Stack Hodler, twitter anon investor joins me to chat: 

  • Fiat currencies & #Bitcoin
  • JPY and Japanese bond market
  • Why you shouldn’t #GetOnZero
  • Credit Cycles
  • Mortgage Boycotts



Stephan Livera links:

Podcast Transcript:

Stephan Livera – 00:00:01:
Stack Hodler. Welcome to the show.
Stack Hodler – 00:00:03:
Thank you, Stephan. Good to be here. Thanks for having me.
Stephan Livera – 00:00:06:
Yeah, I have been enjoying some of your Twitter insights and I thought this would be an interesting conversation,
obviously, just to get a bit of your views on what’s going on around the world in a macro economic sense and from
one bitcoiner to another. So obviously don’t dox anything about yourself, but do you want to just give us a little bit of
at least what you’re mainly interested in from a bitcoin perspective?
Stack Hodler – 00:00:29:
Yeah, sure. Like you’re saying, I’m an anonymous investor in the Swiss Alps, surrounded by cows and beautiful
vistas, etcetera, but I’ve been posting on Twitter, say, like, the last six months, mainly about the big macro stuff. So as
the prices plummeting and people are freaking out, I kind of like to just take a step back and say, all right, what is the
bigger picture here? What is actually happening and how does bitcoin fit into all this stuff? So I’ve been focusing on
that and I think people have been finding it a nice way to kind of take their mind off the price. So that’s what I’ve been
focusing on, the big macro stuff.
Stephan Livera – 00:01:05:
Yeah, for sure. And as I read you’re doing, it’s more like fundamental analysis around, just looking at the news and
how that plays into, let’s say, the bitcoin thesis, right?
Stack Hodler – 00:01:16:
Yeah, I mean, it’s exactly that, and I think I saw a tweet from ZeroHedge the other day and I think it kind of sums it up,
but they were saying, like, look, there’s so many crazy things going on in the world right now, we can’t even keep
track, right? So if ZeroHedge is saying that, then, you know, that just some crazy shit’s going down. So I’ve been
trying to just honestly just stay on top of it and for my own understanding of what’s going on, always with the question
of how does bitcoin fit into this, does this change the thesis at all for investing in bitcoin? And really, the answer is
kind of no. It’s this whole time we’ve been seeing a crazy thing after crazy thing happened, and I always ask myself,
is this going to lead eventually to more liquidity or less liquidity? And ultimately, I think the liquidity will return. And I
think most of us at this point see that if you care about the bitcoin price, it’s really a reflection of liquidity in the system,
right? So we kind of just have to monitor what’s going on, what’s eventually going to you’ve heard this phrase a lot but
break and ultimately lead to more liquidity entering back in. So that’s what I’ve been focusing on. And that’s
everything from movements in Fiat, Currencies and debt markets and tracking various entities that look like they
might be on the verge of blowing up and things like that. End of the world stuff, all that stuff. So that’s what I’ve been
paying much attention to.
Stephan Livera – 00:02:34:
Yeah. And so as you were rightly saying, there’s so many different things going on. Perhaps the challenge then is
figuring out what’s actually the signal here in all of the noise. So what kinds of things are you looking at as the
important things to pay attention to?
Stack Hodler – 00:02:47:
Yeah, I mean, certainly like fiat currencies would be one of the first places to start. I think the big story has been this
whole time we were like, what’s going to be the best store value and inflation hits? Well okay, we’ve had an

amazingly high CPI prints and what’s the best thing to hold? Funny enough, it’s been the dollar. The dollar has been
absolutely murdering pretty much every asset and every other fiat currency, really. Maybe not the rubble, but we can
get into that later. But I think the big story has been this dollar strength, right? And you’ve seen some people taking
victory lapse saying, haha, all you idiots thought the dollar system was going to die and here we are, dollar is stronger
than ever and every other fiat is failing. And I think that’s fair. I think the dollar milkshake guy, Brent Johnson, I think
his name, he deserves so much credit for calling this out. He was on this, he understood how the system works. And
when there’s a demand for dollars because there’s all this dollar denominated debt, the dollar is going to be
something that performs best. So kudos to him. But one thing I would say is, look, this dollar strength really is in a
way it’s a weakness because what it’s doing is it’s incentivizing every economy in every country around the world to
find a way to get off this dollar reserve system, right? I mean, if it’s crushing all of these economies, emerging
markets, etc, that’s just the biggest incentive in the world to find something else to trade in. And I think that’s what
we’re starting to see. That’s been a huge thing happening and we can talk more about that later as well. But the other
fiat currencies I’m keeping my eye on are number two and number three, which are the euro and the yen. And I think
a lot of people have talked about the yen at this point. But just giving a brief overview, it’s been like a lot of fiat
currencies, it’s been getting crushed against the dollar. It’s lost something like 36% of its value in the last year and
that’s really just a signal of the debt prices that they’re in. You’re talking about Japan is a country with something
around 250% debt to GDP and they cannot let ten year yields rise above 00:20 5%, which is just pretty insane
because if it rises past that point, then essentially their economy implodes. And the reason for that is they have all
these conservative Japanese debt holders, people like, you know, pension plans, insurance funds, things like that,
and they hold tons of Japanese debt. And any decrease in that value is essentially going to make them insolvent. So
their economy can’t afford yields to go about 00:20 5%. So as the Fed has been raising, it’s essentially just been
putting pressure on Japan and on those ten year yields. And the bank of Japan has had to step in and change their
policy to, okay, they’re already doing yield curve control, but they were kind of do it selectively as needed. But now
they’re at the point where they’re like, look, we will buy unlimited Japanese government bonds daily with yen printed
from the sky, and frankly, we don’t give a damn if the yen is devaluing. All we care about is that we don’t go past on
the yield. So that’s pretty crazy, I think, seeing that. It’s almost like looking into the future of all of these central banks,
whether it’s the ECB or the Fed, because they’re all kind of in the same problem, right? There’s too much debt.
There’s no hope of paying it off through growth. And at the end of the day, what’s going to suffer is going to be the
currencies. So with Japan in particular, the thing that I find very interesting there is they are the largest foreign holder
of US. Treasuries. So they have like 1.6 trillion in US. Treasuries. And so if they can’t let rates rise above 0:25 % and
the result of that is the yen getting crushed, well, they can keep that going as long as inflation doesn’t get too bad in
Japan. But if it does, and then there’s popular demand for them to change this policy, one of the only things they
could do, one of the only moves they can make at that point, would be to start dumping US. Treasuries on mass at
the same time that the Fed is talking about doing quantitative of tightening. So that’s not a situation that the Fed
wants to see happen. So with the Fed essentially at that point step in and say, hey, why don’t we help you buy these
JGB’s, these Japanese Government Bonds? They might do that, actually. So then you get almost like said
quantitative for Japan, which is kind of crazy. But yeah, so there’s just this large amount of US. Treasuries that let’s
just say they did sell that and they just kind of dumped out on the market. You would have the point where then the
Fed is suddenly looking at massive yields skyrocketing, and they might actually be at the point where they have to
start doing yield curve control too.
Stephan Livera – 00:07:20:
Yeah, sure. And I think so. Just to walk through some of the thinking there, as you were rewinding a little bit, as you
were saying, if US. Rates rise, why is that putting pressure on the Japanese bond market? Is that basically because
the competition in terms of for investment, now more and more people are going to try to buy USD and get into USD
bonds on the margin, which sucks away people who are buying otherwise would be buying Japanese government
bonds. And so that’s causing this dynamic that you’re explaining, where basically the Japanese institution is the
Central Bank has to enter the market more and print more.
Stack Hodler – 00:07:57:
Yeah, I think that’s very well said and I think that’s what you’re seeing not just in Japan, but in Europe with the Euro
as well, you look at comparative anytime there’s like a policy divergence between these Central Banks, the one that’s
raising rates is the one that’s attracting capital. And so it applies the pressure on all these other central banks to raise
rates and try to keep pace with the Fed, because if they don’t exactly what you just said happens, and it draws capital
over to the side that’s raising rates.
Stephan Livera – 00:08:26:

