[00:01:42] Preston Pysh: Wow. I’ll tell you what, this is my first time in Latvia and in that part of the world in general and I had a blast. I really liked the August 70 degree temperature, which was really nice, but it was a pleasure meeting you in person over there. It was just an awesome event.

[00:01:59] Matthew Mežinskis: Yeah, it was great. That high signal event for sure. The first one we did was in November of 2017, which was an exciting time. As you can imagine, it was like right after SegWit was activated and we had been screaming towards all time highs. So it was a very exciting time, but people were a little bit thinking for Riga, we could do a little bit better for the weather.

[00:02:19] So we moved it earlier. And it’s actually gotten earlier and earlier now it was in late August, which was a kind of an interesting time for a conference, but I’m glad the people that wanted to be there were there. So yeah, it was really good.

[00:02:28] Preston Pysh: Yeah. Max said, just be thankful you weren’t here in November.

[00:02:33] Matthew Mežinskis: That’s true. It can be bone chilling at times for sure.

[00:02:37] Preston Pysh: So, hey, Matthew, this is where I want to start because one of the things I’m really passionate about from an education standpoint is teaching people, like everybody in Bitcoin knows there’s 21 million coins. But what I think is lost on a lot of people is how the base money of the fiat system is Works what it looks like the sheer quantities and then like all the multipliers on top of that, which I don’t want to talk about upfront.

[00:03:03] I just want to talk about base money because so few people ever even discuss this. This is your forte. This is where you love to start and I love that about you because in my opinion, this is where the conversation really needs to begin. Teach us about base money. What is fiat base money? What is it?

[00:03:22] Matthew Mežinskis: Sure. Yeah, it’s kind of, I have hung my hat on that for many years now. You can find me on most platforms at one base money, the number one base money. It’s a concept that I think has been overlooked, frankly. And you can get conspiratorial. Why is it not understood more? I don’t think you need to get conspiratorial.

[00:03:39] I just think it’s because we’re talking about central banks. We’re talking about a monopoly. We’re talking about a privileged class. It’s usually something that they don’t really want to Sort of shed light on, but if you actually drill into the numbers, which are there, they are available. You just have to find them on the websites and on the balance sheets of central banks.

[00:03:56] It can illuminate a lot of the confusion around the whole financial system, in my opinion. So anyway, that’s what I’ve been trying to get to over the years. This is the starting the seventh year of me tracking this stuff. I do it every quarter. And basically what it is, is you’re looking at the liability side of the central bank.

[00:04:13] That’s what base money is. If that sounds confusing, there’s basically assets on a central bank, which we talk, I’m sure, I know you talk about on the show a lot. What is the central bank buying? What’s the central bank selling? Typically, they used to in old days hold gold, which is the backer of the money.

[00:04:28] But now it’s mostly for big central banks. It’s the sovereign bonds. It’s the sovereign debt of the country. And they can influence the price of the bonds, of course, many ways by doing many different activities. But so it’s the treasury market is what the central bank holds on their asset side.

[00:04:42] Of course, they’re not the full treasury market, but there’s a huge proportion, by the way, the United States, When the federal reserve started a hundred years ago, they held zero bonds. They were more, they were buying corporate bonds. They were lending to banks. It was a totally different thing. Now they hold about 20 percent of all United States debt federal reserve.

[00:05:00] So that’s seven, eight, 9 trillion. It fluctuates right on the asset side. That’s, it’s about 20 percent of all of the treasury is outstanding. So that’s just a little side note. But anyway, we get lost in the treasury market often because it’s liquid and it’s easy to talk about. But what I focus on is the liability side of the balance sheet.

[00:05:17] And that is what they use to buy those treasuries. And of course that’s this money printing, the printing press, that’s the monetary base. So that’s what it is. It’s the liability side of the central bank balance sheet. And it’s two things. Traditionally, primarily the first is the notes and the coins that you have in your wallet in a grocery store till under your mattress.

[00:05:36] Everybody knows what that is. Obviously that’s, that is counted. That is recorded somewhere. It’s a liability of the central bank. It used to be the majority. Of the liabilities. Now it’s a minority. The new majority is what they call the bank reserves.

[00:05:49] Preston Pysh: What’s the percentage of the cash versus the bank reserves? Do you know? A ballpark?

[00:05:54] Matthew Mežinskis: Absolutely. It used to be 80, 20 cash to bank reserves before the global financial crisis. Now it’s about 70, 30 bank reserves to cash. It’s a complete inversion almost. And we can talk about the effects of that, but just to lay down the definitions a little bit more, the bank reserves as I always define them.

[00:06:13] It is, you can think about it kind of like fiat gold or something, or it’s a fiat way that banks move money around, but really what it is, it’s the bank account for each bank. So each bank in a banking system, so in the United States Federal Reserve System, all the banks that have a charter, they have what’s called a master account.

[00:06:28] And that master account is literally the bank reserve. So they’ll have a ledger entry, they have assets with the Fed, the Fed has liabilities to the bank, that’s the bank reserve. It doesn’t have to be digital, by the way. I mean, bank reserves existed before, computers were around. You totally had bank reserves in the old days, but now it’s hyper.

[00:06:44] It’s very fast. It’s very liquid. So those two things, by the way, are most analogous to Bitcoin because they’re what we call RTGS or real time gross settlement. And those are the only things, actually, in the banking system that are such. So, in the United States, when you want to clear these banks, Obviously we can clear the cash.

[00:07:02] That’s pretty simple, right? It’s real time. Like one person has the cash. The other person doesn’t. Once the trade is done, it’s done and the money has moved. It’s real time gross settlement. And the same thing is with the bank reserves it’s done in the United States through a Fedwire system. And that is just a massive amount of cash.

[00:07:17] It’s a quadrillion dollars a year. Or something like that. I have a chart. I didn’t have it ready, but I do have a chart tracking that.

[00:07:22] Preston Pysh: And so in volume, when you’re saying…

[00:07:25] Matthew Mežinskis: Yeah, in volume, not value but volume. So incredibly voluminous, high velocity transactions. And that’s the base money.

[00:07:32] That’s so at the end of the day, if you think the old ways of payment in the U S a check, for example, you can have a check from, PNC bank, a check from JP Morgan chase. And you think about how long it might take. One person deposits the check. One person might take a couple months or whatever. And you have all these checks outstanding between banks, but eventually, and it really does work this way, right?

[00:07:53] In the financial system, eventually you go up, up, up, up. And you might get to a point where JPMorgan Chase has a billion dollars owed from, let’s say, PNC Bank or something. It’s a Midwestern bank where I’m from. And PNC Bank, say, is owed a billion one from JPMorgan Chase. So they don’t like, how do they solve that?

[00:08:11] Well, they solve it with the bank reserves. End of day, final settlement. There’s no more core thing in the financial system is 100 million of bank reserves would flow between JPMorgan Chase and PNC. It’s a final net settlement, but we call it real time gross settlement because you’re actually wiring like real, real cash, real bank reserves.

[00:08:29] And of course, this is just all done in the books of the Fed, primarily the New York Fed. And that’s, that’s how it goes. So that’s a little bit more verbose probably than we needed, but that’s the monetary base. Some of it’s paper, some of it’s, digital. And like I said, the split about today worldwide is 70, 30, 70 percent of these reserves, 30 percent cash.

