What's up? And welcome to the Bitcoin
magazine podcast. I'm Dave and I'm G.
You know, how we know. We just went through a bull run,
right? How mainstream media.
They're poking their little heads back in asking everybody
what's this bit coin thing. Huh?
What is a cryptocurrency did you see last week's episode of 60
Minutes? I saw a clip of it.
Let's let's actually play it really quick.
There's no actual coin. That is true.
That is something that trips, and it was a dumb question, but
I can't get past. It, took me a little while to
I'm so Antiquated, I can't imagine things that do not have
a physical component. It's really abstract for a lot
of, don't patronize me, so Anderson Cooper's side.
The question on everybody's mind right now is what pulled Bitcoin
out of the bear Market realistically.
There's never one thing that makes Bitcoins price rise or
fall, right? No no I mean Sue complicated.
It's way too complicated and the mainstream media always wants to
focus on one narrative and want to answer for one problem.
The very very focused Bitcoin. There are several reasons that
could be driving the price up and today we wanted to focus on
arguably, one of the biggest reasons.
That's been fueling, the recent Bull Run, of course, we're
talking about the US China trade War, which could continue to
affect the price for years to come.
Come for several administration's from now to
help us wrap our heads around this rejoined by Jeffrey Tucker
and economics writer, he's written several books.
He's going to help us understand what impact.
The US, China trade conflict might have on the Bitcoin price.
But first, let's take a quick look at the news.
Raise your pizza to the one and only Lazlo honey.
Ants May 22nd Mark, the 9th Annual Bitcoin Pizza Day
celebrating. The first real world transaction
in Bitcoins history at Bitcoins all-time high those Bitcoins.
Spent on Papa John's Pizza will be worth 200 million dollars.
Well, as lohanya To The Man Behind the holiday has famously
become a meme and the butt of many poor investment jokes.
But in reality, well, as low as a Bitcoin, mining Pioneer, in
the early days of Bitcoin mining was primarily done by P use,
which were more flexible in the task, they could tackle but
could only perform one of the time.
This led Laszlo to develop the first mining code using gpus or
graphics cards which increases hash power tenfold.
Other users quickly repurposed his code for versions of Windows
Mac and Linux revolutionising the mining industry.
Almost 10 years later, Laszlo is still involved in Bitcoin as a
hobby, but not really a career and he looks back on his
Infamous purchase with a healthy sense of humor.
So from the Bitcoin, Dean team and the community in general.
We thank you Laszlo. Last week, the Dutch Financial
intelligence and investigation service shut down the crypto
mixing service best mixer crypto mixing is essentially the
practice of pooling multiple transactions together.
Scrambling funds in obscuring links between addresses, it's a
popular method for adding another layer of anonymity to
crypto currency transactions, and it's fairly common.
The best mixer shutdown. Came after Internet Security
firm McAfee raised? Turns about its service.
Claiming that is being used to launder money.
While the best mixer shutdown may be bad news for other crypto
mixing Services out there. Best mixer seems to have been
particularly egregious about its willingness to let users break
the law. Speaking of scrambling your
funds, a revelation from tethers, ongoing legal troubles
revealed that its reserves includes a combination of
assets. That investors probably weren't
aware of according to court documents, originally obtained
by the block. Whether stable coin is
apparently back by Bitcoin at least in part in theory tethers
supposed to maintain stable value because it's backed by the
US dollar. Originally it claim to every
tether token was backed by $1 in reserve earlier this year.
It changed that backing to include loans in a testimony
included in tethers. Ongoing dispute with the New
York, attorney general's office, legal counsel revealed that
tether has used. Some of its Reserve funds to
invest in Bitcoin among other instruments using Sable coin
reserves to Invest in an asset is volatile as Bitcoin appears
to defeat the purpose. But hey, we're not blaming
anyone for buying Bitcoin and if you've been fascinated enough,
buy Bitcoins volatility lately. You might also like to know what
Ron Paul thinks last week in New York, Bitcoin magazines.
Colin Harper talked with the retired, libertarian politician
Ron Paul about gold cryptocurrencies and why the US
dollar could self-destruct during the interview, Paul
admitted that his interest in crypto currency comes from
recognizing the need for alternative assets in a free
market place. Paul went on to say, the more
successful cryptocurrencies are the more the federal government
will want to be involved and that banning cryptocurrencies
could be done as a last ditch effort to save the US dollar.
An outspoken privacy, Advocate and critic of the US Federal
government's fiscal policies. Paul was preaching sound money.
Well before most of us were even born.
