Why Bitcoin Will Hit $1 Million a Coin!: Meme Coins, Bitcoin, and The Future of Crypto | Arthur Hayes PT 2

Welcome back to Impact Theory with Tom Bilyeu! In today's episode, we're diving deep into the future of cryptocurrency with Arthur Hayes, a pivotal figure in the crypto trading world. Join us as Arthur breaks down the genius behind convertible debt strategies, the importance of Bitcoin's inherent volatility, and why this volatility, far from being a drawback, plays a critical role in trading success. We'll unpack Arthur's predictions on Bitcoin potentially skyrocketing to $1 million per coin, fueled by strategic fiscal policies and reshoring initiatives. The conversation also explores meme coins as a culturally significant yet volatile asset class, their role in the youth-driven financial movement, and how retail investors are challenging traditional market dynamics. Tune in to get Arthur's take on investment strategies, market sentiment, and the ever-evolving landscape of decentralized finance. Whether you're a seasoned investor or just crypto-curious, this episode is packed with insights that could reshape your understanding of the digital currency revolution SHOWNOTES 01:07:52 TRUMP'S pandemic policy: helicopter money for redistribution. 01:11:17 QE increases money supply and GDP, risks inflation. 01:18:00 Jobs crucial for maintaining legislative majority. 01:21:59 Stable coins useful outside developed banking systems. 01:27:20 Tether exceptionally profitable; government accepts stablecoins' growth. 01:34:07 Manufacturers choose America over costly exports elsewhere. 01:37:58 Government spends via Fed; gold sale unnecessary. 01:41:12 Quantum computing won't break Bitcoin's encryption. CHECK OUT OUR SPONSORS Range Rover: Range Rover: Explore the Range Rover Sport at https://landroverUSA.com https://landroverusa.com/ Audible: Sign up for a free 30 day trial at https://audible.com/IMPACTTHEORY https://audible.com/IMPACTTHEORY1 Vital Proteins: Get 20% off by going to https://www.vitalproteins.com https://www.vitalproteins.com/ and entering promo code IMPACT at check out. NetSuite: Download the CFO’s Guide to AI and Machine Learning at https://NetSuite.com/THEORY https://netsuite.com/THEORY Found Banking: Try Found for FREE at https://found.com/impact What's up, everybody? It's Tom Bilyeu here: If you want my help... STARTING a business:join me here at ZERO TO FOUNDER https://tombilyeu.com/zero-to-founder?utm_campaign=Podcast%20Offer&utm_source=podca[%E2%80%A6]d%20end%20of%20show&utm_content=podcast%20ad%20end%20of%20show SCALING a business:see if you qualify here. https://tombilyeu.com/call Get my battle-tested strategies and insights delivered weekly to your inbox:sign up here. https://tombilyeu.com/ ********************************************************************** If you're serious about leveling up your life, I urge you to check out my new podcast,Tom Bilyeu’s Mindset Playbook https://open.spotify.com/show/47VE90Cittmo6TGGFqg2xf —a goldmine of my most impactful episodes on mindset, business, and health. Trust me, your future self will thank you. ********************************************************************** Join me live on myTwitch stream https://impacttheory.co/4fitmnJ. I'm live daily from 6:30 to 8:30 am PT atwww.twitch.tv/tombilyeu https://impacttheory.co/4fitmnJ ********************************************************************** LISTEN TO IMPACT THEORY AD FREE + BONUS EPISODES on APPLE PODCASTS:apple.co/impacttheory http://apple.co/impacttheory ********************************************************************** FOLLOW TOM: Instagram:https://www.instagram.com/tombilyeu/ Tik Tok:https://www.tiktok.com/@tombilyeu?lang=en Twitter:https://twitter.com/tombilyeu YouTube:https://www.youtube.com/@TomBilyeu Learn more about your ad choices. Visit megaphone.fm/adchoices https://megaphone.fm/adchoices See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Tom Bilyeu?

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• 0:45Tom Bilyeu?

  Their dashboard tracks what comes next based on what your business actually needs. So EIN number, registered agent, licenses and permits, bookkeeping, business banking. I tell every founder the same thing, just make it official. Click the link in the show notes to check out Taylor Brands and get started on your business today. This is a paid advertisement. I'm Tom Bilyeu and this is Impact Theory. Welcome back to part two of my sit down with Arthur Hayes. Let's dive right back in. So you said that you're not in the chat rooms. The people that you see be successful with meme coins, or I'll say it as a statement from my side. You tell me if you've seen the same. The people that I know that have done well-ish, obviously there's no guarantees here,

• 1:28Tom Bilyeu?

  but that have done well-ish in the last two cycles with meme coins, live in the chat rooms. For them, it's all about that sort of backroom energy. What's hyped, what's that early alpha? Who gets the sense that there's cracks in the narrative that maybe this isn't going to play out? And so they know when to take their chips off the table. I've been in groups where people will literally say, okay, are we buying now? We selling now? Like, what are we doing? And they're trying to coordinate in blocks. I think partly to, it actually doesn't feel like they're trying to pump and dump. What it feels like is they don't want to be the last man standing. They don't want to be the last one to realize, oh, we're going to sell. They don't want to make a dumb decision. If everybody gets out together, then they feel less dumb if it goes up. And if everybody stays, they feel less dumb if it goes down.

• 2:11Tom Bilyeu?

  And then if there's wisdom in the crowd, then they're able to take advantage of it. But it feels like if you're not doing that, odds of you keeping your finger on the pulse are very low. Would you agree with that?

