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Coin Stories with Natalie Brunell
Cem Karsan: Why the U.S. Dollar's Power Matters More Than Gold or Bitcoin
01:14:13
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- [00:00]
A
If you are an American and if you're here in the US and you believe in American strength, going back to a gold standard would essentially be like saying, we're going to give up our military. The reserve currency in the Federal Reserve of the United States is the most powerful thing. Not even close. More powerful than the US Military. It is the thing that drives the strength of the United States.
- [00:24]
B
Hey, everyone. Welcome back to the show. Joining me in person is Jem Carson. He's been on the show before. He, he is the founder and CIO of Kai Volatility and Kai Wealth. And I've been following your tweets very closely, sir. So I'm glad you're back on. Thanks for joining me.
- [00:38]
A
Good to be back. It's been a while.
- [00:40]
B
Okay. Where to even start? I feel like there are some folks out there who feel like this country's headed in the right direction economically and some who say we're about to go over a cliff. So maybe we can sort of zoom out and get your prognosis on where we're at in the economy.
- [00:58]
A
As, as usual, when we speak, you're going to get a, a bit of a, a nuanced assessment. For me, you know, it's not just good, bad, it's complicated. What do I mean? So you can do something that's very, maybe structurally good on a transactional basis, but you can underpin many decades of, you know, hard earned soft strength, right? You can break down alliances and structural stability in an, in a organization while still getting, maybe building some new resource strength, for example. And I think that's a lot of what's happening. You know, Trump, you know, took on this very America first approach, which is at its core a very transactional approach. It's saying if, if, you know, you give me this and I'll give you that. And I think, I think that at its core makes sense. If you're playing a game of risk, right, you want to, you know, it's a very simple game. You try and take the stronger things and give away the weaker things. But there is a core strength that can be built through collaboration. And you can sometimes give up little things over time and build some real core structural strength. That's how the US Dollar, right, became the reserve currency of the world. It's how we built the UN and alliances. It's how, you know, we did the Marshall Plan and, and built now, you know, people look now at Germany and Japan and those are kind of two of our biggest allies in the world. That's who we fought against. In World War II. And so all of these things take time and effort, are built block by block and in life entropy is the way of the world and it is easier to let those things crumble. It takes a lot of effort to to maintain those things and doesn't take much to tear those things down and and we are letting those things go and it is hard to appreciate the long term importance of that, but it's critically important. In the meantime we are doing some short term good things right, but we're getting some short term good benefits by doing that. But it is a very short, in my opinion, short sighted approach. It is a approach that can pay dividends in the short to medium term but ultimately under undermine the the core most important things that the US has has earned in the world.
- [03:45]
B
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- [05:11]
A
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- [05:18]
B
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- [06:24]
A
Yeah, it's easy to think about these things in almost like a linear are we going in a good direction or bad? But the reality is these cycles and what we're experiencing now, even though it, it's been a four or five year thing and seems like a big thing that's going to change the world for the next hundred years, the reality is a lot of the drivers of what we're seeing are a function of major big cyclical occurrences. Some people might have read the fourth turning. There are other examples of this. These are different viewpoints on, on similar phenomena. There are repeating patterns that exist in, in over you know, 40, 80 year periods. It is not that long ago that World War II happened. You know, that's 80 years ago. You know, 1960s and 70s. That's about 40 years ago. Right. Or you know, the 70s call it, you know, 50 years ago. Those cycles and those, those drivers of those, the populism, they move away from globalization, the moving away from the world, those things have happened before and they're driven by generational changes. It's because younger people have experienced certain outcomes and they have a different view of the world and a view what needs to happen in the world quite differently. And you and I talked about this on the last time we got together. But I think it's critical for people to understand the populism that we are experiencing and we have been experiencing now for you know, just over 10, 10 years. And that's accelerating is a function of anybody who was born 1982 or so has only experienced one world. It's a very simplistic world relative to the 150 years, 250 years of America. It is a world that everything goes in one direction. It is a certain regime, and it is a regime that we see throughout history that then leads to other regimes. That regime is increasing supply side economics, Money going to capital, money going to wealthy individuals. Right. And that money went that way because of declining interest rates. The Federal Reserve force interest rates peaked in 1982 at 20%, all the way down to 0, 20, 21 over 40 years. So if you've been around for 40 years and you look back, all you've experienced is declining interest rates. Which meant what? Why is that important? That means one, we've seen a incredible boom in equities and asset values. Because the more you want to use into capital and the more money you send a wealthy individuals, what happens? Well, they bid up assets because they don't spend that much money. They invest money. Two, we've seen the growth and power of the corporation, which also happens over these cycles because you're sending money to corporations and investors and assets. Okay, what does that led to? Increased globalization, record profit margins. But what does that also lead to?
- [09:15]
B
Wealth concentration.