As we mentioned earlier, one of the proposed causes for
Bitcoins, most recent Bull Run is the US China trade conflict,
this geopolitical event Falls in line, with the idea of Bitcoins
use as a Global Financial Safe, Haven to better understand the
trade conflict and explore its connection to bitcoin.
We spoke to Jeffrey Tucker and economics writer and the current
editorial director for the American Institute of economic
research. You know, risk-taking and, and
kind competition. And the Magic and mystery of the
price system, the coordination across borders and all over the
world, you know, that all come down to reduce to the chicken
fingers at your youth. You know.
It's that is to me, amazing and I can't stop telling that story.
It's enraptured me from the time I was, you know, 20 years old
and it still does. Today that's Jeffrey, he's been
covering the US China trade conflict since it first began in
early 2018, his libertarian leaning, economic views have
also made him a Strong advocate for cryptocurrency.
Here he is again. If you think a Bitcoin is a kind
of the new gold, It's actually an improvement over golden since
it, it doesn't take up space and it doesn't weigh anything.
So when I realized it was actually an improvement over
gold, I began to think, you know, it's possible that that
crypto could become a new Safe Haven because we always need one
and I think I have discerned a pattern and I would have to get
some serious. Kind of metrics to prove it.
But I've discerned a pattern since about, I would say mid to
late 2013 where every time they're sort of Market trouble,
crypto responds and gold sometimes response, but not
nearly as much. So I think that there has been a
change in Market psychology around the world.
That hardly anybody has commented upon that crypto has
become the new way to protect yourself.
Violence, political Elites and arbitrary Rule, and it's not
just here, it's in China, it's in Malaysia.
It's in America, it's all over the world.
So this is a really cool kind of global resistance movement and a
sense, and it's, and it's happening through economics and
finance and what are some of the better-known events that trouble
markets? Well, you know when you look at
liquidity problems you know appear in the banking system
where suddenly you can't you can't get loans and the and you
know the banking System seems to be under pressure or said some
extent broken. We're trading relationships
break down and Supply chains, or disrupted, where there's rumors
of a large bank and unable to meet its obligations.
When there's talk of new regulatory regime that's going
to make it more difficult for us to engage each other.
I mean, all these kind of events, tend to trigger more
Just encrypt up and I'm not one of these to the Moon guys.
Like I actually think that crypto has a price and it's the
right price, whatever it is right now but the demand where
this technology tends to rise when there's political trouble,
I think we've started to see that happening.
At first, I thought I was imagining it right, like, in
2013, I started to think, well, maybe maybe I'm just making this
up, you know? But I have seen it so often and
more recently like this, Is this bump that?
We've seen, actually this extraordinary bump who seem to
the markets? I think it's probably nobody can
prove this the direct reflection of the fact that us regime is
completely and wholly, dedicated to fomenting a global trade war
and and demand for crypto is just gone through the roof.
I mean, I think it was underpriced for the last year
and a half. Yeah, maybe they this this bear
Market was actually quite devastating and It really kind
of rattled everybody. You know, you guys are kind of a
crypto oriented podcast, you know what it was like for the
last year and a half. I mean people are just been Guam
and just depressed and oh my God I can't believe we expanded the
business so much what were we thinking?
Twenty thousand dollars is unsustainable.
We're not ready for this technology and Wednesday as
winds. The Winds of Winter going to end
is it April? Is that September?
Is a December, you know, just kept going on and on and it was
miserable. And then I think I think the
markets just needed a good reason to correct and trumps.
Trade War, just provoke that gave us.
That reason taking a few steps back.
Can you just give us a rudimentary understanding of the
US? China trade War?
Yeah, yeah so first of all, anybody's been raised in the
post-war period has come to believe that the one true thing
is that trade should be free and and the trade barriers should be
low and tariff should be low. And we should have more economic
integration. And, and that's the doctrine,
the name of the father, Son, and the Holy Spirit.
That's the end of the story. Amen, we are going to have free
trade forever and The way history works and and there is a
massive consensus all over the world and then in July 2015 I
was hanging out in Vegas. It is a dumb conference and
Trump spoke. And I heard this guy speak and I
thought, oh my God, this guy does not understand the division
of labor. He thinks that all production
should be National and he thinks that anything that's not
National is actually downward pressure on the GDP and the way
a country becomes Great Is by By promoting autarky.
I mean, it was weird because it's just completely contradicts
everything Adam Smith taught us and, and the cardo.
