How The Bible Helped Me Understand The Capital War

[Music] Welcome back to the Bitcoin Layer. I'm Nick Batia.

At this channel, I am both your teacher and a student. I try to teach you guys what I know from my experience, but I also need to ask the questions because I am in a position somebody who wants to take all the information in and then deliver it to you with the most clarity and the most signal that I possibly can.

At the Bitcoin layer, what we've been doing for the past few years is building up a framework. I've been having conversations with people across the financial world and through that process I have started to rely on some big brains to help us put together the pieces to the big puzzle. Where is the world going? The global macroeconomy, what is Bitcoin's position in it all? And how should we be investing?

One of those people is Kane McGukin at the desk. We call him Big Brain Kane. We just had Matt Dyn on the show. You guys have to check out these episodes with the people that I love to ask questions to because I am here as the student today.

Kane, it's great to see you. I'm excited to chat about the grand strategy.

>> Nick, thanks for having me on again. I enjoy these conversations as well. I think I would I appreciate the compliment. I would throw you in that big brain bucket as well. Um, somebody that I've always enjoyed just over the years just uh shooting back and forth notes and messages and and talking about what's going on. I mean, I think if you look around at the news headlines and the markets, whatever it may be, there's a lot of fear going on, a lot of reasons to be afraid, a lot of be reasons to be fearful of what might be happening or what did happen or what is going to happen. But I also think in these times and we we've talked on a couple of times, the opportunity is that it's just a major paradigm shift. And the opportunity is we're getting to live through it. And the other opportunity for learning is to look back at past scenarios because most of what we see today or we saw yesterday or we'll see next week has already played out before, just not exactly the the same way. So the times and dates and people involved may be different, but the human emotion, the psychological reasoning and the desires and the outcomes typically are very similar across financial history. So thanks again for having me on and look forward to this conversation.

>> Yes. And you know, I I won't take your compliment back because I the reason that I use the reason that I love to speak with people like you is I need to speak with people that have read more books than I have and different books than I have and learn from those mental models through you and also receive reading recommendations because that's I mean that's just the path as a student and it's the path to being a good teacher as well is you just have to read. So even though I could communicate in my own words what is a capital war we have talked extensively with Michael how the author of the book capital wars it's going to be the subject the main subject of our conversation today. Kain what is the capital war that we are in? I know you are pouring through this book over the last couple months specifically. So, I'm eager to to just pick your brain on what you learned from Michael How's book.

>> It first off, it's a great book. Um, and I think reading classic t this is a newer book, but it goes back to his days of Solomon Brothers and they're really the the group if you've read Liars Poker kind of what got everybody excited about Wall Street in the same way that a younger generation person may be excited about becoming a developer on the internet or Google or Facebook, but but it's how Wall Street sort of really got popular. And so his group, his team, they were at Solomon Brothers and they did this major study about global liquidity and they figured out that yeah, there's lots of economic theories and whatnot, but it's it if you could boil it down, if I could simply boil it down, if you just follow the money, there's a good quote in there by Stanley Ducken Miller, I'll butcher it, but basically follow the money and that means follow the Fed and look at global liquidity and that's what matters. And so in this time, just like in the early 1900s, just like in the 70s, just like hundreds of years ago, when when big major paradigm shifts happen, money needs to change and move at the speed with which people change. And usually when that happens, typically when that happens, you also have regime changes, meaning who is the primary controller of the currency across the globe. So, we're just at one of those times where to me that is the war. And we're also at a time, if you if you just read the general sentiment of global populations, I think most people would agree that that the common war tactics of planes and drones and and guns and and all of that, everybody really wishes that we could avoid that part. And so, when you do it in a financial way, there's hopefully less of that. And and also I mean in all the major wars you've seen capital be used as a warfare tactic just not the primary one and this one feels like more a 21st century war where it's global liquidity flows it's gold it's Bitcoin and it's chips.

