Fiscal Armageddon: How U.S. Debt Could Destroy the Middle Class Lyn Aldean Part 2

Part 2 – Escaping the Inflation Trap: What’s Next for America, Bitcoin, and Your Wealth In the dramatic second half of this essential conversation, Tom Bilyeu and Lyn Alden chart the turbulent path ahead for the U. S. economy, the fate of government entitlements, and the role of assets like Bitcoin and real estate as lifeboats in a sea of currency debasement. Lyn offers insider-level guidance on how investors and ordinary people can adapt, protect themselves, and even thrive as the current system buckles under its own weight. This part gets tactical: Lyn breaks down her investing playbook for a world ruled by persistent money-printing, explains why governments and corporations are wrestling with the Bitcoin question, and discusses why the “soft default” through inflation is already underway. Tom and Lyn tackle difficult truths about the future of Social Security, social unrest, and wealth redistribution—and where hope and opportunity still exist. If you want answers, strategy, and clarity on surviving the era of fiscal dominance, this episode is unmissable. SHOWNOTES 33:15 – Policy-fueled asset bubbles and the hollowing of Main Street 36:56 – Trump vs. Powell: Interest rates, housing, and the limits of central banking 41:18 – The hard reality: Government spending, entitlements, and default scenarios 46:19 – Why America can’t “run the Volcker playbook” anymore 49:06 – Will the U. S. eventually default—hard or soft? What happens to the middle class? 51:31 – Can America escape this destiny without violent upheaval? 54:49 – The entitlement time bomb: When will Social Security “break”? 59:23 – Wealth inequality, pain, and predictions for the coming decade 1:07:03 – Socialism vs. austerity—and why both parties are moving away from growth 1:10:44 – Can AI and productivity growth save us? Or is it too late? 1:14:10 – Lyn’s investing approach: Three pillars for an inflation-dominated world 1:19:33 – Is Bitcoin the answer? Risks, opportunities, and macro perspective on BTC 1:25:31 – Stablecoins, altcoins, and public-company treasuries 1:30:57 – Will Bitcoin’s volatility fade—and what must happen for wider adoption? 1:43:53 – Lyn’s playbook for ordinary people: How to protect yourself and grow wealth 1:46:06 – The future of the dollar and why global diffusion, not collapse, is likely 1:49:32 – How to learn more from Lyn Alden FOLLOW LYN ALDEN: Twitter: https://twitter.com/LynAldenContact Website: https://www.lynalden.com 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: 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 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: https://tombilyeu.com/call Get my battle-tested strategies and insights delivered weekly to your inbox:sign up here. https://tombilyeu.com/: 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. ********************************************************************** 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 for part two of my conversation with the incredible Lynn Alden. If you missed part one, hit pause, go back, watch it. You're going to want to know what we covered in the beginning before you dive into this. But if you're ready, let's get right back into it. I think one of the big problems that we're up against is something I call late-stage liberalism,

• 1:29Tom Bilyeu?

  where you have, for so long, things have gone so well, and the country, I mean, the West en masse, and certainly the US, has done well for so many generations that not only do we not remember a time that was hard, our parents don't remember a time that was hard. Like, you have to get back to my grandparents to remember the Great Depression. And it really does just feel like...

• 1:58Tom Bilyeu?

  Money grows on trees. And I was writing a video essay about this and I was like, actually, if it had to be grown on trees, people would have more respect for it. We literally print it out of thin air. It's easier than growing it on trees. And so the very joke we used to make to try to explain to kids that money doesn't come easily is like way harder than what we actually do with money. And so people literally, this is why I think socialism is gaining popularity with young people, is it's like they have no sense of like, this is hard to come by. So they look at the people that have a lot more of it and they're really annoyed. Cause they're like, well, this very easy thing is being given to somebody else is not being given to me. That sucks. Let's do wealth redistribution. Let's take it from those guys, cause it's just, you know, growing on trees anyway.

• 2:43Tom Bilyeu?

  Give more to me and take from them if you have to, whatever, I don't care. But like, let's just make sure that everybody has something with like a terrifying blindness to how difficult capitalism really is. And the thing that I am always trying to get people to understand is even China realized to pull people out of poverty, I have to use what I call red light, green light capitalism, what they would probably call capitalism with Chinese characteristics. And it's like, that's the only thing. It's the only thing that over and over and over, all around the world has shown that works.

• 3:21Tom Bilyeu?

  And we are now, we have created a, an economic situation through, I mean, to oversimplify, but through deficit spending and money printing, we have created a situation where people think, oh, well, this is always going to be good. It's always going to be functional. Give me the money. And that's going to accelerate the breaking of the economy. Do you see that same mentality growing in people? Do you see us like, not only putting our hand on the stove, but like, holding it down on the burner? With the reaction being a more socialist bent rather than austerity? So we're going socialism instead of austerity?

