Transcription
A seven sigma event is something that's only supposed to happen once every thousand years. We're getting seven sigma events every seven years, and they're getting even closer to each other. So what does it mean? It means that what is being sold right now are 10-plus-year treasuries.
There are three things that we can see to determine just how specific the selling is. Number one. Number two is that the move has come from the third is that are collapsing. The supply of money is a liability. Deposits, M2, that's a liability. That is supply. So, of course, the supply of money will go up when the assets go up. But liabilities, not the way that we measure it. The way that I feel like liabilities or M2, it's a trailing liquidity index.
If Bitcoin can just be that generational money like cash and like real estate is today, then people can think, oh yeah, it can go, it can go to $10 million in the future. I suggest that Bitcoin will be at $1 million in the next several years. To give people that taste of the potential growth that you're not late, you're still early in this asset class. You give them the proper context for that. The price of a home in the last 10 years has gone from a,000 Bitcoin to 5 Bitcoin; that trend will continue. They have to understand the long-term mindset.
Man, Nick, we have so much to go through. Uh, I always love talking to you because you are a wealth of knowledge, and you are sort of specifically positioned to talk about what's going on in the world today, right? Uh, former US treasuries and money market trader. So like we're talking about, we're going to talk about bonds today. A professor of USC Marshall School of Business. I love that because, um, a video I made earlier today was like in this world of theory, but in the real world. So you understand the business side, you understand the treasury side. Um, we're going to talk about money. Uh, we're talking about your new book. Uh, so so much stuff there. Um, but we could say that maybe since the Trump administration announced the tariff plan, it's it's triggered all types of chaos. Uh, stocks, bond market, treasury yields, whips on back and forth. It's been super volatile. People on X are whispering about a Bretton Woods agreement. Um, would you say this is the beginning of the end for the fiat system or just another panic in an already chaotic decade?
Well, it's not the end of the fiat system in my opinion. What it is, it's an attempt to realign the world and reorder the world. So I think that we've been under a regime of globalization for the last few decades, and a big part of that has been the US consumer reliant on the Chinese exporter for cheap goods and the US government relying on the Chinese surplus for financing. That relationship has been going on for quite some time. It's a two-way street. It's it's it's yes, you can say that you uh the ch that China has risen up and taken advantage of the US in this situation, but it is a two-way street. However, the president has made it very clear himself, his treasury secretary, his commerce secretary, and the chief of his council of economic advisers—all of them have made it very clear that that era has ended. Tariffs are one of the first steps on the path to reordering and to figuring out the new regime. What are we going to be in now that we've declared the old regime null and void, or that that's what we are attacking? So that's the way I see it. Yes, that the market is experiencing an enormous amount of volatility off of uncertainty, and that's what volatility is. Volatility comes from options prices, as you know, and option prices imply volatility. So when market makers are uncertain, they step away from the writing of options. It gaps out implied volatility by definition. That is where you know volatility comes from. It comes from uncertainty. So people don't understand fully what is the plan, obviously, because even the president is a negotiator. He's not even laying out all of the things that he's going to do, just the ones that he needs to get his way. And in that, we are in that world now. We live in President Trump 2.0's world. And we are, if you want to play by the rules, you have to understand that volatility is probably going to be the name of the game.
Yeah, I want to talk about that plan. We were saying how you kind of have to read every single word. They're laying it out, but you have to listen to it. But before that, um, so you talk about the volatility, we can look at sentiment in the market as well, and like there are like readings that we haven't seen since the global pandemic when like the whole world was literally shut down and everyone was going to die, or like the global financial crisis when the whole banking system shut down. I mean, do you think that amount of negative sentiment and and uh volatility is warranted? I mean, is it as bad as the whole world dying and shutting down in 2020?
So this goes back to one of the core parts of my new book thesis, which is, you know, the book is called *Bitcoin Age*, and it's not just about Bitcoin, Mark; it's about the credit system that's the backdrop for our world, and that credit system is—it dies if it can't continue to expand because we're in a debt-based monetary system. That's correct. And in a debt-based monetary system, the increase year-over-year in debt is necessary for the survival. And the the banks that are controlling this credit system have instituted a a political, an economic system around them, including uh government government regulation, central banks, and international trade agreements that allow for these banks to receive a bailout or to receive the support from the people—actually extract the people's future, present, and future earnings and tax revenue for the benefit of this system, all in the name of that system provides jobs for the world, and so they use the scare tactic of contraction to avoid it. So because we live in that system, it's gone, it's contracted and expanded so many times that the leverage is so large in the system that what you get during these times of volatility are—my mentor taught me, taught it to me in these in these words: He goes, "A seven sigma event is something that's only supposed to happen once every thousand years. We're getting seven sigma events every seven years," and they're getting even closer to each other. So what does it mean? It means that the perceived normal distribution of returns doesn't exist. It returns are not normally distributed. Neither are volatility events. Volatility events that are supposed to happen once every thousand years are happening every few years. So statistically, it's supposed to be impossible. However, we we're experiencing it. And I believe the volatility events that are happening so often are simply a a symptom of our credit system being so based on a lot of thin air, basically.
Right. Yeah. The the leverage in the system magnifies the volatility. That's right. Right. It's like if I had four or five books in my hand, I could balance it. If I have four or 500 books, the thing is swinging uh wildly. Yeah. And if we think about the volatility and the expected returns, you—all of these portfolios are built on models. And so when the expected volatility spikes like that, the the the AI, which runs a lot of these portfolios, it doesn't know what to do, right? And it it it literally errors out and force sells. So that's actually what you're witnessing is it's a computerization. It's an algorithmic uh dominance of financial markets. All of these are components that lead to these large moves. But it doesn't—I think you need to understand that that is part of the market structure as opposed to take each volatility event as something that should be taken uniquely, meaning that in the pandemic what you had is the largest contraction ever in GDP, uh the quickest, largest contraction ever in GDP, and the quickest expansion from monetary and fiscal that you ever saw. That's just another example of what I'm talking about is that when it contracts, you have to expand it. So that was another magnified one. We're just experiencing these now more and more.