• 2:22Speaker 01

  Absolutely. I mean, to be a crypto day trader, if you want to be a stock day trader, a Forex day trader, options day trader, pick your financial asset class. If you, if this isn't your full-time job, you will lose all your money. Just period. If you're not putting in the work, then you will not get the reward. If you can't do that because of your mental predilection or your full-time job, then be more of a buy and hold type person. Doesn't mean you can't trade meme coins, but you know, maybe you want to treat something with a little bit more lindy. Maybe you're not in the chat rooms buying the one million, $10 million market cap coin, thinking it's going to go to a billion. You're buying the $500 million market cap coin that goes to a billion. Yes, your return's less, but it's less likely for you to lose all your money very quickly.

• 3:07Speaker 01

  But a $10 million market cap meme coin could go nowhere very quick and go down to one very quickly as well. So I think people need to like self-select their lifestyle for what they want to achieve in trading. If you're not, if you do not have a lifestyle to sit in front of a computer screen, all your waking hours, have alerts on your phone and all this kind of stuff, which is fine. I don't do it. I don't think that's fulfilling, at least for me, then don't do it. And then change your trading strategy. But don't think you're going to be, you know, I got on the subway, my 45 minutes, you know, commute home. I'm going to trade some meme coins. I'm going to quit my job next week. Like, that ain't happening.

• 3:44Tom Bilyeu?

  All right. I want to read some of the things that were listed, I think by Murad, that were listed as the utility of meme coins. Because I really, I'm finding this narrative that you're talking about, very realistic, very compelling, very revelatory of the flip in the system that I can feel coming. I knew eventually the youth would take over and this might be the way that they do it. Uh, so here is the, the meme coins offer a lot of utility slide. I'm just going to read a few of these. Uh, having fun, loneliness reduction, identity, finding a similar crew, hope, provisioning, friendships, being a part of a cutting-edge culture, a sense of belonging.

• 4:26Tom Bilyeu?

  Uh, a guild in the MMORPG that is crypto and on and on it goes. That's, that's less than half of them. But, uh, it's a pretty interesting idea because that reads like a cultural phenomenon. It does not read like a financial phenomenon. Uh, and that feels right for.

• 4:46Tom Bilyeu?

  The youth today in terms of how socially connected they are, how they feel rejected by the system, how it is inevitable that they're going to inherit and thusly take over the system. Now, do you think that this is going to happen under Trump? Is he going to accelerate this? Is he going to block this? What does that look like? Are meme coins going to get crushed out of existence?

• 5:12Speaker 01

  I think Trump is just a representative of the time. So more like, I take more of like a Harry Seldon sort of approach to things. If you're familiar with the foundation series by Asimov and Psycho History, which like individual people don't have that much of an effect based on just the way that history is moving, right? People think that Trump is the one causing all these, you know, terrorists and changing American economic policy and all those sorts of things. And my, my belief is that Trump is just a representation of something that would have happened anyways. He might be a very bombastic representation of that, but the America that he's inheriting is because of things that happened 80 years

• 5:54Speaker 01

  ago, or 50 years ago, or decades in the making, or what other countries have done, where their particular set of policies decades ago, up until the present. Trump's just a very loud voice box of things that are already happening. And so I think that what Murad describes has nothing to do with politics. It's if we're going, if we educated a whole generation on their smartphone, and I know there's been pushbacks on that. And, you know, we have preteens on social media. Obviously, people are saying that's a really bad thing. Doesn't really matter. They're connected in this way. Okay, well, are they going to express themselves financially in the same way that a boomer who didn't get a mobile phone until, you know, late 1990s, because they were so expensive?

• 6:37Speaker 01

  Um, had to, you know, call their friends on a landline back in the day. Didn't have email. I'm thinking they express themselves financially different than the generation that's running things. Of course, that's, that's, that's human nature. If you read, uh, Howe and Strauss and the first turning and sort of how generational cohorts move throughout history together. You know, every 80 years, we have sort of a reset because, you know, the people die out. There's a new generation. They have a new technological software that governs how they, how they act, interact with each other. And that manifests itself through the culture, through financial services and all these sorts of things.

• 7:17Speaker 01

  And so I don't think Trump, Trump is irrelevant to this whole phenomenon of a social media connected generation, whether you think that's good or bad, who lives on their smartphones, whose best friend might be, you know, a thousand kilometers away in the communicating chat rooms and Twitch and video games and all these sorts of things. They're not going out into the park and communicating that way or to restaurants or to a bar in the same ways that I may have, or my mom or my dad may have, right? So I think this isn't a Republican Democrat or pick your left, right political sort of, sort of thing. This is how have we brought up this generation, Gen Z?

• 8:01Speaker 01

  How are they going to express themselves financially? And now what do we have? We have sort of this, we have boomers with all this, well, they need to sell it at some point. Does the youth want to buy what the boomers are selling? That's the question.

• 8:14Tom Bilyeu?

  Yeah, I think the aggressive answer that we're seeing from them is no, they don't. Uh, there's just too much financial isolation. They, they have been iced out of a system that, uh, through the mechanism that, that you've written about a lot and you touched on briefly here of the way that money gets into the system, how it sidesteps people. In fact, I think it's worth going into, you wrote an article about how a dollar gets into the system when the Fed is buying, uh, assets, when they're injecting capital into the system. Uh, if you don't mind, walk us through, how does money get to the rich and make the rich richer? And what would it need to look like for the money to get to the, the plebes, uh, as you lovingly call them so that people can understand a bad system when they see it?

• 8:57Speaker 01

  Yeah, so quantitative easing, I know we have these new terms for it, but it's been around for a very, very long time. The first quantitative easing episode happened with the Bank of England, I don't know, I forget the particular financial crisis. It might have been the collapse, it was a collapse of the one of the major trading companies. They got overextended, the few wars over in the colonial period, the Bank of England stepped in and printed money to bail out this company. And that was some, maybe 17th century, something like that. But quantitative easing, printing money to right-size a financial ecosystem is not a new concept. We just have new terms for it.

