The Autopsy of a Dying System - How a Foreign Money Printer Rigged the Game and why Bitcoin is the only way out.

Title: The Autopsy of a Dying System

Subtitle: How a Foreign Money Printer Rigged the Game and Why Bitcoin is the Only Way Out.

The consensus hallucination blames the Fed. The reality is a foreign money printer running a 40-year rigged game.

This is the autopsy of that lie. I dissect the malware that infected the West and reveal the only asset with the physics to escape the coming demolition.

The full transmission is your survival guide.

Credits: @Searley1, host of the great podcast: A Different Perspective;
Camera:   / tarbox_arts 
Acid Capitalist™ 🖤⚔️💣

When I say call centre at the end, I meant to say data centre, I was suffering from brain freeze…

Transcript

When I saw call centre at the end, I meant to say data centre, I was suffering from brain freeze…

Transcript

: What you really want in an asset class is you want government sponsorship.

: You want the government coming in saying, we like this thing.

: So look at Musk.

: They went, we really like him.

: Electric cars.

: That makes us look cool.

: We're going to subsidize.

: So we are the wind.

: We are the wind.

: We're going to propel you forward.

: As an equity investor, I want a slice of that action.

==============

: Good morning.

: It's Tuesday, the 1st of July.

: With me today, I have the legend and market commentator extraordinaire, the acid capitalist himself, Hugh Hendry. Hugh, welcome.

: What a beautiful day.

: I mean, 1st of July, very hot in London.

: Lovely to see you in London.

: Nice to be here.

: A flying visit.

: I came in at the tail end of last week to see my daughter, her 18th birthday.

: Does that make you feel old? Or does it make you feel young?

: These are things I don't deliberate much about.

: I never enjoyed having...Kids.

: But I'm really enjoying having young adults.

: She's the youngest. I've got two girls, 18 and 21. And a son who's 22. And they're now like little mini rock stars and they're great fun.

: Amazing.

: How long are you staying for?

: I leave tomorrow. I'm going to go and visit my father. And then I'm going to Paris. And then going back to Tokyo, back to Blade Runner. And then I'm meeting up with my daughters again at the end of July in L.A. We're going to Joshua Tree, I love the desert, 

: Oh, fantastic.

: And then back to St Barts and my summer camp.

: Yes, of course.

: Of course, which is August, right?

: Yeah. The third year.

: So we encourage people to come with partners.

: It's a beautiful place. Three formal days stretching to five so you can taste the beaches and the restaurants. And so I think we've got nine speakers. We must have about 40, 45 people.

: Amazing.

: Best of luck with that.

: Thank you.

: So what's been taking your attention,

: Well, within six months, of course, that takes you to the start of Trump 2.0. The personality, putting that to one side of the orange man, the economic policies that are being pursued,

: being pursued very competently by amazing technocrats like Scott Besant, is an acid capitalist dream.

: Tell me more.

: I'm sure your audience likes gold. Everyone's attuned to the dangers of fiat currencies and all that stuff, this temptation for the creation of money and the manifestation of that is in rising asset prices.

And, everywhere you look, you've got asset prices which seem elevated.

And a lot of the responsibility is typically put at the door of the Federal Reserve in America, the charge that monetary policy being...too easy, too accommodating, quantitative easing, this kind of free put from the Federal Reserve. That they're always bailing you out when things go wrong.

And sure enough if we take a step back, the s&p is up 60 times since since it bottomed in 1982. Now 1982 is a particular bottom because you know in real terms i think in ‘82 you weren't kind of any higher than the 1929 high so from a very depressed level but we're up 60 times and so everyone's like oh my god its the Fed and and the fiat money's out of control 

But I've always ascribed more potency to the notion of a money printer which resides overseas, outside America and is actually controlled by other sovereign nations, the Chinese and other mercantilist trading nations and the system of international trade is a historical merry-go-round and there are various stops but the stops would be at Bretton Woods and the stops before that would be 1929 and the would be 1931 in the UK coming off the gold standard and

Keynes had a profound objection to Bretton Woods because it was being created in the image of the gold standard and the gold standard had failed for a very obvious and evident reason which had been ignored in the mimicry of the old system

And the flaw was that it allowed nations to gamify economics to their benefit.

Without such flaws, the economic system is one which is constantly pursuing equilibrium.

In economics, we typically don't have trees that grow to the sky.

Economics being a natural evolution, that requires mean reversion,

But that doesn't exist in foreign trade owing to the free flow of capital.

The Chinese have done fantastically well.

You can only use wondrous descriptive terms for how they've transformed their cities and their country.

