Original title: Trump Truth
Author: Arthur Hayes, founder of BitMEX; Translated by: 0xjs@ Jinse Finance
Step Four: That’s the distance between where the vertical plank is attached to the movable bracket and the wall. My yoga teacher taught me to place the heels of my hands where the plank and bracket meet. I curl up like a cat, making sure the back of my head is flush with the board. If the distance is right, I can move my feet up the wall behind me, turning my body into an L shape with the back of my skull, back, and sacrum all touching the board. I have to resist the tendency of my ribs to flare out by engaging my abdominal muscles and tightening my tailbone. Phew—I’m already sweating, just from keeping my body in the right position. But the real work hasn’t started yet. The challenge is to lift one leg to a completely vertical position while maintaining alignment.
The stick was like a cure for bad posture. If your posture is not right, you will notice it immediately, you can feel parts of your back and hips pulling away from the stick. When I lifted my left foot, with my right foot still against the wall, all my musculoskeletal issues were exposed. My left lat was turned outward, my left shoulder was turned inward, and I looked like an asymmetrical curling iron. But I already knew this because my sports trainer and chiropractor both found that the muscles in my left back were weaker than my right, which caused my left shoulder to sit higher and roll forward. Doing handstands with the stick only made my imbalances more obvious. There was no quick fix for my problem, only a long road and sometimes painful practice to slowly correct my imbalances.
If vertical plank is my body alignment truth potion, then US President-elect Donald Trump has played a similar role on a variety of geopolitical and economic issues facing the world today. The reason the global elite hate Trump is that he tells the truth. The Trump truth I’m referring to is limited to a narrow range of topics. I’m not talking about whether Trump will tell you the truth about the size of his dick, his net worth, or his golf handicap. Rather, Trump truth tells the truth about the actual relationship between different nation states and the opinions of the average American voter when they are away from the safe space of political correctness Nazis.
As a macroeconomic forecaster, I try to make predictions based on public data and current events to guide the asset mix of my portfolio. I like the Trump Truth because it acts as a catalyst, forcing other heads of state to acknowledge the problems facing their countries and take action. It is these actions that ultimately bring about the future state of the world that Maelstrom hopes to profit from. Even before Trump’s re-entry, countries were acting in the way I predicted, which further strengthened my confidence in how money printing and financial repression methods will be implemented. This end-of-year article aims to step through the major changes that are taking place within and between the four major economic blocs and nation-states (the United States, the European Union “EU”, China, and Japan). It is very important to my near-term position whether I believe that money printing will continue and accelerate after Trump’s coronation on January 20, 2025. This is because I believe there is a large gap between the high expectations that crypto investors have for how quickly Trump can change the status quo, but Trump has no politically acceptable solutions to quickly achieve such changes. The market will immediately realize that Trump has only a year at most to implement any policy changes around January 20th. This realization will lead to a massive sell-off in cryptocurrencies and other Trump 2.0 stock trades.
Trump has a year to act, as most of the US elected lawmakers will begin campaigning in late 2025 for the US midterm elections in November 2026. The entire House of Representatives and a large number of Senators must run for reelection. The Republican majority in the House and Senate is very thin, and they will most likely lose power after November 2026. The American people are rightfully angry. However, it will take more than a decade, not just a year, for even the savviest and most powerful politicians to solve the fundamental domestic and international problems that are negatively affecting them. As a result, investors are preparing for severe buyer's remorse. But can a wall of money printing and a raft of new regulations designed to stifle savers overcome the "buy the rumor, sell the fact" phenomenon and keep the crypto bull market alive and well in 2025 and beyond? I believe it can, but this post is my cathartic attempt to convince myself of this possibility.
Currency Phase Changes
I will quote Russell Napier in my very simple timeline of monetary structure after World War II.
1944–1971 Bretton Woods
Countries fixed their currencies to the dollar, which was pegged to gold at $35 per ounce.
1971–1994 Petrodollar
US President Nixon abandoned the gold standard and allowed the dollar to float against all currencies because the country could not maintain its peg to gold while funding a larger welfare state and the Vietnam War. He made a deal with the oil exporting Persian Gulf states (particularly Saudi Arabia) that they would price their oil in dollars, pump as much oil as required, and recycle their trade surplus into US financial assets. If you believe some reports, the US manipulated certain Gulf states to raise the price of oil in order to use it as a backstop for this new monetary structure.