And it’s a very unfortunate scenario, but as people have been saying this for a while, is that the world is going to look
like Japan, basically. Like, if you want to get a sense of what our future is for those in the Western world, it’s going to
look potentially like Japan does, which means an environment of low growth. I’m not sure what Japanese corporate
tax rates are, but I know their personal income tax rates are relatively high. And so this is also another bad factor,
right? Because if you’re an individual in those countries and you’re looking down the barrel of paying 50 55% tax rate
at the top rate, then it’s just not looking good for you.
Stack Hodler – 00:09:01:
Yeah, no, absolutely it’s not. I think the world turning Japanese. We haven’t even had to wait long because look at
Europe, right? I mean, I actually didn’t look at the news. I think it came out an hour ago. But today, for the first time
since 2011, they’re actually raising rates, which let’s give them a little round of applause. Raising rates to 0%. Very
impressive. From negative 0.5%. So that whole story was kind of funny, actually, because they came out, what was it,
like one or two months ago? And they said, all right, we’re seeing the euro get completely decimated by the dollar. It’s
time for us to make moves. We got to try to keep pace with the Fed and yeah, we’re going to start raising rates, too.
And what happened? Yields went from zero or negative and just completely shut up. And it freaks them out, right?
Like, they saw yields, Italian yields, German yields, all the yields going skyward. And three days later so they had a
meeting and then three days later, they had an emergency meeting. And then the emergency meeting, they basically
discussed like, okay, how the hell are we going to raise rates without completely blowing up these debt laden
countries, right? Like Italy with 150% debt GDP. Like, how are we going to raise rates without sending them into a
debt crisis? And so they came out and they said, okay, good news, guys, we came up with this brilliant idea. It’s
called anti-fragmentation tool. And bottom line, there is central bankers are amazing, coming up with silly names for
money printing. It’s the same damn thing, right, this anti fragmentation tool. It’s going to let them raise rates. But what
they’re doing is they’re going to be buying Italian bonds, are basically buying the bonds of the pigs, the bonds that are
going to end up shooting up higher because they’re higher risk countries. The ECB is just going to end up buying
those, doing a form of yield curve control, just like Japan, at the expense of, say, the northern countries like Germany
or the Netherlands. So they’re going to be robbing Petr to pay Paolo. And it’s probably not even going to help that
much because actually, one last thought and then I’ll stop here. But I was thinking it’s interesting because in Italy right
now, you can expect, all right, so if they’re helping bail out the Italian bond market, it’s going to come with some
strings attached, right, from the ECB. So you’re going to have this supernatural entity, ECB, trying to dictate fiscal
policy like they normally do, but they’re going to be trying to do that to a sovereign state like Italy. And it’s at an
interesting moment because once again, Italian government collapses. What’s new? But it was Mario Draghi who was
a central banker and he’s out now the question is, who comes in after him? And if you have the ECB dictating tighter
fiscal behaviors, does that lead to sort of a populist movement of potentially Italians wanting to exit the EU? So one
thing I was just thinking about is thinking through this stuff, of course.
Stephan Livera – 00:11:46:
And so, as people have been saying for years, many, even Austrians, such as Philip Barges, has written about the
tragedy of the Euro and pointing out there’s just this systemic floor. And we’ve seen, obviously, with Brexit occurring,
are there other countries who are starting to look for the exit doors? And then that also could be a big problem in the
case where debt is concerned, because there’s always that question of who’s taking on debt for which one and where
does the debt go and what does that mean for the EU breaking down? Of course, that might be some time away, but
these are the actions that are leading towards that. So the other interesting dynamic as well in Europe is that there
are a lot of depositors who are just sitting there getting owned by negative rates. And that’s just been the reality for
years now. So I’m curious what your view is on those depositors and why they are staying in the ECB euro banking
Stack Hodler – 00:12:48:
Yeah, that’s a great question. Why are they doing it? I would assume it’s just some sort of form of momentum, right?
They don’t really know any better. And a lot of people don’t really think about these things too deeply unless it gets
really acute and I think if they enter a situation like Japan where you’re seeing an aggressive, again, 36% loss against
the dollar this year euro has been crushed as well, I think you might start seeing people start questioning that,
hopefully, I would imagine. But at the same time, I mean us bitcoin as we are in a bit of a bubble, and I think it’s easy
for us to assume that people will figure it out. But we’re talking about questioning sovereign debt. In most people’s
minds, sovereign debt is like the safest thing. And even if it’s negative yielding, like, okay, I’m willing to pay to pay to
hold these bonds because it’s the safest thing I can hold. So I think breaking that, I don’t know how that happens. And