Yeah. So let's get back to the plan you said. So we're sort of in Trump's world. We have to know what Trump's plan is; you're paying attention to all these words that are being said so you can understand that. Um, let's look at from a historical uh basis for a minute, right? Because uh we were kind of talking about earlier where like a lot of people are saying like Trump doesn't shouldn't do this. He doesn't have the right to do this. Who is he to crash the markets? These types of things. But presidents do these things. And so we can look back just through a couple. So like the Bretton Woods agreement, uh the Plaza Accord in 1985. And what's interesting about those is it sort of seems like they were trying to fix the same problem, which is trade imbalances. Right. So that's what I think 1944 was about. I think that's what the Plaza Accords were about. So you sort of have this free market. Um, the world realigned and pegged back to the dollar in 1944, and then the imbalances grew. 1985, we had to kind of re bring it back in, and then today we're talking about trade imbalances again, the what the president's chief of the his uh chief economic adviser has said: We are living in this world where the Chinese exporting has hollowed out US manufacturing. It seems very cliché to talk about it because it's that's a theme that's been with us for quite some time, a few decades, but now they're ready to address it. It also seems cliché to say that a strong economy has to have strong manufacturing when the US, which is the world's largest economy, has hollowed out manufacturing. So people, they're unable to see necessarily that we need the manufacturing back to survive on the long term because in the short term, all of these technology services that we provide as a nation are consumed by everyone across the world. So it is keeping our economy going, right, the whole IT sector and technology sector, even social media. When you think about where are all the social media companies based and where have they come from? The all the strong internet companies over the last few decades, they're all United States-based. So why do we need manufacturing? They are saying that yes, we we do need it, and it is to address this permanent trade deficit that we are in; it creates a permanent capital account surplus. And that's one of the keys. If you have the if you have this huge capital account surplus, it means that the world, the rest of the world, is holding your debt, and that makes you subject to them also in a way. So all of these things are trying to be addressed here.
Do you think—I want to get to the manufacturing back, but like let's just talk about the trade imbalances for a minute, right? Because um Trump's talked about trying to close those trade imbalances, and obviously um talked about the tariffs for each nation that we have that, and some of the some of them look ridiculous, like the trade imbalance maybe with Vietnam, for example, right? Um, but it doesn't include to the point that you just made, right? That's like what are we exporting to Vietnam? Like what what can they buy of ours? But it doesn't seem to include what we really export, which you said are the tech sector. So we have so we've we've grown our way from making textiles like a 100 years years ago, and we've moved to higher-level things. So now we produce science, medicine, technology, and we export the technology, and so they receive that technology, but that doesn't show up in those trade balances.
Well, that what they and that's what they're trying to address with tariffs is they're trying to make them pay for some of those things coming in so that there's more of a balance. They're also trying to make sure that or I'm sorry, what they're trying to do with their protective tariffs like in Vietnam, if they have protective tariffs, they are preventing US goods from coming in. Those technology products are taxed double so that they might go and get them from China, for example. Those are the, you know, some of the things that are trying to be addressed in terms of exporting to a country like Vietnam. But what they've said, part of the part of this dual public good that the United States provides to the world, one of them is defense, the other is US dollars and US treasuries. The defense side seems to be something that they want to make sure the trade deficit is closed with the rest of the world because if you simply buy more US weaponry, that will shrink the trade deficit, and what you're doing is that in you're doing a couple things at the same time: you're lowering the amount of money that you have to spend as the United States on protecting the world because your ally is now going to build up their army, but not opposed to you, but in alliance with you. So the that foreign country buys weapons from the United States, that gives us, you know, a balance of trade in our favor, and if so we're buying if we're buying things from them, it is more balance if they're buying weapons from us. So that does seem to be part of the agenda. So I expect I expect a big boost to the demand for US the US military-industrial complex.
Yeah. Well, I mean, that's part of the uh that was my kind of thesis of this uh Amazon Prime, which is what Nate what which uh Trump has been saying how with NATO, each country is supposed to pay a percentage of the GDP towards security. That was the agreement, but they haven't done that. So what you're saying is the big push is him to do that. So if these countries were to take 2%, 4% of their GDP back towards military, that could help offset that trade imbalance.
Yeah. And we've been talking here about China. We've been talking about Vietnam. Uh, before we started, we were talking about the potential for a deal with India and how is it going to look with Russia with the United States? Are we going to go into more of an alliance with them and try to pull them away from China? Europe is an entirely different theater of this reordering, and you know, to talk about Europe and the role of NATO and all that, it's a it is it starts to be a different conversation than what we're talking about with China hollowing out the US manufacturing or trying to find ways to get non-China and non-Europe countries to pay more, their fair share.
Right. We were talking about how um when you start connecting a lot of dots, you can see that one of the things Trump did when he first came in was he threatened the BRICS. So the tons of videos I've talked about, it's been all over the BRICS, the BRICS, the BRICS, their own currency, gold-backed currency, their growing power, etc., etc. Um, and he sort of warned the BRICS, hey, if you try to launch your own currency, 100% tariffs against you, anyone who moves away from the dollar. And so the BRICS is this uh coalition, this trading block. Um, and the C in BRICS is China, which is is the big one. So um in one way, you can see that was one of his focal points. And it seems like part of what he's trying to do then is sort of reorg—maybe the US doesn't have enough power against China necessarily, but if we could pull some of that trading block away from China, then the US could have have more power there. And you know, we can't dismiss what he's saying. You have to listen to it because it's it's fascinating to see the speed at which some of these things are now happening. But listening to one of your recent episodes talk about BRICS, I what I realized that he's actually trying to kill BRICS, in that he's trying to take the C, China, and isolate China. And to do that, you have to bring Brazil, Russia, India, and South Africa and the others like the United Arab Emirates, which who has already announced a over 1 trillion investment in the United States. That that is maybe the big play here. It's the thesis for the last few years was: Can a BRICS alliance rise up as a trading block and threaten the US dollar realm by using their own swap lines? Now maybe BRICS is—he's just trying to end that alliance in one swift move and isolating China. And that's what we saw with the 90-day pause is that exactly, you know, you you you you go 50%, even more on China, and you pause everyone else. But why? Because 75 countries called them. And they're not making that up. Yeah. We have the bilateral confirmation. I don't know if 75—they always love to exaggerate, but doesn't matter. The calls came in. The deals are already penciled in. The meetings are being set. All of those tariffs are coming down, maybe. And so that's part of, you know, your 4D chess. There's so much going on.
Yeah. And we just have to do our best. I—yes, I teach at USC, but if unless you're a student, and I know you're reading history left and right, Mark, every day, unless you're a student, you can't you won't be able to keep up. Yeah. Because uh the history is what gives you the perspective. So again, back to 1944 or 85 where the world did come together and did agree to repeg back to the dollar and did agree to reset uh the trade balances and did agree to allow the US to devalue its currency, right? Each of those times. And so then you start to go, well, I guess every, you know, couple decades we just do this thing, whatever. We just do it again, right? And you get that perspective. Um, I think, you know, when the BRICS started, it made sense. A little small trading block, whatever. But now China is is big enough to rival the US. And I think then it sort of is like uh danger. We have to kind of do that. I think also the um, you know, the global supply or I should say the global pandemic and supply chains breaking down really put the world on notice as to—especially in the United States—like shoot, we couldn't even go to war with China. We don't even have medicine. And I think the Ukraine war even put that more on blast where NATO couldn't even produce enough ammunition to keep up with Russia. And so I think it's important to think about that. Back to Europe, for example, I think um it was interesting where uh Van der Leyen from the EU was like, ah, we'll retaliate against the US, but then like Meloni from Italy's like, I'm going to come over and talk to you, and you know, like Germany might need the US to buy its BMWs and Audis and Volkswagens, and um you start thinking about then, well, the EU wants to play, you know, hardball, but then what what about Germany and what about, you know, Italy and like the implications of potentially breaking apart the EU. So seems like there's some big moves being made, and and uh we don't know, obviously—the world, this is a complex system, and unintended consequences will prevail, but it seems somewhat likely to work out. What do you think?