: Now, in economics, the scorecard would be, the currency trading much higher, more valuable vis-a-vis the British pound, the US dollar, the euro.

But this free flow of capital has allowed for gamification whereby the Chinese

authorities have used the dollars coming in from the trade account to buy U.S. dollars in an effort to bid down the value of their currencies.

The currency is pretty much unchanged since 1994.

That is the world today.

Yeah, exactly.

Imagine the price of commerce, the price of the exchange between the two largest economies in the world being wrong for 40 years, right?

You mean dollar being too strong?

Dollar being too strong means the Chinese remember being too weak.

So yes.

And just to hold that currency peg for so long with a vol of 3%.

That is unnatural and that requires an immense amount of kinetic financial energy. And that energy gets charged into the financial system.

And that's the money printer, if you will.

The S&P at 6,000 is very much sponsored by the Chinese Communist Party : 

That policy has survived unchallenged because of this contemptuous notion that America enjoys this exorbitant privilege, that the American government has the ability to print liabilities in its own currency.

And the international trade has turned that around to being an exorbitant cost to the American economy.

And there's these kind of notions of free will self-determination.

You know, did the chicken cross the road on his own free will kind of thing?

Does America, the rise and rise of American debt...

Is that because of these notoriously inept politicians?

Or is it an exogenous event imposed upon them?

And of course it's not helped by the big, fat, stupid bill that they keep putting forward and voting through.

It's not helped by that but I believe they have very little free will in the determination of that because they accept this gamification of international trade.

So for me, the ecstasy that I have with regard to Trump 2.0 with economics is a great courage to challenge that status quo, to say we are no longer willingto essentially be this host for another nation and their ambitions, China.

So tariffs, potentially a weaker dollar, is that... I keep saying weaker dollar.

But you want the currencies of sovereign nations which have gamified the system, who've used the system to their benefit, to rob their international brothers and sisters of prosperity and trade and employment, wealth, they've taken that out of the system to benefit a sovereign mission.

And the way you stop that is to put roadblocks in terms of international capital flows and you do so by stopping this money system, this offshore money system which bids up asset prices but also forces America to be the consumer of last resort to be the person that takes on all the debt when the world needs someone to be robust.

And Trump 2.0 is like that form of mercantilism is over.

So if you roll it forward, what's Trump's endgame?

Is it to do what Vance hopes and bring manufacturing back to the US?

Is it control,

I believe it's reimposing notions of self-determination whereby, it should be random, the notion of a US trade surplus, that there might be a random distribution of surpluses and deficits, but they will occur.

Whereas surpluses don't occur just now.

America just produces deficits.

China just produces surpluses.

And that's a system where...debt in America has to rise every year to keep that system alive.

And the Trump administration recognizes the extremes and the vulnerabilities of where debt is to GDP, where credit ratings are, where, with the level of interest rates being as elevated as they are today, that your biggest expenditure now is on the service of the debt.

These are factors which, if...someone doesn't set out to control them, then they can actually, have a geometric form of expansion,

So the idea, 

China's attracting over a trillion dollars of trade flow into China.

That's trade, it's not investment flow.

And so the tariffs goal is to price China out of the market.

Guess what? Poof! A trillion, you don't have a trillion.

Maybe you have a fifth of that now

So the Trump dynamite is the power to influence the shape and the edge of the currency market so that it’s much harder to peg the FX rate.

: And so, yes, in the common vernacular, the prescription would be that the dollar would be weaker vis-a-vis trade countries which enjoy a profound trading advantage.

Now, that's not the euro.

That's not sterling.

But that's very much renminbi.

And in doing so, you might bring back political control of the US deficits,

the expansion in the public sector.

I would say that today it's like 75-80% determined by exogenous factors, mostly the Chinese, and 20-25% determined by oddities such as the big fat bill.

Is Trump aware of that, or do you just think it's part of Make America Great Again?

I've reflected on that because, and bizarrely this is when I start talking about cancer patients and the like, and I wish not to be flippant about it, but it's…It's as though the American economy had been diagnosed with a stage four terminal cancer.

You only have to listen to Ray Dalio, who's like a doctor with a stern prognosis saying this is stage four, right?

You will die.

The Republic ends.

In fact, yesterday I downloaded Francis Ford Coppola.

He financed a movie,

Metropolis,

I think it's called, and he funded it by selling a stake in his vineyards.

It was a real passion project.

Oh, yes, I read something about this.

He released it and it bombed.

But Francis is obviously visionary, and I can't believe I didn't even see it.

It just bombed and no one talks about it [update, it is unwatchable bad]

Anyways, it's set in modern America and the script, it feels like it's a Roman Empire and Decline and Ayn Rand movie.