- [09:16]
A
Wealth concentration. That means the rich get richer and the poor get poorer. The middle class in America has been hollowed out as a result of that. And particularly, who has felt the most, that the most? Millennials have. Not only because they've been around for 40 years, that 40 years and but they were labor. They came out of high school and college during this period, as have everybody below them as well. It starts with millennials, but there are people below them and all they've experienced is a, a inability to keep up, an inability to buy a home. Right. Ability to pay for increasing tuition costs, inability to get jobs that, that keep up. And that's because of globalization. Money going to capital, money's going to the top. And what does that drive? If you experience that for 40 years, if that's the only world you've lived in, what does that do fiscally? Does that make you support more capitalist policies? Does that make you support lower interest rates? Or does that make you say, hey, wtf? What's happening here? What about me? It provokes anger, it provokes confrontation in the streets, it forces protectionism, okay? And that's so critical. And we're going to get to that. But all of these things are what we're seeing. We've been Talking about this for 10 years, we have been. And the last five years, we said it's going to increase, buckle up. And that's what we've seen. And it's not. It's not going to change in a year or two, because the reality is, as a country, the millennial generation on down is becoming politically dominant because baby boomers are dying off. And as they reach political dominance, which is around 3rd, 19th, 2034, it will reach its peak. And it doesn't mean it's going to fall off from there, but then it'll plateau and kind of move on, on. And these realities are critical to understanding the politics of the time and the opinions of the time. There is no right system. Everybody wants to belong to a tribe. Left or right. Yeah, this is right. No, that's right. Since time incarnate, the. The Greeks and the Romans wrote about, you know, do you give the best violins to the best violin players, or do you give it to the worst violin players? What. What does that mean? Do you give all the best things to the wealthy and the corporations so they can create incredible things, or do you make a more equal society where people are, you know, generally happier and more equal? And the reality is, there's no right answer. We would not have the technological innovation that we have. We would not have had the growth and, and, and improvement in societies that we've had that because we have thrown it to capitalist system that has created more technology, more globalization, more peace, if we didn't go that way. Free market economics are the way of the world. They are like the natural system. It's evolutionary. Things grow and improve through evolution, through competition. But what'd your mom tell you? Life's not fair. Life's not fair. But we are human beings, and we believe in a sense of fairness. We believe in a sense that, you know, we should be able to look at each other in the eye and treat each other as humans with some level of dignity and equality. And so the pendulum swings, and we are amidst the swing of a pendulum. And so we have to appreciate that the best answer is actually not the left or the right. Just like anything, it's the one that's murky and in the middle, and everybody wants to argue over left and right. It's not left or right. The answer is, do we want a system that is fair, but that still promotes hard work and success and that's murky and that's hard to. To argue, you know, Are you. For right now, though, the pendulum is swung, and so we, in a Sense have taking. We've. We've pulled things forward.
- [13:18]
B
Yes.
- [13:19]
A
And so we have to now pull it back. And that's painful. Mm. And when you do that, protectionism, as I mentioned, as a measure, as a part of this, you can't get populism. You can't improve the lot of your people without where's the money been going overseas. Right. Without putting up borders and tariffs and restrictions. So that is a populist activity. But by doing that, what does that do? We've been sending money to China for 50 years, and that makes them happy. That slows down their growth. Now, because we go from cooperation and capitalism, which is by definition cooperative, because the money flows to the lowest place, to competitive. And this is when wars happen, economic wars, hot wars, cold wars. It's not a surprise that 80 years ago we went into World War II. Right. It's not a surprise that. That we, you know, the Great Depression preceding that. And, And. And so these are difficult times. There's no way to just skip over this unless we just keep doing what we've been doing. And that's unsustainable. Now what will happen is, you know, this generation will learn the other lessons, which is there's no right answer. And if you go too far left. Right. That's incredibly inefficient. And these are incredibly difficult times that we're going through. Well, the net result is, is that generation will eventually, just like the baby boomers, will become more capitalist over time because the system's not. There is no fairness. Yeah, but. But that's where we are. And the. And the costs are meaningful. And so buckle up. I will say on the bright side, and I always like to say this, because this always gets people really stressed out when I say all this crisis is good. Crisis is this system, if it continues to. Entropy, which is where we are, will collapse.
- [15:28]
B
There's so much to unpack there. Okay, where I'll start is this friction between labor and capital, because I think right now it actually symbolizes a shifting in the importance of one ledger to another, because to your point, it's mostly been financial capital liquidity. And we ran the ledger. Right. We have the Federal Reserve now. It seems like there's another important ledger emerging, and that's the physical, the material ledger, the commodities, the energy inputs, neutral reserve assets like gold. Can you talk to me a little bit about maybe that geopolitical shift that we're seeing? Because it's not just weighed on the American public and created this massive divide and this wealth concentration, But Also, I mean, if you zoom out geopolitically, I feel like other countries are looking at us saying, well, they're just going to print to oblivion and we need alternative systems that work for us. And it's only natural that they might develop alternative currencies, alternative economic rails that benefit themselves because we've been in charge of the financial ledger.
- [16:38]
A
If we pull back, as I was saying at the very beginning from the world, which we are doing, and we become more protectionists and less, less trading less with other entities and trying to make sure that, that we, we only feed our people, close our, our world off. What happens in that situation is, is people stop using our currency. People start saying, wait a second, you were sending things to us, we were collaborating, we were getting a benefit of this. But now you're trying to take everything back. You're trying to compete away, you're trying to take new land, you're trying to take new commodities. And, and so the greatest asset that we've had as the United States is the exorbitant privilege of the US dollar. That allows the, the trade that, that it, that underpins. It allows us to have leverage and to get what we want ultimately and to maintain control in the world. If we lose that, that power, right, we become very vulnerable. We have other benefits. I'm not saying that's not the only strength, but we become just another strong country. And there's a big difference between being just another strong country and running the, the full system that the world operates on. And that's what I was kind of talking, alluding about, alluding to at the beginning. It becomes a more equal world. You know, when we look at crypto, I know, you know, it's a big focus here, right? Crypto's goal is to make things more fair. In a sense. It's not the only goal, but it's a big part of the thesis. Making things more fair by definition means making the US Less powerful.
