# Bitcoin, Liquidity and the Future of Digital Assets

**Podcast:** The Milk Road Show
**Published:** 2026-04-14

## Transcript

And you've been stomaching this volatility, it's okay.
I mean, we're we're we're just going through uncertain periods, and that's normal.
It's actually normal for an asset that's being adopted.
What's up, everybody?
It's LG Du Set here, and welcome to the Milk Road Show, the daily crypto show that promised we would sell if we ever got back to 75k, and we are totally gonna break that promise.
Today is April 14th, 2026.
We all know about the Trump taco.
Trump always chickens out.
But our guest today has a much better acronym for it.
Time to allocate to high conviction opportunities.
James Labish, co-manager of the Bitcoin Opportunity Fund and author of the Informationist Newsletter is with us today to tell us how no matter what happens, all paths lead to more liquidity.
Today's episode is brought to you by Consensus Miami, where the next cycle starts.
Some turn crypto tax chaos into confidence and nexo earn interest, borrow and trade crypto.
James, welcome back to the show, man.
LG, good to be here.
Good to talk to you for the first time on Milk Road.
Excited about it.
That's right.
That we have to resist talking about hockey because I think we spent 20 minutes before the show talking about hockey, which is definitely not something the audience cares about.
Uh and the last time you were on the show was right as the hockey season was starting, uh October 7th.
Uh and my God, James, a lot of things have happened in crypto.
So first of all, we won we won the Olympics, which was you know, you guys, you won the Olympics.
Yeah, that's we do not win the Olympics.
Yeah, yeah.
You guys tell you when you have a hot goalie, that's what happens.
So and at least at least you had that going on.
Because if you're a crypto, if somebody who manages a crypto fund, uh it's been an interesting six months since your last time on that.
Yeah, this has been one of the most difficult uh investing periods of my of my career, and I've been doing this for 30 years.
And you know, just the sheer amount of uncertainty and the volatility uh early in uh late last year, early this year in this space was it was a little bit unexpected, you know.
I mean, people thought that we were just gonna rip into the 120, 140, 150, 180, you know, maybe break 200 going into the year end into into this year, but that did not happen.
Um it was uh it was not what was expected, and that's kind of what you have to expect in this space, which is Bitcoin's gonna do what it wants to do, and then everything else kind of files around it.
So it's been a it's been a an extraordinarily uh challenging environment.
But that said, I'm still as confident uh and have as much conviction in the space as ever.
So uh it doesn't it doesn't phase me.
I mean, we've seen so many, um, we've seen so many events over my career that this is nothing.
So everything you're listening to today is also covered in our daily crypto newsletter, and on Sundays, we even recap the best parts of the entire week's worth podcasts.
So check it out at the link below.
But you were also saying that this is one of the hardest times.
What what specifically has been hard, like just the the pure percentage of drawdown or like that those October 10th, February 5th wicks.
Like what what what has made this kind of a harder time than than a lot of other stuff in your career?
That's that's 30 years in finance.
Yeah, well, so the d-leveraging event back in October was uh that that took everybody by surprise.
I mean, we had some you had a little bit of um of hint, a hint and indication leading up to it.
Uh if you look back, you had you had OGs selling hundreds of thousands, and it looks like over a million coins going into going throughout last year.
And so they were just kind of sitting on it and um they were cashing out bless them.
You know they they had been sitting on these uh the this asset for how many years you know some of them some of them for a decade and they're sitting on it or longer and they they suddenly had made tens of millions or some of them hundreds of millions or even billions of dollars and they're like I'm out I'm I'm I'm gonna go buy my land I'm gonna go be completely self-sovereign it doesn't matter what currency I'm in I'm gonna I'm going to get my assets and so that that kind of that was kind of going on throughout the year between 100 and 125000 uh Bitcoin price and then you had that deleveraging event um uh in October that was it just kind of took everybody so by surprise and we never really recovered off of that we tried to but um the space lost confidence and then once it broke 100,000 that was kind of it so and then you get you've got all the tariff you know the the the market reacting to to the tariff headlines uh the tariff announcements the the tariff the um the rulings and the courts i mean it was just one thing after another and then you had the war.
And so uh and that kind of took every everybody on the whole market kind of um moved in a way that people didn't expect.
