Macro Update: Bitcoin’s Path to $1,000,000 & Global Monetary Reset | Luke Gromen

If you're acting in the interest of the United States, then yeah, you should absolutely just let inflation run hot, screw bondholders, screw banks. The alternative is much, much, much worse. It ain't going to get better from here if we don't do something on that front.

Bitcoin as a political force. It's undeniable their political power has surged. But the beauty of Bitcoin is, right? Like, unlike everything else, they really can't stop it. Ultimately, a way of essentially standing up Bitcoin as sort of the defacto neutral reserve asset to kind of fight the gold, you know, BRICs system. What would that do to the price? I think you could probably add a zero to be safe, to start.

What if I told you all the chaos, wild news cycles, economic policy flip-flops, the geopolitical drama isn't just random madness, but a screaming red flag of something massive unfolding right now? Today, we're sitting down with Luke Grossman, the macro mastermind from FTX, a guy who's called market moves with eerie precision while everyone else was chasing shadows. We're digging into why Washington is panicking, the impact of currency devaluation, and the hidden shift in military power that's reshaping global influence. And of course, where Bitcoin fits into this wild puzzle and where it's headed. Stick around, because by the end, you'll understand how to position yourself in a world that's changing faster than anyone wants to admit. Going beyond Bitcoin to bring you the skills and insights you need to escape the fiat matrix. This is Mentor Sessions.

Awesome. Luke, well, thank you so much for joining us today. To kind of kick things off, I don't know about you, but for me, the last couple of months, the news cycle seemed absolutely ridiculous. Like, we had Dow cutting the Ellen's out, we had tariffs, we had Trump versus Powell, and we got Trump versus Obama. We had the war with Iran. We had where's the list? Rhinos at the Fed, the Genius Act and the Clarity Act. Just to kind of get a lay of the land, that 30,000-foot macro view, what are we looking at here? What's signal and what's just noise that's distracting us? What has your attention right now?

It's a great question. I think the noise, in some ways, is the signal. You know, there was high confidence we came into the year that Plan A was going to be, you know, finally, you know, we have some Wall Street adults in the room, and we've got a businessman in the office, and and we're going to dodge, and we're going to, you know, we're going to take some pain, right? We're going to let asset prices fall a little. We're going to adjust and shift investors into long-term treasuries. And ten-year judges buy the ten-year Treasury yield. It's going to come down. And as it comes down, then we're going to term out the debt. And we're going to dodge and and and that'll bring yields down further. And we're going to put an and I was watching this thing the whole time going like, I'll have some of what they're I like it wasn't like, you know, by March people going, how did you know yields were going to go up when they, you know, after a brief moment when they try to do dodge? I'm like, math. Yup. was literally, you know, you just look at the U.S., you know, the dollar debt, foreign dollar debt position, which is like $13, $14 trillion. So foreigners need dollars. And, you know, if they cut and if things slow, the dollar's going to go up. And then you look at the $26 trillion net that foreigners own of dollar assets, like it was just it's just it's an equation. It's like, you know, one plus one equals two. And they were like, well, one plus one equals one dog and, you know, or Doge. And so I think that when I say the the noise is the signal, I think very serious people thought that was going to work.

Really?

Yeah, I really do. And so I think part of this noise that we're seeing is a little bit of panic. You know, the panic mannequins aren't out in, in America. The panic bins are in D.C., the panic bins are in the White House. And why I think that noise is the signal is it's like, oh, gosh. Like, not only did we get that, but then we get, well, we've, you know, April 7th lesson with Tucker Carlson. We have all the leverage. We're the debtor economy. The creditor economy has all that has no leverage. I taught economic history. I know how this goes. And what we said at the time is A, the Treasury market will blow up remarkably fast if they try this. And B, watch rare earths. Yep. And so like a bald guy in Cleveland, you know, seven days later, you know, warn them, you know, warn them, hey, this is how it's going to go. Why again? It wasn't some secret connections or or, you know, it was just you look at where the leverage points are, the real leverage points. And there seems to be a lack of second derivative thinking around those, you know, culturally these days. Like, we we just sort of, you know, we're like bulls in a china shop. And seven days after they did Liberation Day, the Treasury market started to literally blow up and they had to back off. And then the rare earth thing is ongoing. And it's it's it's astonishing to me that the administration apparently didn't understand this leverage point. I mean, the Chinese literally weaponized rare earths against the Japanese 15 years ago. Hillary Clinton said in 2011, we're we're dependent on China for the rare earths to make our bombs. Now, she was Secretary of State that for eight years. She didn't do a damn thing about it. It's neither here nor there. But the point is, is, I think ultimately there was this part of the noise is the signal point is this recognition of, oh my gosh, like, I think this is the White House recognizing they don't have the economy they thought they had. They don't have the, markets they think they have. They don't have the military they think they have. And what I mean by that is ultimately, we can't go to war without Chinese reserves, and we're not going to be able to for five or 10 years. And so that's what I think some of this infighting and noise and all of this stuff is just I think, you know, sort of panicking. I think they're going, oh, gosh, okay, so what's Plan B? Well, Plan B is what Plan they should have been all along, which is okay, we're going to juice growth. We're going to juice inflation. We're going to devalue the dollar. We're going to devalue the debt. And, you know, I think some of that's going on. But that's that's how I'm looking. I think the noise is the signal that just there's, you know, all this stuff going on is like, you know, flying to sound repeatedly. And the reason they're flying the sound is because A, the strategy they laid out failed. And B, they don't have the cards, they think they had.

That's very interesting. I should want to touch on that for a second too, as well, too. So, regarding the currency devaluation, you've, you've called for that for quite a while now. And actually, I was listening back to an interview you did with Preston Pysh. And back then, we were sitting around 107, 109. You called for 95 to 106. Months later, we're bang on. And it's just been like this continuous trend over the entire year. I'm curious if one, that is the currency devaluation that we're seeing there. Also seeing gold and Bitcoin appear to rip, or at least continue to grow as a result. And do you expect that this is going to continue, or are we kind of reaching the end of that trend? And I just want to take on one of the thing as well, too. The idea that we can grow our way out of this. I'm hesitant, but I'm not nearly as knowledgeable. If 0% interest rates couldn't really juice that much growth, can they get enough to actually resolve the situation?

