Summary of "Three Economists, One Bitcoin Podcaster" Episode on THE Bitcoin Podcast

Episode Details:

• Title: Three Economists, One Bitcoin Podcaster | BPI Economists / Professors Josh Hendrickson, Thomas Hogan & William Luther
• Host: Walker America
• Release Date: May 24, 2025

1. Introduction

In this episode of THE Bitcoin Podcast, host Walker America welcomes three esteemed economists—Josh Hendrickson, Thomas Hogan, and William Luther—who are senior fellows at the Bitcoin Policy Institute. The discussion delves deep into the intersection of Bitcoin, monetary policy, and the United States' fiscal challenges.

2. Background of the Guests

William Luther introduces himself as an Associate Professor at Florida Atlantic University and the director of the Sound Money Project at the American Institute for Economic Research. He shares his early exposure to Bitcoin, tracing back to 2010 when he first learned about it through his graduate advisor, Larry White, a pioneering figure in digital currencies.

Thomas Hogan is a Professor of Economics at the newly established University of Austin. He recounts his initial encounter with Bitcoin in 2010-2011 during his graduate studies, focusing on its potential as a non-governmental monetary system and its implications for monetary economics.

Josh Hendrickson, Chair of the Economics Department at the University of Mississippi, explains his journey into Bitcoin in 2011. His research centered on alternative monetary regimes and the role of the Federal Reserve, which naturally led him to explore Bitcoin's design and its economic significance.

3. Bitcoin's Early Days and Adoption

The economists discuss Bitcoin's unexpected progress since its inception:

• Thomas Hogan reflects on Bitcoin surpassing early expectations by becoming a serious contender as a reserve asset, attributing its success to the disciplined Bitcoin community that resisted fundamental protocol changes. He notes, “Bitcoin has made a lot more progress on that front than we expected” (11:29).

• William Luther emphasizes the importance of coordination in establishing Bitcoin's initial value, challenging George Seljen's earlier skepticism about introducing an intrinsically worthless item as money. He states, “The role of coordination in establishing some initial value is crucial” (16:59).

4. Bitcoin vs. Gold as Reserve Assets

A significant portion of the discussion contrasts Bitcoin with traditional reserve assets like gold:

• Thomas Hogan expresses skepticism about immediate hyperbitcoinization, suggesting that while Bitcoin is gaining traction, especially in countries with unreliable banking systems, a complete shift from established currencies like the US dollar may not occur swiftly. He notes, “I could see a lot more adoption of Bitcoin, both by individuals and by governments in other countries” (30:23).

• William Luther draws parallels between Bitcoin and the historical gold standard, highlighting how governments have historically manipulated commodity-based systems. He warns, “The idea that maybe the government would mismanage some market-based money... is not just a hypothetical; it's a historical reality” (31:51).

5. US Federal Debt and Monetary Policy

The trio delves into the complexities of the US national debt and monetary policies:

• Josh Hendrickson outlines the dilemma of the US's debt trajectory, emphasizing the unsustainable nature of the current fiscal path. He explains how the demand for US treasury securities continues to outpace the country's ability to supply them, leading to distorted economic conditions. “[The] US is on an unsustainable trajectory for its debt” (39:50).

• William Luther concurs with Federal Reserve Chair Jerome Powell's assessment of the debt's unsustainability but adds nuance by distinguishing between "good debt" (investment in productive assets) and "bad debt" (spending on current consumption). He asserts, “It's not so much the size of the debt... but rather it's the spending that has taken place as a result of that debt” (43:09).

• Thomas Hogan highlights the role of entitlement programs in exacerbating the debt crisis, pointing out that long-term commitments like Medicare and Social Security are key drivers of exponential debt growth. “[Entitlement programs] have just become massive insurance companies” (46:15).

6. Bitcoin as a Fiscal Solution?

The conversation explores whether Bitcoin can serve as a strategic reserve to mitigate fiscal irresponsibility:

• William Luther argues that merely adding Bitcoin to government reserves won't solve fiscal irresponsibility. He questions why governments would manage a larger budget responsibly, stating, “We still have to find some mechanism to get the government to be fiscally responsible” (17:13, 55:58).

• Josh Hendrickson elaborates on the potential catch-22 scenario where government acquisition of Bitcoin could trigger self-fulfilling expectations of fiscal distress, potentially driving Bitcoin's value to zero. “There's this little catch-22 here where... [government] set off the event they’re trying to prevent” (58:23).

7. Tariffs and International Trade

The economists analyze the impact of tariffs and trade policies on the US economy:

• Thomas Hogan discusses the complexity of assessing tariffs' benefits versus their political motives, suggesting that Trump's tariffs may aim to foster patriotism and unify the American populace rather than purely economic gains. “A lot of it is partly just political that gets left out of the economic conversation about tariffs” (72:48).

• Josh Hendrickson points out that while tariffs can initially increase the value of the dollar by reducing imports, this appreciation can offset some of the intended economic benefits. He explains, “Dollars become more valuable. So... part of that cost is being offset” (86:15).

• William Luther critiques the effectiveness of government compensation schemes for those adversely affected by trade policies, citing unintended consequences like increased disability roles and strained social structures. “Some of the ways that we have tried to compensate folks have just not worked out very well” (93:10).

8. Future of Bitcoin and Monetary Systems

Looking ahead, the guests share their perspectives on Bitcoin's role in future monetary systems:

• Thomas Hogan remains cautiously optimistic about Bitcoin's adoption, especially in nations with unstable currencies. However, he doubts the immediate overhaul of the US dollar's dominance, stating, “I think the dollar stays the biggest kid at the schoolyard for some time to come” (62:39).

• Josh Hendrickson emphasizes the strategic interest the US government might have in promoting neutral reserve assets like Bitcoin and gold to maintain dollar dominance without transferring its benefits to other currencies. “They recognize that to keep the current system of dollar dominance... you need people... to move towards neutral assets” (67:11).

• William Luther underscores the historical precedent of governments manipulating commodity-based monetary systems and expresses skepticism about governments adopting Bitcoin responsibly. “We have to remember that those governments... can do things... They can persuade strong arm people into doing things” (19:21).

9. Conclusion

The episode concludes with the guests highlighting ongoing efforts to influence Bitcoin policy and upcoming events:

• Walker America mentions an upcoming summit hosted by the Bitcoin Policy Institute, encouraging listeners to participate and engage with the community.

• All Guests invite listeners to follow their work through the American Institute for Economic Research and their respective platforms for further insights into Bitcoin and economic policy.

Key Takeaways:

• Bitcoin's Progress: Bitcoin has exceeded early expectations, becoming a credible reserve asset due to strong community support and institutional adoption.

• Fiscal Challenges: The US faces an unsustainable debt trajectory driven primarily by entitlement programs, not merely the debt's size.

• Government's Role: Adding Bitcoin to government reserves alone won't enforce fiscal responsibility; structural changes in spending behavior are necessary.

• Trade Policies: Tariffs present complex economic and political challenges, often with unintended social consequences.

• Future Outlook: While Bitcoin shows promise, its role in reshaping global monetary systems remains uncertain, especially against entrenched systems like the US dollar.

This summary encapsulates the core discussions, insights, and conclusions from the episode, providing a comprehensive overview for those who haven't listened to it.