So first of all, you had gold and silver rip higher going into the end of the year and last year, like just painfully giving, you know, people like Peter Schiff a uh massive amounts of ammo at the at Bitcoin and the crypto space.
But um, and then the war hits, and funny enough, Bitcoin hangs in there, and things like gold and silver, which are supposedly the safe haven assets, you know, or at least uh gold, starts to fall.
And so it's been, and then you've got the the movement around AI.
You've got the top seven largest companies in in uh in the SP 500, um, the Mag Sevens, who were reaping gains from AI, all except for Apple.
Apple was not really involved in AI up front.
Um, and so though those stocks had had just skyrocketed, and then suddenly there was a rotation out of them into other names.
And so again, it's just been a it's been a really interesting period.
And that's just talking about the investment side, but on the economic side, now you've got um you've got the Fed that has a new chairman coming in, we think, uh, and you've got them almost outwardly fighting with this administration, the White House, and refusing to move on rates.
Uh, it's difficult to see exactly where the economy is going because it's it's being driven by um the top the top demographic, the wealthiest demographic is is really driving this economy.
Uh whereas throughout the years of 2021 through 2025, it was really just fiscally driven, most of it, along with what people here are calling the boomers, which uh the wealthy generation is just spending hand over fist.
And uh so that's been driving the economy.
At the same time, you've got younger, you've got the younger generation struggling to buy houses, struggling to keep up with the uh the with the economy because they're wage earners and they don't have assets, and uh and then you've got AI in the mix.
And I can tell you firsthand, AI is it's eating up jobs.
Now, where that how quickly that occurs and and what the actual fallout of that is.
I'm not a boot, I'm not a doomer on that.
I don't think that that's going to destroy our economy.
I think it's going to enhance it, at least up front, but people are going to have to embrace it and move around it.
And you're seeing companies lay off swaths of of thousands of tens of thousands of people because they just don't need to have them now.
Their jobs are literally been replaced by these uh these language models.
And um, and that's only going to grow.
So it gives the the markets a little bit of of uh, you know, they they're just operating on uncertainty now between the rates, between the economy and unemployment, between the war, uh between AI and the and the changes that are going that are happening or going to happen with AI.
It's just the market keeps moving around these things.
But here's the funny thing, LG.
The market feels and has felt like it just wants to continue to march higher.
And it's felt like that for a while.
And so every time we get a big headline and you know, major negative news, especially of the Middle East, yeah, the market may draw down a few percent, but it bounces right back.
And here we are again, you know, touching all-time highs.
And so it's been an extraordinarily interesting, but again, really difficult market to navigate around when you're when you're trying to uh take advantage of moves, but keep your core conviction and not get uh not get swept up with negative hype.
So that's that's been an it's it's made it interesting to say the least to set the stage for your question.
Well, well, as somebody who runs a Bitcoin fund, how do you manage that then?
Like, do you I just want to understand how the inner workings work here?
Like, is it is this you guys raising funds and then you're just you're wedding waiting for these technical kind of slower bottom signals on Bitcoin?
Like, how does how does that work, especially in a time like this?
Because I think there's a few ways to look at it, where one, like you came on six months ago, those expectations didn't pan out.
We didn't go to 150.
Um, but but for a Bitcoin fund, it's like, hey man, like you're you're getting a 50% plus discount uh on the price that we had six months ago.
So this also, you know, it's a challenging time, but it's also um as somebody who you know wants this has a much longer term view.
I feel like it's also an opportune time, despite the drawdown.
So I just want to understand, James.
Like, how does that how does that work?
Give us a bit of that that insider insight there.
Yeah, so well, it was not a great year for we we raised our second fund last year.
Um, and um it wasn't a great year to what we thought it was going to be.
Right now, to step back.
Um last year, last summer, you remember, we had all that hype around the Bitcoin treasury companies.
And there was just one after another after another was being announced, and some companies were pivoting to a Bitcoin strategy, uh, some small companies that that had other legacy businesses that they just decided they want to do something else, like Semler and some of the other ones.
Well, so there was a lot of hype around that.
And uh for our fund, what's what's different is we don't have to buy in the public markets if we don't want to.
We can we get access to some of these things early.
And so, um, and it's just because we can commit.
It's not that something you can do on on the retail level.
Um, so they go to the banks, they get they get commitments from you, and then they start working around the deal for uh a private placement that's that is it's it's priced off those commitments, and you um and you're able to get in on some of these at at much better prices.