- [18:23]
B
So do you think that we are losing that status?
- [18:27]
A
I think if we're not careful, we will. I don't think it's going to happen quickly again. We could get into all the reasons things don't change that abruptly. We have a ton of power that we can still wield, and if we do the right things as a country and stand up to oppression and support those and keep allies, we will probably get through this 20 year or so period. Right. And maintain that strength. That's what World War II is about. If we had not gotten involved In World War II, if we had Isolated ourselves and walled off ourselves. The world and the rest of the world had fallen. This world would look very different. So we have to rise to that challenge. But we have to be involved in the world and, and want to maintain that our allies and our strength globally throughout this. I definitely believe that, that if we wall ourselves off and try and say it's. We're just going to be on our own. No. Yeah. We will lose, lose our reserve currencies at us eventually. You're losing the trust of the world too. By not. By not at least, you know, doing your best to at least involve others in some form or another doesn't mean you have to kowtow to everything they want. Right. But it does mean that you have to be thoughtful about your role in the world and whether you're being somewhat fair, maintaining some level of legitimacy. So, yeah, I would argue that, that, that we are heading in that direction. The last year or so has not been very good for that, you know, for, for maintaining the reserve currency of the US but one year does not. Is not going to change the world.
- [20:15]
B
Would you agree with some of the analysts that say we actually have maybe come to the realization that we can't hold on to that status and so we're actually just trying to muddle our way through the transition?
- [20:27]
A
That's a very fatalist view to be taking as the strongest, most powerful country in the world.
- [20:32]
B
Well, why? What if people are out there and they advocate for the idea of going back on a gold standard, backing the US Dollar again with something that is a neutral reserve asset?
- [20:42]
A
I think that's incredibly naive. If you are going to, if you are an American and you, if you're here in the US and you believe in American strength, I think going back to a gold standard would essentially be like saying we're going to give up our military. The reserve currency in the Federal Reserve. The United States is the most powerful thing. Not even close. More powerful than the US Military. It is, it is, it is the thing that drives the strength of the United States.
- [21:10]
B
But.
- [21:10]
A
And you're going to say you're going to take the Federal Reserve and the reserve currency of the US and turn it into a shackle where you have little to no control. I think that would be incredibly bad for the United States. I think it would be more fair.
- [21:29]
B
See, this is where I think it's really interesting because there's this growing question, I think, among even just the mainstream public of what actually does back the dollar. Because you could go back and be like, well, it's the US Military. Now people are saying it's the stock market because they can't afford for it to go down. Otherwise they have to come in and print and. But if, let's say the US Military that's backing the dollar, I mean, where is our military equipment made? What do our supply chains rely on? Right. Because we've hollowed out so much of that. That, that's what I think is informing some of the administration's decisions recently, especially when it comes to their international endeavors.
- [22:04]
A
Yeah. The answer is power in all its forms backs the US dollar. And the US dollar itself, reflexively, is part of that power. We earned that power. We created a system that depends on us, that is sticky, that allows for leverage. Military is part of that. Military helped us get there. Winning World War II is a big part of it. Rule of law is a huge part of it. Degrading the rule of law, which we're also doing, is a major, major problem. If other countries can't trust what the US Is doing and that is doing them in some type of legal, fair way, it's, it's no different than you and I or a group of people together. What leads to power in a room? Who has control? Who has control? Yeah, you have to be strong, you have to be big. But you can't just bully everybody. You have to be smart. You got to do things that benefit the whole group. You become a king or queen, not just through tyranny. Right. But through thinking about the whole and trying to also do well as best as you can for the whole, while still maintaining control and power. You need a carrot, you need a stick. And over time you build power, which gives you more leverage and more ability to do certain things.
- [23:39]
B
It seems like you're foreshadowing in this conversation, but also in some of your recent tweets that you think that we could be headed toward something that is violent potentially. I mean, on a grand scale war. But even here in our country, just more of a powder keg when it comes to the interactions between various community members.
- [23:59]
A
Yes. I think we are at a point here where there is a lot of anger which is driven by the things I talked about. You know, it to 40 years, 50 years is a long time. It's two generations. It's enough for people to feel that their father, mother are doing worse than their grandfather and now they're doing worse than their father there. That depth of loss of status is, you know, it breaks the kind of fundamental fabric of society. And so we are at a point where whether you are poor, African American in Chicago, poor white in West Virginia, that you've been suffering for 50 years from the same realities of increasing inequality. And although you don't understand the machinations that I'm necessarily talking about for the most part, and what's driving it, you are angry, and you are angry at the powers that be. And instead of understanding this and uniting and saying, hey, we are, we are poor, and it is a class issue, what politicians do is they say, nope, it's the immigrants or it's the, the other race or it's the, you know, it is the, the conservatives or the liberals. Right. The reality is people are angry. And it serves people in power to point the poor at each other rather to have them unite against. Right. The bigger issue, which is inequality itself. And as we continue to divide our country in that way. So the rhetoric matters. It matters. As we continue to divide our country in that way, we are heading towards much more internal conflict. That is our biggest risk. Our biggest risk, our biggest foe right now for the next 10, 20 years, is not actually China. It's actually not whatever else is in the media. It is this internal struggle. And by the way, our adversaries, China, Russia, want that. They have, it's well publicized that their number one greatest focus, where they spend their money and their energy and they have for now, 20, 30 years, is not on betting on one backing Trump or backing Biden or doing whatever, which is what the narrative is. It's about dividing the people of America. They fund anytime on social media, on any other. There are bots that are literally, their only job is to find discontent and magnify it. That is the most powerful thing that any other country can do, is to degrade and break down the country, the strongest country in the world, from within.