I'm watching that on the plane to Tokyo when I go back.

But that's the stage four cancer - the decline of the roman empire

And so you need a radical intervention with uncertain effects.

But you'd rather take uncertainty rather than the certainty of death.

And that's where we are with the economic policies of Trump.

Now, the doctor will sell you that intervention and the necessity for that intervention.

And you'll ask, is it going to hurt?

And the doctor will be like, yeah, yeah but he will hush that up kind of thing.

And the grim reality, and again, I'm not trying to make light of it.

The grim reality is when you turn up at the hospital and it's the nurse.

She's the one that says, honey, this is the nastiest thing that's ever going to befall you.

And I wish you every courage.

So I don't know if Trump actually has met with the nurse.

I don't know if the doctor would be the Scott Bessent saying, this is what we do, this is why we do it.

So does this change world order?

Is this a structural change?

I'm clearly out of sync somewhere in the universe of finance, because I don't get the dollar weakness.

That we've seen recently with the euro and sterling et al

I can barely read the Financial Times, during the best of times,

and the nonsense that's written about the dollar.

So why do I not...

understand why the dollar is as weak as it is.

Because what we are seeing is essentially euro dollar, Dixie free fall

The biggest component is the surging euro, not the renminbi because it's still pretty much pegged.

And I don't see how the dollar needs to revalue vis-a-vis the euro or the British package. And if anything, I think it's revaluing higher versus the yen already has.

So I don't understand the relative merits why somehow Europe now is better and

why people are very quick to write off the tiny period of American exceptionalism last year, where like the seven great stocks in the S&P and all the capital flow coming into the States like oh that was the climatic end. I say that’s BS

Where is the capital going?

It's going to stay in America.

Now, markets are making all-time highs, but in dollar terms, overseas markets like Europe have outperformed.

Now, as macro students with regard to the currency, what doesn't get enough attention?

America, if you will, is it Atlas or Samson?

And dastardly Delilah came along and cut his hair and he lost his strength.

And I see Trump 2.0 as Samson's growing his hair.

It’s getting longer and he's getting stronger and he's flexing his muscles.

And so what I mean by that is the tax franchise of America is expanding.

To the rest of the world.

I mean, that is, that's the tariff.

It's a tax on the rest of the world.

And it's like, well, who's going to pay it?

A big component of it is going to be paid by overseas agents.

The whole NATO budget is a tax.

It's like, when you cut my hair, when I had this crew cut,

I spent a trillion dollars a year for your defense.

Guess what?

I'm not doing that anymore, right?

So now you've got to spend 5% of your GDP on defence.

That's a tax that America's imposed on them.

Look at the disaster in the UK with pushing wealthy non-doms out of the country.

I mean, the Trump visa thing is, what is it, a million, $2 million or something?

I don't think it was that much, but you're right, the golden visa.

It's genius.

You want these people, right?

Of course you do.

: And then you've got the avalanche out there,

the revenue avalanche threat of AI,

because when we talk about non-doms and golden visas,

it's the narrowness of the tax system.

on the tax bearing load on the economy being so narrow

The rich people pay it and you're pushing them away, like, no, we don't like you.

Maths, right?

And then you've got, obviously, a large swath of white-collar professionals, right?

High tax bracket.

And they pay a fair load, right?

But around the corner, AI is wiping these people’s jobs out.

Wiping them out.

And you're chasing the nom-doms away.

Look at the Labour Party, the disability thing.

Everyone's a cripple now.

Everyone's got an emotional malady.

COVID made it legitimate for everyone to behave uneconomically

And you can't question it, right?

And when the Labour Party try and cut it, they're like...we can’t use our majority for change

And that comes to the point where the sovereign debt to GDP, has never been higher.

So anyway, the UK insane.

Trump is sane.

Come to America.

If you're rich, come to America.

You're really welcome.

If you're the Mujahideen, you're not welcome.

So that's going on.

Now the trade tariff, I think, was the only way they could get it around Trump because I'd have gone for a tax on the capital account.

So we return to gamification, international trade again, just briefly.

China has a closed capital account.

I can't go and open a renminbi account, a bank account there.

I can't buy their bonds.

I can't buy property, etc.

I can do all of that in America.

I mentioned the fact there's a trillion dollar of trade flow which can be

manufactured into purchasing essentially US dollar risk-free assets.

You could impose a tax on that which then would go back to the US.

I would do that.

: And it's embedded in the provisions in this big stupid bill that's going through,

which would give them that ability.

And yet everyone's like, you've got to take that out because it's really dangerous for markets.

What happens if China doesn't continue to buy sways of U.S. debt?

