By Arthur Hayes
Compilation | Wu Blockchain about Blockchain
Please note that this article contains biased views and is only used to share personal opinions. It does not constitute any investment advice. Arthur Hayes also ridiculed himself for the low accuracy of his short-term judgments. Readers are advised to focus on his non-price-related reasoning logic and analysis.
Original link:
https://cryptohayes.substack.com/p/trump-truth?utm_campaign=post&utm_medium=web&triedRedirect=true
The opinions expressed herein are solely those of the author and should not be relied upon to make investment decisions, nor should they be construed as advice or a recommendation to engage in investment transactions.
Step Four: This is the distance between a vertical plank and a movable stand. My yoga teacher instructs me to place the heels of my hands where the plank meets the stand. I bend my body like a cat, making sure the back of my head is pressed against the board. If the distance is right, I can step my feet up the wall and turn my body into an "L" shape, with the back of my head, back, and sacrum all in contact with the board. I have to resist the tendency of my ribs to flare out by activating my abdominal muscles and tightening my tailbone. Phew—I'm already sweating just from maintaining the correct position. But the real challenge is yet to begin. The difficulty lies in kicking up with one leg and maintaining a completely vertical position while maintaining the body's alignment.
The stick was like a truth serum, revealing incorrect posture. If the body was out of alignment, it was immediately apparent, and you could feel certain parts of your back and hips pulling away from the stick. When I lifted my left foot up while my right foot remained pressed against the wall, all my musculoskeletal issues were exposed. My left lat was abducted and my left shoulder was rolled inward, looking like a crooked rubber band. But I had known this for a long time because my athletic trainer and chiropractor had both discovered that my left back muscles were weaker than the right, causing my left shoulder to lift up and roll forward. Practicing handstands with the stick only made the imbalances in my body more obvious. There was no quick fix for my problems, only a long road, filled with sometimes painful exercises, to slowly correct my imbalances.
If the vertical planks are my body-aligned truth serum, then US President-elect Donald Trump, Mr. Orange, serves a similar purpose for a variety of geopolitical and economic issues facing the world today. Why do the global elite hate Trump? Because he tells the truth. The Trump truth I’m talking about is limited to a narrow realm. I don’t mean whether Trump will tell you his penis size, net worth, or golf handicap. Rather, Trump truth concerns actual relations between different countries and what the average American voter thinks when they are in their safe space, away from the politically correct “Nazis.”
As a macroeconomic forecaster, I try to make predictions based on publicly available data and current events in order to make decisions for my portfolio. I like Trump Truth because it acts as a catalyst, forcing other heads of state to look at the problems facing their countries and take action. It is these actions that ultimately shape the future state of the world, and Maelstrom hopes to profit from them. Even though Trump has not yet returned to the throne, countries have already begun to take the actions I predicted, which further strengthens my confidence in how money printing and financial repression will be implemented. This year-end summary aims to review the major changes between the four major economies and countries (the United States, the European Union, China, and Japan). Critical to my investment decisions in the short term is whether I think money printing will continue and accelerate after Trump's coronation on January 20, 2025. Because I believe that crypto investors have too high expectations about how quickly Trump can change the status quo, and the reality is that Trump does not have any politically acceptable solutions to bring about these changes quickly. The market will soon realize that Trump has only a year at most to implement any policy changes, and the time point is around January 20. This realization will lead to a violent sell-off in cryptocurrencies and other Trump 2.0 stock trades.
Trump has only one year to act, as most of the elected US lawmakers will start campaigning in late 2025 for the midterm elections in November 2026. The entire US 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 may well lose power after November 2026. The American people are rightly angry. However, solving the domestic and international problems that affect them negatively will take more than a decade, not just a year, for even the most astute and powerful politicians. Therefore, investors are preparing for severe buyer's regret. But can printing money and a host of new regulations overcome the phenomenon of "buy expectations, sell facts" and keep the crypto bull market alive into deep 2025 and beyond? I think it can, but let this article be my self-persuasion to try to convince myself of this final conclusion.
Currency Phase Changes
I will quote Russell Napier on a very simplified timeline of monetary structure after World War II.