[00:08:46] Preston Pysh: Just to kind of wrap some more numbers around everything you’re talking about. And for simplicity, if you’re a bank, let’s say you’re JP Morgan, let’s say I’m Wells Fargo. If we’re going to have a balance of payments, let’s say you owe me 10 billion. That’s happening with base money, that exchange between you and me happening over fed wire is happening with base monetary units of dollars.

[00:09:09] And so when we’re talking about how much M0, because base money is often referred to as M0, how much of this is there total? If you add up all the M0, call it the US, the Euro, Japan, how much of that is in existence around the world, roughly?

[00:09:26] Matthew Mežinskis: Yeah. Before I answer that, I was just thinking, always doing math on the fly.

[00:09:29] It’s hard. If I was at a billion and a billion one in my prior examples, a hundred million would be that net based. I say that it was a hundred million. Okay. Yeah. Regardless of the quick little math correction. So the M zero, yeah, it’s actually again, some slight technicalities with M zero people confuse us a little bit.

[00:09:44] So if you have M zero, that is the cash and coin that is outside in the economy. Like I said, in people’s wallets and stuff, that’s not all of the cash. There is that. Small portion, which is not M zero. And that is cash that is still in bank vaults. Oh, interesting. Not in the central, not in the central bank, but in bank vaults.

[00:10:00] So I just call it vault cash. It’s it is called vault cash. So you have vault cash plus M zero. Yeah. Vault cash plus M zero equals. Physical currency issued by the central bank. So there’s actually three different physical supply. I’ve never heard that before. Okay.

[00:10:15] Preston Pysh: Okay.

[00:10:15] Matthew Mežinskis: Yeah. Right. So it’s just a small technicality, but to split those up, what I just said, it’s roughly 95.

[00:10:22] It depends on the central bank, but 90 to 95 percent is M zero. That means out in the economy, out in the world and five to 10 percent is in banks.

[00:10:31] Preston Pysh: Okay. In vault cash. And I read this in your report. It’s if you take like the top five, it’s like 35 trillion. Oh yeah.

[00:10:39] Matthew Mežinskis: And the actual number, if you market to market us dollar equivalent, sorry, the percentage is there.

[00:10:43] The actual number is 9 trillion. It’s about 9 trillion. Okay. And that’s a real like up to date as of last quarter as the top 50 currencies in the world. You weight them all by the exchange rates 9 trillion, a little over 99. 1 trillion.

[00:11:00] Preston Pysh: What’s fascinating. So the gold market cap, that’s often.

[00:11:04] Quoted is 10 to 15 trillion for gold. And so you’re basically saying that if you take all of these M zeros of the top five countries in the world, it’s the equivalent of what gold is. Is that correct?

[00:11:16] Matthew Mežinskis: Yeah, it’s a little bit, gold actually, as I’m counting, it gets up to about 15 trillion now because we had a big run up.

[00:11:24] Remember in this last year, going up to 20, 2, 500 an ounce. So the current valuation of gold minus about seven to 8% Industrial gold, which I don’t count like there’s 50 percent industrial silver, as you probably know, about 15 trillion and the numbers that are constantly changing, right? It’s also something to think about.

[00:11:41] It’s like, that’s the gold pot. Then there’s the Fiat pot. Then we have the Bitcoin pot. We have a silver pot too, which is a bit smaller. 600, 700 billion silver, but Bitcoin is 1. 2 trillion, 1. 1 trillion depending on the day at the moment. So that’s a huge, that’s just a huge penetration of this whole market in the last 15 years.

[00:12:01] Yeah. And just to get right down to brass tacks, Bitcoin has already passed the fifth largest currency, and it did that in February, and that was the British Pound Sterling. So of all the Pound Sterling notes, all with the Queen on them, all the notes and pictures and coins, plus the bank reserves in the British Isles, That’s about 1 trillion. Wow. Right now, Bitcoin is floating below 60, 000. It’s actually flirting with that market cap. This is goes by market cap, of course, the comparison. So Bitcoin is right at about the, but for since February, it’s been above this, which was pretty remarkable. It’s been above and that’s the fifth largest currency.

[00:12:34] And then after you get past the sterling, you only have So we’re left and that’s the, the dollar, the Euro, the yen and the yuan.

[00:12:41] Preston Pysh: I have a chart. I just want to bring up real fast for folks. This is on trading view and I have the M0 for a couple different countries here. I’m just going to throw this up.

[00:12:51] So this is the U S this is the M0 for the U S the monetary base. And this chart I find really interesting. I’m curious to hear your point of view, Matthew, because it’s moving at what it seems like a pretty standard growth rate there right up until the 2008 financial crisis, and this is when Bernanke and everybody started announcing quantitative easing and the expansion of the M zero just.

[00:13:19] Took off, you can see them trying to tighten it there leading up into COVID and then all of a sudden COVID happens and they expand it again. And the chart’s kind of crazy when you look at it compared to some of the M zeros for other countries. So I’m going to bring up the one for Japan and this is Japan since the 19 we’ll call it 1970.

[00:13:43] And it’s moving much more, and it’s interesting seeing how they’re trying to tighten it here for the last, call it year, right? But this one is much more exponential and not as lumpy as the U. S. ‘s. And then I got the U. K. here as well. This is for the pound. And it’s kind of characteristic to what we see in Japan, where it’s just been kind of moving out aggressively without the lumpiness that we see in the U S.

[00:14:10] Here’s Japan. So I, when I’m going back to the U S and I’m comparing it to them, I’m just saying it’s almost the U S has been trying to like hold back the floodgates where everybody, all these other central banks have just been moving out aggressively debasing and expanding their monetary base.

[00:14:27] The U S it appears like they were really trying to hold it back. 2008, just haven’t been able to. Sustain the growth rate of the monetary base and it’s aggressively moving out. And my expectation in the coming four years is that we’re going to see yet another massive jump in M zero. I’m real curious to kind of just hear your overall take as we’re looking at these charts and whether you would agree with that last statement or not.

[00:14:54] Matthew Mežinskis: Yeah, I absolutely do agree with it, but one thing is very interesting. Maybe if you can leave the charts back on, I don’t use trading view precisely for this reason. And if the trading view people are listening, this is like, maybe some breaking news for them. But this is one of the big problems with money supplies, which I’m an M1, M2, M3, or especially the monetary base versus M0, as we just talked about.

[00:15:15] Because even M0, as I said, can be broken down into, bro, this vault cash, cash outside. Even right here on TradingView, these are incorrect numbers. So the reason is very simple, a very simple broad concept. Perhaps someone at TradingView here is from the UK, but the UK, South Africa, and one other country I’m blanking on right now.

[00:15:32] They typically use this term M0 for the monetary base. That’s how they call the monetary base. Yeah. Which includes both the currency and the reserves. Okay. But as I defined it to you and how the US use it, the US says MB, a monetary base for specifically the balance sheet of the Fed. And M zero is just the cash.

[00:15:49] So just for an example, this M zero that you’re showing on the screen, that is us monetary base. But if you go to Japan, that’s why I wanted you to double check it. Okay. Japan, that is just cash. That’s just physical currency. No way. Yeah. And the actual monetary base of Japan is 675 trillion yen. This is 113.

[00:16:09] And you can see another very interesting thing just about the cash markets as you see how like. They’re very not the last recent like year, but see how the spikes basically every year. Yeah. Like you can go back to the, to the eighties. That’s a very interesting, like you always see that in the cash markets.