So I think we are sort of coming to the end of part one of the dollar devaluation. It's going to have to go a lot lower.

Really?

Oh, yeah, I think so. Over time. Yeah. A tricky thing because you got to get that the GDP down. You got to sort of anesthetize the long end of the bond bond market, right? And so I think part of what we're watching, and we can touch on this in a bit, part of I think what we're watching with stablecoins and the the desire suddenly to shift issuance forward is essentially to pre-anesthetize the long end of the yield curve so that when the dollar goes from 97, where we are today, to 87 or, I don't know, 80 or 75, something, then, you know, the resulting inflation that I think will start showing up later this year as a virtue of, or as a result of the, you know, the lagged impact of the dollar weakness we've seen so far. You won't necessarily need to lose the long end, in other words. Right. But if they try to just get the dollar down a whole lot more from here, then I think you start bringing up inflation concerns. Term premiums rise, you start to lose the long end, and then you go into sort of this debt spiral dynamics. We've seen it for a couple of brief moments over the last several years. And that that's going to undo everything that they have accomplished so far. So I think it'll continue. But I think there's sort of an order of operations they seem to be following. And in terms of, sorry, the second question was, If XRP could induce growth enough. Yeah. If there could, could?

Okay. Interesting. Could you unpack that a little bit?

Sure. Yeah. So in 2022, as, as Powell is getting ready to hike rates, like this is the wrong thing to do. And consensus was, oh, he's going to be the he's going to be the next Volcker. He's going to he's going to do the tough things. And I said that the GDP when Volcker did this was 2,530%. It's 130% today. You know, it's down to 120 or 122. The, you know, the deficit was 2% of GDP. It's seven. When Powell was maybe six when Powell started, you know, the U.S. net international investment position was positive. In other words, America had more foreign investments and foreigners had here by like 5 or 10 points of GDP. So as he strengthened the dollar, as Volcker strengthened, the dollar's rates rose. The dollars that were overseas on net came back here, containing inflation and and bolstering growth and bolstering asset prices. Like the net international investment position as opposed to being positive ten when Volcker did that, it was negative. It's it's I think it's negative almost 30% now. So like like it's it's, you know, you've got $26 trillion net. Sorry, negative -90%. Right. It's -90% of GDP. So you've got nearly as much in GDP here on net of foreigners' money. And so when the dollar rises, when he tries to play Volcker, what are they going to do there? They have to sell dollar assets. And our economy is based on the rise in dollar assets on the margin. And so our tax receipts to the government. And so Powell, paradoxically, people thought the brave thing was to be Volcker. It wasn't. The brave thing was to be Arthur Burns on steroids or or a modest version of Rudy Van Hovenstein. Right. Yeah. The brave thing for, for for Powell to do, which is to say in 2022, hey, inflation's a it's becoming a political problem for Biden. Understood and agreed. And that the GDP had gone from 130 down to 117. The deficit had gone from 3.1 trillion down to 1.4. All he had to do was sit on his hands and hold rates at zero for another year. That the GDP would have been back to probably, I don't know, maybe maybe 103. And, you know, inflation could have ticked up some more and the deficit would have gone from one four to maybe 800 billion. And then if he'd had done it for one more year. So that takes us into 2024. You know, inflation at that point probably run in ten, 12%. Stock markets ripped, bond markets, you know, being held down. We would probably have gotten to a position where that the GDP was down to 85 to 90%. And, and the deficit probably would have been back to five, $600 billion or like 2% of GDP. So they would have completed sort of the restructuring or the, the, the paying for COVID. Right. You had all these politicians saying we got to spend all this money. COVID is like World War Two. Okay, great. But then on the other side of World War Two, the Fed came in and kept rates pinned from 1946 to 51, and bondholders got friggin destroyed on a real basis. Real rates went to -13% at the lows. Bondholders paid for World War Two with the purchase value, went from being able to buy steak with their bonds to being able to buy hamburger with their bonds, being able to buy dog food with their bonds. And that's what had to happen to bonds this time. And Powell chickened out. Why? Political reasons. You know, obviously, we can see, you know, it was messing with Biden's election, reelection chances or, sorry, the midterms. Excuse was a problem politically for Biden and the midterms. And so that's why I say you can do it. You know, now, the problem is because he chickened out, then, you know, now 10 to 12% inflation ain't going to cut it. Now you're going to need 15, 16, 17% inflation, 20% inflation for two or three years with rates at zero. And then you can get the deficit back to five, $600 billion. You can maybe, even maybe even a surplus. Who knows. You know, having the S&P up 50% on year on year like it was in 2021 or so. That helps. It's a huge driver of tax receipts. So it's really just a question of, you know, do you have, you know, number one, who are you acting for if you're Powell, right? If you're acting in the interest of the United States and the balance sheet of the United States, then yeah, you should absolutely just let inflation run hot, screw bondholders, screw banks and on a real basis, they'll get paid every dollar nominally. And you set the U.S back up to be in a good position. Now, if you decide you want to act on the behalf of bondholders, banks and one political party, you know, you get what we got right now. And so, you know, I hope you enjoyed his, you know, his moment in the sun because obviously he's not having as much fun as he was in 2021 when they were saying he was the hero of COVID and he did a marvelous job handling that without question. So he just he didn't go hard enough. He had to, you know, the brave thing was, you know, Cubans on a real basis. Now, wouldn't that have, like. Really not, strong. Sorry, Gary. Age of afterbirth and just loving this. Wouldn't that have consequences? Knock. Consequential knock-on effects in terms of bondholders around the world looking at them as more risky and further getting away from bonds as the preferred collateral and kind of reserve asset?