And everybody every Economist for like hundreds and hundreds
of years, actually is gluten free trade and this guy didn't
get it. I mean like it was not there's a
couple levels to it one is that a protectionist regime is almost
always dictatorial. It increases the power of the
executive and Donald Trump most loves nothing better than that
but it was also like this. Weird strange intellectual
failing that he had like he just couldn't Crockett and so I wrote
about it immediately in fact, just this morning I reread an
article I wrote July of 2015 and I would be really happy to read
the sections on all the stuff that I warned that okay.
It might be true. That romp is an authoritarian
racist. It might be true.
All the terrible things that everybody says about it might be
true, but actually the over Overwhelming truth about him is
that he is a mercantilist, our tacos protectionist and that he
imagines himself to be the CEO of this country and that he's
got to run this country like a business, his own private
business and he's going to vertically and horizontally
integrate all production under his control.
And I warned about this in 2015. I said you think he's going to
liberate us. This could destroy everything,
you love and disrupt the world economy and lead to War.
I mean, I just Flat out said it. So, this is a catastrophe in the
making and everybody was against me.
I mean, it was just them, I got. So I got trolled so hard.
I mean, thousands upon thousands, tens of thousands of
angry tweets and bitterness and hatred at me, like, I've never
experienced anything like it. I mean, I went to Freedom test
the next year and I gave a big speech against Donald Trump.
I said, you know, you you think he's gonna liberate you, he's
going to raise your taxes is going to increase.
Oppression is going to do, is go limit your travel and wreck the
worldwide division of labor, and you will suffer.
And I yelled this to the crowd and the booze were overwhelming
like two-thirds of the audience was like screaming at me.
Boo, Boo. Boo yelling, yelling me off
stage. Okay Jeffrey.
What is the Tariff? So I've tariff is erect a
barrier. Says, if you want to import
this, this good from this foreign country and it's coming
across the border, then you're going to have to pay 10%, you're
going to pay 20%. 5% of the value of the thing as a form of
tax. Foreign countries don't pay
perhaps Americans, do pay taxes. So Trump just lying about that.
That's what, that's what a tariff is.
What a trade deficit is, is just an accounting fiction, that
measures the difference between what we buy from a country
versus what that country buys from us.
And what's weird about these trade-offs of figures is that
they're calculated based on What's called the country of
origin. And that In turn is defined by
whether and to what extent a single product not service, but
a single product is substantially transformed.
So, you could, you can come up with the idea of a Bitcoin
coffee cup and you might sell it to all your customers, you
design it. And all the people who buy it
are your people and you're making all the profits and
everything else. But you discover it's easier to
produce this coffee cup and try which it often is.
Well, guess what? The country of origin of your
coffee cup is China. And so when people buy your
Bitcoin coffee mug, they that registers and international
trade statistics as a purchase from China.
And if you're buying more from China than China is buying from
you. And other words, you're buying
more Bitcoin coffee mugs from China, than China is buying
Bitcoin coffee mugs made in C or whatever.
Then that registers is a Exit. Okay, I got to ask you, is there
a link between the trade conflict and the Bitcoin prize?
What is very difficult to determine cause and effect in
real time financial markets? But at this point I would say
that I'm just going to throw out a number and say two-thirds of
the run-up in the price. We've seen in the last six weeks
is due to the trade War. So how did this whole thing
start? Yeah well it began in 2018 with
you know this Who's large large scale, tariffs against steel and
aluminum. That was his first thing and
then he started on those Ellsberg New Capital goes as
production goes and then he start going after consumer
goods. Some targeting the single
country which is really kind of unprecedented in the post-war
period. Targeting a single country.
We're not going to buy your your stuff anymore or if we do we're
going to, I'm going to punish our own citizens for doing so.
And and again, like I think our trade deficit is something like
Listeners can check all my numbers on this stuff but it
does matter what their precisely I can.
But I think it's like 425 million and so Trump wanted to
tax that amount of goods as a way of resolving the trade
deficit. By the way, the trade deficit
with China has only gotten worse and it since you trade War Began
so it's had an unintended consequence of actually causing
lead a more destruction trade. Not Not reduction, trade,
deficits at all. So I knew that Trump really had
it in his brain that he wanted to packs up to more than 400
billion dollars worth of Chinese product.
And and, and here's how weird economics is.
So in the first quarter of 2013, we saw something like a 3.5 3.25
percent annualized, increase in the GDP, and if you don't know
anything and you're kind of stupid, then you can attribute
that to anything. NG so Trump said up, there you
go, right right tariffs are working.
So he thinks that he caused he caused an increase in
productivity in the first quarter because of his Terrace.
It's it's um, it's Madness. It's a daughter Madness.
Do you think we're anywhere close to finding a resolution on
this? So, this is where I completely
disagree with many many commentaries.
