Episode Summary: "America" Will Support Bitcoin, Fiat Is Hopeless | Macro Monday
Release Date: July 7, 2025
Podcast: The Wolf Of All Streets
Host: Scott Melker
Special Guests: Peter Cheer, Mike, James
Topic Overview:
In this episode of Macro Monday, host Dave sits down with economists and financial experts Mike, James, and special guest Peter Cheer to dissect the current state of the economy, the implications of the recently passed Big Beautiful Bill, and the future of traditional fiat currencies versus Bitcoin and other cryptocurrencies. The discussion delves deep into budget deficits, market dynamics, and the sustainability of current economic policies.
1. Introduction to Macro Economics and Current Market Conditions
Dave opens the discussion by setting the stage for the episode:
“[00:03] Dave: Well, good morning, everyone. It is time for Macro Monday... Bitcoin's in a trading range. Not a whole lot happening as far as market movement goes, but there's a lot of stories underneath the surface for us to unpack.”
Mike acknowledges Scott's commitment to family amid challenging times:
“[01:20] Mike: ...kudos to Scott... you don't get those days back with your kids... Markets will always be there. Take care of those kids.”
Key Points:
- Bitcoin remains in a stable trading range.
- Underlying stories influencing the market despite apparent stability.
- Importance of balancing personal life with professional responsibilities.
2. Analysis of the Big Beautiful Bill and Its Economic Impact
Dave introduces the Big Beautiful Bill, highlighting its potential to influence growth and the budget deficit:
“[04:55] Dave: ...the ultimate irony of the bill... Both sides' criticisms are large. The criticism on the Republican side is it doesn't cut spending enough. The criticism on the Democrat side are it cuts spending too much.”
Peter Cheer provides his perspective on the bill's immediate effects:
“[07:08] Peter Cheer: ...the most important thing is we actually had the House, the Senate agree on something. ... it's going to be slightly pro-growth in the near term.”
James critiques the Congressional Budget Office (CBO) projections:
“[09:55] James: ...the CBO is pretty much garbage in and you're getting garbage out... The real issue is... the spending is going to continue. Fiscal deficits are going to continue.”
Notable Quotes:
- Dave [04:55]: "The criticism on the Republican side is it doesn't cut spending enough. The criticism on the Democrat side are it cuts spending too much."
- Peter Cheer [07:08]: "We actually have some actual law passed by this administration, we can take some degree of certainty..."
Key Points:
- The Big Beautiful Bill is seen as a modest pro-growth measure but raises concerns over the budget deficit.
- Bipartisan criticism reflects deep divisions on fiscal policy.
- Skepticism about the CBO's ability to accurately project long-term deficits.
3. The Unending Cycle of Budget Deficits and Political Incentives
James delves into the structural issues with the U.S. budget deficit:
“[09:48] James: ...the real issue is... as we all quote Lynn Alden, nothing stops this train. It's just math. The spending is going to continue.”
Dave questions the political motivations behind fiscal policies:
“[18:38] Dave: ...the government's goal isn't to see asset prices go up, whether that be bonds or stocks?”
Mike reinforces the idea that political incentives drive continuous spending:
“[19:48] James: ...the only first principle we have. It's what do I need to do to get reelected?”
Notable Quotes:
- James [09:48]: "Nothing stops this train. It's just math. The spending is going to continue."
- Mike [19:48]: "What do I have to do to get reelected? That's all they care about."
Key Points:
- Endless budget deficits are a result of political incentives prioritizing reelection over fiscal responsibility.
- Structural deficits lack viable long-term solutions within the current political framework.
- The focus on short-term gains undermines sustainable economic policies.
4. Implications for Traditional Markets: Bonds, Stocks, and Commodities
Mike discusses the unusual ratios in commodity markets, particularly crude oil and gold:
“[01:20] Mike: ...the amount of barrels of crude oil per 1 ounce of gold right now it's about 50 barrels of WTI crude oil...”
James highlights the flaws in bond market projections:
“[09:55] James: ...the CBO... they don't include any recessions in their estimates...”
Mike emphasizes the elevated valuations in the stock market and potential risks:
“[16:03] Mike: ...stock market's up 7%. Bitcoin's up only double. That dish there should be up triple...”
Notable Quotes:
- Mike [01:20]: "The amount of barrels of crude oil per 1 ounce of gold right now it's about 50 barrels of WTI crude oil."
- James [09:55]: "They don't include any recessions in their estimates. So if you look out 10 years and assume there's no recessions, that's kind of ridiculous."
- Mike [16:03]: "Stock market's up 7%. Bitcoin's up only double. That dish there should be up triple."
Key Points:
- Commodity ratios indicate potential undervaluation or overvaluation in certain markets.
- Bond market projections are overly optimistic, ignoring potential economic downturns.
- Elevated stock market valuations may not be sustainable without corresponding economic growth.