Well, I think U.S. Treasury bonds have have already lost to gold as a reserve asset. That started in 2014. The global central banks have sold on net, $200 billion of U.S. Treasury bonds since 2014. They bought $800 billion of gold. So central banks have already decided, like they've done the math. They look at this and go, you know, one plus one is two. One plus one is not Doge. And if you believe one plus one is two and not Doge, then you can't own long-term treasuries. And you have been able to for ten years on a on a real basis. And I think they remain uninvestable on a real basis. So, you know, the central banks to sponsor this system have known this for some time. Paradoxically, had he done that, gold would have gone to the moon. But central bank balance sheets would have improved meaningfully. The dollar would have weakened meaningfully. And those central banks probably would be back in buying our bonds by now. But they're still not. In terms of the private sector? Sure. Yeah. They're not going to be happy they got screwed. And so what, like, like a lot lesser powers have completely screwed their bondholders and had bondholders back buying their debt within, you know, a couple of years, you know, look how long Argentina was locked out of markets like, Yeah, 17 times. And like these bondholders, they show right back up. Greece. Right. Yeah. You know, the these bondholders like they put you in the penalty box for like a second. And oh, by the way, we're not Greece or Turkey. We can make we could make them do it. We could regulate them into it. And, you know, we have to a certain extent. So, you know, I think it would have been a modest concern, but I don't think it's nearly as as much of a fear or as much of an issue, you know, that the bondholders make it out to be, right? When you hear the people who say those things, who to those people tend to be, it's the Larry Summers of the world. It's the Ben Bernanke's of the world. It's the Janet Yellen's of the world who have a very, you know, entrenched interest in defending the system that they set up versus, you know, versus where it needs to be evolving to, given what has happened. Yeah. And so ultimately, it's devalue the currency, and then all the inflation's probably going to flow mostly into the hard assets. Gold, Bitcoin, and probably real estate and commodities. Yeah. Stocks.

Gary, do you have anything? I've been I've been hogging the mic this whole time. I'm glad you hogged the mic. Because I wanted you to get your questions in. Because I'm about to be an asshole and blow up this interview.

Let's go for it. So, you said that, they they should have held rates low, close to zero, and I believe. And correct me if I'm wrong. The idea is to kind of save the United States and get us back on track. And I guess I have to just wonder, what is the United States, if not more than just a collection of people in it? And in that respect, if you're intentionally inflating the money supply when we say we're inflation 10 or 12%, what we're actually saying is we're stealing from people 10 to 12% of their wealth each year. And if that's what we're doing, then what are we saving?

That depends. Right? If you're talking about the 1%? Yeah, they get screwed. And I say, you know, and the bottom 90%, you know, their wages skyrocket, right? You can just look at us and go, we've been we have consciously made a decision since roughly the 80s. Right. So if you go back further than that, 1940 to 1960. Right. It was it was, you know, what's good for, you know, 1960 and 1980. What's good for GM is good for America. 1980 to 2020. What's good for Goldman Sachs? And the Treasury market is good for America. And the regime just changed. Right. And really AJ Price say 1940-1980. Right. What's good for GM is good for America. In 1980 and 2020, those 40 years. What's good for Goldman Sachs and the Treasury market is good for America. So yeah, would that have screwed the Treasury market out holders and Goldman Sachs? Yeah. On the margin relative to, you know, everybody else in the economy. Sure. And like I think Goldman Sachs to be okay. I think the boomers who own 55% of the wealth in this country and who are receiving 70%, seven 0% of the all-time high tax receipts, are going to boomers in the form of entitlements. So the richest generation in history is getting 70% taking food out of the mouths of the younger generation, literally, because we can't afford education, we can't afford some of this other stuff. We should be investing in infrastructure for the future. Yeah. Do I mind taking money from Goldman Sachs and the richest generation in history via inflation? Not at all. Not for my kids. I would do it every day. And so you can see from 1980 to 2020 who the winners in the economy were. They were Wall Street, they were Washington D.C. and their politicians because they could run big deficits and they were China. Do I mind screwing Wall Street, Washington and China to rebalance the economy by allowing wages to rise and taking money? Basically, you know, if you're an electrician and your wages, your food bills growing 15%, your wages are growing 15% and your house is locked in on a 30-year mortgage at five, are you losing now? What? You're getting a debt jubilee on your house. So I think it would be, you know, particularly if you do what we've done on the immigration side under under the current administration where the supply labor stops growing. I think you rebalance things in a way that haven't been rebalanced in a long time in this country if you were to do that. But, you know, to your point, that's it's tricky. Powell can't do all that. Right. So, you know, Biden wasn't going to let you know he wasn't going to curtail immigration to help allow wages. So then you're going to get into a situation where, you know, Biden was still president and he's letting in lots of people. Then you're going to get food bills up 15% and wages flat. Well, now you have a revolution that's not going to work. So it really kind of has to be a whole of of government approach. I think it's very fair. But in terms of, you know, inflating away on a relative basis the wealth of the winners of the last 40 years, I got no qualms. It's the right thing to do. The alternative is, you know, much, much, much worse. You know, you mean people keep saying, well, when's winter things going get worse? Well, like, you can see advertisements for private security in Brentwood and Beverly Hills. You can see CEOs getting shot in the streets of Manhattan. You can see the most tumultuous, you know, social and political divisiveness in this country in 50 years. Like, it ain't going to get better from here if we don't do something on that front.

May I just follow up for a moment? And I think the idea of what you're saying is, over the years, so many of the wealthiest, most connected people I agree with you have benefited from the way our system is set up. Without question. It at the risk of sounding like a socialist for a moment, which I definitely am. So I get what you're saying there. I guess I just wonder the way you described it of, you know, the prices going up, but your your wages go up to match and so on and so forth, for, you know, the working people. Is that actually how it plays out? Because from what I understand, like with something like the Cantillon effect, where it's those who were closest to the money printer who get the benefits first and those farthest behind who see their wages lag behind prices. That's not how it works, as far as I understand. And by inflating the money supply, we're actually pumping more into those who have these quote unquote, hard assets, who already have their established wealth, who have their lawyers and accountants, where they can afford to hide their assets and their savings while the working people continue to get screwed to the price of houses and so on and so forth. What am I missing here?