• 4:03Speaker 01

  So far, that's the approach. And ironically, it's not just on the left, even the right. I mean, basically owning owning pieces of of private companies and kind of this top down tariff approach are basically top down type of economic management. So you see kind of elements pop up, both in terms of the, you know, the literal socialist left, but then also a more socialist aspects of the right as well. So in some sense, the Republican Party ends up looking in some ways more like the European right, which is where it's not necessarily fiscally conservative, even though there's aspects of of social conservatism. And so the the parties look a little different than they did, you know, and say the Paul

• 4:46Speaker 01

  Ryan era of the Republican Party or the Reagan era of the Republican Party. And you see the democratic side shift as well. I think the the thing that the US does have going for it compared to, say, Europe, because you mentioned like when we have these kind of when things go well, we're more likely to make these types of decisions to kind of kneecap ourselves. So I think Europe has a bigger issue around energy. The United States, at least, we have the resources to be pretty energy independent and to kind of not have that be our limiter unless we, you know, want it to be. So I think, again, we have a lot of the tools here. We have, you know, the great geography in the world. We have a great system that really kind of fuels innovation.

• 5:31Speaker 01

  We have energy. We have resources. And it really comes down to a handful of big pockets of problems, such as healthcare, top-heavy entitlements, defense spending, and kind of more broadly, what we've done, and this is what fuels a lot of the wealth concentration. We've made it so that the the most lucrative things that most people can do, unless you're like a top 1%, you know, creator in some way, like, you know, Bill Gates or you know some sort of founder if you're not that the most lucrative thing you can do is go into finance and so basically anyone who gets in a position where they basically short fiat currency so they they get into a position either as a wealth individual or at the helm of a big entity like a company or a fund where

• 6:15Speaker 01

  they can short fiat currency at pretty low rates and then they can buy assets with it that's basically the most lucrative thing you can do in this current system for the most part if you're if you're just kind of a reasonably intelligent person and so we kind of heavily reward the finance sector and we punish and add all these incentives against the more kind of hands-on parts of the economy and so whether it comes to rethinking the global status of the dollar whether it's truly tackling healthcare defense these are the things that are actually pretty solvable problems and just my concern is that we will constantly be distracted by other things and five 10 years will go by and we still won't have meaningfully addressed these issues and you know polarization will

• 7:00Speaker 01

  be higher people will be kind of focused on potentially the wrong things to be angry at.

• 7:05Tom Bilyeu?

  Yep, okay, I when I really try to put a playbook together one is hey go invest in assets you just you have to do it but the other is okay is there a way out of this growth is certainly you can theoretically it doesn't violate the laws of physics you can theoretically grow your way out of this the only thing that I see on the horizon that is even remotely capable of that would be AI one do you see anything else on the horizon even just generalized deregulation or do you think AI has a shot at this do you think AI is overhyped like what are your thoughts on growth?

• 7:44Speaker 01

  So I think that AI and growth in general extends it that's this part of what allows us to go on so long and even you know before I talked about how like people decades ago were saying the debt's going to be an issue part of why it took a while for it to become a more acute issue is because of growth so like before it was in the form of of connecting you know Eastern labor and resources to, you know, West capital and and and other things and kind of bringing that all together. That's a form of productivity growth. That's a form of just more efficient systems operating. And automation in general, like the growth of technology, Moore's law, all of that was very powerful.

• 8:25Speaker 01

  For basically enabling standards of living to keep increasing despite the fact that our monetary system was inflating. And going forward, I think that AI can do some of that, especially with the white collar work. So we can get potentially more productive in certain areas. And therefore reduce the cost of those things, make them more abundant. The the part where I tend to be somewhat more bearish on AI, and this this all comes down to timeframes, is generally real world in the field. So more the robotic side of things that I think AI doesn't solve everything in the next, call it five, 10 years. That it it could certainly have, it it can and will have impacts on small businesses, large businesses. The way consumers do things is going to have a major impacts on the economy.

• 9:09Speaker 01

  And in the form of growth, but that the real world interaction is still, I think, going to be slower than people think. We hit certain bottlenecks, technology speaking. So we we often kind of think of technology as a smooth growing thing, whereas in reality, we kind of have these more stepwise things. The the example I like to use is flying. So for thousands of years, humans made basically no progress on flying. Then they made some progress with, you know, hot air balloons and zeppelins. But it really wasn't until we put aluminum and hydrocarbons together, where we you go from Wright Brothers to man on the moon in a human lifetime. But but then we hit a pretty much a stagnation.

• 9:51Speaker 01

  So I mean, our fastest, you know, jets were decades ago, both, you know, military jets and and and commercial jets. You know, there's not been a lot of innovation. We've kind of hit like a a soft ceiling in a lot of parts of aviation. And it's on the other hand, Moore's law, the growth of electronics and all that field software.

• 10:16Speaker 01

  That's where we've had the vast majority of our technological gains over the past several decades. And I think we can hit a certain point where, you know, we have these rapid gains for a period of time, but then we do run into kind of a soft ceiling. So that's kind of my expectation with AI. But like many other people, I have to just look to see what experts in the field are exploring and, you know, try to, you know, bring the engineering side I have to bear, but it's certainly not in that particular field. So I can only, I can only opine on it to a certain degree.

• 10:48Tom Bilyeu?

  Right. Well, so let's now go beyond the opining. I have a feeling that you also invest. So in this moment, looking at the landscape, where are you? You like 100% deployed in Bitcoin? Do you spread things out broadly? Do you holding bonds? Like what, where, how are you approaching this moment from an investing standpoint?

