The Hurdle Rate Podcast – Episode 46: "Build The Structure"

Date: February 3, 2026
Hosts: Tim Kotsman, Ben "the Working Man" Workman, Jeff Walton, Matt Cole

Overview of the Episode

This episode, titled "Build The Structure," takes a deep dive into the complexities of recent macroeconomic changes, especially around the appointment of a new Fed Chair, the impact of quantitative easing/tightening (QE/QT), the ongoing U.S. debt crisis, the shifting market structures, and how these changes intertwine with Bitcoin's role as both a hedge and transformative asset. The hosts also explore the evolving intersection of AI, the emergence of digital-native currencies, and the necessity of robust financial structures that can weather both bullish and bearish cycles.

Key Discussion Points & Insights

1. The New Fed Chair: Warsh’s Appointment and Market Reactions

Timestamps: 00:00 – 20:42

The Medicine Analogy & QE's Limits

• Matt riffs on the U.S. being an overweight patient, and the Fed the doctor. Instead of addressing the root cause (excessive debt), the Fed administers "medicine" (QE) that only treats the symptoms:
  • "[The Fed] gives you pain medicine and it gives you antidepressants. ... The patient gets more overweight, more debt, but it still feels OK because it has medicine." — Matt (04:10)
• Warsh, the incoming Fed Chair, breaks from tradition, refusing additional pain medicine—markets panic ("the market pukes").
• There's skepticism about whether real discipline (i.e., fiscal austerity) will ever come:
  • "Are they going to start to do fiscal austerity? ... The answer to that is no." — Matt (06:10)

The Bitcoin Nuclear Bomb & "Gunpowder, Not iPhone"

• The "nuclear bomb" analogy: If QE stops and something breaks in the market, Bitcoin could skyrocket overnight due to a loss of faith in the dollar.
  • "Bitcoin's adoption curve isn't going to be like the iPhone. It's going to be like gunpowder." — Jeff quoting a favorite analogy (11:01)
• Emphasis on Bitcoin’s unique position as a global opt-out asset, immune to the physical constraints (and controls) of gold.

2. Market Structure Bill, Interest Rates, and Risk

Timestamps: 13:29 – 20:42

• Debate over the potential for lowering interest rates alongside QT. Concern about U.S. fiscal behavior: "Nothing has changed from their probability of default ... who’s going to be the buyer at the long end of the curve?" — Jeff (13:58)
• The panel agrees: The patient (Congress/Senate) likely won't confirm or support a "doctor" (Fed Chair) who refuses them their "medicine."
• Matt: "If he [Warsh] comes in hard hock and he's like, 'We're not going to ever do QE again … good luck,' and they vote for him. I doubt that." (17:18)

3. AI’s Deflationary Impact and Market Convexity

Timestamps: 20:42 – 31:36

AI, Deflation, and Macro Shifts

• Warsh’s openness to AI as a deflationary force is seen as forward-thinking.
• Link is drawn between exponential AI-driven productivity and the need for coordination between Treasury and Fed to prop up liquidity (to avoid being outcompeted globally).
• "If the gunpowder scenario has increased, think about that as an option value. Like if you bought a leap, a long dated call option, the odds of that hitting are higher today than they were one month ago." — Matt (23:48)

The AI-Bitcoin Nexus

• Explosion of AI agents (Claudebots, Multbook) is accelerating the shift toward AI-enabled autonomous businesses.
• Jeff: "Computers are going to be making businesses with very little human interaction ... they're going to want to be paid in digital scarcity." (24:50)
• Bitcoin emerges as the natural currency for digital agents: jurisdiction-agnostic, digital-native, and programmatically transferrable.

Privacy Trade-offs

• Concern about privacy loss as people enable AI agents to access personal and enterprise data.
• Jeff: “The thing that concerns me about this current AI movement is you're completely sacrificing privacy right now for experimentation.” (28:00)

4. Rise of the “Pref Only” Model and Durable Market Structures

Timestamps: 32:56 – 44:39

What Is the “Pref Only” Model? Why Now?

• Discussion on why firms are abandoning high-risk debt/margin structures in favor of perpetual preferred equity ("Pref Only").
• "[The pref model] was built for this specific scenario: a bear market with bullish fundamentals." — Matt (34:51)
• The structure is designed for resiliency: No margin calls, no cliff maturities, can survive short-to-medium term volatility without forced selling.

Stress Testing, Risk Modeling & Institutional Credibility

• The importance of building financial products for all market conditions, not just bull runs.
• A multi-year track record, especially through volatility, is critical for institutional credibility.
• Jeff: “Building for resiliency ... when those times come where you might hear about struggles happening in other places, but you know that you had the foresight to prepare for this, right? Winter always arrives, you just don’t know how long it’s going to be there for.” (43:56)

Quantitative Perspective

• 4-year CAGR for Bitcoin stands at 19% after recent drawdown (as of Feb 2, 2026).
• The data-driven approach (Monte Carlo simulations) shapes risk decisions and underpins the preference for liability structures that match Bitcoin’s volatile path.

5. Super Cycles, Endurance, and Staying the Course

Timestamps: 46:45 – 48:39

• Examination of the "super cycle" theory: recent 30–50% drawdowns are now the norm—so far, no break with prior expectations, unless an 80% crash occurs.
• Emphasis on “building the structure” that lasts, even as sentiment gets shaken during weekend liquidity squeezes.
• Final rallying cry:
  • “Keep building, build the structure that’s built for endurance … when you can do that, it’s zoom out, touch grass, buy the dip.” — Matt (48:25)

Notable Quotes & Memorable Moments

• Matt: “The Fed is not the root problem here … the real problem is the United States debt crisis, that we cannot stop spending money.” (07:33)
• Jeff: "Bitcoin’s adoption curve isn’t going to be like the iPhone. It’s going to be like gunpowder." (11:01)
• Matt: “The doctor can change the path that things go … but how much control does the doctor have without a willing patient?” (15:28)
• Jeff: “If you look at the U.S. government as a business, nothing has changed from their probability of default.” (13:37)
• Jeff: “These [AI] computers are going to be able to calculate risk and compare these instruments relative to everything else much faster than any human.” (33:14)
• Jeff: "Building for resiliency ... winter always arrives, you just don’t know how long it’s going to be there for." (44:02)
• Matt: “Keep building, build the structure that’s built for endurance … zoom out, touch grass, buy the dip.” (48:25)

Timestamps for Important Segments

• 00:00–09:22 – Fed Chair Warsh, QE as medicine, U.S. debt patient analogy
• 09:22–13:29 – Bitcoin as “gunpowder,” systemic opt-out assets
• 13:29–20:42 – Rate structure, market confirmation, Senate’s role
• 20:42–31:36 – AI as macro force, rise of digital-native currencies, privacy discussion
• 32:56–44:39 – Pref Only Model, risk and durability, institutionalization
• 46:45–48:39 – Super cycles, endurance, closing thoughts

Episode Takeaways

• The U.S.’s structural debt issues are unlikely to resolve through political means; crisis-driven monetary responses are baked in.
• Bitcoin’s role as a store of value and opt-out becomes more pronounced as traditional monetary systems face stress.
• AI is accelerating both macroeconomic change and the case for digital native assets (Bitcoin as AI-era currency).
• Market structures (like the pref-only model) which anticipate volatility and build enduring frameworks are essential for both institutions and individuals.
• Building resilience, not chasing short-term gains, remains the mantra—“build the structure” for whatever winter may come.

Next Episode: Stay tuned for ongoing coverage as Warsh’s stance and the macro landscape develop.