Felix Jauvin: My Macro Outlook (The Debasement Trade Begins)

Transcript

What happens to that $400 to $600 billion is going to be very important for 2026. Do we take that and put out sty checks? That's obviously just going to be a probably a net positive because you're you're taking money from corporations and probably giving it to individuals. >> Do you think that would help to accelerate through any kind of downturn that would occur at a macro level? curious how you see these two like kind of crypto phenomenon affecting the broader global macro picture.

>> Welcome back to the rule. This is your home to learn from the biggest guests, the brightest minds at the tip of innovation. Our goal is to help spread the collective knowledge of everyone in our community. >> We are breaking crypto out of its echo chamber and taking it to the real world. Deja, welcome back to Rollup TV. Man, a lot has happened since we had you on last with your trade after the trade article and post. I think back in April, Bitcoin's alltime highs. We'll give you a little confetti for that for calling that one right. I hope your portfolio is looking good, man. Good to have you back.

>> Thanks, man. A lot's happened for you guys, too. You guys have been killing it. Whole rebrand, killing the live streams. It's uh feels like there's been a lot of traction on your guys' end, too, since the last time we chatted. >> A thank you, brother. Yeah, it's been fun. Uh I was just out in Seoul and and uh Togan as well running the Asia conference tour. I think you were there as well. Any any takeaways? What do what do you think about uh the Eastern Hemisphere these days? >> Um yeah, so I was actually only at Seoul. I had to come back. So I didn't I didn't make it to token 249, but uh yeah, that was my first time at an Asian crypto conference. It is Yeah, it's it's that's where retail is. Hey, man. Like they're just it's fullon. People are like, "Where's retail?" Yeah, they're in

Asia. They're in Soul. There is just I was walking through one of the I I went by like I was there for the origin summit um but I went by the Korea blockchain week conference and every booth people are just lined up like crazy trying to win something for free trying to sign up for something and it's just like >> normal people you know just like not crypto industry people. It's just people that are just interested in in in the whole world. It's yeah it was really interesting comparing that to the US where it's like all just suits and you know black rock and that type of thing. Yeah.

>> Yeah. It's just like a different different vibe. I mean, it's speculative driven. It's they've got the inherent kind of I don't know, you know, gambling culture or just kind of, you know, go to the park and play play dice or play dominoes or, you know, then that leads into what I saw was people in Korea doing perpetrating live on a big screen there. So that whole kind of like culture, >> you know, I'll say I think I think it does run a little bit deeper than just gambling because there it really feels like there's some hyper financialized capitalistic attitude in South Korea and I think part of that stems from their very close neighbor being a rather communist authoritative country and they've really got this cultural identity that says we're not them. we're

gonna be our own thing and that's going really far in the other direction which is super super capitalistic hyper financialized markets about everything and that really runs through their culture. >> Yeah. Big time. It's also interesting like South I've traveled to other Asian countries but mostly tourism destinations and it was one of the first places I've ever been to where they're such a economic powerhouse where you know they have Samsung and everything so like why do you need tourism there? So nobody speaks English and everybody it's a very rich country. Um and they're doing really well. It was really really interesting to see. >> Yeah. Well, there's a >> welcome Felix to >> ton of fun.

>> Money moves fast episode four. Rob, >> this is our premier tokenization, payments, macro kind of show. We looping you in here today to bring the macro picture that kind of will balance out some of this stable coins, tokenization kind of stuff that's happening in in the cryptosphere. Um, so Rob, pass it to you. I know you just had a great pod with Arthur Hayes. Maybe you could set the stage here for sure to kind of give us some of his takes. >> Uh Fiao had a great combo uh I think just a few days before I did because my conversation was uh at token in Singapore. And so one thing that I gleaned from Arthur during our conversation as well as in uh his second to last piece 47 which is the best hand

in presidential poker. uh and he described the outlook for Trump and the Fed and the generic monetary policy that the US is moving towards. And if Trump can get a fourth governor in the federal board of the governors, then he can essentially take control of the Fed and control the monetary policy, which is really important for him to enact his his fiscal policy ahead of the elections in November. because if uh the Republicans lose the midterms, then he would still have the Fed to really enact his his power and his control. And so in the last Fed meeting, we saw two governors descent. There was a third one that kind of, you know, spontaneously resigned. And now this fourth one is all up to Lisa Cook. If Lisa Cook gets

cooked, then Trump takes control of the Fed and he can basically use the Fed to his will. And so FA, you're the macro expert here. are how do you see this landscape playing out and what were some of the takeaways that you had from your conversation with Arthur in in uh after your podcast in Soul? >> Yeah, it's it's a wild macro backdrop right now. Like the fact that we are suddenly in this situation where we're trying to piece apart and game out the scenario analysis around a takeover of the Fed effectively is just like wild.

