(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.) I recently went kitesurfing in Fuerteventura, one of the Canary Islands that is technically part of Spain. If you had seen me, you would have snickered to yourself and said, “man, Arthur really needs to stick to crypto!”
Another phenomenal article by Lord Satoshi's VP of fiat banking affairs. Arthur's posts are the most insightful of ANY financial analyst in the market today - he has a supremely unique ability to mix the horrifying fiat complexity and dread with the hope of a Lord Satoshi/crypto future in comical and educational terms that entertain throughout. I cannot recommend reading multiple times to truly absorb it all.
Another Arthur Hayes face-ripping tour de force. HODL.
My guess is the Alt is Filecoin, Hayes got me onto Token Terminal after saying check the protocols that are making money/revenue and Filecoin is top 3 in revenue generated on token terminal & Arthur would see that daily. Plus with Filecoin releasing FVM & lilypad tech for AI & compute over data it has to up there on his list. Plus his family office is based in Singapore and Filecoin is all over the Asian markets...
Wtf is this shitcoin you speak of Lad?!
Two horses one ass... fuckin' classic
Dying to know the AI shitcoin... my guess is still AKT and the 99% comment is a bit of misdirection.
enjoyed the thoughts, i have some questions though.
wasn't Trump president for all of 2020 though? and would there not be lag effects on the purchasing power from all the print print in 2020? how is "inflation and raises accounted for" in the two charts you present? just asking don't hurt me
Should’ve read this blog first before commenting on 𝘿𝙤𝙪𝙗𝙡𝙚 𝙃𝙖𝙥𝙥𝙞𝙣𝙚𝙨𝙨 (https://open.substack.com/pub/cryptohayes/p/double-happiness?comments=true&commentId=41381042).
QUOTE: “[chart showing Treasury interest payments exceed nominal GDP, growing faster than GDP] 𝘐 𝘦𝘴𝘵𝘪𝘮𝘢𝘵𝘦 𝘵𝘩𝘢𝘵 ~$23 𝘣𝘪𝘭𝘭𝘪𝘰𝘯 𝘪𝘯 [net] 𝘭𝘪𝘲𝘶𝘪𝘥𝘪𝘵𝘺 𝘪𝘴 𝘯𝘦𝘵 𝘪𝘯𝘫𝘦𝘤𝘵𝘦𝘥 𝘦𝘷𝘦𝘳𝘺 𝘮𝘰𝘯𝘵𝘩.”
A key point is that investments that will do well either have an income (e.g. BigTech) or no expenses (e.g. a hard asset such as Bitcoin). Thus ostensibly why Hayes chose Filecoin per Peter Killops’ comment on this page.
First my summary of this blog.
• With such a large debt-to-GDP ratio, the Fed is actually injecting stimulus by forcing interest rates higher because it’s both paying interest on reserves parked at its windows, while also increasing the interest payments of the U.S. Treasury. Volker didn’t have to try to control the market price (i.e. interest rate) because he wasn’t staring at a global depression, government collapse when he only did QT, as the GDP-to-debt ratio was minuscule. I must correct Hayes, that the Fed isn’t making a mistake by choice as they are trapped and have no other choice.
• Eventually the fiscal situation will spiral into out-of-control inflation unless the government can ramp up to financial repression on steroids (ergo CBDCs) to force depositors to save at negative real interest rates. In this way, the inflation can be reduced/minimized (and hoping the governments can inflate away their debt-to-GDP problem over the very long-term) by essentially bleeding depositors of wealth with an inflation tax, albeit at hopefully lower inflation than it would be if unchecked with the worsening status quo.
• To get the significant/surviving/most-favored financial players to play along given they would no longer be able to earn risk-free profits on reserves parked at the Fed, they will be allowed to offer ETFs (e.g. a Bitcoin ETF) for which they can take risk-free fees. As Hayes had explained in his Kaiseki blog (https://cryptohayes.substack.com/p/kaiseki-b15230bdd09e) this would allow speculative profits in CBDC fiat, but not delivery of the underlying asset. Thus speculative bubbles blown by still massive increases in QE to fund these massive fiscal deficits, because such financial repression will likely also require the government to become even more socialist (think UBI paid with CBDCs).