- [27:08]
B
Well, and it helps the fact that so many people feel so left behind. Right? Because their nervous system's already on edge and they're looking for an outlet and they're looking for a scapegoat. And so to your point, the fact that the right answer might be in sort of the murky middle, a lot of people, I think, don't even know how to identify themselves because for so long we have had these two camps. And I feel like there are a lot of people who feel like they can't identify with either of them. They don't subscribe to everything that the Democrats are doing, and they don't subscribe to everything that the Republicans are doing. Some are changing courses. But all this points back to that growing Populism. And you had a really interesting point or tweet recently. Just talking about your own identity of being a Republican but not being aligned with everything that the party stands for. Do you want to touch on that just a little bit?
- [27:52]
A
Yeah, I think it's important. So first of all, what is a Republican?
- [27:56]
B
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- [28:58]
A
What's a Republican? It has two parts to it. One, there's the fiscal part which is very clear. A Republican has small government, believes in free markets. Right. And believes that essentially as we've talked about, that free market economics, the natural system is a better system and that you should try and keep government out. This is a classical definition that goes back thousands of years. The left and right, this is kind of everything we've been talking about. Talking about. The left believes that there should be some level of fairness, that a system should be more equal and that at the far, far left you have communism somewhere, but close to that you have socialism. Right. But on the far right you have fascism which is like complete, you know, it's, it's free and, and power is all that matters.
- [29:56]
B
And the corporations fuse with corporations.
- [29:58]
A
Right, exactly. And so from that regard, although I am more centrist because I do believe in balance and that both are important, I do believe that at the end of the day, free markets, the natural system is dominant. The reason I believe we have a left and right, this is actually my own view, is that because as humans we have a larger frontal cortex and Most animals are not as aware of self as we are. We are so aware of self because your frontal cortex, it does executive function, it objectifies things. You are a human, I am a human. So we must have some level of equality. This is a glass, this is a. Another like a cup. They're similar. There should be some equality between them. This simple idea creates a social structure. It makes us very social. It makes us believe in fairness. In some ways that's very powerful, but it's core to who we are. You cannot as a society turn to human beings and say fairness doesn't matter. Right. But the reality is, if just in terms of pure science and physics of the world and how the world, biology, the world, the way the world works, life is not fair. Equality is not an actual construct. It is a made up construct that, that we, that we create. So, so in my view, because of that, I do believe ultimately that if you don't follow the natural system, it doesn't, it's more inefficient and things become a bigger problem at the end of the day. And I believe in the power of free markets and the power of these constructs. That said, I'm not an absolutist. I think to be like fascist or complete. Right. It's to be, you know, not compassionate to your human, to who you are and what we believe in as society. And I think there are benefits by the way of cooperation that can transcend like Prisoner's dilemma, you know, we can do better as a whole if we actually can cooperate. So. So it's complicated. I'm not, but I'm more right than left structurally. What most people don't even think about those things these days when they say Republican or Democrat. Honestly they've flipped because like right now the policies of the Republicans are protectionism and populism. Right. So. So that classical definition, which is what I'm talking about when I talk about Republican Democrats and by the way, there are a lot of disaffected Republicans because they're saying the same thing. They're like, this isn't a Republican Party.
- [32:27]
B
Well, also you have Republicans who are making talking points that if you zoom out and rewind like 30 years, it was what the Democrats were actually saying about 30 years ago.
- [32:37]
A
And this happens all the time now. What's happened is it's become much more tribal.
- [32:42]
B
Yes.
- [32:44]
A
And what Republican Party has become known as the conservative party? Conservatism by definition isn't necessarily a Republican thing. And that reality is also flipped over time. Conservatism as. As a. As a construct is believe that the way things used to be is better and change is bad. Liberalism by definition is the idea that change can be beneficial, that we can grow and improve and change. And there's some truth, again, just like anything, that somewhere in the middle is probably true. We shouldn't throw out everything and evolve to, you know, a. A cat is. Is as a human or a cat. You know, the woke thing is. Is too far. Right. Like that's my opinion. But there is some truth in the middle. And I in general, despite being fiscally conservative. Fiscally conservative, meaning more Republican, more right. Do believe in the power of our ability to improve over time and become better human beings. Like progress, you know, is. Has been incredible. You know, we don't all want to go live in the Middle Ages. Right. And so that said, I think we can go too far. So I tend to be more socially liberal. That does not mean, you know, all the things that, you know, nowadays is necessarily associated with that, but tend to be fiscally Republican. And I do think the answer, the right answer though is right in the middle. I am a pragmatist. I want to have better outcomes for everybody. I want us to. To. I believe in the America, by the way. I think this is one of the most important things to note. America is a complete aberration in the history of human and animal kind. We have 250 years of history where there has been actually quite a semblance of freedom. Individual freedom and liberty.
- [34:57]
B
Yeah.
- [34:58]
A
That did not exist in history before and is not natural. That was gained partially because the America was an empty space in a sense. Right. And people escaped into it and created this construction where there was no power.
- [35:19]
B
Well, and you actually wrote it in the post very well. I think, you know, there was this distribution of power because those people escaped tyranny. They did not want a strong central government that ballooned in size. I think that they would actually be ashamed to see how large our welfare state has become and the bureaucracies and like the red tape and how much it's actually sucking a lot of economic energy out of the private sector because it's ballooned so big. And most of the jobs and opportunities are actually created from the public sector. And everyone's looking to the public sector. Rescue me. You know, Y. And that's not the way that this country was envisioned.