[00:16:24] That’s the holidays, the holidays spike on demand for cash. Yeah. So that’s that’s what you can really see that in a physical cash chart, but it’s even on trading view, it’s so confusing for people that API or whatever. And even with the biggest central banks, this is incorrect data. But in Japan, it’s correct to call it M0, but it’s not correct to call the U. S. chart M0. That is U. S. MB or monetary base. So if anyone from TradingView is listening, that is just not the right number.

[00:16:49] Preston Pysh: I love that. If you’re listening to this and you don’t think Matthew knows what he’s talking about, I’m sorry. Like, he’s a killer.

[00:16:55] Matthew Mežinskis: So, yeah, that’s why I do it myself. That’s why, there’s an AP, none of these APIs exists on like half of these, more than half of these banks and stuff. So, but anyway, back to your, you actually, you want me to show you my screen?

[00:17:05] Preston Pysh: Yeah, I’m going to, I’m going to pass this over to you. I’m going to stop sharing.

[00:17:08] You show your, cause I have your charts here, but I want you to, you’re going to be able to pull them up faster than I can show some of your charts for people to kind of wrap their head around what’s happening.

[00:17:17] Matthew Mežinskis: So we’ll, I’ll answer the question, but this is the bottom line total MB now. So this is the top highlighting the top five currencies, world basic money.

[00:17:26] So the total, I don’t know if I’ve told you yet, is that you see in the tool tip there, world total 26. 1 trillion.

[00:17:32] Preston Pysh: Matthew, before you go any further, people are going to want to pull this up for themselves. This is at your Porcopolis economics website and then help navigate them so that they can find this.

[00:17:42] Matthew Mežinskis: Unfortunately, no, there’s so many charts that I have and I just, I don’t have the, if the donations would go up, maybe I can get it there, but I have a few charts hosted on Bitcoin. On my website, it’s port goblins. io. Most of these are going to have to go to my YouTube channel or check out the monetary base websites.

[00:17:59] One base money. You can find me anywhere as a platform, but yeah, it’s just local hosting. Most of these, it’s high charts program. Anyway, so this is the figure, right? We’re at 26, 26. 12 trillion. And you remember Preston, you asked me about how much physical cash in the world, about 9 trillion.

[00:18:16] So as I said, it’s about a 30, 70 split. This is the total you’re looking at, but between cash and bank reserves. Okay. So that’s bottom line, big picture. This is how it looks. And just right off the bat, you can see obviously a huge, really, the biggest spike we had was not the global financial crisis because the U. S. Yeah, the U. S. spiked a lot, but worldwide, we’re all just chugging along printing.

[00:18:38] And then you see, they tried from 2018 to just before COVID, in fact, to normalize. And you may remember, we had that repo spike in September of 2019. So it really wasn’t normalizing, but they’re trying to. And anyway, COVID hits and you see it just explodes. It was 20 trillion before COVID, February, 2020, and then 30 and a half trillion a year later, a year, two years or so.

[00:19:01] So that should just, everybody should understand that that’s how money printing actually works. This is the actual printing press went up 10 trillion. And now we’re back down. They’ve again, trying to do is normalize normalization of all balance sheets. And we’re back down to 26 trillion. More to say on this, but let’s just keep it with the descriptions.

[00:19:18] Maybe just to show you Japan. So here’s Japan. This is in dollar terms. You can’t see it, but so this is Japan in dollars, right? This is Wittgenstein’s ruler, right? Everything. There’s no North star in finance. So we have to, I’m putting it in terms of dollars, but of course this is a yen. Think this is actually yen when you’re looking at this.

[00:19:35] So 4. 2 trillion is yen. And if I gave you the actual yen figure at 675 trillion, and then remember we were looking at that a hundred and trillion. So chart that was actually just the paper. So, this is the yen, we stack on the yuan, stack on the euro, and then stack on the pound, of course, and this is where bitcoin is larger than, you can see the pound right now is about trillion one, pretty much right at bitcoin valuations, and then of course you have the dollar, and the dollar, this does match, That M zero chart that you said that you showed me 5. 73 trillion. That’s the monetary base of the U S federal reserve. And then the rest of the world is 18 percent of that or a little less than 5 trillion. So it’s again, greater distribution as pretty common works everywhere. And you see the top five has always been 80 percent or so of the pie.

[00:20:22] Preston Pysh: What’s the dotted line up on the top there? I’m sorry. I’m missing that.

[00:20:26] Matthew Mežinskis: Yeah, that’s the percentage of the top five.

[00:20:28] Preston Pysh: Oh. Okay. Got it. Just showing you. So it’s steady at 80%. Yeah. 80 20 principle. Yep. This is the question I got for you as I’m looking at this. It almost seems, when you just look at the math, that it’s growing at a certain percent.

[00:20:42] When we look at this, it’s an exponential, right? Like every year it’s compounding at, call it, Eight to 12 percent or whatever the number is. I’m sure 12. 7, 12. 7 percent is the growth rate. There you go. When we look at where we’re at right now. And let’s say that we took the volatility and we put a bar on the top and we put a bar on the bottom.

[00:21:03] We’re grinding on the bottom rail, which tells me there needs to be something soon in order to keep this 12. 7 percent growth rate on pace. I suspect that growth rate is very characteristic of the overall. Global economy and what the capacity of pain and exuberance that can be expressed or felt by the participants in the system.

[00:21:28] So are we grinding on this bottom rail? And if we are, what does that mean for what they’ve got to do next?

[00:21:35] Matthew Mežinskis: Yeah, completely agree. And you’re completely correct to have that assessment. I’ll show you here. So this is a saint shark. I’m zooming into from the pretty much the global financial crisis. So we’re at 5 trillion monetary base then roughly went up to 30 down back down to 26.

[00:21:49] 12. So if I showed you the dollar changes, this is just changing dollar value. You can see that, you 12 month numbers. So we were, like you said, the peak was COVID and now we’re clearly grinding on the bottom side. And really it’s never been this negative as far as changes. So The worst was in or the best really, if you want to talk about cutting the money supply, was in December of 20, October, December, 2022 went down 13.7 percent per year, continued that 12 month, continued a little bit, and now it’s still low at 4 percent per year. So I absolutely agree with you. We’re on the lower end and If you look at the way that they’re talking, pal is obviously already hinting that he’s ready to shop finally. So, it’s just gasoline on the fire, right?

[00:22:38] Preston Pysh: With equity markets at all time highs, by the way, right? Isn’t that great? At least here in the U S and I know there’s like five companies driving these indices, but. It still needs to be said, right?

[00:22:48] Matthew Mežinskis: No, I mean, you want to look at, I mean, yes, it’s true. And yes, we are top of you there, but it’s still the best benchmarks for stock markets.

[00:22:54] And yeah, so I absolutely think this is going to change at some point. Of course, the question is always when, but based on, let me back this up and show you something interesting here. This is actually an interesting point. People always say the dollar. is, this is going to crash and whatever. I’m sure you’ve had a variety of guests over the years that think the dollar is doomed.

[00:23:12] And Peter Schiff, obviously our Bitcoin friend is always saying this, but in fact, if you look at it this way from the construct of the central bank’s monetary base, the dollar actually comes off looking quite strong. And I’ll try to illustrate that here. So without going too much into my metrics and my methodology, I only go back to the global financial crisis here because This is the only point you got to imagine.