• 9:38Speaker 01

  But at the end of the day, what is fiat money? Fiat money is created either by the government spreading it to an existence, or the banking system creating a loan which creates a corresponding deposit. So with that framework in mind, what happens when the Federal Reserve buys bonds? It's quantitative easing. Essentially, what the Fed does is they say, hey, JP Morgan, and that was the example that I used, I'm going to credit you a deposit on my ledger, and I'm going to take this bond from you or one of your clients. And the example I used, BlackRock. BlackRock sells a bond to the Fed, the Fed uses JP Morgan as an intermediary, and now JP Morgan has a corresponding deposit at the Fed,

• 10:23Speaker 01

  BlackRock now has a corresponding deposit at JP Morgan, and the question is, what does BlackRock do with this new money, right? If all the government is doing is printing money to buy financial assets, does that inspire confidence that there is an underlying demand for money from the people, the people who are with the most propensity to spend? Of course not. We know that rich people are rich because they've satisfied their shorts in life. They have a house, they have a car, they have food to eat. They don't need to buy any more stuff. What do they buy? They buy financial assets, stocks, bonds, more real estate, or they buy trophy assets, nice watches, expensive art, all these types of things.

• 11:06Speaker 01

  And so the example that I illustrated in the essay was taking a dollar, I've taken a safe financial, a government bond that pays an interest rate. I've taken that from the financial, from a rich person. I've given them money. What does a rich person do? Okay, well, I don't have the bond anymore that paid me two or three percent or whatever it is. I need something else. I go out and I buy stocks. Or from a company, I do a stock buyback. Why would I increase production and take operational risk? When my, when my, my base customer didn't get any wealthier because the government printed this money and bought these bonds. And so what I go through to show is that quantitative easing creates no or very little real economic activity. No one's going out and buying stuff.

• 11:51Speaker 01

  What happens is you give rich people more funny money, and what do they do? They go and they buy more stuff that they think they want, watches, cars, art. If you give it to a company, their end customer didn't get any wealthier. So they're not hiring any more people because why would you hire more people when they don't have any more money? You buy back your stock because that enriches your very wealthy shareholders better than you taking risk and trying to offer a new product. And so quantitative easing doesn't increase the growth potential of an economy. It just increases its indebtedness. And so if you take a look at the United States, for example, two thousand and eight until two thousand and twenty, the QE period,

• 12:32Speaker 01

  the debt to GDP rose from something like, I want to say thirty or forty percent to a hundred and twenty percent or whatever it is, but it's that sort of magnitude of you increase the debt and you did nothing for the underlying economy. That's what I call QE for rich people. So. QE for poor people means that, okay, well, instead of giving this money to rich people to buy stuff, how do we incentivize those who want to consume either, you know, the 99% of the economy or 90% of the workforce to do that? Well, the government needs to spend the money into stuff. So in 2020, what happened, right? There was the COVID thing. And Trump was cautioned

• 13:17Speaker 01

  by his advisors, maybe erroneously so, that he needed to shut down the economy. And so he said, well, okay, that's really bad. He's a business person, obviously. Shutting down the economy is not good. People lose their jobs, blah, blah, blah. How do we get people not to revolt? Okay, we're gonna hand them money. So Trump did helicopter money. Probably the most redistributive financial policy since Franklin Delano Roosevelt in the 1930s with the New Deal, in terms of what he did for people in America, in terms of how printed money was handed out. So the Tris re-mail everybody a check. As a lot of your listeners know, they got the stimulus check, I know, a few thousand dollars in the mail, whatever it was. And so it wasn't means tested. If you had a job, if you didn't have a job, you

• 14:00Speaker 01

  got a check, right? And so what did you, what did you do? You went out and you bought stuff that you wanted. Cars, washing machines, you know, got a fancy haircut, whatever, right? Went on a nice foreign vacation, okay?

• 14:13Tom Bilyeu?

  Meme coins.

• 14:13Speaker 01

  So, exactly, meme coins, Bitcoin, if you had, if you had enough of that stuff. But at the end of the day, you gave money to people who needed to buy stuff. And so they increased the consumption of goods. What happened? Cars were sold out. You went to, you know, I don't know, is Sears still a thing? Went to the department store and you bought a washing machine. Oh shit, the one I wanted isn't here because everybody else in the country now is able to upgrade their lifestyle and buying these things that they want. Oh, guess what happened? Now that there's all this demand, you actually saw loans to small businesses by non-too-big-to-fail banks, so the regional banks, their, the amount of loans they issued in the 2020 to 2022 period was above trend because the businesses had customers who had

• 14:58Speaker 01

  money to spend and they were out of product, so they needed to increase production. And the bank was like, of course, I will lend you money to go and increase your production, hire more people, pay your staff warm. And so we saw all this economic growth because the Fed printed money. The treasury spent it into the economy and instead of it going to very, very rich people in terms of the, the money, it went to everybody in America and then they all decided, I want to buy something, whether it's a good or a service. And obviously there wasn't enough capacity in the system, the capacity expanded. So you saw this nominal GDP growth accelerate rapidly. From 2020 to 2023, you saw debt to GDP actually decline by I think 10 or 15

• 15:42Speaker 01

  percentage points. So QE for poor people is inflationary, as we know, inflation went up. However, from the government's perspective, it deleverages their balance sheet and it allows everyone to participate in buying stuff. Except rather than just, you know, the top 1% of rich people who own financial assets, who get richer, you know, trading stocks between themselves or, you know, expensive houses. So these are the two systems and the way that a money is created. The bank created money because it lent money to businesses to expand. It gave you a personal loan because you had a solid job because employment was up, because there were people were buying more stuff, right? So QE for poor people gives the banks the ability to profitably issue more credit, which increases the money