5. The Future of Bitcoin and Cryptocurrencies Amid Economic Policies
Mike and James debate the future trajectory of Bitcoin and other cryptocurrencies:
“[25:09] James: ...if and when the stock market does collapse... rates will spike higher again...”
Mike warns about the potential end of the cryptocurrency boom:
“[26:03] Mike: ...we're at that now. I see it everywhere. I just. And when people say that...”
Dave counters with observations about the resilience and development within the crypto community:
“[56:33] Mike: ...cryptocurrencies. ...I'm anti being a dumbass. And obviously he's not a dumb ass...”
Notable Quotes:
- Mike [16:03]: "Stock market's up 7%. Bitcoin's up only double. That dish there should be up triple."
- James [25:09]: "If and when the stock market does collapse...rates will spike higher again."
- Mike [26:03]: "We're at that now. I see it everywhere. I just... have to be careful."
Key Points:
- Bitcoin and cryptocurrencies are at a critical juncture, potentially signaling the end of their rapid growth phase.
- The sustainability of crypto markets is questioned amidst rising deficits and potential economic downturns.
- Regulatory and market pressures may lead to significant corrections in the cryptocurrency space.
6. The Role of Government Policy in Shaping Market Dynamics
Peter Cheer discusses the impact of government policies like the Supplemental Leverage Ratio (SLR) on banks and the broader market:
“[36:22] James: ...the supplemental leverage ratio is... to make sure that they don't have too much leverage on their balance sheets...”
Mike and Peter explore how these policies might exacerbate market volatility:
“[38:22] Peter Cheer: ...in normal markets it reduces volatility. But what it does is... it tends to create much larger moves when stuff starts breaking...”
Dave ties these policies back to the overall goal of maintaining asset price inflation:
“[34:00] James: ...additional liquidity...”
Notable Quotes:
- James [36:22]: "The supplemental leverage ratio is a ratio that the Fed puts on the banks to make sure they don't have too much leverage..."
- Peter Cheer [38:22]: "It tends to create much larger moves when stuff starts breaking because everyone's now limit long."
- Mike [38:22]: "We need the stock market to keep going, which means we need liquidity."
Key Points:
- Government-imposed financial ratios like the SLR aim to control bank leverage but may inadvertently increase market volatility.
- These policies are designed to provide liquidity and stabilize markets but can lead to exaggerated movements during economic stress.
- The interplay between policy measures and market reactions underscores the fragility of the current economic system.
7. Predictions and Closing Thoughts on Market Trends
Mike predicts a significant correction in risk assets, including Bitcoin and stocks:
“[43:26] Mike: ...every time in history you get these massive inflationary periods, you always get deflation. That is my point is on a global basis, the best asset right now potentially protect against normal Deflation is a U.S. treasury long bond...”
James remains cautiously optimistic about the continued growth of hard assets despite potential downturns:
“[52:38] James: ...we're still going to have lift off for that. But we are nowhere near a watershed moment.”
Peter Cheer suggests increased crypto-friendly legislation as a potential game-changer:
“[60:33] Peter Cheer: ...Democrats haven't figured that out to the extent that they do. I would think that will mean that there will be more and more crypto friendly legislation.”
Notable Quotes:
- Mike [43:26]: "The best asset right now potentially protect against normal Deflation is a U.S. treasury long bond."
- James [52:38]: "We're nowhere near peak nirvana... we still have the Federal Reserve saying they're going to pull back."
- Peter Cheer [60:33]: "There is no other group that has immense amount of wealth spread across all these things... so that is the base of money that every politician should be striving to get."
Key Points:
- Anticipated market corrections could significantly impact both traditional and crypto assets.
- Long-term growth of Bitcoin is still viewed as viable by some, despite short-term challenges.
- Legislative support for cryptocurrencies could reshape the market landscape, enhancing adoption and stability.
Conclusion
The episode of Macro Monday provides a comprehensive analysis of the current economic climate, emphasizing the precarious balance between government fiscal policies and market stability. While traditional fiat systems appear increasingly unsustainable, Bitcoin and other cryptocurrencies face their own set of challenges amid potential regulatory crackdowns and market corrections. The consensus among the panelists suggests caution, highlighting the need for strategic asset allocation and vigilance in anticipating economic shifts. As the Big Beautiful Bill takes effect, its impact on growth and deficits will be pivotal in shaping future market dynamics.
Noteworthy Moments:
- Budget Deficit Discussion [09:48]: James emphasizes the inevitability of continued deficits due to political incentives.
- Commodity Ratios [01:20]: Mike highlights unusual ratios like crude oil per ounce of gold, indicating potential market shifts.
- Bitcoin's Future [25:09]: Predictions on Bitcoin facing significant corrections amid economic pressures.
For listeners who missed the episode, this summary encapsulates the critical insights and expert opinions shared by Dave, Mike, James, and Peter Cheer on the intertwined futures of traditional finance and emerging cryptocurrency markets.