So, what do I mean by that?
Well, the Bitcoin treasury companies for your your listeners who who don't know the math around it most of them are judged on what's called mNAV and that's that's basically where they're where their uh shares are trading and the best way to do it is enterprise value including shares and debt and cash and you put it all together and get what what the whole enterprise is worth and then you divide that by the amount of Bitcoin that you have on the balance sheet.
So if you're a company like uh microstrategy you might command a 1.25 1.5 1.75 ratio because your growth in Bitcoin is you've got these levers to pull where you're gonna get more Bitcoin down the road and it's better for your underlying shareholders so but you had some of these companies that were trading in the market they would come to they would come to market and they would trade in the market uh at multiples that were crazy multiple six 10 12 15 times mnav and they just people were buying them in the open market we didn't have to do that and we didn't do that we avoided all that so um, but even then, even though we were we were buying some of these companies at one times mNAV or just barely above or barely below one times mNAV, which is a really good price for them, well, Bitcoin still drew down and they all drew down along with it.
And so margins compressed and everything.
So it was it the mark around those was uh it was um you know it was pretty volatile.
So how do you how do you deal with that?
Well, to answer your question from earlier, which is okay, you've got these great opportunities, it looks like a great opportunity to come in.
Yes, and we're still raising money for fund two, and we think it's a great time to do it.
So I can't make a public you know pitch to people.
And it's this our fund isn't appropriate for everybody.
It's first of all, you have to be an accredited investor, and um, and it has to be it has to be um something that we feel is is appropriate for your portfolio.
So we talk to every single investor, make sure that this is something they want and it fits for them.
But anyways, but we are on a Bitcoin standard, so we don't sit in US dollars because we're a Bitcoin-based fund, when somebody sells if they if they send us dollars or you know, Canadian dollars or what or euro, whatever it is, we immediately turn that into Bitcoin.
And so it's on our balance sheet uh as Bitcoin, it's not our balance sheet as as dollars.
So a lot of funds, what they'll do is they'll get investments from around the world and they'll immediately turn into dollars or short-term treasures and sit on those while they're looking for uh investments.
Well, what's unique about our fund is that we we look at investments again against Bitcoin.
So if you're looking at investments today, there are not that many investments that look all that attractive on a risk reward basis versus Bitcoin, because Bitcoin is down so sharply over the last six months that now we're looking at Bitcoin, it's got a fantastic risk reward ratio.
Now, some of those things do they those opportunities do come up and they come up in in short time frames.
So you have to be nimble and you have to be ready to turn that Bitcoin into um into cash to be able to send to an opportunity or negotiate out sending Bitcoin for that investment.
So those are things that we do.
And but just like you said, we think it's a great time right now to be investing in this space.
And so having that Bitcoin, sitting on that Bitcoin and watching for opportunities, this is this is where we feel like it really gets good.
Speaking of those uh those dat companies, the biggest one obviously the strategy, micro strategy, Michael Saylor, and we've discussed them often on the show.
And it's not it's actually, you know, it's funny, it's something that our audience actually doesn't um you'd think they react more to it.
And and and I think maybe we just haven't framed what that company is doing quite well.
And I feel like it's something that you you are obviously uh support in some way.
Um, and I think these days as well, when people talk about uh narratives, right?
We hear that it's like this is like strategy going under would be the, you know, this cycle's FTX, it would be that that'd be the apocalypse of everything that's happened.
Is that I well that's and I think that that's maybe I don't want to spend too much time talking about it because I think it's it's something that people don't necessarily have a lot of exposure to and they don't necessarily fully understand it.
But James, I feel like you're in a good position to maybe uh explain uh in in some layman's terms for us why what exactly Sailor's been doing and why this is important and why it won't go under as well.
Because I think that's something that we maybe sometimes at times we struggle to understand, and we also keep in mind that it's like, hey, it's crypto, anything can happen, it's both the fun and the and the risk here.
Um so I think maybe you could frame that for us.
Yeah, no, that's that's it's a great question.
And so uh without getting into big numbers and and the complicated math around it, basically what strategy is doing and what Michael has done, and you know, I was on I was on stage with him here um at the MicroStrategy conference just a um a few weeks ago.
And you know, he said quite honestly every iteration has has improved.