I've been watching the, you know, politics in the EU to the best of my ability, and my opinion is that if you are to see some grand reordering within Europe because of this idea that Trump is looking for more alliances and the EU as a block doesn't appear to be allied with the United States in this effort, a lot of the agendas are opposed to each other, that Italy will be the one that leads its way out and can establish, you know, a a bilateral relationship with the United States that protects Italy in in its effort to leave. Now I'm not making the prediction, but that's the way I'm thinking about it, Mark. So I'm thinking, I'm looking at Italy, and I'm watching their politics because it's the it's the only country that is showing any hint of it. And so that's the one that we have to watch.
Uh, yeah, I mean, you're going to have countries that I think need it. They're hinting at it. Countries that maybe need it, like I said, Audis and BMWs and Mercedes. Um, and then some countries need security. I want to talk about the currencies. We talked about maybe some currencies not surviving, maybe the sort of groundwork that's been laid with currencies, and then obviously we're going to get into the thesis of your book, but let's just spend a minute talking about the Treasury market and the bond market. Um, it's been super volatile. You know a couple things about this. So I'm curious. Um, as of the time of this recording, which is uh April 11th, um, today we see like it seems like a massive selloff in the Treasury market, which people are pegging back to Europe. Um, speculation is potentially Europe is fighting against the e uh the US doesn't want the US to sort of break apart or potentially um China has a bunch of treasuries in Europe. What would you make of the situation?
Uh, so one to the to your later point, China has treasuries all places. So I've I I used to face uh my when I was on the bond desk, I used to face Citadel, which faced SAFE, which is the Chinese uh basically their treasury portfolio. So I I got to hear some stories, and yes, China has treasuries around the world in different in different parts, including uh I believe it's Belgium and/or Luxembourg. Um, so but what's happening when in treasuries? Is there a financial warfare going on with Europe? I don't actually know. I've seen some early research, but I haven't done enough work on that cuz I just saw that this morning. So it's something I'm going to be looking at. What is happening in the treasury market is fascinating because it appears to be very, very focused selling. And the reason that I say that is what is being sold right now are 10-plus-year treasuries. So 10- and 30-year treasuries and treasuries along that part of the curve. There are only so many of those treasuries. Now it yes, it's dragging yields up, but the price action, if we look into it, there are three things that we can see to determine just how specific the selling is. Number one, the yield curve has dramatically steepened, means that the front end of the yield curve is not behaving in this way at all, that it's all a steepening move. Okay. So meaning those that hold twos, threes, fives around the world are not exhibiting any of this behavior. That's one. Number two is that the move has come from real yields. So if we look at the market for a 10-year Treasury is at about 4.5% today. That can be decomposed into two components: the real yield, which you can get in the market through the TIPS yield, and then the difference, which is called the inflation break even, which is a number that you back into. So the real yield is a compensation for owning treasuries, and the inflation component is a kicker. What you get after the fact, basically, the plus CPI component, and so that calculation, the inflation component is not moving. All of the move is from real yields. It doesn't it means it's not an inflation scare. Okay. Okay. So that's the second. The third is that swap spreads are collapsing, and this is what people are talking about with the basis trade where investors were long treasuries and short uh derivatives against it, trying to arbitrage a small amount of profit. Swap spreads have collapsed, which means that the selling is being done on the cash instrument, which is treasury securities, 10s, 20s, and 30s, and the buying to unwind the trade is being done in derivatives. So the original position was long securities, and it's now selling the securities. So whoever was long the basis trade was financing treasuries in the repo market. They are they own all these treasuries. They're not long the full risk because they're hedged on the other side. So when rates move together, their their trade doesn't change. They just capture that difference over time. But now it moved against them. What they were what they were short was going down faster than what they were long. Right. Right. In the risk-off move. So this actually started, and I don't know who owns this trade and who's financing it and who's blowing up, but what I see is that with swap spreads collapsing, that means that the selling is so localized in these 10s, 20s, and 30s, it's very dramatic. I've only seen this type of price action once, once, and that was February of 2020 when the pandemic was when that uncertainty of what was happening and yields were actually collapsing, going all the way to zero, and then after a certain point, the 30-year yield started gapping up in a way.
That I mean, that's what we actually saw this time is that it was triggered by a bull move, right? It's wild, Mark, it's so crazy to watch. It's it's dynamic, and instead of trying to predict, you know, which I know everyone's trying to say, who did this or who's blowing up, I don't know. So instead of trying to speculate, which I'm doing also, I'm just trying to understand the mechanics and explain that to, you know, my readers as well. What would the psychology or the game theory behind this tell you potentially? That that's more in the speculative. So there's a theory out there that, yeah, there's a theory out there that, which I think is it's so close to the to the Mar-a-Lago accord that we're talking about, which is that the credit system that I talk about in my book, I explain that the dollar system is no longer a US sovereign phenomenon. It's a global banking phenomenon. Okay, and they've leveraged the the country's currency to expand around the world. And that is the Euro dollar system, an offshore dollar system that functions outside of the regulations of the United States. They they go by their own regulations, the Basel Accords, right? And the that world is allowing, part of Steve Mnuchin, the the council of uh the White House's main economic adviser, this dual public good. One of them is the US dollar and US treasury securities. So perhaps what they're saying with that dual public good is that, hey, this Euro dollar system that you're using, you're using it free of charge. We are not a we're not agreeing with you using it to that free of charge. Maybe we'll let you still use it, but you have to pay in some way. Maybe the that action is triggering a financial war between Europe and the United States, the European banks specifically, right, that utilize this Euro dollar system. Who and and if it's happening, I'm not sure. But that's a theory that I'm trying to work with right now and and and uh spec out.
Yeah, I want to take a break real quick and just say that there's only so much you can learn through videos. Yeah, build your knowledge, build your skills, but you need to build your relationships. Relationships plus skills equals money. So come build your relationships and your knowledge at the Bitcoin conference, May 27th through 29th in Las Vegas. I'm going to be there speaking for the fourth year in a row, and lots of other people way bigger than me. Entertainment, politics, media, finance, you name it, they'll be there. So come check it out. Save some money with my code, Mark Moss, or I'll put a link down below. If you use my code to save some money, I'm going to do a private meetup just for you and some of my friends. So let me know. Use that code, save some money, send me a message, and we'll get you in the private meetup, and I hope to see you in Las Vegas.