[00:23:34] I got 50 currencies here, but before 2007, I didn’t have 50. It wouldn’t be right to start doing a change. Yeah. Right. So the basket changes, but I can still, with the basket that I have measure a monthly growth and this is where I get my top line number. So this is this black, let me take off the red. So this is with the baskets that I have, I can still figure it out and do weighted averages of the monetary base.

[00:23:55] And the U S like I said, is only 20, 22 percent of the monetary base. Back in the seventies, it was like 40 percent something like that with the data that I had, obviously, regardless, we get to this number that we talked about. This is exponential growth, exponential growth and log scale. It’s going to go straight line.

[00:24:11] Let’s just put everything on. So we see it. There’s the chart on log. So the chart is on log and you see it kind of looks like a straight line. I’m not drawing trend lines here, but you kind of see that the green itself goes a trend line. And then here is the is basically brass tacks. This is the number.

[00:24:23] So that’s the annualized. Okay. compound growth rate. Oh, the money’s flat. 12. 7%. But here’s interesting. It’s amazing. This is amazing. Yeah. So the craziness all started after 2000, you see the first big spike was Y2K. This is literally Y2K where it goes up to almost 30%. Yeah. People were taking out cash like mad worried about Y2K.

[00:24:43] I remember there’s one libertarian, this crazy guy, Gary North. Who was, I don’t know, he, he has a checker pass in my opinion, but he’d like buried a tractor and like just this crazy stuff that people were doing during Y2K. So anyway, I’m all for protecting yourself and your family. I’m not, I’m not saying that, but it can be reasonable to people take out cash, like crazy here.

[00:25:00] And that happened. And then, 911. com, there was a big crisis. They printed more here. You can see in the early 2000s, this was Greenspan being called the maestro by the New York times. And then tried to cool that off. And then of course that was the crisis. And then the major QE one, two, three. But here is interesting.

[00:25:15] Now, you can notice that in my chart, this, it really is the only time if you just take the broad span of 50 years where they’ve tried to, they’ve gone so crazy positive at times that they’ve had to go negative at other times, right? To, as I say, normalize the balance sheet. Okay. But now let’s put back. So this, just remember, this is like kind of the, the scientific number, if we can call it that, of looking at the units first, euros upon euros, yen upon yen, doing all these measurements of weighting them.

[00:25:40] But if I just went back to that chart I showed you before, or not the chart, but the the metrics of the USD changes, right? So it’s a different metric. It’s a change in the USD value. See that it falls even faster. So you see like 2021 on the upside, it’s relatively the same, but on the downside. The money print is kind of flat, a little bit down, but the money, the black, the black bars, but the red bars go down as we looked at before, right?

[00:26:06] We were at 30 trillion. We went down to 26 trillion. So what is that telling us? What is that showing? Remember, the black bars are kind of like the best way that we can measure the global weighted average of a print. Central banks are kind of still printing, kind of flat, kind of doing nothing, but the value of their print, Currencies measured in dollars has fallen massively.

[00:26:26] It’s fallen four trillion And so it tells you that the dollar is still the best looking horse in the glue factory You know that as much as all people against other fiat. Yeah against other fiat. Yeah, absolutely. So That tells me that they’re going to have the courage to, and it’s actually the wrong way to say that they’re going to think that they have the courage to lighten up because the dollar is still strong.

[00:26:47] It’s very strong historically against other currencies, and you could see even here the way that before 2022, we were valued at 30 trillion, but this fall is really not due to cutting. Yes, the U. S. has cut Europe has cut a little bit, but the it’s really due to the collapse of the dollar value of the other currencies when you see this green area fall.

[00:27:05] So it’s a, the point is. I, I think that they’re going to continue it. I think specifically the U. S. is going to continue. And once the U. S. changes, all the other central banks are going to look at it as carte blanche to continue to print as well from their side. So yeah, like you said, it’s on the lower end of the bound.

[00:27:20] Generally, you’re at 12. 7%. Sometimes you’re way over it in recent decades, but now it’s very low. And if you just look at this sort of pendulum swinging analysis and you look at, you look around and you look at the news and you look at everything else, I don’t see not printing in the near future.

[00:27:35] Preston Pysh: Just to put this number, this 12. 7 percent in context for people, when you use the rule of 72, your buying power or the value of this is cut in half every six years. So whatever you think a hundred bucks is today, it’s 50 bucks six years later. In terms of what you can go out and buy based off of a debasement of 12.7%. And this is globally. So the U S I think the U S is, isn’t as, I mean, you just got into how the dollars, the best in the glue factory, the dollar is like what, seven or 8%, maybe nine is 9%. 1 year, 8. 1 year doubling. 8. 1. So every eight years in the U S it’s half as much. But if you’re living anywhere else in the world, the 12.7 is probably the number that’s more characteristic and you’re losing half of your buying power every six years. So like you’re swimming hard today. Well, in six years, you’ve got to swim twice as hard to be in the same spot and to be able to go do the same things. And I think. Matthew, people can feel this.

[00:28:35] They can feel this. They can’t quantify it because it’s just, it’s just slow enough that the debasement is happening at a pace that like, they just can feel something’s different, but they can’t put their finger on it. And they don’t have a degree in macroeconomics. And even if they did, they probably still wouldn’t understand this.

[00:28:50] In fact, you can almost guarantee they wouldn’t understand it if they had a degree in macroeconomics.

[00:28:57] Okay, this is the question I wanted to go to. So it seems like we’re coming to a head when we look at this. There’s this global cooperation that’s clearly happening between all these major central banks.

[00:29:06] You ease for the next two or three years and then we’ll ease and it’s like this. You can see it in the chart because it’s very normalized for the most part, the cooperation between all these central banks. But it seems like things are coming to a head, particularly in Japan right now, when we look at the currency exchange between the yen and the dollar, what are your thoughts around this?

[00:29:26] Because it’s getting spicy. Like within weeks, I mean, we just had this massive capitulation event that happened. What was it two or three weeks ago? The carry trade is supposedly over. It’s not over. At least in my opinion, it’s not over. Is this kind of the canary in the coal mine what’s happening in Japan to the U S dollar?

[00:29:44] And they really need the yen to be able to continue to weaken, but the dollar like, can’t get too strong. Talk us through what you’re seeing over there right now.

[00:29:52] Matthew Mežinskis: Yeah. I’m more interested in this stuff. Usually in the long term, to be honest, I don’t consider myself sort of like a train spotter of the short term stuff, but I, I haven’t been paying attention and the yen carry trade is an interesting story.

[00:30:05] Of course. I don’t actually see them doing, we saw on that M zero is a little bit of tapering off that there’s on the physical cash. But really, if you look at the, let me just quote your number here again. So if you look at the yen over the last 50 years, 50 plus years, it’s 11 told you the dollar was 9 percent growth rate.

[00:30:21] The yen is a 11. 6 percent growth rate. And over the last trailing 12 months, they’re still just positive a little bit, 0. 7%. It’s flat, but it’s still a little bit positive. So, again, to me it doesn’t seem like there’s just business as usual for these people. Right. And that’s kind of what I wanted to, it’s maybe a little dodge or pivot to your question, but back to the way that you started the question talking about the 12.7 percent and most people can’t sort of get their heads around that. At the end of the day, and this is why I think Bitcoin is such an amazing relief from all this is 12. 7 percent compounded. That’s compounding figure. That’s about 1 percent a month. So 1 percent a month. If you compound it, it’s not 12 percent a year.