• 11:10Speaker 01

  Yeah, good question. I mean, fortunately, I have better answers there than on what public policymakers should do because that's always the hard part. The way, the way that I've approached investing for myself and my clients is I generally say a three pillar portfolio. So most people are, you know, they think of the 6040 portfolios, 60% stocks, 40% bonds. The problem is that in fiscal dominance, bonds don't do very well. They generally lose a lot of purchasing power. And so my approach is instead of three pillar portfolios, so one pillar is high quality equities. So that part's still the same. One part is hard monies, commodity producers, kind of these, the more art asset type of

• 11:52Speaker 01

  approach. And then the final pillar is cash equivalents. So that is a section that does get debased, but it can be used to kind of protect against volatility and rebalance into the other portions. And that, of course, will depend on how old the investor is. Another way of kind of thinking about it is you take the 6040 portfolio, you take out some of the bonds and put something like gold in the place, maybe not for all of it, but some of it. And you take the equity side, and you take a little bit of the equities out and put in some Bitcoin. That's kind of how I've tailored a portfolio. Because in that physically dominant environment, those types of monies, those types of more hard assets tend to be winners.

• 12:35Tom Bilyeu?

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• 13:18Tom Bilyeu?

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• 14:48Tom Bilyeu?

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• 14:55Tom Bilyeu?

  Thanks for sticking around. Let's get right back into the action. Okay, and how do you conceptualize Bitcoin? Do you think of it as gold? Do you think of it as money? How do you categorize it in your mind?

• 15:11Speaker 01

  In some ways bigger than that. I view it as money. It's also portable capital. I think more fundamentally what it does is it solves the problem of fast settlements. And so it kind of solves a century and a half problem that humanity's had. So, you know, for all of human history, transactions and settlements were roughly at the same speed. You couldn't really transact any faster than you could move around the world. So transactions happened at the speed of foot and horses and ships. But ever since we invented the telegraph, and specifically when we deployed the telegraph over long distances by the 1860s,

• 15:48Speaker 01

  we reached kind of this new era where people could communicate around the world at roughly the speed of light and therefore could transact roughly at the speed of light. But we had no fast settlement. So settlements still took the form of literally sending and auditing gold, for example. And so we became reliant for about a century and a half on very centralized ledgers to try to bridge that whole gap between fast transaction speeds and yet still very slow material settlement speeds, any sort of like final delivery. And what is interesting about Bitcoin is that it's basically the invention of fast settlements. It finally allows value to be sent long distances in a way that's practically irreversible.

• 16:31Speaker 01

  In a similar way that you chip gold and it gets audited and therefore that transaction's done. It's not resting on a centralized ledger's ongoing maintenance. And so that's basically what that problem solves. But then it's up against very large network effects. So it starts in 2009. It's tiny. It's up against the $100 trillion fiat currency system. And so it's slowly growing into that. Right now, even at a $2 trillion market cap, it seems big, but it's something like 0.2%. Of global assets, gold, gold at something like a 20 trillion network size estimated is around 2% of global assets.

• 17:15Speaker 01

  So I think Bitcoin is going to grow into kind of the role that gold fills to some extent. But then potentially has a avenue to grow further still because it's able to solve things that even gold itself as a money can't solve. So there's certain things obviously gold can do that Bitcoin can't do. You can use it in industry. It has all these kind of practical purposes, but as a money Bitcoin is in many ways more powerful. It's able to beam around the world in 10 minutes, even faster by using some higher layers. And I think another way of kind of thinking about it is because especially with your audience and in general, anyone who's technologically minded. Our first thought is, well, the first technology is going to be the one that gets displaced.

• 18:00Speaker 01

  It's going to be some later thing that comes and displaces it. And the one, the way that I've kind of conceptualized this is the really big exception for that is communication protocols. Those so far tend to have a very long life cycle of lasting. So whether it's Ethernet, whether it's simple mail transfer protocol, whether it's TCP IP, whether it's USB. Once these things kind of become dominant in their fields, they tend to, one, they update over time. So what place, what displaces USB is the next USB rather than literally a competitor. And two, the complexity and the fast moving parts, that tends to happen at the periphery or on higher layers.

• 18:43Speaker 01

  Whereas the core of the system itself is kind of very simple. And I think that Bitcoin is kind of following a similar approach, which is this new communication protocol that exists. And this, in this case, it's a communication of value and it's achieved basically network effect dominance. So it becomes increasingly less likely that something within its own field will displace it in a similar way that Ethernet and USB and others have kind of achieved dominance. And therefore it's going to grow into. Whatever total addressable market has, which I think is north of gold's current 2% of global assets.

• 19:18Tom Bilyeu?

  What do you think about people that aren't, they either aren't sold or don't care about it as a transactable thing, but they think instead of it as a store of wealth? Does that seem silly? Or because Bitcoin is not transacted like money is right now.

• 19:40Speaker 01

  Yeah, I don't think it's silly. I think that basically people solve the problem they have. And for most parts of the world, people, when they wake up, they don't have a payments problem. They have a store of value problem.