I think there’s probably a lot more trust in the EU and ECB amongst your average investor than you and I might think
or hope. I don’t know, it’s a good question. I’m not sure why they would do it. Certainly it seems a bit masochistic on
their side.
Stephan Livera – 00:13:55:
Yeah, of course. I mean, look, the obvious answers are in some cases they may be a regulated institution with no
other choice. In other cases, it’s the momentum, as you said. And in some cases it’s just that they don’t see that they
have an easy way out because from their point of view, if you’re a fiat person, you might just be thinking, oh well, I
can’t easily get a bank account somewhere else. Okay, what if I have these European bonds from their perspective,
because that represents sort of like future euros. And maybe the idea is, again, I’m bending over backwards here to
try to steal man the case, but it might be like they’re seeing it as like future euros. And I understand for some people
who are. Let’s say. Bond bulls. Part of the case that they would make. Obviously I disagree with them. But again.
They see it like I’m holding these USD bonds because that represents future dollars. Which I can use in the time of a
crisis to scoop up some cheap things on cheap property or cheap businesses and accumulate things on the cheap to
get a good deal. Or it may be for systemic reasons that they hold a lot of USD bonds because they don’t have any
other easy way to store value. Because let’s say the deposit guarantees at various banks only go up to, let’s say
250,000 or 100,000, depending on that. If we’re talking about high net worth, people with a lot of money or
institutions, and in that case, maybe that’s why they’re holding a lot of bonds. So I’m curious, do you agree or
disagree with that, or have any reflections on that?
Stack Hodler – 00:15:16:
Yeah, no, I think that’s all accurate. It’s hard to say. I don’t personally own any bonds, so it’s hard to put myself in their
shoes just knowing that we’re at the end of a big debt cycle and ultimately it’s the debt holders that are going to get
crushed. I think ultimately we’re going to reach the point where the only people that want to hold bonds are it’s going
to be the group of people you mentioned, it’s the ones that are forced to right. It’s going to be the pension funds that
have a certain forced allocation and they’re just going to have to take the loss, essentially. But yeah, the other thing
you can say is I can see the appeal of, okay, now the rates have gone up to, let’s say around 3%, maybe I can see
the momentum trade, it’s like, okay, maybe if I buy 3% and it goes back to zero, then the value of those bonds are
going to shoot up and then I can sell them at that point. But I think holding to maturity, knowing that the currency that
they’re denominated in is going to be printed to oblivion, I think that’s just kind of silly. I don’t know. I do think a lot of
people probably look at them just as trades at this point. But yeah, you can also make the argument that, hey, look, if
I live in Europe and all I care about is euros, then I’m happy to hold these bonds. Yeah, it might be worth a little less
in the future, but at least I’m not taking on any currency risk or I’m not going to buy Bitcoin because it’s too volatile
and I’m a retiree and I just want to be guaranteed X amount of euros in ten years. Right. And so maybe that’s good
enough for them. So yeah, I think those are probably all valid reasons.
Stephan Livera – 00:16:37:
Yeah, sure. And I think maybe to some extent we’re just underestimating the inertia because I’m sure there are a lot
of people with just basically no knowledge of this. They just do their normal job and as part of that, some money goes
into the pension fund and that could be a government requirement in many countries. That is the case. And
unknowing to them, that fund holds some allocation of stocks and bonds and that’s where a lot of them a typical
allocation, obviously the 60 40 stocks and bonds is a common thing. Other funds have different allocations of stocks
around the world and maybe a bond component. And reality is that they’re the people who are holding bonds without
really even knowing it and maybe not having that much control over what precisely is in that retirement account. So
maybe that’s one component of it. And I think the other interesting part, and as you mentioned, I think it is that
question of who takes the loss, because I think if we look historically, I think in most cases it’s the debt holders, the
bondholders, who are the ones who get wrecked. But what’s the possibility on the other side that if for argument’s
sake, if let’s say, governments start to default the honest way as opposed to the inflationary pathway. I’m curious if
you have any thoughts on that.
Stack Hodler – 00:17:50:
Yeah, but I think everybody takes a loss in that case, right? Like, if you’re talking about default and they just let
everything collapse, then okay, you’re talking about a depression. And in that case, it’s pretty much everybody
collectively, I mean, people who have enough cash in that case will be actually be in the best shape. But collectively, I

