(Any views expressed in the below are the personal views of the author and should not form the basis for making investment decisions, nor be construed as a recommendation or advice to engage in investment transactions.) In the dark ages before TikTok and Instagram entertained us with duck lips and alphabet luxury brands wearing peacocks, car rides used to be very boring – at least for me. I got car sick when reading, so my many five-to-six hour journeys between Buffalo, New York and Detroit, Michigan were bone-crushingly boring. I listened to a lot of banal radio. One particular show I remember was a cigar aficionado broadcast hosted by Cigar Dave. I don’t smoke – never have – but nonetheless I received an early education on the difference between Cuban and Dominican Republic tobacco wrapping methods.
Another reason why interest rates are high is that this is the only way the Treasury can get anyone to buy any bonds. And this in a climate where China and the Saudis are selling US bonds. Yellen's recent Chinese trip was all about asking them to buy more bonds and stop selling them. The Emir of Qatar just visited El Salvador to find out how they are running a Bitcoin based Treasury. Expect a whole lot of Middle East nations to buy Bitcoin instead of US bonds going forward.
Did anyone bother to notice you published this very important blog (presumably intentionally) on 9-11. Signaling you’re aware of proven-beyond-any-doubt to be true conspiracy non-theories.
Doesn’t your Kaiseki blog (https://cryptohayes.substack.com/p/kaiseki-b15230bdd09e) apply here? For subtle financial repression must eventually become overt. The inflate-away-the-debt-to-GDP ratio also corresponds to consolidating the banking system into the Fed’s direct-to-window orbit[1] and provides the pretext to push everyone onto a Hotel California-esque CBDC. FedNow should help accelerate panic bank runs at the precipice.
Bitcoin’s decline abated as the (e.g. FTX, etc) leverage bled out of the system, lurched higher with BTFP, and stalled ostensibly awaiting a genuine Fed pause perhaps on November 1 with the 10 year ostensibly recently doing the work that another Fed Funds hike would have.
Should we rule out a March 2020 “blackswan” to spike the QE punch bowl again? The Ukraine war is approaching another inflection point as Ukraine’s front line offensive having literally bled out its human fodder[2] is allegedly about to be overrun by 750k Russian conscripts with Congress refusing to send more aid. Will our cluster bombs be deployed against Russian civilians forcing Putin to take more drastic action such as nuking Kiev? The Neocons might see that as a Pearl Harbor to increase American support for OUR aggression in Ukraine since 2008 at least with the rejection of U.S. Ambassador William Burns’ “nyet means nyet” (no means no) communique. The complex political factor being the Neocons need plausible cover for a far too visible stealing again or even outright canceling the 2024 POTUS election, thus their backs are also up against the wall and becoming increasing desperate. Me thinks someone who created Bitcoin is playing all parties off on each other to usher in a dystopian NWO. You may not realize how dystopian Bitcoin is. Hope you have stored your BTC in addresses that begin with 1, not 3 nor bc1.
[1] For as long as the yield curve remains inverted such that the banks are borrowing short (i.e. liquid deposits) at higher interest rates to than to lend long (e.g. mortgage loans), of which anticipation of a recession, staying liquid to BTFD/BTFP and risk-free, highly liquid, high yield at the Fed window (via money markets) may be some of the subtle financial repression driving factors?
[2] Now forced to conscript old men and females, begging EU countries to force their male refugees back to Ukraine.
P.S. I’m enthused to discover that you are cross-posting on Substack, although I slightly prefer the tighter kerning on Medium’s reading font. I was banned from the increasingly pay-walled Medium and all my content was deleted. I expect the same outcome on Substack eventually. Highly sensitive political content not recorded on an indelible block chain has a half-life measured in years, even months if one of the major social networks, not decades.
He didn't directly emphasize a strong cause-and-effect relationship between a high debt-to-GDP ratio and bitcoin's certain rise. It's an indirect cause.