1994–2024 Petroyaun
China sharply devalued the yuan against the dollar to fight inflation, collapse its banking system, and revive its exports. China and the other Asian Tigers (Taiwan, South Korea, Malaysia, etc.) pursued mercantilist policies that provided cheap exports to the United States, which led to the accumulation of dollars overseas as foreign exchange reserves, which enabled them to afford dollar-denominated energy and high-quality manufactured goods, and ultimately introduced more than a billion low-wage workers to the global economy, thereby suppressing inflation in the developed West, allowing central bankers in those countries to keep interest rates at rock-bottom levels because they mistakenly believed that endogenous inflation had been falling for a long time.
White is USD/RMB and yellow is China's GDP in constant USD.
2024 — Now?
I do not know the name of the system currently being developed. However, Trump’s election is a catalyst for changes to the global monetary system. To be clear, Trump is not the cause of the realignment; rather, he has been outspoken about the imbalances he believes must change and is willing to enact highly disruptive policies to rapidly achieve changes that he believes will benefit Americans first. These changes will put an end to the petroyuan. Ultimately, as I argue in this article, these changes will increase the supply of fiat currencies and financial repression around the world. These two things must happen because no leader in the United States, the European Union, China, or Japan wants to de-lever their system into a new sustainable equilibrium. Instead, they will print money and destroy the real purchasing power of long-term government bonds and bank savings deposits so that the elites remain in charge of the new system.
I will first outline Trump's goals and then assess how various groups or countries reacted.
Trump truth
To function properly, the US must run current and trade account surpluses in the petro-yuan system. The result has been the deindustrialization and financialization of the US economy. If you want to understand how this works, I suggest you read all of Michael Pettis. I don’t think this is why the world should change its economic system, but since the 1970s, white American males (whom the American state was supposed to serve) have lost their place. The key word here is “average”; I’m not talking about high-ups like Jamie Dimon and David Solomon, CEOs of JPMorgan and Goldman Sachs, or the wage hustlers who toil for them. I’m talking about the brother who once worked at Bethlehem Steel, owned a house and a spouse, and now the only women he sees are nurses at a methadone clinic. This is obvious because this group of people in the US are slowly killing themselves with alcohol and prescription drugs. Everything is relative, and relative to the higher living standards and job satisfaction they enjoyed after World War II, relative to the rest of the US/world, things are not good right now. It’s well known that this is Trump’s supporters, and he talks to them in a way that no other politician would dare to do. Trump promised to bring industry back to America and give meaning to their miserable lives.
For bloodthirsty Americans who love playing war video games, who are a very powerful political group, the current state of the U.S. military is embarrassing. The myth of the supremacy of the U.S. military relative to near neighbors or peers (only Russia and China currently meet this standard) begins with the idea that the U.S. military liberated the world from Hitler's onslaught. This is not true; the Soviets sacrificed tens of millions of men to defeat the Germans. The Americans were just mopping up troops. Stalin was upset that the United States took so long to launch a major offensive against Hitler on the Western European front. U.S. President Franklin Delano Roosevelt let the Soviets bleed so that fewer American soldiers would die. In the Pacific theater, although the United States defeated Japan, they never faced a full-scale onslaught from the Japanese army because Japan committed most of its fighting power to the Chinese mainland. Instead of glorifying the Normandy Landings in movies, Hollywood should show the Battle of Stalingrad, the heroism of General Zhukov, and the millions of Russian soldiers who died.
After World War II, the U.S. military tied with North Korea in the Korean War, lost to North Vietnam in the Vietnam War, hastily withdrew from Afghanistan after a decade of presence, and is now losing to Russia in Ukraine. The only reasonable record of the U.S. military was in the two Gulf Wars, using extremely advanced and extremely expensive weapons against third world countries such as Iraq.
The point is that winning wars is a reflection of the robustness of an industrial economy. If you care about war, the US economy is a mess. Yes, the Americans can do leveraged buyouts like any other country. However, their weapons systems are a mix of Chinese imports sold at inflated prices to captive customers like Saudi Arabia who must buy them under geopolitical agreements. Russia has an economy less than one-tenth the size of the US on paper, but it produces unstoppable hypersonic missiles at a fraction of the cost of conventional missiles made in the US.