1944 – 1971 Bretton Woods
Countries fixed their currencies to the U.S. dollar, which in turn was pegged to gold at an exchange rate of $35 per ounce of gold.
1971 – 1994 Petrodollar
US President Nixon abandoned the gold standard and allowed the dollar to float against all currencies because the US could not maintain the dollar's peg to gold while needing to finance an increasingly large welfare state and the Vietnam War. He made deals with oil exporting countries (particularly Saudi Arabia) to price their oil in dollars, produce on demand, and reinvest their trade surpluses in US financial assets. If some reports are to be believed, the US also manipulated certain Gulf countries to raise oil prices, thereby supporting this new monetary system.
1994 – 2024 Petroyuan
China devalued the yuan sharply to fight inflation, collapse its banking system, and reignite its export industry. China and the other Asian Tigers (Taiwan, South Korea, Malaysia, etc.) implemented mercantilist policies to provide cheap exports to the United States, which led to the accumulation of dollars overseas as currency reserves, allowing them to pay for energy and high-quality manufactured goods priced in dollars, and ultimately brought more than a billion low-wage workers into the global economy, which depressed inflation in the developed West and allowed their central banks to keep interest rates very low because they mistakenly believed that endogenous inflation had been falling for a long time.
USDCNY is shown in white and China's GDP (in constant US dollars) is shown in yellow.
2024 – Now?
I have not named the system that is currently developing. However, Trump’s election is the catalyst that will change the global monetary system. To be clear, Trump is not the root cause of the realignment; rather, he is outspoken about the imbalances that he believes must change and is willing to adopt highly disruptive policies to quickly bring about changes that he believes will benefit Americans first. These changes will put an end to the petroyuan. Ultimately, as I have argued in this article, these changes will increase the supply of global fiat currencies and financial repression. Both of these things must happen because the leaders of the United States, the European Union, China, or Japan are unwilling to deleverage and move the 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 elite can continue to control everything in the future new system.
I will begin with a brief overview of Trump's goals and then assess the response of each economic region or country.
Trump truth
In order for the petro-yuan system to work, the US must run current account and trade account surpluses. The result is the deindustrialization and financialization of the US economy. If you want to understand the mechanics of this, I recommend reading all of Michael Pettis’s work. While I don’t think this is why the world should change its economic system, the people that so-called “American hegemony” serves – the average American white male – have lost their former advantages since the 1970s. The key here is the word “average”; I’m not talking about high-powered figures like Jamie Dimon (JP Morgan) and David Solomon (Goldman Sachs), nor the wage slaves who work hard for them. I’m talking about the brother who used to work at Bethel Steel, own a house and a wife, and now the only women he sees are nurses at a methadone clinic. Clearly, this is becoming apparent as this group of people self-destruct through alcohol and prescription drugs in the US. Everything is relative, and compared to the higher living standards and job satisfaction they enjoyed after World War II compared to the rest of the US and the world, this is clearly not a good life now. As you all know, this is exactly Trump's base, and he connects with them like no other politician can. Trump promises to bring industry back to America and bring meaning to their dull lives.
For those bloodthirsty Americans who enjoy playing video game wars, a very powerful political group, the current state of the U.S. military is a joke. The myth of the U.S. military’s superiority against near or equal competitors (currently only Russia and China meet that criteria) began with the American military saving the world from Hitler’s attack. This is not accurate; the Soviet Union paid tens of millions of lives to defeat the Germans, and the United States was just there to clean up the mess. Stalin was very frustrated that the United States took so long to fight Hitler’s attack on the Western European front. U.S. President Franklin Delano Roosevelt let the Soviet Union bleed so that fewer American soldiers would die. In the Pacific theater, while the United States defeated Japan, it never faced a full-scale attack by the Japanese military because Japan committed most of its combat power to mainland China. Instead of glorifying the Normandy Landings, Hollywood should be showing the Battle of Stalingrad and the bravery of General Zhukov and the millions of Russian soldiers who died defending their country.
After World War II, the U.S. military was locked in a stalemate with North Korea in the Korean War, lost to North Vietnam in the Vietnam War, retreated chaotically from Afghanistan after a decade in 2021, and is now in the process of losing a war with Russia in Ukraine. The only achievement the U.S. military can be proud of is defeating third world countries such as Iraq in the two Gulf Wars using highly complex and overly expensive weapons.