>> On our last episode we talked about the dollar depreciating for technology. So what what Kane what I took from that episode was that yes, the US is printing a lot of money. That's a generic term for the combination of central bank balance sheet expansion which we're about to swing back toward. We've been in the opposite of that for some time. But the commercial banking system expands. Also, wealth is monetized. That's an important thing that people don't think about. I started to understand this more and more that the global stock of wealth which includes equities and real estate at at any turn and it includes Bitcoin as well at any turn an unrealized gain can come to a realized gain and the realization of that gain physically puts new wealth into it. It actually just spurs on the wealth itself when you monetize that gain. And many of the time the monetization of that gain is done through a credit expansion exwrites the transaction most of the time. We think about cost of living. In my book Bitcoin Age, I talked about the median home price and the average income, the median income. Incomes rise, real estate prices rise as the dollar is devalued. Unfortunately for the average American, asset prices, including homes, have gone up at a much faster rate than wages have. So that's a disadvantageous effect of dollar depreciation, dollar devaluation. But Kane is saying, hey, in this next decade, what we're going to see maybe in addition to that is the dollar being devalued for the express purpose of technological advancement in the country. So now that tie that into the capital war and how you see it came.

>> Yeah. And so when you have currency just so I think first off, if you step back, I think most of us, myself included, look at value incorrectly. So we look at a transaction. If Nick, if you're on one side and I'm on another, we look at that value as the the unit in the middle, the token that you or I might exchange, the dollar bill, um, you know, whatever, an old currency note, a gold bar, a bitcoin, whatever. But really the the value exchange is if you have a book and I have cash in this case or Bitcoin, you value that book less than the monetary unit I'm going to give you. And I value that book more than the monetary unit I'm going to give you. So the value transfer is just moving that physical thing that I might need, that I might want, or whatever it is. And and that's really the money the the currency the unit whether we use a rock a gold gold bar a token a dollar bill some other foreign currency it doesn't matter now in your region it might matter more to you than than some other unit but so I think first off we we get value there's a misunderstanding of value transfer and what that means and I think from a capital war perspective when society changes is when paradigm shift happened, things that people value and and and the units that people desire as money change. And so we're in this point where globally, China wants a seat at the table. The US really doesn't want them to have a seat at the table. they sort of got in in 2000 and and and in capital wars they go over that with the world trade um set up and kind of not bullied their way but pushed their way into the IMF and the BIS and and got a seat at the table with the SDR basket. So that gave them some clout, but but from our perspective in the US, we were fine with them just sort of continuing to make goods for the world. And so after a while, the low man on the tote totem pole wants to rise up and and human evolution is a a situation where it's just a series of, you know, elites falling, the have nots rising, and you just continue a cycle over and over. And I think from a book perspective, one thing that's helped me more than than another is growing up in a Christian household. You go to church, you hear the stories, you listen to everything. But I had never actually read the full Bible until 2020. And I sat down. I was like, "Hey, well, there's only one place that I know that has a ton of messed up stories, a lot of good things, but a lot of really bad stories in there to help you see through the noise." So I sat down and read it over a year. And as I'm going along, you know, there's chaos here in the States, there's chaos in China, there's chaos all across the world. And many of those stories were playing out exactly as they were written, and they were just another version. So that really helped put the war component into context because for whatever reason, humans have just been waring ever since. And in the US, it's kind of been more of a physical war uh group. And in China, while they have been at war, they prefer to do it in a more civilized manner manner, less confrontational, more behind the scenes. And they're really, and I picked this up from Ray Dallio, they're really more about, hey, we've been here for, I think, 1500 years or so as a civilization. We just kind of want our land, our area of the world. We don't want someone coming in and telling us what to do. And so when you move into this world of supply chains and money being the thing that that the the dominant things that everybody wants, then it's important to control those things. And in my opinion, the US sort of lost sight over that over the last 50 years because we've got very short-term in nature. And it's like, well, who cares if we're not building and shipping the goods? We're getting all this money. Look at these profits. And then at some point you wake up in a world and you see that all that profit that you got and you turned around and bought basketballs and then those dollars got repatriated back in the form of other nations buying your land and other nations controlling the timing of when you do or don't get goods uh turns into a war. And um so I think you're seeing that and you've seen that in the financial markets for over a decade now. It's just really come to a level where the average person is feeling it and seeing it and asking questions.