Trump is no peace-loving hippie; he fully believes in American military supremacy and exceptionalism, and is happy to use that military might to slaughter humans. Remember, during his first term, he assassinated Iranian General Qassem Soleimani on Iraqi soil, to the delight of large swathes of the American public. Trump didn’t care about violating Iraqi airspace and unilaterally deciding to murder a general of another country that the United States is not officially at war with. So he wants to properly rearm the empire so that its capabilities match the hype.
Trump advocates for the reindustrialization of America to help those who want good manufacturing jobs and those who want a strong military. To do this, the imbalances created under the petro-yuan system need to be reversed. This will be done by devaluing the dollar, providing tax grants and subsidies to produce domestically, and deregulation. All of these factors combined will make it economically sensible for companies to move production domestically, as China is currently the best place to produce products, due to the pro-growth policies enacted over the past three decades.
In my article , Black or White?, I talked about quantitative easing (QE) for the poor and how this would finance the reindustrialization of the United States. I believe that incoming U.S. Treasury Secretary Bessant will pursue such an industrial policy. However, this will take time, and Trump needs to produce immediate results that can be sold to voters as progress in his first year in office. Therefore, I believe Trump and Bessant must immediately devalue the dollar. I want to discuss how this can be achieved and why it must happen in the first half of 2025.
Strategic Bitcoin Reserve
“Gold is money, everything else is credit.” – JP Morgan
Trump and Bessant have repeatedly discussed the need to weaken the dollar to achieve U.S. economic goals. The question is, what currency should the dollar be devalued against, and when?
After the United States, the world's largest exporters are China (currency: renminbi), the European Union (currency: euro), the United Kingdom (currency: pound sterling), and Japan (currency: yen). The dollar must fall against all of these currencies to encourage profitable companies to move production to the United States. Companies do not necessarily need to be registered in the United States; Trump allows Chinese manufacturers to set up factories in the United States and sell products locally. But Americans must buy products made in American factories.
Coordinated currency agreements are a thing of the 1980s. Today, the United States is less economically and militarily powerful than it was then relative to the rest of the world. Therefore, Bessant does not have the ability to unilaterally dictate exchange rates to other countries. Of course, Bessant could use a carrot-and-stick approach to cajole each country into agreeing to devalue its currency against the dollar. This could be accomplished by using tariffs or threatening tariffs. However, this would take time and a lot of diplomacy. There is an easier way.
The United States holds 8,133.46 tons of gold, the most of any sovereign nation, at least on paper. As we all know, gold is the de facto currency for global trade. The United States has only been off the gold standard for 50 years. The gold standard has been the rule throughout history, and the current fiat currency system is the exception. The path of least resistance to achieving Bessant's goal is to devalue the dollar relative to gold.
Currently, the value of gold on the U.S. balance sheet is $42.22/ounce. Technically, the Treasury issues gold certificates to the U.S. Federal Reserve (Fed), which the Treasury values at $42.22/ounce. Suppose Bessant can convince the U.S. Congress to change the legal price of gold, thereby devaluing the dollar against gold. In this case, the Treasury's general account (TGA) at the Fed will receive dollar credits that can be used in the economy. The greater the devaluation, the higher the TGA balance will immediately increase. This makes sense because dollars are essentially created out of thin air by valuing gold at a specific price. For every $3,824/ounce increase in the legal price of gold, the TGA increases by $1 trillion. For example, adjusting the carrying cost to the current spot price of gold would generate $695 billion in TGA credits.
Dollars can be created by changing the holding cost of gold, by government fiat, and then used to purchase goods and services. This is the definition of fiat currency debasement. Since every other fiat currency also has an implicit gold value based on the amount of gold held by their respective governments, these currencies all automatically appreciate relative to the dollar. Overnight, without consulting any other nation’s treasury, the United States can achieve a massive devaluation of the dollar against all of its major trading partners.
The bottom line is, can't the largest exporters restore their weak currencies by devaluing them more than the dollar against gold? Sure, they can try, but none of these currencies are global reserve currencies and have no inherent demand from trade and financial flows. Therefore, they cannot match the US's gold devaluation, which would quickly lead to hyperinflation in their economies. Hyperinflation is inevitable, because none of these countries/groups can be self-sufficient in energy or food like the US can. This is politically unacceptable, because the social unrest caused by inflation would force the ruling elites to step down.
