Transcription
Yo, welcome back to another episode of the Jack Malers's Show. Ladies and gentlemen, I got a brand new streaming setup. So, boy, do I have a show for you. We're going to be breaking down everything Treasury Secretary Scott Bessant has been talking about as the bond market is collapsing and Bitcoin is making new all-time highs.
Before we get started, happy Memorial Day here in the United States of America. And I'm going to have to keep this episode a little short because I'm on my way to Vegas. Flying from Chicago to Vegas. I got some things to announce. I'll see you guys on the main stage Thursday, 3:20 local time in Vegas. I've got two announcements for my two separate companies. I got an announcement for Strike I'll be talking about on stage and I got an announcement for 21 that we'll be releasing this week as well. Big week, big week for the Orange Coin. Let's go, Bitcoiners.
Um, and without further ado, let's get started. Before we do, guys, like, subscribe. You guys are showing me so much love. We're over 26, we're almost at 27,000 YouTube subscribers. Hopefully you guys have seen. I've been posting more content. I've got an editor. I've got a new streaming setup. If you guys don't mind hitting the subscribe button, it's the only way you can really support me. This is like a hobby of mine. It's the most fun hobby I have, to be candid. But this isn't sponsored by anyone. There's no—I'm not selling you a gym membership. I'm not selling you a hardware wallet. This is just me. I got no—like I—I set up this streaming [ __ ] myself. I googled it, read a couple manuals, downloaded some open source software. It's just me and I want to keep it that way. I want to just be pure, authentic, truth-seeking conversation from a guy that's been in Bitcoin for 13 years whose dad was in financial markets for 40 years. That's what this podcast is. So, no sponsors, no bias. Sometimes I'm right, sometimes I'm wrong, but you'll always get the truth and you'll always get authentic, vulnerable conversation with me. And so, if you want to support me, just subscribe to the channel.
Um, I—I—I'm on a mission, man, on a mission that I can become a podcaster. Okay, I'm looking in the chat. Looks like you guys can hear me. Looks like you guys can see me. Um, and uh, that makes me proud cuz I might have figured this streaming [ __ ] out. All right, without further ado, let's get started.
Ladies and gentlemen, I am talking to you live with a Bitcoin price of $19,480 US. That puts Bitcoin's market cap at $2.18 trillion. We have a new all-time high since I spoke with you all. That all-time high is $111,980. We're only 2% from that all-time high. So, we're hanging around all-time highs, not going to lie. Very exciting. And I think I know why. That all-time high was 4 days ago, by the way. So, it was late last week. For those of you that do not keep time in Eastern or Central or Pacific, and you care about block time, I'm talking to you all at 898,52 block height.
Okay, without further ado, let's get into this rant because I got to go to the airport. Since I last spoke to you all, Japan bonds plunge. The BOJ is retreating from the Japanese bond market. Japan bonds plunge. And we've got issues because when the Japan—Japan bond market and those yields start to heighten, the US bond market gets messed up. And the theme of today, as that we've talked about on this show over and over and over and over again, is the existing financial system that's been the result of post World War I, post World War II, it's starting to unravel. It's starting to fall apart. And Bitcoin, in my opinion, is going to be some—it's going to play some role in the future financial system as a neutral reserve asset. An asset that's based on proof of work that no one can print, that everyone has access to. It's inclusive. It's divisible. It's transferable. It's scarce. Okay. So this show we're going to break down the existing financial system collapsing in front of our eyes and watch the world adopt what I think is the greatest monetary invention in the history of our species.
So this week Japan had issues in their bond market. Guys, it's like a house of cards. Okay? If one card falls, it starts to cascade them all. When Japan has issues, the US bond market has issues. Let's step through it. So immediately Trump's next hurdle, the bond market hates his beautiful tax bill, right? Okay. So the theme is US yields skyrocketed again. We saw bond market volatility again. Japan's having bond issues again. And Scott Bessant has come out and has not been shy about his opinions and his thoughts on the bond market. Okay. So, he's come out and said Moody, who downgraded the US credit, is a lagging indicator. It does not matter. He's come out and said that we have to focus on the deficit to GDP and that it's the highest outside war of our rec—out of our recession.
So, here's what I've done today, guys. I've pulled up Scott Besson's interview. So since the bond market has gone absolutely haywire, I've pulled up his interview and keyed it with each time he's gone to the media and said how he's going to print money, how he's going to debase the dollar, how he's going to try and get the United States out of this problem. What we're going to do is walk through each press release, each article. I'm going to link it to this interview, which I highly, highly, highly recommend because here's the deal. Anytime monetary authorities want to change something, they cannot surprise the market. They cannot surprise the market because the market cannot take volatility. A highly leveraged financial market cannot take free market volatility. It cannot take prices going up and down in the free market trying to figure out what's going on. It can't sustain that. Okay? And so what financial authorities do is they tell you in plain English exactly what they're doing and what's going to happen. Okay, this is what people don't understand. Like, Jack, how did you know this was going to happen? Because I'm just—I'm listening. All I'm doing is I'm listening. These guys are telling the market exactly how they're going to print the money, exactly where the money printing is going to come from, exactly how they're going to juice financial assets because they cannot catch the market off guard. If they catch the market off guard, the free market, it's going to be volatile and volatility is going to kill a highly, highly, highly levered financial system. Okay, so let's step through it, shall we?