mean, people aren’t going to be able to get jobs, and it’s a complete disaster, right? So, I mean, there’s various ways.
There are various ways that they can handle things. They can also create huge amounts of taxes and tax the wealthy
and sort of confiscate wealth. That’s another way that somebody could take a loss. So no matter what asset you hold,
but let’s say you have a net worth above, I don’t know, 10 million or whatever the number will be, maybe you’re going
to have massive confiscatory taxes, and that’s one move that the government takes. But I think historically, you see
various moves. Typically the currency loses in the end, they debase the currency and they try to get money flowing
again. But in the meantime, they might try other things as well, austerity, large taxes, etc. And so, yeah, you kind of
want to be prepared. And I think originally one of the reasons we connected on Twitter was this idea of how do you
prepare for various economic environments? And at the time, I think this was in November, we were tweeting similar
things, but there was this whole, like, get on zero movement in the bitcoin community. And I was thinking I think you
were too, we were kind of cautioning people saying, like, look like, yeah, this is great. It’s great to get on zero when
everything’s going up 10, 15% a day, but it’s not so great to get on zero when they actually are tight and assets are
selling off and we’re in a deflationary spiral, and suddenly the only thing that everybody wants is cash, right? And in
that case, you want to have a cash cushion and you want to make sure you have cash flow. And that’s personally
how I like to invest. I like to think about, okay, what are the various stages of the economy that we’re going to go
through, and how can I make sure I’m not stressed out to the max during any one of these stages? And I think I like
having mostly bitcoin and with a sizable cash cushion and then also some gold. We can talk about that if you want. I
hold gold, reluctantly, basically, but I.
Stephan Livera – 00:19:57:
Do hold some you’re a shitcoiner now whatever. But I think the interesting yeah, the comments around get on zero
because I can understand the view, which is, oh, look, on average, bitcoin is going up and you should just maximize
that. But I think when you put it into practice, there are various steps and things along the way that might stop you.
So, quick example, what if you’re running a business and if you have staff to pay, you have certain liabilities that are
just in fiat, in USD or whatever other fiat that can be difficult. Or if you have. Let’s say. A big lump sum payment
coming due in. Let’s say. Six months or three months.
Stack Hodler – 00:20:34:
Stephan Livera – 00:20:35:
You’re not going to go all into bitcoin and then have to at the worst possible timing. If you had to. Let’s say we had
this big drop from. Let’s say. 69,000 at the top down to call it 17,500 ish at the bottom recently. Which we had maybe
a month ago. At that point, if you had to pay a Fiat obligation of $10,000, you’re paying over half a coin. Whereas I
can certainly appreciate where there’s a little bit of a need to balance the cash cushion aspect with. The other
important point to consider is what if you lose your job?
Stack Hodler – 00:21:08:
Stephan Livera – 00:21:08:
Because if you lose your job and there’s a bitcoin bear market, then you’re just getting a double whammy negative on
both sides. So I think that’s where probably my principal disagreement with the get on zero movement is. And of
course I read articles and I did podcasts about that too, but I think, of course, I’m very highly allocated to bitcoin, but I
don’t quite believe it makes sense to go zero. But that’s kind of how I’m seeing it. Do you have any other reflections
on that?
Stack Hodler – 00:21:37:
Yeah, same thing. I just put an emphasis on the, you know, at the bottom of a deflationary spiral. So if, God forbid,
they let it just go all out into a depression, I mean, that’s when it’s going to be hardest to have a job and have cash

flow, and that’s when that’s the moment you would have to sell bitcoin. Let’s say you lose your job, like, okay, you’re
going to sell at the very bottom as like a worst case scenario. That’s a non zero probability. So you want to make sure
you’re insulated for a moment like that. So I think that that’s just the logic of it. And then the other thing is, like, look,
great, hold the majority of your wealth in bitcoin, fine. When bitcoin goes to where we know it’s going to go, then the
extra Fiat you have, it’s not going to be worth a ton at that time, but your bitcoin is going to more than make up for
that loss. So that’s kind of how I think about it. I don’t mind holding some Fiat as a way to just sleep well in moments
like this, and if it ends up being worthless one day, then I know the bitcoin, it’s going to more than make up for that
loss. So that’s totally fine.
Stephan Livera – 00:22:32:
Yeah, right. Also curious to get your thoughts on the credit cycles component of this, because I think that’s another
thing that comes through in some of your threads, and I think you wrote one as well about this idea of why people are
selling and people who sell because they have to and not because they want to. So could you elaborate on that idea?
Stack Hodler – 00:22:51:
Yes, of course. I think, first of all, you have to understand when we had negative or 0% interest rates for so long, like
for ten years plus, everybody and their mother is taking out debt, right? Like, money is free. We saw it on Twitter all
the time. It’s like, oh, take out debt, buy assets, it’s all free money. Why not do it? Well, that’s all well and good, but
then if they do start raising interest rates, then the next thought in somebody’s mind who’s holding debt is crap, I’m
not going to be able to service this debt at higher interest rates. So what I should do is, let’s say I bought assets on
leverage. I should probably sell those assets at this high price now, pay back that debt, pocket the difference, I made
some profit, no worries. But as they’re doing that, the asset prices start to fall, right? And then more and more people
are looking at their balance sheet and they’re saying, well, actually, I have all this debt, I should probably sell some
assets for cash too, or I’ll move into something like bonds that seem safer that I can sell at a later point. And so that’s
what happens. It’s like people are essentially selling assets to be able to pay this debt. Now, in the meantime, if
you’re sitting there and you don’t have any debt and you have cash flow and you have cash cushion, so all your short
term obligations are covered, really, you have zero reason to worry at that point, right? Because you don’t have to sell
an asset at a depressed price. You can kind of ride it out. But I think the thing to know is. Like the way these credit
cycles typically end. At least at this stage in the big debt cycle. Which is when we have tons and tons of debt in the
system. Essentially what happens is eventually there’s some leveraged entity that has tons of debt and they’re a
massive entity and they end up coming close to default. Or they actually default. And at that point, essentially, central
banks have to slam on the brakes, send rates down to zero, print a bunch of money, and then bail out that entity that
has a bad debt. So basically, the two things to know are, like, number one, just have enough cash and have a job.
Like during that deflationary period where you don’t have to worry and sell assets and don’t take on too much debt.
So you’re not one of the people that’s like, scrambling to sell assets. And then number two is just be positioned for
when that turnaround comes, you’re holding an asset that, number one, can’t be debased. Like the currency is about.
To be. And number two, I mean, this is what I love in particular about Bitcoin, this is so important. But you want to
hold stuff without counterparty risk because at that moment when you have what’s called a globally systemic
institution close to default, that’s the moment of maximum risk, right? And that’s when you want to hold something
that doesn’t have that counterparty risk. So that’s the way I think about it. Thinking about credit cycles that way kind of
helps me wait until that moment. Like, okay, something eventually is going to break. So I have to do is make it
through to that point.
Stephan Livera – 00:25:31:
Right. And so, as Bitcoin is very naturally bullish on Bitcoin and therefore bearish on a lot of fiat, as you’re saying that
it takes time for this cycle to play out. And in the short and maybe even medium term, certain fiat currencies will do
well. Like the US dollar obviously, objectively has done well in that short to medium term because maybe we’ve seen
this dynamic of high inflation countries where they are running to the US dollar. So Argentinians are running to the US
dollar because they’ve seen this movie before. They’ve seen it every few decades or every decade. So they sort of
have that cultural, I guess, knowledge that they might just go and do that because they saw their dad do it or their
granddad did it. And other countries are doing that. In a sense, the US and the USD and US government bonds, they
have a lot more bag holders around the world just because things are priced in USD and people run to the USD at
least in the short and medium term. Of course, long term we see everyone’s running to Bitcoin. So it’s kind of an
interesting question for a bitcoiner about how to navigate these waters when it’s kind of like a short term bullish for
USD moment.

