We've just crossed into uncharted territory in OG and
hedge fund manager said that we just tripped a major wire that
requires the Fed to act unless it risked the entire system
collapsing. He says that it holds too few
bank reserves relative to GDP in order to maintain a healthy
system. Excess liquidity in the system
is drying up at record pace. The Feds repo facilities, its
shock absorbers are down 99% and have just $5 billion in
reserves. What does this mean?
I thought that we had a capitalistic system.
I thought that we had free markets.
No, they always need to intervene.
The system is a Ponzi, and we will cover exactly what the Fed
and the Treasury is going to need to do in order to cover up
the holes between now and midterm elections.
This is Dante Koch with Bitcoin. Simply let's go all right, let's
get started with the juicy news. Hedge fund manager in OG James
Lavish put out a fire newsletter in his publication the
informationist this morning. He basically laid out the case
for why the Fed is screwed while liquidity is drying up in what's
going to happen next. The reverse repo facility
basically the feds shock absorber is down 99% from
trillions of dollars to just 5 billion over the last several
years. In fact, it's fallen from 600
billion to just 5 billion today and that's just in a matter of
10 months. At the same time, he highlights
that reserves are down and are dwindling.
They've fallen by over a trillion dollars in the last two
years. This is Money that the banks
hold in reserve at the Fed. And he goes on to highlight
another crucial fact. The spread between the sulfur or
the overnight fed funds rate and the effective federal funds rate
is blowing out, which means that there's less liquidity in the
system and people are unwilling to take free money when it's
offered to them. And if we're starting to figure
this out, it's a fact that Jerome Powell knows that this is
happening, too, which is why he probably probably is signaling
that we're moving from quantitative tightening to
quantitative easing. the Fed has no choice but to print.
It can do this several ways, increasing the money supply
broadly into the markets. They can raise capital by
raising the repo rates, allowing the banks to earn more money on
the money that they're able to print out of thin air, which
they will use to buy Treasuries to fund the debt that the United
States government has. Another form of printing.
Oh, yeah. Because the United States
government is burdened with debt, $37.9 trillion worth of
debt. It's grown $1.7 trillion since
the ceiling was lifted in July. That's $425 billion every month,
or $25 billion a day, roughly. The train isn't stopping.
And this was explained in an awesome clip and segment from a
great episode that happens every Friday between Jordy Visser and
Anthony Pompliano. Jordy Visser lays out exactly
what's going on and what James Lavish explained in his
newsletter. This is part of fiscal
dominance. This is what you have to
understand. I don't even know the best way
to describe it because there's a lot of terms like Sofur, the
standing repo facility. Let's just say you're a
homeowner and all of a sudden you have a lot of bills coming
at the same time and you're scrambling to get cash because
you don't have enough cash sitting around.
That's kind of where the financial system is right now in
the US. There's a certain threshold
level of where bank reserves need to be.
And if it goes below that, the banks will have to kind of rush
for cash and go through it. So there's been this pressure
which normally happens every quarter end, but it's happened
now. And I think part of the reason
it's happened now is because of the first brands and Tricolore,
which when you're really tight to the level, you end up with a
lot of kind of people scrambling around.
So all of a sudden SOFR, which has to do with overnight, let's
say collateral back securities, the spread has gotten extremely
high, which says there's problems going on.
Jerome Powell said this week we're probably going to have to
stop QT. So for everyone out there that
got them kind of freaking out, the problem is guess what
checkmate. You got the Fed QT, they're
buying the bonds from the Treasury and the Treasury needs
to issue lots of debt because the debt didn't get any better
this year. So remember when we started the
year, there's a debt deficit, you know, problem.
We did dodge all this stuff. Nothing has solved the problem.
And so we have these revenues coming in on the tariff.
That's all well and good, but we still have the Treasury issuing
lots. And this gets back into the
Michael Howell thing, which is we have a lot due this year, we
have a lot due next year. And so this puts pressure under
the Fed and that's why they can't let the runoff happen
anymore. And that just means that they're
going to be in the market easing liquidity whenever these happen.