This is the interview I've been dying to show you guys. This was Bessant and he tweeted this out a week ago, okay? May 18th. And I tried to play it last time and it didn't work. I'm going to play it this time and I'm pretty confident you guys are going to be able to hear it. Obviously, if you can't, we will fix that. But, uh, let's listen in.
Several components there. Uh, so if we unpack it, there is the growth, the potential growth of the debt, but what's more important is that we grow the economy faster. So what we've seen under the past four years and you know what we inherited—uh I inherited 6.7% deficit to GDP which was the highest deficit when we were not at war—not in a recession. So we've been trying to bring down the spending and we are going to grow the revenue side. So we are going to grow the GDP faster than the debt grows and that will stabilize the debt to GDP which even Secretary Yellen and I agree is the most important number there.
Okay, let's focus and zoom in here. We're going to dissect Secretary Treasury Scott Bessant and all he's doing to debase the dollar, prolong this financial system, which means weaker dollar, stronger assets, scarce assets like Bitcoin should perform. He says, "Our focus is to grow the economy faster than the debt. That's how we will stabilize debt to GDP."
Now, let's take a look at this tweet from Warren Pies. We're way too zoomed in here—uh on my screen share. Okay, how do I do this here? If I zoom out. There we go. Let's take a look at this tweet here. Um—Oh no. What did I just do? Oh my god. I'm making a mock. I'm not a professional podcaster. All right, here we go. Let's take a look at this tweet by Warren. And if I can—Here we go. Professional podcaster, I am. Okay. Warren's comments. Moody's downgrade equals no big deal because there's no chance of not getting paid back by the United States, but there's a high chance of getting paid back with a debased currency. Okay. So, Treasury Besson saying Moody's downgrade was no big deal. They could downgrade the US credit. No problem. Who cares? Those guys are lagging indicators. We're focused on growing the GDP faster than the debt. Okay. Warren does the calculations. 97% public debt to GDP plus 3.2 primary deficit plus 3.4 efficient—uh effective interest rate, excuse me, equals US must grow GDP at 6.6% to keep debt to GDP stable. US must grow at 6.6%. So in order for Besson to get away with what he's claiming, it has to grow 6.6%. Now why is that number relevant? Let me tell you guys, this has happened four times in history—in US history. This has only happened four times. Okay, what are those four times? The .com bubble, the everything COVID bubble, and the housing bubble. Outside of those three bubbles, the only time GDP has grown 6.6% or higher is high secular inflation—the two decades where inflation was out of control which was 1965 through 1985. When a man tells you who they are, believe them. Believe them. Bessant says, "I have to grow the GDP faster than the debt." Okay, one second, Mr. Treasury Secretary. Give me a second. Do the math. Okay, carry the one over here. Got it. So, you need 6.6%. Which means you need either extremely high inflation or an asset bubble. What have I been saying on this show over and over and over for a year? These guys got to juice assets. These guys need a weaker dollar. These guys are going to debase the currency. These guys are going to re-orchestrate global capital flows. And these guys are going to juice assets. And they're telling you the asset they want to juice. Gold, Bitcoin, not tariff gold. Setting up a Bitcoin strategic reserve. So, step number one, listen to what the guy's saying. He's telling you who he is. When a man tells you who he is, believe that man. Believe that man. He's saying 6.6% GDP growth against the debt. You need—you need an everything bubble, mister. That comes with inflation. Never in the history of our country have we seen that much GDP growth without money printing. Without money printing. Let's keep going.