Then we have, so you talk about the dollar, the dollar systems, then we have the currencies, and so as this is all trading, then we sort of get into that, and um we had talked about, you know, I had thrown out the comment which you seem to agree on that there's a handful of currencies around the world that probably won't make it out of this year. Um, obviously this pushes inflation out, currencies are inflating. Um, you seem to agree with that. Tell me, tell me your view on potentially why some currencies won't make it out this year.
Yeah, so in my first book, Layered Money, I explain how money used to be this relationship between commodity money and credit money. And without that relationship anymore, the United States dollar and US Treasury specifically rises to the top of the pyramid of money in this world, in the absence of gold. And who's even above the US Treasury security? It's the US government, right? Because they are the ones that promise to pay US treasuries. The dollar is simply what is accepted or what the what the Treasury decides to pay out on its debt. That's what defines the dollar, and that's the theoretical way to think about it. And so if that is the case, leverage on top of leverage on top of leverage for countries that don't have a lot of real assets or things that underpin it makes it so that in a world with Bitcoin present and US treasuries and the US government continuing to be strong, you can envision currencies won't survive. Non-US dollar currencies won't survive in the long term. So I could think about that a lot 5 years ago, but now we are in a rapid reordering as we've discussed, and in that rapid reordering you can quickly imagine that in a in the next Mar-a-Lago accord, some currencies will just say we'll do dollar stable coins and we'll figure out a way to finance our own activity. That is something that a currency is a national tool. So to get a country to give up their currency, they're going to have to get something in return, right? Because they need flexibility. That's a key here. However, there is a path to uh non-dollar countries now taking the dollar and reorienting their financial system in an alliance with the United States to avoid their perpetual devaluation. So you mentioned Lebanon and you mentioned Turkey. These are two countries that have had currencies that, you know, the chart just looks like a waterfall. And so you can't even see actually the chart anymore when you zoom out what's happening. That's how much it's collapsed. So it's it's much it's possible now in a way that maybe it was more much more speculative before.
Well, we've seen it to the point that you mentioned a couple um and probably these things um accelerate that, right? So like if these countries now have tariffs and they have to come up with some trade balance, uh maybe instead of retaliating they try to sort of like work around it, maybe they're subsidizing some of their industries, things like that, well that just means more hyperinflation for them, and then part of maybe this Mar-a-Lago Accords similar to the Plaza Accords was allowing the US to devalue which then pushes more inflation their way as well, right? So both of those things put a lot of pressure on their currency which causes it to collapse.
Yes. So what you what we haven't talked about yet is the currency aspect of it of the trading side of the equation. So that that's why tariffs are only one part of it because if you put tariffs on a let's say a Vietnam, and then they cheapen, they say okay we'll get rid of our tariffs or you get rid of your, but then they cheapen their currency that strengthens the dollar and that makes the agreement not back to being not fair. And so the protection against currency devaluation is part of it. Which means that the Mar-a-Lago accord is part of this plan. That is where they have to go because if you agree then you have to say okay the tariffs are gone and we agree to fix our currency at this price and not manipulate it. It is they it is part of the equation. You can't actually discuss the tariff without the currency manipulation side of it. They call it the the non-tariff cheating. That's what the administration is calling it. If you address that as well as the tariffs then you can achieve your goals of capping the dollar which has been a theme of ours. And just for again for everyone listening, if you don't understand history, like this is just what happens. This is what happened in '44. It's what happened in '85. And it's pegging back to the dollar and allowing the dollar to to devalue. And so these things start to accelerate that. And then you mentioned stable coins. You know, I had talked about in this video I did which you saw which was um sort of some of the groundwork that Trump had laid before even going into this reorg, whatever you want to call it, um the new deal that he's trying to push through. But it was pushing through some stable coin bills, and and we've seen, you know, you and I in the Bitcoin space in the crypto space, we've seen the stable coins, US dollar stable coins really starting to gain acceptance. And you have these other countries where their currencies are inflating rapidly, inflating, hyperinflating, and the people want to get into dollars, but the countries don't allow them, capital controls. And so the stable coin has been a way for them to sort of get around that. And so you have this, you know, deal where I think partly the US and Trump wants to strengthen the dollar's uh role in the world. Number two, you need to sell more and more treasuries. And on the other side you have people who want dollars. And so if we can get them stable coins, we can increase the dollar strength. Um, and then we can make those stable coin companies buy US treasuries. So it's like a pretty good combo. But then what that seems to do is then accelerate their own native currencies going into even faster and faster hyperinflation. And that's the that's the wild card because like I just said in my previous response, the currencies are a tool for the countries, right? So if you go and shake down another country and you say "Hey, you have to adopt the dollar, you don't get your own currency, you can't print money when you go into a crisis, you can't come up with a new a new deal for yourselves because you can't finance it unless you go to our banks." Um, is that is that fair? And so I don't know the answer to your question. I don't know how if you get the countries on a dollar stable coin standard how they're able to finance their own what happened um after '44 and after '85 when the countries sort of repegged back to the dollar. Well, what happened for 14 years in Europe is that you didn't have any free movement of capital, you have c you had capital controls, and so the Euro dollar system actually started for many reasons, but one of them is that the FX desks opened up for the first time in '58 in the city of London in the late 50s. I discussed this in the book. Now that you had currencies trading against each other for the first time or any exchange where a bank could actually do it and make the market, then you got currency cross-currency arbitrage trades for the first time. And that was because the city of London banks could raise deposits in dollars in Europe. Basically taking that surplus that was over there and saying "Hey, give us some of that. We'll make a market in this currency or we'll invest it in uh pounds and create and capture an arbitrage." So when I think about the capital controls of 1944 to '58, Bretton Woods didn't just make it so that every country could be exchanged for dollars and dollars could be exchanged for gold really easily. And that's what kept a stable system. In fact, France in the 60s said I we don't want these dollars. We're taking the gold back. So but that was after decades of manipulation and inflating the dollar of course.