Tell me how much dollar weakness is needed to reindustrialize the U.S. economy, and I can tell you the new price of gold. If I were Besant, I would invest big. Big means a $10,000 to $20,000/ounce revaluation. Luke Gromen estimates that a return to the 1980s ratio of gold to the Fed’s dollar liabilities would result in a 14x increase in the gold price from current levels, to nearly $40,000/ounce after devaluation. This is not what I expect, but illustrates how overvalued the dollar is relative to gold at its current spot price of about $2,700/ounce.
As many of you know, I'm a bit of a gold bug. I own physical gold bars in vaults and junior gold mining exchange traded funds (ETFs) because the easiest way to devalue the dollar is against gold. Politicians always press the easy button first. But this is Crypto Trader's Digest, so how does a $20,000/ounce gold price drive up Bitcoin and crypto prices?
Many crypto hopefuls are first focusing on the Bitcoin Strategic Reserve (BSR) discussion. U.S. Senator Lummis has introduced legislation that would require the Treasury to purchase 200,000 BTC per year for five years. Interestingly, if you read the bill, she proposes to finance the purchases by increasing the price of gold held on the government's balance sheet, as I described above.
The case for the BSR is similar to the case for the United States to store more gold than any other nation state; it enables the United States to assert financial hegemony over all other nations in both the digital and physical realms. If Bitcoin is the hardest currency ever created, then the strongest government fiat currency is the one whose central bank holds the most Bitcoin. Furthermore, a government whose finances rise and fall with the price of Bitcoin will have policies that favor the expansion of the Bitcoin and cryptocurrency ecosystem within its borders. This is similar to how governments encourage domestic gold mining and a robust gold trading market. Looking at how China encourages domestic gold holdings through the Shanghai Gold Futures Exchange, this is an example of a state gold-positive policy designed to increase the financial strength of the country and its citizens in real currency terms.
If the US government creates more dollars by devaluing gold, and uses some of those dollars to buy Bitcoin, its fiat price will rise. This in turn will stimulate competitive sovereign purchases by other countries, which must catch up with the US. Then the price of Bitcoin will gradually rise , because no one will sell Bitcoin and get a fiat currency that the government is actively devaluing. Of course, long-term holders will sell their Bitcoin at a fiat price, but that price will not be $100,000. This argument is logical, but I still don't believe that the BSR will happen. I think politicians would rather spend the newly created dollars on the welfare of the people to ensure their victory in the next election that is coming soon. However, it doesn't matter whether the BSR happens in the United States, because the mere threat of it will create buying pressure.
While I don’t believe the US government will buy Bitcoin, this does not affect my bullish view on the price of Bitcoin. Ultimately, the debasement of gold creates dollars, which must find a home in real goods/services and financial assets. We know from experience that due to the limited supply of Bitcoin and the ever-decreasing amount in circulation, its price increases faster than the global supply of dollars increases.
The Fed's balance sheet is in white, Bitcoin is in yellow. Both are indexed at 100 on January 1, 2011. The Fed's balance sheet has increased by 2.83 times, while Bitcoin has increased by 317,500 times.
In summary, a rapid and dramatic devaluation of the dollar is the first step for Trump and Bessant to achieve their economic goals. It is also something they can accomplish overnight, without consulting domestic lawmakers or foreign treasury chiefs. Given that Trump has a year to show progress on some of his goals to help the Republicans maintain control of the House and Senate, my base case is for a devaluation of the dollar against gold in the first half of 2025.
Next, let’s slowly observe China and speculate on how they will respond to “Trump’s truth.”
Choyna
China faces two major problems in the near term. It needs to create jobs for the more than 20% of unemployed educated youth and stop the decline in real estate prices. Trump's truth poses a problem because the United States also needs to provide civilians with better-paying jobs and increase financial investment in production capacity. I discussed in the previous section that the big sticks that Trump and his deputies will wield are a weak dollar and tariffs. What are the weapons in China's hands?
I think China has made it clear that ideologically it must implement QE and allow the RMB to float freely. So far, China has implemented very little fiscal stimulus paid for by money printed by the central bank. I think this is because they do not want to exacerbate domestic economic imbalances. Also, they are sitting on the sidelines until a new American emperor is elected. But in the past few weeks, it has become clear that China will implement massive stimulus through the proven financial channel of QE and let the RMB float freely.
For those who don't understand why QE causes a devaluation of the RMB, remember that QE expands the supply of RMB. If the supply of RMB increases faster than another fiat currency, then mathematically the RMB depreciates relative to that currency. In addition, RMB holders may be able to front-run the central bank and sell RMB today in exchange for a fixed supply financial asset such as Bitcoin, gold, US stocks, etc. to protect their purchasing power in the future. This will also cause the currency to depreciate.