• 19:52Speaker 01

  That's something that people in developing countries have. And then even in developed countries, we just have a slower version of it is where are we going to store our value? So that's something that basically 8 billion people in the world have as a problem. Payment problems, while some people have them, they're way less universal. You know, most people in developed countries don't think I have all these payment frictions all the time. Now, certain areas do. There has been, for example, deep banking in certain countries. People have the issue, like I point out, that there's over 40 currencies in Africa. There's over 30 currencies in Latin America. So we can imagine in the United States, if every state had a currency, and imagine all the cross-border frictions, not just in terms of payments,

• 20:33Speaker 01

  but in terms of cross-state lending and things like that. So if an entity in New York wants to lend to an entity in Michigan, and you're balancing 50 different currencies. And so a lot of the world actually kind of lives under that type of friction-filled system. So especially in a cross-border sense, you're more likely to have payment frictions. So I think that the problem that Bitcoin is kind of filling into, the thing that it's solving is more that portable store of value problems. It's portable capital. But then around the margins, it can also solve payment problems for those that have it. But then in addition, that's a crowded field. So for example, stablecoins, not for every person, but for a lot of people, stablecoins solve a lot of their frictions as well.

• 21:17Speaker 01

  So going back to that example about Africa, like you'll see a lot of stablecoin volumes happening in several countries there like Nigeria. Because especially for shorter-term holding and paying, stablecoins are equal or in some cases better than Bitcoin.

• 21:32Speaker 01

  At that specific task. And where Bitcoin really shines is that over that long arc of time, it can't really be sanctioned. It's not centralized. It doesn't debase. It's truly permissionless rather than this kind of centralized node on top of a blockchain. And so I think over time, it grows into more of that payments aspect. But I think in the current time where it's high volatility and it's growing into its total disposable market, it more serves as that kind of portable capital aspect.

• 22:01Tom Bilyeu?

  Okay. Whenever I think about Bitcoin, and my audience will know, but for anybody that's encountering me for the first time, I'm heavily invested in Bitcoin, big believer, but I definitely don't trust myself to be right about Bitcoin in the way that, say, Michael Saylor does. What do you think about the Bitcoin treasury companies master in terms of that just massive concentrated bet?

• 22:24Speaker 01

  So I think it makes sense for someone to do it. I mentioned before that basically in this current system where you have debasing currency, anytime someone can borrow or short fiat currency and go long another asset, as long as they manage risk and volatility well, they get rewarded for it. So I think it makes sense that that someone figured that out you can do with Bitcoin. It was actually written about by Pierre Richard back in 2014. He wrote an article called speculative attack. And he's like, someone's going to figure out that if you can borrow fiat currency and buy Bitcoin, you're just going to keep doing it over and over again. That started happening six years later in 2020, and it's been happening ever since. And we're starting to see it in other companies as well. So

• 23:04Speaker 01

  Meta, Planet of Japan, you know, a bunch of others. I think that makes sense. I do think that, you know, this cycle will hit a degree of froth in it. And so some of these levered entities will get shaken out. We've all seen, you know, altcoin treasury companies spinning up, which I think, you know, looking back years from now, will probably not be seen as very positive things to have done to, you know, use leverage to, you know, kind of stick altcoins in a publicly traded vehicle.

• 23:30Tom Bilyeu?

  Just because they're going to wipe out value? Why would we look back and say bad idea?

• 23:36Speaker 01

  Because it wipes out value. Yeah. I think basically, there's been a long history of You know, altcoins have one or two good cycles under their belt. When they come out, they get launched, they they get hype, but then they kind of roll over relative to Bitcoin, and then never really recover. So that's that's been kind of the case over and over and over again. And I kind of expect that to keep happening just because of that communication network effect aspect that I talked about before. So

• 24:01Tom Bilyeu?

  Do you think though, that with the altcoins, that people are really fooling themselves into thinking this one's going to be bigger than Bitcoin? Is that the phenomenon? Or is the phenomenon, I'm gonna bet against or bet on culture, I'm gonna be smarter than the next guy, this is PvP servers all day, and I'll just know when to get out?

• 24:20Speaker 01

  Yeah, I think that that makes sense. I think that a lot of that is PvP. I think when you put it in a in a publicly traded vehicle, it gets a little bit more more potentially serious, or the scale's bigger. But yeah,

• 24:31Tom Bilyeu?

  So those guys, you really think like, that's wild to me. First of all, I didn't know that there were companies using an altcoin treasury like approach. Obviously, if they created their own coin, sure, but that seems insane. Is this a thing that's happening a lot? Like, are there any altcoins that you could point to and be like, well, that was smart? I mean, maybe Solana, but like, woof. Other than that?

• 24:56Speaker 01

  Yeah, I think a lot of them can make good trades. But I think that none of them really have the quality of a treasury asset, which is different. Basically, it's something that I think there's there's a difference between like a hedge fund holding a trade versus a publicly traded company using it as a long term treasury asset. I think Bitcoin has met that standard. I don't really view others as having met that standard. I think they're more like penny stock tech plays, basically, where, you know, for example, I'm on the I'm on the record of being bullish on stable coins. So obviously, any sort of rails that enable stable coins to function have some degree of value. So I think it's not to say that there's no value in the space. But

• 25:37Speaker 01

  generally speaking, it's inflated because there is this really big speculation element and this PvP element kind of built on top of it. And so I think and I think over time, you've kind of seen the narratives play out. And now that the narratives in that whole space are pretty weak outside of stable coins and certain other forms of of tokenization.