- [35:53]
A
Absolutely. And absolute power corrupts. Absolutely. That is what they were trying to, you know, protect against.
- [36:01]
B
Yeah.
- [36:02]
A
And that is the natural system that I talked about that drives entry. It's the dominant system. In a sense, this is probably an unpopular opinion, but in a sense what they were is they were trying to put some constructs of democracy, democrat left upon a natural system that they knew made the natural fiscal right system dominant and allowed people to keep their level of fairness, equality. A system that was, you know, pursuit of happiness, right. Pre equal liberty. All of these words are. What are they? Left or right? The left. They're equal, they're free. And so while still maintaining not a communist system, not a socialist system, not an absolute control system, the ability of free markets to run. And that is the beauty of the system. It is a system that allows for the. The protection of our liberties, the protections of equality and ability to rebalance without revolution. Right. The whole system would normally be boom, boom, boom. Every all rich get richer power power and then collapse in revolution. This is the left and right, right battling throughout history by creating a democracy that allowed for the relief of that and a protection of those, those, those left, the people, right, those that equality, they've allowed it to prosper and succeed over 250 years. The biggest risk America has is the degradation of the checks and balances that were put in place by the founding fathers to protect against the. The absolute power corrupting absolutely the biggest risk we have.
- [37:45]
B
Okay, I think you might find this thought experiment a little bit interesting because if you focus in on the founders, they also had a debate internally about whether there should be a central bank.
- [37:57]
A
Yes.
- [37:57]
B
And so you talk about free market.
- [37:59]
A
Oh, I have a strong opinion.
- [38:01]
B
I want to get your opinion because I think we do see this differently and you talk about free markets and.
- [38:05]
A
I think we might agree more on this than you think.
- [38:07]
B
Really. Okay, well, I would love to hear your thoughts, but I do kind of. I want to push back on the idea of whether we've really had free markets. If we have a monopoly over money and a Federal Reserve that can always hit the printer and save itself, bail itself out. Because, you know, actually RFK Jr. When he ran, I think he made such a strong point when he said there has been socialism for the bankers and one class of society and rugged like brutal capitalism for the rest who haven't been able to get mom and dad at the Fed to bail them out, which is what essentially the banking system has done over and over. And no crisis is too big that they won't bail out. And that has contributed to a lot of the, I think wealth concentration and the, you know, asset, the concentration of who owns assets and what their values are. So I mean Are we in a free market if we have a monopoly over money?
- [38:59]
A
Natalie, I couldn't agree more. I couldn't agree more with what you're saying. Our founding fathers would be rolling in their graves if they knew we created the Federal Reserve. Rolling in their graves. It is a complete removal of the checks and balances of the system. It concentrates the power into the wealthy's hands. And now to be clear, I'm not one of those people who think it was all a grand plan to undermine the system and to consolidate power to the rich.
- [39:37]
B
Right.
- [39:38]
A
I think it had some relatively good underpinnings in the sense that. And this is where we get to the big picture, right? The average person, if you ask them, would you like to smooth the business cycle? Would you like to have this, all this boom and bust be much more.
- [40:00]
B
Right.
- [40:00]
A
Calm.
- [40:00]
B
You don't say, you don't know this, but this is all in this book.
- [40:03]
A
Yeah, yeah. Cool.
- [40:05]
B
There, there are some good intentions behind it.
- [40:07]
A
100%. Yeah. People would want that. But, but let's, let's think about it. If you continue to let this one create this one entity that has all this power, that has no checks and balances on it really, that then has one tool, by the way, one tool, monetary policy, which by definition, anytime they stimulate, the money goes to the rich. That then on top of that is mandated to, to make sure that they, they do two things, very simple model, maximize, like maintain price stability and maximize, really gdp. They say employment, but it's really growth. What are they going to do? What is that machine going to do? Anytime there's a crisis, they don't want it to become a depression. They don't want to get it worse. They don't want a crisis. So they're going to lower interest rates. We're going to stimulate with the one tool we have, and we're the ones who can act quickly because government can't act quickly because the government was set up with checks and balances to by definition not react until there was a crisis. H. So what do you do? Well, the Fed gets stronger and stronger. The system ultimately leads to more and more monetary policy. And each time we have a crisis, more and more money goes to the rich and the poor get more and more screwed. So, okay, we agree, we agree. But I want to be clear, at the same time, we can say that and also understand that as, as unfair as it is and as poor as it is for the underpinning of the United States's fabric and structure, it is also the most powerful entity in the world and it's owned and controlled by the most powerful entity in the world and is now completely. I would argue that we as the United States, in terms of pure power, it's not about fairness. I'm talking about fairness in the world.
- [42:12]
B
Right.
- [42:12]
A
In terms of the United States, these are two separate issues. We would not be if we had not taken ourselves off the gold standard in 1971, we would not be nearly as strong as we were or as we are now. That the boom that we have had since then and the increase in consolidation of power since then is a function of the Federal Reserve and the power of the Federal Reserve. Both those things can be true. And so what I can tell you is if you live outside the United States you should believe in bitcoin and want to make sure that the, that the, you know and generally Western the West you 100 your goal, your number one goal is to undermine the Federal Reserve and understand, undermine the reserve currency United States.