The point is that victory in war is a reflection of the resilience of the industrial economy. If you care about war, the US economy is simply not good at it. Yes, Americans can do leveraged buyouts, and they do it like no other. And Russia, although its economy is less than one-tenth the size of the US economy on paper, produces unstoppable hypersonic missiles at a price far below the cost of US conventional weapons.
Trump is not a peace-loving "Christian hippie" who fully believes in the military supremacy and exceptionalism of the United States and is happy to use this military power to commit mass murder. Remember that during his first term, he assassinated Iranian General Qassem Soleimani on Iraqi soil, which made many people in the United States very happy. Trump did not care about violating Iraqi airspace and unilaterally deciding to murder a general of a country that the United States had not officially declared war on. So, he hopes to rearm the US military to match its capabilities with the propaganda.
Trump advocates for the reindustrialization of America, helping those who want good manufacturing jobs and those who want a strong military. To do this, the imbalances that have developed under the petro-yuan system need to be reversed. This will be done by weakening the dollar, providing tax subsidies and incentives to promote domestic production, and relaxing regulations. All of these measures combined will make it more economically motivated for companies to move production back to the United States, as China is currently the most competitive place in the world to produce goods, resulting from three decades of policies aimed at promoting growth.
In my article "Black and White?" I talked about "Quantitative Easing (QE) for the Poor" and how this could be used to finance the reindustrialization of the United States. I believe that incoming US Treasury Secretary Bessant will pursue such an industrial policy. However, this will take time, and Trump will need to show immediate results that can be sold to voters within the first year of his term. Therefore, I believe that Trump and Bessant must immediately devalue the dollar. I want to discuss why this is possible and why it must happen in the first half of 2025.
Strategic Bitcoin Reserve
“Gold is currency, everything else is credit”
-- JP Morgan
Trump and Bessant have repeatedly discussed weakening the dollar to achieve their economic goals. The question is, against what should the dollar be devalued and when?
After the United States, the world's largest exporters, in order of export volume, are China (currency: renminbi), the European Union (currency: euro), the United Kingdom (currency: pound sterling) and Japan (currency: yen). To encourage companies to move production back to the United States, the dollar must depreciate against these currencies. Companies do not necessarily need to be headquartered in the United States; Trump agrees that Chinese manufacturers can set up factories in the United States and sell goods locally. But Americans must buy goods made in American factories.
Coordinated currency agreements are a thing of the 1980s. Today, the United States is not as powerful economically or militarily as it once was. Therefore, Bessant cannot unilaterally demand that other countries adjust their exchange rates against the dollar. Of course, Bessant can use some "carrots and sticks" policies, using tariffs or threats of tariffs to force other countries to agree to devalue their currencies against the dollar. However, this takes time and a lot of diplomacy. In fact, there is a simpler way.
The United States has the largest gold reserves in the world, at 8,133.46 tons, at least on paper. As we all know, gold is the real currency of global trade. Since the United States left the gold standard 50 years ago, the gold standard has been the mainstream of history, and the current fiat currency system is the exception. The simplest path to achieve Bessant's goal is to devalue the dollar by comparing it to gold.
Currently, gold is valued on the U.S. balance sheet at $42.22 per ounce. Technically, the Treasury issues gold certificates to the Federal Reserve (Fed), and these certificates are priced at $42.22 per ounce. Suppose Bessant is able to convince the U.S. Congress to change the legal price of gold, thereby devaluing the dollar relative to gold. Then, the Treasury General Account (TGA) will receive a dollar credit and can invest it in the economy. The greater the devaluation, the greater the immediate increase in the TGA balance. This is because dollars are essentially created out of thin air by valuing gold at a certain price. For every $3,824 per ounce increase in the legal gold price, $1 trillion of TGA growth is generated. For example, adjusting the book value of gold to the current spot price would generate $695 billion of TGA credits.
Through government fiat, dollars can be created and then spent by changing the book value of gold. This is the definition of fiat currency debasement. Because the value of all other fiat currencies is also implicitly tied to gold, those currencies will automatically appreciate relative to the dollar based on the amount of gold held by governments. The United States can quickly accomplish this debasement of the dollar to all of its major trading partners without consulting any other countries' treasuries.