You know, you we we've been through these regimes before. Like the if you look at the long history of the Fed and how quoteunquote independent it is, we've had times where it's basically just subservient to Treasury and therefore the the presidential administration. Last time that happened was in the 1940s basically. And that was the outright yield curve control, which Arthur talks about in his piece where he's saying that's where we're headed. I likely agree. You know, we could talk about semantics and whether that's like a overt yield curve control where they're like, "All right, you know, we're we're not letting 10year yields get above 5% and if they are, we're going to buy unlimited amounts until they come lower." Or did they go for the soft version, which you can make the argument has already been going on for a couple years now. That's the whole

yellinomics or as Arthur calls it bad girl yelling type policies where it's like all right we're going to we're going to issue a lot more T bills than bonds and and just starve the market of duration which effectively mechanically is a very similar thing to quantitative easing basically. So yeah it's it's a crazy time. Um it's been a really interesting trajectory. So, as you mentioned at the start of the show, last time I was on here back in mid April or whatever, I wrote that trade after the trade and it was really going forth into explaining how with this this debasement trade that's become quite popular recently. It was it was really beginning to explain some of those ideas and those ideas have held ever since. So, it's high fiscal deficits. It's a weakening

of fiat currencies meaningfully. And this is what's always confusing for people is that you look at the DXY and you're like, well, it has, you know, it went down a lot in the first part of the year, but it hasn't really gone down since. But FX pairs are always relative to other FX pairs. So, you have to consider that. But it's kind of like all FX fiat currencies are melting at at a similar pace. So, you don't really see it in the rate differentials, but yeah, we are in this debasement trade well underway into it now. Um, you know, that that thesis looked really good for a few months there. we saw Bitcoin rip. Um, that felt really good. And then in in the summer, I started to slow down a little bit in terms of my my bullishness. Um, I was mentioning how I

felt like it was time for gold to take the baton from Bitcoin for a little bit for a few months. And that's, you know, I was about I was about a month early on that call, but it started to really happen. And, you know, the past month and a half, Bitcoin's been pretty crappy up until the last week or so. And and gold has really set the stage there. So, that happened. Um, and then in recent Go ahead. >> Could I just jump in? What were some of the mechanics that you saw in the in the market that led you to the conclusion, look, this it's time for gold to take the baton and run with it? >> Yeah. So, one was seasonality. Um, I'm not a huge seasonality maxi, but just I I've been through enough years in markets at this point to recognize that

end of August is not really a great time for risk assets. Um, at the same time that just the technicals were looking really good for gold, it had been consolidating for for four months. Um, it just looked like it was ready to break out higher. And what we've learned over the last few years is that it's it's rare to see gold and Bitcoin go up at the same time, which is it's funny I say that because today is a day where gold and Bitcoin are going up at the same time, but generally speaking, it's sort of like one goes and then the other one catches up. So it just felt like it was time for that to happen that we got a little stretched in terms of Bitcoin running and and gold consolidating sideways. So yeah, it's it was a bit more market structure type signals that

I was looking at. And then that yeah, that played out and then in the past few weeks, you know, I was kind of really confused about the price action in crypto honestly because I am very very bullish on the macro structure. Um, you know, equities were looking great, gold was running, but Bitcoin and crypto were doing really badly. And I was a bit confused about why and perplexed. Obviously, I knew that, you know, early September, mid-Sepptemeber, it's not really a good time for crypto almost ever. Um, but it still didn't quite make sense to me. And then we got this SEC news that dropped that digital digital asset treasury companies were being investigated for insider trading. And then everything started to make sense.

And it was if if you go back and look at the chart, we bottomed the second that news came out. We bottomed that like 109K. And then I put out a few I was like, "All right, that makes way more sense why we're getting this idiosyncratic sell-off." Because all these insider, you know, they're talking to 200 plus people. So all these 200 plus people, they're like, "Oh crap, well, I better sell some crypto because they're, you know, the show is over. The DATs are getting investigated by the SEC." Um, and so it all got front run. And so I I put out a tweet and said, "All right, I think that's the bottom. I think it got front ran. Now we're going to see this catch up back to where it should be trading based on macro. And then we've seen obviously the run from

109 to 125 since. So yeah, it's looking good. >> And as of yesterday, the post kind of now forward looking from where we are today from you that has gone viral is, you know, every country's is pivoting to running it hot. We're going to run as wide of deficits as possible to try to outgrow the debt. I think there's some stable coin commentary to kind of be had in there as well. Central banks are giving up on inflation and fiscal dominance is arriving. Nominal assets will do well. Debasement hedges will do even better. The world of 2010 to 2020 is no longer. Reset your priors. LFG.

You know, let's talk about this kind of forward-looking thought process. So, nominal assets will will do well. Debasement hedges will do e even better. The last decade doesn't really apply to the next. kind of talk us through what your mental model is for investing in the next, you know, five five-ish years with regards to nominal assets, debasement hed, just kind of where you see people allocating capital um and the and the broader trend. I think it's it's the debasement trade, but perhaps you you >> Yeah, >> you could kind of go a bit more in depth.