Comrades have already started to withdraw their money from China.
As I explained before, due to China's food and energy shortages, they can't go toe-to-toe with the US and devalue the yuan against gold. This would lead to hyperinflation. But that doesn't mean China can't significantly increase the supply of yuan to support real estate, which is causing deflation. Recent headlines have said that the People's Bank of China (PBOC) is willing to devalue the yuan in response to Trump's tariff threats, suggesting that China is ready to go all-in on quantitative easing.
China’s top leaders and policymakers are considering allowing the yuan to depreciate in 2025 in response to higher U.S. trade tariffs as Donald Trump returns to the White House. – Reuters, December 11, 2024
I believe the reason the PBOC is being vague about why the RMB must be allowed to float freely and eventually depreciate against the dollar in the short term is because they do not want to exacerbate the pace of capital flight. Telling their wealthy comrades directly that PBOC policy is now explicitly focused on printing RMB and buying government bonds would only ring alarm bells in the minds of the investing public and cause a rush of capital across the border, first into Hong Kong and then from Hong Kong to the rest of the world. The PBOC is hoping that investors will take the hint and buy domestic stocks and real estate instead.
Eventually, as I predicted in my article “ Come on Bitcoin, Let’s Go Bitcoin ”, the People’s Bank of China will do enough QE and monetary stimulus to stop deflation. We will know if these policies are working if Chinese Government Bond (CGB) yields start to rise. Currently, CGB yields are at historical lows as investors would rather buy RMB principal protected investment instruments (government bonds) than risk losing money in the stock and real estate markets. This indicates pessimism about the medium-term strength of the Chinese economy. It is easy to turn pessimism into optimism, just print a lot of RMB and remove CGB from investors’ portfolios through central bank open market operations. This is the definition of quantitative easing. See the T chart in my article “ Black and White? ” to see how this process works.
The problem with money printing at the macro level has always been the external value of the RMB. A strong RMB has some positive externalities. It helps Chinese consumers buy imported goods more cheaply. It increases the likelihood that Chinese trading partners will price goods they trade with China in RMB, because they can turn their RMB around to buy Chinese-made goods, confident that the real value of the RMB will remain stable over the long term. It also helps Chinese companies borrow in RMB at affordable rates. However, all of these positives are meaningless in the face of Trump’s truth. Let me be clear: America can print more money than China can without hyperinflation. Trump and Bessant have made it clear that this is what they intend to do. Therefore, China will allow the RMB to float against the dollar, which means that the RMB will depreciate in the short term.
A weaker yuan would allow Chinese manufacturers to export more products before Besant significantly devalues the dollar against gold. In the short term, this would bring forward production and help put China in a stronger position in negotiations with Trump, when China would have to agree to certain demands from the Trump team in exchange for more favorable access for Chinese producers to the U.S. consumer market.
The question that cryptocurrency investors should ponder is how wealthy Chinese investors will respond to the People’s Bank of China’s signal that it will increase the supply of RMB. Will capital flight through various legal channels in Macau (casinos) and Hong Kong (companies registered in Hong Kong by Chinese owners) be allowed to operate normally, or will these channels be closed to keep capital locked up onshore? Given that the US line is to restrict the ability of certain pools of capital (such as Texas public university endowments ) to invest in Chinese assets, why would newly issued RMB be allowed to flow into the US through Hong Kong to help fund Trump’s economic goals? Printed RMB must buy Chinese stocks and Chinese real estate. So while the door is open, I expect capital flight from RMB to USD to intensify because the opportunity will sooner or later disappear.
For cryptocurrencies, at least in the short term, Chinese capital will flow out through Hong Kong, exchanged for dollars, and buy Bitcoin and other shit coin. In the medium term, once China responds by prohibiting Chinese capital from fleeing through liquid and obvious channels, the question is whether Hong Kong crypto ETFs will be allowed to accept southbound capital flows from mainland Chinese investors. If the mainland believes that de facto control of crypto ownership through Hong Kong state-owned asset management companies will strengthen China, or at least make China equally competitive with the United States in the crypto space, then Hong Kong ETFs will quickly gather assets. This will add another pillar to the crypto bull market, as these ETF managers must purchase spot cryptocurrencies on the global open market.