So when they first came out, what was so excited, exciting about MicroStrategy, when they first came when they first pivoted to a Bitcoin strategy, they just started buying Bitcoin.
And then they thought, hey, how can we how can we arbitrage this fiat system to buy more Bitcoin?
And the way they did that was by issuing um convertible bonds, and by issuing convertible bonds, they're we they were able to basically borrow dollars and then turn around and put them into Bitcoin.
They ran into some challenges there because when you issue convertible debt, then the typical buyer of convertible debt by and large is a hedge fund, and so hedge funds do what's called convertible arbitrage.
Well, what does that mean?
It means that they buy the convertible debt, and then because those those bonds literally, it's called convertible debt because they can be converted into shares at a certain ratio and a certain price, okay.
So, but they take that math, these hedge funds, and they then they short shares against it to lock in a certain ratio that the all the what they call it is delta hedging, and that's the optimal ratio to trade around.
So when the when the price of the of the shares goes up, you can short more.
And what comes in, you cover them and you can just trade around it, right?
And so um, because as you get closer to that, to that price point that you can convert the shares, the shares in, then you want to kind of lock in those profits.
And so, but trading around them, what happens?
You have a ton of hedge funds who are sitting on your stock, meaning that they're shorting it, they're borrowing it and shorting it.
And so your stock kind of gets a lid on it.
So, what was brilliant about it is that he Michael figured out a way to issue debt at for free.
Like you didn't, he didn't have to pay for an an interest rate on those convertible bonds.
People were buying zero coupon convertible bonds.
Why would they do that?
Because of what I just said, because they can trade around the volatility of the stock and and monetize that volatility, which is what he was doing.
Basically, he said, My stock is volatile because of Bitcoin.
I'm going to use these converts, the convertible bonds, because who wants to buy them?
Anyone who wants to be long volatility, meaning they can, they can play around with it.
Then I'm going to monetize that.
I'm going basically turn that volatility into the ability to buy more Bitcoin.
And I'm going to basically turn the volatility of my stock that's around Bitcoin into the ability to buy more.
So that was a, I mean, that was his first kind of foray into that.
And then he started doing more instruments and he figured out that preferreds were a little bit easier to deal with.
They didn't have, they didn't have the overhang of of the short sellers from hedge funds.
And then ultimately he landed on what is called stretch, STRC.
And so what stretch is, is it's a it's a perpetual preferred um share.
Okay.
So it means it's a it's basically it's a share that pays a dividend that's in a it it trades like a bond.
And so you'll see it trading at 100 or right above it or right below it, but it pays this dividend and that dividend of 11.5% every single month, you're getting this dividend of 11.5% annualized per month.
And so people can buy that and know that they're going to get that dividend, but he doesn't ever have to pay back all the money that he's basically borrowed for that, right?
Because it's it's now in the market.
And if you want to liquidate your shares, you can liquidate them in the market.
You don't have to come to him to do it.
And so uh it's a it's a very lick, extremely liquid market, and it's perpetual, meaning that there's no, there's no end date.
It doesn't mature.
So he doesn't have to sit here worrying about his balance sheet maturing, which is what gave him so much uh, you know, the market gave him so much grief on when he was doing the converts, or like, yeah, but at some point you're gonna have to come up with all the money to pay down these converts and and you know, when they mature.
Well, he doesn't have that problem anymore.
So he's got these converts that mature over time, and it's a ladder, uh, a time ladder of conversion.
It's not, it's not, it's inconsequential at this point to the amount of Bitcoin that he's got on his um on his balance sheet, which is you know, um it's about $60 billion, $58 billion worth, he doesn't have to worry about that.
And so now he's got this perpetual preferred.
So why is that important?
It's important because if it trades up above that $100 level, which is what's called par, that means that he can issue more preferred at a it's basically he's issuing more preferred and borrowing more money and going and buying more Bitcoin.
And so he's able to just do this, and he's and you're watching him do it in billions and billions of dollars of it.
And so now if you look at uh if you look at his his whole balance sheet and you look at uh stretch STRC, now it's it's 6.3 billion dollars, which is more than all the other instruments that he had put together.
So it's basically he's borrowing this these dollars and he's buying Bitcoin with him, and he's just creating this fortress of Bitcoin on his balance sheet that you know it doesn't matter if Bitcoin draws down by 50, 60 percent from here, it's not going to matter to him.
He can just keep he can keep buying more.