• 16:27Speaker 01

  supply. It increases the velocity of money. It increases growth, gross domestic product. So it's very good for the government. The bad thing is obviously inflation, which was experienced in, in the United States and, and other places around the world. But these are the two ways that the Fed can print money and either the government can spend it, or they can hand it out to rich people via stock buybacks and, you know, other, other things. And so that's what I sort of illustrated in a very technical way with accounting T-charts. And so back to our, our original discussion in the beginning, why is there going to be $10 trillion of credit created? Well, Trump saw what happened when he did the stimulus checks and Biden followed with a stimulus check of his own. It was successful. The US government is over leveraged. Scott Vessin, the new Treasury Secretary, should he be

• 17:12Speaker 01

  confirmed, understands this to a very deep degree. The US government must deleverage if they're going to accomplish any of their goals. This is the way to do it. And it makes the banks profitable. It makes everybody in the United States feel wealthier. Yes, there is a bit of inflation. Everyone has a job. Businesses come back to build more production inside of America because there's a customer there willing to buy stuff. And so that's why I believe this is going to be the government policy QE for poor people. Because they did, they did QE for rich people. And there's obviously, you know, bad effects to that. And you have sort of social strife and this cantillion effect of, you know, the rich get richer, the poor get poorer, all that sort of stuff happens.

• 17:57Speaker 01

  And worst off, the government balance sheet deteriorates, which is not good. So it's in the government's best interest to pursue this policy of encouraging bank credit growth by spending this money and giving it to everyone versus just the top 1%. So that's kind of in a very high level way, what I was talking about with that example.

• 18:18Tom Bilyeu?

  Taking a short pause, but when we're back, Arthur Hayes dives even deeper into the future of crypto and global finance. Luxury brands are not charging you more for better cashmere. You're paying for the storefront, the ad budget, the name on the tag, but Quince cuts all of that out. They work directly with ethical factories. They skip the middlemen and sell 100% Mongolian cashmere, starting at just 60 bucks. 50 to 80% less than similar brands. Now, I gave one of these as a gift last year. It was a big hit and gifting is really the test of a brand. You might tolerate a lot of stuff in your own closet that you would never give to somebody else. I've got their joggers and a couple of their tees as well.

• 19:01Tom Bilyeu?

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• 20:31Tom Bilyeu?

  That's Q U O dot com slash impact. And we're back. Okay, so government's gonna print, they're gonna hand out stimmy checks because that works to reduce the debt to GDP burden. Now, one thing that may have been just correlated.

• 20:53Speaker 01

  Well, I don't know if they're gonna hand out stimulus checks in the way they did during COVID. But the other way they do this is they say, okay, there's a chip sack, the Green New Deal, all this sort of industrial policy. Hey, I'm gonna hand you some money, build a chip factory, hire Americans. Build a new car factory, hire Americans. Build more natural gas, oil, hydrocarbon productive capacity, hire Americans. That's the, that's gonna be the way they do it this time. It won't be, hey, everybody gets a thousand dollar check in the mail. That was very inflationary. I don't think they're gonna repeat that again.

• 21:26Tom Bilyeu?

  Got it, got it. That's where I thought you were going and I was like, whoa. Cause that had some, some knock on consequences. Okay, that's really interesting. I didn't know that about the.

• 21:38Tom Bilyeu?

  How that when you're doing it the rich people way that it actually worsens your debt to GDP. That is horrible and should be avoided at all costs. So that's really interesting. Now, I'm not a money printer guy, but at least if there's a path to using money printing to do what Ray Dalio calls the beautiful deleveraging. It's got to be done, so that's certainly better than open warfare. But it does beg a question of government control. Now, you wrote another article, very, very impressive article, as yours always are. And in it, you, I'm not going to be able to get the words perfect, but it's this idea that a regime like the incoming Trump administration could use fiscal policy as a way to make

• 22:22Tom Bilyeu?

  the populace dependent on them or their financial success dependent on them such that they get reelected. Do you see that as a, a problem incoming?

• 22:34Speaker 01

  I mean, I think, let's put, let's put, let's not put a moralistic term on it. It's neither good nor bad. If you're a politician in a representative democracy like the United States, you know, in US Congress, you're elected every two years and the Senate is every six. Trump's got a problem. Okay, so he won a landslide victory. His edge in the House and the Senate, I think it's one, one person in the House and maybe two or three senators in the Senate. And there's going to be another election in 2026. Now, everybody's human. They said, okay, Biden bad because, you know, inflation, I don't like my job. Okay, there's this other guy over here, Trump, I'll vote for him. You could reverse it.

• 23:15Speaker 01

  If Trump was a president and whoever's vice president was ready for reelection and he had the same economy that Biden presided over, and then you had Kamala Harris as the challenger, they would have voted for Harris. It doesn't matter. The party is irrelevant. I think people need to get out of this blue versus red, Republican, Democrat. Like, if I'm the median voter, Biden fucked me. Okay, I'm going to go with Trump. Okay, it's 2026 or 2025. Which congressman am I voting for? Did I, all these problems that Trump said he's gonna solve, why aren't they solved yet? Are they not solved yet? Okay, I'm going back to the Democrats. That's what Trump has to counter. And obviously, Trump is not getting reelected, but he wants JD Vance and all these other people

• 23:57Speaker 01

  that are riding on his coattails to be in government positions longer after he's gone. And so he's got to be very conscious of like, how do Republican congressmen and senators get reelected in 2026? Which means, I think that this policy that I've outlined, which Scott Besson and some of the other advisors have hinted at, is the way to go. Congressperson can say, I brought that factory back to my district. Look, there's 10,000 new jobs created because of this bill that, you know, I voted on, sponsored by whoever, right? So they need to be able to point back to things that happened immediately, next 12 to 18 months, in their district.