The most important rebuttal is, will the largest exporters try to regain their currency weakness by devaluing against gold? Of course, they can try, but none of these currencies are global reserve currencies and lack endogenous demand based on trade and financial flows. Therefore, they cannot match the US gold devaluation, which will quickly lead to hyperinflation in their economies. Hyperinflation is almost certain, because none of these countries/economies can be self-sufficient in energy or food like the US can. This is politically unacceptable, because the social unrest caused by inflation will cause the existing ruling elite to lose power.
How much of a dollar devaluation would it take to reindustrialize the U.S. economy, and I would tell you the new gold price. If I were Besant, I would do something big. Big means a $10,000 to $20,000 an ounce gold revaluation. Luke Gromen estimates that a return to the 1980s gold to Fed dollar liabilities ratio would result in a 14x increase in the gold price from current levels, a revaluation of gold to nearly $40,000 an ounce. This is not what I would expect, but it illustrates how overvalued the dollar is in real terms at current spot prices (around $2,700 an ounce).
As many of you know, I am a mini gold enthusiast. I own physical gold stored in vaults and small gold mining exchange traded funds (ETFs) because the easiest way to devalue the dollar is through gold. Politicians always push the easy button first. But this is Crypto Trader's Digest, so how does a $20,000/ounce gold price drive Bitcoin and cryptocurrency prices?
Many cryptocurrency 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 Bitcoins per year for five years. Interestingly, if you read the bill, she proposes to finance these purchases by increasing the price of gold on the government's balance sheet, as I described earlier.
The argument in favor of the BSR is similar to why the United States has the largest gold reserves in the world; this allows the United States to claim financial dominance in both the digital and physical realms. If Bitcoin is the hardest currency known, then the strongest government fiat currency is the one whose central bank holds the most Bitcoin. Furthermore, a government whose financial health fluctuates with the price of Bitcoin will have policies that are favorable to expanding the Bitcoin and cryptocurrency ecosystem. This is similar to governments encouraging domestic gold mining and establishing a robust gold trading market. Looking at how China encourages domestic gold holdings through the Shanghai Gold Futures Exchange is an example of a pro-gold state policy designed to increase the financial strength of the country and its citizens in real money.
If the US government creates more dollars by devaluing gold, and uses some of those dollars to buy Bitcoin, then the fiat price of Bitcoin will rise. This will prompt competitive buying from other countries as they have to catch up to the US. The price of Bitcoin will therefore rise incrementally, because why would anyone sell Bitcoin and receive dollars, which are being actively devalued by the government? Of course, there is a fiat price at which long-term holders might sell their Bitcoin, but it will never be $100,000. The argument is logically sound, but I still don't think the BSR will happen. I think politicians would rather spend the newly created dollars on benefits to the public to ensure their victory in the upcoming election. However, it doesn't matter whether a US BSR will happen, because the threat alone is enough to create buying pressure.
Although I do not believe the US government will buy Bitcoin, this does not affect my bullish view on Bitcoin prices. Ultimately, the devaluation of gold creates dollars, and these dollars must flow into real goods/services and financial assets. We know from experience that since the supply of Bitcoin is limited and the circulation is decreasing, the price of fiat Bitcoin has increased faster than the global supply of US dollars has increased.
The Fed's balance sheet is shown in white, Bitcoin in yellow. Both have been indexed to 100 since January 1, 2011. The Fed's balance sheet has grown 2.83 times, while Bitcoin has grown 317,500 times.
In short, weakening the dollar quickly and dramatically 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 fiscal chiefs. Given that Trump has a year to show voters progress on his goals to help the Republicans maintain control of the House and Senate, my base case is that a devaluation of the dollar relative to gold will occur in the first half of 2025.