And so um, and in and I should disclose that I'm also I'm I'm on the board of directors of the a company called uh Strive, ASST, which is a public company doing the same exact thing to a much smaller degree, you know, we have hundreds of millions of dollars worth of our preferred out there while you know while he's got his uh his six six point whatever billion.
So now we've got a billion dollars of of Bitcoin, but you know, uh our our preferred is only at 437 uh million.
So we're we're at a fraction of it.
But anyway, so the the point of it all though is that this is one of those companies that if you're asking, well, what is he going to do with all that Bitcoin?
Well, that's a good question.
And we're we look forward to what he ends up doing in the future with this.
Because in reality, if you if you own, if you hold millions of a million or more Bitcoin, you're gonna be the largest holder of Bitcoin out there, larger than Satoshi, which his big his Bitcoin had been idle all these years, and you're going to be able to create some sort of you know uh pro you'll call them products or whatever around that.
And we're we're looking forward to seeing what that looks like.
But in the reality is he's gonna, you know, Michael's Michael Saylor and strategies, that's gonna be the the financial company of the future.
You know, today you talk about JP Morgan, but in the future you'll be talking about MicroStrategy because they're gonna they're gonna have more Bitcoin than anybody, and they're gonna have that that fortress of a balance sheet.
And so we we're that's our largest position in our hedge fund, and you know, it's been we got in early understanding what they were doing, talking to their treasury uh treasurer, um Sharish and understanding exactly what they're doing.
And we uh we support it.
We think it's a we think it's the right place to be, especially in the recovery of of Bitcoin.
It's gonna be, I think we think that it uh it has that kind of leverage that's a positive lever to this uh to this space.
So you're gonna you're gonna regret asking me a simple question.
Man, that was not a simple answer, man.
That's like a that's a that's a load of you tried to keep it simple, which is great.
Um definitely more to digest.
Just go back and rewind.
But if you if you didn't understand all that, it's not it's not that complicated.
It really is.
No, I I did, I did.
I got I got most of it.
Uh, but I do I do we're gonna move on from it because it's it's it's I think if we want to learn from more from it, they can they can continue to learn um and understand.
And I think I think you giving us an explanation of of kind of how it works is very helpful.
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What I want I do want to ask you though, James, is we teased this in the intro, and you told me this before the show is that you said that no matter what happens, um, liquidity is going to increase.
So I want to what I want to know from you while we are talking micro strategy, which which uh like you're saying will balloon in value is as Bitcoin goes back, goes back up and has all these hedges kind of against different scenarios.
What is what's the biggest risk right now for Bitcoin in general?
Um, and don't say quantum, I don't want to talk about quantum.
I talk, I'm I want to talk about the liquidity side, the drawdown side, clarity act, whatever you think uh is kind of uh, you know, what what is kind of uh if anything holding the market back or um potentially something that you're worried about going forward?
Yeah.
Yeah, the interesting thing, LG, is that you know, years ago, I thought, well, once once institutions get into this, that's it.
It's gonna be it like you, you're gonna be left behind, and it's it's off to the races.
The funny thing is, and this is this comes to what I think is the big biggest risk to Bitcoin, which is just the delays of people understanding it and and embracing it.
And the here's a funny thing is that somehow, once again, Wall Street has figured out a way to get in there before retail.
And it there's so much noise around Bitcoin, and there's so much negativity around it in the media that by and large, we're in our little bubble over here.
But by and large, the vast majority of people do not understand it, they don't trust it, and they think that it's a it's for criminals and for money launderers and for uh you know people traffickers.
They do not get it.
And so funny enough, I thought, and I've been saying it for years that you can get in before Wall Street takes over, but Wall Street is taking over.
You're seeing, you know, MicroStrategy buying a million Bitcoin here.
He's got he's got just under 800,000 Bitcoin now.
And you're seeing BlackRoe with their their um Bitcoin ETF.
You got Fidelity is involved in it, they've got their ETF, and then some of the a lot of the other ETF um managers.
And now you've got places like JP Morgan, Morgan Stanley, you know, Vanguard is even offering it to their uh investors now.
And so they're you're seeing institutions get involved, and you're seeing larger institutions starting to starting to put it on their balance sheets and putting it in their in their funds and their on in their portfolios, while by and large, retail still fumbles around with it, and they're they're buying and selling really poorly.