Across the Sea of Japan, the elites who run Japan’s electronics companies, China’s export rivals, are grappling with how to respond to the Trump truth.
Japan, the Land of the Setting Sun
Although Japan’s elite politicians are proud of their culture and history, they are still America’s “towel bitches.” Japan moved on after the nuclear attack, and with the help of dollar loans and tariff-free access to American consumers, by the early 1990s, Japan rebuilt into the world’s second largest economy. Most importantly for my lifestyle, Japan built the most ski resorts in the world. Just like today, the trade and financial imbalances of the 1980s caused a stir in American elite political and financial circles, forcing a rebalancing. Some argue that the currency agreements of the 1980s weakened the dollar and strengthened the yen, ultimately puncturing the bubble in Japan’s stock and real estate markets in 1989. The logic is that in order to strengthen the yen, the Bank of Japan (BOJ) had to tighten monetary policy, causing the bubble to burst. As always, real estate and stock bubbles are blown up by printing money, and when the loose monetary policy slows or stops, the bubble will burst. The problem is that Japanese politicians will commit financial hara-kiri to please the American daimyo.
Today, just as in the 1980s, there are large financial imbalances between Japan and the United States. Japan is the largest holder of U.S. Treasuries of any country. Japan has also pursued aggressive quantitative easing, which evolved into yield curve control (YCC), resulting in an extremely weak USD/JPY exchange rate. I have written about the importance of the USD/JPY exchange rate in two articles: I Don’t Care and Spirited Away .
Trump's truth is that the dollar should appreciate against the yen. Both Trump and Bessant are well aware that this must happen. Unlike China, which will make a countervailing currency adjustment, in Japan Bessant will dictate the direction of the dollar-yen exchange rate and the Japanese will follow.
The problem with a stronger yen is that it means the Bank of Japan has to raise interest rates. In the absence of government intervention, here’s what will happen:
1. As interest rates rise, Japanese government bonds (JGBs) become more attractive, and Japanese companies, households, and pension funds will sell foreign stocks and bonds (mainly U.S. Treasuries and U.S. stocks), convert the foreign exchange proceeds into yen, and buy JGBs.
2. Higher JGB yields mean lower prices, which has a significant negative impact on the Bank of Japan's balance sheet. In addition, the Bank of Japan holds a large amount of US Treasuries and US stocks, and as Japanese investors sell these bonds to repatriate capital, the prices of these bonds will also fall. In addition, the Bank of Japan must pay higher interest on yen bank reserves. Ultimately, as this process unfolds, this is bad news for the Bank of Japan's solvency.
Trump wants the Japanese financial system to be able to avoid collapse. American naval bases in Japan can deter Chinese maritime power, and Japanese production of semiconductors helps ensure that the United States has a friendly supply of critical components. Trump will therefore instruct Bessant to take the necessary steps to ensure that Japan survives economically in the event of a stronger yen. There are multiple ways to do this; one way is for Bessant to use the power of the U.S. Treasury to provide the Bank of Japan with a dollar-yen central bank currency swap so that any sell-off in U.S. Treasuries and U.S. stocks will be absorbed on the sidelines. Here is a description of the process from my article Spirited Away .
The Federal Reserve - they increase the supply of dollars, or in other words, in return they get the yen that was previously created due to the growth of the carry trade.
CSWAP — The Bank of Japan owes the Federal Reserve dollars, and the Federal Reserve owes the Bank of Japan yen.
Bank of Japan - They now hold more US stocks and bonds, whose prices will rise due to the increase in the amount of dollars caused by the growing CSWAP balance.
Bank of Japan - they now hold additional Japanese government bonds.
This is important for cryptocurrencies because the amount of dollars will increase to finance the unwinding of the massive USD/JPY carry trade. The unwinding will be slow, but trillions of dollars will be printed to keep the Japanese financial system solvent.
Correcting the Japan-US trade and financial imbalances is fairly easy because Japan ultimately has no voice and is currently so politically weak to offer any real opposition. The ruling Liberal Democratic Party (LDP) lost its parliamentary majority, throwing Japan’s governance into a state of turmoil. The elites have no political capacity to oppose Trump’s truth, just as they secretly loathe the uncivilized Americans.