Stack Hodler – 00:26:43:
Yeah, and I think one of the other interesting things to understand there is like, yes, people are running to USD
because it’s the best performing fiat. There’s also the aspect of, well, there’s so much dollar denominated debt around
the world and there’s not actually that many dollars. So once that debt, people are scrambling to pay off that debt. It’s
just a race for scarce dollars that’s just driving demand. So that’s a global phenomenon too, because you have this
zero dollar market where without getting too crazy into the details, like some other podcasts I’ve heard, basically you
have all of these loans that are offshore that are denominated in dollars. But the banks that made those loans, they
can’t issue dollars, right? So if people are trying to pay those loans off, they’re going to have to try to sell assets. And
really there’s just a scarce amount of dollars created in the US that everybody kind of has to fight over. That’s why
you see the Dixie shooting up and all the other fiats getting destroyed and then one of the interesting things to think
about is when do you have hyperinflation? When do these credit cycle busts end in something like a hyperinflation?
And typically it’s when you have a lot of debt in a currency that you can’t print. So that’s why you see it in places like
Argentina, where they might have a lot of dollar denominated debt, but they can only print pesos. So that’s a situation
where you’re going to end up printing pesos and you’re not actually going to get that much closer to paying off your
debt. Same thing happened obviously, in Germany, they had to pay their debt was in gold, right? But they’re trying to
print deutsche marks or whatever they were at the time. And so that’s what happens there. But typically if you can
print your currency, so let’s say the US. Or Europe, you have a lot of debt, but you can print your currency. Typically
they can manage without causing a hyperinflation. I think that’s probably a mechanism that a lot of Bitcoiners aren’t
familiar with. It’s just like when these credit cycle deflations happen and you get a deflationary period. Essentially
what’s happening is credits being taken out of the system. And so if these Central Banks start printing a bunch of
money, they sometimes can actually balance it out, right? Like they’re putting money into the system, but there’s
money being taken out in the form of credit. And so that’s kind of like it’s a complicated fiat mechanism that doesn’t
always make sense intuitively. But as long as you can print your own currency, you can sometimes avoid that
hyperinflation pretty easily.
Stephan Livera – 00:28:59:
I see what you’re saying. So it’s sort of like saying there are two countervailing forces. And of course, in all of this, the
population is being rated, right? They are absolutely being rated. It’s just that the government and the central bank
are potentially able to benefit in some sense because they’re able to print enough that they can take command of the
real resources out there in the world because they’ve managed to print while this credit deflation was occurring. Or
they were able to, let’s say, bailout the politically connected, as we saw in 2008 and 2009, where they were basically
bailing out the politically connected while letting the everyday people suffer. And I’m also curious to get your view on
this as well, because there’s been a view, I think, for some time in the investing world about, okay, it’s the long run,
right? Like, just keep buying equities because it’s just going to go up in the long run anyway. And people might even
make the historical examples of 2008, there was a big drop, but in 2009 it was a big relief recovery. So if you sold out
then and you weren’t in in 2009, you missed all that recovery juice of equity market gains. Do you see that as a trap
this time? How are you looking at equities and how people get tricked. Basically, the question I’m asking is, will
people get tricked by pattern matching of what happened last time?
Stack Hodler – 00:30:22:
Yeah, the short answer is I don’t know. I don’t want to say this time is different or anything like that because I don’t
know, but my gut tells me it’s actually not different this time. I think that it all comes down to in my opinion, it all comes
down to like a liquidity play. And I think that equities are going to be more scarce than the Fiat flood they’re going to
send our way. So anything that’s denominated in Fiat will probably go up over time. To me, I’m like, okay, well, I want
to hold the thing that’s going to reliably go up the most. That’s why I’m more interested in holding Bitcoin and equities.
I mean, I have nothing against equities, honestly. I think it makes a lot of sense. I wish we lived in a world where
equities were priced fairly and you could make smart, intelligent investments. But one thing that’s interesting though,
is I think you can kind of make the argument that people treat, at least in the US. But actually, I guess around the
world, but people treat the S&P 500 index kind of in the way that Bitcoiners would love people to treat Bitcoin, right.
They treat it as a store of values. Everybody knows, okay, don’t just put cash in the bank, you’re going to lose long
term, so just buy an index and don’t think about it. And I think that’s kind of the message that Bitcoiners would love
people to adopt about Bitcoin. And I think we see the advantages of Bitcoin over something like the S&P 500. Now, to
steal man, their argument, they would say something like, equities are backed by cash flowing businesses. There’s
real property, plant and equipment on the ground. There’s tangible things tied to these equities. But on the other
hand, we could say, look like Bitcoin is more portable. You can take it with you to any country, you can self custody.
It’s not in anyone’s jurisdiction. Like the United States, where if Saudi Arabia buys a bunch of S&P 500, do they get it