Instead, he strongly emphasized a strong cause-and-effect relationship between nominal yields and an increasing GDP (caused by the fed for the reasons he stated in the essay) as the reason. He argues that because of negative real yields (calculated by nominal yields - GDP) investors will revert back to seeking risk assets such as high-growth tech stocks (Nvidia), bitcoin, etc. He's arguing that BOTH debt levels AND GDP will continue to rise which will in turn keep real rates negative.
Hi Arthur, 80% of your essay is strong. But towards the end, you've jumped to the conclusion that BTC will fare well but it's not clear why this is the case. You've offered one pithy sentence - "The reason why Bitcoin has such a positive convex relationship with Fed policy is that debt-to-GDP levels are so high that traditional economic relationships break down" - but that doesn't reveal the why. Is it because BTC offers insurance against a systemic risk (as Taleb might say, a fat tail risk)?
That may not be relevant. Whether the expenditures are actually creating any positive effects or not, there is still massive deficits and fiscal expenditure. This is financial repression.
Thanks for your honest review of why your prediction haven't come true so far, it's great to see authors with this kind of initiative. And great article.
"The reason why Bitcoin has such a positive convex relationship with Fed policy is that debt-to-GDP levels are so high that traditional economic relationships break down."
Could you explain the cause-and-effect relationship between a high debt-to-GDP ratio and the fact that Bitcoin's price is certain to rise ?
Is it because this high ratio will make people want to invest less in bonds, and presumably more in alternative assets ?
He didn't directly emphasize a strong cause-and-effect relationship between a high debt-to-GDP ratio and bitcoin's certain rise. It's an indirect cause.
Instead, he strongly emphasized a strong cause-and-effect relationship between nominal yields and an increasing GDP (caused by the fed for the reasons he stated in the essay) as the reason. He argues that because of negative real yields (calculated by nominal yields - GDP) investors will revert back to seeking risk assets such as high-growth tech stocks (Nvidia), bitcoin, etc. He's arguing that BOTH debt levels AND GDP will continue to rise which will in turn keep real rates negative.
Well he did state that once debt-to-GDP-ratios breach a threshold, there is a phase-transition and there is no alternative other than financial repression. That is a fairly direct causal relationship.
Good point, but does financial repression equate to a certain rise in bitcoin's price? I'm not sure if that's what Arthur was trying to insinuate, but I don't think it does.
Bitcoin is in the process of transitioning from a speculative asset to a store-of-refuge (not value) from an increasingly multi-polar world wherein governments can confiscate your other assets because you were trading with the enemy. Bitcoin can easily move very large capital over distance, gold can not. Financial repression will coincide with accelerated awareness that there are now 81,000 IRS agents whose mission will be to drain everyone of their resources. The financial repression is coinciding with accelerating fiscal and lawfare abuse -- a further accelerant or non-linearity of the phase-transition. Financial repression on steroids will be the CBDCs which will seek to trap everyone in debased dollars and digital asset bubbles and prevent them from cashing out to assets which can’t be printed out-of-thin-air. Will the phase-transition be iron-fisted totalitarianism with every American for example forced to fund the government’s sovereign debt? Or will it be easier to trap them in CBDCs and fund the sovereign bonds with Fed QE? Imagine a Bitcoin ETF that everyone can pile into legally but for which they can never actually cash out to actual ₿ (i.e. “not your private keys, not your Bitcoin”). One wrinkle is that the U.S. can’t easily cancel the U.S. dollar cash without causing a massive loss of trust in the U.S. dollar as there are so many cash dollars floating around overseas.
Also I happen to know something that most people do not know.
Which is that Bitcoin will undergo an event where the 13+ million ₿ which are not stored in addresses that begin with 1 (not 3 nor bc1) will be involuntarily donated to the miners by the protocol (no need to access the private keys). This is because the 2017 soft-fork broke the Nash equilibrium by creating these UTXO which are only recognized by the legacy protocol as ANYONECANSPEND. This event must happen before ₿ rises to be the NWO reserve currency. Timing is more like 2028ish.