>> Totally. Yeah. So the reason that I I put that out was we had the the Japanese elections happen in the last couple days and the person who won first woman prime minister and she's pretty far right compared to what they've had historically and she's running on this platform of cutting taxes a ton and basically running the economy hot. So similar to what we've been seeing already in the US and you know Europe got a lot of this. There's different reasons for this idea of running it hot. some countries it's about increasing their fiscal deficits to increase their defense spending. That's sort of what's going on in Germany and and Europe. Um so there's there's parts of that and there's parts of just this this giving up of central banks in terms of their inflation targets. So, you know, they're

never going to say it outright, but it's it's quite evident that when you're getting the type of rate cuts that we're getting across the board. I saw an interesting chart from Bank of America where this is the first time I think since 2008 that we've seen no central bank hike in the world for the last two months. So we're just in this like coordinated monetary easing cycle. Meanwhile, most inflation targets have not bottomed out. So in that in that situation, obviously the the the bad side, the downside is inflation, right? If if you're running the economy hot, by by definition, you get inflation. Now, inflation can be really bad for risk assets like equities if it triggers a Fed re or a central bank reaction function, but we're seeing the opposite

right now where it's it's actually, you know, they're sort of letting it letting it ride. And so, in the meantime, what does inflation do for risk assets? It leads to, you know, higher higher nominal revenue. Basically, like, you know, net revenue in companies is a nominal metric. It's it's not real. and and therefore as inflation comes higher those econ those those companies that have econ economics of scale um their margins will increase their sales will increase their profit will increase etc etc so that's why the the the nominal assets is going to do well is because we're seeing this running at hot at the same time that the central bank is not kicking in their hawkish reaction function the reason why debasement hedges work even better is

you know because basically they don't have any sort of of cost associated with it. Obviously, in an inflation regime, costs would increase as well. Um there's just that that idea of, you know, if gold is just a pet rock, it just sits flat there. It's not actually doing anything. The reason it appreciates is because everything else is going down, which makes it look higher. Uh similar idea to Bitcoin. So, those are going to do really well. And then the last piece there about this this um emergence of of fiscal dominance um and that it's not the same regime as 2010 to 2020 is because that regime was a regime where we couldn't get enough growth. We were trying to run it hot, not even run it hot, just run it at target. We were trying to throw so much

money, so much quantitative easing at the wall just to get out of the fears of deflation. And that is a completely different regime than we're in now since postcoid. And so it it throws off a lot of those traditional macrome metrics that people look at. Um it's just we're in a we're in a completely different world now. We're in this world of a very handed heavy-handed fiscal impulse. So you just you can't really look at that that decade anymore. And so I think there's a lot of recency bias in a lot of people where they're not recognizing that fact that we are just in such a different regime now. >> The wait is over. The Talis test net is live. Be part of the revolution. Join now at testnet.talis.network.

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You know, th this was another thing that we we sort of outlined over the last few weeks is is that yeah, if you look and you mentioned this with DXY, the dollar doesn't look like it's depreciating very much because it's indexed against other foreign currencies and foreign other foreign currencies are inflating even faster than the dollar is. And so this is kind of perpetuating the debasement trade that you're talking about and leading to to Bitcoin and gold doing quite well. I I want to get your takeaways from the the podcast you did with Arthur and Soul because this was kind of the topic of of one of his next pieces about uh that steel day and how he's almost predicting a fxit, a French Brexit and and France kind of going back to the Frank and leaving the EU, leaving the euro. Um unless the the European

Central Bank again prints money, debases the euro further to kind of bail France out. um and and they've been also tethered to to Japan and Germany for so long and so I'm curious did did you have a chance to talk to Arthur about this um generally what what were some of your takeaways from that conversation? >> Um yeah so when I talked to him that piece wasn't out about Bastial Day he had just published uh the 47 one which was really interesting and yeah I think it really hits the nail on the head in terms of how to think about again comparing to 2010 to 2020 we didn't even have to think about what the composition of the Fed looked like. Now we're in this completely different regime where we're more overtly politicizing and and taking the Fed back closer to the

political administration that's in power at the time. So yeah, I think it's it's the right question to be asking is what does that look like if if Cook gets fired, if they can actually fire her. Um, obviously the second order impact that Arthur gets into in that piece is that then in 2026 when they can go and renominate the the Fed regional presidents, the governors have the veto power about whether who gets in or gets not. So typically that's never been used as a tool to decide in terms of the composition of hawks versus doves, but I think it's increasingly likely that that's what they're going to do in 2026 is make sure that they get in all the right doves into the Fed in 2026. So that's the portion of of Arthur's piece that I think is really compelling and you know leads to just this even more

bullish you know macro environment. Um and then the second one in terms of Bastile Day I I didn't actually I haven't read it yet but I have definitely some thoughts in terms of the the original sin of of Europe and the Euro environment is that you have this common currency for all the different countries but the debt is is different for each country. And that's just been the headache ever since the Euro zone was was created was you know what I think is a mistake which is that we you know how do you how do you navigate monetary policy in a world where the currencies set for one for all these countries but then each country has a different debt profile. It just makes no sense. So that's why you've had this issue where monetary policy from from

the ECB has been mostly driven by whoever has the riskiest debt. So in the 2010s it was Greece. um you know if you just want to see a simple way of comparing this is like looking at German boons like BTP boons compared to Italian bonds and the spread of that and so basically any time that there's an issue in terms of monetary policy of the weakest link of that bond environment so probably Italy or something like that that's what drives monetary policy but then it's like well we need a completely different monetary policy environment for Germany like we're in a completely different economic landscape so you translate that to France where you have, you know, their long and bonds are are selling off like crazy. They're in a completely different environment. So, it just it