>> Can you unpack how the Bible is helping you see current USChina relations rising up the totem pole as you say and the big picture? I'm going to leave this very open-ended. Kane

>> Mhm.

>> what do you see? I mean, there's there's

>> And how did And how did the Bible help you specifically?

>> Well, I I think one um, you know, from a seeking out standpoint. So, we've all been given different talents, different gifts, different abilities. But if you're not ever ready to receive it, then you have to continuously go and learn and do and make mistakes. And through those mistakes is where we gain the experience. And through that experience is where we gain wisdom. But one of the core tenants of the Bible is to seek wis wisdom and the people that seek will find. It doesn't mean that we will find it tomorrow. And that's sort of the idea here in the states is that if I want a million dollars then I can just do an affinity scam or a pump and dump scheme and get it tomorrow. That's not realistically not a good thing. Maybe it takes 10 years. So seeking wis wisdom, understanding what comes with wisdom and understanding. seeing uh light is good, darkness is evil. The number of references to light and darkness, if you just replace the word with good and evil, knowledge and understanding, evil, um you see that in Star Wars, I mean the entire original Star Wars, if you listen to the wording, it sounds kooky, but if you listen to the wording and you listen to the force, and what the force is is like the spirit. So if you're a, you know, Christian that kind of understands the Bible or I don't even want to say religious, but just have a spiritual understanding, you start to see that everywhere. And then, you know, the other thing that that's one of the most dominant words in the Bible talks about the heart. And so a man can't change and uh until the heart changes, right? Um and and wherever your desires are, that's what's driving your heart. So you may say, "Hey, I don't want all this money stuff." But if you're constantly seeking it, that that's where your decisions are going to take you. So we've turned into a society and China has sort of taken advantage of that with the whole Tik Tok deal where in the states we have all this wealth. The rest of the world's been kind of impoverished and all we're seeking is more and more wealth. And I think you were on a podcast the other day u what Bitcoin did and you talked about one of the major problems is hoarding of capital and so in capital wars howell talks about that and talks about the hoarding of safe assets and through quantitative easing and quantitative tightening really they're taking more and more safe assets out well so the US for the last two or three decades that's where all the capital in the world has flowed to the US and then a lot of that money just goes and sits in bank accounts and we have politicians that are, you know, hundreds of millions of dollars in their personal accounts and they only made 250 a year. It kind of doesn't make sense. You've got individual families that have hundreds of millions of dollars, billions, trillions of dollars that really, if you sit down and think about it, you can't spend that. But from a perspective of wisdom and just thinking through the basic foundations that kind of the Bible does teach you whether you decide to go that route or not. We were all put here for a purpose to be used as a tool to create things not create a bunch of money that we just sit in a silo and then it never goes back to be reinvested. And so in Capital Wars, he talks a lot about that. And also, uh, Richard Warner, who wrote Princes of Yen, which was about the collapse of Japan and how that happened. And you're seeing a lot of that today in in the United States. I'm not saying the United States is collapsing, but you're seeing a lot of the same framework be rolled out. And we talk a little bit about that, but you've got the savings and investment. And at some point, savings have to be pulled out of savings where you're just sitting on debt capital basically. Yes, you may be collecting yield and that's paying your your income, but it has to be put to a productive use. And right now, we're seeing in China, they took a lot of their savings, a lot of the liquidity that that Michael goes through into productive uses. They built ports, they bought rare earths, they bought gold exchanges and other place. They bought gold to facilitate ywan back trade. Um meanwhile the US we've taken a lot of credit and we bought bigger houses and we bought more basketballs and we bought bigger TVs. While those things are nice and they're all wonderful, they don't help human productivity. So you got a waring situation where too much capital is siloed, not enough capital globally is being put to productive uses. And you know when you flip it on your head, if there's 8 billion people, 7.7 billion, 7.6 billion live not in the United States, but most of the world's capital is in 330 million people's hands. So there's just a massive imbalance. So if we can, you know, use the capital war component, if we can create a situation in financial markets that redistributes, reteases out that wealth, then you lift up the have knots and lower the halves. Um, and and I'm not saying that it has to go that way. It just big picture, if I step back, I don't take a side. I just look at capital flows and I use some of the historical examples that that I've read through that make sense to me. That's That's how I see it.

