly I see Ukrainians no longer believe this. I think Ukraine has become very cynical about the Europeans and saying look look you want us to fight you want us to die but you're not supporting us so this is not a deal and I think they're right. I think this is something that that is as I said in the beginning a a one of these strategic catastrophes that Europe sort of enters from time to time in its history and this could well be another one.
Well, you Ukrainians have every reason to beware Europeans bearing supposed solidarity. Uh like we Greeks learned hard way that when the word solidarity is being used in Brussels for us, it really meant stagnation and going back decades. I I have it on good authority, Vulcan, that an argument was uh discussed in Brussels in the last few days that if peace were to break out in Ukraine following Trump's intervention, this will be a terrible thing for the military Kenzian policy of rearming Europe. Uh and therefore uh yet again you see the hypocrisy rubbing themselves in the Ukrainian flag but not giving a damn about the the real prospects the really existing prospects of Ukraine.
I think on this note we'll wrap it up. I think Yans and I are in broad agreement. I think we debunked the the we tried to debunk the notion we certainly debunked the notion that we on the side of Putin. After the break, we shall be discussing my beef for the day and that is the way in which crypto has been taken over by big government and big finance. The result being a mini crypto winter last week. We'll be back after the break. Don't go away.
Welcome back to the econs. There is a romantic belief that crypto is a realm joyously free of governments, of central banks, of political shenanigans. At the risk of upsetting these libertarian dreams, this libertarian romance, I shall argue that um last week's crypto mini winter, the sudden dimminion in the valuation of all these cryptocurrencies like Bitcoin, Ethereum and so on. This uh mini crypto winter I shall be arguing happened because of the uh endless march of stable coins. A march that has meant that the crypto universe has been taken over that it is moved and shaped by an unholy alliance of big government and big finance. Let's look at the events of last week. Why did Bitcoin, Ethereum, and the rest of the free floating cryptos crash? It's not hard to discern the reasons. Vulcan and I have already dedicated a podcast to stable coins like Tether and no doubt Vulcan we are going to return to the issue of stable coins again and again to cryptocurrencies that are pegged effectively mainly to the dollar. Now you and I Vang agree that stable coins not only undermine the libertarian dream of apolitical money, the dream that bitcoin originated. But we have also warned in our articles but also here in the econocclasts that stable coins are destabilizing and will most probably be the reason uh behind large scale financial crisis in the future. But why am I saying that big government is behind all this? because they are. When the Trump administration pushed the so-called Genius Act through Congress, they effectively legitimize stable coins in order to deploy them as instruments that allow them, the American government, to borrow more and more and more cheaply. How did they do this? You know, every dollar you use to buy Tether or Circle, any of these US dollar denominated stable coins, those companies use to buy American debt, government debt. In short, Congress gave the state seal of approval to stable coins like Tether, even going so far as to forbid the Fed, the American Central Bank, from challenging Tether Circle and any newcomers in this stable coin market. And this is why I'm saying that big finance is also implicated because Wall Street bankers like JP Morgan are keen to issue their own stable coin as are big tech from Meta to Amazon. Now let's see how this played out last week encouraged by Trump's genius act only last month just over a period of 30 days tether minted a huge amount of new tokens. 17 billion of USD was printed. And even more spectacularly during the 24 hours before the crash of Bitcoin, Ether and the other free floating cryptocurrencies, Tether meed only in during those 24 hours another billion dollars of USDT tokens overnight. Is it not clear what happened? Here we have Tether minting unprecedented amounts of new dollar tokens that the American government is encouraging as a means for them to borrow more, but also as an instrument in its war to maintain the dollar's monopoly over international and national payments in a world where America's share of global production continues to shrink. Now add to all this another juicy fact. Tether has already used some of its customers dollars to buy 112 tons of gold. In other words, Tether is beginning to simulate a privatelyowned offshore stationed in El Salvador central bank. Now, if you put all this together, what do you get? A simple but I believe true explanation of why institutional and retail investors sold Bitcoin and Ether to buy Tether's tokens. Wulfkin, what do you think about my hypothesis?