• 25:59Tom Bilyeu?

  Do you use debt to buy Bitcoin?

• 26:04Speaker 01

  I do not, but I mean, I've been long microstrategy since 2020.

• 26:11Speaker 01

  I view it, I treat it as much smaller position than core Bitcoin.

• 26:16Speaker 01

  And then anyone who has optional leverage that doesn't get rid of it is in some ways using leverage to buy assets. So for example, you know, I have, purposefully, I have mortgages attached to properties. Because if I, if, if I can short fiat currency at 3% for the long term, I figured instead of, you know, selling stocks or selling Bitcoin to pay that off, I'm kind of indirectly slightly levered on assets. But for the most part, I let other proxies do it for me. I let, you know, microstrategy do that for me rather than myself hold Bitcoin in debt.

• 26:52Tom Bilyeu?

  And do you have a like philosophical stance that you use to explain to yourself or to other people? Like, this is why I don't go all in like Michael Saylor. Because if, if Saylor is right, he is going to make himself one of the wealthiest people on planet Earth. Like if this continues to, you know, 10x from here or more, like he's really, really going to be upper echelon of wealthy. Not that he isn't already, but I mean, it will just be absolutely absurd. But boy, oh, boy, the reason I don't do it is I just don't trust myself to be that kind of right. While I have high risk tolerance, clearly not that high. And there could be a black swan event or whatever.

• 27:36Tom Bilyeu?

  And so I just, as a philosophy, go, I'm going to spread myself across a broader basket of risk on assets, to be sure. But I want that more diffuse take because who knows?

• 27:51Speaker 01

  Yeah, so my, my approach is when I'm very high convicted bullish on something, I size it so that if I'm right, I materially benefit from it. But if I'm wrong, it's not like a financial kill shot. It's just a major setback. And so with Bitcoin, It is my largest individual asset, but it's one of many assets. And there's also a difference between someone who, you know, say, sticks half their net worth in Bitcoin versus someone who bought some Bitcoin and then because of superior performance, it's become half of their net worth. And they psychologically treat it somewhat different. So I, you know, I have a lot of Bitcoin exposure, but it's in that kind of broader mindset of

• 28:36Speaker 01

  more broadly that I want to own multiple types of high-quality assets, short fiat currency where I can, or let other, you know, let my assets do it for me on their balance sheets. And I think that, you know, to quote Paul Tudor Jones, I think Bitcoin is the fastest horse in the race, but I don't think it's the only horse. And I think that it's, I have a clear head by not being 100% in on something. It gives me kind of a zen aspect in bear markets. So for example, in November 2022, when Bitcoin was, had collapsed from 69,000 all the way down to like 16,000, I was at the Pacific Bitcoin Conference and, you know, we were having a good time. We were on stage, we were laughing, you know, the energy there was high.

• 29:22Speaker 01

  And I think because, one, people knew what they own, and two, anyone who wasn't levered or didn't size it inappropriately relative to their volatility and risk expectations, use it as a buying opportunity. So I think it makes sense for someone to be all in, but not necessarily everybody and not even necessarily most people is how I put it. Another way of kind of pointing out is that, that, you know, Michael Saylor does have other assets in his personal life. He does have properties and things like that. And this particular vehicle obviously represents the vast majority of his net worth, but he'd still be okay if Bitcoin had a problem. So I think people, you know, you want to put yourself in a position where, you know,

• 30:06Speaker 01

  if Bitcoin doesn't perform the way you think you will, it could be, you know, obviously very damaging to someone financially, but it's not necessarily an irrecoverable thing, you know, if they encounter an issue. And it's going to partially depend on their level of conviction, their level of research that they've done on it.

• 30:22Tom Bilyeu?

  Yeah, agreed. Do you see the volatility of Bitcoin coming down and would you celebrate that or be sad?

• 30:30Speaker 01

  So historically, it has mildly decreased cycle after cycle. And I think that's normal. I think that when you go from a one, like a, you know, a million dollar asset to a billion dollar asset to a trillion dollar asset, it's naturally that the the holding of it gets more diffused and there's kind of less kind of tail optionality going on. So I think that over the next five, 10 years, I do expect volatility will decrease. And I view it as a good thing because as it kind of gets higher toward a total just for market, we'd expect volatility to decrease. And also, part of why people don't use it for payments at scale is that volatility. So you can't really price things in it because

• 31:11Speaker 01

  of that high volatility. We still live in a very fiat world. Our liabilities, either in debts or in just ongoing obligations, rent, mortgages, things like that, our expenses are in are in fiat currencies around the world. So people can't really price things in Bitcoin. If Bitcoin does get much larger and more liquid and the volatility goes down, that actually opens the possibility where people could price things more readily directly in Bitcoin, especially when you're talking about a context where, you know, a continent with 40 currencies and it can become more of a standard that that people use. So I do expect volatility to decrease. And while the downside is it takes away from the explosive

• 31:53Speaker 01

  return potential over time, I think the upside's outweigh it. But I also think we have much more to go, most likely, before that volatility gets, you know, to what we consider low, like gold.

• 32:06Tom Bilyeu?