• 24:41Speaker 01

  And so these are things that can be voted on very quickly, that every elected representative wants to champion, whether they're Republican or Democrat. If you are in office today, and you're gonna vote against a factory coming into your district, you are not getting reelected. And so, it doesn't matter, I think there will be a lot of bipartisan support for these sorts of policies, because the voter doesn't care if you're Republican or Democrat. They care that they have a job and that their wages went up 10% or whatever. And then you, as a politician in power, can claim that you were responsible. Whether that's true or not is irrelevant. But for the median voter, that's what they see. And so that's why I think that this is the only way for them to really maintain the marginal

• 25:24Speaker 01

  lead that they have in the House and the Senate past 2026. They need to create jobs yesterday, because they only have a year, year and a half, before people start campaigning, and Congress becomes completely dysfunctional, because all they care about is, you know, what are the polls saying about my reelection chances? And yeah, maybe this radical policy that Trump or one of his advisors put through might benefit, you know, America in the long term, but I need to get reelected in a year. And there's a bunch of people who are gonna be disenfranchised by this change, change in travel direction, therefore, I can't vote for this. Even if they are Republican. And so, Trump's ability to govern is about 12 months.

• 26:04Tom Bilyeu?

  Yeah, it is going to be very interesting to see now in that 12 months. He is talking about all kinds of aggressive tariffs at a minimum as a negotiating tool. What do you think is going to be the ramifications of Trump and tariffs?

• 26:19Speaker 01

  I think, again, it's a negotiating tool. I subscribe to the Scott Besson sort of quips about, okay, if you start at 60%, maybe it goes to 5%, right? Just standard business negotiation or, yeah, I'll slap 100% tariff on you over the next four years. I'll slowly increase the temperature of the water as it gets close to boiling. Do we want to make a deal here, right? I think it's a negotiating tactic because at the end of the day, high tariffs in the short run can be very negative for growth in in America. Because if you think about America, it's a financialized economy. Most of the companies in the S and P 500 and the Nasdaq 100 are international companies

• 27:03Speaker 01

  that make the majority of their revenue outside of the United States. And so if you start slapping tariffs on all, you know, especially China, all these countries, the China goes, oh, okay, you want 25% tariff? Well, actually, no iPhones are sold in my country anymore. Go fuck yourself, Apple. There goes the everyone's, you know, Magnificent 7 and Nasdaq 100 QDQs and S and P 500. Vision Apple's down 30%. How do you like those capital gains taxes in California? Ain't none to go around, right? And so that's, this is an interlocked economy. I think tariffs are a threat. I think we can see that if he's inviting Xi Jinping to come to the inauguration, Trump is inviting Xi Jinping, the president of China, to the inauguration. This is negotiation.

• 27:46Speaker 01

  He started out a position of extreme maximalism, and he'll dial it back to get the things that him and his team want to get. And so that's where I come down on on the tariff issue. And look, if they go, you know, go ham on tariffs, it's going to be so negative for growth. You can basically assure a Democrat House and Senate in 2026. And I think they know that.

• 28:07Tom Bilyeu?

  Yeah, it's gonna be a wild ride. I, uh, we certainly have a front row seat to it. So, speaking of a front row seat to all of the changes that are happening in the financial markets, talk to me about stable coins. So, the idea that basically money is bifurcated into two things. It's an idea that I heard first from Sailor, at least put like this. I think it's really insightful, and that is you've got money as currency and money as capital. And capital flows, obviously, to Sailor, it all boils down to Bitcoin. Anybody that wants their capital preserved in the most efficient way possible is gonna be going into Bitcoin.

• 28:47Tom Bilyeu?

  But capital flow into currency is not gonna be going into Bitcoin. Bitcoin's just not optimized for that. And so now you start getting into stable coins, not being controlled by the government. What do you think is going to happen to stable coins? Is this gonna be, do we need a regulatory environment that invites stable coins into the US? Uh, will the government try to use that as a moment to slide in CBDCs? What, what is this gonna play out as?

• 29:15Speaker 01

  So, first and foremost, stable coins and, you know, the most successful one is Tether. USDT is essentially a, a dollar credit that moves on a blockchain. And Tether has bank accounts and holds treasuries in the tune of like 130 billion US dollars. Now, there's other ways to do stable coins. I'm a big investor in one called Athena, but it hasn't really germane to this conversation.

• 29:40Speaker 01

  They're very useful outside of the West, let's put it that way, right? If you are an American viewer of this program, you probably have a bank account, what's it, like Zelle and Cash App and all these sorts of things, right? It's decently easy to pay somebody in the United States, go to Western Europe, they have banks that work. Now, you go to where I live and spend most of my time, which is the other parts of the world, and some banking systems work, Singapore, Hong Kong, some nonexistent or completely clunky for a tourist. I spent a lot of time in Argentina, right? Very difficult. You know, the first time I went to Argentina, I think Dollar Peso was at Thirty or fifty. Last year when I went, it was a thousand, right?

• 30:23Tom Bilyeu?

  Okay.

• 30:25Speaker 01

  And the funny thing is, the bank will only let you, the bank hasn't adjusted the amount of cash that you can pull out of the ATM. So now, what was like a few hundred dollars maximum you could pull out of the ATM equivalent is now like thirty bucks. And they charge you ten dollars a fee on top to move, to take your money out, right? So it's fucked up. And as a tourist, you're like, well, how am I gonna pay these bills? Things have obviously not stayed that cheap. Stuff costs money. So I use stable coins. They're easy. I can pay my ski instructor. I can pay my driver. I can pay the restaurant bill. And everyone has a phone, everyone has an internet, and we can transact this dollar thing on a blockchain.