- [43:01]
B
Well, it's interesting because some people do see bitcoin as a tool that undermines the Fed, destroys the Fed. Others are saying that it's going to actually be used as a tool of government to strengthen the dollar, especially by way of stablecoins. So do you have any thoughts on that? I mean I know that in the.
- [43:15]
A
Short term they are using the ability for stablecoins to buy, you know, the U.S. treasuries and the long bond as a form to support the dollar and support that's a very short term reality. I think in the long term any type of forced conservatism or restriction of the greatest strength that the U. S has is not good for the U.S. it's like saying you're going to take the guns away from the most powerful entity in the world. It's, it's now in my opinion that also means at some point under this administration but at some point if this becomes a bigger problem and the great irony is if bitcoin gets stronger and stronger, at some point it comes head to heads with the biggest powers in the world which it's competing with. And so there is no money since the beginning of time that hasn't had a sponsor.
- [44:22]
B
It is really interesting because this administration has been very pro the entire industry. This is the bitcoin president setting up a strategic bitcoin reserve and that's going to be set up with some of the bitcoin that has been forfeited. Right. The civil forfeitures and the seizures. And then who knows how we're going to Potentially build it up with more Bitcoin. But I do, I feel like, if anything, the country would move to embrace something like Bitcoin because I don't see another path forward in terms of if you're saying, like, how do we.
- [44:54]
A
The government or the people.
- [44:55]
B
No, I'm saying, okay, the US Government wants to maintain its power. The US Government has the dollar. But even if you look at, for example, global central bank reserves, gold has now surpassed U.S. treasuries for the first time in a couple of decades. Right. So countries are moving away from the dollar. We're trying to extend dollar dominance. We're trying to use these new digital asset rails to kind of push it. Right. And we need buyers for our debt. So, like, how do you see some of these forces playing out? Because I'm someone who. I don't think the dollar's going away tomorrow. I don't think the dollar's reserve status is going away tomorrow. But I do think that there's going to be maybe a shift and a bifurcation of people recognizing that the dollar is no longer the reserve asset. Gold or something else might take its place, but we'll still be transacting. A lot of the world's trade will be conducted in the dollar. Many debts are denominated in the dollar, but the dollar's no longer that thing that underpins the entire system. Because we've lost the trust of so many people because we kept printing.
- [45:59]
A
Yeah. I think, I think the reality is that allowing things to be traded and money to be moved without the control of the United States is, Weakens the power of the United States and weakens the dollar itself in the Federal Reserve. So I think the more we head in that direction, the more the dollar will over time. This is not an overnight thing. We're talking decades.
- [46:28]
B
Yes.
- [46:30]
A
Will would continue to lose status. And I do think the powers that be eventually. I don't think we're in a place where it's a big enough risk yet. And they can do these things like they are with stable coins and whatnot to help themselves along the way and use them as tools. But I think these are short term levers. I think the bigger structural game that you're talking about definitely puts the two at loggerheads. I think the, the, the dollar. I think that said, there are games that can be played and they will likely try and move towards, which allow them to increasingly control crypto. Right. And use it as a tool of control in that sense. And can undermine it in a sense. Right. And so we'll see. I think one of the biggest, one of the biggest things is, you know, we are going to have to, what's clear is monetize the debt.
- [47:30]
B
Right.
- [47:31]
A
And that monetization 71 was part of that. Right. And I think we're going to have some type of debt jubilee, or whatever you want to call it. And that is well understood at this point, I think, by the powers of me. So we're heading towards a, you know, what that looks like, how they're going to do it. A lot of different paths. Yeah, but, but I do think ultimately, you know, collecting assets, putting them under, you know, hard assets, anything that, that is worth something, including crypto and putting that under that U.S. umbrella before you then, you know, debase the currency is definitely what this is all about. And that's what the rush to gather assets by China and all these other entities all over the world are. But it is also, you know, what gold moving into Venezuela is about.
- [48:25]
B
Yeah, I mean, I know that they're going to debase. I think that that's the certainty here. They're going to put everything on the Fed's balance sheet at the end of the day. And to your earlier points, that sort of benefits the, the folks that own assets. There are certainly people that benefit from the inflation and money printing at the expense of the working class, so to speak, or labor. AI is going to put some interesting pressure points on the labor market too. Right. As that accelerates. Because a lot of companies are going to need to lay people off. People are going to be crying out for help and you know, help from the government and universal basic income, all of that. So I feel like we do have a lot of frictions ahead of us, but for, for the average person, I mean, you know, let's, let's talk about some of the positives, the opportunities. You said crisis is an opportunity. What are the solutions that the average person can embrace that protects them from the volatility? Your area. That's to come.
- [49:13]
A
Well, and we've been talking about this for five years, so we're not like a Johnny come lately on this. I want to be clear, but you want to be in harder assets. We were very bullish of gold three, four years ago to buy them with calls.
- [49:26]
B
Right.
- [49:26]
A
Like get leverage on it. That's true for commodities across the board. Anything of fundamental value becomes much more valuable in a, A, a bifurcated world.
- [49:38]
B
Yes.
- [49:39]
A
You have multiple entities bidding over now y. Things that used to be widely shared.
- [49:44]
B
Yes.
- [49:45]
A
And competition in the context of limited supply yeah, means higher prices.
- [49:50]
B
It's that physical ledger.
- [49:52]
A
That's it. And it's that simple. And so there is. And that applies to everything now. Now there are certain things that are more valuable than others and that's fundamentally because they're market supply constrained or more important, critical to power. I mean that in all kinds of like both actual power and power.
- [50:19]
B
Yeah.