Next, our beautiful professional podcaster. Bang. Next, Elon Musk. Do you guys remember that Elon and Doge and all the cost cutting in America was going to save the government? We were going to stop all this inefficient spending. Our deficits were going to be solved by Elon Musk, right? Remember that? Come on. This was only a few months ago. Well, let's read this tweet on May 23rd. I have come to the perhaps obvious—perhaps obvious. It was only obvious as if you were listening to this show. Everyone in their mother thought that Elon was going to slash government spending. Doge was going to get in there and kick the butt of all these criminals and we were only in such a deficit and had so much debt because all these people—I would go into the sauna. You'd go to the gym. You're like, "Man, thank—thank you Elon. Elon's going to fix this country." Right. Right. I'm not making that up, am I? But now it's an obvious conclusion. Okay, fair enough. I've come to the perhaps obvious conclusion that accelerating GDP growth is essential. Doge has and will do great work to postpone the day of bankruptcy of America. But the government means that only radical improvements in productivity. Elon's admitting he can't cut that. Nothing stops this train. As Lyn Alden says, he can't cut enough of the spending. It's too late. He's saying we have to focus on GDP growth. Cutting costs is—we're way beyond that. The notion that someone—some really talented entrepreneur was going to get the keys to the White House and run an efficient balance sheet. On this show, we were laughing at that. A muck. There's no way. Unless you're going to cut government defense spending, unless you're going to cut entitlements. And here's the problem, guys. Let me explain the problem. If Donald Trump and his administration say no one's getting their entitlements, no one's getting their benefits, we're not spending on defense, guess what? They're not winning the next election. The problem with giving someone access to the money printer is the people—the people will just vote in someone that says, "I'm going to print the money. I'm going to give you a bunch of free shit." That's who people vote for. Humanity destroys itself if we have access to print time and energy. And so if you want to get elected, which is all of these politicians' jobs, you can't cut any of this stuff. You cannot cut promises you've made to people. You cannot do that. And so when Elon's like, "I'm going to cut—I'm going to save the country." Cut what, brother? Cut what? Nothing. So in a shocking admission from Mr. I'm going to save this country myself. And uh—now let's listen to this honestly like jaw-dropping interview. I encourage everyone to watch it, but let's listen to this jaw-dropping interview. Um—we'll—we'll revisit this interview a lot throughout this show—um with Secretary Besson.
Okay. Yeah, I think most of us who have dealt with Washington would not disagree with that at all. The question is where do you trim and how do you go about it? There was a $2 trillion number thrown out at a rally here in New York City as I recall by Elon Musk and Howard Lutnik. Uh—was that a wrong number? Are you going to come close to $2 trillion out of costs? Well, we—we'll see over what—what the scoring window is. You know, could—could we end up with 150 billion a year in savings, you know, over the CBO window? That—that'd be a trillion and a half. So, so—but you're on track, you think, on the—on the cost-cutting side. Well, again, there's a lot of resistance that the doge and Elon were criticized for the—the pace they did, but I—I tell you just in my three and a half months in Washington, if you don't move fast, then the—the swamp kind of grabs you and you start sinking and the—the vested interests kick in. What other—Okay, let me—because you know things can get complicated and politicians and translating it to the everyday person. Let me translate the question of Elon Musk told the American people with President Trump in this administration that they would cut $2 trillion and save this country by slashing our deficits. Are you going to do that? Let me translate Scott Besson's answer. No. No was his answer. It was really long. It was like a 90-second answer. It was a really long way of saying no, we're not. He effectively said, "Yeah, no, we'll—we'll get there if we're allowed to take 20 years to get there and it's compounding and you're totaling the sum." So, the answer is no. The answer is, guys, let me translate it even further. The answer is we thought—I can't tell if they actually thought this because even listeners on my show couldn't have thought this. We thought we could cut so much spending that we would fix this broken, highly levered financial system. But we realized we can't. So now we have to print money. Which brings me to my next one.
Next. Bessant May 23rd. Again, guys, as soon as the bond market gets volatile, as soon as yields start to go up, whether it's Japan, America, all of this is tied together, it's one giant deck of cards, it's one giant, highly levered financial system. Okay? As soon as that happens, you will hear immediately from all financial authorities, whether it's Jamie Diamond, Scott Besson, Jerome Powell, Donald Trump, and we'll walk through it today. So May 23rd, as soon as these markets got volatile, it's a Friday. Bessant, I'm expecting to hear from Bessant. Here he comes. We could change the supplemental leverage ratio over the summer. Okay, let's—We've talked about this show—on the show over and over and over and over about the supplemental leverage ratio. Let's listen to what Mr. Treasury Secretary has to say about it. So let—let's see where that ends up. And of course we will—we can keep coming back in—in terms of making government more efficient. U—I—I think I've—I've been there three and a half months now and—and I can tell you the amount of waste, fraud, and abuse is startling. Yeah, I think most of us who have dealt with Washington would not disagree with that at all. The question is where do you trim and how do you go about it? There was a $2 trillion number thrown out at a rally here in New York City as I recall. Oh no, my tabs got messed up. Hold on. As you look at this problem right now, uh—what—what is your approach uh—to making sure that—Hold on. This is important. I'm really sorry. Not a professional podcaster, but I want you guys to hear this. Including on Bloomberg that there may be—if I can call it privatization. Found it. Found it. Found it. Found it. Apologize again. I'll get the hang of this. At least I'm moving in the right direction. Okay, this is Bessant talking about the supplemental leverage ratio change. There are reports—uh included on Bloomberg that there may be—if I can call it privatization of Fanny May and Freddy Mack. Something that's been talked about since I think they were nationalized essentially during the great financial crisis. I heard the president say, "I'm gonna ask Scott Beth about this." So, has he asked you and where does that stand? Uh, we—it—it is a goal for this administration. Oh, no. I got it wrong again. Sorry, guys. Also, let me check the chat. Make sure you guys can actually—like you're still hearing and listening to me. I know everyone's so upset with me. Uh, I'm sorry. I'm sorry. I'm trying to figure it out. I really want to get this show right, but um—it is not easy. I got a lot of respect for uh podcasters at this point. The supplementary leverage ratio SLR, they're very close to moving the supplementary. Where are we with that? You're going to US—late to US. Let's talk about the supplemental leverage. Got it. Okay. Sorry again. Ratio—uh which seems like an obscure thing off to the side but it has been the subject of much discussion and it does as I understand it relate to US treasuries and yields on US treasuries so that if major banks held more US treasuries it would bring—it bring yields down. You've said you're going to take more of an active role as I understand it with respect to some of that banking regulation. Where are we with that? Uh—I—I think we are very close to moving the supplementary leverage ratio SLR there that is moving along very quickly—uh between the three banking regulators the Fed, the OC and the FDIC. So I would think we could see something on that over the summer.