I think the I think it refers back to the sort of the whole of government type approach to it, which is if you keep allowing millions of people into the country illegally, to basically dilute the supply of labor that ensures and maintains and reinforces that Cantillon effect. My I would argue that if that that if you, do that in a constrained labor supply, then all of a sudden it sort of dilutes the Cantillon effect or even starts to shift or move, move the especially skilled trades, etc., up in front of, say, the financiers, a lot of financiers in the Cantillon effect. In other words, you know, like I tell a buddy of mine right here, he's he's a contractor and he's like, man, I'm so busy. I'm like, booked out 18 months. I say, how many or how many a year? You know, clients are boomers. He's like, oh, it's probably two-thirds. I said, for the boomers, raise the price 40%. He goes, why? I said, because they get all the money, they're going to pay it. I said, there's not enough of you guys around and they know it, and you're reliable and you're trustworthy and you get the job done fast and quality. Raise your price 40%, and if they won't pay it, walk away, they'll come back. And he tried. And he's like, you're right, I can raise the prices on boomers. They are completely price inelastic. They want it done and they just pay. I said exactly. And so I think it really like I said, it, it depends on the structure of the whole thing. If you, you know, if you've got people that can undermine you then, you know, then, you know, in terms of diluting the labor supply, it's a recipe for, for what you said, which is just an absolute disaster from the Cantillon effect. But if you actually do it from a way that stops, you know, that stops the falling and maybe even bumps, sort of the bottom 50, bottom 80% of the people up in line, a few slots, then it can kind of improve the cohesiveness of the country as opposed to deteriorating it.

It's very interesting. I just want to point out to that, that, in terms of negotiating, boomers have all the money, but none of the times, let's say, a good position to necessarily be in. I want to make sure that I kind of have. Hate mail? My apologies, since I'm here, since I'm the Gary. Gary can handle it. He's got quite the, quite the ego. Now, if I understand correctly, then essentially by developing the currency, we're going to be and we as long as that integration is kind of capped or under control, that you then be increasing the wages and kind of you could possibly move to even offshoring things like manufacturing and industrial base back in the US. Now, what I think this is, is basically kind of that double-edged sword, because this would strengthen the US domestically and probably improve relationships here. But wouldn't this also then not come at the cost, which I'm totally fine with, of the US empire? Meaning that even with the devalued currency, wouldn't that make it harder even to like Chinese rare earths and military strength kind of abroad? You'd lose more of that international impact, which if I have this correct, it might be like a, reinforcing circle, meaning that if you focus domestically, it weakens the US empire, internationally. And then as that continues, that essentially what the US and you can correct me if I'm wrong here, but I almost view it and given I were talking this beforehand, that the US is not necessarily exporting dollars around the world, what they're exporting is protection. But if that protection, their ability to kind of intervene and protect on behalf of different players in the geopolitical space is waning, I think it benefits. Ultimately, it continues to benefit the domestic base. But doesn't that continue to shrink the US's influence abroad?

So. Yeah. I mean, I think a perfect example, you know, really, of it is, you know, the dollar fell 90% against oil from 2001 to 2008, right? It went from $15 a barrel to $150 at peak. That's well. 90% against oil. What did we get for that? Shale. Right. Like they knew shale was there. They knew it was there. In 1980, there were two things that drove it. Number one, the long lateral, steerable lateral technology. Huge deal. But the big one that no one wants to mention is friggin price. The price of oil rose ten X and suddenly, when paired with that technology, production in the US went from, you know, whatever, 4 million barrels a day to 18 million barrels a day over ten years, all the related demand jobs, etc.. I do agree with the dynamic of, you know, the structure of the system is, is essentially, you know, exporting. Yeah. Defense as a service, if you will. Right. Or in defense of the Commons as a service, along with us exporting our, you know, dollars, bonds, capital markets to recycle. Right. And that's okay. What is one like what did I, you know, Yeah. Wall Street, China. Great. Because China's making all this stuff. But the system has become a victim of its own success and of technology, paradoxically, right? In America, it's it's considered anti-American or Luddite if you're like, oh, I want to slow down the pace of technological growth. The problem is with technology, paradoxically, it's not a problem, but it's it's a paradox. It has eroded. I mean, what does technology do over time? It erodes the value of artificial moats, right? If you have an artificial moat, tech's deflationary. So who's got the biggest artificial moat in the world? I would argue it's like the banking system. But we'll set that aside for later. But sort of the dollar system, like the, you know, U.S. defense, we spend $1 trillion a year. And like the I hear very credible rumblings that for the last 12, last 18 to 24 months, the United States has been running the strategy and the weapons and tactics of the Ukrainian army. And we lost to the Russians. The Russians are winning. Like they outspent us 4 to 1. And not only they outspent us 4 to 1, but there is a a or excuse me, I'll produced us 4 to 1, not not outspent us, but outproduced. Excuse me. And that's according to Mark Ruddy, the Secretary General of NATO. Earlier this year. And more than that, the nature of warfare, like Erik Prince, the former head of Blackwater, came out earlier this year, gave a speech, said that warfare as a result of what we learned in Ukraine, went through arguably the biggest change since Genghis Khan put stirrups on horses 800 years ago. Wow. And what that change is, is drones, missiles, subs as well. That's a separate discussion. But these drones and missiles and the technology have, in his words, not mine, rendered obsolete. Trillions of dollars of American defense spending. And so, you know, you start going, you say, well, we provide safety on the oceans. Okay, great. How's it going in the Red Sea against a Houthis? Not so good. Not so good. Why? Because the asymmetric dynamic of drones and high-speed missiles mean that they can pop shots at $100,000 a rattle, and possibly risk severely damaging a $12, $20, $12, $15 billion carrier, which has two big problems. Number one, it pierces the veil. You know, the emperor has no clothes. But number two, you don't get to take a shot at a carrier and not have a very serious escalation. Right. So like we would respond and then someone else would respond. It, you know, someone hits a U.S. carrier, it runs the risk of World War Two. But in his in this speech, Erik Prince said, look, here's how it would go in Taiwan if the Chinese blockaded Taiwan. We would send a carrier. And if we sent a carrier there and it threatened them, it might get sunk. And now you see pictures of, you know, 5,000 American men and women on a boat that's smoking or sinking. But all of this speaks to this dynamic of the technology is evolving to a spot that the the defense as a service is no longer credible. And if it's no longer credible, then what are we doing? Like what we have? No. You know, no, we we very likely have stuff that the world can't even believe we have. Trump's alluded to that a few times. And if you don't use it, you know, it's like a tree falling in the forest and no one around. And there's probably pretty good reasons they're not using it. That's neither here nor there. But to me, when we take a step back to the monetary, we say, okay, well, this deal worked and it was great for Wall Street, Washington and China. And we protect the Commons. Except we can't protect the Commons anymore. And we're spending trillions of dollars to not protect the Commons when it can be done equally effectively for way less money. But in that case, it requires a change in the structure of the system. Right? I mean, like, doesn't require $800 billion a year to have some Navy Seals with a 50 cal sniper rifle doing pirate duty, you know, off the coast of Africa, like it's not that expensive. Like you don't need carriers to fight those guys. Right. And the carriers you do have against great powers are, like, not that useful anymore because technologies evolved. So there's this paradox of, you know, yes, if we focus more on home and we change the system, we do this inflation and we devalue the dollar, we we would actually probably in the long, it's probably the right strategic move because we can get back to investing in things that allow us to adjust to the new reality of warfare, rather than trying to defend a status quo that is over and just hasn't been marked a market yet in the minds of a lot of investors. So that's it's a long answer, but I think it's a really good question, really important, because there is it would absolutely pull away from Empire. And you go, so what? Empire is not going so good. Is, is, you know, if you can't stop the Houthis in the Red Sea without taking real casualties or the fear of real casualties, that would escalate things to an unacceptable level, then like like it's over. It just hasn't been marked a market yet.