Yeah. Um, so then we go to the next level which is then back sticking on the currencies for a minute. So then we have uh potentially 300 and $350 trillion of US dollar denominated debt in the world with about 80 to 100 trillion dollars of currency. So then there's this massive demand or shortage for dollars, and then you have the US which uh aggressively, especially after 2020, has like opened up swap lines with all these countries, and so is that another tool to sort of reorient the world where it's like hey you need the dollars for your debt, even China's given you dollar denominated debt, you want swap lines with us, maybe you come over the and the swap line is the formal extension of the Euro dollar system, and so when the swap line is put on with the United States and another country. What they're saying is that your dollar system or if your banks hold dollars or operate dollars, we recognize that and we're going to arrange something so that you can make sure that you access us. And it it actually started the other way in when the the dollar swap line started back in the '60s, they were so that the US could bring dollars back, right? Because dollars were piling up o abroad. So we wanted a way to actually pull those dollars back. Now the Euro dollar system in theory and per 2007 the crisis, they rely on dollars going out, right, in a crisis. And so those dollars going out in a crisis in the swap line, they need the dollars out to them because there's so much debt. They don't have the dollars to repay the debt. So we need to give them more dollars. Their banks have issued dollar debt. And so if their liquidity dries up, they need a source. They need a funding source. And so that's what the swap line is used for today. And it can and will be used potentially as a political tool that you only get the swap line if your banking system adheres by our new Euro dollar rules and our trading block.
Of course. Yeah, that's part, I mean, yes, that's the accord, right? You have to get the trade in a way where you're buying more American or you're building the factory here. You mentioned the the Germans. They're BMW factories in South Carolina. So they're doing it. He he'll just say make all of them here or you have to make 90% of the stuff here. You have to assemble it all here. You have to, and so each country will have their own way of paying for the dual public good, Mark. Some of it will be buying the weapons straight up, and some of it will be through this multitude of tariffs, reshoring manufacturing, restricting access to swap lines, and uh putting a lid on their Euro dollar systems within that part of the world.
Yeah, fascinating. It is. It's so fascinating. It seems like, I mean, we have no idea how this turns out obviously, but when you look from a historical perspective and then you start to see the game board starting to sort of be laid out by listening to them and reading their papers and and things like that. Um, it seems clear where we're going. It's what does the path from here to there look like? It's like we're in a jungle. We can see the mountain top, but we don't know every twist and turn we're going to have along the way. So it's pretty interesting. I want to I want to pivot into the old system and now into the new system. So sort of what your book is is written about this new age, the Bitcoin age, and something that um, you know, I still haven't got my head around, you're maybe still trying to figure it out, we all are, is um sort of we have gold and Bitcoin being forced into the world. And when I say forced into the world, I mean um Bitcoin specifically because the United States has agreed to or decided to have a strategic Bitcoin reserve. They're talking about a sovereign wealth fund. Um, so sort of maybe forcing that into the world. Um, but then we also have um them allowing gold to really maybe take off if you will. Obviously there's been a lot of talk coming out of the Trump administration about revaluing gold, things like that. Um, so we have these two other assets that seem to be almost maybe contradictory to the dollar remaining a dominant store of value, like they seem to want it to be with treasuries and whatnot. So when we talk about the layered money pyramid, US treasuries at the top, US government is above that. And so what the US, by the way for everybody listening, Nick has written two books. So the first book was Layered Money. The next one is The Bitcoin Age. So we're talking about both, but he's referencing the uh Layered Money. So you might want to read that book too.
That's right. And so at the top of the pyramid we have the US government above US treasuries. So if the US government owns gold and Bitcoin, mark to market it, what it does is it gives a way to guarantee. It's a guarantee on the liability. So the way that a capital structure works is that you have assets that are funded by debt and equity. Well, if there's equity in the country and the country has a lot of equity, right, The United States government itself has a lot of equity, right? All of that equity shows up as assets as long as there's not leverage against it. And borrowing also assets minus liabilities.
That's right. And so in a in a in a liquidation scenario, obviously in a corporate liquidation scenario, the the liabilities have a claim on the assets of of the entity. And so if you have all these US treasuries and you have the government with assets, obviously you can't uh convert a treasury to Bitcoin in the future. And I'm not projecting that at all. But if the countries go back to more of an equity-based system in a in their own mentality even where the assets of other countries, it's not just US treasuries but it's US treasuries, gold and bitcoin that there's real equity that's non-credit-based that can anchor. So Bitcoin, the what gold did for the world for centuries was it sets an anchor so that you can devalue your currency versus gold. It gives them that flexibility. So in the future if you want to devalue your currency versus the dollar or something, you might have to have real assets on your balance sheet for the US to even let you access the swap line or let you uh do something or take Bitcoin or gold as tribute because that's something that we've seen all throughout history is that to participate in our system you have to pay into the system. So maybe the the tribute in to pay be part of the club like Amazon Prime is you have to pay in gold or Bitcoin. So when I think about the future and then setting up a strategic Bitcoin reserve, is it possible that the strategic Bitcoin reserve is simply the receive address for the United States government?
Possibly. Yes. And comp and countries paying tribute in Bitcoin, the receive address going in that way.
That's correct. Yeah, there was a lot of talk about the strategic Bitcoin reserve. Is it necessary? Is it not necessary? Um, I made a a video recently talking about China's second fatal mistake. And I was I was referencing it back to China's first what I called fatal mistake was in 1873 when silver was demonetized. The world moved to a gold standard, and China said "We got a ton of silver. We're not going to the gold standard." And that's fine. Uh, everyone comes at the price they deserve. Right? So China decided not to. But then silver got devalued. They lost about 30% of their purchasing power. They eventually capitulated. Um, however, that sort of knocked them out of the world order. So a lot of people think with the strategic Bitcoin reserve it's not necessary. Why should the government use our tax dollars to buy things like that? Is it really strategic because like it's not like oil, like we need oil, it's just Bitcoin. But I in that frame you see like if China or another country decides to come over in 5 years or 10 years, do they get 20, 30% devaluation? Does it repeat again? So I think that the I want to bring up one thing about Trump again. Yeah. One of the first things that he said was "We're going to go to Fort Knox. We're going to go see if the gold is there." And do you think that that's just Trump randomly saying something? No. That's part of the plan. And so we talk about Bannon. What a student of history he is. He mentioned gold and Bitcoin together in the same sentence on the All-In pod. Yeah. So you have to take their word for it that they're thinking about it. So then I would argue that to people that say it's not strategic, why would they need strategic? It's not like oil. I would argue that that is completely not the case. Okay, if we are going into a Bretton Woods to Mar-a-Lago and they've hinted that gold and Bitcoin are things that they're thinking about and it's not just thinking, they said we're going to go to Fort Knox, and they did a they created a strategic Bitcoin reserve, so they're on the policy side of it already, what they are saying is that Bitcoin is a strategic part of the Mar-a-Lago accord, digital currency. The digital currency executive order came before the Bitcoin order.
Yep. The stable coin stuff came before.