First of all, right, I'll tell you what happens.

Amazingly great things happen for America.

The problem we forget is if you go back 100 years and you look at all the equity investments you could make across countries,

you forget there were so many sovereign failures.

The US is the one that made it.

And sitting here today, I'm not sure that whatever version of China will survive.

I think there's an imbedded jump risk in Chinese equities. I think there's even jump risk with Xi.

I think he's so profoundly messed up.

I don't know how stable he is, and there's an arc there that maybe we'll come back to.

Yeah.

But that's a survivorship thing with the U.S.

So anyway, if the Chinese stop buying U.S.

Treasuries, and this a bold statement, the Chinese currency would appreciate 

So we'd get back to the objective of the Trump 2.0 which is the need for a revaluation in the exchange rate.

But it's not clear that the CNH would rise because there's a huge wall of domestic money that wants to get out of China.

So if the US closed its capital account and China opened it where would the currency go?

There's so much wanting to come out versus what you would want to come in But over time you would have to say a sober analysis would be that the economics of the situation would take the dollar or rate from 7 to closer to 5 

But just now there is a risk that we might trade 9 god forbid we will see

Anyway, the Chinese actually stopped buying treasury bills 

They're playing a different game.

And the game is appalling.

It becomes like an episode or a chapter of Dune and the spice colonies of Arrakis.

I've been thinking a lot of that recently. I actually think of the U.S.

being a spice colony of the Chinese, that the Chinese are the empire.

And the spices that the colony of America produces are these treasury bonds.

Interesting.

The Chinese financial system, the spice, the spice is dollars.

They need dollars coming in.

It's dollars, it's not their local currency they have to manufacture.

They have a huge need for a gigantic repository of sovereign dollars assets

to underpin their financial system.

But their treasury holdings was getting too much attention,

Newspapers can go the Chinese own $3 trillion of treasuries.

And then there was the fear despite their own volition,

they had chosen a higher risk asset,

the subprime,

the CDO stack back in 2006, 2007,

as a surrogate for a Treasury risk-free asset.

They needed surrogates back then for treasury bills because at the turn of the

century, the US was running balanced budgets.

And so they weren't producing the spice, 

And so Wall Street had to invent a risk-free surrogate to mop up the huge offshore demand, which created the housing market bubble in 2006.

And the Chinese took all of that MBS and, of course, it blew up in 2008.

And then, like, Gucci pigs, they were bitching about the damage done

And, you know, we had to send Hank Poulsen over to China and he said, well, I'm really sorry. And then the U.S. bailed everything out to preserve their money.

So the Chinese thought, ooh, it's getting a bit hot.

So what they're doing now is another form of arrakis.

And spice colony, this time the colonization of Africa in theBelt and Braces Initiative?

You know, the overseas Economic Expansion Program.

Oh, yes.

BRI, Belt and Braces Initiative.

I fear I sound like a conspiracist, but it's really, really evil.

So they need dollars, right?

Yep.

So they go to say Mozambique.

And Mozambique has got huge thermal coal deposits stranded in the middle of the damn country.

And they're like, hey, they'll get Mozambique to borrow dollars, to finance mining - the thermal coal projects-

and the Chinese are going to own the dollar debt and receive dollar carry just like with treasuries

And so the dollars Mozambique is raising, those dollars are coming back into the Chinese system.

So, they go to commodity-rich but fundamentally poor and corrupt countries which can use the latent commodity collateral they have to borrow dollars,

which are then siphoned back into the Chinese system.

And it's literally spice dollars, the fuel for the Chinese economy to grow at 5%.

No one talks about it.

It was very easy to talk about ownership of treasuries.

It's much harder to talk about the fiscal brinkmanship in Mozambique et all 

But effectively, you have with the agency,

They’ve gone into some of the poorest and politically weak nations,

not very robust countries.

And you've expropriated their prime assets to facilitate the flow of dollars back to China.

So if trade supplications and deficits between China and America and China and the rest of the world become just random economic events and not this gamification, this serial trade supplication that grows to the sky every year.

The system was built on the Chinese need for dollar certificates

Deposited into the euro-dollar system as collateral.

US treasuries are the gold collateral of the gold system.

They make the world go around.

And if we move away from that world, you don't print money.

When you don't print money, it doesn't boost asset prices.

And so the reason that...politicians from both sides have not pursued the Trump agenda is because their experts have said,

if you pursue this,

you'll have a profound deflationary bust in all asset prices.

And we don't think that's good.

Its disingenuousness,

because the path that we're on is that every 10,

to 15 years we will have an enormous blow-up.