Imagine mining Bitcoin cheaper than buying on an exchange with direct payouts. Hitting your wallet like clockwork. Saves mining. Makes it real. You own the rig? No gimmicks. It's your asset pumping up Bitcoin every single day. No markup on hardware or electricity. They get paid when you get paid. Fully aligning incentives. Mining Bitcoin below exchange cost is a great way to DCA your stack. It's so simple anyone can do it. No tech skills required. You get white glove support and education, a rig performance guarantee. Plus, it's powered by 100% carbon-free energy prioritizing renewables. Ready to take control of your Bitcoin future? Visit SandsMining.com by scanning the QR code or clicking the link in the description down below to book a free consult and start mining today. Are you still delaying taking self-custody of your Bitcoin? Do you feel secure in your current Bitcoin setup? If something were to happen to you, would your stack make it to your loved ones? A Bitcoin mentor. We've helped thousands of people level up their Bitcoin security and fast track their understanding. If you find that you simply don't have the time to go through all the books, the tutorials, the guides, you can book a free one-on-one strategy session with myself, Gary, or any of the other great mentors by visiting Bitcoin mentors. Scan the QR code or simply click the link in the description down below to find out how Ben and the entire expert team at Bitcoin Mentor can help you accelerate your Bitcoin journey. Use promo code BTCsessions for 10% off.

Yeah. I think what a lot of what you're saying there from, you know, my limited knowledge compared to yours, it makes sense to me. And that's just the nature of warfare we've seen of all throughout human history. I mean, you can even go back to just World War Two, where the Japanese had all the battleships thinking they were going to win the sea. We came across with the aircraft carriers and like, what? Wait, this thing is going to win it. And it did. Technology evolves. I'd like to bring up something. I watch your interview with Tucker and you mentioned the Carl Blessing letter from, the, the Deutsche Bundesbank back in 1967, where Blessing from West Germany basically suggested to America, like, hey, what do you think if we kind of, put some of our Deutschmarks in gold, i.e. repatriate some of our gold from you? And American authorities more or less said, I mean, you could do that, and maybe we could remove our troops from West Germany, and you can deal with the Russians yourselves. And that was the end of that. So to Nathan's point of, you know, us kind of exporting protection, it and to your point, if we're not as good at that anymore, and it seems to be less and less effective, and we're manufacturing less ability to do that here compared to China, how does that affect the dollar worldwide in the sense how much of other people using the dollar comes down to they want to use the dollar, or they're using it as a favor to us because we say so, or we're protecting them?