fees one day? That’s just not a thing with Bitcoin. And honestly, tying yourself entirely to the future of the United
States. I don’t know if that’s something I’m comfortable with these days given the debt situation, but I do think it’s
interesting how people treat the S&P 500. And it’s actually reacted pretty well during at least this initial drop. Now,
does it drop further? I think I think one of the things you’re alluding to was like, well, like when a bubble pops, people
are in the buy the dip mentality and the S&P 500 goes down in price and it still looks appealing, right? It looks
appealing to buy because in your head, you’re thinking about the earnings that are projected for all these equities.
But essentially what happens is that initial bubble bursts. People lose a bunch of wealth so their portfolios get smaller.
And when that happens, people naturally just spend less money. And when they spend less money, eventually that
leaks into the earnings. And once those updated earnings with less the lower earnings come in, then the share price
to Google will fall after that. So, yeah, people who buy the dip can kind of lose at that point, but I think ultimately it’s
probably just going to once the money printer turns on, all this stuff goes back up again, right?
Stephan Livera – 00:33:16:
Yeah. It becomes more like a stock melt up situation. Yeah. Even if the price to earnings ratios are getting into crazy
levels, right, because historically at much more lower levels than they are today. But they can definitely just get back
up there. So another angle that was interesting is this whole idea of mortgage boycott. And maybe this is touching on
a little bit around that idea of who takes the loss, because there’s been a little bit of news coming out of China with,
let’s say, certain, I think, residential mortgages, where people were just basically boycotting because I don’t know the
full detail, but as I understand, there were some property developers who went under and stopped building the
building. So then the people on the other side who are with the mortgage are like, well, I’m not paying that then. So
I’m curious, do you have any thoughts on what the implications of that will be like will we see that in other places?
Stack Hodler – 00:34:09:
Yeah, I would imagine the implications are pretty big, but I don’t know. One thing I do know is that I posted a couple
of things about this on Twitter and pretty quickly I’ll get replies from not bots, but they look like accounts that are
maybe funded by the CCP. So that’s an interesting thing. It’s like it’s telling me that clearly they don’t want me talking
about this, so I’m going to talk about it anyway. Essentially, they have the Chinese real estate market. It’s massive,
right? It’s the largest single asset class in the world. So bigger than us equities and us treasuries, etcetera. It’s like
$60 trillion in size, this market. So it’s massive. And it’s where Chinese people store their wealth, right? Like they
store their wealth in real estate instead of the S&P 500 index. But the thing is, a lot of this is not even necessarily
finished real estate in the sense that people are buying kind of these concrete boxes and these giant towers and
nobody’s really living in them. They made some money, they need a place to put it. And so they’ll buy real estate, but
half the time it’s not even hooked up to electricity. So it’s kind of just like honestly, it’s a crappy storehold of wealth
because these people, they needed a place to store their wealth. And some concrete boxes what they all kind of
collectively settled on. But yeah, so there’s been I mean, a lot of people listening to this probably remember this
whole everground default situation last year. One of the largest property developers in China defaulted on their debt
last year. And it turns out there’s a whole bunch of these developers that were over leveraged and ran out of money.
So they’re essentially insolvent at this point and they don’t have any money to finish these projects. But then the
weird thing is, in China, they do this thing where you start paying your mortgage on your apartment before you even
have the apartment. So the apartment doesn’t exist, but you’re paying a mortgage on it, which is kind of crazy, but
now people are realizing that, okay, there’s no way our developers are going to be able to finish this project. So why
don’t we just stop like you said, why don’t we just stop paying the mortgage? Right? Like it’s a form of protest. So
apparently there was 301 projects in 91 cities that are now seeing these protests pop up. And the crazy thing is, it’s
not even just the mortgage holders. Now. Did you hear about the suppliers as well?
Stephan Livera – 00:36:18:
No, I didn’t hear about this. So they’re doing this also?
Stack Hodler – 00:36:20:
Yeah. So essentially it’s the suppliers that they were supplying raw materials to the developers and to make the
supplies, they essentially took out loans from the bank as well. And now they’re refusing to pay back their bank loans.
So they’re like, they’re like, look, everyone stop paying me, so I’m going to stop paying you. So at the end of all of this
is these Chinese banks and they’re holding a bunch of bad debt, basically. So who loses? For now, it’s the Chinese
banks. But like any big bank, the government’s probably not just going to let them fail. So what’s really going to