The EU, the last
While many Europeans (at least those not named Mohammed) have some Christian leanings, the biblical saying “the last shall be first” definitely does not apply to the EU economically. The last shall be last. For whatever reason, Europe’s elite politicians continue to hold onto this position and accept the relentless blows from Uncle Sam. Europe should do everything it can to integrate with Russia and China. Russia provides the cheapest energy via pipelines and provides food to feed the people. China provides cheap, high-quality manufactured goods and is willing to buy European luxury goods in quantities that would make even Marie Antoinette blush. Instead of trying to integrate into the vast, unstoppable Eurasian sphere of shared prosperity, the European continent has long been confused by the two island nations of Britain and the United States.
Germany and France are in dire straits economically because of Europe’s unwillingness to buy cheap Russian gas, abandon its green energy transition scam, or engage in mutually beneficial trade with China. Germany and France are the economic engines of Europe – the rest of the continent may just be a vacation spot for Arabs, Russians (ok, maybe not anymore), and Americans. This is ironic considering how much European elites hate people in these regions, but the rich have the final say and the poor stay out.
This year, there were two very important speeches by Super Mario Draghi (The Future of European Competitiveness, September 2024 ) and Emmanuel Macron ( European Speech, April 2024) . What’s frustrating about these speeches, if you’re European, is that both politicians correctly identified the problems facing Europe — namely, expensive energy and a lack of domestic investment — but offered solutions that ultimately amounted to “we need to print more money to finance the green energy transition, and do more financial repression.” The right solution would be to abandon unwavering support for elite US risk-taking, achieve détente with Russia for cheap gas, embrace nuclear power, do more trade with China, and thoroughly deregulate financial markets. Another frustrating fact is that many European voters who, like me, believe that the current policy mix is not in their best interests went to the polls and elected parties that wanted these changes to happen. But the elites in power are doing everything they can to undermine the will of the majority. Political turmoil continues as neither France nor Germany actually have a governing government.
The truth about Trump is that the US still demands that Europe avoid Russia, limit trade with China, buy US-made weapons to defend against Russian and Chinese attacks, and prevent strong Eurasia integration. Because these policies have a negative impact on the economy, the EU must resort to financial repression and money printing to maintain a balance of payments. I will use a few words from Macron to illustrate the future of European financial policy and explain why you should be scared if you hold capital in Europe. You should be worried that your ability to escape the European capital basement will be closed and the only thing you can buy in your retirement account or bank deposit is the crappy long-term EU government bonds.
Before I quote Macron, I would like to quote Enrico Letta, former Italian Prime Minister and current director of the Jacques Delors Institute think tank:
The EU has 33 trillion euros in private savings, mainly held in the current account (34.1%). However, this wealth is not fully utilized to meet the EU's strategic needs; the worrying trend is that European resources are turned to the US economy and US asset management companies every year. This phenomenon highlights the serious inefficiency of the EU's savings utilization, which, if effectively utilized within its own economy, will greatly help achieve its strategic goals. - Much More Than A Market
Letta left no doubt about what he thought the problem was; Macron’s subsequent remarks reiterated those points. European capital should not be financed by American companies, but by European ones. The authorities know better than you what to do with your capital, and they can force you to hold underperforming European assets in a variety of ways. For example, for those who keep their money with institutional money managers through pension funds or retirement accounts, EU financial regulators can define the universe of suitable investments so that your investment managers can only legally buy EU stocks and bonds. For those who keep their money in banks, regulators can prohibit banks from offering non-EU stock and bond investments because they are not “appropriate” for depositors. Any time your money is with an EU-regulated trustee, you are at the mercy of the likes of Christine Lagarde and her band of merry muppets. You may like her, but make no mistake, as president of the European Central Bank (ECB), her job is to fiscally secure the survival of the EU project, not to help your savings grow faster than the inflation her banks need to keep the system solvent.
And if you think only people at the World Economic Forum in Davos would advocate for things like this, here’s a quote from the notorious racist, fascist, [fill in the blank]ist…they say so…Marine Le Pen:
Europe should wake up...because the United States will defend its interests more vigorously.
The "truth about Trump" has also attracted attention on both the left and right sides of the EU's political circles.
Coming back to the point that EU politicians refuse to take simple and less economically damaging measures to solve their problems, here is Macron speaking out for the people:
“So the days of Europe buying energy and fertilizer from Russia, outsourcing to China and relying on the United States for security are over.”
Macron went on to stress that EU capital must not be directed to the best performing financial products, but rather invested in the barren lands of Europe:
"The third shortcoming: Every year, about 300 billion euros of our savings are used to finance Americans, either in Treasury bonds or capital risk. This is ridiculous."