  And do you think that there's going to be tax policy that will need to be put in place to make it so that you can transact at least at smaller dollar amounts before you get taxed for this to really become that that settlement layer? Or do you think it doesn't matter?

• 32:26Speaker 01

  I think that does matter. I think that there's a significant number of people that would spend more Bitcoin if they didn't have this administrative or tax overhead on top of it. That'll be jurisdiction by jurisdiction. So there's some countries that will be ahead of the game in terms of getting away from that and other ones that'll be more reticent. It also generally should fuel innovation because, you know, right now, our payment systems are very much permissioned payment systems. And, you know, we have software now. We have open source, decentralized, permissionless things to build on. And so, you know, tax can sometimes get in the way of that by basically saying that, you know, that this would be the easier way to do it, but because of tax, we can't. That's also, I think, part of what

• 33:11Speaker 01

  keeps stable coins pretty attractive at the current time, not just the stability, but also because there's less of a tax overhead if you're just using it for holding and spending.

• 33:22Speaker 01

  But over time, I think that that actually will be important. And for example, when, you know, when people were kind of advocating the government to buy Bitcoin, I think a better policy is to let people use Bitcoin more easily. So I would actually be more interested in a politician saying, we want to, you know, have a certain threshold for which Bitcoin transactions are not taxable versus telling me how much Bitcoin they want to buy on behalf of the government.

• 33:48Tom Bilyeu?

  Taking a short break, but there's more Impact Theory after. Stay tuned. You're probably paying two salespeople to do one salesperson's job. That's where today's sponsor, Pipe Drive, comes in. An intelligent, AI-powered sales CRM loved by growing sales teams. Pipe Drive just launched meeting intelligence built right into the CRM. Before every call, it pulls deal history and past conversations into one brief. During the call, it records and takes notes. After it, it drafts your CRM updates to review and approve. So there's less admin and more selling. Switch to a CRM built by salespeople for

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• 34:56Tom Bilyeu?

  Thanks for staying tuned. Now, let's get back to it.

• 35:00Tom Bilyeu?

  And are you getting nervous is probably the wrong word, but do you get tense at all about governments starting to have huge stakes in it, different companies buying big stakes? And I know there are some people that are, they don't love that this is becoming a part of the traditional financial system. They wanted it to remain just completely outside of that.

• 35:22Speaker 01

  So I think there's no world where it gets to be a multi-trillion dollar asset and only individuals own it and not other pools of capital. I think that basically, once you get this big and liquid, it's inevitable that either corporate entities or pension funds, or even some sovereigns are going to want to own it. Basically, anything that you're responsible for managing, if you become bullish on Bitcoin, it makes sense for you to add it to your thing. So this starts at the, you know, yourself and your family, and then it trickles into professional life for those managing other types of assets. So I think it's totally inevitable that if it's going to be successful, it's going to be at all these different types of balance sheets. As far as concentration risk, I don't really

• 36:04Speaker 01

  view that as a problem because it's a proof of work network, not a proof of stake network. And the concentration is thus far pretty manageable. So MicroStrategy has 3% of coins, roughly speaking. You know, potentially the more bigger concern is that a lot of entities use Coinbase as custody. So I think they have something like 10% of coins, which is not fantastic, but I think not the end of the world. People have to kind of remember that even back in, say, 2011, like with Mt. Gox, you know, at one point, they had like a double-digit share of the network. So there's always been these little pockets of concentration that spin up and then either, you know, get diffused or break in some capacity. So I think

• 36:46Speaker 01

  that the network is sufficiently spread out, that that's not really a long-term concern I have. And I generally view it as inevitable. There are people that say that Bitcoin has in some way failed now because these large entities hold it. But it's a permissionless asset. It's there's no way to prevent large pools of capital from owning it. And to the extent that, you know, the Bitcoin proponents that think it'll change the world. Part of that involves going through every balance sheet out there, including increasingly big ones. It even goes back to in 2010, when the late Hal Finney was writing about this, he was he was kind of doing back the envelope math on saying, you know, Bitcoin has this many transaction throughput, and if this many people want to own it, they're going to have to own it through proxies.

• 37:31Speaker 01

  So he was kind of analyzing the concept of Bitcoin banks back then. So this has been kind of a known aspect from the beginning. And another one, Nick Zabo, he was one of the kind of the before Bitcoin came out, he was active in the field of kind of trying to create digital gold and other types of assets like this. And the way he envisioned it was a two-tiered system. We have kind of a settlement network itself that's suitable for larger transactions. And then various mechanisms on top of that, whether it's software like Chomney and Mintz, or whether it's old school, you know, custody arrangements to allow smaller transactions and other things to scale.

• 38:13Speaker 01

  So I think that some degree of custody is inevitable, and some degree of connection between Bitcoin and everything else is inevitable, again, as long as it's successful. I mean, if it's not successful and it just kind of rolls over, then it doesn't get into balance sheets. But as long as it continues to be dominant at what it does, and as long as it continues to be decentralized and secure, I think it will show up on more and more types of balance sheets. It's mostly a one directional thing.

• 38:39Tom Bilyeu?

  Given the obviousness of fiat dysfunction, why do you think more companies don't have like treasuries that are Bitcoin? I mean, you don't necessarily have to become a Bitcoin treasury company, but why aren't more people going, thank you for the fiat. I'm going to immediately move this over into Bitcoin or some at least meaningful percentage. Why isn't that happening?