- [50:20]
A
And, and I think. And so the act. We're beginning to go through a period where people will actually be looking at fundamental value more. And that applies not just to commodities, but anything. What is the fundamental value of X? What is the fundamental value of Y? And, and how do I get more of it? Whereas we were kind of more on what is, what does the future growth looks like and what, what can we build together. So yeah, assets. Book value matters more.
- [50:54]
B
Okay, so I know an asset that has a fixed supply of 21 million. Are you bullish on it in this time of. It's backed by energy.
- [51:04]
A
Yes, yes, I am.
- [51:05]
B
You know it?
- [51:06]
A
I've heard of. Yeah, I think I may know what you're alluding to. Yeah. As a part of a, A pool of commodities. I would include that in a pool of commodities. I think it is different. It is fixed in value. It has its. Much like gold has its power. It based on the people. People's belief in it. And it is in limited supply. It's also functionally useful. I think that's important. And I think that in a world where it's hard to move money or different systems, you know, make it hard to do certain things, that has some fundamental value as well. Probably most importantly, the reason I'm bullish of crypto in the short to medium term, meaning in the next, let's call it five years, is, is because the greatest sponsor to, to crypto and bitcoin, it's essentially the millennial kind of zeitgeist. It is a. About fairness and technology's ability to. To make things more fair, which is the world they lived in. Those that. And those people who are becoming more politically dominant and are going to have a better say in how the world goes and where we're ending up are by definition the people who have created, supported, grown with crypto. And that very circle means that it should maintain an increase in value, I would say until 34. The big question, as I mentioned is, is it's the reality of at some point it does hit kind of. It goes head to head with power, with, with entities which do not want it to succeed. And those entities are way more powerful than the owners of crypto, again, money by definition has always. It was its creation. As much as people think it's just a ledger and a measure of, of trading and it's functionally useful. It's all true. It's growth and its adoption and it's use throughout time is because the power, the powerful have used it as a ledger under their control. If you think that we are going to have global revolution and that those that have power are going to let power be wrested from their hands to all the people of the world, good luck, I think that's very naive. But that doesn't mean that the good fight won't be fought, and that doesn't mean that it can't be very successful for the next five, ten, maybe longer. But I do think ultimately it will, it will come under the weight of its own success at some point. I think there's a limited ability for it to, to get, to take over because of that.
- [54:13]
B
Well, let me ask you, first of all, do you own Bitcoin?
- [54:16]
A
I do.
- [54:16]
B
You do own Bitcoin. So couldn't you make the argument about Bitcoin sort of threatening the dollar already and at an earlier point, the US Government going after it to squash it before it does become powerful enough to serve as something that would create a global competition for a monetary base?
- [54:37]
A
There are $500 trillion of global assets in the world, about $4 trillion of crypto. It is not a threat to the US dollar or even close. And it is a means of, you know, at this point it would be incredibly unpopular to ban it and particularly in a populist environment. And so politically it's not really viable to do. And by the way, this is the one way it does succeed. Ultimately there is what I think is an unlikely part of the distribution where crypto becomes the America. It becomes the revolution against power, and succeeds to such a point because of tyranny. It's not likely.
- [55:30]
B
Well, I find that to be interesting because being such a small asset class with regards to just global wealth and the different distribution of where people are invested, bonds, equities, all that, it seems like an easier place to squash something before it becomes something that's worth $100 trillion. Right. And nation states have it in their reserves, which we haven't seen yet. But I think we are going in that direction. I mean, we do have a president that established the strategic bitcoin reserve. So I think it's going to be harder if, if bitcoins more distributed and worth 100 or 200 trillion dollars don't you think?
- [56:05]
A
Sure, sure. But again, if the reserve status of the US dollar and the power of the US is to maintain dominance, or if another country, even maybe it's China, who knows, becomes dominant, then crypto gets in the way of that.
- [56:25]
B
Have you seen Balaji talk about this?
- [56:27]
A
I don't think so. No.
- [56:28]
B
He had a really interesting interview with Luke Grohman where they discussed the US dollar and he actually thinks that one part of the world, in this new multipolar dynamic that we have, one part of the world is moving more to the gold side with BRICS and that the US actually might embrace crypto and Bitcoin and the G7S might go in that direction in order to counter the force of the gold side.
- [56:51]
A
That's interesting. I mean the US has way more gold than any other entity in the.
- [56:55]
B
World by far and we haven't revalued it. Do you think that's possible?
- [56:57]
A
100 they're going to revalue it at some point?
- [56:59]
B
Oh yeah, yeah.
- [57:01]
A
That's part of.
- [57:01]
B
But they're going to wait, they're going to bit. So that's one of the reasons you're bullish on gold then. Right? Because you think they're going to bid it up high, high, high and then revalue.
- [57:07]
A
It's all about monetizing the debt in terms of, you know, you know, a fiat currency versus hard currency revaluation. So, so yeah, I think that's true. But, but I do, I do think that crypto is not a hard asset per se. Right. It maintains its value because. Right. Of the people and so it falls somewhere in between. And I do think that because of that debasement, that's a big bull thesis for crypto, but that's a very short to medium term thing. The debasement is not the loss of the reserve status of currency. I don't think those two things are aligned. I mean that was the case, we would have lost a reserve currency status in 1971. We actually maintain more actually I would argue the debasement of the, like the currency, the, the removal of debt, the monetization of debt is what will ultimately allow us a refresh which will help the US maintain its reserve currency. I mean what happens to the dollar the second there's no more debt. It's like you remove one of the biggest overhangs right. To or narratives against the dollar. So I think one of the. We are going to monetize our debt, we are going to debase the currency. But in doing that I think the dollar actually strengthens ultimately.