Well, I think there's also. I think there's some of that. And I think there's also sort of the incumbent payment system infrastructure. And I think technology's disrupting all of it. Right? So, like, you know, the protection side, you know, if we threaten the Germans with that today, there's an economic impact that I think is very big for various localities in Germany. And that would be an issue. Now, practically speaking, like we're protecting you from the Russians is like one of the dumbest things I ever hear. Because, like, number one, the Russians have 11 time zones, they can barely handle, right? So, like, the same person will tell you we are protecting Germany and Europe from being overrun by the Russians, and then that same person will turn around in a different podcast and say, China is like open field running because the Russians don't have enough to defend their own border against China. So eventually China's going to start taking over Russia. Okay. So they're going to go west and leave that even more exposed to the far greater military power and threat that doesn't. No one ever pushes them on that. By the way. Then no one else. And then that same person will then finish their podcast by going, Russia has a catastrophic demographic crisis, and the country is going to be like, you know, down 50% population in 20 years, which may or may not be true. I don't know. But like those three things cannot exist all together, particularly with the then overlay it with the very simple observation that at peak America, the greatest military in the world, had 500,000 soldiers roughly in Iraq. And it's a desert. Deserts are easier to defend, and especially with our weapons systems, as it were structured, than say, Europe, which has trees and lots more cities and lots more hills and mountains and all these things. And the greatest military in the world with 500,000 soldiers could not control Iraq. And Europe is 17 times the size of Iraq. Putin doesn't have 17 times the army times 500,000. And he's got a demographic crisis and he has a border crisis. So like this whole dynamic of like, well, we're the only thing standing between, you know, Europe speaking Russian, you know, is our military is like laughable, especially when you overlay the realities of what happened in Ukraine and these are horribly tragic. But like, there are people that you can see studies that have that have estimated the casualty rates suffered by Ukrainian infantry. When drones are in the battle and it's like in the open, it's like 90-plus percent. In the woods, it's like 40%. So 90% by by way of comparison, we've all seen the opening scenes of Saving Private Ryan. Those are 90% casualty rates. Door goes down, everybody's hit. So like, if the Russians somehow did take Europe, they're literally going to be like swatting these drones away and they're all going to be dead within, you know, a year or less. So this, along with the background of like, this sort of protection as a service card, sort of is is no longer a weapon. And then it's sort of a follow-on to that. Sorry. Around the dollar. What does it mean for the dollar? Yes, I think that's part of it. I think it's part of it. Right. But people say, well, ultimately the U.S. military backs the dollar. Well, that dynamic of it, it's not good for the dollar because, you know, and very, you know, at high levels, it has been noticed. You know, there was an article a couple of weeks ago that in one of the defense trade rags that asserted that the U.S blew through 15 to 20% of its air defense missile inventory in just 11 days of medium combat against, you know, defending defending Israel from Iran and Israel. You know, you know, as we poopoo the Iranian stuff over and over and over. But the the Iranians were said to have another five years worth of this stuff.

Whoa.

Running out. Oh, yeah. And oh, by the way, guess who makes guess who makes the rare earths that we need to make the stuff to replenish us? That that, China. Almost all of it. So at a high level, in very senior levels of power, there are two things that are understood. The Americans cannot go to war against near peer or peer powers because the Chinese decide who goes to war with near peer or peer power. So, number one, all of the sort of trade negotiations, dollar stuff that we think about, always has the background or we will Saudi Arabia or we will go to. Yeah. And the reality is, is like, if we try to do that, the Saudi MBS is going to pick up the phone and go, hi, President Xi. Hi, President Putin. How many missile systems can you give me? And, you know, David, David P. Goldman, Asia Times says Chinese can make 4,000 cruise missile motors a week with AI integrated manufacturing. By way of comparison, according to him, America as of two years ago had 5,000 Tomahawk cruise missiles in inventory.

Total?

Total war. You. Everybody says war is ultimately about who can make more the fastest. Absolutely. And that's what we did in World War Two. And today that's China. And it ain't even close. Yeah. Like the paradoxically at least me be very bullish on risk assets because I think we're going to peace for at least the next 12 to 18 months for a simple reason. No one can go to war without China. But then I do think that has implications for the dollar around, you know, sort of this ultimate, you know, backing of the dollar. I don't think it necessarily is, you know, people stop using it because of these military realities. I do think the bigger risk is sort of the payment side, right? That basically the dollar is used and, and, and, and we sort of been shooting ourselves in the foot on that for 15 years. You know, we kicked Russia around out of the SWIFT system in 2012, which is like, you know, unless there's something there where that I just I'm not, you know, party to in terms of why we did it, privy to. But that's like running your single best offensive football play. Super secret, you know, double pass, you know, against, like, Saint Mary's School for the Blind. Yeah. Have to. I have to show. But continue. Stupid amongst like, an ocean of galactic stupid tactical strategic decisions. But more recently, you know, when you repeatedly weaponize the dollar against Russia, when you threaten sanctions against China, when you threat, you are telling people, you know, it's like here it's like giving your kids a video game system that the longer they play it, they're going to get cancer. How long would you let your kids play with that video game?

It's. It depends. Which kid?

Yeah. It's but it's, it's literally like that's, you know, this they made it clear that this was the best weapon we have, especially now that everyone at a senior level knows that the United States cannot go to war with near peer or peer powers without the without the Chinese sending them the virus to do so. So now we're into this weird situation where the U.S. either has to make some real concessions, which I think will be dollar negative, and I actually think or strategically in our long-term interest, or we got to keep using the only weapon we have, which is we're just, you know, it's like, you know, Game of Thrones, right? You know, the Mad King burn, burn them all. You know, sanction them, sanction them all. You get a sense. Okay. And again, here with technology, I made reference to the before with the with the defense side. But like you can make payments using China's WeChat, using the People's Bank of China's e-you know, yuan outside the dollar system entirely. And, you know, Yanis Varoufakis gave a great speech two weeks ago in Britain where he said, look, you know, when they set this stuff up, no one wanted to use it. And then the Europeans and Americans grabbed $480 billion of Russian of theirs, and then they threaten 100% sanctions on Russian oil. And then they and you go, okay, I'll use some of this. Yeah. And, oh, by the way, you know, nobody trusts a Chinese more than Americans. But everybody trusts gold more than the even our former Alan Greenspan said that in 2014. So, that the gold better than the dollar. So, you know, China has set up gold convertibility. Yeah. Even a couple of weeks ago, said, hey, we're opening up Hong Kong gold vaults. Boom. You end up with the yuan, you'll bring it to Hong Kong, we'll give you

Gold. Yep, from? Not China. Yep. And from, yep. And we've done all we've, we've done all the marketing for them. You know, we've just set it up. It's like, okay. Thank you.

So again, I think it's ultimately, you know, I think the dollar's going to be like, it'll still be used, right? But it's a, it's, it's giving itself Gresham's Law disease, right? Or, you know, and paradoxically resolving this dilemma, right? Driven dilemma is, is being fixed because people are going, all right, well, fine, I'll divert some of my payments into the, you know, non-dollar system. Doesn't touch that system. I'll settle in gold. And, you know, we look around and say, wow, central bank gold reserves are up another 1100 tons this year. Wonder why that's happening? I wonder why. Like, I think that's going to keep happening. And I think eventually you'll see Bitcoin get involved with that. But, you know, not yet.

