End of the End of Super Debt Cycle Transcript

.... ​In other words we are witnessing the end of what some economists call a debt super cycle which is a multi-generational cycle in which a civilization increases its levels of public and private debt until they become unsustainable 
 
At that point the system of leverage quickly unwinds and debt is restructured but often not until the civilization undergoes an economic depression and shifts to a lower level of complexity. 
 
We are seeing the beginnings of this today, with the collapse of major cryptocurrency exchanges, like FTX and Voyager, and crypto hedge funds, like Alameda and Three Arrows Capital. 
 
Essentially these institutions placed massive market bets using leverage, or debt rather than assets they owned. 
 
They also lent money they didn't have to financial services providers in the crypto space to prop up yield products. In effect high rate crypto savings accounts, which became very popular with retail investors in an environment of low fed rates where most Bank savings accounts effectively yielded zero percent. 
 
Crypto exchanges and hedge funds also had venture arms that invested in hundreds of startups building across the crypto ecosystem. Because these companies were significant market makers, their collapse has triggered systemic shocks causing a cascade of insolvencies and bankruptcies. 
 
Millions of investors have lost significant amounts, if not all of their wealth. 
 
The criminality of what was underway is only now beginning to come to light. But the bad actors in a debt super cycle aren't just the companies making wild unkeepable promises or engaged in outright fraud. They take their cue from the sovereign, and in the case of the United States the Federal Reserve has doubled its balance sheet since the start of the coronavirus from four to eight trillion dollars. 
 
This is what both FTX and Terra Luna tried to do, to print their own private currencies, to prop up their asset books and valuations, but they were not sovereign. They could not force anyone to use their tokens under the threat of sovereign violence. But the state can and prop up the value of its currency for a time. But at some point, confidence in the sovereign also collapses. 
 
After all, debt is a game of confidence. It doesn't matter if you have lots of debt potentially for a long time until suddenly it does and that is the point of no return. Our national debt is currently over 31 trillion dollars and growing. Our debt to GDP ratio currently stands at 125 percent which means that our productive economy cannot generate enough value to repay our debts. 
 
And the world's biggest investors in U.S treasury bonds other sovereigns, other countries, have been systematically selling their holdings and buying less. Confidence is plummeting. It is this very environment that Bitcoin was built for environment that Bitcoin was built for.
 
History has shown again and again that during crises of confidence in governments people rely on stores of value that keep their value over long periods of time like gold, silver or land. 
 
One of the ways that archaeologists know a society was facing conflict and war at a certain period in time is the larger number of coin hordes buried in the ground during that period. 
 
Which brings us to the problems with physical commodities. They're very difficult to store because they are heavy they take up a lot of space and even more difficult to move especially across borders. 
 
If you're a politically persecuted minority for example and you bury your life's wealth in your backyard but then you have to flee the country to save your life, the chances you will ever see that wealth again are slim to none. 
 
But even if you somehow are able to retrieve some of it and take it with you it can easily be found and confiscated. Try crossing a border today with ten thousand dollars worth of gold and you will see what I mean. 
 
Physical Commodities are also hard to verify if someone hands you a gold coin and says it's 97 pure how do you verify that if you're not a jeweler with the right experience and equipment. Bitcoin was developed to solve these problems. Cost of verification is done by The Ledger which only admits transactions with real Bitcoin. If you're transacting on the Bitcoin Ledger you know that Bitcoin is real and not fake. 
 
it's also easy to move Bitcoin anywhere. Peer-to-peer either by sending it electronically by taking a tiny hard drive with you or by memorizing your seed phrase and regenerating it on a new hardware wallet when you are in a safe place. None of this requires any third parties any banks or financial institutions. 
 
The true promise of Bitcoin is therefore self-custody, that you store your Bitcoin yourself on special hardware and you transact with it yourself using that hardware. 
 
I'm well aware that this process is still a pain in the ass for most ordinary people but is it:

• more of a pain in the ass than having your accounts frozen or 
• having your money stolen by a corrupt counterparty? 
• Is it more of a pain in the ass than needing to verify your identity and tell the government exactly what you're going to do with even very small amounts of money whenever you want to send it or spend it? In America most people didn't think they would ever be the victims of this kind of exploitation and surveillance until now.

 
And so now is the perfect time to say Bitcoin is not crypto. 
 
Of course it uses advanced cryptography but it has nothing to do with what crypto has come to mean colloquially. 
 
The Ponzi schemes joke coins and unregistered securities that virtually all cryptos are. 
 
Bitcoin is not a company token or a scheme to create fake value for underwriting bad debt. Bitcoin is absolutely scarce, peer-to-peer, censorship resistant, digital currency designed to keep your wealth safe through any political and economic storm. 
 
Its price fluctuates in the short term but over the long term it's the best performing asset in human history so the only question is are you patient enough to secure your future and this brings me to the question of character. You know in 2017 shortly after we launched learning machine the world went through the ICO or initial coin offering craze this is one of the crypto bull runs. Many of our competitors were launching their own tokens and raising Millions even hundreds of millions of dollars off of the sale of these coins. We had to make a strategic corporate decision about whether or not to do that and we chose not to. There was simply no value that a token would add for our user base or for our product plus we knew that these coins passed the Howie test and therefore they were unregistered securities even if the SEC for some inexplicable reason wasn't going after the vast majority of them 
 
We stuck to building and selling a software product that delivered real value for real users. This was a slower path to growth but it was real. Today I continued to work in the real economy that productive part of human society that generates the value governments use to secure the debt they create but our government has chosen to try to have everything to fulfill everyone's spending priorities while creating unimaginable amounts of money out of thin air and then raising interest rates to fight the inflation that will inevitably occur when you double the supply of money in circulation. 
 
This is not a sustainable situation. In this context Texas has the opportunity to lead by demonstrating fiscal discipline and respect for property rights. 
 
In 2021 the Texas blockchain council worked with our Champions and colleagues in the Texas state legislature to pass HB 1576 which created the state work group on blockchain matters. A group of subject matter experts with a mandate to make policy recommendations about blockchain technology for the state of Texas. I was appointed to that group by Texas speaker Dave Phelan. That report was just published and my colleagues and I testified about it yesterday for the Texas Senate committee on business and commerce. Please find this report.
 
It's linked on my Twitter and Linkedin bios and read it. It showcases why Texas is leading in responsible, well-collateralized, financial services and it outlines the role Bitcoin should play in restoring confidence in both state and National governments. 
 
Finally the Texas Bitcoin Foundation announced this week that we have partnered with Texas State Technical College to launch the world's first professional certification programs in Bitcoin mining offered by any institution of higher education anywhere in the world. This will create a pool of talent for Bitcoin miners the backbone of the Bitcoin protocol right here in Texas. 
 
This project didn't require a 50 million dollar Grant from the FTX future fund. Just a couple of dedicated energy entrepreneurs, Felicia and Gideon Powell, to provide the seed funding so the project can start small demonstrate success, and grow based on the actual value it provides for the Texas economy.