Japan
Although Japan’s elite politicians are proud of their culture and history, they are still America’s “Towel Men.” Japan was nuked after World War II, but it survived and rebuilt the world’s second largest economy with the help of dollar loans and tariff-free access for American consumers, and by the early 1990s, Japan became the country with the most ski resorts in the world. In the 1980s, as today, trade and financial imbalances caused a stir in American political and financial elite circles, forcing the United States to rebalance. Some believe that the currency agreements of the 1980s weakened the dollar and strengthened the yen, which ultimately led to the collapse of the Japanese stock and real estate market bubbles in 1989. The logic is that in order to strengthen the yen, the Bank of Japan (BOJ) had to tighten monetary policy, which led to the collapse of the bubble. As usual, the real estate and stock bubbles were inflated by printing money, and when the loose monetary policy slowed or stopped, the bubbles would burst. The key is that Japanese politicians will be willing to commit financial “hara-kiri” to please their American “daimyo”.
Today, like in the 1980s, financial imbalances between Japan and the United States are extremely large. Japan is the world’s largest holder of U.S. Treasuries. Japan has also implemented aggressive quantitative easing (QE) and moved to yield curve control (YCC), which has led to an extremely weak USD/JPY exchange rate. I wrote about the importance of the USD/JPY exchange rate in my two articles, Shikata Ga Nai and Spirited Away.
Trump’s “truth” is that the dollar should appreciate against the yen. Trump and Bessant have made it very clear that this must happen. Unlike China, in Japan there will be no hostile currency realignment, Bessant will dictate the direction of the dollar-yen and Japan will follow.
A stronger yen means the Bank of Japan (BOJ) will have to raise interest rates. Here’s what could happen without government intervention:
1. Rising interest rates: Japanese government bonds (JGBs) become more attractive, and Japanese companies, households, and pension funds will sell foreign stocks and bonds (primarily U.S. Treasuries and U.S. stocks), convert the foreign currency proceeds into yen, and buy JGBs.
2. Higher JGB yields: This means lower prices, which will have a huge 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, which will also depreciate when Japanese investors sell them to repatriate capital. In addition, the Bank of Japan must pay higher interest on its yen bank reserves. Ultimately, as this process develops, this will be bad news for the solvency of the Bank of Japan.
Trump has an interest in ensuring that the Japanese financial system avoids collapse. US naval bases in Japan help to check Chinese maritime power, and Japanese semiconductor production, etc., ensures that the US has access to friendly critical components. Trump will therefore instruct Bessant to take the necessary steps to ensure that Japan can financially survive the appreciation of the yen. There are multiple ways to do this; one way is that Bessant could use the power of the US Treasury to provide the Bank of Japan with a dollar-yen central bank currency swap so that any sales of US Treasuries and US stocks can be absorbed over the counter. Here is a flow diagram of my Spirited Away article.
The Fed - The Fed increases the supply of dollars, in other words they receive the yen created by the growth of the carry trade in Japan.
CSWAP - The Fed provides U.S. dollars to the Bank of Japan (BOJ), while the Bank of Japan provides Japanese yen to the Fed.
Bank of Japan - They now hold more US stocks and bonds, and the prices of these assets will rise because as the CSWAP balance grows, the amount of US dollars also increases.
Bank of Japan - They now hold additional Japanese Government Bonds (JGBs).
The impact of this on cryptocurrencies is that the supply of dollars will increase to support the unwinding of the massive Japanese dollar-yen carry trade. The unwinding process will be slow, but trillions of dollars will be printed to maintain the financial stability of the Japanese financial system.
Correcting the Japan-US trade and financial imbalance is fairly easy because Japan ultimately has no say and is currently too politically weak to mount a substantive opposition to Trump’s “truth.” The ruling Liberal Democratic Party (LDP) lost its parliamentary majority, throwing Japan’s governance into disarray. Japanese elites are currently politically unable to oppose Trump’s “truth,” even though they privately resent the US’s “barbaric” behavior.
The last will be the last
While many Europeans, at least those whose names aren’t Muhammad, are Christians to some degree, the biblical saying that “the last shall be first” clearly doesn’t apply to the EU’s economic situation. The last remain last. For some reason, Europe’s elite politicians continue to quietly accept the “ruthless pounding” from the United States. Europe should make every effort to integrate with Russia and China. Russia offers the cheapest energy delivered by pipeline and is a major food producer that can feed its people. China offers cheap, high-quality manufactured goods and is willing to buy European luxury goods in quantities that would shame Marie Antoinette. Instead of making such an effort, Europe is always held back by two island nations: Britain and the United States.