So on that point, that I want to use that out a little bit. So you make a very strong case for gold being the, everyone's moving to gold as the, neutral reserve asset. And then my question is, what is it that is preventing Bitcoin from also fulfilling that role? What is it that you need to see in terms of adoption or market cap? Is it purely that it's just too early in its monetization phase, that it can handle the necessary liquidity, or kind of what's going on that you see that maybe Bitcoin, but not Bitcoin yet? Because arguably, like the idea of even having things priced in dollars. So we're just looking at maybe from like the unit of account, you got kind of that currency asset split into two. Bitcoin very nicely moves those right back together. Like, one, why not Bitcoin at this point in time? And kind of where do you see things going? And then two, if Bitcoin was to eventually lead, eventually find itself in that sort of a role, wouldn't that, unlike gold, doesn't really compete with a dollar in terms of a currency? Can Bitcoin and the dollar actually coexist further down the line?

I think ultimately, why not Bitcoin yet? Is is what you just said, right? Liquidity. I think it's liquidity and it's track record, right? It's tech. It's new. It's, you know, you can't touch it. You can't look in the vault if you're a sovereign and say, there it is, you know, until you really understand the technology. And once you do that, then you can look at it and say, there it is. So I think there's a learning curve there around that that is accelerating rapidly. And there's a whole group of people out there that are, I think, pushing the understanding of that very, very nicely, various different lobbyist groups and, and etcetera. So I think that's a possibility.

As I look at it, I think some of what we're seeing with stablecoins is effectively an admission by the US going, okay, we did stand up long-term treasuries as a primary reserve asset. And 11 years ago, you know, central banks were like, yeah, no, led by the Chinese and Russians. But we sort of fought and they stood up gold. And over the last 11, you know, ten, 11 years, gold and long-term treasuries fought. And the reality is, is that gold won by knockout. You can see it in the chart, you know, the price of gold in Treasury by a long-term Treasury bond futures is up for ten years. So gold wins by knockout. Oh. We need a new neutral reserve asset. And the reason we need to be neutral is the Chinese will happily still use dollars to trade, and they're going to want to buy, you know, Freeport-McMoRan with their dollars, and they're going to want to buy, you know, the port of New York, New Jersey, like they tried to, yeah, Air Force Base.

System post '71 says, you've got to have a wide-open capital account if you want the dollar to be structured that way. And if you don't want the dollar to be you, if you don't want the Chinese buying up all of the good stuff, right? Like, like America's been like, well, no, no, no. Buy this empty strip mall in Minneapolis. It used to be a Best Buy in China. Like, no, I'll take the port of La Long Beach, please. I'll take the port of New York. And like, if you don't want your dollars to be good for stuff that people want, then you're going to have to close your capital account on some level. And doing that changes the dollar system, and you're going to need to offer something of value. And we can't use our gold, but not not anywhere near $3,300 an ounce, you know, maybe $30,000 an ounce. We could certainly do that. That's one way out of it. And certainly that would have implications for the dollar and the trade value and re-industrialization, inflation, lots of different things.

But ultimately, you know, you can start with a stablecoins setup and you, to me, I mean, it's, I'm intrigued because if you have stablecoins start to sort of disintermediate foreign currencies on phones around the world, right? Hey, I want to own a digital dollar. And I mean, you know, I mean, I'll use Besson's example from three weeks ago, right? If I'm in Nigeria and I want to own dollars, I can now buy, you know, basically leveraging American technology on my iPhone internet, I now can have access to a digital dollar. And you can see why they would want to do that. You know, the the naira, the dollar in naira terms over the last three years, I think is up like 300%. Yeah. Great. But how long is it going to be till that same person on that same phone with that dollar stablecoin looks at the performance of Bitcoin in naira terms and goes, oh, Bitcoin was up 4,600%. You know what? I'm going to take 20% of my money in my digital dollars. I'm going to put it in Bitcoin. And I'll take the volatility because I know it. And that's fine. And, you know, if you're living in Nigeria, you're probably used to more anyway, relative to the average, you know, Boomer who wants to clip his 4% coupon from Uncle Sam.

And so I, I think that, they're not saying it, but I think the stablecoin thing is ultimately a way of essentially standing up Bitcoin as sort of the de facto neutral reserve asset that sort of, you know, the Treasury market's laying there on the mat bleeding out, barely conscious. And they're like, you know, like tagging in Bitcoin basically through the stablecoin market to kind of fight the gold, you know, BRICS system that has, you know, drubbed us, you know, as you know, gold tends to do to fiat currency systems. So I, there's an interesting dynamic there. There's a lot of execution sort of risk developments, policy stuff that I think kind of has to happen. But you can see clear, I saw you guys smiling at it, like like you sort of, you can see clear to the intuitive and the human incentive path there. You know, I don't think the Secretary of Treasury, United States says, we want Bitcoin to be our new, our new reserve asset. I don't think he's ever going to say that, but he's gotten relatively close to pronouncements around that without saying that, in my opinion, so far.

Amazing. I'd be remiss if I didn't ask too, then, just for a little bit of bull pawn. What would that do to the price? I think you could probably add a zero, Gary. You had something there? Yeah. Yeah. I'll zoom us back out to 30,000 feet. You know, we've talked a lot about how there's going to be pain. I think no matter what happens, no matter which policies are pursued, there's been pain already. Just based on the fact that you have a system that prints money. We talked about the Cantillon effect before. We were talking about people getting screwed. So people are going to be screwed by the fix. I mean, just given that the fiat system is is based on credit, it's based on debt, it's based on a money printer, which in essence steals from some more than others. We're talking about all these ways to save America and maybe save the system. Is it, is the fiat system worth being saved?