• 39:03Speaker 01

  So I think until, so until the past year, a big variable was it wasn't taxed well. So basically for, for not that tax, I mean, accounting like it wasn't a treat on accounting purposes very well. So basically if it went down in price, they had to book that as a loss. But if it went up in price, they couldn't book that as a gain. So just kind of ratchet it down. So they'd have to say, okay, here's our official financials, but here's like really what our financials look like. And that's, that's not attractive to a lot of CEOs. In addition, it's because it's volatile, there's a lot of career risk where if you're already CEO of a company, you know, buying an asset that, you know, can go down 80% at certain times and has introduces a risk where they might not otherwise want it.

• 39:48Speaker 01

  Historically, the way that companies have been dealing with this whole fiat to basement issue is they decapitalize themselves. They basically, they pay out dividends, they buy back their own shares, they purposely take out debt they don't need just because they're basically shorting the fiat currency. Like an example I like to use is that, you know, Coca-Cola has been profitable for like every year for like a century. And yet, why do they have 40 billion or 50 billion in debt? And it's because they can't basically that, you know, if, if someone's going to offer them the ability to, you know, issue bonds for 10 years, 20 years, 30 years at 2, 3, 4%, which, you know, until kind of recent high rates that you're able to do, it's, it's lower than their other cost of capital. They

• 40:33Speaker 01

  say, well, if we're going to borrow at 2% and buy back our own shares with it, their, their arbitrage of the fiat currency system, just like everyone else. They're just doing it a less volatile and, you know, explosive way as doing it with Bitcoin. And so that's, that's been kind of the, the go to choice for a lot of companies. Whereas Bitcoin is one, until recently, it wasn't really big and liquid enough to be on their radar. Then the accounting issues were there. And once, once Those things were addressed like now that it's a $2 trillion network. Now that the accounting issues are addressed, we do see it popping up more. But I still think it'll take years because of the the high volatility aspect of it, which which means that it's more disposed that someone who owns a lot of the company.

• 41:16Speaker 01

  For example, Michael Saylor had dominant voting rights in the company. So if you're able to convince one person to make a really decisive move, that's where that tends to show up. It's also, I think, not an accident that Fidelity was earlier into Bitcoin than most other financial institutions, because it's a more privately held entity. So if, you know, the CEO was on board with it, it could happen. Whereas if you have a more diffused ownership, where the CEO might only own 2% of the company, and is basically just an employee there rather than like a true owner, you're less likely to get that kind of high conviction decision making compared to entities that have tighter ownership. That's also why you see a lot of small businesses, small private businesses will own Bitcoin.

• 41:59Speaker 01

  And you'll see a lot of people that are, you know, they might be on the board of a pension. They might be on the board of a bank. And in their personal life, they might have a lot of Bitcoin, because they could just make that decisive decision. But there's no one really in place at a lot of these types of entities. They can just make a pretty decisive call like that. If there's any degree of controversy to it, which there is because of the volatility and historically because of the accounting treatment.

• 42:22Tom Bilyeu?

  Fair. Now, do you think in terms of long term potential risks for Bitcoin, that quantum could present a problem?

• 42:32Speaker 01

  Over the long arc of time, I think it's worth monitoring. I've been able to talk to some of the experts that focus on this. So they they kind of come up with with their potential solutions and how they might address it. So just like how USB and Ethernet update over time, Bitcoin does update over time. In terms of non consensus changes, there's regular updates. And then in terms of consensus changes, there's occasional updates that happen over time. If a very large percentage of the network agrees to do it, and potentially they could replace the signature types with more quantum resistant signatures. The downside is they generally take a lot more space, and therefore you run into issues like the block size limit,

• 43:16Speaker 01

  the amount of bandwidth that is needed. So doing it prematurely is unlikely to be successful because there's to be more pushback against the cost of that compared to doing it. So I think I'm optimistic that I know that there are solutions on the table. They might be just like how we talked before about the complexities of the fiscal budget, that there are solutions, they're just kind of hard to arrive at. The same is generally true for Bitcoin and quantum resistance, that if we do hit that point, there are solvable ways around it. And then, yeah, I still think it'll take many years to probably reach that point.

• 43:51Tom Bilyeu?

  Okay, so that, fingers crossed that you are correct there, and that's sort of where I've settled out as well. If you were talking to the average person right now, the person that is getting eaten alive by inflation, that the stuff that we were talking about at the beginning, they're just not super aware, how would you coax them into making a change in their life? So I always try to lead people with a playbook, like, go do this. You gave us your three pillar strategy, but for people that are like, they don't even understand the difference between the three pillars. Do you have like a basic way for somebody to think about this to move forward?

• 44:30Speaker 01

  Sure, I would say that for any asset you own, think of the dilution. So if you're owning fiat currency, and the currency supply is growing by 7% per year, you're owning a smaller and smaller share of that network. Equities and real estate have different dilution rates. So for example, real estate might have a 1% or 2% long-term dilution rate. Gold has something like a 1.5% long-term dilution rate due to new mining. So for any asset that you consider owning, a first step is to know the dilution rate, both in terms of the number of units, if you can, and also market share. Is it kind of being diluted because it's losing market share in a big thing? So the main thing is to own truly scarce things

• 45:15Speaker 01

  that are then not being diluted. So high-quality equities, high-quality real estate, Precious metals, Bitcoin, whatever kind of, how much research they've done, they might be more convicted in certain areas than others.