happen is China is going to have to do I mean, most likely, in my limited knowledge, they’re probably going to have to
do some form of a bailout. But it’s a very tricky situation because if you do a bailout, do you encourage other people
to stop paying their mortgages? I mean, if this is a widespread problem that could kind of encourage that behavior.
They have their party congress coming up in the fall, so they want to avoid all bad optics. And this is certainly not
great optics.
Stephan Livera – 00:37:20:
Yeah, it’s fascinating to think about because there’s so many different angles of how things could go. But as you were
saying at the start, it’s the banks who are taking the loss, but then eventually in many cases, and not endorsing this,
but just mutually recognizing what are the likely or possible outcomes. If the Government does a taxpayer funded
bailout, well, then taxpayers are paying. If the government prints, well, then all currency holders are getting debased.
If they do a bail in, then the current depositors of those banks get wrecked. So there’s someone somewhere is going
to wear that loss of the non performing loans that have been made in these overly exuberant times. And so it’s really
just pointing out that there’s really not any good options or nice ways this is going to play out. And unfortunately, there
have been from an Austrian perspective, there have been malinvestments made and the only way out now is to
liquidate them and have those resources go elsewhere. And so that’s the unfortunate reality of what’s going to
happen. And it may not just be restricted to China. And I think maybe the broader point here is that people were using
properties as their store of value. And perhaps there’s also a cultural component to this as well. Like, from when I talk
to Chinese people as well, as I understand, it’s seen like if you are a man looking for a wife in China, you need to
have a property in a car, otherwise you’re a loser kind of thing. So maybe there’s a cultural component of that over
time, because it seemed like our property is the way property is the thing you do. And in various countries, this exists,
this property culture. So this whole culture of using property as a store of value, maybe that has to change and
people will slowly learn to use Bitcoin as a store of value.
Stack Hodler – 00:39:04:
Yeah, I hope it does change. And I think that storing your wealth in a concrete box that doesn’t have electricity is far
from ideal. Right. And for various reasons that Bitcoin is know well, but how much liquidity are you going to be able to
get out of that in the future? Especially with the demographic situation of China, it’s not exactly divisible, it’s not super
portable, not the Chinese Government wants you to have your wealthy portable. But, yeah, it’s far from an ideal store
of wealth and it is probably a cultural thing, but it’s nice to know that now there is this thing called Bitcoin that is just
engineered as a store of wealth. And I think about it often and how grateful I am to hold it. The fact that I can take my
wealth with me anywhere around the world, no government has a say over it. It’s truly an empowering feeling and the
more you think about it, the more you just kind of fall in love with this asset, just from a practicality standpoint. And
then the other thing I would say, and this is far more speculative, but if we’re talking about how does it play out and
what are the consequences of this, I would say that it’s in times of internal struggle that countries often lash out
externally. And we obviously know that China has their sights set on Taiwan. Is this the type of distraction that would
maybe speed up that timeline? That’s something I would keep my eye on, but I think certainly if they have some form
of a real estate collapse or a banking crisis before the party Congress, they might want to deflect by invading Taiwan.
So hopefully that doesn’t happen. But that could also be something that this leads to.
Stephan Livera – 00:40:34:
Right. And it’s these times in history when the extremist leader can come up and say the things that agitate the
population and directed their anger and ire at somebody else and then use that to, as you said, distract from the
problem. We’re also seeing this idea of the bricks nations like Brazil, Russia, India, China, etcetera, some of these
other countries who are almost trying to make moves outside of the US. And the Western nations to sort of do their
own thing instead of the Western world thing. I’m curious if you have any thoughts on these shifting alliances.
Stack Hodler – 00:41:15:
Yeah, I think it’s one of the most interesting things happening in the world right now. And again, it’s one of these
signposts of, okay, if I see this happening, how does it make me feel about my Bitcoin investment? It makes me feel
pretty damn good. Things are changing in very unpredictable ways. But holding a neutral reserve asset that can’t be
debased or confiscated, I think it’s a perfect time for that. And I think that ultimately, these nations are going to be
looking for something like Bitcoin. But right now, what they’re doing is they’re in the process of again, going back to
one of the original points I made, they’re in the process of figuring out how to get out of this dollar system. Right. The