So I don't think this is a one off shock because what's causing
the first brands in the Tricalore, it's the K shaped
economy. We have a problem guys.
And unless the labor market gets better, which is not going to
happen with AI into the midterm elections, they're going to have
to juice the system. Another reason to be positive on
Bitcoin. So regional banks.
We all know that this leads to money printing.
We all know that the system is a Ponzi and that the winners are
predetermined. We live in AK shaped economy and
the government is so large that it cannot let the system fail.
The system is financialized and the system is the equity
markets. They cannot crash.
We must move to a new system, not through collapse, but
through a slow and gentle deflation into another system
completely. And we know what that new system
is going to be. The Fiat system is a Ponzi
scheme. It is of course, but the
government was 7 trillion of debt in 2007 when Michael Bury
challenged the system. When George Soros challenged the
system or Druckenmiller challenged the system, they were
big relative to the system. Now the government is $37
trillion, it's 120% of GDP. They can't allow it to go under,
and they have tools that were created.
We still have QT. We weren't supposed to have QE
for more than a year after we did it.
Bernanke told us it wouldn't be here.
So for everyone kind of going through this, unfortunately for
all of you, it is not only a Ponzi scheme, but the end game
is not at crashing. The end game is it being
replaced by the new system. The new system is stablecoins,
the new system is Bitcoin. The new system is tokenization.
All of this is coming and next year is going to be a boom year
for all of those things. Right now, that system has
rewarded the people who own the hardest assets in the 20th
century, which is gold, which has been the best performing
asset over the past 20 years, minus Bitcoin.
Over the last two years, gold has moved from 4% to 6% of all
the investable assets. But before it was at 22% of
investable assets, meaning that. But the world has moved away
from its desire to want hard and scarce assets, and people still
don't seem to understand the importance of hard and scarce
assets. Listen to this clip between
Andrew Ross Sorkin, Bill Meyer and Mark Cuban.
Gold prices hit records high this week.
Oh, they did. Yes, they did.
Oh, and that, that that didn't sound good.
That's not a good sign. Usually gold goes up.
It's good if we're decorating the White House.
Gold goes up when you're worried about the value of the dollar
going down. That's the equation.
What has the dollar done? But people go to gold when they
are scared, right? Yes, it's so it's so crazy gold.
I mean it's so anti. I mean, what are you going to do
with gold, right? Walk around with a bar and hit
somebody over the head, you know, And then it's like, no.
And also like, I mean, I think I have some gold in My Portfolio.
I don't actually have it in my right.
It's just says it's still something just right on, right?
Still digital, right? Yeah, right.
It's still like I own gold. Like I said, gold has performed
fantastically. It's outperformed every asset in
the market over the last 20 years except Bitcoin, and the
numbers aren't even close. And that's because we're
transitioning between analog assets to digital assets, from
physical capital to digital capital.
And the world has yet to understand that Bitcoin is going
to be the big winner from this. The Sky's the limit.
We haven't even been close to a stimulatory environment since
Donald Trump has taken office. We've had high CPI prints
instead of low CPI prints. We've had tariffs instead of tax
cuts. We've had wars instead of peace.
With AI going to increase productivity in earnings in
these publicly traded companies, the Sky's the limit for what's
going to happen. In addition to the Fed entering
into a QE policy, the race is going to be on to acquire more
Bitcoin, and there will be a new price discovery that we can't
even fathom right now. When this price discovery
happens, it's going to happen quickly.
The reason I'm buying Bitcoin is because I think when we get
through the all time highs again and basically get rid of this
four year cycle belief, now there's no imaginary place for
people to ever again care about. And that's normally what happens
in equity markets. And oh, by the way, 2017 was the
end of the Donald Trump tax cuts.
We've had tariffs this year. We've had bad stuff happen this
year. The equity market in 18 was bad
at one point. It was down 20% year to date in
December. In 2022, the equity market was
down. So the one thing about the
Bitcoin having cycle, it seems to have been trading with
traditional finance markets. So when you say that bitcoins
for your cycle is going to play out next year, you're also
embeddedly saying you don't believe in AI and you don't
believe profit margins are coming and you don't believe the
earnings are going to be higher and the S&P is going to go
higher and you don't believe that the Fed's going to cut
interest rates. Yeah, exactly.
