Bitcoin, The Critical Money Layer with Nik Bhatia

 
 

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“All of that monetary profligacy over the last 10 years put the Fed’s reputation on watch; everybody and their mother knows about the Fed and its willingness to just do QE infinity, and so in a post-pandemic world where they got caught, basically, without a plan, now they have to preserve their reputation.”
— Nik Bhatia

SHOW DESCRIPTION

Nik Bhatia is Author of Layered Money and founder of TheBitcoinLayer.com. In this interview, we discuss Jeff Snider’s Eurodollar ideas: how all money is credit money; why Bitcoin will be a check, but will not replace, fractional reserve banking; and how Bitcoin will complement the dollar as a generational store of value.

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Three months ago we interviewed Jeff Snider who discussed the Eurodollar system, how Central Banks aren’t in control of the levers of money, and why we could be entering a deflationary depression. The show generated a huge amount of interest, particularly because despite the Eurodollar system being opaque and poorly understood, it is arguably a central cog in the global economy.

Nik Bhatia, amongst other esteemed commentators, was compelled to respond to Jeff’s show. This is because Jeff’s ideas and the way he presents them are enlightening and engaging. There is broad agreement regarding the unacknowledged criticality of this part of the global economic system, and the resultant challenge it presents for being able to define money.

There is also consensus that inflation won’t be the runaway phenomenon some are warning of, because the impact of QE was offset by tightening in the Eurodollar market. As such, deflationary pressures could soon become apparent meaning banks should be taking more risk to stimulate growth. It is fair to state Nic is an admirer of Jeff: Nic attributes Jeff’s seminal work to helping him develop Layered Money.

However, Nic does also have some important divergent opinions from Jeff. Nik believes that the banking system isn’t out of control. Whilst it doesn’t necessarily have the power it seeks to portray it does, neither is it an impotent bystander. The recent moves to quell inflation have only just begun in earnest. Could the Fed show that it has teeth in this regard?

What is most illuminating however is their convergent ideas around Bitcoin. Whilst presented in different ways, they both see Bitcoin’s role as an important store of value. They also agree that fiat’s elasticity will continue to be a desired utility. What Nik leads on in this regard is that Bitcoin can act as a vital check on fiat and Central Banks: it makes money pluralist.

TIMESTAMPS

00:01:38: Introductions
00:02:13: Developments at The Bitcoin Layer
00:06:26: The eurodollar system
00:14:46: Eurodollar reserves and fractional-reserve banking
00:22:14: The Triffin dilemma
00:27:14: All money is credit money, and comparing Bitcoin to the dollar
00:35:46: Bretton Woods and the gold standard
00:46:09: A return to sound money
00:54:37: Government reactions to the economic crisis
00:59:29: UK pensions, and coupon bonds and interest rate swaps
01:07:37: Moral hazard
01:11:05: Interbank protections since 2008
01:16:00: The role of the Fed
01:25:53: MMT and central planning
01:31:25: There will be no death of the dollar
01:39:16: Bitcoin's inelasticity vs fiat's elasticity
01:45:27: The Bitcoin ecosystem pyramid
01:49:08: Credit systems based on Bitcoin
01:55:58: Final comments

 

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SHOW NOTES

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Mentioned in the interview:

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