Yeah, the Bitcoin order. So they see Bitcoin as an anchor to digital currency, right? Because this is I wrote about this in Layered Money, Bitcoin to stable coin swap, atomic swap. Yeah, is the new is the new agreement. M, and I'm just realizing it right now actually that that is, I mean, that's that is the future, the Bitcoin to stable coin atomic swap setting the market for currencies and for the dollar and having the ability to swap stable coins for Bitcoin through a market maker, but being able to do that anchors the world, re-anchors the world in a whatever period of economics you want to take, the gold standard, the gold exchange standard, the Bretton Woods agreement, they all have an anchor, they all attempt to have an anchor, they all need something at the top of the monetary pyramid that is the science of monetary hierarchy, uh that's what the gold bugs would say is that uh only gold can work because what happens is when fiat currencies inevitably blow up, which they always do because of human intervention, um you need to relaunch them, but they must be anchored to something, and so that's what I hear from the gold bugs, and even when you look at even like say Zimbabwe, they would relaunch but anchor to the dollar, but you need to anchor to something, and I think that's the point you're saying, so maybe in this new world it's anchoring to gold and bitcoin.
Yeah, that is the that is the world that I see uh unfolding today, right, the interim step, the process that we're going through, right? And so if you just observe the price action of each of these two assets over the last 15 years. That's what you're witnessing in many ways. And when you look at uh currencies versus gold and bitcoin, it really helps to look at non-dollar prices too because then you can really see where the devaluation is happening.
Yeah. Uh, I want to go back to something you said, um Trump randomly saying things. It looks like he randomly says something, and that's what the media narrative is. Um, I would reference back to again you were saying earlier, and I agree. You have to go and listen to these people in the administration. You have to listen to all the things that they're saying because they're telling us. U but there was an interview with Leticin podcast, and he was like, I've known Trump for 35 years. We grew up in New York. We used to go to all these things together. He's like, I've known him for 35 years, and he said um he never says things off the cuff. He always and gets goes gets all the research first, and he is knows exactly what's going on, and then he'll only start talking about it after that point. So to the media cuz he kind of like throws things out randomly. You think he's talking randomly, but per Lutnik, 35 years they've been working together. He's like, he never does that. He's like these Trump thing or I'm sorry, the tariff things. He's like, he's been talking about that since the 80s. He's like, it wasn't like I brought that to him. I started working for him. He gave it to me. And so I think that's just an important piece. Um, we don't know if that's wrong or right, but take it from someone who's been known him for 35 years. And then I think for me that adds a little bit more gravity to the things that he's saying to your point, like when Bannon talks about gold and Bitcoin together at the same time, like we should certainly be listening. He was talking about Japan dumping in 1988, and that you you can you can you can take the string right from that comment about Japan in the in the late 80s to today.
Yeah, I want to get into the core thesis of your book, The Bitcoin Age, and how really it talks about all of this, but I just want to go into one more topic first because um one thing that's talked about, just at least I've talked quite a bit and sort of it's gaining more momentum is global liquidity. Um, Michael Howes been talking about it, you guys, the Bitcoin layer, which by the way, uh is maybe my favorite newsletter to keep me up to date on things. I I try to curate my news sources because I it's hard to stay on top of everything, uh the Bitcoin layer. We'll link to that down below. Nick Nick and his team does an amazing job with that. But you've created your own uh global liquidity layer. I like
that you actually told us how you created it, unlike Michael. How it's like this black box. Uh, Ralph, Paul, Real Vision's got got one as well. But it seems that back to we were talking, I think before we started recording, uh, Stanley Ducken Miller, the greatest of all time. He realized early in his career was liquidity that moves assets. You measure global liquidity. Um, we can get into, you know, Bitcoin moves off of global liquidity with an 8 to 12 week lag, all those things. But my bigger question is, in light of all of this, with the tariffs and the trade wars and the angling for dollar supremacy and all that, what does that do to global liquidity in the short term?
In the short term, it hits it hard because one of the main components of our index is bond volatility. And so we were just talking about uh market makers stepping back from the options market, basically saying, "I'm not going to write you any options because I don't know what's going to happen." It when they do that, it makes the whole system less able to create new money, and that's the source of a of falling liquidity.
Why does it make the system less able to make new money? Yeah. So it comes down to collateral. When we think about the way that our index is structured, we use the asset side liquidity approach, and that's something that it really sets us apart. I think that if people are interested in liquidity as a concept, and people that have liquidity indices, they need to understand, are you using a liability-based metric or an asset-based metric? That's the first thing. People that quote global M2 or any sort of M2-based liquidity, even when we think about Fed liquidity, which is, you know, when the Treasury general account goes up or down, or repo reverse repo goes up or down, those are all liability-based metrics. Okay, liabilities in the system today are deposits and shadow money like repo, so an M2 isn't going to capture shadow money. And it's also the result of credit creation, which can come from assets. So that's why we use an asset-based measure.
We got that inspired by Michael House's global liquidity index. I basically picked his brain over the course of the last couple years trying to ask him, "Hey, what's in it? How do you make it?" And u without trying to ask him what the formula is, really trying to understand. So people can read his book, *Capital Wars*, and understand where that liquidity-based metric comes from. What you said earlier about 300 trillion in US dollar-denominated debt but only a h 100red trillion in cash, that is why we use asset-based liquidity because the asset side needs to get funded, and the asset side has to roll its money based off of only a 100red million in liquidity out there. Okay. And so what the reason that we measure assets and collateral is that if you have treasuries, treasuries are the asset base of the financial system. When they go up in price, it makes banks more uh able to create new money because mark-to-market the whole portfolio goes up in price. And you multiply that throughout the rest of the financial system, falling interest rates, which means rising bond prices, falling dollar, which means the ability for foreign countries to borrow more easily, and falling bond volatility. All of those things boost the size of the asset uh base of the banking system, and that in itself allows liabilities, liability money, whether it's deposits or shadow money or the printing of trades to just interest rate swaps when they get created out of thin air. They do that because the bank is confident that its asset base is fine, not that rates are rising, volatility is spiking, and the dollar is spiking. All of that's going to hit their ability to create money. So sorry for the long answer, but it's uh that's what we're constructing. It's not just the monetary supply liquidity going up. It's even the ability to create money.
That's correct. It's not the supply of money. The supply of money is a liability. Deposits, M2, that's a liability. That is supply. It's not of course assets and liabilities match. So of course, supply of money will go up when the assets go up. But liabilities, not the way that we measure it. The way that I feel like liabilities or M2, it's a trailing liquidity index. The leading one are bond prices today, volatility today. That doesn't show up in M2 right today, but we want to know what's happening today in the market. Why did stocks crash today? Because bond volatility exploded. When bond volatility explodes, market makers step back. They stop printing trades. Liquidity seizes up. Somebody has to sell. Somebody's margin called. Then it's tight. And you see how that happens. So we want to know what's happening right now, and that's what we're trying to build. So that's um so right now we're in high volatility, and so that means the global liquidity takes a little bit of a hit in the short term.