Trump is implicitly saying why don’t we just rebase it now, take our own self determination back within our control.

It’s Very difficult to get politicians to do that, really.

And Trump was a Trojan horse because he's the last person you’d have thought that's going to vote for that.

But then it comes back to, does he actually know that it's stage four and we're talking about chemotherapy?

Does he know this is chemotherapy?

It's meant to hurt and it might kill the patient, the US economy, or certainly the elevated price level of all assets.

We don't know.

And that's where you come back to Taco Man, all that kind of stuff. Does he get it? The seriousness, the dire consequences short to medium term of these policies

Yeah, exactly.

But then again, if you read the art of the deal, this is exactly what he's up to.

I mean, go in high...

Come down a bit lower.

Everyone thinks they've got a deal and he comes out the winner.

Spreading confusion.

Correct.

People are like, I don't know what this guy is doing.

Is he for real?

Just the fact that you've got Besant.

You know, Besant, here we are in the city of London, and you have to go back to the famous confrontation between the Bank of England and Scott, Stan, and George.

And Besant was the guy...

He was the analyst writing the paper saying, this is how this thing works,

And now he's running American dollar policy.

So that's kind of cool.

The New York Post had a piece,

and it might just be nonsense,

but it put a lot of little points together and said,

where is Xi?

He's just not being seen.

And, like, bodyguard counts, and there's been a lot of humbling.

It's like, oh, what's happening?

So when America bombed Iran

I was in Japan in that weird time zone when,

you know, the B-52s, whatever they're called, dropped the big dumpsters onto the nuclear sites in Iran.

I put out a piece that i’ll share with you now

That I think the Iranians have got nothing, I think all they've got is bluff 

That it feels comparable to the end of the Russian communist system where they just ran out of ideology and they ran out of money.

After 50 years, they're like, we got nothing.

And I think over the course of the last 18 months or so,

you're seeing that the Iranians kind of got nothing.

: Like the Israelis have come in and just decapitated the Iranian system of terror.

And it was time for America to call the bluff too,

I don’t want to be overtly political or veer off into the world of what ifs 

but I kind of go to playfulness and what ifs as I try and coax visions of the future in my head

So here's a question for you

in the context of the last 50 years, what's the one thing that if you could go back and change?

I mean that would affect the direction of the world.

It's a very tough question.

I've obviously thought about it.

For me,

It would be the third quarter of 1979 when the Iranian Revolution takes the U.S. hostages.

They cross the border, and there's no respect for the sovereignty of the American embassy in Tehran.

And they get away with it.

They were gangsters and they were having fun.

And they got away with it.

In my world, you just could not countenance that loss of sovereignty in Tehran.

And America should have had boots on the ground immediately.

Bombing.

It should have just been...

I'm going to take you all out.

Your families, everyone, like, get your Mujahideen out of my embassy or you're dead, right?

And, yet that didn’t happen

and like that botched up rescue mission,

That's the thing I would change because...

That cemented the theology, the precedent for a nation run by theologists, a nation rejecting modernity.

The tragedy, because it was like the most progressive Arabian society.

Remind me, was that in the middle of the oil crisis?

Yeah, you'd had the two oil crisis, and... it was at the tail end of that.

You had Volcker coming in and raising interest rates.

Carter had been elected in ‘77, 

But it coincided with the peak in gold.

Gold peak was, I think, the week of the botched...Navy SEAL failed mission where the helicopters went down in the desert.

And that's where gold hit $850.

And gold was the default holding when the world's crazy.

Investors saying ‘I ain't buying’... because stocks and bonds only flourish in a regulated world, a world that makes sense.

Linear with parameters that you can respect.

In the 70s with oil, all the various...ideology conflicts it was just like i need an asset class which is a finger to the man 

So let's let's move on then very briefly and an asset class that gives the finger today, bitcoin yeah 

Remind me, you were quite positive bitcoin recently or you you've sort of changed your view ?

My thing is always, this is such a strange business, investing, speculating, yeah.

And the conceit of intelligence that we have, logicality traps, it's remarkable.

As speculators, the...dumb things we convince ourselves we should do right and so it sounds trite but it's actually very powerful that as a speculator I'm drawn to things which are rising in price…momentum is a wonderful trade

Yeah.

There used to be that thing about how does a billionaire become a millionaire?

It can't be that. We didn’t have billionaires.

How does a rich person become a poor person?

Today it would be billionaire, millionaire.

And back then the answer would be start an airline.

Today it would be run a value shop, they don't work in this economic environment.

So you asked about Bitcoin.

Bitcoin has been going up.

That's attracted my attention.

And it has cycles.