[00:30:58] It’s about 13 percent a year. That’s what we’re at. So you can think about it that way. It’s just a constant debasement. And I continue to be amazed that there’s not. Like Bloomberg and, a lot of these news organizations following something like this, really dig into it, find the growth rates.

[00:31:15] Cause I don’t know if you saw the last report, I did one this time where I just put trend lines of all the other things, like kind of main things like stocks, stocks with dividends, population, GDP. And you can see growth rates of, four or five, six population, one percent, but other things around general finance and the economy growing at four or five, six, seven.

[00:31:32] The highest thing that is not Bitcoin is stocks with dividends. It’s nine percent stocks without dividends reinvested to seven percent. That’s the slope of the curve, the slope of the exponential trend line. So all of those things, you just stack them up, you look at them in a column. This money printing number is like pretty high.

[00:31:48] I mean, 12. 7 percent on a blended weighted, like a blended weighted average over 50 plus years. Even if they are, they’re flat right now at the very moment, it would be a Herculean effort to sort of, and I don’t see how you would change the system.

[00:32:01] Preston Pysh: No.

[00:32:02] Matthew Mežinskis: There’s just no way. I mean, there’s just no way everything that you talk about with guests on your show.

[00:32:05] I mean, it’s just there’s too many headwinds coming at them to try to change it other than, I don’t know, going back to either some new Bretton Woods or adding Bitcoin, which we can talk about. But so to me, that’s the big thing. It’s 1 percent a month. That’s the number to think about. Yeah. It’s kind of flat at the moment.

[00:32:20] Yeah. We’ve got this yen carry trade, maybe under winding and some money being deployed back there and not enough demand in the U S and things like that. But again, if all those things happen, that’s even more reason for them to print more in the fed, buy more bonds.

[00:32:31] Preston Pysh: The number you threw out for the M zero was a 10 trillion increase through COVID. And so when I’m looking at base monetary base, sorry. Yep. The monetary base expanded by 10 trillion. In this next, whatever it is, the expansion, I don’t think that they’re going to be able to just kind of like trickle it up at this 12%. I think that’s going to be another leap or another jump that’s just because of how lumpy everything’s kind of been over the last decade.

[00:32:59] It seems like that’s the new modus operandi of the central banks. Do you agree with that? If so, what does that next jump have to be? Does it have to be 15, 20 trillion in order to kind of catch back up and kind of keep the oil in the engine kind of circulating, like what do we got here?

[00:33:16] Matthew Mežinskis: Yeah, I agree. All of the prior bumps that we’re talking about were preceded by. This sort of decreasing, either getting close to zero or in the last two cycles, negative, which is again, unique. I mean, they’ve never had to do that because they’ve just haven’t prepared themselves for this kind of day of reckoning, which seems like it’s coming.

[00:33:37] So I would say, let me show you. Can I show you one more? Yeah, yeah, yeah. All right. So here is a trend line. It’s of the monetary base itself.

[00:33:46] Preston Pysh: Oh, I love this. This is exactly what I was describing with the rails, right? Okay. For people that just saw what happened on the screen there, can you make it go back so that it’s not in log terms so that they can see the normal linear? So this is linear. This is great. Yep.

[00:34:01] Matthew Mežinskis: So this is the same chart I showed you. We got the 26. 12 trillion of June 2024. Yes. The trend line is that by the way, this, this is well under trend. As you mentioned, the trend line is 32 trillion on linear scale. You see how quickly it grows. Let’s just spoil it and let’s go all the way out to, I think I go out to 2033 here.

[00:34:18] Okay. Which was after two having, two more having the Bitcoin. So 80, 83 trillion is the number.

[00:34:27] Preston Pysh: Which today sounds totally ludicrous to anybody that’s listening to this and seeing the numbers. They’re saying there’s no way, but it seems the math is really quite simple and straightforward and they keep it inside of these bounds.

[00:34:40] Boy, I can’t wait to pull this video up in 2030. What did you say? That was 2032.

[00:34:45] Matthew Mežinskis: That’s 2033.

[00:34:48] Preston Pysh: We’ll see where we’re at, but go ahead. Okay. So now it’s in long term.

[00:34:51] Matthew Mežinskis: Right. So end of the decade, only somewhere about 60 trillion, 60 trillion by. And this is monetary base. 2030. This is monetary base same money supply I was showing you.

[00:35:01] Preston Pysh: How much of a multiplier is the M2 over that? Just so we could kind of, cause I know a lot of people like to track the M2.

[00:35:08] Matthew Mežinskis: Yeah, I got a lot to say about this. I actually don’t know current off the, like, I don’t have a global M two. Like, I have a global monetary base. It’s a whole different can of wax.

[00:35:20] But if you looked at the U. S. itself and three, we should look at him three, which is another topic. You’re upwards of, like, 35 trillion, something like that. That’s just U. S. and three.

[00:35:29] I think you can probably roughly say it’s something like 100 trillion is this global bank liquidity. Yes It’s like 100 trillion and the monetary base is 26 trillion So it’s you’re roughly looking at something like a 5x multiple 4 or 5x multiple.

[00:35:44] Okay is how it looks but yeah That’s we could table that if you want to get a lot to say about that, too But this just if we did a trend line now, this is a simple trend line and actually Another quick aside everything gets kind of lost in the numbers, but the slope of this trend line is less You Then that’s 12.7%. Wow. Because I’m doing a very dumb, simple exponential regression of all the USD values. And remember how I told you, I only have the top 50 currencies going back to like 2007 and some of them a drop off. Right. But this is very interesting because the slope is like 10 and a half or something like that.

[00:36:15] 10 and a half percent, which is lower than the 12. 7. So again, what does that tell you? The way that I, like the scientific way to calculate the real growth is higher. But if you look at it, you would think Especially since I’m adding more currencies later, like I’m adding the Chinese Yuan from 2000. That’s a big one.

[00:36:33] The British Pound, they haven’t even published their bank reserves until 2006. The Bank of England is an incredibly opaque bank. That’s one of the things. So all of this more data comes, it’s like loaded at the end. You would actually think in dollar terms, if you got a big increase, this would be higher.

[00:36:48] But again, it continues to show the thesis that if it’s lower, try to try to visualize what I’m saying here. Dear listener, dear viewer, the best number I can give you is 12. 7%. But if you kind of look at different ways, you look at this, like they’re on a trend line on these USD values, and you would think that since there’s a lot more data coming, a lot more data increasing in the later years, you would get an even higher growth, a faster growth, because it’s like artificially higher.

[00:37:11] But it’s even lower than the 12. 7. Why is that? It’s a, it’s a, if you measure it this way, just a sort of a brute force, non, not so with a fine tooth comb exponential curve on the USD values, these USD values again, Wittgenstein’s ruler keep decreasing, like the euro decreases as far as in terms of the dollar, the yen is decreasing as far as the dollar goes.

[00:37:31] So it’s a very interesting phenomenon. The dollar keeps getting stronger. That’s the point. What I wanted to say with this slope of this curve. But anyway, a lot of nuance there. It’s the point is it could be even more. The actual growth rate is 7. 7%. But in, if you look at the sort of USD equivalent values and then you run a trend line on that, it’s only about 10 percent growth regardless.