>> All right. I want to let you guys know about another great Unchained event that is taking place online October 28th with Mark Moss and Jeff Andrew. They will explain to you why the 401k system is not meant to serve you, but meant to serve an entire fee structure. and they will teach you why Bitcoin scarcity make it the perfect asset for a retirement portfolio and some of the regulations around Bitcoin in retirement and how you can get that Bitcoin into some of these tax advantaged retirement portfolios. Register now at unchain.com/tblstream where the future of finance runs on Bitcoin. Go to store.blockstream.com blockstream.com and use code tbl for 10% off. Pick up a Jade Plus hardware wallet. It integrates seamlessly with your Blockstream app and it's the perfect way for both pros and beginners of Bitcoin to get started with your cold storage. Store.blockstream.com. Use code tbl for 10% off. Never sell, just borrow with Arch Lending. Arch lets you borrow against your Bitcoin. Unlock cash without selling. Instantly access a Bitcoinbacked line of credit for as little as $5,000 for up to two years. There's no rehypothecation ever and insured custody at Anchorage Digital. Stay long, stay liquid. Go to archlandending.com/tbl and use code Nick, that's nikk for 0.5% off of your interest rate. So Kane, is the United States on a better path away from the 50 years of spending the or spending the resources on bigger houses and basketballs as you say you see a future of more technology investment instead of that previous. So are we on the right path? Are some of those things happening? talk about the path forward for the United States.

>> Yeah, I think um we we talked about last time and we talked about how in capital wars it talks about in the 30s they depreciated dollars and put it in the things that were needed the most natural resources because you had to build out the infrastructure and and so to me when you look around today what is that because we are depreciating dollars and I mean realistically we've been depreciating forever and it was technology and you look around and you think well well what is it that our lives run on is technology which is chip rails, the internet. We're now putting money on the internet. That's the whole thing with with Bitcoin, crypto, stable coins, the whole gamut. I just call it cryptocurrency ecosystem just like you would call it financial services regardless of what you're in. So I think the opportunity is that we're truly going to that place where if we can get past the divisions between nations where people can more freely float about the world. I mean you can freely float about the world now more than ever but there's also these tensions. So that's kind of getting closed down. But if we can keep that open then our money will flow that way. Our communication always already flows that way. Our business already flows that way. So that could be a better place. Um and and I think that's important. Um and you know for the US it's a little bit I think that's the last ditch effort to not effectively become like Britain did in after World War II and and during World War I where they were dominant. You know, if if anybody's a college football fan, it's kind of like Alabama. They owned college football for a decade, but you could see the cracks two or three years before Sabin retired. They started not beating people by as much. They started having closer games. They lost a couple of games. That stuff naturally happens. But you just saw that that aging decline. And it's a natural cycle. Again, to throw a Bible reference in there, we all talk about the fourth turning. And I was just rereading I think I think it was Isaiah. may be wrong, but it basically says in there the world operates in 70-year cycles, which was crazy because, you know, with the fourth turning, you're like, "Wow, they figured all this stuff out decades before, but it's something that's been happening since man roam the earth." Um, so I think the US kind of is sitting at that state 250 years in the currency, depending on where you count it, it's 90 to 70 years old. Those are all typical life cycles. And so when we get these major changes, we shouldn't expect really this time to be different. Now, there were times when in the ancient Chinese eras where they went on for a couple hundred years, Rome were a few hundred years, but they really kind of peaked at two 200 or so. and and so we shouldn't expect that another regime doesn't come in and we also shouldn't expect that another currency doesn't come in because a currency always comes and one of the things about liquidity that how goes over and I'll just kind of glance at my notes here um is the importance of it is and this is also something that Richard Warner and the princes of yen went over as you put more liquidity into the system, you actually increase the risk because yes, it allows more investable capital, but people tend to hoard it. And in Howell's case, he talks about as more liquidity comes in from a central bank, they actually start pulling out the safe assets. And so, you're actually forcing investors into riskier parts of the market and then you're taking those safe assets off the table. And I think that's one of the problems that the US faces right now with bank reserves. They're completely worthless asset. You can't do anything with them. You or I can't do anything with the bank reserve. Now JP Morgan and City can do something between each other or with the central bank with the reserve, but they can't do anything with business, with moving savings, with creating in I mean, you sort of can with investments, but it it's just a dead asset. And so if you think about well how does the US potentially red dollarize or push back on the ddollarization this warfare this capital moving away from the US. You do what they did in the Genius Act which just to me it's maybe that's why they named it. It's genius. We'll just take the reserves out of the banks. They're worthless and we'll put them in these stable coin entities and we'll force them to buy treasuries. And now those reserves are tethered to global consumption of the other 7.3 or 7 billion people and and and make those usable in that regard because they do have backing purposes but they're not usable in terms of money. It's