creates these very tense potential fractures between the different countries. So, I think it's I think it's going to be increasingly a bigger issue. And I I think it's totally possible that we see more more exits from the European Union for sure. >> Yeah. And a lot of the a lot of the points that Arthur made um in that previous post also Bastile Day and and in our conversation are forecasts that are are playing out on the two to threeyear time horizon really kind of the the stable coin trade. Bessant has talked about three trillion in stable coins going into 2027 and 2028. And so I think that is sort of Arthur's time horizon. But FA, I'm curious more about maybe a little bit more of a near-term

time horizon. If you're looking through to the end of the year, you're looking maybe to uh the beginning of next year. There's a lot of it feels like impending mania, at least the sentiment feels that way on on Twitter. And so if we have all of these these monetary easing policies, all of this money printing on the horizon in the two to threeyear time horizon, but we have this impending, you know, three to six month mania feeling and then, you know, just kind of one more pump and then it's all over. How do you how do you reconcile these? How do you balance the near-term and the midterm when when one feels, you know, really overinflated and the other one feels like there's still a lot more inflation to go?

>> Yeah, it's funny. We we just went through this exercise on the latest roundup we did on Ford guidance where it's like all right we are all so bullish and it's just so clear to us. So it's like all right what's the catch here and oftentimes the catch in those s sort of situations is is market structure positioning. So what we did is this this deep dive into uh Scott Rubner who's one of the best like flows guys in in Wall Street. He was at Goldman Sachs for years and now he just recently joined Citadel. And so he he analyzes flows basically in looking at you know market structure positioning. And so there's a few important considerations to have in terms of gauging positioning.

There's hedge fund leverage exposure either gross or net. So gross exposure is at all-time highs but net exposure for hedge funds is actually not at all-time highs yet. So there's a lot of there's a lot of hedging happening on which increases that gross exposure, but the net exposure just isn't quite there. So that's one where it's like all right, we're not we're not too far extended on that one yet. The two other big systematic flows that I would look at as well. This is mostly for equities. We can get into how that correlates to crypto. But uh CTAs, which is just like trend programs, um basically as as things go higher, as momentum increases, they increase their allocations. So back in April, CTAs were completely offside.

None of it was long because the trends were so bad. The momentum was so negative. So a lot of the the idiosyncratic bid that we've seen in equities for the past six months has been CTA's repositioning. As we go higher, they buy more basically. So they're now almost maxed out. Um and then the last one as well as wall targeting funds. So they sort of do the same thing where as volatility comes down, they basically buy more risk. So you can see like basically as the VIX chart comes down from where it was like 60 down I don't even know where it is today like probably mid- teens.

>> Um they keep buying as well. So they're getting close to maxed out. >> So there's yeah like I don't know when I look at the when I look at these market structure positionings it's like all right I think we're like 75% stretched I don't think. >> So I think there's a little bit more room to go. >> Um but then you compare that with >> yeah o October into November to December it's just such a bullish time of year. It's it's one of those times of year where it just feels like, you know, people just get steamrololled if if they're trying to trying to go the other side here, especially December. Like Santa rallies are just, you know, we we we just grind higher. So, >> yeah, >> I don't know. I I've been through enough of these that I just feel like it's

important to respect that and it's just, you know, so far it's been clear, right? Like September is the most bearish month for Bitcoin. We were down and then as soon as it ended, we've just been up only ever since. >> Yeah. What's your take on the everinccreasing amount of capital going into money market funds? I think it's it's it's almost I think it's is is it eight trillion now or something or or some some very sorry it's probably 8 billion into money market funds since like the beginning of or end of last year or something. It's just been on a steady rise. Meanwhile, the stock market has obviously just been appreciating.

How does that play into the market structure kind of uh uh aspects that you just mentioned? Yeah. So, it's important to consider where that money is coming from. So, I think when people look at that chart, they think, "Oh, people are selling their S&P 500 stocks to get in the money market funds because they're scared the economy is going to crash and look at all this cash sidelined." That's that's not the case. In reality, what it is is all right, we've seen the charts of the government interest payments, right? Like interest payments are the highest you it's above defense spending, etc. So, that's one side of the the ledger, right? the the liability side on the federal government. The asset side of that is money market funds, asset under management. That's where all the Toss are that are getting 4% on their cash.

So that just keeps going into the money market funds. So what that's showing is just increased incomes basically. It's that all these people are getting 4% on their cash. Um you know, so that's pretty interesting for people to also the one inflow into money market funds is coming from bank deposits. So, it's not coming from equities or other risk capital. It's people that have a savings account at JP Morgan or something where they're getting like half a percent on their savings and they're like, "Okay, well, wait, why don't I just go into a money market fund and get 4%." Like, why am I sitting here? And it's still it's not it's cash that they need to be somewhat liquid, but it just makes sense to transfer it from their checking account or savings account to the money market funds. So I think it's I think

it's noise in terms of saying that you know it's look at all the silite capital that's about to come into risk markets but I think the signal is is that it is it is increased incomes for people to spend basically and this is actually the the last step of that is that's that's the main driver of M2 like you see people talking about M2 growth and what that is is basically what I just described >> blockchain shortcuts templates and widgets launch without friction for builders by builders. Visit enso.build. Relay, low fees, lightning speed, and the power of multi-chain at your fingertips. Instant multi-chain payments. Choose any token on any chain.