[00:37:49] You can see that you’re looking at something like 60 to 80 trillion after seven to 10, nine years. And if you look, let’s just zoom in. If we see from. Like 2013 after Q, let’s go actually from now. After the global financial crisis, the financial crisis, we’re kind of on trend based on the all time trend, went up to the 97.

[00:38:08] 5 percentile, pretty rare error came down pretty much back to almost trend before COVID exploded again. And now we’re under trend. Still, we still could go lower. So now The words that I’ve been saying, let me put some numbers to them. Two and a half percentile, which again is very rare event. That’s 23 trillion.

[00:38:24] Our current value is 26 trillion. If we project out a little bit, let’s say perhaps one of Bitcoin bulls happening next year, 24. 2 trillion. I find it very hard to believe that Bitcoin would be pumping in the monetary base would be going down again. This is another thing. Bitcoin’s kind of colliding with these new waves, right?

[00:38:40] Preston Pysh: Talk to us. Let’s dig into that. Because I think that that’s something that, people will, will say, Oh, yep, there’s a four year cycle and Bitcoin. And then like, that’s the end of their thesis and that’s the end of their argument, but there’s this entire other factor, which I completely agree with you, which is the Fiat expansion and contraction.

[00:38:59] And if it’s contracting aggressively and maybe the supply suffocation and Bitcoin is happening simultaneously, talk to us, how you kind of see that price action performing despite. What many people just generically make, well, it’s the fourth year, so Bitcoin’s going to pump.

[00:39:15] Matthew Mežinskis: Right. So there is actually, I have some sympathy to the cycle so far.

[00:39:20] Also, one of the things I’ve been studying a long time is this power trend line. That’s had a lot of press, I guess, this year is Giovanni fellow from Italy. It was the first to observe it. I actually did a chart as well in 2018. Didn’t know about him at the time. He was a little bit before me.

[00:39:32] Preston Pysh: The big shift, just so people understand the big shift that I think he brings is just, he’s logging the time as well, where a lot of other people were just logging the Y axis.

[00:39:41] He started logging the X axis as well.

[00:39:44] Matthew Mežinskis: Right. And when you do that, when you log the Y and you log the X, a power trend line will look like an exponential channel. It looks straight, it looks straight up. But on log linear, it will kind of look like it’s decaying a little bit, but it’s still a very high rate.

[00:39:57] So here I have another chart can display this a little bit, but bottom line about this new thing. I have sympathy for the four year cycle. I think a lot of people there’s validity to that. So far as reasons, obviously we have the, the avenue and all things that sort of coincide with that. We have a new crop of new Bitcoiners seems to just get excited.

[00:40:12] Every four years, people want to spend mommy and daddy’s money on Bitcoin. And I know it’s a lot of reasons, but as you see here, so here is the, The same chart I showed you. Remember this is the monetary base growth. Yeah. Right in red now and Bitcoin market cap change is in green. Now that’s so, so extreme.

[00:40:27] I have to cap Bitcoins on the right. Understand that Bitcoin is on the right axis. Monetary base growth on the left, these are multiples. The Bitcoin is, is four times higher. The axis, I’m doing a multiple of four. Mm. Okay. Okay. So. For 40 percent growth on the left, you’d get 160 percent growth of Bitcoins.

[00:40:43] Just Bitcoin’s growth, as we know, is so huge. But Bitcoin, over the last 10 years, specifically the 2013 cycle, the 2017 cycle, we’ve seen it’s been pretty uncorrelated. Like it pumps, fiat may pump, it may go down. Bitcoin is pumping. You can kind of see that, right? And then this is understandable, right?

[00:40:58] It’s Bitcoin is a non correlated asset. It has been, it’s been different than gold, different than fiat currencies, different than stocks. It’s just been non correlated. But what has been interesting, and I’m not exactly sure what it portends, other than it might line up with these trend lines that I just drew to you about the monetary base, you see, actually, with this last cycle, this COVID cycle, we sort of lined up, right?

[00:41:17] You see that the fiat money, this is all right, enough of this. Let’s slow it down. That was the exact same time that Bitcoin was gearing up for the next cycle, 2018, 2019, right? And then we explode together for different reasons, but we explode together and, meme stocks exploded, all the rest. So we explode together and then we go down together.

[00:41:36] And now Bitcoin is obviously way more, but you can even see that. Fiat is still kind of going with it, right? It’s a little bit that we’re trying to pump it a little bit last year, put a little bit more and Bitcoin, of course, was pumping a lot more. So very interesting.

[00:41:48] Preston Pysh: So when we’re looking at what we think comes next from on the Fiat side and the expansion, what are we, two years from them really kind of expanding?

[00:41:57] What are your thoughts?

[00:41:58] Matthew Mežinskis: Yeah, that I don’t have a handle on. Like you said, we’re at the lower end of the range. We see that we went out of the 97 or the two and a half percentile. So, so low, but you know, again, Bitcoin is starting to move up. They tried to start to move up the printing press a little bit at the end of last year.

[00:42:12] Now they’re down again a little bit. So, I can’t say it’s so scientific or predictable about what Fiat is doing, but compared to the, it almost seems in

[00:42:21] Preston Pysh: Matthew, it seems like there needs to be some type of geopolitical event to, give them the narrative to turn it back on.

[00:42:27] Matthew Mežinskis: That’s the scary thing, obviously. And, I live in Eastern Europe and it’s a scary thing for us. And. I get into that in plenty of other shows, but you know, we have real worries about our security over here. And I also have worries about false alarms and false flags or people that, are gonna want to use global chaos to do more evil things.

[00:42:46] Preston Pysh: I appreciate your reservation. Cause it’s so often that, you get guests and they’re like, yeah, this is what’s going to happen. And you know what? I think there’s enormous amounts of brilliance and knowledge in a person who says, I don’t know. And it’s not something that I even want to try to predict because I don’t know.

[00:43:03] There’s no way for me to know. I know I appreciate that. Let me just change gears just a touch central bank digital currencies. So we’re talking about monetary base and you talk a little bit about this in your report. In fact, you say CBDCs are LARPing. Help us understand kind of your point of view on the role that central bank digital currencies are going to play.

[00:43:24] Are they going to play a role? Is this going to just be privatized money as a pseudo CBDC? What are some of your thoughts?

[00:43:31] Matthew Mežinskis: Yeah. So CBDCs are not new, at least from concept. We know the bank of England, I believe was the first to publish a white paper on that about 10 years ago. 2013, 2014 was the first CBDC paper from the Bank of England.

[00:43:43] Bank of England is very interesting entity, by the way. And it’s obviously it was the first modern central bank. The Swedish bank is older than them, but they really started doing the modern monetary operations, the Bank of England first. And they are really not transparent either. They don’t publish the total balance sheet.

[00:43:58] So the federal reserve, you can find total assets, this and that. You can find the monetary base of the Bank of England, but there is Other liabilities outstanding and other assets outstanding that don’t publish the total. They say in their website that they publish, 80 to 90 percent of the assets.

[00:44:13] But I think it’s very interesting that it’s an interesting central bank that has old ties and for whatever reason they are not fully transparent. That’s one point. The part about the CBDCs. Yes, they’re sort of a mid tier central bank. They want to be nimble on their feet. They want to try to, it makes sense to me that they were the first one to write about it.