Because Europe won't buy cheap Russian gas, give up the green energy transition scam, or engage in mutually beneficial trade with China, Germany and France are in a terrible economic situation. Germany and France are the engines of the European economy - while the rest of the continent is literally a vacation spot for Arabs, Russians (well, maybe not anymore) and Americans. It's very ironic that the European elites really dislike the people in these regions, but money talks, bullshit rides motorcycles.
This year, the key speeches in Europe were delivered by Super Mario Draghi (September 2024, “The Future of European Competitiveness”) and Emmanuel Macron (April 2024, “Europe’s Speech”). The most frustrating thing for Europeans is that both politicians correctly identified the problems facing Europe – namely expensive energy and lack of domestic investment – but the solutions they proposed ultimately boiled down to “we need to print more money to finance the green energy transition and impose more financial repression”. The correct solution should be: abandon unconditional support for the risky actions of the US elites, reach a truce with Russia, obtain cheap gas, embrace nuclear energy, strengthen trade with China, and completely deregulate financial markets. Another frustrating fact is that many European voters (I am one of them) believe that the current policy mix does not serve their interests and they voted for parties that want to change the status quo. However, the elites in power are doing their best to obstruct the realization of the majority opinion. Political turmoil is ongoing because France and Germany do not actually have an effective government in power.
I will quote a few passages from Macron about the future of European financial policy and explain why you should be worried if you hold capital in Europe. You should be worried that your ability to escape the European capital dungeon will be shut down and you will end up buying shitty long-term EU government bonds in your retirement account or bank savings.
Before I quote Macron, here’s a quote from Enrico Letta, former Italian Prime Minister and current president of the Jacques Delors Institute:
“The EU has a staggering €33 trillion in private savings, most of which is held in current accounts (34.1%). However, this wealth is not being fully utilized to meet the EU’s strategic needs; a worrying trend is that European resources are being diverted to the US economy and US asset managers every year. This phenomenon reveals major problems in the efficiency of the EU’s savings utilization, which could play a huge role in achieving its strategic goals if these resources were effectively reinvested in the EU’s internal economy.”
This passage points out the huge potential of savings within the EU, which has not been effectively utilized, but has instead flowed to the US economy and asset management companies. This phenomenon further shows that the EU's current economic strategy has serious efficiency problems, and if the use of these savings can be re-examined and adjusted, it may bring huge economic and strategic benefits to Europe.
Much More Than a Market
Letta wasted no time in expressing what he saw as the problem, and Macron’s subsequent remarks reinforced those points. European capital should not be financed by American companies, but by European ones. There are a number of ways that European authorities can force you to own underperforming European assets, whether you want to or not. For investors who hold their money through pension funds or retirement accounts, for example, EU financial regulators can define the universe of appropriate investments so that your investment manager can only legally buy EU stocks and bonds. For those who keep their money in bank accounts, regulators can prohibit banks from offering non-EU stock and bond investments because they are “unsuitable” for depositors. Whenever your money is held by an EU-regulated trustee, you are under the control of someone like Christine Lagarde and her team. You may like her, but make no mistake: her job is to financially ensure the survival of the EU project, not to help your savings grow faster than the inflation her banks need to keep the system solvent.
If you think that only people in Davos at the World Economic Forum are advocating these things, you are wrong. Here is a quote from the notorious racist, fascist (or whatever word you want to fill in)… as they say, Marine Le Pen:
“Europe must wake up ... because the United States will defend its interests more vigorously.”
Trump’s “truth” has sparked strong reactions across the EU’s left-wing and right-wing political spectrum.
Coming back to the EU politicians’ refusal to take simpler and less financially ruinous solutions to their problems, Macron is telling the public clearly here:
“Yes, the days when Europe bought energy and fertilizer from Russia, outsourced to China, and relied on the United States for security are over.”
Macron went on to emphasize, and further reinforce, that capital should not be directed toward the best performing financial products, but rather wasted on the barren wasteland of Europe:
"The third shortcoming: Every year our savings, about 300 billion euros, go to finance the United States, either by buying government bonds or capital risk. This is absurd."