Over the summer and knowing the markets as you do, would you anticipate that might have a significant material effect on Treasury yields? Uh—well I—I think it could because banks are being penalized for holding treasury. You know there's a large supplementary—uh leverage charge. So I—I think for holding the risk-free asset we can reduce that. And you know I—I've seen estimates that it could bring yields down by tens of basis points. Certainly—uh during the COVID crisis—uh it was the—temporarily taken off and it had a big effect. Boom. Okay. Sorry again for my podcasting—uh rookiness, but guys, he's telling you in broad daylight, I'm going to allow banks to use unlimited leverage this summer. He's telling the market again—markets cannot take surprises because they cannot take—well not all markets—free markets can. Free markets where true humans are destined to—to perform can. But the legacy financial system cannot take surprises. It cannot take surprises because it cannot take leverage—or excuse me—because it cannot take volatility. It cannot take volatility because it cannot take leverage. Okay? He's telling you guys we—I'm going to change this rule this summer. It's what he's saying in broad daylight. He's prepping the market. In fact, look at the title of the YouTube video. Besset sees easing capital rule on treasuries this summer. It's just like a—guys, I know the Treasury market is screwed. I'm coming to save it. I'm coming to save it. And here's how—here's exactly how I'm going to save it. Here's exactly how I'm going to print the money. I'm going to print the money by allowing banks to have unlimited leverage which allows unlimited credit. You're effectively—you're—you're producing buying power without any actual money, right? Is money printing. It is liquidity positive. There are different forms of QE we've talked about on this show. Their words are interesting. They can't say we're going to do QE because everyone knows QE means inflation. Inflation means my life sucks. And so if they say we're going to do QE and things get more expensive, then the American public is going to say, "All right, screw you guys. It was a nice try, but I'm going to vote in the Democrats now and give them a shot." And so they have to be clever. Like even—even Bessant saying, "We're focusing on deregulation because we're focusing on growth. Let's get the rules out of—all these rules are constraining these guys. What's with all the constraints? Let them build." That's such a clever and interesting way to say, "Let's give them unlimited leverage because nobody wants to buy my dog [ __ ] bonds." Because let me make another point. At the end of the day, I think Scott Besson is super smart, brilliant, brilliant, brilliant trader, brilliant fund manager. I'm sure he's an awesome and nice guy. None of this is personal. But you have to keep in mind who he is right now. Who he is right now is a bond salesman. That's who he is. The next four years of his life, he has a boss. His boss is Donald Trump. And his job is to make sure the US government can finance itself. And he does that by selling bonds. So at the end of the day, no matter what this guy says, he's trying to get someone to buy these dog [ __ ] bonds. And so we're going to focus on deregulation. We're going to unlock the American growth by getting all these—like handcuffs off of the innovators. Is a really clever way of disguising dollar debasement, inflating assets, putting us in an asset bubble by a tremendous amount of liquidity positive, unlimited leverage for the banking system.
Okay, next, this was huge. Okay, I am giving very serious consideration to bringing Fanny May and Freddy Mack public. I will be speaking with Treasury Secretary Scott Bessant, Secretary of Commerce Howard Lutnik, and the Director of the Federal Housing Finance Agency William Py among others, and will be making a decision in the near future. Fanny May and Freddy Mack are doing very well, throwing off a lot of all caps, I love this guy, cash and the time would seem to be right. Stay tuned. Okay, why is this a big deal? For those that do not know, Fanny May and Freddy Mack were taken under the US government in the housing crisis. Okay? And the US government absorbed Fanny May and Freddy Mack in their entire balance sheet after the financial crisis. Okay? There's been talks recently of making Fanny May and Freddy Mack a private business again, which means unleashing it from the US government's balance sheet and making it operate like a normal company—just like a JP Morgan Chase or just like Bank of America or just like Wells Fargo, just like another financial services firm with a massive—massive—massive balance sheet. Okay, why is this interesting? This is interesting because the private sector would have a brand new highly levered balance sheet to buy mortgage bonds. Okay, basically I've been trying to think way—ways to simplify this. Think of it this way. The US government is running out of people to sell their dog [ __ ] bonds to. Okay? They need new buyers of their dog [ __ ]—So let's—let's recap how they've been finding these buyers. One, we know about the hedge funds in the Cayman Islands and Bessant saying he'll implement Treasury buybacks, right? Okay. So that solves for these hedge funds that are just running arbitrage trades. They don't actually care about the price of the bonds because they're just arbing. They're buying the physical. They're selling the future. It's an arbitrage trade. They need a lot of leverage. Besson's going to provide them the leverage through Treasury buybacks. Number two is the supplemental leverage ratio. We just heard him talk
About that. That is making sure that US banks can take US consumer deposits and, with unlimited leverage, buy these dog [ __ ] bonds. They still need more buying power.