I'm not so sure. I think we we we we may have for the probably for the first time sort of a bit of a disagreement here. Uh we agree on on stable coins. From my understanding, the the crash well the mini crash of Bitcoin. It's down by about a third. Is the result of investors having to liquidate their riskiest assets. There's a lot of people who fear a broader tech crash. I'm not sure they're right, but there is certainly wobbles at the moment that this might happen. I think it will happen eventually. I don't think it's it's about to happen anytime soon. And what happened is through the Bitcoin ETFs, the Black Rockck ETF for Bitcoin. This made it a lot easier for investors, for normal investors, but also institutional investors to actually pile into Bitcoin because previously Bitcoin was only sort of accessible through the internet directly. You had to sort of, you know, create wallet wallets with secret passwords. This not this is not sort of the world of investment. And this is a world for you know as you mentioned the techie investors that started that started the whole thing but it wasn't it was it's not the world of professional investment. So I think what happened is the fact that Bitcoin became part of the sort of the tech race the part of the tech became a tech investment. It wasn't really in the in the market where gold is even though it's a very similar type of type of type of asset. It it is supply constraint. It has no sort of industrial uses. I think it will probably continue to fall a little bit because there's there this process of unwinding risky position still going on in the sector and people you know people are you know still bullish on AI because AI is is real is real stuff. you know it will will gain real profits as you know as we saw with the profits of Nvidia last week with Bitcoin it's very hard to it's very hard to make a techie a tech case for Bitcoin and that's why people who sort of erroneously you know p entered into this kind of kind of gotten out and I think I would call this sort of a healthy correction I don't see you know there are some some investors like Kathy Wood who thinks that bitcoin will rise to 1.3 million price from where it is today so it's about 80 86,000 today this is this is delusion It's not, you know, Bitcoin is not it's not a tech stock, but it still has potential to to sol solidify itself. In 2021 during the pandemic, the price of Bitcoin over a period of 6 months fell by over 70%. Now, that was a real crash and people predicted that Bitcoin would be finished. I remember there were a lot of economists, European economists in particular, the European economists hate Bitcoin like like nothing. And they predicted that this was the end. And then they were kind of shocked, you know, to to learn that the price of bit bitcoin had rebounded to 30,000 and then nowadays then went up to 100,000 and it peaked at 125,000. So this is like a something they had not expected. I expect it will it will rebound again and there is obviously an interaction. And I, you know, I don't want to deny that people dumping Bitcoin by by stable coins and that may come from the same portfolios, but I don't think this is the main driver. This, you know, I think it's a factor in it and I think people reported this and I saw these reports myself. I think the main driver that as far as I can tell was kind of an early tech meltdown.
Well, it's good that we have some some measure of disagreement. Look, where we don't disagree is that um uh volatility has spiked recently uh because of this ubiquitous to talk about an AI bubble. It's no longer an everything rally. Uh some things are going up, some things are going down because of this volatility. And in this context, um Bitcoin was always going to be suppressed uh in terms of its dollar value. But there is clearly uh a drift from Bitcoin, from Ethereum to stable coins. And my view is that the imprint, the seal of approval that stable coins got from the Trump Trump administration. And the fact that everybody now knows what some of us were saying, you, me, others were saying a year ago, that stable coins are part of the Trump team's u plan for securing and effectively reinforcing the dominance of the dollar of the dollar payment system across the world. And the therefore it makes perfect sense that when you have enhanced volatility around uh doubts regarding the AI bubble or uh the hypothesis of AI bubble that money shifts to stable coins. the massive increase in issuance of Tether and the fact that now Tether is also buying gold as um a reserve backing its um digital uh US dollar tokens that I think is important and Vulcan what really I think even if I'm not right yet I think I will be proven right not because I'm so smart but because of what the United States Treasury is predicting The US Treasury a few months ago predicted that with the Genius Act, this was they were talking up their own Genius Act and they were saying as something that is positive. They were predicting that 6.6 trillion American dollars will moved will shift from plain vanilla American bank accounts onto stable coins like Tether. uh just that prediction is enough to cause a flood in Tether. So essentially what I'm saying is Bitcoin will never die. I have no doubt about that. Anybody who said that Bitcoin will die just don't understand or actually do it out of hatred for Bitcoin. They're not doing it out as of of some kind of legitimate uh intellectual analysis. Uh but the point is that Bitcoin was never macroeconomically significant and never will be. Whereas stable coins as a result of this alliance between big government, Trump champion big government and big finance and big tech Yeah. is going to become both a tech stock and a financial instrument of the establishment.