[00:44:30] But as we know, nearly every country has written, said something about CBDC since then. And we have a lot of Caribbean banks that are active now, started some Southeast Asian banks, starting China, obviously is pilot CBDC. It’s still a very small nascent thing at the moment. But what it is, just to quickly explain, it would be a third rail of this base money, so it is the digital equivalent of that physical currency component or the M0 component, as you mentioned, so you’d have something like wholesale banking cash, which is bank reserves, you’d have Retail physical cash and you have retail digital cash, which would be CBDC.

[00:45:07] So I imagine you’ve had people in your show talk about how Orwellian it is and can be, and you could just track transactions. And you really, if people start accepting CBDCs for all cash payments and all sort of smaller Venmo type payments as they have in the U S today, I know, or SEPA instant payments as they have in Europe, then you wouldn’t even need a need for banks.

[00:45:28] Frankly, so this is actually one of the reasons why I think it’s a lot of hype. I think it’s banks. I think there’s hope here, frankly.

[00:45:36] Preston Pysh: Because the banks are going to lobby against it.

[00:45:38] Matthew Mežinskis: Exactly. And who, I mean, who are the biggest client of the central bank? It is their banks in their constituencies, in their systems.

[00:45:44] It’s very difficult for me to see a true CBDC system emerging where you basically just have 50 or 60 or whatever central banks that have their digital cash and it’s like, why would you put all of that effort into one central bank when the whole point of having sort of the banking system as we have right now is that the central bank doesn’t need to be involved in these things.

[00:46:05] You have, client privileges, all the rest. I just don’t see it. I think it’s just a LARP. I think they’re, they’re just kind of acting like it’s something that’s exciting and innovative and interesting for them, but I don’t see really it’s anything.

[00:46:19] Preston Pysh: Now, when we look at tether and we look at how much, I mean, they’re killing it from a profit standpoint, it’s totally insane.

[00:46:26] The amount that they’re able to retain. It seems like the banks would want to get into that game of let me buy short duration treasuries. The US government and hell, any government at this point has a huge incentive to allow this because they need a buyer of all of this trash that they’re issuing. And so it’s almost like there’s this relationship between.

[00:46:47] That is naturally occurring between stable coin issuers, governments that want to issue a bunch of short duration papers so that there’s actually a buyer. And then the tokenization of dollars in particular, because there’s high demand for dollars all over the world, particularly in developing nation states, because their local currencies are absolute disasters of 20 to 50 to 100 percent inflation on an annualized basis.

[00:47:13] And so you have this really odd, unique setup. That it seems like the proliferation and the desire for stable coins is only going to get way stronger, especially where we look at where these numbers are that we just talked about are going next in the coming, 10 years, they need a mechanism in place in order to expand the number of monetary units out there.

[00:47:35] And it seems like this is the most obvious way to go about it. What are your thoughts?

[00:47:40] Matthew Mežinskis: A hundred percent agree. I think it’s gonna happen. We’re on the road for that. I’m sure you saw that Paul Ryan interview on Bloomberg. Yeah. A while back unprovoked. He’s talking about debt crisis and he is talking about a possible way to solve the debt crisis would be a stable coin demand for treasuries.

[00:47:54] Yeah. Which is just, it’s hilarious to me to think that that politician is actually, just talking about some cryptocurrency that way.

[00:48:01] Preston Pysh: And he’s not in office, which I find interesting that he’s saying this. Former politician, I should say. Former politician saying this. And it’s almost like he’s saying what the ones that are in office aren’t allowed to say.

[00:48:12] Right. Am I reading into this too much? Like, or is he just, is just Paul the smarter than the ones that are in office and they just don’t understand what the heck’s happening? Like this gets very speculative and it’s like, there’s no way to be able to tell. But like, Do you think that the people in charge are totally figuring this out?

[00:48:29] Or is there just a couple people kind of in finance and in politics that are actually understanding where this is all going?

[00:48:36] Matthew Mežinskis: No, I think they’re figuring it out. They know that there’s real demand there. They know that it is a way to boost treasury demand. So they’re going to go after it for sure. A hundred percent.

[00:48:45] I think it’s hilarious, though, that tether of all companies, like the one that was in the crosshairs for so long, this sort of nebulous Caribbean entity with nefarious investors or whatever. We don’t know. Yeah, perhaps it’s something we don’t know. Those are the narratives, right? I just think it’s so funny that the government’s going to go after anything that it can to keep its Golden goose clucking away.

[00:49:05] So it’s, they’re absolutely going to go for it. And I think it’s a much more realistic use of cryptocurrency to have it. The title of my podcast is crypto voice. I’m going to the last Bitcoin and have that title is well before it became a legal term, like 2015, 2016, I came up with it, but crypto is going to come back to Bitcoin. You’ll see, I think it’s Bitcoin.

[00:49:24] Preston Pysh: Because of stable coins.

[00:49:26] Matthew Mežinskis: Not just the only, I just think Bitcoin is just, it’s so incredible what you can do with it and the freedom that you have. And like I tell everybody, and I said this in my presentation about Nazi gold and moving crazy amounts of money around the world in Europe in the 1940s.

[00:49:41] If you’re a Bitcoiner and you’ve been around a long time and you haven’t experimented with or tried multi sig, I just urge you please to do so because it’s a superpower. It’s battle tested, it’s been around 10 years. And now with taproot, these amazing upgrades, I mean, you can have like backup paths and all sorts of things that help you from a 5 rent attack to help you against a state attack or just really preserving your funds for your family for forever.

[00:50:03] It really is an incredible technology and I’m a traveler, I’m international. So, I’m happy to recommend it. I mean, multi jurisdiction, even multi forms of hardware wallets, multi backups, we’ll get back to the tether by the way. But I’m good on this tangent on multi signal. I think, I’m a free banker.

[00:50:18] I like the market. I like what banks do. Even you might want to have a private key backed up in a KYC vault, perhaps a bank. That’s going to help you from a 5 rent stack. And you don’t have to have it only in one bank. You can have it backed up in as many places as you like, the Winklevii, the Winklevoss twins, as far as I remember their strategy of locking up.

[00:50:37] Pretty significant portion of the Bitcoin network was Shamir sharing the old one addresses, the pre segwit addresses, and they just have it in safe deposit boxes all around America and multiple backed up in multiple wallets, multiple places, but that’s just one seed with multi sig, you can just do so many different things.

[00:50:55] It really is a superpower. And so there’s so many things that Bitcoin is doing, like the average politician today has no idea. That this is coming. And even with the stable coin thing, I think, again, it’s a bit of a LARP, whatever, but they’re going to do it. They’re going to go after it. Can I show you one more?

[00:51:10] Preston Pysh: Yeah.

[00:51:10] Matthew Mežinskis: Just to show you, hopefully we’ll drive it home.

[00:51:12] Preston Pysh: To your point on the multi sig, it’s almost like your creativity is the limitation because there’s just so much capability to protect yourself or your entity or whatever it is you’re using it for. Yeah. I’m sure you’ve interviewed a lot of these folks and I know you have listened to your podcasts over the years.

[00:51:29] I kind of came into my own of the financial awakening. Let’s say in the light of the global financial crisis, I was listening to Peter Schiff, listening to Jim Turk. Jim Turk is obviously much better on Bitcoin than Peter Schiff, but I remember 10 years ago and it’s a lot of excitement. Silver had that run up in 2011 where it went up like to 50 and of course crashed back down people that really want to protect yourself, protect your family, all those things.