They're buying it on hype moments and they're selling it on panic and panic moments.
I've I have personally painfully witnessed this with people who have been telling about Bitcoin for a while, and they finally get in up towards the all-time highs.
And then when it breaks 100, it goes down, they're like, I don't understand it, and they get out.
And they literally they lose 30, 40, 50% of their investment because the they just, you know, they don't have they don't understand it.
And that's the that's the word.
It's not that they're it's not that they're they're not smart.
It's it's it's typical.
So the what holds Bitcoin down is this continued misunderstanding of it for general the general um population.
And so institutions will cons will they'll continue to put their uh their positions in place.
They'll continue to put their products in place to get ready for that influx of your everyday person.
And so, and when we get through this this current period of of uncertainty, LG, um, and this does march back towards 100,000, you're gonna see people get they're gonna get that hotball of money that we saw going toward gold and silver is gonna come into the Bitcoin space again.
And that hotball of money is something that I've written about, which is just that that the people who are lagging, the bottom leg of that K-shaped economy that I talked about earlier, are trying to catch up.
And so they're chasing trends, they're chasing what they think is hot.
And it used to be the meme stocks, and then it was a board apes, and then a lot of cryptos, and then it became gold and silver, and God knows what it's gonna be next.
But um, you know, there's a hot, it's poly market, it's the it's calci, it's the you know, betting on the masters on the you know, six sixteen hole with two holes left, they're putting down thousands of dollars to try to really quickly make up some money, and so it's kind of crazy, but that's the world we live in now, and so patience and understanding are gonna be key for people who are getting into this space.
I cannot emphasize that more.
But you asked about liquidity.
Why does it all matter?
Like what why does that matter so much?
Well, I use the US because they're the largest um source of liquidity outside of China.
Um, but I use the US with the US stock market being so integral to everything that is going on down here.
Um, and the situation we're in, it's pretty simple math.
We currently are at we have $39 trillion of debt plus hundreds of millions of dollars of unfunded liabilities.
Let's call it under just under 200 trillion dollars.
But we have so much debt on our books that we are now running multi-trillion dollar deficits every single year.
So our debt doubles every 10 years.
It doubled 10 years from 10 years ago to today, it's doubling again in another 10 years.
So we're gonna be bumping up to 100 trillion dollars of debt in the mid 2030s, and which is just mind blowing.
Their numbers are just too big for everyday people to make sense of.
But why that matters is that we're never gonna pay this debt down.
When you hear the the Treasury secretary speak, he admits this.
It's like this is not something that's just gonna be paid off, but it's got to be managed.
And the way they manage that is by making sure that there's enough liquidity in the system to continue to fund the deficits that we're that we are running.
And it's it, you know, for you for the listeners, I've talked about this um extensively, but that's basically this the you're running these deficits like that, they can't be wiped out.
Um there's you have what's basically what I call the four-door problem, which is that you have four doors you can go through when you when you have so much debt, you have so much debt to GDP and you've got these deficits and the four doors are you've got one option which is to have austerity which is to cut spending you saw the Doge Commission they tried to cut spending they tried to get out all the the fat and all of the um the fraud but it it's just overwhelming and and the the amount of of need outside of all that is too great so the each side tries to trick each other into cutting spending on their constituents but they're not going to do it they're not gonna cut Social Security or Medicare or Medicaid which are the biggest pieces of all this they're not going to cut defense spending obviously we we've just entered yet another war um and uh and they're not going to default on the debt which is to say that they won't pay the interest on it which is um you know it's it's a trillion dollars that's basically half of what the deficit is so they're not gonna they're not going to default on that so they're not gonna cut spending i mean the second door is you could raise taxes.
And if you know you raise taxes, if anybody has never ever seen the laffer curve, it's basically this curve that says that as you raise taxes on productivity, you get to this, you get to kind of the spot where it it levels out because productivity is is hampered by taxes.
Why is that?
Because you the company stops investing in profitable business lines, stops hiring people, stops doing RD research and development on new lines of business.
So you get to the curve, just kind of tops out, and that's it.
That's you that's the top of the amount of taxes you can get.
And the problem is then you now you've got a declining curve of productivity.
And so that that you know ultimate tax point only lasts for a little bit of time and then it starts going down.
So it doesn't work.
We've seen it in Europe, it just it doesn't work.
The productivity is is hampered, and it's not, it's just not a good um not a good direction to take um the economy.