Everybody's assuming that Trump wants, some kind of deal.
I don't believe that I think Trump wants Terrace and he
doesn't want to do, he wants more and more tears.
I mean he's negotiated in very bad faith and he's made the
Chinese Communists. Look, great, you know, like
they've been Earnest negotiators trying to come up with some
solution to keep World Trade going.
What do you mean by that? Well, because they've been,
they've been coming to those organizations assuming an
Earnest desire to reach a deal. And it's like, what, what do you
want? You want your intellectual
properties? That's cable change that you
want less industrial subsidies, how we can work on that.
But we going to do about agricultural subsidies.
If you know, they came to the table expecting actually not
even understand poor Chinese it's just a bathrobe.
It's not even understand what the problem was right and they
kept flowing out new solutions that every time there's a new
solution there was a new problem.
Yeah. But what about your Enterprise?
Special economic zones. You've got.
That's really unfair and when our companies come to your
country, Tree. Isn't it wrong that you, you let
your companies negotiate deals that involve the student of Ip
and and wait, your intellectual property laws a terrible
especially on Pharmaceuticals because you have this great
exemption for medicinal herbs that are ancient Chinese secrets
and so on. So every time the Chinese China
negotiated as we try to come up with some solution to the
problem to come to a deal, Trump Administration would rejected
say that the so good. I'm the question.
Is why? And I think the answer is that
the u.s. meaning, all Trump does not want a deal.
He wants High tariffs and wants to fundamentally disrupt, our
trading relationship with China and he's getting his way.
It's really catastrophically evil and it's going to be so
expensive for American consumers, but it's even going
to be worse than that. We don't even know what the
consequences are going to be. It could be absolutely grim.
Because the world economy for last 20 years, has really,
really 50 years, really benefited from this Co-op
International cooperation and now we're just u.s., it's just
out there saying. Yeah, everything should be made
in the US. So what do you think is the
Trump administration's in game here?
The end game is high, high high high tariffs, which he thinks he
can drive all production of everything and to United States
borders, that's the thing. Okay, and it's extremely
terrifying because it will absolutely and progress us, it
really well. If he can get his full agenda
through, it's going to be a catastrophe.
We've not seen anything like this.
Anything remotely like this since 1930, smoot-hawley tariff,
but, and they were 40 or 45 percent.
But they pertain to not that many Goods, right?
These tasks that trumps doing pertains to everything, like,
just look around you and see how many things are made with.
With multinational cooperation that are inclusive of Chinese
production and it's everyone. Everything around.
You is going to be disrupted. Supply chains, it costs are
going to rise. Prices are going to rise.
We don't have enough, we're going to P be diverted workers
are going to be diverted from this industry.
But that industry repairing the damage of the Trump
Administration is going to take ten years and actually the
reparations for the damage, she's doing does not going to
begin for another five. Okay.
So what's going to be the long-term impact on this?
I think I think what Trump is teaching the world pertains to
the danger of relying on politicians to make decisions
for our lives and that's going to be the lasting impact of
trump. Like the never Trump movement is
going to. Here's my actual prediction like
after he leaves office in five years there's going to be such
wreckage and people are going to realize just how horrible
everything was That that it's going to leave at least for one
generation. A lasting lesson.
Don't ever trust anyone man with that much power and if you don't
mind, let me just back up slightly on this question
because we look at foreigners. Do not understand this
Americans. Do not understand this, they
don't understand how Trump alone could be making these decisions
and having such an impact on the world economy.
Like how is it possible that under a system of checks and
This isn't constitutions and limited government.
Like, we're supposed to have and so on that one person could get
away with this, it's a little bit circuitous.
Like, if you read the US Constitution that says, Congress
has sole power over to negotiate trade deals with foreign
Nations. Like wait, how do we get from
that to this new system? The answer is really weird after
smoot-hawley in 1930 which was passed by Congress many
stakeholders than the systems of government around the world said
we don't trust legislate tors with his power because they have
abused it and they caused the Great Depression to get much
much worse. And from now on starting 1934
going forward, trade will be centralized in the executive
because we can it's only the executive we can really trust to
protect free trade, is that crazy?
And so that actually happened. So he Are we suddenly everything
is going along swimmingly, right?
Every president from FDR forward has been basically about
negotiating better and better deals and lower and lower
Terrace and you can look at the charts and see that ever since
the general agreement on tariffs and trade of in 1948 tariffs of
falling and falling and falling. And that's just what everybody
thought the world was supposed to work like and that's what it
was going to be a man. Whoops, the wrong guy.