[00:51:51] You dig into it a little bit more. You get an account of gold money. You do these things. It’s just, it’s nice, but it’s just not. It’s not that exciting. You’re still going through some KYC process. You’re going through a lot of trust through hurdles. Yeah. A lot of trust, a lot of trust. And you see what has happened in China.

[00:52:05] It was a big, there’s a big stink in the gold market. Like, are you going to keep your gold, our gold in Hong Kong? What are we going to do about Hong Kong? And these things are not going to end. I’ve read some of these books. There’s this I’m blanking on his name. One of the guys from Gata, some of the people from Gata, obviously a little wild, but self interest.

[00:52:21] Yeah, sure. But one of the gentlemen, very, Nice. Good scholar. I really enjoy listening to him. Black and on his name, he said, I’ve been thinking about this for 50 years. And I think the gold community can agree, like perhaps the safest place for gold is someplace off the planet, someplace like Mars. It’s something that they’ve been thinking about.

[00:52:40] You can imagine being a gold bug in the seventies while the price is going to 850 an ounce. And it’s just, it’s lucky for us that right now we have this thing called Bitcoin where you can, you really can have a superpower by taking custody of it, taking it outside of. The traditional banking system, because it is outside money, just like gold.

[00:52:56] It’s outside. It’s different. It’s different than a financial system. And I think that that’s in the end of the day, that’s going to be the massive saving grace. Yeah. Yeah. Yeah.

[00:53:05] Totally agree.

[00:53:06] Matthew Mežinskis: Having said all that, I really did want to get back to the tether question.

[00:53:09] Preston Pysh: Okay, yeah, let’s do it.

[00:53:10] Matthew Mežinskis: Great. Right. So now back to the tether their story, obviously in the demand for treasuries, I mentioned earlier how we’re about at 20%. This is a chart you don’t see every day. This is a lifetime chart of. The United States federal government debt and how much central bank owns of that debt over time.

[00:53:26] Okay. I’m going to put it on log left so you can start to see things a little bit more. So basically we’re not going to go through, I’ve done this many times and back to the founding and stuff, Andrew Jackson paid it all off here at 1835, so on and so forth. But let’s go, let’s go up here now to the federal reserve.

[00:53:40] You see, so the dark green is what they own. The light green is the total debt. It looks a little bit goofy, but you can see it in the tool tip. World war one, world war two, you have big bumps. So basically from Vietnam was the worst time if you had broad Federal Reserve history, but one of the things that broke the gold standard was growing United States debt.

[00:53:58] But also what is interesting not talked about is in 1975, which was incidentally the year that Vietnam ended and already the gold standard had ended. We get up to 18% Of the United States treasuries owned by the Federal Reserve. Federal Reserve prints money, base money, bank reserves primarily, by the treasuries.

[00:54:17] So the debt was 500 billion, the Fed owned 88 billion of that, 17%. Alright, and then from there, they decided, alright, let’s fix this, and Reagan years came in, and actually, the debt kept growing, so the percentage got better, but the Federal Reserve didn’t buy as much, relatively speaking. Then you have these crazy times about the global financial crisis This goes down here because there’s more corporate bailouts precisely during this time, the TARP and the TALF and those things, but anyway, you can see QE 1, 2, 3, and then COVID the all time high was about 28%.

[00:54:47] So the Federal Reserve in November 2021 owned 8 trillion dollars of treasuries. Well, the total SNE trillion. Okay. 28%. That has come down. We’re at, again, this period of normalization. We usually you and I can guess what’s going to happen at some point close here. Well, this just is not sustainable, but now it’s down to just under 20%, 19.5 percent as of June, 2024. So 6. 7 trillion worth of treasuries are owned by the fed, 34 trillion in total. And as that number is going just continues to go up the total debt. This is where I against, I think that the headlines are a bit bigger than the reality here. I think at the end of the day, the problem, the United States federal government is going to have is the biggest buyer is still going to be the Fed.

[00:55:29] It’s still going to be the money printer. How big is the market cap of tether Preston? It’s like a couple of hundred billion right now.

[00:55:34] Preston Pysh: It’s a 118 billion.

[00:55:36] Matthew Mežinskis: 118 billion. Yeah. So that’s actually, even though they are a huge buyer of treasuries, they don’t even compete with the Fed. The Fed has 6. 7 trillion.

[00:55:45] They don’t compete with foreign central banks. So, That’s where the big money is still. That’s it’s politics. It’s real politic. And yeah, I think it’s good. Yeah. I think they’re going to do it. I absolutely think stable coins are going to be here to stay to, to sop up some of that demand or that supply. I should say about the treasuries.

[00:56:01] Look at this chart. Like the main buyer that’s going to be. The key in how financial markets, particularly the treasury market’s going to evolve here into the future.

[00:56:12] Preston Pysh: Matthew, at what percentage does this become an issue? Like, okay, so there, I mean, cause they’re the issue where they’re the owner, it’s this reciprocal loop of cesspool loop.

[00:56:22] At what point does it become a major issue? Because everybody knows it’s just a made up market.

[00:56:27] Matthew Mežinskis: Yeah. It was only 17, 18 percent to end the Vietnam war. Yeah. And of course that wasn’t the only reason, but that was an issue. Now up to 30 of course it can go up to a hundred, you know what I mean? Like Zimbabwe, these types of countries, you’re talking a hundred percent there at that point.

[00:56:41] They’re just printing money, buying debt and that’s it. Yeah. I don’t know the answer to that Preston, but I do know the trends are the pattern has now become clear. We don’t want to take the pain. We don’t want to have a forest fire to clear out the underbrush. We want to just bail everybody out. Yeah.

[00:56:55] Yeah. And even though they try to normalize, even though they’re trying to do the good things as they talk about in all the press conferences, we see at the end of the day, this is crazy. The trend is up and when I put it back to the broad numbers that we talked about 20 or 26 trillion now globally in money print, I think 60 trillion by the end of the decade, totally possible.

[00:57:15] 80 trillion by the end of two Bitcoin halvings from now, totally possible. Yeah.

[00:57:20] Preston Pysh: Unreal, Matthew, this was amazing. I learned a ton and the fact that you have these charts so cleanly presented and in a way that make it accessible. If folks, if you listen to this in audio format, go back, watch the YouTube with these charts.

[00:57:35] Holy man, this is crazy how this was presented. Matthew, you have a website, you have a podcast, give people a handoff to these things and anything else that you want to highlight, they want to learn more because you’re just a wealth of knowledge, sir. Oh my goodness.

[00:57:49] Matthew Mežinskis: Well, I appreciate it means a lot coming from you.

[00:57:51] I’ve listened to show a lot over the years. I really do appreciate it It’s good to be on it. And yeah, I try to put out high signal like this I’m just gonna talk about what I know I can back up with pictures and charts and numbers So one base money is my handle. You can find me on all the platforms on Nostra as well One base money and my website is Porkopolis.io

[00:58:10] Porkopolis.io is the old old name of Cincinnati in the golden years of Procter Gamble, but love that love that I didn’t know that Yeah. So that’s my hometown. Anyway, that’s yeah. Oracopolis. io. You can find all the information or one base money at any of the platforms.

[00:58:25] Preston Pysh: Yes, sir. Okay. We’ll have links to all that in the show notes.

[00:58:28] Matthew, thank you for your time. This was really enjoyable.

[00:58:30] Matthew Mežinskis: Thank you, Preston. Good to be here.

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