Is that too US-centric? So back to maybe the second goat of all time, George Soros, he has something he calls the imperial circle, right? So then you have basically money flows around the world, and specifically when you're looking at global assets like Bitcoin or other commodities, for example, right? So like that's certainly US-centric, but what about these other countries that are forced to start debasing their currencies right now? We had obviously in Europe and Germany specifically, they talked about, you know, increasing $500 billion of debt to build up their military. You have China dealing with their own problems over there trying to inflate their currency. So how does that affect globally? I mean, is it just you just extrapolate that to the globe, or are we looking at that too US-centric there?
Yeah, you know, over the last few years, Mark, I've joked around that gold is old and uh, you know, just this whole idea that gold is old, right? In a Bitcoin world, it's it's exciting to think about the future in a Bitcoin standard. Well, gold is no longer old in the Mara Lago era. It's not. Uh, we making it sexy again. Well, if you think about the breakout, we flagged it at the Bitcoin layer when it broke out 2200, it's we said, you know, 3,000 is a lock here, and and that was about I think 1 year ago, we could see, so the market was already telling us something was happening with gold, and so the answer to your question, the devaluation, the bond volatility, what is hitting, what is bond volatility hitting? It's hitting stocks, it's hitting corporate bonds, and it's hit Bitcoin far less than I thought it might have in this type of event. Bitcoin is held in really well, but it's still ticking most of the time with the stock market, but gold is at an all-time high. So bond volatility is not affecting gold in a negative way. It's pro it's potentially it's doing what it's supposed to do. It's potentially happening at the same time in the same portfolios. M. So that's what it's really hard to wrap my head around, but I'm a price action analyst. So I'm watching. Yeah, I watch daily returns, but I watch I watch five-minute candles because unless unless you're wa and I and I and I only do that when it's volatile. Yeah. Sometimes I won't look. Sometimes I won't even look at anything besides a daily or a weekly candle for weeks or months even. But when it's moving like this, I move to the five, 15-minute candles, the tick charts, because I want to know who's buying and selling what at the same time. I want to know what the correlations are. I want to know. And it's it's it's one of those things where right now if you watch the gold price action reaching all-time highs, the last three candles have been uh all-time high candles on gold. We're above 3,200 today as of this recording. It's doing this with all the bond volatility. It's doing this. It's not like stocks have bounced back way up. They bounced a little bit. Yeah. And are still chopping around. It's all within the range of, you know, the current volatility index. So it's it's it's amazing to watch gold reemerge right now as potentially the anchor of the financial system until we get the Mara Lago accord.
Would you say that's in contrast to like in 2008 or 2020 when the you know S&P 500 dropped, gold dropped with it? And so now what we're seeing, to what you're saying now, we're watching stocks drop, but gold is going up. That's why I watch correlations and and in the minute stuff. If you watch everything, you know, risk off, everything dumping, you don't get gold's pump until the QE is announced later. You don't get it on the volatility event. So that's exactly the point here and why I do switch into those five-minute candles when we're in volatile times. Yeah.
Now you had said earlier, back to your book, the Bitcoin um the Bitcoin age, you had talked about how it's not just about Bitcoin, it's about this whole age of the financial system that we're in right now. So tell us the thesis of the book and how that particularly fits into this sort of world that we're seeing sort of unravel right now.
Bitcoin has established itself as a decentralized store of value for the next internet generation. I I believe that the Bitcoin age started sometime around 2016 when it became clear that it would be officially part of the financial uh system in 2016. And so that event were was the CME coming out and saying Bitcoin futures and the indexing of Bitcoin's price based off of actual Bitcoin exchange data, not just some derivative, but the the physically settled price at a certain time on a Bitcoin exchange linked into the financial system. We got futures that went live in 2017. Obviously, ETFs in 2024 as an echo boom of that f the ETF approval was simply an echo boom of 2017. So that is really why I I use that 2016 moment as the the graduation. Before that, Bitcoin is a rising star, and after that, Bitcoin is certified, but it's just it takes time for people to see it, right? We get events like the strategic Bitcoin reserve, which make people much more aware, but the process had been building for quite some time. It it still continues to amaze me. I mean, I was in Bitcoin in 2016. It wasn't clear to me, and I remember obviously that happening and and uh it still seemed like layer ones were up for grabs in 2017, 2018. Um, but you know, every time one of these things happens, it becomes more cemented, and even today, to your point uh with the strategic Bitcoin reserve, one of the biggest things we would always hear, at least for me, would be, "But what if the governments make it illegal?" And it's like that's gone now, but yet there's still many so many people that just still don't believe in this future, but so um it's a legitimate asset um does it expose sort of well I should say maybe the other way um does the moral this Mara Lago accords I should say the need for these These types of Marlo accords really expose the current existing financial system for what it is and really the flaws of it and always needing to be reset and how these trade imbalances and specifically around the credit sort of gets out of whack over time and does it really like expose itself and then at the same time highlight Bitcoin?
Well, I think that the system can survive if it reins in the leverage because then you know fractional reserve banking can operate in a responsible way. I don't think that that's a I don't think that that's a a a a thesis because we actually saw fractional reserve banking for millennia. I mean, it it the the idea that money is only commodity money and expands when credit is based off commodity. It's not historically true. Credit and the extension of credit is what we need to let our economies function. If you if you restrict the access of money to commodity money, you prevent human exploration and expansion. I mean, if gold or Bitcoin are growing at 3% or 1% a year, you're saying that we can only have 4% money growth forever, and that you're limiting the amount of productivity for the world by simply your ability to get better plus the 4%. And the world has put a referendum on that, I believe, in the last hundred years that say, "No, we want to grow now. We want to create money now, borrow from the future and extend." Now for the last 50 years since we went off the gold standard, and even in the decades before with the advent of the Euro dollar system, fractional reserve banking expanded and expanded in a way where now it's like this nine sigma events happening every few years. It's completely unsustainable at the current level. So I believe the Mara Lago accord, the attempt is to rein in some of it, to reestablish an equity component to it, and in that way extending the life. Now I don't I can't project after that, right, or but I can see what they're trying to do, and whether it will work or not, and whether fractional reserve banking can be operated in a responsible way in the future, I don't know, but if you have an equity component and you have less non-tariff cheating, currency devaluation abroad, then maybe it does progress toward that.