Yeah, I think on this point we agree. I heard Steven Mirron from the you know Trump's former economic adviser who's now a member of the Federal Reserve predicting an issuance volume of stable coins of between 1 and 3 trillion between now and the end of the decade and that sort of chimes with your with the treasuries uh estimates of 6 trillion. Now we have to sort of put this into perspective. The QE by the Federal Reserve, the quantitative easing during the pandemic, the number of sort of the stocks they bought, the bonds they bought, the government bonds they bought during that period was only 3 trillion. So if you consider that this is a macroeconom, you're absolutely right. This is macroeconomically relevant. Uh you know, we're talking trillions, not billions. We're looking at a massive expansion of the US supply of debt and demand for debt and it will be tokenized. Um and tokenization is going to happen pretty much to everything. It's going to happen to st stocks and shares not in Europe because we are Europeans. We don't do this kind of thing but the Americans did this. So we will see a flood of debt of debt issuance and of debt securities. And that alone will sustain the the role of the dollar. It's the it's the is the game plan. And you know when people hear Europeans Europeans like to think of you know Donald Trump as a very stupid man. And you know the opposite is the case. He's very cunning. This is probably one of the smartest, you know, not one I approve of and I think we're probably both in agreement with, but in terms of, you know, deviously, deviously smart strategies I can remember in my lifetime. I, you know, the idea of, you know, you got to come up with stuff like that. I mean, you know, I don't think that you and I would have come up with that. You know, we saw it when it happened, but this is really smart and, you know, we don't have anyone like that in Europe. I don't think the Chinese are that smart either. I know that he's got a lot of smart people in the Treasury and they actually make the Trump agenda work on its own. it will probably not work. Um, but it is through this sort of massive expansion of US debt. And it's not just that the states that the that it maintains the dollar's lead. It also means that it will usurper other fiat currencies. I think the euro is much more under threat from US dollar stable coins than from innocent crystal cryptocurrencies like Bitcoin. Bitcoin, you're right, is not a macroeconomic thing. It's, you know, even if it if its value were to raise to 1 million, would still not be a macroeconomic thing. actually the opposite. The higher its value, the less macroeconomically significant Bitcoin is for obvious reasons.
Look, the geopolitical and um international implications are absolutely enormous. for unheard. I wrote an article in which I was uh making the the case that um for Trump, everybody was talking about the tariffs, but stable coins and crypto were the real spear with which uh he was going to battle in order to maintain the exorbitant privilege of the United States. Uh and of course, if he succeeds in doing that, it will be at the expense of financial stability and of world development. But this is where I this is why I'm an opponent of Trump. But as like you, I I dismissed as idiotic the Europeans who claimed that uh the Trump team are a bunch of idiots. Now, now from this global perspective, there's the United States. We already discussed what's going on there. Then there is China. There is the rest of the world. And of course, there is Europe. Now the Chinese are not lesser minds than the Trump team. There's no doubt in my mind about that. They're very cautious. They're playing a very adult game. Uh they are honing and developing their uh blockchain technologies, the bricks pay system, the digital currency of the Chinese uh central bank. This is all being put in place with a very long-term plan. The problem is smaller nations in Europe. I was in Malaysia recently speaking to members of the government and they are panicking because um US denominated stable coins like Tether are reducing their degrees of freedom to conduct uh monetary policy is happening in Europe as well. We already discussed this in the previous podcast. uh the you know Europe's determination to neuter our own digital euro uh on behalf of the French and German bankers primarily is a gross dereliction of duty. They have no idea what tsunami is coming our way from that. But you see small nations trying to be a bit smarter than the Europeans. For instance, did you hear that in Kygystan, the government just launched a stable coin that was backed by its own gold reserves. So, I'm not saying that this is a solution or that it's particularly clever, but you can see that there is more intellectual life in Kygystan than there is in Frankfurt or in Brussels.