Yes, because I do think it, it has some, there's some flexibility to it that, you know, to me, I think the fix is not pegging your currency to some hard asset that is better for savers, but cruel in other directions and also and again, cruel away from that politically destabilizing, you know, you. So to me, the fix to Griffin's dilemma has always been and remains, you separate. You know, you've got your unit of account, right? So currency unit, account, medium of exchange, store of value, unit of account, anything, state dollars, whatever. When my kids have kids and beyond, you've got to separate the store of value and the medium of exchange. And I think fiat is very useful as a medium of exchange. I think where it goes wrong is when you then have your store of value also denominated in that, in that medium of exchange, so that you can steal from your, you know, you can steal from your, your, your, your creditors right now from inflation. Right. Those are the two. So when you marry those two, the creditors get screwed. And when you marry, when you marry the store of value and sort of kowtow to that, then your debtors get screwed. And, and, you know, because now you're like, hey, we're spending 70% of, you know, of receipts on entitlements. Well, if we went to a hard currency, receipts are going to fall, you know, in all likelihood, for a period of time. And we need to run a balanced budget. And so, you know, we need to cut entitlements 50% starting tomorrow permanently. Like, you know, in a country with 14 guns for every ten people, stability. So like, sort of the US, the Solomon splitting the baby, the, how you cut that Gordian knot is you separate store of value, medium of exchange. So that you can continue sort of your liquidity on one hand with the medium of exchange and do the things you need to do and hopefully make better policies over. That's, yeah, store of value will lead to better policies over time, right? Yes. In theory. Over time, those people are going to end up with more and more political power as they end up with more and more money, more wealth. And I think you're seeing that in real time with sort of Bitcoin, right? Like Bitcoin as a political force ten years ago was like, who are these nutcases? And now they're like, you know, they've got the president. And, you know, I was down at Bitcoin 2024 last year. The president was there. Several senators right there. It's undeniable their political power has surged. Why? Let's not be naive. Their wealth has surged. Why has their wealth surged? They because it's because they are gaining share of wealth by virtue of having this emergent separation of store of value and medium of exchange.

Do you, do you think that it needs to, you know, I know you're saying separating out in a fiat world, you know, medium of exchange and store of value. Do you believe that in a Bitcoin world, I would argue when that happens, and I don't know the exact timeline, would you need to separate those two things out? You might not, you might not. And, you know, if you run the game theory, I would completely concede your point right there is, you know, at some point, the people saving in the fiat instruments go, wait, I'm the sucker at the card table. I need to own Bitcoin. Right. And, and, you know, there's only one hardest currency. And they sort of, and you end up with. I have a hard time coming up with an argument to say that doesn't eventually happen. Politically, I can tell you that happens too fast. Yeah. With political and political, bad political, I think that's an understatement. Yeah. But the beauty of Bitcoin is right? Like, unlike everything else, they really can't stop it, you know, unless you sort of shut off the electricity and shut off the internet. And, A, you're going to have even worse political problems if you do that, and B, like, you shut off the internet, like the wealth of the top 1%, 0.1%, like goes to zero overnight. So they can't do that. So that's, you know, it really is sort of what's that quote from, you know, Hayek. The, or Hayek. Yeah, right. Like the only way you're going to get hard money is you sort of sneak it, sly, roundabout way. Yeah. Way. And it's blended really with Henry Ford sort of electricity dollars. So, in terms of how it's structured. So, I completely concede your point, Gary, that you could get there. I think it's a myth, a matter of how do we get there? What's that look like? You know, there's windows, right? I don't think Gen X really thinks we're going to get that much in terms of Social Security. And I don't, I, like, if you just kind of screw us as a generation, you'd be like, oh, well, you know, it. You know, it's like Vinnie Daniels in, in, you know, make sure, you know, tell me how you're going to screw me and I'll do the deal. Yeah. Know? No, it's common. You're going to get rich when your parents die and leave you all their stuff. You're not getting any Social Security. Well, they, thank you. Exactly. Yeah. It's true. Yeah. Great. Big Short reference, by the way. I love that scene. Beautiful.

I want to pivot for one quick second. I do want to get this question in and get your thoughts on Luke. I know you've, I believe you talked previously about the idea of a sovereign debt crisis. And in my view, that's still kind of in the cards, but I imagine that the central banks are just going to swoop in and it gets pushed down to the private sector. What I want to ask specifically was, where in the world would you expect the highest probability of a sovereign debt crisis to occur, if anywhere at all? And the one thing that I want to point out is I found it very interesting was the, the 30-year gilts right now are 50 basis points above where it was during that Liz Truss crisis back in fall of 2022. And there was the chancellor, was it, Rachel, Rachel Reeves? Yeah. I think that she's got Chancellor on the brink of selling 5 billion pounds of Bitcoin to plug the hole in their budget. That just screams like they're doing great, but maybe there's somewhere else.

I was about to say the, yeah. If I had to guess, I would start with the UK. They're a twin deficit nation. Big financial markets. Not much real economy relative to that. Foreign policy that seems to fail. Still think it's 19, you know, oh seven in terms of their relative power and military projection and defense industrial base. And yeah, now, of course, they're our second biggest foreign creditor. So if they have a problem, guess what they're going to be selling to? You know, and it's mostly private sector, not official sector, but still, you know, it would spread fast. And, yeah, I could own when I looked at that, I, I all I can think of was Brown's bottom around, you know, gold, right? They sold all their gold at $250 and '99 or 2000 to basically bail out the Obama, and, yeah, to bail out the politicians' bad decisions. You know, that's, you know, if you think if you think Bitcoin's a bubble and you think like, think about it, the guy who's selling it to you is that government. Time peak, like I would love to pose that Bitcoin's never going higher. Britain is talking about selling it to plug in the holes in their budget for, like, good luck. Short it. They're knock yourself out. Beautiful.

With that, Luke, is there any place? Tell people. Where can they go to check out, forest for the trees, Twitter, all that fun stuff? Absolutely. FTX LLC.com for more information about our different institutional and mass market research products. And, X or the the tweeter as I, I say, I say like a fuddy-duddy, and I look at Luke Grossman, lucky grow man. If you enjoyed this episode with Luke Roman, please do like and subscribe and check out the previous episode with Alex Glattstein on Bitcoin as a tool for human rights.