>> the big picture about stable coins and why they're so important to the American agenda. Now I want to ask you about productivity also. You mentioned that what we really need is enhanced productivity. Did you see the $1.5 trillion announcement from JP Morgan, the 27 key industries? This is right along the lines of this dollar depreciation for technology. Are you So, let me just ask you this. Is the JP Morgan announcement material for you enough to show you that something is actually happening that wasn't happening before? Is it something that you expected? And then you can blend in what you feel the you effect on productivity will be and whether this is material for the United States.

>> Yeah, I think it's a big deal. I think it piggybacks on what we talked about last call where for whatever reason this potential regime change has caught and we've had our own regime changes here in the United States. It just flips flip-flops back and forth. But this particular round, we're seeing a different style of of business and and we're actually seeing a very Chinese style of business where you take government direct buy into companies. Government says JP Morgan, we need you to to release these reserves, lend against this regardless of the cost to you. That's actually a productive use. And that's what Richard Warner talks about when you take money and you invest in businesses and companies. So AI, chip rails, you know, innovative new engineering um equipment and companies that will use more technology that's all very productive. It's you you talk about capex boom, that is a capex boom. And capex booms mean that think about when you build a house. It might cost you 800,000 upfront, a million upfront, and then you pay it down over the 30 years. So that's a capex boom, that 800,000 because it went into the guys that built it, it went into the neighborhood, all that stuff. And then you spend the next 30 or 20 years paying that down. That was a very productive use. But if you just go and buy another Range Rover and a and a boat, that's not very productive. It's productive to my own personal, you know, interest and hobbies, but not to the community around us. So, I see them as very productive uses of capital. Um, and at first when I started seeing these direct investments by government entities, I was like, wait, this is a communist tool. But the way that China does it is very capitalist. and they they they create the money and they say we're going to give you we're going to give this sector so K-shaped recovery. I was like, what does that mean? So I finally look it up a couple years ago and it's basically they're just picking which industries need to do better or for whatever reason they want them to do better and pushing money towards that way. Japan was very successful at doing that. China is very successful at doing that. Now we're starting to do it. Something else that Howell goes over in his book is the importance of a sovereign wealth fund to protect against exchange rate um, you know, exchange rate changes. So high exchange rates usually capital flows to that to get that investment return. But too much capital comes in it creates boom and bust within that economy. And a a sovereign wealth fund can help control that because they can keep that capital. They can sell dollars and buy yuan or they can invest it in businesses or they can just sit on it or they can go take it if it's coming into the US. We could invest it in France or or whatever. So I think when you look at that the direct investments in what I assume was a call from the top, hey we need you banks to lend to these specific industries. Um, I I see that as a positive take. And my first take was this is really negative. But then when you sit down and you think about it, I was like, wait, the traditional banking rails, Swift, a Fedwire were the most important rails of the last 100 years. Well, who managed them? Government sponsored entities. The entire mortgage market. Government sponsored entities. So I think while it was probably under the covers a little bit more, the US and and most countries operate that way where governments even though they tend to get the minutiae and the day-to-day wrong in my opinion because there's too much regulation. The big picture framework they get right. The problem is we in in just the history of man they all tend to overstep their bounds. My country is not big enough. I want yours. Okay, mine and your country is not big enough. I want yours. And then we create these situations where Russia says, "Hey, this used to be our land." Or China says, "Hey, this used to be our land." And and so we create these war situations. and and hopefully we can stave off through creating enough liquidity to share the savings that are locked up over here with other countries and nations where um we can avoid the big wars that we've seen

>> through reading the Bible and thinking about current events and global pol politics. Are you do you come out of it optimistic or pessimistic or both? And can you give us a sense of how you feel today thinking about where we are in the world both as an American and as a human?