• 31:08Speaker 01

  Because, you know, the dollar is still the reserve currency of the world. It's the most used currency. And, you know, back to Gresham's law, I spend bad money, I spend fiat, I save good money, I save bitcoin. So I don't want to spend bitcoin when I'm paying people or going to a restaurant. I want to spend dollars. And this allows me to use the beauty of decentralized finance and these blockchains to bypass a banking system that wouldn't allow me or take a very long time for me to move money from where I have it to where I am. So that's the beauty of stable coins. I don't think they're that useful in the West. And if you take a look at where Tether has been very successful, it's been in emerging economies, especially

• 31:49Speaker 01

  in sort of like Asia and Latin America. And their chief competitor is sort of the dollars in a bank account with a credit on the blockchain is Circle, which is very tied in with Coinbase. And yes, they are successful, but they're nowhere near as successful as Tether because they're concentrating on a market that doesn't need their product, right? Americans and Western Europeans don't need a dollar stable coin. Their stuff kind of works. Whereas the rest of the world, shit does not work. And this is a leapfrogging improvement over how you can move a stable currency in their mind and pay for goods and services in a way to bypasses the banking system. And so I think stable coins are great. It's a great use case of the technology, has a product market fit.

• 32:33Speaker 01

  And yeah, I'm, I don't, on the regulatory front, I mean, they work. I don't know if you need to have any more things. Present to make them work any better because they're used by people all around the world to solve real world problems.

• 32:48Tom Bilyeu?

  Now, an idea that I've heard that I think is really interesting is that Bitcoin is not great for US Treasuries because people are not going to be storing their money in Treasuries if they can get their money stored into something like Bitcoin. But stable coins are great for dollar dominance because so many of them are backed by US securities. So, uh, sorry, US Treasuries. Do you think that stable coins are good for the dollar? Like, does this help? Stick around. When we return, Arthur Hayes is breaking down exactly what you should do to navigate this financial upheaval.

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• 34:08Tom Bilyeu?

  My link gets you an exclusive 30 days free instead of the usual 14-day trial. There's no credit card payment needed. Just head to pipedrive.com/impact to get started. Again, that's pipedrive.com/impact and you can be up and running in minutes. We're back. Let's dive right in. Do you think that stable coins are good for the dollar? Like, does this help?

• 34:35Speaker 01

  Absolutely. I mean, Tether is the top 20 holder of US Treasuries.

• 34:42Speaker 01

  The fact, the notion that they're not regulated is pure hocus pocus. Tether complies with KYC, ML, all that sort of stuff. They give information to federal, US federal authorities on whatever people they want to get information on. Right? So if you, if you're like, oh, I'm gonna avoid, you know, I'm, I'm not being seen in the financial system by using Tether, you're an idiot. They are completely, their ability, they can freeze your wallets. They can report you to financial authorities. So like, don't think that using Tether is somehow allowing you to do some sort of illicit financial activities. That's, that's just pure comedy, in my view. So, at the end of the day, right?

• 35:24Speaker 01

  This is a dollar. It might not be the dollar that benefits Jamie Dimon or, you know, David Solomon at JP Morgan or Goldman Sachs, but it benefits the dollar's role as the global reserve currency, you know, the US Treasury and the government in and of itself. So why are stablecoins been demonized so much? Because the people who run the dollar for the government, the large money-centered banks like JP Morgan, Citi, Wells Fargo, Bank of America, don't own Tether. And Tether is the most profitable financial services company in the world per employee. Something, I forgot the number, like 60 million dollar per employee or something crazy, whatever it is, their revenue. So their, their net income per employee. And so that's why the banks hate them.

• 36:09Speaker 01

  The US government shouldn't have a view either way. If the dollar is getting used, whether it's JP Morgan making the money or, you know, the Tether owners making the money, as long as it's a dollar, I should be cool with it. And you're starting to see that change. And the most recent quarterly refunding announcement by the US Treasury, they had a supplementary presentation all about stablecoins and about how stablecoins, especially like Tether-like stablecoins are accumulating US short-term US Treasuries. And, you know, the tone of the article was, they're not bad things. We should learn to live with them. They're still expanding the use and the role of the dollar. And so I think there's been a bit of a change in sort of the mindset

• 36:53Speaker 01

  of, okay, well, who cares if Jamie Dimon is not making money on this? As long as me, the government, my currency is being used around the world, it's good for me.

• 37:04Tom Bilyeu?

  Yeah, that this one strikes me as a no brainer. If you can get the digital stablecoin backed by a US dollar product, then you're back at the position of being able to export your inflation around the world even more, even harder. Now, look, I'm an anti inflation guy, but I'm saying if you've got the system and that's how it's working and you've got people out there who would be way better off with our level of inflation than their own hometown. Like, think about Argentina five years ago. Uh, or Zimbabwe, they would be killing to have access to a USD backed stablecoin. Um, great for us, great for them. So yeah, this one seems like I'd be very shocked if

• 37:48Tom Bilyeu?

  our own government continues to stand in the way. Bitcoin, which actually seems to be getting better adoption, uh, strikes me as I would get why they were anti that. Which, speaking of, by the way, Trump being, um, nudged certainly by Michael Saylor, if nobody else, to build a strategic Bitcoin reserve. What do you think about that? Wise? Going to happen? Not going to happen?