So it's your third door.
Your third door is you could just default on the debt, just you know, default on the debt and um and just write it down, which you've seen emerging markets do, and they've been hammered by that.
But once you do that, then you can no longer use debt in your own currency.
Your currency is hammered by that, and people don't trust it anymore.
So it's not something we would ever do.
Uh why would we never do it?
Because we issue debt in our own currency.
And so that brings us to the fourth door, which is the easiest door to walk through.
It's the one that we walk through every single day, which is print more money and use that printed money to service that debt, basically.
And that's called fiscal uh dominance.
And so you just continue to create more money in ways that uh expand the money supply.
Um, through there's a lot of different ways you can do it, but basically uh you can either do it through banks and lending and through the Fed creating uh larger balance sheets, or you can do it by just literally printing money and buying your own debt, which is what we're getting to.
And that's that is called QE, quantitative easing.
So people hear this all the time: QE, QE, QE.
Well, you have two ways that the that the Fed can move.
They can either have QE, which is printing money, buying assets, typically US treasuries and mortgage-backed securities, or they can do QT, which they start drawing liquidity out of the market.
Well, they did QT for a little while, barely, you know.
They were doing $60 billion a month.
They pulled it down to 30 billion, then 25 billion.
Now they just cut it off completely.
They're not now they're back in the market, and they're doing what's what we like to call QE uh light, which is they're buying T bills.
Basically, they're they've been uh adding liquidity to bank reserves in order to keep the system going.
So all everything you heard me just say, all it means is we need liquidity to manage all of that debt.
There's just there's no way around it.
The math is you need more liquidity to manage that debt.
And by that I mean you have to create more dollars.
And what happens when you create more dollars?
Think of it as a monopoly board.
If you're all sitting there playing, and then suddenly your buddy gets a whole bunch of money from the bank that they just give to him, you know, lend it to them, then suddenly there's more money in the on the board.
And so what happens to all the things that all the assets on the board?
They go up in price.
And that's what you're watching every single day.
Assets go up, houses go up, land goes up, gold goes up, stocks go up, Bitcoin goes up.
Over time, that's what happens.
They do this along the way, but over time, that's what happens.
And so that gives you great comfort if you're an investor and you're sitting here in these assets.
If you're sitting here in Bitcoin, um, and some of the other ones that do have utility, um, you know, there, I'm not, I'm not the kind of person that says that everything's a garbage unless it's Bitcoin.
There are some things that will have utility.
There's no doubt about it.
I'm just focused on Bitcoin.
But if you sit here and you have that and you've been and you've been stomaching this volatility, it's okay.
I mean, we're we're we're just going through uncertain periods, and that's normal.
And it's actually normal for an asset that's being adopted.
Remember, this thing is only 16 years old, 17 going on 17 here.
It's still a teenager, you know.
If you think about it, gold now has $30 trillion dollars of of um market value, basically, total market value.
I mean, Bitcoin's over a trillion dollars.
I mean, it's it it's a gold's been a it's been around as money and as a store of value for thousands of years.
For Bitcoin to be 120th or 130th its size, that's astounding.
It's absolutely astounding.
So be patient.
The liquidity train is coming, and it will it right now.
We're getting a trickle to a stream of liquidity in the US.
But if we have some sort of event that is a hundred-year event, God forbid, but we know it's coming.
You know, the 100-year events seem to happen every five or 10 years in my career.
You know, I got in a 1994 LG, and we had 98, we had long-term capital management in the year 2000.
We had the tech bubble in 2001, we had 9-11, 2008.
We had the the great financial crisis in 2020, we had so it is like one after another.
So it's coming again, just brace yourself, but don't panic.
If the market draws down, there they have no choice but to come in and and stabilize more liquidity.
It's just the math.
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Well said, James, man.
That's uh I never even heard that four-doors analogy.
Is that is that your own?
Well, I'm the one who's who's I'm the only one who I've I've read about saying frames it that way.
Yeah, yeah, yeah.
I framed it that way this earlier this year because I kept saying the other choice, but it's it's basically four doors.
You got one door, and so yes, I like that.
I kind of coined it.
It's it's in my newsletter.
You can read all about it.
Um, James, my last question for you, uh, because we want to wrap this up here.
Is last time you're on the show, everybody was talking about October.