dollar reserve currency has been bad and good, but it’s been really bad for a lot of these countries. And in particular,
they don’t like the idea of the US. Bailing themselves out every time by printing a ton of money and then turning
around and buying scarce commodities with that printed money. So why should the US. Have the advantage of just
being able to print oil? Essentially, we heard words like that come out of Putin recently. He was essentially saying,
you know, me and all these other countries are done with trading scarce commodities for infinite paper. I think it
comes down to that. Now, one of the things I find most interesting is it’s crazy to hear all of these things being said
just, you know, in the broad daylight, right? Because in the past, I don’t even remember, but, you know, Gaddafi
wanted to set up a sort of a Pan African gold backed currency to replace the US dollar on the continent. And while we
saw it happen to him, he ended up in a ditch, murdered. So I would say that the fact that these countries are so
emboldened to be now openly talking about ditching dollar is a pretty huge signpost. And they are just out in the open
making deals with each other in various currencies. I saw a deal between Russia and India for oil being paid in, oddly
enough, UAE. Durham, I’ve seen Turkey and Russia talk about trading and using the Turkish lira. But that’s a funny
one to me, right? Because that makes me laugh. It’s like, okay, Russia wants to stop accepting dollars, but they’re
going to accept Turkish lira, which is garbage, right? So ultimately, I think, yeah, maybe they’ll accept Turkish lira, but
they’re going to want to convert that pretty immediately into something that’s a lot more scarce than that fiat currency
in particular. Or if they hold Turkish lira, like, okay, now you have this coincidence of want problem. You got to hope
that Turkey has stuff that you want to buy with their lira. Right? So it’s interesting to watch them step through this logic
and what they’re ultimately going to end up on will be interesting to watch. But what are your thoughts on the bricks
and all this stuff that’s happening?
Stephan Livera – 00:43:49:
Yeah, so the way I’m seeing it is that they will only have limited power to try to change away from the US dollar. Of
course we wish they would go straight to bitcoin, but we know bitcoin is perhaps a bit young and a bit small for that.
Right now, the current market of bitcoin is something like 450,000,000,000. It’s not even half a trillion as we speak
today. Of course it will grow, probably not at the size yet that some of these larger nations could realistically go into
bitcoin openly at least. And so I think we will see some of these countries try to make moves to at least build their
own alternatives. Like, there was this whole, like with the whole Russia Ukraine war, there were moves and
discussions about alternatives to the swift payment network. So, yeah, they’re going to try to build out their own little
payment networks. But I think in terms of denominating contracts, that might be difficult in a world when people are
running to the USD. So it’ll be interesting to see what happens with that. Maybe they’ll try to make more of a
commodity plays. I guess I don’t have any special insight into what the bricks would do, though. I think at the end of
the day, it just comes down to enough people being patient and recognizing, like, if you’re a bitcoiner, just having that
patience and not expecting everything to happen tomorrow. Because there will be times when bitcoin takes a dump,
right? It takes a drop. As we saw, as we’ve seen recently with Tesla, the news came out recently that they sold 75%
of their bitcoin. So even companies and large companies who are buying bitcoin may be in a position where they
have to sell it. And so that’s just part of the reality. And I think for bitcoin is out there. Whether you are an individual or
part of a company or part of it is about being financially in the right place and stable enough that you can actually hold
onto your stack because you don’t want to become a forced seller is probably the key idea.
Stack Hodler – 00:45:37:
Yeah, I would agree. That kind of sums up my recent my recent feelings. Probably best just real quick back to the
bricks, though. We’re seeing so, like you said, Brazil, Russia, India, China, South Africa, but we’re seeing other
countries talking about joining as well. So this is kind of a growing coalition. And yeah, they’re not going to be able to
move away from the US dollar immediately, but they are starting to denominate some trade in various currencies. But
some big movements here. Saudi Arabia is talking about joining Argentina and Iran, and I think I saw the UAE as
well. So these are large countries and there are two things to know about them. Number one is a lot of them have
commodities that are needed by the Western world. And so that right there is a source of real power, right? It’s not fiat
debt power like the west is used. It’s real power because you need these commodities to function in the modern
world, essentially, so they can wield that power over Fiat Indebted countries. And then the other thing is, there are
also large holders, a lot of these countries are large holders of foreign exchange reserves. So in particular us.
Treasuries. So, like Saudi Arabia, their whole thing for a while was, we’ll sell oil in dollars and then we’ll store profits
in US. Treasuries. Well, the big thing is happening there is that’s now changing. If you look at treasury flows from
Saudi Arabia, they’re actually selling some and not buying any more US. Treasuries. I think what happened was
Russia $300 billion in foreign exchanges reserve were frozen by the US. and Europe in Russia. And I think all these
countries were like, okay, well, that pretty much put an end to that store of value, right? And so when you think of the
US. Dollar, you can’t really separate it from the debt that underlies it. And if there is not demand for that debt, public
demand for that debt, then it’s essentially going to have to be purchased by the Fed via printed US dollars a-la Japan.
So that is kind of the thing that I’m also keeping an eye on, is like, how do these countries stop? China? Also, I just

saw a headline that China fell below 1 trillion in holding. So they’re kind of letting their US. Treasuries fall off as well.
So these are big, huge changes, right? Like into how the world trade works and what’s being used as a store of
value, etcetera. So those are things I’m keeping an eye on. Yeah.
Stephan Livera – 00:47:57:
So in a way, we could maybe summarize it as the different countries and governments around the world are just
going to have to engage in a lot more money printing. So it’s just money printing around the world is almost the theme
that we’ve been talking about today, because they are getting pushed into increasingly, they’re in between a rock and
a hard place, that they’re in a bad situation and I guess arguably the least bad thing from their point of view is to print.
And so that’s what they’re probably going to do. So I think that’s essentially the view if you’re looking at in the world
as an investor, as a assessing at the macroeconomics of it, it’s to see that they’re going to have to print. And so we all
have to think, what are we going to do in response to that? Well, what things go up when they’re printing? Well, as
you mentioned, it’s things like, equities, maybe a little bit of the property market, but also we think bitcoin is going to
be the actual long term sustainable answer here. So I’m curious your view on that, and I guess from your perspective,
why would you see bitcoin as the longer term answer?
Stack Hodler – 00:48:57:
Yeah, for me it’s pretty simple. It’s, you know, the finite 21 million growing network, more people being aware of it,
versus the infinite fiat that we know is essentially going to have to debase over time to take care of this debt problem.
And that is also growing in awareness. People are figuring out like, oh crap, these fiat bonds are not the ideal place to
hold wealth long term. There’s this thing, bitcoin that’s finite, that also, I think, going into a world of more chaos, less
cooperation, you really want this neutral reserve asset that sort of steps back from all of these conflicts internationally.
So I think that to me, that’s why I love holding bitcoin. I love that it’s finite. I love that there’s no counterparty risk and I
love that it’s outside of any one jurisdiction. To me, that makes it stand apart. Maybe it’s there with gold in a way, but
we know how much easier it is to use bitcoin and how much more portable and divisible, etcetera it is. So, yeah,
that’s why I love bitcoin and that’s why I think it’s a thing to hold long term.
Stephan Livera – 00:50:04:
Fantastic. Well, I think that’s probably a good spot to finish up. So any final closing thoughts for people out there? And
also, where can people find you online?
Stack Hodler – 00:50:12:
Yeah, I would just say stay solvent, stack sats, and be patient. Like Stephan said, things can take time to play out.
And expecting bitcoin to go straight up to the moon is probably not the expectation to set for yourself. But if you set
your expectation of, I’m going to hold this finite asset that has zero counterparty risk, and in the meantime, maybe I’ll
hold a little cash cushion so I sleep all night. I think you’ll be in great shape. Yeah. If you want to follow me,
@stackhodler on Twitter and yeah, thanks Stephan, this was really fun.
Stephan Livera – 00:50:43:
Stack Hodler – 00:50:43:
Thank you.

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