In Brussels, they've tried to frustrate it because uh the banking lobby uh intervened. I supported the ECB's plan to to launch a digital currency for precisely that reason. And the ECB understands this. The European Parliament doesn't understand it. The European Commission doesn't understand it. They don't understand the full threat that's coming our way. Now, the interesting thing is I I also agree with you that Chinese are playing a long game and that's uh you know when I said that they were smart. I didn't mean that this was the right strategic decision to take for the United States because I do ultimately think it will be defeat self-defeating. It will not be self-defeating this decade. It will probably happen after a long delay. Remember the last global financial crisis that they didn't start in 2007 or 2008. It's, you know, it built up these subprime mortgages were actually created in the 1980s. It was only in the early 2000s that they took off and became a financial stability threat. And the same with with stable coins. This could take 10 20 years. But if this thing crashes, the western financial system will crash. There isn't going to be, you know, a bailout. There isn't going to be what what happened before. It would be a destruction of the financial system. and the Chinese system would then be you know it would then have mostly decoupled from the western system in that in that at least from its exposure to the to the risk. So that's why I think in the long run the Chinese are smarter than than we are. I remember as a as a young journalist I covered German industry and and uh you know I met in that period a lot of sort of older industrialists and they you know I was not you know part of you know never particularly fond of the German industrial establishment. I felt they were rather conservative but they had one quality. They had the quality. They were long-term planners. And then a new generation come came in and they were more sort of like financial market oriented and more modern and they became shorter and shorter in their orientation. Today German industry is one of the most short-term oriented people. I mean they're even shorter shorter term in many respects than than some investors, some financial investors. And I think that's sort of a quality that the Chinese have preserved. Um I don't think the Russians have it. I think Europeans have certainly lost it in policym in Brussels is hopeless. is just short and it's just about the next move and you know the Chinese are will ultimately prevail on this this thing I I I I agree uh and it will be a bubble of of a kind we have not seen before well as heard is based in Britain I think we shouldn't ignore the bank of England's um similar failure to take into consideration what's happening in the stable coin world and to do something about the digital pound which I believe they discussed past they uh researched and quietly dropped as a priority. So you know the United Kingdom also doesn't have much to be proud of in terms of their capacity to keep up with the developments that are coming to us like as I said a tsunami out of the Trump administration.
I'm hearing that they are actually maybe reconsidering that precisely because of what happens in the United States. I think that your your your description was right. They did they came out against it. The House of Lords in the UK came out massively against it in the report. This is a gamechanging event what's happening in the US and eventually you know Europeans will sort of catch wind of it too uh that they need to have their own digital currencies in order to protect themselves against it. What they don't understand is that American bankers, Wall Street bankers are going to benefit from US denominated stable coins. Whereas the bankers in London, in the city of London, in Frankfurt and in Paris who are fighting against the digital pound and against the digital euro are the ones who will in the long term effectively be shooting themselves in the foot. But you know, strategic impotence has been part and parcel both of the United Kingdom and of the European Union for a while now. and Brexit hasn't changed that. I'm very pleased we had this discussion. We will come back to stable coins. There's no doubt because even if we don't want to talk about them, they will want us to be immersed in discussions about the kind of mess that they will bring about across the world, not just in Europe and in the United Kingdom. That's it for today. Uh we'll be back next week where we will be debunking two other myths. Until then, don't forget to rate, like, and subscribe to the Econosts.