75 plus network supported. More than 5 million users. 8 billion plus volume processed. 70 million plus transactions. Fast, reliable, everywhere. Start swapping today only on Relay. >> Yeah. Yeah. I mean that has been I mean that correlation has continued to uh prove you know whether it's a causation doesn't equal correlation type of thing or correlation doesn't equal causation type of thing that M2 has gone up steadily and Bitcoin has been a good 90 days behind it consistently. I think maybe just in this last pullback um that kind of shifted a bit because of of that news they were talking about with the treasury companies but it seems like it's you know kind of right back on

track now. One other thing that that I think is uh particularly on people's minds is with regards to what Trump's been saying about the tariffs uh about the revenue from the tariffs, things like stimulus checks, things like um you know giving out uh better numbers for for you know certain programs, certain allocations. Trump's looking to take this tariff revenue and do something with it. And one of the things that we talked about or that he talked about last week was stimulus checks. What's your take on the current tariff situation? like if you had to just look back at the last 6 months or so of the tariffs like is this considered a success in the US's eyes why why not and you know do do you reasonably think that we're actually going to see stimmy

checks by the end of the year >> so so I will say that my macro bullshness the biggest tail risk right now is tariffs for sure tariffs are attacks tariffs are taking money out of the system from people that spend it either corporates or consumers and putting it back to the government basically. So by definition that is a compression of of uh spending ability by either individuals or corporations. So we've increased tariffs a lot right like if depending on how you analyze it it's going to be somewhere between 400 and 600 billion dollars of of tariffs for one year. That's that is a huge tax hike. So that's taking money out of the economy. So there is something to be worried about I think in terms of of

what that does to economic growth. Now the question is have we priced that in or not. I don't really know. You know I actually I interviewed somebody George Robertson who's who's deep on this topic right now. He's he's very bearish for this reason. He thinks we're we just started a recession. Um and the big reason for that is this tariff dynamic. So where does that lead us? The question of what happens to that 400 to600 billion dollars is going to be very important for 2026. Do we take that and put out sty checks? That's obviously just going to be a probably a net positive because you're you're taking money from corporations and probably giving it to individuals >> that's probably going to have

>> Yeah, exactly. That's and they're going to spend it, right? Like their marginal propensity to consume is much higher. So that in that situation, oh man, that's just game on 100%. Um, the issue with that is that I do believe, don't don't quote me on this, but I do believe that they need congressional approval to do those stim checks. Now, does Congress actually do that? I I don't know. I mean, I think there's a lot of there's a lot of bad taste in a lot of people's mouths about the idea of sty checks after how inflationary things got in 21. So, I don't know if they're going to be able to pass that one, but it's a sign to look at. The other side of the equation is what would happen is the Supreme Court in November, they're going to be deciding whether tariffs are lawful or

not under how Trump's been doing them. And if they deem them unlawful, the the US government needs to refund that 400 to600 billion. It needs to go back to people, which would be also insane. So the answer to like economic growth in 2026 probably has to do with what happens with that 400 to600 billion dollars. That would be insane if they have to pay back all of the revenue that they got from tariffs. >> Yeah. I don't even know how they go about doing that. >> Would they I mean it feels like rather than it it feels like we're at this impass where you can either go the path of of QE for poor people and print the money and and and essentially take that not not print but you already kind of have the money from tariff revenue give it give it to you know you know middle

America and just generally the citizens of US. The other direction is is they deem the tariffs unlawful. They force the US to refund the tariffs back to these these other countries. Where does that money come from? Rather than giving it to like the citizens, they they print it and give it to the other countries and the globalists win. So it it really feels like we're going to come to a decision on on who we're trying to benefit. Is it foreign nations or is it, you know, the people here at home? And I think, you know, we know which the administration would prefer. Um, and it's just a matter of whether Cong Congress goes a similar direction. Um, so I I'm curious a little bit about the

tokenization side of things, like some of the knock-on effects of of this monetary policy. You know, another so so the debasement trade is certainly one one thing that we're seeing play out. The other thing here is that we're seeing crypto adoption at an institutional scale like we've never seen it before as well as regulatory. And so if there's a time when VIX spikes, these hedge funds kind of run that out and and we do kind of come back to earth a little bit, it almost feels like that time frame like that that bare market, if you want to call it that, would happen really quickly. And maybe I'm just maybe I'm long biased, but with the news that's coming out of the SEC about uh you know, stable coins as collateral for a lot of these markets

and generally just putting more and more of these assets on chain, would do you think that would help to accelerate through any kind of downturn that would occur at a macro level? >> Yeah, I think that probably makes sense. I guess the big question is whether whenever that happens, do we see a runup in credit creation and like under collateralized credit creation in crypto? Because obviously that was the the X factor in 2021, 2022 or whatever, mostly 2022 was that we didn't realize that everything was just levered credit um and it was just like this loop.