This plan will fail because Westerners aren’t Asians. Westerners will break out of this walled garden, when they can compare the freedom of the underlying asset to the ETFs which send profits back to overzealous governments which will essentially confiscate it all with CBDCs, taxes, wealth taxes, decrees, edicts, etc.. The truculent, uncooperative Westerners (especially North Americans!) will force the government to become even more totalitarian as the governments attempt to hold on for dear life (HODL).
Also Satoshi put a poison-pill in Bitcoin…because anyone who does not know the following will lose all their Bitcoins. There is a 13+ million BTC anyone can spend booty created by the 2017 soft fork. The pay-to-script-hash that enables the SegWit and all that Blockstream Power Rangers developers “users controlled Bitcoin” (User Activation Soft Fork ASAF) nonsense (i.e. the imbecile, erroneous concept that Bitcoin is a democracy and not here to destroy democracy), is anyone can spend in the legacy protocol. Satoshi intentionally laid this trap and set the blocks to 1 MiB, so that it will be immutable and the future reserve currency. Bitcoin is merely the 1988 Economic Magazine's cover story Phoenix. I even dug up the 1998 anonymous user group post that foreshadowed by essentially describing its design. Do you not see a 10 year cycle? 1988 announced. 1998 design leaked anonymously. 2008 launched. 2018 reached popular awareness. And 2028 it rises as the Phoenix fulfilled.
The 2017 soft fork never hard forked off, but it will be forced to. And legacy protocol hodlers will receive both forks, but those not hodling in addresses that begin with 1 will only receive the non-legacy fork and thus they will receive a nearly worthless token (because the miners will have first dibs on the anyone can spend).
The looming Bitcoin ETFs will be completely drained when the miners restore the Nash Equilibrium that the 2017 impostor soft fork broke, thus taking as “anyone can spend” donations all BTC that are stored in addresses that begin with 3 or bc1. Actually what BlackRock will be doing is acting like they are innocent when everyone is fleeced and destroyed, while they are actually working for the colonial masters. This will be the hack on centralized keys that does not require access to the keys because it will come from the miners. Read the fine print on the Terms and Conditions of BlackRocks ETF filings. So what BlackRock’s ETF investors will end up with is essentially soft fork impostor tokens and they will be capital control marooned on the CBDC regime.
QUOTE: “𝘉𝘪𝘵𝘤𝘰𝘪𝘯 𝘪𝘴𝘯'𝘵 𝘳𝘦𝘢𝘭 𝘮𝘰𝘯𝘦𝘺. 𝘐𝘵'𝘴 𝘢 𝘧𝘪𝘢𝘵 𝘤𝘶𝘳𝘳𝘦𝘯𝘤𝘺. 𝘈𝘯𝘥 𝘣𝘪𝘵𝘤𝘰𝘪𝘯 𝘸𝘰𝘯'𝘵 𝘸𝘰𝘳𝘬 𝘰𝘯 𝘵𝘩𝘦 𝘯𝘦𝘸 𝘘𝘶𝘢𝘯𝘵𝘶𝘮 𝘴𝘺𝘴𝘵𝘦𝘮.”
@Rob-yc7bs I was the person who figured out that Satoshi employed double-hashing precisely to combat quantum computing with colored coins. You do not know what you are talking about. Bitcoin is only fiat if TPTB control 51% of the mining hashrate (which I believe they will but they will not reveal their hand until it is time for the Antichrist).
Interesting you should quote Dr. Charles Calomiris on fiscal dominance. He's also saying BTC will go to zero within a decade :)
Peter, how are you playing it?
Love it! Nice guess…
for those of us who can't go to Token2049, any idea which shitcoin he's talking about?
Arthur, couldn't the Fed just set a cap on the amount of reserves where it will pay the IORB rate? Couldn't that have the effect of bolstering the regionals while kneecapping the majors (instead of total carnage)?
If that were the case, the majors would try to push for new high-fee products, but regionals could raise their customer deposit interest rates to be more appealing. (Which would have the added effect of supporting local businesses and small-caps.)
Thx for the provided information Arthur !!!
Incredible article. Thank you