Get some charge of the Nevers. Powering and nobody can stop it
in the future of Bitcoin became more widely adopted as a
currency or store value. How would a trade conflict work
differently? Let's say you want to design a
website and everybody knows too expensive.
We can't afford it. So you go to a service like up
work and you hire some guy in Beijing was like oh it's no
problem. I'll do it for a tenth of the
price. You pay him to up work channels.
There's no tariff. Let me fired a guy in Beijing.
There's no tariff, service services.
Subject characters. That'd be impossible to collect
impossible to collect. So the service side and thank
God, we've got such a big global Service economy right now
because that that is exempt from this Ward.
The problem pertains to the goods.
We use iPhones. IMAX dishwashing detergent
candles, glassware flatware pictures on your wall.
Know, all those things that are the physical things around.
Us are profoundly affected by this and we've got now, huge
tariff walls. It's going up and retaliation
going up and so all this stuff is going to rise in price.
I don't know how crypto will affect compliance with Terrace.
However, I do know that humanity is not very good and living in
cages. You know, we're Birds, we want
to fly. We could actually start seeing
the rise of a massive Global gray Market in Goods that will
evade tariff compliance. And that could be fueled by
cryptocurrency manly. This is what always always what
happens to be. Like, if New York taxes
cigarettes, you know, at 100%, what happens almost immediately?
You're going to get cheaper, cigarettes on the street
suddenly, they're being smuggled from New Jersey, Connecticut,
and Massachusetts in people's Trunks and sold through
alternative means, right? That's what taxes and barriers
to trade, always, do they Inspire the creation of grey and
black markets. So we're going to create A
massive Global Tax regime where all Goods coming and going from
every country or subject to 10:25. 40% taxation.
You incentivize people to find alternative ways of saving money
and you will not be able to stop it.
Nobody how many citations do deliver?
How many people you put in jail? You'll never stop it.
Can you explain how tariffs actually work?
Like, how are they collected? Let's go back to our Bitcoin
coffee. Again, and you want to get this
coffee cup and you've got 5,000 of them being coming in from
China. And so now you've got the
Customs saying. Whoops each cup is worth $5 so
you're going to pay a 25% tariff on that.
That's going to massively raise your costs.
So how how do you pay that do just write a check to the
treasury know what happens is? You have to hire An agency
called it's a private company called an importer of record.
So when the thing comes over on the boat and is unloaded the
Importer of record gets a complete list of everything it's
saying and then you know and then he pays and then you pay
him and he charges you premium, right?
He charges for his services and then you have to pay the costs
and maybe you can split the difference with him or
something. I mean there's ways you can go
about this but basically I've got a hot potato in the form of
a huge premium that you didn't want to pay.
And somebody is going to bear the cost, so now you finally got
them. But your bottom line is really
squeezed, right? So you paid more for the coffee
cups. They want to do, so you were
going to sell them for $10 each. Now you and your friends are
sitting around going, well, you know, we got a problem because
we had to pay a bill to create a huge bill from this importer of
Records terrible and we're having a hard time paying
salaries. We're gonna have to raise the
prices of these things. So instead of $10 your coffee
cup, now costs $15 but that also reduces the quantity demanded
among your customers because many people like they'll take a
Bitcoin mug for 10 bucks at 15 instead of, that's a little
edgy, right? So you're going to sell fewer.
So now your business is under pressure from another direction
is so you got growing costs, less demand for your goods and
and ultimately, you can't pay your Saturday after I fire an
employee and that means you're going to have to work a lot
longer hours and so on. And so it's these are the
spillover consequences of just small changes in tariffs,
terrible, it's terrible and evil.
Wow. Yeah.
I want to go take a shower. Hey, but we're making America
great. The Bitcoin magazine podcast is
a BTC media produced podcast on the let's talk.
Bitcoin Network stories, come from articles written by Bitcoin
magazine staff, including Peter Chihuahua, Colin Harper, Jimmy
key, Landon Manning and are van weird mm the music provided by
Billy Sly from the crypto Cantina.
The very special thanks to Our Guest Jeffrey Tucker.
And of course such as she Nakamoto, we are eternally
grateful, visit Bitcoin magazine.com for more in-depth
news analysis and resources about the most Peer-to-peer
currency and make sure to follow us on Twitter at Bitcoin
magazine. You can find more engaging
crypto podcast over at let's talk Bitcoin.com.
You can follow them on Twitter at the LTB Network, for all the
latest episodes. Be sure to subscribe to the show
on the Apple podcast app Spotify or wherever else you get your
podcast. If you got the time, please
leave us a review. It really helps us improve the
show and reach new listeners again, guys.
Thank you for tuning in and we'll see you next time.