Finally, in a last-ditch effort, Macron said he would suspend Basel III banking regulation. Essentially, this would allow banks to buy unlimited amounts of high-priced, low-yielding EU government bonds. Holders of euro-denominated assets would be losers, as this would effectively allow the supply of euros to increase indefinitely.
“Secondly, we need to re-examine how Basel and solvency standards are applied. We cannot be the only economic region in the world that applies these standards. The United States was the source of the 2008-2010 financial crisis, but they chose not to apply them.”
Macron correctly points out that Americans don’t follow these global banking rules and concludes that Europeans don’t need to either. Hello, fiat finance collapse to Bitcoin and gold.
Draghi goes on to argue in his latest report that, in addition to financing the massive welfare state (France, for example, has the highest government spending as a percentage of GDP in the developed world at 57%), the EU will need to invest €800 billion per year. Where will the money come from? It will come from the ECB printing money and EU savers buying bad, long-term EU government bonds under financial stress.
I am not making this crap up. These are direct quotes from both the left and right of the EU political spectrum. They tell you that they know best how to invest EU savings. They tell you that banks should be able to use unlimited leverage to buy EU member states’ bonds, which the ECB will eventually issue after pan-Eurobonds. And the rationale behind this is Trump truth. If Trump’s America is to weaken the dollar, suspend prudent bank regulation, and force Europe to cut ties with Russia and China, then EU savers must accept subpar returns and financial repression. EU cowards should sacrifice their capital and their real living standards to preserve the EU project. I’m sure you noticed the large amount of eye-rolling in the tone of this section, but I won’t be mad at you if you want to lower European living standards. I bet many of you enjoy waving the flag in public, but at home will rush to your computer and try to get out as quickly as possible. You know, the escape is to buy Bitcoin before it’s banned and keep it yourself . But EU readers, it’s your choice.
Globally, as the circulation of Euros increases and the stranglehold on capital within the EU tightens, Bitcoin will surge. This is the stated policy of the elites. However, I believe it will be a “do as I say, not as I do” situation. Those in power will secretly move assets to Switzerland and Liechtenstein and go on a crypto buying spree. Meanwhile, those who refuse to listen and protect their savings will suffer under government-sanctioned inflation. This is how the croissant flakes.
The end of truth
Our truth endpoint is the 24/7 free cryptocurrency market. The rise of Bitcoin after Trump’s victory in early November was a leading indicator of accelerated growth in the fiat money supply. In response to the Trump truth, every major economic bloc/country had to react immediately. And the reaction was to devalue currencies and increase financial repression.
Bitcoin (yellow) is leading the increase in U.S. bank credit (white).
Does this mean that Bitcoin will go straight to $1 million without any major correction? Absolutely not.
I don’t think the market realizes that Trump actually has very little time left to accomplish anything. The market believes that Trump and his team can perform an immediate economic and political miracle. The problems that led to Trump’s popularity have been brewing for decades. So, no matter what Elon Musk tells you at X, there is no immediate solution. As a result, it is virtually impossible for Trump to appease his supporters sufficiently to prevent the Democrats from retaking both legislative chambers in 2026. People are impatient because they are desperate. Trump is a savvy politician who understands his supporters. To me, this means he has to do something big sooner rather than later, which is why I am betting on a significant depreciation of the dollar against gold in his first 100 days in office. This is an easy way to make U.S. production costs globally competitive quickly. It will result in an immediate reshoring of production capacity, which will result in increased hiring today, rather than in five years.
Before we enter the crash phase of the crypto bull market, I believe the crypto market will experience a painful crash around the Trump inauguration on January 20, 2025. Maelstrom will be selling off certain positions early, hoping to re-buy some core positions at lower prices sometime in the first half of 2025. Obviously, every trader will say this and believe they can time the market. And most of the time, they end up selling too early and subsequently lack the confidence to re-buy at a higher price than they just held. Then, for the remainder of the bull market, the above traders will be underinvested. Knowing this, if the bull market is unstoppable on January 20, we will admit defeat, lick our wounds, and return to the bull market. Trump Truth shows me the structural flaws of the global order. Trump Truth shows me that the best way to maximize returns is to hold Bitcoin and cryptocurrencies. Therefore, I will buy the dips.
Yahtzee (Note: Yahtzee is a classic dice game that combines a unique combination of luck and strategy)!!!