The new ETFs have specific terms which state they are not responsible for this looming event, which leads me to believe they know it is coming. If we find they are storing the ₿ in addresses that begin with 3 or bc1, then we know they are preparing for everyone who invests in the Bitcoin ETFs to lose everything.
These topics can be deep for a layman. I try to provide the germ of understanding for those who want to invest the effort. Recognizing what we do not know is the first step towards correcting our blind spots. I do not know everything either. But my expertise in this specific area presumably exceeds most of the readers here. Note I got sidetracked and still haven’t completed my blog. Will do…
I have been aware of that cited nonsense for a few years now. This is utter nonsense which I entirely refuted in my documents. I actually link to it from my documents and then shred it to smithereens.
It sounds cute to an ignorant layman. Dig into and ye shall find. Else lose all your Bitcoins, I do not care if you prefer to remain ignorant. Stop your foolish, Dunning-Kruger-esque talking down to the expert. You cited a half-witted, chest-thumping idiot who knows nothing because he failed to study and think carefully. You are the clearly (ostensibly) the fool with only a cursory apophenia, boasting about that which you do not fully comprehend. The only appropriate action for you now if you care at all about truth and not your fragile, useless ego, is read and think.
Genius! So grounding for me to read every article! Greatly appreciative.. Thank you Arthur.
Another reason why interest rates are high is that this is the only way the Treasury can get anyone to buy any bonds. And this in a climate where China and the Saudis are selling US bonds. Yellen's recent Chinese trip was all about asking them to buy more bonds and stop selling them. The Emir of Qatar just visited El Salvador to find out how they are running a Bitcoin based Treasury. Expect a whole lot of Middle East nations to buy Bitcoin instead of US bonds going forward.
I do not think you understood the blog. The point is that the interest rates are far too low.
The goat writes again!!!
Did anyone bother to notice you published this very important blog (presumably intentionally) on 9-11. Signaling you’re aware of proven-beyond-any-doubt to be true conspiracy non-theories.