The US is in so much debt. They have so much financing to do: $36 trillion of debt. Refinancing this at 4-12% is so expensive, they need another buyer. So what do they come up with? They take a government-owned balance sheet and they puke it out to turn it into a private company that can, in return, go buy their dog [ __ ].
So, it is estimated that Fannie Mae and Freddie Mac is going to raise $130 to $150 billion. Okay, which, according to the 3% rule, you're allowed to leverage. So we—I think that these guys—So I'm just going to read a trusted macro source has done the math at $125 to $150 billion of fresh equity plus retained earnings at 33 times leverage, which is the rule that would give Fannie Mae and Freddie Mac, a new private company, $4 to $5 trillion of room to buy mortgage-backed securities. Four to five trillion. So, this is another very sneaky way of printing money. How are they printing money? They're taking a a company that had to be taken over by the US government and they're spitting it back out as a private institution. Guys, this is a this is another way of the government buying its own bonds, but instead of the government saying, "We don't have any more buyers of our debt. No one—" If you had a friend that was $36 trillion in debt, would you ever lend him any money? No. So the world is like, "I don't want to give you guys any more money. You're not making me whole for it. You're not keeping my purchasing power. All I'm getting is printed pieces of paper that is worth less eggs, less gas, less groceries over time." And the US government is like, "Shit, we need buyers of our dog [ __ ] bonds. So let's give unlimited leverage to hedge funds on Wall Street. Let's give unlimited leverage to our banking system, and let's puke out Fannie Mae and Freddie Mac, which we had to take over and disguise them as a private company only so that they can highly lever themselves to buy our dog [ __ ]." You'd have to be kidding. And so, but what the public doesn't understand is this is in broad daylight money printing. They're taking a piece of the government, puking it out as a separate company just to turn around and buy their dog [ __ ].
Okay, I have to keep going because I have to get to the airport. So, you know it's real when they have mainstream media write about it. Trump teases possibility of taking Fannie Mae and Freddie Mac public. Talks of ending government control of the mortgage giants have been underway since last year.
Okay. Now, surely I've screwed up here the timing of when Bessant is talking about this. Yeah, I think most of us who have dealt with Washington would not disagree with that at all. The great—So, I just had it messed up, but give me a second cuz I want you guys to hear what he says about Fannie Mae and Freddie Mac. Here we go. It has to do with taxation and the IRS. Uh, I know that you were really pushing hard for monetization of the IRS. At the same time, we've lost a lot of people at the IRS. Isn't that hurting their ability to do their job? Uh, so David, my my three inflation reduction act and back to this crazy CBO scoring by increasing expenses there was the scoring that you would actually somehow up collections which didn't happen is apply the highest US regulatory uh and a nationalized essentially during the great financial ah here we go find it sorry again I messed up my tabs apologize but Okay, listen, listen, listen, listen. There may be a if I can call it privatization of Fannie Mae and Freddie Mac. Something that's been talked about since I think they were nationalized essentially during the great financial crisis. I heard the president say I'm going to ask Scott Besson about this. So, has he asked you and where does that stand? Uh, we it it is a goal for this administration. Uh, you know, again, we're doing peace deals, tax deals, trade deals. So as we land some of those deals then we will focus on that. But David, what I what I can tell you uh we are doing a great deal of the uh a great deal of studying at Treasury because the one requirement the one requirement for this privatization is that they are privatized in such a way that mortgage spreads the do not widen and in fact is there a way that we can make the spread between the risk-free rate and mortgages tighten as the Fannie and Freddy are privatized. That was exactly my question. So, do you know the answer to the question yet? Is there a way to do that? Because most people are concerned that will drive up mortgage rates. Uh, sure. There there there's several ways to do it and we're exploring it. So, uh, we will move forward. Uh, again, after we land some of the peace deals, trade deals, and tax deals, then we will work on this privatization deal. One of—Okay, important.