• 38:12Speaker 01

  I don't think it's going to happen, but I think the discussion of it is very instructive to how I believe Trump and especially, and well, Scott Besant will be the one doing it, will very rapidly devalue the dollar. So again, to bring jobs home to the United States, to make a company on the margin when I locate a productive facility in the United States, the cost of doing business globally, the dollar is too strong. And so how does the US devalue very quickly without having to do a lot of these bilateral currency negotiations? So many older listeners who are American or Western European will be familiar with in the Louvre Court, Plaza Court that happened in the 1980s,

• 38:55Speaker 01

  which are very unilateral discussions. The Treasury Secretary at the time said, we are doing this and, you know, Japan, you will allow your currency to appreciate and Germany, you will do this and France, you will do that. Now, I don't think the US has that sort of gravitas and military and economic position to sort of dictate to all these other countries, where their exchange is going to be. Maybe they will, but it takes time. They, again, Trump has 12 months. He's got something done yesterday. Uh, and so how do I devalue the dollar quickly? Well, what does the US have? And more so than any other country in the world, supposedly, if you believe the figures, the United States has, it's a Fed and a Treasury, have the most amount of gold of any other sovereign nation, even China.

• 39:40Speaker 01

  Again, if you believe the, the World Gold Council figures, um, I've done the math because I'm writing about this right now. US is about eighty one hundred tons of gold that are supposedly stored in Fort Knox. And because of how the accounting has transpired, the US Treasury, sorry, the Fed, holds gold at forty two dollars and twenty two cents per ounce on its balance sheet. That was a level, I think that the last level, uh, I think it was Gerald Ford or Nixon devalued a dollar to that level in the nineteen seventies. That's where they hold gold on the balance sheet, right? So the theory goes, and this is not something I came up with. This has been talked about by very senior and seasoned,

• 40:23Speaker 01

  you know, financial markets analyst, Scott Beston is absolutely aware of, of how this works. And to the point about Bitcoin Strategic Reserve, if you, if you read the bill by Senator Loomis, she explicitly states, okay, how do I pay for this Bitcoin I want to buy? Well, I use the gold, I revalue it at a different level, and I spend the money. And I'll describe how that's done in a second. So everyone's kind of talking about the same thing. We, United States has all this gold. It's held at an artificially low price. And so on an, on an accounting basis, the US Treasury unilaterally can decide what the value of gold is on the Fed's balance sheet.

• 41:03Speaker 01

  So Scott Beston wakes up on January twenty first and he says, okay, I need to devalue the dollar by a lot. Okay, I'm gonna say that gold is now worth $5,000 an ounce on my balance sheet. Now, for every, it's about $3,800 of revaluation of gold on the balance sheet creates a, a debt, a credit in the Treasury's general account at the Fed of $1 trillion. So, tell me the amount of spending that you want to have without having to go to Congress, and I'll tell you the gold price. And that is what the Treasury can do without input from anyone else, because the value of gold on the Fed's balance sheet is under the complete purview of the Secretary of the

• 41:48Speaker 01

  Treasury. And so, what happens? The US says, okay, well, the gold is now, I don't know, it's got $10,000 an ounce. And so now I've created a few trillion dollars of dollars that I can spend on whatever it is that Trump and his team want to, to spend money on. So what have I done? I've take, the amount of gold hasn't changed, but I've created a bunch of more dollars in an accounting fashion, and I'm spending them into the global economy. So, I've increased the amount of dollars in the world, gold price is the same, the gold quantity is the same, therefore I've devalued the dollar. Now, versus every other country in the world, now the dollar is much weaker through this gold channel.

• 42:31Speaker 01

  It's weaker than the yuan, it's weaker than the yen, it's weaker than the euro. Those are the three, you know, China, Japan, Germany, three largest exporting countries. So if I am a manufacturer, and now, you know, the three major places where I would have located a facility, it's way more expensive to do so, to export to the world, I guess I gotta come to America and deal with Trump and his team, because the dollar has now been devalued. And guess what? Best I didn't have to call a single foreign finance secretary or minister and discuss with them what he's gonna do, or get them to agree. It happens automatically, because now the US government says gold is worth, you know, $5,000, $10,000, $15,000 an ounce. How high could it go? Who knows?

• 43:15Speaker 01

  Luke Gromen, another financial analyst, he has a chart, I don't know where it is, and it's the percentage of gold as a, the amount of gold is a percentage of the amount of liabilities of the Fed in the 1980s versus today. And so they went back to where gold was as a percentage of the overall liability base. As gold as the asset liabilities are the amount of dollars in existence, you would do about a 14x rise in gold. So that's like $40,000 an ounce in gold. Do I think that's going to happen? I don't know. Who knows? Probably not. But that's just instructive of the, of where we're going from 2,600, 2,700, $100 an ounce to 5, 10, 15, 20,000 dollars an ounce.

• 43:59Speaker 01

  And now with these trillions of dollars, okay, if Trump really believes in Bitcoin and Bitcoin is a new hardest currency, and he wants to set up the United States to have, you know, the best balance sheet of any sovereign nation, then yes, he can use some of those trillions of dollars and go in the market and buy gold. But he could also use it as tax breaks or, you know, cheaper healthcare or whatever it is they decide to do. But the best point, the best part is it happens immediately. You don't need congressional approval. Your boys who are in charge of these departments can do this stuff unilaterally without talking to foreign counterparts or anyone in the deep state who would sort of oppose, oppose what they're doing. So that's why this talk about strategic Bitcoin reserve is nice.

• 44:41Speaker 01

  But what you really should be talking about is how, and I, this is the theory that I have and I have my portfolio geared toward. There will be a massive devaluation of the dollar versus gold in the first half of 2025.

• 44:54Tom Bilyeu?

  Okay. And as an individual, if that happens, do I similarly benefit from that? Does gold as it's traded to?