QUOTE: “𝘜𝘴𝘪𝘯𝘨 𝘧𝘪𝘯𝘢𝘯𝘤𝘪𝘢𝘭 𝘳𝘦𝘱𝘳𝘦𝘴𝘴𝘪𝘰𝘯 𝘵𝘰 𝘦𝘯𝘴𝘶𝘳𝘦 𝘵𝘩𝘢𝘵 𝘯𝘰𝘮𝘪𝘯𝘢𝘭 𝘎𝘋𝘗 𝘨𝘳𝘰𝘸𝘵𝘩 𝘪𝘴 𝘩𝘪𝘨𝘩𝘦𝘳 𝘵𝘩𝘢𝘯 𝘣𝘰𝘯𝘥 𝘺𝘪𝘦𝘭𝘥𝘴 … 𝘐𝘯𝘧𝘭𝘢𝘵𝘪𝘰𝘯 𝘣𝘦𝘤𝘰𝘮𝘦𝘴 𝘴𝘵𝘪𝘤𝘬𝘺 𝘣𝘦𝘤𝘢𝘶𝘴𝘦 𝘯𝘰𝘮𝘪𝘯𝘢𝘭 𝘎𝘋𝘗 𝘨𝘳𝘰𝘸𝘵𝘩 > 𝘨𝘰𝘷𝘦𝘳𝘯𝘮𝘦𝘯𝘵 𝘣𝘰𝘯𝘥 𝘺𝘪𝘦𝘭𝘥𝘴 … 𝘐𝘧/𝘸𝘩𝘦𝘯 𝘵𝘩𝘦 𝘮𝘢𝘳𝘬𝘦𝘵 [refuses financial repression] 𝘰𝘯 𝘵𝘩𝘦𝘪𝘳 𝘜𝘚 𝘛𝘳𝘦𝘢𝘴𝘶𝘳𝘪𝘦𝘴, 𝘵𝘩𝘦𝘯 𝘵𝘩𝘦 𝘫𝘪𝘨 𝘸𝘪𝘭𝘭 𝘣𝘦 𝘶𝘱. 𝘛𝘩𝘦 𝘍𝘦𝘥 𝘮𝘶𝘴𝘵 𝘵𝘩𝘦𝘯 𝘦𝘪𝘵𝘩𝘦𝘳 𝘧𝘰𝘳𝘣𝘪𝘥 𝘣𝘢𝘯𝘬𝘴 𝘧𝘳𝘰𝘮 𝘢𝘭𝘭𝘰𝘸𝘪𝘯𝘨 𝘵𝘳𝘢𝘯𝘴𝘧𝘦𝘳𝘴 𝘵𝘰 𝘥𝘪𝘨𝘪𝘵𝘢𝘭 𝘧𝘪𝘯𝘵𝘦𝘤𝘩𝘴 𝘰𝘧𝘧𝘦𝘳𝘪𝘯𝘨 𝘱𝘩𝘺𝘴𝘪𝘤𝘢𝘭 𝘤𝘳𝘺𝘱𝘵𝘰𝘤𝘶𝘳𝘳𝘦𝘯𝘤𝘪𝘦𝘴, 𝘰𝘳 𝘪𝘵 𝘮𝘶𝘴𝘵 𝘳𝘦𝘴𝘵𝘢𝘳𝘵 𝘲𝘶𝘢𝘯𝘵𝘪𝘵𝘢𝘵𝘪𝘷𝘦 𝘦𝘢𝘴𝘪𝘯𝘨 (𝘢𝘬𝘢 𝘮𝘰𝘯𝘦𝘺 𝘱𝘳𝘪𝘯𝘵𝘪𝘯𝘨) 𝘢𝘯𝘥 𝘣𝘶𝘺 𝘣𝘰𝘯𝘥𝘴 𝘵𝘰 𝘦𝘯𝘴𝘶𝘳𝘦 𝘵𝘩𝘦𝘪𝘳 𝘺𝘪𝘦𝘭𝘥 𝘪𝘴 𝘭𝘦𝘴𝘴 𝘵𝘩𝘢𝘯 𝘯𝘰𝘮𝘪𝘯𝘢𝘭 𝘎𝘋𝘗 𝘨𝘳𝘰𝘸𝘵𝘩.”
Doesn’t your Kaiseki blog (https://cryptohayes.substack.com/p/kaiseki-b15230bdd09e) apply here? For subtle financial repression must eventually become overt. The inflate-away-the-debt-to-GDP ratio also corresponds to consolidating the banking system into the Fed’s direct-to-window orbit[1] and provides the pretext to push everyone onto a Hotel California-esque CBDC. FedNow should help accelerate panic bank runs at the precipice.
Bitcoin’s decline abated as the (e.g. FTX, etc) leverage bled out of the system, lurched higher with BTFP, and stalled ostensibly awaiting a genuine Fed pause perhaps on November 1 with the 10 year ostensibly recently doing the work that another Fed Funds hike would have.
Should we rule out a March 2020 “blackswan” to spike the QE punch bowl again? The Ukraine war is approaching another inflection point as Ukraine’s front line offensive having literally bled out its human fodder[2] is allegedly about to be overrun by 750k Russian conscripts with Congress refusing to send more aid. Will our cluster bombs be deployed against Russian civilians forcing Putin to take more drastic action such as nuking Kiev? The Neocons might see that as a Pearl Harbor to increase American support for OUR aggression in Ukraine since 2008 at least with the rejection of U.S. Ambassador William Burns’ “nyet means nyet” (no means no) communique. The complex political factor being the Neocons need plausible cover for a far too visible stealing again or even outright canceling the 2024 POTUS election, thus their backs are also up against the wall and becoming increasing desperate. Me thinks someone who created Bitcoin is playing all parties off on each other to usher in a dystopian NWO. You may not realize how dystopian Bitcoin is. Hope you have stored your BTC in addresses that begin with 1, not 3 nor bc1.