So, what's he saying? He's saying, "As soon as we figure out the trade deals, as soon as we pass the tax bill, which is capital controls, as soon as I change the supplemental leverage ratio, I'm going to bring this privatized or excuse me, this nationalized mortgage company and I'm going to puke them back out so they can highly lever themselves and give me $2 to $5 trillion dollars worth of QE effectively." Okay? So in this order, so I've been I I've been saying since Trump got inaugurated, I expect a lot of choppiness. I expect a lot of volatility. If you're going to reorder capital flows and try and unwind the world from a post-World Wars monetary order, it's not going to be easy. It's not going to be smooth. People are going to get caught off guard. There's too much leverage. Okay. But now we're at the stage where these guys better print, put up or shut up. Print the money. Scott's been saying, "Everyone calm down. I can print the money. Everyone calm down. I can print the money." All right, Scott. Whip it out. Show us you can print it. That's what the markets are saying at the end of the day.
And I'm seeing a lot of questions in the chat on how are bonds and mortgage-backed securities the same. I prepared for this. Let me read you an exchange between Jerome Powell and a reporter at one of the Fed hearings in July of 2021. This is directly from the transcript. The reporter's name was Brian Chang. "Hi, Chairman Powell. Brian Chang here from Yahoo Finance. I'm just wondering if you could provide a little bit more color in terms of how you're thinking about mortgage-backed securities purchases as you inch towards taper. Within the context of home prices that continue to rise, we've heard a lot of people talk about the idea that maybe they'd like to cool off on specifically the MBS, the mortgage-backed security purchases. Is that more because of the optics or is it because there's an observed relationship from the committee's view between mortgage-backed security purchases under QE and the hot housing market? Thank you." Jerome Powell responds with: "So a number of participants raised that the questions around mortgage-backed securities and tapering at at today's meeting as a matter of fact and yesterday's meeting and I'll just say that generally speaking I don't think and I don't think that I think that Treasury and MBS purchases affect financial conditions in very similar ways. Boom. There may be modest differences in terms of contributing contribution to housing prices, but it's—and he's stuttering here—it's not something that's big. It's not—it's more stuttering. So, where I think we are is there there really is little support for the idea of tapering MBS earlier than treasuries. I think we will taper them at the same time. It seems likely based on where people are now." Okay. Point is, this is a secret form of QE, a secret form of money printing, finding a way to find buyers for dog [ __ ].
Okay, mind you, the birth of fiat as we know it was during the World Wars when the Bank of England gave themselves a loan. They were selling bonds. No one could buy it. So, they gave a line of credit to an employee to buy their own bonds. That's printing money, guys. That's affording buying power to purchase [ __ ] without real proof of work backing it.
Okay, so to close out here, um, a few things we've seen now like Jamie Diamond, Warren Buffett, all of these [ __ ] that say Bitcoin should be at zero, Bitcoin's overvalued, it's at 110,000, it's time for a correction. Is this the peak of the bull market? Blah blah blah blah blah blah blah. Right. What I wanted to show you guys is this is a study, May 2025. Okay, look at the date here, done by the Bank of America. Look at the bottom right of this screenshot. B of A Global Research. So no, this data is not old and know this I'm not citing a small bank. I'm not citing an anonymous Twitter researcher. I'm citing the Bank of America. Okay. Global research in May 2025. Looks like fund managers are really overweight bonds. Look at the top two things they own: Utilities and bonds. Utilities and bonds. Okay. So, anyone that's going to tell you, man, like there's way too much risk in the market, you know, Bitcoin's been on a run. It needs to come down. Uh, if you look at research and take a take a look under the curtain of what fund managers have allocations to, they have allocate, they're swimming in bonds. They're swimming in the thing that's going to get them killed or that's already gotten them killed. Okay. Now if I go to my next one, this is their exposure. Same research, same global research. This is their exposure to equities. So obviously we don't have on here Bitcoin. If I if if Bank of America reported, you know, how much fund managers were buying Bitcoin, that'd be awesome. But the best the closest proxy is equities, right? This risk-on risk-off idea. And so this notion that like we're running hot, this is the beginning of the bear market. Listen, this is my personal opinion. You take it for what it's worth, but fund managers from Bank of America research: Underweight on equities, overweight on bonds. It's another way of saying we're just getting started. Do you have any idea how much money is going to have to leave the bond market that's about to get murdered and killed due to money printing, negative real rates? They're people aren't overweight risk. Look at this. They're not overweight risk. Everyone flee the equities market after liberation day. Look at this. Like look at this data. So for all these people that come out and say, "Yeah, Bitcoin had a nice run. Sometimes you get lucky. Now it's going to zero." We barely gotten started. Do you know how much money is trapped in bonds that needs a new home as soon as Besson starts just gushing out the money printer?