• 45:06Speaker 01

  So if you don't, there's no, there's no impact. The dollar's weakened. Okay. But it wasn't like they did some crazy tariff or something else to get it there vis a vis another country. It's an accounting thing versus gold. So if you own gold, great. You've, you've made, you've made a gain in fiat in terms. If you don't own gold, uh, you know, sorry, out of luck. You didn't participate, but it's not like your life has changed in any way, shape or form, you know?

• 45:31Tom Bilyeu?

  Right, right. But the way that you're talking about it.

• 45:34Speaker 01

  $10 a pound of beef is still $10 a pound of beef.

• 45:37Tom Bilyeu?

  Right, right, right. So beef priced in dollars, no change, but I do hold gold. So if this were to happen, then that it's not just a magic trick on their balance sheet. This actually does impact the world. It would impact the amount of dollars I have in gold.

• 45:55Speaker 01

  Correct.

• 45:57Tom Bilyeu?

  Got it. Very interesting. Would, if they do this, will they just borrow against the gold that they have? Or will they actually sell the gold to create the dollars?

• 46:05Speaker 01

  No, there's, there's no, that's the beauty of it. There's nothing. It's literally because of how the economics work, the accounting flows in the government, gold is at $42 an ounce now. Now, obviously, it's about $2,700 in the free, free market. So just going to where the spot price of gold is, that gets the government, I think, about $700 billion of a credit. So now the treasury has an account at the Federal Reserve called the Treasury General Account. That's where government spending occurs. So when you pay the government salaries or they hand out your, you know, social security check or whatever, it comes from the Fed's account, the Treasury account, the Fed. Then it goes to the banking system like JP Morgan and, you know, those sorts of banks.

• 46:47Speaker 01

  That's how it flows. So number one, the US government doesn't need to sell any gold. All it says is, I was saying gold is worth $42 an ounce. I now say it's worth X. X could be $5,000, $10,000, $15,000 an ounce. And because I've now created all these dollars, accounting basis, because now I have this massive credit with the Fed. I've just created a bunch of dollars and I can spend them on whatever I want to spend them on. So I've just created all these dollars out of thin air. So that's why this is beautiful, because it requires no input from anyone else other than Scott Besson at the Treasury, who does what, if Trump says, I need weaker dollar, I need businesses coming back to America. He says, gotcha, buddy. Let me just do this real quick.

• 47:32Speaker 01

  And now the dollar is the weakest currency out of all of our trading competitors. And so now companies on the margin are going to want to put their factory here and export, either sell stuff in America or export it around the world from America.

• 47:47Tom Bilyeu?

  And so when they say that they're weakening the dollar, they specifically mean against gold is the benchmark?

• 47:52Speaker 01

  Yes. And so by transit of properties, it'll weaken against the yuan, the euro and the yen.

• 47:59Tom Bilyeu?

  Because they have not moved their peg.

• 48:02Speaker 01

  Well, there's not, not that it pegged, I just created a bunch of dollars.

• 48:05Tom Bilyeu?

  Sorry, sorry, I used the wrong word. They, they also have a, an amount that they say, an ounce of gold is this many yuan.

• 48:14Speaker 01

  And they're not going to create more money based on whatever it is, they're, what they think the price of gold should be. Because they don't have the reserve currency. So China could do the same thing. They say, okay, well, we think gold is worth a hundred million yuan an ounce. We have all this yuan and we can go spend it. Great. But you're not, you don't have an inbuilt demand for your currency, even as much as you're trying to do more trade bilaterally in your own currency. Great. But at the end of the day, the dollar is still what sixty something percent of world trade or seventy percent, whatever it is. So they have that, have that demand, that demand for the currency. So the US can devalue more than any other country without suffering hyperinflation. And if you think about the major trading partners of the US, Germany, Japan, China, none of them are self-sufficient in hydrocarbons.

• 48:59Speaker 01

  The US can be, it wants to be. None of them are self-sufficient in food. The US can be, if it wants to be. So the US can go fucking nuts with very hyperinflationary policies, with very inflationary policies that would be hyperinflationary in China, Japan, and Germany. They cannot do what the US can do because they don't have the same natural blessings as this fictional area we call America has.

• 49:26Tom Bilyeu?

  Very fair. Okay. Talk to me about Bitcoin security. Do you have any concerns? Google Willow announcement comes out. I talked to Sailor about it. He's not worried in the slightest. Almost like, why are you bothering me with this question kind of energy?

• 49:44Tom Bilyeu?

  What do you think? Is, is there any future?

• 49:47Speaker 01

  I'm not a cryptographer. A little bit that I've read about this from people who are way smarter than me and who know this stuff is that the type of calculations that Google Willow can do is not.

• 49:58Speaker 01

  Does not translate into being able to break SHA256, which is the encryption algorithm of Bitcoin. And so until that happens, then we don't have anything to worry about. Obviously, you can always up and change things with the network. This has been a perennial concern of, oh, if quantum computing, therefore Bitcoin is broken kind of thing. And I am not qualified to sit here and give all the retorts to that. But I think Andreas Antonopoulos and some very smart people who understand this issue very deeply have very easily debunked that sort of line of thinking. So Google will is great. We're upgrading our ability to do calculations in a quantum way. Does that affect the Bitcoin encryption algorithm? No.

• 50:41Tom Bilyeu?

  Love it. Arthur, this has been wonderful. Where can people follow along with you?

• 50:46Speaker 01

  So on X, at Crypto Haze, Substack, Crypto Haze as well. And then come to the various conferences around the world where I speak.

• 50:56Tom Bilyeu?

  I love it, man. Well, enjoy the Salt season. I'm sure it is going to be a lot of fun. And everybody at home, if you haven't already, be sure to subscribe. And until next time, my friends, be legendary. Take care. Peace.

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