Finally, in a coup de grace, Macron talked about suspending Basel III banking regulations. Essentially, this would allow banks to buy unlimited amounts of high-priced, low-yielding EU government bonds. The losers would be those who hold euro-denominated assets, as this would effectively allow the supply of euros to increase indefinitely.
“Second, we need to revisit the way Basel and Solvency are applied. We cannot be the only economic region in the world to enforce these rules. The United States was the source of the 2008-2010 financial crisis, but they chose not to enforce these rules.”
Macron aptly noted that the United States does not follow these global banking rules, concluding that Europe doesn’t need to follow them either. Hello, fiat currency financial collapse against Bitcoin and gold.
Draghi further argued in his recent report that in addition to financing the massive welfare state—France, for example, has the world's highest government spending as a percentage of GDP at 57 percent—the EU will need to invest 800 billion euros a year. Where will that money come from? It will be printed by the ECB, and EU savers will be forced to buy low-yielding, long-term EU government bonds through financial repression.
I am not spouting nonsense. These are direct quotes from both the left and right sides of the EU political spectrum. They tell you that they know how best to invest EU savings. They tell you that banks should be able to use unlimited leverage to buy EU member state bonds and that, eventually, the ECB will issue pan-Eurobonds after these bonds are created. The rationale for all this is Trump’s “truth”. If Trump’s America intends to weaken the dollar, suspend prudential bank regulation, and force Europe to break ties with Russia and China, then EU savers must accept low returns and financial repression. EU “fools” should sacrifice their capital and real living standards to maintain the EU project. I bet many people enjoy waving the flag in public, but rush to their computers when they get home to find a way to escape as soon as possible. I know the way to escape is to buy Bitcoin and self-custody it before it is banned. But EU readers, it’s your choice.
Bitcoin will skyrocket as the circulation of Euros increases worldwide and the repression of EU-based capital becomes increasingly severe. This is exactly the public policy of the elites. However, I think it will be a "do what I say, not what I do" situation. Those in power will quietly transfer assets to Switzerland and Liechtenstein and buy cryptocurrencies like crazy. And ordinary people who are unwilling to listen and protect their savings will struggle under state-sanctioned inflation. This is the vulnerability of French pastry.
Truth Terminal
Our truth terminal is the 24/7 crypto free market. Bitcoin’s rise after Trump’s victory in early November was a leading indicator of accelerated fiat money supply growth. Faced with Trump’s “truth,” every major economic region and country must react immediately. The reaction is to devalue the currency and increase financial repression.
Bitcoin (yellow) is leading the growth of U.S. bank credit (white).
Does this mean that Bitcoin will go straight to $1 million without any major pullback? Absolutely not.
I don't think the market realizes how limited the time Trump actually has. The market thinks Trump and his team can pull off an immediate economic and political miracle. However, the problems that led to Trump's popularity were actually decades in the making. So, no matter what Elon Musk tells you on Platform X, there is no quick fix. So, it's almost impossible for Trump to appease his voters enough to prevent the Democrats from retaking both houses in 2026. The people are desperate because they are desperate. Trump is a savvy politician and knows his voters. To me, that means he has to make big moves early on, which is why I expect a massive devaluation of the dollar against gold to occur within his first 100 days in office. That's a simple way to quickly make U.S. production costs globally competitive. It would result in an immediate reshoring of production capacity and an immediate hiring boost, not something that happens five years later.
Before we enter the “crash phase” of this crypto bull market, I think crypto markets will experience a dramatic decline before Trump’s inauguration on January 20, 2025. Maelstrom will lighten some positions in advance, hoping to buy back some core positions at lower prices in the first half of 2025. Obviously, every trader will say this and believe that they can accurately time the market. Most of the time, they will sell too early and then lack the confidence to buy back in at a higher price than before. As a result, these traders miss out on the profit opportunities of the entire bull market. If this is the case, we will admit defeat, lick our wounds, and re-enter the bull market. Trump’s “truth” shows me the structural flaws of the global order. Trump’s “truth” tells me that the best way to maximize returns is to own Bitcoin and cryptocurrencies. Therefore, I will buy the dips.
Yahtzee!!!