>> Yeah. Um I I would say both. I I tend to probably be a little bit more of a uh pessimistic. I mean I try to be I mean I'm optimistic but it comes out as pessimistic. I just because I think a lot of our problems if we did boil it down to the simplicity just take proverbs it's very simple you know China has their own versions of proverbs they say the same thing um you know the five key religions they all say the same thing now we can get in some tickytacky differences obviously the ones that say you should you know believe in idols I I don't think many people believe in that some people do but Um those are probably incorrect but general consensus on all those is do good, be good, you know, be fruitful, take your resources, use them wisely. That's the gist of it all. And and to me, what what reading the Bible helped me understand is that morals are what break the money. And when our morals get extremely far away from the base principal rules, so like if you just read Proverbs, when you get extremely far away from that, two standard deviations away, everything collapses. The currency collapses, people's values collapse, people's morals collapse. And and humans will allow morals to drift up until the point that their money no longer works the way they thought it did. So at that point for most Americans because we didn't see the impoverishness that other nations basically live giving us all the basketballs and boats and rare earths and all that kind of stuff. But in 2020 when China said, "Hey, if you're not going to listen, we're turning off supply chains." Instantly our money broke. Inflation hit. Every Americans, what is this? Why did this go up 35% this week? And so reading through Howell's book, the big aha for me was tying all that together. The big aha was for me, I'd always wondered about China's yuan peg. Just never made sense to me. And I'm not a currency guy. Um, and all I remember in my early days as a business is the US claiming foul for different things that China was doing. And when I looked at him, I was like, but we've been doing this for 50 years. So, I don't understand how it's wrong for them but not right for us or right for us, wrong for them. But what the yuan peg did when you understand the liquidity flows that how goes through typically nations and we've done it in World War II, we did it in Japan and and you know we've tried it again but China has stopped it with that is they flood a country based on exchange rates. They flood a country with capital. It creates typically a real estate boom is how you wipe a country out because that is wealth and and when people don't have that wealth they don't they don't have anything to create credit off of but you create that boom and then it bust and so China to avoid that um they took those dollars through the belt and road initiative took away all the supply chains all the natural resources all the things that you would need to create wealth and foundational wealth and Then the US is like, "Well, you have to remove the wine." They're like, "No, because you'll push our currency up. You'll create a bust." And oh, by the way, we own the supply chains. And so in that manner, the US finally realized, wait, they can avoid Triffin's dilemma because they don't have to supply the liquidity to the world. Howell proves out that more and more they are the primary liquidity provider to the world but they don't have to be the police for the world but they get all the benefits and so what we're seeing is as he puts it we're seeing capital start to flow from the west to all the eastern nations we're seeing all the productivity in more of the eastern nations the you know the what is it the smaller the global south here on our side and you're starting to see US have to go rebuild relationships with the global south and you're seeing China rebuild relationships with the eastern half. So um I think the I'm positive uh from reading the Bible. I mean if you have true faith and belief everything is going to work out. You still have to do your part. You still have to be productive. But fear is something that humans use as a tool. And I think once you kind of get a better grasp of the wisdom and the understanding and seeing how the world works, it allows you to be less fearful of stuff you see in the news.

>> Can you go back to the peg?

>> Um, you talk about the after COVID the supply chain shutdown the and then China explains to the US that we're not going to we're not going to appreciate our currency. We're not going to break the peg because you'll find a way to speculative attack our currency and cause a bust.

>> Mhm.

>> Um, now rewind a little bit. Before the the COVID break, yuan had a peg. It was uh, you know, they were slightly appreciating the currency. Um, in the ear in the ear in the early 2010s and then they slowed down the appreciation, went the other way. Can you talk about your understanding of the peg bigger picture even if you have to rehash a little bit of your previous answer?