We were portraying, everybody was saying, listen, by the end of the year, by the end of this quarter, we're doing 150, 160k Bitcoin.
When when, and you can even just say a specific date.
You were talking about polymarket betting, all that kind of stuff.
You can even just tell me a specific day or month that you think we would hit 150k.
150k.
Given everything you know now, everything how everything's changed and what everything you've just said.
What is that?
What is a timeline for that?
And it could be it's just for fun, not a financial advice, it's just for fun, everybody.
I would be shocked if we're not if we're not bumping back up toward 100, 125,000 by the end of this year, and we're not hitting 150 next year.
I would be, I would be very surprised.
So, but you know, I'm uh I'm an eternal optimist, and uh but I just the way that the way that the world is moving and the need for liquidity is so great that yes, Bitcoin often will lag, especially something like gold, but the way these things have moved and where gold is now versus where Bitcoin is, I would not want to be short Bitcoin and long gold.
I would I would be in the in the other trade.
And so I fully expect that this is going to uh it's gonna stabilize in here once we do get a um a little bit of of certainty around the Middle East, which it's looks like we are getting some of that.
But why would I say that?
It's first principles, LG.
You've got an administration who does not want to go into the uh into the midterms here that happen for the US in November.
You don't want to be going into the midterms if you're this the administration, you know, limping in the markets because you're it's people and their pocketbooks and going out and pumping gas into their cars are frustrated.
You want to make sure that you don't want to have a flare-up in, especially a flare up in in uh inflation because of an oil crisis.
It's the worst kind.
I lived through it in the 70s and 80s, and it was brutal.
So this administration, first principles, does not want that.
They want to win the midterms.
And to do that, they need peace.
They need to be going into the midterms on a on a unstabilization strength.
So, and I believe that they will push to do that.
That's number one.
Number two, we have a new Fed chairman coming in.
Do I think that means he's going to be lowering rates the moment he gets in?
No.
I think that would ruin his legacy and make it appear like the Fed is just no longer even tacitly removed from politics, that it's fully politically driven.
I don't think he'll do that.
But I do think it means that it gives room for the other Fed officials who are more dovish, who are on the on the uh side of let's, you know, that inflation is kind of tackled here.
We're going to live with the two or three percent, that you know, three to percent-ish.
And um we need to keep the market going.
That they're they're more worried about a downturn in the economy than they are in a flare-up of of non-energy crisis-driven inflation.
And so, you know, I think that that means that we're there, this administration, a new Fed chairman, and then you've got the treasury.
And the Treasury, the the Treasury Secretary, Scott Bissent has been talking about for a while that they they need to be able to move out on the curve.
And so they're gonna do what they need to do in order to get bonds issued out further out on the curve.
Now that gets you to the last question is does that mean that we're going to do what's called operation twist, which is add in liquidity in order to buy longer term debt, in order to be able to issue longer term debt as as uh a country and get away from this cycle of every 90 days turning over all this debt, you know.
And so at some point we'll have to manage that.
Today, no, it's not, it's not a crisis level yet.
But because there's so much debt that comes that matures monthly now, at some point it could turn into a crisis.
And so they're managing that.
That means that there's got to be liquidity in the market to do that, which is why they're already doing QE light.
So honestly, LG, I'm I'm super optimistic.
Um, I think we're, you know, outside of a market shock where everything correlates to one, which is always possible, you know.
Full disclaimer, like you said in the beginning, we don't predict markets here.
I've learned not to do that in my 30-year career.
But I am I am handicapping that there's a higher probability that we'll be higher from here than there is uh that we'll be lower.
Again, save a uh a correlation to one event where everything sells off because of a black swan.
Well, Bitcoin will go down with it.
But in my mind, that would be an opportunity because they will come to the market with fire hoses of liquidity.
They have no choice.
And this is the US Treasury and Fed.
Yeah, yeah.
I know what you're just saying, they yeah.
That's good.
If you guys want to read more of James's thoughts on all this, Jameslavish.com is the is the is the site and the informationist is the newsletter.
Uh James, thank you for your thoughts, man.
Um, very insightful, very well spoken too.
I love having guests like you who can who can eloquently speak for a while and and and have it make sense for us.
So I really appreciate that.
Um great to see you, man.
And uh thank you for coming on the show.
All right, thank you, LG.
It's good to be here and uh I look forward to talking to you again soon.
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