[1] For as long as the yield curve remains inverted such that the banks are borrowing short (i.e. liquid deposits) at higher interest rates to than to lend long (e.g. mortgage loans), of which anticipation of a recession, staying liquid to BTFD/BTFP and risk-free, highly liquid, high yield at the Fed window (via money markets) may be some of the subtle financial repression driving factors?
[2] Now forced to conscript old men and females, begging EU countries to force their male refugees back to Ukraine.
P.S. I’m enthused to discover that you are cross-posting on Substack, although I slightly prefer the tighter kerning on Medium’s reading font. I was banned from the increasingly pay-walled Medium and all my content was deleted. I expect the same outcome on Substack eventually. Highly sensitive political content not recorded on an indelible block chain has a half-life measured in years, even months if one of the major social networks, not decades.
You know absolutely nothing about the war in Ukraine or the Ukrainian people.
You got that backwards. You know absolutely nothing.
https://archive.today/https://www.quora.com/What-is-billionaire-George-Soros’-ultimate-agenda/answer/S-Moore-152
He didn't directly emphasize a strong cause-and-effect relationship between a high debt-to-GDP ratio and bitcoin's certain rise. It's an indirect cause.
Instead, he strongly emphasized a strong cause-and-effect relationship between nominal yields and an increasing GDP (caused by the fed for the reasons he stated in the essay) as the reason. He argues that because of negative real yields (calculated by nominal yields - GDP) investors will revert back to seeking risk assets such as high-growth tech stocks (Nvidia), bitcoin, etc. He's arguing that BOTH debt levels AND GDP will continue to rise which will in turn keep real rates negative.
Hi Arthur, 80% of your essay is strong. But towards the end, you've jumped to the conclusion that BTC will fare well but it's not clear why this is the case. You've offered one pithy sentence - "The reason why Bitcoin has such a positive convex relationship with Fed policy is that debt-to-GDP levels are so high that traditional economic relationships break down" - but that doesn't reveal the why. Is it because BTC offers insurance against a systemic risk (as Taleb might say, a fat tail risk)?
Because ostensibly real rates are still negative. Which was the entire thesis of the blog.
Analysis 100%
awesome Arthur. You've been teaching me a lot - I appreciate your honesty
Decent post Arthur. Always agree that btc is the way.
But one potential huge flaw is your assumption that the Atlanta fed GDP NOW forecast is valid.
Do some in depth analysis into their weak methodology and you may change your assumptions.
It’s almost guaranteed to be revised lower.
That may not be relevant. Whether the expenditures are actually creating any positive effects or not, there is still massive deficits and fiscal expenditure. This is financial repression.
Thanks for another great article
500 IQ
Thanks for your honest review of why your prediction haven't come true so far, it's great to see authors with this kind of initiative. And great article.
"The reason why Bitcoin has such a positive convex relationship with Fed policy is that debt-to-GDP levels are so high that traditional economic relationships break down."
Could you explain the cause-and-effect relationship between a high debt-to-GDP ratio and the fact that Bitcoin's price is certain to rise ?
Is it because this high ratio will make people want to invest less in bonds, and presumably more in alternative assets ?
He didn't directly emphasize a strong cause-and-effect relationship between a high debt-to-GDP ratio and bitcoin's certain rise. It's an indirect cause.
Instead, he strongly emphasized a strong cause-and-effect relationship between nominal yields and an increasing GDP (caused by the fed for the reasons he stated in the essay) as the reason. He argues that because of negative real yields (calculated by nominal yields - GDP) investors will revert back to seeking risk assets such as high-growth tech stocks (Nvidia), bitcoin, etc. He's arguing that BOTH debt levels AND GDP will continue to rise which will in turn keep real rates negative.
Well he did state that once debt-to-GDP-ratios breach a threshold, there is a phase-transition and there is no alternative other than financial repression. That is a fairly direct causal relationship.