The Fed's going to cut rates, but.
It's not going to come without volatility, something that
Samson Mao calls his Max Payne theory and that the biggest
winners are going to be the people that are able to most
tolerate those extreme levels of volatility.
But we'll get to that right after the break.
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I also have another theory called Max Payne theory and that
is like the most painful outcome for the most people is the most
likely outcome. So if we think that Bitcoin
volatility is always going to be low and we just gradually stair
step up to 1,000,000 and to 10 and to dollar parity with Sats,
that is the best case for the world.
Everyone has a long time frame to accumulate.
Everyone has time to buy and I don't think that's going to be
the case and I think a lot of people realize this.
If you look at Sailor and strategy, he's buying any time
like it. It doesn't matter if it's a top.
He's doesn't care about dips because there is this urgency
because the time is running out to buy Bitcoin at these low
prices. So we're going to see a fast run
up and gold is a good parallel for what we're likely to
experience with Bitcoin. If you look at the picture
circulating right now on the Internet, there are people
lining up forming queues to buy gold and gold is at an all time
high. So nobody wants Bitcoin when
it's in the low 100 KS. But once we get to like half
$1,000,000 per Bitcoin, I think the world's going to wake up,
central banks are going to wake up, and nation states are going
to start joining the race. And that's when you go to
1,000,000 very quickly and beyond.
Samson mentioned Sailor in this clip, highlighting one simple
fact that the people that tend to be the biggest winners are
the ones that have a relentless focus and drive and are able to
do a simple thing consistently over a long period of time.
And that's why Michael Saylor says that the most important dot
is always the next one. He continues to stack
relentlessly. But Michael, Michael Sailor
might be a little bit crazy for you.
So here's a couple of other indicators to show you why the
market is about to have a melt up before it has a meltdown.
On Friday morning, the VIX jumped above 28.
Every time that the VIX has jumped above 28 and it's been
within 3% of all time highs, Well, we've had some fireworks
afterwards. This happened in 1999, in 2020
and 2021. One year later, the market's up
on average 21% after these sorts of events.
And one other thing that tends to happen is that when gold runs
Bitcoin sprints, we said this on the show a lot, but also when
gold finds a local top or a new top, well, assets tend to rotate
into Bitcoin. In fact, in 2020, when gold
reached a local market top around $2000 an ounce, well, a
lot of that money rotated into Bitcoin and Bitcoin was up 550%
after gold reached that local top.
Are we near topping gold? That remains to be seen, but
still, when gold runs, Bitcoin sprints, and gold has had a year
for the ages. In fact, it's been his best
performing year, up over 65% since 1979 when it was up over
126%. History doesn't repeat, but it
rhymes and it's leaving a lot of clues and making a good beat
right now. It appears that through the end
of this year and through the middle of next year when midterm
elections come around, there's a lot of reasons to be bullish on
assets like Bitcoin and why Bitcoin is most likely to be the
biggest winner when it comes to QE.
When it comes to the Fed being backed into the corner and
needing to unleash liquidity into markets when it goes to tax
cuts from tariffs, the market is going to be incredibly
stimulatory and the hardest assets that also have a digital
backing like Bitcoin are going to be the biggest winners.
Don't overcomplicate the trade, stay humble and stack sets and
continue to build this digital network and knowledge around
Bitcoin in real life by going to conferences like the Mining
Disrupt conference in November. About a month from now, from
November 11th through November 13th, some of the largest
Bitcoin miners and manufacturers and keepers of the network are
going to be down in Dallas, TX. Most of them will likely have
used the promo code simply Bitcoin to get 20% off their
ticket. But if you haven't done so, go
ahead and do it. Use the promo code simply
Bitcoin for 20% off your ticket. And if you haven't already
subscribed to the channel, do so.
Share this video if you continue to get value from these
episodes. This is Dante Coco Bitcoin
simply happy stacking.