That's intriguing, but it's going up, and it's going up with volatility.

And, you know, a lot of kids, and they want to be hedge fund managers.

And it's just like,

if you get that opportunity,

and you've been given $100 million or whatever to manage, which is really not enough, you need $300 million for break even,

But in your first year, you should be...searching for assets, asking what's going up that I can trade?

I want to be three times leveraged.

And I'm going to be kind of super smart, ok maybe not 3x leveraged but i’m going to try and trade it a little bit with options and all that stuff.

You don't go, oh, I made 6% in my first year.

Because you know what? You won't make it.

So my first year I did that.

That was gold. Gold in 2003 was my Bitcoin of 2025.

It's a starting point, man.

Just look at the things that are going up, right?

And then try and conceive of how you can try and put that into your portfolio.

Now, a lot of things have been going up.

metaphorically, i’m talking about things like heavenly bodies going up and going down and so that makes me think of physical mass and weight and energy and discharge and this is kind of thing

moving from economics to mathematics and engineering and so

The attraction, the real thing I get, I finally got with Bitcoin was the mass.

: The fact that it was tiny.

$660 trillion global wealth and $2 trillion bitcoin.

U.S.equities are $50 trillion.

Gold is $20 trillion.

It’s hard to believe the SPX is going to triple in the next five years. Just too much mass, I don’t force the energy force that could propel such a mass forward so violently

I would say its impossible unless there are some other reasons and it's the complete destruction of fiat money.

But it's not going to happen in three years.

But Bitcoin could do that.

I find it very hard to imagine that gold could do that.

$20 trillion is huge... And why?

Because when you revalue something which is 20 trillion into 60 trillion, it actually has a knock-on impact on your economic neighbours and the like. it changes the world.

And that hits friction and there are circuit breakers.

It kind of doesn't happen.

: But to go from 1 to 3 trillion, to go from 1 to 10 trillion dollars today...

it doesn't change the world hugely, you wouldn't notice it and so bitcoin could trade at a million bucks, I believe

That's just me playing mind games, just trying to loosen my mind.

But what you really want in an asset class is you want government sponsorship.

You want the government coming in and saying, we like this thing.

Look at Musk.

They went, we really like him.

Electric cars.

That makes us look cool.

We're going to subsidize.

We are the wind.

Put up your sail.

We're going to propel you forward.

Now, As an equity investor, I want a slice of that action.

And again, back to Trump, with the new administration, they're like,

this is what we want to happen.

And why do they want it to happen?

Because where it dovetails, it's like we prepared this.

We were talking about, what if the Chinese never buy a treasury again?

Well,

maybe that's why Scott's thought about that and he's pushing the stablecoin.

Yeah.

And the stablecoin is just like because you want to just keep your Bitcoin in crypto rather than every time you dip between fiat and crypto there's a freaking charge.

so you want to keep it in the crypto world.

And of course, then you want to get a yield from it.

And so these huge stablecoin platforms are going to be the guys saying,

we need treasuries,

we're over here,

we want treasuries.

And they become the bank.

So money, the transmission of money, monetary standards, they evolve.

Now there are crisis moments in finance, but there's a lot of technology at pla, you know, the rise and rise of America at the beginning of the 20th century, the telegram,

Mrs. Smith could live in San Francisco but visiting in New York,

and she could be in Macy's, and she wants to buy a handbag and her bank on the other side of the continent confirms her credit with the new technology,

Today, there is so much inertia and lack of trust in financial transactions, you know that i had to write 20 times in French, ‘i promised i will not default on this mortgage’, insanity 

because of the bankruptcy laws in Europe and stuff,

there's a great inertia and fear about actually extending credit.

And so our mostly paper file fin system works on the basis of distrust.

And so the advances in blockchain could provide clarity of ownership, like no one can cheat, and defaults are easier to manage

Transactions costs and speed would both improve.

That's the future.

And that requires things like Solano and all the other bits and pieces of crypto,

Ethereum and the like.

So the government is pushing it.

That's wonderful.✅

And I think they're pushing it for this macro sovereign,

protecting the dollar’s status, keeping the hegemon of the dollar globally.

It's the only... Europe can't do it owing to no one unified euro bond asset

And then another factor that you don't want to be fighting is big money.

And again, big money, back to my kind of the weight of everything argument.

Consider Ken Griffin, Citadel, because Citadel is the matrix.

He's not betting on the stock market going up 20%.

I mean, he's got a tiny part of his empire that does that.

but rather, he makes money when you trade.

He loves those Robin Hood guys, right?

Yeah, he does.

He’s the system: every time you touch your screen, every time you think about investing,

boom,

boom,

boom,

he's taking a little clip.