Um so I think you know right now we don't really see that. Yes, there's some lending credit buildup in the DATs, but uh it's it's pretty muted compared to what happened last cycle. We we haven't seen that sort of leverage buildup. Most of the lending that we do these days, you know, people like Maple and you know, Morpho for the I think they're over collateralized as well, but yeah, you know, we they're all mostly overcolateralized there. There's Wildcat, I know they are starting to do under collateralized lending, but overall we're just way lower. So, as long as we don't build that up a bunch and we don't create that credit risk, I feel like you're right. I feel like it will shorten the amount of it. I think I think we're we're our correlations are much tighter to macro assets now. And, you know, the the government, the fiscal

authorities, the monetary authorities don't want to see that market crash for very long. You know, we can only it was like COVID was like a three-week crash, liberation day was like a fiveday crash. like they're just they keep getting shorter because we we can't handle the strain of it because the the the treasury market blows up. Like the reason they pivoted so quickly in April is because the treasury market was trying to blow up. I was like the two days before that I was buying the dip but also crashing out because I was freaking out of what I was seeing in the treasury market and then of course that's what led to the pivot. Um so yeah, I just don't think it's tenable to let that pain happen. I think the the the other kind of like macro effect here that is coming from within the like the

crypto economy is is this stable coin growth as a as a way to kind of expand the US dollar hedgeimonyy in a global fashion. um you know, you've kind of got that bucket happening and obviously Trump, Secretary of Treasury, um Bessant and those guys are really pushing that and then you've also got this like tokenization 247 equity trading powered by settlement and stable coins happening at the same time. And I think that's kind of where what Rob was getting at with regards to how this affects, you know, price action in terms of a a downturn. But looking at this broadly with these two kind of buckets happening simultaneously I is there any material effects that

you're that we could expect on the deficit because of stable coins or on equities markets because of these tokenized equities being traded 247 in in in the future. Perhaps we're just accelerating towards more of this hyper financialization and just kind of the world adapting to what crypto has been doing for the last 1015 years. when you're thinking about these two kind of categories here. I mean, it's probably a different uh conversation for each. So, feel free to just kind of like start where wherever you want, but curious how you see these two like kind of crypto phenomenon affecting the broader global macro picture.

>> Yeah. So, for for stable coins, the answer lies in what do what do people have to sell to buy that stable coin to use it? So, if you're somebody in the US and I don't know, you're in a money market fund or something or you're in cash or whatever, you're you're selling a T- bill to buy a stable coin, the stable coin is also a T bill. So, that's sort of net neutral. That doesn't really change the landscape. Now, it's very different if you're in another country or if you're in another FX currency where you you sell that, say, you know, say you live in Argentina, super high inflation, a lot of issues there. you you sell the Argentinian peso to buy US dollar i.e. stable coins i.e. t bill bills that will lead to a marginal

increase in T bill demand which would allow them to probably issue more T bills um and and serve that landscape. So you know another one would be if you yeah say you have paper currency of the US dollars and and you want to swap that for T bills i.e through a stable coin. That's also another marginal increase. So I think what people get hung up a lot basically is that you have to consider what is that person selling to buy the stable coin. Oftent times people get tripped up and they only look at the buy. They look at oh look people are buying stable coins but it's like yeah but what are you selling to actually buy that thing because everything has a different side to the ledger to it. So I think that we're going to head into a world where you know it's very

compelling for a lot of these countries to own stable coins. Therefore I do think it's going to increase a lot. I think the use case is for those emerging markets that have very high inflation and very uh weak currencies basically. So that covers that. And then I think in terms of the broad landscape of what does it look like to get into this world where we tokenize equities, where we have 24/7 trading, like I don't see how that would do anything for the fiscal deficit. But I do think it's going to be very powerful in terms of the the capital efficiency it creates. Like this has been I I I have two views on crypto. Like there's one where that you know there's these decentralization ideas. So Bitcoin I don't I'm not really convinced that anything else has really met that. maybe like Zcash or something like that lately

has been pumping, but for the most part, most assets don't really meet that threshold of what does it mean to be like truly decentralized. But that doesn't make me bearish. Like I'm not a Bitcoin maxi. Like I still believe in all the other alt currencies that we're creating and L1's. And that's because I think there's a lot of really interesting capital efficiency things that we can do and this is one of them. And if if you make capital more efficient, that means you can use it more effectively, which probably means you can increase growth. So I do see it as a perhaps another tailwind to this idea of running it hot is that if you just make capital hyperefficient, we can do more things with it. Basically >> that breaks my brain when I think about tariffs because like like you said earlier, tariffs are attacks. Like that

does not that's not like free market dynamics when it when it really comes down to it. It's not super capital efficient. We're putting up these these artificial barriers. But then I think like well maybe this is like some longer term theme that's playing out like you know I kind of made a side comment about the globalists earlier but like the EU kind of fracturing these guys going into more localized currencies maybe that would have been less efficient in the past but given the infrastructure that we have now to coordinate across these currencies and maybe make foreign you know forex markets and and generally markets more efficient maybe now we have the technology to coordinate these markets in these currencies.

And actually, it is more efficient to go local and rather than kind of group into like one currency to rule them all. So, I I at a certain point, it's just we'll we'll wait and see. We'll see how this plays out. But I there's really no clear definitive way to to kind of feel out where where the market is dislocated, solve that, make it more efficient, and then give those gains back to the market and generally see more growth. I'll say the one thing. Um, a good buddy of mine, Austin Campbell, who he's kind of he knows a ton about stable coins. He like he developed the PAX stable coin.