- [58:22]
B
So you think bitcoin or you think gold's going to what price before they revalue it?
- [58:28]
A
I mean, I think it, it's another at least 3 to 5x from here before it's even in the conversation. I think it could be 10, 10x plus.
- [58:39]
B
And we're here in 2026. And again, gold just crossed and exceeded US treasuries in effects reserves. So doesn't that tell you that gold is already back as the reserve asset?
- [58:52]
A
I think it's. Yeah, it's not the only reserve asset, but yes, yes, it is. And again, reserve asset implies that only an actual hard asset that is in the reserve is what is valuable. There are a lot of things that are incredibly valuable that the US has, right. That, that, that fundamental power and value is, is ultimately what backs the dollar.
- [59:21]
B
Fascinating.
- [59:21]
A
Yeah. So I think there's a, there is a great path for crypto in the short to medium term, but I do think ultimately, again, it could be five years, 10 years, and probably closer to 10. There'll be some major, major headwinds and it could even become completely. You know, we could see a such a crazy situation where it's 10x where it is now. Right. In five to 10 years. And then in 20 years where it's forbidden and relegated to, to corners of the world where you can't access.
- [60:03]
B
Fascinating. I obviously disagree, but it's great to talk to you as we wrap up. Just any final thoughts or anything? We maybe didn't cover that. You want to dive a little bit more into.
- [60:10]
A
Oh man, we covered a lot.
- [60:12]
B
We did. It was so interesting.
- [60:14]
A
Yeah. I always a great conversation. Yeah. Yeah. Honestly, I just think the most important thing that I'll put a little. I like ending with a positive note is, is crises. It's, you know, buckle up. It's going to be not just a crazy couple of years. The next decade, I would get at least till 1920 34. I keep saying 1920 34, 2035. This is going to be a lot more of what you're feeling now. People feel very disrupted. Like the world's coming apart at the seams. I want to remind people, if you were alive in the 60s and 70s where, you know, politicians are being assassinated left and right as race riots, Vietnam War, people are getting drafted going in the war. This is, this is nothing. Yeah. And by the way, go talk to the greatest generation. Right? Like, buckle up. It's gonna get crazier. And this isn't crisis. Prepare accordingly. But Again, at the end of the day, we are better off because of what happened in the 60s and 70s. We are better off because of what happened in World War II. We are better off because of, you know, the Civil War and the revolution and all the other cycles that we've gone through like this. Honestly, it is what allows us to fight back against the entropy that is natural. The system is in this disrepair. We have not had crisis. We've had this incredible peace which has given us this illusion that what we're feeling now is, is incredibly disruptive. But that, that, that peace and that time of stability was really no burning of the underbrush. Right. This is what has created a much more combustible situation. And hopefully, and I'm very optimistic about this crisis will bring us together. Real crisis, like World War II type crisis, ultimately will stop politicians pointing to the people at the bottom, to each other and will help us, help bring us all together in a way to help solve the real problems which are reinvigorating the foundations of the founding fathers of the U.S. and the west and Western liberal democracy and improving the structures that'll help us go another 80 years.
- [62:27]
B
I just hope people take their individual sovereignty more seriously. Don't be dependent. Don't look to other people to, you know, the path for your security. Look to yourself. Honestly, I love the people that, and I meet a lot of people, the greatest Generation, who are just like, pull yourself up by your bootstraps. The information's out there. Learn it. Acquire hard assets, protect yourself, because really no one's coming to save you.
- [62:51]
A
Well, people are going to be forced to learn that lesson. And that's how they became the greatest generation. It happened to them. They had to rise to, you know, to that. And so people will, we have, we're always all way more capable of doing things that we want. And I, I will also encourage people to stop pointing the finger and stop trying to go to the tribalist kind of worst parts of ourselves.
- [63:15]
B
Yeah.
- [63:16]
A
And see that we're really in this together. And there's ultimately, you know, a bit of entropy that we all need to come together.
- [63:23]
B
We're all in the murky middle.
- [63:24]
A
It's true. That's where we want to be. That's the best place.
- [63:26]
B
All right, where do you want to send people?
- [63:29]
A
Gem dots? Actually, it's jam J A M dot underscore croissant. I don't even know anymore.
- [63:38]
B
I will link it in the jam.
- [63:39]
A
Underscore croissant at Twitter. You can find me on socials that way. Kai Wealth.com Kai Volatility.com if you know if we can help you in any way through this crazy 10, 20 years ahead, please reach out.
- [63:55]
B
Perfect. I will link all of that. You know, after our conversation. I actually think you you might like this book. I think I need to pick it up. I was not even going to suggest it to you at first, but now I'm going to totally sell you.
- [64:05]
A
Well, Bitcoin is for everyone, including me.
- [64:07]
B
Me including Jim. Okay, thanks guys. Thank you so much for checking out this episode of Coin Stories. Make sure you're subscribed to the show so you don't miss any new episodes. If you can, turn on those notifications and leave us a positive review, they really help the show grow organically with new listeners. We have a free weekly newsletter. You can sign up@thenewsblock.substack.com this show is for educational and entertainment purposes only. Nothing should constitute as financial investment advice, and you should always do your own research. I'm always open to feedback and guest suggestions, so please feel free to reach my team@infoalkingbitcoin.com I'll see you next time.