So my last one here is what I like to look at is Bitcoin priced in gold because Bitcoin priced in dollars kind of is boring to me. Um, you can tell to me when does the real bull market start when we make a new all-time high in gold. So, let's pull up the weekly chart. You can kind of see here the trend of Bitcoin demonetizing gold. And so, the first all-time high we made was Bitcoin was worth 15 um ounces of gold, then 30, and we're kind of at this level. At one point, Bitcoin was 40. This was late 2024. And so, for people that are like, "We made all-time high. We made all-time high." Yeah, we did in dollar terms, and we should celebrate that. But, you know, this I we have not, you know, made all-time high in my opinion yet. This is what I'm looking for. And this when I read this report, I was like, "Oh my gosh, the amount of overweight that fund managers are in bonds, quote-unquote, safe haven. I mean, they're going to get slaughtered and that capital is going to need a new home." And when everyone's like, "Yeah, but they already have a lot of risk." No, they don't. They're like as risk-off as they've been in a very long time. Look at that. Okay, sorry again for uh the podcasting difficulties. I'm getting better. You guys got to admit I'm getting better. But that actually just goes to show just how bad I was if I'm being candid with myself. Um, let me blow myself up here so I can do some Q&A real quick. Um, so yeah, I was one of the worst podcasters in the history of live streaming. Um, I'm probably still down there, but I'm getting better and so I I will continue to get better. Thanks for hanging with me. Uh, that is the end of my rant. So dissecting Scott Besson, dissecting uh the crash of the bond market, how this guy's going to print money. He's going to print money by treasury buybacks. He's going to print money by supplemental leverage ratio change. He's going to print money by even bringing Fannie Mae and Freddie Mac out of government, puking them out as a private company so that they can turn around and buy this dog [ __ ]. We're talking about trillions and trillions and trillions and trillions of dollars of money printing here. Bitcoin smells it. Bitcoin's always the first to move. It's the freest market. It smells blood. It smells blood.
All right, I got to blitz through these because I got to get on the road and head to Vegas. Macro, does that mean they will make the bank buy their bonds? Yes. Long TLDDR is the US government will make their banks buy bonds. Um, in my opinion, JP Morgan, Chase, Bank of America, these too big to fails. These are they're they're effectively um an arm of the government. How are mortgage-backed securities the same as bonds? I kind of covered this already. Um, Jerome Powell in an exchange in 2021 said they effectively apply the same market dynamics. They're they're they're sneaky QE. They're sneaky QE. They're not literally the same as bonds, but they're sneaky QE. Do you think they'll print as well or just privatize Fannie and Freddie? Also, will Powell stop QT and cut later this year? Um, I I don't know. I So, again, the the funniest thing is all you have to do is listen to these guys. They're going to tell you exactly what they're going to do because they cannot surprise the market. You're never going to get like, why didn't Trump just work on privatizing Fannie Mae and Freddie Mac? And why do you have to tweet it? Why do you have to tweet? Hey, guess what? I'm thinking about an idea and you should listen to Scott Bessant on Bloomberg talk about it. Why is he doing that? Why doesn't he just [ __ ] do what he wants to do? Because he can't surprise the market. It's too levered. It's way too levered. So, all I'm doing is listening. I mean, I'm running the math and I'm like, "Okay, well, this doesn't make any sense. They have to print a lot of money. Real rates have to has to be negative." Then boom, Scott Besson, CN C CNN. Yeah, we're going to have to focus focus on GDP outgrowing the debt. Okay, that's another way of saying real rates have to be negative. And if I do the math, 6.6%, you guys, GDP hasn't been 6.6% 6% growth since the everything bubble in COVID or before that the dotcom bubble or before that the housing bubble or before that the decades of inflation running hot. So I'm just listening. We'll see. We'll see what happens. My expectation is they start implementing some of these things like treasury buybacks. They start implementing things like the Treasury uh the the supplemental leverage ratio. I do expect a lot more volatility at some point in the summer because the whole tariff thing by the way like we have to remember they're like we made a deal the greatest deal ever. The deal was we paused it. That's not a deal. So what happens when it comes unpaused? Probably a lot of volatility. The market's probably going to freak out again like oh crap everything I use in my life is made by China. Is it going to become 10 times more expensive? So, I think this summer they're going to have to implement a lot of this liquidity positive stuff. They're going to have to bend the knee and come to terms with some tariff stuff that will involve a lot of volatility and they're going to switch their focus to capital controls because we we saw in in the Trump bill imposing a 30% withholding tax on foreign capital is the same thing, reordering capital flows. It's telling China take your money and get the [ __ ] out. It's not saying that by we're not going to initially with the tariffs it's we're going to reduce your trade surplus so you don't have a trillion dollars a year to buy US assets. Now it's okay fine you have a trillion dollars a year but you can't invest it here. Same same outcome. Uh, industry what happens to strategy if the price of Bitcoin drops below 69,000 which is strategy's average purchase price. Nothing. Nothing. You know the interesting thing about strategy for example but a lot of similar companies is uh the debt that they're getting is it it matures five years. This is not like a 12-month you know 10% loan. It's usually like you know 0 to 1% and over five years. So the reality of the situation is nothing happens. um, show goes on and the reason these five-year you know convertible