He's he was advising Congress on the the Genius Act and stuff. He thinks that within seven years there's going to be hardly any other fiat currencies. He thinks like US stable coins are just going to amalgamate everything and just eat the world. So, he thinks in Yeah, like in 8 to 10 years there'll be a fraction of the amount of fiat currencies that exist today, which is just crazy. And do you think there's one US stable coin to rule them all? Or do you think there's do you believe in this this privatized with public thesis where we have Wyoming based stable coins issued by the government but then we have Walmart stable coin, Amazon stable coin, Libra project ends up playing out.

>> Um yeah, actually it's funny you say that. I just read last night Nick Carter wrote a piece this week on that topic and that was very interesting. I'm glad I read it in time so I can actually say something how smart thanks to him. Um, but yeah, I think I think he's correct. I think there's we're going to go into this world of proliferation. On the back end, he talked a lot about how on the front end for the consumer, it's just going to be USD. It's just going to be dollars. But in the back end, there's going to be a lot of different stable coins that are used either internally, yeah, like a a JP Morgan stable coin, an Amazon stable coin, or whatever. But those are all because of the Genius Act compliance that we have now, they can all be basically fungeible. They're all

just going to be backed by repo or T bills. So it doesn't really matter how it gets settled down in the back end, but in the front end it's just going to look like US dollars. So yeah, I think in in the future, I think Nick's right. I think we're going to move away from this world of just Tether and Circle and move more to this world of more privatized stable coins. Um and and no clear winner. No no monopoly. I don't even think of duopoly like we have right now. >> Yeah. Very interesting. Guys, we are doing this show right now in the middle of a government shutdown. This has been a multi-day government shutdown where we are absolutely having zero uh progress on the ETFs that are supposed to be going through. Those crypto ETFs are supposed to be coming

this month. There are now being they're now delayed by you know about a week amongst other kind of you know facilities and and efforts that that governments do which should you know very far far and wide reaching. >> Yeah. No jobs reports. There's no Friday. We got no draws report. >> Bitcoin's ripping and this is like do we think that that like like what's going on here, Felix? Like what is the ramifications of this dormant shutdown and and like why does this just feel so tame and normal? Like should we be a bit more worried about this?

>> So yeah, people are asking me into the leadup of the shutdown what I think about it and I was like well I don't think about it because I don't think it matters >> at all. I yeah, maybe not initially. Like obviously the longest one right now is the last one that happened in 2018, which I think was like 30 days. So I feel like if we I feel like the market's complacent right now and just thinking, okay, well, you know, they're just going to do the whole show and song and dance. They're going to, you know, try to debate for whatever wins they want to get for their sides of the party or whatever and then we'll all move forward. And I think that's that's the expectation right now. And I think it would take it's a time thing. I think if we got to the end of the month and we're

about to hit that new record of shutdown and there's like zero progress. Yeah, maybe then markets freak out a little bit. Um, but I don't know. I just I don't really see the tangible impact. I mean, obviously right now like if we had that Jaws report, we would have a better idea of whether we should be cutting or not in October, but in the meantime, it's sort of just like a lack of lack of news is good news. Um it's just like >> well but it's funny that just like Bitcoin bottomed more or less on that news but then this this this shutdown really just feel like it just gave it a springboard for it gave the market a reason to maybe buy it or at least respond to it and since since then it's just been on a on a >> gold obviously as as well prior I think

gold's kind of kind of getting a little hot here. It's at 4,000 per ounce. >> Yeah, I I agree. I've been swapping some gold into Bitcoin. Um, that's kind of what I was doing. Yeah, like 109 is when I started and kind of >> did that up to 117. But yeah, I do agree. I think it's it's rotation time for sure. >> And silver's going alltime highs as well as we speak. So, I think that's probably a good tell for gold, too. >> Yeah. >> So, Ben Cohen thinks that, you know, we get a like a slowdown here in precious metals following silver's all-time high. uh you know Q4 and there's a you you'll get a better chance to buy gold and silver sometime in first half of of 2026 for then like the next kind of like bigger trade in terms of this debasement

rally like what is your vision for the future of Bitcoin gold and silver like are these things just going to be you know kind of going through these cycles themselves in this broader macro cycle of the debasement trade you know I think we got people calling for $5,000 per ounce gold which now doesn't seem that farfetched Obviously, Bitcoin quarter million or sorry, yeah, quarter million. Like, do you just see these two assets kind of going neck and neck just in their own ways throughout their own kind of like individual cycles, but through the broader kind of five to 10 year horizon like the trend is up and to the right because of this debasement philosophy.

>> Yeah, I think that I think yes for gold and bitcoin, you know, it's just like yeah, I just harp on just like just own both like you know we are in the meat of the debasement trade and I do think there's room to go as as you get further down the risk curve of precious metals and commodities something also changes where their their use cases of it change as well and their supply demand like you always have to think about supply and demand functions for commodities because when when silver rallies a bunch suddenly it's a lot you know new mines they're a lot more profitable to be able to open and operate at a higher price.