Yeah, I agree with that. I think uh there's always going to be credit. We probably had barter and then credit before we had currency, right? It was like uh I know you here, I'll give you the wheat. Uh I know you're good for the cow or the wheat or whatever it is. And Mark, I want to say that you know I I'm now starting to understand that that's not anthropologically based, that the idea of barter, it's actually the idea of I owe you and you owe me. It's not that we have to trade right now. You give me what you have, and maybe next week I'll give you what I have. So maybe it was credit first before barter. It was I mean we're you know as a family like, "Hey, I'll give you this. Okay, you give me that or you give it back to me later." Maybe it happened simultaneously or something. Money is what will settle the debt. And so that's why money could be you know in in history it could be bronze or it could be oxen or it could be anything that you know was accepted. So money is what's accepted. So today, right now, dollars are accepted. Many people accept Bitcoin. Uh fewer accept gold online, right? It's not something that people accept, but people accept it to transfer wealth to themselves in the future. So whatever is accepted is money. It doesn't mean money has to be commodity or it has to be credit uh or a credit type of money like a dollar deposit. All of that stuff can be used as money. What exists is the human desire to produce, to explore, and to expand and and exchange and exchange. And in that way, they'll figure out the system. But how do you ultimately say, "Okay, it's time to settle up. Pay me now"? In the future, it might be in treasuries, in dollar deposits, in gold, in Bitcoin. And today it honestly is all of those things, just at varying degrees. Yeah. So that's why all of those things can be considered money. And I in the future the balance obviously I believe changes to weigh a little bit more to Bitcoin relative.
And so you ask about the thesis of the book. Bitcoin can be compared to a 100red trillion in cash and 300 trillion in real estate. Those are the two asset classes that Bitcoin can compare itself to right now, obviously gold. But why only real estate? Yeah, why not gold or why the bond market or why not collectibles or fine art? I talk about gold in the first book and how Bitcoin can and should rise to gold on a historical basis. So historically, gold is the best neutral money. Bitcoin should take that should capture that. But the market for it is much bigger than gold. And the reason it's cash and it's real estate, these are two ways that money is stored over time. Some of it for temporary, some of it for long-term fixed income, equity, these asset classes are part of the financial system. Some of it's used for production, some of it's used to lend money to production, and some of it in both of those asset classes just uses wealth storage. But I want to explain to people that Bitcoin at 2 trillion is still very small relative to what people are holding in cash in real estate. I feel like Bitcoin and equities complement each other. One is savings and one is investing in production. So I don't want to suggest that Bitcoin just starts eating all of these asset classes at once, even though it will take part of equity, part of fixed income, and it is and part of gold. I want to give people that really high ceiling to where Bitcoin can expand to. If Bitcoin can just be that generational money like cash and like real estate is today, then people can think, "Oh yeah, it can go it can go to $10 million in the future." And that's what I want people to walk away. I I suggest that Bitcoin will be at $1 million in the next several years in the book to give people that taste of the potential growth that you're not late. You're you're still early in this asset class. You give them the proper context for that.
Yeah. Yeah, I think about it like that's sort of like a venture capital frame, which is like Uber. Okay. What what as what markets is disrupting? What is the total adjustable size of that market? Uh, what percentage do we think we can capture from that market? And so when you think about, you know, Bitcoin disrupting just store of value assets, you know, Michael Saylor's talked about this $900 trillion dollars of store value, that's where like what are things people are storing their wealth in? And so to your point, you know, equities and stuff, some of that is productive capital being loaned to those companies or being raised by those companies, etc. Um, but one thing that I worked out, I gave this talk at um Bitcoin Miami a couple months ago in Abu Dhabi, and it's like that 900 trillion Saylor says maybe half of it is store value, half of it's productive, but whatever you want to call that, but um based off of the rate of growth from 2010 to 2020 and from 2020 to 2024, 2025 now uh based off the CBO projections, the deficit expending, etc., etc. um that basket continues to grow. So just at the rate it's on, by 2030 that should be like 1.3 quadrillion. By 2040, that should be like three and a half quadrillion. So then the question is, what percentage of that basket do we capture by 2030 or by 2040, right? And so to your point, I would 100% agree with you like obviously you're not going to eat the whole basket, but by 2030 if you get 1.25% of the basket, it gets it to that $21 trillion market cap would be on par with gold. And Uber and Airbnb captured 10% of their market shares in less than 10 years. So 1.2 25% is totally conservative and realistic if it is a better asset, which we think it is. Um, yeah. You know, when I think about where Bitcoin can go and that $1 million price and 21 trillion market cap, I I want people to understand that that is my view over the coming years, not not something that I will have to wait for.
Right. Right. And so it is based on math and that relative addressable market. Y and unless you have those numbers and that framework, you might not be able be able to imagine $1 million Bitcoin because that's just a random number. Yeah. Actually, the number that matters is the market cap relative to other assets' market caps. Right. So Nick, speaking if you're going to speak to stick to the average person, the average you know working um middle-aged working person saving, dreaming of this uh better future. Um, but you're feeling anxious because you see all this volatility and you're hearing about the system being reset and you're looking at your portfolios uh moving up and down, uh the whole monetary system being reset, what would you tell them specifically and then tell them about the time to get into Bitcoin now?
Yeah. So in the book, I explain how the average price of an American home has gone from 25,000 to over 400,000 in the last 50 years. And incomes have only gone up from 9 to 80,000. And so you would have needed 2 and a half times your earnings back then. Now you need five times your earnings to buy a home. So prices are expanding, but in a non-equitable way, really in a in a distributed way that works for some people, and it works against many people. So in that way, the credit system is built to work against a huge segment of the population, especially those that aren't able to actively borrow and invest from that credit creation system. Right. So that disadvantages people, and that uh the price of a home in the last 10 years has gone from a thousand bitcoin to five bitcoin. And to ex to explain to people that that trend will continue, they have to understand the long-term mindset. Bitcoin is super volatile, as we explained. It's subject to bond volatility, and it's subject to these one in a thousand-year events happening every few years, and so that can create a lot of fear. It can also create a roller coaster. So you know, I I love the fact that when we lead with research, what we can do is express our opinion and lay it out for people to the best of our ability. I'm lucky that I don't have to trade other people's funds. Yeah. Because even if a client comes to you and say, "I'm ready to buy Bitcoin," and then they experience a 40% and you say, "Oh, you know, just hold on," and then they pull their money out, you've impaired their portfolio. Yeah. Even though they were the one who timed it and timed it on the way out. So people have to take that long-term mindset. And I would also tell people that the United States of America has the best property law in the world. And so United States-doiciled corporations, broadly speaking, are investments that are relatively good compared to other things. And so Bitcoin for savings and a long-term mindset, US production, those are the areas that I feel safe to operate in as an individual, and those are asset classes I think that complement each other and are positioned for the future.
Great. We're going to end it with that. Nick Batia, the Bitcoin Layer. Like I said, one of my main newsletters I read. We'll link to that down below. The Bitcoin Age. Get that. I'm just gonna say get that book. And the reason why is because of what Nick just said. If you just try to buy Bitcoin but you don't understand it, you haven't done the work, you haven't done the research, you don't have any conviction, you're borrowing Nick's conviction or my conviction. Get your own. We'll link to that down below. Anything else you want to say? Uh, you guys can catch everything we're doing at the bitcoinlayer.com, the links to my books and and everything. Mark, I appreciate you having me.
All right. Thank you.