But those little fees, they need a system-wide expansion.

So you get system-wide inflation.

Well, it goes back to our discussion before we started recording.

I am High price, small TAM (tiny addressable market)

Small price, big TAM.

And that's obviously what Ken's after.

So he looks around and equities are $50 trillion.

We're kind of at the max TAM.

It's a huge sum, you know, but it's not going to expand.

But what if we could take something from a trillion to 10 trillion?

Freaking amazing. We'll make so much money!

And so it's only four years ago where it would be a crime, the notion of an ETF that was Bitcoin. And now BlackRock has one.

And now they're doing blockchain on every US treasure that's going to get issued.

You're going to see where all the money goes.

It's amazing.

Right, who else do you have?

Oh, and then perhaps the biggest thing is when you...

There are, there are no derivatives in crypto.

They're just beginning.

We brought options into the S&P, I think, in 1982.

Yeah, right.

I call it fractional reserve investing.

The amount of money, the flow that you suddenly create that goes into,

the market is infinite

It's insane, right?

So I find bitcoin very compelling and think could trade 10 times higher and very rapidly - like over the next three.

I think it has to be very rapid because it still has to catch everyone out.

Markets going up like that, some people get it, most people don't.

And the reason is because it does it so rapidly.

That always holds you back.

So, I have such a compulsion on the notion that I am contemplating the sale of my glorious, beautiful house in St Barts.

Why would you ever want to do that?

First of all, because it's...a trade, a trade that has run its course.

And I'm leaving a bit on the table,

but I had a 3 million equity investment,

which funded debt,

which funded expansion.

I'm not bragging on numbers.

I don't give a damn about numbers, but three has become 35.

Yeah.

Okay.

But done.

You know what I mean?

Done.

And so why 35?

Because, again, if people are listening attentively, people... think price is just something magic that comes out of nowhere.

You see it on Dragon's Den when they announce the valuation of the business,

I’m like, you're making that up!

I shout at the TV, I love that show, I shout at the TV!

And I shout because price is a very logical contract.

Rationality delivers. It's a living, breathing. It's something that exists in logic.

It's not something made up.

So when I say $35 million, I'm talking about you don't pay tax in St.Barts.

Everything gross is net. The property is a real asset. And you're talking about an annual revenue of over $2 million.

And when you account for an annual expense charge, you're looking at like a 3% real yield.

That's where you get to $35 million

And with $35, I would contemplate taking between $5 and $10 million and buying Bitcoin firmly believing it could become a hundred million 

now would i be a hundred million times happier?? 

not at all but i'm at a point in my life where i feel like I need mission and all my assets are tied up in the one trade, i mean the house is astonishingly beautiful it's the manifestation of my mind is not that I'm beautiful, the beautiful version of me.

But you've got to be clinical, I say.

Cut it off.

I’m trying to move on. And actually, I'd love to build a new place.

I've got ideas about it.

I want to work with prefabrication techniques.

The prefab houses in America.

I told you I'm going to Joshua Tree.

Yeah.

I’ll take my notebook and design things.

Yeah.

So I've got one more topic I'd like to touch on, if that's OK.

And it's a topic that is causing a lot of column inches and a lot of time.

What's the acid capitalist view of how AI will change us and what we do and the world?

Well, it's changed me, made me infinitely smarter.

And I've actually just published a paper on this, The Memory Parasite.

It's scary.

I mean, I'm always a little bit...far away from planet Earth.

But this has taken me far.far away from planet Earth.

But the big brother element doesn't concern you?

The fact that all your thoughts are now there?

Yeah, it does.

My kids...write prompts with the word thank you and please and could you do this, I don't

Sam Altman he doesn't want you to do it because all this niceness consumes electricity, takes more bandwidth

He's like, what do you want?

And that's what I do.

But my kids are like, when the machines take over, they're going to wipe you out.

I’m the first one they're going to take.

They tell me i’m being rude, being rude in your prompts, having no manners.

I've got all my kids on my account. and It's really embarrassing because I write everything.

I'll get a message from a 29-year-old, very cute girl or whatever,

and I'm like, ‘okay, how should I respond to that?’

But the one that always freaks them out is, remember I'm saying I try not to waste the energy with please, could you, et cetera.

But when it makes an error, and it does make errors, it is fallible.

I'm like, Jesus, that's wrong, why is that wrong, you know?