• 45:28Speaker 01

  And for Bitcoin, I think my advice tends to be that there's a lot of numbers that make sense, but zero is probably not the right one. Which is to say, you know, there are people that are more than 100% all in, like they're levered long. And there are other people that a 3% or 5% allocation could make sense. But I think that if you don't own any, and if you've never sent a Bitcoin transaction. I do think that going forward, that's a, that's a good thing to have done. It's a good thing to have, at the very least, you've educated yourself on the functionality of this, because it's a different way of, of doing money.

• 46:06Speaker 01

  And I do think that, that going forward, zero is not the right number. It could be an amount that's not that important to you, but at least you have skin in the game now and maybe would, would pay attention to it going forward.

• 46:19Tom Bilyeu?

  I think that is very sage advice. Now, you talked about market share and that being one of the things you need to pay attention to. Market share as it applies to the dollar, do you see any realistic challenge to dollar hegemony? Is that on your risk of things to be worried about? Or are you like, no, no, no, listen, inflation, yes, we have to worry about that very much. But the dollar is going to be the reserve currency for a very long time.

• 46:43Speaker 01

  I think we're seeing gradual diffusion, because people, when they, when they think about dollar losing status, their immediate thought is what replaces it? And the answer is that there's no other fiat currency that has the characteristics to replace the dollar. And so, for example, after World War II, the United States was like over 40% of global GDP. We had all the manufacturing base, yeah, we had all the gold, we were the only entity still standing, basically, everything else was rubble. And so you're in this kind of unusually dominant position, and we've been able to ride that now for, for, you know, 80 years. And there's no, so the US is no longer in a position that's anywhere near that dominant.

• 47:23Speaker 01

  We're, you know, we're a quarter of global GDP on a purchasing power basis, or even less, something like 15%. On a purchasing power parity basis of GDP. But also China's not big enough, Europe's not big enough, there's no other currency block that, that's really in a position to just be the, the global ledger that everyone uses. So I think that the, that the challenge on the dollar is not going to be another fiat currency. It's gonna be one of two things. It's gonna be more of an interest in neutral assets. So things like gold and Bitcoin is currently by far because gold's 10 times bigger. That's the preference that that central banks have been doing over the past decade or so, where they're gradually kind of bringing gold back into the system to some extent.

• 48:07Speaker 01

  Even some of them were repatriating it because they were like storing it abroad. And some of them were actually, you know, paying the expense and logistics of getting it back in their own borders. And then around the margins, there are some like El Salvador or the Kingdom of Bhutan that get Bitcoin on their balance sheet or in certain sovereign wealth funds, they have indirect exposure. So I think that that will become more common. And then two, there can be more of a diffusion of currencies where there's no one currency that displaces the dollar. Let's say the Chinese currency goes from a 0% holding to a 5% to a 10% holding, for example, and you get more of this plurality, especially in, I think that basically that whole kind of,

• 48:48Speaker 01

  the whole region around Asia is probably, I think, gonna gradually a little bit get more in China's orbit over time,

• 48:56Speaker 01

  which I don't necessarily view as a bad thing because I talked before about the dollar hegemony has a cost to it. We basically, we overvalue our currency and to maintain that status, we basically hollow out our industrial base. We run these big trade deficits with the rest of the world to get them dollars. Because in order to use the dollar as a global reserve currency, they need dollars. And ironically, they get them through our trade deficits. So I think that as we enter more multipolar world, either because neutral reserve assets are more popular or because there's some degree of diffusion among the top five or so currencies, that actually takes some of the imbalance away from the US economy. And going back to my earlier point, if that's kind of acknowledged to be happening,

• 49:40Speaker 01

  there are ways to kind of make that transition more graceful. Then if they try to fight back and fully maintain hegemony, even when it's no longer even serving our interests anymore. So I think that's, that's kind of the, the big risk there.

• 49:54Tom Bilyeu?

  That is very interesting, very interesting. Okay. I definitely not thought of it that way. That is fascinating. Lynn, this has been incredible. I have so enjoyed my time with you. Where can people engage with you?

• 50:09Speaker 01

  People can check out my book Broken Money. They can go to Lynn Alden.com and see my work there. I have a bunch of free articles that people can check out and I appreciate the opportunity and enjoy the conversation.

• 50:20Tom Bilyeu?

  Oh, truly. Boys and girls, if you are not already, trust me, you're going to want to follow Lynn very closely. Such an incredible voice in the space. And as you guys just saw over the last two hours, exceedingly insightful on the, I mean, every aspect of the economy at this point. Lynn, thank you so much again for your time. Boys and girls, if you have not already, be sure to subscribe. And until next time, my friends, be legendary. Take care. Peace. Let's talk about a pattern that is guaranteed to be killing your progress. You know what you need to do. You need consistent nutrition. We all do. You need vitamins, probiotics, greens. We all know that we should be doing more of it. When your morning gets chaotic, you skip it. When you travel, you skip it. When your routine breaks, everything tends

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