So it's like okay well you know if if gold has just 2xed I'm going to open that mine and operate it because now the the you know the financials make sense to operate at that level. So then what happens is you get more supply that comes onto the market you get more supply onto the market and suddenly you have more supply than what the demand is requiring from it. So then you get you get the opposite side of the cycle where you know too much supply not enough demand price goes down basically and then you get that reflexive loop. So, so commodities are very very reflexive and that happens even more in in copper um and and and these other commodities as well. So, silver is a funny one because it's sort of in the middle like gold's it's it's supply dynamics are are so

there's so much friction to it like it's hard to just open up a new gold mine randomly. It's a lot more difficult than something like copper. So I think something like silver sits in the middle where it has that monetary premium a little bit but it also has that classic commodity function where as the price rallies more mines are going to open more supply so that sort of has will self-reflectively correct but I think bitcoin and uh and gold are very unique in that circumstance right like obviously bitcoin especially like the >> you never hear people talk about the difficulty adjustment anymore but like that is such a powerful thing like that as you know >> as it increases it it matches it basically. So you never get that reflexive commodity unwind of supply versus demand. It always stays in

equilibrium and that's just like insane and I think that's why Bitcoin's the best out of them all for sure. Well, I think like the main reason why I was super curious about your your take with that kind of gold and silver and metals and Bitcoin is because when I'm looking at my portfolio right now, which is highly denominated in crypto and I'm looking at like the the the move from crypto into like real world assets slowly. That's been like the continuous philosophy every cycle 2017 now we're here again just like this consistent piling into you know let's call it like safer longer term uh less volatile things. you know, Bitcoin, you know, un, you know, ironically feels like safer than anything right now, but it's also at 1255,000. So, I think we can see a Bitcoin under 100K in in the

future. Um, but, you know, being 25 years old, looking at the landscape here, everything is expensive. Like, what am I going to do? Buy buy the S&P here? Am I going to go buy a buy a buy property here? Like, gold? Like, metals are just everything is so expensive. Is there anything in the world right now that is like va d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d drastically undervalued that you know uh you you have your eyes on is there anything that is not just like already through this massive run up and just the thought is like oh it could go higher versus like oh like the market's not responding to this and I

know I'm just kind of putting you on the spot here >> when I'm looking at the at the >> when I'm looking at the landscape of like what's what's even happening everything just seems so expensive >> it is And yeah, it's so I I used to be like a value investor type person, you know, like I got into this whole thing through intelligent investor security analysis and all of that. So I was in the regime of thinking about, okay, well, I need to buy I need to buy, you know, decent things at a cheap price type of idea. And honestly, like I I got oneshotted by that idea when I got into macro and and and crypto and everything because I started to realize just how broken the system is now. Like we're the reason everything's expensive now is

because it's a it's a political decision to do so basically. Like you know up here in Canada especially like real estate is the only thing we do in this economy now because for whatever reason we've we've stopped using the natural resources that we have. uh our currency used to be correlated to gas and and oil and now it's not because we're just a real estate ponzi. Um and that's like our retirement foundation for for most of society. So like it's it's a political decision. So you have to respect that you you have to play the game. You have to dance while the music is playing from the fiscal and monetary authorities until proven otherwise. So, I think this is what also like oneshots so many traditional macro thinkers is they look at valuations and

they're like, "That's expensive, but yes, it's expensive and it'll probably get more expens." Now, the problem is what I just said sounds like bubble talk. Um, and that's like the >> That's what I was thinking. >> Yes. >> It's it's the crux of the age, right? Is you're constantly balancing between, >> you know, midcurve and right curve. Right curve is I'm buying even though it's expensive because I know it's going to be expensive. Mid curve is like, "Oh, wait. This could actually just be bubble talk at the generational top." And I don't I don't know how to navigate like if you guys have ideas, let me know. But it's it's something that keeps me up at night. Am I being insane here?

>> It's like you're buying like your options of asset purchases right now or like you're looking at it. It's like, okay, everything's expensive. It's just a matter of like I guess what you're comfortable with, what you have conviction and and you know what you're willing to hold for a longer period of time. Also just like where your current allocations are. But yeah, that's what I'm battling with. I'm like like it's just it hasn't Yeah, it's it's it's not like sure pulling money out of like the the sketchy perex, you know, $100 million market cap coin that you just hit a 5x on and pulling it to gold. Okay, it's probably like a reasonable play. Like that's a good sustainable wealth move.

But like, you know, looking at it from like okay gold Bitcoin land real estate. It's kind of like, guys, like, is there gonna be somebody buying after me? Because, you know, like where's the money coming from? So, >> yeah, it's tough. But I I I do like if you look at the history of the last 15 years, I do think it's better to be on that side than buying the value traps. Like, >> value has just been terrible for so many years. And it's all been growth. And >> I I don't see any reason for that to really change. So yeah, you just kind of get I mean it's it's so like an easy way to think about it in terms of just a crypto analog, right? Is do I want to buy hype that is being bought back all the time, has all this revenue and

everything or do I want to go buy like you know lowflat high FTV token that just unlocked after a year and is just going to be down only forever like it's it's kind of obvious which one has the tailwind and which one has the headwind. >> Yep. And the same thing goes for the macro assets. FA the coho the host of forward guidance the local macro expert on rollup TV. Thank you for your time man. It's been a pleasure. Uh look forward to riding the four wave with you together. Maybe get you back on sometime Q1 and assess 2026. Always appreciate your insights and takes man.

>> Yeah. Thanks guys. Always enjoy uh the content you guys are putting out and yeah you're killing it. So always happy to be here. >> You too dude. Thanks brother.