And then it comes back with this friggin' made up, contrite, I'm really, really sorry, I'm gonna try harder,

but I'm like, shut up! you're a machine you're faking it right 

i'm not buying it right 

Its one thing to make a mistake, i can respect mistakes 

i'm a world-class loser because i actually i train myself to manage my errors

i'm going to make mistakes, i have to be able to accommodate them, not be decapitated by them and that’s why i have contempt for ‘I'm sorry’

‘shut up’ I type

you're wasting energy.

So does it change the world?

And How does it change the world?

And will the world be a better place for it?

Because the machines, I guess, will take over.

So I'm very aware that I'm living a science fiction version of my life now.

You know the Tom Cruise one directed by Steven Spielberg, where they have the AI blobs and they see crimes in advance and they send Cruise to take it on before the crime happens.

Fascinating kind of morality and the like.

That's happening today because AI has memory.

And the more you use it, the more it knows you more than your closest confidants

Correct, yeah.

It knows everything about me.

And I'm getting to the point where it's prompting me.

It gets it before I get it, like thought bubbles are coming digitally out at me.

The whole idea that it, it took a couple of iterations for the computer to beat the Korean Go expert, and then all of a sudden it now just wipes the floor with humans.

It's that machine learning that's the scary part, I think.

The memory.

But the economic model is not obvious yet.

: So I've got a friend, he maybe listening,

he's in the UK, no, of course not, he's no longer here, did I mention he's rich,

so of course he's not in the UK, he's in Monaco.

But he's a British AI entrepreneur.

And commercial stuff / adaption is happening, is a reality

Fashion internet brands. They don't need anyone, don't need property.

Debt collection.

Banking systems.

You don't need people picking up phones.

Call centres eradicated.

Back to what we were saying.

All of those people were paying tax.

They had jobs.

Exactly.

The British government with a huge majority and it can't reduce disability insanity freebees - the disability allowances are responsible for 20% of all new UK car sales. A system in total failure and rising geometrically, everyone wants free money

I was about to say, but governments still need healthcare spending and they still need roads and they still need defence etc

The value of the thing we're developing is huge, so the asset value they reckon, they’ll tax the capital and we’ll be fine.

maybe.

But it's not...obvious to me at least, the great stock market winners.

It's more like you're investing now in the picks and shovel as opposed to...

I guess the concern is it's very nice for ChatGPT to rewrite a letter or help you

use the correct grammar.

But actually,

I guess it's what's happening that we don't see behind closed doors and the speed of machine learning and robotics and...

the missing ingredient for me to be more relaxed 

I'd like someone to adequately explain how you make returns on these giant data centres.

The return is not obvious.

Rather than hosting 1,000 people in a call center, that would be outsourced to your AI provider. So you pay subscription.

Yeah, so it becomes cloud.

It's hard to shake off historical comparisons.

So the 1999 and the tech bubble is not the right comparison.

Because there was only one Google, one Apple back in the day, one Amazon.

I mean, there might have been a Yahoo or Ask Jeeves, but they soon got wiped out very quickly.

Whereas this is seven, profoundly well financed.

And don’t forget deepseek in China, a sovereign investment.

The comparison is perhaps more attuned to the 19th century when private companies were building multiple railroads to the same destination.

Interesting.

But the valuations on these stocks, they're not actually absurd because the growth has been coming through.

But yeah, so for me, I am definitely finding that...I'm becoming an addict.

The paper I wrote was, hey, this is from six months in the future.

This is where you're going to be.

This is how your life will have changed.

And what I am writing, I can scarcely believe how good it is, that I'm able to do this and so I'm spending more and more and more time online

I've got these nodes of curiosity which then feed on them themselves and so I'm like a spice colony of curiosity.

I'm definitely in a rabbit hole.

Now, speaking of your writing, you have a Substack.

Is that how listeners can follow you?

What's your medium of choice at the moment?

Well, I'm on Patreon as well, but Substack is just superior.

Sorry, Patreon, but it's superior.

Substack is really...like Twitter or X. Except the people who are on the platform want to pay real money fro great content

You've got an audience, people are like, I buy this stuff. It's fantastic.

So you see less and less of me on, why would I be on Twitter?

People, they come in, people moan about shit.

So yeah, Substack is my principal vehicle and I use Instagram, YouTube,and X as a front window to say, ‘hey, I'm doing this over here’.

Instagram's kind of funny because of the lifestyle I have.

And again, talking about being playful with time, but when you're at a bar, girls always say, where are you from?

And I respond, ‘the future’.

Does that still work?

It never lets me down.

So, I mean, I have to say this has been absolutely delightful.

Thank you very much for coming and dropping by on your very brief visit to London.

And I guess if anyone's listening and fancies a villa in St.Bart's, then you call me and I'll take a very small margin.

Hugh, this has been brilliant.

Thank you so much.

Thank you.