bonds typically what strategy is used uh are attractive is because you know with Bitcoin over a long enough time frame it's historically been a performant asset um so you're not really speculating in the short term so so nothing nothing would happen show go on and if Bitcoin was really really low five years from now 10 years from now be a different story but I don't I think anyone would expect strategy to do well if Bitcoin fails. So, it's effectively a pretty binary bet. Bitcoin works, company does well. Bitcoin doesn't work, the company doesn't do well. And I think that's what Sailor wants. Uh, strike lending questions. Can you take a deep dive into the loan product? Specifically, the process we should follow to avoid liquidation if there is a downturn in price and how we are notified and protected. Yes. Um, deep dive into the loan product. Uh, I'll do that at some conference presentation. Probably I can even dedicate a uh episode um on here to walking through the product um if that would be useful. But to answer your question specifically um in our FAQs we talk about when we send out a margin call notification, when we would potentially liquidate your position, all of that is public. And the answer is uh you have sufficient time. Um the way to to add more collateral. The way you add more collateral is just depositing more Bitcoin. So it's pretty straightforward. You go get more Bitcoin. You deposit to the app and make sure that your LTV ratio is within the bounds that you know we need. Uh the the the margin call time window by the way is 24 hours. So and you'll get notifications on the app. You'll get an email. Um customer support if you know you have a phone number. So, we make you put a phone number on file when you open a loan. We'll give you a call. We say, "Hey, just, you know, heads up. Um, the Bitcoin price has fallen far too much and we need you to go whether whether cold storage or, you know, the Bitcoin that you have on strike. Um, we need more collateral to get your LTV back into a good place." And so, that is how it works. Uh, and all of this is in the app. You can go check your loan health uh at any point. It's pretty straightforward. Um, and so again, I would go to strike.me/mefaq uh and check all this out. Um I wish I can give a little bit more of a detailed answer and screen share and walk you through it. So maybe I do in a future episode, but um it's uh LTV ratio um is around 70%, you'll get that phone call and then much later on 85% is when we would start to sell some of the collateral to get it back into a good standing space. We wouldn't sell all of it, just just the part to get get you back into where we need you. Um, where do you get the dollars from to loan against Bitcoin? It's a good question. It's not easy to find these dollars, but from a variety of partners. The one that I'm allowed to make public at this point is Naidig. Um, others we uh haven't gotten the blessing to make public, but um it's difficult um because people that understand Bitcoin would rather just buy Bitcoin than get, you know, 8-10-11-12% a year. Bitcoin's averaging 62% a year. So it's not the easiest thing in the world, but um we have started getting phone calls from US banks and some really really large capital providers and um that's you know in part what's empowering me to potentially without blowing my announcement uh give you guys things like single-digit rates and some really really cool uh Bitcoin-backed lending products. So um we'll see. Uh, where can we tune in for your two announcements about strike and 21? Um, so Bitcoin Magazine is live streaming the conference. I speak on day three, which is Thursday. Uh, that's May 29th. I'm at 3:20 p.m. local time in Vegas. I believe Vegas is mountain time, so that's 2:20 Pacific. That is 4:20 Chicago and Central time, and that is 5:20 Eastern. Um, so definitely tune in on the Bitcoin Magazine live stream. I think it's called the Bitcoin Conference 2025. And then the 21 announcement. Um, I will probably just hop out uh grab my phone, record a little selfie vid video announcing uh what we've got going on. So um so yeah, looking forward to that and uh it's going to be a big week. Um and uh last question, there's an there's a 21 question. How much Bitcoin has uh 21 acquired so far before the merger? All I can say again guys, uh what we announced is an intent to go public, but uh we're in what's called the approval process. And so, uh I cannot um talk too much about anything until um this transaction is hopefully approved. So, you know, take that with a grain of salt, right? Um it is what it is. But um I we expect to have at least and hopefully more 42,000 Bitcoin um by the time the transaction close. So that that's what I can say. And um you know, we're going our intent is to go out and prove to you all that uh we're a lot of the way there, if not all the way there. So think about prove to you all proof of reserve something something other. Um so um going to be a big week. All right. Uh, I'm gonna be late to my flight and I can't do that. So, um, I appreciate you guys always. I'm hang with me. I'm gonna become a better streamer. I promise. Um, one step at a time, but at least you guys know. Um, I'm not working with some team and I'm not like all big and corporate over here. Um, it's just me hanging with you and, uh, shooting the [ __ ]. Sometimes I'm wrong, sometimes I'm right. All the times, uh, I'm honest and I'm myself. And uh that's in part what I try and sell to the world is I I don't think the world wants another like old white guy in a blue suit trying to convince you of his corporate biases. I think you know people want the truth and someone real they can relate to. So that's who I try and be to you guys. So um if you haven't, please subscribe to the channel. I really appreciate it. The road to 100K. Um, I think we're going to disrupt media by just having a Bitcoiner that has his own voice and is able to speak the truth um against politicians or or anyone else. So, definitely give me a subscribe and uh follow me on Twitter and stuff because all my announcements will be there and uh I'll see you guys next week to recap it. So, much love. I appreciate you and uh I'll see you guys.