Good point, but does financial repression equate to a certain rise in bitcoin's price? I'm not sure if that's what Arthur was trying to insinuate, but I don't think it does.
Bitcoin is in the process of transitioning from a speculative asset to a store-of-refuge (not value) from an increasingly multi-polar world wherein governments can confiscate your other assets because you were trading with the enemy. Bitcoin can easily move very large capital over distance, gold can not. Financial repression will coincide with accelerated awareness that there are now 81,000 IRS agents whose mission will be to drain everyone of their resources. The financial repression is coinciding with accelerating fiscal and lawfare abuse -- a further accelerant or non-linearity of the phase-transition. Financial repression on steroids will be the CBDCs which will seek to trap everyone in debased dollars and digital asset bubbles and prevent them from cashing out to assets which can’t be printed out-of-thin-air. Will the phase-transition be iron-fisted totalitarianism with every American for example forced to fund the government’s sovereign debt? Or will it be easier to trap them in CBDCs and fund the sovereign bonds with Fed QE? Imagine a Bitcoin ETF that everyone can pile into legally but for which they can never actually cash out to actual ₿ (i.e. “not your private keys, not your Bitcoin”). One wrinkle is that the U.S. can’t easily cancel the U.S. dollar cash without causing a massive loss of trust in the U.S. dollar as there are so many cash dollars floating around overseas.
Also I happen to know something that most people do not know.
https://anonymint1.substack.com/p/decentralized-data-storage-and-delivery#%C2%A7what-wont-work
(c.f. the specific linked section)
https://archive.today/https://www.quora.com/What-is-billionaire-George-Soros’-ultimate-agenda/answer/S-Moore-152
Which is that Bitcoin will undergo an event where the 13+ million ₿ which are not stored in addresses that begin with 1 (not 3 nor bc1) will be involuntarily donated to the miners by the protocol (no need to access the private keys). This is because the 2017 soft-fork broke the Nash equilibrium by creating these UTXO which are only recognized by the legacy protocol as ANYONECANSPEND. This event must happen before ₿ rises to be the NWO reserve currency. Timing is more like 2028ish.
The new ETFs have specific terms which state they are not responsible for this looming event, which leads me to believe they know it is coming. If we find they are storing the ₿ in addresses that begin with 3 or bc1, then we know they are preparing for everyone who invests in the Bitcoin ETFs to lose everything.
I'm not sure about what you write in the end because my knowledge is limited in that area, but I completely agree with the first part.
These topics can be deep for a layman. I try to provide the germ of understanding for those who want to invest the effort. Recognizing what we do not know is the first step towards correcting our blind spots. I do not know everything either. But my expertise in this specific area presumably exceeds most of the readers here. Note I got sidetracked and still haven’t completed my blog. Will do…
https://seebitcoin.com/2017/02/segwit-facts-not-anyone-can-spend-so-stop-saying-they-can/
I have been aware of that cited nonsense for a few years now. This is utter nonsense which I entirely refuted in my documents. I actually link to it from my documents and then shred it to smithereens.
https://anonymint1.substack.com/p/decentralized-data-storage-and-delivery#%C2%A7what-wont-work
(c.f. the specific linked section)
https://archive.today/https://www.quora.com/What-is-billionaire-George-Soros’-ultimate-agenda/answer/S-Moore-152
It sounds cute to an ignorant layman. Dig into and ye shall find. Else lose all your Bitcoins, I do not care if you prefer to remain ignorant. Stop your foolish, Dunning-Kruger-esque talking down to the expert. You cited a half-witted, chest-thumping idiot who knows nothing because he failed to study and think carefully. You are the clearly (ostensibly) the fool with only a cursory apophenia, boasting about that which you do not fully comprehend. The only appropriate action for you now if you care at all about truth and not your fragile, useless ego, is read and think.
cheers Arthur, another great article with a lot of good explanations about finance.
Breaking down of traditional correlations between different assets.
Also, how does one invest in farmland? Is it viable for retail?