>> Yeah. So to I never fully understand it and still to to be fully transparent probably don't all that well. But at the same time it's it's people talk about 4D chess. It is the 4D chess move. And so again I came in the business in 2006. So basically right into the crisis and went down that rabbit hole and around 2010 to 2015 there's just flurry of articles about China and the belt and roads initiative and the empty cities and all that that stuff and China going around to Africa and Canada. They were doing oil sands in Canada, rare earths and I think it was Africa, Middle East, building all these partnerships and then 2015 rolls around and it wasn't even covered that much but it it was in the midst of it was before but in the first election when when Clinton and and Trump uh ran against each other and the whole Russia thing and it was like okay well Trump's buying a lot of gold, China's buying a lot of gold, Russia's buying a lot of But China and Russia are supposedly creating a lot of chaos. At that point, you know, Bitcoin was was around, but it wasn't it was just a nent asset. Um, but historically, gold is the thing that you want in rough times. And then you had trading partners kind of at each other's throats or or you know allies sort of allies sort of enemies um at each other's throat intentionally creating chaos and creating this noise online which was becoming more and more used in our everyday life. So you had this tool to create fear any time of the day anytime you want which stirs people to do various things. Um, and then you have the people that sort of can see all the data, can see all the information, can see all the partnerships, relationships, and and whatnot that goes into running a global economy. Buying gold, I was like, well, something something has to be there. And then in 18, you saw gold kind of pop out of a base and interest rates break down in a way that the normal relationships didn't typically match up. So, I was like, well, there's something there. And then the yuan peg I just always never understood. And so through reading his book um I forgot exactly where it was but I think in the 180s pages around the 180s it became very clear that that peg fended off the typical speculative currency attack. So US gives China a ton of treasuries, a ton of dollars for goods that floods China with dollars. is they end up taking dollar loans from US banks. Then all that has to go out just naturally to to pay bills and and whatnot. And all of a sudden you find yourself with not enough reserves to sell down the attacker, which will be the US dollar, and buy your own to support your own currency. And so it's a game where a nation, just like you see in court, a larger entity takes on a little entity. What do they do? They just delay, delay, delay, delay because they have unlimited funds to pay attorney fees and the little guy doesn't.

Kane, give me your closing thoughts about the current system going into the next system. You mentioned Bitcoin and stable coins and how key those are going to be. But I think Michael How is also talking about potentially the end of the European style of fractional reserve banking and you mentioned reserves as a debt asset in the way that exist that it exists today.

>> Yes, exactly. That's one thing he mentions that it was just some notes that I made. Traditional Euro style banking, it's a soundbased collateral. You create credit on it. You keep doing it over and over. But we've shifted to a liquiditybased system. But all the assets in the system, they take too long to convert. And and Bitcoin is the first asset where it's instantaneous. You can convert that into any currency you want that can be used in some region, but it's a liquidity tool and we now are in a system that is built on liquidity function. So shadow banking functioning, just rolling the debt, not truly paying down the debt. So the point that that hit me was okay, it's a it the paradigm shift how we get from traditional Euro style banking to this new instantaneous let's just say tick- tock style financial system just always on always going quick and instant is through the chip rails the stable coins and the bitcoin and you're seeing China fighting for enough of the hard asset the gold to continue to play along in the Euro style system and you're seeing the US trying to build up capacity to better compete in the in the the new liquid system.

Kane McGukin, thank you so much for joining us as always sharing your expertise. Some of the reading recommendations, Michael How's Capital Wars, which we discussed uh extensively, Richard Warner's Princes of Yen. Uh we look forward to our next conversation, Kane. You can continue to pick your brain on what's going on, the grand strategy, America's role, fourth turning, these 70-year cycles, Bitcoin's role in it all, dollar depreciation for technology, US China relations, and much much more. Please tell people where they can find your writing.

>> Yes, my writing is on Substack. So, it's just my name, Kane McGukan. And then also, I post on X just kind of things as I see or think about. Uh again, Kane McGan. So, not hard to find. It's a little hard to to spell, but it's K A N E M C Gu K I N. And we'll link it all. Kane, thanks as always. We'll catch you guys next time.

>> Thanks, Nick.

[Music]